EXHIBIT 10.18
MERCHANT SERVICES AGREEMENT
This Agreement made as of the 27th day of April 2002 between Global Payments
Direct, Inc. (hereinafter referred to as "Global") with principal offices
located at Four ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ and Online Data Corp.
(hereinafter referred to as "ISO") with principal offices located at ▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
In consideration of the mutual promises hereinafter set forth, the parties
hereby agree as follows:
A. MERCHANTS
ISO will market Global's merchant processing services to merchants. Global
will provide ISO with the Global credit policies and ISO agrees to use its
best efforts not to accept any merchant application which does not meet
Global's credit criteria ISO will prescreen all potential merchants and
submit to Global a complete application package containing the findings in
the pre-screening process. Global will use reasonable efforts to accept or
decline any such merchant within two business days of receipt of a
completed application by Global's credit department. Global may refuse to
accept any such merchant and such decision shall be at the sole discretion
of Global. A referred merchant shall be considered accepted when (1) it
has been approved by Global, and (2) it has a fully executed merchant
agreement (the "Merchant Agreement") between the merchant, Global, and a
member of MasterCard and Visa (if required by the applicable card
association network). Any such accepted merchant shall hereinafter be
referred to as a Merchant.
B. SERVICES
1. Credit Review. Global will provide on-going credit review for all
Merchants. Upon request from Global, ISO will reasonably assist
Global in obtaining and providing updated financial information from
any Merchant.
2. Collections. Global will make reasonable attempts at collecting any
amount owed by a Merchant under its Merchant Agreement but ISO will
reasonably assist Global, as requested, in such collection efforts.
Subsequent to Global's receipt of payment from ISO, as set forth
herein, of any amount due to Global from a Merchant under a Merchant
Agreement, Global will promptly assign to ISO the account receivable
resulting from the unpaid obligation of the Merchant, allowing ISO
to assume the collection efforts associated with the unpaid Merchant
obligation.
3. (a) Chargebacks and Credit Losses. Global agrees to use reasonable
efforts to process retrieval requests and chargebacks relating to
Merchants in an expeditious manner. ISO shall bear any and all
losses, costs, or expenses, including reasonable outside attorney's
fees, arising from or related to all chargebacks and credit losses
in respect of any Merchant Agreement, including the principal amount
of all chargebacks and credit losses. An amount equal to ISO's
liability for the chargebacks, credit losses, costs and expenses
referenced above will be deducted by Global each month from the
Reserve Account identified below in Section 3(b), and/or from ISO's
monthly payment due from Global hereunder and defined as
Compensation in Section D below. If the ISO's liability for such
losses cannot be satisfied each month through deductions from the
Reserve Account and/or from ISO's Compensation due from Global
hereunder, ISO will promptly pay the entire amount or any balance
due for the applicable month to Global within ten (10) business days
of Global's request for such payment. This Section shall survive
termination of this Agreement.
(b) Reserve Account & Compensation Deductions/Security Interests.
(i) Global shall establish a deposit account (the "Reserve Account")
to secure the performance of ISO hereunder. The Reserve Account
shall be funded in the following manner: ISO shall fund the Reserve
Account in the amount of $30,000 upon execution of this Agreement.
In addition, at such time that ISO's gross monthly bankcard volume
processed hereunder equals or exceeds $60,000,000, then, commencing
in the month that the referenced volume is met and each month
thereafter, Global shall debit from the Compensation payable to ISO
hereunder and deposit into the Reserve Account that amount necessary
to maintain the Reserve Account in an amount which is equal to
$30,000 plus five (5) basis points of the gross dollar volume of the
aggregate Merchant transactions processed during the two (2) months
preceding the date of the monthly debit. The formula set forth in
this section for calculation of the Reserve Account will be reviewed
by Global at the end of each six (6) month period during the term of
the Agreement, and Global may modify the formula for calculating the
Reserve Account after each such review as it deems necessary to
insure that the Reserve Account is proportionate to the then current
measure of credit losses, chargebacks and related expenses
hereunder. Global will provide ISO with notice of modifications to
the Reserve Account formula which shall be effective for the next
subsequent six (6) month period of the Agreement.
(ii) Promptly after each debit by Global for Reserve Account
purposes, but not later than seven (7) days after the date of such
debit, Global shall submit to ISO a statement detailing the
computations
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used to determine the amount debited for Reserve Account purposes
for the subject month, and stating the then current balance of the
Reserve Account.
(iii) ISO hereby grants to Global and member bank a security
interest in the Reserve Account and in all of its rights, title and
interest in the Compensation amounts due to ISO and hereby
authorizes Global to deduct from the Reserve Account and the
Compensation any amounts due to Global or the member bank from ISO
hereunder. ISO will not grant to any third party a security interest
in the Reserve Account or in its rights, title and interest in the
Compensation, nor will it pledge, assign, or permit any lien to
attach to the Reserve Account or to its rights, title and interest
in the Compensation. ISO agrees to execute any documents and to take
any other actions as requested by Global to perfect the security
interests granted herein. Global shall refund to ISO any Reserve
Account balance which exists on the date which is one hundred and
eighty (180) days after the effective date of the termination of
this Agreement.
4. Personal Guaranty. In addition to the foregoing, a principal of ISO
or other third party-acceptable to Global shall execute the personal
guaranty attached hereto as Appendix C thereby guaranty the
performance of the ISO hereunder.
5. Merchant Enrollment and Accounting Data. Global will provide
Merchant accounting services through a vendor of its choice. Global
will designate an account representative to ISO to assist them with
questions, account changes, deletions, etc. ISO shall be responsible
to enter the Merchant data into and to maintain such data in the
master file. ISO shall be responsible for and shall indemnify Global
with regard to any liability arising from ISO's failure to properly
maintain the Merchant data in the master file. If ISO requests
additional reports, microfiche, or customized requirements, Global
shall use reasonable efforts to accommodate such requests upon
mutually agreeable pricing.
6. Customer Service. ISO will provide POS terminal deployment and
support. ISO will provide other primary Merchant customer services,
including services related to Merchant deposit inquiries and
Merchant disputes. Global will provide services related to
chargebacks and retrievals as set forth in Section 3 above.
Financial adjustments must be provided to Global for posting to
Merchant accounts. Any notifications regarding processing terms,
pricing, or issues provided to the Merchants by ISO applicable to
services provided by Global or contemplated hereunder must be
reviewed and approved by Global in advance of distribution of such
notifications.
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C. MERCHANT RETENTION
ISO agrees not to directly, knowingly, or actively solicit any merchant
business currently processing or utilizing Global's services; provided,
however, that the foregoing restriction shall not apply in the event ISO
discovers for the first time that Global is processing for a merchant
during the course of ISO's actual and inadvertent solicitation. The
individuals signing this Agreement at the end do so bind themselves as ISO
and personally to the provisions of this Section C.
D. COMPENSATION
Global agrees to pay or cause its successors or assigns to pay ISO as full
consideration and compensation for all of ISO's duties and obligations
hereunder, the fees set forth in Appendix A, payable on the 15th day of
the month following the month during which they are earned (the
"Compensation"). Global shall have the right to change any fees or charges
on Appendix A upon sixty (60) days written notice to ISO unless such
changes are the result of pass-throughs in which event Global shall
provide ISO with sixty (60) days written notice or such lesser notice as
reasonably practicable under the circumstances. Notwithstanding the
foregoing, in the event that any increase in the fees and charges on
Appendix A (excluding increases for pass-throughs) exceeds five (5%)
percent of the then current fees and charges, ISO may terminate this
Agreement upon sixty (60) days written notice to Global, unless Global
agrees to reduce the increase so that it is equal to or less than the five
(5%) percent measure. In any event, ISO shall have the right to direct
Global to pass through to the Merchants such increase so that the
Compensation paid to ISO shall be equal to that received prior to the
change. This Section shall survive termination of this Agreement for as
long as Global or its successors and assigns continually processes for
such Merchant and ISO continues to comply with Sections B, C, E, F, G, H,
and I of this Agreement.
ISO agrees to pay to Global all card association and network organization
registration, association, and other fees incurred as a result of this
Agreement or the processing contemplated hereunder.
E. PRICING
ISO shall provide to Global, concurrently with the execution hereof, a
full and complete schedule of all fees and charges, including equipment
sales or lease charges, assessed or charged by ISO to any merchant who
makes application for a merchant agreement with Global. ISO agrees not to
alter, change or amend any fee or charge reflected on this ISO schedule on
file with Global without notifying Global and further agrees that no
charges shall be made or
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assessed against any merchant applicant in excess of the charges reflected
on the ISO schedule.
F. MERCHANT AGREEMENTS
1. Merchant Notification. ISO must provide Global with copies of
notifications affecting processing, pricing and issues thirty (30)
days prior to receipt of such notification by Merchants if such
notification relates to services provided by Global or its
affiliates hereunder.
2. Right To Terminate Merchant Agreements. Global shall have the right,
in its sole discretion, to terminate, suspend or otherwise close any
Merchant. Global will use its best judgment to determine the method
used to close a Merchant, with the understanding by both parties
that continuing to process for an account (while suspending payment)
may occasionally be more prudent than immediate termination of
services. Global agrees to notify ISO of such terminations,
suspensions or closures within five (5) business days of the end of
the month during which these events occur.
3. Other products and services. Except as otherwise set forth in
Section C hereunder or otherwise under this Agreement, Global
recognizes ISO's rights to solicit and service other products and
services to Merchants, including, but not limited to, equipment
leasing services.
4. Assignment of Merchant Agreements. Notwithstanding the solicitation
restrictions set forth in Section C above, subject to Global's
rights under Section 0.2 below, and assuming ISO's full compliance
with all of the terms of this Agreement, at any time during the term
of this Agreement, ISO may instruct Global upon written notice, and
Global hereby agrees, to assign all of its rights and obligations in
all or an identified segment of the Merchant Agreements to another
transaction processor designated by ISO, and will coordinate with
the member bank for the purpose of requesting its assignment of its
rights and obligations under the subject Merchant Agreements to
another member bank designated by ISO, conditioned upon the
execution of novation(s) by all interested parties to effect a full
and final release of Global and the member bank from each assigned
Merchant Agreement, such novation(s) and release(s) to become
effective on the effective date of the assignments, and subject to
any other requirements of the member bank. In the event of an
assignment of the Merchant Agreements as set forth above during the
initial term of the Agreement, ISO shall pay to Global a fee (the
"Exit Fee") equal to the product of (a) Global's average monthly
revenue received hereunder (such monthly average not to be less than
eighty (80%) percent of the highest monthly revenue received during
the twelve (12)
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month period, or such lesser number of months that the Agreement has
been in effect, immediately preceding the date of the written notice
described above) and (b) fifteen (15), which product shall equal the
Exit Fee, which Exit Fee shall be payable to Global by ISO prior to
its assignment of its rights and obligations under the Merchant
Agreements. Any and all reasonable costs of Global and the member
bank associated with the assignment of the Merchant Agreements shall
be paid by ISO and/or reimbursed to Global and the member bank by
ISO within thirty (30) days of the date of Global's invoice for
reimbursement of such costs.
G. CONFIDENTIALITY
The parties agree that the terms of this Agreement, as well as all
information of a business nature relating to the business operations of
the parties and customer information, which are disclosed in connection
with this agreement are confidential. The parties shall not, without the
express prior written consent of the other party, use (except as
contemplated by this Agreement) disclose or permit access to any such
confidential information during the term of this Agreement or for a period
of two (2) years thereafter. Each party agrees to cause its employees and
agents to take such action as shall be reasonably necessary to preserve
and protect the confidentiality of such information.
The obligations imposed upon either party herein shall not apply to
information:
1. which becomes available to the public through no wrongful act of the
receiving party; or
2. which may be published prior to the date hereof, of
3. which is already in the possession of the receiving party and not
subject to an existing agreement of confidence between the parties;
or
4. which is received from a third party without restriction and without
breach of this Agreement or any other agreement of confidence; or
5. which is independently developed by the receiving party (without use
of information provided hereunder); or
6. which is disclosed pursuant to a requirement or request of a
government agency or a court of competent jurisdiction.
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H. AUDIT AND EXCHANGE OF INFORMATION
Upon seven days notice, ISO agrees to furnish Global such financial
statements and information concerning ISO, its principals, partners,
proprietors, or its affiliates as Global may from time to time reasonably
request. Global, or its duly authorized representatives, shall have the
right to review the books, records, and operations of ISO upon request
during normal business hours. ISO and each of the parties whose signatures
appear below authorizes Global to order a consumer credit report or any
other background report of ISO, such individuals, or any officer,
shareholder, managing agent, principal, partner, proprietor, or affiliate
of ISO. Subsequent reports may be ordered in connection with updating,
renewing, or continuing this Agreement. Upon the written request of any
individual who is the subject of a consumer credit report, Global will
provide the name and address of the consumer credit reporting agency
furnishing such report.
I. NAME AND TRADEMARKS
ISO acknowledges the proprietary interest of Global Payments Inc. in and
to all trademarks, logos and trade names and any goodwill attaching
thereto. ISO further agrees not to use the name, logo, or marks of Global
Payments Inc., Global Payments Direct, Inc., Global Direct, Global,
National Data Payment Systems, Inc., NDPS, CNET Card Acceptance Services,
CNET, National Data Corporation, NDC, Pulse, CASH STATION, American
Express, HONOR, YANKEE 24, NYCE, MAC, MOST, STAR/EXPLORE, Interlink,
Maestro, Diners Club, Discover, or JCB except as approved by Global and
acknowledges no rights in these names, logos and marks by virtue of this
use. Nothing herein shall affect any rights ISO may have with respect to
any such trademarks, logos, and tradenames under any other agreement.
The use of the name, logo, or marks of National Data Payment Systems, Inc.
or Global Payments Direct, Inc. may be utilized only when expressly agreed
to in writing by Global and only under the specifics stated in the written
agreement. Global must approve any reproduction of its name, logo, or
marks in writing.
J. TERM AND TERMINATION
This Agreement shall have an initial term of three (3) years from the date
both parties execute this Agreement and shall thereafter automatically
renew for successive twelve (12) month periods. Either party may terminate
this Agreement by notifying the other party in writing at least sixty (60)
days prior to the expiration of the initial or any renewal term.
If either party defaults in the performance of any obligation under this
Agreement (which shall not include a breach of the performance standards)
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and fails to remedy such default within thirty (30) calendar days after
receipt of written notice of the default, the other party may terminate
this Agreement upon written notice.
K. NOTICES
Any notices permitted or required hereunder shall be deemed given when
deposited in the United States mail with postage prepaid and addressed as
follows:
If to Global: Global Payments Direct, Inc.
Four ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Secretary
If to ISO: Online Data Corp.
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Attention: ▇▇▇▇ ▇▇▇▇▇
L. INDEMNITY AND LIMITATION OF LIABILITY
ISO agrees to defend, indemnify and hold Global, its parent, affiliates,
employees, officers and directors harmless from any claims, actions,
threatened actions, or legal proceeding arising from ISO's negligence or
breach of any obligation under this Agreement, and against any and all
expenses including judgments, fines, amounts paid in settlement, and any
losses or damages resulting therefrom. This indemnification includes
attorneys' fees and expenses and shall survive termination of this
Agreement.
Global agrees to defend, indemnify and hold ISO harmless from any claims,
actions, threatened actions, or legal proceeding arising from Global's
negligence or breach of any obligation under this Agreement, and against
any and all expenses including judgments, fines, amounts paid in
settlement, and any losses or damages resulting therefrom. This
indemnification includes attorneys' fees and expenses and shall survive
termination of this Agreement.
Except for a breach of Section C, G or 1, in no event shall either party
be liable to the other party for any special, consequential, or indirect
damages in connection with this Agreement.
M. FORCE MAJEURE
Neither party shall be liable for failure to fulfill its obligations under
this Agreement if such failure is due to any cause or condition beyond
such party's reasonable control, such as: natural disaster, acts of God,
strikes, fire, floods,
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war, riot, electrical power failure, decrees of government bodies or
communications failure.
N. GOVERNING LAW
This Agreement shall be governed by and shall be construed in accordance
with the laws of the State of Georgia, without regard to its conflicts of
law provisions. If any provisions of this Agreement shall be held to be
invalid, illegal, or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
O. GENERAL PROVISIONS
(1) This Agreement contains the full understanding of the parties with
respect to the subject matter hereof, and no waiver, alteration or
modification of any of the provisions hereof shall be binding unless
in writing and signed by both parties. Failure to enforce any
provision of this Agreement shall not constitute a waiver of
provision by the party failing to enforce.
(2) Neither party to this Agreement may assign its rights or obligations
under this Agreement without the express prior written consent of
the other party, such consent not be unreasonably withheld or
delayed, except that the obligations of either party under this
Agreement may be provided or fulfilled by any parent, subsidiary,
affiliate, successor corporation or subcontractor of such party so
long as such party assumes full responsibility for such obligations.
In the event ISO decides to assign any rights it may have hereunder
in connection with the Merchant Agreements or to exercise its rights
under Section F.4, Global shall have a right of first refusal and an
opportunity to match any offer in connection therewith.
(3) Each party represents that the individual executing this Agreement
on its behalf has the requisite power and authority to do so and
that this Agreement constitutes a valid and binding obligation.
(4) Each party agrees to comply with all applicable federal, state, and
local laws, regulations, ordinances and codes, including those
related to payment of income and Social Security taxes, and those
relating to equal opportunity and nondiscrimination in employment.
(5) If any part of this Agreement is held invalid, such invalidity shall
not affect the remainder of the Agreement which shall be interpreted
according to its original intent.
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(6) Nothing herein contained shall be construed as constituting a
partnership, joint venture, or agency between Global and ISO.
Nothing in this Agreement shall give either ISO or Global authority,
whether express or implied, to create any duty or obligation on
behalf of the other. ISO has no authority to accept any business on
behalf of Global. Business referred by ISO shall be considered an
offer from a prospective customer, subject to Global's acceptance or
rejection. ISO agrees not to represent itself as an affiliate, agent
or employee of, or partner, joint venturer, co-principal or
co-employer with Global, or any of Global's affiliates or parent
corporation by reason of this Agreement.
(7) Each party agrees to become and remain at all times during the term
hereof a registered Member Service Provider and Independent Sales
Organization, as applicable, with Visa and MasterCard in accordance
with, and if required by, applicable regulations as the same may be
in effect from time to time.
(8) ISO agrees to immediately notify Global in writing of any change in
the identity of its principal owners or officers.
(9) Each party agrees to fully comply with all existing and future rules
and operating regulations issued by MasterCard or Visa applicable to
merchant accounts or agreements, the use of cards or the
transactions contemplated by this Agreement, all of which rules and
operating regulations are expressly incorporated herein. Each party
further agrees to fully comply with all rules and regulations of any
other card association, network organization, or any other entity
which governs any processing service provided to a Merchant
hereunder, of whatever nature.
(10) All paragraph headings contained herein are for descriptive purposes
only and the language of such paragraph shall control.
(11) The parties each agree to use commercially reasonable efforts to
comply with the applicable performance standards set forth in
Appendix B hereto.
Global Payments Direct, Inc. Online Data Corp.
By: By: /s/ ▇▇▇▇ ▇▇▇▇▇
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Name: Name: ▇▇▇▇ ▇▇▇▇▇
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Title: Title: President, CEO
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Date: Date: 4/27/02
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