EXHIBIT 14.4
STORED VALUE CARD AGREEMENT
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THIS STORED VALUE CARD AGREEMENT (this "AGREEMENT") is entered into as
of JULY 30th, 2004 by and between XXXXXXX BANK CORPORATION, a Utah industrial
bank with offices located at 00000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxx
Xxxxxx, Xxxx 00000 ("MERRICK"), and XXXXXX BEAUMONT, INC., a corporation
organized under the laws of the State of Florida with offices located at 0000
Xxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxx 00000 ("SV PARTNER"). Merrick and
SV Partner are each referred to herein as a "Party" and collectively as the
"PARTIES".
RECITALS:
X. Xxxxxxx is a principal member of the Card Associations (as defined
herein) and is authorized to engage in the business of issuing to consumers
pre-funded stored value cards for use by consumers in purchasing goods and
services from merchants displaying the name and/or logo of the Card
Associations; and
B. On the terms and conditions described herein, Merrick and SV Partner
desire to enter into a relationship pursuant to which, among other things,
Merrick will issue Cards (as defined herein) and SV Partner will perform certain
services in connection therewith.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Merrick and SV Partner hereby
agree as follows:
ARTICLE 1 - DEFINITIONS
1.1 DEFINITIONS. Whenever used herein, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"ACTIVATION CARD" means an inactive plastic or paper card that has not
been authorized to effect any transaction and is distributed by SV Partner to
individuals seeking to obtain a Card. Each Activation Card shall be considered a
reference device for purposes of obtaining a Card and shall not be embossed.
"AFFILIATE" means, with respect to any person, corporation or entity,
any other person, corporation or entity that directly or indirectly controls, is
controlled by or is under common control with such person, corporation or
entity. For the purposes of this definition, "control" shall mean the power to
direct the management and policies of a person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "common control" and "controlled" have meanings correlative to the
foregoing.
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"APPLICABLE ASSOCIATION RATIONS" means all applicable rules,
regulations and requirements established from time to time by Visa and
MasterCard.
"APPLICABLE LAW," with respect to either Party, means: (i) the
Applicable Association Regulations; (ii) all applicable federal, state and local
laws, statutes, regulations and regulatory guidelines; (iii) relevant judicial,
regulatory and administrative interpretations; and (iv) determinations of any
relevant Governmental Authority that relate to or are binding upon that Party.
"APPLICATION" means the expression by a potential cardholder of his or
her desire to have a Card and the provision by such potential cardholder of
information required by Applicable Law for the issuance of a Card.
"APPROVED MERRICK TERMS CHANGE REQUEST" has the meaning set forth in
Section 3.3b.iii.
"APPROVED SV PARTNER TERMS CHANGE REQUEST" has the meaning set forth in
Section 3.3a.iii.
"AUTHORIZED LOCATION" means each location that is authorized by SV
Partner and Merrick pursuant to the terms of Section 4.1a to receive funds and
instruments tendered by Cardholders and prospective Cardholders to be added to
such Cardholders' and prospective Cardholders' Card Accounts; PROVIDED, HOWEVER,
that a company that operates a chain of company-owned stores, and all of the
locations owned and operated by that company, shall be deemed to be a single
location for purposes of this definition.
"BUSINESS DAY" means any day that is not a Saturday, Sunday, holiday or
other day on which cornmercial banking institutions in Utah or Florida are
authorized or obligated by law or executive order to be closed.
"BUY-OUT MULTIPLE" means: (i) six, if the Calculation Date (as that
term is used in the definition of Termination Amount) occurs during or prior to
the twenty-fourth (24th) month following the Effective Date; or (ii) if the
Calculation Date occurs after the twenty-fourth (24th) month following the
Effective Date, the lesser of: (A) six (6); and (B) the number of months between
the Calculation Date and the next following anniversary of the Effective Date.
"CARD" means each Virtual Card or plastic, electronically encoded
stored value card issued by Merrick to a Cardholder at the request of that
Cardholder.
"CARD ACCOUNT" means a sub-account of the Funding Account established
on Xxxxxxx'x books (either by Merrick or by SV Partner on behalf of Merrick) for
each Card that is issued, which sub-account shall evidence the aggregate amount
of value Merrick has loaded on the Card in connection with which such
sub-account has been established that has not yet been refunded to the
Cardholder, transferred by Merrick to the Settlement Account to settle with the
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Card Associations for value transferred through use of the relevant Card or Card
information or removed in connection with the assessment of any fee or charge
pursuant to the terms of the relevant Cardholder Agreement. A Card Account is
not a credit card account, deposit account or any other type of bank account of
a Cardholder.
"CARD ASSETS" means all of Xxxxxxx'x rights, title, interest,
privileges and obligations in and to the Cards, Card Accounts, Cardholder
Agreements and Cardholder Lists.
"CARD ASSOCIATION" means either or both of Visa and/or MasterCard, as
applicable.
"CARD CRITERIA" means the criteria used to determine the circumstances
under which Merrick may close or terminate a Card or Card Account, as set forth
on the attached EXHIBIT 1.1-1.
"CARD SERVICING TERMS" has the meaning set forth in Section 3.2b.
"CARD TERMS" has the meaning set forth in Section 3.3a.
"CARDHOLDER" means a Person who, as a result of the marketing
activities performed by SV Partner pursuant to the terms of this Agreement, has
submitted an Application for and who has received a Card.
"CARDHOLDER AGREEMENT" means the agreement between Merrick and each
Cardholder containing the terms and conditions applicable to the Card, the Card
Account and the Cardholder's use of such Cardholder's Card.
"CARDHOLDER INFORMATION" means all "nonpublic personal information" (as
defined by Applicable Law) relating to Cardholders.
"CARDHOLDER LIST" has the meaning set forth in Section 5.2.
"CISP" has the meaning set forth in Section 5.1c.
"COMPLAINING PARTY" has the meaning set forth in Section 2.5f.
"CONFIDENTIAL INFORMATION" of the Disclosing Party means any and all
information relating to the business and operations of the Disclosing Party,
including, without limitation, marketing plans, trade secrets, proprietary
ideas, technological developments, financial information and results, customer
lists, supplier lists, business forecasts, software and sales, merchandising and
marketing plans and materials, disclosed (and marked or designated as
confidential) to the Recipient. In addition to, and without limiting the
generality of, the foregoing, any information or data that is marked as
"confidential information" of a Party shall be deemed to be "Confidential
Information" of that Party for the purposes of Section 5.4.
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"DAILY ACTIVATED FUNDS AMOUNT" means, for each Settlement Day, the
total amount of payments the Processor indicates were applied to the Card
Accounts during the period to which such information relates.
"DAILY REPORT" has the meaning set forth in Section 0.0x.xx.
"DAMAGING ACTIVITIES" has the meaning set forth in Section 2.5f.
"DEFAULT TRANSFER PERIOD" has the meaning set forth in Section 8.3a.i.
"DEFAULT TRANSFER RIGHT" has the meaning set forth in Section 8.3a.i.
"DELEGATED DUTIES" has the meaning set forth in Section 11.2a.
"DISCLOSING PARTY" means Merrick or SV Partner, as applicable, to the
extent Merrick discloses Confidential Information to SV Partner, or SV Partner
discloses Confidential Information to Merrick.
"EFFECTIVE DATE" means the date on which Xxxxxxx'x board of directors
ratifies and approves this Agreement, if it so ratifies and approves this
Agreement.
"FUNDING ACCOUNT" means the internal record kept on the books of
Merrick to, among other things, evidence the aggregate balance of all Card
Accounts on the books of Merrick. The Funding Account is not a credit card
account, deposit account or any other type of bank account of SV Partner or any
third party.
"GLB ACT" has the meaning set forth in Section 5.1a.
"GOVERNMENTAL AUTHORITY" means any federal, state, local, domestic or
foreign governmental, regulatory or self-regulatory authority, agency, court,
tribunal, commission or other regulatory or self regulatory entity, the United
States of America, any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"HARMING PARTY" has the meaning set forth in Section 2.5f.
"INDEMNIFICATION EVENT" has the meaning set forth in Section 9.3a.
"INDEMNIFIED MERRICK PARTIES" has the meaning set forth in Section 9.2.
"INDEMNIFIED SV PARTNER PARTIES" has the meaning set forth in Section
9.1a.
"INDEMNIFYING PARTY" has the meaning set forth in Section 9.3a.
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"INDEMNITEE" has the meaning set forth in Section 93a.
"INITIAL TERM" has the meaning set forth in Section 2.5a.
"ISO" has the meaning set forth in Section 2.4a.
"ISSUANCE CRITERIA" has the meaning set forth in Section 3.1a.
"LEGAL FEES" means all charges and fees payable by Merrick or SV
Partner, as the case may be, to its legal counsel and, to the extent any
full-time salaried employee of Merrick or SV Partner that is licensed to
practice law provides services or counsel to Merrick or SV Partner, as the case
maybe, in connection with: (i) a judicial dispute or legal, regulatory or
administrative proceeding; or (ii) the creation, preparation, review or approval
of Marketing Materials or communications to Cardholders, an amount equal to the
market value of such counsel or services, as reasonably determined by Merrick or
SV Partner, as applicable.
"LOSSES" means any and all losses, liabilities, damages, costs and
expenses, including, without limitation, any Legal Fees (including, without
limitation, those incurred to enforce the rights hereunder against another party
hereto), disbursements and court costs, in each case reasonably incurred by
Xxxxxxx, XX Partner or any other Indemnified Merrick Party or Indemnified SV
Partner Party, as applicable.
"MARKETING MATERIALS" means Activation Cards and any and all other
marketing materials, advertising copy, graphics, commercial media, Web
Advertisements, press releases, notices, mailings, call scripts, statements made
by employees, representatives and agents of SV Partner, and other marketing,
promotional and sales materials of any kind or nature used or intended to be
used by SV Partner that refer in any way to Merrick, Cards or Card Accounts.
"MARKETING PERIOD" means the period of time during which SV Partner
shall be permitted to market and promote Cards, solicit the completion of
Applications and submit, or cause the submission of, completed Applications to
Merrick, the length of which shall be determined by Section 2.5a.
"MASTERCARD" means MasterCard International Incorporated.
"MERRICK DEFAULT" has the meaning set forth in Section 8.3b.
"MERRICK HOLDING ACCOUNT" has the meaning set forth in Section 4.1b.
"MERRICK TERMS CHANGE REQUEST" has the meaning set forth in Section
3.3b.
"MONTHLY MERRICK WITHDRAWAL AMOUNT" means an amount calculated each
month during the SV Partner Payment Period and the calendar month following
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termination of the SV Partner Payment Period in accordance with the terms of
EXHIBIT 4.1e.
"MONTHLY TRANSACTION VOLUME" has the meaning set forth on EXBIBIT 4.1E.
"MSP" has the meaning set forth in Section 2.4a.
"NON-COMPETITIVE PRODUCTS AND SERVICES" means: (i) secured and
unsecured credit cards; and (ii) and payment cards of any type tied to one or
more FDIC-insured deposits.
"PERIODIC TRANSFER," for each Authorized Location, means: (i) the sum
of all transfers of funds made by such Authorized Location to Merrick in any
given day, if more than one transfer is made in a day; (ii) the daily transfer
of funds made by such Authorized Location to Merrick, if one transfer is made
each day; or (iii) any transfer of funds made by such Authorized Location to
Merrick, if transfers are made less regularly than on a daily basis.
"PERMITTED PERSONS" has the meaning set forth in Section 5.3.
"PERSON" means an individual permitted by Applicable Law to own a Card.
"PRIVACY REGULATIONS" has the meaning set forth in Section 0.xx.
"PROCESSOR" means Galileo Processing, Inc. or such other entity jointly
designated by Merrick and SV Partner to process Card-related transactions.
"RECIPIENT" means Merrick or SV Partner, as applicable, to the extent
Merrick receives Confidential Information from SV Partner, or SV Partner
receives Confidential Information from Merrick.
"RENEWAL TERMS" has the meaning set forth in Section 2.5a.
"REQUIREMENTS OF LAW TRANSFER PERIOD" has the meaning set forth in
Section 8.4b.
"REQUIREMENTS OF LAW TRANSFER" has the meaning set forth in Section
8.4b.
"RESERVE ACCOUNT" means the internal record kept on the books of
Merrick to evidence amounts transferred from time to time by SV Partner to
Merrick, and transferred by Merrick from the Funding Account, for use by Merrick
in accordance with the terms of ARTICLE 4. The Reserve Account is not a credit
card account, deposit account or any other type of bank account of SV Partner or
any third party.
"RESERVE AMOUNT" has the meaning set forth in Section 4.2a.
"SDP" has the meaning set forth in Section 5.1c.
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"SETTLEMENT ACCOUNT" means the bank account and/or the internal record
kept on the books of Merrick to which Merrick transfers amounts from the Funding
Account for the purpose of settling Xxxxxxx'x obligations to the Card
Associations that relate to the issuance or use of the Cards. The Settlement
Account is not a credit card account, deposit account or any other type of bank
account of SV Partner or any third party.
"SV PARTNER DEFAULT" has the meaning set forth in Section 8.2d.
"SV PARTNER HOLDING ACCOUNT" has the meaning set forth in Section
4.lc.i.
"SV PARTNER PAYMENT PERIOD" has the meaning set forth in Section 8.1.
"SV PARTNER TERMS CHANGE REQUEST" has the meaning set forth in Section
3.3a.
"SETTLEMENT DAY" means each day on which Merrick is required to settle
with the Card Association(s) in connection with transactions effected on the
Cards.
"TERMINATION AMOUNT" means an amount determined upon the occurrence of
an SV Partner Default, which amount shall be equal to the Monthly Merrick
Withdrawal Amount for the calendar month immediately preceding the calendar
month in which such SV Partner Default occurred, multiplied by: (i) twelve (12),
if the SV Partner Default occurs during or prior to the twenty-fourth (24`h)
month following the Effective Date; or (ii) if the SV Partner Default occurs
after the twenty-fourth (24th) month following the Effective Date, the lesser
of: (A) twelve (12); and (B) the sum of six (6) plus the Buy-Out Multiple,
calculated as of a date (the "Calculation Date") that is six (6) months after
the date on which the SV Partner Default occurred.
"THIRD PARTY PROVIDER" has the meaning set forth in Section 11.2a.
"TRADEMARKS" means trademarks, trade names, logos and service marks.
"TWO-WEEK FUNDING AMOUNT," for each Authorized Location, means, at any
point in time, an amount equal to one hundred fifty percent (150%) of the
largest Periodic Transfer made by that Authorized Location to Merrick during the
immediately preceding two-week period.
"VIRTUAL CARD" means the account number, the expiration date and
validation code provided by or under the direction of Merrick to a Cardholder in
a safe and secure manner upon approval of an Application, which may be used only
at merchants that accept Cards and display the name and/or logo of the
applicable Card Association in payment environments where a physical Card cannot
be presented, including, but not limited to, Internet and mail order and
telephone order merchants.
"VISA" means Visa USA, Inc.
"WEB ADVERTISEMENT" means any graphic or text accessible through the
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Internet, including, without limitation, links, banners, buttons, e-mail
messages and "pop-up" windows, that refer in any way to Merrick, Cards or Card
Accounts.
1.2 INTERPRETATION. Words used herein, regardless of the number and
gender used, shall be deemed and construed to include any other number, singular
or plural, and any other gender, masculine, feminine or neuter, as the context
requires. As used in this Agreement, unless the context clearly requires
otherwise, the words "hereof," "herein" and "hereunder," and words of similar
import, shall refer to this Agreement as a whole and not to any particular
provisions hereof. Article and section headings used in this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement. Exhibits attached hereto, as the same may be added, amended or
replaced from time to time, shall be deemed to be incorporated into this
Agreement by the respective references thereto. This Agreement is among
financially sophisticated and knowledgeable parties and is entered into by the
Parties in reliance upon the economic and legal bargains contained herein, and
shall be interpreted and construed in a fair and impartial manner without regard
to such factors as the Party who prepared, or caused the preparation of, this
Agreement or the relative bargaining power of the Parties.
ARTICLE 2 - MARKETING OF CARDS
2.1 MARKETING OF CARDS; RIGHT TO USE MARKETING MATERIALS IN CARD
SOLICITATIONS. Subject to the provisions of Section 2.2: (i) SV Partner, at its
sole cost and expense, shall use its commercially reasonable efforts to market,
promote and sell Cards during the Marketing Period; and (ii) SV Partner may use
Marketing Materials solely during the Marketing Period in order to market,
promote and sell Cards.
2.2 FORM AND CONTENT OF MARKETING MATERIALS.
a. SV Partner shall submit to Merrick, for Xxxxxxx'x review and
comment, drafts or samples of all Marketing Materials SV Partner desires to use
in order to market, promote and sell Cards, and a description of the manner(s),
places and marketing channels in which SV Partner proposes to use such Marketing
Materials.
b. SV Partner shall not use any Marketing Materials that have not
been reviewed and approved in writing by Merrick, and shall not use any
Marketing Materials so approved by Merrick in any manner or in any place or
marketing channel, and shall not allow the Marketing Materials to be used by any
third party, in any case that has not been approved in writing by Merrick, which
approval, in each case, may be withheld or granted by Merrick in its sole
discretion. Any Marketing Materials submitted to Merrick for review and approval
shall be deemed to be approved by Merrick if Merrick fails to notify SV Partner
of any objection to such Marketing Materials within seven (7) Business Days of
Xxxxxxx'x receipt of such Marketing Materials. In addition, SV Partner shall not
adopt any marketing or promotion practice related to the Cards that is
reasonably objected to (with the reasons for such objection(s)) by Merrick.
c. SV Partner:
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i. Shall ensure that the form and content of all Marketing
Material comply with Applicable Law (and no approval of any Marketing Materials
by Merrick shall be deemed to relieve SV Partner of the foregoing obligation);
ii. Shall ensure that all activities it undertakes or in
which it participates, and all activities of third parties it involves, in
connection with marketing, selling or promoting the Cards comply with Applicable
Law (and no approval of any such activities by Merrick shall be deemed to
relieve SV Partner of the foregoing obligation); and
iii. Shall not engage in any activity or use any marketing or
promotion material that violates or contravenes any Applicable Law.
d. If there is a change in current law, enactment of new laws,
change or development in regulatory interpretations or directives, or change in
Applicable Association Regulations that materially affects the Marketing
Materials, Merrick, at any time by providing written notice to SV Partner, may
direct SV Partner to cease using or modify, in a manner acceptable to Merrick,
any Marketing Materials previously approved by Merrick, and SV Partner shall
cease using or shall so modify such Marketing Materials as soon as possible
after receiving such notice from Merrick.
2.3 ACTIVATION CARDS.
a. As part of its efforts to market, sell and promote Cards, SV
Partner, at its sole cost and expense, shall prepare and distribute Activation
Cards to approved retail locations. Subject to the requirements of Applicable
Law, each Activation Card shall have the name and/or logo of SV Partner on the
front of the Activation Card and shall be of a design approved by Xxxxxxx, XX
Partner, and the Card Association whose name and logo appear on the Activation
Card, as applicable. Merrick shall be identified as the issuer on the back of
the Activation Card.
b. SV Partner shall be solely responsible for: (i) ensuring that
Activation Cards are sold to prospective Cardholders in a manner that complies
with all Applicable Laws; and (ii) appropriately compensating each retail
merchant or other third party involved in any such sale.
2.4 VISA AND MASTERCARD REQUIREMENTS.
a. SV Partner shall cooperate with Merrick in making all
necessary registrations and filings with Visa and/or MasterCard, as appropriate,
that are required in connection with participation by SV Partner in Visa's
independent sales organization ("ISO") program and/or MasterCard's Member
Service Provider ("MST") program, as appropriate. Merrick shall keep SV Partner
informed as to applicable Visa and MasterCard regulations and requirements.
Obtaining all necessary approvals of Visa and/or MasterCard, as appropri ate, is
a precondition to the performance by the Parties of their respective obligations
hereunder.
b. SV Partner agrees: (i) to pay any ISO, MSP, independent
contractor, affinity or co-brand program or like or substitute fees now or
hereafter imposed by Visa or MasterCard in connection with the registrations and
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filings described above; (ii) to execute such applications, agreements and other
forms as shall be required by Visa or MasterCard in connection with such
registrations and filings; and (iii) to comply with all Applicable Association
Regulations (as communicated to SV Partner by Merrick) in all of its activities
under or in connection with this Agreement.
c. SV Partner further agrees that it shall not use any Visa or
MasterCard trademarks or the term "Visa" or "MasterCard" in any manner on any
marketing material in connection with the marketing or sale of Cards unless
Merrick, as issuer of the Cards, is appropriately identified by name and city.
SV Partner recognizes the proprietary nature of the words "Visa" and
"MasterCard" and the registered trademarks of both Visa and MasterCard, and will
comply with all Visa and MasterCard rules and regulations concerning their use
in connection with the marketing and sale of Cards. In the event any of the
terms of this Agreement are inconsistent with Applicable Association
Regulations, the Applicable Association Regulations shall prevail, and the
Parties shall act in accordance with the Applicable Association Regulations.
2.5 MARKETING PERIOD
a. Subject to the provisions of Sections 2.5b through 2.5g below,
the Marketing Period shall continence as of the Effective Date and shall
continue for an initial term of three (3) years (the "INITIAL TERM"). Following
the Initial Term, the Marketing Period shall automatically be renewed for
subsequent renewal terms of one (1) year each ("RENEWAL TERMS"), subject to the
right of either Party to terminate the Marketing Period at the end of the
Initial Term or at the end of any Renewal Term by written notice to the other
Party not less than one-hundred eighty (180) days prior to the end of the
Initial Term or Renewal Term, as applicable.
b. TERMINATION DUE TO BREACH OR DEFAULT. If: (i) any action taken
by SV Partner in connection with its obligations under this ARTICLE 2 or
otherwise in connection with marketing, selling or promoting the Cards are in
contravention of any Applicable Law, and SV Partner fails to correct such
actions so as to comply with such Applicable Law within fifteen (15) days after
receipt of written notice thereof from Merrick; or (ii) if there is a material
default by SV Partner in the performance of any of its other obligations under
this ARTICLE 2 or otherwise in connection with marketing, selling or promoting
the Cards and such default shall continue for a period of thirty (30) days after
receipt of written notice thereof (setting forth in reasonable detail the nature
of the default) from Merrick, then Merrick shall have the right to terminate the
Marketing Period immediately upon written notice to SV Partner.
c. TERMINATION OF THE SV PARTNER PAYMENT PERIOD. The Marketing
Period shall be deemed immediately terminated, without the requirement of
further action or notice by either Party, upon termination of the SV Partner
Payment Period,
d. TERMINATION DUE TO INSUFFICIENT VOLUME. Merrick may terminate
the Marketing Period, effective immediately upon written notice to SV Partner,
if Merrick has issued fewer than ten thousand (10,000) Cards by July 31, 2005.
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e. TERMINATION DUE TO REGULATORY ISSUES. If a Party is required by
any governmental or regulatory authority to terminate the Marketing Period, or
legal counsel to (with the concurrence of the board of directors of) a Party
determines that termination is necessary or advisable as a result of any
violation or potential violation of any Applicable Law in connection with
marketing, selling or promoting the Cards, and if the Parties are unable to
agree upon modifications to this Agreement that eliminate the relevant
governmental or regulatory concerns or cure the violation or potential violation
of Applicable Law, such Party shall have the right to terminate the Marketing
Period upon not less than one hundred eighty (180) days' prior written notice,
or such lesser period of time as may be required under, or necessary to avoid
any violation or further violation of, any such Applicable Law.
f. TERMINATION DUE TO MATERIALLY HARMFUL. Activities. Without
limiting the generality of Section 2.5e, if at any time either Party (the
"Harming Part") is conducting activities in connection with marketing, selling
or promoting the Cards that Merrick (if the Harming Party is SV Partner) or SV
Partner (if the Harming Party is Merrick) (the "COMPLAINING PARTY") determines
are materially harmful to its relationship with any Governmental Authority, the
Complaining Party may notify the Harming Party of such determination, which
notice shall describe in reasonable detail the activities causing such harm (the
"DAMAGING ACTIVITIES") and provide reasonable evidence of such harm. Upon
receipt of any such notice, the Harming Party immediately shall suspend all
Damaging Activities and such Damaging Activities shall remain suspended unless
and until the Complaining Party provides to the Harming Party express written
consent to resume any such activities. If. (i) the Harming Party determines that
its inability to engage in any Damaging Activities materially impairs its
ability to exercise its rights or perform its obligations under this ARTICLE 2;
and (ii) the Harming Party and the Complaining Party are not able to agree upon
modifications to the Damaging Activities or replace the Damaging Activities in a
mutually agreeable manner, the Harming Party may terminate the Marketing Period
by providing one hundred twenty (120) days' prior written notice to the
Complaining Party.
g. TERMINATION DUE TO UNSAFE OR UNSOUND PRACTICES. Merrick may
terminate the Marketing Period upon one hundred twenty (120) days' written
notice to SV Partner if Xxxxxxx'x board of directors, based upon the advice of
legal counsel, reasonably determines that the continued exercise by SV Partner
of its rights and performance by SV Partner of its obligations under this
ARTICLE 2 are not consistent with safe and sound banking practices, and the
Parties are not able to agree upon modifications to this Agreement or to the
activities contemplated under this ARTICLE 2 that satisfy the concerns
identified by Xxxxxxx'x board of directors in malting such determination.
h. EFFECT OF TERMINATION OF MARKETING PERIOD. Upon any termination
or expiration of the Marketing Period:
i. Each Party shall return all property in its possession
relating to Card marketing and promotion that belongs to other Party;
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ii. SV Partner immediately shall cease all activities
designed or intended to sell, advertise or promote Cards, and immediately shall
terminate its use, and the use by any third party, of any and all Marketing
Materials; and
iii. The Parties shall continue to service Cards issued, and
Card Accounts established, prior to the termination or expiration of the
Marketing Period in accordance with the terms of this Agreement.
ARTICLE 3 - ISSUING CARDS; CARD ACCOUNT MANAGEMENT
3.1 ISSUANCE OF CARDS.
a. SV Partner, at its sole cost and expense, shall gather
Applications from prospective Cardholders and assist Merrick in processing such
Applications in accordance with the criteria set forth on the attached EXHIBIT
3.1A-1, as the same may be amended from time to time pursuant to the terms of
Section 3.3 (the "ISSUANCE CRITERIA"). Merrick, directly or indirectly, shall
issue a Card to each Person who submits an Application and satisfies the
Issuance Criteria. Merrick and SV Partner shall follow the processes and
procedures set forth on the attached EXHIBIT 3.1 A-2 in connection with
gathering and processing Applications and issuing Cards.
b. Subject to the requirements of Applicable Law, each
plastic Card issued by Merrick shall have the name and/or logo of one of the SV
Partner brands set forth on the attached EXHIBIT 3.1B or such other SV Partner
brand as may be approved by Xxxxxxx (which approval Xxxxxxx shall not
unreasonably withhold, delay or condition) on the front of the Card and shall be
of a design approved by Xxxxxxx, XX Partner, and the Card Association whose name
and logo appear on the Card, as applicable, Xxxxxxx shall be identified as the
issuer on the back of the Card.
c. Subject to Applicable Law and the terms of this Agreement,
each Virtual Card issued by Xxxxxxx shall have an expiration date of one (1)
year after the date of issuance.
d. Subject to Applicable Law, a plastic Card shall be issued
to each Cardholder and to any Cardholder who requests a plastic Card in
replacement of a lost or stolen Plastic Card. Xxxxxxx and SV Partner shall take
steps to ensure that, upon issuance of any such plastic Card, the Virtual Card
originally issued to such Cardholder is cancelled. Any such plastic Card shall
have the same account number and expiration date as the Virtual Card it is
replacing.
3.2 CARD AND CARD ACCOUNT MANAGEMENT.
a. All non-Card Criteria terms, conditions and features of
the Cards and the Card Accounts, and Xxxxxxx'x obligations to the Cardholders in
connection therewith, shall be set forth in, and governed by the terms of, the
Cardholder Agreements and Applicable Law.
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x. Xxxxxxx and SV Partner each shall assume and perform the
obligations and duties set forth on the attached EXHIBIT 3.2b in connection with
the servicing, processing and management of the Cards and Card Accounts issued
and opened pursuant to the terms of this Agreement (the "CARD SERVICING TERMS").
3.3 CHANGES IN CARD TERMS.
a. CHANGES IN TERMS REQUESTED BY SV PARTNER. SV Partner from time
to time may request in writing that Xxxxxxx implement changes to the Issuance
Criteria, the Cardholder Agreements, the Card Criteria and/or the Card Servicing
Terms (collectively, the "CARD TERMS"), which request shall, at a minimum,
describe in detail the Card Terms changes so requested and the manner in which
SV Partner proposes that such changes be implemented (each, a "SV PARTNER TERMS
CHANGE REQUEST"). Xxxxxxx shall, subject to its rights under Sections 3.3a.i
through 3.3a.ii below, implement or permit SV Partner to implement all such
changes that do not violate Applicable Law or cause Xxxxxxx (without its express
written consent) to assume any obligation or responsibility or to incur any cost
or expense. In connection with each SV Partner Terms Change Request:
i. VIOLATION OF REQUIREMENTS OF LAW. If Xxxxxxx notifies SV
Partner within the applicable time period set forth in Section 3.3a.iii(2) below
that it believes effecting the changes described in any SV Partner Terms Change
Request would result in a violation of Applicable Law, and SV Partner notifies
Xxxxxxx that it disagrees with that belief.
(1) Xxxxxxx and SV Partner, as promptly as possible
after receipt by SV Partner of such notice, jointly shall designate counsel
reasonably satisfactory to both Xxxxxxx and SV Partner to advise Xxxxxxx and SV
Partner with respect to the extent to which effecting such changes would, in the
opinion of such counsel, result in the violation of any Applicable Law.
(2) If such counsel delivers an opinion substantially to
the effect that such changes would result in the violation of Applicable Law, SV
Partner shall pay the reasonable fees and disbursements of such counsel in
rendering such opinion and Xxxxxxx shall not be required to implement or permit
SV Partner to implement the changes described in such SV Partner Terms Change
Request.
(3) If such counsel delivers an opinion substantially to
the effect that such changes would not result in any violation of Applicable
Law, Xxxxxxx shall pay the reasonable fees and disbursements of such counsel in
rendering such opinion.
(4) If such counsel does not deliver an opinion
substantially to the effect that such changes would or would not result in the
violation of any Applicable Law, SV Partner and Xxxxxxx each shall pay Sa% of
the fees and disbursements of such counsel, and SV Partner may require Xxxxxxx
to seek guidance from the relevant Governmental Authorities with respect to such
SV Partner Terms Change Request pursuant to Section 3.3a.ii, absent which
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Xxxxxxx shall not be required to implement or permit SV Partner to implement the
changes described in such SV Partner Terms Change Request.
ii. GOVERNMENTAL AUTHORITY GUIDANCE.
(1) Notwithstanding any activity undertaken or procedure
followed by the parties pursuant to Section 3.3a.i, Xxxxxxx may request, in
writing, within the applicable time period set forth in Section 3.3a.iii(3)
below, guidance from the applicable Governmental Authorities with respect to the
effect of any changes requested by SV Partner in any SV Partner Terms Change
Request. In addition, pursuant to the terms of Section 3.3a.i(4), SV Partner may
require Xxxxxxx to request, in writing, guidance from the applicable
Governmental Authorities with respect to the effect of any changes requested by
SV Partner in an SV Partner Terms Change Request.
(2) Any such request shall be prepared by Xxxxxxx and,
prior to delivery to the applicable Governmental Authorities, shall be presented
to SV Partner for its review and comments, which comments Xxxxxxx shall not
unreasonably refuse to incorporate in the version of the request so presented to
the applicable Governmental Authorities. SV Partner shall be deemed to have no
comments with respect to any such request if it fails to forward any comments it
may have to Xxxxxxx within ten (10) Business Days after its receipt thereof from
Xxxxxxx. Xxxxxxx shall finalize each such request and submit it to the relevant
Governmental Authorities as soon as practicable after receiving comments with
respect to such request from SV Partner, or notice from SV Partner that SV
Partner has no comments with respect thereto.
(3) If any relevant Governmental Authority notifies
Xxxxxxx in writing that, in its opinion, the changes described in such SV
Partner Terms Change Request would result in the violation of Applicable Law, or
that the form or substance of such changes are otherwise objectionable to it,
Xxxxxxx shall not be required to implement or permit SV Partner to implement the
changes described in such SV Partner Terms Change Request.
(4) Each Party shall bear its own costs and expenses in
connection with the preparation and review of any request for guidance presented
or proposed to be presented to any Governmental Authority pursuant to the terms
of this Section 3.3a.ii.
iii. Obligation of Xxxxxxx to Implement Changes. Xxxxxxx
shall implement or permit SV Partner to implement the changes requested by SV
Partner in an SV Partner Terms Change Request if:
(1) Xxxxxxx responds in writing to SV Partner that it
approves or does not object to the changes proposed in such SV Partner Terms
Change Request;
(2) Within ten (10) Business Days after receiving such
SV Partner Terms Change Request: (x) Xxxxxxx fails to notify SV Partner,
pursuant to Section 3.3a.i, that it believes effecting the changes described in
such SV Partner Terms Change Request would result in the violation of Applicable
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Law; or (y) Xxxxxxx fails to present to SV Partner, pursuant to Section 3.3a.ii,
a draft of a request for Governmental Authority guidance in connection with such
SV Partner Terms Change Request;
(3) Within five (5) Business Days after the receipt of
an opinion of counsel, pursuant to Section 3.3a.i, substantially to the effect
that the changes described in such SV Partner Terms Change Request would not
result in any violation of Applicable Law, Xxxxxxx fails to present to SV
Partner, pursuant to Section 3.3a.ii, a draft of a request for Governmental
Authority guidance; or
(4) In response to a request for Governmental Authority
guidance submitted pursuant to Section 3.3a.ii, Xxxxxxx receives written
notification from each Governmental Authority to which such request was
submitted that such Governmental Authority does not disagree in substance with
the proposed changes described in such SV Partner Terms Change Request.
For the avoidance of doubt, Xxxxxxx acknowledges and agrees that if Xxxxxxx
exercises its rights under Section 3.3a.ii in response to any SV Partner Terms
Change Request, Xxxxxxx shall not be entitled to subsequently exercise its
rights under Section 3.3a.i in connection with such SV Partner Terms Change
Request.
An SV Partner Terms Change Request that is the subject of any of the
circumstances described in this Section 3.3a.iii is referred to herein as an
"APPROVED SV PARTNER TERMS CHANGE REQUEST."
iv. SV PARTNER'S REMEDY FOR BREACH BY XXXXXXX OF SECTION
3.3a.iii. If, in breach of its obligations under Section 3.3a.iii, Xxxxxxx takes
any action or fails to take any action in a manner that is designed to
unreasonably delay or prevent the implementation of the changes described in any
Approved SV Partner Terms Change Request and fails to remedy such breach within
five (5) days after receiving written notice thereof from SV Partner, SV
Partner, in its sole discretion, may exercise its Default Transfer Right in
accordance with the terms of Section 8.2d.i.
v. OBLIGATION OF SV PARTNER TO PAY FOR TERMS CHANGES. Except
as otherwise specifically provided above in this Section 3.3a, all costs and
expenses incurred in connection with effecting any SV Partner Terms Change
Request shall be for the account of SV Partner and SV Partner shall reimburse
Xxxxxxx as soon as reasonably practicable after receipt of any demand for such
reimbursement from Xxxxxxx for any such cost or expense so incurred by Xxxxxxx.
Any payment of a cost or expense of Xxxxxxx by SV Partner pursuant to this
Section 3.3a shall be subject to receipt by SV Partner of a written statement
setting forth in reasonable detail such cost or expense and attaching receipts
to the extent applicable.
b. CHANGES REQUESTED BY XXXXXXX. Xxxxxxx from time to time may
request in writing that SV Partner consent to changes to the Card Terms, which
request shall, at a minimum, describe in detail the Card Terms changes so
requested, the manner in which Xxxxxxx proposes such changes be implemented and
whether Xxxxxxx believes such changes are required in order to comply with any
Applicable Law or are otherwise necessary or appropriate in light of guidance
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received from Governmental Authorities (each, a "XXXXXXX TERMS CHANGE
REQUEST") In connection with each Xxxxxxx Terms Change Request:
i. COMPLIANCE WITH REQUIREMENTS OF LAW. If Xxxxxxx has
indicated that it believes such changes are required in order to comply with any
Applicable Law, and SV Partner notifies Xxxxxxx within the applicable time
period set forth in Section 3.3b.iii that it disagrees with that belief
(1) Xxxxxxx and SV Partner, as promptly as possible
after receipt by Xxxxxxx of such notice, shall jointly designate counsel
reasonably satisfactory to both Xxxxxxx and SV Partner to advise Xxxxxxx and SV
Partner with respect to the extent to which effecting such changes are, in the
opinion of such counsel, necessary in order to comply with Applicable Law.
(2) If such counsel delivers an opinion substantially to
the effect that such changes are not necessary in order to comply with
Applicable Law, Xxxxxxx shall pay the reasonable fees and disbursements of such
counsel in rendering such opinion and SV Partner shall not be required to permit
Xxxxxxx to implement such changes.
(3) If such counsel delivers an opinion substantially to
the effect that such changes are necessary in order to comply with Applicable
Law, SV Partner shall pay the reasonable fees and disbursements of such counsel
in rendering such opinion.
(4) If such counsel does not deliver an opinion
substantially to the effect that such changes are or are not necessary in order
to comply with Applicable Law, SV Partner and Xxxxxxx each shall pay 50% of the
fees and disbursements of such counsel and SV Partner shall not be required to
implement or permit Xxxxxxx to implement such changes, subject to the right of
Xxxxxxx to exercise the right set forth in Section 3.3b.ii.
ii. GOVERNMENTAL AUTHORITY GUIDANCE.
(1) Notwithstanding any activity undertaken or procedure
followed by the parties pursuant to Section 3.3b.i, Xxxxxxx may request, and SV
Partner may require Xxxxxxx to request, in writing, guidance from the applicable
Governmental Authorities with respect to changes proposed by Xxxxxxx in any
Xxxxxxx Terms Change Request.
(2) Any such request shall be prepared by Xxxxxxx and,
prior to delivery to the applicable Governmental Authorities, shall be presented
to SV Partner for its review and comments, which comments Xxxxxxx shall not
unreasonably refuse to incorporate in the version of the request so presented to
the applicable Governmental Authorities. SV Partner shall be deemed to have no
comments with respect to any such request if it fails to forward any comments it
may have to Xxxxxxx within ten (10) Business Days after its receipt thereof from
Xxxxxxx. Xxxxxxx shall finalize each such request and submit it to the relevant
Governmental Authorities as soon as practicable after receiving comments with
respect to such request from SV Partner, or notice from SV Partner that SV
Partner has no comments with respect thereto.
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(3) Each Party shall bear its own costs and expenses in
connection with the preparation and review of any request for guidance presented
or proposed to be presented to any Governmental Authority pursuant to the terms
of this Section 3.3b.ii.
iii. OBLIGATION OF SV PARTNER TO APPROVE CHANGES. SV Partner
shall implement or shall permit Xxxxxxx to implement the changes requested by
Xxxxxxx in a Xxxxxxx Terms Change Request if:
(1) SV Partner responds in writing to Xxxxxxx that it
approves or does not object to the changes proposed in such Xxxxxxx Terms Change
Request;
(2) Within ten (10) Business Days after receiving any
such Xxxxxxx Terms Change Request with respect to which Xxxxxxx has indicated
the changes proposed therein are necessary in order to comply with Applicable
Law: (x) SV Partner fails to notify Xxxxxxx, pursuant to Section 3.3b.i, that it
disagrees with such belief; or (y) SV Partner fails to notify Xxxxxxx, in
writing, that, pursuant to Section 3.3b.ii, it is requiring Xxxxxxx to prepare a
draft of a request for Governmental Authority guidance in connection with such
Xxxxxxx Terms Change Request;
(3) Xxxxxxx or SV Partner receives an opinion of
counsel, pursuant to Section 3.3b.i, substantially to the effect that the
changes described in such Xxxxxxx Terms Change Request are necessary in order to
comply with Applicable Law and SV Partner fails, within five (5) Business Days
thereafter, to require Xxxxxxx, pursuant to Section 3.3b.ii, to draft a request
for Governmental Authority guidance; or
(4) In response to a request for Governmental Authority
guidance submitted pursuant to Section 3.3b.ii, Xxxxxxx receives written
notification from any Governmental Authority to which such request was submitted
that such Governmental Authority agrees that the proposed changes described in
such Xxxxxxx Terms Change Request are necessary in order to comply with
Applicable Law.
For the avoidance of doubt, each of Xxxxxxx and SV Partner acknowledges and
agrees that if either Xxxxxxx or SV Partner exercises its rights under Section
3.3b.ii in response to any Xxxxxxx Terms Change Request, neither Xxxxxxx nor SV
Partner shall be entitled to subsequently seek an opinion of counsel in respect
of such Xxxxxxx Terms Change Request pursuant to Section 3.3b.i.
A Xxxxxxx Terms Change Request that is the subject of any of the circumstances
described in this Section 3.3B.III IS REFERRED TO HEREIN AS AN "Approved Xxxxxxx
Terms Change Request."
iv. XXXXXXX'X REMEDY FOR BREACH BY SV PARTNER OF SECTION
3.3b.iii. If, in breach of its obligations under Section 33b.iii, SV Partner
takes any action or fails to take any action in a manner that is designed to
unreasonably delay or prevent the implementation of the changes described in any
Approved Xxxxxxx Terms Change Request, and fails to remedy such breach within
five (5) days after receiving written notice thereof from Xxxxxxx, XX Partner
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shall be deemed to have performed in a manner that contravenes the Applicable
Law or Governmental Authority guidance in a material respect for purposes of
Section.
v. OBLIGATION OF SV PARTNER TO PAY FOR CARD TERMS CHANGES.
All reasonable costs and expenses incurred in connection with effecting any
Approved Xxxxxxx Terms Change Request the changes described in which Xxxxxxx has
indicated it believes are necessary in order to comply with Applicable Law shall
be for the account of SV Partner, and SV Partner shall reimburse Xxxxxxx as soon
as reasonably practicable after receipt of any demand for such reimbursement
from Xxxxxxx for any such cost or expense so incurred by Xxxxxxx, which demand
shall include a written statement setting forth such costs and expenses in
reasonable detail and including receipts to the extent applicable.
ARTICLE 4 - FLOW OF CARD ACCOUNT FUNDS; PAYMENTS TO SV PARTNER
4.1 FLOW OF CARD ACCOUNT FUNDS,
a. SV Partner shall:
i. Submit to Xxxxxxx, for Xxxxxxx'x review and approval
(which approval Xxxxxxx shall not unreasonably withhold, delay or condition)
each entity that SV Partner proposes to use as an Authorized Location; PROVIDED,
HOWEVER, that Xxxxxxx shall be deemed to have approved each entity so proposed
by SV Partner to which Xxxxxxx does not object (providing the reasons for such
objection) within ten (10) Business Days after receiving such submission from SV
Partner;
ii. Enter into a written agreement with each Authorized
Location that sets forth the terms and conditions associated with such
Authorized Location's receipt, handling and transmission of any fiends or
instruments tendered by Cardholders or prospective Cardholders, which agreements
shall, at a minimum, contain language materially similar to the language set
forth on the attached EXHIBIT 4.1 a; and
iii. Ensure that each Authorized Location acts in a manner
consistent with its obligations under its agreement with SV Partner.
b. SV Partner shall ensure that all funds and instruments
representing funds tendered by Cardholders and prospective Cardholders at
Authorized Locations for use in connection with their Cards are forwarded, as
promptly as practicable and, in any event, in a manner and within timeframes
consistent with any agreement between SV Partner and the Authorized Location
receiving any such funds and instruments, to an account designated by Xxxxxxx
for the receipt of such funds and instruments. Xxxxxxx shall ensure that all
such funds and instruments that it actually receives are appropriately reflected
in an internal record kept on its books to track such amounts (the "XXXXXXX
HOLDING ACCOUNT").
c. On each Settlement Day:
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i. Based on information received that day from SV Partner,
Xxxxxxx shall transfer from the Xxxxxxx Holding Account to a separate internal
record kept by Xxxxxxx on its books (the "SV PARTNER HOLDING ACCOUNT"), an
amount equal to the fees charged to Cardholders in connection with new Card
sales that have not otherwise been credited to the SV Partner Holding Account;
ii. Based on information received that day from the
Processor, Xxxxxxx shall transfer an amount equal to the Daily Activated Funds
Amount from the Xxxxxxx Holding Account to the Funding Account; PROVIDED,
HOWEVER, that if the Daily Activated Funds Amount for any day ever exceeds the
total amount reflected that day in the Xxxxxxx Holding Account, amounts
subsequently reflected by Xxxxxxx in the Xxxxxxx Holding Account first shall be
transferred to the Funding Account to satisfy such deficit before being applied
to any subsequent Daily Activated Funds Amount;
iii. Xxxxxxx shall transfer from the Funding Account to the
Settlement Account any amount required to settle with the Card Associations that
day in connection with transactions effected through the use of the Cards or
Card Accounts;
iv. Based on information received that day from the
Processor, Xxxxxxx shall transfer from the Funding Account to the SV Partner
Holding Account an amount equal to that day's "total cardholder income";
v. Based on information received that day from the Processor,
Xxxxxxx shall determine the aggregate amount in the Card Accounts, and:
(1) if the amount held in the Funding Account at the end
of such day (after all of the transfers effected or to be effected from the
Funding Account that day) is less than the aggregate amount held in all of the
Card Accounts (treating any overdraft amount on any Card Account as zero for
purposes of this calculation), Xxxxxxx shall: (A) transfer from the Reserve
Account to the Funding Account an amount equal to the difference between the
aggregate amount in the Card Accounts and the amount then held or to be held in
the Funding Account; and (B) notify SV Partner, in the Daily Report relating to
that Settlement Day, that it made such transfer and the amount of such transfer;
and
(2) if the amount held in the Funding Account at the end
of such day (after all of the transfers effected or to be effected from the
Funding Account that day) is greater than the aggregate amount in the Card
Accounts (treating any overdraft amount on any Card Account as zero for purposes
of this calculation), Xxxxxxx shall transfer from the Funding Account to the
Reserve Account an amount equal to the difference between the amount then held
or to be held in the Funding Account and the aggregate amount in the Card
Accounts; and
vi. Xxxxxxx shall provide to SV Partner a daily settlement
report in such form as Xxxxxxx and SV Partner from time to time shall agree
(each, a "DAILY REPORT").
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x. Xxxxxxx from time to time may withdraw from the SV Partner
Holding Account any and all amounts necessary to pay or reimburse itself for any
and all Losses it suffers or incurs in connection with the Cards, Cardholder
Agreements, Card Accounts or the activities contemplated by this Agreement the
payment of which or responsibility with respect to which it has not expressly
assumed pursuant to the terms of this Agreement, which amount Xxxxxxx shall
appropriately reflect on the Daily Report prepared for the day on which such
amount is so withdrawn.
e. By no later than the fifteenth (15`x`) day of each calendar
month during the SV Partner Payment Period and the month immediately following
the termination of the SV Partner Payment Period, Xxxxxxx shall remove from the
SV Partner Holding Account, for its own use and benefit, an amount equal to the
Monthly Xxxxxxx Withdrawal Amount (calculated pursuant to the formula set forth
on the attached EXHIBIT 4.1 E), which amount Xxxxxxx shall appropriately reflect
on the Daily Report prepared for the day on which such amount is so withdrawn.
f: Xxxxxxx, from time to time, may withdraw from the SV Partner
Holding Account any and all amounts, costs, fees, penalties or fines charged
from time to time by the Card Association(s) that are directly related or
allocable to the Cards or Card Accounts, which amounts Xxxxxxx shall
appropriately reflect on the Daily Reports prepared for the days on which such
amounts are so withdrawn.
g. If, at any time, the amount reflected in the SV Partner Holding
Account is less than the amount or amounts Xxxxxxx is entitled at that time to
withdraw from the SV Partner Holding Account pursuant the terms of this
Agreement, Xxxxxxx shall: (i) transfer from the Reserve Account to the SV
Partner Holding Account the amount of any such shortfall, thereby allowing
Xxxxxxx to withdraw from the SV Partner Holding Account the full amount it is
entitled to so. withdraw; and (ii) notify SV Partner, in the Daily Report
prepared for the day on which such transfer occurred, that it made such transfer
and the amount of such transfer.
4.2 MAINTENANCE OF AMOUNTS IN THE RESERVE ACCOUNT.
a. SV Partner shall forward to an account designated from time to
time by Xxxxxxx such immediately available funds as are necessary to ensure
that, at all times during the SV Partner Payment Period, the amount reflected by
Xxxxxxx in the Reserve Account (absent the wrongful removal or transfer of such
amount by Xxxxxxx) is equal to or greater than the greater of: (i) One Hundred
Thousand Dollars ($100,000); and (ii) the sum of the Two-Week Funding Amounts
for all of the Authorized Locations (the "RESERVE AMOUNT").
b. If Xxxxxxx notes on any Daily Report that the amount in
the-Reserve Account is less than the Reserve Amount, Xxxxxxx shall be entitled
to remove from the Funding Account an amount equal to the fines or fees that
otherwise would have been payable to the Associations or the Processor if
Xxxxxxx had failed to settle with the Associations on the day to which such
Daily Report relates.
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c. If the Daily Report for the last Settlement Day of each
calendar month during the SV Partner Payment Period indicates that the amount in
the Reserve Account is greater than the Reserve Amount, Xxxxxxx shall transfer,
on the next following Business Day, the difference between the amount in the
Reserve Account and the Reserve Amount to the SV Partner Holding Account.
4.3 PAYMENTS TO SV PARTNER. Prior to the close of business on the third
Business Day of each calendar week during the SV Partner Payment Period and the
calendar week immediately following the termination of the SV Partner Payment
Period, Xxxxxxx shall transfer to an account designated from time to time by SV
Partner immediately available fluids in an amount equal to the amounts then held
in the SV Partner Holding Account, and shall reduce the amounts then held in the
SV Partner Holding Account accordingly; PROVIDED, HOWEVER, that Xxxxxxx shall
not be obligated to make any such transfer if the amount then held in the
Reserve Account is less than the Reserve Amount.
ARTICLE 5 PRIVACY; PROPRIETARY AND CONFIDENTIAL INFORMATION
5.1 PRIVACY AND SECURITY OF CARDHOLDER INFORMATION.
a. It is the intent of the Parties that this Agreement shall
qualify under the "joint marketing" and the "service provider" exceptions under
the Xxxxx-Xxxxx-Xxxxxx Act (the "GLB ACT") and privacy regulations issued by the
relevant regulatory authority adopted thereunder (the "TRIVAC REGULATIONS"). The
parties agree to make such alterations to this Agreement to conform to the
industry practices that develop in response to the GLB Act and the Privacy
Regulations that are necessary to achieve the objectives of this ARTICLE 5 and
that do not alter the economics of this Agreement or the allocation of risk
hereunder. SV Partner agrees to comply with all Applicable Laws relating to
privacy and data protection, including, but not limited to, the GLB Act, that
are and may in the future be applicable to the Cardholder Information that is
supplied to SV Partner.
b. SV Partner shall establish administrative, technical and
physical safeguards for Cardholder Information from time to time in SV Partner's
possession or under SV Partner's control that are reasonably designed to: (a)
maintain the security of such records and information; (b) protect against any
anticipated threats or hazards to the security or integrity of such records and
information; and (c) protect against unauthorized access to or use of such
records and information that would result in substantial harm or inconvenience
to any Cardholder. Such safeguards shall be established in accordance with
Section 501 of the GLB Act and the Interagency Guidelines Establishing Standards
for Safeguarding Customer Information adopted pursuant to Section 501 of the GLB
Act.
c. In addition to the foregoing, SV Partner agrees to implement
the safeguards set forth in the Visa Cardholder Information Security Program
("CISP") regulations and the MasterCard Site Data Protection ("SDP")
regulations, as amended from time to time, to prevent use or disclosure of
Cardholder Information other than as provided for by this Agreement, and, as
required in the CISP and SDP regulations, to maintain the integrity and
confidentiality of any Cardholder Information.
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d. This Section 5.1 shall not be deemed to limit the use by SV
Partner of information provided directly to SV Partner by any person, including
Cardholders, in connection with products or services made available by SV
Partner or other vendors.
5.2 CARDHOLDER LIST. During the SV Partner Payment Period, neither SV
Partner nor Xxxxxxx will, except directly in connection with the performance of
its obligations under this Agreement, transfer, sell or disclose to any other
person or entity any list (whether in written or other form) containing the
names, addresses and/or telephone numbers of Cardholders that exists by reason
of those persons being Cardholders (each, a "CARDHOLDER LIST"). Notwithstanding
the above, SV Partner, at its sole cost and expense, may use Cardholder Lists
and include in statements and correspondence sent to Cardholders materials
designed to solicit Cardholders for the purchase of Non-Competitive Products and
Services, and shall be entitled to receive any revenue associated with any such
solicitation that does not otherwise flow through the Card Accounts; PROVIDED,
HOWEVER, that SV Partner shall obtain Xxxxxxx'x written consent prior to any
such use, which consent Xxxxxxx shall not unreasonably withhold, condition or
delay. Without the prior written approval of SV Partner, Xxxxxxx will not use
any Cardholder List, in whole or in part, to solicit Cardholders for any other
product or for any other purpose, except as otherwise permitted under this
Agreement. Notwithstanding the foregoing, nothing in this Agreement shall
require Xxxxxxx to purge Cardholder Information from a general solicitation that
is not targeted, in whole or in part, at individuals because they are
Cardholders or based on information derived by Xxxxxxx from a Cardholder List.
5.3 DISCLOSURE OF CERTAIN PROPRIETARY INFORMATION. SV Partner and
Xxxxxxx agree that the contents of this Agreement are proprietary and shall not
be disclosed to anyone except officers, directors, employees, representatives,
consultants, investment bankers or agents of each such Party and its affiliates
who have a need to know of such contents, legal counsel and accountants for such
Party or any governmental or regulatory agency, if required by Applicable Law,
investors, prospective investors, lenders, prospective lenders or partners or
prospective partners under agreements directly relating to the Card Assets, or
as otherwise approved by the Parties (collectively, "PERMITTED PERSONS").
Notwithstanding any other express or implied agreement to the contrary, each of
the Parties agrees that it and each of its employees, representatives, and other
agents may disclose, immediately upon commencement of discussions, to any and
all persons, without limitation of any kind, the tax treatment and tax structure
of the transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to any of them
relating to such tax treatment and tax structure, except where confidentiality
is reasonably necessary to comply with U.S. federal or state securities laws.
For purposes of this Section 5.3, the terms "tax," "tax treatment," "tax
structure" and "tax benefit" are defined under Treasury Regulation ss.
1.6011-4(c).
5.4 CONFIDENTIAL INFORMATION.
a. PERMITTED USES OF AND OBLIGATIONS WITH RESPECT TO
CONFIDENTIAL INFORMATION.
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i. Recipient shall disclose such Confidential
Information of the Disclosing Party as it may receive only to Permitted Persons
who need to Imow such information given the intended use of such Confidential
Information by Recipient, as permitted by this Section 5.4. Neither Recipient
nor any of its Permitted Persons shall use, disseminate or in any way circulate
within its own organization or otherwise any Confidential Information of the
Disclosing Party that is supplied to or obtained by Recipient in writing, orally
or by observation, except to the extent necessary or appropriate to exercise its
rights or perform its obligations under this Agreement.
ii. Recipient shall treat all Confidential Information
of the Disclosing Party in a manner consistent with Applicable Law and otherwise
with a degree of care that is not less than the degree of care generally
accorded in the industry to confidential information of the same or similar
nature.
iii. Except as otherwise expressly permitted in this
Agreement, Recipient shall not publish or copy any Confidential Information of
the Disclosing Party, or disclose any Confidential Information of the Disclosing
Party to any third party.
b. SCOPE OF OBLIGATIONS. Recipient's obligations under
Section 5.4a with respect to any relevant Confidential Information of the
Disclosing Party shall terminate when Recipient can document that:
i. such Confidential Information was in the public
domain at the time it was communicated to Recipient by the Disclosing Party;
ii. such Confidential Information entered the public
domain subsequent to the time it was communicated to Recipient by the Disclosing
Party through no fault of Recipient or disclosure by any Permitted Person;
iii. such Confidential Information was in the
Recipient's possession at the time it was communicated to Recipient by the
Disclosing Party as evidenced by records of Recipient, who shall have the burden
of proving that such Confidential Information was in its possession; or
iv. such Confidential Information was rightfully
communicated to Recipient by a third party or was otherwise obtained or
independently developed by Recipient free of any obligation of confidentiality
subsequent to the time it was communicated to Recipient by the Disclosing Party.
c. RETURN OF CONFIDENTIAL INFORMATION. As soon as reasonably
practicable after any termination of the SV Partner Payment Period, Recipient
shall return or deliver to the Disclosing Party or, if agreed to by the
Disclosing Party, destroy all materials delivered by the Disclosing Party to
Recipient or prepared by Recipient containing any Confidential Information of
the Disclosing Party and deliver a certificate certifying the destruction of
such information.
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d. DISCLOSURE IN CONNECTION WITH OFFICIAL PROCEEDINGS.
Notwithstanding any provision of this Agreement to the contrary, in the event
Recipient is required by Applicable Law or requested or required in a judicial,
administrative or governmental proceeding to disclose any Confidential
Information of the Disclosing Party, Recipient shall provide to the Disclosing
Party prompt written notice of such request or requirement and all related
proceedings so the Disclosing Party, in its discretion, may seek a protective
order. If, as a result of any such request or requirement, Recipient is, in the
opinion of its counsel, required or compelled to disclose Confidential
Information of the Disclosing Party to any tribunal or stand liable for contempt
or other censure or penalty, Recipient may disclose such Confidential
Information to such tribunal without liability under this Agreement provide d
Recipient has complied with the notice provisions of this Section 5.4d.
e. PRESERVATION OF THE DISCLOSING PARTY'S RIGHTS AND OWNERSHIP. No
disclosure by the Disclosing Party of any of its Confidential Information shall
constitute a grant to the Recipient of any interest or right whatsoever in such
Confidential Information, which shall remain the property solely of the
Disclosing Party. Except as expressly provided otherwise, nothing contained
herein shall limit the Disclosing Party's rights to use its own Confidential
Information in any manner whatsoever.
f. EQUITABLE RELIEF. Notwithstanding any other provision in this
Agreement, each Party to this Agreement understands that if it fails to comply
with this Section 5.4, the other Party will suffer irreparable harm, which may
not be adequately compensated for by monetary damages alone. Each Party,
therefore, agrees that in the event of its breach or threatened breach of this
Section 5.4, the other Party shall be entitled to injunctive and/or other
preliminary or equitable relief, in addition to any other remedies as
provided for in this Agreement.
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS AND WARRANTIES OF SV PARTNER. SV Partner represents
and warrants to Xxxxxxx that:
a. SV Partner is a corporation, duly organized, validly existing
and in good standing under the laws of the State of Florida.
b. SV Partner has all necessary power and authority to enter into
this Agreement and to perform all of the obligations to be performed by it under
this Agreement. This Agreement and the consummation by SV Partner of the
transactions contemplated hereby have been duly and validly authorized by all
necessary action of SV Partner. This Agreement has been duly executed and
delivered by SV Partner and constitutes the valid and binding obligations of SV
Partner, enforceable in accordance with its terms (except as such enforcement
maybe limited by Applicable Law, including, without limitation, banla-uptcy,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and by general principles of law and equity).
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c. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby by SV Partner will: (i)
conflict with, result in the breach of, constitute a default under or accelerate
the performance required by the terms of any contract, instrument or commitment
to which SV Partner is a party or by which SV Partner is bound; (ii) violate the
certificate of incorporation or by-laws of SV Partner; (iii) require any consent
or approval under any judgment, order, writ, decree, permit or license to which
SV Partner is a party or by which SV Partner is bound; or (iv) require the
consent or approval of any other party to any contract, instrument or commitment
to which SV Partner is a party or by which it is bound, other than approvals
that have been obtained or will be obtained prior to or on the Effective Date.
SV Partner is not subject to any agreement with any Governmental Authority that
would prevent the consummation by SV Partner of the transactions contemplated by
this Agreement.
d. There is no claim, or any litigation, proceeding, arbitration,
investigation or material controversy pending, against or affecting SV Partner
that will have a material adverse effect on the ability of SV Partner to
consummate the transactions contemplated hereby. To the best of SV Partner's
knowledge, no such claim, litigation, proceeding, arbitration, investigation or
material controversy has been threatened or is contemplated.
e. SV Partner has not agreed to pay any fee or commission to any
agent, broker, finder or other person for or in connection with this Agreement
or the transactions contemplated hereby that would give rise to any claim
against Xxxxxxx for any brokerage commission or finder's fee or like payment.
6.2. REPRESENTATIONS AND WARRANTIES OF XXXXXXX. Xxxxxxx represents and
warrants to SV Partner that:
x. Xxxxxxx is an FDIC-insured industrial loan corporation, duly
organized and validly existing under the laws of the State of Utah. As of the
Effective Date, Xxxxxxx is a member of MasterCard and Visa.
x. Xxxxxxx has all necessary power and authority to enter into
this Agreement and to perform all of the obligations to be performed by it under
this Agreement. This Agreement and the consummation by Xxxxxxx of the
transactions contemplated hereby have been duly and validly authorized by all
necessary action of Xxxxxxx. This Agreement has been duly executed and delivered
by Xxxxxxx and constitutes the valid and binding obligations of Xxxxxxx,
enforceable in accordance with its terms (except as such enforcement may be
limited by Applicable Law, including, without limitation, bankruptcy,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and by general principles of law and equity).
c. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby by Xxxxxxx will: (i)
conflict with, result in the breach of, constitute a default under or accelerate
the performance required by the terms of any contract, instrument or commitment
to which Xxxxxxx is a party or by which Xxxxxxx is bound; (ii) violate the
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articles of incorporation or by-laws of Xxxxxxx; (iii) require any consent or
approval under any judgment, order, writ, decree, permit or license to which
Xxxxxxx is a party or by which Xxxxxxx is bound or of any governmental agency;
or (iv) require the consent or approval of any other party to any contract,
instrument or commitment to which Xxxxxxx is a party or by which it is bound,
other than approvals that have been obtained or will be obtained prior to or on
the Effective Date. Xxxxxxx is not subject to any agreement with any
governmental authority that would prevent the consummation by Xxxxxxx of the
transactions contemplated by this Agreement.
d. There is no claim, or any litigation, proceeding, arbitration,
investigation or material controversy pending, against or affecting Xxxxxxx that
will have a material adverse effect on the ability of Xxxxxxx to consummate the
transactions contemplated hereby. To the best of Xxxxxxx'x knowledge, no such
claim, litigation, proceeding, arbitration, investigation or material
controversy has been threatened or is contemplated.
x. Xxxxxxx has not agreed to pay any fee or commission to any
agent, broker, finder or other person for or in connection with this Agreement
or the transactions contemplated hereby that would give rise to any claim
against SV Partner for any brokerage commission or finder's fee or like payment.
ARTICLE 7 - COVENANTS
7.1 COVENANTS OF MERRICK
a. COMPLIANCE WITH APPLICABLE LAW. Xxxxxxx shall fully comply with
all Applicable Law in connection with the performance of its obligations under
this Agreement. In addition, in connection with all actions taken by Xxxxxxx
pursuant to, or in connection with, the terms of this Agreement, Xxxxxxx shall
take such actions, or refrain from taking such actions, as SV Partner may
request in order to allow SV Partner, in the opinion of SV Partner's legal
counsel, to fully comply with all Applicable Law unless any such action would
cause Xxxxxxx to violate any Applicable Law.
b. MEMBERSHIP IN CARD ASSOCIATIONS. Xxxxxxx shall maintain its
membership in the Card Associations and shall complete all registration
requirements for SV Partner, as required by each Card Association, in connection
with this Agreement and the issuance of Cards under this Agreement. Except as
otherwise set forth in this Agreement, Xxxxxxx shall pay all applicable
membership fees and other fees, dues, assessments and expenses of each Card
Association imposed upon Xxxxxxx.
c. NOTIFICATION OF EFFECTIVE DATE. XXXXXXX SHALL PROVIDE WRITTEN
NOTICE TO SV PARTNER NO LATER THAN TEN (10) DAYS AFTER XXXXXXX'X BOARD HAS
RATIFIED AND APPROVED THIS AGREEMENT.
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7.2 COVENANTS OF SV PARTNER
a. COMPLIANCE WITH APPLICABLE LAW. SV Partner at all times shall
fully comply with all Applicable Law in connection with the exercise of any
right or the performance (either directly or through any third party) of any
obligation under this Agreement. In addition, in connection with all actions
taken by SV Partner pursuant to, or in connection with, the terms of this
Agreement, SV Partner shall take such actions, or refrain from taking such
actions, as Xxxxxxx may request in order to allow Xxxxxxx, in the opinion of
Xxxxxxx'x legal counsel, to fully comply with all Applicable Law unless any such
action would cause SV Partner to violate any Applicable Law.
b. PRESERVATION OF XXXXXXX'X RIGHTS. SV Partner shall not take any
action or fail to take any action with respect to the Cards or Card Accounts
that would adversely affect the rights of Xxxxxxx as issuer of the Cards.
ARTICLE 8 - TERM AND TERMINATION
8.1 SV PARTNER PAYMENT PERIOD. This Agreement shall be effective during
a period (the "SV PARTNER PAYMENT PERIOD") that commences as of the Effective
Date and ends with the first to occur of: (i) an SV Partner Default; (ii) a
transfer of the Card Assets by Xxxxxxx to SV Partner or its designee pursuant to
the terms of this ARTICLE 8; or (iii) a termination of the Cardholder Agreements
and closure of Card Accounts, either together with or independent of any
transfer of Card Assets, pursuant to the terms of this ARTICLE S.
8.2 TERMINATION BY XXXXXXX,
a. Upon the occurrence of a SV Partner Default, SV Partner shall
pay to Xxxxxxx, as liquidated damages and not as a penalty, an amount equal. to
the Termination Amount; PROVIDED HOWEVER, that SV Partner shall not be required
to pay to Xxxxxxx the Termination Amount if a Xxxxxxx Default has occurred prior
to the occurrence of such SV Partner Default and either: (A) Xxxxxxx has not
remedied such Xxxxxxx Default prior to the occurrence of such SV Partner
Default; or (B) SV Partner has designated a Default Transfer Period that has not
expired prior to the occurrence of such SV Partner Default.
b. If (i) prior to the occurrence of any SV Partner Default, SV
Partner has notified Xxxxxxx that SV Partner has designated a financial
institution that is willing to receive a transfer of the Card Assets from
Xxxxxxx, and (ii) within thirty (30) days after the occurrence of any SV Partner
Default, Xxxxxxx and such financial institution are able to agree upon the terms
of a transfer of the Card Assets from Xxxxxxx and such financial institution,
Xxxxxxx shall transfer to such financial institution the Card Assets upon such
agreed-upon terms, and SV Partner shall pay the costs associated with such
transfer. In connection with any such transfer, Xxxxxxx shall be permitted to
retain that portion of the Funding Account, Xxxxxxx Holding Account and Reserve
Account that Xxxxxxx, under the circumstances, believes is reasonably necessary
or appropriate to cover any Card-related transactions that may be posted to a
Xxxxxxx-owned ICA or BIN following the effective date of such transfer;
PROVIDED, HOWEVER, that Xxxxxxx shall forward the remainder of any such amounts
to SV Partner or its designee not later than sixty (60) days after the effective
date of such transfer.
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c. If (A) prior to the occurrence of any SV Partner Default, SV
Partner has failed to notify Xxxxxxx that SV Partner has designated a financial
institution that is willing to receive a transfer of the Card Assets from
Xxxxxxx, or (B) Xxxxxxx and the financial institution designated by SV Partner
to be the transferee of the Card Assets are not able to reach agreement on the
terms of such transfer within the thirty (3 0) day period described in Section
8.2b, then within a reasonable period of time (not to exceed ninety (90) days)
following the occurrence of any SV Partner Default, Xxxxxxx shall (i)
invalidate, terminate and close any Card Asset that, in Xxxxxxx'x opinion, is
not transferable to SV Partner and (ii) transfer to SV Partner all Card Assets
that it has not otherwise invalidated, terminated or closed, and SV Partner
shall pay the costs associated with such transfer and/or termination. In
connection with any such transfer and/or termination, Xxxxxxx shall be permitted
to retain that portion of the Funding Account, Xxxxxxx Holding Account and
Reserve Account that Xxxxxxx, under the circumstances, believes is reasonably
necessary or appropriate to cover any Card-related transactions that may be
posted to a Xxxxxxx-owned ICA or BIN following the effective date of such
transfer and/or termination; PROVIDED, HOWEVER, that Xxxxxxx shall forward the
remainder of any such amounts to SV Partner or its designee not later than one
hundred eighty (180) days after the date of such SV Partner Default.
d. For purposes of this Agreement, a "SV PARTNER DEFAULT" occurs:
i. Upon Xxxxxxx'x written notice to SV Partner, if SV Partner
or any Third Party Provider takes any action under or in connection with this
Agreement, any Cardholder Agreement, any Card or any Card Account that
contravenes any Applicable Law, Governmental Authority guidance or Cardholder
Agreement in any material respect, or if SV Partner, or any Third Party Provider
fails to take any action where such party had an obligation to act and such
failure contravenes or results in the contravention of any Applicable Law,
Governmental Authority guidance or Cardholder Agreement in any material respect;
PROVIDED that as promptly as possible following a determination that any such
action or failure to take action contravenes or results in the contravention of
any Applicable Law, Governmental Authority guidance or Cardholder Agreement,
Xxxxxxx shall notify the relevant party or parties of such failure or
contravention; PROVIDED FURTHER that no SV Partner Default shall be deemed to
have occurred under this clause (i) if, within fifteen (15) days after written
notice has been given to the relevant party or parties by Xxxxxxx, such party or
parties and Xxxxxxx agree on the necessary steps to resolve such contravention
and initiate such steps within an agreed-upon time frame; and PROVIDED FURTHER
that any determination that any action or failure to take action contravenes any
Applicable Law, Governmental Authority guidance or Cardholder Agreement shall be
evidenced by a written opinion of counsel reasonably acceptable to SV Partner;
ii. If Xxxxxxx appropriately indicates on any three (3)
consecutive Daily Reports that the amount in the Reserve Account is less than
the Reserve Amount;
iii. If SV Partner defaults in the performance of or breaches
any material representation, warranty or covenant made by it hereunder (except
as otherwise described in Section 8.2d.i or Section 8.2d.ii), and such default
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or breach is not cured within thirty (30) days after written notice of such
default or breach, requiring the same to be remedied, has been given to SV
Partner by Xxxxxxx; or
iv. Upon: (A) the filing of apetition or commencement of a
proceeding by SV Partner (i) to take advantage of any bankruptcy,
conservatorship, receivership, insolvency, or similar laws or (ii) for the
appointment of a trustee, conservator, receiver, liquidator, or similar official
for or relating to SV Partner or all or substantially all of its property; (B)
SV Partner's consent or failure to object to any such petition filed or
proceeding commenced against or with respect to it or all or substantially all
of its property, or if any such petition or proceeding shall not have been
dismissed or stayed within sixty (60) days of its filing or commencement, or if
a court, agency or other supervisory authority with jurisdiction shall have
decreed or ordered relief with respect to any such petition or proceeding; (C)
SV Partner's admission in writing of its inability to pay its debts generally as
they become due; (D) the malting by SV Partner of an assignment for the benefit
of its creditors, or (E) SV Partner's voluntarily suspension of the payment of
its obligations.
8.3 TERMINATION BY SV PARTNER DUE TO XXXXXXX DEFAULT.
a. Upon the occurrence of a Xxxxxxx Default:
i. SV Partner may, at any time prior to the correction or
cure by Xxxxxxx of the circumstances that originally gave rise to such Xxxxxxx
Default, designate a period of time, not to exceed twelve (12) months (the
"DEFAULT TRANSFER PERIOD"), during which SV Partner may require Xxxxxxx, upon
reasonable advance written notice, to transfer and convey the Card Assets to SV
Partner or its designee (the "DEFAULT TRANSFER DESIGNEE") PROVIDED, HOWEVER,
that if an SV Partner Default occurs prior to the designation by SV Partner of
any Default Transfer Period or during any Default Transfer Period prior to the
exercise by SV Partner of its Default Transfer Right, the provisions of Section
8.2 shall apply and shall supercede this Section 8.3;
ii. Xxxxxxx shall cooperate with SV Partner in its efforts to
identify a successor owner of the Card Assets and issuer of the Cards during the
Default Transfer Period; and
iii. If SV Partner exercises its Default Transfer Right,
Xxxxxxx shall pay the costs associated with such transfer; provided, however,
that any amounts paid or payable by SV Partner to any direct or indirect
recipient of the Card Assets shall not be considered to be "costs associated
with such transfer" for purposes of this Section 8.3a.iii; and
iv. In addition to the foregoing, at any time following the
occurrence of a Xxxxxxx Default, but prior to (1) the correction or cure by
Xxxxxxx of the circumstances that originally gave rise to such Xxxxxxx Default
or (2) the occurrence of an SV Partner Default and the exercise by Xxxxxxx of
any of its remedies in connection therewith, SV Partner may, upon written notice
to Xxxxxxx require Xxxxxxx to transfer, at Xxxxxxx'x cost and expense, the Card
Assets to SV Partner or its designee (also referred to herein as a "DEFAULT
TRANSFER RIGHT");
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PROVIDED, HOWEVER that any amounts paid or payable by SV Partner to any direct
or indirect recipient of the Card Assets shall not be considered to be costs or
expenses payable by Xxxxxxx in connection with any such transfer.
b. For purposes of this Agreement, a "XXXXXXX DEFAULT" occurs:
i. If Xxxxxxx fails to make any payments to SV Partner under
this Agreement when due and such failure is not cured within ten (10) days after
written notice of such failure, requiring the same to be remedied, has been
given to Xxxxxxx by SV Partner;
ii. If Xxxxxxx defaults in the performance of or breaches any
material representation, warranty or covenant made by it hereunder (other than
as provided for in Section 8.3b.i), and such default or breach is not cured
within thirty (30) days after written notice of such default or breach,
requiring the same to be remedied, has been given to Xxxxxxx by SV Partner;
iii. Upon: (A) the filing of a petition or commencement of a
proceeding by Xxxxxxx to take advantage of any bankruptcy, conservatorship,
receivership or similar laws; (B) the filing of a petition or commencement of a
proceeding by Xxxxxxx for the appointment of a trustee, conservator, receiver,
liquidator, or similar official for or relating to Xxxxxxx or all or
substantially all of its property; (C) Xxxxxxx'x consent or failure to object to
any such petition filed or proceeding commenced against or with respect to it or
all or substantially all of its property, or if any such petition or proceeding
shall not have been dismissed or stayed within sixty (60) days of its filing or
commencement, or if a court, agency or other supervisory authority with
jurisdiction shall have decreed or ordered relief with respect to any such
petition or proceeding; (D) Xxxxxxx'x admission in writing of its inability to
pay its debts generally as they become due; (E) the making by Xxxxxxx of an
assignment for the benefit of its creditors; or (F) Xxxxxxx'x voluntarily
suspension of the payment of its obligations;
iv. If, in breach of its obligations under Section 3.3a.iii,
Xxxxxxx takes any action or fails to take any action in a manner that is
designed to unreasonably delay or prevent the implementation of the changes
described in any Approved SV Partner Terms Change Request, and fails to remedy
such breach within fifteen (15) days after receiving written notice thereof from
SV Partner;
PROVIDED, HOWEVER, that in no event shall a Xxxxxxx Default occur as a result of
SV Partner's own action or failure to take any action required to be taken by SV
Partner.
8.4 CHANGES IN APPLICABLE LAW. If counsel reasonably acceptable to
both parties determines that the exercise by Xxxxxxx or SV Partner of any of
their respective rights, or the performance by Xxxxxxx or SV Partner of any of
their respective obligations, under this Agreement violates any Applicable Law
or causes the other Party to be in violation of any Applicable Lave, or will
violate any Applicable Law or cause the other Party to be in violation of any
Applicable Law following the effective date of any relevant changes or additions
to Applicable Law, then:
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x. Xxxxxxx and SV Partner shall (A) cooperate and use
commercially reasonable efforts to remedy the cause of the violation within
three (3) months of the date on which SV Partner and Xxxxxxx received such
opinion of counsel, or (B) Xxxxxxx may request, in writing, guidance from
applicable Governmental Authorities to determine if such Governmental
Authorities agree with the opinion of counsel;
b. Within twelve (12) months following the expiration of the
three (3) month period set forth in clause (a) above or the date on which both
SV Partner and Xxxxxxx have received notice of the determination of any relevant
Governmental Authority agreeing with the opinion of counsel referenced above, as
the case may be, or such lesser period of time as may be necessary to avoid any
breach by either party of any Applicable Law (the "REQUIREMENTS OF LAW TRANSFER
PERIOD"), SV Partner may require Xxxxxxx, upon reasonable advance written
notice, to transfer and convey the rights, title, interest, privileges and
obligations of Xxxxxxx in and to the Card Assets to SV Partner or its designee
(the "REQUIREMENTS OF LAW TRANSFER RIGHT"); PROVIDED, HOWEVER, that if an SV
Partner Default or Xxxxxxx Default occurs during the Requirements of Law
Transfer Period prior to the exercise by SV Partner of its Requirements of Law
Transfer Right, the provisions of Section 8.2 or Section 8.3, as applicable,
shall apply and shall supercede this Section 8.4;
x. Xxxxxxx shall cooperate with SV Partner in its efforts to
identify a successor to Xxxxxxx during the Requirements of Law Transfer Period;
d. If SV Partner elects to exercise its Requirements of Law
Transfer Right during the Requirements of Law Transfer Period, SV Partner shall
pay the costs associated with such transfer; and
e. If SV Partner fails to exercise its Requirements of Law
Transfer Right during any Requirements of Law Transfer Period:
x. Xxxxxxx shall transfer to SV Partner those Card
Assets that, in Xxxxxxx'x opinion, are capable of transfer to SV Partner;
ii. Xxxxxxx shall invalidate, terminate and close any
Card Asset that is not otherwise transferable to SV Partner; and
iii. SV Partner shall pay the costs associated with
any such transfer, termination or closure.
8.5 TERMINATION FOR DELAY IN EFFECTIVE DATE. Notwithstanding any
provision in this Agreement to the contrary, either Party may terminate this
Agreement, without any liability or obligation owing to the other Party,
immediately upon written notice to the other Party if, for any reason, Xxxxxxx'x
board of directors has not ratified and approved this Agreement by September 30,
2004.
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ARTICLE 9 -INDEMNIFICATION
9.1 INDEMNIFICATION BY XXXXXXX.
x. Xxxxxxx shall assume liability for, defend, indemnify,
protect, save and hold SV Partner and its Affiliates and their respective
officers, directors, employees and permitted assigns (collectively, the
"INDEMNIFIED SV PARTNER PARTIES") harmless from and against any and all Losses
that may be imposed on, incurred by or asserted against SV Partner relating to
or based upon a material breach by Xxxxxxx of any of its obligations,
representations, warranties or covenants contained in this Agreement; PROVIDED,
HOWEVER, that the total amount Xxxxxxx shall be obligated to pay to the
Indemnified SV Partner Parties collectively pursuant to this Section 9.1 shall
in no event exceed the amount of Five Million Dollars ($5,000,000).
b. The remedies provided to the Indemnified SV Partner Parties
pursuant to this Section 9.1 shall be the sole and exclusive remedies available
to the Indemnified SV Partner Parties for any and all Losses suffered or
incurred by any Indemnified SV Partner Party as a result of any Xxxxxxx Breach
or any representation, warranty, action or inaction by Xxxxxxx under or in
connection with this Agreement, the Cards, the Card Accounts and the Cardholder
Agreements.
9.2 INDEMNIFICATION BY SV PARTNER. SV Partner shall be liable to and
shall indemnify, defend and hold Xxxxxxx and its Affiliates and their respective
officers, directors, employees and permitted assigns (collectively, the
"INDEMNIFIED XXXXXXX PARTIES") harmless from and against any and all Losses
suffered by any Indemnified Xxxxxxx Party or to which any Indemnified Xxxxxxx
Party may become subject that directly or indirectly arise out of, are based
upon or relate to this Agreement; the Cards, Card Accounts; their Cardholder
Agreements-or the actions or inactions of any third party directly or indirectly
relating to the Cards, Card Accounts or Cardholder Agreements following any
transfer effected pursuant to ARTICLE 8; PROVIDED, HOWEVER, that the total
amount SV Partner shall be obligated to pay to the Indemnified Xxxxxxx Parties
collectively pursuant to this Section 9.2 shall in no event exceed the amount of
Five Million Dollars ($5,000,000).
9.3 INDEMNIFICATION PROCEDURES.
a. If any event (an "INDEMNIFICATION EVENT") occurs in
connection with which an entity (the "INDEMNITEE") MAY SEEK INDEMNIFICATION from
a Party obligated to provide indemnity pursuant to this ARTICLE 9 (the
"INDEMNIFYING PARTY"), the Indemnitee shall promptly notify the Indemnifying
Party in writing. The failure of any Indemnitee to give prompt notice to an
Indemnifying Party as required herein shall not affect the obligation of the
Indemnifying Party to provide indemnification hereunder, except that the
monetary obligation of the Indemnifying Party shall be reduced by any damages
suffered by it by reason of such non-timely notification.
If any Indemnification Event involves the commencement of any third party
action, suit or other proceeding, whether civil, criminal or investigative, the
Indemnifying Party shall assume the defense thereof, retaining counsel
reasonably satisfactory to the Indemnitee and paying all
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expenses thereof. The Indemnitee shall have the right to employ separate counsel
in any such proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be the expense of the Indemnitee unless: (i)
the Indemnifying Party has agreed specifically to pay such fees or expenses;
(ii) the Indemnifying Party shall have failed to assume the defense of such
proceeding or to employ counsel reasonably satisfactory to the Indemnitee; or
(iii) the named parties to any such proceeding include both the Indemnitee and
the Indemnifying Party, and the Indemnitee shall have been advised by reputable
counsel that representation of the Indemnitee and the Indemnifying Party by the
same counsel would be inappropriate under applicable standards of professional
conduct because there may be one or more defenses available to the Indemnitee
that are different from or in addition to those available to the Indemnifying
Party (in which case, if the Indemnitee notifies the Indemnifying Party, in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense of such proceeding on behalf of the Indemnitee; it being understood,
however, that the Indemnifying Party shall not, in connection with any one such
proceeding, or separate but substantially similar or related proceedings in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate counsel
at any time for the Indemnitee, which counsel shall be designated in writing by
the Indemnitee). No settlement shall be made by an Indemnitee or an Indemnifying
Party of a claim in respect of which indemnity may be sought hereunder without
the prior written approval of the other, which approval shall not be
unreasonably delayed, conditioned or withheld.
9.4 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS. EXCEPT AS OTHERWISE
SPECIFICALLY SET FORTH HEREIN, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY
FOR ANY INDIRECT SPECIAL OR CONSEQUENTIAL DAMAGES (UNDER CONTRACT OR TORT
THEORIES OF LAW), INCLUDING DAMAGES FOR LOST REVENUE, LOST PROFITS OR OTHER
ECONOMIC DAMAGE, AS A RESULT OF ANY BREACH OF THIS AGREEMENT, EVEN IF IT HAS
BEEN ADVISED OF OR HAS FORESEEN THE POSSIBILITY OF SUCH DAMAGES.
ARTICLE 10 -INTELLECTUAL PROPERTY
10.1 TRADEMARKS. The respective Trademarks of SV Partner and Merrick
remain the sole and exclusive property of SV Partner and Merrick, respectively,
and no Party shall use such property of SV Partner or Merrick in connection with
any representation, solicitation, advertising or promotion without the prior
written consent of the owner of such property.
10.2 COPYRIGHTS. Copyrights to all Marketing Materials, other than
those portions of the Marketing Materials supplied by Merrick, shall be owned by
SV Partner, except that any Trademark of either Party that appears on any
Marketing Materials shall remain the property of that Party. Each Party grants
to the other Party a limited, non-exclusive, non-transferable right and license
to use any Marketing Materials it prepares in connection with the performance by
the other Party of its obligations under this Agreement.
10.3 LICENSE TO USE XXXXXXX'X TRADEMARKS.
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x. Xxxxxxx hereby grants to SV Partner a limited,
non-exclusive, non-transferable right to use, display and reproduce the Merrick
Trademarks solely in connection with the performance by SV Partner of its
obligations under this Agreement, and in accordance with Xxxxxxx'x Trademark
usage policies and procedures from time to time in effect.
x. Xxxxxxx shall have the unilateral right to establish such
quality standards concerning its Trademarks and the use thereof as Xxxxxxx xxxxx
necessary or appropriate. SV Partner agrees to submit to Merrick, for its prior
written approval, samples of all uses of Xxxxxxx'x Trademarks, and SV Partner
agrees to use the Merrick Trademarks only in the manner approved by Merrick.
c. Except as provided otherwise in this Agreement, upon
termination of the SV Partner Payment Period, SV Partner shall promptly cease
use of all of Xxxxxxx'x Trademarks. Each of Xxxxxxx'x Trademarks, at all times,
shall remain the exclusive property of Merrick, and any goodwill arising out of
the use of any Merrick Trademark will inure solely to the benefit of Merrick.
ARTICLE 11 -MISCELLANEOUS PROVISIONS
11.1 NOTICES. Any notices or other communications required or permitted
by this Agreement shall be in writing and shall be delivered either by personal
delivery, by nationally recognized overnight courier service, by facsimile,
electronic mail or other electronic means, by first class mail or by certified
or registered mail, return receipt requested, addressed as follows:
IF TO MERRICK TO:
Xxxxxxx Bank Corporation
00000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 000 Xxxxx
Xxxxxx, Xxxx 00000
Attn: President
Fax: (000) 000-0000
Email: xxxx.xxxxxxx@xxxxxxxxxxx.xxx
IF TO SV PARTNER, TO:
Xxxxxx Beaumont, Inc.
0000 Xxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000 Attn:
President
Fax: 000-000-0000
Email: xxxx@xxxxxxxxxxxxxx.xxx
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or to such other address as either Party shall have designated to the other by
written notice given in the manner set forth above. Notices and approvals
required under this Agreement shall be deemed given one day after sent, if sent
by overnight courier; when delivered and receipted for, if hand delivered; when
received, if sent by facsimile, electronic mail or other electronic means or by
first class mail; or when receipted for (or upon the date of attempted delivery
where delivery is refused or unclaimed), if sent by certified or registered
mail, return receipt requested.
11.2 ASSIGNMENT AND TRANSFER. References in this Agreement to a Party
shall include a Party's successor, which shall include, without limitation, any
person into which a Party maybe merged or consolidated, or any corporation
resulting from any merger, conversion or consolidation to which a Party may be a
party, or any person succeeding to the business of a Party or purchasing all or
substantially all of the assets of a Party, without the execution or filing of
any paper or any further act on the part of any of the Parties hereto. Except as
otherwise provided herein, a Party shall not, without the prior written consent
of the other Parties (which consent shall not be unreasonably withheld,
conditioned or delayed), assign this Agreement or its rights and obligations
hereunder under any circumstances, either voluntarily or involuntarily, by
operation of law or otherwise. Any such attempted assignment in contravention of
such prohibition shall be void from the date thereof. Notwithstanding the
foregoing, SV Partner shall be permitted to delegate the performance of its
duties under this Agreement to third parties if, and only if:
a. SV Partner provides to Merrick, in writing, a description
of the entity to which SV Partner desires to so delegate duties (the "THIRD
PARTY PROVIDER"), and a description of the duties SV Partner desires to so
delegate (the "DELEGATED DUTIES");
x. Xxxxxxx in its sole discretion approves of such Third Party
Provider and the performance by such Third Party Provider of the Delegated
Duties;
c. SV Partner certifies to Merrick that the agreement between
SV Partner and such Third Party Provider incorporates the provisions set forth
on the attached Exhibit 11.2; and
d. SV Partner remains principally liable to Merrick for the
performance of all such Delegated Duties,
11.3 WAIVER. No Party hereto shall be deemed to have waived any of its
rights, powers or remedies hereunder unless such waiver is made in writing
signed by such Party. Upon any such waiver of a past default, such default shall
cease to exist. No such waiver shall extend to any subsequent or other default
or impair any right relating thereto except to the extent expressly so waived.
No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision, whether or not similar, nor shall
any waiver constitute a continuing waiver. No course of dealing between the
Parties, and no delay or forbearance in exercising any rights hereunder, shall
imply or otherwise operate as a waiver of any rights of a Party.
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11.4 RELATIONSHIP OF PARTIES. The Parties intend that this Agreement
shall be considered a contractual relationship among the Parties and do not
intend that this Agreement shall result in the creation of a joint venture,
general partnership or any similar form of organization or agency relationship.
11.5 PUBLIC RELATIONS. Each Party will notify the other Party
immediately of any public relations consequences arising from the Marketing
Materials (such as inquiries from the media, consumers, or governmental bodies)
and the Parties will consult prior to the release of any statements or public
relations aspects relating to the Accounts or the Cards.
11.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement shall
become effective as of the date specified in the opening paragraph, upon the
execution by each of the Parties of at least one counterpart hereof, and it
shall not be necessary that any single counterpart bear the signatures of all
Parties. Execution and delivery of this Agreement by exchange of facsimile
copies bearing the facsimile signature of a Party shall constitute a valid and
binding execution and delivery of this Agreement by such Party. Such facsimile
copies shall constitute enforceable original documents.
11.7 AUDITS. Each of the Parties hereto, directly or through third
parties reasonably acceptable to the other party, may conduct reasonable audits
of the books and records, systems and operations of the other Party that relate
to the performance by the other Party of its obligations under this Agreement
provided that: (i) such audits are conducted in a manner that avoids any
material disruption to the business of the Party being audited; (ii) the Party
conducting such audit provides to the Party being audited not less than three
(3) Business Days' prior written notice of such audit; (iii) no books or records
are removed from their usual place of keeping unless authorized in writing by
the Party being audited; and (iv) the expenses of such audit are paid by the
Party doing the audit. In the event the results of any such audit determine that
any amounts have been overpaid or underpaid to one Party, any such overpayment
or underpayment shall be remitted to the Party to which it is owed within twenty
(20) Business Days.
11.8 FURTHER ASSURANCES. The Parties agree that upon request, they
shall do such further acts and deeds, and shall execute, acknowledge, deliver
and record such other documents and instruments, as may be reasonably necessary
from time to time to evidence, confirm or carry out the intent and purposes of
this Agreement.
11.9 SEVERABILITY. If any one or more of the provisions contained in
this Agreement shall for any reason be held in any jurisdiction invalid, illegal
or unenforceable for any reason, such provision shall be deemed modified so as
to be enforceable to the maximum extent permitted by law consistent with the
intent of the Parties as herein expressed, and such invalidity shall not affect
the remaining provisions of this Agreement, which shall continue in full force
and effect.
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11.10 SUCCESSORS IN INTEREST. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permissible assigns.
11.11 NO REMEDIES EXCLUSIVE. No right or remedy conferred herein shall
be deemed to be exclusive of any other right or remedy conferred herein or any
other right or remedy now or hereafter available at law or equity. All rights
and remedies conferred herein, and all rights and remedies now or hereafter
available at law or equity, shall be deemed to be cumulative and not
alternative, and may be exercised concurrently, independently or successively.
11.12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF UTAH, EXCLUSIVE OF ITS RULES
REGARDING CONFLICTS OF LAWS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
11.13 NO THIRD PARTY BENEFICIARIES. The provisions of this Agreement
are for the exclusive benefit of the Parties, and no other person or entity,
including affiliates and creditors of either Party hereto, shall have any right
or claim against either Party by reason of those provisions or shall be entitled
to enforce any of those provisions against either Party.
11.14 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Parties, and supersedes all prior oral or written negotiations
between the Parties, with respect to the subject matter hereof. Except as
otherwise specifically provided herein, no amendment, alteration, change, or
modification of this Agreement shall be effective unless in writing signed by
the Parties.
11.15 SURVIVAL. All payment obligations of the Parties relating to
periods prior to termination of the SV Partner Payment Period shall survive such
expiration. In addition, the obligations of each Party under ARTICLES 5, 9 and
10, and those provisions that, by their terms, are intended to survive
termination of the SV Partner Payment Period shall so survive such termination.
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COUNTERPART SIGNATURE PAGE TO STORED VALUE
CARD AGREEMENT
IN WITNESS WHEREOF, the Parties have hereunto set their hands in
execution of this Agreement as of the date first written above.
By: /s/ Clink Wildks By: /s/ Rd Urrutnt
---------------- --------------
Name: Clink Wildks Name: Rd Urrutnt
Title: CEO Title: PMES/CEO
-38-
EXHIBIT 1.1-1
CARD CRITERIA
o Upon receipt of a written request from the Cardholder to close the Card
and Card Account
o Upon receipt of a written request for a refund from the Cardholder
o Upon the identification by either Merrick or SV Partner of excessive
chargeback activity on the Card
o Upon the identification by either Merrick or SV Partner of suspicious
activity on or in connection with a Card
o Upon the identification by either Merrick or SV Partner of excessive
overdrafts (negative balance) on a Card or Card Account
o Upon the determination by either Merrick or SV Partner that a
Cardholder has inappropriately reported a Card as lost or stolen
o As a result of any regulatory scrutiny or request
o Upon determination that the Cardholder matches information contained on
the OFAC or any other government-issued list
o Following any load or reload (a) for which payment was not received or
(b) purchased with an invalid form of payment (for example, invalid
credit cards, bad checks or non-payment/theft)
o Upon the identification by either Merrick or SV Partner of fraudulent
activity on a Card or related to
o Upon determination by either Merrick or SV Partner that a Cardholder
provided inaccurate or false identification information at the time of
activation
-39-
EXHIBIT 3.la-1
ISSUANCE CRITERIA
1. SV Partner collects from the potential Cardholder the potential
Cardholder's: (i) name; (ii) address; (iii) date of birth; and (iv) social
security number, (or passport number or number from some other form of
government-issued identification from non-U.S. citizens).
2. SV Partner verifies the potential Cardholder's address and social
security number using the Equifax eIDscan authentication service or another
mutually approved authentication service, and confirms that the potential
Cardholder is old enough to enter into a legal and enforceable contract with
Merrick and SV Partner.
3. SV Partner checks to ensure that the potential Cardholder does not
appear on any list provided to it by the federal government, including the
Department of Treasury's Office of Foreign Assets and Control ("OFAC")
"Specifically Designated Nationals and Blocked Persons List", and is not from,
or engaging in transactions with people or entities from, embargoed countries
and regions listed on the OFAC website.
-40-
EXHIBIT 3.1 a-2
PROCESSES AND PROCEDURES FOR COLLECTING INFORMATION AND
ACTIVATING CARDS
1. The customer picks up a retail package containing a plastic or
cardboard (depending on Star Network requirements) Debit card at a
participating retail location. The customer reviews information
contained in the package he or she wishes to purchase, which provides
details of the Card's Terms and Conditions and required notices.
2. The Customer either agrees or does not agree to the Cardholder
Agreement. If the customer does not agree to the Cardholder Agreement,
they can choose not to purchase the Stored Value Retail Card. If the
customer agrees to the Cardholder Agreement, he or she presents the
card to the clerk for purchase.
3. The clerk swipes the Debit Card through the POS terminal, and selects
the appropriate menu to sell and activate a new card.
a. The Customer gives their personal information to the clerk to
input into the POS terminal for identity verification using
Equifax eIDScan program (or another mutually approved
authentication service). The information collected includes:
i. Name
ii. Address (this must be a residential street address)
iii. Date of Birth
iv. Social Security number (if U.S. citizen; otherwise,
an alternative form of identification is obtained).
v. Work phone number.
vi. Secret word.
vii. PIN for ATM or PIN-based point-of-sale transactions.
viii. Type, number and expiration date of the unexpired
government issued identification evidencing
nationality or residence and bearing a photograph or
similar safeguard, such as a driver's license or
passport (this documentary evidence must be visually
inspected by the clerk as it is entered into the
system).
b. The clerk transmits the Customer information to the SV
Partner's Data Center which verifies the customer's
information, runs it against the OFAC list and other databases
and receives an "accept" or "decline" message.
c. If the customer's identity is not verified, they can choose to
purchase a non personalized, instant issue card. If the
customer's identity is verified, they pay for the Stored Value
card.
d. The Card is activated, (a Card Account is set up on the
Galileo Processing system through SV Partner's internal system
updates), and the customer is provided with the account
number; expiration date and CVV value for the Card in order to
use the Card for online purchases.
4. A plastic Card (together with other welcome information, including a
copy of the Cardholder Agreement and copies of SV Partner's and
Xxxxxxx'x privacy policies) is mailed to the customer either by
standard delivery or express mail, if selected by the customer.
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EXHIBIT 0.xx
LIST OF APPROVED SV PARTNER BRANDS
XXXXXX XXXXXXXX
XXXXXX FIRST PREMIER
XXXXXX ALL AXCESS
XXXXXX USA PLUS
XXXXXX ALL AMERICAN
MBI ALL AMERICAN
MBI FIRST PREMIER
MBI USA PLUS
MBI ALL AXCESS
MBI AQUI & AULA
XXXXXX BEAUMONT MONEY CARD
MBI MONEY CARD
-42-
EXHIBIT 3.2b
CARD SERVICING TERMS
SV Partner shall, in each case in a manner that complies with all Applicable
Laws and at its own cost and expense, do the following;
(a) Prepare and submit to Merrick for approval designs for the
Cards.
(b) Assume responsibility and pay for the production and
distribution of Cards, Cardholder Agreements and SV Partner
and Merrick initial and annual Privacy Policies, customer
identification program notices, and other mutually agreed-upon
fulfillment and welcome materials, and ensure Merrick and SV
Partner have appropriate Card, Cardholder Agreement, Privacy
Policy and other fulfillment material inventories to meet
Cardholder needs and demands.
(c) Provide facilities and services to: (i) receive Application
information from potential Cardholders; (ii) verify
Application information; (iii) check Application information
against OFAC lists; and (iv) allow Cardholders to activate
their Cards and activate amounts submitted for loading onto
Cards.
(d) Process all authorization requests submitted in connection
with the Cards and settle all transactions made with or on a
Card, and ensure that authorization availability (90-day
average) meets or exceeds 97%.
(e) Process all adjustments and loads submitted in connection with
the Cards.
(f) Provide competent customer service to Cardholders, using
customer service personnel capable of serving English and
Spanish-speaking Cardholders contacting customer service via
telephone, fax or in writing with issues or problems related
to the Cards.
(g) Ensure that customer service assistance is available during
reasonable business and weekend/holiday hours, seven days a
week.
(h) Provide call center services meeting an average speed of
answer (30-day average) of 25-30 seconds on 85% of calls, but
in no instance more than one minute, and notify Merrick of all
instances where customer service assistance is not available
during business/weekend/holiday hours for more than two hours.
(i) Provide to potential Cardholders the ability to apply for
Cards online in a secure online environment;
(j) Provide to Cardholders the ability to obtain transactions and
account information, in English and Spanish: (i) on the
Internet, in a secure online environment; and (ii) over the
telephone, including through an interactive voice response
unit that is available 24 hours a day, seven days a week (with
uptime of not less than 95% on a 30-day average basis).
(k) Process chargebacks and disputes, and provide to Merrick a
monthly report setting forth the time frames within which
chargeback and dispute processing occurred in the previous
month.
(1) Implement fraud control processes and procedures with respect
to Card data and transactions (fraud monitoring/AML
monitoring) to identify circumstances that require the
preparation and filing of reports mandated by Applicable Law.
(m) Prepare and file with Merrick reports regarding suspicious or
illegal activity (for example, SARs and CTRs) within ten (10)
business days of noting such suspicious or illegal activity.
Cooperate with Merrick
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in finalizing such reports so that Merrick may file them in a
timely manner.
(n) Provide, in a timely fashion, accurate periodic statements to
Cardholders.
(o) Manage, in a manner consistent with the terms of the
Agreement, the process for moving funds from the loading
and/or reloading network participant locations to the Merrick
Holding Account.
(p) Manage Cardholder requests for access to personal information
(i.e., Application information and other card-related
information).
(q) Manage and ensure compliance with Cardholder Privacy Policy
opt-outs,
(r) Establish, maintain and monitor a retail distribution, loading
and reloading network for the Cards, ensuring that each
network participant operates in a manner consistent with their
loading and/or reloading obligations under the agreement
between SV Partner and the given loading and/or reloading
network participant.
(s) Train loading/reloading network participants how to properly
sell, load and reload Cards, including, by way of example,
training participants relative to required identity
verification processes.
(t) Ensure that procedures are in place at each loading/reloading
network participant that cause transactions conducted by the
same Cardholder, or on behalf of the same Cardholder at
different times or locations, to be aggregated for reporting
purposes.
(u) Provide appropriate reports to loading/reloading network
participants.
(v) Ensure that appropriate programming and other operational
infrastructure is in place to allow for new loading/reloading
network participants to be added to the network in a seamless
and non-disruptive manner.
(w) Provide to Merrick exception reports for all Card loads
that are not posted or made available within time frames
required by the Cardholder Agreement.
(x) Appropriately respond to all Cardholder complaints in a timely
fashion, and provide to Merrick, on a regular basis (but not
less than monthly): (i) copies of all regulatory or State
Attorney General complaints received in connection with or
relating to any Card, together with a copy of the response to
such complaints prepared by SV Partner; and (ii) a summary of
all other Card-related complaints, organized by the general
topic of the complaint (with the total number of complaints
and the percentage that each general topic represents of total
number of complaints).
(Y) Maintain appropriate information security mechanisms and
procedures designed to, at a minimum, meet the objectives of
the Guidelines for Safeguarding Customer Information
promulgated by the federal banking agencies.
(z) Provide Merrick with training reasonably necessary to enable
Merrick personnel to use these Services.
(aa) Retain required Cardholder records, and make all such records
available to Merrick and, as required or permitted by
Applicable Law, to Cardholders and in response to requests
from entities entitled under Applicable Law to such
information.
(bb) Manage returned mail and statements in a timely fashion and
update Cardholder information accordingly.
(cc) Maintain, update and archive Cardholder and
transaction-related information from which Merrick will be
able to generate reports.
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(dd) Provide exception reports for applications that do not meet
Issuance Criteria.
(ee) Provide servicing procedures to Merrick, upon request, to
review for compliance with Applicable Law.
(ff) Provide a thirty-day money-back guarantee to each Cardholder,
ensuring that the fees paid by a Cardholder to obtain his/her
Card and any credit balance in such Cardholder's Card Account
will be returned to that Cardholder, if he/she requests such a
return within thirty (30) days of purchasing a Card. All
Cardholder money-back guarantee requests shall be made through
a toll free number that connects with the SV Partner's
servicer and shall not be made at any authorized location. The
Marketing Materials for the Card shall contain the toll free
number used for money-back guarantee requests.
(gg) Provide a refund after the first thirty (30) days following
the purchase of the Card to any Cardholder that SV Partner or
Xxxxxxx xxxxx should receive a refund for reasonable legal or
regulatory reasons.
(hh) Provide to Xxxxxxx such reports and documentation, or access
to such reports and documentation, concerning Cards, Card
related transactions and the services provided by SV Partner
under this Agreement as Xxxxxxx from time to time may
reasonably request.
(ii) Instruct its servicer and/or processor to provide to Xxxxxxx
access to the processing platform.
Xxxxxxx shall provide the following services:
(a) Obtain from MasterCard, at SV Partner's cost and expense, the
BINS or ICAs necessary to support the sales and maintenance of
the Cards.
(b) Obtain from MasterCard, at SV Partner's cost and expense, the
required association-related approvals.
(c) Obtain from any other relevant card-related association, at SV
Partner's cost and expense, the required association-related
approvals.
(d) Compliance with Applicable Law relating to abandoned property
(i.e., escheat).
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EXHIBIT 4.1a
AUTHORIZED LOCATION AGREEMENT LANGUAGE
[Authorized Location] acknowledges and agrees that [Program Operator] or the
financial institution issuing the Cards is the distributor of funds to [Program
Operator] cardholders in accordance with agreements between [Program Operator]
and its cardholders. [Authorized Location] further acknowledges and agrees that
[Authorized Location] receives money from [Program Operator] cardholders for the
express purpose of having such funds loaded or reloaded to their Cards
("Cardholder Funds"). The Cardholder Funds shall be and remain the sole property
of [Program Operator] cardholders during and after the time the Cardholder Funds
are presented to [Authorized Location] by the consumer and will not be deemed
the property or an asset of [Authorized Location], nor will such Cardholder
Funds be included on any [Authorized Location] balance sheet or asset statement.
Moreover, [Authorized Location] agrees that Cardholder Funds will not be subject
to creditors (whether secured or unsecured) of [Authorized Location] or its
affiliates, whether in connection with any bankruptcy or secured creditor
proceeding filed by or against [Authorized Location], its affiliates or
otherwise. [Authorized Location] shall take all action necessary or appropriate:
(i) to ensure that the Cardholder Funds do not become subject to any pledge,
assignment, transfer or security interest made or granted, voluntarily or
involuntarily, by [Authorized Location] to any third party; and (ii) to
accomplish the immediate release to the financial institution issuing the Cards
of all Cardholder Funds, current or future, and remove such Cardholder Funds
from inclusion in any [Authorized Location] bankruptcy proceeding or proceeding
taken by any creditor of [Authorized Location].
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EXHIBIT 4.1e
CALCULATION OF MONTHLY XXXXXXX WITHDRAWAL AMOUNT
The Monthly Xxxxxxx Withdrawal Amount shall be calculated each calendar month
during the SV Partner Payment Period and the calendar month immediately
following the month in which the SV Partner Payment Period terminates, and shall
be the greater of:
1. The product of 0.0028 multiplied by the Monthly Transaction Volume during the
immediately preceding calendar month; or
2. The product of $0.35 multiplied by the total number of Cards on file on the
last day of the immediately preceding calendar month.
The term "MONTHLY TRANSACTION VOLUME," as used in this Exhibit, means the total
dollar amount of transactions (including purchases (net of returns) and cash
advances) effected during the calendar month in question using Cards or
Card-related information.
Notwithstanding the foregoing, in no event shall any Monthly Xxxxxxx Withdrawal
Amount be less than:
(i) $7,500 for the fifth, sixth, seventh, eighth, ninth and tenth
months of the SV Partner Payment Period;
(ii) $10,000 for the eleventh, twelfth and thirteenth months of the
SV Partner Payment Period; or
(iii) $17,000 for any month following the thirteenth month of the SV
Partner Payment Period.
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EXHIBIT 11.2
THIRD PARTY PROVIDER TERMS
SV Partner shall ensure that each of the following provisions are
incorporated into its agreement with each Third Party Provider (each such
agreement, a "TPP Agreement"), revised as appropriate to be consistent with the
style and defined terms of each such TPP Agreement (capitalized terms used in
this Exhibit that are not otherwise defined are used as defined in the
Agreement):
1. The Third Party Provider agrees that: (i) it shall perform its
obligations under the TPP Agreement in a manner that complies in full with all
Applicable Law; and (ii) in connection with all actions taken by the Third Party
Provider pursuant to, or in connection with, the TPP Agreement or the Card
Accounts or the Cards, the Third Party Provider shall take such actions, or
refrain from taking such actions, as Xxxxxxx, either directly or through SV
Partner, may request in order to allow Xxxxxxx, in the opinion of Xxxxxxx'x
legal counsel, to fully comply with all Applicable Law.
2. The Third Party Provider agrees that Xxxxxxx is a third party
beneficiary of all of the rights granted to SV Partner, and of all of the
obligations undertaken by the Third Party Provider, under the TPP Agreement that
relate, directly or indirectly, to the Card Accounts or Cards, and directly may
assert any such rights and seek to have any such obligations enforced. The Third
Party Provider acknowledges and agrees that: (i) Xxxxxxx assumes no liability or
obligation of any nature under the TPP Agreement; (ii) Xxxxxxx does not accept
or assume responsibility for any of SV Partner's obligations under the TPP
Agreement; and (iii) the Third Party Provider will look solely to SV Partner for
any and all payments due to it under the TPP Agreement.
3. The Third Party Provider agrees to provide to Xxxxxxx such reports
and information relating to the performance by the Third Party Provider of its
obligations under the TPP Agreement that relate, directly or indirectly, to the
Card Accounts or Cards as Xxxxxxx, from time to time, reasonably may request.
4. The Third Party Provider agrees that it shall not assign any of its
rights or delegate any of its duties under the TPP Agreement that relate,
directly or indirectly, to the Card Accounts or Cards without obtaining the
prior written approval of Xxxxxxx.
5. The Third Party Provider agrees that Xxxxxxx may conduct reasonable
audits of the performance by the Third Party Provider of its obligations under
the TPP Agreement and of the books and records of the Third Party Provider that
relate to the performance of its obligations under the TPP Agreement, PROVIDED
that: (i) such audits are conducted in a manner that avoids any material
disruption to the business of the Third Party Provider; (ii) Xxxxxxx provides to
the
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Third Party Provider not less than three (3) Business Days' prior written notice
of such audit; and (iii) no books or records are removed from the Third Party
Provider's premises unless authorized by the Third Party Provider. At the
conclusion of each audit, Xxxxxxx, to the extent applicable, shall provide to
the Third Party Provider: (A) the results of such audit; (B) the remedial
actions that need to be taken by the Third Party Provider in order to conform
its performance of its obligations under the TPP Agreement to [the Plan and]
Applicable Law; and (C) the time frames within which such remedial actions must
be taken.
In addition to the foregoing, if the Third Party Provider will be
given, or have access to, any Cardholder Information, SV Partner shall ensure
that each of the following provisions are incorporated into the TPP Agreement,
revised as appropriate to be consistent with the style and defined terms of each
such agreement:
6. The Third Party Provider agrees to develop and implement written
information security policies and procedures (collectively, the "Plan") that:
(i) are designed to protect the security and privacy of all Cardholder
Information in its possession or under its control; and (ii) meet the objectives
of Applicable Law, including, without limitation, the requirements set forth on
the attached Schedule A, as the same maybe amended by Xxxxxxx from time to time.
7. The Third Party Provider agrees to: (i) perform all of its
obligations under the TPP Agreement in accordance with the Plan; and (ii)
provide to Xxxxxxx a copy of the Plan no later than five (5) Business Days after
receipt of a written request for such copy from Xxxxxxx.
8. The Third Party Provider agrees that: (i) all Cardholder Information
shall be and remain the Confidential Information of Xxxxxxx; (ii) the Third
Party Provider-shall maintain the confidentiality of the Cardholder Information
and shall otherwise treat the Cardholder Information in a manner consistent with
the provisions of ARTICLE 5 of the Agreement; and (iii) shall use the Cardholder
Information solely in connection with the performance of its obligations under
the TPP Agreement. The Third Party Provider's obligations under this section
shall survive the expiration or termination of the TPP Agreement to the full
extent necessary to comply with the Plan and Applicable Law.
9. The Third Party Provider agrees to fully disclose in writing to
Xxxxxxx any breach in the security of the Third Party Provider's systems that
result in unauthorized intrusions that may have compromised the security of the
Cardholder Information or may materially affect Xxxxxxx or its customers within
twenty-four (24) hours of the discovery of any such breach. Notification to
Xxxxxxx should be directed to Xxxxxxx'x General Counsel by facsimile
transmission sent to 000-000-0000. Any breach in the security of the Third Party
Provider's systems shall give Xxxxxxx the immediate right to terminate the Third
Party Provider's right and/or ability to receive, process, transmit or possess
Cardholder Information. The Third Party Provider also. shall report to Xxxxxxx
when any material intrusions to its systems occurs, the effect any such
intrusion has on the Third Party Provider, and corrective actions taken by the
Third Party Provider to respond to the intrusion.
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10. The Third Party Provider agrees that upon termination or expiration
of the TPP Agreement for any reason, or upon request by Xxxxxxx pursuant to its
rights under the TPP Agreement or the Agreement, all Cardholder Information,
together with any copies or reproductions thereof, shall be removed from the
Third Party Provider's systems and/or any form of media upon which such
Cardholder Information was stored and returned to Xxxxxxx.
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SCHEDULE A
FDIC GUIDELINES,
----------------
The Third Party Provider shall consider at least the following in its
development and implementation of the Plan:
o Access controls on Cardholder Information systems, including
controls to authenticate and permit access only to authorized
individuals and controls to prevent employees from providing
Cardholder Information to unauthorized individuals who may
seek to obtain Cardholder Information through fraudulent
means.
o Access restrictions to physical locations containing
Cardholder Information, such as buildings, computer
facilities, and records storage facilities to permit access
only to authorized individuals.
o Encryption of electronic Cardholder Information, including
Cardholder Information that is in transit or in storage on
network or systems to which unauthorized individuals may have
access.
o Dual control procedures, segregation of duties and employee
background checks for employees with responsibilities for or
access to Cardholder Information.
o Monitoring systems and procedures to detect actual and
attempted attacks on or intrusions into Cardholder Information
systems.
o Response programs that specify actions to be taken when the
Third Party Provider suspects or detects that unauthorized
individuals have gained access to Cardholder Information
systems.
o Measures to protect against destruction loss or damage of
Cardholder Information due to physical hazards, such as fire
and water damage or technological failures.
ASSOCIATION GUIDELINES.
-----------------------
In addition to the information described above, the Third Party Provider agrees
to include in the Plan policies and procedures designed to ensure that the Third
Party Provider:
o Installs and maintains a working network firewall to protect
Cardholder Information accessible via the Internet;
o Keeps security patches up to date;
o Encrypts stored Cardholder Information;
o Encrypts Cardholder Information sent across open networks;
o Uses and regularly updates anti-virus software;
o Restricts access to Cardholder Information by business
"need-to-know;"
o Assigns unique identifiers to individuals with computer access
to Cardholder Information;
o Does not use vendor supplied defaults for system passwords and
other security parameters;
o Tracks access to Cardholder Information by unique identifiers;
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o Regularly tests security systems and processes;
o Maintains a policy that addresses information security for
employees and contractors; and
o Restricts physical access to Cardholder Information.
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Section x.b. Required Signature of Authorized Representative of Partner
The signature below reflects that the company identified below ("Partner")
warrants and represents the truthfulness and completeness all of the following:
1. That Partner, jointly and severally with the MasterCard International.
Incorporated ("MasterCard") Member that is also the subject of and is a
signatory to this application ((degree)Member"), (I) agrees that
MasterCard is the Sole and exclusive owner of the Licensed Marks; shall
indemnify and hold harmless MasterCard and all of its members, and
their directors, officers, employees, and agents, against any claim,
demand, loss, cost, liability and/or expense, including, without
limitation, reasonable attorneys' fees and costs of investigation,
resulting from, and/or arising in connection with, any act or omission
by on behalf of Partner seeking from or related to the program that Is
deemed by MasterCard to be a Special Issuing Program and that is the
subject of this Special Issuing Program application (the "Program");
(ii) represents that it has read and will comply with MasterCard
standards relating to the use of the licensed Marks and Affinity or
Co-Branded program; (iii) agrees to be bound by said Rules and other
standards, as may at any time hereafter be changed.
2. Partner authorizes Member to use Co-Brander's name and/or logo in
connection with the Program
3. That the Program is subject to and Partner will comply with the
provisions of the bylaws, rules, operating regulations, policies and
other standards of MasterCard, Cirrus System, LLC, Maestro
International Incorporated and any applicable Maestro licensor, and
Mondex International (collectively, the "Standards"), as such Standards
may be amended from time to time and with the applicable terms of this
application and the license set forth herein, and that MasterCard and,
as applicable, Mondex have sole authority to interpret and enforce
those Standards.
4. That MasterCard shall have no liability to partner arising out of the
program or its approval of the program
5. That Partner will not announce, publicize, market, operate or modify
the Program without the express prior written consent of MasterCard.
6. If Partner is a brokerage firm, Partner will ensure that (i) Member has
the right at any time and in Member's sole discretion to terminate the
Program; (ii) each card account Is established by Member and not
Partner; (iii) Member solely and at all times holds all card account
receivables; (iv) only Member authorizes or permits any pre-approved
card account revolving line of credit; and (v) Member provides the
cardholder with a statement for any revolving account activity.
7. That MasterCard has the right at its sole discretion and at any time
notice, to immediately or at any other time specified require that the
Program be modified in order to continue and to 'withdraw Its consent
to the Program and to audit Member and Member's records for compliance
with the Standards and Propane requirements.
8. To timely pay all Program assessments, fees, and other charges as
Partner may become obligated to remit to MasterCard from time to time.
9. Partner agrees that all marketing materials used in connection with
this program must be approved in advance by Member.
Xxxxxx Beaumont, Inc.
----------------------
Name of Partner
By: /s/ Xxx Xxxxx
------------------
Name: Xxx Xxxxx
Title: CFO
Date: 8/12/04
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