HUMBOLDT BANK
INDEPENDENT SALES ORGANIZATION (ISO) AGREEMENT
THIS AGREEMENT (hereinafter "the Agreement") is made between
Humboldt Bank ("Bank"), a California state-chartered banking association with
its principal place of business at 000 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000
and Digital Commerce International, Inc. ("Contractor"), a Corporation with its
principal place of business at 000-000 Xxxxxx Xxxxxx, Xxxxxxxxx, XX X0X 0X0,
Xxxxxx, and is entered into this 8th day of November, 1999 (the "Effective
Date").
AGREEMENT
IN CONSIDERATION of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereto agree as follows:
PART 1. DEFINITIONS
SEC 1.1. DEFINITIONS. As used in this Agreement, unless the
context clearly indicates otherwise, the following terms have the meanings
hereinafter set forth:
(a) "Approached Merchant" means any Eligible Merchant that enters
into a Merchant Agreement with Bank for participation in the Program and
submitted by Contractor.
(b) "Business Day" means any day other than a Saturday, a Sunday
or a day on which the banks in the State of California are authorized by law to
close.
(c) "Card Association" means either VISA U.S.A., Inc. ("VISA") or
MasterCard International, Inc. ("MasterCard").
(d) "Card Association Rules" means the bylaws, rules, regulations
and directives of either VISA or MasterCard.
(e) "Debit Network" means the any regional or national debit
network which routes PIN-based transactions through Bank and with respect to
which Bank is either a direct or sponsored member.
(f) "Eligible Merchant" means a merchant which (i) is not a
merchant for which Bank is currently providing credit card deposit and account
reconciliation services; (ii) is solicited by Contractor to participate in the
Program; (iii) has not been previously submitted by any of the persons or
entities referred to in Section 2.1(b) of this Agreement; and (iv) meets, in
Bank's sole and absolute discretion, the criteria established by Bank in order
to participate in the Program.
(g) "Equipment" means any and all point-of-sale terminals,
printers for credit card vouchers and related equipment leased to an Approved
Merchant pursuant to one or more Leases.
(h) "FDC" means First Data Corporation, or any other provider of
similar services mutually agreed upon between the Parties.
(i) "ISO" means an Independent Sales Organization, which is a
title granted to an entity by VISA as the result of the entity qualifying the
VISA to solicit merchants on behalf of one or more financial institutions for
the collection and processing of credit card drafts.
(j) "Lease" means the finance lease entered into between Bank and
an Approved Merchant for the leasing by said Approved Merchant of the Equipment.
(k) "Lessee" means any merchant who, depending upon the context,
is submitting or has had approved by Bank, an application for a Lease of
Equipment.
(l) "Merchant Agreement" means that agreement entered into between
Bank and an Approved Merchant for participation in the Program.
(m) "Merchant Discount Amount" shall mean that portion of the
amount of bank card drafts or transactions submitted by Approved Merchants and
processed through the Program to be paid to Bank as determined by application of
the Merchant Discount Rate.
(n) "Merchant Discount Rate" means a percentage rate to be applied
to determine the portion of the face amount of a bank card draft or transaction
processed through the Program by Bank under this Agreement to be paid to Bank
pursuant to the Merchant Agreement with the Approved Merchant submitting such
bank card draft or transaction.
(o) "MSP" means a Member Service Provider which is a title granted
to an entity by MasterCard as the result of the entity qualifying with
MasterCard to solicit merchants on behalf of one or more financial institutions
for the collection and processing of credit card drafts.
(p) "Net Sales" equals gross sales minus returns of Visa and
MasterCard transactions. Net Sales specifically exclude transactions from any
other card types.
(q) "Program" means the activities conducted by Bank pursuant to
this Agreement, Card Association Rules and the rules and regulations of the
Debit Networks, whereby Bank acquires credit card and debit card sales drafts
and transactions from Approved Merchants and provides the necessary credit and
debit card processing services and support systems.
PART 2. ENGAGEMENT OF SERVICES
SEC. 2.1. ENGAGEMENT OF CONTRACTOR.
(a) Subject to the provisions of this Agreement, Bank grants to
Contractor and Contractor hereby accepts, the privilege and right to solicit
Eligible Merchants on behalf of Bank to participate in the Program as Approved
Merchants and/or to enter into Leases of the Equipment with Bank. Bank expressly
reserves the right to designate, in its sole discretion, the depository
financial institution in connection with each and every Merchant Agreement.
(b) Nothing in Section 2.1(a) or in any other provision of this
Agreement shall preclude Bank from entering into one or more similar agreements
with any other person or entity, nor the direct solicitation by Bank or any
third party of merchants to participate in Bank's bankcard transactions
processing activities (including Bank's Lease program).
PART 3. PROVISIONS RELATING TO BOTH MERCHANT BANKCARD AND LEASE SOLICITATIONS
SEC. 3.1. ADMINISTRATION BY BANK.
(a) Bank shall have administrative responsibility and control of
any and all matters in connection with this Agreement other than those expressly
stated to be the responsibility of Contractor pursuant to this Agreement.
(b) Bank will facilitate merchant deposits for each Approved
Merchant by opening the necessary merchant deposit accounts or providing
merchant deposit services through use of the Automated Clearing House (ACH).
(c) All applicable materials and information necessary or
appropriate for each application shall be provided Contractor by Bank or other
sources designated by Bank, in Bank's sole discretion. Bank will charge
Contractor a reasonable fee for said material.
SEC. 3.2. SOLICITATION BY CONTRACTOR.
(a) Contractor will solicit, on behalf of Bank, Eligible Merchants
to become Approved Merchants. Except with Bank's prior written approval, which
may be withheld in Bank's sole discretion, Contractor shall not knowingly
solicit any merchant which does not meet Bank's credit criteria for Eligible
Merchants then in effect and communicated in writing by Bank to Contractor.
Contractor acknowledges that such credit criteria may be changed by Bank from
time to time, in Bank's sole discretion.
(b) Contractor will solicit, on behalf of Bank, Eligible Merchants
who do not possess the necessary or appropriate equipment for proper
participation in the Program to enter into Leases of Equipment with Bank, and
will present to Bank all Leases executed thereby. Contractor understands that
all credit standards and funding and Lease factors applicable to Leases are at
Bank's sole discretion and may be changed from time to time. Bank will give
Contractor prior written notice of any such changes. Contractor further
understands, and agrees to so inform all merchants who submit executed Leases
under this Section 3.29b), that such submittals are applications only and that
all such applications are subject to acceptance by Bank at Bank's sole
discretion.
(c) Contractor shall disclose Bank's identity and location to each
merchant solicited by Contractor, and shall in no way suggest imply or infer
that Contractor itself is a member of the VISA and/or MasterCard networks and/or
any Debit Network; provided, however, that if Contractor is an ISO or MSP,
Contractor may identify itself as such.
(d) Contractor shall also initiate and conduct, in accordance with
all rules, regulations and laws governing the activities of Bank, such security
activities as are agreed to between Contractor and Bank in writing from time to
time.
(e) Contractor may not implement any marketing promotion for the
purpose of soliciting Eligible Merchants and Lessees, and/or establishing and
maintaining participation by Approved Merchants in the Program, without Bank's
prior written approval thereof. Except as otherwise expressly agreed in writing,
Contractor shall be solely responsible for its own expenses, of whatever nature,
incurred in developing and implementing its marketing promotions.
(f) Contractor shall submit to Bank, in legible form, all
materials and information required for Bank's review of an Eligible Merchant's
application including, but not limited to, (i) a proposed Merchant Agreement
and/or Lease, as the case may be, properly completed and executed by the
applicant, and (ii) properly completed, signed and verified training outlines
and setup forms, in such form and content as may be required by Bank from time
to time in Bank's sole and absolute discretion.
(g) Each proposed Merchant Agreement and/or Lease submitted by
Contractor to Bank shall include the genuine signature of an authorized
representative of the applicant. Additionally, Contractor shall certify with
respect to each Merchant Agreement and Lease submitted to Bank that (i)
Contractor or its authorized representative has completed a physical inspection
of the applicant's business premises and reviewed the detailed description of
the type of business provided on the merchant setup documentation, and (ii) to
the best of Contractor's knowledge, information and belief, the applicant is
legitimately engaged in a bona fide business operation and is not engaged to any
operation with the intent to defraud Bank or any other person or entity.
(h) Contractor may charge applicants whatever application fee
Contractor deems appropriate, and agrees to remit to Bank, for each applicant,
the application fee specified in Exhibit A, as amended. The application fee must
be clearly identified to the applicant as non-refundable. Any application
submitted without the application processing fee set forth in Exhibit A will be
deemed incomplete and placed on hold.
(i) Contractor shall cause each Approved Merchant to receive
complete training and terminals for use in connection with the Program within
two (2) weeks following receipt by Contractor from Bank of account setup
materials for such Approved Merchant, subject to equipment availability and
merchant authorization.
(j) Bank reserves the right to refuse any transaction offered by
Contractor.
SEC. 3.3. APPROVAL/CANCELLATION BY BANK OF MERCHANTS.
(a) Bank shall approve, approve subject to such limitations as
Bank may choose to impose, or disapprove the application of each applicant to
become an Approved Merchant and/or Lessee under the Program. All decisions
regarding the acceptance and/or conditions of acceptance of any such
application, entering into a Merchant Agreement or Lease with a merchant,
rejecting any such application, or refusing to accept one or more applications
for any reason whatsoever, shall be in the sole and absolute discretion of Bank.
(b) Bank agrees to use its best efforts to achieve merchant
approval or declination within forty-eight (48) hours of receipt from Contractor
of a completed and properly executed merchant application.
(c) Bank, in its sold and absolute discretion, may cancel any
Merchant Agreement between Bank and an Approved Merchant in accordance with its
terms and provisions as Bank deems appropriate, without prior consultation with
Contractor.
SEC. 3.4. OTHER DUTIES OF CONTRACTOR.
(a) Contractor shall be responsible for the payment of any
registration fee (including, but not limited to, any registration fee required
of an ISO or MSP, if applicable) required of it in order to perform its services
pursuant to this Agreement.
(b) Contractor shall be responsible, at Contractor's sole expense,
for all electronic terminal hardware installed at Approved Merchants' locations
and for all related charges and expenses including, but not limited to, purchase
installation, on-site training and ongoing maintenance for and customer service
to Approved Merchants. All Equipment installed at Approved Merchant locations
shall be of a type approved by Bank and compatible with Bank's credit card
processing system.
(c) Contractor shall timely furnish Bank any and all information
and materials that Bank may from time to time reasonably request in connection
with all matters contemplated by this agreement. Contractor also shall take all
such action as Bank may from time to time reasonably request in order to ensure
that all matters contemplated by this Agreement comply with applicable legal
requirements, of whatever nature.
(d) Contractor shall make available, within (7) days of any
request by Bank, VISA, MasterCard or any regulatory agency, all records and
documents within Contractor's control that relate to the services provided by
Contractor. Contractor agrees that Bank, VISA, MasterCard or an appropriate
regulatory agency each has the right to inspect any business location of
Contractor at any reasonable time to ensure full compliance by Contractor of the
provisions of this Agreement and of all applicable rules and regulations of VISA
and MasterCard. Contractor shall cooperate with any and all audits and/or
reviews of Contractor by Bank, VISA, MasterCard or such regulatory agency at any
time, and agrees to reimburse Bank for any amount Bank pays or is required to
pay to cover the cost of any inspection, audit or review.
PART 4. MERCHANT BANKCARD PROGRAM PROVISIONS
SEC. 4.1. MINIMUM NUMBER OF APPLICATIONS. Contractor shall submit
a minimum of 75 complete applications per month to Bank.
SEC. 4.2. FURTHER DUTIES OF BANK RELATING TO BANKCARD PROGRAM.
(a) Bank shall provide deposit and account reconciliation
services, chargeback processing, customer service, terminal support, risk
monitoring and collection services for all merchant accounts.
(b) Bank shall be responsible for, and shall pay, the following
fees and charges relating to this Agreement: (i) VISA, MasterCard and debit
interchange charges, transaction charges and frequency charges; (ii) all third
party processing charges (such as, but not limited to, those of FDC); and (iii)
Automated Clearing House (ACH) fees incurred in connection with the transmittal
by Bank of funds to Approved Merchants.
(c) On or before twentieth (20th) calendar day of each calendar
month, Bank shall provide all of the following information to Contractor for the
preceding calendar month: (i) the total number of open accounts of Approved
Merchants; (ii) Net Sales in dollars by all Approved Merchants for the prior
calendar month; (iii) the total Merchant Discount Amount and fees charged to and
collected from each Approved Merchant individually, and from all Approved
Merchants collectively; and (iv) that portion of the Merchant Discount Amount
and fees to be paid to Contractor by Bank for each Approved Merchant
individually, and for all Approved Merchants Collectively.
(d) Bank agrees that at all times hereunder it shall maintain in
good standing its memberships with VISA, MasterCard and any and all other
entities required to allow Bank to serve as an acquirer for Approved Merchants,
and will provide Contractor the authority to participate as a third party
merchant service provider.
SEC. 4.3. COMPENSATION.
(a) As compensation for the performance of its services pursuant
to this Agreement, Contractor shall be entitled to receive discount income a
specified on Exhibit A. Said compensation shall be computed daily by Bank and
paid to Contractor by the twentieth (20th) calendar day of the following
calendar month.
(b) Notwithstanding the termination of this Agreement, so long as
Contractor is not in violation of Section 7.7(a) Contractor shall be entitled to
continue to receive compensation as set forth in Exhibit A; provided, however,
that in the event Contractor violates, or permits the violation of, Section
7.7(a), Contractor shall not be entitled to any further compensation whatsoever
under this Agreement.
(c) The provisions of this Section shall survive termination of
this Agreement.
SEC. 4.4. RESPONSIBILITY FOR MERCHANT CHARGEBACKS AND OTHER
LOSSES. Bank shall have full recourse to Contractor, and Contractor shall be
liable to Bank, for fifty percent (50%) of any merchant chargeback or other loss
to Bank (including, without limitation, failure to properly provide services
pursuant to Sections 3.2 and
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SEC. 5.2. FUNDING OF LEASE.
(a) Bank agrees to purchase from Contractor all Equipment
appropriate to each Lease accepted and funded by Bank pursuant to this
Agreement, subject to lease price ceilings in effect at the time of purchase, at
the gross price set forth on Contractor's invoice therefor less that percentage
which is applicable to the Grade assigned to the Lessee, as such Grades and
percentages are set forth in Exhibit B (the net of which is referred to
hereinafter as the "Bank Purchase Price"). Bank's current lease price ceilings
are set forth in Exhibit B. Bank has the sole discretion to establish and/or
amend such lease price ceilings, Grade definitions and percentage discounts
relating thereto, at any time upon fourteen (14) days' advance written notice to
Contractor.
(b) Upon funding a Lease Bank will transmit to a deposit account
designated by Contractor, by ACH transmission or direct deposit, said Bank
Purchase Price less: (i) the first month's payment due under the Lease; (ii) any
other amounts required as advance payments under the Lease, and (iii) applicable
taxes, which will be paid by Bank.
SEC. 5.3. PAYMENT OF TAXES. Bank shall pay all applicable state
and local sales and use taxes relating to the Equipment on each Lease presented
and accepted.
SEC. 5.4. MAINTENANCE/SERVICE OF THE EQUIPMENT. Contractor will
perform or cause to be performed, at no cost to Bank, all maintenance and
service on the Equipment required under warranties or any maintenance contacts.
After the expiration of such warranties or maintenance contractors, Contractor
will perform or cause to be performed all maintenance and service on the
Equipment reasonably requested by Bank at reasonable costs.
SEC. 5.5. FIRST PAYMENT DEFAULT. If any Lessee fails to pay in
full the first payment due, other than any payment made at the time of Lease
funding, within fifteen (15) days from its due date, or if a Lessee's first
authorized ACH debit is declined by its bank or other financial institution
(unless the reason for the decline was due to Bank's error), and if Bank's
normal collection efforts do not result in Bank's receipt of such full payment,
Contractor agrees to repurchase the Lease from Bank within fifteen (15) days
after notice thereof from Bank for the Bank Purchase Price (as defined in
Section 5.2(a)), plus a handling charge of one hundred dollars ($100.00).
Contractor agrees that, at Bank's option, such amount will be either (a)
separately remitted by Contractor to Bank within ten (10) calendar days after
demand therefor by check or other draft acceptable to Bank, or (b) charged by
Bank against other payments due Contractor from Bank. If such payment is not
received within fifteen (15) days of demand, the payoff amount will be the
greater of the amount set forth immediately above in this section or the net
payoff plus one hundred dollars ($100.00). If payment is not made within thirty
(30) days of demand, a Small Claims Court action will be filed by Bank.
SEC. 5.6. WARRANTIES RELATING TO LEASES. Contractor hereby agrees
that, by the presentation of any Lease by Contractor to Bank, Contractor is
warranting and representing to Bank all of the following:
(a) The Lessee, on or before executing the Lease, has received a
true copy of the Lease and has been informed in writing of the identity of the
supplier of the Equipment.
(b) The Equipment description in the Lease is complete and
accurate in all respects.
(c) (i) The Equipment described in the Lease is not defective;
(ii) Contractor has good and marketable title thereto; (iii) the Equipment is
not subject to any defense (including, without limitation, claims of
nonconformity or offset by the Lessee); and, (iv) following Bank's purchase
thereof, Bank will have good title to the Equipment free and clear of all
claims, liens or encumbrances except as previously disclosed in writing to Bank.
(d) No portion of the money required to commence the Lease has
been advanced, loaned or rebated by Contractor to the Lessee, and Contractor has
not entered into any separate agreement with the Lessee or any officer,
director, employee, agent or guarantor of the Lessee without the prior knowledge
and written approval of Bank.
(e) CONTRACTOR HAS MADE NO CLAIM OR REPRESENTATION WHICH IS NOT
SPECIFICALLY SET FORTH IN THE LEASE. Contractor further warrants to Bank that
all claims, representations, warranties or statements made by Contractor to Bank
and to the Lessee are true and correct and are not false, misleading or
fraudulent in any respect, whether by direct statement or omission. If there is
any claim of misrepresentation of either or both the Lease Agreement or the
Merchant Agreement, Contractor agrees to repurchase the Lease from Bank for the
total of the Lease payments remaining at the time of such claim (whether or not
such Lease payments are then currently due and payable), less the unearned
income thereon less fifteen percent (15%) of the Contractor's original invoice
therefore, plus a handling charge of one hundred dollars ($100.00). Contractor
agrees that, at Bank's option, such amount will be either (i) separately
remitted by Contractor to Bank within ten (10) calendar days after demand
therefor by check or other draft acceptable to Bank, or (ii) charged by Bank
against other payments due Contractor by Bank.
(f) All financial information and all trade, bank and credit
ratings received by Contractor have been provided to Bank. No negative financial
information or ratings have been altered, deleted from the package submitted to
Bank by Contractor, or otherwise withheld from Bank.
(g) All signed documents submitted to Bank by Contractor were duly
executed by the person(s) purported to have executed such documents, and all
such documents (i) are valid, legal, enforceable and binding on the Lessee or
guarantor, as the case may be; (ii) comply with all applicable laws; and (iii)
are complete, genuine and without alteration or omission.
(h) All signatures on each document were personally witnessed by
Contractor, or by an employee, agent or other authorized representative of
Contractor. If any claim of forgery, unauthorized signature or other matter
involving the authenticity of the Lessee's or any guarantor's signature arises
during the term of the Lease, Contractor agrees to repurchase the Lease from
Bank for the total of the Lease payments remaining at the time of such demand
(whether or not such Lease payments are then currently due and payable ), less
the unearned income thereon and less fifteen percent (15%) of the Contractor's
original invoice therefore, plus a handling charge of one hundred dollars
($100.00). Contractor agrees that, at Bank's option, such amount will be either
(1) separately remitted by Contractor to Bank within ten (10) calendar days
after demand therefor by check or other draft acceptable to Bank, or (2) charged
by Bank against other payments due Contractor by Bank.
PART 6. OTHER WARRANTIES AND INDEMNIFICATIONS
SEC. 6.1. MUTUAL WARRANTIES. Each Party to this Agreement warrants
to the other Party all of the following: (a) it is duly organized and validly
existing under the laws of the state wherein its principal offices re located
and is in good sanding in every other state where it is doing business; (b) it
has all necessary rights, title, license and authority to enter into this
Agreement; (c) the persons(s) signing this Agreement on its b4ehalf has full
authority to bind it to the terms and conditions hereof; (d) performance by it
of its duties and obligations under this Agreement has been duly authorized by
all necessary action, will not violate any provision of its organization
documents, or any amendment thereof, or constitute or result in a violation or
breach under, nor conflict with, any statute or other law, any order or ruling
of any court or tribunal, or any rule or regulation of any administrative agency
or regulatory authority; and (e) with or without the lapse of time after the
giving of notice by a third party, will not violate any provision of, nor
constitute or result in a violation or default under, or conflict with any
contract, agreement, lease instrument or other undertaking to which it is a
party or by which it or any of its properties or assets may be bound or
affected.
SEC. 6.2. SEPARATE WARRANTIES BY CONTRACTOR. Contractor hereby
represents and warrants to Bank all of the following: (a) it has received,
understands, and will comply fully with all requirements of VISA, MasterCard and
Debit Networks; (b) it will conform to and comply with all federal and state
laws and regulations that are applicable to Contractor's provision of service
and performance of its obligations set forth in this Agreement (provided,
Contractor may, in good faith, contest the applicability, validity or
construction of any law or regulation in connection with the provision of
services and performance of its obligations set forth in this Agreement when
expressly authorized by Bank to do so); (c) adequate and property training will
be provided to contractor's marketing representatives for the conduct of
on-premise investigations in accordance with Section 3.2(g), and that Contractor
shall maintain records reflecting such training; (d) in carrying out its
obligations hereunder, Contractor will perform all of its obligations set forth
in this Agreement to the best of its ability, that all information transmitted
to Bank by Contractor or by any agent, employee, subcontractor or other
representative of Contractor shall be accurate, and that all services provided
by Contractor shall be performed with due care.
SEC. 6.3. SEPARATE WARRANTY BY BANK. Bank hereby warrants to
Contractor that Bank will comply with all applicable laws and regulations
regulating banks as acquirer's of credit card and debit card transactions, and
commercial finance lessors.
SEC. 6.4. INDEMNIFICATION OF BANK BY CONTRACTOR. Contractor agrees
to indemnify, defend, and hold harmless Bank and Bank's employees, officers,
directors, shareholders, agents, corporate parents and affiliates against any
and all claims, liabilities, losses, damages, costs or expenses (including,
without limitation, fees and expenses of attorneys and consultants and court
costs) of third persons or entities either directly or indirectly related or
attributable to (a) Contractor's negligence or wrongful act in its performance
under, or Contractor's breach of, this Agreement or any provision hereof, or (b)
to any such action of Contractor in any way associated with or related to this
Agreement. This indemnification obligation of Contractor shall include, without
limitation, any and all claims for contractual, tortious, exemplary, punitive or
statutory damages of any nature whatsoever and any and all injunctive or other
equitable relief.
SEC. 6.5. SURVIVAL. The warranties and indemnifications set forth
in this Part6 shall survive any termination of this Agreement.
PART 7. GENERAL TERMS RELATING TO BOTH MERCHANT BANKCARD AND LEASE PROVISIONS
SEC. 7.1. RELATIONSHIP OF PARTIES.
(a) Contractor is an independent contractor. Nothing herein shall
be construed to imply the existence of a partnership or joint venture between
Contractor and Bank, nor to make Contractor an agent of Bank for tax or other
purposes, Neither Contractor nor any of its directors, officers, employees or
agents, under any circumstances or conditions, shall represent, claim to be or
imply that Contractor or any of its directors, officers, employees or agents or
directors, officers, employees or agents or Bank, nor that Contractor or any of
its directors, officers, employees or agents has any right, power or authority
to create any obligation, express or implied, on behalf of or binding upon Bank.
(b) Contractor may employ such personnel as Contractor deems
necessary to complete performance. Bank may not direct Contractor's employees.
Contractor takes full responsibility for paying all compensation and expenses of
its employees and/or subcontractors, including (but not limited to) all related
local, state and federal taxes, unemployment insurance, Social
Security/Medicare, disability insurance, and other applicable withholdings,
payroll taxes, and workers' compensation insurance premiums.
SEC. 7.2. EXPENSES OF CONTRACTOR. All expenses whatsoever incurred
by Contractor under this Agreement shall be Contractor's sole responsibility,
and neither Bank nor its assigns shall be liable therefore.
SEC. 7.3. TERM. This Agreement shall continue for a period of one
(1) year commencing on the Effective Date, but may be terminated without cause
by either Party upon ten (10) days' written notice, or sooner at the election of
he non-defaulting Party if a Party has materially breached this Agreement or any
other agreement between the Parties. Thereafter, unless earlier terminated, this
Agreement shall automatically renew for consecutive additional one (1) year
terms on each anniversary of the Effective De unless either Party gives written
notice to the other on or before thirty (3) calendar days immediately preceding
the expiration date of the then-current term.
SEC. 7.4. TERMINATION AND ADJUSTMENT PRIVILEGES. In addition to
the provisions of Section 7.3, it is expressly understood and agreed that this
Agreement may be terminated at any time during its initial term and any renewal
term as follows:
(a) Unless Contractor obtains the prior written approval of Bank,
which Bank may not unreasonably withhold, Bank may terminate this Agreement upon
thirty (3)) calendar days' written notice to Contractor upon the occurrence of
either of the following events: (i) Contractor merges or is consolidated, or
enters into an agreement to merge or consolidate, into or with any other entity;
or (ii) Contractor fails to maintain its good standing in each jurisdiction
where it conducts its business.
(b) Bank may, by giving written notice thereof to Contractor,
immediately terminate this Agreement upon the occurrence of an Event of Default.
For purposes of this Agreement, "Event of Default" shall mean the occurrence of
any of the following: (i) A representation made by Contractor in this Agreement
or otherwise in connection therewith proves to be false or misleading in any
material respect, or (ii) Contractor materially or repeatedly defaults in the
performance or observance of any of its duties and obligations under this
Agreement.
(c) Either Party may immediately terminate this Agreement at any
time if the other Party ceases conducting business in the ordinary course or
files any petition in bankruptcy or reorganization or debt consolidation under
federal bankruptcy laws or under any comparable law by or against the other
Party, or upon the other Party's making of an assignment of any of its assets
for the benefit of creditors, or upon the application by the other Party for the
appointment of a receiver or trustee of its assets.
(d) In the event that a change is made to the Program by Bank
which, in Contractor's reasonable judgment, is materially adverse to Contractor
under this Agreement and Bank fails to revoke such change within fifteen (15)
business days after a written request therefor from Contractor, Contractor may
upon at least thirty (3) calendar days' written notice to Bank terminate this
Agreement; provided that from and after any notice of termination given by
Contractor pursuant to this Subsection (d), Contractor's duties and obligations
under this Agreement s they existed immediately prior to such change shall be
unaffected by the change until such termination of this Agreement becomes
effective. For purposes of this Subsection, a change in the Program is
"materially adverse" if and only if; (i) the change is of a substantial and
material nature and materially impairs Contractor's ability to perform its
obligations under this Agreement as such existed immediately prior to such
change; and (ii) within thirty (30) calendar days of written notice from Bank
that the change or a substantially similar change is proposed to be made,
Contractor notifies Bank that, in Contractor's judgment, the proposed change
meets the standard specified in clause (i) immediately above.
(e) Bank may terminate this Agreement upon 30 calendar days'
written notice to Contractor (except where Bank reasonably believes such a delay
would cause serious adverse consequences to Bank, in which case Bank may act
immediately upon written notice to Contractor) if, at any time, Bank determines,
in its sole and absolute judgment, that (i) the business reputation of Bank is,
or is threatened to be, adversely affected by the quality of services rendered
by Contractor or its agents hereunder or by the reputation of Contractor, or
both, or (ii) that further performance of services by Contractor hereunder will
have an adverse financial impact upon Bank for any reason.
(f) In the event that the performance or observance by either
Party of any of the terms or provisions of this Agreement is determined to be
unlawful or in violation of any federal, state or local statute, law, ordinance,
regulation or rule, said Party shall seek to cure the illegality
or violation
within thirty (30) calendar days following the date that such Party is first
informed of such violation or illegality. If such cure is not effected within
such thirty (30) calendar day period, either Party may thereupon terminate this
Agreement upon written notice to the other Party.
(g) This Agreement shall terminate automatically in the event of
termination of Bank's applicable VISA and/or MasterCard license or its
membership in VISA and/or MasterCard, or both, or in the event of
de-registration of Contractor by VISA and/or MasterCard.
SEC. 7.5. BREACH; REMEDIES.
(a) In the event that either Party defaults in any of its
obligations under this Agreement, in addition to any other remedies provided by
this Agreement or applicable law (including, without limitation, termination),
the non-defaulting Party shall be entitled to recover from the defaulting Party
any and all costs, damages and liabilities which it incurs or may incur on
account of such default, including, without limitation, reasonable attorneys'
and consultants' fees and expenses and costs incurred in connection with any
proceeding relating to such default. The provisions of this Section 7.5(b) shall
survive any termination of this Agreement.
(b) Each Party specifically acknowledges and agrees that the
rights, interests and privileges of the other Party set forth in this Agreement
are unique attributes of that Party and may not be quantified in terms of
monetary value. The Parties each acknowledge and agree that any violation of its
covenants set forth herein is likely to result in a remedy for damages being
inadequate to protect the rights, interests and privileges of the injured Party
and is likely to result in irreparable harm. Accordingly, the Parties
specifically agree that, in addition to any and all rights and remedies for
damages, the injured Party shall have injunctive or similar equitable remedies
available to it for any such violation. The provisions of this Section 7.5(c)
shall survive any termination of this Agreement.
SEC. 7.6 SEPARATE BREACH PROVISIONS RELATING TO LEASES; REMEDIES.
With respect to any Lease, Contractor agrees that in the event that:
(a) Bank or any of its assigns discovers any breach of any
warranty or representation made by Contractor pursuant to the provisions of
Section 5.6 of this Agreement;
(b) Bank or any of its assigns discovers that Contractor
misrepresented any material fact pertaining to the Lessee, related Merchant
Agreement of the Lease; or (c) a Lessee claims that Contractor breached any
representation or warranty in connection with the Lease and/or Merchant
Agreement, then Contractor will unconditionally repurchase the Lease from Bank
or its assigns for an amount equal to the monthly Lease payment multiplied by
the number of remaining months due at the time of the repurchase demand, whether
or not such Lease payments are then currently due and payable, less the unearned
income thereon and less fifteen percent (15%) of the Contractor's original
invoice therefore, plus a handling charge of one hundred dollars ($100.00).
Contractor agrees to separately remit said repurchase amount to Bank by check or
other draft acceptable to Bank within ten (10) calendar days after demand
therefor.
SEC. 7.7. NON-INTERFERENCE BY CONTRACTOR
(a) So long as this Agreement remains in effect and for a period
of at least three years after termination of this Agreement, Contractor shall
not permit any subsidiary, affiliate or successor in interest, or any of its
shareholders, directors, officers, employees, agents or nominees, or members of
their immediate families, to interfere, in any manner whatsoever, either
directly or indirectly by any arrangement whatsoever, with Bank's contractual
rights and interests under any Merchant Agreement or Lease, or to cause or
attempt to cause any Approved Merchant to engage in bankcard transaction
processing through any person or entity other than Bank.
(b) Contractor agrees to exercise its best efforts to not violate
the provisions of Section 7.7(a) by its own act or omission or by permitting the
act or omission of any other person or entity described in Section 7.7(a);
however, if Contractor directly or indirectly violates the provisions of Section
7.7(a) and Bank so notifies Contractor, Contractor will have thirty (30)
calendar days to rectify the violation.
(c) This Section 7.7 shall survive termination of this Agreement.
SEC. 7.8. CONFIDENTIALITY
(a) Each party may, in the course of performance of its
obligations under this Agreement, find it necessary or appropriate to furnish to
the other Party, or may find it has access to, certain confidential information
about or proprietary material regarding the Program or regarding the customers,
business plans or other proprietary information of the other Party (hereinafter
referred to collectively as "Confidential Information"). Confidential
Information of each Party shall include, without limitation, that Party's
marketing philosophy and objectives, promotions, markets, materials, financial
results, technological developments, any and all lists of Approved Merchants'
names and addresses, and other similar confidential and/or proprietary
information and materials.
(b) Each Party shall at all times maintain, and cause its
directors officers, employees servants, agents and representatives to maintain,
the confidentiality of all Confidential Information. Neither Party shall sell or
otherwise convey any of the other Party's Confidential Information or materials
to any third party other than potential Eligible Merchants (with respect to
materials and information previously approved by Bank for such purposes) without
the prior written approval of the proprietor of such Confidential Information,
and each Party shall exercise all precautions reasonably necessary to prevent
access to such information or materials buy any such third party. Neither Party
shall disclose, furnish or use such information or materials for any purpose
whatsoever other than those specifically contemplated herein. Each Party agrees
that during the term of this Agreement and thereafter, it shall exercise its
best efforts to prevent its agents, employees and subcontractors from using any
Confidential information to which it becomes privy.
(c) All Confidential Information furnished by either Party to
the other Party in connection with this Agreement is the exclusive property of
the originating Party and, at the request of the originating Party or upon the
termination of this Agreement.
SEC. 7.9. USE OF TRADEMARKS. Contractor has no right to use and
shall not use Bank's trademark, name or any other proprietary designation of
Bank in advertisements, as a reference or otherwise, without the express written
permission of Bank. The provisions of this Section 7.9 shall survive any
termination of this Agreement
SEC. 7.10. NOTICES Any notice that either Party is required or may
desire to deliver shall be delivered as follows:
(a) If the notice relates to any breach or the termination of this
Agreement, by United States certified or registered mail, postage prepaid and
return receipt requested; by private carrier with guaranteed overnight delivery;
or by facsimile transmission with a confirming copy sent by United States
certified or registered mail, postage prepaid and return receipt requested,
addressed as set forth in Section 7.10(c).
(b) If the notice relates to any other matter, by facsimile or
e-mail transmission, addressed as set forth in Section 7.10(c).
(c) All notices shall be addressed as follows:
If to Bank: If to Contractor:
Humboldt Bank c/o Digital International Inc.
Merchant Services Xxxx Xxxxx
000 X Xxxxxx 000-000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000 Xxxxxxxxx, XX X0X 0X0
Fax No: (000) 000-0000 Canada
Attn: Xxx Xxxxxxx. V.P.
(d) In the event of transmission by facsimile, e-mail or private
carrier, such notice shall be deemed delivered on the first business day
following the transmission, provided that the sender can reasonably demonstrate
its receipt.
(e) Either party may designate a different address to which
notices are to be sent by a writing sent to the other Party as provided by this
Section 7.10.
SEC. 7.11. ASSIGNMENT. This Agreement is personal to Contractor
and may not be assigned, transferred, shared or divided, in any manner, without
the prior written consent of Bank, and any such attempt without Bank's written
consent shall be null and void. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the Parties and their heirs,
personal representatives, successors and assigns.
SEC. 7.12. EXCUSABLE DELAYS AND FORCE MAJEURE. Any delay in
performance by either Party hereto of its obligations hereunder shall be excused
when such delay is due to any cause or event of any nature whatsoever beyond the
reasonable control of such Party including, without limitation, any act of God;
any fire, flood, or weather condition; any earthquake; or any act of a public
enemy, war insurrection, riot, explosion or strike; provided, that written
notice thereof must be given by such Party to the other Party within ten (10)
calendar days after occurrence of such cause or event.
SEC. 7.13. CONSTRUCTION OF AGREEMENT
(a) Any exhibit referred to herein and attached hereto is hereby
expressly incorporated herein in its entirety and made a part of this Agreement.
All defined terms under this Agreement shall have the same meanings in any
exhibit referred to herein, except that, in the event of any conflict between
any of the provisions of such exhibit and the provisions of this Agreement, the
provisions of this Agreement shall prevail.
(b) In the event of any inconsistency between any provision of
this Agreement with applicable Card Association rules, the applicable Card
Association rules shall be afforded precedence and shall apply.
(c) This Agreement shall be construed as to its fair meaning and
not strictly for or against either Party.
(d) The respective rights and remedies of Bank and Contractor
under this Agreement shall be cumulative, and the exercise or partial exercise
of any such right, remedy or privilege shall not preclude the exercise of any
other right, remedy or privilege. The non-exercise or partial exercise by either
Party of any right, remedy or privilege under this Agreement shall no impair or
preclude the future exercise by that Party of that same or any other right,
remedy or privilege under this Agreement. The provisions of this Section 7.13(d)
shall survive any termination of this Agreement.
(e) No failure or delay of either Party in exercising any right or
power given to it under this Agreement shall operate as a waiver thereof. No
waiver of any term, covenant, condition or obligation of this Agreement, or any
breach thereof, shall be effective unless granted in writing. The waiver by any
of the Parties of any term, covenant, condition or obligation herein contained,
or of any breach thereof, shall not be deemed to be a waiver of any other term,
covenant, condition or obligation herein contained or of any prior, concurrent
or subsequent right hereunder. The provisions of this Section 7.13(e) shall
survive any termination of this Agreement.
(f) Unless otherwise provided in this Agreement, consent and
approval, when required hereunder on the part of either Party, shall not be
unreasonably withheld.
(g) The captions in this Agreement are for convenience only and
shall not be considered a part hereof nor affect the construction or
interpretation of any provision hereof.
(h) This Agreement may be executed in multiple counterparts, each
of which shall be deemed to be an original and all of which, taken together,
shall constitute one and the same document.
SEC. 7.14. LAW GOVERNING; VENUE; ATTORNEYS' FEES
(a) This Agreement shall be interpreted and construed according to
the laws of the State of California.
(b) The Parties agree and consent that, in the event of any
litigation arising out of or related to this Agreement, any state or federal
court having jurisdiction in Humboldt County, State of California, shall have
jurisdiction and be the proper venue for the determination of all controversies
and disputes arising hereunder. The prevailing Party shall be entitled, in
addition to such other relief as may be granted, to recover its reasonable
attorneys' fees and costs at trial, and on any appeal therefrom.
SEC. 7.15. SEVERABILITY. If a court if competent jurisdiction
finds any provision of this Agreement to be invalid or unenforceable as to any
person or circumstances, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any such
offending provisions shall be deemed to be modified to be within the limits of
enforceability or validity; provided, however, if the offending provision cannot
be so modified, it shall be stricken and all other provisions of this Agreement
in all other respects shall remain valid and enforceable.
SEC. 7.16. ENTIRE AGREEMENT. This Agreement contains the entire
understanding between the Parties with respect to this subject matter, and shall
supersede and cancel all prior offers, negotiations and agreements between the
Parties thereon, whether written or oral. Accordingly, this Agreement now
constitutes the complete and exclusive statement of the terms and conditions
between the Parties covering the performance hereof, and may not be altered,
modified or supplemented except by a writing duly executed by each Party;
provided, notwithstanding the foregoing, that Bank shall have the right to amend
the provisions set forth in Exhibit A hereto upon thirty (30) calendar days'
notice to Contractor.
IN WITNESS WHEREOF, the Parties have executed and delivered this
Agreement by their respective officers as of the day and year set forth below.
Humboldt Bank Contractor
By: _________________________________ By: ________________________________
Title: ______________________________ Title: _____________________________
Date: _______________________________ Date: ______________________________
EXHIBIT A
ISO-50%
1. (a) As compensation for the performance of its services pursuant to this
Agreement, ISO shall be entitled to receive fifty percent (50%) of the net
profits of the Program. For purposes of this section, "net profits" are defined
to mean the total of all Merchant Discount Amounts and merchant discount rate
collected by Bank from Approved Merchants each month pursuant to Bank's
agreement with such Approved Merchants under the Program, but excluding
application income less any ACH rejects, merchant losses, chargebacks and
expenses incurred by Bank in the administration of the Program including, but
not limit4ed to, any and all VISA and for MasterCard costs or fees, third party
processor fees, and Bank Administrative fees.
(b) Should such amount be less than zero, then nothing shall be paid to ISO
until such time that the sum of the "net profits" for the immediately succeeding
months becomes positive. For example purposes only, should the "net profits"
during months 4, 5, 6, and 7 equal $50, ($75), ($25) and $200, then ISO shall be
paid $25, ($37.50), ($12.50), and 100 in each of those months respectively.
(c) Administrative Overhead Fees, including:
Item Item Cost Merchants'Cost
---- --------- --------------
Monthly Min $25.00
Statement Fee $10.00
Per Merchant ETC Help Desk
Monthly Statement
Merchant on File
Various FDR Reporting to Bank
On line Transactions
CD ROM's $3.50 per merchant/per month
FDR 56 KBPS Data Line
Merchant Assistance Voice Calls
Merchant Hot Call/Code 10
Sales Tax
Imprinter Plates
Discover Adds
Humboldt Bank Fraud Control $4.00 per merchant/month
Humboldt Bank Customer Service $4.00
Humboldt Bank Accounting $1.50
Bank Reporting $1.50
Humboldt Bank Chargeback Fee $15.00 $25.00
(d) Visa U.S.A. & MasterCard International Interchange Table:
Item Cost
---- -----
Visa
Visa CPS/Retail - Credit 1.38% + $0.05
Visa CPS/Retail - Xxx-Entered 1.80% + $0.10
Visa Dues & Assessments .084%
FDR Authorization & Data Capture $0.10
Address Verification Service (AVS) Fee $0.05
MasterCard
MasterCard Merit III (70, 80) 1.36% + $0.10
MasterCard Key-Entered (92) 1.85% + $0.10
MasterCard Dues and Assessments .084%
FDR Authorization & Data Capture $0.10
Address Verification Service (AVS) Fee $0.05
2. Discount/Floor Limit: ISO shall be allowed to sign-on merchants at or
above the discount rate and transaction fees stated below for Retail, MO/TO, and
Internet Merchants:
Floor Limit Merchant Classification
1.60% + $0.15 For retail locations where at least 70% of the transactions
are swiped through the terminal.
1.52% + $0.18 For retail locations where at least 85% of the transactions
are swiped through the terminal and are contained on Humboldt
Bank's "Select Retail Merchant List."
2.29% + $0.23 For mail or telephone order merchant locations or any
merchants that swipe less than 70% of their transactions.
2.29% + $0.23 For Internet Merchants ("Note: Excludes CyberCash Transaction
Fee, see CyberCash below.)
3. Application Fees:
Item Cost
---- -------
Application Fee, per merchant application $40.00
Application Fee, additional location or Merchant Conversion* $15.00
Application Fee, Select Retail Program* $15.00
*Note: Reference Program description in Sales Manual, "Application Submission
Criteria."
4. Debit and Lighthouse Club Fees:
Item Cost
----- -----
Debit Monthly Minimum fee $7.50
Debit per Transaction Fee $0.35
Lighthouse Club Equipment and Supply Program Monthly Fee $9.50
5. Internet Gateway Fees:
Gateway Cost
------- ----
Xxxxxxxxx.Xxx
Xxxxxxxxx.Xxx Set-up Fee $99.00
Xxxxxxxxx.Xxx Monthly Internet Gateway Fee $12.50
xXXXXX.Xxx
xXXXXX.Xxx Set-up Fee $49.00
xXXXXX.Xxx Minimum Fee $8.00
xXXXXX.Xxx Discount Rate 1%
xXXXXX.Xxx Transaction Fee $0.20
CyberCash
CyberCash Set-up Fee $159.00
CyberCash Internet Monthly Gateway Fee $17.50
CyberCash Transaction Fee $0.25
Signio
Signio Set-up Fee $75.00
Signio Internet Monthly Gateway Fee $17.50
G-Gate
G-Gate Set-up Fee $50.00
G-Gate Internet Monthly Gateway Fee $7.50
6. The ISO shall pay a registration fee of $11,000 to Bank for ISO program
plus any renewals or expenses.
7. Bank will provide collection service for a fee of 40% of the amount
collected.
8. ISO shall be entitled to 50% for every approved American Express
application and 50% of the net profit paid by American Express.
9. Rolling Reserve against losses: Ten (10) basis points on the total
processing amount of the portfolio. Ten percent (10%) per month would be taken
out to build the amount for the reserve.
10. Up-Front Reserve again losses. $25,000.000
EXHIBIT B
PORT 16
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The terms are as follows:
1) Buy Rate: 48 months
A B C D E
-------------------------------------------------------------------
0.0300 0.0320 0.0360 0.0380 0.0480
2) Digital Commerce International, Inc. agrees to use Humboldt Bank Credit
system as a basis for underwriting leases. All leases of "E" or better will be
accepted by Humboldt Bank, subject to the conditions following:
a) at least 40% of all leases purchased by Buyer will receive a score
of "A",
b) at least 55% of all leases purchased by Buyer will receive a score
of "A" or "B",
c) no more than 22.5% of all leases purchased by Buyer will receive a
score of "C"
d) not more than 15% of all leases purchased by Buyer will achieve a
score of "D",
e) not more than 5% of all leases purchased by Buyer will achieve a
score of "E".
3) Digital Commerce International, Inc. will pay for First Payment Default.
4) Initial payment due is first month plus last month (to include taxes).
5) Lease-end options for merchant: - may return equipment - may elect
month-to-month extension at existing rate
6) Buyout at 10% of gross lease amount
7) Taxes administered by Humboldt Bank
--------------------------------------------------------------------------------
To active this new program, please sign and return. A signed copy must be in the
file.
Name: Xxxx Xxxxx, Xxxx Xxxxxx Humboldt Bank
Business Name: MBS Acquisition Corp. c/o Signature: ________________________
Digital Commerce International Inc. Date: ___________________________
Phone: (000) 000-0000
Fax: (000)-000-0000
Signature: ___________________________
Date: ________________________________
