[Confidential treatment is being sought for certain portions of this Exhibit, as
indicated by a "[*]" symbol and footnoted as "omitted pursuant to Rule 406."
Such omitted portions have been filed with the Securities and Exchange
Commission.]
EXHIBIT 10.11
UVEST BROKERAGE SERVICES AGREEMENT
THIS AGREEMENT, made this 1st day of April, 1999 (the "Agreement"), by and
between UVEST Financial Services Group, Inc. ("UVEST"), and Pacific Mercantile
Bank, ("Financial Institution");
WITNESSETH THAT:
WHEREAS, Financial Institution desires to make a broad range of securities
brokerage services available to its customers; and
WHEREAS, UVEST desires to provide Financial Institution's customers with
such brokerage services.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby covenant and agree as follows:
1. SERVICES
1.1 Services To Be Performed By UVEST
(a) UVEST will accept, establish and maintain cash and/or margin accounts
for customers of Financial Institution pursuant to the policies and guidelines
established by UVEST and in accordance with all applicable laws, regulations,
rules and procedures, including without limitation those of the Securities and
Exchange Act of 1934, as amended, and the National Association of Securities
Dealers, Inc.
(b) UVEST will execute, clear and settle orders for accounts that have been
accepted by UVEST (the "Accounts"), but only insofar as such orders are
transmitted by the Account to UVEST. As used in this Agreement, the term
"securities" includes stocks, bonds (US Treasury, Municipal and Corporate),
mutual funds, unit investment trusts, and listed options, but does not include
commodities.
(c) UVEST shall make available to the Accounts toll-free telephone service
and Internet access for placing orders and for customer service. That telephone
service shall be staffed by personnel of UVEST who may identify the services
provided as services of UVEST, a registered trademark of UVEST Financial
Services Group, Inc.
(d) UVEST will prepare, print and mail to each Account at its address of
record on the books of UVEST confirmation information respecting the execution
of each order for the Account. Each such confirmation will display the name of
UVEST and the Clearing Agent.
(e) UVEST will prepare, print and mail monthly statements to the Accounts
at their address of record on the books of UVEST (or quarterly statements if no
activity in an Account occurs during any quarter covered by such statement and
there is a cash balance or securities position in such Account). No statements
will be prepared for an account if there has been no activity and there is no
cash balance or security position. Each statement will display the name of
UVEST, the Clearing Agent and the Financial Institution.
(f) UVEST will be responsible for the receipt of the customer securities,
delivery of customer securities, making and receiving payment therefor and
holding in custody and
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safekeeping all securities. UVEST shall also be responsible for the handling of
margin accounts, the receipt of dividends, interest and other distributions, and
the processing of exchange offers, rights offerings, tender offers, redemptions,
proxy material, annual reports and other material distributed to shareholders
generally. It shall be the responsibility of UVEST to comply with any and all
prospectus delivery requirements with respect to Accounts that purchase
securities requiring such delivery.
(g) All Accounts shall be maintained as accounts of UVEST or of UVEST's
designated Clearing Agent and UVEST will maintain books and records of all
transactions executed by Accounts through it in accordance with applicable law.
(h) UVEST, in its sole judgment, reserves the right to reject any Account
or order thereof and to terminate any Account previously accepted by it as an
Account, which right will not be unreasonably exercised.
(i) UVEST shall be responsible for providing annual dividend and
distribution information as contained in IRS Form 1087 and any other information
required to be reported to Accounts by Federal, state or local tax laws, rules
or regulations, but only with respect to events subsequent to the effective date
of this Agreement.
(j) All transactions in any Account are to be considered cash transactions
until such time as UVEST has received and approved a duly and validly executed
margin agreement. UVEST is responsible for the operation of such margin accounts
in accordance with all-applicable laws, rules and regulations. UVEST shall have
complete authority and control over the terms, conditions and operations of
margin accounts and shall have the right, in its sole discretion, to modify the
margin requirements of any account.
(k) UVEST may delegate any or all of its duties under this Section to a
clearing agent of its choice, which may, but is not required to be Pershing, a
division of Donaldson, Lufkin & Jenrette Securities Corporation (the "Clearing
Agent"). Pershing is the Clearing Agent on the date of this Agreement. UVEST
shall promptly notify the Financial Institution, in writing, of any change to
the Clearing Agent. That written notice shall constitute a representation and
warranty by UVEST to Financial Institution that such new Clearing Agent has the
facilities and holds all federal and state licenses and approvals required under
applicable laws and regulations to act as a Clearing Agent with respect to the
Accounts.
(1) UVEST shall be responsible for managing the process whereby Financial
Institution's customers' accounts are to be automatically debited or credited,
as appropriate, for the settlement of executed securities orders.
1.2 Activities to be Performed by Financial Institution
(a) Financial Institution shall assist customers in completing UVEST's
Brokerage Account Application and Customer Agreement when appropriate, and, as
applicable, other required forms of UVEST and shall forward those completed
applications to UVEST. Copies of UVEST's Brokerage Account Application and
Customer Agreement will be provided to Financial Institution by UVEST. UVEST
shall cause all such Brokerage Account Applications to contain the following
legend:
"I/we have been advised and understand that securities are offered by UVEST
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Investment Services, not by my financial institution, and that they are not
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affiliated in any way. I/we have been advised and understand that securities
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(stocks, bonds, mutual funds, unit investment trusts, and variable annuities)
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offered by UVEST Investment Services (1) are not deposits of this institution
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(2) are not insured or guaranteed by the Federal Deposit
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Insurance Corporation (FDIC), NCUA or any other government agency; (3) are not
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obligations of, or guaranteed by my financial institution; or (4) involve
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investment risks, including the potential loss of principal I am aware that
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there are fees associated with the purchase or sales of mutual funds and/or
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annuities."
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(b) Financial Institution agrees to (i) review the information contained in
each Brokerage account Application and Customer Agreement and (ii) use its
reasonable to obtain from each customer and verify such documentation,
agreements and information as deemed necessary.
(c) Financial Institution shall cooperate with UVEST in effecting the
automatic debit or credit of Financial Institution's customers' accounts, as
appropriate, for settlement of securities orders.
1.3 Activities to be Performed by Both Parties
(a) UVEST and the Financial Institution shall undertake a marketing
campaign, the scope of which shall be jointly agreed upon by both UVEST and the
Financial Institution, to promote the brokerage services offered by UVEST to its
customers.
(b) Materials to be utilized in connection therewith will refer to UVEST
and must be reviewed and approved by UVEST and Financial Institution prior to
use.
(c) Neither Financial Institution nor UVEST will make any investment
recommendations and will not exercise any discretionary or other authority with
respect to the Accounts.
(d) Each party shall be responsible for compliance with federal and state
laws and regulations applicable to it. Without limiting the generality of the
foregoing, UVEST agrees that it will (i) perform its duties and responsibilities
hereunder diligently and with due care, (ii) provide full and adequate
supervision to all of its brokers and registered representatives and (iii)
notify the Financial Institution, promptly in writing, of any disciplinary
action that may be taken against it by the Securities Exchange Commission
("SEC") or the National Association of Securities Dealers, Inc. ("NASD")
(e) Each party shall be responsible for the on-going training of personnel
who will assist customers in completing the required forms of UVEST and in the
policies and procedures of UVEST.
(f) Financial Institution will be responsible for determining that no
customer is a minor when such customer completes the UVEST Broker Account
Application and Customer Agreement at Financial Institution. When a customer
utilizes the Internet to establish an account, UVEST will be responsible for
determining that no customer is a minor or subject to a disability under any
law, rule or regulation.
2. CUSTOMER AND FINANCIAL INSTITUTION FEES
(a) Schedule A attached hereto and incorporated herein by reference sets
forth UVEST's present schedule of charges to Financial Institution's customers
for orders placed via toll-free telephone service. Schedule B attached hereto
and incorporated herein by reference sets forth UVEST's present schedule of
charges to Financial Institution's customers for orders placed via the Internet.
Such charges may be changed by UVEST from time to time, but in no event shall
such charges be higher than UVEST's regular and customary charges for like
services to like institutions.
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(b) Schedule C attached hereto and incorporated herein by reference sets
forth UVEST's present schedule of charges to Financial Institution for
development, usage and maintenance of a customized discount brokerage Internet
site.
3. PAYOUT TO FINANCIAL INSTITUTION
As compensation for its activities hereunder, UVEST shall pay to Financial
Institution during the term of this Agreement, [*] per transaction, received
by it via the Internet with respect to all orders executed for Accounts that
were introduced to UVEST by Financial Institution. Amounts due to Financial
Institution shall be payable within 15 days of the end of the month during which
such commissions are received by UVEST.
4. MAINTENANCE OF BOOKS
UVEST shall carry all Accounts as UVEST accounts in the name of the
Financial Institution customer, with a notation on its books that such Accounts
were introduced by Financial Institution. Inadvertent omission of such notations
shall not be deemed to constitute a breach of this Agreement. UVEST shall, upon
written request, give Financial Institution reasonable access during normal
business hours to its books and records relating to Accounts that were
introduced to UVEST by Financial Institution for the purpose of verifying fees
payable under this Agreement.
5. INDEMNIFICATION
5.1 UVEST shall indemnify and hold Financial Institution harmless against
any losses, claims, damages, liabilities or expenses (which shall include, but
not be limited to all costs of defense and investigation and all reasonable
attorney's fees) to which Financial Institution may become subject, insofar as
such losses, claims, damages, liabilities or expenses arise out of or are based
upon any of the following:
(a) negligence or the willful misconduct of UVEST or its employees in
providing the services contemplated hereunder;
(b) the failure of UVEST to perform its obligations under this Agreement.
f) the breach by UVEST of any representations and warranties made by it in
or pursuant to this Agreement.
5.2 Financial Institution shall indemnify and hold UVEST harmless against
any losses, claims, damages, liabilities or expenses (which shall include, but
not be limited to, all costs of defense and investigation and all reasonable
attorney's fees), to which UVEST may become subject, insofar as such losses,
claims, damages, liabilities or expenses arise out of or are based upon any of
the following:
(a) the negligent or willful misconduct of Financial Institution or its
employees in conjunction with its performance of its duties under this Agreement
(b) failure of Financial Institution to perform its obligations under this
Agreement.
f) the breach by Financial Institution of any representations or warranties
made by it in or pursuant to this agreement.
* Omitted pursuant to Rule 406.
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5.3 No liability for indemnification under Sections 5.1 or 5.2 shall arise
unless the party making a claim under this section provides to the party against
whom a claim is being made written notice of the commencement of any action
within 10 days thereof. The failure of a party against whom such claim is made
will not relieve the party against whom such claim is made from any liability
which it may have otherwise than under this Section. If any such action is
brought against any party, and it notifies the other party of the commencement
thereof, the party against whom such claim is made will be entitled to defend or
prosecute such action at its expense and through counsel of its own choosing. No
settlement of any action against the party making a claim under this section
shall be made without the consent of the party against whom such claim is made.
5.4 The indemnification provisions in this Section shall remain operative
and in full force and effect, regardless of the termination of this Agreement
and shall survive any such termination.
6. REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS
6.1 UVEST represents, warrants and covenants as follows:
(a) UVEST is presently a member in good standing of the National
Association of Securities Dealers, Inc.
(b) UVEST is and during the term of this Agreement will remain duly
licensed in good standing as a broker-dealer under applicable Federal and state
laws and regulations.
(c) UVEST has all the requisite authority, in conformity with all
applicable laws and regulations, to enter into and perform the services
contemplated by this Agreement.
(d) UVEST is in compliance, and during the term of this Agreement will
remain in compliance, with the capital and financial reporting requirements of
(i) the National Association of Securities Dealers, Inc., (ii) the Securities
and Exchange Commission and (iii) every state in which it is licensed as a
broker-dealer.
(e) During the term of this Agreement and all times there after, UVEST
shall keep confidential any information not otherwise generally available to the
public which it may acquire as a result of this Agreement regarding the business
and affairs of Financial Institution. UVEST shall treat the names of Account
holders as confidential and shall not provide such names to third parties except
as authorized in writing by Financial Institution or as required by applicable
statutes, rules and regulations. Financial Institution acknowledges, however,
that, after the termination of this Agreement, UVEST may use the names of
customers to carry out broker-dealer functions for such customers.
f) UVEST represents and warrants that all computer software and hardware
used in the development, usage or maintenance of its customized discount
brokerage Internet site and all computer software and hardware used in
processing transactions in the Accounts over the Internet are Year 2000
compliant, which means that such software and hardware are designed to
be used prior to, during, and after the calendar year 2000 AD, and that
the software and hardware will operate during each of such time periods
without error relating to date data, specifically including any error
relating to, or the product of, date data which represents or references
different centuries or more than one century.
6.2 Financial Institution represents, warrants, and covenants as follows:
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(a) Financial Institution has all the requisite authority in conformity
with all applicable laws and regulations to enter into this Agreement.
(b) Financial Institution shall not generate and/or prepare any statements,
billings or confirmations respecting any Account.
(c) Financial Institution shall keep confidential any information not
generally available to the public, which it may acquire as a result of this
Agreement regarding the business, and affairs of UVEST, such requirement shall
survive the life of this Agreement.
7. TERM - TERMINATION
7.1 The initial term of this Agreement shall expire one year from the date
hereof. After the initial term, this Agreement will be automatically renewed for
additional one-year terms unless and until terminated by either party upon (90)
days written notice of termination to the other party, such termination to be
effective on the expiration of such (90) day period. Accordingly, the earliest
date as of which this Agreement may be terminated by either party pursuant to
this section 7.1 shall be the first anniversary of the date of this Agreement
(provided written notice thereof has been given by either party to the other no
later than the 90th day prior thereto). The account application and customer
agreements that UVEST has with customers of the Financial Institution shall
survive any termination of this Agreement, whether pursuant to this section 7.1
or other sections of this Agreement, and no termination of this Agreement shall
relieve UVEST of its obligations to customers under such applications and
agreements.
7.2 During the term of this Agreement, Financial Institution will not offer
or promote provision of the services contemplated by this Agreement through or
by any broker, or similar provider, other than UVEST.
8. DEFAULT
8.1 Notwithstanding any provision in this Agreement, the following events
or occurrences shall constitute an Event or Default under this Agreement:
(a) failure of either party to comply with the terms of this Agreement
within fifteen days of written notice from the other party of such failure; or
(b) if any representation or warranty made by either party herein shall be
untrue in any material respect; or
(c) a receiver, liquidator or trustee of either party, or of any
substantial part of its property, is appointed by court order and such order
remains in effect for more than 30 days; or either party is adjudicated bankrupt
or insolvent; or a petition is filed against either party under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law or any jurisdiction, whether now or hereafter in effect, and is
not dismissed within 30 days after such filing; or
(d) either party files a petition in voluntary bankruptcy or seeking relief
under any provision of any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law or any jurisdiction,
whether now or hereafter in effect, or consents to the filing of any petition
against it under any such law; or
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(e) either party makes an assignment for the benefit of its creditors, or
admits in writing its inability to pay its debts generally as they become due,
or consents to the appointment of a receiver, trustee or liquidator for it, or
for all or any substantial party of its property.
Upon the occurrence of any such Event of Default, the non-defaulting party
may, at its option, and without waiving any rights or remedies such party may
have against the defaulting party, by notice to the defaulting party, declare
that this Agreement shall be thereby terminated without penalty and such
termination shall be effective as of the date such notice has been sent or
communicated to the defaulting party.
9. REMEDIES CUMULATIVE
The enumeration herein of specific remedies shall not be exclusive of any
other remedies. Any delay or failure by any party to this Agreement to exercise
any right, power, remedy or privilege herein contained, or now or hereafter
existing under any applicable statute of law, shall not be construed to be a
waiver of such right, power, remedy or privilege. No single, partial or other
exercise of any such right, power, remedy or privilege shall preclude the
further exercise thereof or the exercise of any other right, power, remedy or
privilege.
10. MISCELLANEOUS
10.1 Neither Financial Institution nor UVEST shall hold itself out as an
agent of the other or any of the subsidiaries or the companies controlled
directly or indirectly by or affiliated with the other.
10.2 Neither Financial Institution nor UVEST shall, without having obtained
the prior approval of the other, agree to place or place any advertisement in
any newspaper, publication, periodical or any other media if such advertisement
in any manner makes reference to the other and/or of the services embodied in
this Agreement.
10.3 This Agreement may be modified by a writing signed by both parties to
this Agreement. Such modification shall not be deemed a cancellation of this
Agreement.
10.4 This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the parties hereto. This Agreement may not be assigned
by either party without the prior consent of the other, except that an
assignment by UVEST to a subsidiary or a company affiliated with it (in either
case being a registered broker-dealer) and any assignment by Financial
Institution to another Financial Institution with which it is affiliated shall
be valid in the absence of consent. No assignment permitted to be made without
the consent of the other party shall relieve the assigning party of its
obligations hereunder and assigning party shall be liable for any breach of any
covenants or duties or any representations or warranties of its assignee under
this Agreement. The parties are independent contractors, do not intend to
create, and are not creating any partnership or joint venture or employer or
employee relationship between them. Except as to the extent expressly permitted
elsewhere in this Agreement, neither party is authorized to bind the other party
to any obligation or commitment whatsoever without the express prior written
consent of such party.
10.5 Neither party hereto shall use any service mark, trade name or
trademark of the other party hereto without the prior written consent of the
other. Each party shall have the exclusive right to any such name or mark
developed by it in connection with the services performed by it under this
Agreement.
10.6 In the event of a dispute between the parties, such dispute shall be
settled by arbitration in the county in which the Financial Institution's
headquarters office is located, in accordance with the rules of the American
Arbitration Association.
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10.7 The heading preceding the text, articles and sections hereof have been
inserted for convenience and reference only and shall not be construed to affect
the meaning, construction or effect of this Agreement.
10.8 If any provisions or conditions of this Agreement shall ultimately be
held to be invalid or unenforceable by any court, or regulatory or self-
regulatory agency or body, such invalidity or unenforceability shall attach only
to such provision or condition. The validity of the remaining provisions and
conditions shall not be affected thereby and this Agreement shall be carried out
as if any such invalid or unenforceable provision or condition was not contained
herein.
10.9 For the purposes of any and all notices, consents, directions,
approvals, requests or other communications required or permitted to be
delivered hereunder, UVEST's address shall be 128 South Tryon Street, 13th
Floor, Charlotte, NC, 28202, Attention: President; and Financial Institution's
address shall be: 450 Newport Center Drive, Suite 100, Newport Beach, CA, 92660,
Attention: Raymond E. Dellerba, President & CEO. Notice shall be provided by
registered or certified mail and either party may change its address for notice
purposes as aforesaid.
Made and executed as of the date set forth above.
UVEST Financial Services Group, Inc
By: illegible signature
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Title: President & COO
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Pacific Mercantile Bank
By: DANIEL L. ERICKSON JOHN P. CRONIN
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Title: EVP/CFO EVP/CTO
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