EXHIBIT 10.12
POS NETWORKS
This POS NETWORKS (the "Agreement") is entered
into as of this 1st day of March, 2003, by and between Carrollton Bank a banking
corporation ("Bank") and Kryptosima LLC, a Georgia Limited Liability Corporation
("Correspondent"). Capitalized terms used, but not otherwise defined, in the
Agreement have the meanings assigned to those terms in the Networks' Operating
Rules, as such rules may be amended from time to time (the "Operating Rules").
RECITALS
A) Bank is a principal in Networks, as defined below. "Networks" operate a
telecommunications and processing system ("POS System") which, among other
things, effectuates the switching, processing and settlement of (i)
point-of-sale transactions ("POS Transactions') and (ii) POS scrip transactions
("Scrip Transactions") and, collectively with POS Transactions for the purchase
of goods and services from participating retail merchants ("Merchants") through
the use of the Networks' POS Cards. "Networks" shall mean the POS Systems
operated by NYCE, PULSE, STAR, TRANSALLIANCE, INTERLINK, MAESTRO, AFFN, ALASKA
OPTION, SHAZAM and any other operators of POS Systems as the parties may agree
upon in writing from time to time.
B) Correspondent desires to deploy and service (or cause to be deployed and
serviced) terminals ("POS Terminals") used to transmit POS Transactions at
Merchant locations within the Networks' Primary Marketing Area, and to switch
process and/or settle POS Transactions generated by these POS Terminals.
Correspondent desires to connect these terminals to the Networks. In some cases,
devices will be deployed to consumers' homes, to enable debit transactions to
pay for purchases at Internet Merchants web sites. Internet merchant
transactions will be permitted only for cards bearing the logos of networks that
allow such transactions.
C) Correspondent is not eligible for membership in Networks. Correspondent ( )
is a certified POS Processor with Networks ("Certified Processor") or (X) is not
a Certified Processor, but acts as an intermediary between Merchants and an
independent entity which is a Certified Processor.
D) Networks permit POS Transactions generated by POS Terminals which are not
deployed and serviced by a POS Member or Affiliate to be processed through the
Networks; provided a POS Member or Affiliate sponsors the Merchant at whose
place of business the POS Terminal is located as a "Merchant" of the Networks.
E) Correspondent desires to have Bank sponsor its Merchants into the Networks
("Sponsored Merchants").
F) Bank is willing to sponsor Correspondent's Merchants into Networks subject to
all of the terms and conditions of this Agreement, including, specifically that
Correspondent assume, as to the Sponsored Merchants, all of the duties and
obligations of Bank to Networks, its Members, Affiliates and Processors.
AGREEMENT
In consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Correspondent and Bank agree as follows:
I) Representations and Warranties. Correspondent represents and warrants to Bank
as follows:
A) Corporate Power and Authority. Correspondent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia; is authorized to do business and is in good standing in the
jurisdictions in which its property or the conduct of its business legally
requires such authorization; and has full power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution, delivery, and
performance of this Agreement by Correspondent has been duly authorized by all
necessary action and does not and will not (i) require the consent or approval
of Correspondent's shareholders or partners; (ii) contravene Correspondent's
organizational documents; (iii) violate, or cause injunction, decree,
determination, or award presently in effect having applicability to
Correspondent; (iv) result in the breach of, or constitute a default under, any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which result in, or require, the creation or imposition of any
lien, charge or other encumbrance of any nature whatsoever, upon or with respect
to any of the properties now owned or hereafter acquired by Correspondent.
B) Legally Enforceable Agreement. This Agreement has been duly executed
and delivered by Correspondent and is the legal, valid, and binding obligation
of Correspondent, enforceable against Correspondent in accordance with its terms
except to the extent that such enforcement may be limited by applicable
bankruptcy, insolvency, and other similar laws affecting creditors' rights
generally.
C) Operating Rules. Prior to the execution of this Agreement,
Correspondent has received and reviewed a full and complete copy of the
Operating Rules.
D) Financial Statement Certification. All financial statements
furnished by Correspondent to Bank are correct and complete and fairly present
the financial condition of Correspondent for the fiscal period in question all
in accordance with generally accepted accounting principals consistently
applied. The financial statements published to the SEC by correspondent's parent
company, InstaPay and available online are correct and complete and fairly
represent InstaPay's financial condition. Since the date of the most recent
financial statements delivered to Bank, neither the business, properties nor
condition (financial or other) of Correspondent or InstaPay has been adversely
affected in any material way.
II) Duties of Correspondent.
A) Merchant Agreements. Correspondent shall, from time to time, install
(or provide for the installation of) POS Terminals in retail and other
establishments pursuant to written agreements with Sponsored Merchants (the
"Merchant Agreements"). Such Merchant Agreements shall be in form satisfactory
and substance satisfactory to Bank, shall contain at least the substance of the
provisions of the Operating Rules and shall obligate the Sponsored Merchant to
abide by the Operating Rules. Correspondent shall be responsible for effecting
any necessary and appropriate amendments to the Merchant Agreements that may
become necessary as a result of subsequent amendments to the Operating Rules. In
the event a Sponsored Merchant refused to consent to any such amendment,
Correspondent shall notify Bank prior to the effective date of the amendment to
the Operating Rules and upon such notice such Sponsored Merchant shall be deemed
terminated from participation in Networks.
The Merchant Agreements may contain such other terms and conditions as are
mutually agreed upon between any Sponsored Merchant and Correspondent; provided,
however, that such additional terms and conditions do not conflict with any
provisions of this Agreement or the Operating Rules.
B) Requests for Sponsorship of Merchants. Correspondent shall request
Bank to sponsor Merchants by completing and forwarding to Bank such forms and
other documents as may be required by Networks for enrollment of such Merchants
and a copy of the applicable Merchant Agreement (all such forms and documents,
collectively the "Enrollment Forms").
C) Compliance With Operating Rules. Correspondent agrees to abide by
the Operating Rules and all applicable laws, rules and regulations, as all of
the foregoing may be amended from time to time. Notwithstanding the fact that
Bank may from time to time provide Correspondent with copies of the Operating
Rules or amendments thereto, Correspondent shall be solely responsible for
keeping itself apprised of amendments and changes to the Operating Rules.
D) Notices to Bank. Correspondent shall deliver to Bank within 48 hours
of receipt by Correspondent a copy of all notices or correspondence (other than
routine updates, correspondence and notices sent to all Certified Processors)
that it receives from (i) Networks, (ii) the Networks' Switch, (iii) any
federal, state or local governmental authority, or (iv) any third party, which
in any way relates to any Sponsored Merchant, Correspondent's status as a
Certified Processor, or this Agreement. In the event Correspondent is not a
Certified Processor, Correspondent shall cause its independent Certified
Processor to comply with the provisions of this Section II, D. Correspondent
shall also notify Bank promptly in the event any Sponsored Merchant violates or
fails to comply with its Merchant Agreement with Correspondent, terminates it
Merchant Agreement with Correspondent or has its Merchant Agreement terminated
by Correspondent. Likewise, Correspondent shall notify Bank promptly, in the
event its independent Certified Processor for any reason ceases to be approved
by Networks, violates or fails to comply with its agreement with Correspondent,
terminates its agreement with Correspondent or has such agreement terminated by
Correspondent.
E) Use of Bank's Name. Neither Correspondent nor its independent
Certified Processor shall use Bank's name or logo for any reason, or use or
refer to Bank in any advertisements, sales, presentations or marketing materials
without the express prior written consent of Bank. Correspondent may accurately
describe its relationship with Bank in response to questions and in its dealings
with Sponsored Merchants.
F) POS Processor Agreement. If Correspondent is a Certified Processor,
Correspondent shall enter into a POS Processor Agreement with Networks the
Operating Rules and shall comply with the terms thereof. In addition,
Correspondent shall use its best efforts to maintain itself in good standing as
a Certified Processor. If Correspondent utilized an independent Certified
Processor, such Certified Processor shall enter into a POS Processor Agreement
with Networks as herein provided and Correspondent shall cause such Certified
Processor to comply with the Operating Rules and use its best efforts to
maintain itself in good standing as a Certified Processor.
G) Audits and Financial Statements. Correspondent shall furnish to
Bank, as soon as available, and in any event within ninety (90) days of the end
of each fiscal year, consolidated balance sheets of Correspondent and its parent
InstaPay as of the end of such fiscal year and consolidated statements of income
and retained earnings and statements of changes in financial position for such
fiscal year, all in reasonable detail and all prepared in accordance with
generally accepted accounting principles consistently applied, and reviewed by
an accountant acceptable to Bank. Timely filing by InstaPay of its financials
with SEC as part of its public company reporting requirements shall be
considered to fulfill this requirement.
If Correspondent is not a financial institution or affiliate of a financial
holding company subject to an examination by regulatory authorities,
Correspondent shall, at its own expense, be subject to an as needed or required
by ATM Network periodic examination and audit of all its functions in connection
with its switching, processing and settlement of POS Transactions for Sponsored
Merchants, at such frequency as Bank deems appropriate, by independent certified
public accountants satisfactory to Bank. The scope of such examination and audit
shall meet such standards as may be prescribed by Bank, and the results of such
examination and audit shall be made available to Bank.
III) Duties of Bank. Subject to all of the provisions contained herein, Bank
agrees to sponsor into Networks, and shall use its best efforts to remain as a
member of those Networks, all of the Merchants as Correspondent may request from
time to time; provided, that Bank, in its absolute discretion may refuse to
sponsor any Merchant requested by Correspondent. With respect to any Merchant
accepted by Bank for sponsorship, Bank shall promptly (and in no case later than
5 Business Days after its receipt of the Enrollment Forms for a particular
Merchant) complete and execute the applicable Enrollment Forms, forwarding the
original Enrollment Forms to Networks and photocopies thereof to Correspondent.
For purposes of this Agreement "Business Day" shall mean any day other than
Saturday, Sunday or a "holiday".
IV) Fees. For each Sponsored Merchant, Correspondent agrees to pay Bank a
transaction fee for each POS Transaction which is transmitted by Correspondent
through the Network, as provided in Annex "A" attached hereto. Such fees will be
calculated by Correspondent for each calendar month and will be due and payable
by Correspondent to Bank no later than the 15th day of the next following
calendar month. (Example, September transactions will be paid no later than
October 15th). All payments shall be made in the manner provided in Annex "A"
attached hereto and shall be proceeded or accompanied by a detailed written
statement setting forth all applicable POS Transactions. In addition to the
transaction fees outlined above, Correspondent shall pay, or immediately upon
demand, reimburse Bank for any and all fees and charges which may be imposed on
Bank, Correspondent or any independent Certified Processor from time to time by
Networks, which in any way relate to this Agreement, the Sponsored Merchants or
the POS Transactions.
V) Settlement. All settlement, funding and adjustments for all Transactions
generated by Sponsored Merchants shall be handled by Correspondent or its
independent Certified Processor in accordance with the Operating Rules. Bank
will instruct Networks to settle all such Transactions as directed by
Correspondent.
VI) Liability and Indemnification.
A) Correspondent's Liability. Correspondent shall be jointly and
severally liable with each Sponsored Merchant for each of the Sponsored
Merchant's obligations and liabilities under the applicable Merchant Agreement
and for any Claims (as hereinafter defined) which, in any way directly or
indirectly, relate to, result from or arise out of, any Sponsored Merchant's
violation of, or failure to comply with, the Operating Rules. Correspondent
acknowledges and agrees that it is responsible for any and all obligations
related to the operation of the POS Terminals under the Operating Rules
(including connection to the Network).
B) Bank's Liability. Bank shall be responsible only for performing the
services expressly provided for in this Agreement and Bank undertakes no duties
other than those expressly provided herein. Without limiting the generality of
the foregoing, Bank shall not be responsible for: (i) the acts or omissions of
Correspondent, any Sponsored Merchant, any independent Certified Processor or
any of their representatives, employees or agents or any other person,
including, without limitation, Networks, any Member, Affiliate or any other
Processor, and no such person or entity shall be deemed Bank's agent for any
purpose whatsoever; or (ii) breach of its duties hereunder, to the extent such
breach was caused by legal constraint, interruption in transmission or
communication facilities, equipment failure, war, riot, fire, floor, earthquake
or other natural disaster, strike, emergency or other circumstance beyond Bank's
control.
C) Indemnification. Correspondent agrees to indemnify, defend and hold
harmless Bank and its legal representatives, successors, assigns, agents,
employees, officers, directors, shareholders, subsidiaries, parent corporations,
sister corporations and affiliates, and each of them (collectively,
"indemnities") from and against any and all liabilities, demand, rights (whether
contingent, accrued, inchoate or otherwise), disbursements, including reasonable
legal fees and expenses, of whatsoever kind and nature (collectively "Claims"),
imposed on, incurred by or asserted against, any indemnities which in any way,
directly or indirectly, relate to, result from or arise out of: (i) any breach
of any representation, warranty or covenant of Correspondent contained in this
Agreement; (ii) any act or omission of Correspondent's, any Sponsored Merchant,
or any other person or entity; (iii) Correspondent's any Sponsored Merchants' or
any independent Certified Processor's violation of, or failure to comply with,
the Operating Rules or the Merchant Agreements, and (iv) any Claim of a third
party, directly or indirectly, relating to, resulting from or arising out of
this Agreement or Bank's sponsorship of any Sponsored Merchant as provided
herein (including, without limitation, any Claim for indemnification by Networks
or any member, Affiliate or Processor pursuant to the Operating Rules). Without
limiting the generality of the foregoing, Correspondent shall indemnify, hold
harmless and defend the Bank, Networks and any member, Affiliate or Processor,
from and against all claims, losses, costs, damages, liabilities, or expenses
(including reasonable attorneys' fees) that are suffered as a result of a POS
Transaction or attempted POS Transaction and arise out of any of the events or
causes listed in the Operating Rules.
D) Limitation on Liability. In no event shall any party to this
agreement be liable under any theory of tort, contract, strict liability, or
other legal or equitable theory for any lost profits, exemplary, punitive,
special, incidental, indirect or consequential damages, each of which is hereby
excluded by agreement of the parties regardless of whether or not such party has
been advised of the possibility of such damages.
VII) Term and Termination.
A) Term. This Agreement shall have a term commencing on the date hereof
and continuing in effect until terminated in accordance herewith.
B) Termination of Agreement. This Agreement may be terminated by either
party hereto upon thirty days prior written notice to the other. In
addition, Bank may terminate this Agreement immediately upon the
happening of any of the following events:
1) Correspondent fails to make any payment due hereunder when
due;
2) Correspondent fails to perform or comply with any of the other
terms and conditions of this Agreement and fails to remedy
same with fifteen days after receipt of written notice from
Bank thereof;
3) Any of Correspondent's representations or warranties shall be
false as of the date made;
4) Correspondent makes a general assignment for the benefit of
its creditors, or becomes the subject of a bankruptcy,
receivership, conservatorship or similar proceeding;
5) Correspondent suffers a material adverse change in its
condition (financial or otherwise) after the date hereof;
6) Any federal or state regulatory agency with authority over
Bank requires, or request in writing, that Bank terminate this
Agreement.
7) The Board of Directors of Bank determines that the Bank's
continued performance of this Agreement would constitute an
unsafe and unsound banking practice;
8) Bank terminates its membership in Networks, or its membership
is terminated, or this Agreement or any aspect thereof, is to
be deemed by the Board of Directors of Networks to be a
material violation of the Operating Rules; or In the event
Correspondent is a Certified Processor, its status as such
ceases, for any reason, and in the event Correspondent
utilizes an independent Certified Processor, such Certified
Processor ceases for any reason to be approved by Networks' or
Correspondent's relationship with such Certified Processor
expires or terminates for any reason.
No termination effected pursuant to this Section VII (B) shall affect the rights
and duties of either party under this Agreement under Section VI hereof, with
respect to obligations incurred, or Claims arising out of acts or omissions
which occurred, prior to the termination date.
C) Termination of Sponsored Merchant. Bank may terminate its
sponsorship of any Sponsored Merchant immediately upon the happening
of any of the following events:
1) Such Sponsored Merchant suffers a material adverse change in
its condition (financial or otherwise) after the date hereof;
2) Such Sponsored Merchant violates or fails to comply with the
terms and conditions of its Merchant Agreement or The
Operating Rules;
3) Such Sponsored Merchant terminates its Merchant Agreement with
Correspondent or such Merchant Agreement is terminated by
Correspondent or;
4) Bank, in its absolute discretion, determines that the
continued sponsorship of any Sponsored Merchant exposes Bank
to potential claims.
Termination shall become effective upon the receipt of written notice by
Correspondent and, upon such receipt, Correspondent shall immediately take
whatever actions are necessary to ensure that such Merchant is unable to
initiate POS Transactions through the Network.
VIII) Confidentiality. Bank and Correspondent each agrees to retain in strictest
confidence all files, printed materials, trade secrets, customer information,
produce information and any other information of whatever nature, whether
written or otherwise, disclosed or communicated to it by the other party in
connection with the terms and conditions of this Agreement, and said
confidential information shall not be disclosed to any other person or entity
without express prior written consent of the other party unless the disclosure
is required by Network or any law. Such information may, however, be disclosed
to any consultants, auditors, or attorneys employed by a party, or as required,
to regulatory authorities, or to a party's employees or others in a confidential
relationship with that party who must have access to such information, and then
only to the extent necessary. Bank and Correspondent each agree that information
is not confidential which (a) is already known at the time it is obtained; (b)
is or become publicly known through no wrongful act of the party obtaining it;
or (c) is received from a third party without restriction and without breach of
this Agreement.
IX) Miscellaneous.
A) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland and the Operating Rules.
B) Amendments; Waivers. This Agreement may be amended only by writing
signed by all of the parties hereto. Course of dealing, implication or failure
or a delay in exercising any of parties rights and remedies hereunder, shall not
effect any amendment or modification of this Agreement or the waiver of any such
rights.
C) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original hereof, and all of
which taken together shall constitute one and the same agreement.
D) Entire Agreement. This Agreement and the Operating Rules contain the
entire agreement of the parties and supersede any prior or contemporaneous
written or oral agreements between the parties. In the event that this Agreement
or any portion hereof, conflicts with the Operating Rules or any terms or
provisions of this Agreement. There are no representations, warranties,
agreements, arrangements, or understandings, oral or written between the parties
relating to the subject matter of this Agreement which are not fully expressed
herein, or in the Operating Rules. The parties agree that the traditional
formulation of the parol evidence rule (whereby extrinsic evidence may not be
used to vary or contradict the unambiguous terms of a document that represents a
final and complete expression of the parties' agreement) shall govern in action
or proceeding that my ensue concerning this Agreement.
E) Notices. Except as otherwise expressly provided herein, any written
notice or communication required or permitted to be given under this Agreement
may be personally served, telecopied, telexed or sent by United States or by
express carrier, and shall be deemed to have been received when delivered in
person, upon receipt of telecopy of telex, or five business days after deposit
in the United States mail, registered or certified, with postage prepaid and
properly addressed. For purposes of this Agreement all notices shall be sent to
the address and telecopy and telex number set forth below each parties name on
the signature pages hereto.
F) Nonassignability. Correspondent may not assign this Agreement or its
rights and obligation hereunder to any other person without Banks's express
prior written consent, provided, however, correspondent may assign this
agreement to an entity controlled directly or indirectly by Correspondent
without the prior written consent of Bank.
G) No Third Party Beneficiaries. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective legal
representative, successors and assigns. This Agreement is not for the benefit of
any other person, and no other person shall have any rights against
Correspondent or Bank hereunder.
H) Headings. Headings are used in this Agreement for reference purposes
only and shall not be deemed a part of this Agreement.
I) Severability. If any clause, sentence or other provision or portion
of this Agreement shall for any reason become illegal, null or void, or be held
by any court of competent jurisdiction to illegal, null or void, the remaining
portions of this Agreement shall remain in full force and effect.
J) Further Assurances. The parties hereto from time to time after
execution of this Agreement, without further consideration, shall execute and
deliver, as appropriate, such documents and take such actions as may be
reasonably necessary or proper to carry out and consummate the transactions
contemplated by this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written by their duly authorized officers.
"CORRESPONDENT" "BANK"
Kryptosima LLC Carrollton Bank
00 Xxxxxxxxx Xxx 0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000 Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
BY: ____________________________ BY: __________________________
Xxxxx Xxxxxxx Xxxx X. Xxxxxx
President Senior Vice-President
Retail Delivery Group
Phone #: (000) 000-0000
Fax #: (000) 000-0000
ANNEX "A"
INDIRECT MERCHANT SPONSORSHIP FEES
Monthly Fees:
$.0075 per approved transaction transmitted through the Network.
Minimum Monthly Fee: $500.00
"EXTERNAL PROCESSOR FEES WILL BE BILLED AT COST"
Payment in the form of an ACH debit to your designated DDA, with listing
of the transactions shall be remitted no later than the 15th business day of the
following month for transactions during the prior month.
