assume any responsibility for the Execution of the Request for Transfer by the Executing Bank and completion of the credit transfer to the Beneficiary Bank. Customer understands and acknowledges that any applicable callback notifications on PIN limits established by Customer with Bank for wire transfer dollar thresholds do not apply to Requests for Transfer.
Customer agrees not to initiate a Request for Transfer in violation of applicable federal, state or local law or regulations.
3. Security Procedures. Customer and Bank shall comply with any established security procedures with respect to the initiation and forwarding of any Request for Transfer, including but not limited to, the SWIFT authentication procedures identified in the SWIFT User Handbook, as amended from time to time. Customer agrees that any such security procedures shall be deemed commercially reasonable. Customer understands that the security procedures are not intended for the purpose of detecting errors in the transmission or content of a Request for Transfer controlled by Customer. Customer agrees to be bound by any Request for Transfer sent in the name of Customer that is processed by Bank in compliance with the agreed security procedures whether or not authorized.
4. Amendment or Cancellation. Customer does not have the right to reverse, adjust or revoke any Request for Transfer after it has been received by Bank; provided, however, that Bank will make a reasonable effort to act on such a request by Customer. With respect to a Request for Transfer that has already been Executed, Bank may intervene at Customer’s request, to request that the Beneficiary Bank return all or a portion of the funds. Customer understands that the Beneficiary Bank is under no legal obligation to comply with this request.
5. Rejection/Repair. Bank may reject a Request for Transfer if: (i) it is not initiated or transmitted in accordance with the applicable security procedures; (ii) there is any inconsistency between a Request for Transfer and information previously supplied to Bank; or (iii) Bank has other reasonable grounds not to honor the Request for Transfer. Bank shall have no obligation to repair any Request for Transfer it receives but may, in its absolute discretion, endeavor to repair any Request for Transfer.
Bank shall notify Customer of any rejections or suspensions.
6. Limits on Bank’s Liability. Bank sends outgoing and receives incoming Requests for Transfer using SWIFT. Bank shall not be responsible for the acts or omissions of Customer, the SWIFT network, other financial institution or any other person. Payment to a foreign country is subject to the laws of the foreign country involved. Bank assumes no liability for foreign exchange risk, delays, non-delivery or other events resulting from causes beyond Bank’s control.
R. SWIFT-RELATED SERVICES
The SWIFT-Related Services (the “Service”) will enable organizations with domestic or cross-border activity to initiate or execute payment or transfer instructions from Customer’s Bank account to another account held at Bank or a third -party bank, and to receive account information and payment notifications from Bank via products and services offered by the Society for Worldwide Interbank Financial Telecommunication ("SWIFT").
This Service or other similar services offered by Bank are governed by this Agreement, applicable SWIFT agreements, rules, and terms and conditions (collectively, "SWIFT Terms"), and all other applicable federal, state and local laws and regulations. Unless otherwise defined, all capitalized terms shall have the meanings set forth in the SWIFT Terms.
1. Definitions.
a. “Account Reporting” means cash management notifications, transaction and account information provided by Bank to Customer.
b. “Beneficiary” means the person or entity (including Customer) designated in Customer’s Transfer Request to receive funds. c. “Beneficiary Bank” means the financial institution (including Bank) that credits the funds to the Beneficiary’s account.
d. “Execute” or “Execution” means the debiting of Customer’s account by Bank and the forwarding of the credit transfer to the Beneficiary Bank pursuant to a Transfer Request from Customer.
e. “FileAct” means a file transfer service that utilizes the SWIFT infrastructure to enable the transfer of data in various file formats. f. “Transfer Request” means a MT103 or other SWIFT transfer instruction sent by Customer to Bank for onward processing. If SWIFT -Related services are accessed using SCORE, “Transfer Request” means a MT101 Request for Transfer instruction.
g. “SCORE” means the Standardized Corporate Environment, a SWIFT direct access corporate service which offers Customer a secure connection and standardized environment to manage Customer’s payments and payment information.
2. Security Procedures. Customer shall comply with all security procedures established by Bank for the SWIFT -Related Services, including but not limited to, the SWIFT authentication procedures identified in the SWIFT User Handbook, as amended from time to time. Customer agrees that any such security procedures shall be deemed commercially reasonable. Customer understands that the security procedures are not intended for the purpose of detecting errors in the transmission or content of any Account Reporting, or of a Transfer Request controlled by Customer. Customer is solely responsible for maintaining its own internal security procedures to prevent errors or unauthorized access to Customer’s computer systems by unauthorized employees, vendors or customers. Customer agrees to be bound by any Transfer Request that appears to have been sent by Customer that is processed by Bank in compliance with the agreed security procedures, whether or not authorized. Bank will use reasonable care in transmitting the Account Reporting but assumes no responsibility for the accuracy or timeliness of the information supplied by other financial institutions, the SWIFT network.
Customer agrees to immediately notify and fully cooperate with Bank if it suspects or becomes aware of any breach or compromise of the security of the SWIFT-Related Services.
3. Transmission and Processing of Transfer Requests. Customer authorizes Bank to Execute all Transfer Requests delivered to Bank by Customer in compliance with the terms of this Agreement and any established security procedures. Customer shall adhere to formatting and processing requirements established by Bank. Customer authorizes Bank to use whatever means Bank, in good faith, deems reasonable under the circumstances to execute each Transfer Request, including selection of a funds transfer system, routing and means of transmission. Customer shall be responsible for the accuracy, completeness and timeliness of all Transfer Requests sent to Bank for Execution. Transfer Requests with settlement dates of more than thirty (30) calendar days from receipt may not be processed unless prior arrangements have been made. Customer is solely responsible for initiating Transfer Requests sufficiently in advance to meet Customer’s contractual obligations to its vendors and/or customers. Bank shall not be responsible for any late payment or finance charges that may result from Customer’s failure to allow sufficient lead - time to make a Transfer Request. Bank and any other financial institution may rely on the account, routing or BIC numbers in the Transfer Requests 76 Item 18
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even if such numbers do not correspond to the name of Customer, the Beneficiary or the Beneficiary Bank.
4. Amendment or Cancellation of Transfer Requests. Customer does not have the right to reverse, adjust or revoke any Transfer Request after it has been received by Bank; provided, however, that Bank will make a reasonable effort to act on such a request by Customer. With respect to a Transfer Request that has already been Executed, Bank shall, at Customer’s request, request that the Beneficiary Bank return all or a portion of the funds. Customer understands that the Beneficiary Bank is under no legal obligation to comply with this request.
5. Rejection/Repair of Transfer Requests. Bank may reject a Transfer Request if: (i) it is not initiated or transmitted in accordance with the applicable security procedures; (ii) does not adhere to Bank’s formatting or processing requirements; (iii) there is any inconsistency between a Transfer Request and information previously supplied to Bank; (iv) Customer’s Transfer Requests exceed any applicable transaction limits established by Bank; (v) if there are insufficient collected funds in Customer’s account to fund the Transfer Request; or (vi) Bank has other reasonable grounds not to honor the Transfer Request. Bank shall have no obligation to repair any Transfer Request it receives but may, in its absolute discretion, endeavor to do so.
6. Account Reporting. Bank may send notifications that allow Customer to receive advices relating to Customer’s payments processed by Bank.
Bank may also provide Customer with information on accounts maintained at Bank. If Customer elects to receive notifications and other account information via SWIFT, Customer shall exercise extreme care in maintaining its own security in the receipt of the notifications or information. Customer acknowledges that the data received via SWIFT may include confidential information, including, without limitation, names, amounts, phone numbers and account information. Customer further acknowledges that it alone assumes full responsibility for maintenance of its internal security procedures to keep such information confidential.
7. Limits on Bank’s Liability. Bank will use reasonable efforts to provide notifications and information in a prompt fashion but shall not be liable for the temporary failure to provide timely data. Bank assumes no responsibility for any delays caused, or for inaccurate or incomplete information provided, by the SWIFT network or third -party banks with respect to payments and related information. Bank shall not be responsible for the acts or omission of Customer, the SWIFT network, any other financial institution or any other person. Payment to a foreign country is subject to the laws of the foreign country involved. Bank assumes no liability for foreign exchange risk, delays, non-delivery or other events resulting from causes beyond Bank’s control.
8. SCORE. If Customer accesses the SWIFT -Related Services using SCORE, Customer shall additionally comply with applicable SWIFT agreements, documentation, user guides, security procedures and all other instructions and recommendations provided by SWIFT or by Bank in relation to the use of SCORE. Customer acknowledges that Bank does not regulate the setup and provision of SWIFT membership, joining the SWIFT network or SCORE, the SWIFT network security or the facilities necessary to access and use them. Customer represents that it is, and will throughout the term of this Service remain, an authorized SWIFT participant. Customer authorizes Bank to act on any instruction contained in a SWIFT message received by Bank through SCORE which appears to have been sent by Customer. In the event that Customer requests Bank to provide SWIFT-Related Services through SCORE to a parent company, subsidiary, affiliate or other commonly owned company, Customer agrees that it shall be jointly and severally liable for such related entity’s obligations under this Agreement. Customer represents and warrants that such related entity is a duly authorized agent of the Customer and that the related entity is acting on behalf of Customer in its authorized capacity.
9. FileAct. If the FileAct service is offered by Bank and selected by Customer, Customer may use this service which enables the secure and reliable transfer of files to exchange batches of financial messages, reports, bulk payment files, images and other data over the SWIFT network. FileAct supports both interactive (real -time) and store -and- forward modes. Prior to implementation, Customer shall verify that Bank is capable of supporting the file formats and transaction types that Customer wishes to transmit. If the file format and transaction type is supported by Bank, Customer agrees that the processing of each file shall be additionally subject to all applicable Sections of the Agreement.
The following are additional terms and conditions applicable to all Foreign Exchange Services offered by Bank including, but not limited to, spot, forward, swap and option transactions, whether physically deliverable or non-deliverable FX transactions. Bank may change the number or type of Services offered at any time.
1. Conflicting Provisions and Separate Disclosures. With respect to all foreign exchange transactions or other derivative products entered into by Customer, to the extent that any provision of this Agreement conflicts with a provision of any ISDA Master Agreement by and between Customer and Bank or any documents related thereto (the “ISDA”), the ISDA terms shall govern. Disclosures herein supplement other disclosures that Bank may provide Customer and any other agreements between Bank and Customer in connection with FX transactions, including, but not limited to, ISDA Master Agreement, USBNA Assessment and Agreement for Swap Transactions, the ISDA August 2012 DF Protocol, the ISDA March 2013 DF Protocol, the ISDA General Disclosure Statement for Transactions, the ISDA Disclosure Annex for Foreign Exchange Transactions, and the U.S.
Bank National Association Foreign Exchange Disclosures.
2. Foreign Exchange Risk. Many banking and finance transactions carry risk. All foreign exchange transactions, including but not limited to, swaps, options, forwards, foreign exchange transactions currency accounts, and other similar derivatives and related products involve unique risks specific to the nature of these types of transactions and the currency market.
These types of transactions are not suitable for all Customers. Customer should fully understand the nature and extent of exposure to risk of loss, if any, which in some circumstances may significantly exceed the amount of any initial payment made by or to Customer. All decisions to enter into foreign exchange transactions should be made by Customer giving appropriate consideration to Customer’s experience, objectives, financial resources and business environment. Bank will be truthful in its statements about any facts, but statements made by Bank should not be construed as recommendations or advice.
3. Arm’s Length Transactions. Bank is a dealer and market maker in the foreign exchange market. As such, Bank engages in price quoting, order taking, trade execution and other related activities with counterparties and other dealers and for Bank’s own account. Unless otherwise agree by Bank in writing, Bank acts as a principal on an arm’s length basis, does not act as Customer’s agent, broker, fiduciary, financial advisor or in any similar capacity when engaging in FX transactions with Customer, nor will Bank perform the duties associated with these roles.
4. Pricing. Many factors affect foreign exchange pricing, including but not limited to, the size and nature of the transaction, credit, capital and funding costs, applicable trading venue or platform and the manner that such trading platform or venue is utilized, settlement risk, operational considerations, regulatory requirements, relationship factors such as the amount and nature of service provided and volumes traded by Customer, the type of trade request, and business costs such as fees related to exchanges, brokers or other intermediaries. Market conditions, such as demand, frequency, timing and volatility, also affect foreign exchange pricing. These factors in pricing may result in Bank offering different prices to different customers for the same or similar FX transactions. Unless otherwise agreed, prices quoted by Bank on all FX transactions (actionable and indicative) are an “all in” price that typically includes Bank’s bid or offer spread for the requested transaction and an amount to compensate Bank based on the many factors set forth above. These components will not be separately disclosed unless required by law.
Bank’s pricing may not be reflective of prices being offered by other dealers. During extreme market conditions, such as liquidity events, the notional size and price levels Bank offers may not match levels provided in normal market conditions.
A. ELECTRONIC FOREIGN EXCHANGE SERVICES
1. Introduction. Bank may provide foreign exchange services to Customer in connection with one or more web-based services, via private Internet site owned and operated by Bank (“EFX”). If requested by Customer and agreed to by Bank, Bank will provide such services in accordance with this Agreement and other terms and procedures provided to the Customer. Customer agrees that Customer’s use of EFX and all V. TERMS APPLICABLE TO SPECIFIC FOREIGN EXCHANGE
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transactions initiated thereby shall be governed by this Section, all other relevant sections of the Agreement and any other related disclosures provided to Customer, in either paper or electronic format. EFX shall be available only during hours as established by Bank, which may vary by day or location. Notwithstanding anything to the contrary herein, Bank does not confirm that the person authorizing any EFX transaction is an Authorized Signer or is otherwise authorized to conduct any EFX transaction on behalf of Customer.
2. Access Devices. Once Bank has granted Customer access to any EFX system, System Administrator(s) designated by Customer in the Implementation Documents will be provided with one or more access devices, which may include cards, identification numbers and/or passwords. Customer shall use all EFX services in accordance with the security procedures set forth in this Agreement.
3. Trades.
a. General Procedures. Within the applicable EFX platform, Customer informs Bank that Customer wishes to purchase or sell a stated amount of currency against a second currency on a designated date (“Settlement Date”) either unconditionally or at a displayed exchange rate, if one may be obtained (“Trade”). Any transaction that results following the submission of a Trade shall be Customer’s legally binding obligation.
Trades submitted to Bank via an EFX platform shall be effective only upon acceptance by Bank. Bank will establish from time to time specific times of day after which Trades will not be processed on a "same-day" or "next- day" basis. Trades submitted after Bank's deadline will be considered received on the next business day. Deadlines will differ depending on the Trade currency and other factors. Market movements could occur while systems are processing Customer’s transaction. These market movements may be in Customer’s favor or against Customer’s position and will be reflected in the execution price.
b. Confirmation. Bank shall make reasonable efforts to provide information and status of the terms of any Trade on the EFX platform or by other means established by Bank. Failure by Bank to confirm a Trade for any reason, including without limitation computer malfunction, shall not excuse Customer’s obligations related to any Trade. Bank’s internal records with respect to each Trade shall constitute conclusive evidence of the terms of each Trade. The terms of each Trade shall be incorporated into and become part of this Agreement.
b. Settlement Instructions and Payment. Once a Trade has been made, Customer agrees to make payment or delivery of currency to Bank on the Settlement Date of the Trade in accordance with the settlement instructions provided by Customer, plus any applicable fees or charges.
Bank expects that all trades will settle via standing settlement instructions.
Customer is solely responsible for the accuracy and completeness of any settlement instructions delivered to Bank through EFX and such settlement instructions are subject to the concurrence of Bank. Any change to Customer’s standing instructions must be completed on the platform no less than three business days prior to settlement. Failure to do so may result in settlement after value date and a claim for compensation or use of the previously applicable settlement instructions and a claim for compensation. Bank strongly discourages the use of third- party payments to settle foreign exchange transactions. Third-party payments will only be permitted in certain instances in the sole discretion of Bank. Requests for third -party payments will require all information requested by Bank in connection with anti -money laundering regulations and policies. Settlement instructions for approved third -party payments must be provided on the platform no less than three (3) business days prior to settlement. Settlement instruction provided after this time or incorrect or incomplete instructions may result in settlement after the value date or use of the previously applicable settlement instructions. Should Customer instruct Bank to settle a Trade by debiting an account, Customer agrees to maintain sufficient available funds in the account to settle on the Settlement Date. Should funds be insufficient to settle the trade on the Settlement Date, Bank reserves the right in its sole discretion to debit any of Customer’s account with the Bank in the amount of Trade, subject to applicable account fees and charges, or to terminate the Trade. c. Cancellation or Change. Customer acknowledges and agrees that Customer shall have no right to cancel or reverse a Trade once submitted.
Bank will, however, make reasonable efforts in its sole and complete discretion to cancel or amend the terms of a Trade upon Customer’s request. Should a Trade be successfully canceled or amended, Customer agrees to reimburse Bank for any breakage costs and other expenses incurred by Bank to cancel or amend the Trade, including any fees imposed for this extraordinary service. Bank reserves the right to adjust the exchange rate on any Trade requiring a new Settlement Date to reflect any costs associated with carrying that Trade to a new Settlement Date.
4. Funds Transfers. Customer authorizes Bank to execute and charge the designated Customer account(s) for wire transfer payment orders delivered to Bank via any EFX service. Customer agrees that all such wire transfer payment orders will be governed by the relevant Sections of this Agreement.
5. Representations and Warranties. Customer represents and warrants to Bank as of the date of this Agreement and as of the date of each Trade that: (i) Customer is authorized to enter into this Agreement and any Trade, (ii) the persons entering into the Agreement (and each Trade) on Customer’s behalf have been duly authorized to do so, (iii) the Agreement (and each Trade) is binding and enforceable against Customer in accordance with its terms, (iv) no Termination Event has occurred or is continuing, and (v) Customer is acting as principal with respect to each Trade.
6. Close-Out Events. Each of the following events shall constitute a close-out event under this Agreement (each a “Close -Out Event”): (i) failure by Customer to pay Bank for any amounts due under this Agreement or any Trade, (ii) any voluntary or involuntary insolvency proceeding (including without limitation any proceeding under any bankruptcy, insolvency or other similar laws governing the operations of Customer) shall have been commenced against Customer, (iii) Customer fails, or is otherwise unable, to pay its debts as they become due, (iv) Customer disaffirms, disclaims or repudiates any Trade, (v) any representation made by Customer under this Agreement shall prove to have been false or misleading in any material way at the time that it was made, or (vi) Customer shall be in default of any agreement between Customer and Bank or its subsidiaries or affiliates.
7. Rights Upon Close -Out Event. If a Close -Out Event has occurred, Bank shall have the right to terminate this Agreement and, upon notice to Customer, close out all outstanding Trades on a date specified by Bank (the “Close-Out Date”). In such event, Bank shall liquidate such Trades by calculating in good faith the gain or loss of all Trades as follows: (i) determine the close out amount of each Trade, which shall be equal to the sum of the face value of each Trade in a particular currency with a Settlement Date that is the same or later than the Close-Out Date and the face value of each Trade in the same currency with a Settlement Date prior to the Close -Out Date, plus interest at the Fed Funds rate from and including the Settlement Date, but excluding the Close -Out Date, (ii) convert the close out amount of each group of like currency Trades into U.
S. Dollars at the rate of exchange at which, at the time of the calculation, Bank may buy U.S. dollars with or against currency of each closed out Trade, and (iii) determine for each Trade the sums that would have been owed by Customer to Bank and the sums that would be owed by Bank to Customer (adjusted to present value by discounting the gain or loss at the Fed Funds rate from and including the Settlement Date, but excluding the Close-Out Date). The preceding amounts shall be aggregated, so that all such amounts are netted into a single liquidated amount payable to or by Bank. Customer shall pay on demand any amounts owing to Bank pursuant to this Section and Bank’s calculations shall be conclusively binding against Customer, absent manifest error.
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B. FOREIGN CURRENCY ACCOUNTS
1. Introduction. If requested by Customer and agreed to by Bank, Customer may open a Foreign Currency Account (“FCA”) at U.S. Bank National Association (“Standard FCA”).
2. Permitted Deposits. Bank may accept the following for deposit into FCA:
a. Proceeds of matured foreign exchange purchase contracts; b. Proceeds of foreign currency denominated letters of credit or documentary collection;
c. Incoming international funds transfers;
d. Proceeds of loan disbursements; or
e. Foreign checks and other items subject to collection, which may not be available until funds are received by Bank.
Bank will not accept currency or coin for deposit into FCA. Deposits not specifically enumerated above may be allowed if agreed to by Bank in writing. Only collected and verified funds can be deposited into FCA, whereupon funds will be immediately available for withdrawal or transfer by Customer.
3. Withdrawals. Customer can make withdrawals out of FCA in the following ways:
a. Settlement of a foreign currency exchange sale contract; b. Negotiation of foreign currency denominated letters of credit or documentary collection;
c. Outgoing international funds transfers by wires initiated in accordance with Bank procedures; or
d. Payment of a foreign currency loan.
Each of these methods of making a withdrawal will result in an immediate debit to the FCA for the entire amount Customer has elected to withdraw from such FCA.
4. Interest. Interest rates offered on FCAs are determined in Bank’s discretion based on the applicable currency. Such interest rates may be set at zero or at a negative interest rate. Interest is calculated based on the average daily balance method. The average daily balance method is an annualized rate that reflects the relationship between the amount of interest each fiscal month and the average daily balance in the account for such fiscal month. Negative interest may be assessed as a fee based on the interest rate set by the applicable monetary authority plus the incremental cost of funding to U.S. Bank.
5. Denomination. Customer will elect the denomination of each FCA on a separate account opening document. Transfers of funds into and out of FCA in the currency in which that particular FCA is denominated will be made without regard to the equivalent value of that sum of foreign currency in U.S. dollars or other foreign currencies. Transfers of funds into and out of FCA in a currency other than the currency in which that particular FCA is denominated may be accommodated by the Bank in its discretion. Such transfers will be made at the prevailing exchange rate determined by Bank.
6. Non-Business Days. In addition to non-Business Days specified in the Agreement, there will occasionally be other days on which Bank cannot process or complete a transaction due to holidays in foreign countries.
7. Other Terms. Bank may refuse a deposit, limit the amount which Customer may deposit, return all or any part of a deposit or require that Customer close FCA at any time. Bank may also close FCA without prior notice and remit to Customer any balance remaining after taking into account all pending debits and charges against such FCA.
8. Foreign Currency Account Risks. Investing in any currency other than the base currency of the Customer carries risk. The value of the balances in such accounts may be significantly affected by changes in currency exchange rates. Some other risks of maintaining foreign currency balances include, but are not limited to: the effects of a different economic system in a foreign country, future political and economic developments, possible imposition of exchange controls or other government restrictions, and with respect to certain countries, the possibility of expropriation or confiscatory taxation, political or social instability, or diplomatic developments which could adversely affect the value of the currency. Should Bank’s balances in a foreign country become blocked or withdrawals by Bank become otherwise restricted, Customer’s funds in the FCA will likewise be blocked or otherwise restricted.
WHILE DEPOSITS IN FCAS MAY BE INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION (“FDIC”) UP TO A MAXIMUM
AMOUNT ALLOWED BY LAW, CUSTOMER IS NOT PROTECTED BY
BANK AGAINST FOREIGN CURRENCY EXCHANGE RATE
FLUCTUATIONS OR FROM INABILITY TO ACCESS FUNDS FROM
FOREIGN REGULATIONS BY THE FDIC INSURANCE, OR ANY
OTHER INSURANCE OR GUARANTY PROGRAM.
9. Limitations on Liability. In addition to other limitations on liability set forth in this Agreement, Customer expressly releases and holds harmless Bank, and its affiliates, agents and employees, from any liability, loss, damage or claim related to currency exchange rates or fluctuations in value of the currency in which the applicable FCA is denominated with respect to the U.S. dollar and other currencies. Customer hereby assumes all risks related to currency exchange rates and fluctuations in currency values, including that the foreign currency in FCA might be worth less, in U.S. dollars or other foreign currencies, than the U.S. dollar or other foreign currency equivalent of such funds at the time deposited into the FCA. Bank makes no warranty and no representation about the value of any FCA balance at any time.
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The following are additional terms and conditions applicable to specific Money Center and Safekeeping Services offered by Bank. In the event of a conflict between this Section VI and any other provision of this Agreement, Section VI shall govern. Bank may change the number or type of Services offered at any time. Customer shall not be bound by the terms and conditions for the specific Services described in this Section VI to the extent Customer is not using such Service(s).
Municipal Advisor Rule Disclosure. This disclosure applies to Customer if Customer is classified as a municipality or an "obligated person" under the Municipal Advisor Rule. For purposes of Section 15B of the Securities Exchange Act of 1934 (the "Act") (SEC Rule 15Ba1-1 et seq.) (the "Rule"), Bank: (1) is not recommending and will not recommend an action to Customer; (2) is not providing and will not provide "advice" to Customer as defined in the Rule, and any information or communication from Bank in respect of Customer's accounts with the Money Center or the Safekeeping Departments of Bank or in respect of any securities transaction or potential securities transaction to be executed via such account(s) is not intended to be and should not be construed as "advice" as defined in the Rule; and (3) is not acting as an advisor to Customer and does not owe Customer any fiduciary duty pursuant to Section 15B of the Act or otherwise with respect to any such account(s), information, communication, transaction or potential transaction. Customer should discuss any information or material provided to Customer by Bank in connection with trading, investing or other activity in the such account(s) with any and all of Customer's internal or external advisors and experts that Customer deems appropriate before acting on any such information or material.
A. INVESTMENT, DEPOSITORY AND SAFEKEEPING SERVICES
From time to time, Customer may effect securities transactions or establish deposits with Bank's Money Center Department and/or request safekeeping services from Bank's Safekeeping Department. All such transactions shall be subject to the terms and conditions of this Agreement.
1. Definitions.
a. “Confirmation” means the confirmation statement from Bank as described in this Agreement.
b. A “Money Center deposit” means an interest -bearing demand deposit account, a money market deposit account (“MMDA”), a time deposit, or other deposit liability of Bank to Customer established under this Agreement and maintained in Customer's Money Center investment account.
c. "Safekept Securities" means securities that Bank has agreed to accept and hold for the account of Customer under the terms of this Agreement. d. The term "securities" means all securities (as Defined in the Securities Exchange Act of 1934) and all investment securities or products from time to time offered by Bank to Customer, other than certificates of deposit issued by Bank and deposits made with Bank.
e. “Settlement Account” means any settlement account(s) designated by Customer or any replacement account identified by Customer in a written notice delivered to Bank.
2. Securities Transactions: Compensation and Capacity of Bank. a. In General. In any securities transaction governed by this Section VI.A, Bank may be acting as principal, riskless principal, or agent. Bank’s capacity in any securities transaction will be indicated on the Confirmation. (i) As Principal. When acting as a principal in securities transactions, Bank will either buy securities for its own account or sell for its own account securities owned by Bank, whether such securities are bought before or after receiving Customer’s order. Bank’s compensation is reflected in the price at which Bank buys or sells the securities.
(ii) As Riskless Principal. When acting as a riskless principal in securities transactions, after receiving from Customer an order to buy or sell securities, Bank will buy or sell securities for its own account to offset the sale to or purchase from Customer. Bank’s compensation is reflected in the price at which Bank buys and sells the securities.
(iii) As Agent. When acting as Customer’s agent in securities transactions, Bank will buy or sell securities solely for Customer’s account. Bank’s compensation due from Customer is the amount of any agency service charge indicated on the Confirmation. b. Service Fees. In addition to compensation received as a principal, riskless principal or agent, Bank may charge Customer service fees in relation to securities transaction as specified in the current fee schedule as provided to Customer, which may be amended from time to time upon notice to Customer.
c. Other Compensation; Bank Securities. Bank may be paid a fee or other compensation by any other party in connection with any securities transaction, and any such fee or compensation will be in addition to fees payable by Customer to Bank under this Agreement. Such additional compensation may include, without limitation, advisory, custodial, distribution and/or shareholder service fees (which may be paid as service fees pursuant to Rule 12b-1 under the Investment Company Act of 1940) that Bank or its affiliates may receive from various mutual funds and/or mutual fund service providers, based upon moneys invested in the funds.
Customer acknowledges that those fees or other compensation may be paid to Bank for such services, and that such payments will not reduce or offset any fee or compensation due from Customer to Bank under this Agreement. Further, Customer acknowledges that securities Customer acquires through Bank may directly or indirectly (including through mutual or money market funds) represent an ownership interest in securities issued by Bank or its affiliates or by funds sponsored by Bank or its affiliates.
3. Money Center Deposits.
a. In General. If Customer elects to deposit funds through the Bank’s Money Center Department, that Money Center deposit shall be maintained within Customer’s Money Center investment account. Bank will provide Customer with a Confirmation upon Customer’s placement of funds, and the deposit transaction will be reflected on Customer’s Money Center account statement. With the exception of Eurodollar deposits (which are not deemed deposits under rules promulgated by the FDIC and therefore are not insured by the FDIC), Money Center deposits are FDIC insured per depositor, up to applicable FDIC limits. By opening and maintaining a Money Center deposit, Customer agrees to be bound by this Agreement. b. Access to Funds. In addition to any other restrictions specified elsewhere in this Agreement, Customer shall not be allowed to make withdrawals or transfers from a Money Center deposit at a U.S. Bank branch or ATM or via check. No debit or ATM cards will be issued on a Money Center deposit. Customer shall be permitted to make withdrawals or transfers from a Money Center deposit only by contacting the Money Center Department in the following manner: telephone, facsimile, email, or via an online system provided or approved by Bank.
c. Notice of Withdrawal. Bank reserves the right to require at least seven (7) days written notice prior to withdrawal or transfer of funds from an MMDA, unless otherwise specified on the Confirmation for the Customer's placement of funds. Customer must provide such notice to Bank's Money Center Department by 3:00 PM Central Time via telephone, email, or fax.
4. Pledges; Segregation.
a. Pledges. Upon request of Customer, Bank can provide a form of control agreement suitable for transactions where Customer wishes to grant to third parties a lien, pledge or other rights over its property held by or at the Money Center or Safekeeping Departments at Bank. Customer agrees that all costs of Bank, including reasonable fees and expenses of outside counsel if deemed necessary by Bank, will be at Customer's expense if such a control agreement is requested, whether or not a final agreement is entered into.
b. Segregated Assets. Where Customer wishes to effect transactions hereunder on behalf of its customers using the property of such VI. TERMS APPLICABLE TO SPECIFIC MONEY CENTER AND
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customers, Customer will first notify Bank in writing of its intention to do so before effecting any such transactions. Customer acknowledges that Bank may require one or more additional agreements in order to accept such transactions. Once acceptance of such transactions has been approved by Bank, Customer agrees to include in its instructions to Bank an agreed identifier or designation as to the applicable securities, deposits and transactions.
5. Securities Transaction Requests.
a. Effecting Transactions. Each securities transaction will be effected pursuant to Customer's instructions made verbally, by fax or sent electronically via email or a trading system provided or approved by Bank.
Emailed instructions must be directed to Bank’s email address as designated from time to time by Bank, and fax instructions must be directed to Bank’s fax number as designated from time to time by Bank.
Securities transaction requests may be acted upon by Bank without acknowledgment by Bank that it has received such request. b. Cut-Off Times. Bank establishes cut-off times for receipt of securities transaction requests depending on the type of security and the market in which it is traded. In addition, market holidays, procedural or operational matters, and actions taken by market operators may affect Bank’s ability to process securities transaction requests. Customer instructions for same day settlement received before the applicable cut -off time will be submitted for processing that Business Day. Customer instructions for same day settlement received after the applicable cut -off time may be processed by Bank on a ‘best efforts’ basis that Business Day and otherwise will be submitted for processing the next Business Day. c. Bank's Rights. Bank may reject, refuse to honor, or reverse all or any portion of any transaction request, with or without prior notice to Customer.
If Customer fails to pay in full for any security purchased or fails to deliver security sold, in each case on or before the related settlement date, Bank is authorized in its discretion and without notice or demand to take any one or more of the following actions: cancel the transaction; sell the securities covered thereby; buy-in cover securities or other property required to make delivery; charge the Settlement Account for amounts due; hold Customer liable for any loss, cost or expense including but not limited to, breakage or pair-off fees and the capital charge and interest cost to carry any securities purchased; and/or impose fees.
6. Safekept Securities. Bank, acting through its Safekeeping Department, agrees to hold and keep as custodian hereunder all Safekept Securities, and to deliver such Safekept Securities in accordance with the instructions of Customer, all subject to the terms and conditions of this Agreement.
a. Acceptance and Withdrawal. Securities eligible to be Safekept Securities may be delivered to Bank, and any Safekept Securities may be withdrawn from Bank, in each case upon an instruction of Customer delivered in accordance with this Agreement. Withdrawal or delivery of Safekept Securities is subject to availability (e.g., among other reasons, securities involved in a corporate action or in frozen status, restricted securities or pledged securities may not be available for withdrawal or delivery). Bank shall not be liable or responsible for or on account of any act or omission of any broker or other agent designated by Customer or, in the absence of such designation, selected by Bank to receive or deliver securities for the account of Customer.
b. Registration; Depositories. Bank shall register Safekept Securities in nominee name and may from time to time change the registration of Safekept Securities from nominee name to Customer’s name, or vice versa. Customer agrees that it will timely complete any necessary documentation provided by Bank to change the registration of Safekept Securities. Safekept Securities held in nominee name may be deposited with The Depository Trust Company or other third -party depository acceptable to Bank. Securities that are depository eligible will be held at the depository in the depository’s nominee name.
c. Securityholder Information. Unless otherwise required by law or pursuant to instructions from Customer, in no event shall Bank be responsible to take any action concerning any puts, calls, conversions, exchanges, reorganizations, offers, tenders or other corporate actions or similar matters relating to Safekept Securities, other than (i) to forward to Customer in accordance with this Agreement the written information received by Bank relating to any such transaction, and (ii) follow Customer’s lawful instructions with respect to such actions. Customer may directly vote any proxy or other corporate action, or if it instructs Bank to vote on its behalf, agrees that any instructions to Bank with respect to any such actions shall be delivered to Bank within sufficient time for Bank to act thereon if any action is required. Safekept Securities called for redemption prior to maturity will be presented by Bank for payment provided the trustee or other appropriate entity gives Bank adequate notice of redemption. Should any Safekept Security be called for partial redemption by the issuer of such security, Bank is authorized to accept the allocation applied by any central depository. In the event Bank has to allocate any redemption among its accounts, Bank shall allot the redemption proceeds in accordance with its standard procedures therefor, effected in such manner as it deems appropriate in its sole discretion. d. Collection of Income and Principal. Bank shall collect and receive the interest, principal and other income payable in connection with the Safekept Securities, and shall pay to Customer or credit to the Settlement Account all such amounts. Bank shall not be obligated (i) to pay to Customer or credit to the Settlement Account any payment of interest, principal or other income until Bank receives such payment in immediately available funds or (ii) to institute or participate in any collection proceedings or other proceedings to enforce Customer’s rights relative to any Safekept Securities or to pursue any remedies on behalf of Customer.
Bank is hereby authorized to sign on behalf of Customer any declarations, affidavits, certificates of ownership or other documents relating to securities held by Bank in nominee name that may at any time be required with respect to all coupons, registered interest, dividends or other income.
If any of Customer’s deposits or securities the subject of this Agreement, including Safekept Securities, are subject to a variable or fixed rate of interest and such deposits or securities bear an interest rate less than zero, Customer agrees to pay Bank all amounts of the negative interest or fees that Bank imposes as compensation for the less -than-zero interest rate (which may also be debited from the Settlement Account by Bank), and Customer agrees that the principal amount of such Safekept Securities may be reduced to the extent necessary to cover the amount of the negative interest or fees if available funds are not otherwise provided by Customer.
e. Return of Payments. Customer will repay Bank, or Bank may charge the Settlement Account, in the event that for any reason (i) Bank is required to return to the issuer or to a third party any payments in respect of Safekept Securities, (ii) Bank fails to receive from the issuer or appropriate other party a payment Bank paid to Customer in respect of Safekept Securities, or (iii) Bank must return to the issuer or appropriate other party a payment Bank paid to Customer in respect of Safekept Securities. Customer further agrees that the principal amount of any Safekept Securities may be reduced, and any remittances due from Bank to Customer (whether or not under this Agreement), and any other accounts of Customer with Bank, may be offset to the extent necessary to cover the amount of such returned payments to the extent that immediately available funds are not otherwise provided by Customer to Bank.
7. Confirmation Statements. Promptly after effecting any transaction pursuant to this Section VI.A, Bank will deliver to Customer a Confirmation which shall identify at least (i) Bank and Customer, (ii) the trade and settlement dates of the transaction, (iii) the issuer and par amount of the related securities (for securities transactions) and the principal amount of any deposit (for deposit transactions), (iv) the interest rate if applicable and/or any discount rate applicable to any securities transactions or deposit transactions, (v) the maturity date of the transaction, if applicable, (vi) the capacity of Bank as principal, riskless principal or agent (if the transaction is a securities transaction) and, if applicable, whether the securities will be Safekept Securities, (vii) any terms and information required by applicable law, and (viii) any other terms and information which Bank may include at its discretion. The information contained on the Confirmation shall be considered true and correct and conclusively binding upon Customer unless Customer notifies Bank of any error therein within three (3) business days after the date the Confirmation is deemed delivered to Customer in accordance with this Agreement. Customer may, by notice from an Authorized User in accordance with this Agreement, elect to receive Confirmations by mail, fax, email, or other electronic 81 Item 18
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means including posting to a password-protected website), subject to the terms of this Agreement.
8. Settlement Account. Unless Bank is otherwise instructed in writing, Customer unconditionally authorizes, empowers, and directs Bank (and authorizes and directs Bank to communicate with any financial institution maintaining the Settlement Account as necessary) to: (i) debit the Settlement Account on the settlement date indicated on the Confirmation for the full amount of each transaction effected under this Section VI.A (including all fees and charges payable hereunder), notwithstanding that such debit may cause the Settlement Account to be overdrawn; and (ii) credit the Settlement Account with interest payments, principal payments, maturity payments or other payments received in respect of transactions effected under this Agreement. Customer hereby represents and warrants that instruction from any Authorized User is sufficient to authorize Bank to debit or credit the Settlement Account. If the Settlement Account is not held by Bank, Customer confirms to Bank that it has authorized the financial institution maintaining the Settlement Account to accept debit and credit entries to the Settlement Account and that no such authorization will be cancelled except with prior notice to Bank and in sufficient time and in such manner as to allow the financial institution maintaining the Settlement Account and Bank a reasonable opportunity to act on such termination without disruption of any transactions or services under this Agreement.
Customer acknowledges that ACH payments to a Settlement Account not held by Bank are subject to ACH processing timelines, which may involve a delay in available funds.
9. Delivery. Through the instructions of an Authorized User, Customer shall specify the account to which any securities purchased hereunder are to be delivered. If such account is maintained by the Safekeeping Department of Bank, the securities will be held in accordance with this Agreement. If such account is maintained by an institution other than Bank, Bank’s responsibility for ensuring delivery shall be limited to accurately conveying the instructions for the appropriate delivery account to the depository, agent or issuer of the securities, as applicable for the particular type of securities. Bank will issue no certificate, passbook, or any other evidence of any deposit except for the Confirmation.
10. Interest. All securities, Money Center deposits, and certificates of deposit purchased by Customer or held by Customer under this Agreement shall earn interest on the principal balance from the date of deposit or settlement date, as applicable, computed at the rate and in the manner established by Bank from time to time for the given product. Any interest due will be credited monthly unless otherwise agreed to by Customer and Bank. No interest shall accrue on the date of withdrawal.
Bank reserves the right to change the applicable interest rate on variable rate products (including those products whose underlying interest rate is not managed by Bank) at any time. Such interest rate may be set at zero or an interest rate less than zero. If the interest rate, or the index or other referenced rate upon which the interest rate is based, is at any time less than zero percent, Customer agrees to pay Bank all amounts of the negative interest or fees that Bank imposes as compensation for the less- than-zero interest rate. Bank will not provide notice of rate changes, but Customer may call the Money Center Department to obtain current rate information. Bank shall notify Customer of the applicable interest rate and maturity term for the product opened under this Agreement at the time that the request for such product is made.
11. Fixed Investment Periods. Customer acknowledges that certain products held by Bank under this Agreement have fixed investment periods, and agrees that such products will be held by Customer until their maturity dates or through their commitment dates. Customer agrees that if it withdraws part or all of such product before such date, Bank shall be entitled to impose a penalty (including by debiting the Settlement Account for such amounts) in accordance with the terms of such product or the fee schedule provided to Customer, as applicable, and that the principal amount of such product may be reduced to the extent necessary to cover such penalty if available funds are not otherwise provided by Customer.
12. Repurchase Transactions. Customer shall not effect any securities transactions under this Agreement in the expectation of entering into a repurchase transaction with Bank as counterparty unless Customer shall first have executed and delivered to Bank a written master repurchase agreement, in form and substance satisfactory to Bank, governing such transactions. In any such transaction, where Bank is to hold securities as collateral or as the subject of a transaction, such securities will be held by the Safekeeping Department of Bank subject to the terms of this Agreement, unless Customer is otherwise notified. To the extent of any inconsistency between the terms of any such agreement and the terms of this Agreement, the terms of such other agreement shall control.
13. Fees and Expenses. Customer shall pay to Bank such fees in respect of the services provided under this Agreement, as disclosed to Customer on the current fee schedule (which fee schedule may be amended from time to time by Bank). If the fee schedule is amended, the amended fees will apply to any Safekept Securities being held at that time, and to any securities transactions effected on the day such amendment becomes effective. Customer agrees to pay, and agrees and acknowledges that Bank may debit the Settlement Account for any fees and other amounts owing by Customer to Bank under this Agreement, or exercise an offset for such amounts against any funds of Customer on deposit with Bank, or against any interest, principal or other income received or to be received by Bank on behalf of Customer, whether or not in respect of Safekept Securities. In addition, Customer agrees to reimburse Bank for its commercially reasonable out ‐of‐pocket expenses for providing the services hereunder, including, but not limited to the reasonable fees and expenses of outside counsel if retained by Bank in its discretion in connection with this Section VI. If Customer fails to pay Bank any sums due under this Section VI within thirty (30) days after the same are due (whether or not a late notice is sent to Customer by Bank), Bank may terminate this Agreement and return any Safekept Securities to Customer at Customer’s expense, and to avail itself of any other remedy it may have in law or in equity.
14. Service Termination; Account Closure. Subject to Section VI.A.11 ("Fixed Investment Periods"), Customer may terminate the Service(s) described in this Section VI or close its Money Center investment account at any time upon prior notice to Bank. Bank may terminate the Service(s) described in this Section VI or close Customer's Money Center investment account at any time without prior notice to Customer. If any Service described in this Section VI is terminated or Customer's Money Center investment account is closed for any reason, Customer will continue to be responsible for any obligation incurred by Customer prior to termination or closure and for the fees and costs, if any, payable under this Agreement with respect to delivery of Customer's securities (including Safekept Securities) or funds held by Bank to Customer or to another financial institution.
15. Notices. Except for oral instructions to Bank from Authorized Users or from Bank to Authorized Users, all notices, disclosures and communications (including Confirmations) under this Section VI shall be in writing and delivered by mail, fax, email or other electronic means as provided for in this Agreement. Notices, disclosures and communications (including Confirmations) shall be deemed delivered upon transmission of the same by mail, fax, email or other electronic means as provided for in this Agreement, or on the third (3rd) Business Day after deposit of the same in the United States mail, postage prepaid, and addressed to the mailing address provided by Customer. All written confirmations, notices, instructions, or other communications from Customer to Bank shall be sent to following address (which may be amended from time to time by Bank upon notice to Customer):
For securities transactions:
U.S. Bank National Association
Money Center Department
800 Nicollet Mall, BC‐MN‐H18T
Minneapolis, MN 55402
Fax: (866) 904-7067
Email: [email protected]
For safekeeping services:
U.S. Bank National Association
Safekeeping Department
800 Nicollet Mall, BC‐MN‐H18R
Minneapolis, MN 55402
Fax: (612) 303‐0202
Email: [email protected]
16. Terms and Conditions of Electronic Delivery. All notices, disclosures and communications (including Confirmations and other 82 Item 18
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account information) from Bank may be delivered to Customer by electronic means (including, without limitation posting to a password - protected website) to the extent Customer elects to receive such information through electronic means, subject to the Terms and Conditions of Electronic Delivery set forth in Section VI.B below. Customer agrees that sending information in this manner will constitute good and effective delivery of the information to Customer, regardless of whether Customer actually accesses the website or other electronic medium containing the information.
17. No Investment or Tax Advice. Customer acknowledges that Bank’s role is ministerial in nature and that Bank will not provide supervision, recommendations, or advice to Customer in connection with the investment, purchase, sale, retention, or other disposition of any securities or Money Center deposits, or the advisability or suitability of any product or transaction. Customer is responsible for evaluating the risks associated with such decisions. Customer acknowledges Bank is not an investment adviser, has no investment discretion, and will merely carry out instructions as directed by Customer. Bank’s ability to determine interest rates on securities or Money Center deposits shall not be deemed to be discretion or advice. Customer further acknowledges that Bank will not provide advice to Customer regarding the tax implications associated with the investment, purchase, sale, retention, or other disposition of any securities or Money Center deposits.
18. ERISA. If assets of an employee benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), are intended to be deposited, invested or used by Customer in a transaction under this Section VI.A, Customer shall notify Bank prior to effecting such deposit, investment or transaction and will provide Bank with such additional information as Bank may reasonably request. Customer represents and warrants to Bank that any deposit, investment, or transaction pursuant to this Section VI.A shall not result in a "prohibited transaction" under ERISA or shall otherwise be exempt under ERISA, and Customer further agrees to indemnify and hold Bank harmless from any loss or claim arising therefrom.
19. No Representation or Warranty. Customer acknowledges and agrees that Bank makes no representation or warranty, express or implied, with respect to the validity, enforceability, collectability or investment quality of any securities bought or sold hereunder, or any deposits made or terminated hereunder.
20. Records; Account Statements; Taxes. Bank will maintain records of Customer's account and provide customer with a Confirmation for transactions in accordance with this Section VI.A and periodic account statements. Bank will also send to Customer such notices and reports as are required by law. Customer acknowledges and agrees that it is Customer's obligation to prepare and file all required tax returns and to pay all taxes due on any income that Bank collects for Customer.
21. Set Off. Bank has the right to apply funds in Customer's Money Center investment account or Settlement Account to any debt Customer owes Bank. A debt includes any fees, overdrafts, debts that now exist and debts that Customer may incur in the future, or Customer's obligations under a guaranty. When Bank sets off a debt Customer owes Bank, Bank reduces the funds in the Money Center investment account or Settlement Account by the amount of the debt. Bank is not required to give Customer any notice before exercising its right of setoff. Customer agrees to hold Bank harmless from any claim arising as the result of Bank's enforcement of its right of setoff against Customer's Money Center investment account or Settlement Account. This right of setoff is in addition to any security interest that Bank might have in Customer's Money Center investment account or Settlement Account.
22. Legal Process. Legal process includes any levy, garnishment or attachment, tax levy or withholding order, injunction, restraining order, subpoena, search warrant, government agency request for information, forfeiture or seizure, or any other legal process relating to Customer's Money Center investment account or Settlement Account. Bank may accept and act on any legal process Bank believes to be valid, whether the process is served in person, by mail, by electronic notification, or at a banking location. If Bank incurs any fees or expenses (including attorneys' fees and expenses) due to responding to legal process related to Customer's Money Center investment account or Settlement Account, Bank may, in its sole discretion, charge these costs to any other deposit account Customer maintains with Bank. All legal process is subject to Bank's rights of setoff and security interest in Customer's Money Center investment account and/or Settlement Account.
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B. TERMS AND CONDITIONS OF ELECTRONIC DELIVERY
The following sets forth the terms and conditions of use of Bank’s electronic delivery and notification service (the “Electronic Delivery Service”) in connection with account(s) with Bank's Money Center Department or Safekeeping Department.
The Electronic Delivery Service described in this Section VI.B shall constitute an Internet Service as defined in Section III of this Agreement and shall be subject to the terms set forth therein, as well as any other agreements between Customer and Bank and any applicable laws or regulations. If there is a conflict between the terms and conditions set forth in this Section VI.B and the terms and conditions of any other section of this Agreement or any other agreement between Customer and Bank as they relate to the Electronic Delivery Service, the terms and conditions set forth herein will control.
1. Electronic Delivery of Account Communications. Customer may elect to receive Account Communications (defined below) related to Customer's account(s) electronically. All Account Communications will be delivered electronically by posting to Bank’s password-protected website designated for Customer’s account(s) or, at Bank’s election, delivered via electronic mail to the email address provided by Customer to Bank. “Account Communications” include, without limitation, all current and future account statements, Confirmations, security notices, maturity notices, prospectuses, offering and disclosure documents, shareholder communications (such as quarterly, semi -annual and annual reports, proxy statements, etc.), regulatory communications and other information, documents, data, notices and records regarding Customer’s account(s) with Bank. Bank may, from time to time, designate additional Account Communications that are then eligible for electronic delivery through the Electronic Delivery Service, the delivery of which will then be subject to these terms and conditions. From time to time, Bank may add to, modify or delete any feature of the Electronic Delivery Service or Account Communications eligible for delivery through the Electronic Delivery Service at its sole discretion. Customer acknowledges and agrees that by being enrolled in the Electronic Delivery Service, Customer will no longer receive Account Communications by mail that is otherwise available for delivery as part of the Electronic Delivery Service.
2. Accessing Account Communications. Bank will notify Customer via email when Account Communications are posted. Bank may also provide, in its sole and absolute discretion, Account Communications directly via email. Customer may access all Account Communications for at least thirty (30) days from the date of initial posting. Customer acknowledges and agrees that all Account Communications will be deemed to constitute good and effective delivery to Customer upon posting, regardless of whether Customer actually or timely receives or accesses the Account Information, or if Account Communications are delivered directly to Customer via email, when so delivered.
3. Changes in Delivery Method. Customer must notify Bank if it wishes to discontinue use of the Electronic Delivery Service. Following Bank’s receipt of such notice and after Bank has a reasonable opportunity to act on such notice, Customer will thereafter begin to receive Account Communications via U.S. mail beginning with Customer's next statement cycle and/or mailed Confirmation.
4. Reporting Unauthorized Transactions or Erroneous Statements.
Customer agrees to promptly and carefully review all Account Communications as and when delivered and notify Bank in accordance with this Agreement if Customer objects to any of the information provided.
5. Third-Party Services. Customer acknowledges and agrees that Customer's access to the Electronic Delivery Service and Customer's receipt of email notifications when Account Communications are posted may be delayed or prevented by factors affecting Customer’s or Bank’s Internet or telephone service provider(s) or other similar entities (“Third - Party Service Providers”). Bank makes no representations or warranties whatsoever with regard to the products and services offered by such Third- Party Service Providers and shall not be liable for any loss caused, in whole or in part, by a Third-Party Service Provider.
6. International Use. Bank makes no representations or warranties that any content or use of the Electronic Delivery Service is appropriate, legal or available in locations outside the United States. Customer acknowledges and agrees that accessing the Electronic Delivery Services from territories where its contents or use is illegal and is prohibited by Bank. If Customer accesses the Electronic Delivery Service from locations outside the United States, Customer does so at its own risk. Customer is responsible for compliance with local laws.
7. Proprietary Rights; Materials; Trademarks. All content included or available through the Electronic Delivery Service (other than Customer’s account information), such as advertisements, tests, graphics, logos, button icons, images, audio clips and software, is the property of Bank and/or third parties and is protected by copyrights, trademarks or other intellectual property rights. The compilation (meaning the collection, arrangement and assembly) of all content on the Electronic Delivery Service is the exclusive property of Bank and/or its licensors and is protected by copyrights or other intellectual property rights. The trademarks, logos and service marks displayed on the Electronic Delivery Service (collectively, “Trademarks”) are the registered and unregistered Trademarks of Bank or third parties. Under no circumstances may Customer use, copy, alter, modify or change these Trademarks. Nothing contained on the Electronic Delivery Service should be construed as granting by implication or otherwise any license or right to use any Trademark without the express written permission of Bank or the third party that has rights to such Trademark, as the case may be. 84 Item 18
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(City of Palo Alto, CA) Elavon - Master Services Agreement with Sch. D (6.17.23) dtd 05.30.24 FINAL 1 ELAVON MASTER SERVICES AGREEMENT
This Master Services Agreement (“Agreement”) is between Elavon, Inc. (“ Elavon”) and the entity identified as Company in the signature block below (“Company”). The Agreement will be effective on the date in Elavon’s signature block (the “Effective Date”). The Agreement consists of:
This signature page, the General Terms and
Conditions, and Appendix 1 – Definitions;
Schedule A – Fees;
Schedule B – Company Application
Schedule C – Affiliated Entities
Schedule D – Processing Services Terms;
Schedule E – SAFE-T Terms;
Schedule F – Services in Canada;
Schedule G – Services in Puerto Rico;
Schedule H – Government Terms;
Schedule I – Electronic Check Services Terms; and
Any other schedules and any applicable Statements of
Work entered into under the Agreement.
Agreed and accepted
CITY OF PALO ALTO, CALIFORNIA,
on behalf of itself and each Affiliated Entity
(“Company”):
By:
Name:
Title:
Date:
ELAVON
By:
Name:
Title:
Effective Date:
If Company is receiving Processing Services under Schedule D to the Agreement, the Member, as designated on the Company Application (attached as Schedule B), agrees to and accepts the Agreement.
MEMBER
By:
Name:
Title:
Date:
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(City of Palo Alto, CA) Elavon - Master Services Agreement with Sch. D (6.17.23) dtd 05.30.24 FINAL
2 GENERAL TERMS AND CONDITIONS
1. Defined Terms. Capitalized terms used in the Agreement will have the meanings stated in Appendix 1.
2. Scope of Agreement . The Agreement governs Company’s receipt and use of the Services selected by Company in the Company Application . In addition to the terms of the Agreement, Company will comply with the general terms of the Operating Guide , any terms of the Operating Guide applicable to each selected Service, and any Documentation Elavon provides to Company in writing from time to time that is applicable to the Services.
3. Affiliated Entities. Company’s Affiliated Entities may use the Services so long as they comply with all restrictions, obligations, and requirements imposed on Company. Company will remain fully responsible for any use of the Services by any Affiliated Entities, will cause its Affiliated Entities to comply with the terms and conditions of the Agreement, and will be liable for the acts and omissions of each Affiliated Entity, in each case as though each Affiliated Entity were Company . Affiliated Entities may not enforce the terms of the Agreement against Elavon, but Company may enforce the terms on behalf of its Affiliated Entities. The parties may add Affiliated Entities to Schedule C after the Effective Date by substituting a new Schedule C that is in writing and signed by Company and Elavon. Company will promptly notify Elavon in writing if any entity on Schedule C no longer qualifies as an Affiliated Entity that Company allows to use the Services. For any acts or omissions of an Affiliated Entity giving rise to a termination rig ht by Elavon under Section 4.2, Elavon may terminate the Agreement with respect to (i) only such breac hing Affiliated Entity, or (ii) Company and all Affiliated Entities . If Elavon terminates the Agreement under Section 4.2 as to Company, the Agreement will terminate with respect to Company and all Affiliated Entities.
4. Term and Termination
4.1. Term. Unless terminated as provided below, the Agreement will remain in effect for the Initial Term stated in Schedule A. Thereafter, the Agreement will automatically ren ew for successive Renewal Terms as stated in Schedule A unless terminated as provided below.
4.2. Termination.
(a) Non-Renewal. Either party may terminate the Agreement effective at the end of the Initial Term or any Renewal Term by providing written notice of non-renewal to the other party at least 90 days prior to the expiration of the then current Term.
(b) By Either Party for Cause.
(i) Either party may terminate the Agreement if any of the following conditions remain uncured 30 days after the terminating party notifies the other party in writing of the existence of the condition:
(1) The other party has failed to pay the party an undisputed amount owed to the party under the Agreement; or
(2) The other party has failed to perform a material obligation under the Agreement.
(ii) Either party may terminate the Agreement immediately in writing if any of the following occur:
(1) The commencement of a Bankruptcy Proceeding by or against the other party;
(2) Any representation by the other party in Section 12 is false or misleading in any material respect as of the date made, or becomes false or misleading in any material respect at any time during the Term.
(c) By Elavon for Cause. Elavon may terminate the Agreement immediately in writing if any of the following occur:
(i) A material adverse change in Company’s financial condition;
(ii) Any Payment Network or application of Payment Network Regulations requires Elavon to terminate the Agreement or cease processing Transactions for Company; or 2 Item 18
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(City of Palo Alto, CA) Elavon - Master Services Agreement with Sch. D (6.17.23) dtd 05.30.24 FINAL 3 (iii) Assignment of the Agreement or a Change of Control of Company without Elavon’s written consent. (d) Force Majeure. Company will have the termination right stated in Section 18.14 if a Force Majeure occurs. (e) Additional Termination Rights . If Company is receiving Processing Services, Elavon also will have the termination rights set out in Section 1.6 of Schedule D.
4.3. Account Closing.
(a) Company acknowledges that closing Company’s account with Elavon may take up to 30 days following Elavon’s receipt of written notice of termination.
(b) All obligations of a party regarding Transactions serviced prior to termination will survive termination.
Company will maintain enough funds in the DDA following termination to cover all Chargebacks and returns (if Company is receiving Processing Services), adjustments, fees, fines, penalties, assessments and charges from the Payment Networks and other amounts due under the Agreement for at least 180 days after termination.
4.4. Early Termination Fee . If Company terminates the Agreement before the end of the Initial Term (except for termination for Elavon’s uncured default as stated in Section 4.2(b), termination pursuant to Section 4.2(d), or as stated in Section 7), Company will immediately pay Elavon an Early Termination Fee . Company acknowledges that the Early Termination Fee is not a penalty, but rather a reasonable estimate of the damages Elavon sustained because of Company’s termination of the Agreement before the end of the Initial Term.
4.5. Transition Assistance.
(a) At Company’s request, Elavon will , at no additional cost to Company and for up to 90 days beginning on the termination date of the Services (or such earlier date following notice of termination as may be requested by Company), provide Company with Elavon’s standard assistance in transitioning the Services to another provider designated by Company. In connection therewith, subject to Section 4.5(b) and at Company’s request, Elavon will continue to perform the Services for up to 90 days after the date of termination, and Company will continue to pay Elavon, in accordance with the Agreement during any such period. Each party will fully comply with all provisions of the Agreement during any such period.
(b) Elavon will not be obligated to provide any post-termination Services (other than standard transition assistance) to Company under Section 4.5(a) if Elavon terminates the Agreement for cause under Sections 4.2(b), (c), or (e).
5. Authorized Users; Access; Security of Passwords and User IDs.
5.1. Company will be responsible for the distribution of all passwords and user IDs issued to any Authorized User and for maintaining the confidentiality and security of Authorized User’s passwords and user IDs. Company will ensure that the access granted to each Authorized User to the Services is limited to only the access and information necessary for the Authorized User to perform his or her job functions on behalf of Company. Company will ensure that all Authorized Users will be trained and qualified to access and use the Services in accordance with the terms of the Agreement, the Operating Guide and any Document ation. Company is responsible for its Authorized Users’ compliance with the terms of the Agreement, the Operating Guide, and the Documentation, for all acts or omissions of the Authorized Users, and for all use of any Authorized User’s user ID and password other than by Elavon or Elavon’s third-party contractors or use by third -parties of the user IDs and passwords obtained by such third parties from Elavon or Elavon’s third-party contractors.
5.2. Company will not, and will ensure that its Authorized Users do not:
(a) access or use the Services for any purposes other than for its own internal business purposes (except as authorized by Elavon) as disclosed to Elavon in writing;
(b) modify, reverse engineer, disassemble or decompile any part of the Services or Elavon Materials; (c) knowingly transmit any data that contains software viruses, time bombs, worms, Trojan horses, spyware, disabling devices, malicious code, or other harmful or deleterious computer code, files or programs to or through the Services; 3 Item 18
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4 provided, that Company will use commercially reasonable measures (at least industry standard) to screen for the foregoing.
(d) interfere with or disrupt the servers or networks connected to or providing the Services; (e) remove, change or obliterate the copyright, trademark or other proprietary protection legends or notices that appear in connection with access to and use of the Services or any Elavon Materials; or (f) copy, re-sell, republish, download, frame or transmit the Services or Elavon Materials, including in order to act as a consultant for any third party or, unless otherwise permitted under the Agreement, as a service bureau, outsourcing or application service provider for any third parties, or otherwise allow any third party to use or access the Services.
5.3. Company is responsible for changing the user IDs and passwords of its Authorized Users if it believes that any of those user IDs or passwords have been stolen or might otherwise be misused and for disabling any Authorized User’s IDs and passwords promptly upon the termination of employment of such Authorized User or the cessation of such Authorized User’s need to access the Services. Company will promptly notify Elavon if Company believes the Services or Elavon’s databases have been compromised by use of a user ID or password associated with the Services.
6. Fees and Taxes.
6.1. Compensation. Company will compensate Elavon for all fees and other amounts due for the Services and Equipment in accordance with Schedule A, or as otherwise agreed upon in writing by Elavon and Company. Such amounts will be calculated and debited from the DDA (or, if applicable and Company is receiving Processing Services, the Reserve Account) once a month for the previous month’s activity, or , if Company is receiving Processing Services , may be deducted from the funds due Company under the Agreement.
6.2. Change of Fees. Elavon will not amend the fees for the Services for the Initial Term except (i) as stated in Schedule A or (ii) to pass through to Company increases in interchange, assessments or charges, or increased or new fees imposed by a third party (including a Payment Network).
6.3. Other Amounts Owed.
(a) In addition to the amounts described in Section 6.1 above, Company will promptly pay Elavon for:
(i) Any fines, penalties, assessments , or charges (including those imposed by the Payment Networks as a result of Company’s violation of Payment Network Regulations), attributable to the Agreement (other than those directly attributable to Elavon’s acts or omissions); and
(ii) if Company is receiving Processing Services, any Chargebacks, returns, adjustments and associated fees.
Elavon may debit these amounts from Company’s DDA (or, if applicable and Company is receiving Processing Services, the Reserve Account) by ACH, or, if Company is receiving Processing Services, offset these amounts from funds Elavon otherwise owes to Company. If such offset or ACH debit does not fully reimburse Elavon for the amount owed, Company will promptly pay Elavon such amount upon demand.
(b) Elavon will charge interest on all uncollected amounts owed to Elavon that are more than 30 days past due at a rate no greater than the maximum rate of interest permitted under Laws.
6.4. Taxes. Company will pay all taxes and other charges imposed by any governmental authority on the Services and Equipment provided under the Agreement, excluding any taxes based on Elavon’s property or net income. If Company is a tax-exempt entity, Company will provide Elavon with an appropriate certificate of tax exemption.
6.5. Demand Deposit Account. Company will establish and maintain one or more DDAs to facilitate payment of fees to Elavon. Company authorizes Elavon and its Affiliates that provide Services under the Agreement to initiate ACH credit and debit entries to the DDA in order to pay the fees and any other amounts that may be due by Company to Elavon under the Agree ment, and Company authorizes its depository institution to grant Elavon access to any information or records regarding the DDA reasonably requested by Elavon to debit or credit the DDA and to otherwise exercise Elavon’s rights under the Agreement with respect to the DDA. The foregoing authorizations will remain in effect throughout the Term and after termination of the Agreement until all of Company ’s payment obligations to 4 Item 18
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5 Elavon have been paid in full. Elavon has the right to rely on written instructions submitted by Company requesting changes to the DDA. If Company changes the DDA, the ACH authorizations established under this Agreement will apply to the new account, and Company will provide Elavon such information regarding the new DDA as Elavon deems necessary to effect debits from or credits to the DDA as provided under the Agreement. It may take Elavon up to 10 business days after Elavon’s receipt of a written notice from Company to reflect in Elavon’s system any change to Company’s DDA.
7. Modifications and Discontinuance of Services. Elavon may modify the Services or particular components of the Services from time to time and will use commercially reasonable efforts to notify Company of any material modifications. If Elavon ceases to make a Service selected by Company generally available to its merchant customers ( a “Discontinued Service”), Elavon may cease providing such Discontinued Service to Company upon 180 days’ advance written notice. If discontinuing the Discontinued Service or making a modification to the Services has a material negative impact on Company, Company may terminate the Agreement without any obligation to pay the Early Termination Fee by notifying Elavon in writing within 60 days of Company’s receipt of Elavon’s notice of the Discontinued Service or modification. If Company does not terminate the Agreement within such 60-day period, the Agreement will continue in full force and effect without the Discontinued Service or with the material modification, as applicable . Elavon will not be liable to Company or to any third party for any modification or discontinuance of the Services as described in this Section 7. Company may request transition assistance from Elavon under Section 4.5 for any Discontinued Service.
8. Compliance with Laws and Payment Network Regulations.
8.1. General. Elavon and Company will comply with all Laws and Payment Network Regulations applicable to the selected Services.
8.2. Office of Foreign Assets Control Compliance. Company acknowledges that Elavon is an entity governed by the Laws of the United States of America and as such, cannot provide any products or services to Company or its Customers that contravene the Laws of the United States of America, including the Laws promulgated by the Office of Foreign Assets Control (OFAC) or the United States Department of the Treasury or any successor thereto.
8.3. Export Laws Compliance. Company will comply with all United States export Laws governing the export and re - export of hardware, software or technology applicable to the Services and Equipment, including United States Department of State International Traffic In Arms Regulations (ITAR), United States Foreign Corrupt Practices Act, United States Commerce Department’s Export Administration Regulations , OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and Laws promulgated by OFAC or the United States Department of the Treasury or any successor thereto . Company will not, and will not request Elavon to, export, directly or indirectly, a ny technical data pursuant to the Agreement or any product using any such data to any country for which the United States Government or any agency thereof at the time of export requires an export license or other governmental approval without first obtaining such license or approval.
8.4. Customer Identification. To help the United States Government fight the funding of terrorism and money laundering activities, federal law requires financial institutions and their affiliates to obtain, verify, and record information that identifies each person who opens an account. Accordingly, Company will provide certain information and identifying documents requested by Elavon to allow Elavon to identify Company.
9. Confidentiality; Data Security and Use.
9.1. Confidentiality.
(a) Confidential Information Generally . Each party will protect the other party’s Confidential Information from unauthorized disclosure, publication, or dissemination with the same standard of care and discretion it employs with similar information of its own, but in no event less than reasonabl e care, and will not use, reproduce, distribute, disclose, or otherwise disseminate the other party’s Confidential Information except in connection with the performance of its obligations or rights under the Agreement. The Receiving Party acknowledges that any breach of this Section 9.1 by the Receiving Party may result in irreparable harm to the Disclosing Party for which monetary damages may not provide a sufficient remedy. Therefore, the Disclosing Party may seek both monetary damages and equitable relief with respect to any such breach without any obligation to post bond.
(b) Disclosure of Confidential Information . If the Receiving Party or its agents become legally required or compelled (by applicable public rec ords laws, any publicly filed and noticed deposition, interrogatory, request 5 Item 18
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6 for documents, civil subpoena, civil investigative demand or by any similar process or court or administrative order) to disclose Confidential Information, then the Receiving Party if permitted will provide the Disclosing Party with prompt prior written notice of such legal requirement so that the Disclosing Party may seek a protective order or other appropriate remedy. If the Disclosing Party does not obtain a protective order or other remedy, the Receiving Party agrees to disclose only that portion of the Confidential Information which the Receiving Party is legally required to disclose and to use reasonable efforts to obtain assurances that confidential treatment will be accorded such Confidential Information. Neither party will be obligated to notify the other of the receipt of any non-public or confidential investigative demand, summons, or grand jury subpoena or other similar process that requires confidentiality on the part of the applicable party.
(c) Duration of Obligations. The non-disclosure obligations in this Section 9.1 will continue (i) with respect to Confidential Information that does not constitute a trade secret, for three years following termination, and (ii) with respect to Confidential Information that is a trade secret under Laws, for the longer of three years after termination and such period as the information retains its status as a trade secret under Laws.
(d) Obligations on Termination. At the request of the Disclosing Party upon the termination of the Agreement, the Receiving Party will promptly delete or return to the Disclosing Party all originals and copies containing or reflecting any Confidential Information of the Disclosing Party (other than those required to be retained by Law, or that would be unreasonably burdensome to destroy, such as archived computer records) . If a dispute arises between the parties in relation to the Confidential Information or the Agreement, the Receiving Party may retain a copy of such Confidential Information as the Receiving Party reasonably determines is necessary for its defense of the dispute. In all cases, any retained Confidential Information will continue to be subject to the terms of the Agreement.
9.2. Data Security and Use.
(a) Security Programs Compliance. Elavon and Company will each comply with the applicable requirements of the Security Programs.
(b) PCI-DSS Compliance. Elavon will undergo an annual assessment of its compliance with the PCI-DSS.
Company may review Elavon’s current PCI -DSS compliance status on the Payment Network websites as available.
(c) Elavon Data Breach. If Elavon suffers an Elavon Data Breach, then it will comply with all Laws and Payment Network Regulations with respect to such Elavon Data Breach , including providing the required reporting and forensic audits to the Payment Networks , and, unless prohibited by law enforcement or the Payment Networks, will inform Company of such Elavon Data Breach. Elavon will not pass-through or require Company to be liable to Elavon for any fees, fines, penalties, assessments, or charges levied against Elavon by the Payment Networks in connection with an Elavon Data Breach.
(d) Cardholder Data and Transaction Information.
(i) Elavon and Company will ensure the security of Cardholder Data and Transaction Information in accordance with all Laws and Payment Network Regulati ons. In accordance therewith, each of Elavon and Company will maintain reasonable and appropriate administrative, physical, and technical safeguards designed to (i) maintain the security and confidentiality of Cardholder Data, Transaction Information, and Confidential Information; (ii) protect such information against anticipated threats or hazards to its security or integrity; and (iii) prevent unauthorized access, use, or exfiltration of such information in violation of applicable Laws. Elavon and Company will retain Cardholder Data and Transaction Information for the duration required by Laws and the Payment Network Regulations and thereafter will destroy, in a manner that will render the information unreadable, all such information that is no longer necessary or appropriate to maintain for ordinary business purposes.
(ii) Company will not disclos e Cardholder Data to any third party, except to a Service Provider, unless required by Laws or the Payment Network Regulations. Company will not retain or store magnetic stripe or CVV2/CVC2/CID data after authorization for any purpose. After authorization, Company will retain only the Customer account number, name, and card expiration date if Company has a reasonable business purpose to retain such information and is otherwise in compliance with the Agreement. If there is a failure 6 Item 18
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7 or other suspension of Company’s business operations, including any Bankruptcy Proceeding, Company will not sell, transfer, or disclose Cardholder Data to th ird parties, and Company will (a ) return this information to Elavon, or (b) provide acceptable proof of destruction of this information to Elavon.
(iii) Elavon acknowledges that Company may colle ct information about Company’s C ustomers as part of a Company sales transaction (e.g. , price paid, time, store identifier, SKU information) regardless of the Customer’s payment type and not in connection with the Services, and that the Agreement does not restrict Company’s retention, use or disclosure of such information even though some of that information may overlap with elements of Transaction Information.
(iv) Notwithstanding anything in Section 9.1, to the extent permitted by Law, any Cardholder Da ta, Transaction Information, and information regarding Company, its principals, or Affiliates included on the Company Application or that Elavon otherwise obtains in connection with the Agreement may be:
(1) Used by Elavon and its Affiliates, third-party contractors, agents, and referral partners (a) to provide the Services and related functions to Company and to respond to any furt her application for Services, (b ) for administrative purposes and to maintain Company’s account pursuant to the Agreement, and (c) for Elavon’s internal fraud and compliance monitoring;
(2) Disclosed and shared by Elavon for reporting purposes to credit rating agencies and to the financial institution where the DDA is maintained;
(3) Used to enhance or improve Elavon’s products or services generally;
(4) Used or disclosed by Elavon in the course of any sale, reorganization or other change to Elavon’s business, subject to appropriate confidentiality agreements;
(5) Collected, used and disclosed by Elavon as required by Laws (e.g., for tax reporting or in response to a subpoena); and
(6) Retained for such periods of time as Elavon requires to perform its obligations and exercise its rights under the Agreement.
Elavon may prepare, use, and share with third parties, aggregated, non -personally identifiable information derived from Transaction Information (so long as such information cannot be identified to Company) that is combined with similar information from all of or specific segments of Elavon’s other customers.
10. Assessment and Audit
10.1. Elavon Reports on Internal Controls . Elavon will engage independent, qualified, external auditors (the “ Elavon Auditors”) to assess the internal controls and information security measures in place related to the Services (“Internal Controls Assessment”). The scope of the Internal Controls Assessment will conform with Laws, applicable Card Brand Regulations and industry standards, including generally accepted auditing standards such as the Statement on Standards for Attestation Engagements No. 18 “Attestation Standards: Clarification and Recodification” issued by the Auditing Standards Board of the American Institute of Certified Public Accountants. The frequen cy of the Internal Controls Assessment will be consistent with industry standards . Elavon will provide copies of its SOC 1 and SOC 2 reports to Company upon request, subject to Company’s compliance with Elavon’s confidentiality requirements applicable to the receipt of such reports.
10.2. Company Audit. If Elavon reasonably suspects that it is subject to a financial or reputational risk due to Company’s acts or omissions, Company authorizes Elavon and its agents to perform an audit or inspection of Company’s operations and records to confirm Company’s compliance with the Agreement upon reasonable advance notice, during normal business hours, and at Elavon’s e xpense (unless Elavon reasonably determines based on such audit that Company is not in compliance with the Agreement, in which case Company will bear the cost). Company will maintain complete and accurate records of its performance under the Agreement. Company will execute and deliver to Elavon all documents Elavon reasonably deems necessary to verify Company’s compliance with Section 8.1.
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8 11. Proprietary Rights. As between Elavon and Company , Elavon retains all right, title and interest in and to the Services, Elavon Materials , Updates, and all Intellectual Property Rights in any of the foregoing . Company will not acquire any ownership interest or license rights (except such rights as are expres sly stated in the Agreement (including the Operating Guide)) in or to the Services, Elavon Materials, Updates, or Intellectual Property Rights in any of the foregoing. The rights granted to Company under the Agreement are non-exclusive and nothing in the Agreement will limit the ability of Elavon to market, sell, offer for sale, license or otherwise exploit the Services, Elavon Materials, Updates, or Intellectual Property Rights in any of the foregoing to any third parties or to appoint or authorize any other person or entity to do the same .
12. Representations and Disclaimers
12.1. Elavon Representations. Elavon represents to Company the following as of the Effective Date:
(a) Organization. Elavon is a corporation validly existing and duly organized under the laws of the state of Georgia with all authority, qualifications, licenses and registrations necessary to conduct its business, in all jurisdictions where Elavon conducts business, in compliance with all Laws and Payment Network Regulations.
(b) Authority and Power. Elavon has the power to execute and perform the Agreement. The person executing the Agreement is duly authorized to bind Elavon to all provisions of the Agreement and such person is authorized to execute any document and to take any action on Elavon’s be half which may be required to carry out the Agreement. Further, the signing and performing in accordance with the Agreement will not violate any Laws or conflict with any other agreement to which Elavon is subject.
(c) No Litigation. There is no action, suit, or proceeding pending or, to Elavon’s knowledge, threatened, which if decided adversely would impair Elavon’s ability to carry on its business substantially as now conducted or which would materially and adversely affect Elavon’s financial condition or operations.
12.2. Company Representations. Company represents to Elavon the following as of the Effective Date:
(a) Organization and Information. Company is validly existing and duly organized under the laws of the jurisdiction in which it was formed with all authority, qualifications, licenses and registrations necessary to conduct its business, in all jurisdictions where Company conducts busines s, in compliance with all Laws and Payment Network Regulations. All written information provided in the Company Application, the bid process, and enrollment forms, as applicable, and in the assumptions in Schedule A or any other document submitted to Elavon is true and complete and properly reflects the business, financial condition and ownership of Company in all material respects.
(b) Authority and Power. Company has the power to execute and perform the Agreement. The person executing the Agreement is duly authorized to bind Company and each Affiliated Entity to all provisions of the Agreement as if each Affiliated Entity had executed the Agreement, and such person is authorized to execute any document and to take any action on behalf of Company that Elavon requires to carry out the Agreement. Further, the signing and performing in accordance with the Agreement will not violate any Laws or conflict with any other agreement to which Company is subject.
(c) No Litigation. There is no action, suit, or proceeding pending or, to Company’s knowledge, threatened, which if decided adversely would impair Company’s ability to carry on its business substantially as now conducted or which would materially and adversely affect Company’s financial condition or operations.
(d) Business Use . Company is obtaining and using the Services from Elavon to facilitate lawful business Transactions between Company and its Customers, and using the DDA only for lawful business purposes.
12.3. Disclaimer of Warranties . EXCEPT AS OTHERWISE EXPRESSLY STATED IN THE AGREEMENT , THE SERVICES AND ELAVON MATERIALS ARE PROVIDED “AS IS,” AND ELAVON DISCLAIMS ALL OTHER
WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, REGARDING THE SERVICE S, ELAVON MATERIALS, EQUIPMENT, SOFTWARE, DOCUMENTATION, AND COMPANY’S USE OF THIRD PARTY
SERVICES, EQUIPMENT, SOFTWARE, OR DATA IN CONNECTION WITH THE SERVICES, INCLUDING
THE IMPLIED WARRANTIES OF MERCHANTABILITY, ACCURACY, SATISFACTORY QUALITY, TITLE,
SECURITY, NONINFRINGEMENT, UNINTERRUPTED OR ERROR -FREE USE, AND FITNESS FOR A
PARTICULAR PURPOSE, AND ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING, USAGE OR TRADE.
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9 12.4. No Viruses, Etc. Elavon will not code or insert into any portion of the Services, and will use commercially reasonable efforts to ensure that no Service will otherwise contain, any computer virus, worm, software lock, drop dead device, Trojan- horse routine, trap door, time bomb or any other malicious codes or instructions that may be used to access, modify, delete, damage or disable the Services or Company’s or any third party’s software, firmware, computer system or devices.
13. Indemnification
13.1. By Elavon . Elavon will indemnify and defend Company , its Affiliates, and their respective employees, officers, directors, and agents against losses, damages, liabilities, fines, judgements and expenses (including all reasonable attorneys’ fees) (collectively, “ Losses”) in connection with claims, actions, demands or proceedings (made or threatened) brought by a third-party (“Claims”) arising out of (a) Elavon’s breach of the Agreement; (b) Elavon’s or its third party contractors’ gross negligence or willful misconduct; (c) Elavon’s or its third party contractors’ violation of Laws or Payment Network Regulations; (d) subject to Section 13.5, Elavon’s alleged infringement or other violation of a United States or Canada patent, copyright or trademark of a third party by the Services (but not Equipment) in the form delivered or Company’s use thereof (an “Infringement Claim”); or (e) any personal injury or real or tangible personal property damage to the extent caused by Elavon or its third party contractors .
13.2. By Company. Company will indemnify and defend Elavon, its Affiliates, and their respective employees, officers, directors, and agents against Losses in connection with Claims arising out of (a) any goods or services sold by Company resulting in a Transaction processed under the Agreement; (b) Company’s breach of the Agreement; (c) all use of any user ID and password other than by Elavon or Elavon’s third-party contractors; (d) Company’s or its Service Providers’ gross negligence or willful misconduct ; (e) Company’s or its Service Providers’ violation of Laws or Payment Network Regulations ; or (f) any personal injury or real or tangible personal property damage to the extent caused by Company or its Service Providers.
13.3. Exceptions. The indemnifying party is not required to indemnify the indemnified party for Losses to the extent caused by or resulting from the negligence, gross negligence or willful misconduct of, or breach of the Agreement by, the indemnified party.
13.4. Procedure.
(a) If a Claim is subject to indemnification under the Agreement, the indemnified party will:
(i) Provide the other party prompt notice of the Claim (provided that any delay in notification will not relieve the indemnifying party of its obligations under this Section 13 except to the extent that the delay materially impairs its ability to fully defend the Claim);
(ii) Subject to Section 13.4(b), give the indemnifying party the right to exercise exclusive control over the preparation and defense of the Claim, including appeals, negotiations and any settlement or compromise thereof, provided that the indemnifying party will notify the indemnified party in writing of its election regarding the assumption of control of the preparation and defense of such Claim within 15 days following receipt of the indemnified party’s written notice of such Claim, but, in any event, no later than 10 days before the date on which any written response to a complaint, summons, or other legal filing is due; and
(iii) Provide such assistance in connection with the defense and settlement of the Claim as the indemnifying party may reasonably request, at the indemnifying party’s expense. The indemnifying party will not enter into any settlement that imposes any liability or obligation on the indemnified party, or contains any admission or acknowledgemen t of wrongdoing (whether in tort or otherwise), without the indemnified party’s prior written consent.
(b) The indemnified party may join in the defense, with its own counsel, at its own expense.
13.5. Infringement Claims.
(a) If any part of the Services or the use of the Services becomes, or in Elavon’s opinion is likely to become, the subject of an Infringement Claim, and as a result of such Infringement Claim Company’s use of the Services may be enjoined or interfered with, then Elavon will, at its option and expense, either, and in addition to 9 Item 18
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10 defending Company and paying the final amount of Losses as provided for in Section 13.1, (i) obtain a license for Company to continue using t he alleged infringing components of the Services ; (ii) modify t he alleged infringing components of the Services to avoid the infringement in a manner that still permits the Services to perform in all material respects in accordance with the Agreement ; or (iii) replace t he alleged infringing components of the Services with compatible, functionally equivalen t, and non-infringing components. Elavon will use commercially reasonable efforts to accomplish the remedies identified in this section in a manner that minimizes the disruption to Company’s business operations. If Elavon is not able to accomplish the above remedies within a commercially reasonable time frame and on commercially reasonable terms, Elavon may terminate the Agreement upon written notice to Company. Upon such termination, Elavon will promptly refund any fees paid for Services not performed as of the date of termination.
(b) Elavon will have no liability for any Infringemen t Claim to the extent caused by (i) access to or use of the Services other than as specified under the Agreement and the related Documentation, (ii) combination or use of the Services with non -Elavon products or services (whether or not provided to Company by Elavon), (iii) any hardware, devices, software, services or other resources not provided by Elavon , (iv) failure or refusal by Company to install, implement or use any Update or correction provided by Elavon, (v) modification or alteration of the Services by anyone other than Elavon without Elavon’s prior written consent, or (vi) Company’s goods or services.
(c) THIS SECTION 13.5 SETS FORTH THE EXCLUSIVE REMEDY OF COMPANY AND THE SOLE AND COMPLETE LIABILITY OF ELAVON WITH RESPECT TO ANY INFRINGEMENT CLAIMS.
14. Limitation of Liability.
14.1. Excluded Damages. Neither party or its agents, officers, directors, or employees will be liable to the other party for indirect, exemplary, punitive, special, or consequential damages in connection with the Agreement under any theory of law or equity (whether in contract, tort, negligence, strict liability, by statute, or otherwise) .
14.2. General Limitation . Company acknowledges that fees for the Services are very small in relation to the funds conditionally credited to Company for Transactions, and, consequently, Elavon’s willingness to provide these Services is based on the liability limitations contained in the Agreement. Therefore, Elavon’s aggregate liability for any Losses, regardless of the form of action, arising out of the Agreement or Elavon’s performance or non-performance of Services under any theory of law or equity (whether in contract, tort, negligence, strict liability, by statute, or otherwise), will not exceed, in the aggregate, an amount equal to the greater of (a) the sum of fees paid by Company to Elavon during the twelve months immediately preceding the event giving rise to the Losses, exclusive of fees and variable costs incurred by Elavon to process Transactions such as interchange costs, assessments, charges, and fees imposed by a third party, and (b) one hundred thousand dollars ($100,000). The foregoing limitation will not apply to (i) Losses arising out of Elavon’s breach of its confidentiality obligations in Section 9.1 or subject to Elavon’s indemnification obligations in Section 13.1 (excluding in each case a Data Breach, which is subject to Section 14.3), or (ii) Losses arising out of Elavon’s gross negligence, willful misconduct, or fraud .
14.3. Data Breach Limitation . Notwithstanding the limitations set forth in Section 14.2 and the disclaimers in Section
14.1, Elavon will be liable to Company for Company’s documented and incurred Elavon Data Breach Losses, up to an aggregate amount not to exceed the greater of (a) the sum of fees paid by Company to Elavon during the twelve months immediately preceding the event giving rise to the Losses, exclusive of fees and variable costs incurred by Elavon to process Transactions such as interchange costs, assessments, charges, and fees imposed by a third party, and (b) one hundred thousand dollars ($100,000). The foregoing limitation will not apply to Losses arising out of Elavon’s gross negligence, willful misconduct, or fraud. NOTWITHSTANDING ANYTHING IN THE AGREEMENT TO THE CONTRARY, SECTION 9.2(c) AND THIS SECTION 14.3 SET FORTH COMPANY’S EXCLUSIVE
REMEDY AND THE SOLE AND COMPLETE LIABILITY OF ELAVON WITH RESPECT TO DAMAGES, PENALTIES, COSTS, EXPENSES, OR LOSSES ARISING FROM A DATA BREACH .
15. Purchased Equipment. Elavon will ship to Company the Purchased Equipment described in Schedule A, any Statement of Work, additional application, setup, or order forms, or any addenda or schedules mutually agreed upon in writing by Elavon and Company for the purchase price stated thereon. Company has no right to cancel an order for Purchased Equipment. Unless otherwise agreed by the parties, Company will be responsible for all shipping costs, insurance, import and export duties and similar taxes and amounts.
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11 16. Third-Party Vendors.
16.1. Company Service Providers and Company Resources.
(a) Company may want to use a Service Provider to assist with Transactions. Company will cause each Service Provider and applicable Company Resource to undergo testing, approval and certification by Elavon before Company uses such Service Provider or applicable Company Resource in connection with accessing or using the Services. Company will ensure that each Service Provider or applicable Company Resource maintains certification and compatibility with the Services and that each Service Provider and applicable Company Resource is fully compliant with all Laws, Payment Network Regulations, and Security Programs. Failure of Company’s systems, including Company’s point-of-sale system or property management system, or any Service Provider systems to maintain certification under this section or to be compatible and function with the most recent version of the Services will excuse Elavon from all liability and all of its obligations under the Agreement to the extent that Elavon’s provision of the Services is impaired by such failure.
(b) Company is responsible for any violations of the Agreement that result from the acts or omissions of Company’s Service Providers and any other person who obtains access to Transaction Information from Company or access to systems under Company’s or Service Provider’s control (excluding acts or omissions to the extent attributable to Elavon’s breach of the Agreement, gross negligence, or willful misconduct).
(c) Elavon is not responsible for Service Providers or for the products or services offered by Service Providers, nor is it responsible for any Transaction until Elavon receives complete data for the Transaction in the format required by Elavon.
(d) Elavon may terminate a Service Provider’s access to or ability to integrate with Elavon’s products, services, and systems immediately if the termination results from:
(i) The Service Provider’s breach of any Laws or Payment Network Regulations,
(ii) The requirement of any court order or Payment Network or application of Payment Network Regulations to the Services,
(iii) Elavon’s reasonable determination that the Service Provider poses an unacceptable security risk to Elavon, Company or any Payment Network, or
(iv) The Service Provider’s failure to maintain certification to Elavon or the expiration or termination of an y agreement between Elavon and the Service Provider specific to certification to Elavon with respect to the Services.
16.2. Liability for Direct Agreement with Third Party . Elavon has no responsibility for, and will have no liability to Company in connection with, any hardware, software or services Company receives subject to a direct agreement (including any sale, warranty or end -user license agreement) between Company and a third par ty, including any Service Provider, even if Elavon collects fees or other amounts from Company with respect to such hardware, software or services (and such third party will not be considered a third party contractor of Elavon) . Therefore, Company will be responsible and liable for the failure of any such hardware, software or services (including payment terminals) to comply with Laws, Payment Network Regulations, or this Agreement, or to function correctly .
16.3. Elavon Third-Party Contractors. Elavon may use third-party contractors in connection with the performance of its obligations under the Agreement. Elavon will be responsible for the performance of its obligations hereunder notwithstanding any use of or delegation of any responsibility to any Elavon third-party contractor. Elavon is responsible for any violations of the Agreement that result from the acts or omissions of its third-party contractors.
17. Professional Services.
17.1. Elavon will provide the Professional Services to Company as mutually agreed upon by the parties in a Statement of Work. Each executed Statement of Work will be deemed incorporated into the Agreement and will identify in reasonable detail the Professional Services that Elavon will perform, including: (a) the specific deliverables and services to be provided by Elavon; (b) any responsibilities of the parties in addition to those in the Agreement; (c) the fees and costs that Company is responsible for under th e Statement of Work; and (d) any payment terms that are 11 Item 18
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12 different from or in addition to the payment terms in the Agreement. As between Elavon and Company, Elavon will own all improvements to the Services made by or on behalf of Company that arise out of the Professional Services.
17.2. Elavon will perform the Professional Services in a workmanlike manner. Company will notify Elavon of any failure to so perform within 15 days following the completion of the applicable Professional Services. Elavon’s entire liability and Company’s sole remedy for Elavon’s failure to so perform will be for Elavon to, at its option, (a) use reasonable efforts to correct such failure, or (b) terminate the applicable Statement of Work and refund the portion of any fees received that corresponds to such failure to perform.
17.3. Company will (a) provide sufficient, qualified, knowledgeable personnel capable of (i) making timely decisions necessary to allow Elavon to perform the Professional Services, and (ii) participating in the project and assisting Elavon in rendering the Professional Services; (b) if applicable, provide Elavon with reasonable access to Company’s facilities during Company’s normal business hours and otherwise as Elavon reasonably requests to enable Elavon to perform the Professional Services; (c) provide Elavon with working space and any other services and materials which may reasonably be necessary in connection with the performance of the Professional Services; and (d) perform such other duties and tasks as Elavon reasonably requests to facilitate Elavon’s performance of the Professional Services.
Company acknowledges that: (x) Elavon’s ability to perform the Professional Services is conditioned upon Company’s timely performance of Company’s obligations and (y) the performance of the se Company obligations is material to Elavon’s ability to commence and proceed with the Professional Services.
18. General Provisions.
18.1. Entire Agreement. The Agreement (including the Operating Guide, all appendices, schedules, attachments, exhibits, addenda and other documents incorporated by reference ) and any amendment or supplement to it, constitutes the entire agreement between the parties, and all prior or other agreements, written or oral, are superseded by the Agreement. If a conflict exists between the documents comprising the Agreement, the following order of priority will apply:
(a) Any schedules mutually agreed upon by the parties, with respect to the subject matter thereof;
(b) General Terms and Conditions and the Appendices;
(c) The Operating Guide;
(d) Any signed Statement of Work; and
(e) Any Documentation provided to Company in writing by Elavon.
18.2. Jurisdiction and Venue; Governing Law. All matters arising out of or related to the Agreement will be governed by and construed in accordance with the laws of the State of California, without giving effect to its conflict of laws provisions.
18.3. Exclusivity. During the Term, Company will not enter into an agreement with any other entity for services similar to those Services Company has elected to receive from Elavon under the Agreement without Elavon’s written consent.
18.4. Construction. The headings used in the Agreement are inserted for convenience only and will not affect the interpretation of any provision. Each provision is to be construed as if the parties drafted it jointly. The word “day” will mean “calendar day”, unless specifically stated otherwise.
18.5. Assignability. Company will not assign the A greement, directly, by operation of law , or by Change of Control of Company, without Elavon’s prior written consent. If Company nevertheless assigns the Agreement without Elavon’s consent, the Agreement will be binding on both the assignee and Company. Elavon will not transfer or assign the Agreement without Company’s prior written consent , except for (i) an assignment or delegation to an Affiliate of Elavon, or (ii) an assignment or delegation to any entity into or with which Elavon will merge or consolidate, or who may acquire substantially all of Elavon’s stock or assets.
18.6. Notices. Unless otherwise specified, except for routine operational communications (including account modification, chargeback, and hold notices), which may be delivered personally or transmitted by electronic mail, all notices to the 12 Item 18
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13 other party will be deemed received upon the earlier of (a) actual receipt, (b) five business days after being deposited in the United States mail, return receipt requested , or (c) two business days after being deposited with a nationally recognized overnight carrier. Such notices will be addressed to Company’s address on the Company Application or the last address shown on Elavon’s records, or to Elavon at 7300 Chapman Highway, Knoxville, Tennessee 37920 , with a copy to Two Concourse Parkway, Suite 800, Atlanta, GA 30328, Attn: General Counsel, or such other addresses as Elavon may designate in writing.
18.7. Bankruptcy. Company will immediately notify Elavon of any Bankruptcy Proceeding initiated by or against Company. Company will include Elavon on the list and matrix of creditors as filed with the bankruptcy court, whether or not a claim may exist at the time of filing. Company acknowledges that the Agreement constitutes an executory contract for financial accommodations to, or for the benefit of Company, and, as such, cannot be assumed or assigned in the event of Company’s bankruptcy. Company will be responsible to Elavon for any damages suffered by , and expenses incurred by, Elavon due to a Company Bankruptcy Proceeding.
18.8. Telephone Recording . For quality assurance and training purposes , Company authorizes Elavon to monitor and record customer service telephone conversations at any time, subject to Laws and applicable disclosures if required.
18.9. Amendments. Except as otherwise stated in the Agreement (including in Section 6.2), amendments to the Agreement will be in writing and signed by the parties. Notwithstanding the foregoing, Elavon may amend or modify the Agreement, to the extent such changes are required by changes in Laws or the Payment Network Regulations, upon written notice to Company. Elavon will inform Company of such a change in the Payment Network Regulations or Laws in a periodic statement or other written notice, and such change will become effective at least 30 days after the issuance of the statement or notice.
18.10. Severability and Waiver. If any provision of the Agreement is found to be invalid, illegal or otherwise unenforceable by a court of competent jurisdiction, the validity, legality and enforceability of the remaining provisions of the Agreement will not in any way be affected or impaired thereby. None of the failure to exercise, the delay by any party to exercise, or the partial exercise of any right under the Agreement will operate as a waiver or estoppel of such right, nor will such amend the Agreement. All waivers requested by a party must be signed by the waiving party.
18.11. Independent Contractors . Elavon and Company will be deemed independent contractors and no one will be considered an agent, joint venturer, or partner of the other, unless and to the extent otherwise specifically stated in the Agreement. The Agreement has been entered into solely for the benefit of the parties to the Agreement and is not intended to create an interest in any third party except where explicitly stated otherwise.
18.12. Survival. All of the obligations of each party that by their nature should survive termination or expiration of the Agreement in order to a chieve its purposes, including Sections 3, 4.3, 4.4, 4.5, 5, 6, 8, 9, 12, 13, 14, 16, 18.2, and
18.12, will survive and remain binding upon and for the benefit of the parties.
18.13. Counterparts; Electronic Delivery. The Agreement may be signed in one or more counterparts, each of which will constitute an original and all of which, taken together, will constitute one and the same agreement. Signed counterparts may be delivered by fax or electronic means (e.g., .pdf documents via e-mail), and will constitute signed originals.
18.14. Force Majeure . Neither party will be considered in default in performance of its obligations to the extent such performance is delayed by Force Majeure affecting such party’s ability to perform. A “Force Majeure” means an act of God, natural disaster, pandemic, war, act of terrorism, civil disturbance, action by governmental entity, strike , and other cause beyond such party’s reasonable control. If a Force Majeure interrupts Elavon’s provision of any Services, Company will continue to pay Elavon the fees for the Services owed under the Agreement and Elavon will make all reasonable efforts to restore such Services. If the delay caused by the Force Majeure continues for a more than 14 days, then Company may, upon notice to Elavon, as its sole and exclusive remedy, abate payment to Elavon (to the extent Services are not performed) and terminate the Agreement.
18.15. Business Continuity. Elavon will maintain and adhere to business continuity plans that are commercially reasonable within the industry for the Services.
18.16. Tribal Governments . If Company qualifies as a federally recognized or acknowledged tribal government or an instrumentality thereof, then Company expressly and irrevocably provides a limited waiver of its sovereign immunity (and any defense based thereon) from any suit, action or proceeding or from any legal process (whether through service 13 Item 18
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14 of notice, attachment prior to judgment, attachment in aid of execution, exercise of contempt powers or otherwise) brought by Elavon relative to disputes between the Elavon and Company under the Agreement in the exclusive jurisdiction set forth in Section 18.2. Without prejudice to the limited waiver of sovereign immunity provided in the Agreement, no other waiver of Company’s sovereign immunity from suit may be implied from any action or document. Company waives any requirement for Elavon to exhaust tribal court remedies that might otherwise require, as a matter of law or comity, that a dispute be heard first in the tribal court of Company. The waivers and consents described in this Section 18.16 will inure to the benefit of the parties hereto. The parties will be entitled to all available legal and equitable remedies, including the right to specific performance, money damages and injunctive or declaratory relief. The waivers of sovereign immunity and of the obligation to exhaust tribal court remedies and the c onsents to jurisdiction contained in this Section 18.16 are irrevocable and will survive termination of the Agreement. Company covenants that it has obtained and will maintain in effect all authorizations and consents necessary to grant the waiver of sovereign immunity and the obligations to exhaust tribal court remedies contained herein.
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15 APPENDIX 1 – DEFINITIONS
“ACH” means Automated Clearing House , the funds transfer system governed by the rules of NACHA. ACH allows financial institutions to clear interbank entries electronically. “ACH Rules” means the NACHA Operating Rules and Operating Guidelines, which govern the interregional exchange and settlement of ACH transactions.
“Affiliated Entity” means (i) an Affiliate of Company, or (ii) a person or entity operating a franchise under one or more of Company’s brands pursuant to a written franchise agreement with Company whereby the franchisee consistently displays external identification prominently identifying itself with Company’s trademarks; in each case as listed on Schedule C or an exhibit to an applicable schedule mutually agreed upon by Company and Elavon. “Affiliates” means entities affiliated under the majority ownership or control of, under common ownership or control with, or which own or control, a party.
“Authorized Users” means Company’s employees or contractors designated by Company to access and use the Services. “Bankruptcy Proceeding” means, with respect to an entity, (i) that the entity or any subsidiary of such entity will: (a) commence a voluntary case under the Bankruptcy Code of 1978, as amended, or other federal bankruptcy laws (as now or hereafter in effect); (b) file or be subject to a petition seeking to take advantage of any other applicable state or federal laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts or any other similar conservatorship or receivership proceeding instituted or administered by any regulatory agency or body; (c) consent to or fai l to contest, in a timely and appropriate manner, any petition filed against it in an involuntary case under such bankruptcy laws or other applicable laws; (d) apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of , or the taking of possession by, a trustee, receiver, custodian, liquidator, or similar entity of such entity or of all or any substantial part of its assets, domestic or foreign; (e) admit in writing its inability to pay its debts as they become due; (f) make a g eneral assignment for the benefit of creditors; (g) make a conveyance fraudulent as to creditors unde r any applicable state or federal laws; or (h) take any action for the purpose of effecting any of the foregoing; or (ii) that a case or other proceeding will be commenced against the entity or any subsidiary of such entity in any court of competent jurisd iction, or through any regulatory agency or body, seeking: ( x) relief under the Bankruptcy Code of 1978, as amended, or other federal bankruptcy laws (as now or hereafter in effect) or under any other applicable laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or composition, or adjustment of debts; or (y) the appointment of a trustee, receiver, custodian, liquidator or the like of such entity or of all or any substantial part of the assets, domestic or foreign, of such entity or any other similar conservatorship or receivership proceeding instituted or administered by any regulatory agency or body. “Card Brands” means (i) Visa; (ii) Mastercard; (iii) American Express Travel Related Services Company, Inc.; (iv) Discover Network; (v) Diners Club International Ltd.; (vi) JCB International Co., Ltd.; (vii) China UnionPay Co., Ltd; and (viii) any other organization or association that hereafter contracts with Elavon to authorize, capture, and settle Transactions effected with Credit Cards issued or sponsored by such organization or association, and any successor organization or association to any of the foregoing.
“Cardholder” means the individual in whose name a Payment Device has been issued and any authorized user of such Payment Device.
“Cardholder Data” has the meaning stated in the Payment Card Industry (PCI) Data Security Standard (DSS) and Payment Application Data Security Standard (PA-DSS) Glossary of Terms, Abbreviations, and Acronyms. “Change of Control” means with respect to a party, (a) a merger or consolidation of such party with or into another entity, or the merger of another party with or into such party or any other transaction or series of transactions, with the effect that the equity holders of s uch party immediately prior to such transaction hold 50% or less of the total voting power entitled to vote in the election of directors, managers, or trustees of the surviving entity; or (b) any person or group acquires beneficial owner ship of a majority interest of the voting power or voting capital or other equity interest of such person. “Chargeback” means a Transaction disputed by a Cardholder or Issuer pursuant to the Payment Network Regulations. “Company” has the definition set out in the first page of the Agreement. 15 Item 18
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16 “Company Application” means the Company Application attached as Schedule B and any additional document containing information regarding Company’s business that is submitted to Elavon in connection with Company’s request for Services, including documents submitted by Company as a part of the bid process, if applicable. “Company Resources” means all equipment, communications devices, databases, services, systems and other resources that Company maintains or operates in Company’s or its third party hosting provider’s locations and which enable Company to access and use the Services.
“Confidential Information ” means all data and information, regardless of the form or media, relating to the business of the Disclosing Party of which the Receiving Party becomes aware as a consequence of, or through, the performance of its obligations under the Agreement, which has value to the Disclosing Party and is not generally known by its competitors, which is reasonably identified as confidential at the time of disclosure or which, under the circumstances surrounding disclosure, ought to be reasonably considered as confidential, including technical information, drawings, engineering data, performance specifications, cost and price information (except as provided otherwise in the Agreement), and other information, data and reports, and the terms and conditions of the Agreement. Confidential Information does not include any data or information which (i) is already known to the Receiving Party prior to disclosure by the Disclosing Party; (ii) has become generally known to the public through no wrongful ac t of the Receiving Party; (iii) has been rightfully received by the Receiving Party from a third party without restriction on disclosure and without, to the knowledge of the Receiving Party, a breach of an obligation of confidentiality running directly or indirectly to the other party; or (iv) is independently developed by the Receiving Party without use, directly or indirectly, of the Confidential Information received from the Disclosing Party. Cardholder Data and Transaction Information are not Confidential Information under this definition, and are addressed in Section 9.2(d). “Credit Card” means a card or device bearing the symbol of any Card Brand and associated with a revolving line of credit that can be used to purchase goods and services from Company or to pay an amount due to Company. “Customer” means a client of Company who elects to conduct a payment Transaction with Company through presentation of a Payment Device (including a Cardholder).
“Data Breach” means unauthorized access to, use, disclosure or exfiltration of any Cardholder Data or Transaction Information provided by Company and received by Elavon in connection with Company’s use of the Services under the Agreement. “DDA (Demand Deposit Account )” means the commercial checking account at a n ACH participating financial institution designated by Company to facilitate payment for Transactions, Chargebacks, returns, adjustments, fees, fines, penalties, assessments and charges from the Payment Networks, and other payments due under the Agreement. “Debit Card” means a card or device bearing the symbols of one or more EFT Networks or Card Brands, which may be used to purchase goods and services from Company or to pay an amount due to Company by an electronic debit to the Cardholder’s designated deposit account. A “Debit Card” includes (i) a card or device that bears the symbol of a Card Brand and may be used to conduct signature -based, offline debit Transactions; and (ii) a card or device that bears the symbol of an EFT Network and can be used to conduct PIN-based, online debit Transactions. “Disclosing Party” means the party providing the Confidential Information to the other party directly or indirectly (via one or more third parties acting on behalf of and at the direction of the party providing its Confidential Information). “Discover” means DFS Services LLC.
“Discover Network” means the payment network operated and maintained by Discover. “Documentation” means the Elavon standard written description for the Services, as applicable, that is delivered to Company under the Agreement, including user manuals and best practices guides, as may be amended by Elavon from time to time, but not including marketing materials, proposals, demonstrations or other promotional information. “Early Termination Fee” means an amount equal to the sum of: (i) the greater of (A) the total fees paid by Company during the 12 months immediately prior to termination, and (B) the total fees that would be payable by Company during the 12 months immediately following termination (based, with respect to any per -Transaction fees, on projected monthly Transaction volume as reflected on Schedule A); and (ii) any up-front incentives afforded to Company. “EBT Card” means a card used for electronic benefits transfers. 16 Item 18
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17 “ECS (Electronic Check Services)” means the service offering by Elavon pursuant to which Transactions effected via an ACH Payment Device are presented for clearing and settlement by or through an ECS Association. “ECS Association” means NACHA and any regional ACH association or network, the Federal Reserve (in its processing of ACH entries or demand drafts or other legal replacements or substitutes for a paper check, including under the Check Clearing for the 21st Century Act or un der applicable provisions of the Uniform Commercial Code), and any other organization or association Elavon uses in connection with the ECS that is hereafter designated as an ECS Association by Elavon from time to time.
“EFT Networks” means (i) Interlink Network Inc., Maestro U.S.A., Inc., STAR Networks, Inc., NYCE Payments Network, LLC, PULSE Network LLC, ACCEL/Exchange Network, Alaska Option Services Corporation, Armed Forces Financial Network, Credit Union 24, Inc., NETS, Inc., and SHAZAM, Inc.; and (ii) any other organization or association that hereafter authorizes Elavon or a third party designated by Company to authorize, capture, and settle Transactions effected with Debit Cards, and any successor organization or association to any of the foregoing. “Effective Date” means the date stated in Elavon’s signature block on the signature page of the Agreement. “Elavon” means Elavon, Inc., a Georgia corporation. Elavon is a registered member service provider of each Member. Elavon may also be referred to as “Servicer” in the Agreement, the Operating Guide or other documents provided to Company in connection with the Services.
“Elavon Data Breach” means a Data Breach that (i) originated within data operating systems controlled by Elavon or its third- party contractors, (ii) occurred due to a breach of the Agreement by Elavon , (iii) was not attributable to any act or omission of Company or its Service Providers, and (iv) does not relate to any Company provided data in user defined fields not required by Elavon or used to perform the Services.
“Elavon Data Breach Losses” means (i) any fine, penalty, assessment, or charge levied by any Payment Network or regulatory authority against Company, and paid by Company, due to an Elavon Data Breach ; provided that, prior to any Payment Network or regulatory authority’s finalization of any fine, penalty, assessment, or charge for which Company will seek recovery from Elavon, Company obtains for Elavon the opportunity to discuss and attempt to negotiate such fine, penalty, assessment or charge with the applicable Payment Network or regulatory authorit y, (ii) amounts paid by Company to third parties to reimburse them for their direct losses resulting from or attributable to an Elavon Data Breach, to the extent Company is required by Laws (including by a statutory or contractual obligation or court order) to make such payments (excluding amounts paid under claus e (i) above), and (iii) Company’s direct costs incurred in providing 12 months of credit monitoring to Cardholders affected by an Elavon Data Breach involving unauthorized access to unencrypted full primary account numbers (PANs) or social security numbers.
“Elavon Materials ” means the specifications, documentation (including Documentation) , application programing interfaces (APIs) and other interfaces , nonpublic or proprietary data import routines, sample code and materials provided to Company to enable Company to perform its obligations or exercise its rights under the Agreement, including integration to the Services. “Electronic Gift Card (EGC)” means a special stored value card provided by or on behalf of Company that is redeemable for merchandise, services or other Transactions.
“Equipment” means Purchased Equipment and other devices, equipment and hardware provided to Company under the Agreement.
“Force Majeure” means has the meaning stated in Section 18.14. “Gateway Services” means the hosted gateway services provided by Elavon, as further described in the Operating Guide. “Initial Term” has the meaning stated in Schedule A.
“Intellectual Property Rights” means worldwide patents, trade secrets, copyrights, trademarks, service marks, trade names, and all other intellectual property rights and proprietary rights, including all rights or causes of action for infringement or misappropriation of any of the foregoing.
“Internal Controls Assessment” has the meaning stated in Section 10.1. “Issuer” means the financial institution or other entity that issued the Credit Card or Debit Card to the Cardholder. 17 Item 18
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18 “Laws” means all applicable local, state, and federal statutes, regulations, ordinances, rules, and other binding law in effect from time to time.
“Mastercard” means MasterCard International Incorporated. “Member” means the sponsoring Member designated on the Company Application or on a particular schedule, as applicable.
Elavon may change any Member at any time and will provide Company notice of the change. “NACHA” means the National Automated Clearing House Association. “Operating Guide ” means Elavon’s Operating Guide (formerly the “Merch ant Operating Guide” or “MOG”) , located at www.mypaymentsinsider.com and www.merchantconnect.com (or such other website that Elavon may specify), that prescribes rules and procedures governing Transactions and Company’s use of the Services. Elavon may amend the Operating Guide from time to time, which amendments will be effective upon notice to Company. “Payment Device ” means any device or method used for the purpose of obtaining credit or debiting a designated account including a Credit Card, Debit Card, and any other financial transaction device or method, including an Electronic Gift Card, check (whether converted int o electronic form or used as a source document for an electronic fund transfer), EBT Card, stored value card, “smart” card, or other device created to be used for the purpose of obtaining credit or debiting a designated acc ount. “Payment Network ” means any Card Brand , EFT Network , ECS Association or automated clearing house association, governmental agency or authority, and any other entity or association that issues or sponsors a Payment Device or PayPal Payment Device (as defined in the Operating Guide) or operates a network on which a Payment Device is processed. “Payment Network Regulations ” means the rules, operating regulations, guidelines, specifications and related or similar requirements of any Payment Network.
“PCI-DSS” means the Payment Card Industry Data Security Standards. “POS Device” means a terminal, software or other point-of-sale device at a Company location that conforms to the requirements established from time to time by Elavon and the applicable Payment Network. “Processing Services” means Services other than Gateway Services, SAFE-T Services, and Professional Services.
“Professional Services” means the work Elavon performs for Company in connection with the installation or implementation of the Services, as more fully described in a Statement of Work. “Purchased Equipment” means the devices, equipment and hardware purchased by Company from Elavon under the terms of the Agreement.
“Receiving Party” means the party receiving Confidential Information from the other party directly or indirectly (via one or more third parties acting on behalf of and at the direction of the party providing its Confidential Information). “Renewal Term” has the meaning stated in Schedule A.
“Reserve Account” means the ledger account established by Elavon on its books and records reflecting a contingent payment obligation from Elavon to Company.
“SAFE-T Services” means the integrated security services provided by Elavon, as further described in Schedule E. “Security Programs” means the PCI-DSS, including the Cardholder Information Security Program (CISP) of Visa, the Site Data Protection Program (SDP) of Master card, the Data Security DISC Program and the PCI -DSS regulations of Discover Network, and the security programs of any other Payment Network, and any modifications to, or replacements of, such programs that may occur from time to time.
“Service Provider” means any entity that stores, processes, transmits or accesses Cardholder Data or Transaction Information on behalf of Company or that provides software to Company for transaction processing, storage, or transmission, except to the extent such services are performed by the entity in its capacity as a third -party contractor of Elavon performing Elavon’s obligations under the Agreement. Elavon third-party contractors are not Service Providers. “Services” means the services Elavon provides to Company pursuant to the Agreement. 18 Item 18
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19 “Statement of Work ” means a statement of work for Professional Services that references the Agreement and is executed by the parties.
“Term” means the Initial Term and any Renewal Term.
“Transaction” means any action between Company and a Cardholder or Payment Network that results in transmission of Cardholder Data or Transaction Information (e.g. payment, purchase, refund, return, chargeback, authorization request, settlement submission, transaction inquiry, decryption, conversion to and from tokens). “Transaction Information” means any data or information resulting from a Transaction. Transaction Information includes payment processing-related transactional information that may be collected or stored by Elavon, including the price paid for products or services, date, time, approval, unique transaction number, store identifier, and Customer bank information relating to a Transaction.
“Updates” means all updates, revisions, patches, fixes, new releases, and other improvements or changes to any Services provided to Company under the Agreement.
“United States” means the United States of America.
“Visa” means Visa U.S.A., Inc.
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20 SCHEDULE A
FEES
[Separately provided]
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21 SCHEDULE B
COMPANY APPLICATION
[Separately provided]
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22 SCHEDULE C
AFFILIATED ENTITIES
Check one:
Company named on page 1 only, and all locations will operate under Tax ID Number 946000389.
Company named on page 1, with Tax ID Number ______________________ and the following Affiliates or franchisees (a separate Form W-9 or Form W-8BEN, as applicable, must be submitted for each entity identified below):
Name Tax ID Number
COMPANY, on behalf of itself and each of the Affiliated Entities identified above:
By:
Name:
Title:
ELAVON, INC.
By:
Name:
Title:
Date:
(Schedule C “Effective Date”)
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PROCESSING SERVICES TERMS
This Schedule D sets out additional terms (and modifications to terms in the General Terms and Conditions) that are applicable if Company is receiving certain Processing Services.
1. Processing Services. This Section 1 of Schedule D applies if Company is receiving Processing Services.
1.1. Company Compliance. Company will not submit Transactions for processing to Elavon for any businesses, materially different products, or methods of selling other than those stated in the Company Application without Elavon’s prior written consent.
1.2. Reserve Account.
(a) Establishment. If a Reserve Event occurs, Elavon may establish a Reserve Account in the Reserve Amount to provide security and a source of funds to pay Elavon for all amounts that Company may owe under this Agreement. Elavon will have sole control of the Reserve Account , and, upon Company’s delivery of funds to Elavon for creating credits in the Reserve Account (or Elavon’s crediting the Reserve Account with amounts that otherwise would have been paid to Company), Company will have no further property interest in such funds (or rights to payment) o ther than with respect to a contingent right to payment from Elavon as described in this Agreement upon the termination of the Reserve Account.
(b) Reserve Amount . The “Reserve Amount ” is equal to the aggregate dollar value of: [(average % credits to processing volume during the same period plus average % Chargebacks to processing volume during the same period) multiplied by four] multiplied by [average monthly processing volume] plus [o ne month’s average fees] plus [number of days delayed delivery multiplied by the average day’s processing volume] plus [the amount of fines, assessments, or charges imposed or reasonably expected to be imposed by the Payment Networks, if any].
For purposes of this calculation, the number of days delayed delivery means the number of days between the date on which the Cardholder’s Payment Device is charged and the date the product is shipped to the Cardholder (if the goods are being shipped) or the date the Cardholder receives the product or service. Further, for purposes of this calculation, Elavon will determine the applicable period considering factors such as Company’s Transaction volume and seasonality.
(c) Reserve Event. The following will constitute “Reserve Events”:
(i) Fraudulent activity in any monthly period that equals or exceeds 1% of Company’s average monthly volume over the preceding 12-month period;
(ii) Chargebacks in any monthly period that equal or exceed 1% of the total dollar value of incoming items to Elavon;
(iii) Elavon’s reasonable belief that Company, if not approved by Elavon to engage in delayed delivery transactions, has accepted deposits but has not delivered the goods or services;
(iv) The commencement of a Bankruptcy Proceeding by or against Company;
(v) Termination of the Agreement for any reason or the occurrence of an event listed in Section 4.2 of the Agreement giving Elavon the right to terminate the Agreement;
(vi) Nonpayment of amounts owed by Company to Elavon;
(vii) Fines, assessments, or charges imposed or reasonably expected to be imposed by the Payment Networks;
(viii) The occurrence of a material adverse change in Company’s financial condition;
(ix) Assignment of the Agreement by Company in violation of Section 18.5 of the Agreement; and 23 Item 18
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24 (x) Revocation, termination, expiration or non-renewal of any guaranty, indemnity agreement, letter of credit or any other Alternate Security provided in connection with the Agreement, if applicable.
(d) Funding. Elavon may fund the Reserve Account up to the Reserve Amount by any of the following means:
(i) Elavon may require Company to transfer funds to Elavon for credit to the Reserve Account;
(ii) Elavon may debit the DDA and provide a corresponding credit to the Reserve Account; or
(iii) Elavon may credit to the Reserve Account amounts it would otherwise be obligated to credit to Company.
(e) Use of Funds in Reserve Account . Elavon may apply credits in the Reserve Account against any outstanding amounts Company owes under the Agreement. Additionally, Elavon may debit the Reserve Account to exercise its rights under the Agreement, including its rights of set -off and recoupment to collect any amounts due to Elavon.
(f) Termination of Reserve Account . Credits in the Reserve Account that have not been applied against amounts due to Elavon will remain in the Reserve Account until Company has paid in full all amounts owing or that may be owed under the Agreement, including all Chargebacks, returns, adjustments, fees, fines, penalties, assessments and charges from the Payment Networks , and any other payments due under the Agreement. Notwithstanding the foregoing, if Elavon determines that the Reserve Event that gave rise to th e establishment of the Reserve Account has been sufficiently cured, then Elavon may terminate the Reserve Account or release credits from the Reserve Account, or both , based on Elavon’s reasonable determination for the continuing potential risk of loss to Elavon.
(g) Alternate Security. In lieu of or in addition to establishing and crediting a Reserve Account, Elavon may accept an alternative form of security (“ Alternate Security ”) for the purpose of providing a source of funds to pay Elavon for all amounts owed by Company. Elavon may at any time reevaluate Alternate Security it previously accepted and require funding of a Reserve Account so that the amount of credits in a Reserve Account, taken together with amounts represented by any Alternate Security Elavon accepts, equals the Reserve Amount.
1.3. Recoupment and Set-off.
(a) Elavon has the right of recoupment and set-off, and may offset any outstanding or uncollected amounts owed to it hereunder from:
(i) Any amounts it would otherwise be obligated to deposit into the DDA;
(ii) The Reserve Account by reducing the credits thereto; and
(iii) Any other amounts it may owe Company under the Agreement.
(b) Company acknowledges that in the event of a Bankruptcy Proceeding, in order for Company to provide adequate protection under Bankruptcy Code Section 362 to Elavon hereunder, Elavon may require the creation of a Reserve Account and will have the right to offset against the Reserve Account for all obligations Company may owe to Elavon, without regard to whether the obligations relate to Transactions initiated or processed before or after the initiation of the Bankruptcy Proceeding.
1.4. MATCHTM and Consortium Merchant Negative File. Company acknowledges that Elavon may be required to report Company’s business name and the name of Company’s principals to the MATCH TM listing maintained by MasterCard and accessed by Visa, to the Consortium Merchant Negative File maintained by Discover, if applicable, or to any other negative or terminated merchant file of any other Payment Network, if applicable, pursuant to the requirements of the Payment Network Regulations. Company specifically consents to Elavon’s fulfillment of the obligations related to the listing of Company and Company information in such databases, and Company waives all claims and liabilities Company may have as a result of such reporting.
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25 1.5. Remedies Cumulative . The rights conferred upon Elavon in this Schedule D , S ection 1 are not intended to be exclusive of each other or of any other rights and remedies of Elavon under the Agreement, at law or in equity. Rather, each and every right of Elavon under the Agreement, at law or in equity, is cumulative and concurrent and in addition to every other right.
1.6. Termination. In addition to Elavon’s termination rights in Section 4 of the Agreement , Elavon may terminate the Agreement:
(a) If, after providing 30 days’ written notice, either of the following conditions remain:
(i) Excessive Activity; or
(ii) The acceptance of Card Not Present or Convenience Fee Transactions without proper disclosure to Elavon in the Agreement (including in the Company Application) or an amendment to the Agreement.
(b) Immediately if any of the following occur:
(i) The levy, garnishment or attachment of the Alternate Security, the DDA, the Reserve Account, or any of Company’s property in Elavon’s possession;
(ii) Any change, not approved by Elavon, that constitutes a material change in the types of goods or services Company sells or in the methods by which Company sells them, or any change that results in Company’s violation of Elavon’s underwriting policy; or
(iii) Revocation, termination, expiration or non-renewal of any guaranty, indemnity agreement, letter of credit or other Alternate Security executed in connection with the Agreement.
1.7. Member Responsibilities. Member will facilitate ACH Transactions and comply with all ACH Rules as applicable to Member in providing Services under this Agreement. Member will have no liability to Company under this Agreement. Member is an entity governed by the Laws of the United States of America and as such, cannot provide any products or services to Company or its Customers that contravene the Laws of the United States of America, including the Laws promulgated by OFAC or any successor thereto.
1.8. Company Information.
(a) Authority. Company authorizes Elavon to make, upon receipt of the Company Application and from time to time, any business credit or other inquiries it considers reasonably necessary to review the Company Application or continue to provide Services under the Agreement. Company also authorizes any person or credit reporting agency to compile information to answer those business credit inquiries and to furnish that information to Elavon.
(b) Financial Information . At Elavon’s request, Company will provide Elavon financial statements (audited if available) prepared by an independent certified public accountant selected by Company. Within 120 days after the end of each fiscal year, Company will furnish Elavon, as requested, a financial statement of profit and loss for the fiscal year and a balance sheet as of the end of the fiscal year, each audited if available. Company also will provide Elavon such interim financial statements and other information as Elavon may request from time to time. Notwithstanding the requirements in this section, Company will not be obligated to provide financial statements or similar information required by this section if Company files its financial statements with the Securities and Exchange Commission so long as Company remains registered and obligated to file financial statements (including annual reports on Form 10-K and quarterly reports on Form 10-Q) pursuant to the Securities Exchange Act of 1934, as amended.
1.9. Company Data Incident.
(a) Notice and Investigation . Company acknowledges that Cardholder Data and bank account information it obtains in connection with any Transaction is the property of the financial institution that issued the Payment Device or holds the Customer’s account. Company will notify Elavon within 24 hours (and if notice is given orally, it must be confirmed in writing within the same 24 hour period) if Company knows or suspects that Cardholder Data , Custom er information, or Transaction I nformation has been accessed or used without 25 Item 18
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26 authorization from Company or systems within Company’s control (a “Data Incident”). The notice should be delivered by electronic mail to [email protected] and must include:
(i) A detailed written statement about the Data Incident including the contributing circumstances,
(ii) The form, number and range of compromised account information,
(iii) Specific account numbers compromised, and
(iv) Details about the ensuing investigation and Company’s security personnel who may be contacted in connection with the Data Incident.
Company will fully cooperate with the Payment Networks and Elavon in the forensic investigation of the Data Incident. Within 72 hours of becoming aware of the Data Incident, Company will engage the services of a data security firm acceptable to the Payment Networks and to Elavon to assess the vulnerability of the compromised data and related systems. Company will provide weekly written status reports to Elavon until the forensic audit is complete. Company will promptly furnish updated lists of potential or known compromised account numbers and other documentation or information that the Payment Networks or Elavon may request. In addition, Company will provide all audit reports to Elavon, and such audits must be completed to the satisfaction of the Payment Networks and of Elavon. If Company fails to supply the forensic audits or other information required by the Payment Networks or by Elavon, Company will allow Elavon to perform or have performed such audits at Company’s expense.
(b) Preservation of Records. If there is a Data Incident, Company will take immediate steps to preserve all business records, logs and electronic evidence relating to the Data Incident . Company will cooperate with Elavon to rectify, correct and resolve any issues that may result from the Data Incident, including providing Elavon with (and obtaining any necessary waivers for) all relevant information to verify Company’s ability to prevent future data incidents in a manner consistent with the Agreement.
(c) Liability for Data Incident. Without waiving any of Elavon’s rights and remedies, Company is liable to the extent provided in the Payment Network Regulations for all fraudulent transactions related to any Data Incident and all costs Elavon incurs as a result of such Data Incident.
2. Payment Navigator Services. This Section 2 of Schedule D applies if Company is receiving Payment Navigator Services.
2.1. Additional provisions.
(a) Section 13.2. Indemnification By Company. In addition to Company’s indemnification obligations in Section
13.2, Company will indemnify and defend Elavon, its Affiliates, and their respective employees, officers, directors, and agents against all Losses in connection with Claims arising from alleged infringement of patent, copyright or other intellectual property right, or misappropriation of trade secrets, of any third party by Payment Navigator as modified or altered by Company, its partners, employees, agents or contractors, or the use of any data submitted by Company.
(b) Section 18.3. Exclusivity. This section is amended by adding to the end of Section 18.3 of the Agreement:
“Notwithstanding the foregoing, this exclusivity provision will not apply to any Company point-of-sale location that does not interface or interact with the Payment Navigator Services. The parties intend that this Section only applies to Company’s Affiliated Entities that interface with the Payment Navigator Services.”
3. Additional Definitions
“Alternate Security” has the meaning stated in Schedule D, Section 1.2(g).
“Card Not Present” means the processing environment where the Payment Device is not physically presented to Company by the Cardholder as the form of payment at the time of the Transaction.
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27 “Convenience Fee” means a fee charged by Company for an added convenience to the Cardholder for the use of a Payment Device in a Transaction in accordance with the Payment Network Regulations.
“Excessive Activity” means the occurrence, during any monthly period, of Chargebacks or Retrieval Requests in excess of 1% of the gross dollar amount of Company’s Transactions or returns in excess of 2.5% of the gross dollar amount of Company’s Transactions.
“Reserve Amount” means the amount established pursuant to the calculation stated in Schedule D, 1.2(b). “Reserve Event” means the events designated in Schedule D, Section 1.2(c). “Retrieval Request” means a request initiated by a Cardholder or Issuer that requires Company to produce a legible copy of the Cardholder’s signed Transaction Receipt within a specified period of time. “Transaction Receipt” means the paper or electronic record evidencing the purchase of goods or services from, or payment to, a Company by a Cardholder using a Payment Device.
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Version 2.18 11.05.2021
ASSUMPTIONS / Company PROFILE
Legal Entity Name
Business Segment
Category Description
MCC
Multiple MCCs?
Locations
Volume Average Ticket Transaction Count
VISA $53,723,362 278 193,449
MasterCard $17,351,004 358 48,408
Discover $697,445 162 4,301
Union Pay
American Express $11,037,460 431 25,584
JCB & Diners
PIN-Debit
Checks
EBT
Total $82,809,272 271,742
Projected Monthly Transaction Volume Average Ticket
22,645 $304.73
TERM
Initial Term of: 5 3 Year(s) Renewal Term
(Do not leave field blank)
PROCESSING SERVICES AVAILABLE TO COMPANIES GENERALLY
CARD PROCESSING FEES
Pass-Through
Auth$ Settle $ Settle %
Visa $0.0000 $0.0800 0.10%
MasterCard $0.0000 $0.0800 0.10%
Discover $0.0000 $0.0800 0.10%
Union Pay $0.0000 $0.0800 0.10%
PIN-Debit $0.0000 $0.0800 0.10%
Pass-Through
Auth$ Settle $ Settle %
Visa $0.0000 $0.0000 0.10%
MasterCard $0.0000 $0.0000 0.10%
Discover $0.0000 $0.0000 0.10%
Union Pay $0.0000 $0.0000 0.10%
PIN-Debit $0.0000 $0.0000 0.10%
AMERICAN EXPRESS PUBLIC SECTOR (Third Party Service Processing)
CREDIT CARD SURCHARGING
AUTHORIZATION FEES - Servicer
Telecom Method IP/DIAL
Additional Fee for Telecom $0.0150
Per Authorization Fee
Visa N/A
MasterCard N/A
Discover N/A
Union Pay N/A
PIN Debit N/A
American Express N/A
Diners N/A
JCB N/A
EBT N/A
Other Card Type N/A
Frame Relay N/A
Dial Back-Up for Frame Relay N/A
Voice (VRU) Authorization $0.7500
Voice Authorization with Address Verification $0.9000
Operator-Assist Authorization $1.2500
Bank Referral Authorization $4.0000
OTHER TRANSACTION FEES
Per Transaction Fee
Bill Payment (PIN-Less Debit) N/A
PIN Debit Flat Rate (per settled transaction) (Debit Network Switch Fee is billed separately - per authorization) N/A
AVS Fee (per occurrence)
ACH Fee (per occurrence)
ACH Returned Item Fee $25.0000 (per occurrence)
Fed Wire Settlement (per occurrence, where available)
Fed wire requires CFO Approval
Chargeback Fee (per occurrence) $25.0000
Monthly Minimum (per location) N/A
Monthly Minimum Start Date to be the Effective Date of the MSA Other Fee N/A
3Delta - Level 3 Solutions
Setup Fee N/A
Other Setup Fee N/A
Monthly Fee N/A
Per Transaction Fee N/A
Other Fee N/A
CANADIAN CARD PROCESSING FEES
CANADIAN OTHER TRANSACTION FEES
FOREIGN NETWORK
PROFESSIONAL SERVICES
Professional Services Engaged?: N/A
EQUIPMENT/SOFTWARE
Currency USD Please be sure to use the correct currency.
Equipment Type Purchase or Rental Price /Unit (US$) Monthly Fee(US$) Application see attachment
DCC & MCC
Pricing in this section applies to the following MIDs: 8028494386,8035403206, 8035441446, 8035425654, 8035441438, 8028572116, 8028494311, 8040392824, 8028494279, 8028494378, 8028280884, 8031969309, 8031969424, 8031969374, 8031969465, 8038209444, 8031730016, 8028494287, 8029281543, 8032414040, 8031969341, 8036180357, 8036420654, 8035441461, 8035734741, 8035438806, 8035404493, 8040519111
Pricing in this section applies to the following MIDs: 8028572082,8030022464, 8030022647,8029570382, 8028571993, 8028571944,8028571951, 8028721382
CANADIAN REPORTING
31 Year(s):
REPORTING
Notes: 1) Company will pay a unit swap and for the shipping and handling of any replacement equipment. The fee varies according to the type of terminal. 2) See additional pricing sheet as needed. 3) Rental equipment may be new or used and is dependent on inventory available at time of order. 4) All used equipment is inspected and refurbished upon return before being re-deployed. 5) Rentals are month to month and may be terminated at any time by Company.
SCHEDULE A - SCHEDULE OF FEES
All Visa, MasterCard, Discover, Union Pay, and debit network authorization and Interchange fees, assessments, dues and other fees and charges are passed to Company at cost. Servicer Transaction processing fees include:
All Visa, MasterCard, Discover, Union Pay, and debit network authorization and Interchange fees, assessments, dues and other fees and charges are passed to Company at cost. Servicer Transaction processing fees include:
If this schedule is inclusive of exception pricing on any fees or service, written approval of final pricing included herein must be attached for legal review. Primary documentation should be a P&L model including the final pricing, reviewed and approved by the Pricing and Profitability team. If Professional Services pricing is included, a separate Statement of Work and Professional Services Agreement must be included. Various forms of written approval will be accepted, but must be approved by appropriate parties within the applicable professional services groups as outlined in the pricing guidelines for these products.
City of Palo Alto
Government
9399
Government Services-Not Elsewhere Classified
Yes
Purchase or Rental
Professional Service fees are captured in a Statement of Work. (SOW).
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ACCOUNT IMPLEMENTATION & MAINTAINENCE FEES
ELECTRONIC GIFT CARDS
ELECTRONIC GIFT CARDS (CANADA)
PAYCENTRIC BILL PAY SERVICES
ACCULYNK (INTERNET PIN-BASED DEBIT CARDS SERVICES)
PAYMENT NAVIGATOR SERVICES
MEDEPAY SERVICES
CONVERGE SERVICES
PETROLEUM SERVICES
ELECTRONIC CHECK SERVICE: SERVICE LEVEL AND PROCESSING FEES
NON-PROCESSING SERVICES AVAILABLE TO COMPANIES GENERALLY
HOSTED GATEWAY SERVICES
FRAUD SERVICES
SAFE-T SERVICES
Safe-T Solo™ Per Month/Per MID
$25
$84.99
CONVENIENCE FEE AND GOVERNMENT/PUBLIC INSTITUTION SERVICE FEES (GPISF) Convenience Fee
Convenience Fee Flat Amount
Convenience Fee % Amount (MasterCard, Discover & ACH Programs Only) Implementation Fee (if applicable)
No Merchant-Managed Service Fee
Yes Merchant-Managed Service Fee with Elavon POS Devices/Service Fee Terminals Yes Elavon- Managed Service Fee
Card Acceptance (Check all that Apply):
Yes Point of Sale Yes Internet
IVR Yes Other
1 GPISF Services Programs (Check all that apply, but only if Company Elects GPISF assessments:
Yes MasterCard Government and Education Payment Program Yes Visa Government and Education Payment Program
Transaction Types:
Yes Real Estate Property Tax No Other Education Expenses Yes Government Fees Yes Other Tax
State Income Tax No
Yes Real Estate Property Tax No Other Education Expenses Credit -(SELECT ALL THAT APPLY)
Yes Visa- Eligible MCCs: 8211, 8220, 8244, 8249, 9211, 9222, 9311, 9399 Yes MasterCard -Eligible MCCs: 8211, 8220, 8299, 9211, 9222, 9223, 9311, 9399, 9402 Yes American Express - Eligible MCCs: 8211, 8220, 8244, 8249, 9211, 9222, 9311, 9399 Yes Discover (Available if Elavon Acquired)
Signature Debit -(SELECT ALL THAT APPLY)
Yes Visa- Eligible MCCs: 8211, 8220, 8244, 8249, 9211, 9222, 9311, 9399 Yes MasterCard -Eligible MCCs: 8211, 8220, 8299, 9211, 9222, 9223, 9311, 9399, 9402 Yes Discover (Available if Elavon Acquired)
ACH -(via Electronic Check Services) (Schedule I required) Yes Bill Payment Portal (BPP)
Yes Enterprise Billing Solutions (EBS)
Yes Service Fee Terminal
Company Proprietary Solution or Value -Added Servicer
Yes Safe-T Service (Additional Enrollment Form Required) Other:
% $
Credit Card Service Fee: 2.75% Or
Signature Debit Service Fee: 2.75% Or
SAFE-T LINK™
SAFE-T SOLO™
Biller Direct Services (Select on option Below, But only if Company Elects Biller Direct Services) (Additional Enrollment Form Required):
GPISF PRICING
ACH (Via Electronic Check Services):
Government/ Public Institution Service Fee (GPISF)
SAFE-T SERVICE WEBSITE FEES <-- If yes is selected on line 1033 (Service Web Site), please complete the Service Web Fees section.
The fees specified in this Schedule A shall remain in effect for the duration of the Initial Term of the Agreement provided however, that Elavon shall be entitled to increase the fees as provided in this Schedule A at any time upon ninety (90) days advance written notice to Company upon the occurrence of any one of the following (each a “Fee Adjustment Event”): (i) an increase in Company’s aggregate card transaction expense greater than eight (8) basis points during any twelve (12) month period as a result of any one of the following events: (a) fee increases in interchange and assessments; (b) increased or new fees imposed by a third party; or (c) changes in Company’s card type, mix, or processing method; or (ii) increase in Company’s aggregate card transaction expense greater than twenty (20) basis points during the Initial Term of the Agreement or any successive Renewal Terms as a result of any one event or combination of the following events: (a) fee increases in interchange and assessments; (b) increased or new fees imposed by a third party; and/or (c) changes in Company’s card type, mix, or processing method.
(SELECT ALL THAT APPLY, BUT ONLY IF COMPANY ELECTS GPISF ASSESMENTS) Tuition
Implementation Fee (If Applicable):
PAYMENT TYPES FOR GPISF ASSESSMENT (NOT ALL PAYMENT TYPES ARE SUPPORTED FOR ALL PROGRAMS)(CHECK ALL THAT APPLY, BUT ONLY IF COMPANY ELECS GPISF ASSESSMENT):
ELAVON PRODUCT SUPPORTING GPISF ASSESMENT TO BE USED BY COMPANY (SELECT ALL THAT APPLY):
All Level 4 Companies (or other Public Sector agencies qualified to opt-in) that validate PCI DSS compliance on an annual basis (with initial validation to occur no later than 90 days after account approval) are eligible for the Safe-T Solo Discounted Program Fee, which includes a Discounted PCI Program Fee. Company acknowledges that if Company has not validated PCI DSS compliance within 90 days of account approval, or in subsequent years on or before the anniversary date of account approval, Company will no longer be eligible for the Discounted Safe-T Solo Program Fee and will be required to pay the full, undiscounted monthly Safe-T Solo Standard Program Fee noted above until Elavon is provided with validation of Company’s PCI DSS compliance.
Safe-T Solo Standard Program Fee
Safe-T Solo Discounted Program Fee
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GENERAL PCI PROGRAM
Channel: Direct
Company Managed: No
PCI Compliance Level: Level 3 20,000 to 1 million Visa and/or Mastercard e-commerce transactions processed per year.
Start Date: January 1st, 2024
MID Type: Multi-MID Pricing - Same Owner, Same Address
MIDS:
Billing Type: Monthly
PCI PROGRAM (Basic or Plus) IP NON-IP
Discounted PCI Program Fee (Basic): $15.00
Standard PCI Program Fee (Basic): $74.99
Company Acknowledgement
Signature:
Printed Name:
Title:
Date:
PCI Compliance, PCI/SafeT Program Fees. Level 3 and 4 Companies must comply with the requirements of the Payment Card Industry Data Security Standard (“PCI DSS”). Elavon’s monthly (PCI/Safe-T) Program Standard Fee is disclosed in the Fee section of this Application. For clarity, if Company has selected a Safe-T solution, the fee for PCI DSS compliance is included within the (PCI/Safe-T) Program Standard Fee.
For ninety (90) days following account approval, Company will be charged the (PCI/SafeT) Program Discounted Fee disclosed in the Fee section of this Application. If Company validates its initial PCI DSS compliance within ninety (90) days after account approval, it will continue to be eligible for the (PCI/SafeT) Program Discounted Fee for the 12 months starting with the month in which it provides validation (e.g., if Company validates compliance in March, it will pay the discounted fee from March through February of the following year).
If Company does not validate its initial PCI DSS Compliance within ninety (90) days following account approval, then Company will be required to pay the full, undiscounted (PCI/SafeT) Program Standard Fee until Company validates its annual PCI DSS compliance.
For any time after the ninety (90) days following account approval, if Company validates PCI DSS by the 25th day of a month, Company will be eligible for the (PCI/SafeT) Program Discounted Fee for the 12 months starting with the month of validation (e.g., if Company validates compliance by the 25th of March, it will pay the discounted fee from March through February of the following year). Following the end of each annual PCI DSS compliance validation period, Company will have to the 25th of the following month to validate compliance or Company will be required to pay the full, undiscounted monthly (PCI/SafeT) Program Standard Fee until Company again validates compliance.
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Elavon Master Services Agreement – Schedule H (v.8.1.22) 1 SCHEDULE H
GOVERNMENT TERMS
The terms in this Schedule H are applicable only in the event Company (i) has selected the checkbox on the signature page of the Agreement indicating that these terms apply, and (ii) qualifies as a “government entity” or “government institution” under applicable local, state or federal law.Except as expressly modified pursuant to this schedule, all terms and conditions of the Agreement, including all other schedules and addenda to the Agreement, remain in full force and effect and will govern the relationship between Elavon and Company.
1. Services for government entities and institutions . The Agreement is modified as follows for government entities and institutions:
1.1. Section 4.2. Company will have the following termination right added to the Agreement as 4.2(f):
“(f)Company may terminate the Agreement on 60 days’ prior written notice to Elavon if sufficient legislative appropriation is not available.”
1.2. Section 4.4, Early Termination Fee, is deleted and replaced with “Intentionally Omitted.”
1.3. Section 9.2(b) is revised as follows:
“(b) PCI –DSS Attestation. Company may review Elavon’s current PCI-DSS compliance status on the Payment Network website https://www.visa.com/splisting/searchGrsp.do, as available. Elavon will undergo an annual assessment of its compliance with the Security Programs and, if applicable to the Services provided under the Agreement, the Payment Application Data Security Standards.
1.4. Section 10.1 is revised as follows:
“10.1. Elavon Reports on Internal Controls. Elavon will engage independent, qualified, external auditors (the “Elavon Auditors”) to assess the internal controls and information security measures in place related to the Services (“Internal Controls Assessment”). The Internal Controls Assessment will conform with Laws, applicable Card Brand Regulations and industry standards, including generally accepted auditing standards such as the Statement on Standards for Attestation Engagements No. 18. “Attestation Standards: Clarification and Recodification” issued by the Auditing Standards Board of the American Institute of Certified Public Accountants (the “SSAE 18”). The frequency of the Internal Controls Assessment will be consistent with industry standards. Upon Company’s written request and 30 days advance notice, Elavon make its SSAE 18 SOC 1 and SOC 2 reports available for Company review on Elavon’s premises or through internet conferencing software (e.g. Cisco Webex or Microsoft Teams). Company’s review shall take place during Elavon’s normal business hours and not more frequently than once every 12 months. Company is not allowed to retain, record, or make copies of Elavon’s SOC 1 or SOC 2 reports, which constitute Elavon’s Confidential Information.”
1.5. Section 13.1 is revised as follows:
“13.1 Elavon Responsibilities. In addition to Elavon’s obligations in Section 13.5, Elavon will be responsible for and will at its own expense defend itself against any suits, claims, losses, demands or damages arising out of (a) Elavon’s breach of the Agreement; (b) Elavon’s or its third party contractors’ gross negligence or willful misconduct; (c) Elavon’s or its third party contractors’ violation of applicable Laws or Payment Network Regulations; (d) Elavon’s alleged infringement or other violation of a U.S. or Canada patent, copyright or trademark of a third party by the Services in the form delivered or Company’s use thereof; or (e) any personal injury or real or tangible personal property damage to the extent caused by Elavon or its third party contractors.” 42 Item 18
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Elavon Master Services Agreement – Schedule H (v.8.1.22) 2 1.6. Section 13.2 is revised as follows:
“13.2 Company Responsibilities. As between Company and Elavon, Company will be responsible for, and at its own expense, defend itself against any suits, claims, losses, demands or damages arising out of (a) any sale of goods or services resulting in a Transaction processed under the Agreement; (b) Company’s breach of the Agreement; (c) all use of any user ID and password other than by Elavon or Elavon’s third-party contractors; (d) Company’s or its Service Providers’ gross negligence or willful misconduct; (e) Company’s or its Service Providers’ violation of Laws or Payment Network Regulations; or (f) any personal injury or real or tangible personal property damage to the extent caused by Company or its Service Providers. Company will not make any claims against Elavon for any liabilities, claims losses, costs, expenses and demands of any kind or nature, arising out of or in connection with any of the foregoing suits, claims, losses, demands or damages.”
1.7. Sections 13.3 is deleted.
1.8. Section 13.4 is revised as follows:
13.4. Procedure.
(a) If an Infringement Claim (as defined in Section 13.5) is subject to Elavon’s obligations in Section 13.5 of the Agreement, Company will:
(i) Provide Elavon prompt notice of the Infringement Claim (provided that any delay in notification will not relieve Elavon of its obligations under Section 13.5 except to the extent that the delay materially impairs its ability to fully defend the Infringement Claim);
(ii) Subject to Section 13.4(b), give Elavon the right to exercise exclusive control over the preparation and defense of the Infringement Claim; and
(iii) Provide such assistance in connection with the defense and settlement of the Infringement Claim as Elavon may reasonably request, at Elavon’s expense. Elavon will not enter into any settlement that imposes any liability or obligation on Company, or contains any admission or acknowledgement of wrongdoing (whether in tort or otherwise), without Company’s prior written consent.
(b) Company may join in the defense, with its own counsel, at its own expense.
1.9. Section 13.5 is revised as follows:
“13.5. Infringement Claims.
(a) Elavon will defend Company and its employees, officers, and agents in connection with claims, actions, demands or proceedings (made or threatened) brought by a third party, and will pay the final award of damages assessed against Company, its employees, officers or agents in a final judgment by a court of competent jurisdiction, including awarded costs, or any amount in settlement or compromise authorized by Elavon in writing, arising out of Elavon’s alleged infringement or other violation of a U.S. or Canada patent, copyright or trademark of a third party by the Services (but not Equipment) in the form delivered or Company’s use thereof (an “Infringement Claim”). (b) If any part of the Services or the use of the Services becomes, or in Elavon’s opinion is likely to become, the subject of an Infringement Claim, and as a result of such Infringement Claim Company’s use of the Services may be enjoined or interfered with, then Elavon will, at its option and expense, either, and in addition to defending Company and paying the final amount of damages as provided for in this section, (i) obtain a license for Company to continue using the alleged infringing component(s) of the Services; (ii) modify the alleged infringing component(s) of the 43 Item 18
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Elavon Master Services Agreement – Schedule H (v.8.1.22) 3 Services to avoid the infringement in a manner that still permits the Services to perform in all material respects in accordance with the Agreement; or (iii) replace the alleged infringing component(s) of the Services with compatible, functionally equivalent, and non-infringing component(s). Elavon will use commercially reasonable efforts to accomplish the remedies identified in this section in a manner that minimizes the disruption to Company’s business operations. If Elavon is not able to accomplish the above remedies within a commercially reasonable time frame and on commercially reasonable terms, Elavon may terminate the Agreement upon written notice to Company. Upon such termination, Elavon will promptly refund any fees paid for Services not performed as of the date of termination. (c) Elavon will have no liability for any Infringement Claim to the extent caused by (i) access to or use of the Services other than as specified under the Agreement and the related Documentation, (ii) combination or use of the Services with non-Elavon products or services (whether or not provided to Company by Elavon), (iii) any hardware, devices, software, services or other resources not provided by Elavon, (iv) failure or refusal by Company to install, implement or use any Update or correction provided by Elavon, (v) modification or alteration of the Services by anyone other than Elavon without Elavon’s prior written consent, (vi) Company’s goods or services, or (vii) the negligence, gross negligence or willful misconduct of, or breach of the Agreement by, Company. (d) THIS SECTION 13.5 SETS FORTH THE EXCLUSIVE REMEDY OF COMPANY AND
THE SOLE AND COMPLETE LIABILITY OF ELAVON WITH RESPECT TO ANY INFRINGEMENT CLAIMS.”
1.10. Section 18.2 , Jurisdiction and Venue; Governing Laws , is deleted and replaced with “Intentionally Omitted.”
1.11. Section 18.3, Exclusivity, is deleted and replaced with “Intentionally Omitted.”
1.12. Section 1.7(b) of Schedule D, Financial Information, is revised as follows:
“1.7(b) Financial Information. At Elavon’s request, Company will provide Elavon audited financial statements prepared by an independent certified public accountant selected by Company, or if Company is audited by a governmental authority, then Company will provide financial statements from such governmental authority. Within 120 days after the end of each fiscal year (or in the case of a government entity, when available), Company will furnish Elavon, as requested, a financial statement of profit and loss for the fiscal year and a balance sheet as of the end of the fiscal year, each audited as provided above. Company will also provide Elavon such interim financial statements and other information as Elavon may request from time to time.”
2. Elavon Fee Collection Models
2.1. Direct Debit Fee Collection Model. If Company elects the Direct Debit fee collection model on Schedule B, then Section 6.1 of the Agreement will remain unchanged and in full force and effect.
2.2. Invoice Fee Collection Model. If Company elects and is approved for the invoice fee collection model on Schedule B, then the second sentence of Section 6.1 of the Agreement is deleted and replaced with the following:
“Such fees will be calculated once each month for the previous month’s activity. Elavon will send Company an invoice reflecting the fees due, which Company will pay within 30 days of the invoice date. In addition to all other available remedies, Elavon may offset any outstanding or uncollected amounts that are more than 90 days past due from (i) any amounts it would otherwise be obligated to deposit into the DDA and (ii) any other amounts Elavon may owe Company under the Agreement.” 44 Item 18
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THIS DOCUMENT IS A STANDARD AGREEME
NT FOR USE WITH GENERAL ASSETS (AND NOT WITH AN
INSURER, INVESTMENT-FUND SPONSOR, OUTSIDE TRUSTEE, OR EMPLOYEE BENEFIT PLAN).
CUSTODY AGREEMENT (GENERAL ASSETS)
This Custody Agreement (the “Agreement”) is between
____________________________________________________________________________________ (legal name of entity), a _________________________________________________________________ (legal form of entity) organized under the laws of _____________________________________ _________, (“Customer”), and U.S. Bank National Association, a national banking associati on organized under the laws of the Un ited States with offices in Minneapolis, Minnesota (“Bank”).
The parties hereby agree as follows:
SECTIO
N 1
DEFINITIONS
1.1. “Account” means (i) the custody account established in the name of Customer and maintained under this Agreement for the Assets (as defined below) and (ii) where the context requires, one or more Sub-accounts (as defined below).
1.2. “Accounting Standards” means Financial Accounting Standard s Board (FASB) Accounting Standards Codification (ASC) 820, Fair Value Measurement , or Governmental Accounting Sta ndards Board (GASB) Codification Statement No. 72, Fair Value Measurement and Application.
1.3. “Affiliated Investment” means a security or other property issued, offered, or serviced by Customer or Customer’s affiliate.
1.4. “ Assets” means the securities, cash, and other property Customer contributes, or causes to be contributed, from time to time under this Agreement; investments and reinvestments thereof; and income thereon, as provided herein.
1.5. “Cash-flow Analysis” means a periodic written analysis of Custome r’s cash-flow history, short-term financial needs, long-term financial needs, expected levels and timing of contributions, exp ected levels and timing of distributions, liquidity needs (including but not limited to the anticipated liquidity required to make distributions), ability to provide future funding, and other significant information which could affect cash-flow or the exercise of discretion to manage the Assets.
1.6. “CFR” means the Code of Federal Regulations.
1.7. “Client-controlled Asset” means an asset that is neither registered in the name of Bank or Bank’s nominee nor maintained by Bank at a Depository (as defined below) or with a sub-custodian nor held by Bank in unregistered or bearer form or in such form as will pass title by delivery.
1.8. “Code” means the Internal Revenue Code of 1986, as amended.
1.9. “Depository” means any central securities depository (such as the DTC), international central securities depository (such as Euroclear Bank SA/NV), or Federal Reserve Bank.
1.10. “DTC” means the Depository Trust Company.
1.11. “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
1.12. “Guidelines” means the written investment objectives, policies, strategies, and restrictions for the Account (or for any Sub-accounts therein), including but not limited to proxy-voting guidelines, as amended from time to time Attachment C
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1.13. “Harm” means claims, costs, damages, expenses (including attorneys’ and other professional fees), fines, interest, liabilities, losses, penalties, and taxes.
1.14. “Indemnified Person” means Bank and its affiliates, and their offi cers, directors, employees, agents, successors, and assigns.
1.15. “Investment Advice” means a recommendation, or a suggestion to e ngage in or refrain from taking a particular course of action, as to (i) the advisability of acquiring, holding, disposing of, or exchanging any Asset or any securities or other investment property or (ii) the Guidelines, the Cash-flow Analysis, the composition of the Account’s portfolio, or the selection of persons to provide investment advice or investment management services with respect to the Assets.
1.16. “Investment Company Act” means the Investment Company Act of 1940, as amended.
1.17. “IRS” means the Internal Revenue Service.
1.18. “Messaging System” means any financial-messaging system, network, or service acceptable to Bank, such as the Society for Worldwide Interbank Financial Telecommunication messaging system.
1.19. “National Securities Exchange” means a securities exchange that is regist ered with the SEC (as defined below) under Section 6 of the Securities Exchange Act of 1934.
1.20. “Plan-assets Vehicle” means an investment contract, product, or entity that holds plan assets (as determined pursuant to ERISA §§3(42) and 401 and 29 CFR §2510.3-101).
1.21. “Private Fund” means an issuer that would be an “ investment company” as defined in the Investment Company Act but for §3(c)(1) or (7) thereof.
1.22. “SEC” means the United States Securities and Exchange Commission.
1.23. “State” means the State of Minnesota, United States of America.
1.24. “Statement Recipient” means Customer and anyone else Customer so designates.
1.25. “Sub-account” means a separate portion of the Account.
SECTION 2
APPOINTMENT AND ACCEPTANCE
2.1. Appointment; Acceptance. Customer hereby appoints Bank as custodi an of the Assets. Bank hereby accepts such appointment and agrees to hold the Assets in the Acc ount with due care in accordan ce with reasonable commercial standards, upon the terms and conditions set forth below.
2.2. Establishment of Account.
2.2.1. Customer hereby contributes Assets, or causes Assets to be contributed, to the Account.
2.2.2. Customer hereby represents, warrants, and cove nants as follows, and Bank may resign immediately if Customer breaches any such representation, warranty, or covenant:
2.2.2.1. Customer holds good and valid legal title to all Assets.
2.2.2.2. None of the Assets is (i) an asset of any “p lan” as defined in ERISA §3(3); any “plan” as defined in Code §4975(e)(1); any Plan-assets Vehicle; or any plan or entity not otherwise within the foregoing definitions that is subject to similar restrictions under federal, state, or local law; (ii) subject to the requirements of a special reserve bank account under SEC Rule 15c3-3;
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account under U.S. Commodity Futures Trading Commission Rules 1.20, 22.5, or 30.7; or any similar rule or regulation; or (iii) subject to a public-deposits, public-funds, or other State law that would require Bank to set aside any direct government obligations, government-guaranteed obligations, surety bonds, letters of credit, or other assets as security, regardless of the type or amount of capital of Bank, the am ount of public deposits held by Bank, or the extent to which the Assets are not insured by the Federal Deposit Insurance Corporation or exceed federal deposit insurance limits.
2.2.2.3. Customer is neither (i) a Private Fund, (ii) an investment pool or entity that is an “ investment company” as defined in Investment Company Act §3(a) or is excluded from such definition (or exempted from regulation) by the Investment Company Act, (iii) an insurer, (iv) a reinsurer, nor (v) a natural person.
2.2.2.4. Customer is not a trustee of, and has no duty to engage a trustee for, the Assets.
2.2.3. As directed by Customer, Bank will establish one (1) or more Sub-accounts and allocate Assets among Sub- accounts. Customer hereby covenants not to direct Bank to establish any Sub-account for the benefit of any entity having a different taxpayer identification number than Customer a nd acknowledges that each Sub-Account will have the same taxpayer identification number as Customer.
2.2.4. Customer hereby covenants not to cause or perm it the Account to acquire any Affiliated Investment the price of which is not quoted on a National Securities Exchange.
2.2.5. Bank will keep the Assets (other than deposits at Bank) separate and apart from the assets of Bank.
SECTION 3
BOOKS, RECORDS, AND ACCOUNTS
3.1. Accounting. Bank shall maintain proper books of account and complete records of Assets and transactions in the Account.
SECTION 4
ASSET DELIVERY, TRANSFER, CUSTODY, AND SAFEKEEPING
4.1. Customer will from time to time deliver, or cause to be delivered, Assets to Bank. Bank shall receive and accept such Assets for the Account upon directions from Customer.
4.2. Account Statements. Bank will furnish each Statement Recipient with (i) an Account statement with the frequency designated below (or as subsequently agreed upon by Bank and Customer) within thirty (30) calendar days after the end of the reporting period and (ii) a final Account statement within thirty (30) calendar days after Bank has transferred all Assets from the Account as provided under this Agreement. (However , if Customer directs Bank to hold an Account statement, then Bank may delay delivery thereof until thirty (30) calendar days after the hold has expired.) Such Account statements will reflect Asset transactions during the reporting period and ending Asset holdings. To the extent Customer has established an account in Bank’s on-line portal and granted access thereunder to Statement Recipients, Bank will furnish such Account statements by way of such system. If no frequency is so d esignated or agreed upon, Customer shall be deemed to have designated “Monthly”.
(Check at least one):
Monthly
Quarterly
Semi-annually
Annually
4.3. Confirmations; Notification by Agreement. Except to the extent that Customer and Bank have entered into a separate written agreement that expressly makes Bank an inv estment manager of the Assets, the Account statements described above (including their timing and form) serve as the sole written notification of any securities transactions effected by Bank for the Account. Even so, Customer has the right to demand that Bank provide written notification of such transactions pursuant to 12 CFR §12.4(a) or (b) at no additional cost to Customer. 3 Item 18
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4.4. Corporate Actions. Bank shall forward to any person authorized under this Agreement to direct the purchase or sale of an Asset information Bank receives with respect to the Asset concerning corporate actions.
4.4.1. Notwithstanding anything herein to the contrary, Bank will, without forwarding such information or providing notice, (i) cause Assets to participate in any manda tory exchange transaction that neither requires nor permits approval by the owner of the Assets and (ii) file any proof of claim received by Bank during the term of this Agreement regarding class-action litigation over a security held in the Account during the class-action period, regardless of any waiver, release, discharge, satisfaction, or other condition that might result from such a filing.
4.5. Upon receipt of directions from Customer, Bank shall retu rn Assets to Customer, or deliver Assets to such location or third party as such directions may indicate, provided that in connection therewith it is the sole responsibility of Customer to provide any transfer documentation as may be required by the applicable Depository or third party recipient. Bank shall have no power or authority to assign, hypothecate, pledge or otherwise dispose of any Assets, except as provided herein or pursuant to such directions.
SECTION 5
POWERS OF BANK
5.1. In the performance of its duties under this Agreement, Bank shall have the power to:
5.1.1. Sign Documents. Make, execute, acknowledge, a nd deliver any and all documents of transfer and conveyance and any or all other instruments that may be necessary or appropriate to the proper discharge of its duties under this Agreement.
5.1.2. Hire Service Providers. Hire service providers to assist Bank in exercising Bank’s powers under this Agreement, including any service provider that is affiliated with Bank, and provide them with information about the Account as needed to that end.
5.1.3. Hold Assets Un-invested. Hold in a noninterest-bearing deposit account of Bank any cash Assets (i) that are subject to pending investment or distribution directions received by Bank with r espect to the Account, (ii) that were received by Bank too late in the day to be invested into the Account’s designated sweep vehicle, (iii) as directed under this Agreement, or (iv) for other operational reasons.
5.1.4. Retain or Interplead Disputed Funds. With respect to Assets that are the subject of a dispute, (i) withhold delivery or distribution thereof pending final adjudication of th e dispute by a court or (ii) file an interpleader action or petition a court for instructions at Account expense.
5.1.5. Distribute Assets. Distribute Assets as set forth herein.
5.1.6. Safe-keep Assets. Safe-keep Assets as set forth herein.
5.1.7. Register Assets. Register any Asset in the name of Bank or Bank’s nominee or to hold any Asset in unregistered or bearer form or in such form as will pass title by delivery, provided that Bank’s records at all times show that all such assets are part of the Account.
5.1.8. Maintain Assets at a Depository or with a Sub-custodian. Maintain Assets that are (i) book-entry securities at any Depository or with any s ub-custodian and to permit such Assets to be registered in the name of Bank, Bank’s nominee, the Depository, the Depository’s nominee, the sub-custodian, or the sub-custodian’s nominee and (ii) physical securities at Bank’s office in the United States and in a safe place.
5.1.9. Maintain Assets at a Mutual Fund. Maintain Assets that are mutual-fund shares in Bank’s omnibus position at the fund.
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5.1.10. Collect Income. Collect all income, principal, and other distributions due and payable on Assets. If Customer directs Bank to search the DTC’s Legal Notice System for notice that a particular Asset is in default or has refused payment after due demand, then Bank will conduct such a search and notify Customer of any such notice Bank finds therein.
5.1.11. Exchange Foreign Currency. Exchange foreign currency into and out of United States dollars through customary channels, including Bank’s foreign exchange department.
5.1.12. Advance Funds or Securities. Advance funds or securities in furtherance of settling securities transactions and other financial-market transactions under this Agreement.
SECTION 6
PERMISSIBLE INVESTMENTS; SWEEP DIRECTION
6.1. Permissible investments for the Account include, but are not limited to, any securities or property administered, advised, custodied, held, issued, offered, sponsored, supported by the credit of, underwritten, or otherwise serviced by Bank or by Bank’s affiliate.
6.2. Sweep Direction. To the extent Bank has received no investment direction as to cash Assets held in the Account, Bank will use such Assets to purchase a position in the Account’s designated sweep vehicle.
SECTION 7
SETTLEMENT
7.1. Upon receipt of directions from Customer, Bank will settle purchases made with Assets and sales of Assets on a contractual basis according to Bank’s instruction-deadline schedule and current securities-industry practices, if Bank has all the information and the Account has al l the Assets necessary for the purchase or sale. With respect to purchases and redemptions of mutual-fund shares, Customer hereby acknowledges that meeting Ba nk’s internal trading cut-off on any business day does not guarantee (i) that Bank will settle the pur chase or redemption on the same business day or (ii) if the fund has a floating or variable net asset value (“NAV”), the use of the NAV then most recently determined.
7.2. Customer hereby covenants not to (i) direct the purch ase of an asset, notify a third party that Bank will settle the purchase, or cause or permit anyone else to provide such direction or notice, if the Account has insufficient funds to settle the purchase; (ii) cause or permit proceeds from the sale of an Asset to be used to pay for the earlier purchase of the same Asset; or (iii) cause or permit the sale of an Asset that the Account has not fully paid for.
7.3. With respect to any sale of an Asset on a non-delivery-versus-payment basis, Bank hereby covenants to use commercially reasonable efforts to obtain payment on the same business day that Bank delivered the Asset, and the Account (and not Bank) assumes all risk that payment is delayed or not received.
SECTION 8
PRICE-REPORTING; CLIENT-CONTROLLED ASSETS
8.1. Price-reporting. For purposes of reporting the price of an Asset on an Account statement:
8.1.1. Pricing from Vendor or Exchange. If Bank receives a price from its third-party pricing vendor, or if a price is quoted on a National Securities Exchange, then Bank will report such price.
8.1.2. Pricing from Other Sources. If Bank does not receive a price from its third-party pricing vendor, and a price is not quoted on a National Securities Exchange, then Bank will report (i) the most recent price that Bank received from Customer or Customer’s agent (and Customer hereby covenants that Custom er and Customer’s agents will use a pricing form acceptable to Bank as the means of providing pri ces to Bank), (ii) the most recent price that Bank received from the Asset’s broker, fund accountant, general partner, issu er, investment manager, transfer agent, or other service provider, (iii) the Asset’s par value, or (iv) a nominal value for the Asset.
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8.1.3. Limitations. Customer hereby acknowledges that Bank is performing a routine, ministerial, non- discretionary price-reporting function and that the reported pri ce might be neither fair market value nor fair value (under Accounting Standards or applicable law). Customer hereby covenants not to rely on the reported price as a substitute for (i) determining the Asset’s value in connection with a decisi on to acquire, hold, dispose of, or exchange any securities or other investment property; (ii) obtaining and ensuring the reliability of an independent third-party appraisal with respect to such a decision; or (iii) obtaining Investment Advice.
8.1.4. Pricing Sources; Methodology. Upon Customer’s request, Bank will provide Customer with information about Bank’s pricing sources and methodologies.
8.2 Client-controlled Assets. Customer may direct Bank from time to time to include in the Account statements specific Client-controlled Assets that are registered in the name of Customer. In such a case, Bank has the right to exclude such assets from the Account statements or to include them with a not ation about control. To the extent Bank includes them, Customer hereby acknowledges that:
8.2.1. Customer is responsible for reviewing (i) the Account statements to ensure that they include notations about the control of each such asset and (ii) any third-party reports made accessible by Bank to ensure that they do not inaccurately identify the holder of any such assets.
8.2.2. Bank is not responsible for pe rforming any duties under this Agreement (other than statement-reporting duties, as limited herein) with respect to such assets, and Customer assumes all such duties.
8.2.3. When furnishing Account statements or ma king third-party reports accessible, Bank may rely on information provided by Customer or by Cu stomer’s agents, affiliates, or represen tatives with respect to such assets (including, but not limited to, information on the units, pri ce, or marketability of such assets) without questioning the information. To that end, Customer will cause each holder of such assets to provide Bank with a copy of such holder’s periodic Customer account statements with respect to such assets.
8.2.4. Such assets are subject to Exhibit A (Fee Schedule) hereto.
SECTION 9
LIMITATIONS ON DUTIES
9.1. Customer hereby acknowledges that Bank does not provide any services under this Agreement (i) in a “fiduciary capacity” within the meaning of 12 CFR §9.2(e) or (ii) as a “fiduciary” as such term may be defined in State law or otherwise.
9.2. The duties of Bank will be strictly limited to those set forth in this Agreement, and no implied covenants, duties, responsibilities, representations, warranties, or obligations shall be read into this Agreement against Bank. Without limiting the generality of the foregoing, Bank shall have no duty to:
9.2.1. Evaluate or to advise anyone of the prudence, su itability, or propriety of action or proposed action of Customer in any particular transaction in volving an Asset or the su itability or propriety of retaining any particular investment as an Asset; review, question, approve, or make inquiries as to any investment directions received under this Agreement; or review the securities or other property held in the Account with respect to prudence or diversification.
9.2.2. Act as trustee of the Assets.
9.2.3. Act as custodian of any assets other than the Assets.
9.2.4. Act as investment manager of the Assets, except to the extent the Assets are subject to Bank’s discretion to manage under a separate written investment-management agreement (if any).
9.2.5. Provide Investment Advice.
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9.2.6. Determine, monitor, question, or collect any contributions to the Account or monitor compliance with any applicable funding requirements.
9.2.7. Inspect, review, or examine any Client-controlled Asset or governing, offering, subscription, or similar document with respect thereto, to determine or question wh ether the asset or document is authentic, genuine, enforceable, properly signed, appropriate for the represented purpose, is what it purports to be on its face, or for any other purpose, or to execute such document, regardless of whether Bank has physical possession of such asset or document.
9.2.8. (i) Collect any income, principal, or other distribu tion due and payable on an Asset if the Asset is in default or if payment is refused after due demand or (ii) except as expressly provided herein, to notify Customer in the event of such default or refusal.
9.2.9. Provide notice of, or forward, mini-tenders (which are tender offers for less than 5% of an outstanding equity or debt issue) for any equity or debt issue.
9.2.10. Determine or question whether any direction received under this Agreement is prudent or contrary to applicable law; to solicit or confirm directions; or to ta ke notice of facts not actually known by any Bank employee with direct responsibility for providing services under this Agreement.
9.2.11. Calculate, withhold, prepare, sign, disclose, file, report, remit, or furnish to any taxing authority or any taxpayer any federal, state, or local taxes, tax returns, or information returns that may be required to be calculated, withheld, prepared, signed, disclosed, filed, reported, remitted, or furnis hed with respect to the Assets or the Account, except to the extent such duties are required by law to be performed only by Bank in its capacity as custod ian under this Agreement or are expressly set forth herein.
9.2.12. Monitor service providers hired by Customer or guarantee their performance.
9.2.13. Advance funds or securities or otherwise expend or risk its own funds or incur its own liability in the exercise of its powers or rights or performance of its duties under this Agreement.
SECTION 10
AUTHORIZED PERSONS; DELIVERY OF DIRECTIONS
10.1. Authorized Persons. With respect to this Agreement:
10.1.1. Customer will notify Ba nk of the identity of each (i) employee of Customer who is authorized to act on Customer’s behalf, (ii) third-party agent that is authorized to act on Customer’s behalf, and (iii) employee of each third- party agent who is authorized to act on such agent’s behalf. In no event is any such agent authorized to execute this Agreement or any amendment thereto or to terminate this Agreement.
10.1.2. Bank may assume that any such employee or agent continues to be so authorized, until Bank receives notice to the contrary from Customer (or, with respect to any such employee of any such agent, from such agent).
10.1.3. Customer hereby represents a nd warrants that any such employee or agent was duly appointed and is appropriately monitored and covenants that Customer will furnish such employee or agent with a copy of this Agreement, as amended from time to time. Customer hereby acknowledges that (i) such employee’s or agent’s actions or omissions are binding upon Customer as if Customer had taken such actions or made such omissions itself and (ii) Bank is indemnified, released, and held harmless accordingly.
10.2. Delivery of Directions. Any direction, notice, or other communicati on under this Agreement will be given in writing and (i) addressed as provided pursuant to this Agreement, (ii) entered into Bank’s on-line portal, or (iii) sent by Messaging System. If a direction, notice, or other communica tion was so addressed, entered, or sent, then the recipient bears no risk that the direction, notice, or other communi cation as received by the recipient was compromised by fraud.
Furthermore, any direction under this Agreement to Bank to distribute or transfer cash Assets will not be sent by email.
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SECTION 11
FEES AND EXPENSES
11.1. Fees; Expenses. Customer shall pay Bank compensation for providing services under this Agreement. A schedule of that compensation is attached as Exhibit A (Fee Schedule) hereto.
11.2. Outstanding Fees and Expenses. To the extent of any outstanding compensation, expenses, fees, costs, or other charges incurred by Bank in providing services under this Agreement, Customer hereby grants Bank a first-priority lien and security interest in, and right of set-off against, the Assets. Bank may execute th at lien and security interest, and exercise that right, at any time.
11.3. Advance of Funds or Securities. To the extent of any advance of fu nds or securities under this Agreement, Customer hereby grants Bank a first-priority lien and security interest in, and right of set-off against, the Assets. Bank may execute that lien and security interest, and exercise that right , at any time. Furthermore, nothing in this Agreement constitutes a waiver of any of Bank’s rights as a securities intermediary under Uniform Commercial Code §9-206, and Customer hereby acknowledges that the obligation to pay a purchase price to Bank arises at the time of the purchase.
SECTION 12
INDEMNIFICATION
12.1. Indemnification.
12.1.1. Customer hereby inde mnifies and releases each Indemnified Pe rson and holds each Indemnified Person harmless from and against, and an Indemnified Person will incur no liability to any person or entity for, any Harm that may be imposed on, incurred by, or asserted against an Indemnified Person by reason of the Indemnified Person’s action or omission in connection with this Agreement or the Account, except to the extent that a court of competent jurisdiction has made a final, non-appealable judgment that the Harm resulte d directly from the Indemnified Person’s willful misconduct, gross negligence, or bad faith.
12.1.2. The foregoing provisions shall survive the termination of this Agreement.
12.2. Force Majeure. No party is liable for any delay or failure in performing its obligations under this Agreement caused by wars (whether declared or not and including existing wars and the invocation of war powers), revolutions, insurrections, riots, civil commotion, acts of God, medical emergencies, disease outbreaks, accidents, fires, explosions; stoppages of labor, strikes, or other differences with empl oyees (other than Bank’s disputes with its employees); laws, regulations, orders, or other acts of any governmental authority; or any other circumstances beyond its reasonable control, regardless of whether such was already in existence as of the date of this Agreement. Nor will any such failure or delay give any party the right to terminate this Agreement.
12.3. Damages. No party is liable for any indirect, incidental, special, punitive, or consequential damages arising out of or in any way related to this Agreement or the performance of its obligations under this Agreement. This limitation applies even if the party has been advised of, or is aware of, the possibility of such damages.
12.4. Statements. Bank is not liable with respect to the propriety of Bank’s actions or omissions reflected in a statement furnished under this Agreement, except to the extent a Statement Recipient objects to Bank within thirty (30) calendar days after such statement is furnished.
SECTION 1
3 TERMINATION OR SHUTDOWN
13.1. Termination of Agreement. This Agreement terminates upon the effective date of Bank’s resignation or removal under this Agreement.
13.2. Resignation; Removal.
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13.2.1. Bank may resign under this Agreement by notice to Customer. Customer may remove Bank under this Agreement by notice to Bank. The resignation or removal shall be effective thirty (30) calendar days after delivery of the notice, except to the extent the parties agree in writing to a different effective date . By such effective date, Customer shall appoint a new custodian and notify Bank of the appointment. If Customer fails to do so, Bank shall have the right to petition a court at Account expense for appointment of a new custodian.
13.2.2. Upon receiving notice of such a ppointment, Bank will transfer Assets to the new custodian as directed by Customer or the court, as the case may be. However, Bank shall not be required to transf er any Assets until Bank has received payment or reimbursement for all (a) compensation, e xpenses, fees, costs, or other charges incurred by Bank in providing services under this Agreement and (b) funds or securities advanced under this Agreement.
13.3. Shutdown. Notwithstanding anything herein to the contrary, Bank shall have the power to segregate or restrict an asset, delay processing a direction or transaction, refuse to process a direction or transaction, or suspend the Account for one or more business days or close the Account or terminate this Agreement at any time (i) to comply with Bank’s economic sanctions or anti-money laundering policies or obligations, (ii) to safeguard against fraud, or (iii) pursuant to a court order or direction of an authorized governmental agency or as re quired by law, and Bank will incu r no liability to any person or entity for any Harm in connection with any such segregation, restriction, delay, refusal, suspension, closure, or termination.
SECTION 14
DATA PRIVACY, CONFIDENTIALITY, AND SECURITY
14.1. Definitions. For purposes of this Section:
14.1.1. “ Applicable Privacy, Confidentiality, and Security Laws” means, with respect to a party, all applicable federal, state, and local laws, rules, regulations, directiv es, and other binding requirements issued by any Governmental Authority (as defined below) pertaining to the privacy, confid entiality, or security of Confidential Information (as defined below), including, with respect to Bank, GLBA (as defined below).
14.1.2. “Confidential Information” means all information, data, document s, records, and other materials one party receives in connection with this Agreement or the Account from another party that is labeled “ Confidential Information” or should reasonably be classified by the recipient as personal or confidential information given the nature of the information or the circumstances of its receipt, other than Non-Confidential Information (as defined below).
14.1.3. “GLBA” means the Gramm-Leach-Bliley Act, 15 U.S.C. §§6801 et seq., and its implementing regulations, including Regulation P, 12 C.F.R. Part 1016.
14.1.4. “Governmental Authority” means, with respect to a party, a st ate or federal governmental entity having jurisdiction over such party with respect to the activities that are the subject matter of this Agreement.
14.1.5. “Non-Confidential Information” means information (i) of the disclosing party that was known by the receiving party without any obligation of confidentiality prior to the disclosing party’s disclosure thereof; (ii) of a party that was or becomes publicly available other than pursuant to a breach of this Agreement by the other party; (iii) of a party that was received by the receiving party in good faith on a non-confid ential basis from a third party that is not actually known to the receiving party to have disclosed su ch information in violation of a confid entiality agreement in favor of the other party; (iv) that is independently developed by o ne p
arty without use of Confidential Information; or (v) of a party that is approved for disclosure by that party.
14.1.6. “Services” means the services provided by Bank pursuant to this Agreement.
14.2. Compliance with Law. Bank hereby represents and warrants that it complies with all Applicable Privacy, Confidentiality, and Security Laws.
14.3. Privacy.
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14.3.1. Program. Bank hereby represents and warrants that it maintains an enterprise-wide privacy program that (i) complies with federal banking law and regulations and (ii) is consistent with industry standards for providers of services similar to the Services.
14.3.2. Use and Disclosure of Confidential Information. Bank will use and disclose Confidential Information only as permitted by Applicable Privacy, Confidentiality, and Security Laws and this Agreement. Upon Customer’s request, Bank will provide a monthly written report to Customer regarding how Confidential Information has been used.
14.3.3. Records Retention. Bank will maintain commercially-standard r ecords of Confidential Information for the period required by Applicable Privacy, Confidentiality, and Security Laws (or, if longer, the period required by Bank’s record-retention policy). Following the expiration of such period, Bank will, to the extent practicable, promptly destroy all Confidential Information.
14.3.4. Aggregated, Anonymized, or De-Identified Data. Customer hereby authorizes Bank to use Confidential Information in an aggregated, anonymized, or de-identified format (i) for the purpose of providing reports and analytics to other customers of Bank and to develop new products and services and (ii) for internal purposes that do not involve disclosure of such data to third parties.
14.3.5. Consents. If Customer is a “financial institution” as defined in GLBA [15 U.S.C. §6809(3)], then Customer hereby represents and warrants that Customer has obtained all consents from its customers as needed in order to permit Bank to provide the Services and to use Confidential Information as described in this Agreement.
14.4. Information Security.
14.4.1. Program. Bank hereby represents and warrants that it main tains an enterprise-wide information-security program that (i) complies with federal banking law and regulations and (ii) is consistent with industry standards for providers of services similar to the Services.
14.4.2. Safeguards. Bank will maintain physical, electronic, and pro cedural safeguards that are designed to (i) maintain the security and confidentiality of Confidential Information; (ii) pr otect Confidential Information against anticipated threats or hazards to the security or integrity of Confidential Information; and (iii) prevent unauthorized access to; unauthorized use, disclosure, or modification of; or misuse or loss of such Confidential Information that could result in substantial harm or inconvenience to Customer.
14.4.3. Notification of Breach. Within seven (7) calendar days after Bank becomes aware that Confidential Information has been compromi sed as a result of a breach of security at Bank, Bank will, to the extent permitted by law, provide written notice thereof to Customer. Such notice will include Bank’s estimate of the number of Customer’s records affected and the nature of the information exposed, together with the steps to be taken by Bank to limit such exposure and avoid a recurrence thereof. Bank will cooperate in Customer’s investigation relating to the breach and address the cause of the breach.
14.5. Business Continuity.
14.5.1. Business-Continuity Plan. Bank hereby represent s and warrant s that it maintains a business-continuity
plan that (i) complies with federal banking law and regulations and (ii) is consistent with i ndustry standards for providers of services similar to the Services.
14.5.2. Transfer of Services. In the event of a force-majeure event or a bankruptcy or insolvency of Bank that renders Bank unable to provide the Serv ices, Bank will cooperate with Customer and the replacement vendor selected by Customer to transition performance of the Services to su ch replacement vendor, including through the delivery of any Account records to such replacement vendor. However, the fo regoing will not require Bank to provide any Confidential Information of Bank to any third party unless such third party has executed a confidentiality agreement acceptable to Bank.
14.6. Audit.
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14.6.1. Third-Party Audit. Bank hereby represents and warrants that it obtains an independent auditor’s System and Organization Controls (SOC) 2 Report or its equivalent annually. Upon Cu stomer’s request, Bank will provide the most recent such report to Customer.
14.6.2. Assessment. No more than once per calendar year, Customer has the right to assess the policies, standards, and practices of Bank with respect to the performance of this Agreement, to the extent necessary to verify Bank’s compliance with the terms of this Section. Customer hereby acknowledges that information which Bank deems confidential or proprietary may not be considered necessary to verify Bank’s compliance. The assessment will be conducted during regular business hours upon not less than ninety (90) calendar days writte n notice by Customer to Bank on a date agreed upon by them. Bank will make efforts to resolve deficiencies noted as a result of such assessment in a manner commensurate to the risk those deficiencies represent.
14.6.3. Regulatory Audit. Bank hereby authorizes Customer to provide information regarding the performance of this Agreement to a Governmental Authority with authority to review Customer’s service arrangements, but only when the Governmental Authority specifically requests such information. Notwithsta nding anything in this Agreement to the contrary, Bank may disclose Confidential Information to a gove rnmental agency that regulates Bank, whether in routine disclosures or in connection with such agency’s inquiry about or examination of Bank records or otherwise, without notice to Customer.
14.7. Insurance. Bank hereby represents and warrants that (i) Ba nk maintains Cyber Liability Insurance, Bankers Professional Liability Insurance, and a Financial Institution Bond (Crime and Dishonesty Policy) and (ii) such insurance complies with federal banking law and regulations and is consistent with industry standards for providers of services similar to the Services. Upon Customer’s request, Bank will provide Customer with copies of a certificate of insurance for each form of insurance stated above.
14.8. Customer. Customer hereby represents and warrants that it (i) complies with all Applicable Privacy, Confidentiality, and Security Laws, (ii) ma intains an enterprise-wide information-secu rity program that is consistent with its own industry’s standards, and (iii) obtains an annual inde pendent risk-assessment of its information-security program.
Customer will (i) use and disclose Confidential Information only as permitted by Applicable Privacy, Confidentiality, and Security Laws and this Agreement; main tain commercially-standard records of Confidential Information for the period required by Applicable Privacy, Confidentiality, and Security Laws; and, following the expiration of such period, to the extent practicable, promptly destroy all Confidential Information; and (ii) notify Bank within seven (7) calendar days after becoming aware that Confidential Inform ation has been compromised as a result of a breach of security at Customer, cooperate in Bank’s investigation of the breach, and address the cause of the breach.
14.9. Third Party/Subcontractor. Each party hereby acknowledges that it is responsible for the actions of its officers, directors, employees, and agents with respect to the privacy, confidentiality, and security of Confidential Information.
Customer will not, and will not ask Bank to, disclose Bank’s Confidential Information to any online portal or platform maintained by any third party that Customer has hired to manage or assess Customer’s vendor due-diligence and monitoring activities, unless (i) Customer has identified the third party (a nd the portal or platform) to Bank, (ii) the third party has provided information about its information-security processes and procedures to Bank, in a form acceptable to Bank, (iii) Bank has assessed those processes and procedures, and (iv) Bank has notified Customer that such disclosure to the porta l
or platform is permitted under this Agreement.
SECTION 15
MISCELLANEOUS
15.1. Services Not Exclusive. Bank is free to render services to others, whether similar to those services rendered under this Agreement or of a different nature.
15.2. Binding Obligations. Customer and Bank each represent and warrant that (i) it has the power and authority to transact the business in which it is engaged and to execute, deliver, and perform this Agr eement and has taken all action necessary to execute, deliver, and perform this Agreement and (ii) this Agreement constitutes its legal, valid, and binding obligation enforceable according to the terms hereof.
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15.3. Complete Agreement; Amendment.
15.3.1. Complete Agreement. This Agreement contains a complete statement of all the arrangements between the parties with respect to its subject matter and supersedes any existing agreements between them concerning the subject.
15.3.2. Amendment. This Agreement may be amended at any time, in whole or in part, by a written instrument signed by Customer and Bank. Notwithstanding the foregoing, the terms of Exhibit A (Fee Schedule) hereto alone govern amendments thereto.
15.3.3. Control Agreement. Customer has the power to direct Bank to enter into a separate written control agreement with respect to the Account or any Asset. Any such control agreement prevails over this Agreement to the extent such agreements are inconsistent with each other.
15.4. Governing Law; Venue. This Agreement will be governed, enforced, and interpreted according to the laws of the State without regard to conflicts of laws, except where pre-em pted by federal law. All legal actions or other proceedings directly or indirectly relating to this Agreement will be brought in federal court (or, if unavailable, state court) sitting in the State. The parties submit to the jurisd iction of any such court in any such act ion or proceeding and waive any immunity from suit in such court or execution, attach ment (whether before or after judgment), or other legal process in or by such court.
15.5. Successors and Assigns.
15.5.1. This Agreement binds, and inur es to the benefit of, Customer, Bank, and their respective successors and assigns.
15.5.2. No party may assign any of its rights under this Agreement without the consent of each other party, which consent will not be unreasonably withheld. Customer hereby acknowledges that Bank will withhold consent unless and until Bank verifies an assignee’s identity according to Bank’s Customer Identification Program and, to that end, Customer hereby agrees to notify Bank of such assignment and provide Bank with the assignee’s name, physical address, EIN, organizational documents, certificate of good standing, and license to do business, as well as other information that Bank may request. No consent is required if a party merges with, consolidates with, or sells substantially all of its assets to another entity, provided that such other entity assumes without delay, qua lification, or limitation all obligations of that party under this Agreement by operation of law or by contract.
15.6. Severability. The provisions of this Agreement are severable. The invalidity of a provision herein will not affect the validity of any other provision.
15.7. No Third-Party Beneficiaries. This Agreement is made solely for the benefit of the parties. No person other than such parties has any rights or remedies under this Agreement.
15.8. Solvency. Customer hereby represents and warrants that Customer is neither insolvent nor subject to any pending bankruptcy proceeding. Customer will promptly notify Bank of any such insolvency or proceeding.
15.9. Tax-Lot Selection-Method. For the purpose of complying with IRS regulations requiring cost basis reporting, Customer hereby designates the tax-lot selection-method for the Account:
Minimize Gain – Shares are sold from tax lots having the highest per unit federal tax cost with a holding period of more than one year.
First In First Out (FIFO) – Shares are sold from tax lots having the earliest federal tax acquisition date.
Last In First Out (LIFO) – Shares are sold from tax lots having the most recent federal tax acquisition date.
Highest Federal Cost First Out (HIFO) – Shares are sold from tax lots having the highest federal tax cost per share.
Lowest Federal Cost First Out (LOFO) – Shares are sold from tax lots having the lowest federal tax cost per share.
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Specify Tax Lot – Shares are sold from tax lots that you specify.
Average Federal Tax Cost – Shares are sold across all tax lots using the average cost. If the Account holds investments for which this method is not permitted, the FIFO default method will be used, unless Customer directs otherwise.
Maximize Gain – Shares are sold from tax lots having the lowest per unit federal tax cost.
If the foregoing does not designate one and only one tax-lot selection-method, then Customer is deemed to have designated FIFO method. If Customer wishes to use a tax-lot selection-method that is different from what is selected above for an individual trade, then Customer may designate such other selection-method when executing the trade.
15.10. Shareholder Communications Act Election. Under the Shareholder Communications Act of 1985, as amended, Bank must try to permit direct communications between a co mpany that issues a security held in the Account (the “Securities-Issuer”) and any person who has or shares the power to vote, or the power to direct the voting of, that security (the “Voter”). Unless the Voter registers its objection w ith Bank, Bank must disclose the Voter’s name, address, and securities positions held in the Account to the Securities-Issuer upon the Securities-Issuer’s request (“Disclosure”). To the extent that Customer is the Voter, Customer hereby (i) acknowledges that failing to check one and only one box below will cause Customer to be deemed to have consented to Disclosure and (ii) registers its (check only one):
□ Consent to Disclosure.
□ Objection to Disclosure.
15.11. Tax Reclaims. To the extent Bank provides the Account with a service to minimize foreign withholding or reclaim foreign taxes withheld with respect to an Asset, Customer hereby directs Bank to disclose Customer’s name, address, and taxpayer identification number, as well as the Account’s position in the Asset, to Bank’s sub-custodians and other service providers, to the Asset’s issuer and the issuer’s agents, and to local (foreign) tax authorities as needed in order to provide such service.
15.12. Abandoned Property. Bank will escheat Assets pursuant to the applicable state’s abandoned property, escheat, or similar law, and Bank shall be held harmless therefrom. The provisions of this Section shall survive the termination of this Agreement.
15.13. Legal Advice. Customer hereby acknowledges that it (i) did not receive legal advice from Bank concerning this Agreement, (ii) had an adequate opportunity to consult an attorney of its choice before executing this Agreement, and (iii) executed this Agreement upon its own judgment and, if sought, the advice of such attorney.
15.14. Waiver of Jury Trial. Each party hereby irrevocably waives all right to a trial by jury in any action, proceeding, claim, or counterclaim (whether based on contract, tort, or otherwise) directly or indirectly arising out of or relating to this Agreement.
15.15. Legal Action. If Bank is served with any freeze order, garnis hment, levy, restraining order, search warrant, subpoena, writ of attachment or execution, bankruptcy-court order, receivership orde r, or similar order relating to the Account (each, a “Legal Action”), then Bank will, to the extent perm itted by law, use commercially reasonable efforts to notify Customer of such service. Customer will reimburse Bank for any expenses, fees, costs, or other charges incurred by Bank in responding to the Legal Action, including, but not limited to, any fees charged by an attorney of Bank’s choice. If Customer notifies Bank that Customer is seeking a protective order to resist the Legal Action, then Bank will provide reasonable cooperation at Customer’s request and sole cost a nd expense. In any event, Bank may comply with the Legal Action at any time, except to the extent Bank has received a protective order that prevents Bank from complying.
15.16. Representations and Warranties. Customer hereby covenants that, if any of the representations or warranties that it provides in this Agreement becomes in accurate or incomplete, it will promptly notify Bank thereof and of any fact, omission, event, or change of circumstances related thereto.
15.17. Publicity. No party will disclose the existence of this Agreement or any terms thereof in advertising, promotional, or marketing materials without obtaining, in each case, the prior written consent of each other party. 13 Item 18
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15.18. Counterparts and Duplicates. This Agreement may be executed in any number of counterparts, each of which shall be considered an original, but all of which together shall constitute the same instrume nt. This Agreement and any administrative form under this Agreement may be proved either by a signed original or by a reproduced copy thereof (including, not by way of limitation, a microfiche copy or an electronic file copy).
15.19. E-signature. Each party hereby (i) consents to electronically sign this Agreement, amendments thereto, and Account forms requiring its signature, but may, by notice to each other party, withdraw such consent or opt-out of electronic signing and (ii) covenants to rely on DocuSign (or another e-sign vendor as subsequently agreed upon by all parties) to facilitate any such e-signatures. The party creating the e-signed document through its account with the e-sign vendor hereby covenants to retain the authoritative copy and provide a copy to each other party. No party hereby forfeits any power to use a conventional handwritten signature as a means of signing this Agreement, amendments thereto, and Account forms.
15.20. Foreign Customer. If Customer is organized outside the U.S., th en Customer hereby acknowledges that (i) Bank has not obtained a license under the laws of Customer’s domicile to provide the services described in this Agreement and (ii) Bank has no duty to determine or question whether this Agreement or any Account transaction complies with the laws of Customer’s domicile.
15.21. Effective Date. This Agreement will become effective when all parties have signed it. The date of this Agreement will be the date this Agreement is signed by the last party to sign it (as indicated by the date associated with that party’s signature).
IN WITNESS WHEREOF, an authorized officer of each party hereby executes this Agreement on the date stated beneath that party’s signature.
CUSTOMER: ________________________________________________
By: ________________________________________________
(Signature of Customer’s authorized officer)
________________________________________________
(Printed name of Customer’s authorized officer)
Its: ________________________________________________
(Title of Customer’s authorized officer)
Dated: ________________________________________________
U.S. Mail Address:
______________________________________________________
______________________________________________________
______________________________________________________
Email Address:
______________________________________________________
U.S. BANK NATIONAL ASSOCIATION
By: ________________________________________________
(Signature)
________________________________________________
(Printed name)
Its: Vice President and Relationship Manager
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Dated: ________________________________________________
U.S. Mail Address:
______________________________________________________
______________________________________________________
______________________________________________________
Email Address:
______________________________________________________
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FEE SCHEDULE
This Fee Schedule relates to the U.S. Bank National Association (“USB NA”) Institutional Trust & Custody division (“IT&C”) account identified below (such account, including any sub- accounts therein, the “Account”) and is effective as of _7/1/2024__ (date) (or, if no date is entered there, then the effective date of the Account’s governing trust or custody agreement ) (the “Fee Schedule’s Effective Date”).
Account Name: _ City of Palo Alto________________________________________________________________________ _____ Account Number: __6736304270________________________________________________________________________________
USBNA; Elavon Financial Services DAC (“ El
avon”); PFM Asset Management LLC (“ PFMAM”); PFM Fund Distributors, Inc. (“PFMFD”); U.S. Bancorp Asset Management, Inc. (“USBAM”); U.S. Bancorp Fund Services, LLC (“USBFS”); and U.S. Bank Global Fund Services (Cayman), (Guernsey), and (Ireland) Limited and (Luxembourg) S.a.r.l. (“ USBGFS”) are affiliates of U.S. Bancorp (collectively with U.S. Bancorp, " U.S. Bank "). This Fee Schedule, together with the service contract(s) between the Customer (as defined below) and USBNA regarding the Account (“Account’s Governing USBNA Service Contract(s) ”), describes services that U.S.
Bank expects to provide to the Account pursuant thereto and compensation that U.S. B ank expects to receive therefor:
Acc
ount Profile (Part A): Describes the Account and U.S. Bank’s role with respect to the Account.
Account-level Fees (Part B): Describes fees U.S. Bank receives directly from the Account (the “Account Fees”).
Fund-level Fees (Part C): D escribes fees the Account pays on the investment of Account assets in open -end investment companies registered under the Investment Company Act of 1940 (“ Mutual Funds”), 3(c)(1) or (7) funds (“ Private Funds”), Undertakings for Collective Investment in Transferable Securities funds (“UCITS”), and Alternative Investment Fund Managers Directive funds (“AIFs ”) (each of the foregoing, a " Fund") (the “ Fund Fees”) and fees U.S. Bank receives from those investments or their agents (“U.S. Bank Revenue Share”).
Other Compensation (Part D): Des cribes compensation that U.S. Bank receives other than Account Fees or U.S. Bank Revenue Share (“Other Compensation”).
Changes (Part E): Describes circumstances under which this Fee Schedule may be changed.
Approval (Part F): Provides the customer’s approval of the fees described herein.
ACCOUNT PROFILE (PART A)
If the Account is a USBNA trus t account, then the undersigned is the trust’s grantor; if the Account is a USBNA custody account, then the undersigned is the Account’s owner ( such undersigned, the “ Customer”). USBNA h as no discretion to invest Account assets (a “Directed Account”).
ACCOUNT-LEVEL FEES (PART B)
The Account Fees, which are in addition to Fund Fees and are paid directly to USBNA, are as follows . For a complete description of services that U.S. Bank expects to provide to the Account, see the Account’s G overning USBNA Service Contract(s).
Administration fee Provide account administration. The administration fee is calculated in tiers:
(FOR A _0.5__ bp s on the first $ _500 million__of Account assets USBNA CUSTODY ACCOUNT): _0.25_ bps on the balance of Account assets
Foreign Securities. For Account assets invested in foreign securities other than Eur
oclear-eligible securities, U.S. Bank provides account administration by way of a sub-contract (the “Foreign -securities Custody Agreement ”) between USBNA and a foreign-securities custodian (the “Foreign-securities Custodian”). The name, address, and principal place of business of the Foreign-securities Custodian (and the name and address of the regulatory authority that supervises or regulates it) can be obtained upon request from the Customer’s Relationship Manager at USBN A. Acco unt assets invested in any foreign securities are excluded from the fee- tiers above, the fee-rates on such assets are instead set forth in the U.S. Bank Institutional Trust & Custody Global Fee Schedule (the “Global Fee Schedule”), and the fee for such assets is based on Account assets invested in the applicable country. (U.S. Bank compensates the 16 Item 18
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For
eign-securities Custodian from U.S. Bank’s own fees; the Account does not pay fees in addition to the fees stated herein in connection with services provided by the Foreign-securities Custodian.)
Securities-transfer fees: Transfer DTC-eligible securities (including ETFs), Fed book -entry securities, or domestic open-end mutual funds:
Free receipts (pe r security) Included
Free deliveries (per security) Included
Trade-processing fees: Process purchases, sales, or other transactions with respect to Account assets:
DTC-elig
ible securities, including ETFs (per transaction) Included Fed book-entry securities (per transaction) Included
Domestic open-end mutual funds (per transaction) Included Foreign securities (per transaction) See the Global Fee Schedule.
Certificates of deposit (p er set-up, deposit, or withdrawal) Included Closely-held or restricted stock (per transaction) Included Derivatives: Forwards, futures, options, or swaps (per transaction) Included I nsurance or annuity contracts (per set-up or transaction) Included Non-marketable/physical not otherwise listed here (per transaction) Included Real-estate deeds, leases, or mortgages (per set-up or transaction) Included
Distribution fees: Distribute Account cash:
ACH payment to DDA at USBNA (per ACH payment) Incl
uded
ACH payment to non-USBNA DDA (per ACH payment) Included Check (per check) Included
Wire to domestic location (per wire) Included
Wire to international location (per wire) Included
Foreign-exchange fees : Execute foreign -currency exchange (“ FX”) transactions related to Account assets invested in foreign securities. A spread-fee is built into the exchange rate for each FX transaction; reduces the amount of foreign securities purchased, the amount of proceeds from the sale thereof, or the amount of entitlement payments received with respect thereto, as the case may be; and varies from FX transaction to FX transaction, based on current market conditions . In addition, each FX transaction is subject to trade-processing fees at the applicable rate set forth in the Global Fee Schedule.
Cla
ss-actions fees: File proofs of claim regarding class-action litigation over the Account’s securities:
Filing fee (per filing) $_25__
Recovery fee (per recovery) _2__% of recovery
Maximum recovery fee (per recovery) $_2,000
Asset-holding fee: Hold assets (per year):
Commingled funds (CI Ts/CTFs), LPs, or hedge funds (per holding) Included Insurance or annuity contracts (per contract) Included
Private equity/debt or other commitment-based funds (per holding) Included Real-estate deeds, leases, or mortgages (per deed, lease, or mtge.) Included Syndicated bank loans (per loan) Included
Securities-intermediary fee: Serve as securities intermediary with respect to the Account under a control agreement (per control agreement per year): $_2,5 00 For a complete description of services that U.S. Bank expects to provide to the Account, see the governing control agreement(s).
ADR tax services: Provide the Account with a service to minimize foreign tax withholding or to reclaim foreign taxes withheld with respect to ADRs (per year) $250
Contract-negotiation fee: Cons ider the Customer’s proposed edits to USBNA’s standard service contract(s) (per contract) $_2,500
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Ext
raordinary-services fee: Provide services described in neither this Fee Schedule nor the Account’s G overning USBNA Service Contract(s). The extraordinary -services fee will be calculated at an hourly rate or be a flat fee. USBNA will obtain the Customer’s consent to the fee.
Minimum Relationship Fees. The Account is subject to minimum relationship fees. For each billing period, they apply as follows.
Star
t with the minimum annual relationship fees stated above. Prorate that amount to reflect the length of the billing period elected below (the “Minimum Relationship Fees”). Find the sum of the Account Fees (other than the Minimum Relationship Fees) and the account fees owed with respect to the Customer’s other Institutional Trust & Custody division accounts (excluding accounts that hold plan assets) for the billing period (the “Actual Relationship Fees”). If the Actual Relationship Fees are less than the Minimum Relationship Fees, then the Account Fees for the billing period are the Account’s proportionate share of the Minimum Relationship Fees (rather than the Account Fees otherwise disclosed under this Fee Schedule). That proportionate share is based on relative account balances as of the end of the billing period or over the billing period, as applicable based on the balance method elected below.
Man
ner of Receipt. Account Fees will be calculated (check one and only one):
Monthly.
Quarterly.
Any asset-based Account Fees will be based on (check one and only one): the applicable Account balance (or portion thereof) as of the end of the billing period / the average applicable Account balance (or portion thereof) over the billing period. (The asset values used in such calculation may vary from the asset values reported on an asset statement because of timing issues, such as the posting of accruals or the late-pricing of securities.) Account Fees will then be (check one and only one):
Billed and invoiced to the Customer with instructions on how to remit payment. The Customer hereby acknowledges that U.S. Bank may charge such fees to the Account if the Customer has not paid the invoice within sixty (60) calendar days of receiving it.
Charged to the Account, with a subsequent advice to the Customer about the charges. (This option is unavailable if the Account is a USBNA trust account and the trust’s beneficiary intends to seek credit for reinsurance in respect of the trust.)
FUND-LEVEL FEES (PART C)
Fund Fees. Fund Fees, and U.S. Bank Revenue Share, are based on investment in a Fund and may vary by Fund and by class of shares or units issued by the Fund. Fund Fees are charged against the Fund's assets and reduce the Funds' average daily balance and investment yields. U.S. Bank Revenue Share is paid indirectly from the Fund Fees and is not in addition to the Fund Fees.
Additional Investment -Rel
ated Information. See a Mutual Fund’s or UCITS’s prospectus ; a P rivate Fund’s or AIF’s governing documents (such as a limited liability company agreement, limited partnership agreement, trust agreement, or declaration of t rust), offering documents (such as an offering circular, offering memorandum, private placement memorandum, prospectus, or summary description), and subscription documents (such as an adoption agreement or subscription agreement); and any Fund’s fund- fact sheet (collectively, as applicable, the “Fund-Issuer’s Disclosure”) for Fund details not reflected in this Fee Schedule. See, especially, sections thereof regarding fees, expenses, additional compensation, and payments to financial intermediaries.
First American Funds. US
BAM is the investment advisor to the Mutual F unds in the First American Funds, Inc. family (the " First American Funds"). First American Funds issue shares in multiple classes, and their fees may vary by class. U.S. Bank may enter into agreements with First American Funds or with First American Funds’ service providers (including investment advisers, administrators, transfer agents, or distributors) whereby U.S. Bank provides services to the First American Funds, including, as applicable, services provided by USBAM (investment advisory, shareholder services), by USBNA (custody, securities-lending), and by USBFS (accounting, administration, transfer agency), and receives fees for these services from the Fund or the Fund’s sponsor or agent. Prospectuses for First American Funds are available at https://www.firstamericanfunds.com/index/FundPerformance/ShareholderDocuments.html .
PFMAM Funds . PFM A
M is the investment advisor to the Mutual F unds in the PFM Multi -Manager Series Trust (the "PFMAM Funds"). U.S. Bank may enter into agreements with PFMAM Funds or with PFMAM Funds’ service providers ( including investment advisers, administrators, transfer agents, or distributors) whereby U.S. Bank provides services to the PFMAM Funds , including, as applicable, services provided by PFMAM (investment advisory), by USBNA (shareholder services), and by PFMFD (distribution), and receives fees for these services from the Fund or the Fund’s sponsor or agent. Prospectuses for PFMAM Funds are available at https://mmst.pfmam.com/forms-docume nts.
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Ot
her Mutual Funds. U.S. Bank may enter into agreements with M utua l Funds other than First American Funds or PFMAM Funds (“Other Mutual Funds”) or with Other Mutual Funds’ service providers (including investment advisers, administrators, transfer agents, or distributors) whereby U.S. Bank provides services to the Other Mutual Funds, including, as applicable, services provided by USBNA (custody, securities lending, shareholder services , National Securities Clearing Corporation (NSCC) networking) and by USBFS (accounting, administration, transfer agency ), and receives fees for these services from the Fund or the Fund’s sponsor or agent.
Prospectuses for Other Mutual Funds are available at https://www.sec.gov/edgar/searchedgar/prospectus.
Private Funds. U.S. Bank may enter into agreements with Private Funds or with their service providers, whereby U.S. Bank provides services to such Funds, including, as applicable, services provided by USBNA (custody) and by USBFS (accounting, administration, shareholder services, transfer agency), and receives fees for these services from the Fund or the Fund’s sponsor or agent.
UCITS and AIFs. U.S. Bank may enter into agreements with UCITS or AIFs or with their service providers, whereby U.S. Bank provides services to such Funds, including, as applicable, services provided by Elavon (depositary) and USBGFS (accounting, administration, shareholder services) and receives fees for these services from the Fund or the Fund’s sponsor or agent.
O
THER COMPENSATION (PART D)
Float Income. USBNA may hold (i) cash awaiting either investment or distribution to proper recipients or (ii) funds held for other purposes (for example, pending investment following a trade fail, because funds were received too late to be posted the same day, or pursuant to an investment direction) in a noninterest-bearing deposit account at USBNA and, thereby, earn and retain income on the float as part of its fees for servicing the Account.
Expenses. Expenses, fees, costs, and other charges incurred by USBNA in providing services under the Account’s Governing USBNA Service Contract(s) are expenses of the Account.
Advance of Funds. If USBNA advances funds in furtherance of settling the redemption of Fund shares or units, then the yield, if any, paid on the shares or units that were treated as redeemed is retained by USBNA as part of its fees for servicing the Account.
Foreign Securities or Deposits. In connection with the Account’s global activity, USBNA may hold cash in the form of U.S. dollars or foreign currency in a deposit account at a bank other than USBNA . For example, cash may be held pending settlement of an FX transaction or a foreign-securities purchase. Interest, if any, earned on such deposits is retained by USBNA as part of its fees for servicing the Account.
External Insured Deposit Pro
gram. If the Account participates in an insured deposit program offered by an external cash manager (the “Program Manager”), then USBNA transfers Account assets as directed under the program to and from deposit accounts at banks other than USBNA and receives fees from the Program Manager for making the transfers. The Program Manager and fee are as follows:
Program Manager’s full legal name:
Program Manager’s employer identification number:
_____ bps on Account assets held by USBNA in such deposit accounts Furthermore, the Program Manager receives a portion of any interest earned on such deposits, thereby reducing the amount of interest credited to the Account. For a complete description of the Account’s participation in the program, see the Program Manager’s agreement with respect to the Account.
CHANGES (PART E)
USBNA may amend this Fee Schedule by delivering to the Customer an amended and restated Fee Schedule (or another written notice of the change). If the Customer does not deliver a written objection to USBNA within thirty (30) calendar days thereafter, USBNA will treat the Customer’s silence as approval.
APPROVAL (PART F)
The Customer hereby acknowledges that it:
● is independent of U.S. Bank and has authority to enter into, extend, and renew contracts for the services described herein and to select the investments and approve the fees described herein.
● received, read, understands, and executed the Account’s Governing USBNA Service Contract(s).
● will obtain, read, and understand the Fund-Issuer’s Disclosure for a Fund before selecting the Fund, including, but not limited to, the sections thereof describing fees, expenses, and compensation, and acknowledges that the purchase or sale of Fund shares or units is subject to the terms of the Fund-Issuer’s Disclosure.
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● expect
s to (che ck one and only one) cause or permit the Account to acquire foreign securities and received, read, and understands the Global Fee Schedule / neither cause nor permit the Account to acquire any foreign securities.
● underst
ands and approves the services and fees described herein, including the Account Fees, the Fund Fees for each Fund, U.S. Bank Revenue Share for each Fund, and the Other Compensation.
● agrees to the process described herein for amending this Fee Schedule.
● may contact its Relationship Manager at USBNA regarding this Fee Schedule.
● FOR AN ACCOUNT WHERE A U.S. BANK- AFFILIATED REGISTERED INVESTMENT ADVISER IS THE ACCOUNT’S INVESTMENT MANAGER, understands that USBNA waives any securities -transfer, trade- processing, foreign-exchange, corporate -actions, class -actions, asset -holding, ADR-tax-services, foreign-securities-or-deposits, or external-insured-deposit-program fees described herein.
The Customer hereby executes this Fee Schedule.
Customer: _City o
f Palo Alto________________________________________
By: _______________________________________________________ (Signature of Customer’s authorized officer)
_______________________________________________________ (Printed name of Customer’s authorized officer)
Its: _______________________________________________________ (Title of Customer’s authorized officer)
Dated: _______________________________________________________
Shares of registered investment companies, and units of private funds, are not deposits or obligations of, or endorsed or guaranteed in any way by, any bank, including any bank affiliated with U.S. Bancorp. Nor does the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other governmental agency insure such products. An investment in such products involves investment risks, including the possible loss of principal, due to fluctuations in each product's net asset value. Deposit products are offered by U.S. Bank National Association, member FDIC.
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CUSTODY AGREEMENT
Exhibit A (Fee Schedule)
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May 01, 2024
City of Palo Alto
250
Hamilton Avenue, 4th Floor
Palo Alto,
CA 94301
Re: Contact for Treasury Management Services and Pricing (City of Palo Alto Contract No. C24189061, Amendment No. 1) We are pleased to extend the term of the contract with the City of Palo Alto at the pricing for the de posit a nd treasury ma
nagement services as described on the Wells Fargo Treasury Management Pro posal, Pricing as of Ma y 2024, which is a
ttached hereto as Exhibit 1, for one (1) te rm of one year, effective as of June 1, 2024, through June 30, 2025.
Additional fees will apply to new de posit and treasury management ser vices not described on Exhibit 1, We will provide information regarding those fees in connection with the implementation of any such additional services. We reserve the right to modify pricing to re flect the impact of a ny c hanges in law, reg ulations or interpretations thereof. We also reserve the right to ch
ange our pricing methodology, inc lud ing element IDs for a particular service, so long as th e change does not increase the total price of such service to you (u nless permitted under t he im mediately preced ing sentence).
This
letter agreement along with your Master Agreement for Treasury Management Service signed 10/01/2020, attache d heret
o as Exhibit 2, and other Service Documentation (as tha t term is de fined in the Master Agreement for Treasury Ma
nagement Serv ices) applicable to your accounts and treasury management serv ices provided as described on Exhibit 1, which is incorporated by reference, will constitute the contract governing our deposit a nd treasury management services re
lationship. The Service Documentation, including th e S ervice Descriptions for the treasury mana gement services you are enr
olled in are posted at our Vantage portal. If at the end of thi s e xtended contr act term, the contract is not extended or renewed by your and ou r mutual agreement or othe rwise terminated in accordance with the Service Documentation, the Service Documentation will remain in effect, and we will notify you of change s to pricing for the deposit accounts and treasury management services.
If you agree, please sign, date, and return t his agreement below. Thank you for yo ur b usiness and continued partnership with Wel
ls Fargo Bank. Please feel free to call me with any questions.
Sincer
ely,
Dale Ba
rton
Director, Relationship Manager
415-940-1023
Acknowledged and Agreed:
City of Palo Alto
By:
Name:
Title:
Date:
APPROVED AS TO FORM:
__________________________
City Attorney or designee
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Exhibit 1
Wells Fargo Treasury Management Proposal, Pricing as of May 2023 (Attached)
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© 2023 Wells Fargo Bank, N.A. All rights reserved.
Revised: April 4, 2023
Master Agreement for
Treasury Management Services
The Service Documentation contains the terms under which Wells Fargo Bank, N.A. and the banks, branches or subsidiaries listed in Appendix X (collectively, "Bank") provide you treasury management services (each a "Service"). "You," "your" or "yours" refer to the Bank customer identified on the Acceptance of Services that is signed when you enroll in a Service ("Acceptance"). The terms "we," "us," or "our" refer to the Bank. Other capitalized terms used in this Master Agreement for Treasury Management Services ("Agreement") are defined in this document.
You and we agree:
1. Service documentation. The Service Documentation contains the terms governing each Service and includes:
a. The Service Description (which contains terms and conditions applicable to the specific Service), b. The Acceptance (which indicates your acceptance of the Service Documentation), c. This Agreement (which contains terms and conditions applicable to all Services), d. The account agreement governing the account(s) (each, an "Account") you use in connection with the Service, e. The Product Enrollment Form (which contains set-up information for each Service in which you are enrolling), and f. User Guides (which include our vendors' and our documentation related to the installation, set-up function, features, operation, use, pricing or other aspects of the Services, including Terms of Use, software, software licenses, price schedules, specifications, instructions, and notices).
The documents and individual provisions of the Service Documentation are intended to be read together as one agreement between you and us. This Agreement and the Service Descriptions for Services you enroll in are posted on Wells Fargo Vantage
SM ("Vantage") f/k/a Commercial Electronic Office® (CEO®) . If there is a conflict among the documents that are part of the Service Documentation, they will govern in the order listed above. Your use of a Service confirms your receipt of, and agreement to be bound by, this Agreement and all Service Documentation.
2. Services. You and we will agree upon the Services to be provided and the start date for each Service. Each Service is subject to the approval by our applicable branch or subsidiary. We will notify you when you have completed all requirements for enrolling in the Service and the Service is ready for you to use.
3. Changes to services. We may change (or add to) the terms and fees in the Service Documentation at any time. If a change to a Service requires a change to the Service Documentation, we will post the document(s) with the change on Vantage. When required by Applicable Law, we will notify you of the change. If you continue to use a Service after a change takes effect, you will be bound by the change. As used in this Agreement, the term "Applicable Law" means all applicable laws (including common or customary laws), statutes, constitutions, policies, decrees, judgments, treaties, regulations, directives, by-laws, rulings, orders or operating circulars governing our activities and/or any Transaction (see section 6-a) governed by this Agreement, including, but not limited to, the funds transfer system and clearing and settlement house rules.
4. Term and termination. Unless a Service is terminated in accordance with the Service Documentation, this Agreement and each Service will continue in effect until terminated by either party upon 30 days' prior written notice to the other party. When a Service is terminated for any reason, the Service Documentation governing the terminated Service is also terminated.
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We may suspend or terminate any Service:
a. After we notify you of a breach of any provision of the Service Documentation or any other agreement with us, and you fail to cure the breach (if it can be cured) within 15 days of the date of the notice; or b. Without prior notice to you if:
i. We reasonably suspect that an Account associated with a Service has been compromised or otherwise subject to irregular, unauthorized, fraudulent, or illegal activity, ii. You become subject to any insolvency or bankruptcy proceeding, or any receivership, liquidation, reorganization, or other similar proceeding, or you enter into any agreement or proceeding for voluntary liquidation, dissolution, composition with or assignment for the benefit of creditors or other winding up, iii. We determine in our sole discretion that continuing to provide a Service may place us at risk of financial loss or result in an unacceptable credit exposure,
iv. Any guaranty of your obligations to us ("Guaranty") is terminated, revoked, or its validity contested by the guarantor ("Guarantor"),
v. We determine in our sole discretion that a material adverse change has occurred in your ability to perform your obligations under the Service Documentation, or in the ability of a Guarantor to perform its obligations under a Guaranty, or
vi. The Account necessary to provide a Service is closed.
The termination of a Service will not affect your or our respective rights and obligations with respect to the Service(s) provided before the termination including without limitation Transactions. We will not be liable to you for any losses or damages you may incur as a result of any termination of any Service or termination or restriction of any Vantage access rights under section 9(d) below.
5. Service fees. You will pay us the fees described in the Service Documentation and any taxes applicable to each Service, however designated, but excluding taxes based on our net income. We may debit your Account for any fees not covered by earnings credits and any taxes that are due, or we may send you an invoice for these amounts, which you will promptly pay. Our charges and fees are in the applicable fee schedule for Services used in connection with your Account.
6. Security procedures.
a. Unless otherwise agreed, you agree that "Security Procedure" is the applicable security procedure described in the Service Documentation for your Initiation Method for the Service, which we will use to verify the authenticity of a Transaction. The term "Initiation Method" refers to the method we offer in the product enrollment form ("Set-up Form") or other Service Documentation for delivering your Transaction instructions to us with respect to the applicable Service and includes any applicable transmission protocols. The term "Transaction" means (i) any funds transfer, payment order, or payment instruction (including any communication cancelling or amending an instruction), and (ii) any instruction, data or other information which we receive in your name with respect to a funds transfer. The purpose of the Security Procedure is to verify the authenticity of the Transaction. We will not use the Security Procedure to detect an erroneous or duplicate Transaction. You will be responsible for any erroneous or duplicate transaction we receive in your name. You agree to be bound by each Transaction, whether or not authorized by you, issued in your name and accepted by us in compliance with the Security Procedure for the Service.
b. You agree that each Security Procedure for the Initiation Method in the Set-up Form or other Service Documentation for each of the Services (a) best meets your requirements with regard to the size, type and frequency of your Transactions, and (b) is commercially reasonable.
7. Confidential information. Unless otherwise stated in the Service Documentation, "Confidential Information" means all (a) User Guides, (b) Security Procedures, passwords, codes, security devices and related instructions and technical and non-technical information and intellectual property rights relating to our vendors' or our technology, IT infrastructure or data security, including trade secrets, systems information security program or processes, SSAE or SOC reports, and testing procedures or results. You will not acquire any ownership interest in or rights to Confidential Information as a result of your use of any Service.
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You will:
a. Maintain the confidentiality of the Confidential Information, b. Not disclose (or permit your employees or agents to disclose), copy, transfer, sublicense, or otherwise make any of it available to any person or entity, other than your employees who have a need to use the Confidential Information in connection with the applicable Service, and c. Not decompile, reverse engineer, disassemble, modify, or create derivative works of any Confidential Information.
You will notify us immediately if you know of or suspect any unauthorized disclosure, possession, use, or knowledge (each, an "Unauthorized Use") of any Confidential Information. If you (or your employees or agents) are responsible for the Unauthorized Use, you will, at your expense, promptly take all actions, including initiating court proceedings to recover possession and prevent further Unauthorized Use of the Confidential Information. You will also compensate us for any injury caused to us as a result of the Unauthorized Use.
8. Currency conversion. When your instructions require us to convert the amount of a Transaction from the currency in which the Account is denominated ("Account Currency") to another currency ("Foreign Currency"), we will do so using the Applicable Exchange Rate in effect at the time we execute your Transaction. "Applicable Exchange Rate" means the exchange rate we set and use for you when we convert one currency to another currency and includes a markup. The markup factors include costs incurred, market risks and our desired return. The exchange rate we provide to you may be different from the exchange rates you see elsewhere. Foreign exchange rates are dynamic, and rates fluctuate over time based on market conditions, liquidity, and risks.
If a financial institution designated to receive the funds does not pay the beneficiary specified in the Transaction, and the funds are returned to us, we will not be liable to you for a sum greater than the amount of the Transaction after we have converted it from the Foreign Currency to the Account Currency using the Applicable Exchange Rate in effect at the time the funds are returned to us. You accept the risks of any change in the Applicable Exchange Rate between the time you request a Transaction and the time the Transaction is either completed or is unwound due to a cancellation, an amendment, a rejection, or a return.
9. Vantage .
a. Description of Vantage. Vantage is our electronic banking platform that is accessed through the Internet. Your Authorized Agents (defined below) may use Vantage to access (i) Services in which you have separately enrolled and (ii) third-party sites we may make available through Vantage. We offer different channels through which you may access Vantage, including personal computers and mobile devices. We may add or eliminate channels at any time. A Service or third party site accessible through one channel may not be accessible through another channel.
b. Access to Vantage. When you enroll in Vantage, and as we may determine is necessary after enrollment, we will provide Log-On Credentials (defined below) to the persons who are authorized to access Vantage on your behalf (each, an "Authorized Agent"). Log-On Credentials mean one or more secure methods we provide to access the Services and may include user IDs, passwords, token IDs, and other methods that we adopt from time to time.
We have no obligation to separately verify or authenticate any communication we receive in your name through Vantage, whether or not it was actually from an Authorized Agent. You assume the entire risk of (i) unauthorized use of your Log-On Credentials and (ii) unencrypted electronic transmissions. c. Administration of Vantage. We offer two options for administering Vantage: (i) Administration and (ii) Bank administration.
i. Administration. If you enroll in the Administration option, there are three categories of Authorized Agents:
Company Administrator, Administrator, or User. Unless you and we separately agree, we will provide Log-On Credentials only to your initial Company Administrator(s) who will (a) assign Log-On Credentials to other individuals and (b) designate those individuals as one of the following:
(1) A Company Administrator, who may perform all functions of your initial Company Administrator,
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(2) An Administrator, who may perform all functions of an Administrator including designating other Administrator(s) and User(s), or
(3) A User, who may access the Services designated by a Company Administrator or an Administrator, as well as those Services in which we permit a User to self-enroll.
Each Company Administrator and Administrator has the authority to enroll you in additional Services. In addition to your use of Administration as described in this subsection, you may request that we assign Log-On Credentials to Users that you designate in writing to us. Your designation to us will specify the Services which the User is authorized to access in addition to those Services in which we permit a User to self-enroll.
ii. Bank administration. For the Bank administration option, there is one category of Authorized Agent:
Users. We will assign Log-On Credentials to each User you designate.
You will promptly revoke the Log-On Credentials of any Authorized Agent or User when that individual is no longer authorized to access Vantage. If you notify us in writing to revoke the Log-On Credentials of an Authorized Agent or User, we will have a reasonable time after receiving your written notification to revoke the individual's access.
d. Terminating access. We may terminate or restrict any Authorized Agent's access to any Service through Vantage if we determine such use:
i. Does not comply with any term applicable to Vantage, ii. Is not permitted by Applicable Law,
iii. Is not authorized by you or any third party whose authorization we believe is necessary, or iv. Should be denied for your or our protection (without us agreeing to or being required to make this determination in any circumstance).
e. Financial information. Financial market data, quotes, news, research, and other financial information developed by third parties and transmitted to us ("Financial Information") may be available to you at Vantage. The posting of any Financial Information or any other information or data at Vantage is not a recommendation by us of any particular Service or action. We do not guarantee the accuracy or completeness of any Financial Information, nor are we responsible for (i) the actions or omissions of the third parties developing or transmitting Financial Information or (ii) any decision you make or action you take by relying on any Financial Information. f. Miscellaneous. For purposes of this section 9 only, "Service" includes each service and product we or any of our affiliates offer that you access through Vantage. This section 9 will survive the termination of any Service or this Agreement.
10. Alerts.
a. Non-subscribed alerts. When you enroll in Vantage or other channels or Services, you consent to receiving by email or other delivery channels, servicing messages that we determine are important or urgent. You do not need to subscribe to receive such alerts and you do not pay additional service fees. b. Subscribed alerts. You may also enroll in fee-based alerts for applicable Services so that you can receive messages you subscribe to at the intervals and through delivery channels that you choose.
11. Liability and indemnification.
a. We are not obligated to honor, in whole or in part, any Transaction or other instruction that:
i. Exceeds the available balance in the Account, unless otherwise provided in the Service Documentation, ii. Does not comply with the Service Documentation or our applicable policies, procedures, or practices made available to you,
iii. We have reason to believe may not have been duly authorized, should not be honored for our or your protection, or involves funds subject to a hold, dispute, restriction, or legal process, or iv. Would possibly result in us not complying with Applicable Law. b. Neither we nor our software vendors make any express or implied representations or warranties with respect to the Services or any software used in connection with the Services, including any warranty as to the merchantability or fitness for a particular purpose, other than those expressly set forth in the Service Documentation.
6 Item 18
Attachment D - Wells
Fargo Agreement for
Lockbox and Related
Services
Item 18: Staff Report
Pg.
160
Packet Pg. 345 of 946