STORED VALUE PREPAID CARD SPONSORSHIP AGREEMENT
Exhibit
10.4
STORED
VALUE PREPAID
CARD SPONSORSHIP AGREEMENT
THIS
STORED VALUE PREPAID CARD SPONSORSHIP AGREEMENT (this “Agreement”), dated as of
October 20, 2006, (the “Effective Date”), is by and between ▇▇▇▇▇▇
Beaumont, Inc.
(“Company”), a Nevada corporation located at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and Palm
Desert National Bank
(“Bank”), a national bank located at ▇▇-▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
Each may be referred to here in as a “Party” or collectively as
“Parties.”
RECITALS
WHEREAS,
Company
has developed and is the sole owner of a stored value prepaid card program
to
provide payroll services to employees; and
WHEREAS,
Bank is
a member of various Networks for the purposes of issuing prepaid cards;
and
WHEREAS,
Bank is
willing to provide sponsorship and the rights and privileges that follow from
sponsorship to Company for the purposes of issuing Company’s stored value
prepaid card.
NOW,
THEREFORE,
in
consideration of the premises and mutual covenants set forth herein, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties, intending to be legally bound, hereby agree as
follows:
AGREEMENT
ARTICLE
I - DEFINITIONS
SECTION
1 - Definitions
Except
as
otherwise specifically indicated, the following terms shall have the following
meanings in this Agreement (such meanings to be equally applicable to both
the
singular and plural forms of the terms defined):
ACH
means
the Automated Clearinghouse network, governed by the rules of the National
Automated Clearinghouse Association (“NACHA”).
BIN
means
Bank Identification Number and is a number assigned to Bank by System for the
purposes of identifying and routing electronic payment
transactions.
Card
Account
means
the record of all credits and debits to a Card with respect to Items originated
by each Cardholder.
Card
Product or Card
means
the various prepaid cards issued within a Program as Company shall request
and
Bank shall approve now and in the future, pursuant to the Rules.
Cardholder
means
the person who (i) is issued or accepts a Card and/or (ii) uses a Card to
originate a transaction.
Cardholder
Agreement
means
the terms and conditions of use approved by Bank and Systems, and accepted
by a
Cardholder prior to the activation of the Cardholder’s Card.
Cardholder
Funds
mean the
total amount of pooled funds on deposit with the Bank which are associated
with
one or more Card.
Graphic
Standards
mean all
standards, policies, and other requirements adopted by a System from time to
time with respect to use of its Marks.
Issuer
means a
Member Bank that issues Cards.
Item
means a
transaction that is processed between parties through the System and its Members
or through the Processor, the Bank and Company, including purchases, cash
withdrawals, disputes and refunds.
▇▇▇▇
means
the service marks, trademarks and copyrights of a System and/or Bank, including
but not limited to, the names and other distinctive marks or logos, which
identify a System and/or Bank.
Membership
means
the membership in a System and licensing rights thereto obtained by
Bank.
Merchant
means an
entity that contracts with an Acquirer to originate an Item at a
point-of-sale.
Processing
Services
means
those services, which are reasonably required or necessary to Issue a Card
and/or process a transaction in accordance with the Rules of a System. Such
services shall include but not be limited to: account set-up and maintenance;
chargeback processing and compliance; Card design; Card production; Card
issuance; transaction processing; Settlement; System access; Cardholder dispute
resolution; customer service; System compliance; regulatory compliance; security
and fraud control; collections; and activity reporting.
Processor
means
the third party that Company may retain to perform Processing Services under
this Agreement.
Program
means a
particular payroll card program by which an employer’s employees will be issued
cards for funds distribution and which is subject to this Agreement and the
business contemplated hereunder.
Program
Materials
means
all materials and methods of marketing used by Company in connection with this
agreement, including without limitation, advertisements, brochures, telephone
scripts, applications, Cardholder Agreements, and similar
materials.
Program
Revenues
mean all
interchange fee and other fees and revenues generated by or accruing under
a
Program marketed and governed by this Agreement.
REGULATION
E
means
(i) the regulation, all amendments thereto and official interpretations thereof
(12 C.F.R. Part 205) issued by the Board of Governors of the Federal Reserve
System implementing Title IX (Electronic Funds Transfer Act) of the Consumer
Credit Protection Act as amended (15 U.S.C. 1601 et seq.) and (ii) the
Electronic Fund Transfer Act and any amendments thereto.
Regulatory
Authority
means,
as the context requires and as they may have jurisdiction over one or more
parties to this Agreement, any System; any state Department of Financial
Institutions; the Federal Deposit Insurance Corporation; The Office of the
Comptroller of the Currency; the Office of Thrift Supervision; the Federal
Reserve Board; and any federal or state agency having jurisdiction over the
Bank, Company, Merchants, Processors, or Cardholders.
Rules
mean the
by-laws, operating rules and regulations adopted by any System or the National
Automated Clearing House Association (NACHA), Bank’s procedures and standards,
applicable federal and state laws, and any regulations and guidance from any
Regulatory Authority, as the same may from time to time be amended, modified,
or
supplemented.
Settlement
means
the movement and reconciliation of funds between the Bank, Processor and Systems
in accordance with the Bank’s policies and procedures and the Rules and subject
to the terms of this Agreement.
System
means
Discover, MasterCard, Visa, Pulse, Star, NYCE, and/or any other Card network
authorization, routing, processing or funds transfer system for transmitting
Items and Settlement thereof.
ARTICLE
II - DUTIES OF COMPANY
SECTION
2.1
-
Marketing
Company
shall, from time to time, promote and market a Card Product to their customers.
Company is solely responsible for all costs and expenses associated with
marketing of any Card or Program under this Agreement. Each customer shall
be
presented to the Bank for approval, along with whatever documentation Bank
requests to adequately review and approved customer. Company shall obtain Bank’s
prior written approval for any marketing materials bearing Bank's name or any
System ▇▇▇▇ or name before distribution or broadcast of such materials, and
Company shall ensure that all marketing materials comply with the Rules.
SECTION
2.2 - Scope
of Agreement
Company
agrees that the scope of this Agreement shall be limited to Programs, as
detailed in the Program Outline, attached as Schedule A and provided by Company
with the application. Bank’s obligation to provide any services, sponsorship or
otherwise, outside the scope of any Program and/or other than as required by
this Agreement must be agreed to in writing executed by both Company and Bank.
Additional Program(s) may be added to this Agreement as Addendums to Schedule
A
with the Bank’s written approval. Company may receive any such services outside
the scope of this Agreement from any third party if its receipt of such services
does not interfere and/or limit Bank’s ability or right to provide the services
provided for in this Agreement.
SECTION
2.3 - Additional
Offerings
(a) Company
may develop materials and/or product offerings or may send additional
solicitations to Cardholders ("Additional Offerings") without Bank’s approval
provided that such Additional Offerings do not include Bank’s name or any System
▇▇▇▇. Additional Offerings which utilize Bank’s name or any System ▇▇▇▇ shall
require Bank’s prior written approval, which approval shall not be unreasonably
withheld. Company shall supply to Bank in writing all details, terms and
conditions of any proposed Additional Offerings which contain Bank’s name or any
System ▇▇▇▇ before the distribution of such Additional Offerings, and Bank
shall
have the right to and must approve any such Additional Offering before its
distribution.
(b) All
income and expense for materials, product offerings, or Additional Offerings
will be the income and expense of Company.
SECTION
2.4
-
Printing
of Cards and Cardholder Agreements
All
Cards, Cardholder Agreements or other Program Material shall identify the Bank
as the Issuer and include any such names or Marks as may be required to conform
to Graphic Standards and Rules or other laws and regulations. Prior to the
issuance of any such materials, the Bank must approve in advance in writing
any
such materials, including but not limited to the Cards and the Cardholder
Agreements, Applications and Statements which shall be developed by solely
and
exclusively by Company.
SECTION
2.5
-
Pricing
(a) Company
shall be solely responsible for ensuring that all charges and fees to be paid
by
applicants to become Cardholders shall be those charges that comply with all
applicable State and Federal laws, Rules and Regulations. All charges and fees
assessed by Company shall be given by Company to Bank in advance and Bank shall
have the option, but no obligation, to prohibit or limit such charges and fees
if such fees violate an applicable State or Federal Law, Rule, or Regulation.
The charges and fees paid by Cardholders shall be disclosed in the Cardholder
Agreement and Applications given to the Cardholder by Company and Bank at the
time the account is opened and when the Card is received.
(b) Company
may modify Cardholder pricing by giving written notice of the proposed
modification or addition to the Bank and to the Cardholder. Company acknowledges
and agrees that it shall be solely responsible for ensuring that any such
modification or addition complies with the the Rules,. Bank shall have the
option, but not the obligation, to prohibit or limit a pricing modification
if
such modification violates an applicable State or Federal Law, Rule, or
Regulation.
SECTION
2.6
-
Establishment
of Cardholder Applications
Company
shall be responsible for accepting and processing Cardholder applications in
accordance with the Rules and based on criteria, terms, and conditions used
by
Company that shall at all times comply with the Rules. Company, when requested
by the Bank, will provide reports indicating compliance with the established
criteria.
SECTION
2.7 - Deposit
and Reserve Accounts
Bank
will
open such Bank accounts as are necessary to provide the services outlined in
this Agreement, collectively referred to as “Deposit Accounts,” which accounts
shall be established by Company and controlled by the party represented in
Schedule C attached hereto.
(a)
On
each
business day during the term of this Agreement, the applicable System will
debit
or credit the Deposit Accounts for the net funds required for Settlement with
System for purchases and ATM withdrawals made by Cardholders offset by the
(i)
funds received from System for merchandise returned by Cardholders; and (ii)
any
other credits received from System that are due to Cardholder on such business
day.
On
each
business day during the term of this Agreement, Company shall credit the Deposit
Accounts for the following items: (i) funds received from Company for deposit
to
the Cardholders’ Card Account(s); and (ii) any other credits due to Cardholders
and payable by Company.
(b)
Company
represents and warrants that the Deposit Accounts will be at all times funded
by
Company in an amount that is no less than 100% of the total amount of the
current day’s balances of Cardholder Funds, subject to Company’s next business
day crediting of the Deposit Accounts for deposits to Cardholders’ Card
Account(s). Company, without prior written approval from the Bank, shall not
withdraw funds from the Deposit Accounts, provided that, upon termination of
this Agreement, Bank shall return any remaining funds in the Deposit Accounts
in
accordance with the terms of this Agreement.
(c)
An
interest bearing account designated “Reserve Account” shall be established and
controlled by Bank on behalf of Company as an account for potential losses
for
overlimits, fraud, and losses due to disputes or embezzlement. Account shall
be
funded with a minimum amount of $5,000 or 1% of the balances of Cardholder
Funds
on deposit at the Bank, whichever is greater. The amount maintained in the
Reserve account may be reviewed by Bank upon request of Company in or after
the
third year of this Agreement.
(d)
Company
shall, on a daily basis, cause to be provided to Bank a report which report
shall show the total of funds and/or credits due from Company to Cardholders,
the previous day’s balance of Cardholder Accounts and the current day’s balances
of Cardholder Accounts. Such report shall also contain any other information
reasonably requested by Bank from time to time that Company can readily produce.
SECTION
2.8
-
Implementation
Service Standards
Company
shall be responsible for a timely implementation of the Program, according
to
timelines, deliverables and milestones established by Bank, in consultation
with
Company and Processor. If Company fails to meet certain key milestones within
established time frames, Bank may impose fees as outlined in Schedule B.
SECTION
2.9 - Customer
Service Standards
Company
shall develop customer service standards for servicing that are designed to
promote customer satisfaction and to promote the preservation and growth of
the
customer base.
Bank
may,
but shall not be required to monitor or at any time audit or otherwise review
compliance with standards to ensure required levels be maintained. The Bank
may
request additional customer service standards; if the Bank receives any
guidance, complaints or comments from any Regulatory Authority or System or
is
required to do so by any Rules, Company will have thirty (30) days to comply
with a written request from the Bank.
Company
will advise Bank of all Cardholder complaints or allegations of erroneous or
unauthorized transactions, to the extent Company has received notice of such
complaint or allegation, for each calendar month within ten (10) business days
after the end of each calendar month. Company will respond to Bank within ten
(10) business days of notice from Bank with respect to any complaint received
by
Bank from a Cardholder. Such advisement shall in no way be deemed or interpreted
to relieve Company or Bank of any of its respective responsibilities under
this
Agreement.
SECTION
2.10 - Access
to Documents and Information
Bank
shall at all times have reasonable access to all information and documents
it
requires to comply with all applicable laws and Rules concerning any Program,
which Company may acquire or which may be in the control and possession of
Company, including but not limited to information and documents in the
possession of any third party providing Processing Services or otherwise
performing any of Company’s obligations hereunder, which information and
documents include but are not limited to applications for Cards, information
concerning Program revenues, information concerning transactions and agreements
affecting the management and administration of any Program.
Company
shall provide Bank with copies of any and all of the following documents and
information, to the extent same exist: applications; advertisements;
disclosures; terms and conditions; Company’s policies and procedures promulgated
in connection with this Agreement; and any other documentation, processing
information or customer service information which the Bank may reasonably
request (hereinafter referred to as “Documentation and Processing”). If Bank, in
its sole discretion, determines that such Documentation and Processing fails
to
comply with any law, Regulations or guidance of a Regulatory Authority then
Bank
may request appropriate changes be made to such Documentation and Processing,
and Company will use its best efforts to accomplish such changes as soon as
practicable. In the event Company is not able to accomplish such changes
immediately, and Bank determines in good faith that it has a legal or regulatory
risk, such risk to be provided in formal written notice to Company, then Bank
may terminate this Agreement upon thirty (30) days written notice, without
penalty.
Company
will also provide to the Bank any other information requested by Bank as may
be
required, from time to time by regulatory authorities, to ensure that safe
and
sound business practices are being followed concerning processing, merchant
settlement and income to the Bank.
SECTION
2.11 - Sponsorship
Certification and Administrative Fees
Bank
shall complete all registration requirements as required by each applicable
System or Network of which the Bank has agreed to become a member after
obtaining from Company any corresponding agreements and/or commitments in
writing from Company and/or entity(ies) providing Processing Services or any
other service in connection with a Program. Company shall pay all applicable
fees and expenses of each applicable System as imposed on Bank because of its
sponsorship or registration of Company, and as required to maintain a Program.
Company and Bank shall use reasonable commercial efforts to deliver to the
other, within thirty (30) business days of receipt, a copy of all notices or
correspondence (other than confidential information) it receives from any System
relating specifically to a Program. Company acknowledges and agrees that it
is
responsible for any and all obligations and compliance related to the operations
of the Program which are imposed upon Bank whether by a System, Regulatory
Authority, or any Operating Rules and Rules and Company further agrees that
it
will take all steps necessary to ensure that its operations are in compliance
promptly after its receipt of notice thereof from Bank. Bank agrees that it
will
cooperate with Company to ensure such compliance.
SECTION
2.12 - Liability
of Company for System and Regulatory Claims.
Company
shall be liable to Bank for any and all liabilities and every loss, claim,
demand, and cause of action (including, without limitation the cost of
litigation and reasonable attorneys' fees) suffered or incurred by Bank as
a
result of or arising out of Company’s failure to comply with any provision of
this Agreement, Rules, applicable laws or regulations except to the extent
such
non-compliance is as a result of Bank’s wrongful acts or omissions, provided
that Bank provides Company with prompt notice of any such loss, claim, demand,
or cause of action and permits Company the option to defend such claim or cause
of action. Further, Bank may not settle any claim or cause of action for which
it will seek indemnification from Company without Company’s prior written
approval.
Should
Bank be assessed any fee, fine or penalty by any System or Regulatory Authority
in connection with Company’s actions pursuant to this Agreement, Bank shall
notify Company of such amounts ten (10) days prior to the Bank settling these
expenses by setting off, drafting or wire transferring from one or more of
the
accounts for the amounts due except for those amounts identified as the
responsibility of the Bank.
SECTION
2.13 - Insurance
2.13.1 COMPANY.
Bank
will require, without limiting Company’s liability to Bank or third parties,
that Company maintain comprehensive or commercial general liability insurance,
including coverage for products, completed operation, and blanket contractual
liability for obligations undertaken by Company under this Agreement. Such
comprehensive general liability insurance shall provide for minimum combined
bodily injury and property damage coverage limits of $1,000,000 per occurrence
or $2,000,000 aggregate and name the Bank as additional insured. In addition,
Company will obtain and maintain in force a comprehensive crime policy including
employee dishonesty/fidelity coverage naming the Bank as joint payee with
respect to the work or operations done in connection with this Agreement.
Coverage will include the processing provided by Company and/or any third
parties Company chooses to process, maintain, emboss or distribute cards. A
copy
of such policy or suitable evidence of insurance must be provided to Bank.
All
policies (providing that such insurance is primary to any liability insurance
carried by Bank) must be with insurance carriers that have an A.M.
Best rating of “A”
or
better or otherwise acceptable to Bank. The Certificate will also provide that
any such policy may not be terminated or materially modified without the Insurer
given thirty (30) days prior written notice to both the Bank and Company.
2.13.2 BANK. Bank
will
maintain comprehensive or commercial general liability insurance, including
coverage for completed operation, and blanket contractual liability for
obligations undertaken including a Fidelity Bond covering loss of money,
securities or other property resulting from one or more of theft, fraudulent
or
dishonest acts with a limit of liability of not less than $5,000,000 each single
loss, and Errors and Omissions insurance with a limit of liability of not less
than $5,000,000 per Claim. Any required insurance policy shall be reasonably
acceptable to Company. Company will receive proof of insurance and will be
notified with not less than thirty (30) days’ prior notice to Company of any
cancellation or material alteration of such policy. Company shall be given
copies upon request of all insurance contracts, riders, additions, endorsements
and any deletions.
SECTION
2.14 - Contingency
Plans
Company
shall have a viable and tested contingency plan in effect and hereby warrants
that any third party performing any of its duties hereunder has represented
to
Company that it has a viable and tested contingency plan in effect. The plan
shall provide for short-term recovery of data for processing, reasonable
security, confidentiality of customer data and reasonable period for full
recovery in relation to the volume and importance of the application to
Company’s operations and duties under this Agreement.
SECTION
2.15
-
Error
Resolution
Company
agrees to resolve, in accordance with the applicable Rules all alleged errors
or
unauthorized transactions with respect to any transactions performed or
attempted to be performed in accordance with or under this Agreement. In
particular, Company agrees, upon notification by Bank of a complaint or
allegation, to obtain any and all documentation or data required to resolve
the
matter, fully investigate the allegations, advise Bank of the results of the
investigation and provide an audit trail of information pertinent to the matter,
all within any required timeframes required by the Rules but in no event later
than ten (10) business days after Bank has provided Company with notice of
the
complaint or allegations..
SECTION
2.16 - Records
Company
agrees that it will keep, or require third parties to keep, current and accurate
records regarding transactions processed by Company (or any third party whom
Company retains) or for the Bank in accordance with System Rules and
specifications with respect to services performed pursuant to this Agreement.
Company agrees that, to the extent permitted by law, it will keep and disclose
all documentation and statements required by any applicable laws and Rules.
SECTION
2.17 - Security
Company
agrees that it will allow only authorized personnel to have access to any
systems available pursuant to this Agreement and will require personal and
workstation identification for all transactions it enters or processes. It
further agrees to establish and comply with all security procedures and systems
needed to protect all confidential cardholder information and cards, as may
be
required under the Rules.
SECTION
2.18 - Back-Up
of Data
To
the
extent Bank will depend upon any data communications systems provided by
Company, Merchant or Cardholder, Company will require appropriate daily back-up
of such data, so that in the event the data communications systems fails,
Company or Bank or its designee, at the Bank’s discretion, will be able to
continue processing applications and transactions. Company will provide Bank
with copies of such back-up plans upon Bank’s reasonable request.
SECTION
2.19 - Independent
Processor
Company
has selected a system approved or registered Card processor, if such
registration is required, to process Card transactions and provide Processing
Services for Programs. Company shall pay for all processing costs for accounts
processed under this agreement. Company will not change the Processor without
advance written notification to Bank.
SECTION
2.20 Third
Party Services
Company
shall obtain Bank's prior written approval, which Bank may grant or deny in
its
reasonable discretion, before retaining any third party to provide services
for
the benefit of or in connection with the Program. All services provided by
any
such third party must be performed in compliance with the Rules. Company will
assist Bank in obtaining any due diligence or agreements with the third parties
that may be required by the Rules or by any Regulatory Authority.
The
Bank’s approval of any third party shall not in any way relieve the Company of
its duties and obligations under this Agreement, nor shall such approval
constitute a representation or warranty by the Bank that the services to be
performed or products to be furnished by a third party will be performed as
agreed or represented.
SECTION
2.21
-
Account
Data
Company
shall provide to Bank any data and/or other information required to reconcile
accounts or substantiate information concerning deposits, returns, chargebacks,
fees, or amounts settled or as required by any Regulatory Authority.
Company
shall make such data and other information available to the Bank at the sole
cost and expense of Company. Whenever an error or unauthorized transaction
is
alleged to have occurred, Company shall use its best efforts to obtain all
documentation related to the transaction within ten (10) business days of
receiving a request for such information from the Bank.
SECTION
2.22 - Right
of Set Off
If
at any
time Company breaches any of its obligations, covenants, representations or
warranties
under this Agreement or Bank has determined that Company has breached any of
its
obligations, covenants, representations or warranties, and Company is indebted
to Bank, Bank may, without notice, exercise its right of set off against
bank-held funds and exercise the rights and remedies provided in this Agreement
or the Uniform Commercial Code. Company hereby agrees that Bank shall have
the
right to enforce its rights as provided herein. Company agrees that any and
all
costs incurred by Bank in enforcing this Agreement, including reasonable
attorneys’ fees, shall constitute additional indebtedness secured by this
Agreement. Company represents and warrants none of the funds in any account
held
by Bank are “trust funds” or funds belonging to other parties. Company agrees to
execute such documentation, including but not limited to security agreements,
UCC-1 Financing Statements, assignments and notices of assignment, as may be
reasonably requested by Bank to effectuate and perfect its security interests
granted pursuant to this Section 2.22. Bank will provide written notice and
a
detailed accounting in no more than three (3) business days in the event it
exercises its rights under this provision.
ARTICLE
III - REPRESENTATIONS AND WARRANTIES
SECTION
3.1
-
Company
Representations and Warranties:
In
addition to the representation and warranties elsewhere herein, Company warrants
and represents to the Bank as follows:
(a) This
Agreement is valid, binding, and enforceable against Company in accordance
with
its terms.
(b) Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of Nevada and is authorized to do business in each state in which
the
nature of Company's activities makes such authorization necessary.
(c) Company
has the full power and authority to execute and deliver this Agreement and
to
perform all its obligations under this Agreement. The provisions of this
Agreement and the performance by Company of its obligations under this Agreement
are not in conflict with Company's Articles of Incorporation, bylaws or any
other agreement, contract, lease or obligation to which Company is a party
or by
which it is bound.
(d) Neither
the Company nor any senior officer of Company has been subject to any of the
following:
| (i) |
Felony
criminal conviction;
|
| (ii) |
Bankruptcy
filing or petition (excluding any senior officer of
Company);
|
| (iii) |
Federal
or state tax lien;
|
| (iv) |
Administrative
or enforcement proceedings commenced by the Securities and Exchange
Commission, any state securities Regulatory Authority, Federal Trade
Commission, federal or state bank regulator, or any other state or
federal
regulatory agency; or
|
| (v) |
Restraining
order, decree, injunction, or judgment in any proceeding or lawsuit,
alleging fraud or deceptive practice on the part of Company or any
principal thereof.
|
(e) For
this
subparagraph, the word "principal" shall include any personnel directly or
indirectly owning twenty percent (20%) or more of Company.
(f) Company
will provide to the Bank the most recent audited financial statements for
Company and any Principals. Company agrees to provide audited financial
statements on an annual basis, as soon as possible, and in any event within
ninety (90) days after the end of Company’s fiscal year, and interim quarterly
financial statements if requested.
(g) Annual
Federal Tax Return will be sent to Bank within fourteen (14) days after filing
for Company and any Principals.
(h) As
soon
as possible, and in any event within ninety (90) days after the end of Company’s
fiscal year it will provide the Bank with a copy of most recent Form 10-K filed
with the U.S. Securities and Exchange Commission, if applicable.
(i) Company
will comply with the Rules and any laws, regulations, guidance, orders or rules
issued by the Regulatory Authorities that relate to the cards, matters and
transactions contemplated by this Agreement and shall cause all third parties
performing any of its respective obligations hereunder to comply with all of
the
foregoing, as may be applicable.
(j) Company
is familiar with and able to fully comply with (i) the Rules; and (ii) the
applicable federal laws and regulations and the laws and regulations in the
states in which Company does or may do business, including, without limitation,
those laws and Rules governing Programs and card services.
ARTICLE
IV - DUTIES OF BANK
SECTION
4.1
-
Background
Investigation
Bank
may
conduct, at its expense, reasonable investigation as it may from time to time
believe appropriate, and Company shall cooperate with Bank in connection
therewith. Company consents, on an ongoing basis, to the Bank’s obtaining any
consumer credit report or other investigative documentation on Company and/or
any Principal, which Bank deems relevant for any purpose, related to this
Agreement.
SECTION
4.2
-
Membership
in the Systems
Bank
shall maintain its Membership in good standing and shall abide by all the Rules
applicable to the Bank, provided, however, that Bank may elect to terminate
its
Membership at any time by giving Company sixty (60) days’ notice of its
intention to terminate Membership. Nothing herein shall be deemed to obligate
Bank to attempt to maintain Membership if the Systems have
elected to terminate the Bank’s Membership.
SECTION
4.3
-
Notices
Bank
shall deliver to Company a copy of all notices or correspondence that it
receives from the System, or any other third party, relating specifically to
Bank's sponsorship of Company, within thirty (30) business days of receipt
of
such notice or correspondence unless legally or contractually prohibited from
doing so, or unless the information is of a confidential nature.
SECTION
4.4 - Settlement
Bank
will
settle, in a timely manner pursuant to National Bank standards, all funds with
various Systems that Company and Bank have agreed to utilize for acceptance
of
the Card issued under any Program.
SECTION
4.5 - Other
Services
Bank
shall be under no obligation to provide services beyond those services set
forth
in this Agreement.
ARTICLE
V - COMPENSATION, FEES AND EXPENSES
SECTION
5.1
-
Compensation
to the Bank
For
its
services under this Agreement, Company shall compensate Bank for such services
in accordance with the provisions of Schedule B attached hereto.
SECTION
5.2 - Expenses
of the Bank
Bank
shall be solely responsible for the following expenses:
(a) Bank's
own internal costs and expenses incurred in connection with maintaining the
Deposit Account(s) and, except as may be otherwise agreed herein, its own
internal monitoring of Programs, including all legal expenses.
(b) All
annual Membership fees relating to Bank's general licenses with and general
Membership in any System utilized by the Bank in connection with Programs,
and
any fines and penalties, or portion thereof, assessed by any such System or
any
Regulatory Authority due to Bank's negligence, fraud or willful misconduct,
excluding any fines or penalties caused by Company or its officers, directors,
employees or agents.
(c) Such
other services and expenses that Bank may deem necessary or appropriate for
Programs and which are not the obligation of Company hereunder.
SECTION
5.3
-
Expenses
of Company
Company
shall be solely responsible for payment to Bank or on Bank’s behalf, to the
extent Bank incurs such charges, for expenses associated with Programs,
including but not limited to the following:
(a) All
fees,
penalties, assessments, expenses, etc. payable to any System for any current
or
future registration of Company, except to the extent such penalties or
assessments are due to the acts or omissions of Bank.
(b) All
System fees associated with BINs assigned to Bank for Company, including but
not
limited to transaction and volume fees, quarterly operating certificate or
quarterly Membership fees related to Programs or pursuant to any Agreement
between Bank and System.
(c) All
fines
and penalties assessed by any System or any Regulatory Authority (other than
Bank) due to Company’s actions or the actions of any third party retained by
Company.
(d) Any
losses sustained from any Card or Card Account for any reason, except to the
extent such loss was caused by Bank’s negligence or willful
misconduct.
Company
also agrees that it is solely responsible for the following expenses that
Company will incur:
| (e) |
Advertising
and other expenses associated with the marketing incurred by Company,
any
party under its control or any party for which it is providing services,
not including Bank.
|
| (f) |
All
expenses associated with establishing and maintaining any accounts
with,
or receiving services from, any financial institution providing
Settlement;
|
| (g) |
Costs
incurred by any Processor or by Company or any part under its control
or
any party for which it is providing services for any account
processing.
|
| (h) |
Expenses
associated with manufacturing, embossing, and mailing Cards, which
are
incurred by Company and are associated with BINs assigned to Bank
for
Company.
|
| (i) |
All
other amounts incurred in connection with customer service, balance
inquiries, 800 numbers, automated response unit (ARU) programming,
chargebacks, fraud and/or administration of any Program, as provided
in
this Agreement (except those specifically made the responsibility
of Bank
pursuant to Section 5.2).
|
ARTICLE
VI - LIMITATION OF LIABILITY
SECTION
6.1
-
Limitation
on Liability
Other
than stated herein and subject to Section 6.2 herein, Bank shall not be liable
for any loss or damage, direct or indirect, for any cause whatsoever,
(including, but not limited to, those arising out of or related to this
Agreement) with respect to any claim or allegation made by any Cardholder,
third
party, or Company, including but not limited to an allegation of an erroneous
or
unauthorized transfer or transaction, provided that Bank will be liable for
any
losses associated with Bank’s gross negligence or intentional misconduct with
respect to the funds in the Deposit Account.
SECTION
6.2
-
No
Special Damages
In
no
event shall Bank or Company be liable under any theory of tort, contract, strict
liability or other legal or equitable theory for any lost profits, exemplary,
punitive, special, incidental, indirect or consequential damages, each of which
is hereby excluded by agreement of the parties regardless of whether or not
Bank
or Company has been advised of the possibility of such damages. This section
6.2
should not be construed to limit the liabilities and obligations of the parties
under section 2.12, 6.1, 6.2, or 9.1.
SECTION
6.3
-
Disclaimer
of Warranties
Bank’s
and Company’s express warranties in this agreement are its only warranties and
Bank and Company specifically disclaim all other warranties of any kind, express
or implied, arising out of or related to this Agreement, including without
limitation, any warranty of merchantability or fitness for a particular purpose
or non-infringement. Bank’s and Company’s liability to each other hereunder
shall in no event exceed an amount equal to actual monetary damages incurred
by
Company and/or Bank, as applicable.
ARTICLE
VII - TERM AND TERMINATION OF AGREEMENT
SECTION
7.1
-
Term
and Termination of Agreement Without Cause
The initial
term of this Agreement
shall be for a period of five (5) years, commencing on the date hereof and
shall
continue for two (2) successive three (3) year periods, unless prior to the
expiration of the initial term or the first three (3) year extension period
either party gives the other not less than one hundred eighty (180) days written
notice of its election not to renew or extend this Agreement.
Notwithstanding
the first paragraph of this Section 7.1, Bank agrees that Company may terminate
this Agreement without cause at any time. Company agrees that its decision
to
terminate without cause, i.e.,
not a
termination for cause pursuant to Section 7.2, prior to the expiration of the
term will result in administrative costs and fees to the Bank and therefore
agrees to pay a cancellation fee, in addition to other damages, in the following
amounts:
| (a) |
During
first year $10,000.00
|
| (b) |
During
second year $5,000.00
|
| (c) |
During
third year $2,500.00
|
| (d) |
During
fourth year $1,500.00
|
| (e) |
During
fifth year $1,500.00
|
| (f) |
During
any renewal period $1,500.00
|
Company
furthermore agrees such cancellation fee will be paid immediately upon written
notice of termination.
SECTION
7.2
- Termination
of Agreement For Cause
Either
Party shall have the right to terminate the Agreement or any Program upon
occurrence of one or more of the following events:
| (a) |
Failure
by the other Party to observe or perform, in any material respect,
that
Party’s obligations to the other Party hereunder, so long as the failure
is not due to the actions or failure to act of the terminating Party,
but
only if the failure continues for a period of: (A) thirty (30) days
after
the non-performing Party received written notice form the other party
specifying the failure in the case of a failure not involving the
payment
of money, or (B) ten (10) days after the non-performing Party receives
written notice for the other Party specifying the failure in the
case of a
failure to pay any amount then due
hereunder;
|
| (b) |
In
the event any representation, warranty statement or certificate furnished
to it by the other Party in connection with or arising out of the
Agreement is materially adverse to the terminating party and intentionally
untrue as of the date made or
delivered.
|
| (c) |
The
other Party: (A) voluntarily commencing any proceeding or filing
any
petition seeking relief under Title 11 of the United States Code
or any
other federal, state or foreign bankruptcy, insolvency, liquidation
or
similar law. (B) applying for or consenting to the appointment of
a
receiver, trustee, custodian, sequestrator or similar official for
such
Party or for a substantial part of its property or assets, (C) making
a
general assignment for the benefit of creditors, or (D) taking corporate
action for the purpose of effecting any of the foregoing;
or
|
| (d) |
The
commencement of an involuntary proceeding or the filing of an involuntary
proceeding or the filing of an involuntary petition in a court or
competent jurisdiction seeking: (A) relief in respect for the other
Party,
or of a substantial part of its property or assets under Title of
the
United States Code or any other federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (B) the appointment of a
receiver, trustee, custodian, sequestrator or similar office for
the other
Party for a substantial part of its property or assets, or (C) the
winding
up or liquidation, of the other Party, if such proceeding or petition
shall continue un-dismissed for sixty (60) days or an order or decree
approving or ordering any of the foregoing shall continue unstayed
and in
effect for sixty (60 ) days.
|
| (e) |
Upon
any change to or enactment of any law or regulation which would have
a
material adverse effect upon the program rendering one or both of
the
Parties unable to substantially perform this Agreement, provided
that the
Parties cannot find a legally workable solution to the change in
law or
regulation within a reasonable amount of
time.
|
| (f) |
Violation
of any federal or state law relating to the performance of this Agreement
rendering one or both of the Parties unable to substantially perform
this
Agreement, provided that the Parties cannot find a legally workable
solution to avoid violating the law or regulation within a reasonable
amount of time.
|
| (g) |
Upon
direction from any Regulatory Authority to cease or materially limit
performance of the obligation under this
Agreement.
|
| (h) |
Either
party shall have the right to terminate this Agreement upon breach
of
warranty or representation.
|
SECTION
7.3
- Survival
of Payments and Obligations Upon Termination
Upon
notice of termination and/or cancellation of this Agreement or any Program
at
any time for any reason, and at the Bank’s written request, Company shall
promptly provide notice of cancellation of the Program to all affected
Cardholders processed through BINs assigned to the Bank and shall take
appropriate action to cause all Cards to be cancelled or reissued and if
applicable, money on deposit with the Bank to be refunded to the Cardholders.
Additionally, upon the effective date of termination of this Agreement, Company
will discontinue all use of the Bank’s name and Marks and the name and Marks of
any System. At the Bank’s option and upon written notice to Company, this
Agreement shall continue in full force and Bank shall continue to provide the
services currently then being provided until such time as all Cards are so
cancelled or reissued, but in no event exceeding ninety (90) days from notice
of
cancellation and/or termination. If such termination is made by Bank pursuant
to
Section 7.2(a), Bank, in addition to any other rights and/or remedies it
may have at law and/or at equity, will have the option to withhold and pay
directly expenses that it has incurred from any of the accounts, including
Settlement, Bank fees, System expenses and chargebacks or any other charges,
fees or costs.
Upon
termination and/or cancellation of this Agreement or of any Program, Bank shall,
upon Company’s request, provide Company with reasonable transition assistance so
that Company may transition a Program to another financial institution.
SECTION
7.4
-
Disposition
of the Deposit and Reserve Accounts
Upon
the
termination of this Agreement or termination of any Program for any reason
including but not limited to the termination and/or expiration of this Agreement
at the end of the Initial Term or any Renewal Term, this Agreement shall remain
in full force and effect with respect to all provisions regarding the Deposit
or
Reserve Accounts and Company’s obligations and duties with regard to resolving
any alleged errors or unauthorized transactions. However, an amount representing
total alleged errors or unauthorized transactions at termination and for 90
days
subsequent to termination will be required to be deposited in a suspense account
held by Bank, provided that Bank shall release to Company all funds in the
suspense upon the earlier of 90 days following termination or the resolution
of
all outstanding alleged errors or unauthorized transactions. The balance of
the
Deposit and Reserve Accounts shall remain with and be equal to the total of
the
outstanding balance for all issued cards and Reserve Amounts, pursuant to this
Agreement, provided that Bank shall return funds in the Deposit Account to
Company upon the transfer of the issued cards to a new financial institution
in
an amount equal to the outstanding balance on the issued cards that are
transferred. In addition, notwithstanding the foregoing, upon termination of
this Agreement, Bank shall promptly return to Company an amount equal to the
funds in the Deposit Account less the outstanding balance on the issued cards.
The Bank may, in its sole discretion, place a hold on all such funds and/or
disburse such funds in accordance with this Agreement and the Rules, provided
that Bank exercises its discretion in good faith.
SECTION
7.6 - Chargebacks,
Disputed, or Erroneous Transactions
In
the
event of termination or expiration, this Agreement shall remain in full force
and effect with respect to all provisions regarding chargebacks, disputed,
erroneous transactions, and allegedly erroneous or unauthorized transactions.
Company shall continue to process and service those accounts in dispute or
with
account liability under this Agreement. After Company has paid Bank in full
for
any items and allegedly erroneous or unauthorized transactions, accounts that
become loss accounts shall be Company's property and shall be assigned,
transferred and conveyed by Bank to Company or Company’s designee, unless such
losses are due to Bank’s negligence or intentional misconduct.
ARTICLE
VIII - CONFIDENTIALITY
SECTION
8.1
-
Confidential
Information
Under
this Agreement, the parties will be disclosing to each other certain
confidential and proprietary information including customer lists, customer
data, business plans, software, data, prototypes, documentation, customer
information, and other business and/or technical information (the
“Information”). The Information may be disclosed in either oral or written
form.
The
receiving party shall hold the Information in confidence and shall prevent
the
disclosure of the Information, unless it is in accordance with the terms of
this
Agreement. The receiving party shall use the Information only for the purpose
of
fulfilling its obligations under the Agreement; shall reproduce the Information
only to the extent necessary for such purpose; shall restrict disclosure of
the
Information to its employees and agents with a need to know; and shall advise
such employees and agents of the nondisclosure obligation assumed herein. Other
than as expressly permitted by this Agreement, the receiving party shall not
disclose Information to any third party without prior written approval of the
other party.
The
above
restrictions on the use or disclosure of Information shall not apply to any
Information:
| (a) |
which,
as established by the receiving party’s written records, is independently
developed by the receiving party or its affiliated company or lawfully
received free of restriction from another source having the right
to so
furnish such Information;
|
| (b) |
after
it has become generally available to the public without breach of
this
Agreement or any other agreement to which Company is a party;
|
| (c) |
which
the disclosing party agrees in writing is free of such restrictions;
or
|
| (d) |
was
in the receiving party’s possession as of the date of this
Agreement
|
Information
may be disclosed where a party is legally required to disclose such information,
including pursuant to a governmental or judicial order, provided that the
receiving party notifies the disclosing party of the pending disclosure prior
to
such disclosure, unless the disclosing party is legally or contractually
prohibited from doing so. Information may also be released to the Processor
to
the extent necessary and required to process transactions and service
Cardholder’s accounts as required pursuant to the Rules and
Regulations.
All
Information shall remain the property of the disclosing party and shall be
returned upon written request or upon the receiving party’s determination that
it no longer has a need for such Information.
The
parties acknowledge that in the event either party breaches the terms of this
Section 8.1, the non-breaching party shall be entitled to injunctive relief
in
addition to any other remedies that may be available to it at law or under
the
terms of the Agreement.
SECTION
8.2
-
Access
Unless
prohibited by applicable law, Company shall provide to Bank full access to
all
account information in whatever available form or medium necessary for Bank
to
perform its obligations hereunder and agrees to cooperate fully and promptly
with any reasonable request from a Regulatory Agency or Bank’s auditors or
compliance personnel to obtain any records, including inspection at Company’s
premises or the of premises any third party, which are related in any way to
this Agreement or Company’s ability to comply with its terms, provided that Bank
shall bear its own costs in connection with any such request.
SECTION
8.3
-
Return
of Materials
Each
party agrees that upon termination of this Agreement and the request of the
other party, it will send certification of its destruction of, or deliver to
the
other party, all written and tangible material in its possession which
incorporates any Confidential Information belonging to the other party, or
otherwise relates to the other party’s businesses, except that information which
must be retained as required by Regulatory Authority or System to comply with
retention guidelines.
ARTICLE
IX - GENERAL PROVISIONS
SECTION
9.1
-
Indemnification
(a) Company
covenants and agrees to indemnify and hold Bank, its parent or affiliates,
and
their respective officers, directors, employees, agents and permitted assigns
harmless, against any losses or expenses arising out of this Agreement including
but in no way limited to those arising from any legal action, claim, demand
or
proceedings brought against any of them as a direct result of; (1) any
negligence, fraud or willful misconduct by Company, its officers, directors,
employees, agents, merchants or Cardholders or their officers, directors,
employees or agents; (2) any action or omission of Company or its officers,
directors, employees or agents or action or omission by Cardholders or merchants
or their banks which violates any law, Regulation or Rule; (3) any claim
relating to obligations owed to or by Company or any third party retained by
it;
(4) actions taken by Bank in accordance with or in good faith reliance upon
information or instructions provided by Company or by its agents; (5) Company’s
or its agents failure to comply with any federal, state, or local laws or
Regulations, the Operating Rules or Rules; (6) the acts of omissions of the
Processor; (7) the breach of this Agreement by Company; and (8) any breach
of
the agreement between Company and Processor. This provision shall not apply
to
the extent such claim is the direct result of any gross negligence, fraud,
willful misconduct or material breach by Bank or to the extent the Bank is
obligated to provide indemnity under sub paragraph (b) below.
(b) Bank
covenants and agrees to indemnify and hold Company, its parent or affiliates,
and their respective officers, directors, employees, agents and permitted
assigns, harmless against any losses or expenses arising from any legal action,
claim, demand or proceedings brought against any of them to the extent they
are
the direct result of Bank’s (or its officers, directors, employees, or agents’)
breach of this Agreement, negligence, fraud or willful misconduct, or failure
to
comply with the Operating Rules, Rules, applicable laws or Regulations. This
provision shall not apply to the extent such claim arises out of any gross
negligence, fraud, willful misconduct, or breach by Company or its officers,
directors employees or agents or to the extent Company is obligated to provide
indemnity under sub paragraph (a) above.
(c) If
any
claim or demand is asserted against any party or parties (individually or
collectively, the “Indemnified Party”) by any person who is not a party to this
Agreement in respect of which the Indemnified Party may be entitled to
indemnification under the provisions of subsections (a) or (b) above, written
notice of such claim or demand shall promptly be given to any party or parties
(individually or collectively, the “Indemnifying Party”) from whom
indemnification may be sought. The Indemnifying Party shall have the right,
by
notifying the Indemnified Party within ten (10) business days of its receipt
of
the notice of the claim or demand, to assume the entire control (subject to
the
right of the Indemnified Party to Participate at the Indemnified Party’s expense
and with counsel of the Indemnified Party’s choice) of the defense, compromise
or settlement of the matter, including, at the Indemnifying Party’s expense,
employment of counsel of the Indemnifying Party’s choice. If the Indemnifying
Party gives notice to any Indemnified Party that the Indemnifying Party will
assume control of the defense, compromise or settlement of the matter the
Indemnifying Party will be deemed to have waived all defenses to the claims
for
indemnification by the Indemnified Party with respect to that matter. Any
damages to the assets or business of the Indemnified Party caused by a failure
of the Indemnifying Party to defend shall be included in the damages for which
the Indemnifying Party shall be obligated to indemnify the Indemnified
Party.
SECTION
9.2
-
Arbitration
In
the
event of any dispute between Bank and Company relating to this Agreement, or
their performance hereunder, Bank and Company agree that such dispute shall
be
resolved by means of binding arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association (the “AAA”), subject
to any modifications contained in this Agreement, and judgment upon the award
rendered by the arbitrator(s) may be entered in any court of competent
jurisdiction. The arbitration decision shall be binding upon the Bank and
Company. The arbitrator(s) shall be limited to awarding compensatory damages
and
shall have no authority to award punitive, exemplary or similar type damages.
The dispute shall be determined by one (1) arbitrator, except that if the
dispute involves an amount in excess of One Million Dollars ($1,000,000)
(exclusive of interest and costs), three (3) arbitrators shall be appointed
to
decide by majority vote unless the parties agree otherwise. The arbitrator(s)
shall be selected from panels maintained by the AAA unless the parties agree
otherwise. The determination of the arbitrator shall be binding upon the parties
and judgment upon the award rendered may be entered in any court having
jurisdiction thereof. The arbitrator(s) shall base the award on the applicable
law judicial precedent, which would apply if the Dispute were decided by a
United States District Court Judge sitting in California. The award shall be
in
writing and include the findings of fact and conclusions of law upon which
it is
based unless the parties agree otherwise. Notwithstanding the foregoing, no
party shall be prevented from seeking injunctive relief from a court of
competent jurisdiction in order to enforce this Agreement. Depositions may
be
taken and other discovery may be obtained during such arbitration proceedings
to
the same extent authorized in civil judicial proceedings. The arbitrator(s)
will
resolve any discovery disputes. The arbitrator(s) and counsel of record will
have the power of subpoena process as provided by law. Arbitration fees payable
to the arbitrator in advance of an award shall be paid equally by the parties
to
the dispute. The arbitrator(s) shall award recovery of all costs and fees
(including reasonable attorneys’ fees, administrative fees, arbitrator fees,
costs and expenses) to the prevailing party. The arbitrator(s) may also grant
provisional or ancillary remedies including, without limitation, injunctive
relief, attachment or the appointment of a receiver, either during the pendency
of the arbitration proceeding or as part of the arbitration award. The
arbitration shall be governed by the substantive laws of the State of California
without regard to conflicts of law rules. The arbitration proceedings shall
be
conducted in Palm Desert, California, unless the parties agree
otherwise.
SECTION
9.3
-
Disclosure
(a) Each
party shall promptly notify the other of any action, suit, proceeding, facts
and
circumstances, and the threat of reasonable prospect of same, which might give
rise to any indemnification hereunder or which might materially and adversely
affect either party's ability to perform this Agreement.
(b) Each
party represents and warrants to the other that it has no knowledge of any
pending or threatened suit, action, arbitration or other proceedings of a legal,
administrative or regulatory nature, or any governmental investigation, against
it or any of its affiliates or any officer, director, or employee which has
not
been previously disclosed in writing and which would materially and adversely
affect its financial condition, or its ability to perform this
Agreement.
SECTION
9.4
-
Legal
Compliance
Company
represents and warrants that it is familiar with the requirements of all
applicable laws, regulations Operating Rules and Rules, including but not
limited to federal and state consumer protection laws and agrees that it shall
be solely responsible for complying and causing all third parties to comply
with
all such laws and Regulations and all other applicable laws and Regulations
relating to its activities under this Agreement, now and in the future. Nothing
in this Section 9.4 shall relieve Company of its obligations under this
Agreement including, without limitation, the requirements of Section
2.
Without
limiting the generality of the foregoing and other terms and conditions herein,
Company’s obligations under this Agreement, including without limitation, its
responsibility for all legal compliance, shall in no way be affected, altered
and/or waived in the event Bank performs, exercises or fails to exercise, any
right, obligation, option, or otherwise, to provide instruction, guidance,
or
recommendations of any kind, and/or review, any aspect of the Program.
SECTION
9.5
-
Legal
Authority
Company
and Bank each represents and warrants to the other that it is a corporation
duly
organized and validly existing as of the date of this Agreement, that all
consents and approvals necessary for this Agreement to be valid and binding
on
it have been obtained, and that fulfillment of its obligations pursuant to
this
Agreement does not conflict with any provision of any state or Federal law
applicable to it or any other contract to which it is a party.
SECTION
9.6 - Force
Majeure
Neither
party shall be liable for any failure or delay on its part to perform, and
shall
be excused from performing any of its non-monetary obligations hereunder if
such
failure, delay or non-performance results in whole or in part from any cause
beyond the absolute control of the party, including without limitation, any
act
of God, act of war, riot, earthquake, fire, explosion, natural disaster,
flooding, embargo, sabotage, government law, ordinance, rule, regulation, order
or actions. Either party desiring to rely upon any of the foregoing as an excuse
for failure, default or delay in performance shall, when the cause arises,
give
to the other party prompt notice in writing of the facts which constitute such
cause; and, when the cause ceases to exist, give prompt notice thereof to the
other party. This Section 9.6 shall in no way limit the right of either party
to
this Agreement to make any claim against third parties for any damages suffered
due to said cause. If any performance under this Agreement is postponed or
extended for longer than sixty (60) calendar days Bank or Company may, by
written notice, terminate the Agreement immediately.
SECTION
9.7
-
Relationship
of Parties
Bank
and
Company agree they are independent contractors to each other in performing
their
respective obligations hereunder. Nothing in this Agreement or in the working
relationship being established and developed hereunder shall be deemed or is
intended to be deemed, nor shall it cause, Bank and Company to be treated as
partners, joint ventures, or otherwise as joint associates for
profit.
SECTION
9.8
-
Regulatory
Examinations and Financial Information
Company
agrees to submit to and cooperate fully and promptly with any examination that
may be required by any Regulatory Authority, Bank auditors or Bank’s compliance
personnel. Company shall also promptly provide to Bank any information, which
may be reasonably required by any Regulatory Authority or Bank’s auditors or
compliance personnel in connection with their audit or review of Bank or the
Program. Company shall promptly furnish Bank, at Company's expense, with
financial statements. Company shall also promptly provide such other information
as Bank may from time to time request with respect to the financial condition
of
Company and such other information as Bank may from time to time request with
respect to third parties retained by Company.
Bank
may
require an annual operational audit of Company’s operations to be performed by
the bank or a third party as designated by the Bank. All of expenses associated
with the performance of such an operational audit shall be the sole
responsibility of Company.
SECTION
9.9
-
Governing
Law
This
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the State of California. The parties hereby consent to service
of
process, personal jurisdiction, and venue in the state and federal courts in
Palm Desert, California or Riverside County, California.
SECTION
9.10
-
Survival
and Severability
All
representations and warranties and terms of this Agreement herein shall survive
any termination or expiration of this Agreement. In the event that any part
of
this Agreement is ruled by a court, Regulatory Authority (other than Bank),
or
other public or private tribunal of competent jurisdiction to be invalid or
unenforceable, such provision shall be deemed to have been omitted from this
Agreement. The remainder of this Agreement shall remain in full force and
effect, and shall be modified to any extent necessary to give such force and
effect to the remaining provisions, but only to such extent.
SECTION
9.11
-
Successors
and Third Parties
Except
as
limited by Section 9.12, this Agreement and the rights and obligations hereunder
shall bind, and inure to the benefit of the parties and their successors and
permitted assigns.
SECTION
9.12 - Assignments
The
rights and obligations of Company and Bank under this Agreement are personal
and
are not assignable either voluntarily or by operational law, without prior
written consent from the Bank, provided that Company may transfer, assign,
or
dispose of its rights or obligations under this Agreement without Bank’s consent
to a parent, affiliate, or subsidiary, or to any successor as a result of any
merger, consolidation, or other corporate reorganization of such party or any
sale of all of substantially all of the stock or assets of such
party.
SECTION
9.13
-
Notices
All
notices, requests, financial statements and approvals required by this Agreement
shall be in writing and shall be deemed to have been duly given as follows:
(i)
upon receipt if personally delivered; or (ii) upon deposit in the mail, if
sent
by certified or registered mail, postage prepaid, return receipt requested,
or
by overnight carrier, addressed as indicated below, or at such other address
of
which the notifying party hereafter receives notice in conformity with this
section.
To
Bank: Palm
Desert National Bank To
Company: ▇▇▇▇▇▇ Beaumont, Inc.
▇▇-▇▇▇
▇▇
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▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
▇▇▇ ▇▇▇▇▇▇ Attention:
▇▇▇▇ ▇▇▇▇▇▇, President
▇▇▇-▇▇▇-▇▇▇▇;
Fax: ▇▇▇-▇▇▇-▇▇▇▇ ▇▇▇-▇▇▇-▇▇▇▇
Fax: 941-
Email:
▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇ Email:
▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
SECTION
9.14
-
Waivers
Neither
party shall be deemed to have waived any of its rights, powers, or remedies
hereunder except in writing signed by an authorized agent or representative
of
the party to be charged. Either party may, by an instrument in writing, waive
compliance by the other party with any term or provision of this Agreement
on
the part of the other party to be performed or complied with. The waiver by
either party of a breach of any term or provision of this Agreement shall not
be
construed as a waiver of any subsequent breach.
Notwithstanding
the generality of the foregoing, and for illustrative purposes only, Bank and
Company shall not be deemed to have waived any of their respective rights as
a
result of any course of dealing or by its exercise or non-exercise of any right
of approval or recommendation or supply of information, including without
limitation, in the event that Bank has the right to review or approve any aspect
of any Program and declines and/or does not for any reason exercise or opt
to
exercise that right.
SECTION
9.15
-
Entire
Agreement and Amendments
This
Agreement constitutes the entire Agreement between the parties and supersedes
all prior Agreements, understandings, and arrangements, oral or written, between
the parties with respect to the subject matter hereof. This Agreement may not
be
modified or amended except by an instrument or instruments in writing signed
by
the party against whom enforcement of any such modification or amendment is
sought.
SECTION
9.16
-
Counterparts
This
Agreement may be executed and delivered by the parties in counterpart, each
of
which shall be deemed an original and both of which together shall constitute
the same instrument.
SECTION
9.17 - Exclusivity
The
Program covered under this Agreement are exclusive to the Bank, to the extent
that:
(a)
The
Bank’s Capital to Deposit ratio remains within compliance guidelines, in which
case bank will relinquish right of exclusivity;
(b) The
Bank
permits Company to continue to honor any current sponsorship agreements for
other programs.
THE
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
IN
WITNESS WHEREOF,
this
Agreement is executed by the parties as of the date and year first above
written.
October
25, 2006 PALM
DESERT NATIONAL BANK
Date
By:
/s/
▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇, Senior Vice President
October
24, 2006 ▇▇▇▇▇▇
BEAUMONT, INC.
Date
By:
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇
Name
and
Title: ▇▇▇▇▇
▇. ▇▇▇▇▇, Chief Executive Officer
ADDENDUM
TO
THIS
ADDENDUM TO STORED VALUE PREPAID CARD SPONSORSHIP AGREEMENT
(the
“Sponsorship Agreement”) of October 20, 2006, is made this 10th
day of
November, 2006, by and between ▇▇▇▇▇▇ Beaumont, Inc. (“Company”), a Nevada
corporation with its principal place of business located at ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and Palm Desert National Bank (“Bank”), a national
banking association with its principal place of business located at ▇▇-▇▇▇
▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, with reference to the following:
RECITALS
WHEREAS,
Company
and Bank entered
into the Sponsorship Agreement which sets forth the terms
whereby
the Bank provides stored value prepaid card sponsorship to Company to make
Cards
available to its individual clients; and
WHEREAS,
To
further clarify, append, revise and define various terms and conditions of
the
Sponsorship Agreement to wit the addition of;
NOW,
THEREFORE,
in
consideration of the mutual covenants and premises set forth below, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby
acknowledged, the parties agree as follows:
AGREEMENT
ARTICLE
2 - DUTIES OF COMPANY
SECTION
2.2 Scope
of Agreement
The
Parties agree to add Schedule A.1, as attached and made a part of this Addendum
by reference to the Parties’ Sponsorship Agreement.
SECTION
2.23 Sponsorship
Agreement in effect and defaults.
Except
as
expressly set forth herein, the Sponsorship Agreement shall remain in full
force
and effect, and all of the provisions of the Sponsorship Agreement, including
but not limited to all of the General Provisions of the Sponsorship Agreement,
shall apply with full force and effect to this Addendum.
Upon
the
occurrence of a default by a party of its obligations pursuant to the terms
of
either the Sponsorship Agreement or this Addendum, the non-defaulting party,
at
its sole and exclusive option, may declare that a default has occurred in
both
agreements, and the non-defaulting party may proceed to exercise any and
all of
its rights, powers and remedies under either or both of agreements, or otherwise
at law or in equity.
IN
WITNESS WHEREOF,
this
Addendum is executed by the parties as of the date and year first above
written.
November
10, 2006 PALM
DESERT NATIONAL BANK
Date
By:
/s/
▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇, Senior Vice President
November
10, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, INC.
Date
By:
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇
Name
and
Title: ▇▇▇▇▇
▇. ▇▇▇▇▇
Chief
Executive Officer