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Home My WebLink About2001-05-15; City Council; 16186; Banking Services ContractsAB# /6! \r6 MTG. 5-/+‘~ DEPT. 7k53 CITY OF CARLSBAD -AGENDA BILL TITLE: ADOPTION OF BANKING SERVICES CONTRACT WITH WELLS FARGO BANK ADOPTION OF CUSTODY SERVICES CONTRACT FOR CITY INVESTMENTS WITH UNION BANK OF CALIFORNIA CITY MG%$@ RECOMMENDED ACTION: Adopt Resolution No. 300 \ - 1 q a , awarding a contract to Wells Fargo Bank to provide banking services to the City of Carlsbad. Adopt Resolution No. dco 1-143 awarding a contract to Union Bank of California to provide custody services to the City of Carl&ad. ITEM EXPLANATION: Banking Services and Custody Services for Citv Investments. The City currently receives banking services from Wells Fargo Bank and custody services for City investments from Union Bank of California. The contract with Wells Fargo Bank had a term of three years with an option to extend for additional two years. The banking contract with the extension expired on January 31, 2001. The current contract with Union Bank of California does not have a specific term but does allow termination at any time with a thirty-day written notice from either party. To prepare for the awarding of new contracts for banking and custody services, the City Treasurer developed a process to solicit and identify institutions that would provide the best services at the lowest costs. This process involved the following: 1. The firm of Money Matters, Inc. was employed to assist in the preparation and distribution of Requests for Proposals, and to analyze the proposals received. 2. To ascertain whether any cost savings would accrue if the same institution provided both services, all banks that were in a position to do so were invited to submit proposals for both banking and custody services. 3. Requests for proposals (Exhibits 3 and 4) were sent to a total of twenty banks. a. Two banks made proposals for both services: Wells Fargo Bank and Union Bank of California. b. Two banks made proposals only for the banking services: Bank of America and U. S. Bank. c. Four banks made proposals only for the custody services: City National Bank, U. S. Bancorp, U. S. Trust, and Bank of New York. 4. An ad hoc committee was formed to review the analyses of Money Matters, Inc., interview the two finalists, and determine a recommendation regarding the best proposals for banking services and custody services. The committee consisted of three members of the Finance Department, a representative from Money Matters, Inc., the Assistant to the City Treasurer, and the City Treasurer as the chair. The ad hoc committee unanimously determined that the lowest cost and best services would be achieved with banking services from Wells Fargo Bank, and custody services from Union Bank of California. (Exhibits 5 and 6) The City Treasurer recommends that Wells Fargo Bank be offered a contract to provide banking services, and that Union Bank of California be offered a contract to provide custody services. Each contract will commence on February 1, 2001 and be for a term of five years. Each will allow for sxtensions with a thirty-day written request. The City’s prior agreement with Wells Fargo Bank ?age 2 of Agenda Bill # 1 b 1 \%b expired on January 31, 2001. The City’s agreement with Union Bank of California does not have a specific term but does allow termination at any time with a thirty-day written notice from either party. Since that date and while the terms of the attached Agreement were being negotiated, both Wells Fargo Bank and Union Bank of California continued to provide the City with banking services and custody services respectively, without the benefit of an agreement. It is recommended that the City Council ratify the provision of these services and make the effective date of the attached Agreement February 1,200l. All transaction rates proposed by both Wells Fargo Bank and Union Bank of California are guaranteed for the entire term of five years. Based on the current type and volume of required services, it is anticipated that the total cost of banking services and custody services would remain the same, approximately $4200 per month and $400 per month for banking and custody, respectively. However, these total costs will increase as the number of transactions increase. FISCAL IMPACT: Assuming that the number of transactions for each service will increase at an annual rate of 3%, the twelve-month cost for each contract is projected as follows: Banking Custody Service Service First Year Second Year Third Year Fourth Year Fifth Year $50,400 $4,800 51,900 4,940 53,500 5,100 55,100 5,250 56,800 5,400 EXHIBITS: 1. Resolution No. Gmw-I42 Banking Services Contract. 2. Resolution No. do0 I - /!I\3 : Custody Services Contract. 3. Request for Proposal for Banking Services. (On file in the Treasurer’s Office) 4. Request for Proposal for Custody Services. (On file in the Treasurer’s Office) 5. Wells Fargo Bank’s response to the RFP for Banking Services. (On file in the Treasurer’s Office) 6. Union Bank of California’s response to the RFP for Custody Services. (On file in the Treasurer’s Office) EXHIBIT 1 RESOLUTION NO. 2001-142 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA APPROVING THE CONTRACT FOR BANKING SERVICES WlTH WELLS FARGO BANK WHEREAS, the City of Carlsbad’s contract with Wells Fargo Bank for banking services will expire on February 1, 2001; and WHEREAS, the City of Carlsbad solicited proposals from 13 financial institutions with branch operations within the City of Carlsbad to provide banking services; and WHEREAS, the City Treasurer received competitive proposals from four banking institutions to provide banking services to the City of Carlsbad; and WHEREAS, the proposals were analyzed and reviewed by an ad hoc committee; and WHEREAS, the ad hoc committee unanimously concurred that the Banking Services Proposal submitted by Wells Fargo Bank was the best overall for banking services; and WHEREAS, Wells Fargo Bank has provided the City with excellent service since merging with First Interstate Bank and Norwest Bank. WHEREAS, Wells Fargo Bank has been providing necessary banking services for the City since January 31,200l without benefit of an agreement; and WHEREAS, The City desires to ratify any banking services performed by Wells Fargo Bank without the benefit of an agreement: NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California as follows: 1. That the above recitations are true and correct. 2. Wells Fargo Bank offers a five-year contract with an option to extend for two additional years to provide banking services. The City Council accepts the offer and the contract will commence on February I, 2001. 3. The effective date of the contract will be February 1, 2001 and any banking services performed by Wells Fargo Bank after that date is hereby ratified. 4. That the City Treasurer is hereby authorized to sign the attached Agreement for Banking Services which includes the following documents. 1. Banking Services Agreement; 2. Contract for Deposit of Moneys; 3. Master Agreement for Treasury Management Services; 4. Commercial Account Agreement; 5. Commercial Electronic Office (CEO) Online Access Agreement; 6. Commercial Depository Service Description; 7. Account Reconciliation Plan Service Description; 8. Positive Pay Service Description; 9. ACH Services Description; 10. Corporate Cash Management Account Agreement and 11. Commercial Electronic Commerce Collection Service Description. (See Attachment “A”) and any other documents necessary to carry out the intent of this resolution upon advise of the City Attorney. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council on the 15th day of May , 2001, by the following vote, to wit: AYES: Counicl Members Lewis, Finnila, Nygaard and Hall. NOES: None. ABSENT: Council Member Kulchin. ATTEST: Attachment A to resolution 2001-142 Banking Services Contract with Wells Fargo Bank includes the following: 1. Banking Services Agreement 2. Contract for Deposit of Moneys 3. Master Agreement for Treasury Management Services 4. Commercial Account Agreement 5. Commercial Electronic Office (CEO) Online Access Agreement 6. Commercial Depository Service Description 7. Account Reconciliation Plan Service Description 8. Positive Pay Service Description 9. ACH Services Description 10. Corporate Cash Management Account Agreement 1 I. Commercial Electronic Commerce Collection Service Description 12. PC Manager Service Description 13. Wire Transfer SErvices SEcurity Procedure Agreement City of Carlsbad May 30,200l Records Management Department MR MARK HEWLETT, VP GOVERNMENT BANKlNG MAC E28 18-l 6A WELLS FARGO BANK 707 WILSHIRE BOVD 16m FL LOS ANGELES CA 90017 Re: Banking Service Agreements The Carlsbad City Council approved Resolution 2001-142 on May 15, 2001 authorizing the execution of various banking services agreements, as listed on Attachment “A,” between the City of Carlsbad and Wells Fargo Bank. Please have the appropriate agent execute the agreements on behalf of Wells Fargo and send thefuZZy executed oriainals to our office at the address below. Please make a copy of the agreement for your records if needed. Thank your for your prompt attention and assistance. Sincerely, Debra Doer&r Senior Office Spe f ialist Records Management Department/Office of the City Clerk Enclosures cc: Mr. James Stanton, Treasurer 1200 Carlsbad Village Drive - Carlsbad, CA 92008-l 989 - (760) 434-2808 @ BANKING SERVICES AGREEMENT This Agreement for the provision of banking services is entered into this lst day of February, 2001 by and between the City of Carlsbad, a California municipal corporation (“City”), and Wells Fargo Bank, National Association (“Bank”), herein collectively referred to as the “Parties.” RECITALS WHEREAS, City desires to retain Bank to act as depository of City funds and as provider of banking services in the manner provided for in the City’s “Request For Proposal for Banking Services,” dated August 25, 2000 and the Bank’s “Proposal for Banking Services” dated September 25, 2000, both included herein by reference. WHEREAS, City wishes to contract with a bank having experience in the receipt, safe keeping, and management of municipal funds; and WHEREAS, Bank is willing to enter into a contract with City to provide professional banking services in accordance with this Agreement. NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the Parties agree as follows: ARTICLE I - SCOPE OF SERVICES 1.1 Bank’s Specified Services Bank shall perform for City the banking and cash management services which it has offered to perform in Bank’s “Proposal for Banking Services.” 1.2 Additional Services Bank may perform services in addition to those referenced in Section 1.1 when requested to do so by City. Compensation for any additional services performed by Bank shall be negotiated between Bank and City and incorporated into this Agreement or other mutually executed writing prior to Bank performing such additional services. 1.3 Cooperation with City T 8 In performance of the aforementioned services, Bank shall work closely with the City Treasurer, Assistant to the City Treasurer, Finance Director, Assistant Finance Director, Senior Accountant, and other City staff having responsibility for the deposit, withdrawal, and investment of City funds. 1.4 Satisfactory Performance Banks agrees to perform all services to the reasonable satisfaction of City and within the time frames agreed upon. City staff or a designated individual will do evaluations of the work. If the quality of the work is not reasonably satisfactory, the City shall have the right to: 1) meet with Bank to review the quality of or manner in which the services are being performed and resolve matters of concern; and/or 2) terminate the Agreement as hereinafter set forth. 1.5 Compliance with Law All services rendered hereunder shall be provided in accordance with the requirements of applicable local, state, and federal law. 1 1.6 Familiarity with Work By execution of this Agreement, Bank warrants that: 1) it has thoroughly investigated and considered the services to be performed; 2) it has examined the applicable provisions of local, state, and federal law regarding the deposit, withdrawal, management, and investment of City funds; and 3) it has carefully considered how the services should be performed. ARTICLE II -TERM 2.1 Term of Agreement Unless terminated earlier pursuant to the express provisions of this Agreement, the term of this Agreement shall commence on February 1, 2001, and continue until January 31, 2006. All prices, fees, and funds availability quoted in the “Proposal for Banking Services” and the attached “Banking Services Bid Form” and agreed upon in subsequent discussions with City shall be guaranteed until January 31,2006. 2.2 Extension of Time The term of this Agreement may be extended for two additional years by City and Bank by written agreement with respect to each such extension at least thirty (30) calendar days prior to the date on which this Agreement or an extension thereof would otherwise have terminated. The terms and conditions of the Agreement as so extended shall be as set forth herein, except that City and Bank may mutually agree, in writing, to modifications of this Agreement. 2.3 Termination Notwithstanding the term specified in Sections 1.4 or 2.1, either Party to this Agreement may terminate its obligations under this Agreement at any time by providing at least sixty (60) days advanced written notice of such intent to terminate to the other Party. Either Party may terminate its obligations under this Agreement for any reason. The 60-day period following the delivery of notice shall be called the “Termination Period.” 2.4 Effect of Termination In the event of termination of this Agreement, City shall be liable to Bank for all services performed and compensation due to Bank for those services rendered up to the date that Bank ceases performance of those services. If City serves notice of termination upon Bank, Bank shall stop rendering services under this Agreement by the end of the Termination Period, unless directed otherwise by City, and shall deliver to City all money, negotiable instruments, funds, and other property of City’s currently on deposit with or held by Bank. Bank shall also deliver to City copies of any reports or other documents relating to services performed for City under this Agreement. ARTICLE III - COMPENSATION 3.1 Amounts and Manner of Compensation Except as provided below, for the provision of all banking services rendered, during the term of this Agreement, City shall compensate Bank in the amounts and manner provided for by the “Request For Proposal f ARTICLE IV - COORDINATION OF WORK 4.1 Coordination of Work The following officer positions of Bank (not totally inclusive) are authorized to act on Banks behalf with respect to the services specified in this Agreement and to make all decisions in connection therewith: Senior Vice President, Government Banking Vice President, Government Banking Assistant Vice President, Government Banking Vice President, Treasury Management Sales 4.2 Notices Any notices to be given under this Agreement shall be sent by prepaid mail or overnight delivery addressed as follows: To City: City of Carlsbad Attn: Mr. James M. Stanton City Treasurer 1635 Faraday Avenue Carlsbad, CA 920067314 To Bank: Wells Fargo Bank Attn: Mr. Mark Hewlett Vice President Government Banking, MAC E2618-16A 707 Wilshire Blvd., 16’h Floor Los Angeles, CA 90017 ARTICLE V - INDEPENDENT CONTRACTOR 5.1 Bank’s Status Bank is an independent contractor and not an employee of City. Neither City nor its employees shall have any control over the conduct of the Bank or its employees except as herein set forth, and Bank expressly warrants not to, at any time or in any manner, represent that Bank, or its officers, employees, or agent, are in any manner officers, employees, or agents of City. It is distinctly understood that Bank is and shall at all times remain as to City a wholly independent contractor, and that Banks obligations to City are solely as prescribed by this Agreement and the referenced documents. 5.2 Bank’s Personal Services - Inducement This Agreement contemplates that the Bank’s personal services and those of its officers, employees, and agents are a substantial inducement to City for entering into this Agreement. Except as otherwise provided in the Master Agreement for Treasury Management Services entered into between Bank and City, Bank may not assign any interest in this Agreement except upon consent of City. Further, Bank shall not subcontract any portion of the performance contemplated under this Agreement without prior written approval by City. Nothing in this Agreement shall be construed as preventing Bank from employing as many employees as Bank deems necessary for the proper and efficient execution of this Agreement. ARTICLE VI - INDEMNITY 6.1 lndemnitv of City Each Party shall indemnify, defend, and hold free and harmless the other Party and their officers, employees, and agents from and against any and all loss or liability for claims that occur or arise as a result of any negligence of such Party, its officers, employees, and agents in performing any and all services rendered pursuant to this Agreement providing, however, such Party’s obligation to defend, indemnify, and hold free and harmless shall not arise as a result of that portion of any claim that may occur as a result of the other Party’s negligence. Those portions of any other agreements between the parties that are inconsistent with this Section of the Agreement are of no force or effect with regard to this Agreement. ARTICLE VII - MISCELLANEOUS 7.1 Enforcement of Agreement This Agreement shall be construed and interpreted as to both validity and performance of the Parties in accordance with the laws of the State of California. Legal actions concerning any dispute, claim, or matter arising out of or in relation to this Agreement shall be instituted in the Superior Court of the County of San Diego, State of California, or any other appropriate court in such county, and Bank covenants and agrees to submit to the personal jurisdiction of such court in the event of such action. 7.2 Disputes In the event of any dispute arising under this Agreement, the injured Party shall notify the injuring Party in writing of its contentions by submitting a claim therefor. The injured Party shall continue performing its obligations hereunder so long as the injuring Party cures any default within thirty (30) days after service of said notice, or if the cure of the default is commenced within 30 days of said notice and is cured within a reasonable time after commencement, provided that if the default is an immediate danger to the health, safety, and general welfare, either Party may take immediate action. Compliance with the provisions of this Section shall be a condition precedent to any legal action, and such compliance shall not be a waiver of either Party’s right to take legal action in the event that the dispute is not cured. 7.3 Waiver No delay or omission in the exercise of any right or remedy of a non-defaulting Party on any default shall impair such right or remedy or be construed as a waiver. City’s consent or approval of any act by Bank requiring City’s consent or approval shall not be deemed to waive or render unnecessary City’s consent to or approval of any subsequent act of Bank. Any waiver by either Party of any default must be in writing and shall not be a waiver of any other default concerning the same or any other provision of this Agreement. 7.4 Rights and Remedies are Cumulative Except with respect to rights and remedies expressly declared to be exclusive in this Agreement, the rights and remedies of the Parties are cumulative and the exercise by either Patty of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other Party. 7.5 Integration The “Contract Documents” consist of this Banking Services Agreement, and the following documents, collectively referred to as the “Bank Documentation”: the Contract for Deposit of Moneys, the Commercial Account Agreement, and the Master Agreement for Treasury Management Services and 4 related Service Documentation. In the event of a conflict between the Banking Services Agreement and any of the Bank Documents, the Banking Services Agreement shall control. A conflict among the Bank Documents will be resolved in the manner specified in paragraph 1 of the Master Agreement for Treasury Management Services. The Contract Documents represent the entire understanding of City and Bank. No prior oral or written understanding shall be of any force or effect with respect to those matters covered in the Contract Documents. These Contract Documents may not be altered, amended, or modified except in writing by both Parties hereto. 7.6 Amendment This Agreement may be amended at any time by the written mutual consent of both Parties. No amendment shall be effective unless written and signed by the Parties. 7.7 Agreement Supersedes Other Documents To the extent that there is any conflict between this Agreement and any other relevant documents associated with Bank providing banking services to City, the terms of this Agreement shall prevail. 7.6 Corporate Authoritv The persons executing this Agreement on behalf of the Parties hereto warrant that they are duly authorized to execute this Agreement on behalf of said Parties and that by doing so, the Parties hereto are formally bound to the provisions of this Agreement. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed with all of the formalities required by law on the respective dates set forth opposite their signatures. CITY OF CARLSBAD Dated: J-j-j 3/q City Treasurer 1 Dated: Dated: Dated: By: Title: WELLS FARGO BANK, NATIONAL ASSOCIATION “BANK” By: Title: By: City Clerk APPROVED AS TO FORM RONALD R. BALL, City Attorney BY: ***SEE PAGE S*** Deputy City Attorney WEXLSFARGOBANK Contract for Deposit of Moneys THIS CONTRACT, relating to the deposit of moneys, is made as of the 1st day of February IOcc~ between James M Stan- (“Treasurer”) acting il his or her official capacity as City Treasurer of City of Carlsbad (“Depositof), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”), having a shareholder’s equity of $11,330,000,000.00 on December 31, 1998, and is made with reference to the following facts: WHEREAS, the Treasurer proposes to deposit in the Bank from time to time, moneys in his or her custody in an aggregate amount on deposit at any one time not to exceed the total shareholder’s equity of the Bank, and said moneys will be deposited subject to Title 5, Division 2, Part 1, Chapter 4, Article 2 (commencing with Section 53630) of the Government Code of the State of California (the “Local Agency Deposit Security Law”). WHEREAS, the Government Code requires the Treasurer to enter into a contract with the Bank setting forth the conditions upon which said moneys are deposited. WHEREAS, in the judgment of the Treasurer, this Contract is to the public advantage. NOW, THEREFORE, the parties agree as follows: 1. This Contract cancels and supersedes any previous contracts between the Treasurer and the Bank relating to the method of collateralization of Depositor’s deposits. To the extent not inconsistent herewith, any such deposit shall be subject to the terms and conditions of the Bank’s standard disclosure statement (as in effect from time to time) for deposits of that type. 2. This contract, but not deposits then held hereunder, is subject to termination by the Treasurer or the Bank at any time upon 30 days’ written notice. Deposits may be withdrawn in accordance with the agreement of the parties and applicable federal and state statutes, rules and regulations. This contract is subject to modification or termination upon enactment of any statute, rule, or regulation, state or federal, which, in the opinion of the Administrator of Local Agency Security of the State of California (the “Administrator”), is inconsistent herewith, including any change relative to the payment of interest upon moneys so deposited by the Treasurer. The Treasurer may withdraw Depositor’s deposits from the Bank immediately upon receiving notice from the Administrator that the Bank has failed to pay assessments, fines or penalties assessed by the Administrator. The Treasurer may immediately upon receiving notice from the Administrator withdraw authorization for the placement of securities with the Agent of the Bank in the event that the Agent of the Bank fails to pay fines or penalties assessed by the Administrator. 3. Interest shall accrue on any moneys so deposited as permitted by any act of Congress of the United States or by any rule or regulation of any department or agency of the Federal Government. If interest may legally be paid on the account into which the moneys are deposited, then all moneys deposited shall bear interest at a rate agreed upon by the Treasurer and the Bank. 4. The Bank shall issue to the Treasurer for each deposit a receipt on a form agreed to by the Bank and the Treasurer, stating the interest to be paid (if any), the duration of the deposit (if appropriate), the frequency of interest payments (if any) and the terms of withdrawal. Each such deposit receipt is by reference made a part of this contract. 5. The Bank will maintain at all times with the Agent of the Bank as security for Depositor’s deposits: (a) eligible securities of the classes described in Government Code Section 53651 (except subdivisions (m) and (p) having a market value at least 10% in excess of the total amount of deposits secured by those securities, (b) eligible securities of the class described in subdivision (m) of Government Code Section 53651 having a market value at least 50% in excess of the total amount of deposits secured by those securities and (c) eligible securities of the class described in subdivision (p) of Government Code Section 53651 having a market value at least 5% in excess of the total amount of deposits secured by those securities. If the Administrator determines that a security is not qualified ~to secure public deposits, the Bank will substitute other securities to comply with the requirements of this Paragraph. 6. The Treasurer hereby waives security for that portion of the total amount on deposit which is insured pursuant to Federal law. 7. The Agent of the Bank, which the Treasurer and the Bank hereby authorize to hold the eligible securities posted as collateral under this contract, is BNY WESTERN TRUST COMPANY. The Agent of the Bank has filed with the Administrator an agreement to comply in all respects with all provisions of the Local Agency Deposit Security Law. 8. Authority for placement of securities for safekeeping in accordance with Government Code Section 53659 is hereby granted to the Agent of the Bank, including placement with any one or more Federal Reserve Banks or branches thereof. 9. If the Bank fails to pay all or part of any moneys of the Depositor on deposit with the Bank which are subject to this contract when ordered to do so in accordance with the terms of withdrawal set forth on the applicable deposit receipt, the Treasurer will immediately notify the Administrator in writing. Action of the Administrator in converting the collateral required by Paragraph 5 above for the benefit of the Depositor is governed by Government Code Section 53665. 10. The Bank may add, substitute or withdraw eligible securities being used as security for deposits made hereunder in accordance with Government Code Section 53654, provided the requirements of Paragraph 5 above are met. 11. The Bank shall have and hereby reserves the right to collect and retain for the Bank’s own account the interest or income on the securities, except in cases where the securities are liable to sale or are sold or converted in accordance with the provisions of Government Code Section 53665. 12. The Bank will pay all expenses incurred in transporting eligible securities maintained as collateral for moneys on deposit to and from the Agent of the Bank. The Depositor will pay (or promptly reimburse the Bank for or otherwise compensate the Bank for) all expenses incurred in transporting all moneys deposited with the Bank to and from the Depositor’s offices. The Depositor will pay the Bank (or otherwise compensate the Bank for) the fees and charges stated in the Bank’s then current Schedule of Charges (unless the Bank and the Treasurer otherwise agree) for handling, collecting and paying all checks, drafts and other exchange or securities according to the Banks standard practices. 13. This contract, the parties hereto, and all deposits governed by this contract shall comply with and be subject in all respects to the Local Agency Deposit Security Law, and all other state and federal laws, statutes, rules and regulations applicable to such deposits, whether now in force or hereafter enacted to promulgated, all of which are by this reference made a part hereof. IN WITNESS WHEREOF, the Treasurer in his or her official capacity on behalf of the Depositor, and the Bank by its duly authorized officer, have signed this contract in triplicate as of the day and year first above-mentioned. TREASURER OF: WELLS FARGO BANK, NATIONAL ASSOCIATION By: Melinda Pulizzano-Moorley Title: docs981 xalif4.doc (rev. l-27-98) MASTER AGREEMENT for TREASURY MANAGEMENT SERVICES This Master Agreement for Treasury Management Services (“Agreement”) is entered into this 1st day of February, 2001 between WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) and the undersigned (“Company”). Bank provides certain treasury management services to its business and commercial customers, and Company anticipates that it will from time to time engage Bank to perform one or more of those services in accordance with this Agreement (each a “Service”). For each Service, the following documents (collectively the “Service Documentation”), as each may be amended from time to time, contain the terms, conditions and fees governing the provision of that Service to Company and any of its subsidiaries or affiliates on whose behalf Company is acting: . Master Agreement for Treasury Management Services; . Service Description for each Service; . Security Procedure Agreement for a Service; l Account Agreement for Company’s Business or Commercial deposit accounts related to a Service; . Set-up Form(s) for a Service; n User Guide for a Service; n Any agreement with Bank governing access to a Service through the Internet, including without limitation, the Commercial Electronic Office (CEO) Online Access Agreement; and n Any other document referred to in one of these documents as incorporated in or a part of the document or the agreement contained in the document. Company, for itself and on behalf of each of those subsidiaries and affiliates, agrees to be bound by such terms and conditions, and the term “Company” as used in the Service Documentation includes Company and each of those subsidiaries or affiliates. As used in the Service Documentation: . “Account Agreement” means, for each Service, the agreement between Company and Bank governing each deposit account at Bank related to the Service; Master Agreement for Cash Management Services JB3417Q2.3 (Final 05/17/00) Page 1 . “Security Procedure Agreement” means, for each Service involving a transfer of funds from an account at Bank, the written agreement between Company and Bank establishing the security procedure(s) used to authorize a transfer; . “Service Description” means, for each Service, the written description of that Service and certain of the terms governing its use, as modified or amended from time to time, which Bank provides with respect to that Service; . “Set-up Form(s)” means, for each Service, the form(s) which Bank requires be completed or provided to Bank by Company for that Service; and . “User Guide” means, for each Service, any guides, quick reference guides, manuals, price schedules, specifications, materials, computer programs, computer program licenses, reset diskettes, documents, computer, website and other instructions, forms and notices, as modified or amended from time to time, not included in the applicable Service Description, which Bank provides in connection with that Service. If Company is already a treasury management services customer of Bank, the Service Documentation for each Service that Company is currently receiving replaces the existing agreement(s) with Bank or any predecessor to Bank by acquisition or merger with respect to the Service, unless the Service is listed as an “Excluded Service” below Company’s signature at the end of this Agreement. Any existing agreements with respect to each Excluded Service will remain in effect and continue to govern the Excluded Service until terminated in accordance with their provisions. Bank and Company agree: 1. Services. Bank will provide Company with each Service separately requested by Company and agreed to by Bank on a case by case basis. Each Service is described in the Service Description and other Service Documentation applicable to that Service. Bank may require that the request be in writing and be signed by an authorized officer, agent or employee of Company as set forth in a resolution of Company’s Board of Directors certified in writing by an appropriate officer of Company to be current and correct; or, if Company is not incorporated, by other appropriate procedure acceptable to Bank. Company’s use of a Service after receipt of the Service Documentation for that Service will confirm its agreement to the terms, conditions and fees set out in the Service Documentation for that Service. Company acknowledges receiving a copy of the Service Documentation for each Service it requested at the time it entered into this Agreement. In the event of any conflict among the items constituting the Service Documentation, the following will govern in the following order: n the Service Description; 9 the Security Procedure Agreement; n the Master Agreement for Treasury Management Services; n the Set-up Form(s); n the User Guide; and l the Account Agreement. Master Agreement for Cash Management Services JB3417Q2.3 (Final 05/17/00) Page 2 2. Performance of the Services. Bank will perform each Service in accordance with: . reasonable commercial standards applicable to Bank’s business; . operating circulars, regulations and laws governing the activities of Bank; . applicable funds transfer system(s) and clearinghouse rules; and . the Service Documentation. 3. Changes to Sewices. Except as otherwise provided in the Banking Services Agreement of even date herewith between Bank and Company (“Banking Services Agreement”), Bank reserves the right to change the terms, conditions and fees contained in the Service Documentation for any Service at any time. Bank will provide thirty (30) days prior notice of any material change, including fees. Notice may be provided in writing, electronically or by printing a message on, or enclosing a message with Company’s related account statement or account analysis statement. If Company does not wish to be bound by such a change, it may discontinue using and terminate the affected Service before the change becomes effective. If Company continues to use a Service after the change becomes effective, it will be bound by the change. 4. Term and Termination. Except as otherwise provided in the Banking Services Agreement, this Agreement and all Services provided hereunder will continue in effect until terminated by either party upon seven (7) days prior written notice (unless a particular Service may be terminated sooner in accordance with the applicable Service Description). Bank may immediately terminate this Agreement upon notice to Company if Company is in material violation of a provision of the Service Documentation. Bank may immediately terminate this Agreement without notice to Company if Company files, or has filed against it, a petition under the U.S. Bankruptcy Code or a similar state or federal law. The termination of a Service or this Agreement will not affect Company’s or Bank’s rights with respect to transactions which occurred before termination. Upon termination of a Service, Company will immediately: 9 return to Bank any original and all copies of User Guides in its possession, custody or control relating to the Service; l return to Bank the original and any copies of software and other materials and delete any hard disk data related to the Service; and . if requested, certify in writing to Bank that the original and all copies have been returned and the hard disk data has been deleted. Unless provided otherwise in a Service Description each additional Service will commence within a reasonable time after Bank agrees to provide it. 5. Sewice Fees. Company agrees to pay Bank for each Service in accordance with the fees set out in the Service Documentation for the Service. Company also agrees to pay an amount equal to any taxes applicable to each Service, however designated, exclusive of taxes based on the net income of Bank. Except as otherwise agreed in writing, all fees and taxes may be periodically debited against Company’s accrued Master Agreement for Cash Management Services JB3417Q2.3 (Final 05/l 7/00) Page 3 earnings credit. Bank may debit Company’s account(s) with Bank for any amount by which the fees or taxes exceed the accrued earnings credit, or may send an invoice to Company for such amount which Company agrees to promptly pay. Bank may assess finance charges on any invoiced amounts that are not paid within 45 days of the date of invoice. Finance charges are assessed at a rate of 1.5% per month (18% per annum) or the highest amount permitted by law, whichever is less. Charges for accrued and unpaid interest and previously assessed finance charges will not be included when calculating finance charges, Payments and other reductions of amounts owed will be applied first to that portion of outstanding fees attributable to charges for accrued and unpaid interest and previously assessed finance charges, then to other fees and charges. 6. Authority to Combine Funds. Company represents and acknowledges that any and all transfers and commingling of funds required or permitted by a Service, and all other aspects of the performance of each Service, have been duly authorized by all necessary persons, including, without limitation, the accountholder of each account related to the Service. Company further represents and acknowledges that Company has obtained, and will maintain in its regular business records and make available to Bank upon reasonable demand for a period of six (6) years after the termination of a Service (or such longer period as Bank may reasonably require in writing prior to the end of the six (6) year period), adequate documentary evidence of such authoriiation, executed by the duly authorized officer(s) or other representative(s) of each accountholder in accordance with that accountholder’s organizational requirements. Company additionally represents and acknowledges that each transfer or commingling of funds required or permitted by a Service is neither in violation of any of its or its subsidiaries’ or affiliates’ internal requirements, nor in violation of any applicable federal, state or local statute, ordinance, regulation, rule of law, decree, judgment or order of any judicial or administrative authority. 7. Proprietary Property and Confidentiality. Except as may be otherwise provided in Bank’s Service Documentation, all computer programs, systems, reset diskettes and other items provided by, through or on behalf of Bank with respect to a Service, and all related information, constitute Bank’s proprietary property having great commercial value to Bank. Bank will remain the sole owner of all such proprietary property and Company will not acquire any proprietary interest or rights in it as a result of Company’s use of any Service. Company will not create or permit others to create, by reverse engineering or otherwise, the source code or any part of the source code from the object code of any computer program. Company will not transfer, copy, alter, modify, reproduce or convey in any manner any computer program, system or other such proprietary property. Company’s right to any User Guide is expressly limited to the right to use the User Guide as set out in that User Guide. Company will keep the contents of all such proprietary property confidential and will not permit its employees or agents to disclose, copy, reproduce, lend, sell, assign, transfer, sublicense or othenrvise make any of it available in whole or in part to any person or entity, including, but not limited to, any of its successors or affiliates, other than those of its employees who have a need to use proprietary property in connection with the applicable Service. Company agrees to notify Bank immediately if it knows or suspects that there has been unauthorized disclosure, possession or use of any computer program or other proprietary property, Master Agreement for Cash Management Services JB3417Q2.3 (Final 05/l 7/00) Page 4 6. n obtain redress for any injury caused to Bank as a result. Couriers. Company may utilize a courier in connection with a Service and in so doing it agrees at all times and in all respects that: . notwithstanding any arrangement through which the courier may be paid, the courier is Company’s agent and not Bank’s, and Company and not Bank is responsible for any services performed or promised and not performed by the courier; and . Company assumes all risk of loss prior to acceptance of delivery by Bank from the courier and subsequent to the courier’s acceptance of delivery from Bank. Although Bank may undertake reasonable efforts to assist in any loss recovery, Company represents and acknowledges that it (and not Bank) will be responsible for all loss recovery procedures, processes and costs relating to such losses. 9. Third Party Networks. Bank’s provision of certain Services is dependent upon its ability to provide access to third party networks or systems. Unless otherwise provided in the Service Documentation, Bank will determine the funds transfer, communications, Internet service providers or other system(s) to be used in performing each Service. In the event that any network, provider or system is unavailable, or if Bank determines in its discretion that it is unable to continue to provide access to a network, provider or system, it may, upon notice to Company, discontinue the affected Service or take such other action as may be reasonable in the circumstances. IO. Liability. and if it is responsible for the unauthorized disclosure, possession or use, it will, at its expense, promptly: . take all reasonable actions, including, but not limited to, court proceedings, to recover possession of, or to prevent further unauthorized disclosure or use of, any computer program or other proprietary property; and 10.1. Bank will only be responsible for performing each Service as expressly provided in the Service Documentation, and will only be liable for material losses incurred by Company to the extent such losses directly result from Bank’s negligence or intentional misconduct in performing a Service. 10.2. IN NO EVENT WILL BANK HAVE LIABILITY FOR ANY CONSEQUENTIAL, SPECIAL, PUNITIVE OR INDIRECT LOSS OR DAMAGE WHETHER OR NOT ANY CLAIM FOR SUCH DAMAGES IS BASED ON TORT OR CONTRACT OR BANK KNEW OR SHOULD HAVE KNOWN THE LIKELIHOOD OF SUCH DAMAGES IN ANY CIRCUMSTANCES. 10.3. Bank is under no obligation to honor, in whole or in part, any entry, file, batch release, payment order, transaction or instruction which: Master Agreement for Cash Management Services JB341782.3 (Final 05/17/00) Page 5 . exceeds Company’s collected and available funds on deposit in an account with Bank related to the entry, file, batch release, payment order, transaction or instruction, unless otherwise provided in the Service Documentation for the applicable Service; . is not in accordance with any term or condition applicable to the relevant Service; l Bank has reason to believe may not be authorized by Company or any third person whose authorization Bank believes is necessary; 8 involves funds subject to a hold, dispute, restriction or legal process Bank believes prevents their withdrawal; n would result in Bank exceeding any limitation on its intraday net funds position established pursuant to present or future Federal Reserve guidelines; n would violate any applicable provision of any risk control program of the Federal Reserve or any applicable rule or regulation of any other federal or state regulatory authority; . is not in accordance with any other requirement of Bank’s applicable policies, procedures or practices; or m Bank has reasonable cause not to honor for its or Company’s protection. 10.4. Company agrees to promptly examine each statement received from Bank for a deposit account related to a Service, and to promptly report any erroneous credit or debit. Company also agrees that within 30 days after Bank mails or otherwise makes the statement available, Company will report to Bank any claim for credit or refund due to an erroneous or unauthorized debit, a missing signature, an unauthorized signature, or an alteration. Statements will be deemed to have been mailed on the first business day following the statement date. Within 6 months after Bank mails or otherwise makes the statement available, Company will report to Bank any claim for credit or refund resulting from a forged, unauthorized, or missing endorsement. Such reports will be made by (i) calling the telephone number listed on the statement for such purpose and (ii) submitting a written report to Bank as soon as possible, but in any event, within the time frames described in this Subsection. Without regard to care or lack of care on the part of Bank, if Bank does not receive notice within the time frames specified in this Subsection, Bank will be released from all liability for the Items charged to the account and for all other transactions or matters covered by the statement. 10.5. Company will promptly furnish proof of loss in written form to Bank, and will provide reasonable assistance to Bank in recovering a loss. If Company is reimbursed by or on behalf of Bank, Bank or its designee will be subrogated to all rights of Company. Master Agreement for Cash Management Services JB3417Q2.3 (Final 05/l 7/00) Page 6 10.6. Company will notify Bank in writing immediately if it becomes aware of any claim of loss or liability by a third person related to a Service. 10.7. Company acknowledges that reconstruction of an event which caused it to suffer damages becomes difficult and may be inaccurate more than one year following the occurrence of the event. Accordingly, Bank and Company agree that any claim, action or proceeding against the other for damages arising from or in any way related to an act or omission of the other in connection with a Service, including without limitation any claim based on negligence, must be brought within one year from the date of the act or omission, unless the act or omission or its consequence to Company was intentionally concealed by Bank, in which case the claim, action or proceeding must be brought within one year from the date when the concealed act, omission or consequence was actually discovered, or should reasonably have been discovered, by Company. 10.8. Bank will not have any liability for failure to perform or delay in performing a Service if the failure or delay is due to circumstances beyond Bank’s reasonable control. Bank will make reasonable efforts to prevent such occurrences. II. Indemnification. Except to the extent that Bank is liable under the terms and conditions in the Service Documentation, Company agrees to indemnify and hold Bank, its directors, officers, employees and agents harmless from all loss, liability, claims, demands, judgments and expenses: . arising out of or in any way connected with the performance of a Service (including without limitation, any warranty made by Bank as the result of a statute, regulation, rule, policy, procedure or guideline applicable to a Service); . arising out of or in any way connected with an act or omission of any agent, courier or authorized representative of Company’s; and n if the Service includes a license or sublicense of any software to Company, arising out of or in any way connected with the wrongful or unauthorized use of the software and any related materials by Company, its partners, members, directors, officers, employees or agents or by any other person gaining access to the software or any related materials through it, or them. 12. Warranty of Compliance. Company acknowledges that a Service may not be used to conduct any transaction in violation of Federal or state law. Company expressly warrants that a Service will not be used in a manner which violates any sanction or control administered by the Ofice of Foreign Assets Control or Bureau of Export Administration. 13. Affiliates. Company may from time to time desire to obtain a Service under the terms of this Agreement from a present or future Bank affiliate. Bank will make a reasonable effort to arrange for the affiliate to provide the Service. With respect to each Service provided by an affiliate: n the term “Bank” when used in the Service Documentation will include the affiliate; Master Agreement for Cash Management Services JB3417Q2.3 (Final 05/l 7100) Page 7 . Bank and the affiliate may share any information helpful in providing the Service; m liability with respect to the Service will be limited solely to the affiliate providing the Service; and . Company authorizes Bank and the affiliate to initiate such instructions, and to make such debit and credits, to accounts of Company at Bank and the affiliate as are necessary or appropriate to effect the performance of the Service. Nothing in this Section 13 will apply to Bank’s or an affiliate’s use of agents or independent contractors to provide all or any portion of a Service. 14. General. 14.1. 14.2. 14.3 14.4. The Service Documentation will be governed by and interpreted in accordance with substantive federal laws, regulations and rules and, to the extent such laws, regulations and rules are not applicable, the laws of the State of California. Any Service Documentation or Service which is inconsistent with applicable laws, regulations or rules will be deemed modified and applied in a manner consistent therewith, and Bank will incur no liability to Company as a result of the inconsistency or modification and application. Any Service Documentation deemed unenforceable or invalid will not affect the enforceability or validity of the remaining Service Documentation. The related Service Documentation constitutes the entire agreement between Bank and Company and supersedes prior oral or written representations, conditions, warranties, understandings, proposals or agreements regarding a Service. Headings do not constitute a part of this Agreement. Portions of this Agreement designated 4, 5, 7 10, 11, 12 and 14.3 will survive termination of this Agreement. Any notice, electronic message, electronic record or other communication may be sent to Company at its then current address on file with Bank. Company may provide notice to Bank in writing by mailing, couriering or personally delivering, or if allowed in the Service Documentation, electronically delivering it to the attention of Company’s Relationship Manager at Bank, at the address where Bank’s Relationship Manager is located. If it does, notice will be deemed received when actually delivered. Bank will be entitled to rely on any written notice or other written communication, or if allowed in the Service Documentation on any electronic record or electronic message, believed by it in good faith to have been signed or otherwise authorized by an authorized representative of Company or otherwise appropriately authenticated and, except as expressly stated in the Service Documentation, shall have no obligation to verify the signature (including an electronic signature), or other authorization or authentication. Bank will have a reasonable time after receipt of any notice, message, electronic record or other communication to act on it. No provision of the Service Documentation may be modified except in writing signed by the party against whom the modification is to be enforced. No course of dealing or waiver of any right on one occasion will constitute a modification of the Service Master Agreement for Cash Management Services JB3417Q2.3 (Final 05/l 7/00) Page 8 14.5. 14.6. 14.7. 14.8. 14.9. 14.10. 14.11 Documentation or be a waiver of the same or any other right on a subsequent occasion. Neither party may assign or transfer its rights or obligations with respect to any Service or the related Service Documentation without the other party’s prior written consent, which consent will not be unreasonably withheld. However, Bank may assign its rights and obligations with respect to any Service or the related Service Documentation to any successor by merger, consolidation or corporate reorganization. No person or entity will be deemed to be a third party beneficiary under any Service Documentation. Bank may, without notice, refuse to honor any payment, transfer, release or withdrawal order which would result in an overdraft, even if it has previously allowed overdrafts. Bank may establish cut-off times, and may change those cut-off times upon reasonable notice to Company. Delivery and use of an informational Service occurs when the information is provided. Company represents and acknowledges on Company’s behalf and on behalf of Company’s employees and agents, that except to the extent prohibited by applicable federal and state privacy laws, Bank may monitor, record and retain telephone conversations, electronic messages, electronic records and other data transmissions at any time without further notice to anyone, and that Bank will have no liability for doing or failing to do so. Neither the provisions of any Service Description nor Bank’s performance of any Service will relieve Company of any obligation regarding the maintenance of records or from employing adequate audit, accounting and review practices customarily followed by businesses similar to Company. Unless otherwise provided in the Service Documentation, Company will retain and provide to Bank, upon request, all information necessary to remake or reconstruct any deposit, transmission, release, file, entry, batch or order relating to a Service until thirty (30) days after Bank receives the deposit, transmission, release, file, entry, batch or order. Bank may grant credit to Company in connection with a Service, but is not required to do so. It is never the intention of Bank to violate any applicable usury or interest rate laws. Bank does not agree or intend to contract for, charge, collect, take, reserve or receive (collectively “charge or collect”), any amount in the nature of interest or in the nature of a fee, penalty or other charge, which would in any way or event (including demand, prepayment or acceleration) cause Bank to charge or collect more than the maximum Bank would be permitted to charge or collect by any applicable federal or state law. Any such excess interest or unauthorized fee will, notwithstanding anything stated to the contrary, be applied first to reduce the true indebtedness, if any, and any excess amounts will be refunded. Unless otherwise specifically defined in a document included in the Service Documentation for purposes of that document, the term “Banking Day” means Master Agreement for Cash Management Services JB3417Q2.3 (Final 05/l 7/00) Page 9 that part of a business day occurring prior to the cut off time stated in Bank’s applicable funds availability policy, and the term “Business Day” means a day, other than a Saturday, Sunday or day when Federal Reserve Banks are closed. Master Agreement for Cash Management Services JB3417Q2.3 (Final 05/17/00) Page 10 Agreed To And Accepted By: Agreed To And Accepted By: WELLS FARGO BANK NATIONAL ASSOCIATION (“Bank”) I City of Carlsbad (“Company”) By: Name: Title: By: e,ry Of t%d,dd 6 Nawz+ #&..4-- 6 . Titk:c& treasurer ;ramPE M. Stanton By: Name: Title: Excluded Services. Each Service listed below will continue to be governed by an existing agreement(s) and not by this Agreement: ATTEST: City Clerk APPROVED AS TO FORM: RONALD R. BALL, City Attorney BY: &w&&/j/ Jc. /Lf&c&&y.. Deputy City Attorney Docs20011 .CarlsbadPl .doc Master Agreement for Cash Management Services JB3417Q2.3 (Final 05/l 7/00) Page 11 COMMERCIAL ACCOUNT AGREEMENT May 15,200O This Agreement contains the terms and conditions of the Company’s commercial demand deposit account or commercial money market deposit account (the “account”) at the Wells Fargo Bank at which the account was opened (“Bank”). This Agreement, together with the companion Contract for Deposit of Moneys, replaces any prior agreements regarding the account. All fees and other charges for the account and the services referenced below are detailed in a separate fee and information schedule which has been provided to Company. By using the account after receipt of this Agreement, Company is deemed to have agreed to all terms and conditions set forth below, as may be modified or supplemented by the most recent fee and information schedule provided to Company. This Agreement, incorporates by reference the applicable fee and information schedule, funds availability policy, and any applicable rate sheets for interest-bearing accounts that have been separately provided to Company concerning the account. Modification of Terms. Bank reserves the right to add, change, or delete (individually and collectively referred to as a “modification”) the terms and conditions described in this Agreement and the fees contained in any fee and information schedule. Except in the case of modifications in FDIC charges, Bank will send Company prior notice of any such modification or notify Company by printing or enclosing a message on/with Company’s account statement. If Company does not wish to be bound by any such modification, it may discontinue using the service affected by the modification or close the account before the effective date of the modification. Company’s continued use of the account, or, if the modification only affects a specific service, Company’s use of that service, after the modification becomes effective will be deemed to be Company’s agreement to it. Laws Governing the Account. The account is governed by the laws and regulations of the United States and, to the extent applicable, the laws of the state of California, without regard to conflicts of laws principles. Company and Bank agree that any lawsuits, claims, or other proceedings arising from or relating to the account or this Agreement will be venued exclusively in the state or federal courts in San Diego County, California. Any term or condition contained in this Agreement which is inconsistent with applicable law or regulation will be deemed modified and applied in a manner consistent with such law or regulation. Any term or condition deemed unenforceable or invalid will not affect the enforceability or validity of the remaining provisions of this Agreement. Verification of Transactions; Right to Reverse Erroneous Credits. All transactions, including without limitation those for which Bank has provided a receipt, are subject to Bank’s final veriication. Bank is not responsible for a deposit until it has been received and verified by a Bank employee. A receipt received at the time of deposit is not evidence that a deposit has been verified. Bank may reverse or otherwise adjust any credit it believes it has erroneously made to the account at any time without prior notice to Company. Affiliates. Deposits and withdrawals may be made at a bank affiliated with Bank (an “affiliate”), provided the affiliate agrees. If a deposit is made at an affiliate, the availability of the deposit for withdrawal will be described in the affiliate’s funds availability policy. If an affiliate cashes an Item for Company, Bank may place a hold on the account for a corresponding amount of funds. If the Item is later returned to the affiliate for any reason, Bank may debit the account at Bank for the amount of the Item. -l- Statements and items Paid. Statements, notices, and other information regarding the account will be mailed to the address reflected in Bank’s records for the account, unless Bank agrees otherwise in writing. Company agrees to promptly examine each statement received from Bank and to promptly report any erroneous credit or debit. Company also agrees that within 30 days after -Bank mails or otherwise makes the statement available, Company will report to Bank any claim for credit or refund due to an erroneous or unauthorized debit, a missing signature, an unauthorized signature, or an alteration. Statements are deemed to have been mailed on the first business day following the statement date. Within 6 months after Bank mails or otherwise makes the statement available, Company will report to Bank any claim for credit or refund resulting from a forged, unauthorized, or missing endorsement. Such reports are to be made by (i) calling the telephone number listed on Company’s account statement for such purpose and (ii) submitting a written report to Bank as soon as possible, but in any event, within the time frames described in this section. Without regard to care or lack of care on the part of Bank, if Bank does not receive notice within the time frames specified above, Bank is released from all liability for the Items charged to the account and for all other transactlons or matters covered by the statement. Check Endorsement Requirements. By Federal regulation, the area on the back of an Item between l-712 inches from the “trailing edge” and 3 inches from the “leading edge” is reserved for depository bank endorsement (the “Depository Bank Endorsement Area”) and must be kept clear and unobstructed. The endorsement of the payee or depositor should be placed on the back of the Item along the “trailing edge” but must not be placed in the Depository Bank Endorsement Area. If Company marks or obscures the Depository Bank Endorsement Area or Company cashes or deposits an Item on which the Depository Bank Endorsement Area is marked or obscured, a delay may occur if the Item must be returned. Examples of marks which may obscure the reserved area are endorsements, rubber stamp imprints, carbon bands and preprinted information. Any resulting delay or loss is Company’s responsibility. COMPANY AGREES TO HOLD BANK HARMLESS FROM ANY LOSS, LIABILITY, OR DAMAGE BANK MAY SUFFER OR INCUR ARISING FROM OR IN ANY WAY RELATED TO MARKS APPEARING IN THE DEPOSITORY BANK ENDORSEMENT AREA AT THE TIME OF ENCASHMENT OR DEPOSIT. When Deposits Are Credited to the Account. All over-the-counter deposits or ATM deposits to the account which are received before Bank’s established cutoff time on any Business Day will be credited (and will be considered deposited) to the account as of the close of business that day, and will be reflected in that day’s Ledger Balance. All other deposits (such as cash letter or lockbox) will be processed in accordance with separate agreements or banking practice. All deposits received after Bank’s established cutoff time on a Business Day or at any time on a day which is not a Business Day will be credited (and will be considered deposited) to the account at the end of the next Business Day. Deposits placed in one of Bank’s “night depositories” before the established deadline on any Business Day will be credited to the account at the close of business on that same day; all other deposits placed in the “night depository” will be credited to the account at the end of the next Business Day. All deposits are accepted subject to verification. Bank reserves the right to make adjustments to the account for computation or other errors. Use of Funds. Company’s use of funds deposited to its account will be governed by Banks separately disclosed collection schedule and funds availability policy. The funds availability policy describes when funds deposited to Company’s account will be available to be used for all purposes. Bank’s collection schedule describes when deposits of Items that satisfy certain criteria will be considered collected. Uncollected funds may not be available to be used for all purposes. There may also be a fee charged in connection with any use of uncollected funds that is permitted by Bank. The collection schedule and funds availability policy may change from time to time without prior notice. Deposited Items Returned. Bank may charge back to the account any deposited Item that is returned, even if withdrawals were made against it. This right of charge back is not affected by the expiration of any applicable midnight deadline, provided (i) the Item is returned in accordance with a law, regulation, or rule (including a clearing house rule) that is binding on Bank; or (ii) Company has breached a warranty made in connection with the Item. Bank has the right to pursue collection of such Item, even to the extent of allowing -2- the payor bank to hold the Item beyond the midnight deadline in an attempt to recover payment. Collection efforts may include redepositing such Items one or more times without notice to Company. Bank will not be obligated to notify Company of the receipt of any notice of nonpayment with respect to a returned check or of the initial physical return of the Item if Bank chooses to present it a second time. Determining Balance; Debiting the Account; Order of Posting. A determination of the account balance for purposes of making a decision to dishonor an Item for insufficiency or unavailability of funds may be made at any time between the presentment of the Item (or earlier upon receipt of any notice of presentment) and the time of return of the Item. No more than one such determination need be made. The account may be debited on the day an Item is presented by any means, including without limitation electronically, or at an earlier time based on notification received by Bank that an Item will be presented for payment or collection. Bank may pay Items presented against the account in any order it chooses, unless a particular order is either required or prohibited by law. In particular, Bank may, if it chooses, pay Items in the order of highest dollar amount to lowest dollar amount (unless such a practice is specifically prohibited by an applicable state or federal law, rule, or regulation). Bank may change the order of posting Items to the account at any time without notice. Funds Transfers. Rules of Funds Transfer Systems. Funds transfers to or from the account will be governed by the rules of any funds transfer system through which the transfers are made, as amended from time to time, including without limitation the National Automated Clearing House Association and any regional association (each an “ACH”), Clearing House Interbank Payments Society, Society for Worldwide Interbank Financial Telecommunications, and Electronic Check Clearing House Organization. The following terms and conditions are in addition to, and not in place of, any other agreements Company has with Bank regarding electronic transactions. Notice of Receipt of Funds. Unless Bank has otherwise agreed in writing, it will notify Company of funds credited to the account through Company’s account statement covering the period in which the funds were credited. Bank is under no obligation to provide Company with any additional notice or receipt. ACH Transactions. The following terms apply to payments to or from the account that are transmitted through an ACH. 0 Company’s rights as to payments to or from the account will be governed by the laws of the state that govern the account. l Credit given by a receiving bank to its customer for a payment from the account is provisional until final settlement has been made or until payment is considered received under applicable law. l If final settlement or payment is not made or received, the receiving bank will be entitled to a refund from its customer and Company, as the originator of the payment, will not be considered to have paid Company’s customer. 0 If a payment is made to the account and Bank does not receive final settlement or payment is not received under applicable law, Company will not be considered to have received payment and Bank will be entitled to reimbursement from Company for that payment. Additional Terms Applicable to All Commercial Money Market Deposit Accounts. Bank has the right to require seven days’ written notice before Company withdraws money from any commercial money market deposit account (“MMDA”). Preauthorized transfers, automatic transfers, on-line transfers, point of sale purchases, payments to other persons, and transfers by telephone from Company’s MMDA are limited to a total of six in any calendar month or statement cycle. Preauthorized transfers include automatic bill payments, transfers to Company’s other accounts with Bank, or automatic transfers to other persons that Company has authorized Bank to make. If Bank permits transfers from Company’s MMDA by check, draft, check card or any similar order for withdrawal, no more than three of the six transfers may be made by such means in any -3- calendar month or statement cycle. If Bank determines that Company is exceeding the limits described above on more than an occasional basis, Bank will, at its option, either close Company’s MMDA, transfer the funds on deposit in Company’s account to another account that Company is eligible to maintain, or terminate Company’s right to make transfers and write Items against its MMDA. Security Interest; Bank’s Right to Setoff. Bank may setoff against any accounts of Company maintained with Bank or any affiliate (including matured and unmatured time accounts) for any obligation Company owes Bank, whether due or not, at any time and for any reason as allowed by law. Company grants Bank a security interest in the account for the purpose of securing any obligations that may from time to time arise under this Agreement. Bank may consider this Agreement as Company’s consent to Bank’s exercising its right of setoff or asserting its security interest should any law require consent. Bank may fund all or a portion of any overdraft in one of Company’s accounts at Bank by charging any of Company’s other deposit accounts at Bank, including without limitation any transaction account that is part of a sweep account, even though such charge overdraws the other account. The rights described in this section are in addition to and apart from any other rights, including any rights granted under any security interest agreement, that may have been granted to Bank. Lost Items. When Company cashes or deposits a check or other Item at Bank, Bank acts as Company’s collecting agent to collect the Item. Company has the risk of loss, including reconstruction costs, for Items lost while in the process of collection. If an Item deposited in the account is lost in transit, Bank may reverse the credit given for that Item. If an Item Company cashes at Bank is lost in transit, Bank may recover the funds given to Company from any of Company’s accounts at Wells Fargo or any affiliate, or directly from Company. Service Fees. Company agrees to pay Bank in accordance with the fees set out in the then current fee and information schedule applicable to the account. Company also agrees to pay an amount equal to any applicable taxes, however designated, exclusive of taxes based on the net income of Bank. Usury Savings Clause. It is never the intention of Bank to violate any applicable usury or interest rate laws. Bank does not agree or intend to contract for, charge, collect, take, reserve or receive (collectively referred to herein as “charge or collect”), any amount in the nature of interest or in the nature of a fee, penalty or other charge, which would in any way or event (including demand, prepayment or acceleration) cause Bank to charge or collect more than the maximum Bank would be permitted to charge or collect by any applicable federal or state law. Any such excess interest or unauthorized fee will, notwithstanding anything stated to the contrary, be applied first to reduce the true indebtedness, if any, and any excess amounts will be refunded. Earnings Allowance. The average monthly Investable Balance in a commercial demand deposit account may earn an “Earnings Allowance” which, depending on the arrangement with Bank, may be applied against that month’s service fees for the account. An Earnings Allowance in excess of the total monthly service fees cannot be credited to the account as interest and may not be carried fonnrard to the following month. Earnings Allowances are calculated on a 365/366-day year basis using an “Earnings Allowance Rate”, which is a variable rate established by Bank (and which may be as low as zero percent). This rate is determined monthly and is applied to the average Investable Balance for that month using the following formula: Earnings Allowance Rate multiplied by the number of days in the month divided by 3651366 days multiplied by the average Investable Balance for that month. As the factors used in the formula change, the Earnings Allowance earned on a given average monthly Investable Balance will vary. Payment of Fees; Finance Charges. Company may either be directly debited or invoiced for fees, charges and taxes incurred in connection with the account. Except as otherwise agreed in writing, all fees and taxes will be periodically debited against Company’s accrued Earnings Allowance. Bank may debit Company’s account(s) with Bank for any amount by which the fees or taxes exceed the accrued Earnings Allowance, or may send an invoice to Company for such amount which Company will promptly pay. Bank may assess finance charges on any invoiced amounts that are not paid within 45 days of the date of invoice. Finance charges are assessed at a rate of 1.5% per month (18% per annum) or the highest amount permitted by law, whichever is less. Charges for -4- accrued and unpaid interest and previously assessed finance charges will not be included when calculating finance charges. Payments and other reductions of amounts owed will be applied first to that portion of outstanding fees attributable to charges for accrued and unpaid interest and previously assessed finance charges, then to other fees and charges. Debiting of service fees occurs on the twentieth day of each month, or, if the twentieth day is not a Business Day, on the next succeeding Business Day. Dates and Special Instructions on Checks. Bank may, without inquiry or liability, pay Company’s checks even though: (i) special instructions written on the checks indicate that Bank should refuse payment (e.g., “Void after 30 days,” * Paid-In-Full,” or “Void over $100n); (ii) the check is stale-dated (i.e., it bears a date that is more than 6 months in the past), even if Bank has knowledge of the date on the check; (iii) the check is post- dated (i.e., it bears a date in the future); or (iv) the check is not dated. In addition, Bank may pay in US dollars the amount that has been MlCR-encoded on any check drawn by Company, even though Company has purportedly drawn the check in a foreign currency. Stop Payment Orders; Notices of Post Dating. The term “stop payment order” refers to both an order to Bank not to pay a check and to a notice of postdating. To be effective, a stop payment order must be received in a time and manner that gives Bank a reasonable opportunity to act on it before paying, accepting, certifying, cashing or otherwise becoming obligated to pay Company’s check as provided in the Uniform Commercial Code. Bank need not honor a written stop payment order for more than 6 months. However, there are circumstances in which Bank may, in its sole discretion elect to honor a stop payment order for a longer period of time without notice. Company must renew its stop payment order if it does not want the stop payment order to expire. Each renewal is treated as a new stop payment order. If the check is presented for payment during the period a stop payment order is effective, every effort will be made to return the check, provided the stop payment order is accurate and complete. Bank may pay a check after an order has expired even though the check is more than 6 months old. An instruction to revoke a stop payment order must be received in a time and manner that gives Bank a reasonable opportunity to act on it. In addition to Company’s name and account number, Bank requires the exact name of the payee, the exact check number, and the exact amount of the check. All of the information must be correct in order for Bank to stop payment of a check. Bank will have no liability for paying the check if any of the information provided in the stop payment order is incorrect or incomplete. Bank may require information regarding the underlying transaction for which the check was issued including without limitation proof that Company does not owe the money to the payee of the check prior to making any decision regarding recrediting the account. If Bank recredits the account after paying a post- dated check over a valid and timely notice, Bank may charge the account for the amount of the check as of the date of the check. If Company does not comply with these conditions, Company will be responsible to Bank for the full amount of the check, and Bank may charge the account for that amount. Adverse Claims. If Bank receives a claim to all or a portion of the account that is adverse to Company’s interest or if a dispute arises regarding the identity of the authorized signer(s), and Bank (i) cannot in good faith determine the relative rights of the person(s) making claim to the funds or authority or (ii) does not believe that it is otherwise adequately protected if it ignores the claim or dispute, Bank may without liability to Company and in its sole discretion: (a) place a hold on funds in the account or any other Company account subject to the claim or dispute, (b) close the account and send the funds to Company or to Company and the claimant(s), or (c) interplead the funds. If Bank places a hold on the funds, the hold may be placed for any period of time Bank believes to be reasonably necessary to allow a legal proceeding to determine the merits of the claim or dispute to be instituted. Overdrafts and Insufficient Funds. Bank may, at its option, pay or refuse to pay any Item if it would create an overdraft without regard to whether Bank may have previously established a pattern of honoring such Items. Bank may place a hold on balances in any other account of Company until the overdraft is paid or it may setoff the amount of the overdraft against any other accounts of Company in accordance with the terms of this Agreement. Bank has no obligation to notify Company before it decides to either pay an Item that creates an overdraft or to dishonor an Item that is drawn against insufficient funds. If Bank pays an Item against insufficient funds, Company agrees to repay any overdraft immediately. Company will be required to -5- pay for any costs of collection that Bank incurs in recovering the overdraft from it, including its reasonable attorneys’ fees and court costs. Acts and Omissions of Other Financial Institutions. When Bank cashes or collects an Item for Company or accepts a deposit to the account (each of which is referred to in this Agreement as a “Deposited Item”), Bank is not responsible for the actions or inactions of any other financial institution that handles that Deposited Item. If a Deposited Item is lost or misrouted by another financial institution (a “Collecting Bank”) during the collection process: (i) Bank will have no responsibility to Company for the actions or inactions of the Collecting Bank; (ii) Bank may charge the account for the amount of the Deposited Item (and reverse any interest that may have accrued to the account in connection with the Deposited Item); and (iii) Company agrees to cooperate with Bank in recreating the Deposited Item. Checks Presented Over-the-Counter for Payment by a Non-Customer. If a check drawn against the account is presented over-the-counter for payment by a person who is not a deposit customer of Bank, Bank may charge a fee to the person presenting the check as a condition for payment of the check. Bank may require. identification acceptable to Bank and not prohibited by law, including a fingerprint of the person presenting the check. Bank may dishonor the check if the person refuses to pay the fee or provide the identification requested by Bank. Forgeries or Missing Signatures; Alterations. Bank will have no responsibility for reviewing the number or combination of signatures on an Item drawn against the account. This means that if Company has indicated that more than one signature is required in connection with an Item drawn on the account, Bank will have no liability to Company if a transaction is conducted on or through the account contrary to the signature requirements Company has specified, provided at least one of the required signatures appears on the Item. Bank will have no liability to Company for failing to detect a forged signature or an alteration of an Item, if the forgery or alteration is such that a reasonable person could not reasonably be expected to detect it. Limitation of Liability; Indemnification. WHETHER IN CONNECTION WlTH A SERVICE OR THE ACCOUNT, IN NO EVENT WILL BANK, ITS DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS BE LIABLE FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT OR PUNITIVE DAMAGES, WHETHER ANY CLAIM IS BASED ON CONTRACT OR TORT OR WHETHER THE LIKELIHOOD OF SUCH DAMAGES WAS KNOWN TO BANK Except to the extent that Bank is liable, Company agrees to indemnify and hold Bank, its directors, officers, employees and agents harmless from all claims, demands, judgments, and expenses (including their reasonable attorneys’ fees and legal expenses) arising out of or in any way connected with performance under this Agreement. Company agrees that this indemnification will survive termination of this Agreement. Legends. Company is responsible for all losses, claims, damages or expenses that result from a restrictive legend or notation on Company’s checks. Facsimile or Mechanical Signatures. If Company uses a facsimile or other mechanical signature (including a stamp) to sign Items or endorse Items, Bank may rely on that signature as Company’s authorized signature without regard to when or by whom or by what means such signature may have been made or affixed to an Item deposited to the account or drawn against or otherwise debited from the account. If Company uses a facsimile or other mechanical signature (including a stamp) to sign or endorse Items, Bank may also conclusively treat as authorized any signature that reasonably resembles Company’s facsimile or mechanical signature. Lost or Stolen Checks. Company is in the best position to prevent the wrongful use of the account. If Company’s checks are lost or stolen, Company must immediately notify Bank at the telephone number listed on Company’s account statement for such purpose. Failure to do so will hamper Bank’s ability to prevent loss and will, therefore, relieve Bank of any liability regarding the checks. Upon such notification, Bank may at its discretion, close the account and open a new one. All checks will then be returned as “Account Closed” unless -6- Company specifically requests that a particular check be paid. (To make such an exception, Bank must agree to provide the service and Company must in a timely manner provide Bank with the check number, dollar amount and the name of the payee.) If third parties make regular deposits to or withdrawals from the account (such as wires or ACH transfers), Company must notify those parties of the new account number immediately. Protection Against Counterfeit Checks. Company acknowledges that there is a growing risk of loss resulting from the increasing use of counterfeit checks. Company recognizes that the account is susceptible to losses from counterfeit checks. Company is aware that Bank offers a service in conjunction with Bank’s account reconcilement plan services that is known as “Positive Pay”. Positive Pay is an effective means of controlling the risk arising from counterfeit checks. Bank has advised Company that if it does not use the Positive Pay service, Bank will be unable to prevent losses from counterfeit checks and Company will be treated as having assumed the risk of those losses. Internal Controls. Company shares responsibility for preventing the fraudulent or unauthorized use of the account. Company agrees to take reasonable steps to ensure the integrity of its internal procedures with respect to its checks and the account. Payment Authorization Service. Company may, by executing and delivering to Bank a Payment Authorization Service Setup Form (“Setup Form”), elect to utilize Bank’s Payment Authorization Service for the account. Under the terms of such service, Bank will, without Company’s specific approval as to any particular Item, (i) automatically return unpaid (marked “REFER TO MAKER”) Items drawn against the account which are presented to Bank, and which exceed the “Maximum Dollar Authorized Payment Amount” specified on the Setup Form, (ii) refuse encashment of Items drawn against the account which are presented to Bank through its branch/store network, and which exceed the “Maximum Check Cashing Amount” specified on the Setup Form, (iii) refuse withdrawal requests against the account which are presented to Bank through its branch/store network, and which exceed the “Maximum over the Counter Withdrawal Amount” specified on the Setup Form, and/or (iv) refuse encashment of Items drawn against the account which are presented to Bank throught its branch/store network, and which are made payable to an individual. Transferring an Interest in the Account. The account may not be pledged, assigned, or in any other manner transferred, whether in whole or in part, without the written agreement of Bank. Bank does not have to accept or in any way recognize the transfer. Interest-Bearing Accounts. If the account earns interest, the account is a variable-rate account. Bank may in its sole discretion change the interest rate on the account at any time. If an Item, such as a check, is deposited to the account, interest begins to accrue no later than the Business Day Bank receives credit for the deposit of that Item. Checking Subaccounts. For each checking account, Bank may establish on Company’s behalf, a master account and two subaccounts. All information that is made available to Company about the account will be at the master account level. The subaccounts are comprised of a savings account and a transaction account. At the beginning of each statement period, Bank will allocate funds between the two subaccounts as it deems appropriate. Checks received by Bank that are drawn against the master account will be presented for payment against the transaction subaccount. Funds will be transferred from the savings subaccount to cover checks presented against the transaction subaccount as may be needed. On the sixth transfer from the savings subaccount during a statement period all of the funds on deposit in the savings subaccount will be transferred to the transaction subaccount. If the account earns interest, the use of subaccounts will not affect the interest earned. Target Balance Accounts. If Company maintains multiple accounts at Bank, Company may designate in writing one such account as its “Principal Account” and one or more additional accounts as “Target Balance Accounts”. For each Target Balance Account, Company will separately specify to Bank in writing the Ledger Balance or Collected Balance which Company wishes to maintain in such account (the “Target Balance”). At -7- the end of each Business Day, Bank will determine the applicable balance on deposit in each Target Balance Account. If the applicable balance in a Target Balance Account exceeds its Target Balance, Bank will transfer from the Target Balance Account to the Principal Account such funds as are necessary to bring the applicable balance to the Target Balance. If the applicable balance is less than the Target Balance, Bank will transfer from the Principal Account to the Target Balance Account such funds as are necessary to bring the applicable balance to the Target Balance. Bank may, but will not be required to, transfer funds if the transfer would create an overdraft or exceed the Collected Balance then on deposit in the Principal Account. CheXstoF Service. Company may elect to utilize Bank’s CheXstor Service in connection with the account. As part of this service, Bank will maintain microfilm records of all Iterhs paid against the account for a period of seven years or any longer period required by applicable law (“Record Period”). Canceled Items are shredded and recycled as part of Bank’s commitment to improve the environment. Under this service, Bank will provide a photocopy of any Item posted against the account which Company requests during the Record Period. Company may request a photocopy electronically via its personal computer or by contacting Bank at the telephone number listed on Company’s account statement for such purpose. If Bank fails to provide Company with a copy of an Item Company requests during the Record Period, Bank will reimburse Company for (and Bank’s liability will be limited to) any direct loss Company incurs as a result of the Item’s unavailability (not to exceed the amount of the Item). Bank will require Company to substantiate any claimed loss. Legal Process. Bank may accept and act on any legal process that it believes is valid, whether served in person, by mail or by facsimile transmission, at any Bank location. Legal process includes a levy, garnishment or attachment, tax levy or withholding order, injunction, restraining order, subpoena, search warrant, government agency request for information, forfeiture, or other legal process relating to the account. Any such legal process is subject to Bank’s security interest and right of setoff. Bank will not notify Company of a grand jury subpoena affecting its account. Any fees or expenses Bank incurs in responding to any such legal process that are not subject to statutory reimbursement procedures may be charged against any account Company maintains with Bank. Bank will not have any liability if there are insufficient available funds to pay Company’s Items because Bank has withdrawn funds from the account or in any way restricted Company’s access to funds because of legal process. Disclosure of Information. Generally, Bank will not disclose information about Company’s accounts, but may do so under the following circumstances: (i) to comply with a statute, regulation, or rule; (ii) in connection with examinations by state and federal banking authorities; (iii) to comply with any legal process, including without limitation a subpoena, search warrant or other order of a government agency or court; (iv) when Bank determines that disclosure is necessary or appropriate in order to complete a transaction; (v) to verify the existence and condition of the account for a third party, such as a merchant or credit bureau; (vi) to provide information to Company’s legal representative or successor; (vii) when reporting the involuntary closure of the account; (viii) when Bank concludes that disclosure is necessary to protect Company, the account, or the interests of Bank; (ix) to agents, independent contractors, and other representatives of Bank in connection with the servicing or processing of the account or account transactions, account analysis, or similar purposes; (x) to its affiliated banks and companies; or (xi) if Company gives its permission. Inactive Accounts. If the account has had no withdrawal or deposit activity, and Bank has had no contact from Company regarding the account for one year, the account will be considered inactive and Bank may cease sending account statements. Service fees and other terms applicable to active accounts, including all changes to these terms, will apply to the account while it is inactive. If the account has any deposit or withdrawal activity or Company contacts Bank about the account, it will be reinstated as an active account. Closing the Account. Either Company, through its authorized signer(s), or Bank may close the account at any time without prior notice. If the signature of more than one authorized signer is required for signing checks, the same number of authorized signers will be required for Company to close its account. Instructions received by facsimile to close the account will not be accepted. Closure of the account will not affect Company’s obligation to pay Wells Fargo any amounts owed with respect to the account. -6- Customer Service. In the event of questions or errors regarding Company’s account transactions, records or statements Company should immediately call the telephone number listed on Company’s account statement for such purpose. Warranty. In addition to any other warranties that Company makes by law or agreement, Company also warrants that all signatures on any Deposited Items are authentic and authorized. Monitoring Telephone Communications. To ensure that Company’s inquiries are handled promptly, courteously, and accurately, telephone calls between Company and Bank may be recorded or monitored by supervisory personnel. Credit Reports. Subject to applicable federal and state fair credit reporting laws, Company authorizes Bank to obtain credit reports and make whatever other inquiries Bank deems appropriate concerning Company or any individual designated as an “authorized signer,, on the account. Questions. Company’s relationship manager can answer questions and assist to resolve any issues that may arise from time to time. Miscellaneous. This Agreement will constitute the entire agreement between Bank and Company and supersede prior oral or written representations, conditions, warranties, understandings, proposals or agreements regarding the account. Headings do not constitute a part of this Agreement. Any notice or other communication may be sent to Company at its then current address on file with Bank. Bank will have a reasonable time after receipt of any notice or other communication to act on it. No person or entity will be deemed to be a third party beneficiary under this Agreement. Bank may establish cut-off times, and may change those cut-off times upon reasonable notice to Company. CERTAIN DEFINED TERMS Business Day - is a day, other than a Saturday, Sunday or day when Federal Reserve Banks are closed. Collected Balance - is the Ledger Balance in the account less Deposit Float. Deposit Float - is the total dollar amount of Items deposited in the account for which, based on the collected funds schedule used by Bank or the applicable affiliate for this type of account, the account has not yet been credited for purposes of calculating the Collected Balance. Investable Balance - is the Collected Balance in the account less (i) the portion of such Collected Balance that Wells Fargo is required by law to hold in reserve at a Federal Reserve Bank and (ii) other adjustments. Item - includes a check, draft, demand draft, preauthorized draft, or other order or instruction for the payment, transfer, or withdrawal of funds (including a withdrawal slip), automatic transfers, and electronic transactions. “Item” also includes any writing created or authorized by Company that would be a check or draft but for the fact that it has not been signed. Ledger Balance - is the balance in the account after all debits and credits for the day are posted. -9- COMMERCIAL ELECTRONIC OFFICE (CEO) ONLINE ACCESS AGREEMENT You, the customer named below, have asked to be allowed to enter the Commercial Electronic Office (the “CEO”) of Wells Fargo Bank, N. A. (‘VVells Fargo”) at Wells Fargo’s website so that you can use certain financial senrices (the “Services’,) of Wells Fargo or its affiliates (the “Affiliates”) online. The general terms and conditions applicable to your use of the CEO are contained in this Online Access Agreement (the “Agreement”) which you must sign and return to Wells Fargo before you are allowed access to the CEO. Terms of Use for the CEO. Persons entering the CEO for you (the “Users”) must also accept the Finally, before you are able to use a Service through the CEO you must sign or accept the applications, agreements, instruments, rules, standards, policies, instructions, and other documents and forms required to use the Service (the “Service Forms”). 1. USING THE CEO. You agree to use the CEO only as provided in (a) this Agreement, (b) the rules, procedures, standards, requirements, and policies made applicable to the CEO from time to time by Wells Fargo and the Affiliates, (c) any communications, instructions, terms, or conditions appearing at the CEO, and (d) any state or federal laws or regulations applicable to the CEO 2. (a) ID CODES AND PASSWORDS. (b) Each User will be given an ID code and a password by Wells Fargo to be used when the User first enters the CEO. Wells Fargo will also assign a company ID code to you for use each time a User enters the CEO. Although your company ID code and the ID codes for each User will remain the same for each entry into the CEO, the password assigned by Wells Fargo to each User must be changed to a new User-selected password when each User first enters the CEO. Wells Fargo will not know the new passwords or any subsequent passwords selected by the Users. You will be able to manage and control who in your company has access to the CEO and the Services by the ID codes and passwords. It is your responsibility to ensure that your company ID code and the User ID codes and passwords are known to, and used only by, persons who have been properly authorized by you to access the CEO and use the Services through the CEO. (cl 03 FAILURE TO PROTECT ID CODES AND PASSWORDS MAY ALLOW AN UNAUTHORIZED PARTY TO (1) USE THE SERVICES, (2) CORRECT, CHANGE, VERIFY, OR SEND DATA USED WITH THE SERVICES, (3) SEND INFORMATION AND COMMUNICATIONS TO, OR RECEIVE INFORMATION AND COMMUNICATIONS FROM, WELLS FARGO AND THE AFFILIATES, OR (4) ACCESS YOUR ELECTRONIC COMMUNICATIONS AND FINANCIAL DATA. ALL ENTRIES INTO THE CEO, ALL COMMUNICATIONS SENT, AND ALL USES OF THE SERVICES, THROUGH YOUR ID CODES AND PASSWORDS WILL BE DEEMED TO BE ENTRIES, COMMUNICATIONS, AND USES AUTHORlZED BY YOU AND BE BINDING UPON YOU. YOU ASSUME THE ENTIRE RISK FOR THE FRAUDULENT OR UNAUTHORIZED USE OF ALL ID CODES AND PASSWORDS, You acknowledge the importance of developing internal procedures to limit such risk, which procedures will include, at a minimum, (a) notifying Wells Fargo immediately when any new person becomes a User or when any existing User no longer is to be a User, and (b) not keeping, in any form or in any place, lists of ID codes or passwords. You agree to not@ Wells Fargo immediately when you become aware of any loss or theft of, or any unauthortzed use of, any ID codes or passwords. You also agree to notify Wells Fargo immediately when you become aware of any unauthorized entry into the CEO. 3. _ . FINANCIAL INFORMATION. Financial market data, quotes, news, research, and other financial information (collectively, “Financial Information”) developed by, and transmitted to, Wells Fargo by third parties will be available at the CEO. The posting of any Financial Information or any other information or data at the CEO will not be a recommendation by Wells Fargo or any Affiliate that any particular Service or transaction is suitable or appropriate for you or that you should receive or in any way use any Service. Neither Wells Fargo nor any Affiliate guarantees the accuracy, completeness, timeliness or correct sequencing of any Financial Information, nor are they in any way responsible for the actions or omissions of the third parties developing or transmitting Financial Information or for any decision made or action taken by you in reliance upon any Financial Information. 4. USE OF CERTAIN SOFTWARE TO ACCESS THE CEO. In using the CEO you will be sending financial and other data as well as electronic messages directly to Wells Fargo and the Affiliates through the Internet. You acknowledge that when the Internet, or any other electronic communications facilities, are used to transmit or receive data and messages, the data and the messages may be accessed by unauthorized third parties. To reduce the likelihood of such third party access, you agree to transmit and receive data and messages through the CEO using only software, including, but not limited to, browser software, or other access devices that support the Secure Socket Layer (SSL) protocol- or other protocols required by, or acceptable to, Wells Fargo, and to follow the Wells Fargo log-on procedures that support such protocols. C:\WlNDOWSREMPlcarlsbadCEO.doc 1 of2 081600 5. DISCLAIMERS. Neither Wells Fargo nor any Affiliate will be your advisor or fiduciary with respect to this Agreement or any Service. NEITHER WELLS FARGO NOR ANY AFFILIATE MAKES ANY EXPRESS OR IMPLIED WARRANTY AS TO THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE CEO, THE FINANCIAL INFORMATION, OR THE SERVICES, AND NEITHER WELLS FARGO NOR ANY OF THE AFFILIATES MAKES ANY OTHER WARRANTY, PROMISE, COMMITMENT, GUARANTEE, OR REPRESENTATION WITH RESPECT TO THE CEO, THE FINANCIAL INFORMATION, OR THE SERVICES EXCEPT THOSE WARRANTIES, PROMISES, COMMITMENTS, GUARANTEES, OR REPRESENTATIONS SPECIFICALLY STATED IN THIS AGREEMENT OR THE SERVICE FORMS. 6. LIMITATION OF LIABILITY. Neither Wells Fargo nor any Affiliate will be liable to you for any direct or indirect damages or losses suffered or incurred by you in connection with the CEO, any of the Services, any Financial Information, any other information or data you receive through the CEO, or any failure to provide, or delay in providing, access to the CEO, any Service, or any Financial Information, except to the extent any Service Form specifically provides otherwise and except to the extent such damages or losses arise directly from the gross negligence or willful misconduct of Wells Fargo or an Affiliate. Notwithstanding any provision of this Agreement or any Service Form to the contrary, IN NO EVENT WILL WELLS FARGO OR ANY AFFILIATE HAVE LIABILITY FOR ANY CONSEQUENTIAL, SPECIAL, PUNITIVE, OR INDIRECT DAMAGES OR LOSSES WHETHER ANY CLAIM FOR SUCH DAMAGES OR LOSSES IS BASED ON TORT OR CONTRACT OR WHETHER WELLS FARGO OR ANY AFFILIATE KNEW OR SHOULD HAVE KNOWN THE LIKELIHOOD OF SUCH DAMAGES IN ANY CIRCUMSTANCE. 7. RESTRlCTlNG OR TERMINATING ACCESS TO THE CEO. In addition to, and not in substitution for, any provision in this Agreement or the Service Forms, you understand and agree that neither Wells Fargo nor any Affiliate will in any way be obligated to permit Users access to any Financial Information or the use of any Service through the CEO if (a) such use or access is not in accordance with any term or condition applicable to the Service or the CEO or to the information to be accessed, (b) such use or access is not permitted by any state or federal law or regulation, (c) Wells Fargo or an Affiliate has reasonable cause to believe that such use or access may not be author&d by you or any third person whose authorization Wells Fargo or such Affiliate believes is necessary for such use or access, or (d) Wells Fargo or an Affiliate has reasonable cause to deny such use or access for your protection or the protection of Wells Fargo or any Affiliate. If any Service cannot be used through the CEO, Wells Fargo will make reasonable efforts for such Service to be used by other means. Wells Fargo reserves the right in its sole discretion at any time upon 66 calendar days written notice to you, or upon immediate written notice to you if you have violated any provision of this Agreement or any Service, to terminate this Agreement and your access to the CEO or to terminate your use of any or all the Services through the CEO. Neither Wells Fargo nor any Affiliate shall have liability to you for any losses or damages you may suffer or incur as a result of any such termination. 8. WAIVERS. Neither Wells Fargo nor any Affiliate shall be deemed to have waived any of its rights or powers under this Agreement unless such waiver is in writing and such writing is signed by an authorized representative of Wells Fargo or such Affiliate. No delay, extension of time, compromise, or other indulgence which may occur or be granted from time to time by Wells Fargo or any Affiliate under this Agreement shall impair the rights or powers of Wells Fargo or any Affiliate under this Agreement. 9. AMENDMENTS. Wells Fargo may amend this Agreement or add to this Agreement at any time upon written notice to you. You will be deemed to have accepted an amendment of, or an addition to, this Agreement if any of your Users use any Service through the CEO more than 30 calendar days after you receive notice of such amendment or addition. 10. ASSIGNMENT. Except for transfers of your rights, duties, and obligations to Wells Fargo and the Affiliates under this Agreement by operation of law, such rights, duties and obligations may not be assigned by you without the prior written consent of Wells Fargo and the appropriate Affiliate. Except for transfers of Wells Fargo’s or any Affiliate’s rights, duties and obligations to you under this Agreement to another Affiliate or by operation of law, such rights, duties and obligations may not be assigned by Wells Fargo or any Affiliate without your prior written consent. 11. GOVERNING LAW. Your rights and obligations and the rights and obligations of Wells Fargo and the Affiliates under or in connection with this Agreement will be governed by and be subject to the laws of the State of California. 12. SEVERABILITY. If any provision of this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceabitity of such provision in other jurisdictions, and of the remaining provisions of this Agreement in all jurisdictions, shall not in any way be affected or impaired. 13. ENTIRE AGREEMENT. This Agreement and the Terms of Use for the CEO set forth the entire and only agreement among you, Wells Fargo and the Affiliates and between you and Wells Fargo and between you and each Affiliate with respect to your use of the CEO. Any prior agreements, representations, statements, negotiations, undertakings, promises or conditions, whether oral or written, with respect to the CEO which conflict with the provisions in this Agreement are superseded by this Agreement. This Agreement is signed below by your duly authorized officer or officers on the dated stated below. Date: -q?kb47/ c3 /I’)) 0 f &@/w# 4 / / [Customer me] -rn& By: I &: Cry ?+l?~~Svc/)~/L C:\WIMlOWS\TEMF%xrlsbadCEO.doc 2of2 JAMES M. STANTON 081600 COMMERCIAL DEPOSITORY SERVICE DESCRIPTION This Service Description contains provisions which, in addition to the provisions contained in the Master Agreement for Treasury Management Services between Bank and Company (the “Agreement”), will govern Company’s ordering of cash from Bank’s cash vault, and Company’s delivery to Bank, at Bank’s cash vault or night depository locations, of containers containing cash, checks, other negotiable instruments or food coupons for deposit to Company’s account at Bank (collectively, the “Services”). 1. Cash Orders from Bank’s Cash Vault. Company agrees that the following procedures will govern its ordering of currency and coin (“cash”) from Bank’s cash vault and the delivery of cash by Bank to an armored car service acting as Company’s agent (“Agent”): 1.1 Cash Requests: Company may request in writing or by telephone (each a “Cash Request”) that Bank make available to Company’s Agent at Bank’s cash vault, in an amount designated in the Cash Request, shipments of cash (each a “Cash Shipment”) in bags or other containers (“Cash Bags”). Bank is authorized to act upon any Cash Request Bank receives in accordance with this Service Description, and which Bank believes in good faith to have been made by an authorized representative of Company. Bank has no obligation whatsoever to verify, and will not be liable for its failure to verify or investigate, any Cash Request. 1.2 Delivery to Companv’s Aaent: Bank is author&d to deliver Cash Shipments to any person whom Bank in good faith believes to be Company’s Agent. Bank will have no further responsibility, and Company assumes all risk of loss, for cash delivered to any such person. Deliveries of Cash Shipments will take place only at the locations, on days, and during the hours published by Bank from time to time. Bank reserves the right to suspend its cash ordering and delivery service at any time without notice. 1.3 Companv’s Authorized Representatives: Company will promptly certify to Bank the identity of the person with whom Bank is authorized to communicate regarding authorization codes or other security procedures, and of Company’s Agent authorized to accept delivery of cash. Company agrees to give prior written notice to Bank of any change in the person or Agent so authorized by Company. Bank will be fully protected in relying on each such notification and on the obligation of Company to promptly notify Bank of any change in the person or Agent so authorized by Company. 1.4 Debit of Account: On the Business Day that Bank delivers any Cash Shipment to Company’s Agent, Bank is authorized to debit Company’s designated account (“Designated Account”) for the aggregate amount of the shipment. Company must maintain collected balances in the Designated Account (which may not be a subaccount) sufficient at all times to cover fully any debit. Bank has no obligation to release a requested Cash Shipment or any portion thereof to Company’s Agent unless there are sufficient collected funds in the Designated Account to fully cover the amount of the Shipment at the time the Shipment is to be made available to Company’s Agent. If Company fails to specify a Designated Account to Bank, Bank may debit any account which Company maintains with Bank for the amount of a requested Cash Shipment. 1.5 Packing Slip; Differences in Shipment Amount: Each Cash Shipment will be accompanied by a packing slip. The packing slip will disclose the aggregate amount of the Cash Shipment, the overall number of containers included in the Cash Shipment, and the number of containers delivered to Company’s Agent for transmittal to Company. With respect to any Cash Shipment made available to Company’s Agent, Company will notify Bank immediately in writing of any difference between the amount specified on the packing slip for that Shipment and the amount, as counted by Company, of Commerda/ oepositorV Service Desc@fiw~ (Revised 0&?31U0) 2. the Shipment. In the event that the difference cannot be resolved, Bank’s count of the amount of the disputed Shipment will be conclusive and binding on Company. Delivery and Processing of Deposit Shipments at Bank’s Cash Vault The following procedures will govern Company’s delivery of currency, coin, checks, other negotiable instruments or food coupons (each a “Deposit Shipment”) to Bank’s cash vault locations, and Bank’s processing of such Deposit Shipments: 2.1 Use of Aoent to Deliver Shioments: Company will deliver Deposit Shipments in deposit bags or other containers (“Deposit Bags”) to one of Bank’s cash vaults via an armored car service acting as Company’s agent (“Agent”). Company is responsible for making all arrangements with its Agent for delivery of Deposit Shipments. Bank may accept Deposit Shipments from any person Bank believes in good faith to be Company’s Agent. The delivery of a Deposit Bag to Bank or Banks receipt for it on a manifest will not be deemed proof of Bank’s receipt of the contents listed on the deposit slip contained in the Deposit Bag or Company’s records. Bank witI have no responsibility for any Deposit Bag or its contents delivered to one of Bank’s cash vaults until the Deposit Bag is accepted by Bank in accordance with its procedures and the contents of the Deposit Bag are counted by Bank. 2.2 Delivers Procedures: In delivering a Deposit Shipment to Bank’s cash vault, Company agrees to comply (and to cause its Agent to comply) with the following procedures: . Deliver Deposit Bags only at the locations, on the days, and during the hours published by Bank from time to time; . Properly endorse all checks and other negotiable instruments included in a Deposit Shipment; l Use only Bank-approved Deposit Bags that are properly secured; l Specify the number of Deposit Bags belonging to Company which are included in the overall shipment delivered to Bank, as well as the contents of each Deposit Bag, on a delivery manifest, a copy of which Company’s Agent will provide to Bank at the time of delivery; l Obtain the signature of Bank’s employee who accepts delivery on that portion of the delivery manifest which the Agent retains; and 1 Retain a copy of the receipt or other document covering each Deposit Bag delivered by Company to its Agent for at least one year from the date of delivery to Company’s Agent. Company agrees that Deposit Bags will be used only for the deposit of currency, coin, checks, other negotiable instruments or food coupons (collectively “items”), and will not be used in any unauthorized manner or for any unlawful purpose. As to any property other than items included in a Deposit Bag, Bank will not be deemed a bailee and will have no liability for any loss of or damage to such property which may occur. 2.3 Cut-off Time; Deposit to Designated Account: If a Deposit Shipment is received at one of Bank’s cash vaults on a Business Day before Bank’s published “cut-off time” for that cash vault, the aggregate amount of the deposits in such Shipment will be credited on that Business Day to the account with Bank specified on the deposit slip for that Shipment (the “Depository Accounr). If a Deposit Shipment is received at a cash vault on a Business Day after Bank’s “cut-off time,” the aggregate amount of the deposits in that Shipment will be credited to the Depository Account on the next succeeding Business Day. Bank will not deposit any items received in any Deposit Shipment unless the account number of the Depository Account into which the deposit is to be made is specified on the deposit slip for that Shipment. 2.4 Processing of Deposit Shipments: Company authorizes Bank to open each Deposit Bag, count the contents, credit the amount of items to the Depository Account indicated on the deposit slip contained in the Deposit Bag and process any food coupons, all in accordance with Bank’s customary procedures. All deposits are subject to verification, and Banks count of the items will be conclusively deemed to be correct and complete for all purposes. No relationship of debtor and creditor will arise Commerce/ ileposifofy SeMce Descriprion (Revised OM3/00) Page 2 between Bank and Company until the count has been completed and the deposit credited to the Depository Account. Company acknowledges that it has had an opportunity to have Bank’s applicable count and verification procedures explained to its representative and agrees that the same will be deemed commercially reasonable. Company understands that no photocopying or microfilming of items will be performed at any cash vault location. 2.5 Adiustment Procedures: If the aggregate amount of the items in any Deposit Shipment, as counted by Bank, is less than that reported on the deposit slip covering that Shipment, Bank will debit the Depository Account specified on the deposit slip by such difference and report the difference to Company. If that Depository Account has an insufficient collected and available balance to cover the debit, Bank will debit any of Company’s other accounts with Bank for the difference, and Company agrees to promptly reimburse Bank for the difference (or any portion thereof) for which ‘there are insufficient available balances in Company’s accounts with Bank. If the aggregate amount of the items in any Deposit Shipment, as counted by Bank, is more than that reported on the deposit slip covering the Shipment, Bank will credit the Depository Account specified on the deposit slip for the difference and notify Company of the difference. Delivery and Processing of Deposit Shipments at Bank’s Night Depository Locations. The following procedures will govern Company’s delivery of currency, win, checks, other negotiable instruments or food coupons (each a “Night Deposit”) to Bank’s night depository locations, and Bank’s processing of Night Deposits. 3.1 Night Depositorv Locations: Issuance of Kevs: Company may make Night Deposits to its deposit account(s) with Bank by placing the items to be deposited into disposable bags furnished by Bank (each a “Night Bag”) and then placing the Night Bags in the night depository receptacle (“Night Depository”) at one of Bank’s branches/stores (each a “Store”) listed on Bank’s Night Depository Set-up Form. Each office of Company listed on the Night Depository Set-up Form will receive one key to the Night Depository at a designated Store. Company will designate in writing to Bank the individuals to receive the key for each of its offices; Bank may require such individuals to sign a receipt for the keys they receive. 3.2 Contents of Night Baqs; Deposit of Night Baqs: Company agrees that Night Bags will be used only for the deposit of currency, coin, food coupons, checks or negotiable instruments properly endorsed by Company (collectively “items”), and will not be used in any unauthorized manner or for any unlawful purpose. As to any property other than items included in a Night Bag, Bank will not be deemed a bailee and will have no liability for any loss of or damage to such property which may occur. Each Night Bag must contain one or more deposit slips listing all the items contained in that Bag and their total dollar amount, and identifying the deposit account of Company into which the dollar amount of the deposit is to be credited (the “Designated Account”). After each Night Bag is placed in a Night Depository, the Night Depository must be securely locked. At the time each Night Bag is placed in a Night Depository the Bag must be securely closed and placed completely in the Night Depository. 3.3 Processina of Night Deposits: Bank may open each Night Bag and remove its contents without Company or any of its representatives being present. The contents of each Night Bag will be processed in accordance with Banks standard procedures, and if placed in a Night Depository before Bank’s established “cut-off time” on any Business Day, those items acceptable for deposit will be deposited into the Designated Account as of the close of business on that same Business Day. Night Deposits placed in a Night Depository after Bank’s established “cut-off time” will be credited to the Designated Account on the next succeeding Business Day. Company understands and agrees that the contents of a Night Bag will not be credited to the Designated Account, nor will the relationship between Company and Bank be that of a debtor to a creditor with respect to any item in a Bag, until Bank has accepted the item for deposit into the Designated Account after counting all the items in the Bag and calculating the total dollar amount of all such items. 3.4 Countinq and Adjustment Procedures: If Company’s records regarding the total dollar amount of the items in any Night Bag differ from Bank’s calculation of the total dollar amount of the items in the Bag, Company has the burden of proving that its records show the correct amount in the Bag or Bank’s total will be accepted as final. If there is a difference between Bank’s total and Company’s total commercial Ckpo&y Sewice fkscriition (Revised OW&tUl) Page 3 for the amount of items in a Night Bag (as Company’s total is shown on the deposit slip or slips in the Bag), Bank will send Company a statement indicating the amount of the difference. In the event that the difference cannot be resolved, Bank’s count of the dollar amount will be conclusive and binding on Company. 3.5 Claims of Lost or Stolen Items: Company will have the burden of proving the amount of any item which it claims was lost or stolen while it was at a designated Store and that disappearance of the item occurred while it was at the designated Store. Company agrees to notify Bank immediately if Company determines that any Night Bag or any item in a Night Bag has been lost or stolen while at one of Bank’s Stores. Company agrees that it will have total responsibility for each Night Bag and its contents until the Bag has dropped completely into a Night Depository. 4. Liability. Bank will have no liability to Company for any losses, liabilities, damages, costs or expenses suffered or incurred by Company as a result of: n any failure by Company to follow Bank’s instructions or procedures with respect to preparation and delivery of a Deposit Shipment to Bank; l any failure by Company to follow Bank’s instructions or procedures with respect to preparation and delivery of any Night Deposit to Bank, use of any Night Depository, or any mechanical defect in any Night Depository, the lock or key to any Night Depository, or any Night Bag; l any negligent or intentionai act of any agent or employee of Company; l inclusion in a Deposit Bag or Night Bag of property other than items or of items belonging to someone other than Company; or n any failure by Company to diligently cooperate in good faith with Bank in reconstructing checks or other negotiable instruments. In the event of a loss involving cash, Bank will not be liable for damages exceeding the amount of the cash. In the event of a loss involving checks or other negotiable instruments, Bank will make a reasonable effort but will have no duty to reconstruct them, and will have no liability to Company in excess of Bank’s costs to reconstruct the items, plus necessary costs to stop payment, if applicable; and the face amount of those checks or other negotiable instruments that cannot be reconstructed and will not be replaced despite Company’s reasonable efforts to obtain replacement. Company agrees to cooperate fully with Bank in reconstructing checks or other negotiable instruments. As used in this Service Description, “reconstruct” means to identify items to the extent of determining the face amount, the name(s) of the payee(s), any necessary endorser(s), the drawer and the drawee. 5. Special Instructions. Company may submit to Bank in writing any special handling instructions it may have in connection with cash orders or deposits of items at Bank’s cash vault or night depository locations. Bank may at its option accept or reject the instructions and so notify Company. Even if accepted, Bank may stop complying with the instructions upon prior notice to Company if, in Bank’s opinion, continued compliance would increase Bank’s costs or risks, interfere with its established or revised procedures, or diminish the efficiency of Bank’s operations. Any loss attributable to increased risk resulting from a special handling procedure will be borne solely by Company. CommercM Deposby Setvice Desctiption (Revised 0&23tUO) Page 4 ACCOUNT RECONCILIATION PLAN SERVICE DESCRIPTION This Service Description contains provisions which, in addition to the provisions contained in the Agreement between Bank and Company (the “Agreement”), will govern the use of Bank’s Account Reconciliation Plan (“ARP”) which assists commercial customers to reconcile their checking account to their internal accounting records (the “Services”). 1. Description of Services. The Services offered by Bank pursuant to the terms of this Service Description, one or more of which have been separately designated by Company in the ARP Services Set-up Form delivered to Bank, are generally described as follows: 1.1. Full ARP Service: The Full ARP Service will provide Company with assistance in reconciling statements for the transaction account(s) at Bank separately designated in writing including electronic writings (the “Account”) as provided in this Service Description and the other Service Documentation. Company will provide Bank with the issue date, serial number and dollar amount of each check it has issued on the Account (the “issued check information”). Issued check information may be submitted via electronic transmission directly to Bank, or Company may deliver it in the form of either MICR, diskette or magnetic tape to a data processing specialist, in accordance with Bank’s instructions. Bank will electronically reconcile the Account by matching the issued check information against checks that have been paid. Bank will send a full ARP statement to Company after receiving Company’s final issued check information for the period covered by the statement. The full ARP statement will include the following sections: l Detailed Credits n Detailed Checks = Detailed Other Debits l Balance by Date l Issued By Date n Reconcilement Summary l Statement Recap The following additional optional reports will detail specific portions of the full ARP statement and are available in the media of Company’s choice. A variety of options exist for grouping, sorting and subtotaling reports, including: l Issue Notices Not Received Report l Disbursement Float Report . Outstanding Checks Report - Posted Items Report n Voids and Cancels Report . Credits Report . Issues This Cycle Report . Bank Originated Entries Repot-l l Unpaid Checks Report n Stop Payment Report . Match Paid Items Report . Reversed Checks Report n Prior Payments Report . Paid Checks Report Account Recondliation Plan Services Description (Revised 07LMIO) Page 1 l Deposit Location Report Account Reconciliation Plan Services kwiption (Revised 07LXvUO) Pege 2 1.2. Partial ARP Service: The partial ARP Service will enable Company to receive a paper report and/or computer readable file of paid check information to assist Company to reconcile statements for the transaction account(s) at Bank separately designated in writing (the “Account”) as provided in this Service Description and the other Service Documentation. On Company’s account statement date, Bank will prepare a partial ARP statement. Company may have the activity on the statement grouped, sorted and subtotaled according to its predetermined needs. The partial ARP statement will include the following sections: . Detailed Credits . Detailed Checks n Detailed Other Debits l Balance By Date l Statement Recap The following optional reports will be available at frequencies that will match Company’s business cycles and a variety of options exist for grouping, sorting and subtotaling reports, including: l Posted Items Listing n Credits Report n Stop Payments Report l Paid Checks Report n Bank-Originated Entries Report n Reversed Checks Report . Deposit Location Report Bank may charge additional fees for these optional services. Bank may add or delete reports and revise the content and format of the partial ARP statement and the reports at any time. 1.3. Deposit Location Reporting: Deposit Location Reporting (YDLR”) is a Service feature that can enhance the usefulness of the deposit portion of Company’s bank statement. DLR is offered in conjunction with both the Full ARP and Partial ARP Services. DLR provides the location number and location name on the ARP optional reports. If Company chooses to use DLR, Company will provide Bank with a list of its location numbers and names, and may amend the list from time to time by notice to Bank in writing. DLR includes the following features: 1 Company’s location names are systematically matched with location numbers and reported on optional reports. . A Deposit by Location optional report, containing all deposit-related activity, is available. l Deposit-related transactions may include: cash vault deposits, branch deposits, automated clearing house transactions, business automated teller machine express deposits, deposit adjustments and returned items. Account Reconci/iatbn Plan Sewices Description (Revised 07RWO) P6ge 1 2. Statement Cycles. The cycle for both full and partial ARP statements will be the same as the cycle for the Account statements. 3. Software, Hardware and Equipment. Company will, at its own cost and expense, obtain, install and, at all times during its utilization of the Services, maintain in good working order all software, hardware and other equipment necessary for it to use the services in accordance with this Service Description and the other Service Documentation. 4. Terminology. Unless specifically defined in this Service Description, terms used in this Service Description have the meanings, if any, provided in the Agreement for Treasury Management Services (referred to in this Service Description as the “Agreement”), the other Service Documentation and Articles 3 and 4 of the Uniform Commercial Code as adopted in the state in which Bank’s principal offtce is located, as each may be amended from time to time. Accwnl Reconciliation Plan Se&es Description (Revised 07RWO) Page 2 POSITIVE PAY SERVICE DESCRIPTION This Service Description contains provisions which, in addition to the provisions contained in the Agreement between Bank and Company (the “Agreement”), will govern Company’s use of Bank’s Positive Pay check fraud reduction program (the “Services”). 1. Description of Services. The Positive Pay Service will enable Company to instruct Bank to return counterfeit checks, checks otherwise not validly issued and certain altered checks. The Service is available only in conjunction with Bank’s Account Reconciliation Plan Service, which is subject to the terms of additional Senrice Documentation, which Company acknowledges having accepted by using this Service. Company will provide Bank with the complete issue date, serial number and amount of each check issued (the “check issue data”) on the transaction account(s) at Bank separately designated in the Positive Pay Service Set-up Form or otherwise in writing from time to time (the “Account”). The check issue data will be provided to Bank in the format and medium, by the deadline(s), and at the place(s) specified by Bank in the Positive Pay Services Set-up Form or otherwise in writing to Company. On each business day the check issue data, as Bank has recorded it up to and including that business day, will be electronically matched to checks presented against the Account. The check issue data will also be provided to Bank’s branches to assist its tellers in making decisions about cashing checks. If a check presented against the Account does match the check issue data Company has given Bank (a “matching check”), Bank will make final payment and charge it to the Account. Company will be informed of the check number and amount of each check which is not a matching check in a report (the “Positive Pay Exceptions Report”) which Company must access through Bank’s Wells Electronic BankedI or Information Reporting Services. This information will include checks which are not matching checks because of encoding errors unless Company is receiving Bank’s Controlled Disbursement Service through Wachovia Bank, N.A. (“Wachovia”) (the “Greenville Controlled Disbursement Service”) or Perfect Positive Pay Service through Wells Electronic Banker@. On the business day on which Company is informed that a check is not a matching check, Company may instruct Bank through We//s Electronic Banker or Information Reporting Services to return the check, identifying the check by complete serial number and amount, and Bank will do so if Bank receives the instruction at the place(s) and before the deadline(s) specified by Bank on the Positive Pay Exceptions Report Bank makes available to Company. If Company does not use Bank’s Image Positive Pay Service, it will make the pay or return decision based on the Magnetic Ink Character Recognition information provided. If requested by Company, Bank will use reasonable efforts to provide a copy of a check, but will have no liability if it is unable to do so prior to the deadline for returning the check. If Company misses the deadline for requesting the return of a check or if a check is not a matching check because of an encoding error, Bank will make final payment of the check and charge it to the Account. In performing the Service Bank will be required to use only the check issue data that Company has provided to Bank in the format and medium, by the deadline(s), and at the place(s) specified by Bank. 2. Limitation of Liability and Indemnification. Each check which Company has instructed Bank to return in accordance with this Service Description will be deemed not to be properly payable. Each matching or other check Company Positiva Pey Service Description (Revised 07/0AlO)o) Page I has authorized Bank to pay in accordance with this Service Description will be paid without Bank performing its customary (or any other) check verification procedures, and Bank will have no liability whatsoever for paying the check if its serial number or amount is altered, or if it is counterfeit, bears a forged or unauthorized signature or was otherwise not validly issued . Company waives, and releases Bank from, any claim that such returned checks are properly payable and any claim against Bank for wrongful dishonor, or that such paid checks were not properly payable. Company agrees to indemnify and hold Bank harmless from any losses or liabilities it may suffer or incur as a result of its return of a matching or other check at Company’s instruction. 3. Stop Payment and Return Decisions. The Service will not be used as a substitute for Bank’s stop payment service. Company will follow Bank’s standard stop payment procedures if it desires to return a matching or other check that was validly issued. Nothing in this Service Description will limit Company’s right to stop payment on any matching or other check or Bank’s right to return any matching or other check that Company has authorized Bank to pay in accordance with this Service Description if Bank determines in its sole discretion that the check is not properly payable for any reason (without Bank’s agreeing to, or being required to, make such determination in any circumstance) or that there are insufficient collected and available funds to pay it in the Account, 4. Termination. The Services will automatically terminate if the Account is closed for any reason. Termination of the Services will not terminate Company’s or Bank’s rights or obligations under this Service Description or the Service Documentation with respect to events or actions which occurred before such termination. 5. SofWare, Hardware and Other Equipment. Company wilt, at its own cost and expense, obtain, install and, at all times during its utilization of the Services, maintain in good working order all software, hardware and other equipment necessary for it to perform in accordance with this Service Description. 6. Survival. Section 2 will survive termination of the Services. 7. Terminology. Unless specifically defined in this Service Description, terms used in this Service Description have the meanings, if any, provided in the Agreement, the other Service Documentation and Articles 3 and 4 of the Uniform Commercial Code as adopted in the state in which the Bank office holding the Account is located, as each may be amended from time to time. PosMe Pay Setvice Da9xi@on (Revised 07ll34lO) Page 2 This Service Description contains provisions which, in addition to the provisions contained in the Master Agreement for Treasury Management Services between Bank and Company will govern Company’s origination and receipt through Bank of credit and debit entries (“entries”) to and from accounts maintained at Bank and other financial institutions by means of the automated clearing house (the “ACH”) in which the Bank is a participant (the “Services”). 1. Description of Services. The Services offered by Bank pursuant to the terms of this Service Description, one or more of which have been separately designated by Company in the ACH Services Set-up Form delivered to Bank, are generally described as follows: 1.1. Origination Services: 1.1.1. Direct ACH Oriaination. The Direct ACH Origination Service will enable Company, using Company’s software, to create entries and files in standard ACH format and send them electronically to Bank for transmission in accordance with the Rules (see Subsection 4.1). 1 .1.2. Third Partv ACH Orinination. Company will not be using Bank’s Third Party ACH Origination Service. 1 .I .3. ACH Express. The ACH Express Service will enable Company to create entries and files in standard ACH format at its own personal computer and send them electronically to Bank for transmission in accordance with the Rules (see Subsection 4.1). All files transmitted through the ACH Express Service must be created and transmitted to Bank using software specified by Bank which is the original, confidential, valuable and proprietary property of Politzer & Haney (the “Software”), which has licensed it to B@nk, or to an affiliate of Bank, with the right to sublicense it to Company. Bank grants Company a non-exclusive and non-assignable sublicense to use the Software solely for the purpose of initiating entries in accordance with the provisions of the license (a copy of which is available to Company on request), this ACH Services Description and the other Service Documentation. This sublicense will terminate upon the earlier to occur of termination of the license or termination of this Service. Upon termination, Company will promptly return all copies of the Software to Bank. IN NO EVENT WlLL BANK BE LIABLE FOR ANY INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOST DATA, PROGRAMS, PROFITS (ANTICIPATED, ACTUAL OR OTHERWISE), OR BENEFITS RESULTING FROM USE OF, RELIANCE UPON, OR INABILITY TO USE THE SOFTWARE, REGARDLESS OF WHETHER OR NOT BANK HAS BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR ANY OTHER THEORY OR FORM OF ACTION. IN NO EVENT WILL BANKS CUMULATIVE LIABILITY TO COMPANY IN RELATION TO THIS SUBLICENSE EXCEED A SUM EQUAL TO THE TOTAL SUBLICENSE FEE ACTUALLY PAID TO BANK. COMPANY ACH Services Description Page 1 (Revised SrSO/OO) ACKNOWLEDGES THAT NEITHER POLITZER AND HANEY NOR BANK MAKES ANY WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WlTHOUT LIMITATION THE WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE. Company agrees that, if required by law, the Software will not be exported directly or indirectly, separately or as a part of a system, without first obtaining a license from the United States Department of Commerce or any other appropriate agency of the United States Government. Bank may make copies of any enhanced versions of the Software available to Company at such price as Bank will determine at its sole discretion. Company acknowledges that Politzer and Haney has the right to enforce the terms of the license directly against Company in the event of a breach of its terms by Company. Company may not assign the license or this sublicense to anyone. Bank may discontinue to provide to Company any maintenance or other support with respect to the Software which it now, or hereafter provides upon prior written notice to Company. Company will not publish, disclose, display or otherwise make the Software available to others. Company will secure and protect the Software in a manner consistent with the protection of its own proprietary information and take appropriate action by instruction or agreement with its employees who are permitted access to the Software to ensure such protection. Company acknowtedges that, except as specifically permitted in writing by Bank, Company will not provide, transmit, further sublicense, transfer or otherwise distribute the Software or any part of it to a third party, or copy, reverse engineer, reverse compile, or reverse assemble, modify or alter the SoMare or any part of it. I. 1.4. Cross Border ACH. The Cross Border ACH Service will enable Company to create entries and files in standard ACH format for the purpose of debiting or crediting accounts held outside the United States and send them electronically to Bank for transmission in accordance with the Rules (see Subsection 4.1). With respect to credit entries, Bank will convert the amount to be transferred from United States Dollars to the currency of a designated foreign government or intergovernmental organization (“foreign currency”) at Bank’s buying rate for exchange in effect on the date the entry is transmitted by Bank to the ACH or gateway operator. If the financial institution designated to receive the funds does not pay the beneficiary specified in the entry, or if the entry is subsequently determined to be erroneous, Bank will not be liable for a sum in excess of the value of the entry after it has been converted from foreign currency to United States Dollars at Banks selling rate for exchange at such time as the entry is returned to Bank. Wrth respect to debit entries, Bank will convert the amount of each entry from foreign currency at Bank’s selling rate for exchange in effect on the settlement date of the entry. If the financial institution designated to receive the entry subsequently returns it, Bank may charge the Account (see Subsection 4.2) for the sum equal to the value of the returned entry as measured in foreign currency at Bank’s buying rate for exchange at such time as the entry is returned to Bank. Bank will not be liable for any failure or delay by a gateway operator, any intermediary financial institutions, or the receiving depository financial institution in the designated foreign country in processing or failing to process any entry Bank transmits, or for acts or omissions by a third party, including by way of example and not by way of limitation, the delay or failure of any third party to process, credit or debit any entry. ACH Services Description (Revised 5/30/00) Page 2 1.15 Internet ACH. Internet ACH will enable Company to originate ACH transactions via the Internet. Company will provide for its own access to the Internet through either an Internet service provider or through a local area network connection to an Internet service provider. If Company’s service provider is unable to provide access at any time, Company will not be able to access the Service. After Company has successfully completed the authentication process and obtained access to the Service, Company will build a database of payment transactions. Company’s database and applications will reside on a Bank owned and managed server. Company will, from that database, create a batch. Company will be responsible for verifying its batch totals and settlement date. Once verified, Company will only need to press a button to “release” that batch to Bank for processing. Bank will create a file of released batches in standard ACH format and process the file in accordance with the Rules (see Subsection 4.1). 1.2. Receiving Services: 7.2.1. ACH Debit Filter. The ACH Debit Filter Service will enable Company to better protect its accounts at Bank from unauthorized debit entries. Bank offers three options that monitor the debit entries posted to accounts. Of the three available options, Company has elected to have all debit entries automatically blocked from its accounts (a “Complete ACH Debit Block”). Bank agrees to install the Complete ACH Debit Block without charge to Company. 1.2.2. ACH Investment Fund. The ACH Investment Fund Service will enable Company to offer direct deposit or direct payment arrangements to its customers. Bank will prepare detailed transaction information which it will send to Company in one file each morning on a business day. Company has elected either individual postings or a consolidated settlement of transactions on the ACH Services Set-up Form. 2. Provisions Applicable Only to Origination Services. 2.1. Security Procedure: Bank will verify that Company has authorized, canceled or amended an entry that constitutes a payment order (as that term is defined in Section 4A- 103(a)(l) of the Uniform Commercial Code, as amended from time to time) solely by means of the security procedure separately agreed to in writing by Bank and Company. The security procedure will not be used to detect errors. Company will promptly notify Bank in writing of the identity of each person authorized to receive information regarding the security procedure (each singly or in the aggregate, an ‘authorized person”) and of any change in an authorized person. Bank will have a reasonable time after receipt of a notice to act on it. Company will establish and maintain effective internal procedures to safeguard against unauthorized transmissions and batch releases. Company warrants that no individual will be allowed to initiate transfers or batch releases in the absence of proper supervision and safeguards, and Company will take reasonable steps to maintain the confidentiality of the security procedure and any passwords, codes, security devices and related instructions provided by Bank. If Company believes or suspects that any such information or instructions have been known or accessed by unauthorized persons, Company will notify Bank immediately followed by written confirmation. Bank will have a reasonable time after receipt of notice to act on it. If a payment order, or a request for cancellation or amendment of a payment order, received by Bank purports to have been transmitted or authorized by Company, it will be deemed effective as Company’s payment order or request and Company will be obligated to pay Bank the amount of the payment order even though the payment order or request was not authorized by Company, provided Bank accepted the payment order in good faith and acted in compliance with the security procedure. If a payment order, or request for cancellation or amendment of a ACH Services Description Page 3 (Revised 5BOlOO) payment order, received by Bank was authorized by Company, Company will pay Bank the amount of the payment order, whether or not Bank complied with the security procedure with respect to that payment order. 2.2. Rejected Entries: Bank may reject any entry or file which does not comply with the requirements in this Service Description, the Rules or the security procedure with respect to which the Account (see Subsection 4.2) does not contain sufficient available funds to pay for the entry. Bank may reject an entry received for credit to an account maintained at Bank (an “on-us entry”) for any reason for which an entry may be returned under the Rules. If an entry or file is rejected, Bank will make a reasonable effort to notify Company promptly so that Company may repair and retransmit the entry or file. A notice of rejection will be effective when given. Bank will have no liability to Company by reason of the rejection of any entry or file, the fact that notice is not given at an earlier time than that provided for in this Service Description or for any loss resulting from Bank’s failure to provide notice. If Company requests that Bank repair an entry or file and Bank endeavors to do so, Bank will not be liable for its failure to make the requested repair. Company will pay all charges and expenses Bank incurs in connection with file repairs. 2.3. Payment Obligations; Settlement: Company will maintain in the Account (see Subsection 4.2) as of the applicable settlement date and time immediately available’funds sufficient to cover all credit entries Company originates through Bank. If requested, the funds will be placed on deposit with Bank before Bank delivers the credit entries to the ACH or gateway operator. Company’s obligation to pay Bank for each credit entry matures at the time Bank transmits or otherwise delivers the credit entry to the ACH or gateway operator and is unaffected by termination of the Services. Bank is authorized to debit the Account for the total amount of all credit entries on or before the applicable settlement date. Bank is not, however, intending to make a loan to Company. Notwithstanding any other provision of this Service Description or the other Service Documentation, Bank is authorized upon notice to Company to place a hold on an equal amount of funds in the Account or in any other accounts at Bank or any affiliate of Bank owned in whole or in part by Company, or to take any other action it deems appropriate to ensure that it receives payment. Bank may charge the Account or any other Company account at Bank or any affiliate of Bank for any debit, correcting or reversing entry which is later returned to Bank. Bank may also set off against any amount it or an affiliate of Bank owes to Company in order to obtain payment of Company’s obligation as set forth in this Service Description. 2.4. Cancellation or Amendment: Company will have no right to cancel or amend any entry or file after its receipt by Bank. However, if the request complies with the security procedure Bank may use reasonable efforts to act on it prior to transmitting the entry or file to the ACH or gateway operator or, in the case of an on-us entry, prior to crediting a receiver’s account, but will have no liability if the cancellation or amendment is not effected. Company will reimburse Bank for any expenses, losses or damages Bank may incur in effecting or attempting to effect Company’s request. 2.5. Returned Entries: Except for an entry or file retransmitted by Company in accordance with the requirements of this Service Description, Bank will have no obligation to retransmit a returned entry or file to the ACH or gateway operator if Bank complied with the terms of this Service Description with respect to the original entry or file. 2.6. Preparation of Entries and Files; Processing Schedules; Reconstruction: Each entry and file delivered to Bank, including any amendments, cancellations, reversals, corrections or changes related to it will be prepared in accordance with the Rules, the Service Documentation and Bank’s then current instructions. Bank will process each entry or file in ACH Services Description Page 4 (Revised 5/30/00) accordance with its then current processing schedule, provided (i) the entries or files are received by Bank’s applicable cut-off time on a business day and (ii) the ACH is open for business on that business day. Entries or files will be deemed received by Bank, in the case of transmittal by tape, when received by Bank at the location stated in the ACH Services Set- up Form, and in the case of transmittal by electronic transmission, when the transmission (and compliance with any applicable security procedure) is completed. If Bank receives an entry, file or batch release after its processing deadline, Bank will not be responsible for failure to meet the deadlines of the ACH operator for processing and transmitting the entries or files. If any of the requirements of clause (i), (ii) or (iii) of this Subsection 2.6. are not met, Bank will use reasonable efforts to transmit the entries or files to the ACH by the next applicable deadline of the ACH which is on a business day on which the ACH is open for business. Except as provided in Section 2.4, in the case of an on-us entry, Bank will credit the receiver’s account in the amount of the entry on the effective entry date contained in any instructions accompanying the entry, provided the requirements set forth in clauses (i) and (ii) of this Section 2.6 are met. If either of those requirements is not met, Bank will use reasonable efforts to credit the receiver’s account in the amount of the entry no later than the next business day following the effective entry date. Company will retain copies of each entry and file delivered to Bank or will be able to fully and completely reconstruct each entry and file for a period of five (5) business days after the applicable settlement date and will submit the copy or reconstructed entry or file to Bank upon request. 2.7 Effective Entry Date: The instructions accompanying an entry or file will specify a business day on which the entry or file is to be delivered to the ACH or gateway operator (the “effective entry date”). 3. Provisions Applicable Only to Receivinq Services. 3.1. Notice to Receiver: Unless required by applicable law, Bank will have no obligation to notify Company of the receipt of an entry, other than by showing it on the periodic statement for the affected deposit account (see Subsection 4.2). 4. Provisions Applicable to Both Origination and Receiving Services. 4.1. Rules: Origination, receipt, return, adjustment, correction, cancellation, amendment and transmission of ACH entries must be in accordance with the Operating Rules of the ACH in which Bank is a participant and, with respect to credit entries which constitute payment orders, Article 4A of the Uniform Commercial Code as adopted in the state whose law governs the Agreement, as both are varied by this Service Description and the other Service Documentation, and as both are amended from time to time (the “Rules”). Company acknowledges that it has had an opportunity to review and agrees to comply with and be bound by the Rules, except that so long as a Complete ACH Debit Block remains on a specific deposit account of Company, Company will have five (5) business days to notify Bank of any unauthorized ACH debit entry against such deposit account. If the unauthorired ACH debit entry occurred as a result of Bank error, the five (5) day notification limit will not relieve Bank of any liability as it relates to the error. Company will be responsible for promptly obtaining all future amendments. 4.2. Account: Company will maintain at least one deposit account with Bank as designated in the ACH Services Set-up Form (the “Account”). 4.3. Provisional Credit: Any credit Bank gives to Company is provisional until Bank receives final settlement and the entry for which credit was given is deemed to be finally paid as provided in this Service Description, the Rules and all laws, rules and regulations ACH Services Description (Revised 5/30/00) Page 5 governing any aspect of the entry, including the laws, rules and regulations of the country to which the entry was sent. If Bank does not receive final settlement, it is entitled to a refund from the credited person and Company will not be deemed to have paid that person. 4.4. Reversing Entries: At Company’s request, Bank will make a reasonable effort to reverse an entry, but will have no responsibility for the failure of any other person or entity to honor Company’s request. 4.5. Warranties: Company acknowledges that under the Rules, Bank makes certain warranties with respect to each entry. Company agrees to reimburse Bank for any loss Bank incurs, including its reasonable attorneys’ fees and legal expenses, as the result of a breach of a warranty made by Bank unless the breach resulted solely from Bank’s own negligence or intentional misconduct. 4.6. Indemnification: Company acknowledges that under the Rules, Bank indemnifies certain persons. Company agrees to reimburse Bank for any loss Bank incurs, including its reasonable attorneys’ fees and legal expenses, as the result of the enforcement of an indemnity, unless enforcement resulted solely from Bank’s own negligence or intentional misconduct. 4.7. Identify Authorized Persons: Any person identified by Company in the ACH Services Set-up Form or any certification, notice or other communication delivered to Bank may receive information, communications and notices regarding the Services, and is authorized to transact all business, make all agreements and sign and deliver all documents in connection with the Services. If the identity of such a person changes Company will promptly notify Bank in writing. Bank will have a reasonable time after receipt of a certification, notice or other communication to act on it. 4.6. Agents: If Company elects to use an agent with respect to the Services, Company, and not Bank, will be solely responsible for the acts and omissions of Company’s agent, and its agent will, without limitation, be authorized to originate, receive, return, adjust, correct, cancel, amend and transmit entries and files, and select the security procedure used to authenticate entries. Company agrees that any security procedure selected by its Agent will be treated as commercially reasonable for all purposes. Bank may rely on instructions it receives from Company’s agent and need not make any inquiries to verify or confirm that instructions are within the scope of the agency. Company will certify each agent’s identity and any changes to Bank in writing. Bank will be fully protected in relying on each certificate and on the obligation of Company to promptly certify any change in the agents so certified. Bank will have a reasonable time after receipt of a certification or change to act on it. Bank may at any time use agents and/or independent contractors to process entries or provide all or any other portion of the Services, and will be solely responsible for the acts and omissions of its agents and independent contractors. However, Bank will not be deemed to be the agent of, nor responsible for the acts or omissions of any other person, including without limitation any Federal Reserve Bank, ACH, Internet service provider or transmission or communications facility, any receiver or receiving depository financial institution (including without limitation the return of an entry by such receiver or receiving depository financial institution), and no such person will be deemed Bank’s agent. 4.9. Software, Hardware and Backup Requirements: Subject to Paragraph 1 .1.3., Company will, at its own cost and expense, obtain, install and, at all times during its ACH Services Description (Revised 5/30/00) Page 6 utilization of the Services, maintain in good working order all software, hardware and other equipment necessary for it to perform in accordance with this Service Description. Except with respect to the Internet ACH Service, Company agrees to implement, on a periodic basis not less than weekly, backup-measures, including, among other things, copying onto a diskette(s) each week’s current data base files. With respect to the Internet ACH Service, Bank will perform data base backup on a scheduled basis. In the event of any failure of such software, hardware or other equipment, Company will deliver to Bank all data which it would otherwise have provided that is necessary for Bank to perform Bank’s obligations in connection with the Services. 4.10. Survival: Sections 2.3,4.3,4.5,4.6 and 4.10 will survive termination of the Services. 4.11. Terminology: Unless specifically defined in this Service Description, terms used in this Service Description have the meanings, if any, provided in the Rules, as amended from time to time. As used in this Service Description, “negligence” will mean a material failure to use that degree of care that would be used under the same or similar circumstances by a national banking association having substantially the same volume and type of ACH activity and approximately the same number, size and diversity of ACH customers. ACH Services Description (Revised 5/30/00) Page 7 CORPORATE CASH MANAGEMENT ACCOUNT AGREEMENT This Corporate Cash Management Account Agreement (“Agreement”) is entered into as of the date set forth below by and between the undersigned customer (“Customer”, severally and collectively if more than one) and Wells Fargo Bank, N.A., a national banking association (“Bank”). WHEREAS, Bank furnishes to its customers the Corporate Cash Management Account service described below (the “Service”); WHEREAS, Customer desires to obtain the Service from Bank; WHEREAS, Customer and Bank agree that the Service will be provided by Bank to Customer subject to the following terms and conditions. Customer and Bank agree as follows: 1. Accounts: Customer shall designate an account (the ‘Concentration Account”) and may designate an account for the receipt of investment earnings (the “interest Account”). The Concentration Account and the Interest Account may be maintained at Bank or at an affiliate of Bank (“Affiliate”). Customer and Bank shall jointly designate in Schedule A the desired target balance (the “Specified Balance”) for the Concentration Account. 2. Investment Sweep Option: On each Business Day, Bank will compute the excess funds position (the “Investment Sweep Amount”) of the Concentration Account, based upon the Specified Balance. Only collected balances above the Specified Balance will be swept. If the Investment Sweep Amount is greater than zero, Bank will debit the Concentration Account and Bank shall invest the resulting Investment Sweep Amount until the following Business Day in accordance with the investment sweep options designated by Customer (the “Designated Investment(s)“), subject to the Designated Investment(s) being made available by Bank or its agents. If the Concentration Account is maintained at an Affiliate, Customer authorizes and instructs Affiliate to allow Bank to debit and credit the Concentration Account as provided herein. Bank reserves the right to discontinue the availability of a particular investment option at any time without notice to Customer. Customer shall complete a CCMA Designated Investments form identifying those investments desired by Customer. The Investment Sweep Amount will not be swept until Bank has received a properly executed CCMA Designated Investments form; upon Bank’s receipt of such form, Bank will begin sweeping the Investment Sweep Amount within ten (10) Business Days of receipt of such form. If the Designated Investment(s) are not available on any given Business Day, Customer instructs Bank to invest the Investment Sweep Amount in a “Repurchase Transaction” as defined in the Master Repurchase Agreement attached as Schedule B and incorporated herein by reference (the “Master Repurchase Agreement”). The Investment Sweep Amount will be allocated by Bank each Business Day among the Designated Investment(s) and any Repurchase Transactions by a proprietary computer program based on preset criteria for the availability of investments. On the following Business Day, whatever the specific allocation of Designated Investment(s), Bank will sweep the Investment Sweep Principal Amount to the Concentration Account for Customer’s immediate use or reinvestment. However, the CCMA 12/00 Page 1 3. Investment Sweep Interest Amount will not be credited to the Concentration Account until after the close of business on the following Business Day. Designated Investment(s): In providing this service to Customer, Bank makes available to Customer certain investment options. Customer directs Bank to sweep funds into the investments designated by Customer. With respect to the investment options made available under this Agreement, Bank has various alternatives for where, from and how the investments are obtained. Bank may act as principal, as agent for the issuer or as agent for Customer in doing so. When acting as agent for the issuer, Bank receives compensation from the issuer, which may increase based on volume. Customer authorizes Bank to act in any of the above capacities as desired by Bank. When Bank acts as agent for Customer for mutual fund transactions, Bank represents numerous Customers as agent and such funds are held in Bank’s name for the benefit of Customers. Bank provides all subsidiary accounting services on behalf of Customers for these purposes and is the only party authorized to effect transactions in the fund accounts. Customer authorizes Bank or its designee to transmit purchase and redemption orders to the mutual funds, and otherwise interact with the mutual funds, consistent with the terms of this Agreement. If the Designated Investments of Customers choice are not available on a given day, the Investment Sweep Amount will be invested in whole or in part in a Repurchase Transaction. The Master Repurchase Agreement and this Agreement will apply to all such investments. If the Investment Sweep Amount is invested in whole or in part in a Repurchase Transaction, the repurchase counterparty (Bank or an Affiliate) will deliver to Bankers Trust, or any affiliate or subsidiary thereof, (‘Bankers Trust”) (or a similar party as determined by Bank), serving as a third party custodian for the benefit of Customer and the repurchase counterparty, the securities serving as collateral pursuant to the Master Repurchase Agreement and identified in Customers daily confirmation of investment transaction(s). In the event of default by or insolvency of either Bank or the repurchase counterparty, Bankers Trust will contact Customer for instructions as to disposition of such collateral securities and distribution of any sale proceeds thereof. Customer expressly consents to Bankers Trust (or a similar party as determined by Bank) serving as third party custodian. The Bank will use its “Best Efforts” to make available an adequate amount of securities for the daily investment of Concentration Account funds. In the event that the Bank does not have adequate securities available for investment on a given day, the Bank reserves the right not to invest any part of the balances in a Customers Concentration Account. In order to assist the Bank in determining what amount of securities may be necessary for investment, Customer agrees to notify Wells Fargo Institutional & Brokerage Sales at least one business day prior to the business day that Customer expects to have more than its usual balances in its Concentration Account for investment through the Service. 4. Interest Earnings and Expenses: The Designated Investment(s) and any Repurchase Transactions will be structured to earn interest on a daily basis. On transactions where Bank is acting as a principal and for Commercial Paper investments where Bank is acting as principal or as agent for the issuer, the interest rate is established by Bank and may be changed daily without prior notice to Customer. Customer may obtain information on the current interest rate(s) by contacting Bank. As full or partial compensation for performing the Service and in connection with those Designated Investment(s) where Bank is acting as principal or agent, Bank reserves the right to take a markup on the sale of the Designated Investment(s) to Customer. The amount of interest earned by Customer, net of any markups, will be identified in periodic statements to Customer. Bank will credit earnings to the Interest Account on each Business Day. CCMA 12/W Page 2 5. 6. 7. 8. 9. 10. 11. 12. cc&l 12mo Periodic Statements: Bank will provide periodic statements to Customer of investment transactions detailing daily transactions, accrued investment earnings, and a summary of earnings credited. Customer must review the statements and notify Bank of any errors, overcharges, improper investments or other problems with the Service (collectively, “Error(s)“) within ten (10) Business Days of Banks mailing of the first notice on which any such Error(s) appears. If Customer fails to notify Bank of such Error(s) within the time period set forth above, the confirmations and statements will be deemed to be correct and conclusive as to Customer. Fees: Customer shall pay Bank those fees set forth on Schedule C attached hereto and incorporated herein by references (the “Fees”). At its discretion, the Bank is authorized to debit the Concentration Account for payment of the fees or, if Customer is a Cash Management Customer, Bank may charge Fees to Customer’s account analysis. Disclaimer: Bank is not providing any investment advice hereunder and makes no representation or warranty as to the suitability or safety of any of the investments made pursuant to this Agreement or Customers choice of Designated Investment(s). As long as Bank or its Affiliates invest funds of Customer in Designated Investment(s) or in a Repurchase Transaction as provided herein, neither Bank nor Wells Fargo & Co. and Affiliates, or their employees, officers or directors shall be liable to Customer for any reason whatsoever related to the purchase of any Designated Investment(s) or a Repurchase Transaction for Customer’s account. Bank makes no express or implied representations or warranties with respect to the Service other than those expressly set forth in this Agreement. Authority of Banks to Appoint Agent(s): Bank is authorized to appoint agents, including Affiliates or subsidiaries, to assist Bankers Trust in the performance of its obligations under this Agreement. Amendments and Changes: Except as otherwise provided, Bank may amend the terms of this Agreement (or of the attached Schedules) and the fees charged hereunder from time to time by giving written notice to Customer or by mailing a copy of the amended Agreement or Schedule to Customer. Their prospectuses, and federal and state securities laws and regulations govern changes to fees charged by the mutual funds. Customer shall make any changes to its Designated Investment(s), or Specified Balances or accounts, through the execution of a new Designated Investment(s) form or Schedule A, respectively, by any person authorized by Customer to execute this Agreement and the delivery of such form or schedule to Bank on any Business Day. Any such changes shall become effective no later than five (5) Business Days following receipt by the Bank. Schedules: All Schedules referenced in this Agreement are hereby incorporated by reference. In case of any inconsistency between the Schedules and this Agreement, the Schedules will prevail. Capitalized terms used in the Schedules shall have the meaning set forth in this Agreement, unless such terms are defined in the Schedules. Counterparts: This Agreement may be executed in as many counterparts as may be deemed necessary or convenient, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same agreement. Notification: All written notices required by this Agreement shall be delivered or mailed to the other parties at the addresses set forth below or to such other address as a party may specify in writing. Notices sent hereunder shall be effective upon receipt, or if personally delivered, telexed or mailed as herein described, on the earlier to occur of delivery or five (5) Business Days after the postmarked date (if mailed). Page 3 13. 14. 16. 16. 17. 18. Multiple Signers: If this Agreement covers more than one legal entity, each such entity shall be included in the term ‘Customer” and each such entity shall execute Schedule D pursuant to which they will agree to be bound by the terms and conditions of this Agreement. Bank may take instructions and direction from any party signing this Agreement on behalf of all signers. All signets authorize Bank to act on such instructions and direction. Such authorization shall include but not be limited to any changes or amendments to this Agreement or changes to Designated Investments or any schedule. Whether or not indicated on such instructions or direction, such actions shall be deemed to have been taken on behalf of all legal entities included in the term “Customer” hereunder. Notice sent to a signer of this Agreement should be ‘deemed notice to all signers of Schedule D. Governing Law; This Agreement shall be governed by and construed under the laws of the State of California, without giving effect to the conflict of laws principles of such state. Assignment: We may at any time assign or delegate our rights and duties under the Service Documents to any of our Affiliates that are owned or controlled by Wells Fargo & Company. Otherwise, neither we nor you may assign or transfer its rights or obligations under any Service Document without prior written consent which shall not be unreasonably withheld. We may at any time assign or sell our operations facilities which provide the Services. Termination: Bank or Customer may terminate the Service with or without cause upon written notice of at least ten (10) calendar days. Bank or Customer may immediately terminate the Service by giving written notice if either party violates any of the terms of conditions for using the Service. Limitation on Liabllity: Banks liability relating to the Service shall be limited exclusively to actual proven damages arising directly from Bank’s negligence or willful misconduct. In no event shall Bank be liable for any special, incidental, indirect, consequential or punitive losses or damages, whether any claim is based on contract or tort or whether the likelihood of such damages was known to Bank. Bank will perform the Service in a manner consistent with the quality provided when Bank performs similar services for its own account. Bank, however, cannot be responsible for the errors, acts or omissions of others, such as communications carriers, correspondents or clearing houses through which Bank may effect Customer instructions or receive or transmit information in the performance of the Service. Bank cannot be responsible for any loss, liability or delay resulting from or caused by war, communications networks outages, labor disputes, legal constraints, fires, power surges or failures, earthquakes, civil disturbances or other events beyond Bank’s control. In addition, Bank shall not be liable for any losses or damages to the extent caused by the action or inaction of Customer, or any agent or employee or Customer, whether or not such action or inaction constitutes negligence or a breach of this Agreement. Disclosure of Customer Information: Customer consents to the disclosure of Customer information to Wells Faroo & Co. or anv Affiliate or subsidiarv. Page 4 19. DISCLOSURE STATEMENT: IMPORTANT INFORMATION GENERAL l Funds deposited into the Concentration Account or the Interest Account are insured by the Federal Deposit Insurance Corporation (FDIC), subject to the FDIC’s terms for such insurance but only until they are swept into investment instruments. * Investment instruments offered, sold, or placed by Bank are not deposits in or obligations of, and are not guaranteed by, Bank or any Affiliate (except for Repurchase Agreements, see below); and are not insured by the FDIC, the Securities Investors Protection Corporation, or the United States of America. l l Investment instruments offered, sold, or placed by Bank are subject to investment risk including possible loss of principal invested or the nonpayment of interest. Yields vary with market conditions. Past performance is no guarantee of future results. WELLS FARGO: Bank, Affiliates or their subsidiaries may act as an investment advisor, custodian, transfer agent or provide other services, for or on behalf of certain mutual funds and receive fees for such services. Such relationships and the fees for such services are disclosed in the prospectuses for those funds. The Wells Fargo Funds are sponsored and distributed by Stephens Inc., Member NYSUSIPC. Wells Fargo and its affiliates are not affiliated with Stephens Inc. REPURCHASE AGREEMENTS: Repurchase Agreement transactions are obligations of, but not deposits with, the repurchase counterparty (the Bank or Affiliates). COMMERCIAL PAPER: Bank may act as agent for the issuer or as agent for Customer for commercial paper transactions. Commercial paper is an unsecured obligation of the respective issuer. MUTUAL FUNDS: Bank may act as agent or as principal for Customer for mutual fund transactions. Money Market Mutual Funds seek to preserve the value of your investment at $1 .OO per share; it is possible to lose money by investing in the fund. The markup on mutual fund transactions on balances greater than $100,000.00 may be up to 1.25%; the amount for balances less than $100,000.00, may be up to 1.75%. GOVERNMENT SPONSORED ENTERPRISES (“GSE”1: Bank will act as principal for all GSE transactions. Discount notes and other short-term obligations issued by GSE’s are obligations of their respective issuers. The obligations of such issuers are not obligations of, nor are they guaranteed by, the United States of America. CCMA 12mo Page 5 PROSPECTUSES AND OTHER INVESTMENT INFORMATION: Prior to Customer’s choice of Designated Investment(s), Customer acknowledges having received and read current prospectuses or other information regarding the Designated Investments, including but not limited to Offering Statements and Information Statements, as applicable, describing the investments being offered. Customer acknowledges Customer has read and understands the Corporate Cash Management Account Agreement, including the Disclosure Statement, the Designated Investments Form and all Schedules. Bank Customer WELLS FARGO BANK, N.A. 111 Main Street, Suite 306 MAC P6769-031 Vancouver, WA 98660 City ofXarlsbad Company Name By: Dealer Bank Officer Signature Officer Title City Treasurer Officer Title Date Date Attest: APPROVED AS TO FORM RONALD R. BALL. Citv Attornev BY: m [, &f&I&&& Deputy City Attorney CCMA limo Page 6 Designated Investments Form Corporate Cash Management Account Agreement Wells Fargo Bank, N.A. IMPORTANT INSTRUCTIONS: PLEASE READ BEFORE COMPLETING 1. 2. 3. 4. You may select multiple investment options. If you do, please rank them in the order that you wish to invest your funds; for example, 1 for first, 2 for second, etc. Rank Commercial Paper (CP) or Mutual Fund (MF) choices higher than Government Sponsored Enterprise (GSE) choices. If you do not wish to invest your funds with a particular issuer, please leave that issuer line blank. You may select the CP option go the MF option, but you may not select both. If you select a CP issuer(s) or a MF issuer(s), then you must also select at least one GSE issuer. 1. 2. 3. Commercial Paper Investment Option General Mills, Inc. Weyerhaeuser Real Estate or Weyerhaeuser Company, whichever is available Mutual Fund Investment Option Wells Fargo Cash Investment Money Market Fund Wells Fargo Treasury Plus institutional Money Market Fund Dreyfus Treasury Prime Cash Management Government Sponsored Enterprise & PEFCO’ Investment Option (Must select at /east one and we recommend three of more) Federal Home Loan Bank (“FHLB”) Federal National Mortgage Association (“Fannie Mae”) Student Loan Marketing Association (“Sallie Mae”) Private Export Funding Corp. (UPEFCOD) This form lists Customer’s choice of investments for the Corporate Cash Management Account Agreement (the “Agreement”) between Customer and Bank (as defined therein) and is subject to the terms of the Agreement. Customer acknowledges having read and understood the Disclosure Statement in the Agreement. 6 J4y y2PHu/z e/2, Officer Title clT7kd9 / Date ’ Pefco is not a GSE and may not fall within certain regulatory guidelines. CCMA 1mo Page 7 Schedule A Designated Accounts and Specified Balances Corporate Cash Management Account Agreement Wells Fargo Bank, N.A. The Concentration Account, Interest Account and Specified Balance listed below are subject to the Corporate Cash Management Account Agreement. Concentration Account Name Account Number Specified Balance (if desired) Interest Account Name (May be the Concentration Account) Account Number If this Schedule A is executed to replace an existing Schedule A to the Corporate Cash Management Account Agreement, then the following paragraph applies: This new Schedule replaces any existing Schedule A to the Corporate Cash Management Account Agreement. Except for this change, the terms and conditions of the Corporate Cash Management Account Agreement (including the Disclosure Statement, Designated Investment form and all Schedules) apply and are reaffirmed. &y &wPJ? P/L Officer Titfe JZJ /h Date ’ CCMA mo Schedule B Master Repurchase Agreement Corporate Cash Management Account Agreement Wells Fargo Bank, N.A. Between: Wells Fargo Bank, N.A. And Customer, as designated in the Corporate Cash Management Account Agreement (“CCMA Agreement”) to which this Agreement is attached and incorporated into by reference. 1. Applicability From time to time the parties hereto may enter into transactions in which one party (“SelleP) agrees to transfer to the other (“Buyer”) securities or other assets (“Securities”) against the transfer of funds by Buyer, with a simultaneous agreement by Buyer to transfer to Seller such Securities at a date certain or on demand, against the transfer of funds by Seller. Each such transaction shall be referred to herein as a “Transaction” and, unless otherwise agreed in writing, shall be governed by this Agreement, including any supplemental terms or conditions contained in Annex I hereto and in any other annexes identified herein or therein as applicable hereunder. 2. Definitions (a) “Act of Insolv&cy”, with respect to any party, (i) the commencement by such party as debtor of any case or proceeding under any bankruptcy, insolvency, reorganization, liquidation, moratorium, dissolution, delinquency or similar law, or such party seeking the appointment or election of a receiver, conservator, trustee, custodian or similar official for such party or any substantial part of its property, or the convening of any meeting of creditors for purposes of commencing any such case or proceeding or seeking such an appointment or election, (ii) the commencement of any such case or proceeding against such party, or another seeking such an appointment or election, or the filing against a party of an application for a protective decree under the provisions of the Securities Investor Protection Act of 1970, which (A) is consented to or not timely contested by such party, (B) results in the entry of an order for relief, such an appointment or election, the issuance of such a protective decree or the’ entry of an order having a similar effect, or (C) is not dismissed within 15 days, (iii) the making by such party of a general assignment for the benefit of creditors, or (iv) the admission in writing by such party of such party’s inability to pay such party’s debts as they become due; (W “Additional Purchased Securities”, Securities provided by Seller to Buyer pursuant to Paragraph 4(a) hereof (c) “Buyer’s Margin Amount”, with respect to any Transaction as of any date, the amount obtained by application of the Buyer’s Margin Percentage to the Repurchase Price for such Transaction as of such date; (4 “Buyer’s Margin Percentage”, with respect to any Transaction as of any date, a percentage (which may be equal to the Sellers Margin Percentage) agreed to by Buyer and Seller or, in the absence of any such agreement, the percentage obtained by dividing the Market Value of the Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such Transaction; (e) “Confirmation”, the meaning specified in Paragraph 3(b) hereof; CCMA fzm Pafle 9 3. Initiation; Confirmation; Termination (9 “Income”, with respect to any Security at any time, any principal thereof and all interest, dividends or other distributions thereon; (9) “Margin Deficit”, the meaning specified in Paragraph 4(a) hereof; VU “Margin Excess”, the meaning specified in Paragraph 4(b) hereof; 0) “Margin Notice Deadline”, the time agreed to by the parties in the relevant Confirmation, ‘Annex I hereto or otherwise as the deadline for giving notice requiring same-day satisfaction of margin maintenance obligations as provided in Paragraph 4 hereof (or, in the absence of any such agreement, the deadline for such purposes established in accordance with market practice); 0) “Market Value”, with respect to any Securities as of any date, the price for such Securities on such date obtained from a generally recognized source agreed to by the parties or the most recent closing bid quotation from such a source, plus accrued Income to the extent not included therein (other than any Income credited or transferred to, or applied to the obligations of, Seller pursuant to Paragraph 5 hereof) as of such date (unless contrary to market practice for such Securities); WI “Price Differential”, with respect to any Transaction as of any date, the aggregate amount obtained by daily application of the Pricing Rate for such Transaction to the Purchase Price for such Transaction on a 360 day per year basis for the actual number of days during the period commencing on (and including) the Purchase Date for such Transaction and ending on (but excluding) the date of determination (reduced by any amount of such Price Differential previously paid by Seller to Buyer with respect to such Transaction); (I) “Pricing Rate”, the per annum percentage rate for determination of the Price Differential; (m) ” Prime Rate”, the prime rate of U.S. commercial banks as published in The Wall Street Journal (or, if more than one such rate is published, the average of such rates); (n) “Purchase Date”, the date on which Purchased Securities are to be transferred by Seller to Buyer; (0) “Purchase Price”, (i) on the Purchase Date, the price at which Purchased Securities are transferred by Seller to Buyer, and (ii) thereafter, except where Buyer and Seller agree otherwise, such price increased by the amount of any cash transferred by Buyer to Seller pursuant to Paragraph 4(b) hereof and decreased by the amount of any cash transferred by Seller to Buyer pursuant to Paragraph 4(a) hereof or applied to reduce Seller’s obligations under clause (ii) of Paragraph 5 hereof, (P) “Purchased Securities”, the Securities transferred by Seller to Buyer in a Transaction hereunder, and any Securities substituted therefor in accordance with Paragraph 9 hereof. The term “Purchased Securities” with respect to any Transaction at any time also shall include Additional Purchased Securities delivered pursuant to Paragraph 4(a) hereof and shall exclude Securities returned pursuant to Paragraph 4(b) hereof; (4) “Repurchase Date”, the date on which Seller is to repurchase the Purchased Securities from Buyer, including any date determined by application of the provisions of Paragraph 3(c) or 11 hereof; W “Repurchase Price”, the price at which Purchased Securities are to be transferred from Buyer to Seller upon termination of a Transaction, which will be determined in each case (including Transactions terminable upon demand) as the sum of the Purchase Price and the Price Differential as of the date of such determination; 6) “Seller’s Margin Amount”, with respect to any Transaction as of any date, the amount obtained by application of the Seller’s Margin Percentage to the Repurchase Price for such Transaction as of such date; (9 “Seller’s Margin Percentage”, with respect to any Transaction as of any date, a percentage (which may be equal to the Buyer’s Margin Percentage) agreed to by Buyer and Seller or, in the absence of any such agreement, the percentage obtained by dividing the Market Value of the Purchased Securities on the Purchase Date by the Purchase Price on the Purchase Date for such Transaction. (a) An agreement to enter into a Transaction may be made orally or in writing at the initiation of either Buyer or Seller. On the Purchase Date for the Transaction, the Purchased Securities shall be transferred to Buyer or its agent against the transfer of the Purchase Price to an account of Seller. W Upon agreeing to enter into a Transaction hereunder, Buyer or Seller (or both), as shall be agreed, shall promptly deliver to the other party a written confirmation of each Transaction (a “Confirmation”). The Confirmation shall describe the Purchased Securities (including CUSIP number, if any), identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase Price, (iii) the CCMA 12Mo Page 10 Repurchase Date, unless the Transaction is to be terminable on demand, (iv) the Pricing Rate or Repurchase Price applicable to the Transaction, and (v) any additional terms or conditions of the Transaction not inconsistent with this Agreement. The Confirmation, together with this Agreement, shall constitute conclusive evidence of the terms agreed between Buyer and Seller with respect to the Transaction to which the Confirmation relates, unless with respect to the Confirmation specific objection is made promptly after receipt thereof. In the event of any conflict between the terms of such Confirmation and this Agreement, this Agreement shall prevail. (c) In the case of Transactions terminable upon demand, such demand shall be made by Buyer or Seller, no later than such time as is customary in accordance with market practice, by telephone or otherwise on or prior to the business day on which such termination will be effective. On the date specified in such demand, or on the date fixed for termination in the case of Transactions having a fixed term, termination of the Transaction will be effected by transfer to Seller or its agent of the Purchased Securities and any Income in respect thereof received by Buyer (and not previously credited or transferred to, or applied to the obligations of, Seller pursuant to Paragraph 5 hereof) against the transfer of the Repurchase Price to an account of Buyer. 4. Margin Maintenance (a) If at any time the aggregate Market Value of all Purchased Securities subject to all Transactions in which a particular party hereto is acting as Buyer is less than the aggregate Buyer’s Margin Amount for all such Transactions (a “Margin Deficit”), then Buyer may by notice to Seller require Seller in such Transactions, at Seller’s option, to transfer to Buyer cash or additional Securities reasonably acceptable to Buyer (“Additional Purchased Securities”), so that the cash and aggregate Market Value of the Purchased Securities, including any such Additional Purchased Securities, will thereupon equal or exceed such aggregate Buyer’s Margin Amount (decreased by the amount of any Margin Deficit as of such date arising from any Transactions in which such Buyer is acting as Seller). 1 (4 If at any time the aggregate Market Value of all Purchased Securities subject to all Transactions in which a particular party hereto is acting as Seller exceeds the aggregate Seller’s Margin Amount for all such Transactions at such time (a “Margin Excess”), then Seller may by notice to Buyer require Buyer in such Transactions, at Buyer’s option, to transfer cash or Purchased Securities to Seller, so that the aggregate Market Value of the Purchased Securities, after deduction of any such cash or any Purchased Securities so transferred, will thereupon not exceed such aggregate Seller’s Margin Amount (increased by the amount of any Margin Excess as of such date arising from any Transactions in which such Seller is acting as Buyer). w If any notice is given by Buyer or Seller under subparagraph (a) or (b) of this Paragraph at or before the Margin Notice Deadline on any business day, the party receiving such notice shall transfer cash or Additional Purchased Securities as provided in such subparagraph no later than the close of business in the relevant market on such day. If any such notice is given after the Margin Notice Deadline, the party receiving such notice shall transfer such cash or Securities no later than the close of business in the relevant market on the next business day following such notice. (d) Any cash transferred pursuant to this Paragraph shall be attributed to such Transactions as shall be agreed upon by Buyer and Seller. @I Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the respective rights of Buyer or Seller (or both) under subparagraphs (a) and (b) of this Paragraph may be exercised only where a Margin Deficit or Margin Excess, as the case may be, exceeds a specified dollar amount or a specified percentage of the Repurchase Prices for such Transactions (which amount or percentage shall be agreed to by Buyer and Seller prior to entering into any such Transactions). (9 Seller and Buyer may agree, with respect to any or all Transactions hereunder, that the respective rights of Buyer and Seller under subparagraphs (a) and (b) of this Paragraph to require the elimination of a Margin Deficit or a Margin Excess, as the case may be, may be exercised whenever such a Margin Deficit or Margin Excess exists with respect to any single Transaction hereunder (calculated without regard to any other Transaction outstanding under this Agreement). cc&l ma Page 71 5. Income Payments Seller shall be entitled to receive an amount equal to all Income paid or distributed on or in respect of the Securities that is not otherwise received by Seller, to the full extent it would be so entitled if the Securities had not been sold to Buyer. Buyer shall, as the patties may agree with respect to any Transaction (or, in the absence of any such agreement, as Buyer shall reasonably determine in its discretion), on the date such Income is paid or distributed either (i) transfer to or credit to the account of Seller such Income with respect to any Purchased Securities subject to such Transaction or (ii) with respect to Income paid in cash, apply the Income payment or payments to reduce the amount, if any, to be transferred to Buyer by Seller upon termination of such Transaction. Buyer shall not be obligated to take any action pursuant to the preceding sentence (A) to the extent that such action would result in the creation of a Margin Deficit, unless prior thereto or simultaneously therewith Seller transfers to Buyer cash or Additional Purchased Securities sufficient to eliminate such Margin Deficit, or (B) if an Event of Default with respect to Seller has occurred and is then continuing at the time such Income is paid or distributed. 6. Security Interest Although the parties intend that all Transactions hereunder be sales and purchases and not loans, in the event any such Transactions are deemed to be loans, Seller shall be deemed to have pledged to Buyer as security for the performance by Seller of its obligations under each such Transaction, and shall be deemed to have granted to Buyer a security interest in, all of the Purchased Securities with respect to all Transactions hereunder and all Income thereon and other proceeds thereof. 7. Payment and Transfer Unless otherwise mutually agreed, all transfers of funds hereunder shall be in immediately available funds. All Securities transferred by one party hereto to the other party (i) shall be in suitable form for transfer or shall be accompanied by duly executed instruments of transfer or assignment in blank and such other documentation as the party receiving possession may reasonably request, (ii) shall be transferred on the book-entry system of a Federal Reserve Bank, or (iii) shall be transferred by any other method mutually acceptable to Seller and Buyer. Required Disclosure for Transactions In Which the Seller Retains Custody of the Purchased Securities Seller is not permitted to substitute other securities for those subject to this Agreement and therefore must keep Buyer’s securities segregated at all times, unless in this Agreement Buyer grants Seller the right to substitute other securities. If Buyer grants the right to substitute, this means that Buyer’s securities will likely be commingled with Seller’s own securities during the trading day. Buyer is advised that, during any trading day that Buyer’s securities are commingled with Seller’s securities, they may be subject to liens granted by Seller to third parties and may be used by Seller for deliveries on other securities transactions. Whenever the securities are commingled, Sellers ability to resegregate substitute securities for Buyer will be subject to Sellers ability to satisfy any lien or to obtain substitute securities. 8. Segregation of Purchased Securities To the extent required by applicable law, all Purchased Securities in the possession of Seller shall be segregated from other securities in its possession and shall be identified as subject to this Agreement. Segregation may be accomplished by appropriate identification on the books and records of the holder, including a financial or securities intermediary or a clearing corporation. All of Seller’s interest in the Purchased Securities shall pass to Buyer on the Purchase Date and, unless otherwise agreed by Buyer and Seller, nothing in this Agreement cch4A 1240 Page 12 shall preclude Buyer from engaging in repurchase transactions with the Purchased Securities or otherwise selling, transferring, pledging or hypothecating the Purchased Securities, but no such transaction shall relieve Buyer of its obligations to transfer Purchased Securities to Seller pursuant to Paragraph 3,4 or 11 hereof, or of Buyer’s obligation to credit or pay Income to, or apply Income to the obligations of, Seller pursuant to Paragraph 5 hereof. 9. Substitution (a) Seller may, subject to agreement with and acceptance by Buyer, substitute other Securities for any Purchased Securities. Such substitution shall be made by transfer to Buyer of such other Securities and transfer to Seller of such Purchased Securities. After substitution, the substituted Securities shall be deemed to be Purchased Securities, (b) In Transactions in which Seller retains custody of Purchased Securities, the parties expressly agree that Buyer shall be deemed, for purposes of subparagraph (a) of this Paragraph, to have agreed to and accepted in this Agreement substitution by Seller of other Securities for Purchased Securities; provided, however, that such other Securities shall have a Market Value at least equal to the Market Value of the Purchased Securities for which they are substituted. 10. Representations Each of Buyer and Seller represents and warrants to the other that (i) it is duly authorized to execute and deliver this Agreement, to enter into Transactions contemplated hereunder and to perform its obligations hereunder and has taken all necessary action to authorize such execution, delivery and performance, (ii) it will engage in such Transactions as principal (or, if agreed in writing, in the form of an annex hereto or otherwise, in advance of any Transaction by the other party hereto, as agent for a disclosed principal), (iii) the person signing this Agreement on its behalf is duly authorized to do so on its behalf (or on behalf of any such disclosed principal), (iv) it has obtained all authorizations of any governmental body required in connection with this Agreement and the Transactions hereunder and such authorizations are in full force and effect and (v) the execution, delivery and performance of this Agreement and the Transactions hereunder will not violate any law, ordinance, charter, by-law or rule applicable to it or any agreement by which it is bound or by which any of its assets are affected. On the Purchase Date for any Transaction Buyer and Seller shall each be deemed to repeat all the foregoing representations made by it. 11. Events of Default In the event that (i) Seller fails to transfer or Buyer fails to purchase Purchased Securities upon the applicable Purchase Date, (ii) Seller fails to repurchase or Buyer fails to transfer Purchased Securities upon the applicable Repurchase Date, (iii) Seller or Buyer fails to comply with Paragraph 4 hereof, (iv) Buyer fails, after one business day’s notice, to comply with Paragraph 5 hereof, (v) an Act of Insolvency occurs with respect to Seller or Buyer, (vi) any representation made by Seller or Buyer shall have been incorrect or untrue in any material respect when made or repeated or deemed to have been made or repeated, or (vii) Seller or Buyer shall admit to the other its inability to, or its intention not to, perform any of its obligations hereunder (each an “Event of Defaulr): (4 The nondefaulting party may, at its option (which option shall be deemed to have been exercised immediately upon the occurrence of an Act of Insolvency), declare an Event of Default to have occurred hereunder and, upon the exercise or deemed exercise of such option, the Repurchase Date for each Transaction hereunder shall, if it has not already occurred, be deemed immediately to occur (except that, in the event that the Purchase Date for any Transaction has not yet occurred as of the date of such exercise or deemed exercise, such Transaction shall be deemed immediately canceled). The non- P8ge 13 defaulting party shall (except upon the occurrence of an Act of Insolvency) give notice to the defaulting party of the exercise of such option as promptly as practicable. (b) In all Transactions in which the defaulting party is acting as Seller, if the non-defaulting party exercises or is deemed to have exercised the option referred to in subparagraph (a) of this Paragraph, (I) the defaulting party’s obligations in such Transactions to repurchase all Purchased Securities, at the Repurchase Price therefor on the Repurchase Date determined in accordance with subparagraph (a) of this Paragraph, shall thereupon become immediately due and payable, (ii) all Income paid after such exercise or deemed exercise shall be retained by the non-defaulting party and applied to the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder, and (iii) the defaulting party shall immediately deliver to the non-defaulting party any Purchased Securities subject to such Transactions then in the defaulting party’s possession or control. (c) In all Transactions in which the defaulting party is acting as Buyer, upon tender by the non-defaulting party of payment of the aggregate Repurchase Prices for all such Transactions, all right, title and interest in and entitlement to all Purchased Securities subject to such Transactions shall be deemed transferred to the non-defaulting party, and the defaulting party shall deliver all such Purchased Securities to the non-defaulting party. WI If the nondefaulting party exercises or is deemed to have exercised the option referred to in subparagraph (a) of this Paragraph, the non-defaulting party, without prior notice to the defaulting party, may: (0 As to Transactions in which the defaulting party is acting as Seller, (A) immediately sell, in a recognized market (or otherwise in a commercially reasonable manner) at such price or prices as the non-defaulting party may reasonably deem satisfactory, any or all Purchased Securities subject to such Transactions and apply the proceeds thereof to the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder or (B) in its sole discretion elect, in lieu of selling all or a portion of such Purchased Securities, to give the defaulting party credit for such Purchased Securities In an amount equal to the price therefor on such date, obtained from a generally recognized source or the most recent closing bid quotation from such a source, against the aggregate unpaid Repurchase Prices and any other amounts owing by the defaulting party hereunder; and (ii) As to Transactions in which the defaulting party is acting as Buyer, (A) immediately purchase, in a rewgnized market (or otherwise in a commercially reasonable manner) at such price or prices as the non-defaulting party may reasonabty deem satisfactory, securities (“Replacement Securities”) of the same class and amount as any Purchased Securities that are not delivered by the defaulting party to the non- defaulting party as required hereunder or (B) in its sole discretion elect, in lieu of purchasing Replacement Securities, to be deemed to have purchased Replacement Securities at the price therefor on such date, obtained from a generally rewgnized source or the most recent closing offer quotation from such a source. Unless otherwise provided in Annex I, the parties acknowledge and agree that (1) the Securities subject to any Transaction hereunder are instruments traded in a rewgnized market, (2) in the absence of a generally recognized source for prices or bid or offer quotations for any Security, the non-defaulting party may establish the source therefor in its sole discretion and (3) all prices, bids and offers shall be determined together with accrued Income (except to the extent contrary to market practice with respect to the relevant Securities). 63 As to Transactions in which the defaulting party is acting as Buyer, the defaulting party shall be liable to the non-defaulting party for any excess of the price paid (or deemed paid) by the non- defaulting party for Replacement Securities over the Repurchase Price for the Purchased Securities replaced thereby and for any amounts payable by the defaulting party under Paragraph 5 hereof or otherwise hereunder. (9 For purposes of this Paragraph 11, the Repurchase Price for each Transaction hereunder in respect of which the defaulting party is acting as Buyer shall not increase above the amount of such Repurchase Price for such Transaction determined as of the date of the exercise or deemed exercise by the nondefaulting party of the option referred to in subparagraph (a) of this Paragraph. (9) The defaulting party shall be liable to the non-defaulting party for (i) the amount of all reasonable legal or other expenses incurred by the non-defaulting party in connection with or as a result of an Event of Default, (ii) damages in an amount equal to the cost (including all fees, expenses and CCMA 12.40 Page 14 commissions) of entering into replacement transactions and entering into or terminating hedge transactions in connection with or as a result of an Event of Default, and (iii) any other loss, damage, cost or expense directly arising or resulting from the occurrence of an Event of Default in respect of a Transaction. (h) To the extent permitted by applicable law, the defaulting party shall be liable to the non- defaulting party for interest on any amounts owing by the defaulting party hereunder, from the date the defaulting party becomes liable for such amounts hereunder until such amounts are (i) paid in full by the defaulting party or (ii) satisfied in full by the exercise of the non-defaulting party’s rights hereunder. Interest on any sum payable by the defaulting party to the non-defaulting party under this Paragraph 11 (h) shall be at a rate equal to the greater of the Pricing Rate for the relevant Transaction or the Prime Rate. (0 The non-defaulting party shall have, in addition to its rights hereunder; any rights otherwise available to it under any other agreement or applicable law. 12. Single Agreement Buyer and Seller acknowledge that, and have entered hereunto and will enter into each Transaction hereunder in consideration of and in reliance upon the fact that; all Transactions hereunder constitute a single business and contractual relationship and have been made in consideration of each other. Accordingly, each of Buyer and Seller agrees (i) to perform all of its obligations in respect of each Transaction hereunder, and that a default in the performance of any such obligations shall constitute a default by it in respect of all Transactions hereunder, (ii) that each of them shall be entitled to set off claims and apply property held by them in respect of any Transaction against obligations owing to them in respect of any other Transactions hereunder and (iii) that payments, deliveries and other transfers made by either of them in respect of any Transaction shall be deemed to have been made in consideration of payments, deliveries and other transfers in respect of any other Transactions hereunder, and the obligations to make any such payments, deliveries and other transfers may be applied against each other and netted. 13. Notices and Other Communications Any and all notices, statements, demands or other communications hereunder may be given by a party to the other by mail, facsimile, telegraph, messenger or otherwise to the address specified in Annex I hereto, or so sent to such party at any other place specified in a notice of change of address hereafter received by the other. All notices, demands and requests hereunder may be made orally, to be confirmed promptly in writing, or by other communication as specified in the preceding sentence. 14. Entire Agreement; Severability This Agreement shall supersede any existing agreements.between the parties containing general terms and conditions for repurchase transactions. Each provision and agreement herein shalt be treated as separate and independent from any other provision or agreement herein and shall be enforceable notwithstanding the unenforceability of any such other provision or agreement. 15. Non-assignability; Termination (a) The rights and obligations of the parties under this Agreement and under any Transaction shall not be assigned by either party without the prior written consent of the other party, and any such assignment without the prior written consent of the other party shall be null and void. Subject to the foregoing, this Agreement and any Transactions shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. This Agreement may be terminated by either party CCMA 12AM Page 15 16. Governing Law This Agreement shall be governed by the laws of the State of California without giving effect to the conflict of law principles thereof. 17. 1%. No Waivers, Etc. No express or implied waiver of any Event of Default by either party shall constitute a waiver of any other Event of Default and no exercise of any remedy hereunder by any party shall constitute a waiver of its right to exercise any other remedy hereunder. No modification or waiver of any provision of this Agreement and no consent by any party to a departure herefrom shall be effective unless and until such shall be in writing and duly executed by both of the parties hereto. Without limitation on any of the foregoing, the failure to give a notice pursuant to Paragraph 4(a) or 4(b) hereof will not constitute a waiver of any right to do so at a later date. Use of Employee Plan Assets (4 If assets of an employee benefit plan subject to any provision of the Employee Retirement Income Security Act of 1974 (“ERISA”) are intended to be used by either party hereto (the “Plan Party”) in a Transaction, the Plan Party shall so notify the other party prior to the Transaction. The Plan Party shall represent in writing to the other party that the Transaction does not constitute a prohibited transaction under ERISA or is otherwise exempt therefrom, and the other party may proceed in reliance thereon but shall not be required so to proceed. (W Subject to the last sentence of subparagraph (a) of this Paragraph, any such Transaction shall proceed only if Seller furnishes or has furnished to Buyer its most recent available audited statement of its financial condition and its most recent subsequent unaudited statement of its financial condition. (c) By entering into a Transaction pursuant to this Paragraph, Seller shall be deemed (i) to represent to Buyer that since the date of Seller’s latest such financial statements, there has been no material adverse change in Seller’s financial condition which Seller has not disclosed to Buyer, and (ii) to agree to provide Buyer with future audited and unaudited statements of its financial condition as they are issued, so long as it is a Seller in any outstanding Transaction involving a Plan Party. 19. Intent (a) The parties recognize that each Transaction is a “repurchase agreement” as that term is defined in Section 101 of Title 11 of the United States Code, as amended (except insofar as the type of Securities subject to such Transaction or the term of such Transaction would render such definition inapplicable), and a “securities contract” as that term is defined in Section 741 of Title 11 of the United States Code, as amended (except insofar as the type of assets subject to such Transaction would render such definition inapplicable). (W It is understood that either party’s right to liquidate Securities delivered to it in connection with Transactions hereunder or to exercise any other remedies pursuant to Paragraph 11 hereof is a contractual right to liquidate such Transaction as described in Sections 555 and 559 of Title 11 of the United States Code, as amended. (c) The parties agree and acknowledge that if a party hereto is an “insured depository institution,” as such term is defined in the Federal Deposit Insurance Act, as amended (“FDIA”), then each Transaction hereunder is a ‘qualified financial contract,” as that term is defined in FDIA and any rules, orders or policy statements thereunder (except insofar as the type of assets subject to such Transaction would render such definition inapplicable). CCMA CNO upon giving written notice to the other, except that this Agreement shall, notwithstanding such notice, remain applicable to any Transactions then outstanding. @I Subparagraph (a) of this Paragraph 15 shall not preclude a patty from assigning, charging or othennrise dealing with all or any part of its interest in any sum payable to it under Paragraph 11 hereof. Page 16 04 It is understood that this Agreement constitutes a ‘netting contract” as defined in and subject to Title IV of the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) and each payment entitlement and payment obligation under any Transaction hereunder shall constitute a “covered contractual payment entitlement” or “covered contractual payment obligation”, respectively, as defined in and subject to FDICIA (except insofar as one or both of the parties is not a “financial institution” as that term is defined in FDICIA). 20. Disclosure Relating to Certain Federal Protections The parties acknowledge that they have been advised that: (a) In the case of Transactions in which one of the parties is a broker or dealer registered with the Securities and Exchange Commission (“SEC”) under Section 15 of the Securities Exchange Act of 1934 (“1934 Act”), the Securities Investor Protection Corporation has taken the position that the provisions of the Securities Investor Protection Act of 1970 (“SIPA”) do not protect the other party with respect to any Transaction hereunder; (W In the case of Transactions in which one of the parties is a government securities broker or a government securities dealer registered with the SEC under Section 15C of the 1934 Act, SIPA will not provide protection to the other party with respect to any Transaction hereunder; and (a In the case of Transactions in which one of the parties is a financial institution, funds held by the financial institution pursuant to a Transaction hereunder are not a deposit and therefore are not insured by the Federal Deposit Insurance Corporation or the National Credit Union Share Insurance Fund, as applicable. Bank WELLS FARGO BANK, N.A. Ill Main Street, Suite 306 MAC P6769-031 Vancouver, WA 98660 Wells Fargo Bank, N.A. By: Title: Senior vice President Date: Customer 0 f (%A hc/ Compahy Name w City Treasurer Title: c, 7 y rn 4f-h r k Date: CT/r z-/o/ City Clerk APPROVED AS TO FORM RONALD R. BALL, City Attorney BY: &j& ,&? &J’$k&L Deputy City Attorney CCMA 12&O Page 17 Schedule B - Annex I Supplemental Terms and Conditions Corporate Cash Management Account Agreement Wells Fargo Bank, N.A. Supplemental Terms and Conditions This Annex I forms a part of the Master Repurchase Agreement dated as of ,20 (the “Agreement”) between Wells Fargo Bank, N.A. and Capitalized terms used but not defined in this Annex I shall have the meanings ascribed to them in the Agreement. The following terms and conditions hereby supplement and/or modify the Master Repurchase Agreement between and Wells Fargo Bank, N.A. (“WFB”). 1. 2. 3. 4. In cases in which Wells Fargo Bank, N.A. is Seller, Seller and Buyer agree that notwithstanding anything in the Master Repurchase Agreement to the contrary, the transfer and delivery of the Purchased Securities may be accomplished by segregation in bulk of the Purchased Securities together with other securities being held for the benefit of third parties in connection with other repurchase agreements by Wells Fargo Bank, N.A. or its Custodian. On the Repurchase Date the Purchased Securities shall be released to Wells Fargo Bank, N.A.‘s account. The last sentence of Paragraph 3(b) of the Agreement is amended to read as follows: In the event of any conflict between the terms of such Confim-tation and this Agreement, such Confirmation shall prevail. Paragraph 16 is amended to read as follows: The laws of the State of California without giving effect to the conflict of law principles thereof shall govern this Agreement. The following 2 paragraphs shall be added to Paragraph 9 of the Agreement: @I In the case of any Transaction for which the Repurchase Date is other than the business day immediately following the Purchase Date and with respect to which Seller does not have any existing right to substitute substantially the same Securities for the Purchased Securities, Seller shall have the right, subject to the proviso to this sentence, upon notice to Buyer, which notice shall be given at or prior to 10 am (New York time) on such business day, to substitute substantially the same Securities for any Purchased Securities; provided, however, that Buyer may elect, by the close of business on the business day notice is received, or by the close of the next business day if notice is given after IO am (New York time) on such day, not to accept such substitution. In the event such substitution is accepted by Buyer, such substitution shall be made by Seller’s transfer to Buyer of such other Securities and Buyer’s transfer to Seller of such Purchased Securities, and after such substitution, the substituted Securities shall be deemed to be Purchased Securities. In the event Buyer elects not to accept such substitution; Buyer shall offer Seller the right to terminate the Transaction. (d) In the event Seller exercises its right to substitute or terminate under sub-paragraph (c), Seller shall be obligated to pay to Buyer, by the close of the business day of such substitution or termination, as the case may be, an amount equal to (A) Buyer’s actual cost (including all fees, expenses and commissions) of(i) entering into replacement transactions; (ii) entering into or terminating hedge transactions; and/or (iii) terminating transactions or substituting securities in like transactions with third parties in connection with or as a result of such substitution or termination, and (B) to the extent Buyer determines not to enter into replacement transactions, the loss incurred by Buyer directly arising or CCMA 12lUO Pege 18 resulting from such substitution or termination. The foregoing amounts shall be solely determined and calculated by Buyer in good faith. 5. Notices or other forms of communications between the parties shall be sent as follows: Wells Fargo Bank CCMA Processing 1111 Main Street, Suite 306 MAC - P6769-031 Vancouver, WA 98660 Fax: (360) 759-4834 This Annex I forms a part of the Master Repurchase Agreement dated as of 120 (the “Agreement”) between Wells Fargo Bank, N.A. and s used but not defined in this Annex I shall have the meanings ascribed to the Wells Fargo Bank, N.A. Bv: BL Title: Senior Vice President Date: m&ii&L4 v Title: City Treasurer Date: q/a 3/o/ / City Clerk APPROVED AS TO FORM RONALD R. BALL, City Attorney BY: &&]f & /y. /r&&‘d& Deputy City Attorney CCMA la?0 Pagfe 19 Schedule C Schedule of Fees Corporate Cash Management Account Agreement Wells Fargo Bank, N.A. Monthly Maintenance Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $00.00 CCMA IMO Page 20 Schedule D Additional Signatories Corporate Cash Management Account Agreement Wells Fargo Bank, N.A. It is not necessary for all customers to complete this schedule. Schedule D is used when more than one legal entity’s funds are commingled in the Concentration Account & representatives of such entity are to be signers under the CCMA Agreement. Signatory authority allows representatives from such an entity to negotiate changes to the terms of the agreement, including, but not limited to, the de&nation of investments. The undersigned legal entity is included in the term “Customer” under the Corporate Cash Management Account Agreement (the “Agreement”) between Customer and Bank, and is granted signing authority under the terms and conditions of this Agreement. The undersigned acknowledges it/they has read and understands the Agreement, including the Disclosure Statement contained therein, the Designated Investments form, and all Schedules. Company Name on the Agreement: Date of the Agreement: Additional Signatory: -e * ‘;/ fi?PHSu/2 P/-2 Officer Titllr zh 3 /v Date ’ CERTIFICATION I certify that I am the Secretary or Assistant Secretary of the additional Signatory Company that the signature of the person(s) signing above is genuine and authorized signature of that person and that he/she/they is authorized to sign in the capacity indicated. CCMA WI0 Page 21 COMMERCIAL ELECTRONIC COMMERCE COLLECTION SERVICE DESCRIPTION This Service Description contains provisions which, in addition to the provisions contained in the Agreement will govern Company’s use of the following collection services provided by or through Bank: electronic processing of consumer payments through the Electronic Consumer Collections Service and electronic bill payment information processing and updating of accounts receivable through the Collections Manager Service (the “Services”). 1. Descriptions and Terms of Services. The Services offered by Bank pursuant to the terms of this Service Description, either or both of which have been separately designated by Company in the Commercial Electronic Commerce Services Set-up Form delivered to Bank, are generally described as follows: 1.1. Electronic Consumer Collections Service: The Electronic Consumer Collections Service will enable Company to have its consumer Bill Payments, including those made through Internet bill payment and consumer credit counseling services, received and processed by Bank and credited to Company’s Account (see Section 3). Bank will transmit to Company’s accounts receivable system electronic Remittance Information consolidated from various consumer bill payment service providers. This Remittance Information will be gathered from certain electronic networks (“Networks”) with which Bank has agreements (“ECC Agreements”) providing for electronic consumer collection services, including the routing of remittance data, funds settlement and related services. This Service is provided in accordance with the provisions in Section 2 and subject to the Networks’ rules and procedures and the ECC Agreements (collectively, the “ECC Documentation”). This Service will screen for proper formats to assist in eliminating “unidentified” payments. Debt management proposals may be received electronically when Bill Payments from consumer credit counseling services are received electronically. Bank will return exception items on Company’s behalf. If Company is a lockbox customer of Bank, it will receive one comprehensive file. 1.2. Collections Manager Service: The Collections Manager Service will enable Company to send Bill Payment and related instructions and receive Remittance Information and related data through the automated clearing house (‘ACH”) by electronic data interchange (“EDI”), in paper-based form, by wire transfer (‘wire”) and electronically, in a format compatible with its accounts receivable system, and subject to the provisions in Section 2. Bank will consolidate all Remittance Information into a single transmission that can be formatted to automatically update Company’s accounts receivable system, whether Company requires an ANSI or proprietary format. Company will identify and provide certain information about each of its trading partners as requested in Banks Trading Partner Designation form which Company will complete and return to Bank prior to using this Service. Company is solely responsible for implementing any programs and procedures it determines are necessary or appropriate to ensure the integrity, validity and accuracy of instructions sent and information received through this Service. Bank has no responsibility for reviewing the content of any instructions or information sent or received through this Service. Bank makes no representation regarding the validity or legal enforceability of any contract that is formed, or attempted to be formed, through the use of this Service. Company, and not Bank, is responsible for determining the legal effect of any instructions or information sent or received through this Service. Bank may reformat Company’s instructions to the extent that Bank determines such action to be necessary or appropriate in order to execute them. No acknowledgment that instructions or other information has been received by Bank will be sent to Company unless Bank has otherwise agreed to do so in writing. Nothing contained in any instructions or information sent or received through this Service will be considered confidential, Commercial Elecfmnic Commerce cO//ecffbn Service Descdption (Revised O&14/00) Page I except to the extent specifically identified and expressly agreed to in a separate writing signed by Bank and Company. 2. Receipt of Payments and Related Information. The following provisions apply when Bank receives remittances and related information as part of the Electronic Consumer Collections or Collection Manager Services. 2.1. Definitions: As used in this Section 2, and in Subsections 1.1. and 1.2., the following terms have the definitions set forth below: n Account. “Account” means each of Company’s deposit accounts maintained at Bank and approved by Bank for use with the Electronic Consumer Collections or Collections Manager Services. n Biller’s Guide. “Biller’s Guide” means any User Guide provided to Company to assist it in the use of the Electronic Consumer Collections or Collections Manager Services. l Bill Payment. “Bill Payment” means a bill payment from a Customer to Company effected through the Electronic Consumer Collections or Collections Manager Services. n Corrective Messane. “Corrective Message” means an advice Company sends to correct account or payment information, other than the amount of a Bill Payment or a Customer billing address, in accordance with this Service Description. l Customer. ‘Customer” means an individual or entity that sends a Bill Payment to Company pursuant to an agreement with a Customer Financial Institution. l Customer Financial Institution. “Customer Financial Institution” means a financial institution that provides bill payment services to a Customer and utilizes either the VISA ePay Service, MasterCard RPS or other remittance processing service supported through the Electronic Consumer Collections or Collections Manager Services. . Returned Item. “Returned Item” means an unpostable or refused Bill Payment that Company returns in accordance with this Service Description. m Remittance Information. “Remittance Information” means the information Bank provides to Company concerning Bill Payments that Bank receives that are directed to Company. Remittance Information will be provided in the manner and format, described in the Commercial Electronic Commerce Set-up Form or as otherwise specified by Bank in writing from time to time. . Settlement Date. “Settlement Date” means the date on which an exchange of funds in settlement of a Bill Payment occurs. . Third Partv Service Provider. A “third party service providef is a third party that provides remittance processing services in support of the Electronic Consumer Collections or Collection Manager Services. Such service providers may include, but may not be limited to, VISA USA, Incorporated and MasterCard International, Incorporated. 2.2. Transmission of Remittance Information And Other Data: Each business day, no later than the cutoff time stated in the Commercial Electronic Commerce Set-up Form or as otherwise specified by Bank in writing from time to time, Bank will provide Company Remittance Information regarding Bill Payments directed to it, provided Company can be identified by Bank as the intended recipient. 2.3. Receipt of Bill Pavments; Credits to the Account The Account will be credited for each Bill Payment received by Bank that is directed to Company, provided such payment is not rejected as provided in Subsection 2.4. If the Settlement Date is a business day, the Account will be credited on that day, otherwise the Account will be credited on the next business day following the Settlement Date. Any credit to the Account is provisional until Bank receives final settlement or payment for that credit. Consequently, if settlement or payment is not received in connection with a Bill Payment that Bank has credited to the Account; Bank is entitled to reverse the credit given and Company will repay upon demand any funds withdrawn. Notwithstanding anything in this subsection to the contrary, if Bank concludes or suspects that Company is not entitled to a Bill Payment that has been directed to it, Bank may, to the Commetid Efecfmfc Commerce C&cfion Service Descfiiption (Revised OKWtlO) Page 2 extent not prohibited under applicable law, either(i) delay crediting the Account for the Bill Payment, (ii) delay the availability of funds credited to the Account for the Bill Payment, or (iii) place a hold on funds in the amount of the Bill Payment maintained in the Account or any other account Company maintains with Bank or a Bank affiliate. Reiection of Bill Payments: Bank may, but will not be obligated to reject a Bill Payment: (i) that d?A not contain all of the required information specified by Bank; (ii) that is’ postdated; (iii) if Bank suspects that Company is not entitled to the Bill Payment; (iv) if at the time of receipt Company does not maintain an Account with Bank; (v) if at the time of receipt Bank is not permitted by law to accept credits to any of Company’s accounts; or (vi) if Company is in default under this Service Description or the other Service Documentation. Bank will reject any Bill Payment or Remittance Information directed to Company received after the Electronic Consumer Collections or Collections Manager Services, as applicable, has been terminated. 2.5. Companv Responsibilities: 2.51. Biller Pavment Address. Company will provide Bank with the postal address to which Bill Payments are to be sent. Bank may provide this address information to third party service providers. Company will provide Bank with at least sixty (60) days’ prior written notice of any change in the address to which Bill Payments are to be sent. 2.52.. Customer Account Correction Information. If a transaction posting problem should occur, Company must promptly notify Bank of any Customer account correction information related to the problem. 2.5.3. No Discrimination. Company will not discriminate in any way against or discourage any Customer who elects to make a payment through the Electronic Consumer Collections Service. For example, Company may not increase the purchase price of any good or service, or assess any special charge, with respect to a Customer who elects to make payment through the Electronic Consumer Collections Service rather than through cash or check. 2.5.4. Messages and Instructions. Company will be bound by any Corrective Message or other communication or instruction issued in its name pursuant to this Service Description and received by Bank. 2.5.5. Processino and Posting of Bill Payments to Customer Accounts. Company will process and post to the account of its Customer each Bill Payment received through the Electronic Consumer Collections Service or Collections Manager Service, as applicable, in accordance with its then current applicable billing policies and this Subsection 3.5. Each Bill Payment will be credited to the Customer’s account no later than the close of business of the business day next following the payment’s Settlement Date. In the event that Company is unable to process and post the Bill Payment within the time period prescribed in this Paragraph 2.5.5. and it is postable in accordance with Company’s then current applicable billing policies, Company will treat the Bill Payment as if it had posted it to the Customer’s account in accordance with this Subsection 2.5. Company’s obligations as provided in this Subsection 2.5. are unaffected by any delay that may have occurred in the crediting of the Account, the availability of funds credited to the Account, or Bank’s exercise of any of its rights as provided in this Service Description or the other Service Documentation. 2.5.6. Returned Items. Company must return to Bank each Bill Payment that cannot be posted to a Customers account within the timeframes specified in the operating regulations of any third party service provider through which the Bill Payment was processed. 2.5.7. Dispute Resolution. Company will comply with the dispute resolution procedures of any third party service provider used in connection with a Bill Payment, which Bank will Gmmarcial Eiectronk Commerce collection Semite Description (Revised O&NAJO~ Pege 3 provide to Company from time to time upon request, and will cooperate in good faith to resolve Customer disputes with other participants in the Electronic Consumer Collections Service, the Collections Manager Service or the service offered by the third party service provider. 2.5.8. Information Reauests. Company will upon request provide any information that Bank deems necessary or helpful in connection with the performance of the Electronic Consumer Collections or Collections Manager Services, including without limitation, that pertaining to: (i) resolving disputes, (ii) tracing or processing inquiries about Bill Payments, (iii) complying with applicable law, or (iv) determining Company’s creditworthiness or liability as provided in this Service Description. 2.5.9. Promotional Materials. Company will prominently display at its place(s) of business any promotional material regarding the Electronic Consumer Collections or Collections Manager Services that is requested by Bank. Company will take all necessary steps to protect and preserve the copyrights, trademarks and service marks, of Bank and any third party service provider. 2.5.10. Identification Number. If a third party service provider has assigned Company an identification number for use in connection with the Electronic Consumer Collections or Collections Manager Services, Company will use it in accordance with the operating regulations of that third party service provider. Company will either print the identification number on its statements to its customers or otherwise communicate to its Customers that the number must be used for the submission of Bill Payments or Remittance Information through the Electronic Consumer Collections or Collections Manager Services. 2.6. Adiustments: Bill Payments cannot be canceled or amended by the Customer or the Customer Financial Institution, unless permitted under the operating rules and regulations of the applicable third party service provider. Unless the Customer has been previously reimbursed by Company, Company will repay to Bank any amounts improperly or erroneously credited to the Account, including without limitation any credits that reflect duplicative Bill Payments. Company will also promptly pay or repay to Bank any other sums (including sums in excess of the amount of the related Bill Payment(s)) that Bank is required to pay or refund to a Customer Financial Institution or Customer pursuant to the rules applicable to the Electronic Consumer Collections or Collections Manager Services (including the rules of any third party service provider utilized in connection with the Services, to which Bank is subject, or by any other applicable law, rule or regulation). In the event Bank determines that an amount has been improperly or erroneously credited to the Account or if Bank concludes that it is required to pay or refund to a Customer Financial Institution or Customer as provided in this Subsection 2.6., to satisfy Company’s obligation to Bank arising under this Service Description, Bank may (i) reduce any subsequent payment(s) Bank owes to Company under this Service Description or the other Service Documentation and/or (ii) debit any account Company maintains with Bank or a Bank affiliate. If Bank elects not to exercise any of its rights under this Subsection 2.6., or if after exercising any or all of its rights under this Service Description, Company’s obligation to Bank is not fully satisfied, Company will pay the amount of any remaining unsatisfied obligation to Bank within one (1) business day of receiving a written demand to pay such amount 2.7. Rinht Of Set-OR Net Settlement; Hold Bank Balances: Bank may set-off, withdraw, retain or hold for a reasonable time, to the extent permitted under applicable law, any funds received as a result of a Bill Payment directed to Company, or any funds in any account Company maintains with Bank or an affiliate of Bank, and/or Bank may reduce any subsequent payment(s) owed Company under this Service Description or the other Service Documentation, that Bank deems necessary because of any adjustment, error, termination of this Service, fees owed, any acts or omissions in breach of this Service Description or the other Service Documentation by Company, or any other obligation arising under this Service Description or the other Service Documentation. 2.8. Representations and Warranties: Company represents and warrants to Bank, any third party service provider and each Customer Financial Institution (which representations and warranties will Commefcial Electronic Camnwce G&ction Service Descripion (Revised O&NUO) Page 4 be deemed to be continuing and reaffirming upon each Bill Payment Bank receives for Company’s credit) that: l all information provided and statements made by Company in connection with Bank’s approval of Company’s participation in the Electronic Consumer Collections or Collections Manager Services were accurate and complete in all material respects at the time they were made; l each bill Company sends to a Customer with respect to which a Bill Payment is received will, at the time the bill is sent, be in the correct amount of a valid and enforceable obligation of the Customer that is due and owing to Company; l Company will process and post to the Customer’s account each Bill Payment received in accordance with the requirements of this Service Description; and . all information provided and statements made by Company in connection with (i) its use of the Electronic Consumer Collections or Collections Manager Services, including without limitation any address to which Bill Payments are to be sent, (ii) a Corrective Message and (iii) a Returned Item, will be accurate and complete in all material respects at the time they were made. 2.9. Third Partv Beneficiaries: For purposes of the warranties in Subsection 2.8. of this Service Description and the Indemnification in Section 11 of the Agreement, any third party service provider, each Customer Financial Institution, and their respective directors, officers, employees and agents will be deemed to be third party beneficiaries. 2.io. No Liabilitv of Third Par& Service Provider or Customer Financial Institution: Notwithstanding anything in this Service Description to the contrary, neither any third party service provider nor any Customer Financial Institution will have any liability or responsibility to Company under this Service Description or otherwise for any loss, injury or damage arising out of, resulting from, or in connection with the Electronic Consumer Co!lections or Collections Manager Services. 2.11. VISA USA, Incorporated As Third Par& Service Provider: The provisions of this Subsection 2.11 will only apply to those Bill Payments for which VISA USA, Incorporated is the third party service provider. 2.11.1. Customer Notification. Within 12 months of the date on Which the Electronic Consumer Collections Service commences, Company will communicate to its customers that it is accepting electronic payments, 2.11.2. Customer Account Correction Information. For transaction posting problems, the notice referred to in Paragraph 2.52. of this Service Description must be received, via Corrective Message, no later than five (5) business days of the applicable account’s posting cycle date for the period in which the problem occurred. 2.11.3. Returned Items. Company must return to Bank any Bill Payment that cannot be posted to a Customer’s account within two (2) business days of the applicable Settlement Date. Company will comply with the procedure for initiating Returned Items that Bank provides to Company from time to time. Bank is authorized to act on any Returned Item or any instruction to effect a Returned Item, received in the name of Company, and Company will be bound by any such instruction or Returned Item. 2.11.4. Identification Number. If Company uses paper invoices, such invoices must contain the identification number referred to in Paragraph 2.5.10. of this Service Description to indicate acceptance of a Bill Payment. 2.12. Authorization To Obtain Information: Company authorizes Bank to obtain and review Company’s credit report or other information about it from an authorized credit bureau or from any other person. C~mmercia/ EMrtmic Commerce Collection Service Descriiption (RevisedOiWtJO~ Page 5 2.13. Record-Keepinn Oblinations: Company will maintain records reflecting the transaction(s) giving rise to each Bill Payment for a period of at least two (2) years from the date of the transaction. Such records will be made available to assist in the resolution of any Customer disputes that may arise in connection with the Bill Payment. Bank will maintain records evidencing the Bill Payment for a period of at least two (2) years from the date of the transaction. In the event of any inconsistency between Company’s and Bank’s records, Bank’s records will be deemed to control. 2.14. Confidentialitv Of Customer Information: All information concerning the affairs and the accounts of Customers that wme into Bank’s possession through the Electronic Consumer Collections or Collections Manager Services will be treated in the same confidential manner as is information relating to the accounts of Bank’s depositors. 2.15. Rights of Third Partv Service Provider to Terminate or Limit Its Relationship with Bank: Company acknowledges the right of any third party service provider used in connection with the Electronic Consumer Collections or Collections Manager Services to terminate or limit its agreement with Bank. Upon termination, if termination thereafter prevents or restricts Bank’s ability to provide the Sewice to Company, Bank may upon prior written notice terminate the Service, effective with the termination of the agreement between Bank and such third party service provider. 3. Account. Company will maintain at least one deposit account with Bank, which will be identified in the Commercial Electronic Commerce Set-up Form or otherwise in writing by Company and approved by Bank from time to time (the “Account”). 4. Identify Authorized Persons. Any person identified by Company in the Commercial Electronic Commerce Services Set-up Form or any certification, notice or other communication delivered to Bank may receive information, communications and notices regarding the Services, and is authorized to transact all business, make all agreements and sign and deliver all documents in connection with the Services. If the identity of such a person changes Company will promptly notify Bank in writing. Bank will have a reasonable time after receipt of a certification, notice or other communication to act on it. 5. Agents. If Company elects to use an agent with respect to the Services, Company, and not Bank, will be solely responsible for the acts and omissions of Company’s agent, and its agent will, without limitation, be authorized to initiate, originate, receive, return, adjust, correct, cancel, amend and transmit ACH transactions, wire transfers, Remittance Information and related information and instructions and select any related security procedure. Company agrees that any security procedure selected by its agent will be treated as commercially reasonable for all purposes. Bank may rely on instructions it receives from Company’s agent and need not make any inquiries to verify or confirm that instructions are within the scope of the agency. Company will certify each agent’s identity and any changes to Bank in writing. Bank will be fully protected in relying on each certificate and on the obligation of Company to promptly certify any change in the agents so certified. Bank will have a reasonable time after receipt of a certification or change to act on it. Bank may at any time use agents and/or independent contractors to provide all or any portion of the Services, and will be solely responsible for the acts and omissions of those agents and independent contractors. However, Bank will not be deemed to be the agent of, nor responsible for the acts or omissions of any other person, including without limitation any Federal Reserve Bank, collecting or depository bank, payee or endorsee, ACH or Wire transmission or communications facility, any receiver or receiving depository financial institution or gateway operator (including without limitation the return of any funds by such receiver or receiving depository financial institution or gateway operator), and no such person will be deemed Bank’s agent. cofmmcii/E/~r~iccommerCe We&n ServiceDescription (Revised OM&TlO~ Page 6 6. Sobare, Hardware and Backup Requirements. Company will, at its own cost and expense, obtain, install and, at all times during its utilization of the Services, maintain in good working order all software, hardware and other equipment necessary for it to perform in accordance with this Service Description and the other Service Documentation. Company agrees to implement, on a periodic basis not less than weekly, backup-measures, including, among other things, copying onto a diskette(s) each week’s current data base files related to the Services. In the event of any failure of such software, hardware or other equipment, Company will deliver to Bank all data which it would otherwise have provided that is necessary for Bank to perform Bank’s obligations in connection with the Services. 7. Survival. The portions of this Service Description designated 2.57.; 2.58.; 2.6.; 2.7.; 2.8.; 2.9.; 2.11.2.; 2.11.3.; and 2.13. will survive termination of the Services. Commercial Electronic Commerce colleclion Setvice Oescripfim (Revised 0&4?480~ Page 7 PC MANAGER@ SERVICE DESCRIPTION This Service Description contains provisions which, in addition to the provisions contained in the Master Agreement for Treasury Management Services between Bank and Company (the “Agreement”), will govern the PC Manager Service (the “Service”). 1. The Service. Company may use the PC Manager software (“PC Software”) to initiate, request or receive many of the services and features available with Company’s deposit account(s), including, (a) initiate wire transfers including repetitive wire transfers, through the Wire Transfer Service, (b) receive account balance and certain other types of account information with respect to Company’s deposit account(s) or Company’s accounts with other financial institutions, (c) request stop payment orders on checks drawn on Company’s deposit account(s) or deposit account(s) with another financial institution maintained in connection with the Controlled Disbursement Service, (d) print checks to be drawn on a designated deposit account(s), including any Controlled Funding Account (collectively, the “Designated Accounts”), (e) maintain on Company’s PC a register (“Register”) of checks written and other items originated with respect to the Designated Accounts, (9 transmit the check issue data to Bank electronically from the Register and through such transmission to receive Bank’s Positive Pay Service, (g) retrieve electronically on each Business Day a statement of checks and other items posted against the Designated Accounts on the immediately preceding Business Day (“Daily Statement”), (h) reconcile items on the Daily Statement against the items on the Register (which reconciliation will occur automatically when Company retrieves its Daily Statements), and (i) instruct Bank electronically not to pay, or to correct or repair and pay, any check posted against a Designated Account (items (d) through (i) constituting the “PC Reconcilement Service”), and (j) obtain investment rates for, and Company’s position in, investments made through Banks [Overland Express /MMMF Sweep Services?]. 2. License. 2.1. Grant of License. The PC Software was designed to operate on a PC using a Windows@ compatible operating system. Bank hereby grants Company a non-exclusive, non-assignable license for Company’s use of each copy of the PC Software only on the PC on which each such copy is initially installed and solely for the purposes set forth in the preceding section. The PC Software is the original, confidential, valuable and proprietary product of Bank. Company has the right to use the PC Software consistent herewith and with the other PC Manager Service Documentation. This license will terminate upon the termination of this Service. Upon termination, Company will promptly return all copies of the PC Software to Bank. 2.2. Limitation of Liabilitv. IN NO EVENT WtLL BANK BE LIABLE FOR ANY INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOST DATA, PROGRAMS, PROFITS (ANTICIPATED, ACTUAL OR OTHERWISE), OR BENEFITS RESULTING FROM USE OF, RELIANCE UPON, OR INABILITY TO USE THE PC SOFTWARE, REGARDLESS OF WHETHER OR NOT BANK HAS BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR ANY OTHER THEORY OR FORM OF ACTION. COMPANY ACKNOWLEDGES THAT BANK HAS MADE NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WlTHOUT fYx4enege&cDeslYi-F/NM (RevisedO(l4kWO) Page i LIMITATION, THE WARRANTIES OF MERCHANTABILITY AND OF FITNESS FOR A PARTICULAR PURPOSE. 3. 2.3. Export. Company agrees that, if required by law, the PC Sofhvare will not be exported directly or indirectly, separately or as a part of a system without first obtaining a license from the United States Department of Commerce or any other appropriate agency of the United States Government. 2.4. Restrictions. Company will not publish, disclose, display otherwise make the PC Software available to others. Company will secure and protect the PC Software in a manner consistent with the protection of its own proprietary information and take appropriate action by instruction or agreement with its employees who are permitted access to the PC Software to ensure such protection. Company acknowledges that, except as specifically permitted in writing by Bank, Company will not provide, transmit, further sublicense, transfer or otherwise distribute the PC Software or any part of it to a third party, or copy, reverse engineer, reverse compile, or reverse assemble, modify or alter the PC Software or any part of it. PC Reconcilement. Company acknowledges that if it uses the PC Reconcilement Service, it is essential that Company promptly and accurately enter Company’s check issue data on Company’s PC and then promptly transmit this check issue data electronically to Bank. If a check drawn on a Designated Account is presented to Bank for cashing and the check does not match by serial number and amount the check issue data previously transmitted to Bank for that account, Bank will not cash the check. By transmitting Company’s check issue data for a Designated Account to Bank, Company authorizes Bank to pay a check drawn on that account presented for cashing if the serial number and amount of the check matches the check issue data transmitted to Bank. Company understands and agrees that in cashing a check in accordance with the above procedure, Bank will not use its usual (or any other) check verification procedures, and that Bank will have no responsibility for any forgery, missing signature or othei deficiency in such check. Company understands that Company must deliver to Bank any instruction to, return unpaid, or to correct or repair and pay, a check posted against a Designated Account before 10:00 A.M. local time (8:00 A.M. local time in the case of a check posting against a deposit account that funds Company’s deposit account at another financial institution which is maintained in connection with the Controlled Disbursement Service) on the first Business Day after Bank notifies Company of the discrepancy. 4. Wire Transfers. 4.1. Initiatinq Transfers. Company may initiate most wire transfers, including repetitive wire transfers, electronically through the Senrice. Each time Company request a non-repetitive wire transfer, Company must provide the amount of the requested transfer, the number of Company’s deposit account to be debited or credited, and the number of the account and the identifying number of any bank out of or into which the transfer is to be made. Bank will assign a repetitive request number to each series of repetitive wire transfers which Company request be established. Each time Company requests a repetitive wire transfer, Company must provide the repetitive request number assigned to the related repetitive wire transfer series and the amount of the requested transfer. 4.2. Governing Documentation. The provisions of Bank’s Wire Transfer Services Description, or if separately entered into by Company and Bank, Bank’s Wire Transfer Services Agreement, and any related Security Procedure Agreement between Company and Bank applicable to such Wire Transfer Services will, in accordance with their terms, govern each wire transfer. 5. Positive Pay Service. 5.1. Usinq the Positive Pav Service. On or before the Business Day that Company issues checks drawn on a Designated Account, Company will provide Bank with the number and amount of the check. Bank will electronically match the information to checks presented against the Designated Account and provide the results to its branches to assist its employees in making decisions about cashing PCMananarSvcDeWlNAd3escri-FlNLlL P##lW3 checks presented to tellers. Company may instruct Bank through Information Express@, PC Manager or Wells Electronic BankerTM to return any checks which do not match the information so long as Bank receives the instruction before 12 noon iocal time on the Business Day that Bank informs Company of the mismatch. Company will be deemed to have authorized payment of all other mismatched checks and all checks which are not mismatched. Each check Company has authorized Bank to pay in accordance with this Service will be paid without performing Bank’s customary (or any other) check verification procedures. Accordingly, Bank will have no liability whatsoever for payment of any check without regard to any forgery, alteration or other deficiency affecting the check. 5.2. Governina Documentation. The provisions of Bank’s Positive Pay Service Description will, in accordance with its terms, govern each Positive Pay transaction. 6. Survival. Sections 2 and 3 will survive termination of the Service. 7. Terminology. Unless specifically defined in this Service Description, terms used in this Service Description have the meanings, if any, provided in the Agreement and the other Service Documentation, as each may be amended from time to time. Page 3 WIRE TRANSFER SERVICES SECURITY PROCEDURE AGREEMENT SEE REFERENCE GUIDE FOR REQUIRED DOCUMENTATION AND COMPLETE INSTRUCTIONS . Agreement 0 New 0 Replacement This agreement is made this day of by and between (“you” or ‘your and) (the “Bank”) By signing, you acknowledge receiving and agreeing to be bound by these terms and conditions and those referred to in the Bank’s Wire Transfer Customer Setup Form, wire Transfer Services Agreement, and/or the Master Agreement for Treasury Management Services and the Wire Transfer Services Description. You understand that in any instructions to transfer funds by wire from accounts you maintain at the Bank (“Orders”), the Bank may rely solely (i) on the account number of the person (“beneficiary”) who is to receive the wire transfer rather than the name of that person, and (ii) if provided by you, on the identification number of any other financial institution through or to-which the funds are to be transferred, rather than the name of the financial institution. You agree that you are bound by any Order, whether or not authorized, issued in your name and accepted by the Bank in compliance with the security procedure selected by you. Standard Security Procedures The Bank’s standard security procedures consist of confirming that the personal identification number ePlN”) that accompanies an Order corresponds with a valid PIN assigned to you on voice-initiated Orders. On terminal-initiated Orders only, SecurlD or other system security features are offered by the Bank. A PIN is required for all voice-initiated transfers. Additional Security Procedure (Optional) If circle is not checked, you agree that you have waived this additional security procedure option. 0 Telephone Verification -Voice Initiated Orders Only: If checked, the Bank will make a reasonable attempt to telephone a person(s) designated by you on the Bank’s most current Wire Transfer Customer Setup Form, to verify that a voice-initiated, non-repetitive Order is authorized if it exceeds $ (If no amount is designated, $!iOO,fIOO will be used). If the Bank is unable to complete the cell the Order will not be processed. The Bank will not telephone to verify a Repetitive Order. A “Repetitive Order” is an Order to the bank to pay a specified amount of money to a previously designated beneficiary at a previously designated beneficiary’s financial institution. Individual(s) authorized to receive information regarding the security procedure Name Name I I I Name Nime Customer Approvals - Signature(s) as required by certificate of authority or signature card Legal Name TaxlD/SSN Printed Name Printed Name , Title , Title Signature Date Signature Date I Bank Approvals Bank Name RAUICCIAU I I 1 Banker/Dfftcer Name MAC I Banker/Officer Signature Phone Number Date I( 1 I WTR 12509 (4-90-25995) X_Wim-Tenser-Sacurity_Agreement June 2999 Page 1 of I EXHIBIT 2 RESOLUTION. 2001-143 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING THE CUSTODY SERVICES CONTRACT FOR CITY INVESTMENTS WITH THE UNION BANK OF CALIFORNIA WHEREAS, the City of Carlsbad wishes to commence a contract for custody services for City investments on February 1, 2001; and WHEREAS, the City Treasurer solicited proposals from seven financial institutions to provide custody services; and WHEREAS, proposals were analyzed and reviewed by an ad hoc committee; and WHEREAS, the ad hoc committee unanimously concurred that the Custody Services Proposal submitted by Union Bank of California was the best overall for custody services; and WHEREAS, Union Bank of California has provided by City with excellent service since November 1997. WHEREAS, Union Bank of California has been providing necessary banking services for the City since January 31, 2001 without the benefit of an agreement; and WHEREAS, the City desires to ratify any banking services performed by Union Bank of California without the benefit of an agreement: NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California as follows: 1. That the above recitations are true and correct. 2. That Union Bank of California offers a five-year contract with an option to extend for two additional years to provide custody services for City investments. The City council accepts the offer and the contract will commence on February 1,200l. 3. The effective date of the contract will be February I, 2001 and any banking services performed by Union Bank of California after that date is hereby ratified. 4. That the City Treasurer is hereby authorized to sign the attached Agreement for Custody Services (Attachment “B”) and any other documents necessary to carry out the intent of the resolution upon advise of the City Attorney. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council on the 15th day of MW , 2001, by the following vote, to wit: AYES: Counicl Members Lewis, Finnila, Nygaard and Hall. NOES: None. ABSENT: Council Member Kulchin. Al-l-EST: Exhibit A WyccrBCadsbad Cus-b~dy Set-vice~i RFP CuStody Services Bid Form ‘7ransactions {Pu:xhase, Sale, Maturity, Free Receipt / Delivery) Book Entry Physical Delivery Cash Transfers Wre Transfers Book Transfefs On-hme Access Mainfonance Other Fees Set-Up Fees Other Applicable Fees Mnrmum Annual All inclusive billing . . . . . . . . . . . . . . I,.-._ . . . . . . I.., Principal Paydowns .,..__.. . . . . . . , .--..*** . . . . . . . . . .~” . . . ,._ . I.. 3.. . . . .---... to resolution 2001-143 Price Per Item 50.00 15.00 40.00 10.00 No Charge No Charge NCNl@ None $3,500.00 5.00 Length of Time Fees are Guaranteed for: 5 Years Submitted B,,: Union Bank of California pFi4s iQ3 10 .c: ;=:py,jip; 1 iO@-Ei-ZI Records Management Department May 23,200l MOON SHIL LEE, V.P. UNION BANK OF CALIFORNIA 475 SANSOME ST, 15m FL SAN FRANCISCO CA 94 111 Re: Custody Services Agreement The Carlsbad City Council approved Resolution 2001-143 on May 15, 2001 authorizing the execution of a CUSTODY AGREEMENT between the City of Carlsbad and Union Bank of California. Please have the appropriate agent execute the Contract on behalf of Union Bank of California and send thefuZZy executed orininal to our office at the address below. Please make a copy of the agreement for your records if needed. Thank your for your prompt attention and assistance. Sincerely, Debra Doerfler v Senior Office Specialist Records Management Department/Office of the City Clerk Enclosures cc: Mr. James Stanton, Treasurer 1200 Carlsbad Village Drive - Carlsbad, CA 92008-l 989 - (760) 434-2808 @ ATTACHMENT B CUSTODY AGREEMENT This agreement is made between Citv of Carlsbad, (“Client”) and Union Bank of California, N. A. (“Bank”) TERMS AND CONDITIONS 1. APPOINTMENT AS AGENT Client hereby appoints Bank as agent to act as custodian of cash, securities, and other property (“Property”) described on Schedule A, attached hereto, and other property which may be deposited by Client with Bank from time to time to be held in the account established by this Agreement (“Account”) and Bank agrees to act as Client’s agent for such property according to the terms and conditions of this Agreement. 2. HANDLING OF INCOME AND PRINCIPAL 2.1 Income. Bank shall collect the income, when paid on said Property, and hold it in a demand deposit income account until invested or otherwise disposed of pursuant to Client’s written instructions. 2.2 Principal. Bank shall collect principal of Property when paid on maturity, redemption, sale, or otherwise, and hold it in a demand deposit principal account until invested or otherwise disposed of pursuant to Clients written instructions. 2.3 Collection Oblicrations. Bank shall diligently collect income and principal of which the Bank has received actual notice in accordance with normal industry practices. However, Bank shall be under no obligation or duty to take any action to effect collection of any amount if the securities or other Property upon which such amount is payable is in default, or if payment is refused after due demand unless the Bank has been adequately indemnified by Client in advance. Bank, however, shall notify Client promptly of such default or refusal to pay. 2.4 Additions to and withdrawals from Account. Bank shall make all additions and withdrawals of Property to and from this Account only upon receipt of and pursuant to written instructions from Client except for those withdrawals provided for in Section 4. Upon receipt of such order for each withdrawal, unless otherwise instructed in writing, Bank shall deliver the Property so withdrawn to Client or to Clients designee, upon an appropriate receipt. 3. INVESTMENT OF PROPERTY 3.1 Directions bv Client. Client shall have sole responsibility for the investment, review, and management of all Property held in this Account. Bank shall make all purchases, sales, conversions, exchanges, investments and reinvestments of Property held in this Account only upon receipt of and pursuant to written instructions from Client. Bank shall have no duty or obligation to review, or make recommendations for, the investment and management of any Property held in this Account, including uninvested cash. 3.2 3.3 3.4 3.5 Handle CorDorate Actions. Bank shall notify Client of the receipt of notices of redemptions, conversions, maturities, exchanges, calls, puts, subscription rights, and scrip certificates (“Corporate Actions”). Bank need not monitor financial publications for notices of Corporate Actions and shall not be obligated to take any action without waiting for Client’s instruction. If a Corporate Action has a fixed expiration date, and Bank has not received written instructions regarding it from Client five business days prior to such date, Bank shall take such action as it deems appropriate in its sole discretion. Fractional Interests. Bank shall receive and retain all stock distributed by a corporation as a dividend, stock split, or otherwise. However, in connection therewith, if a fractional share is received, Bank shall sell such fractional share. Use of Nominees. Bank shall have the right to hold all registered securities in the name of its nominee. Use of Securities Depository. Bank may, in its discretion, deposit in a securities depository any securities which, under applicable law, are eligible to be deposited. 4. PLEDGE OF SECURITIES Client shall inform Bank in writing in the event that Client has pledged any Property held in the Account as collateral (“Pledged Collateral”) for any loan or advance (“Secured Obligation”) made to Client by Union Bank of California, N.A., or by any other lender designated by Client (“Secured Party”). Client’s notice to Bank shall precisely identify the Pledged Collateral and state the name, address, telephone number and telex number of the Secured Party and the appropriate officer, if any, to contact in connection with the Pledged Collateral, and Client shall provide evidence that a copy of such notice has been provided to the Secured Party. Client shall be responsible to Bank for keeping Bank informed of any changes to this information, and Bank shall be fully protected in relying on such notice until receipt of a notice providing additional or substituted information. Bank shall segregate and identify such Property in its records as pledged. Notwithstanding anything to the contrary contained in this Agreement, by providing the notice referred to above, Client acknowledges and agrees that the terms of this Custody Agreement are superseded by the terms of any pledge or security agreement covering the Pledged Collateral, and that Bank cannot release the Pledge Collateral without the prior written consent of the Secured Party. In the event that the Secured Party shall notify the Bank in writing of a default of such Secured Obligation, Bank shall follow, with no further obligation, the written instructions of the Secured Party regarding the Pledged Collateral, unless served with an intervening court order to the contrary and shall be fully protected in so doing. Any interest or principal payments due on the Secured Obligation may be charged to the Account upon written instruction from Client. 5. PROXIES AND CORPORATE LITERATURE 5.1 Proxies. Bank shall forward all proxies and accompanying material issued by any company whose securities are held in the Account to Client unless directed in writing not to do so. 5.2 Corporate Literature. Bank shall have no duty to forward or retain any other corporate material received by the Account unless required to do so by law. 5.3 Disclosure to issuers of Securities. Unless Client directs Bank in writing to the contrary, Client agrees that Bank may disclose the name and address of the party with the authority to vote the proxies of the securities held in this Account as well as the number of shares held, to any issuer of said securities or its agents upon the written request of such issuer or agent in conformity with the provisions of the applicable law. 6. CONFIRMATIONS 6.1 Confirmations. Bank shall have no responsibility to send confirmations of security transactions occurring in this Account to Client; however, Client may request confirmations for security transactions at any time at no additional cost to Client, and such confirmations shall be sent to Client within the time prescribed by law. 6.2 Statements. Each month, Bank shall send Client a cash statement and an asset statement showing market values. The statements will show all income and principal transactions and cash, securities and other Property holdings. Client may approve or disapprove such statement within sixty (60) days of their receipt and, if no written objections are received within the sixty-day (60) period, such statements of the account shall be deemed approved. 7. USE OF OTHER BANK SERVICES Client may direct Bank to utilize for this Account other services or facilities provided by Bank, its subsidiaries or affiliates. Such services shall include, but not be limited to (1) the purchase or sales of securities as principal to or from, or, (2) the placing of orders for the purchase, sale, exchange, investment or reinvestment of securities through any brokerage service conducted by, or (3) the placing of orders for the purchase or sale of units of any investment company managed or advised by Bank, Union BanCal Corp., or their subsidiaries or affiliates. Client hereby acknowledges that Bank will receive additional fees for such services in accordance with Bank’s standard fee schedules, which shall be delivered to Client from time to time. Notwithstanding the above, Client hereby directs Bank to utilize for this Account for cash management purposes the HighMark Group of mutual funds advised by Bank. Client shall designate the particular HighMark Fund that Client deems appropriate for the Account. Client hereby acknowledges that Bank will receive management fees for such services in accordance with Bank’s standard fee schedules, which shall be delivered to Client from time to time. These management fees will be in addition to those fees charged by Bank as agent for the Client’s Custody Account. 8. INSTRUCTIONS All instructions from Client shall be in writing from an authorized signer, and shall continue in force until changed by subsequent instructions. Pending receipt of written authority, Bank may, in its absolute discretion at any time, accept oral, wired, or electronically transmitted instructions from and authorized signer of Client provided Bank believes in good faith that the instructions are genuine. 3 9. COMPENSATION AND OTHER CHARGES 9.1 Comensation. Bank’s annual fee as agent shall be based on the fee schedule of the Bank for Custody Accounts provided in the proposal and attached in exhibit A. Fees shall be taken monthly. 9.2 Charuing the Account. Bank is authorized to charge the Account for incidental expenses as well as for funds necessary for Bank to complete any purchase or expense, to make any directed disbursement or take any other action regarding the Account. Bank shall have no duty to make any purchases, exchanges, or disbursements or to incur any expenses, unless the funds necessary to cover the amount of the expense are available in the Account. 10. COST BASES AND DATES OF ACQUISITION Client agrees to furnish Bank with the income tax cost bases and dates of acquisition of all Property held in the Account to be carried on its records. If Client does not furnish such information for any such Property, Bank shall carry the Property at any such nominal value it determines, such value to be for bookkeeping purposes only. All statements and reporting of any matters requiring this information will use this nominal value. Bank shall have no duty to verify the accuracy of the cost bases and dates of acquisition furnished by Client. Property purchased in the Account shall be carried at cost. Il. LIMITED POWER OF ATTORNEY Bank is hereby granted a limited power of attorney by Client to execute on Client’s behalf any declarations, endorsements, assignments, stock or bond powers, affidavits, certificates of ownership or other documents required (1) to effect the sale, transfer, or other disposition of Property held in the Account, (2) to obtain payment with respect to Property held in the Account, or (3) to take any other action required with respect to the Property held in the Account, and in the Bank’s own name to guarantee as Client’s signature so affixed. 12. INDEMNIFICATION As additional consideration for the Bank’s acceptance of this Account and Agreement to act as “Agent,” Client agrees to indemnify, and hold Bank, its officers, directors, employees and agents harmless from and against any and all losses, liabilities, demands, claims, and expenses, any attorney’s fees and taxes (other than those based on Bank’s net income) arising out of or in connection with this Agreement, or out of any actions of Client or Client’s agents which are not caused by Bank’s negligence or willful misconduct. Bank agrees to indemnify and hold City, its officers, directors, employees, and agents harmless from and against any losses, liabilities, demands, claims, and expenses, any attorney fees and taxes arising out or in connection with this Agreement, or out of any actions of Bank or Bank’s agents which are not caused by City’s negligence or willful misconduct. This provision shall survive the termination of this Agreement and shall be binding upon each party’s successors, assigns, heirs and personal representatives. 4 13. AMENDMENT AND TERMINATION OF AGREEMENT 13.1 Amendment. This Agreement may be amended only by a written agreement executed by both Bank and Client. 13.2 Term and Termination, The term of this agreement shall expire on In addition, This Agreement may be terminated at any time by written notice from one party to the other. Such termination shall be effective immediately. this Agreement shall also terminate upon notification to the Bank of Client’s incapacity or Client’s death. Upon termination, Bank shall have a reasonable amount of time to transfer the Property held in the Account in accordance with the written instructions of Client or the person or entity legally entitled to receive such property. Costs related to termination, including without limitation, costs for shipping securities and other Property held in the Account and costs of re- registering securities, generating reports and accounting for disposition of cash shall be charged to the Account. 13.3 Extension of Time. The term of this agreement may be extended for an additional two years by City and Bank by written agreement with respect to each such extension at least thirty (30) calendar days prior to the date on which this agreement or an extension thereof would otherwise have terminated. The terms and conditions of the agreement as so extended shall be as set forth herein, except that City and Bank may mutually agree, in writing to modifications of this agreement. 14. ENTIRE AGREEMENT This Agreement and Addendum (not Applicable) constitute the entire Agreement between the parties. All previous agreements, whether written or oral, between the Bank and Client, are hereby superseded, except any direction to Bank prohibiting it to disclose information to issuers of securities as provided in Section 5.3. 15. SINGULAR AND PLURAL If more than one person shall execute this Agreement, then where the context permits, singular pronouns shall be deemed to be plural personal pronouns. 16. GOVERNING LAW This agreement shall be governed by, and construed under, the laws of the State of California. The forum for any disputes arising out of this agreement shall be the state court located in Northern San Diego County, California 17. TAXATION OF ACCOUNT 17.1 W-9 Certification. Client agrees to provide a completed W-9 or W-8 certification, as appropriate, to Bank. 17.2 Client’s Tax Identification Number is: 95-6004793 5 17.3 Client’s responsibility for Filinq Tax Returns and Pavinq Taxes. Client is responsible for filing any and all tax returns and for paying all taxes on Property and income held in this Account. 18. NOTICES 18.1 Mailinq of Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed as having been duly given on the date of service, if served personally on the party to whom notice is to be given, or on the fifth day after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed as follows: Client: City Treasurer 1635 Faraday Avenue Carlsbad, CA 92008 Attn: James Stanton Treasurer Bank: Union Bank of California 475 Sansome Street, 15th Floor San Francisco, CA 94111 Attn: Moon Shil Lee Vice President 18.2 Chanqe of Address. Either party may change the address at which notice may be given by giving ten (10) days prior written notice of such change to the other w-b. 19. EFFECTIVE DATE This Agreement shall become effective upon the date of receipt by the Bank of the securities and other property described in the attached Schedule A. Date: Accepted: Date: & 7- d/ SCHEDULE A Bank Accounts Bankers Acceptances Certificates of Deposit Collateralized Mortgage Obligations Commercial Paper Common Stocks Convertible Stocks Corporate Bonds Foreign Securities Futures Government Agency Issues Government Bonds Insurance Contracts Publicly Traded Limited Partnership Units Municipal Bonds Mutual Fund Options Preferred Stocks Private Placements Repurchase Agreements Reverse Repurchase Agreements SCHEDULE OF FEES FOR FINANCIAL INSTITUTIONS, MUNICIPALITIES, INSURANCE COMPANIES, CORPORATIONS, AND ORGANIZATIONS MONTHLY ADMINISTRATION FEE $50 Custodian fees for services rendered under a Custodian-Depository Agreement are as follows: SERVICES AVAILABLE l Trade Settlement l Asset Safekeeping l Income Collection l Daily Cash Sweep into one of the HighMark money market funds l Capital Changes - Proxies l Monthly Cash and Asset Statements l Personal Account Coordinator assigned to your account l Toll-Free 800 telephone line and 800 fax line l Dial-in access to the Bank’s Trustware Accounting System ITEMIZED FEES Transaction Fee $15 Depository Eligible $40 Depository Ineligible Monthly Holding Fee $ 1 Depository Eligible $4 Depository Ineligible Disbursements, Fedwires $10 Paydowns $5 Additional Asset/Cash Statements $10 Out of Pocket Expenses As incurred MINIMUM ANNUAL AGGREGATE FEE $3,500 . A transaction is defined as any activity affecting assets, such as purchase, sale, tender offer, stock dividend, free deliveries, maturity, exchange, redemptions, etc. Fees for foreign securities, foreign exchange transactions, international wires and non standard services are quoted separately. . Fees charged monthly against the client’s account unless otherwise agreed. AYrev 6123197