HomeMy WebLinkAboutUS BANK NATIONAL ASSOCIATION - 2003-06-02 (3)DS'° E D c�
CITY -OF HUNTINGTON BEACH
Interoffice Communication
Economic Development Department
TO: Honorable Mayor and City Council
VIA: Ray Silver, City Administrator
FROM: David C. Biggs, Director of Economic Development
Jennifer McGrath, City Attorney
DATE: June 2, 2003
SUBJECT: Late Communication F-1
1. As part of the Recommended Action in subject RCA, please include the language as
follows: The marketing program, as described in this RCA, will be designed and
approved with the assistance of the City Attorney's Office and will be returned for City
Council approval at a future date.
2. Please note that Exhibit A of the Agreement with US Bank National Association should
identify the term "Surf City Huntington Beach," as the Licensed Mark.
We would be happy to answer any questions you might have.
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AND MAMA PART OF THE RECORD ATTHE�j�j
COUNCIL IEEMn OF / f o3
0FRCE OF THE CITY CLERK
CONNIE BROMMAY, CITY CLEW(
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Council/Agency Meeting Held:
Deferred/Continued to:
Approved ❑ Conditionally Approved ❑ Denied
City Clerk's�Signa�ture
Council Meeting Date: June 2, 2003
Department ID Number: ED03-12
CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIL ACTION
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
SUBMITTED BY: RAY SILVER, City Administratorme� q
PREPARED BY: DAVID BIGGS, Director of Economic Develo enP�
SHARI L, FREIDENRICH, City Treasu;
RON HAGAN, Special Projects Mana r
SUBJECT: APPROVE AGREEMENT WITH U.S. BANK NATIONAL
ASSOCIATION FOR IMPLEMENTATION OF THE SURF CITY
HUNTINGTON BEACH AFFINITY CREDIT CARD PROGRAM
Statement of Issue, Funding Source, Recommended Action, Alternative Action(s), Analysis, Environmental Status, Attachment{sj
Statement of Issue: Should the City approve an agreement with U.S. Bank National
Association to implement the Surf City Affinity Credit Card program to provide revenue: to
fund city services for parks and recreation, libraries, cultural activities and other community
programs?
Funding Source: No appropriation is required.
Recommended Action: Approve the Credit Card Affinity Program and Tradem6rk
License Agreement with US Bank National Association ND for the implementation of the Scarf
City Huntington Beach Affinity Credit Card Program, authorize the Mayor and City Clerk to
sign th agreement, and forward to US Bank National Association ND for execution. gppu,-oclaa
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Alternative Action : Do not implement an affinity credit card program to generate revenue /
to pay for city services.
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Analysis: City Council has previously approved the concept of a Surf City affinity credit
card program as a new revenue source to support city services. Staff and the City's agent,
Public Enterprise Group, have completed the RFP process and negotiations with interested
banks. While mast banks wanted the City to invest money and share financial liability, we wlr re
able to negotiate an agreement with U.S. Bank National Association ND (Bank) whereby the City
has no investment requirement or financial liability. The percentage of income that the City will
receive is less than it would be if the City were to invest upfront dollars into the program and
share financial responsibility, however, staff recommends that the City take the conservative
route and implement the program with Bank which does not require any city investment or
financial liability. The Bank is willing to take on all the financial cost of implementing the affinity
credit card program because they believe the well-known Surf City Huntington Beach
RRUE5T FOR COUNCIL ACTIA
MEETING DATE: June 2, 2003 DEPARTMENT ID NUMBER: ED03-12
trademark will provide an enticement for people to switch from their current credit card to the
Surf City Huntington Beach card. The affinity card program is expected to generate an
annual income to the City of $100,000 to $200,000 after the program is in operation for one
to two years. Depending on the success of the program, and if citizens are willing to switch
from their current credit card to the Surf City card, proforma projections indicate that the
program could grow within five years to generate up to an additional $100,000 of annual
income. Under the terms of the agreement with Bank, the City is not required to invest any
funds, nor does the City have any financial risk for the duration of the program. City Council
has previously adopted a policy that the revenue generated from this program would be used
as follows: 20% for Parks & Recreation, 20% for Libraries, 20% for Cultural Programs and
15% for the General Fund. Five percent of the net revenue goes to the city's agent, Public
Enterprise Group, for overseeing the program, and the remaining 20% will be used to pay for
the o ngoing city m arketing of the program i n the Sands, Community Connection, H BTV3,
water bill inserts, and posters and fliers at community centers.
The basic business terms of the agreement are as follows:
1. The C ity s hall p rovide B ank w ith t he " Surf City H untington B each" t rademark a nd t he
license to use such mark for the purpose of issuing Surf City Huntington Beach affinity credit
cards.
2. The Bank shall bear all expenses of manufacturing and issuing the cards, marketing the
program, handling all accounts, and providing direct deposit of the City's percentage of
income from the program.
3. The City shall receive $20 for each account opened under the program and royalties in
the amount of 26 percent of the interchange income, which is .004 percent of net retail sales
volume. Example: For each $100 charged, the City will receive 10.4a.
4. The agreement is for a period of one year with four automatic, successive, one-year
periods unless either party gives thirty days written notice to terminate the agreement.
5. The initial card shall contain both the Bank's name and Surf City Huntington Beach on a
standard VISA and/or MasterCard. If the City's portfolio exceeds 10,000 accounts, the card
will be customized for Surf City Huntington Beach. If the portfolio exceeds 20,000 accounts,
the Bank will provide a customized card with color photography provided to the Bank by the
City.
6. The City has no marketing responsibility, however, the City will provide the Bank with a
minimum of 25,000 names and addresses of current participants in Community Services
programs. No phone numbers, personal data, demographic information, or any other
information shall be given to the Bank. The City will not give the Bank library mailing lists,
water bill mailing lists, building permit mailing lists or any other mailing lists that the City may
have. The City will provide no telephone numbers or any other personal data to the Bank,
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REQUEST FOR COUNCIL ACTION
MEETING DATE: June 2, 2003 DEPARTMENT ID NUMBER: ED03-12
and the Bank shall keep confidential and not provide to any third party any data it collects
from participants of the affinity card program.
7. During the term of the contract, the City would agree that the Bank has exclusivity, and
will enter into no other affinity credit card program with any other banking institution.
8. Bank will have the sole right and responsibility to determine the type of credit cards and
rewards programs to be offered to participants. Depending on the participants' credit rating,
they may be eligible for a classic, gold card or platinum card with VISA and/or MasterCard,
plus a choice of rewards programs that could include miles, points or cash -back options. The
Bank also has the right to co -brand the Surf City card with an existing bank program, with the
approval of the City.
9. Neither the Bank nor the City may sell or assign the agreement to any other party without
mutual consent from both parties.
U.S. Bank National Association ND, i.e., Bank, is a national bank and one of the largest
issuers of affinity card programs. They are a member of VISA USA and MasterCard. The
Bank will direct deposit into the City's bank account the City's revenue generated from the
program on a quarterly basis. In working with US Bank, the City and the Bank have set a
projected 25,000 cards as the City's portfolio goal for the first two years of the program. The
Bank believes that the City can obtain a portfolio of 75,000 cards over the term of the
agreement given the City's demographics, well-known service mark, and regional popularity.
If the City reaches the 25,000 portfolio goal, it would receive over $500,000 in one-time
activation fees and an annual income of $150,000 - $200,000 from royalties.
Although the City is not required to do a marketing program under the terms of the US Bank
contract, staff is recommending that 20 percent of the revenue received be put back into a
marketing program to increase participation. As revenue is received from the program, the
following marketing program should be implemented:
Sands Bulletin ( full p age a d) — I nside c over o f g lossy c olor p ublication and "tip -in" p iece
provided by Bank reaching 72,000 households quarterly. Estimated revenue allocation
would be $8,000 annually.
Direct Marketing to all addresses of Community Services program participants — Database
containing names and addresses of persons registered in recreation class a nd programs.
Estimated participants are 28,800. Each time someone registers for a class, they would
receive a credit card information packet. There would be no cost to the City as direct
marketing and credit card application would be supplied and paid for by the Bank.
Posters and Tabletop Displays at community centers and City facilities, such as Edison
and Murdy Community Centers, Seniors' Center, City Gym & Pool, Lifeguard Headquarters,
Civic Center, Sports Complex, Pier Plaza, Central Library and branches; Meadowlark Golf
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R�QUEST FOR COUNCIL ACTIQN
MEETING DATE: June 2, 2003 DEPARTMENT ID NUMBER: ED03-12
Course, Art Center, and clubhouses. Estimated revenue allocation would be $1,000
annually.
HBTV3 special promotional spots — Estimated revenue allocation would be $10,000 a year.
Distribution by Public Enterprise Group of applications and promotional material at City
events, including the Fourth of July Celebration, US Open of Surfing, Pier Plaza Presents
Concert Series, Association of Volleyball Professionals Tournament, and Concerts in the
Park. Estimated revenue allocation would be $1,000 annually.
Link to City Web Site is no cost to City as the Bank would provide the link.
Water Bill Inserts to promote the program and give citizens. information on how to
participate and how the program helps fund city services. Estimated revenue allocation
would be $5,000 annually.
The estimated total revenue allocated to marketing the credit card program would be $25,000
per year. The actual amount of money spent on marketing would be 20 percent of the
revenue received. The marketing program would be adjusted accordingly.
US Bank rolls out new credit cards in August of each year. Consequently, -the agreement
needs to be approved by the City and submitted to the US Bank Board of Directors for final
approval by June in order to implement the program this August. If this schedule cannot be
met, the program would begin in August 2004.
Staff is recommending that Council approve the agreement with US Bank, and direct staff to
work with US Bank to make the August 2003 roll out schedule.
Environmental Status: NIA
Attachment(s):
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ATTACHMENT #1
CREDIT CARD AFFINITY PROGRAM AND
TRADEMARK LICENSE AGREEMENT
This Credit Card Affinity Program and Trademark License Agreement ("Agreement) is made and
entered into as of June 15, 2003 (the "Effective Date") by and between the City of Huntington Beach, [a
Municipal Corporation Chartered in California] ("Organization") having its principal place of business at
2000 Main St. Huntington Beach, California _and U.S. Bank National Association ND, a national banking
association ("Bank") doing business under the name Elan Financial Services ("Elan"), having its principal
place of business at 4325 17th Avenue SW, Fargo, North Dakota 58103.
RECITALS
WHEREAS, Bank is a wholly owned subsidiary of U.S. Bancorp, is a member of Visa, U.S.A.,
Inc., and issues Visa credit cards, charge cards, stored value cards and other banking cards to cardholders;
WHEREAS, Organization is the owner of certain trademarks, service marks, stylized marks and
logos and applications thereto ("Licensed Marks," as defined below);
WHEREAS, Bank wishes to obtain a license from Organization to use the Licensed Marks in
connection with the creation, manufacture, advertising, and issuance of credit cards by Bank featuring the
Licensed Marks pursuant to this Agreement;
WHEREAS, Organization has agreed to license to Bank the Licensed Marks for such purposes,
subject to certain restrictions and quality control standards set forth herein; and
WHEREAS, Bank is willing to issue such credit cards and perform related services to support this
program, pursuant to the terms and conditions set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises and
covenants hereinafter set forth, and payments provided for in this Agreement, the parties agree as follows:
DEFINITIONS.
For the purposes of this Agreement and except as otherwise specifically set forth herein, the
following terms shall be defined as hereinafter set forth:
1.1 "Account" shall mean a revolving line of credit extended by Bank to an Eligible Member
accessed by use of an Organization Card.
1.2 "Affiliate" shall mean (a) with respect to Organization, any person or entity that directly
or indirectly Controls, is Controlled by, or is under common Control with Organization, and (b) with
respect to Bank, any person or entity that directly or indirectly Controls, is Controlled by, or is under
common Control .with Bank, as of the date hereof or hereafter.
1.3 "Application Page" shall have the meaning set forth in Section 2.4.2 below.
1.4 "Bank Trademarks" shall mean the names "US Bank" and "US Bancorp" and the US
Bank and shield design, which are owned by U.S. Bancorp and/or its Affiliates, as well as any other
trademark or service marks owned by U.S. Bancorp and/or its Affiliates that include the terms "US Bank"
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(-'UBANK," "US," "U") or "US Bancorp," and trademark or service marks with respect to Elan Financial
Services, however such terms may be capitalized or punctuated.
1.5 "Bank Representatives" shall have the meaning set forth in Section 8.3 below.
1.6 "Business Day" shall mean any day (other than a Saturday, Sunday or legal holiday in
Minnesota or North Dakota) on which national banks are permitted to be open in Minnesota and North
Dakota.
1.7 "Cardholder" shall mean a person who requests and receives the Organization Card.
1.8 "Cirrus Service Marks" shall mean the service marks "Cirrus" and a certain half -circular
design, all of which are owned by Cirrus System, Inc.
1.9 "Confidential information" shall have the meaning set forth in Section 8 below.
1.10 "Effective Date" shall mean the date first written above.
1.11 "Eligible Member" shall mean a person who requests an Organization Card from Bank
and meets Bank's credit granting criteria.
1.12 "Licensed darks" shall mean the trademarks, service marks, stylized marks,
photographs, and logos of Organization as listed on Exhibit A attached hereto, as amended by the parties
from time to time, and any and all applications and registrations related thereto.
1.13 "Mailing Lists" shall mean the list of names, addresses and telephone numbers provided
by Organization to Bank from time to time.
1.14 "MasterCard Service Marks" shall mean the mark "MasterCard", the intertwined circle
design and all other service marks owned by MasterCard International Inc.
1.15 "Members" shall mean members, donors, or associates of Organization.
1.16 "National Associations" shall mean, as applicable, Visa U.S.A., Inc.; Visa International,
Inc.; Plus System, Inc.; MasterCard international Inc. and Cirrus System, Inc.
1.17 "Net Retail Sales Volume" shall have the meaning set forth in Section 4.1, below.
1.18 "Organization Card" or "Card" shall mean Visa- and..'or MasterCard -branded credit cards
(which includes Classic and Platinum credit cards) bearing Licensed Marks and Bank Trademarks that are
issued to Eligible Members under this Program.
1.19 "Organization Card Program" or this "Program" shall mean the program, pursuant to the
terms of this Agreement, whereunder Bank issues Organization Cards to Eligible Members and
administers the Accounts.
1.20 "Organization Representatives" shall have the meaning set forth in Section 8.2, below.
1.21 "PLUS SYSTEM Trademark" or "PLUS SYSTEM Mark" shall mean the service marks
"PLUS SYSTEM" and a certain diamond design, all of which are owned by Visa International, Inc.
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1.22 "Program Launch" shall mean the issuance by Bank of the first Organization Card under
the Program.
1.23 "Royalties" shall have the meaning set forth in Section 4.1, below.
1.24 "Sell -Off Period" shall have the meaning set forth in Section 5.3, below.
1.25 "Solicitation" shall mean any advertisement, letter, flyer or other written correspondence
promoting Organization Cards.
1.26 "Visa Service Marks" shall mean the mark "Visa", the Bands Design and all other service
marks owned by Visa U.S.A., Inc. or Visa International, Inc.
Other terms defined herein shall have the meanings set forth in the contexts of use.
2. RESPONSIBILITIES OF WITH RESPECT TO THE PROGRAM.
2.1 Card Issuance.
2.1.1 Upon receipt of an application for the issuance of an Organization Card, Bank
will review and process such request in accordance with Bank's procedures and criteria. Such
procedures and criteria will be in Bank's sole control and discretion.
2.1.2 Bank shall offer Organization Cards to Members at Bank's standard pricing
which is set forth on the applications for credit and may be changed from time to time at Bank's
sole discretion. In addition, Organization agrees that nothing in this paragraph shall be construed
to prevent Bank from changing any fees it may charge to Cardholders.
2.1.3 Bank may, in its sole discretion, undertake periodic reviews of Cardholders and
their Accounts to manage risks associated with fraudulent card use and other Account activity
which has the potential of exposing Bank to financial loss. Bank reserves the right to take any
necessary actions to stop such activity on any Account.
2.2 Desigg and Manufacture of Cards.
2.2.1 Bank will purchase plastic stock and be responsible for ordering, embossing,
encoding and delivering the Organization Cards using a design created by Bank. Each
Organization Card shall bear Licensed Marks, the Bank Trademarks and the trademarks of the
appropriate National Associations in accordance with Section 3.3.2 hereof. Organization shall
have the right to review and provide prior approval for the type and size of Licensed Marks to be
used on the Cards, which approval may not be unreasonably withheld.
2.2.2 Bank shall bear the expense of manufacturing the Organization Cards issued to
Cardholders; provided that Organization shall bear any additional manufacturing or printing
expense incurred by Bank as a result of redesign of the Organization Card requested by
Organization, except pursuant to Section 2.2.1, above, unless both Bank and Organization agree
in writing that a redesign is necessary, or the card redesign involves the addition of Bank or Visa
trademarks in which case Bank shall bear the expense of any additional manufacturing or
printing.
2.3 Design of Statements and Card Carriers.
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2.3.1 Bank will design the Account statements and card carriers, subject to applicable
law and the regulations of applicable National Associations. Elan and/or Bank shall be clearly
identified as the issuer of the Organization Card on each such statement and card carrier. Each
Account statement and card carrier shall bear the Bank Trademarks and the trademarks of the
appropriate National Associations. Organization shall have the right to review and provide prior
approval of the appearance thereof, including the type and size of logo to be used thereon, which
approval shall not unreasonably be withheld.
2.3.2 Bank shall bear all costs and expenses for the design, printing and production of
monthly Account statements and card carriers.
2.4 Solicitations.
2.4.1 Organization shall not be required to provide any services, such as marketing or
promotional services, in connection with the program other than licensing its Licensed Marks to
the Bank. Bank agrees to perform the following Solicitation activities with respect to this
Program, provided that Organization shall have the right to review and provide prior approval of
all solicitation listed below, which approval shall not be unreasonably withheld:
2.4.1.1 Bank agrees to provide the following to Organization.
Bank shall provide to Organization, standard Program take -one credit card
applications which contain Bank Marks and Organization Marks. Such applications shall
be provided by Bank in quantities at its sole discretion.
(a) If the Organization Account portfolio exceeds ten thousand (10,000)
Accounts, Bank shall provide, at no cost to Organization, a customized marketing
piece, which may include but not be limited to statement inserts and brochures,
that contain Bank Marks and Organization Marks and may be integrated with or
replace the Program take -one credit card applications provided by Bank pursuant
to this Section, provided, however, that the incremental cost of such customized
marketing pieces shall not exceed five thousand dollars ($5,000).
(b) If the Organization Account portfolio exceeds twenty thousand
(20,000) Accounts, Bank shall provide at no cost to Organization, (a) Cards customized
with four color photography which shall be provided to new Accounts and upon reissue
for existing Accounts, provided, however, that the incremental costs, including creative
and production shall not exceed ten thousand dollars ($10,000); and (b) a customized
marketing website advertising the Organization Card with a link to an online application.
2.4.1.2 Bank shall engage in a pre -approval mailing for the Organization
Card, not less that once per year, which contains Licensed Marks. The mailing will be
sent to the Mailing List provided to the Bank by Organization, provided that the mailing
list contains at least twenty-five thousand (25,000) names with addresses, and provided
further that Organization reserves the right to update the Mailing List prior to each
mailing and remove names and addresses from such list. The Bank will only mail
information or items related to the Organization Card Program to individuals on the most
recent Mailing List provided by Organization.
2.4.2 Bank shall create, host and maintain a separate web page within Bank's existing
web site ("Application Page") subject to the following conditions and requirements:
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2.4.2.1 The web site shall be co -branded with Bank Trademarks and the
Licensed Marks.
2.4.2.2 The Application Page shall contain an electronic on-line application
exclusively for the Organization Card. Such on-line application shall be consistent with
the standards of Bank's other on-line credit card application software concerning
technology, ease of use by consumers (user -friendliness) and security, and shall at all
times be in -compliance with all applicable laws, rules and regulations.
2.4.2.3 Bank shall ensure that the information provided on the Application
Page is accurate.
2.5 Bank Operational Responsibilities. Bank shall administer and be solely responsible for
all operational aspects of the Program, including without limitation, plastic issuance, statement rendering,
Member and Cardholder telephone inquiries, charge -back processing, computer processing and
collections, and Organization shall have no liability or responsibility therefor. Organization shall not be
required to provide any administrative, marketing, promotional, or any other types of services in
connection with this Agreement. All Royalties described herein are owed to Organization strictly by
reason of the license of the licensed Marks to Bank, as provided herein. Any services referred to herein
explicitly or by implication shall be performed by Bank at its sole expense. Bank shall cause the Program
to comply with all applicable laws, rules and regulations. Bank has all necessary approvals, permits,
licenses and other authorizations to carry out its duties under this Agreement and no governmental
approvals are required. Bank and its employees and agents shall at all times comply with all laws, rules
and regulations applicable to them in connection with Bank's operations.
2.6 Program and Card Policies and Attributes. Bank shall have full responsibility for and
shall control all policies, activities and decisions with respect to all Organization Cards and Accounts,
such as card issuance and cancellation, debt collection, and issuance of personal identification numbers.
ORGANIZATION LICENSES.
3.1 License Grant. Subject to the terms and conditions of this Agreement, Organization
hereby grants to Bank a nonexclusive, nontransferable license to use the Licensed Marks solely in
connection with the manufacture, sale, advertising, distribution and issuance of the Organization Card in
the United States. Subject to Organization's prior written approval, Bank may sublicense the foregoing
rights only to sublicensees who will use the Licensed Marks on Bank's behalf to manufacture, sell,
advertise, distribute and issue the Organization Card. For any sublicense to be valid, sublicensees must
agree in writing to be bound by the terms and conditions of this Agreement, and Organization shall be an
express third party beneficiary of any such writing. Notwithstanding the foregoing, Bank may assign its
rights under this Agreement to a purchaser of substantially all the assets of Bank.
3.2 Reservation of Rights. Bank acknowledges that Organization is the sole owner of all
right, title and interest in and to the Licensed Marks, and that Bank has not acquired, and shall not
acquire, any right, title or interest in or to the Licensed Marks except the limited right to use such
Licensed Marks as expressly set forth in this Agreement. All use of the Licensed Marks by Bank, and all
goodwill associated with such use, shall inure to the benefit of Organization. All rights of Organization in
and to the Licensed Marks not expressly granted under Section 3. t are reserved by Organization. Bank
expressly acknowledges and agrees that, notwithstanding anything to the contrary in this Agreement, all
use by Organization of the Licensed Marks prior to the execution of this Agreement, if any, was for the
sole benefit of Organization. Should any right, title, interest or other ownership in the Licensed Marks
become vested in Bank by operation of law, this Agreement or otherwise, Bank agrees to assign, and
hereby assigns, all such right, title, interest and other ownership to Organization free of additional
consideration. Bank shall provide and execute all documents necessary to effectuate and record such
assignment to Organization.
3.3 Restrictions. All use of the Licensed Marks as permitted herein shall be subject to the
following restrictions:
3.3.1 Bank shall not use the Licensed Marks on any Organization Card not specifically
described in this Agreement without the prior written approval of Organization. Any such use
shall constitute a material breach of this Agreement and is grounds for termination pursuant to
Section 5.2.
3.3.2 Bank shall not create, nor shall it permit third parties to create a unitary
composite mark involving the Licensed Marks or use the Licensed Marks (a) as a portion or in
combination with any other trademarks, service marks or logos, (b) as all or part of a corporate
name, trade name or any other designation used by Bank to identify its products, services or
business or (c) for any other purpose other than as expressly permitted herein. Both during and
after the term of this Agreement, neither Bank nor any parent, subsidiary, nor Affiliate of Bank
shall use any name, trademark, service mark, trade name, trade dress or logo which is confusingly
similar or identical to any of the Licensed Marks. Nothing herein shall prevent Bank from using
or affixing other trademarks to the Organization Cards or marketing materials related to the
Program as long as such usage is not inconsistent with the requirements of this Section 3.3.2;
provided, however that, in no event shall any such other trademark be of greater prominence than
the Licensed Marks, other than Bank Trademarks, PLUS SYSTEM Trademark, Visa Service
Marks, MasterCard Service Marks, or Cirrus Service Marks.
3.3.3 Bank shall not, directly, indirectly or otherwise: (a) facilitate activities which
jeopardize, dilute or otherwise adversely affect the Licensed Marks, or (b) attack, dispute or
challenge (nor aid or encourage others to do so) Organization's right, title and interest in and to
the Licensed Marks, or the validity of the Licensed Marks.
3.3.4 Organization shall have no right, title, or interest in and shall not use the
company name, logos or trademarks of any Visa Service Marks, PLUS SYSTEM Marks, Cirrus
Service Marks or MasterCard Service Marks without specific prior written consent. Upon request
by Organization. Bank shall attempt to obtain such consents and provide written approval to
Organization.
3.4 Notice. In connection with the use of the Licensed Marks, Bank will for each page or
product surface on which a Licensed Mark is used, mark the use of the Licensed Marks with the
appropriate trademark symbol in accordance with applicable law (e.g., "T""', (9`, or s.vm) or as instructed by
Organization in writing from time to time.
3.5 Exclusivity. Organization agrees that, during the term of this Agreement, Organization
shall not be a party to any agreement not in effect as of the date of this Agreement with any issuer of
credit cards for the purpose of issuing credit cards to :Members
3.6 Quality Control. All use of the Licensed Marks as permitted herein, shall comply with
the following quality control standards:
3.6.1 Guidelines. Use of the Licensed Marks hereunder shall be in accordance with the
provisions of this Section 3, and Organization's then -current guidelines, as may be provided and
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updated from time to time by Organization. Bank shall not reproduce or use the Licensed Marks
in any manner whatsoever other than as expressly authorized by this Agreement.
3.6.2 Quality Control. Bank represents and warrants that all use of the Licensed Marks
as permitted herein shall (a) be in accordance with applicable law in the applicable jurisdictions,
(b) conform to at least the standards of quality currently prevailing in Bank's goods and services,
(c) not be offensive, disparaging or misleading as to the origin or quality of the Organization
Cards or the marketing materials related to the Program, and (d) be consistent with the general
advertising practices in the industry. Bank shall not engage directly, indirectly or otherwise, in
any practice or other activity that is or is likely to be detrimental to the goodwill associated with
the Licensed Marks or the goodwill or reputation of the Organization or its services or products,
or that constitutes a deceptive trade practice or unfair competition or that violates any applicable
fair trade laws, privacy protections or advertising rules and regulations or that would disparage
the Licensed Marks.
4. ROYALTIES.
4.1 During the term of this Agreement, Bank agrees to pay to Organization royalties (the
"Royalties") of (a) $20 for Accounts opened under this Program, (b) 26% of interchange income, which
is currently 0.40% of Net Retail Sales Volume. "Net Retail Sales Volume is calculated as gross quarterly
retail sales received by Bank from Visa U.S.A., Inc.; Visa international, Inc. and/or MasterCard
International, Inc. pursuant to charges made by Cardholders, less returns and chargebacks posted to
Accounts and the properly allocable portion of National Association dues and assessments. The actual
interchange rate may vary slightly every month.
4.2 For purposes of this Agreement, Bank shall pay all Royalties within fifteen (15) business
days after the end of each calendar quarter in which such Royalties are earned.
4.3 Bank shall deliver to Organization each month a report indicating the total Net Retail
Sales Volume and interchange income for such month relating to the Program and setting forth
Organization's portion thereof as calculated in accordance with Section 4.1.
4.4 If Organization contracted with broker for the purposes of entering into this Agreement.
Bank may deliver to such broker each month a report indicating the number of Accounts opened pursuant
to this Agreement.
5. TERM AND TERMINATION
5.1 Term. The term of this Agreement shall commence on the Effective Date and shall
continue in full force and effect for one (1) year unless terminated earlier as provided in this Section 5.
Unless either party gives the other party thirty (30) days written notice of its desire to terminate this
Agreement at the end of the then -current term, this Agreement shall automatically be extended, for up to
four (4) successive one-year periods. Notwithstanding the foregoing, at any time after the first
anniversary of the date of this Agreement, either party may terminate this Agreement upon thirty (30)
days' notice to the other party.
5.2 Termination for Cause. Either party may terminate this Agreement and the licenses
granted herein (reserving cumulatively all other remedies and rights under this Agreement and in law and
in equity) in the event of a material breach of this Agreement by the other party, by giving the breaching
party thirty (30) days' written notice thereof; provided, however, that any such termination shall not be
effective if the breach has been cured prior to the expiration of said thirty (30) days.
7
0 0
5.3 Effect of Termination. Upon termination of this Agreement, all rights and licenses
granted hereunder shall immediately terminate, except that Sections 3.2, 4, 5.3, 6, 7, 8 and 9 shall
survive. Upon termination of this Agreement and during the Sell -Off Period, Bank shall have no
obligation to compensate Organization hereunder and Organization shall be entitled to no further
compensation from Bank hereunder, except for Royalties earned prior to such termination as set forth in
Section 4.1 above. Upon termination of this Agreement, Bank shall immediately cease all use and display
of the Licensed Marks, provided that if Bank is not in breach of this Agreement and is properly using the
Licensed Marks pursuant to Organization's quality control standards and guidelines, Bank shall have a
limited right to use any Organization cards or marketing materials related to this Program manufactured
prior to the termination of this Agreement for a period of six (6) months following the termination of this
Agreement while it closes down the Program ("Sell -Off Period"), with Organization's prior written
approval, which shall not be unreasonably withheld. Following termination of this Agreement, Bank
shall not continue to market or accept applications for the Organization Card. Upon termination of this
Agreement, Bank shall retain all right, title and interest in all Accounts and Organization Cards and in all
Cardholder names, addresses, telephone numbers and other Cardholder and Account identifying
information. Without limitation of the foregoing, upon and following termination of this Agreement
Bank shall have the right to solicit any Cardholder or convert any Organization Card and related Account
to any other card or account issued by Bank or any Affiliate of Bank, and to exercise all rights of
ownership with respect thereto, subject to applicable law; provided that Bank shall immediately cease use
of all Mailing Lists and shall immediately return such lists to Organization. Bank shall have no
obligation to assign new account numbers to replacement Cards.
6. INDEMNIFICATION.
6.1 Indemnification Obligations. From and after the date of this Agreement, each party (the
"Indemnifying Party") shall indemnify, defend and hold the other party (the "Indemnified Party''), all it%
corporate parents, subsidiaries and affiliates and all of its and their employees, subcontractors, agents.
officers, directors and shareholders harmless against: (a) any and all out-of-pocket expenses or losses:
liabilities, damages, costs or other direct expenses or claims or counterclaims of third persons or entities
directly related or attributable to (i) the Indemnifying Party's or its agent's or employee's violation (or act
causing the other party to be in violation) of any state or federal law or regulation, or such parties' willful
misconduct; (ii) the Indemnifying Party's breach of any covenant or warranty made by the Indemnifying..
Party in this Agreement; (iii) any material misrepresentation of Indemnifying Party in this Agreement or
any material misrepresentation in or omission from any document, certificate or information furnished or
to be furnished by indemnifying Party under this Agreement; and (iv) any products or services offered:
provided, manufactured, marketed, distributed, advertised, promoted or issued by or on behalf of'
Indemnifying Party (including without limitation the Organization Cards) or based upon use of the
Licensed Marks by or on behalf of Indemnifying Party; (b) any losses due to any fraudulent activity on
the part of any employee or agent of Indemnifying Party; (c) any claims brought by any indemnifying
Party customer, Cardholder, employee or other third party based upon Indemnifying Party's failure to
make any payment to such customer, Cardholder, employee or other third party; and (d) any and all
actions, suits, proceeding;, demands, assessments, judgments, costs and expenses, and any reasonable
attorneys' fees, consultant's fees or court costs incident to any of the foregoing, except for any loss due to
the wrongful or negligent act of the other party or its agents or employees. This Section 6.1 shall not
limit the liability of either party for damages for breach of this Agreement.
6.2 Indemnification Procedures. The Indemnified Party will notify the Indemnifying Pam' in
a reasonably prompt manner of any Claim for which the Indemnified Party is seeking indemnification
pursuant to this Section 6.. The Indemnifying Party may thereafter assume control of such Claim,
provided, that the Indemnified Party will have the right to participate in the defense or settlement of such
Claim. Neither the Indemnifying Party nor the Indemnified Party may settle such Claim or consent to any
judgment with respect thereto without the consent of the other party hereto (which consent may not be
unreasonably withheld or delayed). The Indemnified Party will provide the Indemnifying Party with a
reasonable amount of assistance in connection with defending or settling any such Claim.
LIMITATION OF WARRANTY AND LIABILITY.
7.1 ORGANIZATION DOES NOT MAKE WARRANTIES OF ANY KIND, WHETHER
EXPRESS OR IMPLIED, RELATED TO OR ARISING OUT OF THE LICENSED MARKS OR THIS
AGREEMENT. THE LICENSED MARKS ARE PROVIDED "AS IS," AND ORGANIZATION
SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICI:LAR Pt~RPOSE, NON -INFRINGEMENT AND TITLE, AND ALL OTHER
WARRANTIES THAT -MAY OTHERWISE ARISE FROM COURSE OF DEALING, USAGE OR
TRADE OR CUSTOM.
7.2 In no event shall either party or any of its directors, officers, employees, licensors,
suppliers or other representatives be liable for any indirect, special or consequential damages, or damages
for loss of'profits, business interruption, loss of goodwill, or otherwise, arising from or relating to this
agreement or the licensed marks, even if such party is expressly advised of the possibility of such
damages, except in the case of gross negligence or willful misconduct. Notwithstanding anything to the
contrary, in no event shall the aggregate liability of Organization or any of its directors, officers,
employees, licensors, suppliers or other representatives exceed $100,000. The foregoing limitations of
liability and exclusion of certain damages shall apply regardless of the failure of the essential purpose of
any remedies available to either party.
7.3 Iniunctive Relief. Each party agrees that a breach of its obligations under this
Agreement, including, without limitation, its obligations set forth in Sections 3.3 and 3.6, would cause the
other party- irreparable damage. Accordingly, each party agrees that in the event of such breach or
threatened breach, in addition to remedies at law, the party alleging breach shall have the right to
injunctive or other equitable relief to prevent the breaching party's violations of its obligations hereunder,
and hereby consents to the entry of temporary restraints, a preliminary injunction, a permanent injunction
and such other equitable relief as the court may deem appropriate.
CONFIDENTIALITY.
8.1 Confidential Information. Except as otherwise provided herein or as may be required by
law, in performing its obligations pursuant to this Agreement, each party may have access to or receive
disclosure of certain confidential information about or proprietary material of the other party, including,
but not limited to: such party's marketing philosophy and objectives, promotions, financial results,
technological developments, customer names and addresses and other customer identification
information, and other similar confidential and/or proprietary information and materials (hereinafter
"Confidential Information"). Without limitation, but subject to the provisions of Section 5.3, the terms of
this Agreement and the names, addresses, telephone numbers and other cardholder identification and
account information of persons who become Cardholders shall be Confidential Information belonging to
each party.
8.2 Organization Confidentiality Obligation. Except as otherwise provided herein, and
subject to the California Public Records Act, Organization shall at all times maintain, and cause its
agents, officers, subcontractors, employees and Affiliates ("Organization Representatives") to maintain,
the confidentiality of all Confidential Information belonging to Bank. Organization shall not sell or
otherwise convey any of such Confidential Information to any third person and shall exercise all
necessary precautions to prevent access to such Confidential Information by any third person other than
X
0 •
Organization Representatives who have a need to know or who must access such Confidential
Information in order for Organization to fulfill its obligations hereunder. Organization shall inform those
Organization Representatives of the confidentiality obligations hereunder and require their compliance
with such obligations. Organization shall not use such Confidential Information for any purpose
whatsoever other than those specifically contemplated herein.
8.3 Bank's Con fidentiality_Obligation. Except as otherwise provided herein, Bank shall at all
times maintain, and cause its agents, employees, subcontractors and Affiliates ("Bank Representatives")
to maintain, the confidentiality of all Confidential Information belonging to Organization including but
not limited to Organization's Mailing Lists. Bank shall not sell or otherwise convey any of such
Confidential Information to any third person and shall exercise all necessary precautions to prevent access
to such Confidential Information by any third person other than Bank Representatives who must access
such Confidential Information in order for Bank to fulfill its obligations hereunder. Bank shalt inform
those Bank Representatives of Bank's confidentiality obligations hereunder and require their compliance
with such obligations. Bank shall not use such Confidential Information for any purpose whatsoever other
than those specifically contemplated herein. Notwithstanding the foregoing, Bank shall be entitled to
provide certain Cardholder information to third persons with express permission of such affected
Cardholders.
8.4 Additional Confidentiality Obligations. Except as otherwise provided herein, and subject
to the California Public Records Act, the parties agree that during the term of this Agreement and
thereafter, Confidential Information is to be used solely in connection with satisfying their obligations
pursuant to this Agreement, and that they shall receive such Confidential Information in confidence and
not disclose such Confidential Information to any third party, without the written consent of the other
party, except that either party may disclose Confidential Information as required by any regulatory agency
having jurisdiction over it or during the course of any independent or regulatory audit; provided the
information disclosed remains non-public. The parties may mark documents containing Confidential
Information with applicable language or stamps, such as "Confidential." Notwithstanding anything to the
contrary in this Agreement, if any party is compelled by applicable law, subpoena or court order to
disclose any portion of the other party's Confidential Information, the party so compelled may comply
with such law, subpoena or order, provided, that the party so compelled shall timely notify the proprietor
of the Confidential Information and reasonably cooperate in any of the proprietors' efforts to maintain the
confidentiality of such Confidential Information. Ali Confidential Information furnished by the parties to
each other in connection with this Agreement is the exclusive property of the furnishing party, and, at the
request of that party or upon termination of this Agreement, the other party shall promptly return to the
furnishing party all such information without copying such information. Without the prior written
consent of the other party, neither party shall disclose, furnish, or use in any way whatsoever not
specifically contemplated hereunder, and shall take measures to prevent its agents, employees and
subcontractors from using, any Confidential Information to which it becomes privy. Confidential
Information does not include (a) information which is now in or hereafter enters the public domain (and is
not subject to a confidentiality agreement with the entity obtaining the same) through no action on the
part of either party in violation of the terms of this Agreement, (b) information that is independently
developed by or for a party, (c) information that is received from a third party (subject to such third party
not having violated the terms of any confidentiality agreement), or (d) information that was in the
possession of the receiving party prior to the date of this Agreement and not obtained in violation of any
confidentiality agreement.
9. WARRANTIES AND REPRESENTATIONS.
Each party to this Agreement warrants and represents to the other as follows: (a) it has the full
power and authority to enter into this Agreement and to carry out its obligations hereunder, (b) the
U
individual signing this Agreement on its behalf is duly authorized to do so, and (c) the execution and
performance of this Agreement by it will not violate its organizational documents or bylaws or any
material contract or other instrument to which it is a party or by which it is bound.
10. ,MISCELLANEOUS.
10.1 Assi nment. \'either party shall assign or delegate any of its rights or obligations under
this Agreement without the other party's prior written consent, except as set forth in Section 3.1 hereof.
10.2 Notices. Any notice or submissions required to be given to either party under this
Agreement shall be in writing and deemed given when delivered personally, mailed, first class mail,
postage prepaid, or delivered by confirmed electronic or digital means, to the following addresses: (a) if
to Organization, City of Huntington Beach at 2000 Main St., Huntington Beach, California --- Attention:
Shari Freidenrich, City Treasurer; (b) if to Bank, U.S. National Association ND, 2751 Shepard Road, St.
Paul, MN 551 16, Attn: Senior Product Manager (Bank Branded Cards). Either party may change the
addresses or addressees for notice by giving notice to the other. All notices shall be deemed received on
the date personally delivered, three (3) days after being placed in the mail as specified, or when electronic
or digital confirmation is received.
10.3 Governinj4 Law. This Agreement shall be governed, construed and interpreted in
accordance with the laws of the State of Minnesota, without giving effect to its conflict of law principles.
The laws of the state of North Dakota shall apply with respect to all fees, charges, and attributes of
Organization Cards issued pursuant to the Program.
10.4 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties' respective successors and assigns.
10.5 Amendment and Waiver. No failure by either party to insist upon strict performance of
any term or obligation set forth in this Agreement or to exercise any right or remedy under this
Agreement, nor acceptance of full or partial performance during continuance of a default, shall constitute
a waiver of any such term, obligation, right or remedy, or a waiver of any such default, by the party
entitled to rely upon such term or performance of such obligation, to assert such right or remedy, or to act
upon such default. No modification, course of conduct, amendment, supplement to, or waiver of this
Agreement or any provisions hereof shall be binding upon the parties unless made in writing and duly
signed by both parties.
10.6 Severability. Should any provision of this Agreement contravene any taw, or valid
regulation or rule of any regulatory agency having jurisdiction over either party hereto or should any
provision of this Agreement otherwise be held invalid or unenforceable by a court or other body of
competent jurisdiction, then each such provision shall be automatically terminated and performance
thereof by both parties waived, and all other provisions of this Agreement shall nevertheless remain in
full force and effect.
10.7 Compliance with Visa Regulations. In connection with its performance hereunder. Bank
will comply with applicable regulations of Visa U.S.A., Inc.; Visa International Inc. and MasterCard
International Inc. as in effect from time to time. To the extent any provision of this Agreement conflicts
with such regulations at any time, Bank shall so notify Organization in writing and, thirty (30) days after
Organization's receipt of such notice, this Agreement shall be deemed amended to conform with such
regulations.
11
10.8 Excusable Delays and Force Majeure. Any delay hereunder shall be excused to the
extent approved in writing by the parties. Any delay in the performance by either party hereto of its
obligations hereunder shall be excused when and to the extent such delay in performance is due to any
cause or event of any nature whatsoever beyond the reasonable control of such party, including without
limitation any act of God; any fire, flood or weather condition; any earthquake; any act of a public enemy,
war, insurrection, riot, explosion or strike; provided, however, that written notice thereof must be given
by such parry to the other party within thirty (30) days after the occurrence of such cause or event.
10.9 Immaterial Breach. From time to time, one party to this Agreement may determine that
the other party is in breach of the Agreement, but that such breach is immaterial. In such case, the party
making such determination may, at its option, notify the "breaching" party in writing of the occurrence
and nature of such breach. In such case, the parties will work together in a good faith effort to resolve
any issues relating to the alleged immaterial breach.
10.10 Entire Agreement. Each party hereto has read this Agreement, understands the
Agreement and agrees to be bound by its terms and conditions. This Agreement supersedes all prior
verbal or written agreements between the parties and now constitutes the complete and exclusive
statement of the terms and conditions between the parties covering the performance hereof.
10.11 Independent Contractor Status. Nothing in this Agreement will be construed as creating a
joint venture, partnership or employment relationship between Organization and Bank. Organization and
Bank are independent contractors. Neither party will have the right, power or implied authority to create
any obligation or duty on behalf of the other party, unless pursuant to a separate written agreement
between the parties
10.12 Arbitration. The parties agree that all disputes between them concerning this Agreement
or its subject matter shall be decided by arbitration conducted in Minneapolis, Minnesota pursuant to the
commercial arbitration rules of the American Arbitration Association. The arbitration shall be conducted
by one arbitrator selected by mutual agreement of the parties. The decision of the arbitrator shall be
binding on the parties and may be enforced in any court of competent jurisdiction.
10,12.1 Notwithstanding anything to the contrary contained herein, upon the demand of
either party, whether made before or after the initiation of legal proceedings, but not more than
thirty (30) days after service of process for such proceeding, all disputes between them concerning
this Agreement or its subject matter shall be decided by arbitration pursuant to the commercial
arbitration rules of the American Arbitration Association, and shall be conducted in Minneapolis,
Minnesota, Judgment upon any award rendered may be entered in any court having jurisdiction.
The award of the arbitrators shall specify in writing the factual and legal bases for the award. All
awards shall be based on either party's actual damages and the arbitrators shall have no authority
to award punitive damages. Both parties agree to keep all disputes and arbitration proceedings
hereunder confidential. Both parties understand and agree that no dispute decided by arbitration
may later be pursued before a court except for the purpose of enforcing (a) compliance with this
arbitration provision, or (b) a final decision by the arbitrators.
10,12.2 This provision shall not limit the right of either party to seek equitable relief, or
to exercise any self-help or other rights or remedies available pursuant to the express terms of this
Agreement.
10.12.3 The arbitrators may make an award of attorney fees and expenses of arbitration
proceedings if permitted by law. Any party who refuses to submit to arbitration as requested or
who refuses to comply with the award rendered by arbitrators or the court shall bear the
12
reasonable costs and expenses of enforcement or compliance, whether incurred in connection
with arbitration or judicial proceedings.
[Remainder of this page intentionally left blank]
13
•
IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate
originals effective as of the day and year first stated above.
U.S. BANK NATIONAL ASSOCIATION ND,
a national banking association
REVIEWED AND APPROVED:
CITY OF HUNTINGTON BEACH, A
municipal corporation of the State of
California
Mayor
AT`toe
City Clerk L 3 03
APPROVED AS TO FORM:
City `Administrator
4 4-.�A�ityttorneyV�
INITIATED AND APPROVED:
J
Dir &tor ck Economic Develop ent
0
40
� J�f
LA 1:964702
Exhibit A
Licensed Mark
A-1
• AL5-el-2003 15:00 FROM L5 BANK CPRD 51:C5
[Mbanic
Retail Payment Solutions
Partner Facing Stored Value
Date: 08/01 /03
To: Ron Hagan
From: Joe Janz
FAX: 714-374-1590
Pages: 2 + cover
R£: Cer•,ificate of Incumbency & new signature page
Hi Ron,
Piease forward to Jennifer. Thanks much. Sorry for the delay.
Regards,
Joe Janz
Vice President, Business & Market Development
U.S. Bank - Retail Payment Solutions
651-205-2890
joe.janz@usbank.com
FAX: 651-205-3050
TO 917143741590
is
P.01/23
PUG-01-2023 12:57 551- 205 2077 0=
AUia-01-2003 1�;:00 FROr US EPNK CARD SUCS TO 917143741590
bank.
Fire Sear Ser•xr CuAr"ferd
L.S. BANK NATIONAL ASSOCIATION NO
ASSISTANT SECRETARY CERTIFICATE
P.02/03
I, Jeanne M. Escobedo, an Assistant Secretary of U.S. Bank National Association ND hereby
certify that the following is a true and exact extract from the Bylaws of U.S. Bank National
Association ND, a national banking association organized under the laws of the United States.
ARTICLE VI.
CONVEYANCES, CONTRACTS, ETC.
All transfers and conveyances of real estate, mortgages, and transfers,
endorsements or assignments of stock, bonds, notes, debentures or other
negotiable instruments, securities or personal property shall be signed by any
elected or appointed officer.
All checks, drafts, certificates of deposit and all funds of the Association
held in its own or in a fiduciary capacity may be paid out by an order, draft or
check bearing the manual or facsimile signature of any elected or appointed
officer of the Association.
All mortgage satisfactions, releases, all types of loan agreements, all
routine transactional documents of the Association, and all other instruments not
specifically provided for, whether to be executed in a fiduciary capacity or
otherwise, may be signed on behalf of the Association by any elected or appointed
officer thereof.
The Secretary of the Association or other proper officer may execute and
certify that required action or authority has been given or has taker, place by
resolution of the Board under this Bylaw without the necessity of further action
by the Board.
I further certify that James Geeslin, Vice President and Gailen Veurink, Vice President are duly
appointed and qualified officers of the Association authorized to act under Article VI of the
Bylaws of the Association and that such authority is in full force and effect as of the date hereof
and has not been modified, amended or revoked.
IN WITNESS WHEREOF, I have set my hand this July 25. 2003.
Jeanne M. Escobedo, Assistant
Secretary
$:lafdavitisec-certs/misc/USBNA NA/Geeslin-Veurink.doc
PUG-01-2003 12=57 651 2e5 0077 P.02
AUu-@1-2003 15:01 FROM U5 BPNK CRRD 5UC5 TU 917143741590
p.@3iO3
�' WI-NESS WHEREOF, the pa -ties have executed this Agreement in duplicato
originals effecnve as of the day and yearfrst stated above.
U.S. BANK NATIONAL ASSOCIATION r'D,
A national bank!= assceiation
By:
Jarr e M' Gees�in
Seruor Vice President
Retai meat of ns
By;_
Gailen ] Vetirink
Senior Vice President
Retail Payment Solutions
TOTE- P.33
FUG-01-2003 12:57 0651 205 0077 D.03
.7
•
Power Point Presentation
ATTACHMENT #2
Sur .� iiy
IFA
I T F R I S E
Financial Partnership With
wbanka
For The
"Surf City Huntington Beach"
Affinity Card Program
June 2, 2003
Qbanlc.® The Concept:
A Municipal Affinity
Card Program &d `'
F. 003s-
• This will be the official Credit Card of "Surf
City Huntington Beach®"
• Agreement is with US Bank, one of the nation's
leading credit card banks
0 0
S F,"y' Why Have a Credit Card
.. Sponsored by the City?
The purpose of the Surf City credit card is
to generate revenue for city programs.
In recent years, the state has taken a
greater share of revenues that
traditionally belonged to cities. As a
result, city staff is searching for new ways
to generate funds for city quality of life
programs.
How Huntington
Beach Will Use
Affinity Card IMP"!-®
Income
• 20% Parks and Recreation Fund
• 20% Cultural Fund
• 20% Library Fund
• 15% General Fund
• 20% Incentive Fund for marketing & promotion
• 5% for agent (Public Enterprise Group) to oversee
the program
2
(CO.,
How Will It Work?
• The city receives $20 for each account opened
and a percentage of the transaction fee, which is
$1.40 for each $1000 charged on the card that is
estimated to generate an annual income of
$100,000 - $200,000 to the City.
• A variety of cards will be offered: Classic, Gold,
Platinum, Reward Card, Miles Card, etc., at the
discretion of the bank based upon the individual's
credit rating.
�:f. tidy How Will It Work?
• City has no financial or liability risk; the bank
will pay all costs and assume all financial risk.
• City will give the bank a license to use it's
trade mark "Surf City Huntington Beach" and
the bank will pay for all the marketing and
issuing costs for the program.
3
0
Sw� iry
How Will It Work?
• The Agreement is for one year with four
automatic one-year renewals, unless either
party cancels the Agreement.
• Both Visa and MasterCard will be offered.
• City will provide bank with the names and
addresses of households that are registered
in Park & Recreation activities (28,800).
Co.,
How Will It Work?
Bank will send credit card applications and
j information to our participants.
• No other information, no phone numbers
or other mailing lists, will be given to the
bank, and the bank is required to keep our
Park & Recreation mailing list confidential.
4
SW!�itY
Why Will People Want
the Surf City Card?
• Community Pride
• Brand Identity
• Competitive Interest Rates
• Choice of Rewards Programs
• Help Preserve Quality of Life Programs
5a_ .t�
�. ' City Role in Marketing the
Program
• City Publications — "Sands"
• Website
• H B1V 3
• Posters
• Promotional Materials
• Community Centers
• Libraries
• Water Bill Inserts
s
o(f.
Wbank.*
City Role in Marketing the Program
US Bank rolls out it's new credit card
programs only once a year in August.
If Council approves the Agreement, the
"Surf City Huntington Beach" credit card
will be available this August for residents
to obtain.
Co..
Mbank v
Recommended Action
• Approve the Agreement with US Bank for
the implementation of the Surf City
Huntington Beach Affinity Credit Card
Program.
• Authorize the Mayor and City Clerk to sign
and forward to US Bank for execution.
E
RCA ROUTING SHEET
INITIATING DEPARTMENT: ECONOMIC DEVELOPMENT
SUBJECT: Approve Surf City Affinity Credit Card Program
COUNCIL MEETING DATE: June 2, 2003
RCA ATTACHMENTS ,.
STATUS.:
Ordinance (w/exhibits & legislative draft if applicable)
Not Applicable
Resolution (w/exhibits & legislative draft if applicable)
Not Applicable
Tract Map, Location Map and/or other Exhibits
Not Applicable
Contract/Agreement (w/exhibits if applicable)
(Signed in full b the CityAttome
Attached
Subleases, Third Party Agreements, etc.
(Approved as to form by City Attome
Not Applicable
Certificates of Insurance (Approved by the a Attome
Attached
Financial Impact Statement Unbud et, over $5,000
Not Applicable
Bonds If applicable)
Not Applicable
Staff Report If applicable)
Not Applicable
Commission, Board or Committee Report If applicable)
Not Applicable
Findings/Conditions for Approval and/or Denial
Not Applicable
:EXPLANATION 'FOR MISSING'ATTACHMENTS.
REVIEWED
RETURNED
FORWARDED
Administrative Staff
Assistant City Administrator initial
City Administrator Initial
a
City Clerk
.EXPLANATION -FOR RETURN -OF ITEM:
REQUEST FOR LATE SUBMITTAL
(To accompany RCA's submitted after Deadline
Department: Economic
Development
Subject Surf City Affinity Credit Card
Council Meeting Date: 612103 Date of This Request: 5121/03
REASON(Why is this RCA being submitted late?
The City Attorney's Office had to review the bank procedure for executing the
agreement prior to signing and couldn't complete that task until 5/21/03.
EXPLANATION (Whv is this RCA necessary to this acienda?):
US Bank only rolls out credit cards once a year In August. If the City does not submit an
approved contract by June 15, 2003, we will miss the August 2003 roll out and the credit
card will not be available to the aublic untll August, 2004.
CONSEQUENCES How shall delay of this RCA adversely Impact the City?):
The Credit Card Program is expected to raise $100,000-$200,0001year in revenue to the city
which will be delayed one year if not approved on 612103.
re:
Head
O< Approved 0 Denied
�_ 6;a C ,11,0;z�
Ray Sliver
City Administrator
r--...w. %4n A71A Ain
f
C J
Robinson, Cheryl____
From:
Sent:
To:
Cc:
Subject:
Hi Cheryl,
Brockway, Connie
Thursday, May 01, 2003 6.32 PM
Robinson, Cheryl
Hagan, Ron
rca message from Ron
Ron left a message about an RCA that is being done on credit cards and we have to sign first. How does the followirig
Recommended Action sound to you.:
Approve and authorize execution by the Mayor and City Clerk and forward to for execution on behalf of said
company (agency entitity whatever they are)
Ron is correct -- we always sign last except on State, County and federal agreements the Mayor and Clerk have to sign
first. I Know this is a private company, but in thinking about it, we can go ahead and sign first as long as the City Attorney
is OK with it.
Connie
0
1