[Material marked with an asterisk has been omitted
from this document pursuant to a request for
confidential treatment and has been filed
separately with the Securities and Exchange
Commission.]
MARKETER AGREEMENT
This Marketer
Agreement (the "Agreement") dated as of October 5, 2004
(the "Effective Date") is
between Trycera Financial, Inc. whose address is
170 Newport Center Drive,
Suite 210, Newport Beach, CA 92660 ("Client") and
First Federal Savings Bank of
the Midwest, dba Meta Payment Systems, whose
address is 2500 S. Minnesota
Ave, Sioux Falls, South Dakota 57105 ("Bank").
Each may be referred to here
in as a "Party" or collectively as "Parties".
RECITALS
(a) Bank is a member of
VISA/MasterCard and is in the business of
issuing Cards and
establishing Settlement Accounts for the settlement of
Card transactions.
(b) Client intends to offer
Cards, issued by Bank, to consumers as
an alternative to credit
cards, cash or checks.
NOW, THEREFORE,
in consideration of the mutual covenants and
conditions hereinafter set
forth, the Parties hereto, intending to be
legally bound, agree as
follows:
ARTICLE I - DEFINITIONS
SECTION 1.1 Definitions
Except as
otherwise specifically indicated, the following terms
shall
have the following meanings
in this Agreement (such meanings to be equally
applicable to both the
singular and plural forms of the terms defined):
(a) "Business Day" means any day that
is not a Saturday, Sunday,
holiday or other day on which
commercial banking institutions in South
Dakota or California are
authorized or obligated by law or executive order
to be closed.
(b) "Card" means a pre-paid magnetic
stripe-based stored value card
issued by Bank to a
Cardholder pursuant to this Agreement, used for the
purchase of goods, services
and cash advances by accessing the available
balance in the Cardholder
Funds through a System. Card may include stored
value cards of any type
acceptable by a System.
(c) "Cardholder" means (i) a person
who is issued a Card, and (ii)
uses the Card to originate a
transaction.
(d) "Cardholder Funds" means the
pooled stored value account which is
associated with one or more
Cards, and includes the record of debits and
credits with respect to
transactions originated by each Cardholder.
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(e) "Cardholder Agreement" means the
agreement between Bank and a
Cardholder governing the
terms and use of a Card.
(f) "Governmental Requirements" means
collectively all statutes,
codes, ordinances, laws,
regulations that may apply to Cards (including
Regulation E, Z, and
anti-money laundering laws), rules, orders and decrees
of all governmental
authorities (including without limitation federal,
state and local governments,
governmental agencies and quasi-governmental
agencies).
(g) "Graphic Standards" means all
standards, policies, and other
requirements adopted by a
System from time to time with respect to use of
its Marks.
(h) "Interchange or Interchange Fee"
means the fee paid to the issuer
of a Card by an acquiring
financial institution for a transaction, as
established by a
System.
(i) "Mark" means the service marks and
trademarks of a System and
Bank, including but not
limited to, the names and other distinctive marks
or logos, which identify a
System and Bank.
(j) "Membership" means the membership
in a System and licensing
rights thereto obtained by
Bank.
(k) "Processing Services" means those
services, which are necessary
to issue a Card and process a
transaction in accordance with Government
Requirements and the Rules of
any System and Regulatory Authority. Such
services shall include but
not be limited to: set-up and maintenance of the
Card and Cardholder Funds,
transaction authorization, processing, clearing
and Settlement, System
access, Cardholder dispute resolution, System
compliance, regulatory
compliance, security and fraud control, and activity
reporting.
(l) "Program" means any Card based
system designed for Client
hereunder to provide an
electronic means of providing Client's customers
with access to stored value
financial transactions utilizing a Settlement
Account and a specific list
of Cardholders pursuant to this Agreement.
(m) "Regulation E" means (i) the
regulations, all amendments thereto
and official interpretations
thereof (12 C.F.R. Part 205) issued by the
Board of Governors of the
Federal Reserve System implementing Title IX
(Electronic Funds Transfer
Act) of the Consumer Credit Protection Act as
amended (15 U.S.C. 1693 et.
seq.), and (ii) the Electronic Funds Transfer
Act and any amendments
thereto.
(n) "Regulation Z" means the
regulations, all amendments thereto and
official interpretations
thereof (12 C.F.R., Part 226) issued by the Board
of Governors of the Federal
Reserve System.
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(o) "Regulatory Authority" means, as
the context requires, the State
of South Dakota; the Federal
Deposit Insurance Corporation; the Office of
Thrift Supervision; and any
Federal or state agency having jurisdiction
over Bank or
Client.
(p) "Rules" means the by-laws and
operating rules of any System, the
published policies and
procedures of Bank, as promulgated by Bank's Board
of Directors in good faith to
ensure the continued safety and soundness of
Bank.
(q) "Settlement" means the movement
and reconciliation of funds
between Bank and System
members in accordance with the Rules.
(r) "Settlement Account" means the
account maintained by Bank used
for Settlement of all
transactions initiated by use of a Card(s) by or on
behalf of a
Cardholder.
(s) "System" means MasterCard, VISA,
Cirrus, Plus, and/or any other
card network system of
transmitting items and Settlement thereof.
ARTICLE II
GENERAL DESCRIPTION OF PROGRAMS
SECTION 2.1 Purpose
The purpose of
this Program is to offer Cards, issued by Bank, as an
alternative to traditional
credit cards, cash and checks. It is designed to
offer consumers a convenient
and secure payment mechanism. The Cards may
be used to pay for purchases,
cash advances and other expenses that are
allowed by law.
ARTICLE III - DUTIES OF CLIENT
SECTION 3.1 Marketing
Client shall,
from time to time, promote and market Cards to
prospective customers.
Except as may be
agreed by the Parties from time to
time during the term of this
Agreement, each Party shall be responsible for
its own costs and expenses
associated with marketing of any Card under this
Agreement. Client has no authority to use any
Marks unless Bank is
appropriately identified.
Bank shall have the right to approve or
disapprove any marketing
materials bearing Bank's name or any Mark prior to
distribution of such
materials. Bank shall
not delay or withhold its
initial review of the
marketing materials unreasonably, and Bank shall
provide System's approval of
marketing materials to Client within two (2)
banking days of receipt of
such approval.
SECTION 3.2
Implementation
This Agreement sets forth the
general terms and conditions applicable to
all the Programs.
Client will receive
written approval from Bank prior to
issuing Cards
under
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various Programs.
Bank reserves the
right to refuse service to any
consumer that, in its
opinion, presents excessive financial or reputation
risk.
SECTION 3.3 Printing of Cards and
Cardholder Agreements
All Cards and
Cardholder Agreements shall identify Bank as the issuer
and include such other names
and Marks as may be required to conform to
Graphic Standards, Regulatory
Authority, System, and Rules. The design for
the co-branded Card and
Cardholder Agreement shall be at Client's expense
(including the expense of
undertaking trademark search and acquiring any
intellectual property rights
in such design). Such
design will be subject
to Bank's prior written
approval, which approval shall not be unreasonably
withheld or delayed, and must
comply with all applicable laws, regulations,
and Rules.
Cards will be
distributed in custom packaging with several inserts
including but not limited to
a Cardholder Agreement describing the Program
and Card use. Cards can be activated by Client
or Cardholder by calling an
Interactive Voice Response
Unit, Live Operator, written application, or by
accessing an approved
Internet application. Alternative
activation
methods may be used by Client
with prior approval of the Bank, which
approval shall not
unreasonable withheld.
The Cardholder Agreements shall
be prepared by Bank and may
be amended by Bank, from time to time, upon
notice to Client.
Client shall be
responsible for printing and
distributing the Cardholder
Agreement and any amendments thereto to
Cardholders.
SECTION 3.4 Access to Program
Documents and Information
Bank shall have
access to all information and documents it reasonably
requests concerning the
Client's prospects in order to issue prepaid Cards.
SECTION 3.5 Processing
Services
Client shall
provide for Processing Services to switch or process
Card
transactions.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF CLIENT
SECTION 4.1 Representations and
Warranties
Client represents and
warrants to Bank as follows:
(a) This Agreement is valid, binding
and enforceable against Client
in accordance with its
terms.
(b) Client is a corporation duly
incorporated, validly existing and
in good standing under the
laws of the State of Nevada and is authorized to
do business in each state in
which the nature of Client's activities makes
such authorization
necessary.
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(c) Client has the full power and
authority to execute and deliver
this Agreement and to perform
all its obligations under this Agreement.
The provisions of this
Agreement and the performance by Client of its
obligations under this
Agreement are not in conflict with Client's Articles
of Incorporation, bylaws or
any other agreement, contract, lease or
obligation to which Client is
a party or by which it is bound.
(d) Neither Client nor any principal
of Client has been subject to
the following:
(i) Criminal
conviction (except minor traffic offenses and other
petty
offenses);
(ii) Federal or state tax lien;
(iii) Administrative
or enforcement proceedings commenced by
the Securities and Exchange Commission, any state
securities regulatory authority, Federal Trade
commission, federal or
state bank regulator, or any
other state or federal regulatory agency or
(iv) Restraining order, decree, injunction, or judgment in
any
proceeding or lawsuit, alleging fraud or deceptive
practice
on the part of Client or any principal thereof.
For purpose of this
subparagraph, the word "principal" shall include any
person directly or indirectly
owning ten percent (10%) or more of Client,
any officer or director of
the Client or any person actively participating
in the control of Client's
business.
(e) There is not pending or threatened
against Client, any litigation
or proceeding, judicial, tax
or administrative, the outcome of which might
materially adversely affect
the continuing operations of Client. Attached
to this Agreement is a list
and brief description of all pending lawsuits
in which Client is a
party.
(f) Client has delivered to Bank
complete and correct copies of its
balance sheets and related
statements of income and cash flow. Client's
financial statements, subject
to any limitation stated therein, which have
been or which hereafter will
be furnished to Bank to induce it to enter
into this Agreement do or
will fairly represent the financial condition of
the Client, and all other
information, reports and other papers furnished
Bank will be, at the time the
same are furnished, accurate and complete in
all material respects and
complete insofar as completeness may be necessary
to give Bank a true and
accurate knowledge of the subject matter. The
financial statements are in
accordance with the books and records of Client
were prepared in accordance
with generally accepted accounting principles
("GAAP") as in effect in the
United States, as consistently applied, and in
accordance with all
pronouncements of the Financial Accounting Standards
Board. The Bank will make available a
standard financial package that it
provides its key vendors in
accordance with its other practices.
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(g) Client agrees that at Bank's sole
discretion, Bank, its
authorized representatives,
or agents and any government entity with
regulatory or supervisory
authority over Bank (collectively the "Auditing
Party"), shall have the right
to inspect, audit, and examine all of
Client's facilities, records
and personnel relating to the Program at any
time during normal business
hours upon reasonable notice. The Auditing
Party shall have the right to
make abstracts from Client's books, accounts,
data, reports, papers, and
computer records directly pertaining to the
subject matter of this
Agreement, and Client shall make all such
facilities, records,
personnel, books, accounts, data, reports, papers, and
computer records available to
the Auditing Party for the purpose of
conducting such inspections
and audits.
ARTICLE V - COVENANTS OF CLIENT
SECTION 5.1 Covenants
Client covenants and agrees
with Bank as follows:
(a) It will comply with all applicable
laws, Government Requirements,
the Rules and any rules,
orders and regulations issued by the Regulatory
Authorities that relate to
the matters and transactions contemplated by
this Agreement.
(b) It will promptly give written
notice to Bank of any material
adverse change in the
business, properties, assets, operations or
condition, financial or
otherwise, of Client and any pending, or a threat
of; litigation involving a
sum of $50,000 or more and of all tax
deficiencies and other
proceedings before governmental bodies or officials
affecting Client.
(c) As soon as possible, and in any
event within 90 days after the
end of Client's fiscal year,
commencing January 1, 2004, it will provide
Bank with its audited balance
sheets and related statements of income and
cash flow and all notes and
schedules thereto as of the end of such period.
(d) All written consumer complaints
received by Client, relating to
the Card or its use, will be
immediately reported to Bank. Such report
shall include the name and
address of the complaining Cardholder, a brief
summary of the Cardholder's
complaint, and when resolved a brief summary of
how the complaint was
resolved.
(e) Client will not, without
Bank's prior consent, solicit consumers
through the use of any party
who is not directly employed by and under the
immediate supervision and
control of Client and its affiliates.
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ARTICLE VI - DUTIES OF BANK
SECTION 6.1 Marketer Certification
and Administrative Fees
Bank shall be
responsible for any annual membership fees relating to
Bank Membership with any
System.
SECTION 6.2 Memberships in
System
Bank shall
obtain and maintain at its sole expense a principal
license
with each applicable System,
and shall timely pay all fees, dues, and
assessments associated
therewith. Bank shall
retain its Membership in
System in good standing and
shall abide in all material respects by all the
rules and regulations
applicable to Bank. If
a System elects to terminate
Bank's Membership for any
reason, Bank shall give notice to Client as soon
after it provides notice to
or receives notice from the System according to
the Rules.
SECTION 6.3 Issuer of
Cards
Bank shall be
the issuer of Cards and responsible for holding and
retaining the Cardholder
Funds until such funds are used by Cardholders.
As issuer of the Cards, Bank
is responsible for preparing and updating the
Cardholder
Agreement.
SECTION 6.4 Notices
Each Party shall
deliver to the other Party a copy of all material
notices or correspondence
that it receives from any System, or any other
third party, relating to this
Agreement, within five (5) Business Days of
receipt of such notice or
correspondence.
ARTICLE VII - COMPENSATION AND EXPENSES
SECTION 7.1 Expenses of
Bank
Bank shall be
solely responsible for the following expenses:
Except as
otherwise provided in this Agreement, all annual
Membership
fees related to Bank's
license with and Membership in any System utilized
by a Program, and any fees
and penalties assessed by any such System or
Regulatory Authority due to
Bank's actions or of any third party retained
by Bank.
Interchange
revenue will be paid to Client no later than the 30th
day
of each month for the prior
month's interchange revenue. Interchange
revenue and System/Network
Fees payable to the Bank by Client will be due
within 5 Business Days of
receipt of the corresponding Interchange revenue
from the Bank.
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[Material marked with an asterisk has been omitted
from this document pursuant to a request for
confidential treatment and has been filed
separately with the Securities and Exchange
Commission.]
SECTION 7.2 Compensation Payable
to Bank
Client shall pay
Bank the fees defined in Schedule A.
SECTION 7.3 Compensation Payable to
Client
Bank shall
distribute to Client the fees as defined in Schedule A.
SECTION 7.4 Expenses of
Client
Client shall pay
Bank the fees for products and services set forth in
the attached Schedule A.
After the
***************** of this Agreement,
Bank may amend Schedule A and
adjust its fees on an annual basis upon
providing at least *******
days written notice to Client. No fee shall
increase more than
************** per annum, and the collective sum of all
fee increases during the
initial ************ term shall not exceed
***************.
Client shall be solely
responsible for the following:
(a) Advertising and other expenses
associated with the marketing of
prepaid cards or membership
plans to its consumers or prospect base or any
party under its control or
any party for which it is providing services.
(b) All fines and penalties assessed
by any Regulatory Authority
(other than Bank) or System
due to Client's actions, inactions, or
omissions.
(c) All expenses associated with and
losses from over limit
processing, cardholder or
value load fraud and under floor limit
processing.
(d) A fee not to exceed ***** annually
to Bank to offset the expenses
for conducting such
inspections and audits as described in Section 4.1 (g).
(e) The Independent Sales Organization
("ISO") registration fee
(MasterCard and/or VISA, as
applicable) with respect to the Program(s)
hereunder due on January 1 of
every year hereafter.
(f) System transaction fees related to
the Programs as described
solely in Schedule A of this
Agreement.
(g) All expenses associated with
establishing and maintaining any
accounts with, or receiving
services from, any financial institution
providing Settlement and all
expenses in providing Bank with Account
Balances.
(h) All expense associated with
completing a due diligence review for
any third party relationship
contemplated in this Agreement.
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[Material marked with an asterisk has been omitted
from this document pursuant to a request for
confidential treatment and has been filed
separately with the Securities and Exchange
Commission.]
ARTICLE VIII - LIMITATION OF LIABILITY
SECTION 8.1 No Special
Damages
Neither Party
shall be liable to the other for any special, indirect,
incidental, consequential,
punitive or exemplary damages, including, but
not limited to, lost profits,
even if such Party has knowledge of the
possibility of such damages
provided, however, that the limitations set
forth in this Section shall
not apply to or in any way limit the third
party indemnity obligations
under this Agreement.
SECTION 8.2 Disclaimers of
Warranties
Bank
specifically disclaims all warranties of any kind, express
or
implied, arising out of or
related to this Agreement, including without
limitation, any warranty of
marketability, fitness for a particular purpose
or non-infringement, each of
which is hereby excluded by agreement of the
parties.
SECTION 8.3 Liabilities of Client
for System and Regulatory Claims
Client shall be
liable to Bank for any and all liabilities and every
loss, claim, demand, and
cause of action (including, without limitation,
the cost of investigating the
claim, the cost of litigation and reasonable
attorneys' fees, whether or
not legal proceedings are instituted and
whether paid or incurred, as
the case may be) by or on behalf of any
Cardholder as a result of
Client's failure to comply with the Rules, System
or applicable Regulatory
Authority.
ARTICLE IX - TERM OF PROGRAMS AND AGREEMENT
SECTION 9.1 Term and Termination
of Agreement Without Cause
The term of this
Agreement shall commence on the Effective Date and
continue for five (5) years
(the "Initial Term") unless terminated earlier as
provided below. After the Initial Term, the
Agreement shall automatically
extend for additional periods
of one year each (a "Renewal Term"). During
a Renewal Term, either party
may terminate this Agreement for any reason by
providing written notice to
the other at least 120 days in advance of
termination or as provided
below.
SECTION 9.2 Termination of
Agreement For Cause
(a) Either Bank or Client shall have
the right to terminate this
Agreement upon occurrence of
one or more of the following events:
(i) Failure by the
other party to observe or perform, in any
material
respect, that party's obligations to the other party
hereunder, so
long as the failure is not due to the actions or failure
to act of the
terminating party, but only if the
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failure
continues for a period of (A) thirty (30) days after the
non-performing
party receives written notice from the other party
specifying the
failure in the case of a failure
