Exhibit 10.1
PREPAID CARD AGREEMENT
This PREPAID CARD AGREEMENT is effective as of the Effective Date (this
"Agreement"), and is between MasterCard International Incorporated, a Delaware
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corporation, with its principal offices at 2000 Purchase Street, Purchase, New
York 10577 ("MasterCard"), and Merchant Processing International, Inc. d/b/a
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Bank Freedom, a California corporation, with its principal offices at 2531 S.W.
Acacia St. #200, Newport Beach, California 92660, on behalf of itself and its
Affiliates (collectively, "Customer").
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WITNESSETH:
WHEREAS, Customer offers Prepaid Cards to its customers;
WHEREAS, MasterCard and Customer desire to enter into an arrangement under
the Prepaid Cards will be issued as MasterCard Prepaid Cards as provided in this
Agreement.
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follow:
SECTION 1. INCENTIVES. In consideration of, and subject to, Customer's full and
timely performance of its Commitments and other obligations under this
Agreement, MasterCard will provide the following incentives (the "Incentives")
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to Customer in accordance with Section 4 below:
(a) [*****] Bonus. MasterCard will provide Customer with a [*****] bonus of
[*****] (the "[*****] Bonus"), which shall be payable [*****].
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(b) [*****] Support. MasterCard will provide Customer with [*****] support
of up to [*****] (the "[*****] Support"), for Customer to use for [*****]
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expenses incurred by Customer during the Term for [*****] expenses related to
the [*****] pursuant to this Agreement. All of the [*****] Support shall be
spent in connection with [*****] services related to MasterCard Prepaid Cards,
or the [*****], or other [*****]. Customer shall provide MasterCard, at least on
a calendar quarterly basis, all valid and bona fide [*****], or other
documentation that is satisfactory to MasterCard, for such [*****] expenses. The
[*****] Support shall be payable [*****]. To the extent that the entire value of
the [*****] Support is not used during the Term, any such unused [*****] Support
will be forfeited, and Customer shall refund to MasterCard such unused amount of
[*****] Support.
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(c) [*****] Support. For each Year, MasterCard will provide Customer with
[*****] support (the "[*****] Support"), payable and calculated at the end of
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such Year, using the following formula:
[*****]
where "[*****]" represents the [*****], if any, generated during such Year.
(d) [*****] Rebate. During each Year, MasterCard will provide to Customer a
[*****] of (A) [*****] for each [*****] assessed by MasterCard as [*****] (such
[*****], a "[*****]") during such Year and (B) [*****] for each [*****] assessed
by MasterCard as [*****] (such [*****], an "[*****]") during such Year, in each
case, calculated at the end of the calendar month during which such [*****] or
[*****], as applicable, occurred. Notwithstanding anything to the contrary in
this Section 1(d), Customer shall pay, or caused to be paid to, MasterCard the
[*****] in accordance with the Rules for all [*****], including [*****].
SECTION 2. COMMITMENTS. In consideration of MasterCard's obligation to
provide Incentives as provided in this Agreement, Customer agrees to observe the
following commitments (the "Commitments"):
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(a) Brand Commitment.
(i) Customer shall [*****] for all of its Prepaid Card programs when
actively soliciting prepaid card business from its customers, and cause [*****]
and no Prepaid Card issued prior to, or during, the Term shall [*****] or be
permitted to [*****], or to be [*****], a [*****], unless:
(A) (x) the [*****], (y) MasterCard has [*****] and (z) upon issuance (and
thereafter) [*****]; or
(B) (y) Customer is [*****]
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[*****] of Customer prepaid card program [*****]; provided that Customer does
not [*****] for Customer's prepaid card program other than [*****] and (z) upon
issuance (and thereafter) [*****].
Customer shall cause [*****] for each calendar quarter during the Term to be
[*****]. In the event the [*****] for a calendar quarter during the Term, such
event shall be deemed a material breach of Customer of its obligations hereunder
[*****].
(ii) Notwithstanding anything to the contrary contained in Section 2(a)(i)
above, Customer shall cause all Prepaid Cards with the MasterCard brand for
[*****] generated by such Prepaid Cards, to be [*****] for [*****] and cause to
be maintained as such during the Term.
(b) NO CONVERSION. Customer shall cause all Prepaid Cards to remain as
MasterCard Prepaid Cards and not convert, and prevent the conversion of, any
MasterCard Prepaid Card to a Competing Card.
(c) [*****] REQUIREMENT.
(i) Customer shall cause the [*****] during Year One through Year [*****]to
equal to at least [*****] (the "[*****] Amount"). If, at the end of Year
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[*****], the [*****] during Year One through Year [*****] is less than the
[*****] Amount, then Customer shall [*****].
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Customer shall cause the cum[*****] during Year One through Year [*****]to equal
to at least [*****] (the "[*****] Amount"). If, at the end of Year [*****],
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[*****] during Year One through Year [*****] is less than the [*****] Amount,
then Customer shall [*****].
(iii) If, at the end of Year [*****], the [*****] during Year One through
Year [*****] is equal to or greater than the [*****] Amount, then MasterCard
shall [*****].
(d) Acquired Institutions and Acquired Portfolios.
(i) Except as otherwise set forth in this Agreement, in the event Customer
acquires an Acquired Institution or Acquired Portfolio pursuant to which
Customer acquires Cards that would be Prepaid Cards if offered or managed by
Customer and issued by the Qualified Issuer Institution, such Cards shall be
subject to the terms and conditions contained herein upon the consummation of
such Acquisition Transaction and all such Cards that are Competing Cards shall
be converted to MasterCard Prepaid Cards within [*****] of the closing of the
applicable Acquisition Transaction.
(ii) In the event Customer acquires Cards that would be Prepaid Cards if
offered or managed by Customer and that are subject to a benefit, support, or
incentive arrangement with MasterCard, such Cards and all transactions and
volume associated therewith shall not be included in this Agreement and shall
continue to be subject to such benefit, support or incentive arrangement in
accordance with its terms until the earlier of (y) such date otherwise agreed to
in writing by MasterCard and Customer and (z) the expiration or termination of
such arrangement; provided, however, even upon such expiration or termination,
such Cards and volume and transactions attributable to such Cards shall not be
included in the [*****] or the [*****], unless agreed to otherwise in writing by
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MasterCard and Customer. MasterCard and Customer shall discuss in good faith
mutually agreeable terms to include such Cards and all transactions and volume
associated therewith under this Agreement.
(iii) Notwithstanding anything to the contrary in this Agreement, for the
purposes of calculating the [*****] Support payable to Customer with respect to
a particular Year ("Subject Year"), [*****] shall be subject to the following:
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(A) [*****] generated by MasterCard prepaid cards that Customer has first
included pursuant to Section 2(d)(ii) of this Agreement or [*****], as
applicable, during the Subject Year, shall be [*****];
(B) [*****] generated by MasterCard prepaid cards that (y) Customer has
first included pursuant to Section 2(d)(ii) of this Agreement or [*****], as
applicable, during a Year preceding the Subject Year, and (z) was generated
during any portion of the applicable [*****] that occurs in the Subject Year,
shall be [*****]; and
(C) [*****] generated by MasterCard prepaid cards that (y) Customer has
first included pursuant to Section 2(d)(ii) of this Agreement or [*****], as
applicable, during a Year preceding the Subject Year, and (z) was generated
during any portion of the applicable [*****] that occurs in such Year preceding
the Subject Year, shall be [*****].
(e) BIN. Unless otherwise agreed to by MasterCard and Customer, Customer
shall, upon request by MasterCard, cause the Qualified Issuer Institution: (i)
on or prior to the date of issuance of any MasterCard Prepaid Cards by the
Qualified Issuer Institution, to obtain a separate BIN for the MasterCard
Prepaid Cards it issues and (ii) to maintain such separate BIN until the end of
the Term.
(f) Issuer Prepaid Card Arrangements and MSP Status.
(i) Customer, on or prior to the Effective Date, shall have entered into,
and shall maintain at all times during the Term, a valid and enforceable Issuer
Prepaid Card Arrangement with the Qualified Issuer Institution for the issuance
of Prepaid Cards. Customer shall cause all prepaid cards offered, managed or
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otherwise provided by Customer during the Term to be [*****].
(ii) Customer is a registered MSP as of the Effective Date and shall
continue to be a registered MSP in good standing during the Term. Customer shall
not qualify for any Incentives unless Customer is a registered MSP in good
standing.
(g) AGREEMENTS RESPECTING COMPETING BRANDS. During the Term, Customer shall
not, and shall cause each Qualified Issuer Institution to not, enter into any
agreement or arrangement that will have the effect, directly or indirectly, of
marketing, promoting, publicizing or facilitating the acquisition or use of any
Prepaid Card issued under, or in association with, a Competing Brand, [*****].
(h) USE OF INCENTIVES. Incentives may not be used to promote Competing
Brands or Competing Card programs. Incentives may be used only to promote
MasterCard Prepaid Card programs.
(i) EXPANSION OF PORTFOLIO. Customer shall use its commercially reasonable
efforts to expand the number of Prepaid Cards in, and gross dollar volume
generated by, its MasterCard Prepaid Card portfolios.
SECTION 3. MASTERCARD RULES. Customer shall abide by all present and future
Rules and this Agreement supplements (and does not limit or replace) Customer's
obligations, or MasterCard's rights or remedies, under the Rules.
SECTION 4. PAYMENT. Customer shall submit written requests to MasterCard
for payments of Incentives no earlier than the fifth day following the date such
funds are payable by MasterCard pursuant to Section 1 above, and no later than
sixty (60) days after such date. MasterCard will pay Incentives within sixty
(60) days of receiving Customer's validated request for such Incentives.
MasterCard may withhold or condition any payment, waiver, rebate, or other
provision of Incentives on Customer's providing validation (satisfactory to
MasterCard), including reports and information described in Section 5 of this
Agreement, supporting the request for same. Except as otherwise set forth in
this Agreement, any Incentives payments owed by MasterCard to Customer shall be
made via the MasterCard Consolidated Billing System ("MCBS") or by other means
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as determined by MasterCard in its sole discretion. MasterCard may, at
MasterCard's option, recover any amount owing from Customer under this Agreement
by debiting Customer's MCBS account. Notwithstanding anything to the contrary
set forth herein, Incentive amounts payable under this Agreement shall be
reduced by the amount of any other payment received by or due to Customer (i)
under any benefit, support, or incentive arrangement between MasterCard and
Customer or a Qualified Issuer Institution, other than this Agreement, in
connection with Prepaid Cards or (ii) as successor to an Acquired Institution or
Acquired Portfolio, under any benefit, support, or incentive arrangement between
MasterCard
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and such Acquired Institution or its Affiliates or the transferor of such
Acquired Portfolio in connection with Prepaid Cards.
SECTION 5. REPORTING. In addition to any reporting required under the Rules,
Customer shall provide such reports and information as MasterCard may from time
to time reasonably request to determine whether Customer is meeting its
Commitments or other obligations under this Agreement, including, but not
limited to, written certifications by senior officers of Customer and Qualified
Issuer Institution.
SECTION 6. CONTINUED OBSERVANCE. To the extent that, during the Term, Customer
in any way sells, transfers or divests itself, in whole or in part, of one or
more Affiliates or Cards that would have been subject to the terms of this
Agreement had no such sale, transfer or divestiture occurred, Customer shall
cause the continued observance by the entity acquiring such Affiliates or Cards
of the terms of this Agreement relating to such Affiliates or Cards following
such sale, transfer or divestiture.
SECTION 7. CONFIDENTIALITY.
(a) During the Term and for five (5) years thereafter, unless otherwise
provided under the Rules or required by applicable law, each party will treat
all information relating to this Agreement (other than the existence of this
Agreement), and all terms and conditions of this Agreement as confidential,
shall disclose such information only to those individuals with a reasonable need
to know within its organizations (provided such individuals agree to be bound by
the confidentiality obligations herein), and shall not disclose any such
information to third parties, without the other party's prior written approval,
except that either party may disclose same to its auditors, regulators, outside
board members and outside counsel provided such persons are advised of, and
observe the obligations of this Section 7. The parties acknowledge that, in the
event of a breach of this Section 7, the non-breaching party will likely suffer
irreparable damage that cannot be fully remedied by monetary damages.
Accordingly, in addition to any remedy which the non-breaching party may possess
pursuant to applicable law, the non-breaching party retains the right to seek
and obtain injunctive relief against any such breach in any court of competent
jurisdiction. The provisions of this Section 7 shall survive the termination of
this Agreement.
(b) Notwithstanding the foregoing in Section 7(a), [*****]
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[*****].
SECTION 8. TERM. The term of this Agreement ("Term") shall commence as of the
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Effective Date and shall end upon the conclusion of [*****].
SECTION 9. NOTICES. All notices relating to this Agreement, must be in writing
and will be deemed given upon hand delivery or upon receipt if sent by an
overnight courier delivery service of general commercial use and acceptance
(including, without limitation, DHL, FedEx or UPS) to the following addresses or
such other address as may be later designated by notice given by such party:
IF TO CUSTOMER: [*****]
with a copy to the office of the general counsel at the same address.
IF TO MASTERCARD: MasterCard International Incorporated
addressStreet2000 Purchase Street
placeCityPurchase, StateNew York PostalCode10577
Attention: Chris McWilton, President, placecountry-regionU.S. Markets
with a copy to the office of the general counsel at the same address.
SECTION 10. EXECUTION AUTHORITY. MasterCard and Customer each represent and
warrant that it has all necessary corporate power and authority to enter into
this Agreement and, when executed and delivered, this Agreement shall be each of
Customer's and MasterCard's respective legal, valid and binding obligation
enforceable in accordance with its terms. Merchant Processing International,
Inc. represents and warrants to MasterCard that Merchant Processing
International, Inc. has all corporate authority and power to bind all of its
Affiliates of the obligations set forth in this Agreement.
SECTION 11. REMEDIES. Except as set forth in [*****] of this Agreement, the
remedies for breach stated herein are non-exclusive. In addition to these
remedies, the parties shall be entitled to pursue any other remedies that they
may have at law or in equity.
SECTION 12. MISCELLANEOUS. A failure or delay of either party to enforce any
provision of or exercise any right under this Agreement shall not be construed
to be a waiver. No waiver by a party shall be effective unless expressly made in
writing. If any provision of this Agreement is held by a court of competent
jurisdiction to be unenforceable or invalid in any
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respect, such unenforceability or invalidity shall not affect any other
provision of this Agreement, and this Agreement shall then be construed as if
such unenforceable or invalid provisions had never been a part of this
Agreement. The captions in this Agreement are included for convenience only and
shall not affect the meaning or interpretation of this Agreement. This Agreement
shall be binding upon each party's respective successors and assigns and each
party shall cause such successor and assignee to be so bound; provided, however,
that Customer shall not have the right to assign or transfer to any third party
(including without limitation, by way of sale of any Cards subject to this
Agreement, by voluntary or involuntary transfer, by operation of law or
otherwise), nor shall any successor to Customer have or receive any of
Customer's rights against MasterCard, or the benefits of this Agreement, without
first obtaining the prior written consent of MasterCard. If any party acquires
any interest in this Agreement or the subject matter hereof in any manner,
whether by a change of Control, by acquiring any Cards subject to this
Agreement, by voluntary or involuntary transfer, by operation of law or
otherwise, such interest shall be held subject to all of the terms of this
Agreement and by taking or holding such interest, such party shall be
conclusively deemed to have agreed to be bound by, and to comply with, all of
the terms and obligations of this Agreement; provided, that, unless otherwise
consented to in writing by MasterCard, in the event of a change of Control of
Customer, MasterCard shall not be obligated to provide any Incentives or other
benefits under this Agreement and the successor shall have no rights against
MasterCard with respect to this Agreement. This Agreement evidences the entire
agreement and understanding between MasterCard and Customer with respect to the
transactions contemplated by this Agreement and supersedes all prior agreements
between the parties with respect to such transactions. This Agreement shall not
be amended or modified in any respect except in writing, duly executed by both
MasterCard and Customer. This Agreement and the respective rights and
obligations of the parties hereto shall be governed by the laws of the State of
placeStateNew York without reference to its conflict-of-laws or similar
provisions that would mandate or permit application of the substantive law of
any other jurisdiction. The state and federal courts located in placeStateNew
York shall have exclusive jurisdiction over any and all disputes relating to
this Agreement. This Agreement may be executed in one or more counterparts, each
of which, taken together, shall constitute but one original document. As used in
this Agreement, the terms defined in Exhibit A shall have the meaning assigned
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to them in Exhibit A.
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[Signature page follows]
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EXECUTED as of the latest date written below.
MERCHANT PROCESSING INTERNATIONAL, INC.
D/B/A BANK FREEDOM
By: \s\ Bruce Berman
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Name Bruce Berman
Title: CEO
Date: 6/29/2009
MASTERCARD INTERNATIONAL INCORPORATED
By: \s\Chris McWilton
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Name Chris McWilton
Title: Pres - U.S. Markets
Date: 7/02/2009
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