Online Banking Service Agreement - Online System Services Inc. and CU Cooperative Systems Inc.
ONLINE BANKING SERVICE AGREEMENT
This Agreement ("Agreement") is made and entered into by and between ONLINE
SYSTEM SERVICES, INC., a corporation organized under the laws of Colorado and
located at 1800 Glenarm Place, Denver, Colorado 80202 ("OSS" or "Company") and
CU COOPERATIVE SYSTEMS, INC., a cooperative organized under the laws of
California ("CO-OP NETWORK" or "Client") and located at 2350 South Garey Avenue,
Pomona, California 91766, with an effective date of FEBRUARY 10, 1999.
1. Recitals
Whereas, CO-OP Network is legally organized as a cooperative that is owned by
its shareholder credit unions, and
Whereas, CO-OP Network's business is supplying electronic transaction switching
and related services to its shareholder credit unions and to other credit
unions, and
Whereas, CO-OP Network desires to include online banking services among the
services it offers its shareholder and other credit unions, and
Whereas OSS is in the business of providing online banking services to financial
institutions, and
Whereas, OSS desires to provide online banking services to CO-OP Network and to
support it in improving the quality of online banking offered its credit unions,
Therefore, OSS and CO-OP Network, intending to be legally bound by this
Agreement, agree as follows:
2. Definitions
CO-OP Network's network - the network of interconnected ATMs, host computers,
and external systems such as credit card processors and other ATM networks.
ATMs - Automated Teller Machines.
Deluxe Electronic Payment Systems ("Deluxe") - the company that operates CO-OP
Network's electronic transaction switch for it on an outsource basis.
Switch - the computer at Deluxe that connects and routes ATM and other
electronic transactions between CO-OP Network's credit unions and between these
credit unions and other parties on the CO-OP Network's network.
Host - the computer a particular credit union uses for its internal, back-end
account maintenance and processing, which may be on-premises at the credit
union, or remote at a processing service center operated on an outsource basis.
Online Banking - Internet-based access to various banking functions such as
account information, transfers between accounts, and bill pay.
Online Banking Service - the Online Banking Service provided under this
Agreement by OSS for CO-OP Network, as used by CO-OP Network credit unions and
their members.
Online Banking System - the computer, network and telecommunications hardware,
software and data bases that provide functions and features offered in the
Online Banking Service.
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Online Banking Service Bureau - the providing of Online Banking Services by OSS
to CO-OP Network's credit unions and their members on an outsource basis.
Subscribers - members of CO-OP Network credit unions enrolled in the Online
Banking Service who use the system for online banking.
Users (of the Online Banking Service) - Subscribers, personnel of credit unions
enrolled in the Online Banking Service who perform administration of their
individual credit unions' online banking web sites or customer support, and
personnel of CO-OP Network who perform administrative or customer support for
CO-OP Network credit unions.
EBS - Electronic Banking System licensed from Edify Corporation, which is the
software layer upon which the Online Banking System is built.
3. Scope of Services
OSS will set up and operate an Online Banking Service Bureau on behalf of CO-OP
Network, to provide Internet-based remote banking services to CO-OP Network's
credit unions (CUs) and their members on an outsource basis.
3.1 Initial System Design and Implementation
OSS will set up an Online Banking System to provide Online Banking
Services. OSS will provide or acquire and will assemble, configure and
integrate the facilities, hardware, software, network systems,
telecommunications lines and equipment, and other components for the
required Online Banking System. OSS will employ the Edify Electronic
Banking System (EBS) software as the foundation of the service, and will
develop a custom Online Banking Service Bureau implementation for CO-OP
Network, including integrating with the Deluxe switch and with the Bill Pay
provider. OSS will also develop customer support materials for the program.
Schedule A specifies the items and activities included in Initial System
Design and Implementation. Schedule B specifies the functions and features
to be included in the Online Banking System.
3.1.1 Network Operations Center
OSS will provide the appropriate computing and network equipment at
Network Operations Center (NOC) facilities in the Denver area.
3.1.2 Telecommunications Links
OSS will provide T1/T3 connections to the Internet. CO-OP Network
shall arrange for and maintain the appropriate telecommunications
lines or links for direct connectivity from the Online Banking System
to Deluxe and to the Bill Pay Provider. OSS will provide the required
local access line, routers, and modems for the OSS end of the OSS-to-
Deluxe connection and for the OSS end of the OSS-to-Bill Pay Provider
connection, as specified in Schedule A.
3.1.3 Bill Payment
For bill payment, OSS will provide the front end User interface for
bill payment and the back end system interface from the Online Banking
System to the Bill Pay Provider, as specified in Schedule A. CO-OP
Network will contract directly with the Bill Pay Provider for bill
payment services, including transaction research, adjustment and
maintenance services.
3.1.4 Pilot Testing
OSS shall have the Initial System Design and Implementation activities
sufficiently complete and the system ready for a Pilot Test within six
months of the effective date of this Agreement,
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assuming the Deluxe and Bill Pay provider sides of those interfaces
are made available in a timely manner and CO-OP Network provides its
inputs in a timely manner. The Pilot Test will involve two or three
credit unions, each with a different host system, unless OSS and CO-OP
Network mutually decide differently. The Pilot Test Period will be 45
days, unless CO-OP Network and OSS mutually agree to a different
period. The pilot credit unions will be brought up on line
sequentially.
For the Pilot Test, OSS will coordinate with CO-OP Network and pilot
CU personnel to exercise the system, in order to demonstrate the
effective working of the appropriate functions and features specified
in Schedule B. CO-OP Network shall support this test by: contributing
to establishing the test plan and procedures; making access available
to appropriate systems for test purposes; establishing test accounts
at the pilot CUs for OSS personnel; having CO-OP Network and pilot CU
employees exercise the system using their own accounts; and
participating in and monitoring the test.
OSS and CO-OP Network will jointly conduct the test, making note of
any deficiencies discovered with respect to the functions and features
of Schedule B. OSS shall be alerted immediately as to any such
deficiencies discovered, and OSS shall promptly work to remedy them,
so as to allow appropriate re-testing during the Pilot Test Period.
Before or at the conclusion of the Pilot Test Period, CO-OP Network
will indicate acceptance, conditional acceptance or rejection of test
results. If no specific response is given within 10 business days of
the conclusion of the Pilot Test Period, the test results will be
considered to have been accepted. If any deficiencies are outstanding
at the conclusion of the Pilot Test Period, OSS will remedy them
within 15 business days of notice in order to meet the specifications
of Schedule B and to achieve acceptance.
Upon acceptance of the Pilot Test results, the system will be
considered ready for operation, and the Online Banking Service will
then be made available to the pilot CUs' general membership, and then
to other CO-OP Network CUs. Acceptance of Pilot Test results will
constitute the Completion of Initial System Design and Implementation.
3.2 Service Bureau Operation
OSS will configure and implement individual online banking Web sites for
the various CUs CO-OP Network enrolls in the program, and will operate them
on a service bureau basis. For each CU implementation, OSS will provide
training, a User guide, online help and a Web-based customer support
knowledge base and will support User enrollment. OSS will provide ongoing
24x7 system operation and management of each Web site, including redundant
high bandwidth connections to the Internet and interfaces to Deluxe and the
Bill Pay Provider. OSS will serve as Tier 2 technical support for the
Online Banking Service, providing the CUs and CO-OP Network with support on
technical issues requiring escalation. Schedule C specifies the items and
activities included in Service Bureau Operation. Schedule D describes the
overall customer service concept of operations, and the part that OSS will
fulfill.
3.2.1 Capacity planning
OSS shall implement in a timely manner the online banking Web sites
for all CUs enrolled in the Online Banking Service Bureau as they are
signed up. Implementing such online banking Web sites for CUs will
require OSS (and CO-OP Network) labor and other resources. CO-OP
Network agrees to work with OSS in planning the volume of CU online
banking sites that OSS should be prepared to handle from period to
period, so as to avoid implementation delays or over-capacity
problems.
3.2.2 Test Accounts, Employee Dishonesty Insurance
Each credit union will an online banking site will provide an
appropriate test account that OSS can access, to support
implementation testing and ongoing testing and troubleshooting by OSS.
OSS
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will maintain during the term of this Agreement coverage in the form
of an employee dishonesty policy in the amount of $1,000,000 covering
loss of or from damage to money and securities and property other than
money and securities, from the fraudulent and dishonest acts,
including wire fraud, of its employees.
3.3 Additional Services
OSS will provide all services to setup the service bureau and operate it
under nominal operating conditions, as specified in paragraphs 3.1 and 3.2
above. Additional charges would apply for work in addition to that
specified in paragraphs 3.1 and 3.2. Examples of such additional work, for
which additional charges would apply, are: modifying the EBS side of the
interface to the Deluxe switch system to accommodate changes on the Deluxe
or CU side of the interface (such as specification changes, upgrades,
enhancements and migrations); designing or implementing system or service
upgrades or modifications at CO-OP Network's request; adding other new or
custom functions such as check imaging, real time loan applications, or
"screen pops" for CU MSRs; implementing enhancements to the system or
service as available and offered by Edify/OSS (such as Open Financial
Exchange [OFX], bill presentment, and targeted promotions manager);and
providing additional training on online banking.
3.3.1 Additional Functions and Features
It is expected that from time to time that CO-OP Network will desire
that certain new or enhanced functions and features or related
services be added to the Online Banking Service it offers its credit
unions. It is the pates' intention that CO-OP Network acquire those
additional or enhanced functions, features or services through OSS,
under this Agreement or an amendment to it. CO-OP Network and OSS
agree to negotiate in good faith to arrive at mutually acceptable
terms for incorporating such additions or enhancements. If OSS is
unable to provide certain additional or enhanced functions, features
or services requested by CO-OP Network or declines to do so, CO-OP
Network may obtain those additional or enhanced functions, features or
services from a third party without violation of paragraph 4
(Exclusive Provider), but OSS will continue to be the exclusive
provider to CO-OP Network for the term of this Agreement of Online
Banking Services within the scope of this paragraph 3.
3.3.2 Task Authorization
Additional services will be conducted by way of task orders. CO-OP
Network will authorize work packages by written task order, which will
include a statement of work, deliverables and pricing. Pricing will be
as negotiated and mutually agreed for each task order. A task order
can be time and materials (T&M) at OSS's current T&M rates, or fixed
price, or other mutually agreed terms. Blanket task orders can be
established to allow informal authorization (verbally for instance) of
a series of small tasks (e.g., periodic graphics updates for a CU not
wishing to do it itself) under that blanket task order.
4 Exclusive Provider
The pates agree that OSS will be the exclusive provider to the CO-OP Network of
Online Banking Services within the scope of paragraph 3 for the term of this
Agreement, and that OSS knowingly will provide Online Banking Services to CO-OP
Network CUs only through and with CO-OP and, for twenty-four (24) months after
Completion of Initial System Design and Implementation (as defined in paragraph
3.1.4), to any CU only after first affording CO-OP the opportunity to contract
with such CU for Online Banking Service, unless otherwise mutually agreed on a
case by case basis.
4.1 Existing CO-OP Online Banking Service
It is recognized that CO-OP Network currently is providing Online Banking
Services to certain CUs under the service name Access Anywhere, and certain
other CUs are in the process of being enrolled in the
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service ("Access Anywhere CUs"). As of the effective date of this
Agreement, CO-OP Network will enroll all other CUs desiring Online Banking
Services directly into the OSS-provided service, will cease marketing the
existing Access Anywhere service, and when reasonably possible will migrate
the Access Anywhere CUs to the OSS-provided service covered by this
Agreement. CO-OP Network agrees to use reasonable effort to persuade the
Access Anywhere CUs to change to the OSS service in a reasonably timely
manner. It is recognized that the Access Anywhere CUs have certain
contractual rights that allow them to make the ultimate decision as to when
to migrate. If despite CO-OP Network's reasonable efforts, certain of these
CUs decline to change to the OSS-provided service in a reasonably timely
manner, CO-OP Network may continue to provide these CUs with Access
Anywhere service without violation of the exclusive provider provisions of
this paragraph 4.
4.2 Existing OSS Online Banking Service
It is recognized that OSS offers services similar or identical to the
Online Banking Services to financial institutions other than through this
Agreement. Should OSS have any CU as a client, OSS may continue to provide
that CU with such services outside the scope of this Agreement without
violation of the exclusive provider provisions of this paragraph 4.
5 Fees and Payment Terms
CO-OP Network will pay OSS for the services provided under this Agreement in the
following manner.
5.1 Initial System Design and Implementation Fee
CO-OP Network will pay OSS an Initial System Design and Implementation fee
in the amount specified in Schedule F. This fee is payable upon execution
of this Agreement.
5.2 Service Bureau Monthly Fee
CO-OP Network will pay OSS a monthly fee to operate and maintain the Online
Banking System and Service, in the amount specified in Schedule F. OSS will
invoice CO-OP Network monthly, and COOP Network agrees to pay monthly.
5.3 Credit Union Setup Fee
CO-OP Network will pay OSS a setup fee for each credit union when it is
enrolled in the service bureau, in the amount specified in Schedule F. This
amount is payable to OSS prior to OSS's commencing work on implementing the
online banking Web site for that credit union.
5.4 Credit Union Monthly Fee
CO-OP Network will pay OSS a credit union monthly fee for all credit unions
enrolled in the system at month end, in the amount specified in Schedule F.
OSS will invoice CO-OP Network monthly, and CO-OP Network agrees to pay
monthly.
5.5 Subscriber Monthly Fees
CO-OP Network will pay OSS a subscriber monthly fee for all Subscribers
enrolled in the system at month end, in the amount specified in Schedule F.
OSS will invoice CO-OP Network monthly, and CO-OP Network agrees to pay
monthly.
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5.6 Transaction Fee
CO-OP Network will pay OSS a transaction fee for transactions performed
through Deluxe, in the amount specified in Schedule F. OSS will invoice CO-
OP Network monthly, and CO-OP Network agrees to pay monthly.
5.7 Months and Years Defined
The fees to be paid monthly are based on activity during the month (such as
operating the service for the month, adding CUs, or processing a certain
number of transactions through Deluxe) or totals at end of month (such as
number or enrolled CUs or Subscribers). And several fee levels as specified
in Schedule F vary according to year. For invoicing purposes, a month is a
calendar month, and years begin counting at the 1st of the next calendar
month after Completion of Initial System Design and Implementation as
defined in paragraph 3.1.4. Any fractional month between Completion of
Initial System Design and Implementation and the l~ of the next calendar
month, or at the end of the Term of this Agreement, will be treated on a
pro rata basis based on number of days.
5.8 Future Changes in Laws or Regulations
If future changes in the laws or regulations affecting the business of CO-
OP Network or any CO-OP Network CU require OSS to incur material changes to
the Online Banking Services provided under this Agreement, the pates agree
that they will negotiate and mutually agree to the changes required and any
resulting adjustments in the fees payable by CO-OP Network to OSS under
this Agreement.
5.9 Changes in Technology
OSS will render the Online Banking Services under this Agreement using the
EBS software available from and supported by Edify. CO-OP Network will
cooperate with OSS with the use of any upgrades to the EBS required by
Edify. If at any time during the term of this Agreement other changes in
the software or other technology used for rendering the Online Banking
Services under this Agreement are reasonably required or requested by
either party, OSS and CO-OP Network will negotiate and mutually agree to
the applicable changes and any resulting adjustments in the fees payable by
CO-OP Network to OSS under this Agreement.
5.10 Fees for Additional Services
OSS will invoice CO-OP Network monthly for any additional service work
performed under the provisions of paragraph 3.3, with amounts detailed by
task order. Billing will include any incurred T&M charges, as well as any
initial, progress or final payments that are part of fixed price task
orders.
5.11 Residual Costs Fee
Upon conclusion of the Term of this Agreement, or upon any early
termination, CO-OP Network will pay OSS a Residual Costs Fee, which is
intended to cover unabsorbed setup costs associated with adding new
Subscribers towards the end of the service, in the amount specified in
Schedule F.
5.12 Invoices
Invoices will include applicable sales taxes, if any. Invoices will be due
and payable thirty (30) days of receipt of the invoice. If with respect to
any amount which is not at the time subject to a good-faith dispute, CO-OP
Network fails to pay such amounts when due, OSS may, at its option and
after giving at least twenty-one (21) days' prior written notice,
discontinue furnishing the Online Banking Services specified in paragraph 3
until all past due amounts are paid in full.
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6 Term of Agreement
This Agreement will remain in force for five (5) years ("Initial Term") from the
date of Completion of Initial System Design and Implementation, as defined in
paragraph 3.1.4. At its sole option to be exercised by CO-OP Network by written
notice given not less than 270 days before the end of the Initial Term, this
Agreement may be extended for an additional term of five (5) years. Thereafter
(or at the end of the Initial Term if CO-OP Network fails to extend for an
additional five year (5) term), the Agreement will automatically renew and
extend for successive one (1) year terms unless contrary notice in writing is
given by CO-OP Network or OSS at least one hundred eighty (180) days prior to
termination of the then current term. The Initial Term and any renewal terms are
together referred to as the "Term" of this Agreement.
If CO-OP Network exercises its option to extend for an additional five (5) year
term, then within thirty days of receipt of that notice by OSS, OSS may
nonetheless terminate this Agreement and the relationship at the end of the
Initial Term by arranging for a transfer to CO-OP Network of all items held in
escrow pursuant to Section 14.1, below, to occur at the end of the Initial Term.
Upon such transfer, CO-OP Network shall pay through the escrow the sum of Two
Hundred Fifty Thousand Dollars ($250,000) to OSS, in addition to any amounts
payable pursuant to Section 14.1.
7 Early Termination for Business Reasons
The parties acknowledge that they are entering into this Agreement with the
expectation that a significant number of CO-OP Network CUs and their members
will subscribe to the Online Banking Service covered by this Agreement. If there
are fewer than 25,000 Subscribers (actual or reasonably anticipated) enrolled in
the Online Banking Service by the third anniversary of Completion of Initial
System Design (as defined in paragraph 3.1.4), either party may, no later than
(30) days after the third anniversary date, give notice of its intent to
terminate this Agreement early, provided the effective date of termination as
specified in said notice follows the date of the notice by at least one hundred
eighty (180) days. Should a party make such a call for early termination, the
parties agree to work together to plan and implement a controlled wind-down of
service. It is acknowledged that this controlled wind-down may entail OSS
performing additional work that will need to be covered under the provisions of
paragraph 3.3, and the parties agree to work together in good faith to define
and implement the wind-down and termination of the Agreement.
8 Confidential Information
8.1 Acknowledgment of Confidentiality
Each party hereby acknowledges that it may be exposed to confidential and
proprietary information of the other party, or related third parties such
as Edify or Deluxe, including, without limitation, technical information
(specifications, designs, drawings, analysis, research, processes, computer
programs, methods, ideas, "know how" and the like), business information
(sales and marketing research, materials, plans, accounting and financial
information, personnel records and the like) and other information
designated as confidential expressly or by the circumstances in which it is
provided ("Confidential Information"). Confidential Information does not
include (i) information already known or independently developed by the
recipient; (ii) information in the public domain through no wrongful act of
the recipient, or (iii) information received by the recipient from some
third party who was free to disclose it.
8.2 Covenant Not to Disclose
With respect to the other party's Confidential Information or a related
third party's Confidential Information obtained from the other party, the
recipient hereby agrees that during the Term and at all times thereafter it
will not use, commercialize or disclose such Confidential Information to
any person or entity, except to its own employees having a "need to know"
(and who are themselves bound by similar nondisclosure restrictions), and
to such other recipients as the other party may approve in writing;
provided, that all such recipients will have first executed a
confidentiality agreement in a form acceptable
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to the owner of such information. Neither party nor any recipient may alter
or remove from any software or associated documentation owned or provided
by the other party any proprietary, copyright, trademark or trade secret
legend. Each party will use at least the same degree of care in
safeguarding the other party's Confidential Information as it uses in
safeguarding its own confidential information. Upon termination of this
Agreement for any reason, each party will use its best effort to effect the
return of all such Confidential Information obtained from the other party
in its possession or under its control and will cease using it in any way.
The terms and conditions of this Agreement, including, without limitation,
the fees payable by CO-OP Network, shall be considered confidential
information of OSS, subject to the nondisclosure restrictions under this
paragraph 8.2.
9 Reliance on Information Provided
OSS will rely on the accuracy of all information provided to OSS by CO-OP
Network. CO-OP Network will promptly inform OSS of any such incorrect data or
information, bear the cost of correction and pay any damages arising therefrom.
10 Data Security
The Online Banking System will contain data on the members of the CO-OP Network
credit unions who use the system (CO-OP Network User Data). This data will
include such items as User IDs, PINs, bill payment payee and payment lists, and
certain bill payment and account history data. OSS acknowledges that CO-OP
Network User Data will remain the property of CO-OP Network, and agrees to
provide CO-OP Network, upon its reasonable request, with copies of the CO-OP
Network User Data in a mutually agreed form.
10.1 Restricted Access
OSS will implement reasonable security precautions designed to restrict
external access to CO-OP Network User Data so that a User will only be able
to access his own data in the CO-OP Network User Data, and only his credit
union and CO-OP Network will have administrative access to a User's data.
10.2 Data Integrity
OSS will implement reasonable security precautions designed to prevent the
loss or alteration of COOP Network User Data.
10.3 Data Retention
OSS shall retain copies of all CO-OP Network User Data and Online Banking
System transaction logs and reports for at least 1 year. OSS agrees to
notify CO-OP Network 30 days in advance of any plan to dispose of any such
data, and will provide archive copies of such data to CO-OP Network prior
to such disposition if so requested.
11 Disaster Recovery
OSS will maintain a disaster recovery plan and will perform disaster recovery
preparations including maintenance of current backup tapes stored off-site from
the Network Operations Center (NOC). In the event of a disaster, OSS shall
execute its disaster recovery plan, which will include provisions for acquiring
and integrating appropriate replacement computing and network equipment at the
NOC or at a backup NOC as required, re-establishing appropriate
telecommunications links as required, and re-installing software and databases
from backup tapes as required. Such disaster recovery systems shall be tested no
less than annually and results made available to CO-OP Network. OSS shall
exercise its best efforts, consistent with its obligations to its entire
customer base and to the extent within the reasonable control of OSS, to
reestablish the Online Banking Service at the earliest possible time following a
disaster.
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12 Minimum Performance Requirements
OSS recognizes the importance to CO-OP Network of high availability of the
Online Banking Services specified in paragraph 3.2, including high reliability
of the online banking web site and high levels of responsiveness to customer
support requirements. OSS therefore agrees to meet the minimum performance
criteria specified in Schedule E.
13 Default
13.1 Declaration of Default
Either party may be declared in default of this Agreement upon written
notice thereof (describing the default and [as best the party is able] the
steps necessary to correct the default) if it breaches any material
provision of this Agreement and fails for ten (10) days after receipt of
written notice of default to correct such default or to commence corrective
action reasonably acceptable to the other party and proceed with due
diligence to completion. If the alleged default cannot reasonably be
corrected within such ten (10) day period, the party allegedly in default
will have up to an additional twenty (20) days to correct the default so
long as that party uses all reasonable efforts to correct the default as
soon as reasonably possible during that twenty (20) day period.
13.2 Bankruptcy, Insolvency
Either party may be declared in default of this Agreement upon written
notice thereof if it files for bankruptcy or has a petition filed against
it which has not been dismissed within ninety (90) days, or becomes
insolvent, or if any substantial part of such party's property becomes
subject to any levy, seizure, assignment, application of sale for or by any
creditor or governmental agency, and in any such event, the non-defaulting
party may also declare all amounts due, and to become due, immediately due
and payable.
13.3 Termination for Default
Should either party be declared in default and that default not be timely
corrected, the party not in default, at its option, may, upon written
notice thereof after expiration of the applicable time period in Section
13.1 above, terminate this Agreement and declare all amounts immediately
due and payable. The remedies contained in this paragraph are cumulative
and are in addition to all other rights and remedies available under this
Agreement or at law or in equity.
14 Software Escrow
OSS agrees to keep and maintain in escrow pursuant to an escrow agreement
attached hereto as Schedule G with an escrow agent acceptable to CO-OP current
executed copies of an Edify License Transfer Agreement (an unexecuted copy of
which is attached hereto as Schedule H) and the EBS Application Software
together with all reasonably available documentation for said Software and
business processes employed in providing the Online Banking Service. The escrow
agreement will authorize and obligate the escrow agent to release the EBS
Application Software and documentation to CO-OP Network upon receipt of a letter
of request from CO-OP Network. CO-OP agrees that it will only execute and
deliver a letter of request to the escrow agent if it is able to represent
therein that OSS is in default under this Agreement and such default has not
been timely cured pursuant to this Agreement.
14.1 Edify License Transfer
OSS will maintain with the escrow agent a current executed Edify License
Transfer Agreement. This agreement will effect a transfer from OSS to CO-OP
Network of the Edify Electronic Banking System software and service bureau
licenses obtained by OSS and in use for the Online Banking Services
pursuant to this Agreement. The Transfer Agreement will include provisions
for CO-OP Network to pay OSS the
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then remaining value of the Edify licenses, calculated using a straight-
line 5-year amortization schedule applied to the actual purchase prices and
dates of original acquisition by OSS from Edify.
14.2 EBS Application Software
OSS will provide the escrow agent with a copy of the EBS Application
Software and a license for COOP Network to use that software to provide
Online Banking Services to CO-OP Network member credit unions. EBS
Application Software is that software developed and implemented by OSS for
use in support of the Online Banking Services delivered to CO-OP Network
under this Agreement. This software includes the configuration parameters
needed to operate the CO-OP Network EBS system, the application code needed
to execute the CO-OP Network EBS system (including EBS application code for
the Deluxe and Bill Pay Provider interfaces), the CO-OP Network EBS
database schemas, and the supporting HTML and active server page scripts,
and applicable operating manuals. OSS agrees to provide the escrow agent
copies of this Application Software on no less than a quarterly basis
throughout the term of this Agreement, and also when major upgrades occur.
15 Insurance, Indemnity
Each party will maintain adequate insurance protection covering its respective
activities hereunder, including coverage for statutory workers' compensation,
comprehensive general liability for bodily injury and property damage, as well
as adequate coverage for vehicles. Each party hereto waives any claim against
the other to the extent it is reimbursed by its own insurance carrier. To the
extent a party is not reimbursed by its own insurance carrier, each party will
indemnify, defend and hold the other harmless from all claims, liability,
settlements, costs and expenses, including reasonable attorneys' fees, for loss
or damage to the extent and in the proportion resulting from the acts or
omissions of its own officers, agents, employees or representatives. Each party
does waive as against the other party to this Agreement all rights of
subrogation it or those claiming through it might have.
16 Covenants, Representations, Warranties and Limitation on Liability
The parties acknowledge that the following provisions reflect a fair allocation
of risk:
16.1 Warranties
OSS warrants, to the extent warranted by Edify to OSS, that (i) the use of
the EBS for the Online Banking Services rendered under this Agreement will
not infringe any patents or copyrights under United States law and (ii) the
EBS is "Year 2000 Compliant." "Year 2000 Compliant" means (to the extent
that other information technology, used in combination with the EBS,
properly exchanges date/time data with the EBS) the EBS as provided by
Edify will accurately process date/time data from, into and between the
twentieth and twenty-first centuries, and the years 1999 and 2000 in
accordance with the Edify-supplied documentation. OSS warrants that it will
exercise reasonable care in the performance of its obligations under this
Agreement. OSS makes no other warranties, express or implied, including
without limitation, any warranty of merchantability or fitness for a
particular purpose with respect to the services provided hereunder. OSS
agrees to provide to CO-OP timely and substantive responses to any
inquiries submitted by CO-OP concerning the status of the Online Banking
System in relation to year 2000 compliance. If such responses will require
OSS to incur costs outside the normal course of business, CO-OP will
reimburse OSS for these costs.
16.2 Limitation of Liability
OSS's MAXIMUM AGGREGATE LIABILITY FOR DAMAGES TO CO-OP NETWORK SHALL BE
LIMITED TO ACTUAL, DIRECT AND OUT-OF-POCKET MONEY DAMAGES SUFFERED OR
INCURRED BY CO-OP NETWORK IN AN AMOUNT NOT TO EXCEED THE AMOUNT OF THE FEES
PAID BY CO-OP NETWORK TO OSS FOR THE THREE CALENDAR MONTHS IMMEDIATELY
PRECEDING THE MONTH IN WHICH THE EVENT OCCURRED THAT GAVE
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RISE TO THE DAMAGES, OR $2,500,000, WHICHEVER IS LESS. THE PROVISIONS OF
THIS PARAGRAPH APPLY EVEN THOUGH THE LOSS OR DAMAGE, IRRESPECTIVE OF CAUSE
OR ORIGIN, RESULTS, DIRECTLY OR INDIRECTLY, EITHER FROM PERFORMANCE OR
NONPERFORMANCE OF OBLIGATIONS IMPOSED BY THIS AGREEMENT.
16.3 Limitation on Certain Kinds of Damages and Third Party Actions
IN NO EVENT WILL OSS BE RESPONSIBLE FOR (A) PUNITIVE OR EXEMPLARY DAMAGES
OF ANY KIND, OR LOST REVENUES OR PROFITS, REGARDLESS OF WHETHER IT WAS
ADVISED, HAD REASON TO KNOW, OR IN FACT KNEW OF THE POSSIBILITY THEREOF; OR
(B) FOR ANY LOSS OR DAMAGE TO CO-OP NETWORK, DIRECT OR CONSEQUENTIAL,
ARISING OUT OF OR IN ANY WAY RELATED TO ACTS OR OMISSIONS OF THIRD PARTIES
INCLUDING, BUT NOT LIMITED TO, BILL PAYMENT SYSTEM PROVIDERS AND
TELECOMMUNICATION CARRIERS. NEITHER PARTY SHALL SEEK, OR OTHERWISE APPLY
FOR, ANY PUNITIVE OR EXEMPLARY DAMAGES.
16.4 Factors Beyond Control
OSS will not be in default under this Agreement or liable for any delay or
other failure of performance caused by factors beyond its reasonable
control, such as, but not limited to, strikes, insurrection, war, fire,
floods, earthquakes, lack of energy, acts of God, governmental acts or
regulation, power outages, telecommunications failures or delays, or acts
of third parties. Any right of termination or other remedy under this
Agreement shall be delayed during the occurrence of any event described in
this Section 16.4 so long as OSS continues to use reasonable efforts to
restore its ability to continue to comply with this Agreement. OSS will not
be in default under this Agreement if, after the date of this Agreement,
any law, regulation, or ordinance, whether federal, state, or local,
becomes effective that substantially prevents the ability of OSS to perform
services hereunder. In such event OSS will have the right to terminate this
Agreement upon one hundred eighty (180) days written notice to Client.
16.5 CO-OP Network Covenants
CO-OP Network covenants and agrees that it shall include in its customer
contracts covering the resale of Online Banking Service a provision
substantially as follows: "The CO-OP Network, its officers, directors,
employees, agents and suppliers shall have no liability for delay or
failure of performance in any manner whatsoever caused or contributed to by
factors beyond the reasonable control of such parties."
16.6 Authority, No Conflict
Each party represents that it has the full right, power and authority to
enter into this Agreement and to perform its obligations under this
Agreement. Each party acknowledges that this Agreement constitutes a legal,
valid and binding obligation on it enforceable against it in accordance
with the terms of this Agreement. Each party warrants that its entering
into and performing under this Agreement will not result in a breach nor
constitute a default under its certificate of incorporation or bylaws or
any agreement or instrument to which it is a party or by which it or its
assets are bound.
17 Disputes, Governing Law
17.1 Arbitration
Any controversy, claim or dispute between the parties hereto including but
not limited to those arising out of or relating to this Agreement or any
related agreements or instruments, including any claim based-on or arising
from an alleged tort, shall be determined by binding arbitration in
accordance with the Federal Arbitration Act (or if not applicable, the law
of Colorado). Judgment upon any arbitration award may be entered in any
court having jurisdiction. Any party to this Agreement may bring an action,
including a summary or expedited proceeding, to compel arbitration of any
controversy or claim to which this
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Agreement applies in any court having jurisdiction over such action.
Neither party will initiate an arbitration proceeding until the parties
have, during at least a thirty (30) day period, used reasonable efforts to
attempt to resolve any dispute or claim under this Agreement.
17.2 Venue
The arbitration shall be conducted in Denver, Colorado, if initiated by CO-
OP Network, and in Los Angeles County, California, if initiated by OSS. All
arbitration hearings will be commenced within ninety (90) days of the
demand for arbitration; further, the arbitrator shall only, upon a showing
of cause, be permitted to extend the commencement of such hearing for up to
an additional sixty (60) days.
17.3 Governing Law
This Agreement shall be construed and enforced in accordance with the laws
of the State of Colorado without regard to choice of law principles.
18 Audit and Inspection
Upon reasonable advance notice to OSS, CO-OP Network may at its expense during
business hours inspect and audit the records of OSS pertaining to the
calculation of fees payable under this Agreement. In addition, OSS will arrange
annually for a third party review of its systems, controls and operations, and
will make the results of that review available to CO-OP Network.
19 Notices
Service of all notices under this Agreement shall be in writing and sent by U.S.
Certified Mail, return receipt requested, postage paid, or by national overnight
delivery carrier such as FedEx, addressed to the party to be served notice at
the following address:
Online System Services, Inc.
1800 Glenarm Place, 8th Floor
Denver, Colorado 80202
(303) 296-9200
Attention: ____________________
The CO-OP Network
2350 South Garey Avenue
Pomona, California 91766
(800) 782-9042
Attention: ____________________
20 Trademarks, Publicity and Branding
OSS and CO-OP Network will not use each other's trademarks or service marks
without the other party's prior written consent, which will not be unreasonably
withheld. OSS and CO-OP Network may use each other's name, with consent, in
customer lists and will cooperate with each other with publicity and marketing
activities. CO-OP may "brand" the Online Banking Service provided by OSS by
using the "ACCESS ANYWHERE" brand or another brand of its determination.
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21 Continuing Obligations
CO-OP Network's and OSS's continuing obligations under this Agreement include,
without limitation, those relating to Confidential Information as set forth in
paragraph 8, those relating to limitation of liability as set forth in paragraph
16, those relating to indemnification as set forth in paragraph 15, and all
other obligations which expressly state that they survive. These continuing
obligations shall survive and continue in effect after the termination of this
Agreement.
22 General
22.1 Client acknowledges that it has not been induced to enter into this
Agreement by any representation or warranty not set forth in this
Agreement. This Agreement contains the entire agreement of the pates with
respect to its subject matter and supersedes all existing agreements and
all other oral, written or other communications between them concerning its
subject matter. This Agreement shall not be modified in any way unless it
is in written form and signed by both pates.
22.2 Neither party will assign this Agreement without the prior written
consent of the other party, such consent not to be unreasonably withheld.
No consent shall be required for the assignment of this Agreement by either
party in connection with a merger or sale of substantially all of the
assets of a party, provided that the affected party provides the other
party prompt notice of the transaction. This Agreement shall be binding on
OSS and CO-OP Network and their respective successors and assigns. Any
assignment in violation of this Section 22.2 shall be void.
22.3 If any provision of this Agreement (or any portion thereof) shall be
held to be invalid, illegal or unenforceable, the validity, legality or
enforceability of the remainder hereof, shall not in any way to be affected
or impaired thereby.
22.4 Waiver of any provision hereof in one instance shall not preclude
enforcement thereof on future occasions.
22.5 The headings in this Agreement are intended for convenience of
reference and shall not affect its interpretation.
22.6 The individuals executing this Agreement on behalf of OSS and Client
do each hereby represent and warrant that they are duly authorized by all
necessary action to execute this Agreement on behalf of their respective
principals.
22.7 This Agreement includes each of the Schedules referred to herein,
which are incorporated in this Agreement by reference.
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EXECUTED in multiple originals on the dates shown below.
THE CO-OP NETWORK ONLINE SYSTEM SERVICES
By: /s/ By: /s/
------------------------------- ---------------------------------
Name:_____________________________ Name:_______________________________
(please print) (please print)
Title:____________________________ Title:______________________________
Date:_____________________________ Date:_______________________________
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