EXHIBIT 10.16
SOFTWARE LICENSE, SOURCE CODE, AND
DERIVATIVE PRODUCT DISTRIBUTION AGREEMENT
License Agreement No. ______________
This Software License, Source Code, and Derivative Product Distribution
Agreement (the "Agreement") is entered into this _27th day of November, 2002, by
and between M2, INC., a Florida corporation with its principal place of business
at 850 Trafalgar Court, Suite 100, Maitland, Florida 32751, (hereinafter
referred to as "LICENSEE" or "M2") and DIGITAL COURIER TECHNOLOGIES, INC., a
Delaware corporation with its principal place of business at 348 East 6400
South, Suite 220, Salt Lake City, Utah 84107, and all of its affiliates and
subsidiaries, (hereinafter collectively referred to as "DCTI" or "DCTi").
WHEREAS, DCTI owns the Licensed Software (as defined below);
WHEREAS, DCTI desires to License its software in the ways set forth below;
and
WHEREAS, LICENSEE desires to acquire a license to use the Licensed
Software subject to the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1 "Documentation" shall mean such manuals and other standard end
user and technical documentation that DCTI ordinarily makes
available with a program, including amendments and revisions
thereto.
1.2 "Licensed Materials" means one copy of the Source Code, one copy
of the executable code (i.e. object code) of the Licensed Software
and a copy of all Documentation relating to the Licensed Software,
including, without limitation, textual and/or graphic material,
perceivable directly by humans and/or with the aid of a device or
a machine, and all of the documentation reasonably necessary for a
user to operate the Licensed Software.
1.3 "Licensed Software" means the collection of computer programs
described in the attached Exhibit A.
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1.4 "Source Code" means software in human-readable form, including but
not limited to, programmers' comments, data files and structures,
macros, object libraries, programming tools not commercially
available, technical specifications, flowcharts and logic
diagrams, schematics, annotations and documentation reasonably
required or necessary to enable an independent third party
programmer with reasonable programming skills to create, operate,
maintain, modify and improve the software without the help of any
other person. Data files containing Source Code must be in
standard ASCII format and be readable by a text editor.
1.5 "Transaction" shall mean that function by which a single message
exchange is processed, facilitated and/or completed by or through
the licensed material.
2. DELIVERY AND ACCEPTANCE
2.1 Delivery. DCTI agrees to deliver to LICENSEE the Licensed
Materials listed on Exhibit A within three (3) business days of
the execution of this Agreement.
2.2 Acceptance. LICENSEE shall have five (5) days from the date of
receipt of the Licensed Materials to evaluate the Licensed
Materials for substantial conformity with the specifications set
forth on Exhibit A, and either accept, return for rework, or
reject the Licensed Materials. LICENSEE shall be entitled to test
and evaluate the Licensed Materials by whatever means it deems
appropriate consistent with DCTI's rights in the Licensed
Materials, and DCTI hereby grants to LICENSEE any licenses
necessary for LICENSEE to perform its evaluation. If LICENSEE
returns Licensed Materials for rework, DCTI agrees to correct the
listed defects and resubmit the Licensed Materials for evaluation
by LICENSEE under the same acceptance procedure. In the event
LICENSEE rejects the Licensed Materials, it shall give DCTI
written notice of rejection stating the reasons for its
unacceptability. No payment shall be payable to DCTI until the
Licensed Materials have been accepted by LICENSEE in writing or
LICENSEE fails to reject the Licensed Materials within such 5 day
period at which time the Licensed Materials will have been deemed
accepted.
3. RIGHTS GRANTED AND RESTRICTIONS
License Grant. DCTI hereby grants to LICENSEE a fully-paid, perpetual,
non-exclusive, irrevocable, transferable, assignable, worldwide
license, with limited rights to sublicense as more fully set out in
paragraph 3.1 of this Agreement (the "License") to the Licensed
Materials for the uses set forth in Section 1.2. This License has no
limitation as to seats or site.
3.1 Uses. LICENSEE has the right to use for any and all purposes,
market, transfer, assign, and/or resell the Licensed Materials
under its own name or that of DCTI , at its sole discretion.
LICENSEE may further sublicense any and all licensed materials
that LICENSEE or its agents have enhanced or from which the
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LICENSEE has made derivative products, programs, applications or
code. The License granted herein shall be for the use of the
Licensed Materials by LICENSEE in connection with any or all of
its business operations, including without limitation, the
operations of its affiliates, wherever the same may be located
from time to time and specifically includes the right to install,
execute, use, copy, test, display, distribute and perform the
Licensed Software. The License granted herein shall additionally
include the right to make back-up copies of the Licensed Materials
for back-up purposes and the right to create derivative or
compatible works of the Licensed Materials, as well as the right
to sub-license, resell, transfer, and/or assign the Licensed
Materials and derivative works thereof to LICENSEE's customers,
under DCTI or LICENSEE's name.
3.2 Trademarks. Neither party is granted any right or interest to the,
trademarks or trade names (collectively, "Marks") of the other
party. Neither party may use the other's Marks without the prior
written consent of the other party. Notwithstanding the foregoing,
DCTI agrees that LICENSEE may, in its discretion, use DCTI's name
and the Licensed Software name in identification of the existence
of the Licensed Software as bundled with a LICENSEE Product.
3.3 Licensed Software. LICENSEE shall not be an owner of any copies of
the Licensed Software, but, rather, is licensed pursuant to this
Agreement to use such copies. LICENSEE acknowledges and agrees
that, as between LICENSEE and DCTI, all right, title, and interest
in the Licensed Software and any part thereof, including, without
limitation, all rights to patent, copyright, trademark and trade
secret rights and all other intellectual property rights therein
and thereto, and all copies thereof, in whatever form, including
any written documentation and all other material describing such
Licensed Software, shall at all times remain solely with DCTI.
3.4 LICENSEE Modification. LICENSEE shall have the right, in its own
discretion, to independently modify the Licensed Software for its
own purposes and use, through the services of its own employees or
of independent contractors, provided that same agree not to
disclose or distribute any part of the Licensed Software to any
other person or entity or otherwise violate DCTI's proprietary
rights therein. LICENSEE SHALL BE THE OWNER OF ANY MODIFICATIONS,
DERIVATIVE OR COMPATIBLE WORKS. DCTI shall not incorporate any
such modifications into its software for distribution to third
parties without the prior written consent of the LICENSEE.
4. PAYMENT
Payment. In consideration for the rights and licenses granted to
LICENSEE under this Agreement, LICENSEE shall pay DCTI a one-time
license fee of Fifty Thousand Dollars ($50,000.00) within five (5)
business days of its acceptance of the Licensed Materials in accordance
with Section.
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4.1 Royalty. For a period of two years from commencement of this
Agreement, LICENSEE shall pay DCTI 1/10 of a cent ($.001) for all
accounts receivable revenue generated by actual Transaction
processing as defined herein.
4.2 Taxes. DCTI shall be solely responsible for taxes on amounts paid
to DCTI by LICENSEE under this Agreement, including all state and
local use, sales, property (ad valorem) and similar taxes.
4.3 Right of First Refusal. In the event that DCTI endeavors to
transfer its title to the Licensed Materials, either by sale,
gift, private corporate restructuring, or in a voluntary
Bankruptcy proceeding, DCTI will first give LICENSEE notice and
opportunity to purchase ownership rights in the Licensed Materials
prior to obligating DCTI to the transfer of ownership rights to a
third party.
4.4 Right of Notice. DCTI hereby agrees to give LICENSEE 15 days
notice prior to conveying to any third party the right to
sub-license or resell the Licensed Materials.
5. WARRANTY AND INDEMNIFICATION
5.1 General Warranty. DCTI warrants and represents as follows:
(a) The Licensed Materials do not contain any unauthorized codes,
such as a virus, Trojan Horse, or other software routines designed
to provide unauthorized access, to disable, erase or otherwise
harm software, hardware or data, nor does it contain any self-help
code, such as any back door, time bomb, drop dead device or other
software routine designed to disable a computer program
automatically with passage of time or under the control of a
person other than the LICENSEE;
(b) DCTI has all right, title, ownership and other rights
necessary to grant the License to LICENSEE, free and clear of all
liens, security interests, pledges, encumbrances or charges of any
kind;
(c) The use of the Licensed Materials by LICENSEE in accordance
with this Agreement will not violate or infringe upon any patent,
copyright, trade secret or other intellectual property rights of
other persons or entities; and
(d) The Licensed Software will operate in accordance with and
substantially conform to the specifications set forth in the
Documentation and the specifications set forth on Exhibit A or as
subsequently modified by mutual agreement of the parties.
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5.2 Indemnification. DCTI shall defend, indemnify and hold harmless
the LICENSEE, its corporate affiliates, and any employee or agent
thereof (each of the foregoing being hereinafter referred to
individually as the "Indemnified Party") against all liability to
third parties arising from (a) the negligence or willful or
intentional misconduct or omission of the DCTI or its agents, or
(b) the License granted herein to LICENSEE for use of the Licensed
Materials, including without limitation, the violation of any
third party's trade secrets, proprietary information, trademark,
copyright or patent rights in connection with the licensing of the
Licensed Materials. DCTI may, at its option, conduct a defense in
such third party action arising as described herein and LICENSEE
shall cooperate in good faith with such defense. This
indemnification is limited to the Licensed Software delivered to
the LICENSEE or as modified by DCTI and does not cover third party
claims arising from modifications to the Licensed Software not
authorized by DCTI. If a third party claim causes LICENSEE's quiet
enjoyment and use of the Licensed Materials to be seriously
endangered or disrupted, DCTI shall:
(a) replace the Licensed Materials, without any additional charge,
with a compatible, functionally equivalent and non-infringing
product;
(b) modify the Licensed Materials to avoid the infringement; or
(c) obtain a license for the LICENSEE to continue to use the
Licensed Materials and pay for any additional fee required for
such license.
6. MAINTENANCE.
During the term of this Agreement, DCTI shall, at no additional cost,
(a) provide to LICENSEE all upgrades, modifications and enhancements to
the Licensed Materials created by DCTI, and (b) correct any defects or
malfunctions in the Licensed Materials. For purposes of this Section 6,
"Upgrade" shall mean any correction of any defect or malfunction in the
Licensed Materials, "Modification" shall mean any change to the
Licensed Materials which improves the efficiency and effectiveness of
the basic program functions, but which do not change such functions or
create one or more new functions, and "Enhancement" shall mean any
changes in the Licensed Materials that modify the basic program
functions of the Licensed Materials or add one or more new ones. All
such Upgrades, Modifications, Enhancements, new releases and
corrections shall constitute Licensed Materials.
7. LIMITED LIABILITY
EXCEPT FOR ANY DAMAGES CAUSED BY WILLFUL OR INTENTIONAL MISCONDUCT OR
OMISSION, OR GROSS NEGLIGENCE, NEITHER DCTI NOR LICENSEE, NOR ANY
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PERSON ACTING ON ITS BEHALF (AS AN EMPLOYEE, OFFICER, DIRECTOR, AGENT
OR OTHERWISE), SHALL HAVE ANY LIABILITY HEREUNDER FOR ANY
CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES, OR ANY DAMAGES
BASED ON THIRD PARTY CLAIMS RELATING TO THE USE OF THE LICENSED
MATERIALS, INCLUDING LOSS OF PROFITS ARISING OUT OF THIS AGREEMENT,
WHETHER ANY SUCH CLAIM IS BASED UPON CONTRACT OR TORT.
8. CONFIDENTIAL INFORMATION
8.1 Licensed Materials. All Licensed Software in object code form and
related Documentation provided to LICENSEE hereunder are deemed
non-confidential, and LICENSEE is not under any obligation to DCTI
to restrict access to or use of such Licensed Software in object
code form or related Documentation, provided LICENSEE otherwise
complies with the terms of this Agreement.
8.2 Confidential Information. During the term of this Agreement,
either party may receive or have access to technical information,
as well as information about product plans and strategies,
promotions, customers and related non-technical business
information which the disclosing party considers to be
confidential ("Confidential Information"). In the event
Confidential Information is disclosed, the disclosing party shall
(i) mark the information as confidential at the time of
disclosure, or (ii) if disclosed orally but stated to be
confidential, designate such information as confidential in
writing by summarizing the Confidential Information disclosed and
sending such summary to the receiving party within a reasonable
period of time after such oral disclosure. Notwithstanding any
provision to the contrary, all source code provided by either
party to the other, and all business information with respect to
any unpublished or future DCTI or LICENSEE products, are deemed
Confidential Information for the purposes of this Section 8.
8.3 Nondisclosure. Confidential Information may be used by the
receiving party only in a manner consistent with such party's
rights and obligations under this Agreement. The receiving party
shall protect the Confidential Information of the disclosing party
by using the same degree of care (but not less than a reasonable
degree of care) to prevent the unauthorized use, dissemination or
publication of such Confidential Information, as the receiving
party uses to protect its own Confidential Information of like
nature. The receiving party's obligation under this Section 8
shall be for a period of three (3) years after the date of
disclosure except for either party's source code which shall be
held confidential in perpetuity. The foregoing obligation shall
not apply to any information that is: (i) already known by the
receiving party prior to disclosure; (ii) publicly available
through no fault of the receiving party; (iii) rightfully received
from a third party without a duty of confidentiality; (iv)
disclosed by the disclosing party to a third party without a duty
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of confidentiality on such third party; (v) independently
developed by the receiving party prior to or independent of the
disclosure; (vi) disclosed under operation of law; or (vii)
disclosed by the receiving party with the disclosing party's prior
written approval.
8.4 Notification. Each party agrees to notify the other promptly on
the event of any breach of security under conditions in which it
would appear that any Confidential Information was prejudiced or
exposed to loss. Each party shall, upon request of the other, take
all other reasonable steps necessary to recover any compromised
Confidential Information disclosed to or placed in the possession
of each party by virtue of this Agreement. Each party shall
individually bear the cost of taking any such steps.
8.5 Remedies. Each party acknowledges that any breach of any of its
obligations under this section 8 is likely to cause or threaten
irreparable harm to the other, and accordingly, agree that in such
event, the aggrieved party shall be entitled to equitable relief
to protect its interest therein, which will be limited to
preliminary and permanent injunctive relief for both LICENSEE and
DCTI but will not limit the aggrieved party from seeking expanded
remedies from other unrelated third parties.
9. OTHER PROVISIONS
9.1 Authorization. This Agreement has been duly authorized by all
necessary corporate action on the part of the each party. The
Agreement constitutes the parties' valid and legally binding
obligation, enforceable against it in accordance with its terms.
DCTI has the full corporate power and authority to enter into this
Agreement. LICENSEE has the full corporate power and authority to
enter into this Agreement.
9.2 Publicity. Each party agrees not to publicize or disclose the
existence or terms of this Agreement to any third party (except as
allowed in this agreement in Section 3) without the prior written
consent of the other except as required by law. In particular, no
press releases shall be made without the written consent of each
party.
9.3 Independent Contractors. The relationship of the parties under
this Agreement is that of independent contractors, and neither
party is an employee, agent, partner or joint venturer of the
other.
9.4 Relationship Managers. Each party designates the person(s) set
forth on Exhibit B as the primary contact(s) of each party with
respect to this Agreement, which person(s) may be redesignated by
a party by written notice to the other.
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Disputes and Governing Law.
(a) Dispute Resolution. In the event of a dispute between the parties,
the issue will first be escalated to the individuals identified on Exhibit B. If
these individuals cannot resolve the dispute within two (2) weeks of notice, the
issue will be escalated to the legal counsel of each party and/or the parties'
principals. Either party may initiate dispute resolution by notice to the other
party. Such notice will be without prejudice to the invoking party's rights to
any other remedy permitted hereunder. The parties will use commercially
reasonable efforts to arrange meetings or telephone conferences, as needed at
mutually convenient times and places, to facilitate negotiations between the
parties. In the event that the parties fail or are unable to resolve a dispute
between them after exhausting the escalation process set forth above, then
either party may declare that a deadlock exists. In the event of a deadlock
after undertaking the forgoing steps to resolve the dispute in good faith, the
parties shall attempt to resolve the dispute through mediation prior to
instituting litigation or other adversary proceeding.
(b) Mediation. A party shall initiate a mediation by serving written
notice on the other party by overnight mail. The parties may select any mediator
mutually agreeable to them. If the parties cannot agree on a mediator within
fifteen (15) days, they will, within five (5) days thereafter submit a joint
request for mediation to the Orlando, Florida office of the American Arbitration
Association ("AAA") and request the AAA to select an appropriate mediator with
experience in resolving software development and licensing disputes. The
mediation session shall occur within thirty (30) days of the selection of the
mediator unless the parties mutually agree to extend this time, and shall be
scheduled for not less than one day. Each party agrees to send a representative
with full settlement authority to the mediation. The mediation shall be
conducted exclusively in Tampa, Florida or within 100 miles thereout, unless
otherwise agreed by the parties. The parties agree to hold the content of the
mediation in confidence and further agree that the mediator is disqualified as a
litigation witness for any party to the mediation. The parties further agree
that the mediation shall be considered to be a form of settlement negotiations,
the content of which shall not be admissible as evidence of liability in any
judicial proceeding. Each party shall bear its own expenses and an equal share
of the expenses of the mediator and, where applicable, the AAA. The parties
agree that any refusal to mediate under this section is a breach of contract for
which damages may be recovered in litigation between the parties. Except as
provided below, if the party who ultimately prevails in any litigation
institutes a court action or other adversary proceeding without first attempting
mediation as required hereby, SUCH PREVAILING PARTY SHALL NOT BE ENTITLED TO
ATTORNEYS' FEES OR COSTS THAT MIGHT OTHERWISE BE AVAILABLE TO IT UNDER THIS
CONTRACT OR IN COURT ACTION.
(c) Litigation. In the event a dispute is not resolved by such
mediation, the parties shall have the right to initiate a suit, action or other
adversary proceeding before the appropriate court exclusively within the
jurisdiction of the state and federal courts in the state of Florida. In the
event of such suit, action or other adversary proceeding, the Parties hereto (a)
submit to the exclusive personal jurisdiction of the federal and state courts in
the State of Florida, County of Orange and (b) expressly waive any right they
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may have to a jury trial and agree that any such proceeding shall be tried by a
judge without a jury. All defenses based on passage of time shall be tolled
pending mediation, unless otherwise prohibited by law.
(d) Applicable Law. This Agreement shall be governed by, construed,
enforced and interpreted in accordance with the internal substantive laws of the
State of Florida.
(e) Interim Relief. Nothing in this Section shall be construed to
preclude any party from seeking injunctive or other provisional relief in order
to protect its rights pending mediation, provided however that such relief may
only be sought within the appropriate judicial forum as provided in Subsection
(c) above. In the event a party seeks interim relief without first attempting
mediation, such party shall not forfeit its entitlement to legal fees and costs
that would otherwise be available to it only if such party initiates mediation
within fifteen (15) days after initiating the action seeking interim relief. A
request to a court for interim relief shall not be deemed a waiver of the
obligation to mediate.
9.5 Notice. Any notice or other communication required or otherwise
provided for under this Agreement shall be in writing and shall be
deemed given when delivered by hand or by courier or express mail
or by registered or certified United States mail, return receipt
requested, postage prepaid, or by facsimile if receipt is
acknowledged (except that a notice of termination or default shall
not be sent by facsimile) and shall be addressed to the
appropriate relationship manager as set forth on Exhibit B.
9.6 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective affiliates,
successors and permitted assigns. DCTI may not assign this
Agreement or its interest or obligations hereunder without the
prior consent of LICENSEE. LICENSEE may assign this Agreement or
its interest or obligations hereunder without DCTI's consent
including, but not limited to, in connection with a change of
control of LICENSEE, a merger of LICENSEE with another entity, or
the sale of all or substantially all of the assets of LICENSEE.
9.7 Severability. The terms of this Agreement shall be applicable
severally to each Licensed Software program, if more than one, and
any dispute affecting either party's rights or obligations as to
one or more Licensed Software program(s) shall not affect the
rights granted hereunder as to any other Licensed Software
program(s). If any provision of this Agreement is held to be
invalid or unenforceable by a court of competent jurisdiction,
then the remaining provisions will nevertheless remain in full
force and effect, and the parties will negotiate in good faith a
substitute, valid and enforceable provision which most nearly
effects the parties' intent in entering into this Agreement.
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9.8 Headings. The captions and headings used in this Agreement are for
convenience in reference only, and are not to be construed in any
way as terms or be used to interpret the provisions of this
Agreement.
9.9 Distribution Obligation. LICENSEE may in its sole discretion
decide to distribute or not distribute the Licensed Software or
derivative products created from the Licensed Software as it deems
appropriate.
9.10 Relationship of Parties. In performing under this Agreement, the
parties are acting as independent contractors and this Agreement
shall not be construed as imposing liability upon one party for
the acts or omissions of the other or as providing either party
with the right, power or authority to impose any duty or
obligation on the other except as expressly provided herein.
9.11 Modifications. This Agreement may be modified only by a writing
signed by an authorized representative of each party.
9.12 Waiver. Neither party's failure to exercise any of its rights
hereunder shall constitute or be deemed a waiver or forfeiture of
any such rights.
9.13 Force Majeure. Nonperformance of either party will be excused to
the extent that performance is rendered impossible by strike,
fire, flood, governmental acts or orders or restrictions or other
similar reason where failure to perform is beyond the control and
not caused by the negligence of the non performing party, provided
that the non performing party gives prompt notice of such
conditions to the other party and makes all reasonable efforts to
perform.
9.14 Entire Agreement. This document represents the entire agreement
between the parties as to the matters set forth herein and
supersedes all prior discussions, representations or
understandings between them.
9.15 Exhibits. Each of the Exhibits referred to in this Agreement is
incorporated in full in this Agreement wherever reference to it is
made.
9.16 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original.
9.17 Items 8.1 through 8.5 of this Agreement shall survive the
Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed below on behalf of
each corporation's duly authorized officer as of the date first set forth above.
M2, INC DIGITAL COURIER
TECHNOLOGIES, INC
By: /s/ Joseph W. Adams By: /s/ Don Marshall
------------------------- ---------------------
Print Name: Joseph W. Adams Print Name: Don Marshall
Title: President and CEO Title: CEO
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EXHIBIT A
iGuard - Fraud monitor and management systems for acquiring merchant
transaction processing. Includes a Transaction Processing Rules Engine,
Fraud Alert Case Engine, and Fraud Alert Case Work Flow Queue manager
system.
netClearing - An Internet Payment Gateway process (IPG). Includes the
i24Admin merchant administration system, a merchant-agent portfolio
reporting system (PRS), and a merchant reporting and administrative
system (MRS).
SecureCharge - A transaction authorization and settlement reporting
system, including a batch-based transaction authorization and
settlement system (SecureBatch).
ePos - A consumer-to-merchant payments processing module.
eBatch - A merchant payments module permitting batch submissions for
transaction authorization, capture, settlement and reporting.
SecureCart - An internet shopping cart application including various
security provisions
SecureTrans - Used in conjunction with SecureCart, this module provides
for processing secure payments transactions.
OFS - An order fulfillment system which includes payments processing,
order management and tracking, shipping reports and product back-order
and tracking logic.
SMS - A subscription management system which tracks orders and acquires
payments for products or services on a recurring billing basis.
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DCTI
e-payment services
DCTi netClearing and iGuard
Version 1.0
Table of Contents
Payment Processing with DCTI................................................3
The SecureCharge(R)and SecureBatch(R)Payment Plug-In........................3
ePOS........................................................................3
eBATCH......................................................................3
iGuard Fraud Control........................................................3
Merchant Tools and Reports..................................................4
NetClearing Payment Services for Financial Institutions.....................4
Internet Payment Gateway....................................................4
Risk Management.............................................................5
Tools and Reports...........................................................5
Risk Management and Internet Fraud Control..................................6
Credit Card Clearing Process................................................8
Technology..................................................................9
Performance and attributes..................................................9
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Payment Processing with DCTI
- ----------------------------
DCTI offers credit-card processing services for Visa(R), MasterCard(R), American
Express(R), Discover(R), Diners Club(R), and can support all other major card
schemas. Payment features of the DCTI service include authentication, fraud
control, authorization, settlement handling, and real-time reporting.
The SecureCharge(R) and SecureBatch(R) Payment Plug-In
- ------------------------------------------------------
Designed for ease of use, DCTI's SecureCharge(R) and SecureBatch(R) "Payment
Plug-in" software delivers transaction processing capabilities in a small,
easy-to-install, thin-client format. Because the Payment Plug-ins are built with
technology based on open standards, clients can quickly and easily integrate
them into a wide range of e-commerce server platforms, software packages, and
financial systems infrastructure. Once installed, these lightweight software
libraries enable application programming interfaces (API) that can be
implemented in a secure yet simple manner. Once implemented, the payment
plug-ins handle all security protocols, communication protocols, and message
formatting. The payment plugins securely transmit transaction data to the DCTI
Internet Payment Gateway, discussed below. The gateway examines the transaction
for potential fraudulent activity, logs the transaction in a database for
reporting, and routes the transaction to the card networks for authorization.
The plug-ins are available in a variety of languages on all major operating
systems and are provided in a concise SDK (Software Development Kit). The DCTI
SecureCharge and SecureBatch SDK contain the plug-in software libraries, API
documentation, software languages and sample code for implemention in CGI,
ISAPI, NSAPI, COM/Active-X, Visual Basic, C/C++, Java, and Perl for both Unix
and Windows platforms.
ePOS
- ----
DCTI's ePOS(R) is an easy-to-use, Web-based point-of-sale terminal application.
Merchants can use ePOS from a desktop computer to submit credit card and order
information to the DCTI Internet Payment Gateway, discussed below. With its
Web-based functionality, ePOS provides flexibility for multiple station
processing facilities such as call centers and customer service centers. Most
importantly, because ePOS accesses DCTI's Payment Plug-in, transactions can be
processed with the same rapid response times, Web-based reporting, and access to
important fraud protection service.
eBATCH
- ------
DCTI's eBATCH(R) is an easy-to-use Web-based point-of-sale terminal application
designed for multi-transaction processing. Merchants can use eBATCH from a
desktop computer to submit files of credit card transactions and order
information to the DCTI Internet Payment Gateway. With its Web-based
functionality, eBATCH provides flexibility for multiple station processing
facilities such as call centers and customer service centers to upload recurring
transactions. Most importantly, because eBATCH accesses DCTI's Internet Payment
Gateway, transactions can be processed with the same rapid response times,
Web-based reporting, and access to important fraud protection services as are
available for other credit card transactions.
iGuard Fraud Control
- --------------------
All transactions passed to DCTI's Internet Payment Gateway are guarded by DCTI's
iGuard Payment Protection System, a suite of fraud-detection software routines
and applications. The iGuard System constantly monitors for suspicious
transactions and data entry errors. Merchants are alerted to evidence of the
misuse of card information, detected by such metrics as the verification of
addresses, velocity of purchases, and bad card histories.
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Merchant Tools and Reports
- --------------------------
DCTI offers its merchant clients 24/7 access to account information on a secure,
password-protected Web site called MRS(R) (Merchant Reporting Suite). The
security sub system of MRS is a tool and resource rights based system made up of
users and groups. With the appropriate login and password information, an
authorized user can access this Web site via a desktop computer with and a web
browser. Because DCTI's system captures and displays transaction data in
real-time, all reports provide an accurate reflection of account activity. The
primary categories of information and functionality available to the users of
the MRS(R) system include:
o My Account
o Account Profiles
o User and Group Security Sub-System Management
o Processing Profiles
o Account Activity Reports
o Transaction Summaries
o Detailed Transaction Reports
o Account Velocity Reporting
o Advanced Ad Hoc Transaction Searches
o Customer Risk and Valuation Tools
o Reconciliation Reports
o Chargeback and Exceptions Management
o Account Ledgers
o EPOS
o eBATCH
o Secure Electronic Document Delivery System
o Integrated System News
o Extensive Online Help
NetClearing Payment Services for Financial Institutions
DCTI's payment services for financial institutions provide an outsource solution
for electronic payment services and merchant portfolio management tools. The
payment services software suite is called PRS(R) (Portfolio Reporting Suite) and
includes a white labeled netClearing Internet Payment Gateway, direct
connections to credit card networks, and an extensive array of portfolio
management tools that provide reliable transaction processing services for
institutions with an existing merchant acquiring program. With DCTI's Web-based
portfolio management tools, financial institutions can better control the level
of risk associated with their portfolio, a merchant category, or an individual
merchant.
Internet Payment Gateway
- ------------------------
The Internet Payment Gateway is a term used to describe the collection of DCTI's
risk management, reporting, and merchant account management tools that interact
directly with legacy financial and banking networks, operating systems,
acquiring gateways, and credit-card networks. The gateway is comprised of a
commerce server located at one DCTI's data centers in Salt Lake City, Utah or
Clearwater, Florida, a transaction database, and fraud screening software that
seamlessly integrate into existing systems.
Integrating a portfolio of merchants with the Internet Payment Gateway is
straightforward and efficient. Online account management tools come with an
easy-to-use administration interface that helps users perform functions that
include adding and updating merchants, accessing reports, and monitoring fraud.
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Risk Management
- ---------------
Both merchants and financial institutions are protected by DCTI's iGuard matrix
of fraud detection analysis and software. Through iGuard, an individual merchant
or an entire merchant portfolio can be monitored for potentially fraudulent
credit-card activity and data entry errors.
The risk management software alerts financial institutions to evidence of the
misuse of card information, detected by such metrics as the use of a compromised
Bank Identification Number (a "BIN"), unusual velocity or volume of
transactions, or the use of a compromised card number. Fraud control
administrators (such as risk management officers) can use DCTI's secure PRS Web
site to manage their merchant portfolio and to set fraud detection limits with a
graphical user interface.
Tools and Reports
- -----------------
DCTI offers real-time activity reports and portfolio management tools through
the secure password-protected PRS Web site. The security sub system of PRS is a
tool and resource rights based system made up of users and groups. Clients can
log-on to the secure Web site to view and react to transactions as they occur.
All reports are generated from the live transaction database. Custom reports are
dynamically generated based on any of 16 user selected parameters such as
transaction number, cardholder, or BIN.
Because DCTI has direct access to the card networks the Company can record and
display transaction activity in real-time. Reporting functions available to
financial institution clients include:
o Portfolio Analysis
o General Overview
o Settlement Analysis
o Volume Analysis
o Per Ticket Analysis
o Merchant Activity
o Detailed Transaction Reports
o Transaction Summary Reports
o Deposit Baseline Reviews
o Merchant Velocity
o Violation Review
o Extensive Searching Capabilities
o Ad Hoc Transaction Searches
o Card Holder Name Searches
o Credit Card Number Searches
o Bin Searches
o Fraud and Reporting
o Card Holder Risk and Valuation Analysis
o By Portfolio or Merchant
o Stolen Card Activity
o Captured Transaction Report
o iGuard Fraud Profile Administration
o iGuard Fraud Case Management Suite
o iGuard Fraud Alert Engine
o Reconciliation Systems
o Settlement Report Management
o Merchant Ledger Management
o Adjustment Management
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o Chargeback and Exceptions Management
o Merchant Management
o Merchant Account Management
o Processing Profile Management
o Security Sub System Controls
o User and Group Management
o Tool and Resource Management
Risk Management and Internet Fraud Control
- ------------------------------------------
DCTI's iGuard fraud-screening software suite helps merchants reduce their
exposure to losses generated by credit-card fraud or data entry errors. These
controls were developed specifically for e-commerce businesses, which typically
experience higher rates of credit-card fraud. The software provides added
protection for processing banks and merchants by scrubbing all transactions
through various fraud-detection software routines and databases. Potentially
fraudulent transactions are detected and rejected prior to authorization or
caught by a fraud alert engine and placed in a fraud case management system.
Following is a description of the primary fraud detection routines DCTI can use
to scrub its clients' transactions:
Checksum (Luhn check)
A basic check of how many digits are in a credit card number to ensure
the customer's credit card is valid.
Address Verification System ("AVS")
Merchants can require customers to submit the billing address of their
credit card. The address supplied by the customer is compared to the
address on file with the issuing bank. Merchants may choose the degree
of match (between credit card number and address) at which the
transaction should be rejected.
Difference between name and card number
A credit card number can be matched to a cardholder's name for an
existing client. A mismatch may indicate that a card has been
compromised.
Unusual frequency of purchases
A merchant may record information about how frequently its product or
service is typically purchased with a particular card number. The
information is matched to actual activity so merchants are notified of
any significant variation from that mean.
Unusual time of day for purchases
A merchant may record typical transaction volumes for a particular time
of day. The information is matched to actual activity so merchants are
notified of any significant variation from that mean.
Compromised BIN and card database
All transactions can be checked against a database of BINs or card
numbers that may have been compromised. These options include:
BIN screening
A BIN corresponds to a whole set of cards that a card issuing bank has released.
When the security of a BIN is compromised, chances for fraud increase for all
cards bearing that BIN. DCTI BIN screens help to flag numbers that may be
compromised.
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Card screening
Transactions may be checked against a database of invalid, compromised and
otherwise questionable credit card numbers.
Declined card screening
All transactions may be checked against a database of credit card numbers that
have declined charges recently. This service saves clients transaction fees by
declining the charge before it is submitted to the banking network.
Summary activity
Financial institutions can monitor activity of a single merchant or all
merchants to track sales, credits and single transactions. Even the
flow of money across credit cards can be reviewed to reveal customer
histories, purchasing habits, and money flow into or out of a card on a
daily basis or on an historical timeline.
Fraud reporting
Financial institutions can survey and analyze activity by BIN, card
number, AVS and velocity of purchases. Stolen credit cards and
questionable transactions present themselves on demand.
BIN check
Entire BINs can be reviewed for questionable activity and transactions.
Customer data associated with credit cards can be compared to locate
unreported, stolen or generated card usage. Related merchants are a
mouse click away from review of any suspicious transaction.
Unusual activity
DCTI also provides the ability to generate 90-day baseline data for any
merchant in a bank's portfolio. Side reports offer the ability to
locate transactions exceeding the baseline by whatever range a Bank
determines is valid for that merchant. Excessive tickets, unusual daily
deposits and more can be located quickly and reviewed 24/7.
Review merchant and portfolio activity in real-time
A financial institution's entire merchant portfolio or a single
merchant account can be viewed with DCTI's online charting tools. The
ability to graphically review a merchant's dollar and transaction count
can be a simple indicator of merchant or consumer fraud. Peak hours can
be located within hourly summaries that appear in easy to understand
bar charts.
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1a Merchant Web Site
Real-time reporting
1b Internet Payment
Gateway
VISA MC AMEX Discover
Credit Card Network
3a Issuing Bank
2 Settlement Authority
3b Merchant Bank
Credit Card Clearing Process
To better understand DCTI's products and services, the following explanation and
diagram describe how the credit card clearing process works, and how the Company
simplifies the process. DCTI generates real-time reporting and transaction
management services through a secure Web server. Information such as
authorization notices and settlement data from the credit card companies are
stored in the DCTI database, which generates reports on the DCTI account
activity reporting sites. This means that merchants and financial institutions
can view real-time transaction information any time of the day via a Web
browser.
1 Authorization - When merchants are ready to begin accepting credit
cards as payment for goods or services on their Web site (1a),
they can download DCTI's Payment Plug-In and request DCTI's
assistance in establishing a merchant account. They are then ready
to begin accepting payments.
Once the customer submits a credit card number on the merchant's Web site,
the Payment Plug-in contacts the DCTI Internet Payment Gateway (1b) to
initiate fraud screening and then to request authorization, final sale or
credit.
2 If the transaction is not rejected for potential fraud, the DCTI
Internet Payment Gateway then sends the transaction information to
the credit card network (1c) for authorization or declination of
the charge. This process is completed in-house; the Company does
not use third party acquiring processors. If the transaction is
approved, an authorization code is returned to the merchant's Web
site and the authorization is complete. With DCTI's system, the
real-time authorization and capture process occurs within seconds.
Batch requests are completed within ten to thirty minutes.
3 Settlement - Once the product the customer ordered is shipped (or
downloaded), the authorization code is used to settle the amount
of the transaction. DCTI's Internet Payment Gateway and the credit
card network exchange information with the Settlement Authority
(2) to confirm the transaction.
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4 Funds transfer - Finally the Settlement Authority requests a funds
transfer from the Issuing Bank (3a), which moves money through the
Settlement Authority into the merchant's bank (3b). The payment
process is now complete.
Technology
We have computer facilities in Salt Lake City, Utah to support all of our
products and services. This data center has redundant systems in place for
power, telecommunications, environmental controls, and fire suppression that
assure consistently optimal performance through state-of-the-art system
scalability and reliability. Features of the data center include:
o multiple fiber optic OC-3's from distinct Tier 1 Internet
Service Providers providing highly scalable bandwidth, load
balancing, fault tolerance, and data redundancy for e-commerce
and other Internet applications and customers;
o fully redundant network architecture composed of dual
switches, routers, firewalls, and load balancing devices
providing internet scalability, load balancing and fault
tolerance;
o a range of high availability multiprocessor servers from
various manufacturers including Hewlett-Packard, Dell, Sun
Microsystems and Tandem Computers supporting our business
operations. The super-scalar processing architecture of these
systems manages our service components including simultaneous
payment processing, real-time report generation and merchant
accounting; and
o modern fire retardant systems, security systems, quad-power
conditioners, and industrial battery backup arrays as well as
an 8-day backup diesel generator, which all guarantee
continuous power and environmental control to insure seamless,
around-the-clock systems uptime and availability.
Performance and attributes
DCTI's technology gives online businesses the high-speed performance they need.
Transactions are usually complete in 1-2 seconds. DCTi's Internet Payment
Gateway architecture provide fast, secure, and reliable performance.
o Capacity
The entire Internet Payment Gateway (IPG) is continually tracked for
availability. Once every minute, a test transaction is sent to Visa and
MasterCard. Also, all transaction servers are equipped with Redundant
Arrays of Independent Disks (RAID) and multiple power supplies to
ensure network availability.
o Security
Firewall systems exceed industry standards and work in tandem with a
state of the art intrusion detection system, which uses algorithms to
detect any hacking attempt. Connections and information are protected
by standard RSA encryption to SSLv3.0.
o Scalability
DCTI's infrastructure is highly scalable for future expansion and
increased performance requirements.
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EXHIBIT B
NOTICE AND RELATIONSHIP MANAGERS
LICENSEE: DCTI:
Joseph W. Adams Don Marshall
M2, Inc. Digital Courier Technologies, Inc.
850 Trafalgar Court, Suite 100 348 East 6400 South, Suite 220
Maitland, Florida 32751 Salt Lake City, Utah 84107
Notices with respect to the administration of this Agreement shall be addressed
to the Business Manager set forth above and cc: to LICENSEE's legal department
at:
Andrea T. Tullo
Shumaker, Loop & Kendrick, LLP
101 East Kennedy Boulevard, Suite 2800
Tampa, FL 33602
10