Outsourcing Agreement

OUTSOURCING AGREEMENT
(renewal)


BY AND BETWEEN


COLUMBIA STATE BANK


and


METAVANTE CORPORATION


DATED AS OF


JANUARY 1,200l


TABLE OF CONTENTS


1. BACKGROUND ................................................................ 1 1.1 Definitions ............................................................ 1 1.2 References ............................................................. 1 1.3 Interpretation ......................................................... 1 2. TERM ...................................................................... 1 2.1 Initial Term ........................................................... l 2.2 Extensions.............................................................. 1 3. APPOINTMENT ............................................................... l 3.1 Performance by Metavante Affiliates or Subcontractors .................. 1 3.2 Third Party Products/Services .......................................... 1 3.3 Proper Instructions .................................................... 1 4. CONVERSION ................................................................ 1 5. BANKING APPLICATION SERVICES .............................................. 1 5.1 ADP Services ........................................................... l 5.2 New Services ........................................................... 1 5.3 Automated Clearing House Services ...................................... 1 5.4 Data Warehouse Services ................................................ 2 5.5 Connectware Services ................................................... 2 6. HOME BANKING AND RETAIL DELIVERY SERVICES ................................. 2 6.1 DirectPC Services intentionally omitted ................................ 2 6.2 Internet Banking Services intentionally omitted ........................ 2 6.3 Business Express Services intentionally omitted ........................ 2 7. ELECTRONIC FUNDS DELIVERY ................................................. 2 7.1 Cardholder and Merchant Accounts intentionally omitted ................. 2 7.2 EFT Services ........................................................... 2 8. FEES ...................................................................... 2 8.1 Fee Structure .......................................................... 2 8.2 Pricing and Operational Assumptions .................................... 2 8.3 EFT Services ........................................................... 2 8.4 Training and Education ................................................. 2 8.5 Excluded Costs ......................................................... 2 8.6 Disputed Amounts ....................................................... 2 8.7 Terms of Payment ....................................................... 2 8.8 Modification of Terms and Pricing ...................................... 3 9. PERFORMANCE WARRANTY/EXCLUSIVE REMEDY/DISCLAIMER OF ALL OTHER WARRANTIES .. 3 9.1 Performance Warranty ................................................... 3 9.2 Performance Warranty Exclusions ........................................ 3 9.3 Notice of and Correction of Defects .................................... 3 9.4 Backup Remedy .......................................................... 3 9.5 DISCLAIMER OF ALL OTHER WARRANTIES ..................................... 3 10. MODIFICATION OR PARTIAL TERMINATION ...................................... 3 10.1 Modifications to Services ............................................. 3 10.2 Partial Termination by Metavante ...................................... 3 10.3 Partial Termination by Customer ....................................... 3 10.4 Ownership and Proprietary Rights ...................................... 3 11. TERMINATION .............................................................. 4 11.1 Early Termination ..................................................... 4 11.2 For Cause ............................................................. 4 11.3 For Insolvency ........................................................ 4 11.4 For Force Majeure ..................................................... 4 12. SERVICES FOLLOWING TERMINATION ........................................... 4


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12.1 Termination Assistance ................................................ 4 12.2 Continuation of Services .............................................. 4 13. LIMITATION OF LIABILITY/MAXIMUM DAMAGES ALLOWED .......................... 4 13.1 Equitable Relief ...................................................... 4 13.2 Exclusion of Incidental and Consequential Damages ..................... 4 13.3 Maximum Damages Allowed ............................................... 4 13.4 Statute of Limitations ................................................ 4 13.5 Economic Loss Waiver .................................................. 5 13.6 Liquidated Damages .................................................... 5 13.7 Essential Elements .................................................... 5 14. INSURANCE AND INDEMNITY .................................................. 5 14.1 Insurance ............................................................. 5 14.2 Indemnity ............................................................. 5 14.3 Indemnification Procedures ............................................ 5 15. DISPUTE RESOLUTION ....................................................... 5 15.1 Representatives of Parties ............................................ 5 15.2 Continuity of Performance ............................................. 5 16. AUTHORITY ................................................................ 6 16.1 By Metavante .......................................................... 6 16.2 By Customer ........................................................... 6 17. CONFIDENTIALITY AND OWNERSHIP ............................................ 6 17.1 Customer Data ......................................................... 6 17.2 Metavante Systems ..................................................... 6 17.3 Confidential Information .............................................. 6 17.4 Obligations of the Parties ............................................ 6 17.5 Security .............................................................. 6 18. MANAGEMENT OF PROJECT .................................................... 6 18.1 Account Representatives ............................................... 6 18.3 Development Projects and Technical Support ............................ 6 19. REGULATORY COMPLIANCE .................................................... 6 20. DISASTER RECOVERY ........................................................ 7 20.1 Services Continuity Plan .............................................. 7 20.2 Relocation ............................................................ 7 20.3 Resumption of Services ................................................ 7 20.4 Annual Test ........................................................... 7 21. GENERAL TERMS AND CONDITIONS ............................................. 7 21.l Transmission of Data .................................................. 7 21.2 Equipment and Network ................................................. 7 21.3 Reliance on Data ...................................................... 7 21.4 Data Backup ........................................................... 7 21.5 Balancing and Controls ................................................ 7 21.6 Use of Services ....................................................... 7 21.7 Regulatory Assurances ................................................. 8 21.8 IRS Filing ............................................................ 8 21.9 Affiliates ............................................................ 8 21.10 Future Acquisitions .................................................. 8 22. MISCELLANEOUS PROVISIONS ................................................. 9 22.1 Governing Law ......................................................... 9 22.2 Venue and Jurisdiction ................................................ 9 22.3 Entire Agreement; Amendments .......................................... 9 22.4 Assignment ............................................................ 9 22.5 Relationship of Parties ............................................... 9 22.6 Notices ............................................................... 9 22.7 Headings .............................................................. 9 22.8 Counterparts .......................................................... 9


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22.9 Waiver ................................................................ 9 22.10 Severability ........................................................ l0 22.11 Attorneys' Fees and Costs ........................................... 10 22.12 Financial Statements ................................................ 10 22.13 Publicity ........................................................... 10 22.14 Solicitation ........................................................ l0 22.15 No Third Party Beneficiaries ........................................ 1O 22.16 Force Majeure ....................................................... l0 22.17 Construction ........................................................ 10 22.18 Waiver of Jury Trial ................................................ 10


Schedules - ---------


1.1 Definitions 1.2 Customer Affiliates 5.1 ADP Services 5.3 ACH Services 5.4 Data Warehouse Services 5.5 Connectware 5.6 7.2 EFT Services 8.1 Fee Schedule 9.1 ADP Performance Standards 11.1 Termination Fee


Exhibits - --------


A ACH Authorization Agreement B Attorney-in-Fact Appointment C Affidavit


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OUTSOURCING AGREEMENT


Outsourcing Agreement ("Agreement") is made as of the 1st day of January 1, 2001, by and between Columbia State Bank, a Washington corporation ("Customer") and Metavante Corporation, a Wisconsin corporation.


Metavante and Customer entered into a Data Processing Services Agreement ("DP Agreement") for the provision of certain data processing services. Metavante and Customer wish to continue the business relationship, in accordance with the terms and conditions of this Agreement.


In consideration of the payments to be made and services to be performed hereunder, the parties agree as follows:


1. BACKGROUND


1.l. DEFINITIONS. The defined terms of this Agreement shall have the meaning ascribed to them on attached Schedule 1 .I.


1.2. As of the Effective Date (as defined in Schedule 1.11, the DP Agreement is hereby terminated and of no further force and effect. Such termination is effective without any penalty or payment due from Customer to Metavante for early termination,


1.3. REFERENCES. In this Agreement and the schedules and exhibits attached hereto, which are hereby incorporated and deemed a part of this Agreement, references and mention of the word "include" and "including" shall mean "includes, without limitation" and "including, without limitation," as applicable.


1.4. INTERPRETATION. In the event of a conflict between this Agreement and the terms of any exhibits and schedules attached hereto, the terms of the schedules and exhibits shall prevail and control the interpretation of the Agreement. The exhibits and schedules together with the Agreement shall be interpreted as a single document.


2. TERM


2.1. INITIAL TERM. This Agreement shall commence on the Effective Date and end on the fifth (5lh) anniversary of the last day of the month in which the Effective Date occurs ("Initial Term").


2.2. EXTENSIONS. Unless this Agreement has been earlier terminated, at least one (1) year prior to the expiration of the Initial Term, Metavante shall submit to Customer a written proposal for renewal of this Agreement. Customer will respond to such proposal within three (3) months following receipt and inform Metavante in writing whether or not Customer desires to renew this Agreement. If Metavante and Customer are unable to agree upon the terms for renewal of this Agreement at least six (6) months prior to the expiration of the Initial Term, then this Agreement shall be automatically renewed on a month-to-month basis at Metavante's then-current standard prices, until either party gives the other six (6) months notice of intent to terminate.


3. APPOINTMENT


3.1. PERFORMANCE BY METAVANTE AFFILIATES OR SUBCONTRACTORS. Customer understands and agrees that the actual performance of the Services may be made by the divisions or subsidiaries of Marshall & Ilsley Corporation, Affiliates Controlled by Marshall & Ilsley Corporation, or subcontractors of any of the foregoing Entities (collectively, the "Eligible Providers"). For purposes of this Agreement, performance of the Services by any Eligible Provider shall be deemed performance by Metavante Corporation itself. Metavante shall remain fully responsible for the performance or non-performance of each Eligible Provider under this Agreement, to the same extent if Metavante itself performed or failed to perform such services. Customer agrees to look solely to Metavante, and not to any Eligible Provider, for satisfaction of any claims Customer may have arising out of this Agreement or the performance or nonperformance of Services.


3.2. THIRD PARTY PRODUCTS/SERVICES. The parties acknowledge that certain services and products necessary for the performance of the Services are being, and in the future may be, provided by Third Parties who will contract directly with Customer. Metavante shall have no liability to Customer for information and products supplied by, or services performed by, such Third Parties in conjunction with the Services.


3.3. PROPER INSTRUCTIONS. "Proper Instructions" shall mean those instructions sent to Metavante by letter, memorandum, telegram, cable, telex, telecopy facsimile, computer terminal, e-mail or other "on line" system or similar means of communication or given orally over the telephone or given in person by one or more of the person(s) whose name(s) and signature(s) are listed on the most recent certificate delivered by Customer to Metavante which lists those persons authorized to give orders, corrections and instructions in the name of and on behalf of Customer. Proper Instructions shall specify the action requested to be taken or omitted.


4. CONVERSION Intentionally Omitted


5. BANKING APPLICATION SERVICES


5.1. ADP SERVICES. Metavante agrees to provide Customer with the ADP Services set forth on Schedule 5.1.


5.2. NEW SERVICES. If Customer wishes to receive any New Service which is identified on Metavante's then-current standard price list, Customer shall notify Metavante and the parties shall implement the same in accordance with a mutually acceptable schedule. If the New Service is not identified on Metavante's then-current standard price list, Customer shall submit a written request to Metavante in accordance with Section 18.2 of this Agreement. Nothing contained herein shall obligate Metavante to develop a New Service for Customer.


5.3. AUTOMATED CLEARING HOUSE SERVICES. The automated clearing house services ("ACH Services") to be provided by Metavante shall be subject to the terms and conditions set forth on attached Schedule 5.3.


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5.4. DATA WAREHOUSE SERVICES. The data warehouse services ("Data Warehouse Services") to be provided by Metavante shall be subject to the terms and conditions set forth on attached Schedule 5.4.


5.5. CONNECTWARE SERVICES. The Connectware Services to be provided by Metavante shall be subject to the terms and conditions set forth on attached Schedule 5.5.


6. HOME BANKING AND RETAIL DELIVERY SERVICES


6.1. DIRECTPC SERVICES. intentionally omitted


6.2. INTERNET BANKING SERVICES. intentionally omitted


6.3. BUSINESS EXPRESS SERVICES. intentionally omitted


7. ELECTRONIC FUNDS DELIVERY


7.1. CARDHOLDER AND MERCHANT ACCOUNTS. Intentionally omitted


7.2. EFT SERVICES. The electronic funds transfer services ("EFT Services") to be provided by Metavante shall be subject to the terms and conditions set forth on attached Schedule 7.2.


8. FEES


8.1. FEE STRUCTURE. Schedule 8.1 attached hereto (the "Fee Schedule") sets forth the costs and charges for the Services and Customer agrees to pay Metavante the fees specified in the Fee Schedule for the Services rendered by Metavante. These costs and charges are included in one or more of the following categories:


A. one-time fees associated with any conversion;


B. a minimum monthly fee for certain recurring, aggregated data processing services based on stated volumes; actual volumes in excess of stated volumes shall result in additional charges as further described in the Fee Schedule;


C. an hourly or daily fee for programming, training and related Services requested by Customer; and


D. fees based on Metavante's then current price list for New Services not included in the foregoing categories.


8.2. PRICING AND OPERATIONAL ASSUMPTIONS. The Fee Schedule sets forth the operational and pricing assumptions made by Metavante. If the parties determine that one or more of the pricing or operational assumptions listed in the Fee Schedule is inaccurate or incomplete in any material respect, the parties will negotiate in good faith regarding an equitable adjustment to any materially and adversely impacted provisions of this Agreement.


8.3. EFT SERVICES. In addition to the charges specified on the Fee Schedule, Customer shall be responsible for all interchange and network provider fees and all dues, fees and assessments established by and owed to Visa and/or Mastercard for the processing of Customers transactions, and for all costs and fees associated with changes to ATM (as defined in Schedule 7.2) protocol caused by Customer's use of the EFT Services.


8.4. TRAINING AND EDUCATION.


A. Metavante shall provide training as requested by Customer and agreed to by Metavante. The sessions shall be held at a location mutually agreed upon by the parties. Customer shall be responsible for all Expenses incurred by the participants and Metavante's trainers in connection with such education and training. If Customer requests that training be conducted at a non-Metavante facility, Customer shall be responsible for additional fees as quoted by Metavante.


B. Metavante will provide to Customer, at no charge, one set of each of the User Manuals. When the User Manuals are updated, Metavante will provide the updates to Customer at no additional charge. Additional sets of the User Manuals may be purchased by Customer at Metavante's then current price list.


8.5. EXCLUDED COSTS. The fees set forth in the Fee Schedule do not include shipping and courier costs, telecommunication charges, LU charges, Expenses, Third Party pass-through charges, workshop fees, training fees, late fees or charges and Taxes.


8.6. DISPUTED AMOUNTS. If Customer disputes any charge or amount on any invoice and such dispute cannot be resolved promptly through good faith discussions between the parties, Customer shall pay the amounts due under this Agreement less the disputed amount, and the parties shall diligently proceed to resolve such disputed amount. An amount will be considered disputed in good faith if(i) Customer delivers a written statement to Metavante on or before the due date of the invoice, describing in detail the basis of the dispute and the amount being withheld by Customer, (ii) such written statement represents that the amount in dispute has been determined after due investigation of the facts and that such disputed amount has been determined in good faith, and (iii) all other amounts due from Customer that are not in dispute have been paid in accordance with the terms of this Agreement.


8.7. TERMS OF PAYMENT. Any "one-time" fees shall be paid to Metavante as set forth in the Fee Schedule. Customer shall pay the Monthly Base Fee in advance on the first day of the calendar month in which the Services are to be performed. To effect payment, Customer hereby authorizes Metavante to initiate debit entries from and, if necessary, initiate credit entries and adjustments to Customers account at the depository institution designated in the ACH Authorization Agreement attached hereto as Exhibit A, which shall be executed by Customer contemporaneously with the execution of this Agreement. All other amounts due hereunder shall be paid within thirty (30) days of invoice, unless otherwise provided in the Fee Schedule. Undisputed charges not paid by the due date shall be subject to annual interest


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at the rate of 12% or the highest rate permitted by law, whichever is lower. Customer shall also pay any collection fees and Damages incurred by Metavante in collecting payment of the charges and any other amounts for which Customer is liable under the terms and conditions of this Agreement.


8.8. MODIFICATION OF TERMS AND PRICING. All charges for Services shall be subject to the annual adjustments (including CPI adjustments) set forth in the Fee Schedule.


9. PERFORMANCE WARRANTY/EXCLUSIVE REMEDY/DISCLAIMER OF ALL OTHER WARRANTIES


9.1. PERFORMANCE WARRANTY. Metavante warrants that it will provide the ADP Services covered by this Agreement in accordance with the Performance Standards and where such Performance Standards are not applicable, in a commercially reasonable manner in substantial conformity with the applicable User Manuals (the "Performance Warranty"). THIS PERFORMANCE WARRANTY IS SUBJECT TO THE WARRANTY EXCLUSIONS SET FORTH BELOW IN SECTION 9.2 AND THE REMEDY LIMITATIONS SET FORTH BELOW IN SECTION 9.3.


9.2. PERFORMANCE WARRANTY EXCLUSIONS. Except as may be expressly agreed in writing by Metavante, Metavante's Performance Warranty does not apply to:


A. defects, problems, or failures caused by the Customer's nonperformance of obligations essential to Metavante's performance of its obligations; and/or


B. defects, problems, or failures caused by an event of force majeure.


9.3. NOTICE OF AND CORRECTION OF DEFECTS. Customer shall notify Metavante in writing of any alleged breach of this Performance Warranty. If the breach relates to a Performance Standard, Metavante shall have ninety (90) days to correct the alleged breach; for all other breaches of the Performance Warranty, Metavante shall have thirty (30) days to correct the alleged breach. During this time period, Metavante shall use reasonable efforts, at its own expense, to remedy the breach. Customer shall be responsible for making whatever appropriate adjustments may be necessary to mitigate adverse effects on Customer until Metavante remedies the breach. Metavante will, at Metavante's expense, assist Customer in making such corrections through the most cost-effective means, whether manual, by system reruns or program modifications.


9.4. BACKUP REMEDY. If Metavante fails to remedy the breach in the time periods specified in Section 9.3 above, Customer may file a claim for Damages pursuant to the dispute resolution procedure set forth in Section 15.1 below and, in addition, terminate the Agreement for cause pursuant to Section 11.2 below. THE BACKUP REMEDY SET FORTH IN THIS SECTION 9.4 IS CUSTOMERS SOLE AND EXCLUSIVE REMEDY FOR Metavante's BREACH OF THE PERFORMANCE WARRANTY, TO THE EXCLUSION OF ALL OTHER REMEDIES, IN CONTRACT, TORT, OR OTHERWISE.


9.5. DISCLAIMER OF ALL OTHER WARRANTIES. THIS PERFORMANCE WARRANTY, AND THE REPRESENTATIONS IN ARTICLE 16. ARE IN LIEU OF. AND Metavante DISCLAIMS ANY AND ALL OTHER WARRANTIES. CONDITIONS. OR REPRESENTATIONS (EXPRESS OR IMPLIED, ORAL OR WRITTEN) WITH RESPECT TO THE SERVICES PROVIDED UNDER THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY AND ALL IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS OR SUITABILITY FOR ANY PURPOSE (WHETHER OR NOT Metavante KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING. IN ADDITION, Metavante DISCLAIMS ANY WARRANTY OR REPRESENTATION TO ANY PERSON OTHER THAN THE CUSTOMER WITH RESPECT TO THE SERVICES PROVIDED UNDER THIS AGREEMENT.


10. MODIFICATION OR PARTIAL TERMINATION


10.1. MODIFICATIONS TO SERVICES. Metavante may modify, amend, enhance, update, or provide an appropriate replacement for the software used to provide the Services, or any element of its systems or processes at any time to: (i) improve the Services or (ii) facilitate the continued economic provision of the Services to Customer or Metavante, provided that neither the functionality of the Services nor any applicable Performance Standards are materially adversely affected.


10.2. PARTIAL TERMINATION BY METAVANTE. Metavante may, at any time, withdraw any of the Services (other than the Core Services) upon providing ninety (90) days' prior written notice to Customer. Metavante may also terminate any of the Services immediately upon any final regulatory, legislative, or judicial determination that providing such Services is inconsistent with applicable law or regulation. If Metavante terminates any Service, Metavante agrees to assist Customer, without additional charge, in identifying an alternate provider of such terminated Service.


10.3. PARTIAL TERMINATION BY CUSTOMER.


A. Customer agrees that, during the Term, Customer shall obtain exclusively from Metavante all of its requirements covered by the Initial Services. If Customer breaches the foregoing covenant, Customer shall pay Metavante a Termination Fee for the discontinued Service, as liquidated damages and not as a penalty. StarView product without payment of any Termination Fee. Notwithstanding the foregoing, Customer may terminate the receipt of the


B. Unless otherwise agreed to by the parties in writing, Customer may terminate any New Service upon one hundred eighty (180) days prior written notice to Metavante. Termination of New Services shall not be subject to any Termination Fee, unless the entire Agreement is terminated in a manner which would entitle Metavante to receive a Termination Fee.


10.4. OWNERSHIP AND PROPRIETARY RIGHTS. Metavante reserves the right to determine the hardware, software and tools to be used by Metavante in fulfilling its duties under this Agreement. Metavante and Customer intend and agree that Metavante shall retain title and all


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other ownership and proprietary rights in and to the Metavante Proprietary Materials and information. Such ownership and proprietary rights shall include any and all rights in and to patents, trademarks, copyrights, and trade secret rights. Metavante and Customer agree that Metavante Proprietary Materials and Information are not "work made for hire" within the meaning of U.S. Copyright Act 17 U.S.C. Section 101.


11. TERMINATION


11.1. EARLY TERMINATION. The terms and conditions set forth in attached Schedule 11.1 shall govern the early termination of this Agreement (or any Service which is part of the Initial Services).


11.2. FOR CAUSE. If either party fails to perform any of its material obligations under this Agreement and does not cure such failure within thirty (30) days (or any other cure period specifically set forth in the Agreement) after being given notice specifying the nature of the failure, then the non-defaulting party may, by giving notice to the other party, terminate this Agreement as of the date specified in such notice of termination, or such later date agreed to by the ...