Remittance Processing Services Agreement - Heritage Bank of Commerce and National Processing Co.
REMITTANCE PROCESSING SERVICES AGREEMENT
This REMITTANCE PROCESSING SERVICES AGREEMENT ("Agreement") is made this
1st day of December, 1997, by and between HERITAGE BANK OF COMMERCE, a
California corporation ("Customer") and NATIONAL PROCESSING COMPANY, who is
engaged in the processing and transmission of data exclusively of a financial,
banking or economic nature, 1231 Durrett Lane, Louisville, Kentucky 40285, a
Kentucky corporation ("NPC").
1. Scope of Services. NPC shall provide the services set forth in the
Services & Fees Schedule attached hereto as Exhibit A. Beginning on the date set
forth in the Services & Fees Schedule, Customer shall cause certain invoices and
payments ("Documents") to be mailed to the NPC processing site designated in the
Services & Fees Schedule. Sample Documents are attached to the Services & Fees
Schedule. NPC shall process the Documents according to the procedures and
timeframes set forth in the Operating Procedures, which Operating Procedures
shall be provided by NPC within thirty (30) days of the execution of this
Agreement and may be modified from time to time in writing signed by both
parties. Deposits shall be subject to collection and shall not be available for
withdrawal until funds are deemed collected by the depository bank and, if
applicable, until transferred as collected funds to Customer's disbursement
account as indicated in the Services & Fees Schedule. If funds are withdrawn
prior to collection, Customer agrees to reimburse NPC for interest costs at the
365-day prime rate for the month. NPC shall obtain a demand deposit account in
Customer's name to be used for lockbox deposits and adjustments. Customer shall
notify NPC at least ninety (90) days in advance of any change in the form of its
customer payments, invoices or envelopes or the regular monthly mailing schedule
or volume of Documents or any system or other changes which would affect the
processing of the Documents ("Documents/Processing Changes"). NPC shall admit
properly identified and authorized Customer employees onto its premises for
purposes of monitoring compliance with this Agreement, provided that such
persons shall not include any employee or other agent of any competitor of NPC.
Admittance will be allowed during normal processing hours (without notice), and
shall not interfere with NPC's operations.
2. Fees. Customer shall pay to NPC processing fees in accordance with
the Services & Fees Schedule. All fees specified in the Services & Fees Schedule
are based upon the volume thresholds and other conditions set forth therein.
Customer shall pay the fees for the designated volume threshold reflected in the
Services & Fees Schedule for each month in which the volume of Documents falls
below such threshold. For purposes of calculating fees a standard term is
defined as a machine-readable remittance document whose quality generates
normal rejection rates not to exceed two percent (2%) of the monthly scanned
documents volume. If the reject rate exceeds two percent (2%) in any calendar
month, Customer shall be subject to the OCR reject rate surcharge set forth in
the Services & Fees Schedule. Each credit to a customer account shall be
considered a separate remittance, notwithstanding that a single check or other
vehicle of payment may cover more than one such credit. Certain fees, as
indicated on the Services & Fees Schedule, are based on charges by the Federal
Reserve, FDIC and/or other depository institutions and are subject to change.
NPC shall inform Customer promptly of any changes in such fees. NPC shall
invoice Customer monthly for processing and other services according to the
Services & Fees Schedule and initiate an electronic debit to the Customer's
demand deposit account identified in the Fee Schedule for the amount of such
invoice. Customer hereby authorizes NPC to initiate such debit to Customer's
demand deposit account each month. Each invoice shall reflect credit for
collected balances, if applicable. A late charge equal to one and one-half
percent (1 1/2%) per month shall be imposed on all accounts remaining unpaid for
more than thirty (30) days after the date of the invoice for any reason,
including failure or rejection of an ACH transaction. NPC may modify the fees in
the Services & Fees Schedule from time to time upon thirty (30) days notice to
Customer in order to fairly reflect any change in NPC's costs attributable to
any Client initiated Document/Processing Changes or any changes in applicable
law. NPC may also modify the fees to the Services & Fees Schedule upon each one
(1) year anniversary of the execution of this Agreement and upon each renewal of
this Agreement with sixty (60) days written notice to Customer.
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No fee increase under this Agreement shall exceed the greater of five percent
(5%) or the Consumer Price Index (all urban consumers for the group 1,200,000
or more population for the most recent twelve month period for which such
statistics are available).
3. Term and Termination. This Agreement shall have an initial term as
set forth in the Services & Form Schedule, commencing on the date hereof, and
shall automatically renew for successive like terms, unless terminated as
provided herein. Either party may terminate this AGREEMENT, such termination to
take effect only at the expiration of the initial term or any renewal term,
with at least sixty (60) days written notice to the other or during the Annual
Fee Change provision, according to Section Two, if such fees changes are
deemed excessive by Customer. If either party shall materially default in the
performance of any of its obligations under this Agreement and shall fail or
refuse to cure or commence to cure such default within thirty (30) calendar
days after written notice, the other party may terminate this Agreement on an
additional fifteen (15) days written notice. If any party shall become
insolvent, be placed in receivership, make an assignment for the benefit of
creditors or seek relief or have a petition filed against it under federal
bankruptcy law, the other party may terminate this Agreement immediately upon
written notice.
4. Assignment. Customer or NPC may not assign this Agreement without the
prior written consent of the other party, and any attempted assignment shall be
null and void. This Agreement shall be binding upon, and inure to the benefit
of, the successors and permitted assigns of the parties hereto.
5. Compliance with Law. Customer and NPC warrants and represents that it
will comply with all applicable federal, state and local laws.
6. Confidentiality. The parties acknowledge that, during the course of
negotiation and/or the performance of this Agreement, the parties may have or
may have had access to and may receive or may have received certain confidential
or proprietary information of the other party, in present company or its
affiliated and subsidiary companies, which that party reasonably considers
confidential and/or proprietary ("Confidential Information"). Confidential
Information includes without limitation any information pertaining to a party's
business operations. Each party will protect the other party's Confidential
Information from unauthorized dissemination and use with the same degree of care
that each party uses to protect its own like information, but in no event less
than reasonable care. Neither party will use the other's Confidential
Information for purposes other than those necessary to perform this Agreement.
Each party agrees that it will reveal such Confidential Information only to
those of its directors, officers, employees or agents with a need to know. Each
party agrees not to disclose such Confidential Information to any other third
party, except as may be agreed upon by the parties in writing (and then only
subject to written nondisclosure restrictions similar to those herein) or as
required by law. Confidential Information does not include any information which
(i) is or becomes available to a party on a non-confidential basis from a source
other than the other party or its agents or advisors, provided that such source
is not bound by a confidentiality agreement with, or other contractual,
fiduciary or legal obligation of confidentiality with respect to such
information, (ii) is independently developed by a party without use of any
Confidential Information, or (iii) is or becomes generally available to the
public through no fault of a party, and not as a result of an unauthorized
disclosure by any third party. In the event that either party is required by law
to disclose any information covered by this Agreement, the party being compelled
to disclose shall provide the other party with prompt notice of such pending
disclosure so that the other party may seek a protective order, if appropriate.
The disclosing party shall provide notice of any disclosure required by law to
the other party and, whenever reasonably possible, such notice shall be provided
prior to disclosure. Each party shall return or certify destruction of any
Confidential Information of the other party in its possession upon termination
of this Agreement. The provision of the paragraph shall survive the termination
or expiration of this Agreement.
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7. Dispute Resolution and Arbitration. The parties shall attempt to
resolve all disputes under the Agreement. The senior management of the parties
shall be the first level of resolution. If the senior managers cannot, in good
faith, resolve the dispute, the dispute will be escalated to the executive
management of both parties. If the executive managers cannot, in good faith,
revolve the dispute, the parties shall enter into arbitration as described below
to resolve such dispute. In the event that a dispute remains unresolved despite
good faith efforts of the parties, any controversy or claim arising out of or
relating to this Agreement or the breach thereof will be settled by arbitration
in accordance with the Commercial Arbitration Rules of the American Arbitration
Associate ("AAA") then in effect, and judgment upon the award rendered by the
arbitrators may be entered in any court of competent jurisdiction. Any such
arbitration shall be conducted in the city nearest NPC's main U.S. office having
an AAA regional office. Unless otherwise agreed, there will be three
arbitrators. Each party shall select one arbitrator having experience with and
knowledge of computers and the information services business, and the two
selected arbitrators shall select a third arbitrator. The arbitrators may not
make any ruling, finding or award that does not conform to the terms and
conditions of this Agreement. Either party, before or during any arbitration,
may apply to a court of competent jurisdiction for a temporary restraining order
or preliminary injunction where such relief is necessary to protect its
interests pending completion of the arbitration proceedings. Arbitration will
not be required for actions for recovery of specific property, such as actions
for replevin; provided that the parties must first follow the dispute resolution
process stated above. Neither party nor the arbitrators may disclose the
evidence or result of any arbitration hereunder without the prior written
consent of both parties. Before arbitration or any other form of legal or
equitable proceeding, the aggrieved party shall give the other party written
notice describing the dispute and amount as in which it intends to initiate
action and the prior effort it has made to resolve such dispute. The parties
agree that this Agreements involves interstate commerce and, notwithstanding any
choice of law provisions in this Agreement, any arbitration hereunder shall be
governed by the Federal Arbitration Act (or any successor thereto).
8. Entire Agreement. This Agreement, including the Exhibits and other
documents incorporated herein, constitutes the entire agreement between the
parties with respect to the subject matter hereof and any modification hereof
must be in a writing signed by both parties.
9. Excusable Failure to Perform or Delay in Performance. No party to this
Agreement shall be liable for failure to perform or delay in performance of any
of its obligations under this Agreement (except payment of amounts already due
and owing) where such failure or delay results from any act of God, sabotage,
military operation, national emergency, civil commotion, labor disturbance,
policy, or the order, requisition, request or recommendation of any government
agency or acting government authority, or any party's compliance therewith, or
government proration, regulation, or priority, or any change in laws or
regulations which prevent any party from providing services required by this
Agreement, or any other cause beyond any party's reasonable control whether
similar or dissimilar to the foregoing causes.
10. Governing Law. This Agreement shall be governed by the law of the
State of California (without giving effect to the conflict of laws provisions
thereof): provided that any arbitration initiated pursuant to this Agreement
shall be governed by the Federal Arbitration Act (or any successor thereto). Any
suit, action, or proceeding with the respect to this Agreement shall be brought
in the courts of the State of California, and the parties hereby consent to the
jurisdiction of such state and federal courts for the purpose of any such suit,
action or proceeding. Customer hereby irrevocably waives any and all objections
to the jurisdiction of such courts, including without limitation, lack of
personal jurisdiction, lack of venue, and forum more convenient, Service of any
writ, process, summons, or complaint upon Customer may be made by mail upon it
at the address stated in this Agreement, upon any registered agent for service
or process, or upon the California Secretary of State, or by any other method
provided by law.
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11. Legal Fees. If either party indicates arbitration or any legal action
to enforce any provision of this Agreement or otherwise in connection with this
Agreement, the prevailing party shall be entitled to recover from the other in
reasonable attorney fees and other legal costs in connection with such
proceeding.
12. Notices. Any notice permitted or required by this Agreement must, be
in writing and shall be deemed given when sent by facsimile, registered or
certified mail, return receipt requested, or overnight delivery, and addressed
as follows:
NPC: NPC
1231 Durrett Lane
Louisville, KY 40285-0001
ATTN: Eric Sinclair
Customer: Heritage Bank of Commerce
150 Almaden Blvd.
San Jose, CA 95113
ATTN: Ken Silveira
13. Limitation of Liability. NPC's liability arising cost of or in any way
connected with this Agreement shall not exceed the fees paid for the services
involved and shall not include any liability for any indirect, incidental,
special or consequential damages, including without limitation lost profits.
14. Relationship. Nothing in this Agreement shall be deemed to create a
partnership, joint venture or agency relationship between the parties. Both
parties are independent contractors and neither party is to be considered the
agent or legal representative of the other for any purpose whatsoever.
15. Waivers. Failure of either party to complain of any act or omissions
of the other party, no matter how long the same may continue, shall not be
deemed to be a waiver by such party of any of its rights hereunder. No waiver by
any party at any time of any other provision of this Agreement shall be deemed a
waiver or breach of any other provision of this Agreement or a consent to any
subsequent breach of the same or any other provision hereunder. If any act or
omission by any party shall require the consent or approval of another party,
such consent or approval of such act or omission on any one occasion shall not
be deemed a consent to or approval of said act or omission on any subsequent
occasion or consent to or approval of any other act or omission on the same or
any subsequent occasion.
16. Ownership of Software. All software provided by or used by NPC in
connection with the services rendered pursuant to this Agreement shall remain
the sole property of NPC unless the parties specifically provide otherwise in
writing.
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17. Security of Communications Systems. NPC shall maintain strict security
controls over all items, records, input materials, and instruments
delivered to it, and over all communications lines and facilities used in
connection with the Services, all in accordance with the audited security
standards followed by NPC.
18. Records Retention. NPC shall maintain account records and transaction
documentation regarding the Services described in the Work Statement
("Service Records"), and shall retain copies of all Service Records for a
minimum of five years. NPC shall not obtain any proprietary rights to any
Service Records, and all Service Records, other than for archive retrieval
purposes, shall remain the property of Customer in machine-readable format.
19. Disaster Recovery Plans. NPC shall create a disaster recovery plan and
shall provide suitable off-premises storage for copies of all Service
Records and computer programs used in connection with the performance of
the Services in order to provide adequate backup in the event of loss,
damage or destruction of any equipment or information. NPC's disaster
recovery plan shall be submitted to Customer for review and shall satisfy
all regulatory requirements applicable to Customer with respect to such
plans. NPC shall review its disaster recovery plan at least annually and
shall provide Customer with copies of the results of all disaster recovery
plan reviews.
20. Regulation and Examination. The performance of services by NPC in
accordance with this Agreement will be subject to regulation and
examination on NPC's premises by the government agencies which regulate
and examine Customer as if such services were being performed by Customer
itself on its own premises.
21. Insurance. NPC shall maintain during the term of this Agreement the
following insurance: (i) worker's compensation and employer's liability
insurance as required by applicable law; (ii) commercial general liability
insurance (bodily injury and property damage) with contractual liability
insurance to cover liability assumed under this Agreement, with the limits
of liability of such insurance to be not less than $1,000,000 combined
single limit per occurrence; and (iii) automobile bodily injury and
property damage liability insurance covering owned, non-owned and hired
automobiles, the limits of which shall not be less than $500,000 combined
single limit per occurrence. Upon the request of Customer, NPC shall
deliver promptly to Customer certificates of insurance made out by the
applicable insurer(s) or their authorized agents the insurance required
under this paragraph and for any material policy amendments thereto. Each
such policy shall provide for 30 days' prior written notice to be given by
the insurer to Customer in the event of any termination, non-renewal or
cancellation, or of any material change in coverage or deductibles. All
insurance policies shall be carried with responsible insurance companies of
recognized standing which are authorized to do business in the state in
which the services rendered pursuant to this Agreement are performed.
22. Financial Statements. NPC shall provide Customer with a copy of NPC's
audited financial statements within 90 days of the end of each fiscal year
of NPC.
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23. Termination Following Insolvency. Customer may immediately terminate this
Agreement in the event NPC (i) is dissolved, becomes insolvent, generally
fails to pay or admits in writing its inability to pay its debts as they
become due; (ii) makes a general assignment, arrangement, or compensation
agreement with or for the benefit of its creditors; or (iii) files a
petition in bankruptcy or institutes any action under federal or state law
for the relief of debtors or seeks or consents to the appointment of an
administrator, receiver, custodian, or similar official for the wind up of
its business (or has such a position or action filed against it and such
petition action or appointment is not dismissed or stayed within 30 days).
24. Limitations on Liability of Customer. Customer shall not be liable for any
loss or damage arising from the failure to properly perform its duties
pursuant to this Agreement if such failure is the result of circumstances
beyond Customer's control. In no event shall Customer be liable for any
indirect, incidental, special or consequential damages, including without
limitation lost profits, or for any amount in excess of the amounts due for
services rendered pursuant to the terms of this agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and each of undersigned hereby warrants and represents that he or she
has been and is, on the date of this Agreement, duly authorized by all necessary
and appropriate action to execute this Agreement.
Heritage Bank of Commerce National Processing Company
By: /s/ KEN SILVEIRA By: /s/ ERIC SINCLAIR
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Name: Ken Silveira Name: Eric Sinclair
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Title: Senior Vice President Title: Vice President
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Exhibit A continued
EXHIBIT A
NPC AND CUSTOMER
SERVICES & FEE SCHEDULE
SERVICES
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NPC agrees to provide retail lockbox service for Customer in accordance
with Customer approved operational procedures. In addition to the items
detailed in the Agreement, NPC agrees to the following:
1. This Agreement shall have an initial term of two (2) years with processing
commencing on or about December 1, 1997. At the end of six (6) months,
pricing will be looked at and potentially adjusted for volumes. Pricing will
not go up at this time.
2. There is a minimum monthly Standard Item Processing Fee of $2,000 for the
first six months of the contract which NPC has agreed to waive. After six
months, the minimum monthly Standard Item Processing Fee will be based on 80%
x clean volume x price. (not to be less than $2,000)
3. NPC will continue to maintain adequate facilities, equipment, experienced
personnel and professional expertise for providing services in accordance
with normal standards of the remittance processing industry.
4. Mail addressed to Customer at the Phoenix Post Office will be picked up by
NPC, or NPC's agent, opened, reviewed and processed at periodic intervals
during each day, excluding NPC and bank holidays.
5. NPC will make every reasonable effort to process Scannable single payments
within twenty-four (24) hours of receipt and Exception items within
forty-eight (48) hours of receipt with a performance standard of 95% on time
delivery month to date.
6. Checks will be prepared for deposit and made available on a timely basis for
delivery to a bank within NPC's correspondent banking network, in order to
facilitate cash flow and availability of funds for Customer.
7. Daily back-up (copies of all non-processables or other work requiring
photocopies) will be returned to Customer by the NPC via overnight courier.
8. NPC will make every reasonable effort to process all payments in the correct
batch ranges specified by Customer.
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Exhibit A continued
9. Photocopy requests by Customer will be turned around on a 48-72 hour basis
for items retrieved from NPC's internal film. Items requiring bank
intervention will take longer (based upon individual bank times tables).
10. Errors will be maintained at or below an industry acceptable standard per
category of error. Examples are encoding and data keying errors are 1 in
10,000 and misapplied accounts are 1 in 10,000. NPC constantly strives to be
below these industry standards.
11. NPC will make every reasonable effort to timely and accurately transmit all
daily records, on a same day business basis as processed, to Customer.
12. NPC will make every reasonable effort to timely and accurately transmit all
daily NSF Batch records, on a same business day as processed, to Customer.
13. NPC will make every reasonable effort to timely and accurately transmit all
daily Debit and Credit Memo Batch records, on a same business day basis as
processed, to Customer.
14. NPC will make every reasonable effort to timely and accurately return all
daily Address Changes, on a same day basis as processed, to Customer.
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Exhibit A continued
FEES
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SERVICE TYPE FEE
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PROCESSING FEES
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Scannable Items (1) $.10/Transaction
Unscannable Items, Exception Items,
Multiples, Data Entry Items (2) $.20/Transaction
Un-Processable (Reject) Payments
or Correspondence Only Handling $.10/Item
MISCELLANEOUS PROCESSING FEES
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Data Transmission Actual telephone line charge
Add'l Transmission Request $25.00 per transmission
(Weekdays)
Weekend Transmission $25.00 per transmission
Postage and Courier Cost + 10%
P.O. Box Rental Actual (Currently $450 annually)
Express Mail Surcharge $.36 per package
Photocopies $.20 each
Research $4.00 per request
Cash Remittance Payments $1.25 each
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Exhibit A continued
BANKING FEES
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DDA Account Maintenance $20.00 month account
Additional DDA Statements $4.00 per statement
Deposits $.50 per deposit
Foreign Collection Expense Actual
Wire Transfer (debit) $12.00 each
ACH Transfer (debit) $.13 item
FDIC Actual
(Presently $.000/$1,000 Ledger)
Deposited Items Actual/Item Pass Thru
and Check Clearing (Estimated at $.037)
Reclear Items $2.00 item
Return Items $2.00 item
OPTIONAL SERVICE FEES
---------------------
Account Look-Up ($.42) per Item
Address Changes $.15 per Item
Reject Surcharge > 2% $.05 per Item
Electronic Bill Payments (RPS/ACH) $.10 per Item
Exception Letters $1.50 per Letter
(Unprocessables)
VirtualPAY Home Page Logo $200.00 per month
VirtualPAY Transaction $.0900 per item