CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN REDACTED PROVISIONS OF THIS AGREEMENT. THE REDACTED PROVISIONS ARE INDICATED BY THREE ASTERISKS ENCLOSED BY BRACKETS AND UNDERLINED. THE CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
STORED VALUE CARD
dated as of April 1, 2003
FIRST DATA RESOURCES INC.
NBO SYSTEMS, INC.
TABLE OF CONTENTS
STORED VALUE CARD
This Stored Value Card Service Agreement ("Agreement") dated as of April 1, 2003 ("Effective Date"), is between First Data Resources Inc. ("FDR") and NBO Systems, Inc. ("Customer").
WHEREAS, FDR and Customer wish to enter into this Agreement to provide for the provision of data processing and related services by FDR in connection with Customer's Accounts;
NOW THEREFORE, FDR and Customer agree as follows:
Definitions and Interpretation
1.1 Definitions . Unless the context otherwise requires, capitalized terms used herein shall have the meanings specified in Exhibit B.
1.2 Interpretation . Each definition in this Agreement includes the singular and the plural and the word "including" means "including but not limited to." References to any statute or regulation means such statute or regulation as amended at the time and includes any successor statute or regulation. The section headings in this Agreement are solely for convenience and shall not be considered in its interpretation. The Exhibits referred to throughout this Agreement are attached hereto and are incorporated herein.
2.1 Services . FDR shall make available to and perform for Customer, through Customer's relationship with Sponsor Bank(s), those services described in Exhibit A which are applicable to Customer's Accounts or as specifically provided in Exhibit A (the "Services"). Exhibit A and any document or service referred to in Exhibit A shall be subject to periodic revision by FDR to reflect changes (i) to the FDR System or the services provided by FDR and offered generally to FDR customers and (ii) in the specific Services provided to Customer; provided, however, no such change or improvement shall materially degrade the Services being provided to Customer at such time. For the avoidance of doubt, the parties acknowledge and agree that FDR will make available and perform the Services only for so long as Customer is processing through MasterCard and/or VISA, and that it will be necessary to amend this Agreement if at any time Customer desires to process through a Network.
2.2 Communication Links . FDR periodically shall install, provide or cause to be installed or provided the means for communicating data from its facilities or equipment to the facilities or equipment of Customer, and third parties designated by Customer, as FDR determines is desirable to perform this Agreement. The method of transmission and the media employed will be determined by FDR taking into consideration relevant factors such as traffic
type, inbound and outbound message sizes, traffic loading distribution, and the equipment or devices which are or may be used.
2.3 Enhancements . Customer may periodically request customizations, enhancements, additions or modifications (each an "Enhancement") to the FDR System. FDR shall evaluate all such requests and, if terms and conditions can be agreed to (which shall include payment by Customer of FDR's development charges), FDR shall develop and implement each such Enhancement on terms and conditions agreed to by the parties. Timing of any Enhancement is subject to scheduling and prioritization by FDR of FDR's available resources. Any Enhancement shall remain solely the property of FDR and Customer shall acquire no right, claim or interest in the FDR System.
2.4 Start-Up .
(a) For the Start-Up, Customer shall deliver to FDR all information reasonably requested from time to time by FDR on dates reasonably requested by FDR and Customer and FDR shall agree upon a plan for the Start-Up no later than thirty (30) days following the Effective Date (the "Start-Up Plan").
(b) The Start-Up Plan shall target an expected completion of the Start-Up on a mutually agreed upon date (the "Scheduled Start-Up Date"). If the Start-Up is not completed by the Scheduled Start-Up Date, FDR and Customer agree as follows: each party will devote whatever resources it can reasonably make available to effect completion of the Start-Up as quickly as possible. In arriving upon the Scheduled Start-Up Date, FDR and Customer have assumed (i) all applicable approvals of VISA and MasterCard will be obtained on a timely basis; (ii) the parties shall agree upon a Start-Up Plan no later than thirty (30) days following the Effective Date; and (iii) no hours of Custom Computer Programming Services will be required, or requested by Customer, in connection with the Start-Up.
(c) Customer and FDR each will (i) use all reasonable resources, including the assignment of adequate and knowledgeable personnel, to assure timely performance of the functions required of each under the Start-Up Plan, and (ii) comply with the provisions of the Start-Up Plan so as to enable the Start-Up to be completed on or before the Scheduled Start-Up Date.
(d) FDR shall promptly notify Customer in writing as to any delay or problems being encountered in the performance of FDR's obligations under the Start-Up Plan. If Customer has knowledge that Customer has failed, or will fail to perform its obligations under the Start-Up Plan on a timely basis, Customer shall promptly so notify FDR. In the event of any delay in any of the Start-Up processes, Customer and FDR shall work jointly to promptly resolve any difficulties and ensure satisfactory completion of the Start-Up.
(e) FDR shall provide the Start-Up at no charge; provided, however, Customer shall pay FDR at FDR's then-standard rate for all Custom Computer Programming Services.
2.5 Compliance With Law .
(a) FDR and Customer acknowledge that Customer is subject to a variety of federal, state and local laws, regulations and judicial and administrative decisions and interpretations applicable to its Transaction Card business, including without limitation those pertaining to Regulation E, escheatment, card issuance to minors, equal credit opportunity, truth in lending, fair credit billing, fair credit reporting, fair debt collection practices, privacy and general consumer protection (the "Legal Requirements"). The parties shall cooperate with each other in resolving issues relating to compliance with the Legal Requirements in accordance with the provisions of this Section 2.5.
(b) Customer is solely responsible for (i) monitoring and interpreting the Legal Requirements, (ii) determining the particular actions, disclosures, formulas, calculations and procedures required for compliance with the Legal Requirements (whether to be performed by FDR or by Customer) and (iii) maintaining an ongoing program for compliance with the Legal Requirements. In addition, Customer is solely responsible for reviewing and selecting the parameter settings and programming features and options within the FDR System that will apply to Customer's Transaction Card programs, and for determining that its selection of such settings, features and options is consistent with the Legal Requirements and with the terms and conditions of Customer's Accounts and disclosures to its Cardholders. In making such determinations, Customer may rely on the written description of such settings, features and options in the User Manuals, customer bulletins and other system documentation provided by FDR to Customer.
(c) FDR is solely responsible for compliance with all laws, regulations and judicial and administrative decisions applicable to FDR as a third-party provider of data processing services. FDR will not be responsible for any violation by Customer of a Legal Requirement to the extent such violation occurs as a result of performance by FDR of the Services in accordance with the FDR System documentation (except as set forth in the succeeding sentence), actions or instructions of Customer or written procedures provided by or approved by Customer. FDR will be responsible for violation of the Legal Requirements which result from inaccuracies in the FDR System documentation, User Manuals, customer bulletins and other system documentation provided by FDR to Customer.
(d) Subject to the terms of Article 9, FDR and Customer shall cooperate with each other in providing information or records in connection with examinations, requests or proceedings of each other's regulatory authorities.
2.6 Dependence on Performance by Others . The obligation of FDR to timely perform the Services is expressly subject to the timely performance by Customer, and third-party vendors Customer engages, of their obligations and responsibilities, but only to the extent that failure to so perform directly affects FDR's ability to timely perform hereunder or the cost to FDR of performing hereunder.
2.7 Privacy of Personal Financial Information . FDR and Customer acknowledge the sensitivity and confidentiality of personal consumer financial information which may be contained in Customer's Proprietary Information, including all personally identifiable information relating to an individual consumer in connection with a Customer's Account, any application for a Customer's Account or the marketing or promotion of Customer's Accounts ("Personal Information"). In addition to the obligations of the parties under Article 9, FDR and
Customer acknowledge the protections afforded by law to such Personal Information and each agrees to comply with all such legal requirements applicable to it in the performance of its obligations under this Agreement. Specifically, Customer represents and warrants to FDR that Customer has provided all required notices, opt-outs, opt-ins or other similar rights to consumers with respect to any Personal Information delivered, transmitted or disclosed in any other fashion (i) by Customer or its agents or representatives to FDR or its agents and representatives, (ii) by FDR to any third party at the direction of Customer and (iii) with respect to each of the Services provided by FDR under this Agreement.
2.8 Execution of Sponsor Bank . Agreements by Sponsor Banks. Customer shall at all times during the Term have in place contractual arrangements with one or more financial institution members of VISA and/or MasterCard (each a "Sponsor Bank") for sponsorship, clearing and settlement of transactions with respect to all of the Cardholder Accounts of Customer. Customer shall cause each Sponsor Bank to execute a sponsor bank agreement (each a "Sponsor Bank Agreement") with FDR. The Sponsor Bank Agreements shall be in the form set forth as Exhibit C. In place of a Sponsor Bank Agreement, Sponsor Bank and FDR may enter into such other arrangement as may be agreed to in writing between FDR and Sponsor Bank and FDR shall provide Customer a copy of such other agreement with Sponsor Bank. In the absence of Sponsor Bank Agreements acceptable to FDR covering all of Customer's Cardholder Accounts, FDR shall have no obligation to provide any Services to Customer, may suspend provision of Services to Customer until such time as Customer has in place Sponsor Bank Agreements acceptable to FDR covering all of Customer's Cardholder Accounts, and, in accordance with the provisions of Section 8.1, may terminate this Agreement. In the event Customer requires a new Sponsor Bank for sponsorship, clearing and settlement of transactions with respect to all of the Cardholder Accounts of Customer, FDR will make a good faith effort to cooperate with Customer in securing a new Sponsor Bank; provided, however, FDR shall have no liability for the failure of Customer to secure a replacement Sponsor Bank and Customer acknowledges that FDR is unable to provide the Services if Customer does not have a Sponsor Bank for all of Customer's Cardholder Accounts. If Customer determines that it will switch Sponsor Banks or add new Sponsor Banks, FDR will facilitate such switch or addition, provided that: (a) Customer will provide at least sixty (60) days advance written notice; (b) the new Sponsor Bank will cooperate in the steps necessary to the switch or addition; (c) Customer will pay for any communication links to the new Sponsor Bank and Section 2.2 will apply; (d) Customer will pay for any out-of-pocket or third-party expenses of FDR relating to such switch or addition; and (e) the new Sponsor Bank has executed a Sponsor Bank Agreement acceptable to FDR with FDR prior to the switch or addition. If an additional Sponsor Bank is required for Customer to secure a significant client, FDR and Customer will mutually agree upon the terms and conditions, including costs, for the addition of such Sponsor Bank.
Payment for Services
3.1 Processing Fees . Customer shall pay FDR the Processing Fees set forth in Exhibit A to this Agreement. For each Processing Year after Processing Year 1, FDR may increase each line item of Processing Fees set forth in Exhibit A to this Agreement which were in effect for the immediately preceding Processing Year by an amount not to exceed a percentage of the Processing Fees for such line item which were in effect for the immediately preceding
Processing Year. The percentage to be used for purposes of this Section 3.1 shall be the percentage increase in the CPI during a period described below; provided, however, if the percentage increase in the CPI during such period exceeds four percent (4%), the price increase shall equal: (a) four percent (4%) plus (b) the product of (i) one half (1/2) and (ii) the amount by which the percentage increase in the CPI exceeds four percent (4%) (e.g., if the CPI increases six percent (6%), FDR shall be entitled to increase each line item of Processing Fees, as set forth above, by five percent (5%)). For purposes of this Section 3.1, the "CPI" shall be the Consumer Price Index compiled by the United States Department of Labor's Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers (CPI-U) having a base of 100 in 1982-84, using that portion of the index which appears under the caption "Other Goods and Services". The percentage increase in the CPI shall be calculated as of ninety (90) days in advance of the effective date of said increase by comparing the CPI using a twelve (12) month period ending as of such date and expressing the increase in said CPI through the twelve (12) month period as a percentage.
3.2 Special Fees . Customer shall pay to FDR the Special Fees computed in accordance with Exhibit A to this Agreement. If, at any time while this Agreement is in effect, the charges are increased to FDR for items which are included in the Special Fees or FDR obtains communication or other services included in the Special Fees by another method, resulting in an increase in the charges to FDR for such items, then FDR shall increase by an equal amount the Special Fees Customer is then paying FDR for such items under this Agreement. Such price change by FDR shall be effective on the effective date of the increase to FDR.
3.3 New Products . If FDR commences to offer any new services or products generally to its customers and Customer elects to use any such service or product, or if Customer elects to use services or products which Customer had not previously elected to use, then FDR shall provide such service or product at FDR's then current fees and charges for such service or product or such other price as FDR and Customer may mutually agree.
3.4 Minimum Fees . In Processing Year 1, Customer will require and shall pay FDR for processing services sufficient to generate aggregate Processing Fees at least equal to [ * * * ] (the "Year 1 Minimum Processing Fee"). In each Processing Year after Processing Year 1, Customer will require and shall pay FDR for processing services sufficient to generate aggregate Processing Fees at least equal to [ * * * ] of the Processing Fees paid during the immediately preceding Processing Year, but in no event less than [ * * * ] (the "Minimum Processing Fees"). FDR shall calculate the total Processing Fees paid by Customer in respect of Services performed during each Processing Year (the "Total Annual Processing Fees") within ninety (90) days after the end of each Processing Year and will, after ten (10) days written notice to Customer, draw upon Customer's account pursuant to Section 3.5 of this Agreement for the amount, if any, by which the Year 1 Minimum Processing Fees or the Minimum Processing Fees, as applicable, for the Processing Year exceed the Total Annual Processing Fees for the Processing Year. For the avoidance of doubt and based on economic assumptions material to each party underlying this transaction, Customer and FDR expressly agree that Customer shall pay FDR Processing Fees each Processing Year in an amount at least equal to the Year 1 Minimum Processing Fee or the Minimum Processing Fees, as applicable, until this Agreement
is terminated by Customer solely pursuant to the provisions of Section 8.2 of this Agreement or until FDR terminates this Agreement and invokes compensatory payments pursuant to Section 8.4 of this Agreement.
3.5 Method of Payment . To facilitate the payment of Processing Fees, Special Fees, compensatory payments pursuant to Section 8.4 of this Agreement and any other fee, tax, interest payment, charge or amount due or payable to FDR under this Agreement, Customer shall provide FDR with access to a bank account of Customer's funds not requiring signature including notifying FDR of the demand deposit account number and transit routing number for the account. FDR shall draw upon the bank account on a monthly basis (with the exception of postage, for which FDR shall draw upon the bank account on a daily basis) to pay fees, taxes, interest payments, charges, or any other amount due or payable to FDR under the terms of this Agreement. The detailed records of the amounts drawn on the account of Customer will be provided by FDR to Customer on a monthly basis. FDR shall be under no obligation to effect any Start-Up until the account has been established as provided herein.
3.6 Interest . If FDR is unable to obtain payment of Processing Fees, Special Fees, compensatory payments pursuant to Section 8.4 of this Agreement or any other fee, tax, interest payment, charge or amount due or payable to FDR under this Agreement at the time provided for payment under this Agreement, the unpaid amount of any Processing Fees, Special Fees, compensatory payments pursuant to Section 8.4 of this Agreement or other fee, tax, interest payment, charge or amount shall bear interest at the rate equal to the prime rate plus five percent (5%), from the date on which payment should have been available until the date on which FDR receives the payment. Interest shall not apply to amounts reasonably disputed by Customer during such period as both parties are actively working to resolve any questions on validity of an amount pursuant to Article 4.
3.7 Taxes .
(a) Customer shall pay all taxes and similar charges, however designated, which are imposed by any governmental authority by reason of FDR's fulfillment of its obligations hereunder except for income taxes payable by FDR on amounts earned by FDR or property taxes payable by FDR on property owned by FDR. Without limiting the foregoing, Customer shall promptly pay FDR for any amounts actually paid or required to be collected or paid by FDR.
(b) Customer authorizes FDR to calculate the total amount of sales taxes due from Customer hereunder. Customer shall supply FDR with all information necessary for FDR to compute and remit the taxes (including any tax exempt certificate, claim letter or similar documentation). FDR shall remit the sales taxes to the appropriate taxing authority on behalf of Customer based on the information available to FDR. If FDR underpays or overpays such sales taxes, Customer shall be responsible for promptly paying any shortfalls (including any penalties or interest) and for collecting any refunds from the appropriate taxing authority; provided, however, if such underpayment is solely the result of the negligence of FDR, FDR shall be responsible for any penalties associated with such underpayment.
3.8 Deconversion .
(a) Upon (i) expiration or termination of this Agreement, (ii) transfer by Customer of any accounts from the FDR System to a third party, (iii) abandonment or deletion by Customer or Sponsor Bath (or by FDR, MasterCard or VISA on behalf of Customer or Sponsor Bank) of any BIN or ICA of Customer or Sponsor Bank relating to accounts from the FDR System, or (iv) manual removal by Customer or Sponsor Bank of any accounts from the FDR System, Customer shall pay FDR, at FDR's then current rates (for actual hours expended with respect to activities priced on an hourly basis), for each activity completed by FDR in order to accomplish the Deconversion of affected accounts, including systematic stripping and removal of all such account information from the FDR System; provided, however, that the amount Customer shall pay FDR for Standard Deconversion Services with respect to any Deconversion performed by FDR pursuant to this Agreement shall not exceed [ * * * ] per Deconversion. "Standard Deconversion Services" means (a) not more than [ * * * ] of analysis, design, coding, implementation and project management and (b) one set of test tapes, two sets of production tapes, and one copy of verification reports.
(b) In addition, the amount Customer shall pay FDR pursuant to Section 3.8(a) for any Standard Strip-and-Throw performed by FDR shall not exceed [ * * * ]. "Standard Strip-and-Throw" shall have the meaning set forth in FDR's then current published bulletin relating to Deconversions.
3.9 Growth Rebate . In each Processing Year, Customer shall be entitled to a rebate based on average number of Gross Active Accounts on the FDR System as of the last business day of each calendar month of the applicable Processing Year ("Growth Rebate"). The amount of the Growth Rebate shall equal the product of: (a) the Total Processing Fees (excluding Processing Fees for item numbers 6147 and 7249) for such Processing Year and (b) the applicable rebate percentage set forth in the schedule below. FDR shall calculate the Growth Rebate, if any, for each Processing Year within ninety (90) days after the end of each Processing Year and credit the amount of such Processing Credit, if any, to Customer. For Purposes of this Section, "Gross Active Accounts" shall have the meaning set forth on the CD-121 Ledger Activity Report or its equivalent.
By way of example, if the average number of Gross Active Accounts for the last business day of each month during Processing Year 2 is[ [* * *] ] and Total Processing Fees for Processing Year 2 are [* * *] , Customer will be entitled to a Growth Rebate in the amount of [ [* * *] ] for Processing Year 2; and if the [ [* * *] ] of Gross Active Accounts
for each month during Processing Year 3 is [ [* * *] ] and Total Processing Fees for Processing Year 3 are [* * *] , Customer will be entitled to a Growth Rebate in the amount of [ [* * *] ] for Processing Year 3.
Dispute Resolution and Indemnification
4.1 Informal Dispute Resolution. Any controversy or claim between FDR and Customer arising from or in connection with this Agreement whether based on contract, tort, common law, equity, statute, regulation, order or otherwise ("Dispute"), shall be resolved as follows:
(a) upon written request of either FDR or Customer, the parties shall each
appoint a representative to meet and attempt to resolve such Dispute;
(b) the designated representatives shall meet as often as the parties reasonably deem necessary to discuss the problem in an effort to resolve the Dispute without the necessity of any formal proceeding; and
(c) arbitration pursuant to Exhibit D for the resolution of a Dispute may not
be commenced until the earlier of:
(i) the date that the designated representatives conclude in good faith that amicable resolution through continued negotiation of the matter does not appear likely; or
(ii) thirty (30) days after the date that either party requested negotiation of the Dispute pursuant to Section 4.1(a) of this Agreement.
(d) Notwithstanding the foregoing, this Section 4.1 shall not be construed to prevent a party from instituting formal proceedings at any time to avoid the expiration of any applicable limitations period, to preserve a superior position with respect to other creditors or to seek temporary or preliminary injunctive relief pursuant to Section 9.7.
4.2 Arbitration . If Customer and FDR are unable to resolve any Dispute in the manner set forth in Section 4.1, such Dispute shall be submitted to arbitration in the manner set forth in Exhibit D.
4.3 Indemnification . The indemnification rights and obligations of Customer and FDR under this Agreement are contained in Exhibit E.
Limitation of Liability
5.1 Limitation on Liability . FDR's cumulative liability for any loss or damage, direct or indirect, for any cause whatsoever (including, but not limited to, those arising out of or related to this Agreement) with respect to claims (whether third party claims, indemnity claims or otherwise) relating to events in any period shall not under any circumstances exceed (a) in the
case of the period beginning on the effective date of this Agreement and ending upon the completion of Processing Year 1, the Year 1 Minimum Processing Fee and (b) in the case of any Processing Year thereafter, the amount of the Processing Fees paid to FDR pursuant to this Agreement for Services performed in the immediately preceding Processing Year.
5.2 No Special Damages . IN NO EVENT SHALL EITHER PARTY BE LIABLE UNDER ANY THEORY FOR ANY LOST PROFITS, EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES. THIS SECTION SHALL NOT RELIEVE CUSTOMER OF ANY PAYMENT OBLIGATIONS PURSUANT TO SECTION 8.4 OF THIS AGREEMENT.
Disclaimer of Warranties
EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, FDR SPECIFICALLY DISCLAIMS ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, ARISING OUT OF OR RELATED TO THIS AGREEMENT. THIS AGREEMENT IS A SERVICE AGREEMENT AND THE PROVISIONS OF THE UNIFORM COMMERCIAL CODE SHALL NOT APPLY TO IT.
Term of Agreement
7.1 Term . This Agreement is effective from the date hereof and shall extend for five (5) Processing Years (the "Original Term"). Processing Year 1 of the Term shall commence on the first day of the first calendar month following the completion of the Start-Up and continue through the last day of the eighteenth (18th) calendar month thereafter. For purposes of this Agreement, a "Processing Year" means Processing Year 1 and each subsequent twelve (12) month period.
7.2 Renewal . After the Original Term, this Agreement shall automatically be renewed for consecutive periods of one (1) Processing Year (each a "Renewal Term"), unless either party gives the other party written notice at least six (6) months prior to the termination date of the Original Term or the then-current Renewal Term that the Agreement will not be renewed.
8.1 Termination by FDR . FDR may terminate this Agreement:
(a) if Customer fails to pay FDR any amount due pursuant to this Agreement and such failure is not cured within two (2) business days following written notice from FDR to Customer;
(b) upon written notice to Customer in the event Customer fails to provide or maintain sponsorship, clearing and settlement arrangements for the Cardholder Accounts processed under this Agreement in the form set forth as Exhibit C or otherwise satisfactory to
FDR in its sole discretion and in accordance with all applicable rules and regulations of VISA and MasterCard; or
(c) if any Insolvency Event occurs with respect to Customer.
The rights of FDR to terminate under this Section 8.1 are cumulative and the existence of the right under any provision or subsection is not exclusive of the right under any other provision or subsection.
8.2 Termination by Customer . Customer may terminate this Agreement:
(a) if any Insolvency Event occurs with respect to FDR;
(b) as described in Exhibit F with respect to the failure of FDR to satisfy the Service Levels; or
(c) if neither Visa nor MasterCard will allow Customer's anonymous mall Transaction Card program to continue and Customer pays FDR the amount described in Section 8.4(b).
8.3 Effect of Termination . Upon termination, FDR shall have no further obligation to provide services to Customer and all outstanding unpaid amounts due and owing to FDR shall become immediately due and payable. Termination shall not affect the following:
(a) the obligation of Customer to pay for services rendered or any other obligation or liability owing or which becomes owing under this Agreement whether the obligations arise prior to or after the date of termination including the obligations to make the payments provided in Article 3 of this Agreement and Section 8.4 of this Agreement;
(b) the obligations set forth in this Agreement in connection with any third party software pursuant to Exhibit A;
(c) the obligations of Customer regarding deletion, transfer or abandonment of BINs and ICAs pursuant to Section 3.8; or
(d) the provisions of Articles 4, 5, 6, and 9 and Exhibits D and E.
8.4 Payments Upon Termination .
(a) If FDR elects to terminate this Agreement for cause, Customer and FDR agree that, based on economic assumptions material to each party, Customer shall make a compensatory payment to FDR. Such compensatory payment shall be made by Customer prior to Deconversion and shall equal the sum of:
(i) the Year 1 Minimum Processing Fee or Minimum Processing Fees, as applicable, as set forth in Section 3.4 of this Agreement, for the Processing Year in which the termination occurs (after crediting Customer for any Processing Fees paid for Services provided in such Processing Year);
(ii) the sum of the present values of a payment in each full Processing Year (other than the year of termination) which remains during the Term of this Agreement in an amount equal to thirty five percent (35%) of the Year 1 Minimum Processing Fees or Minimum Processing Fees, as applicable, for the Processing Year in which termination occurs; and
(iii) the amount of Balance Sheet Expenses remaining unamortized on the balance sheet of FDR (the original amount of Balance Sheet Expenses on the balance sheet of FDR shall not exceed [ [* * *] .]
(b) If Customer elects to terminate this Agreement pursuant to Section 8.2(c), Customer and FDR agree that, based on economic assumptions material to each party, Customer shall make a compensatory payment to FDR. Such compensatory payment shall be made by Customer prior to Deconversion and shall equal the amount of Balance Sheet Expenses remaining unamortized on the balance sheet of FDR (the original amount of Balance Sheet Expenses on the balance sheet of FDR shall not exceed [ [* * *] .]
(c) Balance Sheet Expenses shall be amortized on a straight line basis over the Original Term or Renewal Term, as applicable.
(d) In determining the present value of the amount set forth in (a)(ii) above, an interest rate equal to the three (3) month Treasury Bill Rate, as quoted by The Wall Street Journal for the date on which termination occurs or, if not available on the date of termination, as soon thereafter as the next edition of The Wall Street Journal is published, shall be assumed and the payments shall be assumed to be made on the first day of each Processing Year.
(e) FDR and Customer agree that the compensatory payment set forth in Section 8.4(a) and (b) are a reasonable estimation, as of the date of this Agreement, of the actual damages which FDR would suffer if FDR were to fail to receive the processing business for the full Term.
(f) Despite the foregoing, nothing in this Section 8.4 shall limit FDR's right to recover from Customer any amounts for which Customer is otherwise liable under this Agreement, except that upon payment of amounts due under Section 8.4(a) and (b), Customer shall not be responsible for Minimum Processing Fee shortfalls after the year of termination.
8.5 Deconversion Assistance . Following notice of termination of this Agreement, Customer and FDR shall mutually, expeditiously and in good faith proceed to agree upon and document a Deconversion project plan which plan shall specify a date for the Deconversion to be completed. FDR and Customer contemplate that the Deconversion project plan may involve a six (6) to nine (9) month time frame for completion and implementation. As part of the Deconversion project plan, FDR shall perform the services necessary for Customer to transfer its Transaction Card business from the FDR System to the internal or third-party-provided data processing system which Customer has selected.
Confidential Nature of Data
9.1 Customer's Proprietary Information . Upon Customer's request, FDR shall return to Customer (upon the expiration or termination of all of FDR's obligations under this Agreement and payment by Customer of all amounts due to FDR hereunder) all or any requested portion of the proprietary and confidential data of Customer disclosed to FDR including the Cardholder Master Files (collectively, "Customer's Proprietary Information").
9.2 FDR's Proprietary Information . Customer acknowledges that all products and systems provided or used by FDR, including, but not limited to, any developments, Enhancements, methodologies, improvements or modifications, shall remain solely and exclusively the property of FDR. In addition, FDR shall retain sole and exclusive ownership in all works of authorship, ideas, concepts, know-how and inventions, whether or not patentable, created or conceived by FDR in the course of providing the services under this Agreement. Customer acknowledges that FDR, in its sole discretion, may provide to other customers, similar services to those outlined in this Agreement utilizing any intellectual property owned or licensed by FDR as referenced in this paragraph. Customer shall not obtain any proprietary rights in any proprietary or confidential information which has been or is disclosed to Customer by FDR, including, without limitation, any data or information that is a trade secret or competitively sensitive material, whether owned or licensed or otherwise provided by FDR; User Manuals; screen displays and formats; computer software; methodologies; systems; products; system architecture and documentation related to each of the foregoing, in each case, whether owned, licensed or otherwise provided or used by FDR; software performance results; flow charts and other specifications (whether or not electronically stored); data and data formats (collectively, "FDR's Proprietary Information") whether any of the materials are developed or purchased specifically for performance of this Agreement or otherwise. Customer shall return to FDR all of FDR's Proprietary Information upon the expiration or termination of this Agreement.
9.3 Confidentiality of Agreement . Except as required by law, both parties shall keep confidential and not disclose, and shall cause its Affiliates and their respective directors, officers, employees, representatives, agents and independent contractors to keep confidential and not disclose, any of the terms and conditions of this Agreement to any third party without the prior written consent of the other party.
9.4 Confidentiality . FDR and Customer shall maintain Customer's Proprietary Information and FDR's Proprietary Information, respectively, in strict confidence. Without limiting the generality of the foregoing, FDR and Customer each agree:
(a) not to disclose or permit any other person or Entity access to Customer's Proprietary Information or FDR's Proprietary Information, as appropriate, except that the disclosure or access shall be permitted to an employee, officer, director, agent, representative, external or internal auditors or independent contractor of the party requiring access to the same in the course of his or her employment or services;
(b) to ensure that its employees, officers, directors, agents, representatives, auditors and independent contractors are advised of the confidential nature of Customer's
Proprietary Information and FDR's Proprietary Information, as appropriate, and are precluded from taking any action prohibited under this Article 9, provided that in any event Customer and FDR shall each be liable for any breach of this Article 9 by their respective employees, officers, directors, agents, representatives and independent contractors; and
(c) not to alter or remove any identification, copyright or proprietary rights notice which indicates the ownership of any part of Customer's Proprietary Information or FDR's Proprietary Information, as appropriate.
9.5 Release of Information . Despite the foregoing, Customer agrees that Customer's Proprietary Information may be made available to (a) VISA or MasterCard, in association with Interchange Settlement, or (b) following notice to Customer, to supervisory or regulatory authorities of Customer upon the written request of any of the foregoing. Notwithstanding anything in this Agreement to the contrary, Customer and FDR acknowledge that each Sponsor Bank and not Customer owns the transaction and other data related to the accounts sponsored by such Sponsor Bank. FDR may release such data to the applicable Sponsor Bank, the regulatory authorities of such Sponsor Bank or designees of such Sponsor Bank.
9.6 Exclusions . Nothing in this Article 9 shall restrict either party with respect to information or data identical or similar to that contained in Customer's Proprietary Information or FDR's Proprietary Information, as appropriate, but which: (a) the receiving party can demonstrate was rightfully possessed by it before it received the information from the disclosing party; (b) was in the public domain prior to the date of this Agreement or subsequently becomes publicly available through no fault of the receiving party or any Entity acting on its behalf; (c) was previously received by the receiving party from a third party or is subsequently furnished rightfully to the receiving party by a third party (no Affiliate of FDR or Customer shall be considered to be a third party) not known to be under restrictions on use or disclosure; (d) is independently developed by such party; (e) is required to be disclosed by law, regulation, court order or subpoena, provided that the disclosing party will exercise reasonable efforts to notify the other party prior to disclosure; or (f) is required to be disclosed to comply with or to enforce the terms of this Agreement.
9.7 Remedy . If either party breaches any of the obligations contained in this Article 9, the non-breaching party may suffer irreparable harm and the total amount of monetary damages for any injury to such party will be impossible to calculate and therefore an inadequate remedy. Accordingly, the non-breaching party may (a) seek temporary and permanent injunctive relief against the breaching party or (b) exercise any other rights and seek any other remedies to which the non-breaching party may be entitled to at law, in equity and under this Agreement for any violation of this Article 9. The provisions contained in this Article 9 shall survive the expiration or termination of this Agreement.
10.1 FDR's Representation . FDR represents and warrants that the execution and delivery of this Agreement and the consummation of the transaction herein contemplated does
not conflict in any material respect with or constitute a material breach or material default under the terms and conditions of any documents, agreements or other writings to which it is a party.
10.2 Customer's Representation . Customer represents and warrants that the execution and delivery of this Agreement and the consummation of the transaction herein contemplated does not conflict in any material respect with or constitute a material breach or material default under the terms and conditions of any documents, agreements or other writings to which it is a party.
FDR and Customer agree that Sponsor Banks will handle and settle Interchange Settlement pursuant to the terms and conditions governing Interchange Settlement as set forth in the Sponsor Bank Agreements. Upon the request of FDR, Customer shall pay FDR any amount due to FDR pursuant to a Sponsor Bank Agreement that has not been paid by a Sponsor Bank. For the avoidance of doubt, the parties acknowledge and agree that FDR and Sponsor Banks will handle and settle Interchange Settlement only for so long as Customer is processing through the MasterCard or VISA organizations and that it will be necessary to amend this Agreement if at any time Customer desires to process through a Network.
While this Agreement is in effect, FDR shall at all times provide the Services in accordance with the service levels set forth in Exhibit F (the "Service Levels"). FDR agrees to provide Customer with a monthly report setting forth the Service Levels and FDR's performance during the just concluded calendar month relative to the Service Levels. Upon request, FDR will review such reports with Customer monthly. Customer hereby agrees that due to the difficulty of determining and calculating its damages upon FDR's failure to perform in accordance with the Service Levels, the remedies of payments and termination as described in Exhibit F, upon such FDR failure are its sole and exclusive remedies for breach of this Article 12 or the breach of the Service Levels and that Customer hereby elects to waive any and all other remedies Customer may be entitled to under this Agreement, at law, or in equity, as a result of the breach of this Article 12 or the breach of the Service Levels.
13.1 Assignment . Except as otherwise provided herein, the rights and obligations of Customer are personal and not assignable, either voluntarily or by operation of law, without the prior written consent of FDR. Subject to the foregoing, all provisions contained in this Agreement shall extend to and be binding upon the parties hereto or their respective successors and permitted assigns.
13.2 Business Continuity Plan . FDR has created a business continuity plan (the "Business Continuity Plan") and will provide Customer with a written summary of same upon written request. FDR reserves the right to change such Business Continuity Plan and, upon
request, will explain all changes. No change shall degrade the quality of the Business Continuity Plan in a manner which has a material, adverse impact on the Services. FDR will make certain revisions to its Business Continuity Plan which will meet or exceed regulatory agency contingency planning criteria. FDR' s Business Continuity Plan includes a schedule for recovering critical business functions.
13.3 State Law . Except as provided in Exhibit D, this Agreement shall be governed by the laws of the State of Nebraska as to all matters including validity, construction, effect, performance and remedies without giving effect to the principles of choice of law thereof. With respect to any claim arising out of this Agreement, Customer irrevocably waives any objection which it may have at any time to the venue of any suit, action or proceeding arising out of or relating to this Agreement brought in the courts of the State of Nebraska and the United States District Court located in the city of Omaha, Nebraska and Customer further waives any claim such suit, action or proceeding is brought in an inconvenient forum and further irrevocably waives the right to object, with respect to such suit, action or proceeding brought in any such court, that such court does not have jurisdiction over Customer. For purposes of any such suit, action or proceeding Customer agrees that any process to be served in connection therewith shall, if delivered, sent or mailed in accordance with Section 13.4, constitute good, proper and sufficient service thereof.
13.4 Notice . All notices which either party may be required or desire to give to the other party shall be in writing and shall be given by personal service, telecopy, registered mail or certified mail (or its equivalent), or overnight courier to the other party at its respective address or telecopy telephone number set forth below. Mailed notices and notices by overnight courier shall be deemed to be given upon actual receipt by the party to be notified. Notices delivered by telecopy shall be confirmed in writing by overnight courier and shall be deemed to be given upon actual receipt by the party to be notified.
A party may change its address or addresses set forth above by giving the other party notice of the change in accordance with the provisions of this section.
13.5 Waiver . The failure of either party at any time to require performance by the other party of any provision of this Agreement shall not affect in any way the full right to require the performance at any subsequent time. The waiver by either party of a breach of any provision of this Agreement shall not be taken or held to be a waiver of the provision itself.
13.6 Relationship of Parties . Nothing contained in this Agreement shall be deemed to create a partnership, joint venture or similar relationship between the parties. The parties' relationship shall be that of independent parties contracting for services. Neither party shall hold itself out as having the authority to bind the other. All personnel and other agents employed by either party in connection with this Agreement are such party's or its agent's employees and not employees or agents of the other party.
13.7 Third Party Beneficiaries . This Agreement is entered into solely for the benefit of FDR and Customer and shall not confer any rights upon any Entity not a party to this Agreement.
13.8 Subcontractors . FDR may subcontract all or any part of the Services, but, notwithstanding any such subcontract, FDR shall remain primarily responsible for performance of the Services.
13.9 Force Majeure and Restricted Performance . If performance by a party of any service or obligation under this Agreement, including Start-Up or Deconversion, is prevented, restricted, delayed or interfered with by reason of labor disputes, strikes, acts of God, floods, lightning, severe weather, shortages of materials, rationing, utility or communication failures, failure of MasterCard or VISA, failure or delay in receiving electronic data, earthquakes, war, acts of terrorism, revolution, civil commotion, acts of public enemies, blockade, embargo, or any law, order, proclamation, regulation, ordinance, demand or requirement having legal effect of any government or any judicial authority or representative of any such government, or any other act, omission or cause whatsoever, whether similar or dissimilar to those referred to in this clause, which are beyond the reasonable control of such party, then such party shall be excused from the performance to the extent of the prevention, restriction, delay or interference.
13.10 Severability . If any provision of this Agreement is held invalid or unenforceable for any reason, the invalidity shall not affect the validity of the remaining provisions of this Agreement, and the parties shall substitute for the invalid provisions a valid provision which most closely approximates the intent and economic effect of the invalid provision.
13.11 Audit . From time to time during the Term of this Agreement, FDR will allow a third party, selected by FDR, to perform an audit of the electronic data processing environment maintained by FDR to provide the services contemplated under this Agreement. FDR shall provide Customer with a copy of the results of the audit if Customer requests a copy in writing.
13.12 Risk of Loss . Customer shall be responsible for any and all risk of loss to any tangible item (a) provided by FDR for Customer (including without limitation statements and embossed cards) upon the delivery of such items to the U.S. Postal Service or such other courier as Customer may select and (b) provided by Customer to FDR until actual receipt of such items
by FDR. It is expressly understood that the U.S. Postal Service and any courier selected by Customer are the agents of Customer and not FDR.
13.13 Equal Employment Opportunity . FDR will not discriminate against any employee or applicant for employment because of race, color, religion, sex, national origin, disability, age or veteran status as ordered by the Secretary of Labor pursuant to Section 202 of Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, and Section 402 of the Vietnam Era Veterans Readjustment Assistance Act of 1974.
13.14 Entire Agreement . This Agreement, including Exhibits and the executed Affiliate Agreements, if any, sets forth all of the promises, agreements, conditions and understandings between the parties respecting the subject matter hereof and supersedes all negotiations, conversations, discussions, correspondence, memorandums and agreements between the parties concerning the subject matter.
13.15 Amendments . This Agreement may not be amended except by a writing signed by authorized representatives of both parties to this Agreement.
13.16 Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties to this Agreement have caused it to be executed by their duly authorized officers as of the date first written above.
FIRST DATA RESOURCES INC.
By: /s/ Stephen T. Selzer
Name: Stephen T. Selzer
NBO SYSTEMS INC.
By: /s/ Randy J. Steck
Name: Randy J. Steck
I. General Provisions Applicable to the Services
A. FDR will provide the data processing and related services as described in FDR's User Manuals and customer bulletins as updated by FDR from time to time.
B. The Services are further described in Section II of this Exhibit A.
C. Customer shall have the right to use or decline any of the Services listed below on a line by line basis.
II. Processing Fees
A. Price Schedule
If the ratio set forth below is exceeded, Customer shall pay FDR the amount set forth below for each item in excess of the quantity set forth below.
CIS - Online Statement (IN 7311) - assumes two months plus cycle-to-date per AA. For additional months of online storage in excess of this quantity, a charge will be due calculated as follows:
[* * *] .
AA = Active Account = means any designated Cardholder Account that had, during the period of determination as to whether such designated Cardholder Account is an Active Account, a balance or for which a debit, credit, or payment has taken place during such period.