Agreement for Information Technology Services - First Virtual Holdings Inc. and Electronic Data Systems Corp.
AGREEMENT
FOR
INFORMATION TECHNOLOGY SERVICES
THIS AGREEMENT, dated as of October 12, 1994, between FIRST VIRTUAL
HOLDINGS INCORPORATED, a Wyoming corporation (hereinafter referred to as
"FVH"), and ELECTRONIC DATA SYSTEMS CORPORATION, a Texas corporation
(hereinafter referred to as "EDS");
RECITALS
WHEREAS, EDS is in the business of providing information technology
services to entities who service and process financial transactions, including
credit card transactions; and
WHEREAS, FVH has developed a program (the "Program") and an
associated system for conducting financial commerce (that is, the buying and
selling of information, goods and/or services) over the Internet (as defined
below); and
WHEREAS, FVH desires to obtain, and EDS desires to furnish, information
technology services which could include card production, exception and
transaction processing associated with the FVII Program on the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements, covenants, representations, and warranties herein contained, the
parties hereto agree as follows:
ARTICLE I. DEFINITIONS
1.1 CERTAIN DEFINITIONS. As used in this Agreement:
(a) "Account Executives" shall mean the EDS Account Executive
and the FVH Account Executive.
(b) "Bank" shall mean the merchant settlement bank retained as
such by FVH, subject to change by FVH from time to time.
(c) "Base Services" shall mean the information technology
services and applications to be provided by EDS which are
generally described in Schedule A of this Agreement.
(d) "Business Day" shall mean any day that the Bank is open
for business.
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(e) "Data Center" shall mean the EDS data processing center selected by EDS
at which the Program transactions will be processed. The initial Data
Center is located Westlake, Ohio.
(f) "Documentation" shall mean documents, manuals (including user manuals),
and reference materials which collectively contain a description and/or
definition of basic or necessary operating conditions, characteristics,
capabilities, and specifications of the Base Services.
(g) "EDS" shall mean Electronic Data Systems Corporation, a Texas
corporation.
(h) "EDS Account Executive" shall mean an EDS account executive assigned
to act as FVH's primary point of contact regarding this Agreement.
(i) "EDS Equipment" shall mean the hardware to be purchased and installed
by EDS at the Data Center for the processing of the Program
transactions.
(j) "EDS Systems" shall mean any System provided by EDS to provide the Base
Services and Other Services under this Agreement.
(k) "Effective Date" shall mean the date this Agreement is executed and
delivered by EDS.
(l) "Expiration Date" shall mean the third anniversary of the
Implementation Date.
(m) "FVH" shall mean FIRST VIRTUAL HOLDINGS INCORPORATED, a Wyoming
corporation.
(n) "FVH Account Executive" shall mean a representative of FVH assigned
to work with the EDS Account Executive.
(o) "FVH Equipment" shall mean the hardware, to include operating systems,
FVH Systems and associated monitoring equipment, owned by FVH and to
be delivered to the Data Center by FVH and installed by EDS.
(p) "FVH Obligations" shall mean those obligations set out in Schedule B
to be performed by FVH relating to the conduct of the Program.
(q) "FVH Systems" shall mean Systems developed and owned by FVH to
interface with EDS Systems hereunder to support financial transaction
processing for the FVH Program.
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(r) "Implementation Date" shall mean the date on which FVH completes its
acceptance testing pursuant to Section 4.1(i) hereof and certifies its
acceptance of the EDS Systems and the FVH Systems in writing as being
capable of providing Base Services hereunder. In the event the systems
cannot be corrected to pass acceptance testing within 30 days after EDS
is provided written notice of deficiencies, this Agreement may be
terminated by FVH at no further expenses to FVH.
(s) "Internet" shall mean a global network of computer networks which permit
the exchange of electronic files using established protocols.
(t) "MasterCard" shall mean MasterCard International, Inc.
(u) "Other Services" shall mean all services other than Base Services, and
shall include without limitation (i) systems engineering services, (ii)
special computer runs or reports, and special accounting information
applications, (iii) data processing-related forms, supplies, and
equipment other than those provided by EDS to FVH as generic, and (iv)
custom or special enhancements to the EDS System made especially for FVH
or in support of the FVH Program which are outside the scope of this
Agreement.
(v) "Program" shall mean concepts, systems and procedures established by FVH
for the conduct of financial commerce on the Internet.
(w) "Services" shall mean Base Services and Other Services.
(x) "System" or "Systems" means and includes (i) computer programs,
including without limitation software, firmware, application programs,
operating systems, files and utilities, (ii) supporting documentation
for such computer programs, including without limitation input and
output formats, program listings, narrative descriptions, operating
instructions and programming instructions, and (iii) the tangible media
upon which such programs are recorded, including without limitation
chips, tapes, disks and diskettes.
(y) "VISA" shall mean Visa U.S.A., Inc.
(z) "Customer and Business Information" shall include all information
relating to the business of FVH and information relating to its
customers including, without limitation, customer lists, addresses,
demographics, profitability and account information, and all such other
information developed through the use of programs and provision of
services by FVII.
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ARTICLE II. AGREEMENT AND TERM
2.1 Agreement. Subject to the terms and upon the conditions specified in
this Agreement, during the term of this Agreement EDS will supply to
FVH, and FVH will purchase from EDS, all the requirements of FVH for
all information technology services and applications described herein.
It is the intention of the parties hereto that EDS will supply to FVH
all of the transaction processing requirements of FVH for the conduct
of the FVH Program. Notwithstanding the foregoing, during the term
hereof it is agreed that FVH shall have the right to negotiate and
contract for the securing of information technology services and
applications support for periods after the term hereof which are
comparable or competitive with those being provided hereunder.
2.2 Term. The term of this Agreement shall be for the period commencing on
the Effective Date and ending on the Expiration Date or on such earlier
date upon which this Agreement is terminated in accordance with the
provisions of Sections 7.2, 7.3, or 7.4 of this Agreement. The term of
this Agreement will automatically extend for a period of one (1) year
after the Expiration Date and each subsequent anniversary of the
Implementation Date, unless either party gives the other party notice
at least six (6) months prior to the date this Agreement would otherwise
terminate that it does not wish to extend the term of this Agreement
beyond the subsequent anniversary of the Implementation Date.
ARTICLE III. EDS OBLIGATIONS AND REPRESENTATIONS
3.1 Base Services. During the term of this Agreement, EDS will provide to
FVH Base Services for all of FVH's financial transactions processed
through the Program. In connection with the provision of Base Services
hereunder, EDS will:
(a) Provide, install, maintain and operate the appropriate
equipment, including the EDS Equipment, and EDS Systems so as to
provide Services hereunder and to furnish to FVH the daily and
other periodic reports listed in SCHEDULE A attached hereto;
(b) Through access to FVH's account at the Bank, settle on behalf of
FVH all credit card account transactions with the VISA and
MasterCard networks. On each day for which such settlement
results in a net surplus of funds, EDS shall, subject to the
requirements of the Bank, remit such surplus funds in
immediately available funds via the Federal Reserve System wire
facilities to FVH's account with the Bank, conditioned on timely
receipt of funds from the appropriate network. On each day for
which such settlement results in a net deficit of funds, EDS
shall withdraw from FVH's account at the Bank immediately
available funds in an amount equal to such deficit which EDS
shall remit via the Federal Reserve System wire facilities to
the
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appropriate network or networks not later than the close of
business on each Business Day;
(c) Maintain a merchant account processing relationship with the
Bank, it being recognized that the parties may mutually agree
to change the designated bank from time to time;
(d) Operate the FVH Equipment and the FVH Systems at the Data
Center,
(e) Store and safeguard magnetic tapes and disc packs containing
FVH's data in accordance with the data integrity safeguards
specified in Section 6.2;
(f) Provide FVH with a complete set of Documentation used by EDS in
performing the Base Services, together with updates as they are
developed by EDS. EDS will provide FVH with additional copies of
all user manuals upon request, at a mutually agreeable price
therefor;
(g) Provide customer support for participants in the FVH Program as
described in Schedule A;
(h) With the cooperation of FVH, develop, maintain and, as necessary
in the event of a disaster, execute a disaster recovery plan in
accordance with Section 6.7; and
(i) Have sole responsibility for the safekeeping of plastic cards on
behalf of FVH from the time each such card enters into EDS'
possession until such card is delivered to the United States
Postal Service or other common carrier for delivery to a
cardholder.
3.2 Other Services. FVH may from time to time request Other Services. All
Other Services provided to FVH will be billed at a mutually agreeable
price. To obtain Other Services, FVH shall present to EDS a written
proposal or inquiry. EDS shall submit a written bid in response to such
proposal or inquiry within ten (10) business days after receipt thereof.
If EDS indicates it is willing and able to undertake to provide such
Other Services, EDS and FVH shall specify in detail such Other Services
in one or more written addenda to this Agreement.
3.3 Training. EDS shall make EDS personnel available for training by FVH in
the proper use of the FVH System. Both parties shall provide competent
personnel for such training and shall cooperate in scheduling such
training in conjunction with the implementation of the Program.
3.4 Forms. EDS shall provide all forms requested by FVH in connection with
the Program as an Additional Service. Unless otherwise mutually agreed,
FVH shall provide all special, unique, or customized forms.
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3.5 System Implementation. EDS will, promptly after execution of
this Agreement but no later than October 14, 1994 implement
the Base Services, and provide updates and changes as they
occur. FVH shall pay the charges for such initial
implementation in accordance with Section 5.5 of this
Agreement.
3.6 Operating Instruction, System Changes. FVH agrees to comply
with all operating instructions pertaining to the Services as
issued by EDS from time to time. In order to continuously
improve the efficiency and quality of the Services, EDS
reserves the right to make such software, hardware, and
operational changes as it shall reasonably deem necessary and
FVH shall be notified in advance of any changes affecting the
Services to FVH. FVH acknowledges that EDS shall provide the
Services using such software, whether owned by EDS or others,
as EDS in its sole discretion determines appropriate for FVH's
business requirements. Implementation of any special
requirements of FVH not set forth in this Agreement shall be
as mutually agreed upon by EDS and FVH during the period
between the Effective Date and the Implementation Date.
3.7 Authorizations. EDS will provide authorization services to
VISA and MasterCard for FVH's accounts. Such authorization
expense is included in the pricing in Schedule C.
3.8 EDS Account Executive. EDS shall assign to FVH an EDS Account
Executive who shall be responsible for directing all EDS
activities affecting the provision of Services hereunder and
for working with FVH to establish priorities.
3.9 FVH's Rights to Use EDS Systems. EDS Systems (excluding the
specific code written for FVH by EDS hereunder and the
algorithms supplied to EDS by FVH) shall be and remain the
property of EDS, and FVH shall have no rights or interest
therein, except as set forth in this Agreement. Further, FVH
shall keep the EDS Systems confidential and shall not permit
them to be copied or reproduced, in whole or in part, by any
other person, firm, or corporation, at any time.
3.10 EDS' Rights to Use FVH Systems. FVH Systems shall be and
remain the property of FVH, and EDS shall have no rights or
interest therein, except as set forth in this Agreement.
Further, EDS shall keep the FVH Systems confidential and
shall not permit them to be copied or reproduced, in whole or
in part, by any other person, firm, or corporation, at any
time.
3.11 Warranties. EDS warrants that it shall provide the Services in
a professional, workmanlike and diligent manner. EDS further
represents that it shall operate the FVH System in accordance
with the documentation described in Section 4.1(g), and that
the EDS Systems and FVH System will operate together in
material compliance with VISA and MasterCard rules and ACH
clearinghouse procedures. EXCEPT AS SPECIFICALLY PROVIDED
HEREIN, EDS MAKES NO REPRESENTATIONS OR WARRANTIES EXPRESS OR
IMPLIED, TO FVH OR TO ANY OTHER PERSON OR ENTITY REGARDING THE
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MERCHANTABILITY, SUITABILITY, FITNESS FOR A PARTICULAR USE OR PURPOSE OR
OTHERWISE OF THE EDS SYSTEMS OR ANY OF THEM, OR OF ANY INFORMATION
TECHNOLOGY SERVICES OR MATERIALS PROVIDED HEREUNDER.
3.12 System Administration. EDS will insure that the EDS Systems is capable
of being administered in a manner compatible with the FVH System. EDS
will cooperate with FVH to accommodate any reasonable changes or
modifications to the FVH System which may occur from time to time due to
the necessities of business; EDS will perform, as Other Services, any
necessary maintenance and/or refreshment of the EDS Systems. EDS will
maintain the EDS Systems in compliance with applicable laws, regulations
and network rules, but shall rely on FVH to advise EDS of any necessary
changes that EDS would not otherwise be aware of.
3.13 Record Retention. EDS shall store all original data evidencing sales
data for at least six (6) months from the date of the transaction, and
shall retain computer data or a microfilm or microfiche copy of all
such data for at least three (3) years from the date of the transaction.
EDS shall be entitled to charge FVH for the creation or storage of such
copies. If FVH receives any request for retrieval of data, FVH shall
promptly transmit such request to EDS, and EDS shall promptly provide to
FVH (or to the card issuing financial institution if FVH so directs) a
copy of the requested data, all in compliance with the applicable
network rules and for EDS' standard charges therefor.
ARTICLE IV. FVH OBLIGATIONS AND REPRESENTATIONS
4.1 FVH Obligations. In connection with the services provided by EDS
hereunder, FVH will perform the obligations set forth in Schedule B
hereto. In addition, FVH will perform the following:
(a) FVH is solely responsible for providing, and shall bear the cost
of maintaining and insuring, the FVH Equipment and all
telecommunications lines and equipment, including terminals and
control units and data lines, as EDS may require to perform
Services hereunder. All equipment provided by FVH shall be
reasonably acceptable to EDS with regard to compatibility
with the EDS Systems.
(b) FVH will distribute, inspect, and review all reports created
from information transmitted or delivered by EDS and reject all
incorrect reports within thirty (30) days after receipt thereof
during the first six months after the Implementation Date, and
within seven (7) days after receipt thereafter.
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(c) FVH will insure that the FVH System is capable of being
administered in a manner compatible with the EDS Systems. FVH
will cooperate with EDS to accommodate any reasonable changes or
modifications to the EDS Systems which may occur from time to
time due to the necessities of business; FVH will be responsible
for any necessary maintenance and/or refreshment of the FVH
System;
(d) FVH will comply with (A) all state and federal laws and
regulations which affect the Program, (B) applicable by-laws and
regulations of VISA, Visa International and MasterCard, and (C)
EDS' operating policies and procedures set forth in the
Documentation.
(e) FVH is responsible for the quality and accuracy of all data
input to EDS and will use its best efforts to ensure that such
data are organized in the proper input sequence and format. Any
data submitted by FVH for processing which are incorrect,
illegible, or otherwise not in proper form may be, at EDS'
option, returned to FVH for correction before processing. In the
event FVH fails to furnish its data to EDS in the form and in
accordance with the schedule agreed upon, EDS will use all
reasonable efforts to reschedule and process the work as
promptly as possible, it being understood that all expenses to
EDS occasioned by such failure will be borne by FVH.
(f) FVH will maintain an account with the Bank and will make
sufficient funds available at all appropriate times to permit
EDS to fund settlement in accordance with Section 5.6(a).
(g) FVH will organize a training program to be conducted at EDS'
facilities for the purposes of training EDS' personnel in the
proper use of FVH's procedures and the FVH System. FVH will also
furnish any user manuals and/or documentation (which will be
developed jointly by EDS and FVH) necessary for EDS to operate
the FVH System; and
(h) During the term of this Agreement, FVH shall purchase from EDS
all Base Services relating to the Program, including but not
limited to, the Base Services specified herein. Notwithstanding
the foregoing, it is agreed that FVH shall have the right to
develop and test other systems during the term of this
Agreement.
(i) FVH shall be responsible for planning, scripting and conducting
acceptance testing of the FVH System and its operation with the
EDS Systems, and shall certify FVH's acceptance in writing upon
successful completion of all acceptance testing.
4.2 FVH Account Executive. FVH shall designate the FVH Account Executive who
shall be responsible for directing, insofar as EDS is concerned, all
activities of FVH affecting the provision of Services hereunder. The FVH
Account Executive shall also work with EDS to
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establish FVH priorities for the services provided hereunder and for
administration of the Program.
4.3 Representations and Warranties.
FVH hereby represents and warrants to EDS that:
(a) FVH is a corporation duly organized, validly existing and in
good standing under the laws of the State of Wyoming. It has all
requisite corporate power, franchises, licenses, permits, and
authority to own and license its properties (including the FVH
System).
(b) The execution, delivery, and performance of this Agreement by
FVH and the consummation by FVH of the transactions contemplated
hereby have been duly authorized by all requisite corporate
action.
(c) To the best of FVH's knowledge as of the Effective Date, no
consent, approval, order, or authorization of, or registration,
declaration, or filing with, any governmental or regulatory
authority is required to be made or obtained by FVH in
connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
EDS hereby represents and warrants to FVH that:
(d) EDS is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas. It has all
requisite corporate power, franchises, licenses, permits, and
authority to own and license its properties (including the EDS
Systems).
(e) The execution, delivery, and performance of this Agreement by
EDS and the consummation by EDS of the transactions contemplated
hereby have been duly authorized by all requisite corporate
action.
(f) To the best of EDS' knowledge as of the Effective Date, no
consent, approval, order, or authorization of, or registration,
declaration, or filing with, any governmental or regulatory
authority is required to be made or obtained by EDS in
connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.
ARTICLE V. PAYMENTS TO EDS
5.1 Transaction Payments. For each month during the term of this Agreement,
FVH shall pay EDS the transaction charges for Base Services as specified
in Schedule C hereto. The
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minimum fee for Base Services is Five Thousand Dollars ($5,000.00) per
month (the "Monthly Minimum Charge"). The Monthly Minimum Charge is
deferred during the first two months following the Implementation Date.
5.2 Charges for Other Services. Upon receipt by EDS of a request by FVH for
Other Services, EDS shall advise FVH in writing of the charges therefor.
Upon FVH's written agreement (signed on its behalf by either Lee Stein
or Tawfiq Khoury) to pay such charges, EDS shall provide the requested
Other Services in accordance with Section 3.2 hereof, and FVH shall pay
for such Other Services at the times and in the amounts agreed. FVH
shall pay for all such Other Services on a calendar month basis.
5.3 Reruns. FVH shall pay the reasonable charges of EDS for reruns
necessitated by incorrect or incomplete data or erroneous instructions
supplied to EDS by FVH and for correction of programming, operator, and
other processing errors caused by FVH, its employees or agents.
5.4 Cost of Living Adjustment.
(a) If, after the first anniversary of the Implementation Date, the
Consumer Price Index for All Urban Consumers, All Cities
Average, 1982-84=100, as published by the Bureau of Labor
Statistics of the Department of Labor (the "CPI"), shall at any
anniversary of the first calendar day of the month in which the
Implementation Date occurs (the "Current Index") be higher than
the CPI one year prior thereto (the "Base Index"), then,
effective as of such anniversary, amounts payable from and after
such anniversary pursuant to Section 5.1 hereof shall be
increased thereafter by the percentage that the Current Index
shall have increased from the Base Index. In no event, however,
shall a price adjustment under this Section 5.4 exceed eight
percent (8%) for any twelve-month period.
(b) Until such time as the CPI for any anniversary of the Current
Index is announced, payments pursuant to Section 5.1 shall be
made in the amounts otherwise applicable. After the CPI is
published with respect to any anniversary of the Current Index,
EDS shall notify FVH of the increase, if any, of the percentage
that the Current Index shall have increased from the Base Index,
and shall provide a recalculation of the amounts payable (until
the next such increase) pursuant to Section 5.1. Within ten (10)
days thereafter, FVH shall pay to EDS all amounts owing as a
result of such increase with respect to all months during the
period commencing on such anniversary of the Current Index and
ending on the date of such payment.
(c) In the event that the Bureau of Labor Statistics shall stop
publishing the CPI or shall substantially change the content or
format thereof, the parties hereto shall substitute therefor
another comparable measure published by a mutually agreeable
source; provided, however, that if such change is merely to
redefine the base year for the CPI from 1982-84 to some other
year, the parties shall continue to use the CPI but shall,
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if necessary, convert either the Base Index or the Current Index
to the same basis as the other by multiplying such Index by the
appropriate conversion factor.
5.5 IMPLEMENTATION CHARGES. FVH shall pay to EDS an implementation charge of
One Hundred Fifty Thousand Dollars ($150,000.00), payable $50,000.00 on
the Effective Date and $100,000.00 on the Implementation Date.
5.6 PAYMENT.
(a) All amounts payable to EDS pursuant to this Agreement shall be
paid by electronic funds transfer to EDS from FVH's account at
the Bank, such transfers being hereby authorized by FVH. EDS
shall provide invoices for review and written approval by FVH
for all amounts due under this Agreement prior to any such
transfer.
(b) Any amount due EDS hereunder for which a time for payment is not
otherwise specified shall be due and payable within thirty (30)
days after receipt by FVH of an invoice therefor from EDS.
(c) Any undisputed amount due EDS hereunder that is not paid when
due shall thereafter bear interest until paid at a rate of
interest equal to the lesser of eighteen percent (18%) per annum
determined on a three hundred sixty (360) day year or the
maximum non-usurious rate of interest allowed by applicable law.
5.7 TAXES. There shall be added to any charges under this Agreement, and FVH
shall pay to EDS, amounts equal to any taxes, however designated or
levied, based upon such charges, or upon this Agreement or the Systems,
services, or materials provided hereunder, or their use, including state
and local privilege or excise taxes, sales and use taxes, and any taxes
or amounts in lieu thereof paid or payable by EDS in respect of the
foregoing, exclusive, however, of franchise taxes and federal or state
taxes based on the income of EDS.
5.8 TERMINATION FEE. In the event FVH desires to terminate this Agreement
prior to the normal expiration of its term for any reason other than an
uncured default on the part of EDS, FVH may so terminate by paying EDS
the transaction charges incurred through the effective date of
termination, together with a sum equal to (i) EDS' actual and direct
costs for disconnect fees and equipment relocation costs, and (ii) the
sum of $150,000.00 as liquidated damages. In no event shall the total
termination fee payable under this Section 5.8 (but excluding charges
for termination assistance requested by FVH) exceed the sum of
$150,000.00 plus (i) above.
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ARTICLE VI. SAFEGUARDING OF FVH DATA,
CONFIDENTIALITY, AND AUDIT RIGHTS
6.1 Ownership and Use of Data. FVH's data and Customer and Business
Information contain valuable and proprietary trade secrets and shall
remain FVH's property. Immediately upon written request by FVH (provided
that FVH shall have paid to EDS all undisputed amounts owing hereunder)
or, with respect to any particular data, on such earlier date that EDS
reasonable determines that it no longer requires the data in order to
render services hereunder, EDS shall, after obtaining written approval
from FVH, either erase such data from the data files maintained by EDS
or return the data to FVH. EDS shall not utilize FVH's data for any
purpose other than for rendering services to FVH under this Agreement.
6.2 Safeguarding Data Integrity. EDS will maintain internal computer data
integrity safeguards (such as access codes, passwords and anti-virus
programs) to protect against the deletion or alteration of FVH's data in
the possession of EDS consistent with those that are from time to time
generally applicable to EDS information processing centers. Upon payment
by FVH of any fees that EDS incurs, EDS shall provide such additional
internal computer data integrity safeguards as FVH reasonably requests.
6.3 System Ownership.
(a) FVH acknowledges that the EDS Systems, including computer
programs, documentation, forms, and other system materials used
by EDS to provide the Services (but excluding the specific code
written by EDS for FVH hereunder and the algorithms associated
therewith), are, subject to the limitations set out below, the
proprietary information of EDS or, with respect to Systems
licensed by third party licensors, such licensors, and any
disclosure thereof to third parties will result in substantial
monetary loss and irreparable damage to EDS. Accordingly, FVH
agrees not to disclose such materials to any third party, and to
treat the same confidentially and to safeguard them using the
same care and discretion which FVH uses with materials it
regards as confidential. Subject to the limitations set out
below, all computer tapes, disks, programs, specifications, and
enhancements developed in connection with the Services are and
shall remain at all times during and after the term of this
Agreement the exclusive property of EDS.
(b) EDS acknowledges that the FVH Systems, including computer
programs, documentation, forms, and other system materials
relating to the FVH System and used by EDS to provide the
Services, are the proprietary information and trade secrets of
FVH, and any disclosure thereof to third parties will result in
substantial monetary loss and irreparable damage to FVH.
Accordingly, EDS agrees not to disclose such materials to any
third party, or to use such materials for its own benefit, and
to treat the same confidentially and to safeguard them using the
same care and discretion which EDS uses with materials it
regards as confidential. Upon written
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request by FVH, EDS shall deliver a certificate signed by a
division officer stating that EDS has destroyed or returned all
FVH data and FVH Systems.
(c) By way of expansion of the foregoing, EDS agrees that the
specific code written by EDS for use in connection with the FVH
System or for interfacing the FVH System with the EDS System,
and the specific algorithms associated therewith, may not be
utilized by EDS for a period of five (5) years for any project
in direct competition with FVH in the conduct by FVH of the
Program. The EDS systems engineers employed directly and
substantially in connection with the aforementioned code
development may not be utilized by EDS for a period of one (1)
year for any project in direct competition with FVH in the
conduct by FVH of the Program.
6.4 Confidentially.
(a) Except as otherwise provided herein, EDS and FVH each agree that
all confidential information and trade secrets marked
proprietary and confidential and communicated to it by the
other, whether before or after the Effective Date, shall be and
were received in strict confidence, shall be used only for
purposes of this Agreement, and that no such information shall
be disclosed by the recipient party, its agents or employees
without the prior consent of the other party, except as may be
necessary by reason of legal, accounting, or regulatory
requirements beyond the reasonable control of the recipient
party, provided that the disclosing party shall give written
notice to the other party of such requirement to disclose. The
provisions of this Section 6.4 shall survive termination of this
Agreement for any reason, but shall have no application to any
information which is or becomes (through no fault of a party
hereto) public information, is obtained from a third party who
is not subject to any confidentiality obligations, is
independently developed, or is disclosed with the consent of the
party owning such information. In addition, FVH shall be
entitled to disclose to its agents and consultants such
information as may be necessary for the discussion of marketing
strategies or the exploration of business opportunities, so long
as such agents and consultants agree to hold such information in
confidence.
(b) In the event FVH's data or the EDS Systems or any part thereof
should come into the possession of one or more unauthorized
third parties as a result of a breach of this Article VI, the
breaching party shall, at its own expense, use its best efforts
to retrieve such data or systems and, in any event, shall
reimburse the non-breaching party for all reasonable expenses
incurred in connection with its retrieval efforts. In addition
to any remedies the non-breaching party may have, including
without limitation remedies set forth in this Agreement, the
non-breaching party shall be entitled to appropriate injunctive
relief against the breaching party and to prevent any other or
further unauthorized use or disclosure thereof or to require the
return thereof and shall be entitled to recover from the
breaching party reasonable attorney's fees
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<PAGE> 14
and other costs of obtaining such injunctive relief, it being
stipulated that such breach would cause irreparable harm to the
non-breaching party for which no adequate remedy at law exists.
6.5 Security.
(a) EDS will employ controlled access systems, twenty-four hour
on-site personnel, and alarm systems in the Data Center and in
other locations in which Services are performed hereunder by EDS
for FVH.
(b) Except as provided in Section 6.6 hereof, without the prior
consent of EDS, no employee, agent, contractor, or invitee of
FVH shall operate or assist in operating equipment or Systems to
be utilized by EDS hereunder, or enter any room where any such
equipment or Systems are located. Employees, agents,
contractors, and invitees of EDS shall comply with the
reasonable rules of FVH with respect to access to FVH's offices,
data and data files.
6.6 Audit Rights. EDS shall provide FVH's internal and external auditors and
any inspectors or agents from any regulatory body exercising
jurisdiction over FVH's business reasonable access to visit the data
centers from which EDS provides services hereunder for the purpose of
performing audits or inspections of FVH. EDS will provide to such
auditors, inspectors, and agents all such assistance as they may
reasonably require of a routine nature, rendered in connection with any
such audit or inspection. For extraordinary assistance, including,
without limitation, preparation of reports and specially formatted data,
FVH shall pay EDS at EDS' then current commercial billing rates for
similar services.
6.7 Contingency Planning. The parties' responsibilities with respect to
contingency planning will be as follows:
(a) EDS will develop, maintain and, as necessary in the event of a
disaster, execute a disaster recovery plan (the "EDS Plan") for
the Data Center and will provide to FVH and its auditors and
inspectors such access to the EDS Plan as FVH may reasonably
request from time to time. EDS will not be required to provide
access to information of other EDS customers.
(b) FVH will develop, maintain and, as necessary in the event of a
disaster, execute a business resumption plan (the "FVH Plan")
for all FVH locations and the telecommunications links between
the FVH locations and the Data Center and will provide to EDS
such access to the FVH Plan as EDS may reasonably request from
time to time.
(c) EDS will provide to FVH such information as may be reasonably
required for FVH to assure that the FVH Plan is compatible with
the EDS Plan. Further, in the event
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<PAGE> 15
of a disaster, EDS will provide access to all necessary and
relevant information for the adjustment, audit and processing of
insurance claims by FVH.
(d) Each party will be responsible for the training of its own
personnel as required in connection with all applicable
contingency planning activities.
(e) Each party's contingency planning activities will comply, as
appropriate, with such regulatory policies as may be applicable to
FVH's business, as the same may be amended or replaced from time
to time.
ARTICLE VII. TERMINATION
7.1 Arbitration. Any dispute, controversy, or claim arising out of, in
connection with, or relating to this Agreement, or the breach,
termination, validity, or enforceability of any provision of this
Agreement (except for termination by FVH upon payment of the applicable
termination fee as described above, which right shall be absolute) shall
be resolved by final and binding arbitration by a panel of three (3)
arbitrators in accordance with and subject to the Commercial Arbitration
Rules of the American Arbitration Association then in effect. Each party
shall promptly select one arbitrator and the two arbitrators so selected
shall promptly select the third arbitrator. Discovery in the forms
permitted by the Federal Rules of Civil Procedure then in effect shall be
allowed in connection with such arbitration to the extent consistent with
the purpose of the arbitration and as allowed by the arbitrators. Such
arbitrators are authorized to render awards of monetary damages,
direction to take or refrain from taking actions, or both. Judgment upon
the award rendered in any such arbitration may be entered in any court of
competent jurisdiction, or application may be made to such court for
judicial acceptance and enforcement of the award, as the law of such
jurisdiction may require or allow. EDS shall continue to provide services
hereunder during any such arbitration proceedings and FVH shall continue
to make payments, other than any disputed payments, to EDS in accordance
with this Agreement. The fact that arbitration has or may be allowed
shall not impair the exercise of any termination rights in accordance
with this Agreement.
7.2 Termination for Cause.
(a) Except as provided in Section 7.2(b) of this Agreement, FVH may
not terminate this Agreement prior to the third anniversary of the
Implementation Date unless it pays EDS the termination fee as
provided in this Agreement.
(b) In the event that EDS shall materially default in the performance
of any of its duties or obligations hereunder, which default shall
not be substantially cured within seven (7) Business Days after
notice is given to EDS specifying a default in its settlement or
reconciliation obligations, or within sixty (60) Business Days
after notice is given to EDS specifying any other default, then
FVH may, by giving notice
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<PAGE> 16
thereof to EDS, terminate this Agreement for cause as of a date
specified in such notice of termination.
(c) In the event that FVH shall materially default in the
performance of any of its duties or obligations hereunder
(except for a default in payments to EDS), which default shall
not be substantially cured within sixty (60) Business Days
after notice is given to FVH specifying the default, then EDS
may, by giving notice thereof to FVH, terminate this Agreement
for cause as of a date specified in such notice of termination.
In the event that FVH materially defaults in performance of any
of its duty hereunder and EDS elects to terminate the Agreement
in accordance with the provisions hereof, EDS shall be entitled
to the same liquidated damages EDS would be entitled under
Section 5.8 if FVH had terminated this Agreement before the
Expiration Date. Notwithstanding the foregoing, FVH shall have
no liability if the unique nature of FVH's business is such
that it results in a failure or inability to comply with
applicable network rules or regulations of the networks used to
provide the services.
7.3 Termination for Nonpayment. In the event that FVH defaults in the
payment when due of any undisputed amount due to EDS hereunder and does
not cure such default within three (3) Business Days after being given
notice of such default, then EDS may, by giving notice thereof to FVH,
terminate this Agreement as of a date specified in such notice of
termination.
7.4 Rights Upon Termination. Within fifteen (15) days after notice of
termination of this Agreement and payment in full of all undisputed
amounts due EDS from FVH, EDS shall provide all of FVH's master files in
its possession to FVH in the machine-readable format and on media of
FVH's choice at the then current prices for time and materials. FVH
shall promptly return to EDS all copies of the EDS System and
documentation of the EDS System in FVH's possession and completely erase
the EDS System and all elements thereof from its computer system. EDS
shall make all of the FVH Equipment available for pickup by FVH at the
Data Center within fifteen (15) days after receipt of written notice
from FVH following termination of this Agreement.
ARTICLE VIII. INDEMNITIES AND LIABILITY
8.1 Cross Indemnity. EDS and FVH each agree to indemnify, defend and hold
harmless the other from any and all claims, actions, damages,
liabilities, costs, and expenses, including without limitation
reasonable attorneys' fees and expenses, arising out of (i) death or
bodily injury of any agent, employee, customer, business invitee or
business visitor of the indemnitor, or (ii) the damage, loss or
destruction of any property (other than FVH data or the FVH Equipment)
of the indemnitor, unless caused primarily as the result of EDS'
negligence or willful misconduct.
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8.2 Correcting Defects. In the event that any services provided to FVH are
inaccurate, incomplete, or otherwise defective due primarily to EDS'
fault or negligence, EDS shall correct such defect within a reasonable
time not to exceed thirty (30) days without charge to FVH.
8.3 Limitation of Liability. In the event EDS shall be liable to FVH on
account of EDS' performance or nonperformance of its obligations under
this Agreement, whether arising by negligence, willful misconduct, or
otherwise, (a) the amount of damages recoverable against EDS for all
events, acts, or omissions shall not exceed an amount equal to six (6)
times the aggregate monthly compensation payable by FVH to EDS pursuant
to Section 5.1 hereof for the month preceding the month in which such
damages first arose, plus the implementation fee set forth in Section
5.5, and (b) the measure of damages shall not include any amounts for
indirect, consequential, or punitive damages of any party, including
third parties. Further, no cause of action which accrued more than two
years prior to the filing of a suit alleging such cause of action may be
asserted against EDS. In connection with the conduct of any litigation
with third parties relating to any liability of EDS to FVH or to such
third parties, EDS shall have all rights (including the right to accept
or reject settlement offers and to participate in such litigation) which
are appropriate to its potential responsibilities or liabilities.
8.4 Patent Indemnity. Without limitation of liability, EDS and FVH each
shall indemnify, defend, and hold harmless the other from and against
any and all claims, actions, damages, liabilities, costs, and expenses,
including reasonable attorneys' fees and expenses, arising out of any
claim or claims of infringement by the indemnitor of any United States
letters patent, trade secret, copyright, trademark, service mark,
tradename, or similar proprietary right conferred by common law or any
law of the United States or any state alleged to have occurred because
of action taken or not taken by the indemnitor; provided, however, that
this indemnity shall not apply unless the indemnified party shall have
informed the other as soon as practicable of any claim or action
alleging such infringement and shall have given the indemnitor full
opportunity to control the response to such claim or action and the
defense thereof, including, without limitation any agreement relating to
the settlement thereof.
ARTICLE IX. MISCELLANEOUS
9.1 Right of EDS to Perform Services for Others. EDS may perform data
processing services for third parties at any EDS information processing
center that EDS may utilize for processing FVH's data, subject to
Sections 6.3(b) and 6.3(c).
9.2 Hiring of Employees. During the term of this Agreement and for a period
of twelve (12) months thereafter, neither party will, without the prior
written consent of the other, offer employment to or employ any person
employed then or within the preceding twelve (12) months by the other
party, if the person was involved in providing or receiving Services.
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9.3 Notices. Wherever under this Agreement one party is required or
permitted to give notices to the other, such notice shall be deemed
given when delivered in hand or by overnight courier service or when
mailed by United States mail, first class mail, postage prepaid, and
addressed as follows:
In the case of EDS:
Electronic Data Systems Corporation
5400 Legacy Drive
Plano, Texas 75024
Attn: President - Electronic Commerce Division
With a copy to:
Electronic Data Systems Corporation
5400 Legacy Drive
Plano, Texas 75024
Attn: EDS LEGAL AFFAIRS DEPARTMENT
In the case of FVH:
FIRST VIRTUAL HOLDINGS INCORPORATED
c/o Bob Kahan, Esq.
Stein, Kahan and Rosenberg
1299 Ocean Ave.
Santa Monica, California 91401
With a copy to:
William Bagley, Esq.
1720 Carey Ave.
P.O. Box 1436
Cheyenne, Wyoming 82003-1436
Either party hereto may from time to time change its address for
notification purposes by giving the other prior notice of the new
address and the date upon which it will become effective.
9.4 Counterparts. This Agreement may be executed in one or more counterparts
for the convenience of the parties hereto, all of which taken together
shall constitute one single agreement between the parties hereto.
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<PAGE> 19
9.5 Relationship of Parties. EDS, in furnishing services to FVH
hereunder, is acting only as an independent contractor. EDS does not
undertake by this Agreement or otherwise to perform any obligation of
FVH, whether regulatory or contractual, or to assume any responsibility
for FVH's business or operations. EDS has the sole right and obligation
to supervise, manage, contract, direct, procure, perform or cause to be
performed, all work to be performed by EDS hereunder unless otherwise
provided herein.
9.6 Notices, Approvals and Similar Actions. Where notice, agreement,
approval, acceptance, consent or similar action by either party hereto
is permitted or required by any provision of this Agreement, such action
shall not be effective unless in writing signed by the party against
whom such action is sought to be enforced. All requests and designations
hereunder shall not be effective unless in writing. Any approval
required by any provision of this Agreement shall be readily
forthcoming unless the party whose consent is required shall state in
writing a valid business reason for withholding such consent.
9.7 Force Majeure. Each party hereto shall be excused from performance
hereunder for any period and to the extent that it is prevented from
performing any action pursuant hereto, in whole or in part, as a result
of delays caused by the other party or an act of God, war, civil
disturbance, court order, labor dispute, or other cause beyond its
reasonable control, including without limitation failures or
fluctuations in electrical power, heat, light, air conditioning or
telecommunications equipment. Such nonperformance shall not be a default
hereunder or a ground for termination hereof. Notwithstanding the
foregoing, during any period when EDS' performance is hindered or
precluded by reason of any of the aforesaid causes, FVH's obligations to
make payments hereunder shall be reduced on an equitable basis.
9.8 Waiver. A waiver by either of the parties hereto of any of the
covenants to be performed by the other or any breach thereof shall not
be construed to be a waiver of any succeeding breach thereof or of any
other covenant herein contained.
9.9 Media Releases. All media releases, public announcements and public
disclosures by any party hereto relating to the pricing terms contained
in this Agreement or promotional or marketing material using the name,
logo and/or service marks of the other party, but not including any
announcement intended solely for internal distribution or any disclosure
required by legal, accounting or regulatory requirements beyond the
reasonable control of such party, shall be coordinated with and approved
by the other party hereto prior to the release thereof, which approval
shall not be unreasonably withheld. Subject to the foregoing, FVH shall
have no restriction on its ability to market, advertise or promote its
business interests.
9.10 Entire Agreement. This Agreement, including any Schedules and Exhibits
referred to herein and attached hereto, each of which is incorporated
herein for all purposes, constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof as of
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the Effective Date and there are no representations, understandings or
agreements relative hereto which are not fully expressed herein.
9.11 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
9.12 Assignment. Neither party hereto may assign any rights or delegate its
obligations hereunder without consent from the other, which consent may
not be unreasonably withheld.
9.13 Amendment. This Agreement may be amended, supplemented, and terminated
only be a written instrument duly executed by both FVH and EDS.
IN WITNESS WHEREOF, EDS and FVH have each caused this Agreement to be
signed and delivered by its duly authorized officer, all as of the date first
set forth above.
ELECTRONIC DATA SYSTEMS FIRST VIRTUAL HOLDINGS
CORPORATION INCORPORATED
By: /s/ Thomas R. Malis III By: /s/ Lee H. Stein
------------------------- -------------------------
Name: Thomas R. Malis III Name: Lee H. Stein
------------------------- -------------------------
Title: Division Vice President Title: President
----------------------- -------------------------
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SCHEDULE A
EDS BASE SERVICES
OVERVIEW
First Virtual will be established to promote commerce over the Internet.
Commerce will be effected by facilitating the payment for information based
services between buyer and seller without disclosing marketable payment
information over the network (eg. actual commercially accepted account
numbers). First Virtual desires to out source the actual merchant and
cardholder accounting functions with said service.
EDS WILL:
Provide Account Access as follows:
- Provide on-line viewing and updates capabilities to the below the line
system for authorized (by First Virtual or EDS) personnel on site at
EDS/Westlake;
- Create Broker, Demographic, Buyer Settlement, and Seller Settlement
Accounts based on the demographic information provided during the
scheduled batch process;
- Create a cross reference table of First Virtual Account Id, Buyer
Account and Seller Account;
- Create a file of credit card information for Buyers;
- Receive DDA numbers for Sellers, via check, and update the record
accordingly. This will be a manual process;
- Receive credit card information and update the appropriate record
accordingly.
Support Transaction Processing as follows:
- Define formats for communications between First Virtual and EDS;
- Receive/send transactions, batched per EDS defined format, in regular
transmissions from/to First Virtual;
- Retain transaction reference numbers for the life of the transaction
and provide archival access thereafter;
- Buyer transaction will be held in suspense until a First Virtual
prescribed threshold is exceeded or the prescribed number of days has
elapsed. Threshold and number of elapsed days is controlled at the
Broker level;
- Release payment to the seller based on a First Virtual prescribed time
table (established at the Broker level);
- Payment to sellers will be net purchases and generated in the form of
ACH credit;
- Calculate and create ACH transactions for collection of seller related
fees for payment transactions processed;
- Maintain reference between First Virtual Account Id and seller/buyer
account;
- Interface to a Federal Reserve Bank member for ACH transactions;
- Interface to MasterCard and VISA for authorizations and settlement;
- Provide non-payment information (chargeback) to First Virtual for
action deemed appropriate by First Virtual.
<PAGE> 22
EDS Statement of Work
First Virtual
Support Transaction Processing as follows: (continued)
- Receive and process transactions from the originating bank (may be
presented via on-line entry or file transfer) to the below the line
system for disposition of returned/rejected Federal Reserve items
requirements definition to be completed by originating bank/First
Virtual;
- Generate the appropriate reporting to meet management needs;
- Automated handling of chargeback and retrieval from the bankcard
networks, install to be after live date; install to be no later than
four (4) weeks after definition document received;
- Update the buyers' accounts with new add data from the ARU, minimum of
once a day;
- Support updates to buyers' accounts with ARU data multiple times per day
or in real time after the live date (date to be mutually agreed to);
- Retrieve mail from First Virtual P.O. Box;
- Update seller account with demand deposit account information from
checks;
- Stamp checks, 'for deposit only' and forward to First Virtual designated
bank for processing;
- Payment from buyers will be via MasterCard or VISA, DDA as a vehicle for
payment to be later in the project;
- Build and maintain a listing of bankcard account numbers, per
requirements specified by First Virtual, initially for reporting
purposes only;
- Upon request from First Virtual, and authorization from the VISA and
MasterCard, block account numbers as payment mechanism. Based on
parameters defined by First Virtual.
Provide Customer Service as follows:
- Provide 24-line Audio Response Unit for capture and reporting of credit
card information;
- Support requests from First Virtual, to expand Audio Response Unit;
- Assist with obtaining unique P.O. Box, all related fees will be passed
on to First Virtual;
- Accumulate extraneous mail sent to First Virtual P.O. Box and forward to
First Virtual, weekly;
- Provide support for an 800 customer number, recording only;
- Assign a Business Analyst to the First Virtual account for the purpose
of supporting First Virtual in the terms of problem resolution, acting
as project leader for future development requests, and responding to day
to day inquiries.
Support Operations as follows:
- Monitor the above the line hardware on a intermittent rather than a
continuous basis. Report outages to First Virtual and facilitate
maintenance/problem resolution by vendors;
- Monitor the above the line software based on documentation and
instructions provided by First Virtual and report problems to First
Virtual.
2
<PAGE> 23
EDS Statement of Work
First Virtual
Support Operations as follows: (continued)
-------------------------------------------
- Monitor the above the line system connection to PSI, report outages to
PSI and advise First Virtual;
- Back up data on the below the line system and store off site, back up
will be six days a week, Monday through Saturday as is EDS' standard
today;
- Back up data on the above the line system and store off site, back up
will be six days a week, Monday through Saturday as is EDS' standard
today;
- With First Virtual develop documentation for service and processing
provided to First Virtual including, but not limited to, on-line
access to account information, updates to accounts (adding DDA
information), monitoring the above the line system, backing up above
the line system data, problem resolution to the above the line system,
problem resolution to above the line communication network;
- Maintain and update documentation on an ongoing basis;
- Cost for tapes for back of above the line system will be passed through
to First Virtual;
- Provide for 7x24 access to the above the line hardware for First Virtual
personnel and/or First Virtual designated authorized personnel;
- Pass through the expense of the background check, when required for
individuals requiring 7x24 access.
Provide Settlement support as follows:
--------------------------------------
- Electronic statement (settlement summary) will be created for both
buyer and seller activity delivered through First Virtual;
- Buyer will elect to have transactions settled via bankcard;
- Sellers will elect to have transactions settled via ACH. EDS will,
at the time of generation, properly label items relative to their
origin for research purposes and return to originator (Federal Reserve
sponsor);
EDS will support an Environment as follows:
-------------------------------------------
- A new client server environment will be created to provide front end
processing to the cardholder and merchant legacy systems;
- Front end system will maintain a number of tables that provide views
from a seller, buyer, broker and transaction perspective;
- One merchant account, per type of product, (broker) will be established
on the Merchant System to represent the clearing entity of First
Virtual for cardholders wishing to settle their accounts via MasterCard
or VISA;
- Clearing description will be maintained at the Broker level for all
First Virtual settlement (22 positions defined by First Virtual);
- Seller charge options will include per item (sales/credit transaction)
and/or a percentage of volume and/or per ACH item generated;
- Provide a secured environment with back up emergency power supply for
above the line systems at EDS/Westlake.
<PAGE> 24
SCHEDULE B
FVH OBLIGATIONS
FIRST VIRTUAL WILL:
Provide Account Access as follows:
----------------------------------
- No support requirements
Support Transaction Processing as follows:
------------------------------------------
- Subscribe to EDS defined formats for communications between First
Virtual and EDS;
- Send/receive transactions, batched per EDS defined format, in regular
transmissions from/to EDS, minimum of once a day with increases to
mutually agreed to;
- Prescribe dollar threshold or date trigger to release transactions for
payment by the buyer;
- Prescribe time table to release payment to the seller;
- Define seller related fees for payment transaction processed;
- Acquire a relationship with a sponsoring Federal Reserve member;
- Define requirements for below the line system to disposition
returned/rejected Federal Reserve items;
- Ensure bank sponsoring Federal Reserve action will execute a remote
origination agreement with the Cleveland Federal Reserve if required;
- Obtain sponsorship into MasterCard and/or VISA;
- Accept and process non-payment information (chargeback);
- Define report requirements with input from EDS;
- Designate a bank for processing seller checks;
- Provide definition document for automated handling of chargeback and
retrieval from the bankcard networks;
- Provide the requirements for building and maintaining listing of
bankcard account numbers, per requirements specified by First Virtual,
initially for reporting purposes only;
- Obtain authorization to block accounts as payment mechanism from VISA
and MasterCard, in writing. Forward a copy to EDS along with the
requirements for such blocking.
Provide the following Customer Service support
----------------------------------------------
- Provide customer service support, via mail on the Net;
- Pay for P.O. Box.
<PAGE> 25
First Virtual
Support Operations as follows:
- Purchase and install and maintain ownership of hardware required to
support the above the line processing;
- With EDS develop documentation for service and processing provided to
First Virtual including, but not limited to, on-line access to account
information, updates to accounts (adding DDA information), monitoring
the above the line system, backing up above the line system data,
problem resolution to the above the line system, problem resolution to
above the line communication network;
- Cost for tapes for back of above the line system will be a pass through
to First Virtual;
- Provide advance notices and comply with request for security/background
checks, in keeping with EDS' standard background investigation
procedures for individuals requiring 7x24 access to the above the line
hardware;
- Make payment for standard background checks, when required.
Provide Settlement support as follows:
- Determine and execute action to the buyer and/or seller for
transactions declined during the authorization cycle;
- Provide buyer with details of items settled to the networks;
- Provide seller with details of items submitted for payment;
- Advise buyers that all transactions will be settled via bankcard;
- Advise sellers that all transactions will be paid via ACH to DDA
(demand deposit account).
Environment
- First Virtual will define the clearing description that will be
maintained at the Broker level for all First Virtual settlement (22
positions defined by First Virtual);
- First Virtual will define seller charges, which can include per item
and/or a percentage of volume with pass through of interchange.
Outside the Scope
- Automated handling of items returned from the Federal Reserve because
such items will be returned to the originating bank;
- The ACH originating bank will be responsible for procedures to
disposition ACH returned items;
- Conversion of network purchases from non US to US denomination of
currency - initial assumption is to lead off with a US based product,
however, a currency code field will be defined in the message formats;
- EDS will not directly access the Internet (e.g. firewall development is
First Virtual responsibility);
- Real time, continuous back up of the above the line data.
<PAGE> 26
SCHEDULE C
FIRST VIRTUAL
BUNDLED PRICING
MONTHLY TRANSACTION CHARGE - ASSESSED ON EACH INFO PURCHASE-"BEFORE THE TUBE"
TRANSACTIONS BETWEEN
0 - 5,000,000 0.08*
5,000,001 - 10,000,000 0.075
*NOTE-BUNDLE PRICING INCLUDE BATCH AUTHORIZATION FEE. FIRST VIRTUAL WILL NOT
RECEIVE A PASS THROUGH COST OF 5 CENTS FOR A BATCH. AUTHORIZATION FROM FIRST
USA VIA EDS. IT IS EDS' UNDERSTANDING THAT FIRST VIRTUAL'S TRANSACTION
PROCESSING FROM FIRST USA IS 7 CENTS PER TRANSACTION PLUS INTERCHANGE AND
QUARTERLY ASSESSMENTS. PLEASE REFERENCE "SCOPE OF SERVICES FOR BUNDLED PRICING."
ADDITIONAL CHARGES - NOT INCLUDED IN BUNDLED PRICING
BUYER ACCOUNT SET UP FEE 0.35
SELLER ACCOUNT SET UP FEE 3.50
PASS THROUGH EXPENSES
ACH ORGANIZATION
TELECOMMUNICATIONS
POSTAGE
CARD PLASTIC STOCK
NON-STANDARD STATIONARY STOCK
NETWORK ASSESSMENTS, INTERCHANGE AND OTHER CHARGES
TRAVEL AND LIVING EXPENSES INCURRED IN SUPPORT OF THE CUSTOMER
MONTHLY MINIMUM $5,000
ONE TIME DEVELOPMENT $150,000
6
<PAGE> 27
June 28, 1996 [EDS LETTERHEAD]
First Virtual Holdings Incorporated
11975 El Camino Real, Suite 300
San Diego, California 92130
Gentlemen:
Effective October 12, 1994, First Virtual Holdings Incorporated ("First
Virtual") and Electronic Data Systems Corporation ("EDS") entered into a certain
Agreement for Information Technology Services (the "Agreement"). On July 1,
1996, First Virtual plans to take responsibility for certain Base Services
under the Agreement from a computer facility different than the EDS facility
in Westlake, Ohio. Therefore, First Virtual and EDS now agree to compromise and
settle all outstanding issues between them relating to performance under the
Agreement, and continuation of certain services under the Agreement, all under
the terms and conditions set forth in this letter ("Amendment") which shall be
the sole agreement between the parties.
In consideration of the mutual obligations expressed herein, the parties agree
as follows:
Immediately upon execution of this letter, First Virtual shall pay to EDS the
sum of Two Hundred Twenty Thousand Three Hundred Seventy Eight Dollars
($220,378.00) ("Payment"). This payment and execution of the Amendment
represent full and final settlement of all obligations by and between both
parties relating to such matters under the Agreement, as follows:
- $120,378.00 represents all sums due and owing to EDS under the
Agreement for transaction processing through May 31, 1996; and
- $100,000.00 is an additional payment in satisfaction of any and all
other amounts that may be due and owing under the Agreement (except
as stated in the paragraph immediately below), to include
implementation and early termination payments;
- In addition, First Virtual agrees to pay, immediately upon receipt of
an invoice therefor, all charges for transaction processing
attributable to the period from June 1, 1996 through June 30, 1996,
upon which date all obligations of the parties under the Agreement
shall cease except as expressly set forth in this Amendment.
Upon execution of this Amendment, all obligations of the parties under the
Agreement are modified as follows:
<PAGE> 28
Commencing execution of this Amendment and continuing until either party
terminates the Agreement by providing sixty (60) days written notice to
the other, the Agreement shall remain in force and effect, except the
following sections are deleted, having no further force or effect:
Sections 2.1, 2.2, 3.2, 3.3, 3.5, 4.1(g, h and i), 5.2, 5.5, 5.8, 7.2
(a, b and c), and 9.2 of the Agreement and all exclusivity and
termination provisions wherever found in the Agreement; and
Minimum monthly charges shall no longer apply as set forth in the
Agreement. EDS shall continue to provide services to First Virtual as
provided in Schedules A and C to the Agreement until the earlier of (i)
August 1, 1996, or (ii) when First Virtual provides EDS written notice
that Amendment One to Schedule A and Amendment One to Schedule C (both
of which are attached hereto) are to take effect; and
Section 9.3 is hereby modified so that all notices to First Virtual
shall be made to John Donegan, Vice President Operations at Suite 300,
11975 El Camino Real, San Diego, California 92130 with a copy to:
Richard DeGolia, Esq., Wilson Sonsini Goodrich & Rosati, 650 Page Mill
Road, Palo Alto, California 94303-1050.
Except as expressly provided herein, the parties will have no further
obligation or responsibility to each other under the Agreement. Please indicate
your acceptance of and agreement to this Amendment by having an authorized
representative of First Virtual execute both of the enclosed copies of this
letter in the space provided below and return one copy to EDS.
Sincerely,
Electronic Data Systems
Corporation
By: /s/ Thomas R. Malin, III
-----------------------------------------------
Name: Thomas R. Malin, III
Title: Vice President, Card Processing Services
ACCEPTED AND AGREED:
First Virtual Holdings Incorporated
By: /s/ Lee Stein
-----------------------------------
Name: Lee Stein
Title: President
<PAGE> 29
AMENDMENT ONE
SCHEDULE A
EDS BASE SERVICES
OVERVIEW
First Virtual will be established to promote commerce over the Internet.
Commerce will be effected by facilitating the payment for information based
services between buyer and seller without disclosing marketable payment
information over the network (e.g. actual commercially accepted account
numbers). First Virtual desires to out source the actual merchant and
cardholder accounting functions with said service.
EDS WILL:
Provide Account Maintenance as follows:
- Receive DDA numbers for Sellers, via check, and send information to First
Virtual via Barr/RJE; This will be a manual process; (check data entry)
- Receive credit card information from ARU and send to First Virtual:
Support Transaction Processing as follows:
- Send/receive transactions, batched per EDS defined format, in regular
transmissions from/to EDS, minimum of once a day with increases as mutually
agreed to (per attached "File Exchange Schedule"), via Barr/RJE.
- Retain transaction reference numbers 6 months after transaction and provide
archival access thereafter,
- Payment to sellers will be generated in the form of ACH credit as directed by
batch file from First Virtual (via Barr/RJE)
- Interface to a Federal Reserve Bank member for ACH transactions; to include
payments & credits
- Interface to MasterCard and VISA for authorizations and settlement;
- Provide non-payment information (chargeback) to First Virtual for action
deemed appropriate by First Virtual
- Receive transactions from the originating bank (may be presented via on-line
entry or file transfer) and send to First Virtual (via Barr/RJE) for
disposition of returned/rejected Federal Reserve items,
- Generate the appropriate reporting to meet management needs (monthly
accounting statements); as currently defined and supported,
- Retrieve mail from established First Virtual P.O. Box;
- Stamp checks "for deposit only" and forward to First Virtual designated bank
for processing;
<PAGE> 30
EDS Statement of Work
First Virtual
Provide Customer Service as follows:
- Provide 24-line Audio Response Unit for capture and reporting of credit card
information;
- Accumulate extraneous mail sent to First Virtual P.O. Box and forward to
First Virtual weekly;
- Provide support for the current 800 customer number; recording only;
- Assign a Business Analyst to the First Virtual account for the purpose of
supporting First Virtual in the terms of problem resolution, and responding to
day to day inquiries.
<PAGE> 31
EDS Statement of Work
First Virtual
AMENDMENT ONE
SCHEDULE B
FVH OBLIGATIONS
FIRST VIRTUAL WILL:
Support Transaction Processing as follows:
- Subscribe to EDS defined formats for communications between First Virtual and
EDS:
- Send/Receive transactions, batched per EDS defined format, in regular
transmissions from/to EDS, minimum of once a day with increases as mutually
agree to (per attached "File Exchange Schedule"), via Barr/RJE.
- Continued current report requirements with input from EDS; (a monthly report);
Provide the following Customer Service support
- Pay for P.O. Box
Provide Settlement Support as follows
- Provide buyer with details of items settled to the networks;
- Provide seller with details of items submitted for payment;
Outside the Scope
- First Virtual will be responsible for procedures to disposition ACH returned
items;
Conversion of network purchases from non US to US denomination of currency -
initial assumption is to lead off with a US based product, however, a currency
code field will be defined in the message formats;
<PAGE> 32
FILE EXCHANGE SCHEDULE
EDS/FIRST VIRTUAL HOLDINGS INC.
EDS to First Virtual
Production
Report Time Day(s)
-----------------------------------------------------------------------------
DDA updates 11:00pm M-F
ARU updates every 2 hours M-Su
Chargebacks 9:30pm M-F
ACH returned between 3am and 5am M-F
Approved 9:45am and 4:45pm M-Su
Declines 9:45am and 4:45pm M-Su
TE400 11:30am and 7:30pm M-Su
First Virtual to EDS
Production
Report Time Day(s)
-----------------------------------------------------------------------------
Bauths every hour M-Su
Deposits 11:00am and 7:00pm M-Su
ACH out 9:00am and 7:00pm M-F
<PAGE> 33
AMENDMENT ONE
SCHEDULE C
FIRST VIRTUAL
PRICING
MONTHLY TRANSACTION CHARGE:
---------------------------
A1. ASSESSED ON EACH AUTHORIZATION/BETWEEN
0 - 5,000,000 0.04
5,000,001 - 10,000,000 0.04 OR LESS
A2. EACH SETTLEMENT
5,000,000 0.04
10,000,000 0.04 OR LESS
B. ELECTRONIC BATCH HEADER
1 PER FILE 0.10
C. ACH TAPE SETTLEMENT FEE/PER MONTH/PER TYPE OF FILE
250.00
D. ON-LINE MERCHANT STATEMENT FEE PER MONTH 0.025
E. MERCHANT ACCOUNT ON FILE PER MONTH 0.40
F. RETRIEVAL REQUEST 2.00
ADDITIONAL CHARGES
------------------
BUYER ACCOUNT SET UP FEE 0.46
SELLER CHECK HANDLING 0.50
NOTE: BUYER SETTLEMENT FEES INCLUDE THE 0.04 TRANSACTION PROCESSING FEE.
<PAGE> 34
PASS THROUGH EXPENSES
ACH ORIGINATION
TELECOMMUNICATIONS
POSTAGE
CARD PLASTIC STOCK
NON-STANDARD STATIONARY STOCK
NETWORK ASSESSMENTS, INTERCHANGE AND OTHER CHARGES
TRAVEL AND LIVING EXPENSES INCURRED IN SUPPORT OF THE
CUSTOMER
COURIER CHARGES
NO MONTHLY MINIMUM