Exhibit 8.1.1
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STORED VALUE CARD
DISTRIBUTION AGREEMENT
THIS AGREEMENT is entered into this 19th day of May, 2005, by and
between Xxxxxx Xxxxxxxxx, Inc. ("MBI"), 0000 00xx Xxxxxx Xxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxx 00000, and Virtual Card Services. LLC, ("Distributor"), 0000
Xxxxxxx Xx. Xxxxx 000, Xxx Xxxxx, XX 00000.
ARTICLE 1
DISTRIBUTORS
1.1 "Product": MBI Non-Hologram Stored Value Card-ATM Card upgradeable
by the end user to a Hologram Stored Value Card-ATM Card.
1.2 "Product Unit": 1 Non-hologram card and 1 Hologram card in a
non-retail package, (payroll style envelope with Terms and Conditions, card
carrier and PIN card) to which cash can be added at retail locations, to be
shipped directly to the consumer, or to the retail business that will sell to
the consumer.
1.3 "Stored Value Card System": A tool allowing retail locations to
sell, activate and perform Patriot Act compliance for issuers of the Product and
to load value on the Product.
1.4 "Manufacturer's Suggested Retail Price" ("MSRP"): The price of the
Product Units in United States Dollars, as set forth herein. MBI may change the
MSRP of any Product Unit from time to time. Any change to the MSRP of any
Product Unit will take effect upon 30 days prior written notice to Distributor.
1.5 "Distributors "Retail Network": Retailers of Product Units bound
by a distribution agreement with Distributor and selling to the end user of the
Product.
ARTICLE 2
GRANT OF DISTRIBUTORSHIP
2.1 MBI hereby grants Distributor and Distributor accepts for a term
of two years from the date hereof ("Term"), the exclusive right to distribute
Products to Distributors database of sub prime consumers ("Consumers") and
automobile dealerships ("Dealers") in the United States of America, subject to
the terms and conditions of this Agreement.
2.2 Distributor shall use its reasonable efforts to achieve maximum
sales of Products and to establish an adequate retail network, consistent with
good business ethics and in a manner that will reflect favorably on MBI and on
the goodwill and reputation of MBI.
2.3 Distributor will provide sufficient consumer information in a file
format agreed to by both parties, or retail store information to allow
fulfillment of a reasonable order from a Consumer or Dealer in Distributor's
Retail Network within 24 hours of receipt of the order.
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ARTICLE 3
DISTRIBUTOR RESPONSIBLITIES
3.1 Develop distribution in motor vehicle dealership locations that
represent the "Sire Network".
3.2 Distributor anticipates purchasing at least 100,000 Product Units
annually throughout the term of this Agreement and any renewal term hereof.
3.3 Provide Dealers with information regarding the Stored Value Card
System and set up, training and implementation of the Stored Value Card System.
3.4 Provide Dealers a purchase or lease program for the hardware
necessary to implement the Stored Value Card System for Dealers not having
hardware compatible with the Stored Value Card System.
3.5 Provide reasonable assistance to MBI in the implementation of the
necessary products and services to support the Product.
3.6 Provide advertising materials to the Distributor's Retail Network
promoting the Product.
3.7 Establish specifications for a launch plan for distribution of the
Product and inform MBI of the identity of Distributor's team leader responsible
for the launch of the distribution plan and the implementation of the Stored
Value Card System throughout Distributor's Retail Network.
3.8 Distributor acknowledges that implementation of the Stored Value
Card System throughout Distributor's Retail Network will require significant
involvement by Distributor's technical personnel. To implement the Stored Value
Card System Distributor shall:
(a) Define and implement a plan for the trial testing and
loading of the Product, including a timeline and anticipated dates of
implementation.
(b) Provide appropriate information to all Distributors sales
agents and independent representatives sufficient for the sales agents and
independent representatives to market the Product.
ARTICLE 4
MBI REQUIREMENTS
4.1 Deliver Product Units to Consumers or Dealers as required by
Distributor and as provided herein.
4.2 Provide basic telephone support and customer service to end-users
of the Product. Distributor may request that MBI provide additional technical
support to Dealers, with pricing of such additional support to be determined by
MBI based upon the specific nature and time intensity of the support requested.
4.3 Provide Distributor necessary software tools to load the Stored
Value Card System on compatible hardware owned or leased by Dealers.
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4.4 Direct customers of Distributor's Retail Network to local
participating Dealers in Distributor's Retail Network.
4.5 Provide Distributor with up to five days of training for
Distributor's sales staff on set up and implementation of the Stored Value Card
System. Training will consist of:
(a) Providing 5 Product Units to Distributor for training and
testing purposes.
(b) Work with Distributor's staff during the Product launch
and Stored Value Card System implementation to assist Distributor's staff in
gaining an adequate understanding of the Product and the Stored Value Card
System.
(c) Provide training in the areas of transaction, reporting
and other operating procedures.
4.6 Upon the completion of training, MBI shall test the Product as
purchased through a Distributor's Retail Network retailer to ensure proper
functioning of the Stored Value Card System as implemented in Distributor's
Retail Network.
ARTICLE 5
ORDERS AND PRICING:
5.1 The Price per Product Unit is:
(a) 1 ATM Card Product Unit: $3.00;
(b) 1 ATM Card and 1 Hologram Card Product Unit: $5.00;
(c) 2 ATM Card Product Unit: $3.50.
The above pricing is based on anticipated purchase of a minimum of
100,000 units annually. Orders of less than 50,000 units will be priced per
MBI's standard small order pricing, as adjusted by MBI from time to time.
5.2 The Manufacturer's Suggested Retail Price (MSRP) of the all
Product Units will be established and agreed to by both parties. The MSRP for
the Product Units may be adjusted from time to time as deemed necessary by both
parties.
5.3 MBl will use its best efforts to fill Product orders as quickly as
possible following receipt by MBI of the written order (FAX or e-mail shall
constitute a written order).
5.4 All shipments of Product will by F.O.B., and shall be invoiced
upon receipt of the data file with consumer names and addresses. Each Invoice
shall be due and payable to MBI within thirty days of receipt of the invoice.
5.5 Each amount payable to MBI hereunder shall be paid in full, with
no deductions or offsets, and remitted in United States Dollars by check, money
order or deposit in such account at such financial institution as MBI shall from
time to time designate. Delinquent payments shall bear interest at the rate of
l.5% per month of the delinquent amount until paid, or the maximum interest rate
permitted by law, whichever is less.
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5.6 In the event that any Product is superseded by a private label
card developed by the Distributor or new version of the Product offered by MBI,
MBI shall give Distributor notice of such new version. Distributor may obtain
the new version of said Product on a Product Unit per Product Unit basis by
returning unsold Product Units of the superseded Product within thirty (30) days
of such notice from MBI. Upon return of unsold units, together with an order for
the new version of said superseded Product, MBI shall ship the requested number
of Product Units, subject to the provisions of this Article, and provided that
Distributor shall bear the costs of shipping and handling, together with any
difference between the price for the superseded Product Unit and the Product
Unit price for the new version of the Product.
5.7 In the event Distributor desires the assistance of MBI's technical
personnel in implementation of the Stored Value Card System or any upgrade
thereto, including the development of any software to increase the Stored Value
Card System's compatibility with the existing hardware in Distributor's Retail
Network, such assistance shall be provided pursuant to a separate agreement and
at pricing to then be determined by MBI.
ARTICLE 6
COMMISSIONS:
6.1 MBI shall pay the following commissions to Distributor:
(a) $x.xx out of each load fee collected by MBI from a load of
cash onto any Product purchased at any Dealer in Distributor's Retail Network.
(b) $x.xx out of each monthly fee collected by MBI from any
monthly fee due for any Product Unit purchased from a Dealer in Distributor's
Retail Network.
(c) 50% of the net profit of all transaction fees charged to
Consumers.
No commissions for any load or transaction fee shall be deemed
earned until 100% of the cash load, load fee, or transaction
fee has been paid by the Dealers selling the Product load into
the Dealer's MBI service account and such funds have been
swept into an account owned and controlled by MBI (the "MBI
Sweep"). MBI will not activate any load on any Product until
such time as the MBI Sweep has occurred.
6.2 Distributor and Company shall each place $5,000 into a fraud
reserve account from which funds to recover all fraudulent activity will be
drawn. The total amount of this account shall be $10,000 for the initial launch
of the program, and may be adjusted from time to time based on the volume of
fraudulent activity observed. If Distributor elects to create a private label,
then Distributor shall not be required to contribute any additional funds to the
Reserve fund.
6.2 Commissions shall be paid 30 days following the end of the month
in which such commissions were earned. MBI shall provide Distributor with a
monthly reconciliation of commissions earned and paid, or more frequently, if
reasonably requested by Distributor.
6.3 Distributor shall be responsible for any commissions or other
payments to Dealers in Distributor's Retail Network and MBI shall have no
responsibility for such payments. Distributor shall indemnify and hold harmless
MBI against any claim, cause of action, liability or judgment, including
attorney's fees, arising from any Dealer in Distributor's Retail Network for
non-payment of any commission or fee due to the Dealer from sales or service of
the Product.
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ARTICLE 7
INTELLECTUAL PROPERTY RIGHTS
7.1 MBI represents to Distributor that it owns or has a license to all
of the material contained in the Products and that, to the best of MBI`s
knowledge, said Products do not infringe upon any copyright, patent, xxxx work,
trademark or other proprietary right of any third party and that MBI has full
authority to enter into this Agreement. In the event MBI did nor, or does not
have all the required approvals, and is required to remove from the marketplace
all material already installed, then MBI shall reimburse Distributor for it's
total cost of all material Distributor returns to MBI or full cost of having to
replace material Distributor previously installed in the market place. MBI
represents to Distributor there are no known copyright, patent, xxxx work,
trademark or other claims existing or threatened concerning the Products. MBI
shall indemnify and hold Distributor harmless from and against any claims,
expenses, losses or damages arising out of or in connection with any copyright,
patent, xxxx work, trademark or other claim concerning the Products.
7.2 Distributor shall have no rights to duplicate, translate,
decompile, reverse engineer, or adapt Products without MBI's prior written
consent. Notwithstanding the foregoing, Distributor shall not be precluded from
using or creating similar Products.
7.3 Distributor shall promptly notify MBI of any unauthorized third
party duplication, distribution, or use of Products which comes to the attention
of Distributor and shall provide MBI with whatever reasonable assistance is
necessary to stop such activities.
7.4 Distributor shall not attempt to register any of MBI's trademarks,
company names, or trade names without MBI's written permission.
ARTICLE 8
CONFIDENTIALITY
8.1 Distributor, on behalf of itself and its employees, shall take all
reasonable steps to safeguard the Products distributed by it from any
unauthorized use, duplication, sublicensing, or distribution.
8.2 Distributor shall further, on behalf of itself and its employees,
retain all Confidential Information furnished by MBI in strictest confidence and
shall not publish or disclose such Confidential Information at any time during
the term of this Agreement or after its termination.
ARTICLE 9
LIMITED WARRANTIES
9.1 MBI does not warrant that the functions contained in Products will
meet the requirements of any end user or that Products are error-free. However,
MBI does warrant that Products will operate substantially in accordance with the
user documentation. MBI shall further make reasonable efforts to correct any
significant reproducible error in Products or in the Stared Value Card System
for which MBI receives written notice promptly after such error comes to the
attention of Distributor, provided such error relates to the proper functioning
of Products and has not been caused by negligence on the part of Distributor or
any third party, hardware malfunction, or other causes external to the Products
in the Stored Value Card System.
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9.2 MBI warrants that Products are free from defects in materials and
workmanship under normal use for a period of ninety (90) DAYS FROM the date of
delivery by Distributor to the Consumers or Dealers. MBI's entire liability and
Distributor's sole and exclusive remedy, as well as that of any Dealer and end
user, shall be replacement without charge of any Product Unit which proves
defective within the ninety (90) day period.
9.3 The warranties set forth in paragraphs 9.1 and 9.2 of this Article
9 shall also apply to any new versions of Products which Distributor distributes
in accordance with the terms and conditions of this Agreement.
9.4 THE WARRANTIES CONTAINED IN PARAGRAPHS 9.1, 9.2 AND 9.3 OF THIS
ARTICLE 9 ARE IN LIEU OF ALL OTHER WARRANTIES OR CONDITIONS, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, THOSE OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. IN NO EVENT SHALL MBI BE LIABLE FOR DAMAGES, DIRECT OR
INDIRECT, INCLUDING INCIDENTAL OR CONSEQUENTIAL DAMAGES SUFFERED BY DISTRIBUTOR,
ANY RETAILER, END USER OR OTHER THIRD PARTY ARISING FROM BREACH OF WARRANTY OR
BREACH OF CONTRACT, NEGLIGENCE OR ANY OTHER LEGAL GROUND OF ACTION.
9.5 Distributor shall indemnify and hold MBI harmless from and against
any claims, expenses, losses or damages arising out of or in connection with
Distributor's distribution of Products.
ARTICLE 10
COMPLIANCE WITH LAWS
10.1 Distributor shall assure compliance with all applicable federal
and state laws and regulations governing its operations.
ARTICLE 11
RENEWAL OF AGREEMENT AND TERMINATION
11.1 This Agreement shall be automatically renewed for one (1) year
periods after the end of the initial 2 year term, unless either party gives
written notice of non-renewal to the other at least 30 days prior to the end of
their current term.
11.2 This Agreement shall be subject to termination at any time upon
thirty (30) days written notice by either party hereto.
11.3 This Agreement shall be subject to immediate termination for good
cause, at the election of MBI, by written notice to Distributor at any time in
the event of any one or more of the following:
(a) Any illegal, unfair or deceptive business practices or
unethical conduct whatsoever by Distributor, whether or not related to Products;
(b) A receiver, liquidator, trustee or like official is
appointed for Distributor or any substantial portion of its property or if
Distributor shall have filed or consented to any petition in bankruptcy or other
insolvency proceedings or shall HAVE made any assignment for the benefit of
creditors;
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(c) The nonpayment, within fifteen (15) days past the due
date, of any financial obligation due from Distributor pursuant to Article 5
hereof; or
(d) Any default by Distributor in the due observance or
performance of any term or condition of this Agreement, other than that as
specified in subparagraph (b), and such default shall have continued for a
period of thirty (30) days after written notice specifying the same shall have
been given by MBI to Distributor.
11.4 Termination shall not extinguish any of Distributor's obligations
under this Agreement which by their terms continue after the date of
termination, including, but not limited to, the confidentiality obligations
under Article 8 above.
11.5 Termination shall not entitle Distributor to any compensation by
MBI on any grounds whatsoever, including, but not limited to, lost profits, loss
of goodwill, and consequential, direct, indirect, punitive or exemplary damages.
11.6 For a period of six (6) months after termination, Distributor
shall have the right to sell off existing stock of Products for which full
payment has been made.
ARTICLE 12
MISCELLANEOUS
12.1 SEVERABILITY. If any provision or portion of this Agreement shall
become invalid or unenforceable for any reason, there shall be deemed to be made
such minor changes in such provision or portion as are necessary to make it
valid or enforceable. The invalidity or unenforceability of any provision or
portion hereof shall not affect the validity or enforceability of the other
provisions or portions hereof.
12.2 ENTIRE AGREEMENT. This Agreement, together with the attached
schedules, contains the entire agreement between the parties with respect to the
subject matter contained herein and supersedes any and all prior understandings
or agreements between the parties, whether oral or in writing. Any warranty,
representation, promise, or condition not incorporated herein shall not be
binding upon either party. No modification, renewal, extension, or waiver of
this Agreement or any of its provisions shall be binding unless made in writing
and signed by the parties hereto.
12.3 INDEPENDENCE OF PARTIES. Nothing in this Agreement shall be
construed as creating a partnership or joint venture between the parties or
making Distributor an agent or employee of MBI. In all of its operations
hereunder, Distributor shall be an independent contractor, shall conduct its
business at its own cost and expense, and shall have no authority to make any
representation or warranty on behalf of MBI.
12.4 GOVERNING LAW. This Agreement has been negotiated and prepared
and will be performed in the United States, and the validity, construction and
enforcement of, and the remedies under, this Agreement shall be governed in
accordance with the laws of the United States and the state of Florida (except
any choice of law provisions of United States and Florida law shall not apply if
the law of a state or jurisdiction other than Florida would apply thereby),
except as to copyright and trademark matters which shall be governed by the laws
of the United States and any applicable international conventions.
12.5 VENUE. Venue of any action brought to interpret or enforce this
agreement shall lie exclusively in the County of Sarasota, Florida, if the
action is brought in the courts of the State of Florida;
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and if brought in the courts of the United States of America, IN the Middle
District of Florida, Tampa Division.
12.6 WAIVER. Failure or delay on the part of MBI or Distributor to
exercise any right, power or privilege hereunder shall not operate as a waiver
thereof, now shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise thereof.
12.7 NOTICES. All notices, requests, demands, or other communications
which are required or may be given under this Agreement shall be in writing in
the English language and shall be deemed to have been duly delivered if sent by
first class registered or certified airmail, or by telex, facsimile or other
electronic transmission (confirmed by first class registered or certified mail)
and properly addressed to the appropriate party at the address set forth above,
until changed by notice in writing by either party hereto to the other party. If
sent by airmail, notice shall be effective fourteen (14) days from the date of
deposit with the post office. If sent by electronic transmission, notice shall
be effective one day after transmission.
12.8 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests, or obligations hereunder shall be assigned by any
party hereto without the prior written consent of the other party, nor is this
Agreement intended to confer upon any other person except the parties hereto any
rights or remedies hereunder.
12.9 ATTORNEY'S FEES. In any arbitration or litigation brought under
this Agreement or relating to any alleged breach of this Agreement, the
prevailing party shall be entitled to recover, in addition to all damages
suffered, its reasonable attorney's fees and costs.
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IN WITNESS WHEREOF, MBT and Distributor EACH HAS caused this Agreement
to be executed on its behalf by its duly authorized officer.
VIRTUAL CARD SERVICES, LLC MBI, INC.
/S/ By: /S/
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5/25/05 As its: CEO
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Date: 5/25/05
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Distributor
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By:___________________________________
As its:_______________________________
Date:_________________________________
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EXHIBIT A
PROGRAM DESCRIPTION
1. This Distribution Agreement shall be an exclusive agreement between the
parties. MBI shall not enter into any other Agreement whereby a
distributor shall use mass mail marketing programs to the automotive
industry.
2. Distributor shall assist MBI in reporting a consumer use of the
Products loaded on the SIRE Network to Equifax Credit Reporting Agency.
The Distributor shall set an appropriate monthly fee for this reporting
activity, and shall charge the Consumers card each month for the fee.
Each party hereto will each receive 50% of the net profit of the
consumer fee.
3. Distributor shall capture the consumer name, address, and social
security number from each consumer wishing to purchase a Product Unit
from the mass mailing marketing program. Distributor shall send a file
in a secure manner with this information in. a format agreed to by both
parties each day. MBI shall fulfill the consumer orders directly to the
consumer via U.S Mail.
4. Each Dealer shall be required to become a load station on the SIRE
Network, and shall use an approved hardware device to transmit the
name, address, and social security number for each Consumer receiving a
Product Unit, prior to giving the Product to the Consumer. If the
Consumer is also ordering a Hologram card, this information will be
conveyed to MBI in a file format agreed to by both parties so
fulfillment of the Hologram Card Product directly to the Consumer can
be handled by MBI. Distributor shall provide the name and address of
the Dealer with an order for Product Units so MBI can ship Product
Units directly to the Dealer.
