Exhibit
10.14
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.
MARKETER
AGREEMENT
This Marketer Agreement
(the "Agreement") dated as of September 2, 2004 (the "Effective
Date") is between NBO Systems, Inc. whose address is 3676 W.
California Ave. Bldg. D, Salt Lake City, UT 84104 ("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) "Billable Card"
means a Card which a network transaction or a Cardholder load
results in a debit or credit to the Cardholder Funds in the last
thirty (30) days or the Card carries a positive balance.
(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.
(e) "Cardholder
Agreement" means the agreement between Bank and a
Confidential
1
CF Client BH
Bank
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.
(1) "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) "Program Revenues"
means Interchange share, Transaction fee and commission on deposit
as defined in Schedule A generated by or accruing under a Program
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
Confidential
9/2/2004
2
CF Client BH
Bank
Federal Reserve
System.
(p) "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.
(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.
(u) "Transaction" means
a purchase and sale transaction initiated using a Card, or any
credit thereon, between a merchant accepting a Card and a
Cardholder, evidenced by an item, which is presented for payment to
Bank through the Systems, in accordance with the Operating
Rules.
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 approval unreasonably.
Confidential
9/2/2004
3
CF Client BH
Bank
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 a
Cardholder Agreement describing the Program and Card use. Cards can
be activated by Client by calling an Interactive Voice Response
Unit or accessing an approved Internet application. 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 Reserve
Account
Client shall establish
and maintain for purposes of this Agreement a non-interest bearing
demand deposit account (the "Reserve Account") in Client's name.
The Reserve Account will be Client owned and Bank controlled.
Client shall not have access to the funds. Client shall maintain a
minimum balance of [ * * * ] dollars. If Client does
not maintain the minimum balance in the Reserve Account, Bank in
its sole discretion may terminate this Agreement pursuant to
Article IX. Bank shall refund to Client the remaining balance in
the Reserve Account upon Client maintain [ * * *
.]
SECTION 3.6 Funding
Process for Cards
Confidential
9/2/2004
4
CF Client BH
Bank
Client shall send to
Bank each business banking day by 2:00 PM CST an ACH file of the
previous day (or days following a weekend or holiday) Card load
activity. The daily ACH file sent to Bank shall match the
processor's Card load activity report.
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 Maryland and is authorized
to do business in each state in which the nature of Client's
activities makes such authorization necessary.
(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
Confidential
9/2/2004
5
CF Client BH
Bank
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 in Schedule B.
(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 the Marketer
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. Such review will be
conducted at Bank's expense, unless the review is caused by
Client's action, inactions, or omission in which case the review
will be completed at Client's sole expense.
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.
Confidential
9/2/2004
6
CF Client BH
Bank
(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, if
provided by complainant, 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, under the immediate
supervision of, or under contractual agreement with Client and its
affiliates.
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 Bank elects
to terminate its membership in any System, or 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. In such an event, Bank
shall immediately reimburse Client on a pro-rata basis the expenses
previously paid by Client for System related registration or
renewal fees.
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, or are
payable to Client in accordance with the terms of this Agreement.
As issuer of the Cards, Bank is ultimately responsible for the
Cardholder Agreement. Bank and Client are mutually responsible for
preparing and updating the Cardholder Agreement.
SECTION 6.4
Notices
Confidential
9/2/2004
7
CF Client BH
Bank
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.
SECTION 6.5
Processing Services
Bank may use the
services of an independent processing operation (IPO) to switch or
process Card transactions.
ARTICLE VII
- COMPENSATION AND EXPENSES
SECTION 7.1 Expenses
of Bank
Bank shall be solely
responsible for the following expenses:
(a) 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.
(b) Bank shall pay
* * * toward the initial ISO or MSP Registration fee
and [ * * * ] annual renewal fee.
Payments to Client will
be made on the 20 th day of each month for the prior
month's Program Revenues and will be net of any expenses due from
Client.
SECTION 7.2
Compensation Payable to Bank
Client shall pay Bank
the fees for products and services set forth in the attached
Schedule A, netted against compensation payable to Client.
SECTION 7.3
Compensation Payable to Client
(a) Bank, shall pay
Client the fees for products and services set forth in the attached
Schedule A, including but not limited to Interchange, Commissions
on Deposits.
(b) Bank shall
distribute to Client the IVR/Operator costs charged to the
Cardholder, monthly maintenance fees charged to the Cardholder, and
expiration fees (breakage) charged to the Cardholder upon
expiration of the Card in accordance with the Cardholder Agreement
based on reports from the processor. Client shall provide for the
reports being sent from the processor to Bank.
SECTION 7.4 Expenses
of Client
Confidential
9/2/2004
8
CF Client BH
Bank
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) 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, beginning January 1,
2006.
(e) System transaction
fees related to the Programs.
(f) 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.
(g) All expense
associated with completing a due diligence review for any third
party relationship contemplated in this Agreement as mutually
agreed upon by the Parties.
SECTION 7.5 Adverse
Impact of System Fee Change
The Parties agree that
if System materially changes, as reasonably defined collectively by
Bank and Client, the System fees the Parties mutually agree to may
be re-negotiated in good faith on revised pricing. If the Parties
cannot agree on revised pricing within 30 days of notice of a
collectively agreed upon material change to System, either Party
may terminate the Agreement. Cards already issued are subject to
the existing terms and conditions at the time of issuance.
ARTICLE
VIII - LIMITATION OF LIABILITY
SECTION 8.1 No
Special Damages
Neither Party shall be
liable to the other for any special, indirect, incidental,
Confidential
9/2/2004
9
CF Client BH
Bank
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
