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EXHIBIT 10.19  

 
 

Credit Card Alliance Agreement    
  

        This
Agreement, effective as of March 1, 2002 ("Effective Date"), is between Providian Bancorp Services, a California corporation, with principal offices located in San Francisco,
California (together with all its affiliates "Providian"), and PayPal Inc., a Delaware corporation with principal offices located in Palo Alto, California ("PayPal") (collectively, "the
Parties"). 

Recitals 

        A.    Providian
Bancorp Services is an affiliate of Providian National Bank and Providian Bank, each a Card Association member issuing general-purpose credit cards. Providian
provides marketing, credit, technology, operations, systems, compliance, audit and other card-related services and support to these card-issuing affiliates and enters into this
Agreement for and on their behalf in connection with the Program; 

        B.    PayPal
operates the world's largest Internet-based payment network, providing a secure online payment service to its over 13 million customers. PayPal operates a
World Wide Website at http://www.paypal.com (the "PayPal Website"), that allows users to sign up for or use the PayPal products and services involving its online payment services (collectively, the
"PayPal Services"); 

        C.    PayPal
(formerly named X.com Corporation) and Providian previously executed a Credit Card Alliance Agreement dated as of February 2, 2001 (the "Old Agreement"). 

        D.    The
Parties want to enter into this Agreement so that Providian, through its card-issuing affiliates, continues to offer and provide a PayPal
co-branded Card (bearing a PayPal Mark and a Providian Mark) that will be the preferred credit card promoted through the PayPal Services, and as such will be afforded by PayPal the
"preferred alliance partner" opportunities set forth in this Agreement. This Agreement supersedes the Old Agreement as of the above Effective Date and all prior agreements and amendments, both written
and oral, between the Parties pertaining to the Program. 

        NOW,
THEREFORE, for valuable consideration, the Parties agree as follows: 

	1.
	DEFINITIONS.
When used in this Agreement, unless the context clearly indicates otherwise: 

        1.1  "Account"
means a revolving, open-end credit account provided by Providian for PayPal Members and Non-Member Consumers and established pursuant
to this Agreement, of which the features and terms are further described in this Agreement. 

        1.2  "Account
Agreement" means a credit agreement between Providian and a Cardholder with terms and conditions that apply to the Cardholder's Account. 

        1.3  "Active
Account" means an Account booked by Providian on or after March 1, 2002 that is in good standing and that has at least 1 purchase, cash advance,
quasi-cash or balance-transfer transaction posted to it within the first year after it is booked. Such a transaction does not include a fee or charge such as an annual fee or a credit
adjustment. 

        1.4  "Active
Member" means a Member (defined below) that has logged in their PayPal account or received a payment in that account within 90 days as further described
in relevant provisions in this Agreement. 

CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

 

        1.5  "Agreement"
means this Credit Card Alliance Agreement, including all attached Exhibits, which are incorporated by this reference, and any amendments, modifications, or
supplements to this Agreement. 

        1.6  "Applicable
Law" means applicable federal, state and local statutes, regulations, regulatory guidelines and judicial or administrative interpretations as well as any
rules or requirements established by the applicable Card Association. 

        1.7  "Applicant"
means a consumer who submits an Application or other request for an Account. 

        1.8  "Application"
means the action or document by which a Member requests and applies to Providian for an Account. 

        1.9  "Banner
Ad" means any image displayed in the banner space of the PayPal Website that is intended to serve as an advertisement for a product or service. 

        1.10 "Business
Day" means any day other than Saturday, Sunday and any day in which banks in the State of California are authorized or obligated by law to close. 

        1.11 "Card"
means a credit card issued for an Account pursuant to this Agreement that bears both a Providian Mark and a PayPal Mark. 

        1.12 "Card
Association" means either or both of MasterCard and Visa, as applicable. 

        1.13 "Cardholder"
means an individual, residing in the U.S., at or over the age of 18, who applies for and receives an Account. 

        1.14 "Cardholder
Data" means all information, whether personally identifiable or in aggregate, that is submitted and/or obtained by Providian about an Account or an
Application (whether or not completed), including without limitation, credit information, financial standing and demographic data, and Transaction Data. 

        1.15 "Chargeback"
means a transaction using the Account that is subsequently reversed pursuant to Card Association rules. 

        1.16 "Competing
Card Product" means a consumer or business credit card, charge card, card alliance program or co-branded card program that is marketed, offered
or issued by any entity other than Providian or its affiliates to consumers in the United States, but does not include debit cards or lines of credit not tied to credit cards, and does not include any
credit, charge, debit or other card, marketed, offered or issued outside the United States. 

        1.17 "Confidential
Information" means Providian Confidential Information or PayPal Confidential Information, except that it will not include: (1) information that, at
the time of disclosure, is already in the recipient's rightful possession or available to it or its employees from any source having no obligation not to disclose it; (2) information that is or
becomes available to the public; (3) information that the recipient receives from another source having no obligation not to disclose it; and (4) information which is independently
developed by the recipient without the use of any "Confidential Information" of the other Party. 

        1.18 "Marketing
Plan" means the written marketing plan agreed between the Parties as provided in Section 2.2(b) of this Agreement. 

        1.19 "MasterCard"
means the payment card association MasterCard International Incorporated. 

        1.20 "Member"
means any individual with an address within the United States or its territories and possessions that is or becomes registered to utilize the PayPal Services,
whether through a private-label network or otherwise. 

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        1.21 "Member
List" means the list of all Members whose PayPal accounts are not currently closed, locked or restricted by PayPal. The Member List will include each Member's
name, e-mail address, phone numbers, postal addresses and all associated data held by PayPal, which will remain PayPal
Confidential Information, which PayPal will license and provide to Providian under Section 4.1 of this Agreement, and which Providian will use solely for the purposes described in this
Agreement. 

        1.22 "New
Payment Products" means debit cards, stored value cards, online person-to-person payment products, online
person-to-merchant payment products, digital cash products and other new payment technologies that may become available during the Term. 

        1.23 "Non-Member
Consumer" means an individual that receives an advertisement for the Program on the PayPal Website and follows a hyperlink presented on that
site to receive more information about the Program, but does not complete the process to become a Member. 

        1.24 "PayPal
Confidential Information" means all confidential information and documents about PayPal or any of its affiliates, including without limitation, its financial
information, products, marketing plans, strategies, customers, processes and procedures, subject to the exceptions set forth in the definition of "Confidential Information." 

        1.25 "PayPal
Mark" means any design, image, visual representation, logo, service mark, trade dress, trade name, or trademark owned, used or acquired by PayPal now or during
the term of this Agreement. 

        1.26 "Program"
means the program under which Providian and PayPal will solicit Applications for Accounts pursuant to this Agreement. 

        1.27 "Providian
Confidential Information" means all confidential information and documents about Providian or any of its affiliates, including without limitation, its
financial information, products, performance of its products, strategies, marketing plans, performance of its marketing campaigns, customer lists, and Cardholder processes and procedures, subject to
the exceptions set forth in the definition of "Confidential Information." Providian Confidential Information also will include lists of customers or prospective customers, customer data and consumer
transaction data that PayPal receives, regardless of whether that information comes from Providian, from a customer or consumer or from a third party. 

        1.28 "Providian
Mark" means any design, image, visual representation, logo, service mark, trade dress, trade name, or trademark owned, used or acquired by Providian now or
during the term of this Agreement. 

        1.29 "Providian's
Marketing Area" means throughout the United States, its territories, and possessions, other than in the State of Wisconsin, as changed from time to time by
Providian. 

        1.30 "Term"
means the term of this Agreement as specified in Section 6 of this Agreement. 

        1.31 "Trademark"
means any Providian Mark or PayPal Mark. 

        1.32 "Visa"
means the payment card association Visa U.S.A. Inc. 

        1.33 "Web"
means the World Wide Web. "Website" means a location on the Web identified by a URL. 

        1.34 "Web
Page" means a file displayed through Web browser software and made available for viewing, by means of a download to local cache memory, over the Internet through a
common protocol. 

	2.
	THE
PROGRAM. 

        2.1    Offer of Accounts.    Providian will offer to Members and to Non-Member Consumers one or more types
of Accounts. Providian will have sole and complete responsibility and discretion to add, 

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delete or amend any of the terms and conditions applicable to Applications and Accounts, including but not limited to setting pricing terms, setting Providian-funded incentives to induce Members to
submit Applications, establishing new premium categories and other categories of Cards, and making other changes; provided that Providian will give PayPal at least 15 days' advance written
notice of any material changes. Any changes to terms and conditions will be subject to Applicable Law. Subject to Section 2.2(a), PayPal has the right to fund and offer any additional
incentives for adoption or use of the Card or the Account as long as such incentives do not violate Applicable Law. 

        2.2    Marketing of the Program.    PayPal and Providian will work jointly to develop and market the Program and to
solicit Applications from consumers residing in Providian's Marketing Area to enable Providian to establish Accounts and issue Cards, as follows: 

        (a)    Marketing Materials.    Subject to Section 2.1, PayPal and Providian will mutually develop and approve
all marketing, advertising and solicitation materials to be used for Program marketing, including without limitation, content and placement on the PayPal Website to promote the Program. If one Party
develops marketing materials, it will be subject to the other Party's prior written approval which will not be unreasonably withheld or delayed beyond a 10-Business-Day review
period. If PayPal develops
marketing materials, PayPal will incorporate all content identified by Providian as required for compliance with Applicable Law or compliance with Providian card-marketing standards. 

        (b)    Marketing Plan.    Within 30 days of the execution of this Agreement (unless the Parties mutually agree
on a different timetable), the Parties will agree on a written marketing plan specifically describing responsibilities and a timetable for the Parties' implementation and marketing efforts under this
Agreement (the "Marketing Plan"). 

        2.3    Card Design.    Updates to the design of the Card will be determined by mutual consent of the Parties, and will
include one or more of the PayPal Marks on the front of the Card and one or more of the Providian Marks on the back of the Card and will be subject to Applicable Law. Subject to the foregoing, the
PayPal Marks will be in a primary position and the Providian Marks will be in a secondary position on the back of the Card. 

        2.4    Providian as Sole Owner and Creditor of Accounts.    

        (a)    Account Ownership.    Providian will be the sole and complete owner and creditor of, and PayPal will have no
right, title or interest in, the Accounts, the Cards or Cardholder Data. Such ownership will in no way be affected by expiration or termination of the Program or this Agreement. As the creditor,
Providian will have sole discretion over the criteria that must be met to qualify for an Account, for a credit line increase or for repricing or other incentives Providian may wish to offer to
qualified Cardholders. 

        (b)    Applications; Account Servicing.    Without limiting the general nature of the foregoing, Providian will have
the right to decline an Application or Card request from any person who already has one or more credit cards or open-end revolving lines of credit with Providian or its affiliates. An
Application can only be approved by Providian, and neither PayPal nor any of its employees may legally bind or otherwise commit Providian to any agreement or arrangement of any kind. Providian will
have the exclusive right to collect amounts owed by a Cardholder on an Account and to receive payments from Cardholders. Providian will also have the exclusive right to terminate, block or suspend
credit or charge privileges in an Account. Providian will be solely liable for any charge-offs or other credit losses resulting from an uncollectible Account. 

        (c)    Marketing Other Products and Services.    Providian will have the right to market to Cardholders other banking
products or services offered by Providian or its affiliates and third-party membership programs selected by Providian. Providian, at its option, may use e-mail, direct mail 

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(including but not limited to inserts with Cardholders' Account statements), telemarketing and online advertising on the Providian Website and related Websites for such marketing efforts, provided
that: 

        (1)  Providian
obtains Cardholders' prior consent to the extent required by Applicable Law; 

        (2)  The
Parties follow the review and approval process in Section 2.2(a); 

        (3)  The
name, brand or mark of any such product, service or membership program does not have incorporated in it any PayPal Mark without PayPal's prior written consent; 

        (4)  Providian
will be solely responsible for compliance with Applicable Law governing such marketing and advertising efforts; 

        (5)  Providian
does not deliberately target-solicit Cardholders for the purpose of inducing them to use another banking product or service instead of their Account or their
Card, or for the purpose of avoiding compensation to PayPal under this Agreement; and 

        (6)  Providian
does not market a competitive Internet-based payments service to Cardholders, where "competitive" means that the service functions essentially as PayPal
Services function on the Effective Date; provided that Providian and its affiliates may continue to market and offer existing online payment services called BillPay Online and PaySmart and may market
and offer any money-transfer services between and among Providian deposit, credit or other transaction accounts. 

        Exceptions
to these restrictions may be made with the Parties' prior mutual written agreement. 

        Providian Non-Exclusivity. Providian and its affiliates will be free to offer credit card alliances, co-branded
credit cards or other affiliate programs to other companies, including other Internet-based payment services. 

	3.
	ISSUANCE,
ADMINISTRATION AND SERVICING OF ACCOUNTS. 

        3.1    Card Offers and Application Evaluation.    In accordance with this Agreement, Providian will perform for each
type of Account all functions of the issuing bank, including without limitation designing the Application forms, receiving, reviewing and processing Applications for Accounts, providing customer
service and otherwise administering and operating the Program and the relationships with Cardholders, evaluating the creditworthiness of each Applicant, establishing credit limits for each Account and
issuing Cards to qualified Applicants who accept Providian's offer and pay the applicable fee, if any. 

        3.2    Account and Card Issuance.    Providian will evaluate each Application or request for an Account and will open
an Account and issue a Card to each Applicant who is creditworthy according to Providian's credit criteria and standards, who accepts the terms of Providian's offer and who pays the applicable fees,
if any, to open an Account. As to each Application or request Providian approves, Providian will establish the credit line it deems appropriate. Providian will have no obligation or liability to
PayPal in connection with any credit procedure or decision with respect to an Application, and Providian will have no obligation to advise PayPal of its credit criteria or Providian's decision as to
any Application or request for a Card. Providian will use its best efforts, subject to maintaining high customer response rates and in accordance with Providian's privacy policies and applicable law,
to provide PayPal with information, both aggregate and specific, regarding Members that opened Accounts. PayPal will not communicate with Applicants about their Application; provided however, that if
a Member or Non-Member Consumer who is not a Cardholder contacts PayPal via standard PayPal customer service channels with a question about the Program or how to apply for an Account, then
PayPal may communicate with those Members or Non-Member Consumers according to PayPal's standard customer relations policies and will refer them to Providian, in a manner to be mutually
determined by the Parties, including but not limited to prior review and approval by Providian of any 

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script provided by PayPal to its customer service representatives regarding contacts with Applicants, Members and Non-Member Consumers about the Program. 

        3.3    Account Agreements.    Providian will be solely responsible for, have complete control and discretion over, and
bear the cost of production and printing of any Account Agreement. The contractual relationship with respect to each Account will be between Providian and the respective Cardholder. 

        3.4    Production of Cards.    In accordance with Section 2.3, Providian will produce, store, maintain and
emboss plastic stock for each Card solely at its own expense. 

        3.5    Account Administration and Servicing.    

        (a)    Customer Service.    Providian will be responsible for all Cardholder customer-service and record-retention
requirements relating to the processing of Applications and Accounts, including but not limited to Cardholder-initiated calls, Account statements (both on paper and electronic), and all forms
of customer service including online customer service. Providian will bear all costs of administering and providing customer service for Accounts, except as otherwise provided under this Agreement. 

        (b)    Payments.    PayPal will not accept payments on Accounts nor accept billing-error notices under the Fair Credit
Billing Act (Regulation Z) from Cardholders and instead will promptly forward them to Providian via first-class mail or, at Providian's request, via overnight courier at the address that
Providian specifies to PayPal, subject to Providian's change from time to time. If any Cardholder incorrectly makes a check, money order, draft, or other form of payment for an Account payable to the
order of PayPal rather than to the order of Providian or its agents, PayPal hereby expressly authorizes Providian to endorse the item on PayPal's behalf and to credit the payment to the appropriate
Account. Providian will substantially adhere to the Performance Standards as set forth in Exhibit A. 

        (c)    Service Levels.    Providian conducts reviews of its corporate-wide customer service performance
standards and will share these reviews, to the extent they apply to Cardholders, with PayPal on a regular basis. Providian and PayPal will promptly cooperate to develop procedures and a service level
agreement ("Service Level Agreement") regarding Account-related customer service matters including but not limited to the referral of Cardholders who contact a Party concerning a claim, complaint,
dispute or request for information regarding the other Party. PayPal will refer to Providian customer service in accordance with such procedures any Cardholders who contact PayPal concerning a claim,
complaint, dispute or request for information regarding Providian, Accounts or Cards. 

        3.6    Cardholder Inquiries Regarding PayPal.    Providian will refer any Cardholders who contact Providian concerning
a claim, complaint, dispute or request for information concerning PayPal to PayPal customer service in accordance with the referral procedures described in Section 3.5(c). PayPal will be
responsible for all Cardholder inquiries relating to PayPal as well as all complaints or disputes regarding PayPal; provided that Providian may take any action needed to comply with its obligations to
a Cardholder under Regulation Z and other Applicable Law. In addition, PayPal will provide Providian with any information or documents in its possession reasonably requested by Providian with
respect to a Cardholder's dispute concerning Providian, as long as Applicable Law and the PayPal Privacy Policy and User Agreement do not prohibit PayPal from releasing such information or documents. 

        3.7    Credit Risk.    As between Providian and PayPal, Providian will bear all risk of credit loss on the Accounts
and PayPal will have no responsibility for any such loss. 

        3.8    Limited License to PayPal Marks.    PayPal hereby grants to Providian, subject to compliance with the terms of
this Agreement, a limited, royalty-free, exclusive, non-transferable (except as set forth in Section 15.7 below), non-sublicensable right to use, display and
reproduce the PayPal Marks in connection with its marketing, promotion and operation of the Program as set forth in this Agreement. 

6

 

Providian will submit to PayPal, for its prior written approval, such approval not to be unreasonably withheld or delayed, samples of each of Providian's uses of the PayPal Marks. Providian will use
the
PayPal Marks only in a manner approved by PayPal. Except as otherwise provided by this Agreement, upon termination of this Agreement, Providian will promptly cease use of the PayPal Marks. 

        3.9    Legal Compliance.    Providian will be responsible for compliance with Applicable Law with regard to its
participation in the Program, its issuance of Cards and its extension of consumer credit, including those Applicable Law governing billings, consumer credit disclosures, billing error resolution,
collections, and any related charges, such as late fees and overlimit fees imposed on Cardholders and Accounts. 

	4.
	PAYPAL
MARKETING CHANNELS; CARD-RELATED INITIATIVES. 

        4.1    Member List.    PayPal hereby grants Providian a non-exclusive license to use the Member List to
enable Providian to solicit Members for the Card and the Account on a recurring basis throughout the Term. On a regular basis, but not less often than once at the end of each calendar month during the
Term, PayPal will furnish Providian will a full, complete and updated Member List. This monthly Member List will be in addition to any Member List that PayPal will provide to Providian for
e-mail marketing to Members. Besides using the Member List for internal analysis to understand and enhance Program performance results, for offering Cards and Accounts under
Section 4.2, and for any purpose to which the Parties mutually agree through the Marketing Plan or other means, Providian will not use the Member List for any other purpose. Upon the expiration
or termination of this Agreement for any reason, Providian promptly will destroy or return, at PayPal's sole discretion, any and all Member Lists and information regarding Members, except for
information that also is Cardholder information that belongs to Providian. 

        4.2    PayPal Website and E-mail.    PayPal will be responsible for the PayPal Website and
e-mail solicitations related to the Program, subject to Section 2.2. Providian will bear all costs of solicitation and fulfillment associated with the Program, except for costs to
develop and modify the PayPal Website (including without limitation Banner Ads) and to develop and send direct e-mail solicitations associated with the Program, which costs will be borne
by PayPal, unless otherwise agreed. PayPal will be solely authorized to distribute all e-mail solicitations and solely authorized to disseminate PayPal Website solicitations in accordance
with its Member communication policies, User Agreement, Privacy Policy and do-not-promote procedures in which Members have indicated to PayPal that they do not want to be
contacted with offers such as Card Offers. Unless PayPal agrees to exceptions in writing, Providian will only use PayPal's channels for e-mail and web solicitations. In connection with
PayPal's solicitation by e-mail of its Members, Providian may provide PayPal with such information relevant to creditworthiness of the Member-solicitees that may be relevant to restricting
the solicitation to a subset of Members, and Providian and PayPal will cooperate in coordinating such solicitation efforts, in accordance with the Marketing Plan. PayPal will keep all information
provided by Providian in accordance with the prior sentence confidential. Also, Providian will keep all information provided by PayPal private, sharing it only as necessary to carry out this Agreement
and only to Parties bound by confidentiality arrangements at least as strong as this Agreement. 

        4.3    Exclusivity.    

        (a)    Providian as Preferred Credit Card.    During the Term, including any Renewal Term, Providian will be the
exclusive United States credit card or charge card promoted by PayPal in the PayPal registration process on the PayPal Website. 

7

   
        (b)    Restrictions on Competing Card Products.    PayPal will not, in the U.S., without Providian's written
consent,
(1) sponsor, develop or participate in a Competing Card Product; (2) license or allow others to license PayPal Marks to promote a Competing Card Product; (3) negotiate, discuss or
solicit any offer to market or promote a Competing Card Product; or (4) sell, rent or otherwise make available to the issuer of a Competing Card Product any list of Cardholders or any usage and
demographic data on individual Cardholders, provided that PayPal will not be restricted from selling, renting or making available lists of its Members, or usage and demographic data on its Members, in
a manner that does not identify which Members are Cardholders. Notwithstanding the provisions set forth in this Section 4.4, PayPal may accept American Express and Discover on the PayPal system
and may inform Members accordingly. 

        (c)    Other Websites.    With respect to Websites other than the PayPal Website that PayPal may acquire, operate or
control during the Term or any Term renewal, where such Websites do not already have exclusive relations with an organization other than Providian to offer a Competing Card Product directed to a U.S.
market, PayPal will provide Providian with a right of first offer prior to negotiating with, or soliciting proposals from, any Party other than Providian to promote, advertise or solicit a Competing
Card Product on such Websites. In the event that the Parties are unable to complete an agreement on a credit card alliance or co-branding program for such other Website within
45 days after PayPal notifies Providian that the first offer period has begun, then PayPal will be free to negotiate to promote Competing Card Products through such other Website. 

        (d)    Co-branded Sites.    PayPal will use its best efforts to include Providian as the preferred credit
card for the U.S. market under the terms of this Agreement in any co-branded Website that PayPal develops in partnership. A co-branded Website is one that has third-party
branding above the fold and a URL that indicates the joint offering of the PayPal service with the third party. As required by the specific partnership, PayPal may be required either not to offer Card
(or other) Products at all, or to support on the co-branded Website the partner's choice of credit card. 

        (e)    New Payment Products.    Consistent with the Parties' strategic banking relationships, with respect to U.S.
domestic New Payment Products other than online person-to-person payment products, if PayPal intends to work with a U.S. domestic banking partner to develop or provide such New
Payment Products, it will notify Providian of such intent and negotiate in good faith to use Providian as its banking partner for such New Payment Products. With respect to all New Payment Products
(including online person-to-person payment products) that PayPal offers to its Members during the Term, PayPal will use its best efforts to ensure that the Card is the
preferred credit card used to purchase or transfer funds into such New Payment Products for Members. PayPal will ensure that promotional materials for the Program are at least equivalent to the
promotional materials for any New Payment Products. This Section 4.4(e) does not apply to any vendor relationships that PayPal has, or may establish in the future,
with banking partners for use in services such as, without limitation, ACH or merchant processing. The provisions of this Section 4.4(e) will apply exclusively to New Payment Products or
extending PayPal's current functionality to new payments networks such as, without limitation, ATM networks and international bank payments networks, and will not relieve PayPal of any of its other
obligations under this Agreement. 

        (f)    The PayPal Account As An [*] Account.    

        (1)  On
a periodic basis and subject to subsection (f)(2) below, Providian will use reasonable efforts to solicit and offer the Card and the Account to
[*], provided that each such Member completed at least [*]. Providian will conduct these solicitations on a pooled basis at least
[*] times in any 12-month period, and PayPal will cooperate with these efforts by supplying Providian with Member information and data that assists Providian in
contacting Members for these purposes, subject to the PayPal Privacy Policy and User Agreement. Accounts acquired through these efforts will be referred to as [*]. 

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        (2)  Providian's
obligations under subsection (f)(1) above will apply only when the total number of Members using [*] exceed
[*]. 

        (3)  Providian
will have sole and complete discretion to determine the terms and provisions described in Sections 2.1, 2.4, 3.1, 3.2 and 3.3. 

        (4)  Notwithstanding
any provision in this Agreement or in the Old Agreement, the provisions in Section 5.1 of the Old Agreement regarding marketing a second Card will
have no force or effect under either the Old Agreement or this Agreement and will be replaced by the foregoing provisions in this Section 4.3(f). 

        4.4    Limited License to Providian Marks.    Providian hereby grants to PayPal a limited, royalty-free,
exclusive, non-transferable (except as set forth in Section 15.7 below), non-sublicensable right to use, display and reproduce Providian Marks in connection with
PayPal's marketing, promotion and operation of the Program as set forth in this Agreement. PayPal will submit to Providian for its prior written approval, such approval not to be unreasonably withheld
or delayed, samples of each of PayPal's uses of Providian Marks, and PayPal will use Providian Marks in a manner approved by Providian, which approval may not be unreasonably withheld or delayed
beyond a 10-Business-Day review period. Except as otherwise expressly provided by this Agreement, upon termination of this Agreement, PayPal will promptly cease use of
Providian Marks. 

        4.5    Legal Compliance.    PayPal will comply with all Applicable Law regarding its participation in the Program,
including those governing advertising, incentive offers and on-line privacy issues and will comply with all Applicable Law governing the PayPal Services. 

	5.
	COMPENSATION.

        5.1    Old Agreement.    Subject to Section 9.4, effective February 28, 2002, the compensation terms in
Section 5 of the Old Agreement will have no force or effect, and PayPal hereby waives its rights to compensation from Providian under the Old Agreement for the period from March 1, 2002
forward. 

        5.2    One-time Payment.    Subject to Section 9.4, Providian will pay PayPal a
one-time lump sum of [*]. PayPal will apply this payment toward redesigning and changing the PayPal Website within the 6-month period following the
Effective Date to promote and market the Card and the Program more prominently and to increase the rate of click-throughs from the PayPal Website to the Application Web Page, and toward supporting
PayPal's other marketing responsibilities as provided in the Marketing Plan and this Agreement. Providian will deliver this payment to PayPal by March 31, 2002, but in no event prior to the
Parties' amendment of this Agreement to add the Security Standards described in Section 9.4. 

        5.3    Bounty Fee for Active Accounts—March 2002 Only.    Providian will pay PayPal
[*] for each new Account [*]; provided that, during that month, PayPal launches an outbound e-mail campaign to all eligible members
promoting the Card and the Program or launches a special click-through campaign on the PayPal Website promoting the Card and the Program to Members. If PayPal does not launch either the
e-mail campaign or the click-though campaign by March 31, 2002, Providian will pay PayPal only [*] for each new Account [*]. 

        5.4    Bounty Fee for Active Accounts—April 1, 2002 Forward.    Starting April 1, 2002 on a
monthly basis, Providian will pay PayPal a fee for each new Active Account according to either Section 5.4.1 or Section 5.4.2 (collectively the "Bounty Fee").
[*]. 

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        5.4.1    When PayPal Pays Marketing and Solicitation Costs.    When PayPal bears the marketing and solicitation costs
for marketing the Program and soliciting Applications (e.g., PayPal e-mail and the PayPal Website) that result in Accounts, the Bounty Fee
will be as follows: 

        (a)  If
there are [*] or more new Accounts booked by Providian in a calendar month, Providian will pay PayPal [*] for each new
Account that becomes an Active Account during that month, subject to subsection (c) below. 

        (b)  If
there are fewer than [*] new Accounts booked by Providian in a calendar month, Providian will pay PayPal [*] for each
Account that becomes an Active Account during that month, subject to subsection (c) below. 

        (c)  At
the end of each calendar quarter, Providian will review the monthly totals of new Active Accounts for each calendar month in that quarter and make either one of the
following adjustments to the Bounty Fee, as applicable: 

	(1)
	If
the sum of the three months' new Accounts booked by Providian is [*] or more, Providian will pay PayPal [*] for each Account that
becomes a new Active Account during that quarter. For example, if new Accounts totaled [*] in the first month, [*] in the second month, and
[*] in the third month, the quarterly total would equal [*], and the Bounty Fee would be [*] per Active Account for all Active
Accounts in the quarter.

	(2)
	If
the sum of the three months' new Accounts booked by Providian is less than [*], Providian will pay PayPal [*] for each Account that
becomes a new Active Account during that quarter. For example, if new Active Accounts totaled [*] in the first month, [*] in the second month, and
[*] in the third month, the quarterly total would equal [*], and the Bounty Fee would be [*] per Active Account for all Active
Accounts in the quarter. 

        5.4.2    When Providian Pays Marketing and Solicitation Costs.    When Providian bears the marketing and solicitation
costs for marketing the Program and soliciting Applications (e.g., direct mail and other channels) that result in Active Accounts, Providian will pay PayPal a Bounty Fee of [*]
for each Account that becomes an Active Account. The Active Accounts acquired through this channel will count towards the booked Account totals in Section 5.4.1. 

        5.4.3    Payments.    Providian will remit to PayPal payment of the Bounty Fee according to Sections 5.4.1 and 5.4.2
within 45 days after the end of each calendar month during the Term. As provided in Section 5.4.1(c), at the end of each calendar month quarter, Providian will count the actual total
number of new Accounts booked by Providian during the quarter and make either of the adjustments based on subsections (c)(1) and (c)(2) above. If additional Bounty Fee is due, Providian will pay
PayPal the difference. If Providian has overpaid the Bounty Fee, Providian will collect the difference from PayPal by subtracting the amount of the difference from the Bounty Fees that Providian pays
for the subsequent calendar month. If there is no subsequent month in which the Bounty Fee will be paid (because the Term is ending), Providian will invoice PayPal, and PayPal will reimburse Providian
by check within 15 days following receipt of the invoice. 

        5.4.4    Mutual Cooperation to Increase the Number of Active Accounts.    The Parties will use reasonable efforts to
work together and develop promotions and communications to Cardholders with non-Active Accounts so that those Cardholders change their non-Active Accounts to Active Accounts.
Upon
PayPal's request, Providian will furnish PayPal with information that identifies Cardholders with non-Active Accounts or that enables PayPal to contact those Cardholders by
e-mail, subject to the review and approval procedures in Section 2.2 and subject to Applicable Law and the Providian Privacy Policy. 

        5.5    Basis Point Fee.    Effective March 1, 2002, Providian will reimburse to PayPal a Basis Point Fee equal
to [*] basis points of the net amount of Account [*] transactions, when such transactions are 

10

 

posted to an Account that remained in good standing at the end of the previous calendar month and are not, prior to the time of Providian's compensation payment to PayPal: (1) the subject of a
Chargeback request, (2) reversed through a credit adjustment, or (3) otherwise disputed. [*]. Providian will pay all amounts due to PayPal under this
Section 5.2 within 45 days following the end of each calendar month. The Basis Point Fee will apply to [*] transactions on all Accounts booked under this
Agreement and the Old Agreement. 

        5.6    Sunset.    Except as provided in Sections 6.8 and 6.10(a) of this Agreement, upon the expiration of this
Agreement, or if during the Term either Party exercises its termination rights pursuant to Section 6 of this Agreement, Providian will cease to pay compensation to PayPal as of the effective
date of such expiration or termination; provided that Providian will be responsible for all payments that have accrued up to the date of such expiration or termination. 

	6.
	TERM;
TERMINATION. 

        6.1    Term.    Subject to the provisions of this Section 6, the Term will be 5 years from the Effective
Date. On March 1, 2007, the Term will automatically renew for a 2-year period unless either Party gives written termination notice to the other Party at least 90 days before
March 1, 2007. 

        6.2    Exclusive Negotiation Period.    The Parties will have an exclusive negotiation period of 90 days, to
commence 90 days before the date the Term terminates, for purposes of discussing the terms and conditions of a renewal or extension of the Term. 

        6.3    Termination for Breach.    If either Party materially breaches a material term of this Agreement, the
non-breaching Party may terminate this Agreement by giving notice, as provided in Section 15.5, to the breaching Party. This notice will: (a) describe the material breach;
and (b) state the Party's intention to terminate this Agreement. If the breaching Party does not cure or substantially cure its material breach within 30 days after receipt of notice as
described in this Section (the "Cure Period"), then the non-breaching Party may immediately terminate this Agreement by giving notice at any time following the end of such Cure Period.
Neither Party will be held in breach for failure to perform under this Agreement if such failure is due to compliance with Applicable Law. In addition, Providian's failure to meet any of the
Performance Standards in Exhibit A will not be deemed a material breach unless Providian fails to meet that performance standard for 3 consecutive calendar months and PayPal gives
Providian written notice to terminate this Agreement for that reason within 30 days after the end of the third consecutive month. 

        6.4    Termination for Material Change in Applicable Law.    Either Party may terminate this Agreement on the
effective date of any change in the legal or regulatory requirements applicable to the Program, or in the MasterCard or Visa rules applicable to the Program, that: (a) has a substantial
negative impact on the financial burdens or rewards of the terminating Party with respect to the Program, which the non-terminating Party is unwilling or unable to accommodate; or
(b) would render performance of a material obligation of the terminating Party hereunder a violation of the Card Association rules, illegal or otherwise subject to legal challenge, unless
performance of such material obligation is waived by the non-terminating Party. The terminating Party will notify the other Party of such change within 2 Business Days of becoming aware of
such change. 

        6.5    Termination for Insolvency.    If either Providian or PayPal becomes insolvent in that its liabilities exceed
its assets, or is adjudicated insolvent, or takes advantage of or is subject to any insolvency proceeding, or makes an assignment for the benefit of creditors or is subject to bankruptcy receivership,
conservatorship or liquidation, then the other Party may immediately terminate this Agreement. 

        6.6    Termination for Improper Activities.    Either Party may terminate this Agreement upon 15 Business Days'
advance written notice to the other Party of such intent to terminate if, at any time during the term of this Agreement, the other Party is conducting activities that the terminating Party 

11

 

determines are materially harmful to relationships with its federal or state supervisory or law enforcement agencies, provided that the terminating Party promptly notifies the other Party of such
activity, provides evidence of such activity, and the other Party does not cure such activity to the terminating Party's sole and complete satisfaction within 15 Business Days of notification to the
terminating Party. 

        6.7    Termination For Not Meeting Program Performance Hurdles.    The Program Performance Hurdles based on
[*] Rates in Exhibit B will apply to each calendar quarter after [*] following the Effective Date. If any of the Program Performance Hurdles is
not met, PayPal will have the right to terminate this Agreement according to Exhibit B by giving Providian at least 90 days' prior written notice, provided that PayPal gives such notice
to Providian within 10 days' after the date that Providian provides PayPal with the quarterly [*] Rate for the quarter in which the Program Performance Hurdle was not
met. On or before the effective date of termination, PayPal will pay Providian the Termination Fee, if any, that PayPal owes under Exhibit B. 

        6.8    Termination Due to Change of Control.    If either Party enters into a merger, acquisition or agreement
providing for the transfer of control or the sale of all or substantially all of its assets to a third party, that event will be called a "Change of Control" for purposes of this Section 6.8.
In that case, each Party will have the right, as described below, to terminate this Agreement by giving the other Party at least 30 days' prior written notice. 

        (a)    PayPal Change of Control With a Providian Competitor.    If PayPal has a Change of Control with a competitor of
Providian listed on Exhibit C or any of its affiliates (a "Providian Competitor"), each Party will have the right to terminate this Agreement as follows: 

        (1)    If PayPal Terminates.    If PayPal exercises its right to terminate this Agreement: 

	(A)
	Providian
will be relieved from its obligations to compensate PayPal under this Agreement, effective upon the effective date of termination; and

	(B)
	PayPal
will pay Providian [*] per Member who is an Active Member as of the effective date of termination. For example, if the
effective date of termination is August 30, 2003, Members who during the preceding 90-day period either logged in their PayPal account or received a payment in that account will be
counted as an Active Member. 

        (2)    If Providian Terminates.    If Providian exercises its right to terminate this Agreement: 

	(A)
	Providian
 will be relieved from its obligations to compensate PayPal under this Agreement, effective upon the effective date of termination; and

	(B)
	PayPal
 will pay Providian [*] per Member who is an Active Member as of the effective date of termination. 

        (b)    PayPal Change of Control With a Providian Non-Competitor.    If PayPal has a Change of Control with
an entity that is not Providian Competitor ("Providian non-Competitor"), each Party will have the right to terminate this Agreement as follows: 

        (1)    If PayPal Terminates.    If PayPal exercises its right to terminate this Agreement: 

	(A)
	Providian
will be relieved from its obligations to compensate PayPal under this Agreement, effective upon the effective date of termination; and

	(B)
	PayPal
will pay Providian [*] per Member who is an Active Member as of the effective date of termination. 

12

 

        (2)    If Providian Terminates.    If Providian exercises its right to terminate this Agreement, Providian will pay
PayPal a one-time lump sum calculated as follows and discounted to present value at a rate of [*]: 

	(A)
	The
total net compensation, based on the [*] Fee in Section 5, that Providian paid to PayPal for the most recent calendar
quarter preceding the effective date of termination, divided by:

	(B)
	The
 total number of Active Accounts during the same calendar quarter, then multiplying the product by:

	(C)
	The
number of Active Accounts on the effective date of termination, then multiplying the product by:

	(D)
	[*]
installments (representing [*] quarters or [*] years); provided that
the number of these quarterly installments will not exceed beyond February 28, 2007 and will be prorated as needed. 

Providian
will make this lump-sum payment to PayPal within 30 days following the effective date of termination. 

        (c)    Providian Change of Control With a PayPal Competitor.    If Providian has a Change of Control with a competitor
of PayPal listed on Exhibit C or any of its affiliates (a "PayPal Competitor"), each Party will have the right to terminate this Agreement as follows: 

        (1)    If PayPal Terminates.    If PayPal exercises its right to terminate this Agreement: 

	(A)
	Providian
will pay PayPal a one-time lump sum calculated as follows and discounted to present value at a rate of
[*]: 

	(i)	 	The total net compensation, based on the [*] Fee in Section 5, that Providian paid to PayPal for the most recent calendar quarter preceding the effective date of termination, divided
by:
	(ii)	 	The total number of Active Accounts during the same calendar quarter, then multiplying the product by:
	(iii)	 	The number of Active Accounts on the effective date of termination, then multiplying the product by:
	(iv)	 	[*] installments (representing [*] quarters or [*] years), provided that the number of these quarterly installments will not extend beyond February 28, 2007 and will be prorated as needed.

Providian
will make this lump-sum payment to PayPal within 30 days following the effective date of termination; and 

	(B)
	For
[*] after the effective date of termination, Providian will not market a competitive Internet-based payments service to
Cardholders, where "competitive" means that the service functions essentially as PayPal Services function on the Effective Date; provided that Providian and its affiliates may continue to market and
offer existing online payment services called BillPay Online and PaySmart and may market and offer any money-transfer services between and among Providian deposit, credit or other transaction
accounts. 

13

 

        (2)    If Providian Terminates.    If Providian exercises its right to terminate this Agreement: 

	(A)
	Providian
will pay PayPal a one-time lump sum calculated as follows and discounted to present value at a rate of
[*]: 

	(i)	 	The total net compensation, based on the [*] Fee in Section 5, that Providian paid to PayPal for the most recent calendar quarter preceding the effective date of termination, divided
by:
	(ii)	 	The total number of Active Accounts during the same calendar quarter, then multiplying the product by:
	(iii)	 	The number of Active Accounts on the effective date of termination, then multiplying the product by:
	(iv)	 	[*] full installments (representing [*] quarters or [*] years), provided that the number of these quarterly installments will not extend beyond February 28, 2007 and will be prorated as needed.

Providian
will make this lump-sum payment to PayPal within 30 days following the effective date of termination; and 

	(B)
	For
 [*] after the effective date of termination, Providian will not market a competitive Internet-based payments service to
Cardholders, where "competitive" means that the service functions essentially as PayPal Services function on the Effective Date; provided that Providian and its affiliates may continue to market and
offer existing online payment services called BillPay Online and PaySmart and may market and offer any money-transfer services between and among Providian deposit, credit or other transaction
accounts. 

        (d)    Providian Change of Control With PayPal Non-Competitor.    If Providian has a Change of Control
with an entity that is not PayPal Competitor (a "PayPal non-Competitor"), each Party will have the right to terminate this Agreement as follows: 

        (1)    If PayPal Terminates.    If PayPal exercises its right to terminates this Agreement: 

	(A)
	Providian
will be relieved from its obligations to compensate PayPal under this Agreement, effective upon the effective date of termination; and

	(B)
	For
[*] after the effective date of termination, Providian will not market a competitive Internet-based payments service to Cardholders, where "competitive"
means that the service functions essentially as PayPal Services function on the Effective Date; provided that Providian and its affiliates may continue to market and offer existing online payment
services called BillPay Online and PaySmart and may market and offer any money-transfer services between and among Providian deposit, credit or other transaction accounts. 

14

 

        (2)    If Providian Terminates.    If Providian exercises its right to terminate this Agreement: 

	(A)
	Providian
will pay PayPal a one-time lump sum calculated as follows and discounted to present value at a rate of 10%: 

	(i)	 	The total net compensation, based on the [*] Fee in Section 5, that Providian paid to PayPal for the most recent calendar quarter preceding the effective date of termination, divided
by:
	(ii)	 	The total number of Active Accounts during the same calendar quarter, then multiplying the product by:
	(iii)	 	The number of Active Accounts on the effective date of termination, then multiplying the product by:
	(iv)	 	[*] full installments (representing [*] quarters or [*] years), provided that the number of these quarterly installments will not extend beyond February 28, 2007 and will be prorated as needed.

Providian
will make this lump-sum payment to PayPal within 30 days following the effective date of termination; 

	(B)
	For
[*] after the effective date of termination, Providian will not market a competitive Internet-based payments service to Cardholders, where "competitive"
means that the service functions essentially as PayPal Services function on the Effective Date; provided that Providian and its affiliates may continue to market and offer existing online payment
services called BillPay Online and PaySmart and may market and offer any money-transfer services between and among Providian deposit, credit or other transaction accounts. 

        (e)  For
each payment provision in this Section 6.8, the Party obligated to pay will pay the other Party within 60 days after the effective date of termination. 

        (f)    Accounts; Unwinding the Program.    In each of the cases described in subsections (a) and
(b) above, ownership of Accounts will continue to belong to Providian, and the Parties will unwind the Program according to Section 6.10. Providian will have 180 days from the
effective date of termination to transition the Accounts and Cards away from the PayPal Mark. 

15

 

        (g)    Summary.    Solely for the Parties' convenience and not intended to add new terms, the following chart gives a
recap of some of the key terms in subsections (a) and (b) above. If there is a conflict or inconsistency, the terms in subsections (a) and (b) will control. 

	 
	 	If PayPal Terminates:
 
	 	If Providian Terminates:
 

	PayPal Change of Control With Providian Competitor:	 	•    Providian relieved of its obligations.	 	•    Providian will be relieved of its obligations.
	

 	
 	

•    PayPal will pay Providian [*] per Active Member.	
 	

•    PayPal will pay Providian [*] per Active Member.
	
PayPal Change of Control With Providian non-Competitor:	
 	

•    Providian will be relieved of its obligations.	
 	

•    Providian will pay PayPal [*] under Section 5, but for no longer than the remaining Term.
	

 	
 	

•    PayPal will pay Providian [*] per Active Member.	
 	

 
	
Providian Change of Control With PayPal Competitor:	
 	

•    Providian will pay PayPal [*] under Section 5, but for no longer than the remaining Term.	
 	

•    Providian will pay PayPal [*] under Section 5, but for no longer than the remaining Term.
	

 	
 	

•    Providian will not compete in Internet payment services for [*].	
 	

•    Providian will not compete in Internet payment services for [*].
	
Providian Change of Control With PayPal non-Competitor:	
 	

•    Providian relieved of its obligations.	
 	

•    Providian will pay PayPal [*] under Section 5, but for no longer than the remaining Term.

        6.9  A
material feature of the Program is the on-going branding of the PayPal Website and the implicit endorsement of the PayPal Co-Branded Program
Card. Should the PayPal business model be materially altered with the PayPal branding (e.g., through name change due to acquisition or sale, etc.), which subsequently or through time, in Providian's
discretion, materially alters the ability to originate accounts within the Program, then Providian may terminate this Agreement on 30 days' notice unless the terms and conditions of all future
compensation and or reimbursement arrangements are revised to Providian's satisfaction. If Providian terminates the agreement for this reason, there will be no compensation payment. 

        6.10    Effects of Expiration or Termination.    Subject to other terms in this Agreement: 

        (a)    Marks.    Upon expiration or termination of this Agreement for any reason, Providian will have the right to use
the PayPal Marks on Cards issued prior to such expiration or termination, on periodic Account statements and on records of, and on correspondence to, any Cardholder until expiration of the Cards
except as provided in Section 6.8(f). Unless this Agreement terminates due to: (1) PayPal's material breach of this Agreement under Section 6.3, (2) PayPal's insolvency
under Section 6.5, (3) PayPal's improper activity under Section 6.6, or (4) either Party's Change of Control under Section 6.8, Providian will continue to pay PayPal
as provided in Section 5 for a period of 1 year from the effective date of expiration or termination. After the 1-year period, Providian will cease to use the PayPal Marks
except as described above in this subsection (a) or for identification purposes when necessary on Cardholder service or collection letters. Except as otherwise provided in this Agreement, 

16

 

Providian will not claim any right, title or interest in or to the PayPal Marks or to any mailing lists provided pursuant to this Agreement. However, Providian may use the PayPal Marks to complete
any solicitation that Providian is required by Applicable Law to complete. PayPal will not cause or attempt to cause the removal of PayPal's identification or PayPal Marks from any Cardholder's Cards,
checks or records already existing on the effective date of expiration or termination of this Agreement. Neither Party will make or distribute any disparaging or defamatory remarks regarding the other
Party, its products or services or its performance under this Agreement. 

        (b)    Notice to Cardholders and Members.    Upon expiration or termination of this Agreement for any reason, the
Parties will cooperate in good faith to develop a joint notice to Cardholders regarding the termination of the Program within 30 days of expiration or termination. In the event of a termination
resulting from a material breach under Section 6.3, the breaching Party will bear the cost of developing and distributing such notice to Cardholders and to Members. In the event of a
termination for other cause, each Parties will bear one-half of the cost of developing and distributing such notice to Cardholders and to Members. 

        (c)    Solicitations.    

        (1)  If
Providian terminates this Agreement under Section 6.3, 6.5 or 6.6, PayPal will not solicit Cardholders for cards, including without limitation Competing Card
Products, to replace Cards (other than through general solicitation of all Members without targeting Cardholders) for 2 years after the effective date of termination. In no event will PayPal
target-solicit Cardholders to cancel or substitute their Accounts. 

        (2)  If
PayPal terminates this Agreement under Section 6.3, 6.5 or 6.6, Providian may not market to or solicit Members, or communicate with Members through direct use
of a Member List in an manner whatsoever, and will promptly destroy or return, at PayPal's sole election, all Member Lists and other PayPal Member information, provided that Providian will not be
prevented or restricted from marketing to or soliciting Members who already are Providian's credit card customers, and provided that Providian may solicit individuals or entities that are Members so
long as Providian does not target them by virtue of their Member status. 

        (d)  For
purposes of Section 6.5, the Member List constitutes "intellectual property" as that term is defined and used in the U.S. Bankruptcy Code, 11 U.S.C.
§101(35A), §365(n). If Providian terminates this Agreement under Section 6.5 due to PayPal's bankruptcy, Providian would be entitled to use the Member List for the
remaining Term notwithstanding any intervening bankruptcy by PayPal or attempt by PayPal to terminate or reject this Agreement under bankruptcy law. Notwithstanding any PayPal bankruptcy, PayPal will
continue to provide Providian with the Member List on a timely basis during the bankruptcy proceeding, and in any event at least every calendar month. 

        6.11    Survival of Terms of this Agreement.    The provisions of Sections 1, 2.4, 3.7, 5 for purposes of
Section 6.8, 6.10, 7.1, 8.1, 8.2, 9, 10, 11, 15.1, 15.3-15.6, 15.8-15.11 will survive expiration or termination of this Agreement. 

17

  

	7.
	COMMUNICATIONS.

        7.1    Cooperation on Publicity.    From and after the date of this Agreement, Providian will work with PayPal as its
strategic partner to enhance PayPal's relationships with the Card Associations, specifically Visa. Press releases describing the Parties' strategic relationships and the Program will not be made
without the mutual written consent of each Party, which will not unreasonably be withheld or delayed. Without the written permission of Providian, PayPal will not discuss any specifics of this
Agreement or the Program with issuers of other cards, except to disclose to those issuers that exclusivity provisions in this Agreement prohibit its discussion of or entering into agreements for
offerings of Competing Card Products. Without prior written approval from Providian, PayPal will not generally communicate with PayPal customers, potential customers, or outside Parties (other than
PayPal's attorneys, auditors, financial advisors and other agents or contractors with a reason to know within a confidential relationship or confidentiality agreement) about the Program or about
Providian's relationship with PayPal. Providian will not unreasonably withhold consent or delay consent beyond a 10-Business-Day period. These provisions will not apply to
disclosures that PayPal is required to make to the SEC, to shareholders, to the general public or to other individuals or entities as required by Applicable Law. 

        7.2    E-Mail Policy.    PayPal has an interest in avoiding overly aggressive e-mail
solicitation of its Members. If PayPal substantially changes its policy of e-mail solicitations approximately three times per quarter, it will inform Providian in advance. This provision
does not constitute an obligation for PayPal either to expand its policy, nor expands nor changes the provisions in Section 4.2 on type or frequency of marketing that Providian may conduct to
Members. 

	8.
	COLLECTION
AND USE OF CARDHOLDER DATA. 

        8.1    Providian Ownership of Data.    Providian will collect, maintain, and be the sole owner of all Cardholder Data.
Providian may use the Cardholder Data in a manner consistent with this Agreement for any legitimate business purpose and in compliance with Applicable Law, provided that no personally identifiable
Cardholder Data will be disclosed or transferred by Providian to any third party (other than credit reporting agencies or as otherwise necessary or appropriate for administration, servicing and
funding of the Accounts) without the Cardholder's prior express consent. 

        8.2    PayPal Ownership of Data.    Notwithstanding Section 8.1, PayPal will be the sole and complete owner of
all Member Lists and all proprietary information pertaining to Members provided by PayPal to
Providian pursuant to this Agreement and of all information provided to PayPal by a Member in PayPal's registration process. Providian may only use the data provided by PayPal to make the Card
offering and other products mutually agreed upon. Providian may not use the data for any marketing, other than provided by the channels in this agreement. Furthermore, Providian may not sell, lease,
or otherwise disclose this data to any third party. Finally, Providian may not sell or market directly to Members who have been declined for a Card or who decline an offer for a Card, or sell, lease
or otherwise disclose their information to any third party. However, Providian may maintain and use information that it obtains as a result of an Account relationship with a Member or a
Non-Member Consumer. The provisions of this Section 8.2 will not prohibit Providian from using information relating to Members that Providian acquires by other means. 

        8.3    Privacy Policies.    Providian and PayPal will maintain and publish on their Websites in a prominent manner
privacy policies in compliance with Applicable Law. The PayPal Privacy Policy will also follow practices endorsed or imposed by privacy groups such as TRUSTe and BBBOnline. Each Party will provide the
other with notice of any material changes to their privacy policy promptly after the effective date of such changes. 

	9.
	CONFIDENTIALITY. 

18

 

        9.1    Duty to Keep Proprietary Information Confidential.    Providian Confidential Information is a confidential and
valuable proprietary asset of Providian. PayPal Confidential Information is a confidential and valuable proprietary asset of PayPal. Each Party, the Card Associations and each Party's respective
employees, agents, third-party subcontractors and independent contractors ("Representatives") will treat as strictly confidential all Confidential Information and proprietary third-party products that
the other Party provides in connection with the Program. They will not disclose or duplicate Confidential Information or third-party products to anyone not having a need to know in connection with the
performance of this Agreement and will not use them except in connection with the performance of this Agreement. Each Party will take all steps needed to ensure that its Representatives preserve this
confidentiality. 

        9.2    Duty To Keep This Agreement Confidential; Press Release.    PayPal and Providian will maintain the
confidentiality of this Agreement and its terms and will not disclose this Agreement or its terms to any third party; provided, however, that either Party may disclose this Agreement or its terms:
(a) as required by Applicable Law, (b) to its subsidiaries, affiliates and parent companies, (c) to its accountants, legal advisors, financial advisors, government regulators, and
internal and external auditors, and (d) either Party may issue a press release about the Program upon execution of this Agreement if the press release has the written approval of the other
Party, which will not be unreasonably withheld, but which will be subject to regulations including the SEC Quiet Period and other relevant regulations. Providian and PayPal will consult with each
other prior to any conference with the press or other news media relating to the Program or this Agreement, including consultation with regard to responses to inquiries from the press or other media
about the Program or this Agreement. 

        9.4    Information Security.    By March 31, 2002, the Parties will amend this Agreement by adding mutually
agreeable Information Security Standards as Exhibit D to this Agreement ("Security Standards"). If the Parties do not add the Security Standards to this Agreement by March 31, 2002, the
Parties will continue to work together in good faith to establish mutually agreeable Information Security Standards, and Providian will not be obligated to pay PayPal the [*]
lump sum described in Section 5.2 until the Information Security Standards are incorporated in this Agreement. 

        9.3    Duty to Notify Other Party of Any Mandated Disclosure.    Each Party will notify the other immediately if it
receives a subpoena or other legal process referring to Confidential Information or documents containing Confidential Information and will cooperate in any effort the owner of such Confidential
Information has to comply with or to contest the legal process. 

	10.
	INDEMNIFICATION
AND LIMITATION OF LIABILITY. 

        10.1    By PayPal.    PayPal will defend, indemnify and hold harmless Providian against each claim, action, damage
(including reasonable attorney fees and costs) or liability resulting from or relating to PayPal's breach of its obligations or of any terms (including, but not limited to, any representation or
warranty) under this Agreement; and any acts or omissions of PayPal, its directors, officers, agents or employees in connection with PayPal's participation in the Program. 

        10.2    By Providian.    Providian will defend, indemnify and hold harmless PayPal against each claim, action, damage
(including reasonable attorney fees and costs) or liability resulting from or relating to Providian's breach of its obligations or of any term (including, but not limited to, any representation or
warranty) under this Agreement; and any acts or omissions of Providian, its directors, officers, agents or employees in connection with Providian's participation in the Program. 

        10.3    Liability Limitation.    Notwithstanding any other terms in this Agreement, neither Party will be entitled to
recover special, incidental, punitive, or consequential damages, whether based on breach of contract, tort (including negligence), or otherwise, and whether or not that Party has been advised of the
possibility of such damage, except that this limitation will not apply to damages resulting from 

19

 

either Party's breach of its confidentiality obligations under Section 9, its representation and warranty under Section 14.1(f) or (h) as to PayPal, 14.2(f) or (g) as to
Providian, or its obligations under Section 15.1. 

	11.
	ARBITRATION.

        Any
controversy or claim between the Parties arising from or relating to this Agreement, or the breach of this Agreement, will be settled by arbitration to take place in San Francisco,
California or another mutually agreed upon site, in accordance with the Commercial Arbitration Rules of the American Arbitration Association by a panel of three arbitrators selected in accordance with
those rules. Judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction and will be deemed Confidential Information. 

	12.
	FORCE
MAJEURE. 

        Neither
Party will be responsible, nor incur any liability to the other for any failure to comply with the terms of this Agreement due to causes beyond its control, including, without
limitation, fire, storm, flood, acts of war, terrorism, accident, insurrection, sabotage, labor disputes, computer system malfunction, acts of God, acts of third Parties, acts of federal, state or
local government or judicial action ("force majeure"), provided that such actions that do not substantially hinder or prohibit performance will not excuse performance. If an event of force majeure is
caused by a labor dispute, computer system malfunction, or government or judicial action arising from the business operations of a Party and continues for 60 days or more, the other Party may
terminate this Agreement in accordance with Section 6.3. 

	13.
	CONDITIONS
PRECEDENT. 

        Before
either Party will be obligated to implement the Program, all required approvals of any organization must be obtained including, without limitation, a Card Association. 

	14.
	REPRESENTATIONS
AND WARRANTIES. 

        In
addition to any representation or warranties made by the Parties in other sections of this Agreement, the Parties make the following representations and warranties: 

        14.1    By PayPal.    PayPal represents, warrants and covenants to Providian that: (a) it is duly incorporated,
validly existing and in good standing under the laws of Delaware; (b) it is duly authorized to enter into this Agreement and to perform its obligations hereunder; (c) the making of this
Agreement does not knowingly violate any law or regulation to which PayPal is subject or any agreement or contract to which it is a Party or by which it is bound; (d) it will comply with all
Applicable Law (including but not limited to Card Association rules and regulations which pertain to Card Association non-members who are affinity partners of a Card Association member) in
performing its obligations under this Agreement; (e) to the extent required by law, it has applied for licenses and, following receipt of such licenses, will continue to be duly qualified and
licensed and has made and will continue to make all registrations to do business necessary to carry out its obligations under this Agreement under the law
of each state in which the Program will be offered; (f) it owns and is authorized to use the PayPal Marks, and the use of the PayPal Marks does not violate the intellectual property rights of
any third party; (g) its entering into and performing this Agreement does not violate any other Agreements by which it is bound. 

        14.2    By Providian.    Providian represents and warrants to PayPal that: (a) it is a duly organized national
banking association, validly existing under the laws of the United States of America; (b) at the time of the execution of this Agreement, it is duly authorized to enter into this Agreement and
to perform its obligations hereunder, (c) the making of this Agreement does not knowingly violate any law or regulation to which Providian is subject or any agreement or contract to which it is
a party or by which it is bound; (d) it will comply with all Applicable Law in performing its obligations under this 

20

 

Agreement; (e) to the extent required by law, it is and will continue to be duly qualified and licensed and has made and will continue to make all registrations to do business and to carry out
its obligations under this Agreement under the law of each state in which the Program will be offered; (f) it is authorized to use Providian Marks, and the use of Providian Marks does not
violate the intellectual property rights of any third party; and (g) its entering into and performing this Agreement does not violate any other Agreements by which it is bound. 

	15.
	GENERAL
PROVISIONS. 

        15.1    Parties are Independent Contractors.    PayPal and Providian are independent contractors, and neither is the
partner, employee or agent of the other. Neither PayPal nor Providian will have the power or authority to pledge, bind or obligate the other with respect to any third party. 

        15.2    Amendments.    Except as otherwise provided in this Agreement, any amendment or modification to this Agreement
or its Appendices must be in writing signed by both Parties. 

        15.3    Headings.    The Section headings in this Agreement are for convenience only and are in no way to be construed
as enlarging or limiting the scope of the particular terms to which they refer. 

        15.4    Waiver.    The waiver or failure of either Party to exercise any right provided for in this Agreement will not
be deemed a waiver of any further or future right under this Agreement. 

        15.5    Notices.    All notices and other communications between the Parties will be written and will be deemed given
if delivered personally or by overnight courier service, or facsimile transmission or 2 days
after mailing by registered or certified mail, return receipt requested, to a Party at its address set forth below, or to such other address as a Party may designate at a later time, as follows: 

	Providian:	 	Bill Buchanan

Executive Vice President

Providian Financial Corporation

123 Mission Street, 9th Floor

San Francisco, CA 94105

FAX: (415) 644-2321
	

With a copy to:	
 	

Susan Lau

Senior Vice President and

Associate General Counsel

Providian Financial Corporation

201 Mission Street, 12th Floor

San Francisco, CA 94105

FAX: (415) 278-6012
	
PayPal:	
 	

Todd Pearson

Senior Vice President

PayPal Inc.

1840 Embarcadero Road

Palo Alto, CA 94303

FAX: (650) 251-1101
	

With a copy to:	
 	

John Muller

General Counsel

PayPal Inc.

1840 Embarcadero Road

Palo Alto, CA 94303

FAX: (650) 251-1306

21

 

        15.6    "Writing" to Include Electronic Mail.    References to "writing" or "written" in this Agreement will be deemed
to include an electronic mail message that is sent using standard Internet protocols and whose receipt is confirmed by the recipient to the sender. 

        15.7    Assignment.    This Agreement will be binding upon and will inure to the benefit of each Party and its
successors and assigns; provided that, neither Party will assign or transfer its rights under this Agreement by operation of law or otherwise, without the other Party's prior written consent which
will not be unreasonably withheld, except that either Party may assign its rights and obligations to its parent, subsidiary or affiliate, or in the event of reincorporation or reorganization, as long
as the assignment does not result in a substantial change to the Program or otherwise cause a breach of this Agreement. Additionally, Providian may not sell, transfer or assign Accounts to third
parties via a sale of assets, accounts or otherwise without the prior written permission of PayPal which will not be unreasonably withheld. Nothing in this Agreement will prohibit Providian from
securitizing or participating the Accounts or related receivables in accordance with general banking practices. 

        15.8    Third-Party Beneficiaries.    It is expressly intended and agreed that there are no third-party beneficiaries
to this Agreement. 

        15.9    Governing Law.    This Agreement will be governed by and interpreted in accordance with California law,
without regard to its principles of conflicts of laws, with exclusive jurisdiction in courts located in the counties of Santa Clara, San Mateo and/or San Francisco. 

        15.10    Audit and Inspection.    Each Party will keep and maintain, in accordance with generally accepted accounting
principles consistently applied, accurate books and records related to the Program including all charges, disbursements and expenses made or incurred by each Party in the performance of its
obligations. Each Party, including its internal and external auditors and the government agencies that regulate them, will have the right, upon reasonable notice, to audit, at any time prior to the
expiration of 1 year following termination of the Program, the other Party's books and records relating to the Program or this Agreement. Such audit will be at the expense of the auditing Party
and will be conducted during reasonable business hours. If any such audit indicates a discrepancy, the audited Party will promptly make the appropriate adjustments and/or payments, or, in the
alternative and at the auditing Party's option, the auditing Party will deduct or offset such discrepancy. If the discrepancy exceeds 5% of the payments for any given period, the Party that benefited
from the discrepancy will pay the costs of such audit. 

        15.11    Entire Agreement.    This Agreement is the final, full and exclusive statement of the agreement between
PayPal and Providian with respect to the subject matter set forth here. It supersedes all prior agreements and inducements relating to the subject of this Agreement. No promise or agreement made at or
after the execution of this Agreement is binding unless it is written and signed by both Parties. 

        15.12    Counterparts; Facsimile Signatures.    This Agreement may be executed in counterparts and, when fully
executed, will be deemed effective on the date first written above without regard to the dates or times on when actually signed. The signed copies of this Agreement may be delivered by telefacsimile,
and such facsimile exchange has the same legal effect as delivery of a signed original. 

22

 

        IN
WITNESS WHEREOF, the Parties, by their duly authorized representatives, have executed this Agreement as of the date first shown above. 

	 	 	PayPal Inc.
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	 	/s/ Todd Pearson
 Todd Pearson

Senior Vice President
	 	 	 	 	 
	 	 	Date:	 	3/5/2002

	 	 	 	 	 
	

 	
 	
Providian Bancorp Services
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	 	/s/ William Buchanan
 William Buchanan

Executive Vice President
	 	 	 	 	 
	 	 	Date:	 	3/5/02

23

 
 
 

Exhibit A    
  

 
 

Performance Standards    
  

        Whether through Internet services, call center, or customer-service functions, Providian is committed to and strives for 100% customer satisfaction when helping
customers build, protect and responsibly use credit. Under this Agreement, Providian will meet the following service performance standards when servicing the Accounts. 

        Websites:

	•
	95%
availability (online uptime) in any 1-week period and 98% availability in any 1-calendar-month period.

	•
	8
seconds or less average response time for 95% of transactions on a weekly and monthly basis. 

        (Performance metrics will be websites sourced from Keynote, external measurement provider)

        Call
Center: 

	•
	90%
of calls answered within 60 seconds measured on a monthly basis.

	•
	5%
call abandon rate measured on a monthly basis. 

        E-mail
Support: 

	•
	95%
of e-mails (received at the Providian e-mail address that Providian designates to Cardholders for customer service) answered
within 1 Business Day, measured on a monthly basis. 

24

 

 
 

Exhibit B    
  

 
 

Competitors in Section 6.7    
  

Providian
Competitors 

American
Express Company

Bank of America Corporation

Bank One Corporation

Barclays Bank plc

Capital One Financial Corp.

Citigroup Inc.

Fleet Boston Corporation

Household International, Inc. (Household Bank LLC)

J.P. Morgan Chase/Chase Manhattan Corp.

MBNA Bank

Morgan Stanley Dean Witter/Morgan Stanley (Discover and Novus Cards)

Standard Chartered Bank

Wells Fargo & Co. 

PayPal
Competitors 

American
Express Company

Bank of America Corporation

Barclays Bank plc

Citigroup Inc.

eBay

First Data Corporation

HSBC

J.P. Morgan Chase/Chase Manhattan Corp.

Morgan Stanley Dean Witter/Morgan Stanley (Discover and Novus Cards)

Wells Fargo & Co.

Yahoo! 

25

 

 
 

Exhibit C    
  

 
 

Program Performance Hurdles    
  

        PayPal may exercise its right to terminate this Agreement according to Section 6.7 if the following Program Performance Hurdles are not met. 

        If,
after [*] after the Effective Date, and at the end of each consecutive calendar quarter, the Program fails to meet the [*] Rate shown
below as measured over the preceding full; calendar quarter, then PayPal may terminate this Agreement by sending Providian at least 90 days' prior written notice, subject to the Termination Fee
requirement shown below, if any. At the end of each calendar quarter, Providian will report the [*] Rate to PayPal in writing, after which PayPal will have 10 days to
exercise its termination right under Section 6.7 and this Exhibit C. For purposes of this provision, the number of Active Members will be based Active Members during the
90-day period immediately preceding PayPal's termination notice. For example, if PayPal gives Providian termination notice on August 30, 2003, Members who during the preceding
90-day period either logged in their PayPal account or received a payment in that account will be counted as an Active Member. 

	[*] Rate
 [*]
	 	Termination Fee for PayPal to Pay

to Providian

	<[*]	 	No Fee
	>[*], but <[*]	 	[*] per Active Member
	>[*]	 	[*] per Active Member

26

 
 
 

Exhibit D
  
    Information Security Standards    
  

        
[to be added by amendment by May 1, 2002] 

CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. 

27

QuickLinks

Credit Card Alliance Agreement

Exhibit A

Performance Standards

Exhibit B

Competitors in Section 6.7

Exhibit C

Program Performance Hurdles

Exhibit D Information Security StandardsEXHIBIT 10.22

                QUICKLOGIC CORPORATION

CHANGE OF CONTROL
SEVERANCE AGREEMENT

 

This Change of Control Severance Agreement (the “Agreement”) is made
and entered into effective as of August 23, 2001 (the “Effective Date”), by and
between [Executive Officer] (the “Employee”) and QuickLogic Corporation, a
Delaware corporation (the “Company”). 
Certain capitalized terms used in this Agreement are defined in
Section 1 below.

 

R E C I T A L S

A.            It is expected that
the Company from time to time will consider the possibility of a Change of
Control.  The Board of Directors of the
Company (the “Board”) recognizes that such consideration can be a distraction
to the Employee and can cause the Employee to consider alternative employment
opportunities.

B.            The Board believes
that it is in the best interests of the Company and its stockholders to provide
the Employee with an incentive to continue his employment and to maximize the
value of the Company upon a Change of Control for the benefit of its
stockholders.

C.            In order to provide
the Employee with enhanced financial security and sufficient encouragement to
remain with the Company notwithstanding the possibility of a Change of Control,
the Board believes that it is imperative to provide the Employee with certain
severance benefits upon the Employee’s termination of employment following a
Change of Control.

 

AGREEMENT

In consideration of the mutual covenants herein contained and the
continued employment of Employee by the Company, the parties agree as follows:

1.     Definition
of Terms.  The following terms
referred to in this Agreement shall have the following meanings:

(a)   Cause.  “Cause” shall mean (i) any act of personal dishonesty taken by
the Employee in connection with his responsibilities as an employee which is
intended to result in substantial personal enrichment of the Employee,  (ii) Employee’s conviction of a felony which
the Board reasonably believes has had or will have a material detrimental
effect on the Company’s reputation or business, (iii) a willful act by the
Employee which constitutes misconduct and is injurious to the Company, or (iv)
continued willful violations by the Employee of the Employee’s obligations to
the Company after there has been delivered to the Employee a written demand for
performance from the Company which describes the basis for the Company’s belief
that the Employee has not substantially performed his duties and an adequate
opportunity for the Employee to cure such violations.

 

 

(b)   Change of Control.  “Change of Control” shall mean the
occurrence of any of the following events:

(i)    the approval by stockholders of the Company
of a merger or consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity) more than fifty percent (50%) of the total voting
power represented by the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation;

(ii)   the approval by the stockholders of the
Company of a plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially all of the
Company’s assets;

(iii)  any “person” (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under
said Act), directly or indirectly, of securities of the Company representing
50% or more of the total voting power represented by the Company’s then
outstanding voting securities; or

(iv)  a change in the composition of the Board, as a
result of which fewer than a majority of the directors are Incumbent
Directors.  “Incumbent Directors” shall
mean directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of those directors whose election or
nomination was not in connection with any transactions described in subsections
(i), (ii), or (iii) or in connection with an actual or threatened proxy contest
relating to the election of directors of the Company.

(c)   Involuntary Termination.  “Involuntary Termination” shall mean
(i) without the Employee’s express written consent, a significant
reduction of the Employee’s duties, position or responsibilities relative to
the Employee’s duties, position or responsibilities in effect immediately prior
to such reduction, or the removal of the Employee from such position, duties
and responsibilities, unless the Employee is provided with comparable duties,
position and responsibilities; (ii) without the Employee’s express written
consent, a substantial reduction, without good business reasons, of the
facilities and perquisites (including office space and location) available to
the Employee immediately prior to such reduction; (iii) without the
Employee’s express written consent, a reduction by the Company of the
Employee’s base or variable salary as in effect immediately prior to such
reduction; (iv) without the Employee’s express written consent, a material
reduction by the Company in the kind or level of employee benefits to which the
Employee is entitled immediately prior to such reduction with the result that
the Employee’s overall benefits package is significantly reduced;
(v) without the Employee’s express written consent, the relocation of the
Employee to a facility or a location more than fifty (50) miles from his
current location; (vi) any purported termination of the Employee by the
Company which is not effected for Cause or for which the grounds relied upon
are not valid; or (vii) the failure of the Company to obtain the
assumption of this Agreement by any successors contemplated in Section 6
below.

(d)   Severance Benefits Period.  “Severance Benefits Period” shall mean a
period of  twelve (12) months following
the Termination Date.

(e)   Termination Date.  “Termination Date” shall mean the effective
date of any notice of termination delivered by one party to the other
hereunder.

 

2

 

2.     Term of
Agreement.  This Agreement shall
terminate upon the date that all obligations of the parties hereto under this
Agreement have been satisfied or, if earlier, on the date, prior to a Change of
Control, Employee is no longer employed by the Company.

3.     At-Will
Employment.  The Company and the
Employee acknowledge that the Employee’s employment is and shall continue to be
at-will, as defined under applicable law. 
If the Employee’s employment terminates for any reason, the Employee
shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
established under the Company’s then existing employee benefit plans or
policies at the time of termination.

4.     Severance
Benefits.

(a)   Termination Following A Change of Control.  If the Employee’s employment with the
Company terminates as a result of an Involuntary Termination at any time within
twelve (12) months after a Change of Control, Employee shall be entitled to the
following severance benefits provided that Employee enters into and does not revoke
a general release of claims with the Company in substanitally the form attached
hereto as Exhibit A:

(i)     Employee’s base salary for the Severance
Benefits Period as in effect as of the date of such termination, less
applicable withholding, payable in a lump sum within thirty (30) days of the
Involuntary Termination;

(ii)   Employee’s variable compensation computed at
100% for the Severance Benefits Period as in effect as of the date of such
termination, less applicable withholding, payable in a lump sum within thirty
(30) days of the Involuntary Termination;

(iii)  one hundred percent (100%) of any bonus
declared prior to the date of any such termination for the Employee but not yet
paid, if any;

(iv)  all stock options granted by the Company to
the Employee prior to the Change of Control shall become fully vested and
exercisable as of the date of the termination and will remain exercisable for a
90 day period following the Termination Date, notwithstanding any shorter
period stated in the respective stock option agreements and;

(v)   the same level of health (i.e., medical,
vision and dental) coverage and benefits as in effect for the Employee on the
day immediately preceding the day of the Employee’s termination of employment;
provided, however, that (i) the Employee constitutes a qualified beneficiary,
as defined in Section 4980B(g)(1) of the Internal Revenue Code of 1986, as
amended; and  (ii) Employee elects
continuation coverage pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), within the time period
prescribed pursuant to COBRA.  The
Company shall continue to provide Employee with health coverage until the
earlier of (i) the date Employee is no longer eligible to receive continuation
coverage pursuant to COBRA, or (ii) the end of the Severance Benefits Period as
measured from the termination date.

(b)   Termination Apart from a Change of Control.  If the Employee’s employment with the
Company terminates other than as a result of an Involuntary Termination within
the twelve (12) months following a Change of Control, then the Employee shall
not be entitled to receive severance or other benefits hereunder, but may be
eligible for those benefits (if any) as may then be established under the
Company’s then existing severance and benefits plans and policies at the time
of such termination.

 

3

 

(c)   Accrued Wages and Vacation; Expenses.  Without regard to the reason for, or the
timing of, Employee’s termination of employment:  (i) the Company shall pay the Employee any unpaid base
salary and variable compensation due for periods prior to the Termination Date;
(ii) the Company shall pay the Employee all of the Employee’s accrued and
unused vacation through the Termination Date; and (iii) following
submission of proper expense reports by the Employee, the Company shall
reimburse the Employee for all expenses reasonably and necessarily incurred by
the Employee in connection with the business of the Company prior to the
Termination Date.  These payments shall
be made promptly upon termination and within the period of time mandated by
law.

5.     Limitation
on Payments.  In the event that the
severance and other benefits provided for in this Agreement or otherwise
payable to the Employee (i) constitute “parachute payments” within the
meaning of Section 280G of the Code, and (ii) would be subject to the
excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then
Employee’s benefits under this Agreement shall be either delivered in full, or
delivered as to such lesser extent which would result in no portion of such
benefits being subject to the Excise Tax, whichever of the foregoing amounts,
taking into account the applicable federal, state and local income taxes and
the Excise Tax, results in the receipt by Employee on an after-tax basis, of
the greatest amount of benefits, notwithstanding that all or some portion of
such benefits may be taxable under Section 4999 of the Code.

Unless the Company and the Employee otherwise agree in writing, any
determination required under this Section shall be made in writing by the
Company’s independent public accountants (the “Accountants”), whose
determination shall be conclusive and binding upon the Employee and the Company
for all purposes.  For purposes of
making the calculations required by this Section, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Section 280G and 4999 of the Code. 
The Company and the Employee shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section. 
The Company shall bear all costs the Accountants may reasonably incur in
connection with any calculations contemplated by this Section.

6.     Successors.

(a)   Company’s Successors.  Any successor to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company’s business and/or
assets shall assume the Company’s obligations under this Agreement and agree
expressly to perform the Company’s obligations under this Agreement in the same
manner and to the same extent as the Company would be required to perform such
obligations in the absence of a succession. 
For all purposes under this Agreement, the term “Company” shall include
any successor to the Company’s business and/or assets which executes and
delivers the assumption agreement described in this subsection (a) or
which becomes bound by the terms of this Agreement by operation of law.

(b)   Employee’s Successors.    Without the written consent of the
Company, Employee shall not assign or transfer this Agreement or any right or
obligation under this Agreement to any other person or entity. Notwithstanding
the foregoing, the terms of this Agreement and all rights of Employee hereunder
shall inure to the benefit of, and be enforceable by, Employee’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

7.     Notices.

(a)   General.  Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by

 

 

4

 

U.S. registered or certified mail, return receipt
requested and postage prepaid.  In the
case of the Employee, mailed notices shall be addressed to him at the home
address which he most recently communicated to the Company in writing.  In the case of the Company, mailed notices
shall be addressed to its corporate headquarters, and all notices shall be
directed to the attention of its Secretary.

(b)   Notice of Termination.  Any termination or resignation of the
Employee shall be communicated by a notice of termination to the other party
hereto given in accordance with this Section. 
Such notice shall indicate the specific termination provision in this
Agreement relied upon, shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination under the provision so
indicated, and shall specify the Termination Date (which shall be not more than
30 days after the giving of such notice). 
The failure by the Employee to include in the notice any fact or
circumstance which contributes to a showing of Involuntary Termination shall
not waive any right of the Employee hereunder or preclude the Employee from
asserting such fact or circumstance in enforcing his rights hereunder.

8.     Arbitration.

(a)   Any dispute or controversy arising out of,
relating to, or in connection with this Agreement, or the interpretation,
validity, construction, performance, breach, or termination thereof, shall be
settled by binding arbitration to be held in Santa Clara County, California, in
accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association (the “Rules”).  The arbitrator may grant injunctions or
other relief in such dispute or controversy. 
The decision of the arbitrator shall be final, conclusive and binding on
the parties to the arbitration.  Judgment
may be entered on the arbitrator’s decision in any court having jurisdiction.

(b)   The arbitrator(s) shall apply California law
to the merits of any dispute or claim, without reference to conflicts of law
rules.  The arbitration proceedings
shall be governed by federal arbitration law and by the Rules, without
reference to state arbitration law. 
Employee hereby consents to the personal jurisdiction of the state and
federal courts located in California for any action or proceeding arising from
or relating to this Agreement or relating to any arbitration in which the
parties are participants.

(c)   Employee understands that nothing in this
Section modifies Employee’s at-will employment status.  Either Employee or the Company can terminate
the employment relationship at any time, with or without Cause.

(d)   EMPLOYEE HAS READ AND UNDERSTANDS THIS
SECTION, WHICH DISCUSSES ARBITRATION. 
EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING
TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY,
CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING
ARBITRATION, CONSTITUTES A WAIVER OF EMPLOYEE’S RIGHT TO A JURY TRIAL AND
RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE
EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE FOLLOWING
CLAIMS:

(i)    ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF
EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE
COVENANT OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION;
NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC
ADVANTAGE; AND DEFAMATION.

 

 

5

 

(ii)   ANY AND ALL CLAIMS FOR VIOLATION OF ANY
FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF
THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, THE AGE
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT
OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND
HOUSING ACT, AND LABOR CODE SECTION 201, et seq;

(iii)  ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER
LAWS AND REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.

9.     Miscellaneous
Provisions.

(a)   No Duty to Mitigate.  The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement, nor shall
any such payment be reduced by any earnings that the Employee may receive from
any other source.

(b)   Waiver.  No provision of this Agreement may be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and by an authorized officer of the Company (other
than the Employee).  No waiver by either
party of any breach of, or of compliance with, any condition or provision of
this Agreement by the other party shall be considered a waiver of any other
condition or provision or of the same condition or provision at another time.

(c)   Integration.  This Agreement and any outstanding stock option agreements
referenced herein represent the entire agreement and understanding between the
parties as to the subject matter herein and supersede all prior or
contemporaneous agreements, whether written or oral, with respect to this
Agreement and any stock option agreement.

(d)   Choice of Law.  The validity, interpretation, construction
and performance of this Agreement shall be governed by the internal substantive
laws, but not the conflicts of law rules, of the State of California.

(e)   Severability.  The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.

(f)    Employment Taxes.  All payments made pursuant to this Agreement
shall be subject to withholding of applicable income and employment taxes.

(g)   Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.

 

 

6

 

IN WITNESS WHEREOF, each of the parties has executed
this Agreement, in the case of the Company by its duly authorized officer, as
of the day and year first above written.

 

	
  COMPANY:

  	
  QUICKLOGIC CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  EMPLOYEE:

  	
   

  
	
   

  	
  [Executive Officer]

  
	
   

  	
   

  

 

7

 

EXHIBIT
A

SETTLEMENT AGREEMENT AND
RELEASE

This Settlement Agreement and Release (“Agreement”) is
made by and between QuickLogic Corporation (the “Company”), and [EMPLOYEE]
(“Employee”).

WHEREAS, Employee was employed by the Company;

WHEREAS, the Company and Employee have entered into a
Change of Control Severance  Agreement
(the “Severance Agreement”);

NOW THEREFORE, in consideration of the mutual promises
made herein, the Company and Employee (collectively referred to as “the
Parties”) hereby agree as follows:

1.               Termination.  Employee’s
employment from the Company terminated on 
                                 .

2.               Consideration.  The Company
agrees to pay Employee the severance benefits set forth in Section 4 of the
Severance Agreement under the terms and conditions of the Severance Agreement.

3.               Confidential Information. 
Employee shall continue to maintain the confidentiality of all
confidential and proprietary information of the Company and shall continue to
comply with the terms and conditions of the Confidentiality Agreement between
Employee and the Company.  Employee
shall return all the Company property and confidential and proprietary
information in his possession to the Company on the Effective Date of this
Agreement.

4.               Payment of Salary.  Employee
acknowledges and represents that the Company has paid all salary, wages,
bonuses, accrued vacation, commissions and any and all other benefits due to
Employee.

5.               Release of Claims.  Employee
agrees that the foregoing consideration represents settlement in full of all
outstanding obligations owed to Employee by the Company.  Employee, on behalf of himself and his
respective heirs, family members, executors and assigns, hereby fully and
forever releases the Company and its past, present and future officers, agents,
directors, employees, investors, shareholders, administrators, affiliates,
divisions, subsidiaries, parents, predecessor and successor corpora­tions, and
assigns, from, and agrees not to sue or otherwise institute or cause to be
instituted any legal or administrative proceedings concerning any claim, duty,
obligation or cause of action relating to any matters of any kind, whether
presently known or unknown, suspected or unsuspected, that he may possess
arising from any omissions, acts or facts that have occurred up until and
including the Effective Date of this Agreement including, without limitation,

a.               any and all claims relating to or arising from
Employee’s employment relationship with the Company and the termination of that
relationship;

b.              any and all claims relating to, or arising from,
Employee’s right to purchase, or actual purchase of shares of stock of the
Company, including, without limitation, any claims for fraud,
misrepresentation, breach of fiduciary duty, breach of duty under applicable
state corporate law, and securities fraud under any state or federal law;

c.               any and all claims for wrongful discharge of employment;
termination in violation of public policy; discrimination; breach of contract,
both express and implied; breach of a

 

8

 

                        covenant of good faith and fair dealing,
both express and implied; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence;
personal injury; assault; battery; invasion of privacy; false imprisonment; and
conversion;

d.              any and all claims for violation of any federal, state
or municipal statute, including, but not limited to, Title VII of the
Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination
in Employment Act of 1967, the
Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the
Employee Retirement Income Security Act of 1974, The Worker Adjustment and
Retraining Notification Act, the California Fair Employment and Housing Act,
and Labor Code section 201, et seq. and section 970, et seq.
and all amendments to each such Act as well as the regulations issued
thereunder;

e.               any and all claims for violation of the federal, or
any state, constitution;

f.                 any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination;  and

g.              any and all claims for attorneys’ fees and costs.

6.               Employee agrees that the release set forth in this
section shall be and remain in effect in all respects as a complete general
release as to the matters released. 
This release does not extend to any obligations incurred under this
Agreement.  Employee acknowledges and
agrees that any breach of this paragraph shall constitute a material breach of
the Agreement and in the case of a breach by Employee, shall entitle the
Company immediately to recover the monetary consideration discussed in
paragraph 2 above.  Employee shall also
be responsible to the Company for all costs, attorneys’ fees and any and all
damages incurred by the Company (a) enforcing the obligation, including the
bringing of any suit to recover the monetary consideration, and (b) defending
against a claim or suit brought or pursued by Employee in violation of this
provision.

7.               Acknowledgment of Waiver of Claims under ADEA. Employee acknowledges that he is
waiving and releasing any rights he may have under the Age Discrimination in
Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and
voluntary. Employee and the Company agree that this waiver and release does not
apply to any rights or claims that may arise under the ADEA after the Effective
Date of this Agreement.  Employee acknowledges
that the consideration given for this waiver and release Agreement is in
addition to anything of value to which Employee was already entitled.  Employee further acknowledges that he has
been advised by this writing that (a) he should consult with an attorney prior
to executing this Agreement; (b) he has twenty-one (21) days within which to
consider this Agreement; (c) he has seven (7) days following the execution of
this Agreement by the parties to revoke the Agreement; and (d) this Agreement
shall not be effective until the revocation period has expired.  Any revocation should be in writing and
delivered to the Secreatry of QuickLogic Corporation at 1277 Orleans Drive,
Sunnyvale, CA 94089 by close of business on the seventh day from the date that
Employee signs this Agreement.

8.               Civil Code Section 1542.  Employee
represents that he is not aware of any claims against the Company other than
the claims that are released by this Agreement.  Employee acknowledges that he has been advised by legal counsel
and is familiar with the provisions of California Civil Code Section 1542,
which provides as follows:

 

9

 

A GENERAL RELEASE DOES NOT EXTEND TO
CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

9.               Employee, being aware of said code section, agrees to
expressly waive any rights he may have thereunder, as well as under any other
statute or common law principles of similar effect.

10.         No Pending or Future Lawsuits. 
Employee represents that he has no lawsuits, claims, or actions pending
in his name, or on behalf of any other person or entity, against the Company or
any other person or entity referred to herein. 
Employee also represents that he does not intend to bring any claims on
his own
behalf or on behalf of any other person or entity against the Company or any
other person or entity referred to herein.

11.         Application for Employment. 
Employee understands and agrees that, as a condition of this Agreement,
he shall not be entitled to any employment with the Company, its subsidiaries,
or any successor, and he hereby waives any right, or alleged right, of
employment or re-employment with the Company.

12.         Confidentiality.  Employee
agrees to use his best efforts to maintain in confidence the existence of this
Agreement, the contents and terms of this Agreement, and the consideration for
this Agreement (hereinafter collectively referred to as “Settlement Information”).  Employee agrees to take every reasonable
precaution to prevent disclosure of any Settlement Information to third
parties, and agrees that there will be no publicity, directly or indirectly,
concerning any Settlement Information. 
Employee agrees to take every precaution to disclose Settlement
Information only to those attorneys, accountants, governmental entities, and
family members who have a reasonable need to know of such Settlement
Information.

13.         No Cooperation.  Employee
agrees he will not act in any manner that might damage the business of the
Company.  Employee agrees that he will
not counsel or assist any attorneys or their clients in the presentation or
prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against the Company and/or any officer, director,
employee, agent, representative, shareholder or attorney of the Company, unless
under a subpoena or other court order to do so.

14.         Non-Disparagement.  Employee
agrees to refrain from any defamation, libel or slander of the Company and its
respective officers, directors, employees, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns or tortious interference with the contracts and
relationships of the Company and its respective officers, directors, employees,
investors, shareholders, administrators, affiliates, divisions, subsidiaries,
predecessor and successor corporations, and assigns.

15.         No Admission of Liability. 
Employee understands and acknowledges that this Agreement constitutes a
compromise and settlement of disputed claims. 
No action taken by the Company, either previously or in connection with
this Agreement shall be deemed or construed to be (a) an admission of the
truth or falsity of any claims heretofore made or (b) an acknowledgment or
admission by the Company of any fault or liability whatsoever to the Employee
or to any third party.

 

10

 

16.         Costs.  The Parties
shall each bear their own costs, expert fees, attorneys’ fees and other fees
incurred in connection with this Agreement.

17.         Arbitration.  The Parties
agree that any and all disputes arising out of the terms of this Agreement,
their interpretation, and any of the matters herein released, including any
potential claims of harassment, discrimination or wrongful termination shall be
subject to binding arbitration, to the extent permitted by law, in Santa Clara
County, California, before the American Arbitration Association under its
National Rules for the Resolution of Employment Disputes.  Employee agrees and hereby waives his right to jury
trial as to matters arising out of the terms of this Agreement and any matters
herein released to the extent permitted by law.  The Parties agree that the prevailing party
in any arbitration shall be entitled to injunctive relief in any court of
competent jurisdiction to enforce the arbitration award.

18.         Authority.  Employee
represents and warrants that [he/she] has the capacity to act on [his/her]
own behalf and on behalf of all who might claim through [him/her] to bind them to the
terms and conditions of this Agreement.

19.         No Representations.  Employee
represents that he has had the opportunity to consult with an attorney, and has
carefully read and understands the scope and effect of the provisions of this
Agreement.  Neither party has relied
upon any representations or statements made by the other party hereto which are
not specifically set forth in this Agreement.

20.         Severability.  In the event
that any provision hereof becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement shall
continue in full force and effect without said provision.

21.         Entire Agreement.  This
Agreement and the Confidentiality Agreement represent the entire agreement and
understanding between the Company and Employee concerning Employee’s separation
from the Company, and supersede and replace any and all prior agreements and
understandings concerning Employee’s relationship with the Company and his
compensation by the Company.

22.         No Oral Modification.  This
Agreement may only be amended in writing signed by Employee and the President
of the Company.

23.         Governing Law.  This Agreement
shall be governed by the internal substantive laws, but not the choice of law
rules, of the State of California.

24.         Effective Date.  This
Agreement is effective eight days afters it has been signed by both Parties.

25.         Counterparts.  This
Agreement may be executed in counterparts, and each counterpart shall have the
same force and effect as an original and shall constitute an effective, binding
agreement on the part of each of the undersigned.

26.         Voluntary Execution of Agreement. 
This Agreement is executed voluntarily and without any duress or undue
influence on the part or behalf of the Parties hereto, with the full intent of
releasing all claims.  The Parties
acknowledge that:

a.               They have read this Agreement;

 

11

 

b.              They have been represented in the preparation,
negotiation, and execution of this Agreement by legal counsel of their own
choice or that they have voluntarily declined to seek such counsel;

c.               They understand the terms and consequences of this
Agreement and of the releases it contains;

d.              They are fully aware of the legal and binding effect
of this Agreement.

 

IN WITNESS WHEREOF, the Parties have executed this Agreement on the
respective dates set forth below.

 

	
   

  	
  [THE
  COMPANY]

  
	
   

  	
   

  	
   

  
	
  Dated:  [DATE]

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [EMPLOYEE
  NAME], an
  individual

  
	
   

  	
   

  
	
  Dated:  [DATE]

  	
   

  

 

 

12

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