Exhibit 10.3
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CONFIDENTIALITY AND MARKETING AGREEMENT
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THIS CONFIDENTIALITY AND MARKETING AGREEMENT (this "Agreement") is entered into
by Home Inc. ("HOME"), a Delaware Corporation, of 6774 South 1300 East, Salt
Lake City, UT, and C5, Inc. ("C5"), a Utah Corporation, of 0000 Xxxx Xxxxxxxxxx
Xxxxxxx, 0xx Xxxxx, Xxxx Xxxx Xxxx, XX, 00000, effective June 14, 2002.
RECITALS
A. HOME and C5 are interested in jointly marketing certain products
and services of C5 (the "Joint Marketing Project").
B. In connection with the joint marketing effort, HOME and C5 shall
have access to certain trade secrets and confidential and
proprietary information of each other.
C. HOME and C5 desire to preserve and protect such confidential and
proprietary information.
D. To that end, HOME and C5 agree as follows:
AGREEMENT
1. Rights and Obligations
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C5 shall provide the following:
A. Fulfillment services, including staffing, management, and
processing for all credit card merchant accounts offered
and sold by HOME, and POS products, POS Equipment virtual
terminal, software, merchant services and software
solutions ("C5 Products") for HOME to market to businesses,
proprietors, entrepreneurs, and other potential or existing
HOME clients, customers and/or merchants.
B. Financing sources for C5 Products, finance package finding
(which may be through a subcontractor), and disbursement of
such finance package proceeds. C5 shall further take all
steps necessary to ensure that C5 delivers to HOME's
vendor(s) 1) an approval code and merchant account
identification number from C5 or its subcontractor merchant
account company, and 2) written verification of finance
package approval for each HOME client, customer and/or
merchant.
C. Merchant account application processing. C5 or its
subcontractor will accept for processing, properly prepared
applications, agreements and purchase orders submitted for
C5 products from HOME. C5 will further ensure that all
steps reasonably necessary will be taken, including
completion of any necessary paperwork and other
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administrative requirements, to insure funding for each
sale or finance package of a merchant account to HOME
clients, customers and/or merchants.
D. C5 will supply, at no cost, marketing materials for C5
Products. All such marketing materials or materials bearing
C5's trademarks or logos shall be sued by HOME only for the
purpose of promoting C5 Products, and only after C5's prior
approval.
2. Referral Fees
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A. HOME will furnish C5 with leads of HOME's customers for the
sole purpose of C5 contacting those customers to sell them
Credit Card Processing equipment, including but not limited
to Hardware terminals, Processing software and Virtual
Terminals, and assist those customers in obtaining a
Merchant Account. Most of these contacts will be made at
seminar events that are sponsored and paid for by HOME. C5
will pay referral fees to HOME for only those referrals
that purchase or finance this Credit Card processing
equipment from C5. C5 will pay HOME referral fees according
to the following schedule:
i. C5 will advance HOME $240,000 in the form of an
"Advanced Marketing Payment" for 3 weeks of seminar
events ($80,000 per week) each seminar event.
Subsequent $80,000 "Advanced Marketing Payments"
will be made by C5 no later than the Friday that is
three (3) weeks prior to the seminar event. HOME
shall only use the Advance Marketing Payment paid by
C5 for advertising and promotion of HOME seminars
and business sessions where C5 products and services
will be sold. The Advanced Marketing Payment will be
deemed as an advance towards Earned Funding as
further described below. At the time of payment,
HOME will provide to C5 a schedule of the events,
including dates, time, and locations, of the events
for which the advanced payments are made.
ii. Should, through an Act of God, a scheduled seminar
or business session be cancelled, C5 will only
recover 50% of the Advance Marketing Payment paid
for that seminar. Should such cancellation occur
more than one-time in a calendar year, C5 will be
allowed to recover the full amount of the Advance
Marketing Payment for that seminar. In either event,
C5 will deduct a maximum of $10,000 per week from
the following weeks Advance Marketing Payment until
these amounts are recovered.
iii. On the first Wednesday, at least 4 weeks after the
last day of each seminar event, C5 will prepare an
Earned Funding Settlement (the Settlement) statement
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for each seminar event. The Settlement will be
calculated for each seminar as follows:
1. C5 will figure the Earned Funding for HOME
based on 63% of the applications that were NOT
cancelled by HOME'S customers within the
customer's 3-day "Right of Cancellation"
period. A 5% reserve will be held back to
cover any cancellations.
2. The applications will be paid at the rate of
$1,365.00 for every $99.95 finance package and
$1,175.00 for every $89.95 finance package.
The percentages or referral fees for $99.95
and $89.95 finance packages for the Settlement
will be the same as the percentages for the
actual $99.95 and $89.95 funding for this same
seminar.
3. For Example: HOME has a seminar where they
accept 100 merchant account applications from
its customers. Of these 100 applications, the
customers cancel 30 of the applications within
their 3-day Right of Cancellation period. At
the 4 week Settlement date, 44 applications
(70 applications x 63% = 44) will be settled.
If C5 obtains actual funding on 50
applications - 15 at $99.95 (30%) and 35 at
$89.95 (70%) - the Earned Funding Settlement
amount will be figured as follows:
47 x 30% = 14 x $1,365.00 - $19,110
Plus
47 x 70% = 33 x $1,175.00 = $38,775
Total Earned Funding = $57,885
4. In connection with the Earned Funding
Settlement, the Advanced Marketing Payment
will be credited towards the Earned Funding
due to HOME. If the Earned Funding owing for a
particular seminar exceeds the Advanced
Marketing Costs actually paid in advance by C5
for that seminar, these funds will be paid to
HOME in addition to the next Advanced
Marketing Payment or, if there is no Advanced
Marketing Payment paid in the following thirty
days, the remaining Earned Funding will be
paid within thirty (30) days of Settlement. If
there is a deficit of Earned Funding, meaning
that the Earned Funding for a particular
seminar is less than the Advanced Marketing
Payment previously made by C5 for that same
seminar, the difference will be deducted from
the next week's Advanced Marketing Payment
made by C5 to HOME. If no Advanced Marketing
Payment is made in the next thirty (30) days,
then HOME will pay the difference to C5 within
thirty (30) days of Settlement. If HOME's
Earned Funding for a seminar is less than the
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Advanced Marketing Payments for that seminar
by more than 10% for 2 weeks running, then the
Advanced Marketing Payment will be decreased
to the nearest $5,000 increment based on the
average of the Earned Funding for the previous
2 weeks.
5. C5 will pay to HOME additional referral fees
that HOME agrees will only be used to pay
HOME's road crew. These referral fees will be
paid at the rate of $30 for every
substantially complete (all forms are complete
and signed, with evidence of address, such as
a photocopy of a driver's license),
non-cancelled application that is submitted by
HOME to C5. These payments will be made
separately no later than the Friday two weeks
following the seminar. The number of
substantially complete files will be verified
by C5's seminar representative and reported to
HOME's road crew at the end of each seminar
event.
6. HOME recognizes that there is an outstanding
balance due to C5 that will be determined by a
C5 representative and HOME representative.
This outstanding balance shall be repaid in
the following manner: First, a weekly $5,000
payment to C5. Second, any week where Total
Earned Funding exceeds the Advanced Marketing
Payment, HOME will pay 50% (in addition to the
$5,000 weekly payment) of the variance to C5.
These payments will be made until the agreed
upon "outstanding balance" has been paid in
full. HOME will have the right at any time to
prepay the outstanding balance.
B. At the end of this Joint Marketing Agreement, a final
Settlement statement will be prepared 4 weeks following the
last seminar. This Statement will reconcile all Advanced
Marketing Payments and Earned Funding for every seminar or
business session that HOME has sponsored and paid for. At
this time, it will be determined if there is an excess or
deficit in the Earned Funding for all seminars. If there is
a deficit of Earned Funding, HOME will pay this deficit
amount to C5 within 30 days. If there is an excess of
Earned Funding, C5 will pay this excess to HOME within 30
days, EXCEPT, in the event that HOME does not fully comply
with all of the terms of this agreement in ending this
Joint Marketing Agreement, C5 may elect to withhold the
excess Earned Funding to cover any reasonable costs
involved, so long as C5 gives written notice to HOME of any
failure to comply with the terms of the Agreement,
identifying with specificity any such failures and the
resulting costs to C5, and if such failures are capable of
cure, HOME has an opportunity to cure. This will not limit
any other damages that the parties may be entitled to. C5
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may consider that HOME has ended this Joint Marketing
Agreement if HOME has less than 20 approved applications
from its seminars in any given calendar month.
C. These referral are based on HOME providing an e-commerce
enabled web site and shopping cart/online order form that
are compatible with C5's online transaction processing
system. C5's leasing company requires that the web site and
shopping cart/online order form be provided as part of the
terms of the finance package. If it becomes necessary for
C5 to supply the web site and shopping cart/online order
form, these referral fees will be reduced to reflect these
costs.
D. C5 shall retain payment for any HOME referrals sold through
the C5 affiliate site. C5 shall be solely responsible for
all referral commissions paid to customers signing up
through the C5 affiliate site or approaching C5 directly.
In the event that HOME should establish its own referral
program, HOME shall be paid according to the commission
schedule in paragraph 2.A.iii.2 in this agreement as long
as completed finance package and merchant account
applications are delivered to C5. HOME shall be solely
responsible for all referral commissions paid to customers
signing up through the HOME affiliate site.
E. C5 has several different processing solutions available for
HOME to sell to its clients, as well as finance package
terms of 12, 24, 36 and 48 months. Pricing and referral
fees will vary depending upon the options and finance
package terms chosen. C5 will provide price quotes to HOME
utilizing any combination of processing solutions and
finance package terms.
F. C5 and HOME acknowledge and agree that: (1) C5 obtains its
funding for equipment finance packages from Financial
Institutions that are independent of C5 and HOME; (2) these
Financial Institutions control the factors that determine
the amount of funding that C5 receives for equipment
finance packages; (3) these factors are influenced by
interest rates and inflation and are subject to change at
any time; (4) the costs and referral fees set forth above
are based on the factors that are in effect at the time
this Agreement is signed; and (5) if the factors are
changed by the Financial Institutions, or if the Financial
Institutions do not perform as promised, the referral fees
may be adjusted accordingly and will be subject to the same
terms and conditions that the Financial Institutions impose
on C5. Occasionally, these Financial Institutions may
impose other restrictions or qualifications on the
equipment finance packages for HOME's customers, such as
reserve accounts or special qualifying requirements. HOME
agrees that it will be subject to the same terms and
conditions that the Financial Institutions impose on C5,
with the exception that, if these changes effect the gross
funding and/or the reserve amount that is being held that
C5 will pay to HOME by more than 5%, then HOME will be
allowed to give 10 days notice to cancel this agreement,
and HOME may do business with another merchant account
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provider, but C5 has a right of first refusal to match any
other offer to HOME to provide Merchant Account Services to
the customers of HOME.
G. If the percentage of Poor Credit (scored C & D)
applications that are approved by the Financial
Institutions for the customers of HOME exceeds 28%, based
on a 4 week rolling average, C5 reserves the right to
adjust the referral fees paid to HOME to reflect this
increase in Poor Credit applications. If it becomes a
necessary for C5 to adjust the referral fees by more than
5% because of an increase in poor credit applications, HOME
will be allowed to cancel this agreement on 10 days notice
because of this change. To date, the percentage of HOME's
customers being scored as Poor Credit is 27.8%. C5 will
supply these credit scores on the weekly report.
3. Rejects
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A. It is agreed by HOME and C5, that all Rejected Finance
package applications will be handled and settled as
follows:
i. C5 will retain all monies received for Rejected
applications and apply this towards the cost of
obtaining a merchant account and supplying a virtual
terminal product for the customer. EXCEPT, if the
customers 1st months payment bounces or is declined,
C5 will NOT supply a merchant account or virtual
terminal for this customer.
4. Charge backs
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A. C5 will withhold 5% from all Earned Funding settlement
amounts to cover charge backs. C5 will supply to HOME every
30 days, a balance sheet on the charge back reserve.
Subject to the provisions of paragraph 4.B. below, HOME's
liability for charge backs shall not exceed the 5%
withholding set forth in this paragraph 4.A.
B. If the cause of the charge back is based on either fraud or
negligence of the owners, employees, representatives or
agents of C5 or HOME, the company found to be responsible
for the fraud or negligence shall be responsible for the
full amount of all charge backs and shall pay to the other
company the respective portion of the charge back within 10
days from the date of the charge back.
C. The liability for charge backs for C5 and HOME shall
continue for the length of term of the finance packages of
HOME's customers.
5. Third Party Non-Performance
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Both C5 and HOME agree that third party providers referred to
within are defined as those separate entities, individuals,
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vendors, business groups, companies, corporations or partnerships
that provide products and/or services for the seminars presented
by HOME, and that such third party providers are presenting
products and/or services at the above mentioned seminars. Also,
both parties agree that the terms non-performance or inadequate
performance relate to the performance which has been contracted
for, and subsequently has not been provided. In the event that the
third party went out of business and could not perform, HOME would
then undertake the responsibility of performing under the
contracts with customers, either themselves or arranging for
another third party. If HOME fails to provide these services as
specified, HOME will be responsible for the full amount of any
charge backs that occur from the failure to provide these services
in a timely manner.
6. Confidential and Proprietary Information
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In connection with the Joint Marketing Project, C5 may furnish and
may reveal to HOME certain oral and written confidential,
proprietary and/or trade secret information concerning C5 and its
products and/or services (the "C5 Proprietary Information").
Similarly, HOME may furnish and may reveal to C5 certain oral and
written confidential, proprietary and/or trade secret information
concerning HOME and its products and/or services (the "HOME
Proprietary Information"). The C5 Proprietary Information and the
HOME Proprietary Information (collectively the "Proprietary
Information") may include, without limitation, certain
specifications, designs, plans, drawings, hardware, software,
data, prototypes, marketing plans or techniques, identification or
lists of vendors, suppliers, mailing lists, list vendors and the
like, or other business and technical information. As a condition
to providing such information, C5 and HOME each agree, as set
forth below, to treat confidentially and to not otherwise
disclose, and to cause its respective directors, officers,
members, employees, representatives, agents and advisors
(collectively the "Representatives") to treat confidentially and
to not otherwise disclose, the Proprietary Information, whether
such Proprietary Information was furnished prior to, on or after
the date of this Agreement. In addition, for purposes of this
Agreement, "Proprietary Information" shall include, without
limitation, any discussions, summaries, analyses, studies,
compilations, or other documents or memorializations of or
relating to the Proprietary Information. All Proprietary
Information, in whatever form provided, shall remain the property
of the party furnishing such Proprietary Information.
7. Compliance with Laws, Ordinances and Regulations
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HOME and C5 agree that they will strictly comply with all federal,
state and local laws, ordinances and regulations in connection
with any and all work or services performed by them arising out of
or relating in any way to this Agreement and/or their business
relationships with each other. In the event HOME and C5 fail to do
so, all aforementioned parties may, in their sole discretion,
decide to terminate this Agreement forthwith, and to hold all
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outstanding fees owed until a resolution can be found. HOME hereby
indemnifies and holds C5 harmless from any and all claims,
complaints, demands and/or damages arising out of or related in
any way to any failure on the part of HOME to comply with all
federal, state and local laws, ordinances and regulations.
Likewise, C5 hereby indemnifies and holds HOME harmless from any
and all claims, complaints, demands and/or damages arising out of
or related in any way to any failure on the part of C5 to comply
with all federal, state and local laws, ordinances and
regulations.
8. Disclosures and/or Use of Proprietary Information
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C5 and HOME acknowledge and agree that: (A) the Proprietary
Information constitutes valuable, special and unique property of
C5 and HOME; (B) they may use the Proprietary Information for the
sole purpose of soliciting merchant accounts in connection with
the Joint Marketing Project only; (C) they shall not disclose the
Proprietary Information or any information contained therein to
any other corporation, person or entity that is not a party to
this agreement for any reason or purpose whatsoever; (D) they
shall not use the Proprietary Information or any information
contained therein for any purpose other than the Joint Marketing
Project; (E) they shall not disclose or use the Proprietary
Information or any information contained therein; (F) they shall
not make copies of any written or computer-readable Proprietary
Information; and (G) they shall prevent the use of the Proprietary
Information by, and disclosure of the information contained
therein to, any corporation, person, or entity that is not a party
to this agreement.
9. Return of Proprietary Information
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Within thirty days of receipt of written notice of termination of
the Joint Marketing Project, C5 and HOME shall deliver to each
other all written or computer-readable copies of the Proprietary
Information, letters and all other information, that is specific
to the other party's business, which are in their possession or
under their control , regardless of whether prepared by both
parties or by their affiliates.
10. Term of Agreement
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This agreement shall become effective on the date set forth above
and shall continue in effect December 31, 2003, unless terminated
sooner as provided herein. At the end of the agreement, HOME may
do business with another merchant account provider, but C5 has a
right of first refusal to match any other to HOME to provide
Merchant Account Services to the customers of HOME.
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11. Termination of Agreement
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Either party may terminate this Agreement for a material breach of
the terms of this Agreement at any time by giving the other party
written Notice of Termination ("Notice") at least thirty (30) days
prior to the effective date of termination. Either party shall
have the option of preventing the termination of this Agreement by
taking corrective action that cures the material breach, if such
corrective action is taken prior to the end of the aforementioned
thirty (30) day time period. However, if there is evidence that
any material breach is caused by fraud, forgery, or any other
illegal act, either party may terminate this Agreement by giving
the other party written Notice at least seven (7) days prior to
the effective date of termination.
12. Amendment & Waiver
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No modification or amendment hereof shall be valid and binding,
unless it be in writing and signed by the parties hereto. The
waiver of any provision hereof shall be effective only if in
writing and signed by the parties hereto, and then only in the
specific instance and for the particular purpose for which it was
given. No failure to exercise, and no delay in exercising, any
right or power hereunder shall operate as a waiver thereof.
13. Enforcement of Agreement
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This Agreement, and all disputes relating to this Agreement,
whether sounding in tort, contract or otherwise, shall be governed
and construed in accordance with the laws of the State of Utah.
All parties to this Agreement each consent and submit to the
personal jurisdiction of the state and federal courts located in
the State of Utah, and waive their rights to contest personal
jurisdiction. All parties agree that any legal action filed by any
party to enforce the terms of this Agreement must be filed
exclusively in the Third Judicial District Court, for the State of
Utah, in Salt Lake City, Utah. In the event of a dispute regarding
this Agreement, the prevailing party shall be entitled to an award
of attorneys' fees and costs from the non-prevailing party,
regardless of whether the dispute results in the filing of a
lawsuit.
14. Assignment
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No party may assign its rights or duties under this Agreement
without the prior written consent of the other parties.
15. Personal Guarantees
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Within 5 business days of the execution of this agreement, the
following personal guarantees will be provided to C5, in form
acceptable to C5:
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A. Xxxxx Xxxxxxxx'x personal guarantee on prepaid Advanced
Marketing Payments directly attributable to canceled or
non-completed HOME events (except those events cancelled
due to an act of God, as set forth in paragraph 2.A. (ii)),
as set forth in paragraph 2.A. (i) above.
B. Joint and Several Performance Guarantees of all other
obligations under this agreement by Home, Inc. and Online
Tranz. The Home, Inc. Guarantee will include a 2nd priority
security interest in all real estate currently owned by
Home, Inc.
16. Modification
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No amendment or modification of this Agreement shall be valid or
binding on unless made in writing and signed by each party.
17. Counterparts
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This Agreement may be executed in as many counterparts as may be
deemed necessary or convenient. This Agreement, and any
modifications, waivers or notifications relating thereto, may be
executed and delivered by facsimile or electronic mail. Any such
facsimile or electronic mail transmissions shall constitute the
final agreement of the parties and conclusive proof of such
agreement.
_______________________________________ _____________________
Xxxxx Xxxxxxxx, EVP Sales and Marketing Date
Officer of and on behalf of C5
__________________________________ ________________________
Xxxxx Xxxxxxxx President and CEO Date
of and on behalf of H.O.M.E. Inc.
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