Exhibit 10.4
CARD PROGRAM MANAGEMENT AGREEMENT
This Card Program Management Agreement (the "Agreement") dated as of November
19, 2007 (the "Effective Date") is entered into by and between MERCHANT
PROCESSING INTERNATIONAL, INC. whose address is 18500 Von Karman suite 530
Irvine, CA 92612 ("Program Manager") and METABANK, DBA META PAYMENT SYSTEMS,
whose address is 2500 S. Minnesota Ave, CitySioux Falls, StateSouth Dakota
PostalCode57105 ("Bank"). Each may be referred to here in as a "Party" or
collectively as "Parties".
WHEREAS, Bank is a principal member of MasterCard International
Incorporated ("MasterCard"), Visa, U.S.A., Inc. ("Visa"), and various other
electronic payment networks, and is in the business of issuing Cards and
establishing Settlement Accounts for the settlement of Card transactions; and
WHEREAS, Bank wishes to market and promote certain prepaid, stored value or
payment cards (collectively, "Card(s)") to the public, as of means of gaining
new Bank customers, increasing Bank deposits and increasing Bank fee revenues;
and
WHEREAS, Program Manager is in the business of marketing Cards and
implementing programs to consumers and corporations that include the
distribution and usage of Cards ("Programs") and can provide services, either
directly or through subcontractors, to support Card Programs; and
WHEREAS, Bank desires to retain Program Manager to market, offer and
support Card Programs approved by Bank, using Cards issued by Bank; and
WHEREAS, Program Manager desires to market Programs with Cards issued by Bank
and to provide support services for such Programs on behalf of Bank bearing the
mark of one or more electronic payment networks, to consumers subject to the
terms and conditions hereof;
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):
"CARD" means any stored value, prepaid, payment or account access device or
number issued by Bank under authority from one or more electronic payment
networks. For purposes of this Agreement, a Card does not include any credit
card or product that accesses credit.
"CARDHOLDER" means (i) a person who is issued a Card, and/or (ii) uses the
Card to make a Transaction.
"CARDHOLDER FUNDS" means a pooled custodial account associated with one or more
Cards, and held by Bank for the benefit of the Cardholders.
"CARDHOLDER AGREEMENT" means the agreement between Bank and a Cardholder
governing the terms and conditions applicable to the use of a Card.
"GOVERNMENTAL REQUIREMENTS" means collectively all statutes, codes,
ordinances, laws, regulations that may apply to Cards, and all related rules,
orders and decrees of all governmental authorities (including without limitation
federal, state and local governments, governmental agencies and
quasi-governmental agencies).
"MARK" means the service marks and trademarks of a System or Bank,
including but not limited to, the names and other distinctive marks or logos,
which identify a System and Bank.
"PROCESSING SERVICES" means those services which are necessary to issue and
service a Card and process a transaction in accordance with Government
Requirements, Rules, or any Regulatory Authority.
"PROGRAM" means a system of services approved by Bank under which a
specific list of Cardholders subject to a Cardholder Agreement utilizes a Card
to submit Transactions into a System utilizing a Settlement Account to access
Cardholder Funds. This Agreement contemplates that Program Manager may be
permitted by Bank to offer multiple Programs hereunder, each subject to the
terms hereof and the prior written approval of Bank. (For purposes of
calculating the contract minimums as described in Schedule A, a new Program is
initiated through the concept document or the equivalent thereof being filed
with any System. Additional minimums shall not be charged merely by the
addition of a new co-brander).
"PROGRAM REVENUE" means all income derived from a Cardholder's use of a
Card or participation in a Program.
"REGULATORY AUTHORITY" means, as the context requires, the State of
placeStateSouth Dakota; the Federal Deposit Insurance Corporation; the Office of
Thrift Supervision; and any Federal or state agency having jurisdiction over
Bank or Program Manager.
"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.
"SETTLEMENT" means the movement and reconciliation of funds between Bank and
System members in accordance with the Rules.
"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.
"SYSTEM" means MasterCard, VISA, Cirrus, Plus, and/or any other electronic
payment network for transmitting items and
Settlement thereof.
"TRANSACTION" means using a Card to do any of the following: (i) to make a
purchase; (ii) to obtain a credit for a previous purchase; (iii) to obtain cash
from a terminal or automated teller machine ("ATM"); (iv) to make a bill payment
or other payment to a third party; (v) to transfer value to another card or
account; (vi) the initial funds loaded on a Card; or (vii) to add further funds
or to "reload" a Card.
ARTICLE II - GENERAL DESCRIPTION OF PROGRAMS
SECTION 2.1 PURPOSE
The purpose of this Program is to develop, market, and implement Bank
products for use in conjunction with Programs that offer consumers a convenient
and secure mechanism for making purchases and payments subject to the Rules and
Governmental Requirements. Bank hereby appoints Program Manager as Bank's
authorized delegate and representative to (i) market and offer Cards that meet
Bank requirements; (ii) to develop, market and offer Programs that utilize
Cards; and (iii) to perform such services hereunder to support the Cards and
Programs, solely in accordance with the terms of this Agreement.
ARTICLE III - DUTIES OF PROGRAM MANAGER
SECTION 3.1 MARKETING
Program Manager, at its sole expense, shall develop Programs and promote
and market Cards and Programs to prospective customers, in accordance with the
Bank's instructions. All Card products and Programs, together with any
promotions, marketing materials, Card design, and use of Marks related thereto,
are subject to prior approval by Bank and System prior to use. Bank shall be
identified on all marketing material for Cards and Programs contemplated in this
Agreement. Program Manager agrees that Bank in its reasonable discretion may
terminate the marketing or issuance of Cards for any Program at any time.
SECTION 3.2 PRINTING OF CARDS AND CARDHOLDER AGREEMENTS
Bank shall at all times determine the terms and conditions, including any
applicable fees, charged with respect to all Cards issued hereunder. Bank shall
be the contracting party under all Cardholder Agreements and shall enter into a
Cardholder Agreement with each Cardholder. The relationship with each
Cardholder shall be owned by Bank. All Cards and Cardholder Agreements shall
identify Bank as the issuer of the Cards. All Cards shall include such other
names, Marks, and disclosures as may be required to conform to Governmental
Requirements, Regulatory Authority, and Rules.
The terms and conditions contained in the Cardholder Agreements shall be
determined solely by Bank and may be amended by Bank, from time to time, upon
notice to Program Manager. Program Manager, at its sole expense, shall be
responsible for printing and distributing the Cardholder Agreement and any
amendments thereto to Cardholders as directed by Bank.
SECTION 3.3 ACCESS TO PROGRAM DOCUMENTS AND INFORMATION
Bank shall have access to all information and documents it reasonably
requests with regard to any activity contemplated by this Agreement.
SECTION 3.4 PROCESSING SERVICES
Program Manager, at its sole expense, shall provide for Processing
Services. Any processor retained by Program Manager to provide Processing
Services must be approved in advance by Bank, and must have executed a
Processing Services agreement with Bank. A list of pre-approved processors may
be obtained from Bank, upon Program Manager's request.
SECTION 3.5 REIMBURSEMENT ACCOUNT
[Confidential Pricing Information]
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF PROGRAM MANAGER
SECTION 4.1 REPRESENTATIONS AND WARRANTIES
Program Manager represents and warrants to Bank as follows:
(a) Program Manager has the full power and authority to execute and
deliver this Agreement, to perform all its obligations under this Agreement and
other agreements which must be executed to effect the services contemplated
herein.
(b) Except as otherwise disclosed, neither Program Manager nor any
principal of Program Manager has been subject to the following:
(i) Criminal conviction (except minor traffic offenses and other petty
offenses);
(ii) Any unpaid 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
Program Manager or any principal thereof. For purposes of this
subparagraph, the word "principal" shall include any person directly or
indirectly owning ten percent (10%) or more of Program Manager, any officer
or director of the Program Manager or any person actively participating in
the control of Program Manager's business.
(c) There is not pending or threatened against Program Manager, any
litigation or proceeding, judicial, tax or administrative, the outcome of which
might materially adversely affect the continuing operations of Program Manager.
Attached to this Agreement is a list and brief description of all pending
lawsuits in which Program Manager is a party.
(d) Program Manager has delivered to Bank complete and correct copies of
its balance sheets and related statements of income and cash flow. Program
Manager's financial statements, subject to any limitation stated therein, which
have been or which hereafter will be furnished to Bank will fairly represent the
financial condition of the Program Manager.
(e) Program Manager 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 Program Manager'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 Program Manager's books, accounts, data, reports,
papers, and computer records directly pertaining to the subject matter of this
Agreement, and Program Manager shall make all such facilities, records,
personnel, books, accounts, data, reports, papers, and computer records
available to the Auditing Party for the purpose of conducting such inspections
and audits.
ARTICLE V - COVENANTS OF PROGRAM MANAGER
SECTION 5.1 COVENANTS
Program Manager covenants and agrees with Bank as follows:
(a) It will comply with all applicable laws, rules, regulations and
ordinances, Government Requirements, the Rules and any rules, orders and
regulations issued by the Regulatory Authorities (collectively "Legal
Requirements") that relate to Program Manager's business, the Program
Manager's Program(s), this Agreement, or the matters and transactions
contemplated herein.
(b) Program Manager will provide on an ongoing basis, at least once
each calendar year, updated balance sheets and related statements of income and
cash flow.
(c) All written consumer complaints received by Program Manager,
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.
(d) Any litigation or court proceedings filed against Program Manager,
relating to the Card or its use, will be immediately reported to Bank. Such
report shall include a copy of the court papers or proceedings, together with a
summary of the Program Manager's position with respect to the matter, the name
and address of Program Manager's counsel handling the matter, and the likelihood
of settlement of such matter.
(e) Any correspondence, written or verbal, provided by Program Manager to
any state or Regulatory Authority, shall be approved in writing in advance by
Bank.
ARTICLE VI - DUTIES OF BANK
SECTION 6.1 MEMBERSHIPS IN SYSTEM
Bank, as a principal member of the System, shall support the sponsorship
and registration of Program Manager as a marketing agent or service provider of
Bank with each System, as applicable. However, the Parties hereto acknowledge
and agree that Program Manager assumes all risk that the Program Manager or any
Program may not be approved by any System and in any such event Program Manager
agrees to pay all compensation due hereunder to the Bank, including, without
limitation, the minimum monthly Transaction fees.
SECTION 6.2 ASSESSMENT, DEVELOPMENT AND APPROVAL OF PROGRAMS
Bank shall work closely with Program Manager to develop Programs that meet
Bank's strategic objectives and customer goals.
Any Programs proposed by Program Manager shall be reviewed and assessed by Bank,
and shall be approved or declined in Bank's sole discretion.
SECTION 6.3 ISSUER OF CARDS AND APPROVAL OF CARDHOLDERS
Bank shall be the issuer of all Cards hereunder. To do so, Bank shall
sponsor a BIN for the Cards and will maintain a Program whereby it issues Cards
marketed and promoted by Program Manager pursuant to this Agreement. In
addition, with respect to Card Programs that establish an ongoing relationship
with the Cardholder, Bank shall review customer information regarding each such
Cardholder, and shall be responsible for ensuring that each such Cardholder
meets Bank's Customer Identification Program as required by applicable law.
Bank will also regularly screen all Cardholders through Bank's screening system
implemented to comply with Office of Foreign Assets Control (OFAC) regulations.
SECTION 6.4 SETTLEMENT
Bank shall provide for Settlement for all Cards issued by Bank. To
facilitate Settlement, Bank has established or will establish one or more
Settlement Account(s) owned by Bank. Program Manager agrees all Cardholder
Funds shall be held in an account owned and controlled solely by Bank.
SECTION 6.5 SUPERVISION AND OVERSIGHT
At all times, Bank shall be responsible for supervising and overseeing
Program Manager's performance of services hereunder and the results of the
various Programs developed and implemented jointly with Program Manager. Bank
shall review reports and financials from the Programs, and shall meet regularly
with Program Manager, on at least an annual basis, to discuss the results of the
Program(s) (including any problems, losses or complaints, and any changes or
modifications that may be necessary to ensure the viability of the Program(s).
SECTION 6.6 LEGAL COMPLIANCE
Bank will comply with all federal statutes, rules, laws and regulations,
all rules, orders and decrees of the Office of Thrift Supervision, and Rules
that relate to the Bank's performance of its duties and obligations pursuant to
this Agreement.
ARTICLE VII - COMPENSATION AND EXPENSES
[Confidential Pricing Information]
ARTICLE VIII - LIMITATION OF LIABILITY
SECTION 8.1 NO SPECIAL DAMAGES
Neither Party shall be liable to the other for any indirect, incidental,
consequential, punitive or exemplary damages, 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 PROGRAM MANAGER FOR SYSTEM, REGULATORY AND OTHER
CLAIMS
Program Manager shall be liable to Bank for any and all liabilities and
every loss, cost, expense, 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, Regulatory Authority, System, or other third party as a result of
any of Program Manager's Program(s) or the Program Manager's failure to fully
comply with the Legal Requirements.
ARTICLE IX - TERM OF PROGRAMS AND AGREEMENT
SECTION 9.1 TERM
The term of this Agreement shall commence on the Effective Date and
continue for three (3) years (the "Initial Term") unless terminated earlier as
provided below. After the Initial Term, the Agreement shall automatically
extend for additional periods of one year each (a "Renewal Term") unless either
party terminates this Agreement for any reason by providing written notice to
the other at least 120 days prior to the commencement of the next Renewal Term.
SECTION 9.2 TERMINATION OF AGREEMENT
(a) Either Bank or Program Manager shall have the right to terminate
this Agreement upon occurrence of one or more of the following events:
(i) Failure by the other party to observe or perform, in any material
respect, that party's obligations to the other party hereunder, so long as
the failure is not due to the actions or failure to act of the terminating
party, but only if the failure continues for a period of (A) thirty (30)
days after the non-performing party receives written notice from the other
party specifying the failure in the case of a failure not involving the
payment of money, or (B) ten (10) days after the non-performing party
receives written notice from the other party specifying the failure in the
case of a failure to pay any amount then due hereunder; provided, however,
that Bank, in its sole discretion, may terminate this Agreement without
such a cure period if a substantially similar material failure has
previously occurred. Notwithstanding the foregoing, if Program Manager
fails to obtain Bank's prior approval of marketing materials as set forth
in Section 3.1, the following penalties shall be assessed by Bank in its
sole discretion:
[Confidential Pricing Information]
(ii) In the event any financial statement, representation, warranty,
statement or certificate furnished to it by the other party in connection
with or arising out of this Agreement is adverse to the terminating party
and is untrue, misleading or omits material information, as of the date
made or delivered.
(iii) A party (A) voluntarily or involuntary (and such involuntary
petition or proceeding is not dismissed within sixty (60) days)commences
(or is the subject of, as the case may be) any proceeding or filing any
petition seeking relief under Title 11 of the United States Code or any
other Federal, state or foreign bankruptcy, insolvency, liquidation or
similar law, (B) applies for or consents to the appointment of a receiver,
trustee, custodian, sequestrator or similar official for such party or for
a substantial part of its property or assets, (C) makes a general
assignment for the benefit of creditors, (D) commences the winding up or
liquidation of its business or affairs, or (E) takes corporate action for
the purpose of effecting any of the foregoing.
(iv) Upon any change to or enactment of or change in interpretation or
enforcement of any law or regulation which would have a material adverse
effect upon such Party's ability to perform its obligations or such Party's
costs/revenues with respect to the Program.
(v) Violation by either Party of any material federal or applicable
state law relating to the performance of this Agreement.
(vi) Upon direction from any Regulatory Authority or System to cease
or materially limit performance of the rights or obligations under this
Agreement.
(b) Notwithstanding the foregoing, Bank shall be entitled at any time,
upon at least one hundred eighty (180) days prior written notice to Program
Manager to terminate Bank's participation in any Program. Such termination will
not affect or impact any other Cards or Programs implemented hereunder. In the
event the Bank exercises its right to terminate any Cards or Programs under this
subsection 9.2(b), the Bank will assist the Program Manager to ensure a smooth
transition for Program Manager with any affected Cardholders as set forth in
Section 9.3 below.
SECTION 9.3 TERMINATION AND TRANSITION ASSISTANCE
(a) In the event: (i) any Cards or any Programs are terminated by Bank
without cause pursuant to Section 9.2(b); or (ii) this Agreement is terminated
by Program Manager due the a material default by the Bank; then, upon Program
Manager's request, the Bank will take commercially reasonable steps to permit
the relevant Bank Identification Numbers ("BINs") to be transferred to another
issuing financial institution.
(b) In the event that: (i) the Bank elects to terminate any Card or any
Program; or (ii) this Agreement is terminated for any reason, the Parties will
cooperate to provide a smooth and orderly wind-down of the Program or Programs
involved.
(c) In no event will any Parties make any public statement or customer
communication regarding the termination or wind-down of this Agreement, or any
Cards or Programs without the express prior written approval of both Bank and
Program Manager, which approval shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, Program Manager agrees that Bank may communicate
the termination or expiration of this Agreement with any party that Program
Manager has contracted with to provide any Processing Services, marketing, or
other service with regard to the Program.
(d) In the event of termination, Program Manager agrees to transfer all
Cardholder servicing 800 numbers and /or URL's to the Bank as part of any
wind-down. [Confidential Pricing Information]
ARTICLE X - CONFIDENTIALITY
SECTION 10.1 CONFIDENTIAL INFORMATION
The term "Confidential Information" shall mean this Agreement and all
proprietary information, data, trade secrets, business information and other
information of any kind whatsoever which (a) a Party ("Discloser") discloses, in
writing, orally or visually, to the other Party ("Recipient") or to which
Recipient obtains access in connection with the negotiation and performance of
this Agreement, and which (b) relates to (i) the Discloser, (ii) in the case of
Program Manager, Bank and its customers and or associates, or (iii) consumers
who have made confidential or proprietary information available to Program
Manager and/or Bank. The definition of Confidential Information shall include
Customer Information as described below.
SECTION 10.2 COMPLIANCE WITH THE GRAMM-LEACH-BLILEY ACT
The purpose of this section is to ensure that this Agreement conforms to
the applicable provisions of the Gramm-Leach-Bliley Act (the "Act"). Program
Manager acknowledges and agrees that "Non Public Personal Information" and
"Personally Identifiable Financial Information" (as defined in Sections 573.3(n)
and (o) respectively of the Office of Thrift Supervision Regulations on Privacy
of Consumer Information published at 12 CFR Chapter V) about Bank's customers
and Cardholders shall be considered as confidential and proprietary information
of Bank, and shall not be disclosed to or shared with any third party without
prior written consent of Bank. Program Manager agrees to implement and maintain
appropriate measures designed to meet the objectives of the guidelines
establishing standards for safeguarding Non Public Personal Information and
Personally Identifiable Financial Information as adopted from time to time by
the Office of Thrift Supervision. Except as provided in, and subject to the
limitations stated herein, Program Manager will not compile, use, sell or
otherwise distribute any lists of Bank's customers/Cardholders nor use the
names, account numbers or any other Non Public Personal Information and
Personally Identifiable Financial Information about customers or Cardholders to
compile, use, sell or distribute lists or data for use by Program Manager, its
subsidiaries or affiliates, or by any third parties. Program Manager will
instruct its employees, agents and contractors (including the processor) as to
the confidentiality of the Non Public Personal Information and Personally
Identifiable Financial Information and will not disclose any such Non Public
Personal Information or Personally Identifiable Financial Information to any
third party or entity. Program Manager also agrees that any dissemination of
the aforementioned confidential Non Public Information or
Personally Identifiable Financial Information within its own business
entity and to agents and contractors shall be restricted to "a need to know
basis" for the purpose of performance hereunder. Program Manager shall protect
any Non Public Personal Information and Personally Identifiable Financial
Information from disclosure with no less than the same degree of care afforded
by Program Manager to its own Confidential Information. The foregoing
restrictions on disclosure of Non Public Personal Information and Personally
Identifiable Financial Information shall apply for so long as is required under
applicable statutes and regulations. All Program Manager obligations and
undertakings relating to Non Public Personal Information and Personally
Identifiable Financial Information shall survive the termination of this
Agreement for whatever reason.
Program Manager agrees and represents to Bank that it (or its processor)
will implement a security program including measures designed to be in
compliance with Payment Card Industry standards and to meet the objectives of
the Interagency Guidelines Establishing Standards for Safeguarding Customer
Information (the "Guidelines"). Bank has the right to make reasonable requests
to inspect, during normal business hours and upon 30 days advance written
notice, Program Manager' Program, associated audit reports, summaries of test
results or equivalent measures taken by Program Manager or the processor to
ensure that its security measures meet the objectives of the Guidelines in
accordance with the Rules and this Agreement.
In carrying out the above-described obligations to secure and protect the
respective Confidential Information of Bank, Program Manager agrees that it will
protect the Confidential Information of Bank and will require any of its service
providers or subcontractors to protect and safeguard the Confidential
Information of Bank to the same degree required of Program Manager.
Program Manager agrees that in the event there is a breach of security
resulting in unauthorized disclosure of the Confidential Information of Bank,
Program Manager will promptly notify Bank of such breach, the nature of such
breach, and the corrective action taken to respond to the breach.
SECTION 10.3 DISCLOSURE TO EMPLOYEES AND AGENTS.
Each of the Parties, as Recipient, hereby agrees on behalf of itself and
its employees, officers, affiliates, agents, representatives, contractors and
subcontractors that Confidential Information will not be disclosed or made
available to any person for any reason whatsoever, other than on a "need to know
basis" and then only to: (a) its employees and officers; (b) subcontractors and
other third-parties specifically permitted under this Agreement, provided that
all such persons are subject to a confidentiality agreement which shall be no
less restrictive than the provisions of this Section; (c) independent
contractors, agents, and consultants hired or engaged by Recipient, provided
that all such persons are subject to a confidentiality agreement which shall be
no less restrictive than the provisions of this Section; and (d) as required by
law or as otherwise permitted by this Agreement, either during the term of this
Agreement or after the termination of this Agreement. Prior to any disclosure
of Confidential Information as required by law, the Recipient shall (i) notify
the Discloser of any, actual or threatened legal compulsion of disclosure, and
any actual legal obligation of disclosure immediately upon becoming so
obligated, and (ii) cooperate with the Discloser's reasonable, lawful efforts to
resist, limit or delay disclosure. Nothing in this Section shall require any
notice or other action by Bank in connection with requests or demands for
Confidential Information from bank examiners or for compliance purposes.
SECTION 10.4 NON-SOLICITATION OF EMPLOYEES
The Parties agree that during the term of this Agreement each Party will
not seek out or induce any person (by offering employment or otherwise) who is
an employee of the other Party to terminate their employment.
SECTION 10.5 RETURN OF MATERIALS
Upon the termination or expiration of this Agreement, or at any time upon
the request of a Party, the other Party shall return (or destroy if so directed
by the other Party) all Confidential Information, including Customer
Information, in the possession of such Party or in the possession of any
representative, contractor or third party otherwise required by this Agreement
or applicable law. If destroyed, such destruction of Confidential Information
shall be designated by a certificate executed by an officer of the Party which
was responsible for such destruction.
SECTION 10.6 EXCEPTIONS
With the exception of the obligations related to Customer Information, the
obligations of confidentiality in this Section shall not apply to any
information which a Party rightfully has in its possession when disclosed to it
by the other Party, information which a party independently develops,
information which is or becomes known to the public other than by breach of this
Section or information rightfully received by a party from a third party without
the obligation of confidentiality.
SECTION 10.7 MEDIA RELEASES
All media releases, public announcements and public disclosures by either Party,
or their representatives, employees or agents, relating to this Agreement or the
name or logo of Bank or Program Manager, any Bank or Program Manager affiliate
or supplier, including, without limitation, promotional or marketing material,
but not including any disclosure required by legal, accounting or regulatory
requirements beyond the reasonable control of the releasing Party, shall be
coordinated with and approved by the other Party in writing prior to the release
thereof.
ARTICLE XI - INSURANCE
SECTION 11.1 INSURANCE
Program Manager shall maintain, throughout the term of this Agreement,
appropriate comprehensive general liability (which shall include contractual
liability), errors and omissions, bodily injury, property damage, and employee
theft and dishonesty insurance policies, the limit of which shall be no less
than a combined single limit of [Confidential Pricing Information].
ARTICLE XII - GENERAL PROVISIONS
SECTION 12.1 INDEMNIFICATION
(a) Program Manager covenants and agrees to indemnify and hold harmless
Bank, its parent, or subsidiaries and their respective officers, directors,
employees and permitted assigns, as such, against any losses, costs or expenses
arising from any legal action, claim, demand or proceedings brought against any
of them as a result of: (i) any misrepresentation, breach of representation or
warranty or failure to fulfill a covenant of this Agreement on the part of
Program Manager; (ii) any act or omission of Program Manager or its
contractors, providers or representatives which violates any Legal Requirement;
(iii) any claim or action against the Bank related to any state or local law,
rule regulation, or ordinance; (iv) any claim or action by any state regulatory
agency, subdivision, or attorney general relating to any of Program Manager's
Program(s); or (v) any claim relating to obligations owed to or by Program
Manager or any third party retained by it. Provided, however, that this
provision shall not apply if such claim arises out of (i) an act of fraud,
embezzlement or criminal activity by Bank, (ii) willful misconduct or bad faith
by Bank, or (iii) the failure of Bank to comply with, or to perform its
obligations under, this Agreement.
(b) Bank covenants and agrees to indemnify and hold harmless Program
Manager and its parent, subsidiaries or affiliates, and their respective
officers, directors, employees, and permitted assigns, as such, against any
losses, costs or expenses arising from any legal action, claim, demand, or
proceedings brought against any of them as a result of: (i) any
misrepresentation, breach of representation or warranty or failure to fulfill a
covenant of this Agreement on the part of Bank; (ii) any act or omission of Bank
or its contractors, providers or representatives which violates any federal
statutes, rules, laws or regulations, any rules, orders or decrees of the Office
of Thrift Supervision, or Rules; or (iii) any claim relating to obligations owed
to or by Bank or any third party retained by it (except to the extent that
Program Manager has agreed to fulfill such obligation under this Agreement).
Provided, however, that this provision shall not apply if such claim arises out
of (i) an act of fraud, embezzlement or criminal activity by Program Manager or
its contractors, providers or representatives, (ii) negligence, willful
misconduct or bad faith by Program Manager or its contractors, providers or
representatives, or (iii) the failure of Program Manager or its contractors,
providers or representatives to comply with, or to perform its obligations
under, this Agreement.
(c) If any claim or demand is asserted against any Party or Parties
(individually or collectively, the "Indemnified Party") by any person who is not
a party to this Agreement in respect of which the Indemnified Party may be
entitled to indemnification under the provisions of subsections (a) or (b)
above, written notice of such claim or demand shall promptly be given to any
Party or Parties (individually or collectively, the "Indemnifying Party") from
whom indemnification may be sought. The Indemnifying Party shall have the right,
by notifying the Indemnified Party within ten (10) days of its receipt of the
notice of the claim or demand, to assume the entire control (subject to the
right of the Indemnified Party to participate at the Indemnified Party's expense
and with counsel of the Indemnified Party's choice) of the defense, including,
at the Indemnifying Party's expense, employment of counsel subject to the
approval of Indemnified Party, which approval shall not be unreasonably
withheld. Indemnifying Party shall not compromise or settle the matter without
the consent of Indemnified Party, which consent shall not be unreasonably
withheld. If the Indemnifying Party gives notice to any Indemnified Party that
the Indemnifying Party will assume control of the defense of the matter the
Indemnifying Party will be deemed to have waived all defenses to the claims for
indemnification by the Indemnified Party with respect to that matter. Any damage
to the assets or business of the Indemnified Party caused by a failure of the
Indemnifying Party to defend, compromise or settle a claim or demand in a
reasonable and expeditious manner, after the Indemnifying Party has given notice
that it will assume control of the defense, shall be included in the damages for
which the Indemnifying Party shall be obligated to indemnify the Indemnified
Party.
SECTION 12.2 DISCLOSURE
(a) Each Party shall promptly notify the other of any action, suit,
proceeding, facts and circumstances, and the threat of reasonable prospect of
same, which might give rise to any indemnification hereunder or which might
materially and adversely affect either Party's ability to perform this
Agreement.
(b) Each Party represents and warrants to the other that it has no
knowledge of any pending or threatened suit, action, arbitration or other
proceedings of a legal, administrative or regulatory nature, or any governmental
investigation, against it or any of its affiliates or any officer, director, or
employee which has not been previously disclosed in writing and which would
materially and adversely affect its financial condition, or its ability to
perform this Agreement.
SECTION 12.3 RELATIONSHIP OF PARTIES
Bank and Program Manager agree they are independent contractors to each
other in performing their respective obligations hereunder. Nothing in this
Agreement or in the working relationship being established and developed
hereunder shall be deemed, nor shall it cause, Bank and Program Manager to be
treated as partners, joint ventures, or otherwise as joint associates for
profit. Notwithstanding the foregoing, to extent required by applicable law
Bank's appointment of Program Manager as Bank's authorized representative will
establish an agency relationship, limited strictly to the rights, duties and
obligations as set forth herein. Accordingly, Program Manager hereby agrees as
follows:
(a) Program Manager shall serve as Bank's representative or agent for
purposes of rendering the marketing, solicitation, sales and distribution
services and other related services as set forth herein.
(b) Program Manager acknowledges Bank's right to monitor and review the
activities Program Manager performs for Bank hereunder;
(c) Program Manager acknowledges the statutory authority of Bank's
regulator, the Office of Thrift Supervision ("OTS") to regulate and examine and
take an enforcement action against the Program Manager with respect to the
activities performed by Program Manager as agent or representative of the Bank;
(d) Program Manager acknowledges that Bank has provided the Program Manager
with information and training designed to insure that Program Manager will be
adequately educated about the Bank's products and services offered hereunder,
including the distinctions between insured and non-insured products, and
relevant law that may apply to the marketing, solicitation, and customer service
activities instituted on behalf of Bank hereunder;
(e) Program Manager acknowledges that Bank will review and update the
training material on an annual basis and will ensure that Program Manager
receives training as needed; Program Manager's training records will be made
available for review by OTS examiners;
(f) Program Manager acknowledges that Bank must adopt a detailed compliance
program to ensure adequate monitoring, supervision, and control over the Program
Manager and the activities that the Program Manager performs on behalf of the
Bank. Such oversight includes ensuring Program Manager's own anti-money
laundering compliance programs are detailed, thorough, and implemented
accurately and fully.
(g) Program Manager acknowledges that Bank will undertake an annual review
of the compliance program conducted under the auspices of the Bank's compliance
officer to determine if Program Manager is operating in compliance with the
Bank's established policies and procedures regarding the marketing,
solicitation, customer service, or other activities related to the Bank's
authorized banking products or services;
(h) Program Manager acknowledges that Bank will institute a system for
tracking and resolving consumer complaints involving Cards and Programs
hereunder in a timely manner and will provide an annual report regarding
consumer complaints and their resolution to the Bank's board of directors;
(i) Program Manager acknowledges that a review and approval process will be
undertaken by Bank for all Card and Program disclosures, advertising, and other
promotional material;
(j) Program Manager acknowledges that the Bank and Program Manager, in its
capacity as the Bank's authorized delegate and representative, are both subject
to control and supervision by the appropriate OTS Regional Office or OTS
Headquarters. This control and supervision includes, but is not limited to, the
ability to require that Bank obtain OTS's approval (or non-objection) before
entering into a contractual arrangement with Program Manager and the right of
the OTS to approve specific contractual language;
(k) Program Manager acknowledges that the OTS may require both Bank and the
Program Manager, in its capacity as the Bank's authorized delegate and
representative to submit periodic reports to OTS;
(l) Program Manager acknowledges that the OTS may require the Bank to
modify or terminate its relationship with the Program Manager at any time; and
(m) The OTS may institute any other requirements or conditions that the OTS
deems appropriate for that particular purpose.
SECTION 12.4 REGULATORY EXAMINATIONS AND FINANCIAL INFORMATION
Program Manager agrees to submit to any examination which may be required by any
Regulatory Authority or System with audit and examination authority over Bank,
to the fullest extent of such Regulatory Authority or System. Program Manager
shall also provide to Bank any information, which may be required by any
Regulatory Authority or System in connection with their audit or review of Bank
or the Program and shall reasonably cooperate with such Regulatory Authority or
System in connection with any audit or review of Bank. Program Manager shall
furnish Bank, at Program Manager expense, with audited financial statements
prepared by a certified public accountant. Program Manager shall also provide
such other information as Bank, Regulatory Authorities, or the System may from
time to time reasonably request with respect to the financial condition of
Program Manager and such other information as Bank may from time to time
reasonably request with respect to third parties contracted with Program
Manager.
SECTION 12.5 GOVERNING LAW
The Parties acknowledge that Bank, as a federally charted savings bank, is
regulated by the Office of Thrift Supervision, and is therefore subject to
federal law, and entitled to preemption from state laws to the fullest extent
permitted by law. In any matters not so preempted (if any) this Agreement shall
be governed by the internal laws, and not by the laws regarding conflicts of
laws, of the State of placeStateSouth Dakota. Each Party hereby submits to the
jurisdiction of the courts of such state, and (subject to the Bank's reservation
of preemption rights above) waives any objection to venue with respect to
actions brought in such courts.
SECTION 12.6 SEVERABILITY
In the event that any part of this Agreement is deemed by a court,
Regulatory Authority, System, or other public or private tribunal of competent
jurisdiction to be invalid or unenforceable, such provision shall be deemed to
have been omitted from this Agreement. The remainder of this Agreement shall
remain in full force and effect, and shall be modified to any extent necessary
to give such force and effect to the remaining provisions, but only to such
extent.
SECTION 12.7 SURVIVAL
All representations, warranties, and covenants contained herein shall
survive any termination or expiration of this Agreement. In addition to the
representations, warranties, and covenants contained here, the Parties agree
that the following sections will survive termination: Article VIII (Limitation
of Liability); Article X (Confidentiality); Article XII (General Provisions).
SECTION 12.8 SUCCESSORS AND THIRD PARTIES
Except as limited by Section 12.9, this Agreement and the rights and
obligations hereunder shall bind, and inure to the benefit of the Parties and
their successors and permitted assigns.
SECTION 12.9 ASSIGNMENTS
The rights and obligations of Program Manager under this Agreement are
personal and may not be assigned either voluntarily or by operation of law,
without prior written consent from Bank. Any such purported assignment without
the express written consent of Bank is null and void and of no force or effect.
SECTION 12.10 NOTICES
All notices, requests and approvals required by this Agreement shall be in
writing addressed/directed to the other Party at the address and facsimile set
forth below, or at such other address of which the notifying Party hereafter
receives notice in conformity with this section. All such notices, requests,
and approvals shall be deemed given upon the earlier of receipt of facsimile
transmission during the normal business day or actual receipt thereof. All such
notices, requests and approvals shall be addressed to the attention of:
Bank to: MetaBank
dba Meta Payment Systems
2500 S. Minnesota Ave.
Sioux Falls, SD 57105
Attention: General Counsel
Facsimile Number: (605) 977-7501
With Copy to: Brad Hanson, President
Meta Payment Systems
4900 South Western Avenue
Sioux Falls, SD 57108
Facsimile Number: (605) 782-1701
Program Manager to: MERCHANT PROCESSING INTERNATIONAL, INC.
18500 VON KARMAN SUITE 530
IRVINE, CA 92612
Attention: ROBERT CHRISTIANSEN, VICE PRESIDENT
Facsimile Number: 949-910-0775
Tax Identification Number: 20-3219617
SECTION 12.11 WAIVERS
Neither Party shall be deemed to have waived any of its rights, power, or
remedies hereunder except in writing signed by an authorized agent or
representative of the Party to be charged. Either Party may, by an instrument
in writing, waive compliance by the other Party with any term or provision of
this Agreement on the part of the other Party to be performed or complied with.
The waiver by either Party of a breach of any term or provision of this
Agreement shall not be construed as a waiver of any subsequent breach.
SECTION 12.12 ENTIRE AGREEMENT; AMENDMENTS
This Agreement constitutes the entire Agreement between the Parties and
supersedes all prior agreements, understandings, and arrangements, oral or
written, between the Parties with respect to the subject matter hereof. This
Agreement may not be modified or amended except by an instrument or instruments
in writing signed by the Party against whom enforcement of any such modification
or amendment is sought.
SECTION 12.13 COUNTERPARTS
This Agreement may be executed and delivered by the Parties in counterpart,
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
SECTION 12.14 DISPUTES
(a) Duty to Notify. In the event of any dispute, controversy, or claim
arising out of or relating to this Agreement or the construction,
interpretation, performance, breach, termination, enforceability or validity
thereof (hereinafter, a "Dispute"), the Party raising such Dispute shall notify
the other promptly and no later than sixty (60) days from the date of its
discovery of the Dispute. In the case of a Dispute relating to account or
transaction statements or similar matter, the failure of a party to notify the
other party of such Dispute within sixty (60) days from the date of its receipt
shall result in such matter being deemed undisputed and accepted by the party
attempting to raise such Dispute.
(b) Cooperation to Resolve Disputes. The Parties shall cooperate and
attempt in good faith to resolve any Dispute promptly by negotiating between
persons who have authority to settle the Dispute and who are at a higher level
of management than the persons with direct responsibility for administration and
performance of the provisions or obligations of this Agreement that are the
subject of the Dispute.
(c) Arbitration. Any Dispute which cannot otherwise be resolved as provided
in paragraph (b) above shall be resolved by arbitration conducted in accordance
with the commercial arbitration rules of the American Arbitration Association,
and judgment upon the award rendered by the arbitral tribunal may be entered in
any court having jurisdiction thereof. The arbitration tribunal shall consist of
a single arbitrator mutually agreed upon by the Parties, or in the absence of
such agreement within 30 days from the first referral of the Dispute to the
American Arbitration Association, designated by the American Arbitration
Association. The place of arbitration shall be placeCitySioux Falls, StateSouth
Dakota, unless the Parties shall have agreed to another location within 15 days
from the first referral of the Dispute to the American Arbitration Association.
The arbitral award, which may include the attorney's fees of the prevailing
party, shall be final and binding. The Parties waive any right to appeal the
arbitral award, to the extent a right to appeal may be lawfully waived. Each
Party retains the right to seek judicial assistance: (i) to compel arbitration,
(ii) to obtain interim measures of protection prior to or pending arbitration,
(iii) to seek injunctive relief in the courts of any jurisdiction as may be
necessary and appropriate to protect the unauthorized disclosure of its
proprietary or confidential information, and (iv) to enforce any decision of the
arbitrator, including the final award. In no event shall either Party be
entitled to punitive, exemplary or similar damages.
(d) Confidentiality of Proceedings. The arbitration proceedings
contemplated by this Section shall be as confidential and private as permitted
by law. To that end, the Parties shall not disclose the existence, content or
results of any proceedings conducted in accordance with this Section, and
materials submitted in connection with such proceedings shall not be admissible
in any other proceeding, provided, however, that this confidentiality provision
shall not prevent a petition to vacate or enforce an arbitral award, and shall
not bar disclosures required by any laws or regulations.
SECTION 12.15 HEADINGS
The table of contents, various captions and section headings in this
Agreement are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this Agreement
to any Section are to such Section of this Agreement.
SECTION 12.16 DRAFTING PRESUMPTION
Program Manager and Bank agree that they participated in the drafting of this
Agreement and, in the event that any dispute arises in the interpretation or
construction of this Agreement, no presumption shall arise that either one party
or the other drafted this Agreement.
SIGNATURE PAGE TO FOLLOW
IN WITNESS WHEREOF, this Agreement is executed by the Parties' authorized
officers or representatives and shall be effective as of the date first above
written.
PROGRAM MANAGER METABANK, DBA PLACEMETA PAYMENT SYSTEMS
By: ________________________________ By: ______________________________________
Name: ______________________________ Name: ____________________________________
Title: _____________________________ Title: ___________________________________
SCHEDULE A
[Confidential Pricing Information]