Exhibit 10.5
[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 August 8th,
2006
(the "Effective Date") is between Trycera Financial, Inc. whose
address is
170 Newport Center Drive, Suite 210, Newport Beach, CA 92660
("Client") and
New Millennium Bank, whose address is 57 Livingston Avenue, New
Brunswick,
NJ 08901 ("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)
"Active Account" means
any account that is activated and has any
activity, where any activity is defined as a fee, transaction or
cardholder
initiated charge.
(b)
"Business Day" means
any day that is not a Saturday, Sunday,
holiday or other day on which commercial banking institutions in
New Jersey
or California are authorized or obligated by law or executive order
to be
closed.
(c)
"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.
(d)
"Cardholder" means (i)
a person who is issued a Card, and (ii)
uses the Card to originate a transaction.
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(e)
"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.
(f)
"Cardholder Agreement"
means the agreement between Bank and a
Cardholder governing the terms and use of a Card.
(g)
"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).
(h)
"Graphic Standards"
means all standards, policies, and other
requirements adopted by a System from time to time with respect to
use of
its Marks.
(i)
"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.
(j)
"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.
(k)
"Membership" means the
membership in a System and licensing
rights thereto obtained by Bank.
(l)
"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.
(m)
"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.
(n)
"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.
(o)
"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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(p)
"Regulatory Authority"
means, as the context requires, the State
of New Jersey; the Federal Deposit Insurance Corporation; and any
Federal
or state agency having jurisdiction over Bank or Client.
(q)
"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.
(r)
"Settlement" means the
movement and reconciliation of funds
between Bank and System members in accordance with the Rules.
(s)
"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.
(t)
"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 on a non-exclusive
basis, 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.
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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 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.
(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.
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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, 2007, 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. Every effort must be made to
resolve
customer complaint within ten (10) Business Days.
(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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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.
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
$1,000 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.]
SECTION 7.5 Reserve
The
Client must maintain a reserve balance in a demand deposit
account
with Bank in an amount equal to ***** (**%) percent of Cardholder
Funds.
In no instance shall the reserve balance be less than $********.
If the
Client fails to maintain the required reserve balance set forth in
this
Section 7.5 for any two (2) consecutive Business Days after prior
written
notice to Client, then Bank may apply any Compensation Payable to
Client,
as set forth in Section 7.3 to the reserve account until the
minimum
required balance is reached. Funds in excess of the minimum
balance will
be transferred to Client upon Client's request. Upon termination of this
Agreement Client agrees that it will not be entitled to the reserve
account
balance for a period of ninety (90) days from the date of
termination.
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.
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ARTICLE IX - TERM OF PROGRAMS AND AGREEMENT
SECTION 9.1 Term and Termination
of Agreement Without
