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EXHIBIT 10.31
CONFIDENTIAL TREATMENT REQUESTED UNDER 17 C.F.R. Sections 200.80(b)(4), 200.83
and 230.406.
PAYMENTECH MERCHANT SERVICES, INC.
CREDIT CARD PROCESSING SERVICES AGREEMENT
In consideration of the mutual promises herein made and the mutual benefits to
be derived from this AGREEMENT, the undersigned merchant (hereinafter referred
to as the MERCHANT, "you" or "your") and PAYMENTECH MERCHANT SERVICES, INC., a
Nevada corporation, having its principal office at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as PAYMENTECH, "we", "our" or "us") agree
to the following terms and conditions:
1. THE RELATIONSHIP: We facilitate the funds transfer between the various CARD
ORGANIZATIONs and you for CARD SALEs you make to your CARDHOLDER customers.
In a manner similar to the way personal checks are cleared, your CARD SALEs
and CREDITs are cleared according to the various CARD ORGANIZATIONs' rules
and regulations and federal, state and local law. It is the purpose of this
AGREEMENT to establish the legal relationship and contractual duties
required of the parties in order to comply with such rules, regulations and
laws. You will present all your SALES RECORDs to us for processing, except
as otherwise provided in writing, and we will process them in accordance
with the terms of this AGREEMENT.
2. SALES RECORD: Each CARD SALE must be evidenced by a single SALES RECORD
completed with the SALE DATE, the amount and a brief description of goods
and services sold or of the customer deposit tendered, in sufficient detail
to identify the transaction.
3. PRESENTMENT: You must present SALES RECORDs to us within three business
days of the SALE DATE for a CARD SALE or within three business days of the
date you receive the CARDHOLDER's returned merchandise, cancellation of
service, or a price adjustment request for a credit. Such SALES RECORDs
must be presented in an acceptable format and in compliance with the rules
of the CARD ORGANIZATIONs.
4. AUTHORIZATIONS: We will make an electronic authorization request for every
BANK CARD transaction and for those T&E CARD transactions which exceed the
floor limit set for you by the relevant T&E CARD company, but only if you
have not otherwise provided an authorization. We reserve the right to
refuse to process any SALES RECORD presented by you if we are unable to
obtain an authorization, if we reasonably determine that the SALES RECORD
is or will become uncollectible from the CARDHOLDER to which the CARD SALE
would otherwise be charged, or if we determine that the SALES RECORD was
prepared in violation of any provision of this AGREEMENT. The fact that
you or that we obtained an authorization will not be deemed to be our
representation that a particular CARD transaction is in fact a valid or
undisputed transaction entered into by the actual CARDHOLDER or an
authorized user of the CARD.
5. CREDIT FOR SALES RECORDS:
(a) For BANK CARD transactions, except as provided in Section 4, we will
initiate transfer of the NET PROCEEDS to your BANK ACCOUNT(S) not later
than three business days following our receipt of your SALES RECORDs. You
agree that the transfer of NET PROCEEDS to your BANK ACCOUNT(S)
constitutes provisional credit for your SALES RECORDs so long as any
CARDHOLDER has a dispute or challenge with respect to the SALES RECORD for
any reason.
(b) To the extent the NET PROCEEDS for any day are negative, we may pursue one
or more of the following options: (1) recoup all amounts due to us from
any funds otherwise due to you, including but not limited to the proceeds
from your next transmission of SALES RECORDs; (2) debit your BANK
ACCOUNT(S) for the amount of the negative balance; (3) delay presentation
of your CREDITs until you make a payment to use of a sufficient amount to
cover the negative balance; (4) collect the negative balance from any of
your accounts at your bank or at any other financial institution without
notice to you and (5) request (either orally or in writing) payment for
such amounts, and you agree to resolve any negative balance within one
business day of our advice to you of a negative balance.
(c) For T&E CARD transactions, we will forward the SALES RECORDs, including
the required authorization code, to the appropriate T&E CARD company. Your
receipt of the proceeds due you will be governed by whatever agreement you
have with that T&E CARD company, and we do not bear any responsibility for
their performance.
6. ACCOUNTING: Within three business days following the close of a business
day on which activity is submitted to us, we will supply a detailed
statement describing the elements of your NET PROCEEDS and your T&E CARD
transactions for that business day. We will not be responsible for any
error that you do not bring to our attention within thirty days from date
of such statement.
7. CARD ORGANIZATION RULES AND REGULATIONS AND FEDERAL, STATE AND LOCAL LAW:
By signing this AGREEMENT you agree to comply with all rules and
regulations of the CARD ORGANIZATIONs. You also agree to comply with all
provisions of federal, state and local law affecting CARD transactions.
Any failure by you to comply with a
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CARD ORGANIZATIONs' rules and regulations or federal, state or local law
applicable to any aspect of any CARD transaction is a breach of this
AGREEMENT that allows us to terminate this AGREEMENT immediately and
without prior notice to you.
8. YOUR WARRANTIES: You warrant and represent the following and reaffirm such
warranties and representations each time you present a SALES RECORD:
(a) Each SALES RECORD complies with the conditions and requirements of this
AGREEMENT.
(b) Each SALES RECORD is genuine and arises out of a bona fide CARD SALE of
merchandise or services by you and does not involve the use of a CARD for
any other purpose or the refinancing of existing obligations of the
CARDHOLDER.
(c) You have title to the SALES RECORD, and you have the authority to present
the SALES RECORD to us.
(d) To the best of your knowledge, no SALES RECORD is subject to any dispute,
set-off or counterclaim.
(e) The SALES RECORD has not and will not be presented for payment anywhere
else.
(f) Each SALES RECORD represents a valid obligation for the amounts set forth
therein.
(g) All statements on each SALES RECORD are true, and you have no knowledge of
facts that would impair the validity or collectibility of the amount of
the SALES RECORD.
(h) You have performed all of your principal obligations with respect to each
SALES RECORD including shipment of the order or fulfillment of the service
to the CARDHOLDER.
(i) You have reasonable procedures in place to ensure that each CARD SALE is
made to a purchaser who actually is the CARDHOLDER and to whom, upon
receiving an authorization from us, you actually sell the goods or
services and deliver them according to the CARDHOLDER's instructions.
(j) To the best of your knowledge, the goods described in each SALES RECORD
are your sole property and you are free to sell them.
(k) The CARD SALE does not violate your charter or by-laws or any applicable
federal, state or local laws or regulations.
(l) You have made no representations or agreements for the issuance of CREDIT
except as it states in your RETURN POLICY, which has been previously
submitted to us in writing.
9. LIABILITY FOR BREACH OF WARRANTIES: If any of your representations or
warranties in your APPLICATION, this AGREEMENT or in any paper or
documents submitted to us at any time is untrue at the time it is made,
this AGREEMENT may be terminated by us, in our sole discretion, immediately
upon notice to you.
10. ACCEPTANCE POLICIES: The CARD ORGANIZATIONs require strict adherence to
the following card acceptance policies:
(a) You do not increase the price or impose any other fee upon any customer
who uses a BANKCARD for payment of any transaction.
(b) You make no CARD SALEs when only a part of the consideration due is paid
through use of a BANKCARD except pursuant to a policy previously submitted
in writing to us.
(c) You prepare one and only one SALES RECORD per CARD SALE.
(d) You do not require a minimum transaction amount below which you refuse to
honor otherwise valid BANK CARDs.
(e) You do not sell, purchase, provide, or exchange BANK CARD account number
information in any form whatsoever other than to us or pursuant to an
official governmental request.
11. NOTICE TO PUBLIC: Wherever you accept CARDs, you will inform the public of
the CARDs that you honor.
12. RETURN POLICY:
(a) You are required to maintain a fair policy with regard to the exchange,
return and adjustment of CARD SALEs. Your policy must be applied equally
to all CARDHOLDERs and must be posted in your establishment or otherwise
disclosed to customers.
(b) You are required to submit your RETURN POLICY to us in writing prior to
the effective date of this AGREEMENT, and any subsequent change in your
RETURN POLICY must be submitted in writing to us not less than thirty days
prior to such change. We reserve the right to refuse to process any CARD
SALE made subject to a revised RETURN POLICY not acceptable to us.
13. REFUNDS AND CARDHOLDER PAYMENTS: If you allow a price adjustment, return of
merchandise or cancellation of services in connection with a CARD SALE, you
will prepare and deliver to us a CREDIT in accordance with this AGREEMENT.
The amount of the CREDIT cannot exceed the amount shown as the total on the
original SALES RECORD except by the exact amount required to reimburse the
CARDHOLDER for postage that the CARDHOLDER paid to return merchandise in
accordance with a policy that you apply consistently to all of your
customers. You are not allowed to accept
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cash or any other payment or consideration from a customer in return for
preparing a CREDIT to be deposited to the customer's CARD account nor to
give cash refunds to a CARDHOLDER in connection with a CARD SALE, unless
required by law.
14. PAYMENTECH PROCESSING PROCEDURES, FORMS AND FORMATS: You agree to comply
with our processing procedures, forms requirements and data processing
formats for timely and secure processing of SALES RECORDs under this
AGREEMENT.
15. RETRIEVAL REQUESTS: We will send you any RETRIEVAL REQUEST that we cannot
satisfy with the information we have on file concerning a CARD SALE. If you
notify us in writing by certified mail, return receipt requested, of the
resolution of your investigation of such a RETRIEVAL REQUEST within seven
business days after we send it to you, we will take the appropriate steps to
reduce the probability of the CARD ISSUER issuing an unjustified CHARGEBACK.
You acknowledge that your failure to comply with a RETRIEVAL REQUEST in
accordance with CARD ORGANIZATIONs' rules may result in an irreversible
CHARGEBACK of the subject CARD SALE.
16. CHARGEBACKS:
(a) You have full liability for all CHARGEBACKs. You may receive a CHARGEBACK
from a CARDHOLDER or CARD ISSUER for numerous reasons under the CARD
ORGANIZATION rules. The following are some of the most common reasons for
CHARGEBACKs:
(1) The return or non-delivery of goods or services.
(2) An authorization was required and not obtained.
(3) The CARD SALE date is after the CARD's expiration date.
(4) The SALES RECORD is produced incorrectly or fraudulently.
(5) We did not receive your response to a RETRIEVAL REQUEST within seven
business days.
(6) CARDHOLDER disputes the CARD SALE or signature on the SALES RECORD or
claims that the sale price is subject to a set-off, defense or
counterclaim.
(7) The CARDHOLDER refuses to make payment for a CARD SALE because in the
CARDHOLDER's good faith opinion, a claim or complaint has not been
resolved, or has been resolved by you but in an unsatisfactory manner
(Regulation Z).
(8) The CARD was not actually presented and the CARDHOLDER denies making
the purchase. The fact that you or that we obtained an authorization
does not mean that a particular CARD transaction is in fact a valid or
undisputed transaction entered into by the actual CARDHOLDER or an
authorized user of the CARD.
(9) A CREDIT is due to the CARDHOLDER and you have failed to submit a
CREDIT.
(b) We will recreate or retrieve all sales information needed to respond to
CHARGEBACKs with respect to SALES RECORDs. You are not allowed to re-submit
for processing any CARD SALE that has been previously charged back to you.
(c) If we determine that you are receiving an excessive amount of CHARGEBACKs,
we may review your internal procedures relating to acceptance of CARDs and
we may take one or more of the following actions: (1) notify you of new
procedures you should adopt; and (2) notify you of a new rate we will charge
you to process your CHARGEBACKs or (3) terminate the AGREEMENT, immediately.
For purposes of this AGREEMENT, an excessive number of CHARGEBACKs means one
CHARGEBACK per 100 SALES RECORDs or the total dollar amount of CHARGEBACKs
is greater than or equal to one percent of the total dollar amount of SALES
RECORDs for the last thirty days.
17. RECORDS RETENTION:
(a) In order to respond to RETRIEVAL REQUESTs and CHARGEBACKs, you are required
to (1) keep the order information from which the SALES RECORDs are derived
for at least six months from the date of the respective transaction; (2)
retain copies of all such data for three years from the date of the
respective transaction; and (3) furnish the same to us upon request. We will
keep the SALES RECORD information itself for you for the required time
period.
(b) You are not allowed to charge any fee for the creation or storage of copies
required under this AGREEMENT. We may require you to deliver original order
information to us rather than storing it.
18. CLAIMS OF CARDHOLDER CUSTOMERS: To the extent that we have paid or may be
called upon to pay a CHARGEBACK or CREDIT for or on the account of a
CARDHOLDER and reimbursement is not made by you as provided in this
AGREEMENT, then for the purpose of our obtaining reimbursement of such sums
paid or anticipated to be paid, we have all of the rights and remedies of
such CARDHOLDERs under applicable federal, state or local law and you
authorize us to assert any and all such claims in our own name for and on
behalf of any such CARDHOLDER customer individually or all such CARDHOLDER
customers as a class.
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19. [INTENTIONALLY DELETED]
20. RESERVE ACCOUNT: In the event of the occurrence or threat of a material,
adverse change in [**] or of another event as the result of which [**] or
that you may be liable to [**] we have the right to (a) immediately place
payments due you in the RESERVE ACCOUNT and/or stop processing SALES
RECORDs for you until such time as [**] and (b) demand from you an amount
to be placed in a RESERVE ACCOUNT that our experience dictates to assure
payment of such liability. Your failure to pay such amount allows us to
terminate this AGREEMENT immediately.
21. INFORMATION ABOUT MERCHANT'S BUSINESS: You agree to furnish us within five
days your most recently prepared financial statements and credit
information as we may from time to time request. With prior notice and
during your normal business hours our duly authorized representatives may
visit your business premises and may examine your books and records that
pertain to your SALES RECORDs and CARD SALEs. You agree to provide us at
least thirty days' prior written notice of your intent to change the basic
nature of your business or your product line or services, your trade name
or style, or the manner in which you accept CARDs. If we, in our sole
discretion, determine such a change is material to our relationship with
you, we reserve the right to refuse to process SALES RECORDs made pursuant
to the change and we may terminate this AGREEMENT. You will also give us
prompt notice of any potential material adverse change to your business.
You agree to provide us with prompt written notice if you or any of your
parent/principals, subsidiary or affiliated entities are the subject of
any voluntary or involuntary bankruptcy or insolvency petition or
proceeding.
22. LIMITED LIABILITY: We will, at our own expense, correct any data in which
(and to the extent that) errors have been caused by us, or by malfunctions
of our software or machines. However, subject to Section 6, the expense of
correcting such data will be our only responsibility in connection with
such errors or in connection with any other performance or nonperformance
by us under this AGREEMENT. Under no circumstances will our financial
responsibility for our failure of performance under this AGREEMENT [**]. IN
NO EVENT WILL WE, OUR EMPLOYEES OR AFFILIATES, BE LIABLE FOR SPECIAL,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OR CLAIMS BY MERCHANT OR ANY THIRD
PARTY RELATIVE TO THE TRANSACTIONS HEREUNDER.
23. CONFIDENTIALITY:
(a) In performing the services described in this AGREEMENT, we may have access
to and receive certain information about you which you designate to be
proprietary including, but not limited to financial and sales information,
customer lists. Such information will be used solely in connection with
our obligations under this AGREEMENT, we will receive such information in
confidence and not disclose such information to any third party except to
the extent that such information is already public or as required by legal
process. We shall, however, be permitted to publish the fact that you are
using our processing services. We will use our reasonable efforts to
ensure compliance with the terms of this Section 23 by our employees and
will restrict the number of our employees with access to this information.
Furthermore, all employees of PAYMENTECH and its affiliates are required
to sign a confidentiality statement as a condition of employment.
(b) In receiving the services described in this AGREEMENT, you may receive
access to and disclosure of certain confidential information about us
which we consider to be proprietary, including but not limited to our
LICENSED PROGRAMS (defined in Section 24) and our Pricing Schedule. You
agree that such information will be used solely in connection with your
obligations pursuant to this AGREEMENT, and that you will receive such
information in confidence and will not disclose such information to any
third party except to the extent that such information is already public
or as required by legal process. You agree this AGREEMENT, schedules
(including pricing) and addenda are designated as confidential. You will
use your best efforts to ensure compliance with the terms of this Section
23 by your employees and will restrict the number of your employees with
access to this information.
(c) In addition, you will exercise reasonable care to prevent disclosure of
CARDHOLDER information, including, but not limited to, storing all media
containing CARD numbers in an area limited to selected personnel. Prior to
discarding material
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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containing CARDHOLDER information, you will destroy it in a manner rendering
the data unreadable. If at any time you determine that CARDHOLDER
information has been compromised, you must notify us immediately.
24. LICENSED PROGRAMS:
(a) LICENSED PROGRAMS are our proprietary computer programs that we provide for
your use pursuant to the requirements of this AGREEMENT, including without
limitation, for the purpose of transmitting SALES RECORDs to us and
receiving report from us. All programs that we provide to you now and in the
future are proprietary to us and licensed to you on a non-exclusive basis
governed by, and only for the term of, this AGREEMENT. You acknowledge that
the license granted herein is limited to your own use exclusively and that
you do not have the right to sub-license any of the LICENSED PROGRAMS in
either their original or modified form. The original and any copies of
LICENSED PROGRAMS made by you in whole or in part, are our property. You may
modify any LICENSED PROGRAM in machine readable form for your own use and
merge it into other program material to form an updated work, provided that,
upon termination of this AGREEMENT, the LICENSED PROGRAM must be completely
removed from the updated work and treated as if permission to modify had
never been granted.
(b) We represent and warrant that your use of the LICENSED PROGRAMS and any
documentation provided by us pursuant to this AGREEMENT, as contemplated
herein, will not violate any copyright, patent, trade secret, or trademarks
of any person. We will defend (or settle) at our own expense any and all
claims that the above items infringe a trademark, copyright, trade secret,
or patent, if you give us prompt notice of any such claim or lawsuit against
you relating to the LICENSED PROGRAMS or documentation. If your use of the
LICENSED PROGRAMS is prevented by any legal process, we will procure for you
the right to continue to use the LICENSED PROGRAMS, or modify the LICENSED
PROGRAMS so that they are no longer infringing, or replace the LICENSED
PROGRAMS with non-infringing software of equal or superior functional
capability.
(c) EXCEPT AS PROVIDED IN THIS SECTION, PAYMENTECH GRANTS NO WARRANTIES, EITHER
EXPRESS OR IMPLIED, ON ANY LICENSED PROGRAM OR ANY SERVICE PROVIDED UNDER
THIS AGREEMENT, INCLUDING ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT WILL PAYMENTECH BE LIABLE FOR
CONSEQUENTIAL OR INCIDENTAL DAMAGES EVEN IF PAYMENTECH HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.
25. INDEMNITY:
(a) We agree to indemnify you from any liability, loss or expense arising out of
any claim or complaint by CARDHOLDER related to any failure by us to
properly safeguard the CARDHOLDER's information. This indemnification does
not apply to any claim or compliant relating to merchandise or services sold
by you or your failure to resolve a payment dispute. We agree to indemnify
you from any loss due to our mismanagement of funds transferred to you. The
indemnification provided for in this Section 25(a) is subject to Section 22.
(b) You agree to indemnify us from any liability, loss or expense arising out of
any claim, complaint, offset or CHARGEBACK made by a CARDHOLDER with respect
to any SALES RECORD for merchandise or services which are the subject of any
CARD SALE made by you. Also, you agree to indemnify us for any loss caused
by your violation of a CARD ORGANIZATION's rules or regulations or federal,
state or local laws or by your willful misconduct or negligence.
26. EVENTS OF DEFAULT: Upon the occurrence of any one or more of the following
events of default, we may terminate this AGREEMENT without notice or demand,
in addition to exercising our rights and remedies upon default, as set forth
in Section 27. The occurrence of any such event of default also constitutes
a default under all other agreements between us.
(a) Failure to pay when due any amount owing by you to us;
(b) Failure to promptly, punctually, and faithfully perform or discharge any of
your obligations to us;
(c) We determine that any representation or warranty now or hereafter made by
you to us, whether herein or in any other document, instrument, agreement or
paper was not true or accurate when given;
(d) The occurrence of any event of default under any agreement between you and
us even though we may not have exercised our rights upon default under the
other agreement, instrument, or paper;
(e) The application for or appointment of a receiver, trustee, or other person
(pursuant to court action or otherwise) over all or any part of your
property; the assignment of all or part of your assets for the benefit of
your creditors, or the occurrence of any voluntary or involuntary
liquidation; or the entry of an order for relief or similar order with
respect to you in any proceeding pursuant to any statute dealing with
bankruptcy;
(f) The entry of any material judgment against you, which judgment is not
satisfied or appealed from within fifteen days of such judgment's entry;
(g) The service of any process upon us seeking to attach or garnish any of your
funds in our possession;
(h) Your termination of existence, dissolution, winding up, or liquidation;
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(i) The occurrence of any event of circumstance with respect to you and/or the
SALES RECORDs such that we deem ourselves insecure;
(j) Your business failure; or a material, adverse change in your financial
condition; or
(k) The occurrence of any of the foregoing events of default with respect to any
guarantor to us of this AGREEMENT, as if such guarantor were "you".
27. RIGHTS AND REMEDIES UPON DEFAULT: Upon the occurrence of any event of
default, and at any time thereafter, we have all of the rights and remedies
as provided in this AGREEMENT in addition to which we may sell or otherwise
dispose of the SALES RECORDs and other collateral and apply the proceeds
thereof for application towards (but not necessarily in complete
satisfaction of) the obligations due to us or for which we may be liable to
third parties, including without limitation CARDHOLDER customers. The
proceeds will be applied toward your obligations to us in such order and
manner as we determine in our sole discretion, any statute, certain or
vague, to the contrary notwithstanding. You remain liable to us for any
deficiency remaining following such application.
28. FEES:
(a) You agree to pay us for our services as set forth in Schedule A in
accordance with this AGREEMENT. You acknowledge that your pricing is based
on your representation as to your volume of CARD transactions, method of
processing, type of business, and interchange qualification criteria as
represented in your APPLICATION and Schedule A. To the extent your actual
volumes, method, type and criteria differ from this information, we may
modify the pricing set forth on Schedule A or terminate this AGREEMENT with
thirty days' prior written notice.
(b) In addition to the above, from time to time, we may change our fees, charges
and discounts resulting from increases in CARD FEES or the charges of any
third party vendor by giving you notice of the change.
(1) Any price change that is caused by changes in the CARD FEEs will be
applicable to you as of the effective date established by the CARD
ORGANIZATION. Your presentation of any SALES RECORD to us after the
effective date will constitute your acceptance of the new prices.
(2) As to any price change not caused by CARD ORGANIZATION increases, we
will provide you with at least thirty days' notice of the effective
date of this price change. Your presentation of any SALES RECORD to us
after the effective date will constitute your acceptance of the new
prices. Should you choose not to accept the new prices you agree to
notify us, within fifteen days of our price change notice, of your
intent to terminate this AGREEMENT. Such termination shall be effective
thirty days from the date of your written notice to us.
(c) If you terminate this AGREEMENT prior to the expiration of the original or
any renewal term for a reason other than price change or material breach,
you agree that the future harm to us would be difficult to calculate.
Accordingly, in the event of your early termination of this AGREEMENT for
any reason other than an increase in your PROCESSING FEES as provided in
Section 28(b)(2), in order to compensate us for our loss and not as a
penalty, you agree to pay to us as liquidated damages an amount calculated
by multiplying the average monthly PROCESSING FEES from the prior six months
by the number of months remaining in the contract term. Such amount will be
funded, to the extent possible, according to the same methods for collecting
amounts due under Section 5 hereof.
(d) We process all SALES RECORDs in a manner so that each transaction will have
the potential to qualify under the rules of the CARD ORGANIZATIONs for the
reduced CARD FEEs charged by the CARD ORGANIZATIONs. These reduced rates are
known as qualifying rates. For those SALES RECORDs that cannot qualify, the
standard interchange rate will apply, which includes a non-qualification
surcharge for those transactions. If we determine that an excessive amount
of SALES RECORDs do not qualify, we may review your internal procedures
relating to acceptance of CARDs, and we may notify you of new procedures you
should adopt. For purposes of this AGREEMENT, an excessive number of SALES
RECORDs which do not qualify for QUALIFYING RATES is 2 per 100 SALES
RECORDs.
29. TERM; TERMINATION:
(a) This AGREEMENT takes effect when signed by PAYMENTECH and has an initial
term expiring one year from the effective date. At our option, this
AGREEMENT automatically becomes null and void if you fail to [**] from the
effective date. Unless otherwise terminated by either party as provided in
this Agreement, the AGREEMENT will automatically extend for successive one
year terms. Either party may give notice of non-renewal of this AGREEMENT in
writing no less than [**] prior to any expiration date. Also, we may
terminate if a [**]. Termination does not affect either party's respective
rights and obligations under this AGREEMENT as to SALES RECORDs submitted
before termination, nor does it affect either party's rights and obligations
under Sections 5, 15, 16, 17, 18, 19, 20, 22, 23, 24, 25, 27, 28, 29, and
30, all of which continue without limit as to time.
(b) Upon termination by either party for any reason, you will be required to
[**].
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
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Such [**] will be funded, to the extent possible, with [**] otherwise
payable to you under [**]. To the extent such [**] are insufficient, you
will fund the [**] directly according to the same methods for [**] of this
AGREEMENT. You will have no right to return of the funds in the [**] until
[**] In addition, and notwithstanding the lack of outstanding obligations
by you at the termination of this AGREEMENT, we are authorized to retain
[**] after termination of this Agreement or for such longer period of time
as we reasonably determine to be necessary.
30. GENERAL:
(a) APPLICATION AND CREDIT CHECK. All statements made on your APPLICATION for
this AGREEMENT are true as of the date of your execution of this
AGREEMENT. You have no reason to suspect any fact or circumstance not
specified therein which, if known to us, might prevent us from executing
this AGREEMENT. Your signature on this AGREEMENT authorizes us to perform
any credit check deemed necessary of MERCHANT, its principals and
Guarantors.
(b) SECTION HEADINGS: The section headings of this AGREEMENT are for
convenience only and do not define, limit or describe the scope or intent
of this AGREEMENT.
(c) ASSIGNMENT: You cannot assign or transfer your rights or delegate your
responsibilities under this AGREEMENT without our prior written consent.
(d) SUCCESSORS AND ASSIGNS: This AGREEMENT binds you and us and our respective
heirs, representatives, successors and assigns.
(e) SEVERABILITY: Should any provision of this AGREEMENT be determined to be
invalid or unenforceable under any law, rule or regulation, such
determination shall not affect the validity or enforceability of any other
provision of this AGREEMENT.
(f) WAIVERS: No term or condition of this AGREEMENT may be waived unless a
written waiver is signed by both parties.
(g) ENTIRE AGREEMENT: This AGREEMENT including any schedules or addenda
constitutes the entire AGREEMENT between both parties.
(h) NOTICES: Except as otherwise provided in this AGREEMENT, all notices must
be given in writing and either hand delivered, faxed, or mailed first
class, postage prepaid (and deemed to be delivered when mailed) to the
addresses set forth below or to such other address as either party may
from time to time specify to the other party in writing. If said notice is
to PAYMENTECH, in addition to the address below, a copy of the notice
shall also be sent to Paymentech Merchant Services, Inc., Attn: General
Counsel, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
(i) GOVERNING LAW: This AGREEMENT will be governed by and construed in
accordance with the laws of the State of Texas. Any action, proceeding,
litigation or arbitration relating to or arising from this AGREEMENT must
be brought in Dallas County, Dallas, Texas.
(j) ATTORNEYS' FEES: In any action to enforce your obligations under this
AGREEMENT, you will be liable for all of our costs, expenses and
reasonable attorney's fees.
(k) FORCE MAJEURE: We will not be liable for delays in processing or other
nonperformance caused by such events as fires, telecommunications or
utility or power failures, equipment failures, labor strife, riots, war,
nonperformance of our vendors or suppliers, acts of God, or other causes
over which we have no reasonable control.
31. DEFINITIONS:
(a) AGREEMENT refers to this Credit Card Processing Services Agreement,
Application and all schedules, related addenda and amendments, notices and
revisions as well as the APPLICATION.
(b) APPLICATION is your statement of the characteristics of your account that
you have submitted to us to induce us to enter into this AGREEMENT with
you and that has induced us to process your CARD transactions under the
terms and conditions of this AGREEMENT.
(c) BANK ACCOUNT(s) is/are your account(s) in your bank to which we will
transfer your NET PROCEEDS.
(d) BANK CARD is either a MasterCard, VISA or JCB CARD or such other CARD as
we may hereafter designate.
(e) CARD is both the plastic card or other evidence of the account issued by a
CARD ISSUER to the CARDHOLDER and the account number designated on the
CARD, either of which you accept from your customers as payment for their
purchases from you.
(f) CARD FEE is the interchange fee and assessments charged by a CARD
ORGANIZATION. This fee will increase or decrease as a result of changes in
the fees or assessments set by the various CARD ORGANIZATIONs.
(g) CARDHOLDER is the person to whom the CARD is issued and who is entitled to
use the CARD.
(h) CARD ISSUER is the bank that issues BANK CARDs or the T&E CARD company
that issues T&E CARDs.
(i) CARD ORGANIZATION is a BANK CARD interchange system, such as the systems
operated by MasterCard International, Inc. and Visa, Inc.
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
7
8
(j) CARD SALE is a sale made by you paid for by a CARD as of the SALE DATE.
Each order you receive is a single CARD SALE unless the goods or services
ordered cannot be delivered or completed at one time, in which case each
partial deposit, delivery or completion is a later CARD SALE.
(k) CHARGEBACK is a charge against a SALES RECORD you previously presented.
(l) CREDITs are submitted by you to us to offset specific SALES RECORDs
previously presented by you.
(m) MERCHANT is the party to this AGREEMENT contracting with PAYMENTECH whose
correct legal name, legal identity, legal and business address or
addresses and all trade names are set forth in the APPLICATION.
(n) NET PROCEEDS is the net positive or negative amount of your CARD
transaction consisting of (1) the amount of the SALES RECORDS minus the
CARD FEE (2) Less the amount of CREDITs minus the CARD FEE (3) Less the
CHARGEBACK amounts (4) Less the PROCESSING FEES (5) Less amounts to be
credited to the RESERVE ACCOUNT. These items are not necessarily applied
in this order.
(o) PROCESSING FEES are the fees we charge you for our services as specified
in Schedule "A", as may be amended from time to time.
(p) RESERVE ACCOUNT is an account that we may establish on our records for our
accounting requirements and benefit pledged by you to secure payment to
us of any and all amounts which may be due from you to us and for the
benefit of your CARDHOLDER customers. Any and all funds credited to the
RESERVE will be subject to disbursement only by us. You have no interest
in the RESERVE ACCOUNT until your receipt thereof. The RESERVE ACCOUNT
secures our PROCESSING FEES and any other sums as may be due to us, under
this AGREEMENT and all other agreements between us, including CHARGEBACKs
and CREDITs and the claims of CARDHOLDERs arising from CARD SALEs, and you
hereby grant to us a security interest in all funds in our possession at
any time.
(q) RETRIEVAL REQUEST is a request for information on behalf of a CARDHOLDER
or CARD ISSUER relating to a claim or complaint concerning a CARD SALE you
have made.
(r) RETURN POLICY is that policy established by you for the issuance of
CREDITs to refund specific SALES RECORDs.
(s) SALE DATE is the effective date of the CARD SALE at which time you have
performed all principal obligations to the CARDHOLDER in connection with
a transaction, including shipment or delivery of goods or services.
(t) SALES RECORD is a transaction representing a CARD SALE or CREDIT that you
submit to us for authorization and processing.
(u) T&E CARD is a Travel and Entertainment CARD issued by American Express,
Novus/Discover, ▇▇▇▇▇ ▇▇▇▇▇▇▇, Diner's Club, or such other T&E CARD as we
may designate in the future.
YOUR SIGNATURE ON TWO COPIES OF THIS AGREEMENT THAT YOU RETURN TO US INDICATES
YOUR UNDERSTANDING AND ACCEPTANCE OF ITS TERM AND CONDITIONS. WE WILL THEN
INDICATE OUR ACCEPTANCE OF THE AGREEMENT BY RETURNING ONE FULLY EXECUTED COPY TO
YOU, AND TWO SIGNED COPIES OF SCHEDULE A OR OTHER ADDENDA THAT ARE INCORPORATED
HEREIN.
AGREED AND ACCEPTED BY: AGREED AND ACCEPTED BY:
GENERAL MAGIC, INC. PAYMENTECH MERCHANT SERVICES, INC.
-------------------------------------
MERCHANT LEGAL NAME (Print or Type)
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------------- Salem, NH 03079-1952
Street Address (Print or Type)
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
-------------------------------------
City, State Zip (Print or Type)
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------- ----------------------------------
By (authorized signature) By (authorized signature)
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Group Manager
-------------------------------------
By, Name, Title (Print or Type)
August 18, 1998 9/1/98
------------------------------------- ----------------------------------
Date Date
To Be Completed By Paymentech Merchant Services, Inc.
Your Merchant Agreement Contract Number is: 824466-3683
-----------
Your Merchant Processing Identification Number
Will Be Provided At Time of Processing Set Up
REVISION 01/98 V.8
8
9
PAYMENTECH MERCHANT SERVICES, INC.
CREDIT CARD PROCESSING SERVICES AGREEMENT
SCHEDULE A
MERCHANT NAME: GENERAL MAGIC, INC.
MERCHANT AGREEMENT CONTRACT NUMBER: 824466
The average value of MERCHANT's CREDIT CARD transactions will be $50.00.
MERCHANT will process approximately 19,000 CREDIT CARD transactions annually.
PROCESSING FEES
Per CREDIT CARD SALES DRAFT and CREDIT $[**]
Per T&E Card SALES DRAFT and CREDIT $[**]
Per MCI, VISA or T&E CPU (Central Processing Unit) Authorization $[**]
Per Voice Authorization $[**]
Per Voice AVS (Address Verification Service) Authorization $[**]
Per Audio Response Unit Authorization $[**]
Monthly Maintenance $[**]
Monthly Paper Reporting Fee $[**]
Per MCI and VISA CHARGEBACK Processed/Represented $[**]
Collection, Pre-Arbitration & Compliance $[**]
ACH (Automated Clearing House) Funds Transfer $[**]
Network Administration Fee $[**]
Postage, Supplies, Equipment & Other Services Charged as used
Supplemental Products Quoted as Requested
Other Communication Services (Frame Relay Telco Cost) Quoted as Requested
If on any business day, MERCHANT's NET PROCEEDS are negative, any such
amounts shall be collected from MERCHANT's designated bank account via ACH.
SET UP FEES:
Computer to Computer Direct Access (CPU) Set up $[**]
NEGATIVE BALANCE
MERCHANT shall be charged a fee against NET PROCEEDS after the number of
Negative Balances for a calendar month has exceeded two (2) based on the
following schedule.
Negative Balance Amount Fee Per Occurrence
----------------------- ------------------
$[**] $[**]
$[**] $[**]
$[**] $[**]
$[**] $[**]
$[**] $[**]
$[**] $[**]
$[**] $[**]
If a Negative Balance results when any fees are assessed, section 7 shall apply.
-------------------------------------------------------------------------------
Dated Printed June 22, 1998
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
10
PAYMENTECH MERCHANT SERVICES, INC.
CREDIT CARD PROCESSING SERVICES AGREEMENT
SCHEDULE A (CONTINUED)
MERCHANT NAME: GENERAL MAGIC, INC. AGREEMENT NUMBER 824466
[**]
We shall [**] BANK CARD SALES DRAFTs, a [**], as indicated below, that
shall be [**] to a [**]. We shall [**] a [**] to the [**] and provide to
MERCHANT a periodic accounting which, relates by month: i) the amount of
BANK CARD SALES DRAFTs, submitted, ii) the [**], iii) the amounts of [**]
to and [**] submitted and iv) the resulting [**] balance. On a monthly
basis, and no later than fifteen (15) days following the sixth full
calendar month [**], we shall [**] MERCHANT any [**] in the [**] that
exists for the sixth month prior to a current reporting period, subject to
all other terms and conditions herein.
If any periodic accounting shows that a [**] associated with any given
month, becomes or is projected to [**], we shall [**] by [**] MERCHANT
and/or [**] the amounts necessary to [**]. Upon notice from us, MERCHANT
shall [**] within one (1) business day by wire transfer. We may increase
the [**] as it appears to be necessary [**].
[**] [**]%
ACTIVITY PARAMETERS
Maximum Average Ticket of $[**]
DAILY WEEKLY
----- ------
Total BANK CARD SALES DRAFTs $[**] $[**]
Total BANK CARD CREDITs $[**] $[**]
In any case wherein MERCHANT exceeds the above parameters, PAYMENTECH
shall make every reasonable attempt to contact the MERCHANT and advise
MERCHANT of such occurrence, and PAYMENTECH may exercise its rights under
paragraph 21. Failure to contact MERCHANT or exercise any rights of
PAYMENTECH, in no way waives any rights or remedies of PAYMENTECH under
this AGREEMENT at any time.
YOUR SIGNATURE ON TWO COPIES OF THIS ADDENDUM THAT YOU RETURN TO US INDICATES
YOUR UNDERSTANDING AND ACCEPTANCE OF ITS TERMS AND INCORPORATION BY REFERENCE
IN THE PAYMENTECH MERCHANT SERVICES, INC. CREDIT CARD PROCESSING SERVICES
AGREEMENT.
AGREED AND ACCEPTED BY: AGREED AND ACCEPTED BY:
General Magic, Inc. PAYMENTECH MERCHANT SERVICES, INC.
--------------------------------------- -----------------------------------------------
MERCHANT LEGAL NAME (Print or Type)
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
--------------------------------------- -----------------------------------------------
Address (Print or Type)
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------- -----------------------------------------------
By (authorized signature) By (authorized signature)
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, CFO ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Group Manager
--------------------------------------- -----------------------------------------------
By, Name, Title (Print or Type) By, Title (Print or Type)
August 18, 1998 9/1/98
--------------------------------------- -----------------------------------------------
Date Date
--------------------------------------------------------------------------------
Date Printed June 22, 1998
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
11
PAYMENTECH MERCHANT SERVICES, INC.
CREDIT CARD PROCESSING SERVICES AGREEMENT SCHEDULE A -- CONTINUED
MERCHANT NAME: GENERAL MAGIC, INC. AGREEMENT NUMBER: 824466
CARD FEES
FOR DIRECT MARKETING DEPOSITS:
MASTERCARD PASS THROUGH FEES FOR DIRECT MARKETING DEPOSITS
CLASSIFICATION EFFECTIVE 3/27/98
Merit I [**]
Standard [**]
US Corporate Data Rate II [**]
US Corporate Data Rate I [**]
US Corporate Standard [**]
US Corporate Large Ticket [**]
International Corporate Purchasing Large Ticket [**]
International Corporate Purchasing Data Rate II [**]
International Corporate Purchasing [**]
International Corporate [**]
International (Standard) [**]
MasterCard Dues & Assessments [**]
VISA PASS THROUGH FEES FOR DIRECT MARKETING DEPOSITS
CLASSIFICATION EFFECTIVE 3/27/98
CPS Card Not Present [**]
EIRF [**]
Key-Entered Emerging Markets [**]
VISA Commercial Card (Electronic/Key Entered) [**]
VISA Commercial Card (Standard) [**]
Standard [**]
Visa Dues & Assessments [**]
FOR DETAIL DEPOSITS:
MASTERCARD PASS THROUGH FEES FOR RETAIL DEPOSITS
CLASSIFICATION EFFECTIVE 3/27/98
Merit III [**]
Key-Entered [**]
Merit I [**]
Standard [**]
US Corporate Face-to-Face [**]
US Corporate Data Rate II [**]
US Corporate Data Rate I [**]
US Corporate Standard [**]
US Corporate Large Ticket [**]
US Corporate T&E [**]
International Corporate Purchasing Large Ticket [**]
International Corporate Purchasing Data Rate II [**]
International Corporate Purchasing [**]
International Corporate [**]
International (Electronic) [**]
International (Standard) [**]
World Card T&E [**]
MasterCard Dues & Assessments [**]
VISA PASS THROUGH FEES FOR RETAIL DEPOSITS
CLASSIFICATION EFFECTIVE 3/27/98
CPS Retail Credit Card [**]
CPS Retail Check Card [**]
CPS Retail 2 (Key-Entered) [**]
Key-Entered Emerging Markets [**]
EIRF [**]
VISA Commercial Card (Electronic/Key Entered) [**]
VISA Commercial Card (Standard) [**]
Standard [**]
Visa Dues & Assessments [**]
JCB CARD FEEs [**]%
--------------------------------------------------------------------------------
Dated Printed June 22, 1998
[**] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS.
