Exhibit 10.19

 

CONFIDENTIAL TREATMENT HAS BEENREQUESTED FOR CERTAIN REDACTED PROVISIONS OF THIS AGREEMENT. THE REDACTEDPROVISIONS ARE INDICATED BY THREE ASTERISKS ENCLOSED BY BRACKETS AND UNDERLINED.THE CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE SECURITIES ANDEXCHANGE COMMISSION.

 

 

LETTER OF INTENT

 

This LETTER OF INTENT(this "LOI") is entered into effective as of NOVEMBER 9, 2004 (the "EffectiveDate") by and between NBO Systems, Inc., a Maryland Corporation ("NBO"), withits principal place of business at 3676 W. California Avenue, Building D, SaltLake City, Utah 84104, and GREAT LAKES SCRIP CENTER, L.L.C. ("GLSC"), with anaddress of 2111 44th Street Southeast, Grand Rapids, Michigan, 49506. NBO andGLSC are sometimes each referred to herein as a "Party" and collectively the"Parties".

 

RECITALS:

 

       A. NBO is in the business of developing, marketing, owning and operating remotedistribution and processing systems for gift cards, gift certificates, giftrights, vouchers, and other instruments allowing the giving of a right toreceive a credit toward the purchase of merchandise or services.

 

       B. GLSC is in the business of selling and distributing Scrip and relatedproducts to non-profit organizations.

 

       C. The Parties desire to enter into a Pilot Relationship whereby GLSC willutilize NB0's Community Scrip Card ("CSC") for sale and distribution as furtherdefined herein.

 

       D. The Parties desire to evaluate the Pilot Relationship upon its conclusionand, based upon its success, enter into a formal licensing/distributionagreement, the details of which are yet to be defined, and will be executed byseparate agreement.

NOW, THEREFORE, Inconsideration of the premises set forth above, the mutual promises, covenants,agreements and benefits set forth herein below, and for other good and valuableconsideration, the Parties agree as follows:

 

       1. That the Parties enter into this LOI as of the Effective Date listed above,with a Pilot Relationship Term ("PRT") beginning as soon as Discover Card Stock(encoded and embossed) is available, and ending not sooner than three monthsafter the start of the PRT. The PRT can be extended beyond the initial threemonth term through the Parties' mutual written consent.

 

       2. Upon the end of the PRT, the Parties agree to enter negotiations towards theestablishment of a formal licensing and distribution agreement. The Parties mayembark on such negotiations before the end of the PRT, as they deem necessary.

 

----

 

       3. PRT Overview

 

               i. GLSC will designate up to three (3) states as the target market for the PRT.Per recent discussions with GLSC, NBO expects the three states to be California.Iowa, and Minnesota.

               ii. Card volumes for the PRT are to be determined, but NBO's expectation is thatat least **[* * *]** cards will be required for the PRT.

               iii. During the PRT, NBO and GLSC agree to share sales data, including number ofcards delivered to GLSC, and number and denominations of cards delivered toschools in target market states.

               iv. The card design for the PRT is the existing NBO CSC design, as shown to GLSCduring NBO's Oct 13 2004 visit. NBO is willing to redesign the card to suitGLSC's needs after the PRT, provided that NBO's branding features retain asignificant presence on the cards.

               v. The current CSC cards are branded Discover prepaid credit cards, with theDiscover logo and security marks on the card front.

               vi. After the PRT, NBO and GLSC may agree to enable direct sales via theinternet or NBO's call center.

 

4. Economics

 

               i. GLSC will purchase cards from NBO at **[* * *]**.

               ii. GLSC may sell the cards in their target market at [*** * *]**:NBO's expectation is that GLSC will sell cards at a **[* * *]**
               iii. **[* * *]**
               iv. **[* * *]**
               v. **[* * *]**
               vi. **[* * *]**
               vii. **[* * *]**
 

5. CSC Details

 

               i. CSC cards are redeemable only at outlets of merchants who participate in theCSC program.

               ii. NBO will provide GLSC a baseline list of participating merchants and willsupply regular updates to that list.

               iii. **[* * *]**
               iv. CSC card denominations for the PRT will be **[* * *]**.

               v. NBO to provide cards to GLSC with expiration months set 8 months later thancard encoding month. The intent here is to ensure that the cards have no fewerthan 6 months worth of valid use when GLSC activates the cards. NBO may adjustthe absolute longevity of the cards as necessary, with the continuing intentthat the cards have at least 6 months of valid use when GLSC activates thecards.

               vi. GLSC will make an initial announcement to all Scrip Coordinators in thethree-state pilot area and will send periodic reminders to those clients duringthe PRT.

 

 

               vii. **[* * *]**viii. **[* * *]**In particular instructingGLSC's customers to ensure that Terms and Conditions sheets accompany everycard, per Discover association regulations.

 

6. Logistics

 

               i. **[* * *]**
               ii. **[* * *]**If GLSC requires additional activation centers, costsfor those centers to be negotiated between the Parties.
               iii. **[* * *]**
               iv. GLSC activates the cards as necessary in response to GLSC's customers'orders. 

               v. GLSC ships activated cards, along with collateral material, to GLSC'scustomers.

 

IN WITNESS WHEREOF,the Parties have entered into this LOI as of the Effective Date listed above.

 
**Great Lakes		Scrip Center:

 

By: /s/ Jack		Smith

Name Jack		Smith

Title		President**NBO Systems,		Inc.:**
 

By: /s/		Christopher Foley

Christopher		Foley

Chief		Financial Officer
 
 
DATED:		11/9/04
DATED:		11/9/04**