Merchant Agreement – Terms and Conditions

1. Definitions

For the purposes of this Agreement the following terms have the following meanings unless the context otherwise requires:

• “Address Verification” means a service that allows Merchant to verify the home address of Cardholders with the relevant Issuer.
• “Applicable Law” means all applicable federal, state and local laws, rules and regulations.
• “Authorization” means an affirmative response, by or on behalf of an Issuer to a request to effect a Transaction, that a Transaction is within the relevant Cardholder’s available credit limit and that the Cardholder has not reported the Card lost or stolen. All Transactions requiring Authorization by the Card Networks must be authorized.
• “Authorization Center” means the facility or facilities designated from time to time by Bank to which Merchant shall submit all requests for Authorization.
• “Business Day” means any day other than: (i) a Saturday or Sunday; or (ii) a day on which banking institutions in New York are authorized by law or executive order to be closed (and on which Bank is in fact closed).
• “Card” means either a Visa, MasterCard, Discover, or AXP/American Express charge or credit card, debit card (or other similar card that requires a PIN for identification purposes), or pre-paid, stored-value or gift card and may include other evolutionary financial transaction devices used for the purpose of obtaining credit or debiting an account.
• “Card Network” means Visa U.S.A., Inc. (“Visa”), MasterCard International Incorporated (“MasterCard”), Discover Financial Services LLC (“Discover”), and AXP/American Express Travel Related Services Company Inc. (“American Express”).
• “Cardholder” means a person authorized to use a Card.
• “Chargeback” means a Transaction that Bank returns to Merchant pursuant to this Agreement.
• “Forced Sale” means a sales Transaction processed without an approved electronic Authorization number being obtained for the full amount of the sales Transaction at the time the Transaction is processed.
• “Full Recourse Transactions” means mail orders, telephone orders, e-commerce (Internet) orders, Pre-Authorized Recurring Order Transactions, and other “card not present” sales.
• “Issuer” means a member of a Card Network that enters into a contractual relationship with a Cardholder for the issuance of one or more Cards.
• “Mid-Qualified Transactions” means any Transaction categorized as such by the processor designated by Bank to settle Transactions with the Card Networks.
• “Non-Qualified Transactions” means: (i) any Transaction submitted for processing more than 48 hours past the time the Authorization occurred; (ii) any Transaction missing required data; and (iii) any Transaction categorized as such by the processor designated by Bank to settle Transactions with the Card Networks.
• “Pre-Authorized Recurring Order Transaction” means a Transaction that has been pre-authorized by the Cardholder and for which the goods or services are to be delivered or performed in the future by Merchant without having to obtain approval from the Cardholder each time.
• “Qualified Transactions” means any Transaction categorized as such by the processor designated by Bank to settle Transactions with the Card Networks.
• “Rules” means all rules, regulations, by-laws, standards and procedures adopted and/or amended from time to time by the Card Networks (including, without limitation, the Payment Card Industry Data Security Standard), Bank and each relevant Issuer.
• “Services” means the transaction processing services provided by Bank as described in this Agreement. The Services do not include any services not set forth in this Agreement, unless Bank notifies Merchant in writing to amend the existing Services or to add or remove Services covered by this Agreement, in Bank’s sole discretion.
• “Transaction” means the acceptance of a Card or Card account information for payment for goods sold and/or leased or services provided to Cardholders by Merchant and receipt of payment from Bank, whether the Transaction is approved, declined, or processed as a Forced Sale. The term “Transaction” also includes credits, errors, returns and adjustments.
• “Transaction Chargeback Ratio” for any given calendar month, means the number of Chargebacks processed in that month divided by the total number of Transactions processed in that month.

2. Services Provided to Merchant

During the Term and subject to the terms and conditions of this Agreement, Bank shall provide Services to Merchant including but not limited to: (i) Providing technical documentation as needed, and reasonable support in order to allow Merchant to accept and process Transactions; (ii) providing reasonable technical support and customer support for all Transactions, including, without limitation, Authorization, settlement, Chargeback processing and reporting.

3. Term

This Agreement shall become effective on the earlier of: (i) the date signed by Bank, (ii) the date that the first Transaction is processed, or (iii) the date the Merchant Application is approved by Bank (“Effective Date”). The initial term of this Agreement is 3 years beginning on the Effective Date (“Initial Term”). The Agreement shall renew automatically for successive terms of 1 year beginning upon expiration of the Initial Term (each a “Renewal Term” and together with the Initial Term shall collectively be referred to as the “Term”), unless either party provides written notice of termination to the other party at least 90 days prior to the end of the then-current Initial Term or Renewal Term. This Agreement may otherwise be terminated pursuant to Sections 32 and 33, below.

4. Merchant Operating Account

Prior to accepting any Cards, Merchant shall establish a demand deposit account at Bank, or at a financial institution approved by Bank (“Operating Account”), through which fees, charges and credits due in accordance with this Agreement may be processed. Merchant authorizes Bank to debit all amounts Merchant owes hereunder from the Operating Account, whether maintained at Bank or another financial institution, at times deemed appropriate by Bank, through the ACH banking network or by a manual debit of the Operating Account. Merchant waives any and all claims for loss or damage arising out of any such charges or debits to the Operating Account. This authorization will remain in effect after any termination of this Agreement until such time as all Merchant obligations have been paid in full. Merchant agrees to maintain sufficient funds in the Operating Account to satisfy Merchant’s obligations under this Agreement. Merchant shall be solely liable for all fees and charges assessed by a financial institution related to the Operating Account.

5. Fees

Fees: Merchant shall pay all fees as set forth in this Agreement, as may be amended from time to time. Bank may modify the fees and charges payable by Merchant at any time, and will provide Merchant written notice of any such modification at least 30 days prior to the modification.

Non-Qualified Surcharges and Additional Fees: Fees and charges may be subject to additional surcharging from any Card Network, and all such surcharges shall be passed through and paid by Merchant. Notwithstanding the foregoing, certain merchants, including but not limited to airline, car rental, cruise line, fast food, lodging, restaurant, travel agent, and transportation merchants may have separate rates quoted for consumer and commercial (business) transactions. Transactions that do not clear as priced are subject to non-qualified surcharges (“NQS”) that are billed back to Merchant on Merchant’s monthly statement. If Merchant uses any Services for which the corresponding fees and charges are not set forth in this Agreement, Bank will charge and Merchant agrees to pay Bank’s then-current rates for such Service, and such rates may be adjusted by Bank from time-to-time.

Data Security Fees: Merchant may also be assessed a Payment Card Industry (“PCI”) compliance fee, which will be listed on Merchant’s monthly statement. This fee is assessed in connection with Bank’s efforts to comply with the Rules and does not ensure Merchant’s compliance with the PCI standards or any Rule or Applicable Law. The payment of such fee shall not relieve Merchant of its responsibility to comply with all Rules and Applicable Laws related to Cardholder data security. Merchant may also be assessed a Payment Card Industry Data Security Standard (“PCI DSS”) non-compliance fee until Merchant validates compliance or confirms it is using a Payment Application Data Security Standard (“PA DSS”) validated payment application.

Resource Fee: In addition to any other fees, rights, and remedies available to Bank, Merchant will be assessed a fee if: (i) Merchant suffers a data breach or there is any unauthorized access to any system or password or personal identification number maintained by or under the control of Merchant; (ii) fraud, excessive chargebacks, excessive credits, or other transactions or behavior identified by Bank as “high risk” are associated with Merchant; (iii) Merchant violates any Rule or Applicable Law; (iv) a Reserve Account is established; or (v) Merchant requests, or the nature of Merchant’s business or processing activity requires, excessive usage of Bank resources in support of Merchant, or in connection with any Merchant related investigation, accounting, or administrative functions, including but not limited to reconciliation of and reporting related to Reserve Account amounts (“Resource Fee”). The Resource Fee shall be equal to: (i) the number of hours expended by Bank personnel associated with the foregoing events or occurrences multiplied by Bank’s then-current hourly rate for such personnel, such rate not to be less than $125 per hour; plus (ii) legal, accounting, and consultant fees and costs incurred by Bank in connection with the events set forth in this sub-Section. The Resource Fee will be listed on Merchant’s monthly statement.

Payment: All amounts Merchant owes hereunder may be charged to the Operating Account or Reserve Account (as defined below), recouped by adjustment to any amounts or credits due to Merchant, or set off against any account or property Bank holds for or on behalf of Merchant. Merchant shall also pay Bank for any and all fines, fees, penalties, loss allocations, liability assessments and other assessments, registrations, expenses, certifications expenses and other amounts incurred from Card Networks or other third parties, however labeled or defined, as a result of Merchant’s actions, omissions or use of the Services. Merchant agrees that all such obligations and amounts incurred by Bank shall be deemed direct, not indirect or consequential, damages, and shall be collectible from Merchant notwithstanding any provision in this Agreement to the contrary.

6. Merchant Statement

At least once each month, Bank shall make a statement available to Merchant in written or electronic format setting forth Merchant charges and credits (“Merchant Statement”). All information appearing on the Merchant Statement shall be deemed accurate and affirmed by Merchant unless Merchant objects by written notice specifying the particular item in dispute within 30 days of the date of the Merchant Statement. Any and all claims and disputes relating to the Merchant Statement not communicated to Bank in writing within such time frame shall be deemed waived.

7. Reserve Account

Bank may establish and maintain a reserve account at Bank (“Reserve Account”) at any time during or after the Term, for all indebtedness of Merchant that may arise out of or relate to the obligations of Merchant under this Agreement, including but not limited to Chargebacks and fees, in such amount as Bank from time to time may determine in its sole discretion. Bank may fund the Reserve Account by deducting amounts from payments due to Merchant, by effecting a charge against Merchant’s Operating Account or against any of Merchant’s accounts at Bank, or by demanding payment from Merchant. The Reserve Account will be maintained for a minimum of 6 months after the date on which this Agreement terminates or until such time as Bank determines that the release of the funds to Merchant is prudent, in the best interest of Bank, commercially reasonable, and that Merchant’s account with Bank is fully resolved. Upon expiration of this period, any balance remaining in the Reserve Account will be paid to Merchant. The funds in the Reserve Account are the sole and exclusive property of Bank. Merchant shall only have a contingent right to repayment of Reserve Account funds after all liabilities are paid in full, following termination of this Agreement.

8. Security Interest

As security for the performance by Merchant of all of its obligations under this Agreement, Merchant hereby grants to Bank a security interest in: (i) the funds held in the Operating Account and in the Reserve Account; (ii) any funds that may be due to Merchant under this Agreement; and (iii) any inventory with respect to which a Transaction has occurred but has not yet been fulfilled (collectively “Secured Assets”). Pursuant to Article 9 of the Uniform Commercial Code, as amended from time to time, Bank has control over and may direct the disposition of the Secured Assets without further consent of Merchant. Merchant will execute and deliver to Bank such documents, in form satisfactory to Bank, as Bank may reasonably request in order to perfect Bank’s security interest in the Secured Assets, and will pay all costs and expenses associated with filing the same or this Agreement in all public filing offices, where filing is deemed by Bank to be necessary or desirable. Bank is authorized to file financing statements relating to the Secured Assets where authorized by law. Merchant appoints Bank as its attorney-in-fact to execute such documents as are necessary or desirable to accomplish perfection of any security interests. This appointment is coupled with an interest and shall be irrevocable as long as Merchant owes any amount to Bank. In addition to the security interest in the Secured Assets, Bank shall have a contractual right of setoff against the Secured Assets.

9. Processing Transactions

• Merchant shall obtain Authorizations and process Transactions using such equipment and software as may be approved from time to time by Bank, in its sole discretion (“Equipment”). Merchant shall validate Cards and Cardholders in face-to-face transactions as required by the Rules.
• Merchant shall only use Card Network marks for advertising, acceptance decals, or signs in accordance with the Card Network standards. Merchant terminals must prominently display the appropriate acceptance marks at the Point-of-Interaction (“POI”) in accordance with the Card Network requirements for Face-to-Face transactions, E-commerce, sub-merchant transactions, or any other POI. Any use of a Card Network mark by Merchant in acceptance advertising, acceptance decals, or signs must be in accordance with the Rules and standards relating to reproduction, usage, and artworks, as may be in effect from time to time. Furthermore, Merchant’s use or display of any mark will terminate effective upon the termination of this Agreement or upon notification by the Card Network to discontinue such use or display.
• Merchant shall obtain Authorizations for all Transactions in a manner required by Rules and in the manner, and following the processes and procedures, determined from time to time by Bank, in its sole discretion, and communicated to Merchant by Bank.
• Merchant shall submit, in the manner determined from time to time by Bank, such information to Bank or Bank’s designee in connection with Transaction processing as Bank from time to time may determine.
• Merchant shall not submit a Transaction to Bank (electronically or otherwise) until Merchant has performed its obligations to the Cardholder in connection with the Transaction or obtained Cardholder’s consent for a Pre-Authorized Recurring Order Transaction.
• Merchant shall not transmit any Transaction to Bank that Merchant knows or should have known to be illegal, fraudulent or not authorized by the Cardholder, or authorized by the Cardholder colluding with the Merchant for a fraudulent purpose. Transactions must be legal in both the Cardholder’s and Merchant’s jurisdiction.
• Merchant shall not discriminate against or discourage the use of a Card in favor of any other acceptance brand.
• Merchant shall not process a Transaction that does not result from an act between a Cardholder and Merchant.
• Merchant shall not request or use any Card number for any purpose other than as payment for its goods or services.
• Merchant may transmit a Transaction that effects a prepayment of services or full prepayment of custom-ordered merchandise, manufactured to a Cardholder’s specifications, if Merchant advises Cardholder of the immediate billing at the time of the Transaction and within time limits established by the Card Networks.
• Merchant shall not conduct business at a location (country) outside the Bank’s area of use. Merchant may accept Cards only at locations in the regions or areas specified on the Merchant Application.
• Each Authorization and clearing transaction message must identify Merchant and include Merchant’s acceptor business code/MCC that reflects the primary business of Merchant.
• Merchant must ensure that the Cardholder is easily able to understand that Merchant is responsible for the Transaction, including delivery of the goods or services that are the subject of the Transaction, and for customer service and dispute resolution, all in accordance with the terms applicable to the Transaction.

10. Prohibition of Furnishing Account Information

Except as otherwise required by law, Merchant shall not, without the Cardholder’s and Bank’s prior written consent, sell, purchase, provide, or otherwise disclose the Cardholder’s account information or other Cardholder information to any third party other than Bank’s or Merchant’s Third Party Servicers (as defined below) and processing organizations for the purpose of assisting Merchant in its business, or in response to a valid government demand. Merchant must notify Bank of any Third Party Servicers that will have access to Cardholder information.

11. Reconciliation of Transactions

Electronically Transmitted Transactions: Bank shall control and disburse all Transaction-related settlement funds to Merchant. Transactions with respect to which Bank receives payment from or through the Card Networks will be settled on a daily basis, and Bank shall deliver payment to Merchant in connection with such Transactions as soon after receiving such payment as practicable by effecting a credit to the Operating Account equal to the reconciled and paid summary Transaction total of all of Merchant’s total paid summary Transactions since the previous credit. Notwithstanding the foregoing, Bank may, in its sole discretion, effect a credit to the Operating Account in connection with any Transaction prior to the point in time Bank receives payment in connection therewith from or through the Card Networks. In either case, Bank may, if necessary or appropriate, reduce any credit made to the Operating Account by, and/or Bank may require that Merchant pay to Bank an amount equal to: (i) the sum of all Cardholder charges denied, refused or charged back; (ii) all refunds processed on account of Cardholders during said time period; (iii) the amounts, fees and charges, including (but not limited to) Chargebacks, Merchant owes Bank hereunder; (iv) all taxes, penalties, charges, assessments, fees and other items incurred by Bank that are reimbursable pursuant to this Agreement; (v) all applicable rates, fees and charges under this Agreement; (vi) any amount Bank previously credited to the Operating Account that Bank determines, in good faith, was incorrectly so credited; and (vii) any amount Bank determines, in its sole discretion, represents unacceptable risk to the relevant Cardholder or Bank. Any application of funds associated with the settlement of Transactions that differs from the foregoing must be agreed to in writing by Bank and Merchant and may not, in any respect, violate Applicable Law. Merchant may use terminal processing services of any Card Network to deliver Visa Transactions captured at the point of Transaction directly to Visa for clearing and settlement (applicable to US Transactions only).

Reconciliation of Transactions: Merchant shall reconcile each settled Transaction and shall notify Bank immediately of any discrepancies or errors Merchant notes as a result of such reconciliation. Bank shall not have any responsibility or liability for Transaction-related errors or omissions that are brought to its attention more than 30 days after the date on which the Transaction to which such error or omission relates is first presented to Bank for settlement.

Provisional Credit: Any credits to the Operating Account are provisional only and subject to revocation by Bank until such time that the Transaction is final and no longer subject to Chargeback by the Issuer, Cardholder or Card Networks. Bank may withhold payment for a Transaction to Merchant, for any reason, until such time as the Transaction has been verified as legitimate by the relevant Issuer, or Bank receives adequate supporting documentation from Merchant to authenticate the Transaction and mitigate Chargeback risk.

12. Adjustments and Returns

Merchant will maintain a fair exchange and return policy and make adjustments with respect to goods and services sold and/or leased to its customers whenever appropriate. If Merchant limits its acceptance of returned merchandise, or if Merchant is an e-Commerce Merchant, Merchant will ensure that its return policies are clearly set forth on the Transaction receipt or on Merchant’s website, as required by Rules or Applicable Law. If goods are returned, or services are terminated or canceled, or any price is adjusted, Merchant will prepare and transmit a credit or return Transaction, either electronically or by paper, for the amount of the adjustment as a deduction from the total amount of Transactions transmitted that day. If the amount of credit or return Transactions exceeds the amount of sales Transactions, Merchant shall pay the excess to Bank. Merchant shall make no cash refunds on credit Transactions and shall handle all credit adjustments as provided in this Section. If no refund or return will be given, Merchant must advise Cardholder in writing, at the time of the Transaction that the sale is a “final sale” and “no returns” are permitted. Merchant must advise Cardholder in writing of any policy of Merchant that provides for no-cash refunds and in-store credit only. Merchant shall follow Card Network reservation/no-show policies and shall notify Cardholders in writing of this policy on all advance reservations. Merchant shall also notify Cardholders at the time of the reservation of the exact number of days required for reservation deposit refunds.

13. Chargebacks

The acceptance by Bank of any Transaction processed in accordance with the terms of this Agreement shall be without recourse to Merchant, except for: (i) Full Recourse Transactions; (ii) as otherwise indicated in this Agreement; and (iii) under any of the following circumstances:

• No specific prior Authorization for the Transaction was obtained from the Authorization Center, the approval number does not appear in the electronic transmittal that is maintained by Bank, or the Transaction was submitted to the Bank 30 days or more after the date on which the goods and/or services to which the Transaction relates were purchased or leased by the relevant Cardholder;
• The Transaction was based on a pre-authorization form, the Card on which the Authorization was based was canceled and Merchant was so notified prior to the Transaction;
• The Card giving rise to the Transaction was canceled and prior to, or at the time of, the Transaction, and Merchant received notice of the cancellation through the electronic terminal, in writing or otherwise;
• The Card expired prior to the date of the Transaction or the date of the Transaction was prior to the validation date, if any, indicated on the Card;
• The Transaction information required by this Agreement was not submitted to Bank, or the procedures required by this Agreement to be followed in connection with processing a Transaction were not followed;
• Bank or Issuer receives a complaint from or on behalf of a Cardholder stating that there is an unresolved dispute or defense to a charge (whether or not valid) between Merchant and Cardholder;
• The Cardholder makes a written complaint to Bank or Issuer that the Cardholder did not make or authorize the Transaction;
• A setoff or counterclaim of any kind exists in favor of any Cardholder against Merchant that may be asserted in defense of an action to enforce payment against the Cardholder in the Transaction;
• The Transaction was made at or by a merchant other than Merchant;
• The Transaction otherwise violates the terms of this Agreement, Rules or any Applicable Law;
• A Transaction is charged back by an Issuer;
• The Cardholder alleges that goods or services were not provided, were not as described, were counterfeit, or were defective, including but not limited to shipped merchandise which was received damaged or not suitable for its intended purpose or that Merchant that didn’t honor the terms and conditions of a contract;
• The Transaction was not processed within the required time limit after the Transaction occurred as specified in the Rules;
• The Transaction was submitted in the wrong currency;
• A duplicate Transaction was submitted using the same account number, or the Cardholder paid for the merchandise or service by other means;
• Merchant processed a recurring Transaction after the Cardholder withdrew permission; or
• Any representation or warranty made by Merchant in connection with the Transaction is false or inaccurate in any respect.
• In any such case, Bank shall not be obligated to accept a Transaction for credit to the Operating Account. If Bank has credited the Operating Account or Reserve Account for such a Transaction, Bank may return the Transaction to the Merchant, and Merchant shall pay Bank the amount of the Transaction and any associated fees or charges. Merchant agrees that it is solely responsible for all Chargebacks, and that Bank, without prior notice to Merchant, may: (i) charge the amount of the Transaction to the Operating Account or Reserve Account; (ii) recoup the amount of the Transaction by adjustment of the credits due to Merchant; and/or (iii) set off the amount of the Transaction against any account or property Bank holds for or on behalf of Merchant. If Merchant disagrees with Bank’s decision to charge back a Transaction, Merchant must so notify Bank in writing within 10 days of the Chargeback, and provide documentation that the dispute has been resolved to Cardholder’s satisfaction or proof that a credit has been issued.

14. Retention of Information

Merchant shall retain the information required to be submitted in connection with a Transaction or to be maintained in connection with a complaint for 7 years from the date of the Transaction or the complaint. At the request of Bank, Merchant shall provide such information to Bank, as directed by Bank, within 5 days of receipt of a request from Bank. Failure to meet such time frame or non-delivery of any item or delivery of an illegible copy of an item requested by an Issuer shall, among other things, constitute a waiver by Merchant of any claims and may result in an irrevocable Chargeback for the full amount of the Transaction.

15. Recovery of Cards

Merchant will use its best efforts to reasonably and peaceably recover and retain any Card with respect to which Merchant receives notification of cancellation, restrictions, theft or counterfeiting. This notice may be given: (i) electronically through the Equipment; (ii) by the Authorization Center through any means; or (iii) by listing on any canceled Card or restricted Card list. Merchant shall also take reasonable steps to recover a Card that it has reasonable grounds to believe is counterfeit, fraudulent or stolen.

16. Prohibited Transactions

Merchant shall not do any of the following:

• Accept a Card to collect or refinance an existing debt (whether originally owed to Merchant or otherwise) that is considered uncollectible (for example, payments to a collection agency or attempts to recover funds for a dishonored check) except to the extent specifically permitted by the Rules and Applicable Law;
• Accept Cardholder payments for previous card charges;
• Resubmit any Transaction that was previously disputed and subsequently returned to Merchant, irrespective of Cardholder approval;
• Obtain Authorization for the purpose of setting aside the Cardholder’s credit line for use in future sales;
• Obtain multiple Authorizations for amounts less than the total sale amount;
• Extend credit for or defer the time of payment of the total cash price in any Transaction;
• Honor a Card except in a Transaction where a total cash price is due and payable;
• Make any special charge to or extract any special agreement or security from any Cardholder in connection with any Transaction;
• Establish a minimum or maximum transaction amount as a condition of honoring debit cards, or greater than $10.00 on credit cards;
• Transmit or accept payment for any Transaction that was not originated directly between Merchant and a Cardholder for the sale or lease of goods or the performance of services of the type indicated in the Merchant Application form to which this Agreement is attached;
• Use Merchant’s own Card, or one to which Merchant has access, to process a Transaction for the purpose of obtaining credit for Merchant’s own benefit;
• Re-process any Transaction that was previously charged back to Bank and subsequently returned to Merchant, irrespective of Cardholder approval;
• Initiate a Transaction credit without a preceding debit at least equal to the credit;
• Initiate a Transaction credit without a balance in the Operating Account at least equal to the credit;
• Draw or convey any inference concerning a person’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living when any Card is processed as non-accepted;
• Disburse funds in the form of cash unless; (i) Merchant is participating in Visa Cash Back Services, a financial institution providing a manual cash disbursement, a hotel or cruise line, as specified in the Visa Rules, or (ii) Merchant is dispensing funds in the form of travelers cheques, Visa Travel Money Cards, or foreign currency limited to the instrument value plus a commission fee charged by Merchant;
• Disburse funds in the form of travelers cheques, if the sole purpose is to allow the Cardholder to make a cash purchase of goods and services from Merchant;
• Issue a Transaction credit in respect of goods or services acquired in a cash transaction which are returned;
• Make any cash refund to a Cardholder who has made a purchase with a credit Card (all Transaction credits shall be issued to the same credit Card account number used in the sale);
• Require a Cardholder to complete a postcard or similar device that includes the Cardholder’s account number, Card expiration date, signature or any other Card account data in plain view when mailed;
• Accept a Card for the purchase of Scrip (as defined by applicable VISA regulations), except to the extent specifically permitted by Applicable Law;
• Require any Cardholder to pay any surcharge, convenience fee, or service fee in connection with any Transaction except as expressly permitted by, and under terms and conditions that comply with, applicable state law, regulations, and Rules;
• Cause any Cardholder to waive its right to dispute a Transaction;
• Request the Card Verification Value 2 data (“CVV2”) on any card-present environment transaction; or store CVV2 information subsequent to authorization;
• Request a Cardholder account number for any purpose that is not related to payment for goods or services; or
• Add any tax to Transactions, unless applicable law expressly requires that a merchant be permitted to impose a tax, and only if such tax is included in the Transaction amount and not collected separately.

17. Customer Complaints

Merchant shall respond promptly to inquiries from Cardholders and shall attempt to resolve any disputes amicably. If unresolved disputes occur with a frequency unacceptable to Bank, Bank may terminate this Agreement. Bank reserves the right to charge Merchant reasonable fees and reimbursement on account of excessive Cardholder inquiries, refunds or Chargebacks. Merchant agrees to maintain the following information in writing with respect to each claim or defense asserted by a Cardholder for which Merchant has received notice:

• The Cardholder’s name;
• The Card account number;
• The date and time the Cardholder asserted the claim or defense;
• The nature of the claim or defense; and
• The action that Merchant took in an attempt to resolve the dispute.

Merchant shall furnish Bank with this information in writing within 10 days of request.

18. Limited Acceptance

Merchant may elect to accept only certain Visa and MasterCard card types as indicated on the Merchant Application or via direct notification of Bank. Merchant will be solely responsible for the implementation of its decision to limit acceptance of card types including but not limited to policing card types at the point of sale. Should Merchant submit a transaction for processing a card type that it has indicated that it does not want to accept, Bank may process that transaction and Merchant shall be responsible for all fees, charges and other obligations associated with that transaction under this Agreement. Limited acceptance options apply only to U.S. issued Cards.

19. Use of Third Parties; Software

Merchant shall be responsible for any third party service providers with which Merchant has contracted with to provide services related to Merchant’s processing of Transactions hereunder (“Third Party Servicers”) and Merchant shall ensure that such Third Party Servicers comply with the requirements of this Agreement, the Bank, the Card Networks, Applicable Laws and the Rules. Merchant must notify the bank of any Third Party Servicers under contract and provide bank with any information needed for registrations with the Card Networks. Merchant is responsible for any failure by its Third Party Servicer to comply with the Rules. Merchant acknowledges that Bank is not a party to any agreement with Merchant’s Third Party Servicer and shall not be liable to Merchant in any way with respect to any such agreement.

Merchant acknowledges that any equipment or software provided under this Agreement is embedded with proprietary technology (“Software”). Merchant shall not obtain title, copyrights or any other intellectual property or proprietary right to any Software. At all times, Bank or its suppliers retain all rights to such Software, including but not limited to all rights in and to the updates, enhancements and additions of such Software. Merchant shall not disclose such Software to any party, convey, copy, license, sublicense, modify, translate, reverse engineer, decompile, disassemble, tamper with, or create any derivative work based on such Software. Merchant’s use of such Software shall be limited to that expressly authorized by Bank. Bank’s suppliers are intended third party beneficiaries of this Agreement to the extent any terms of this Agreement pertain to such suppliers’ ownership rights, such suppliers have the right to rely on and directly enforce such terms against Merchant.

20. Confidentiality

Merchant understands and agrees that this Agreement and related information including but not limited to Card account information, Cardholder information and information relating to the methods, techniques, programs devices and operations of Bank and the Card Networks shall be considered “Confidential Information” of Bank. Merchant agrees to make reasonable efforts to protect the Confidential Information from disclosure to third parties other than (i) to employees and agents of Merchant who participate directly in the performance of this Agreement and who need access to the Confidential Information to assist Merchant in the performance of its obligations under this Agreement and (ii) as required to Cardholders, Card Networks and Issuers.

21. Compliance with Applicable Law

Merchant represents and warrants that it has obtained all necessary regulatory approvals, certificates, permits, and licenses, and that it is in compliance with all Applicable Law in connection with the operation of its business, including but not limited to those laws involving: (i) the truncation or masking of Cardholder numbers and expiration dates on transaction receipts from transactions processed at Merchant’s location(s) such as the Fair and Accurate Credit Transactions Act (collectively the “Truncation Laws”); and (ii) the collection of personal information from a cardholder in connection with a card transaction (“PI Laws”). As between Merchant, on the one hand, and Bank, on the other hand, Merchant shall be solely responsible for complying with all Truncation Laws and PI Laws and will indemnify and hold Bank harmless from any claim, loss or damage resulting from a violation of Truncation Laws or PI Laws as a result of transactions processed at Merchant’s location(s). Merchant, as a contractual counterparty to the consumer, is subject to the laws and courts of the country in which it operates.

22. Compliance with Rules

Merchant represents and warrants that it and all of its employees, agents, Third Party Servicers, representatives and service providers will comply with the Rules in connection with any and all actions it takes in connection with Transactions. Merchant expressly acknowledges and agrees that it is assuming the risk of compliance with all provisions of the Rules regardless of whether or not the Merchant has possession or knowledge of those provisions of the Rules. Merchant further acknowledges and agrees that it is responsible for the actions of all of its employees.

23. Data Security Rules

PCI-DSS, Visa CISP, MasterCard SDP, and American Express DSR: Merchant is responsible for ensuring that it, and its Third Party Servicers, securely transmits and stores Cardholder and Card data. The Card Networks have implemented standards and programs to protect Cardholder and Card data and Merchant agrees that it, and its Third Party Servicers, comply with all such programs, including but not limited to: (i) PCI-DSS, (ii) the Visa Cardholder Information Security Program (“CISP”); (iii) the MasterCard Site Data Protection Program (“SDP”), and (iv) the American Express Data Security Requirements (“DSR”). A copy of the PCI-DSS is available at www.pcisecuritystandards.org, the Visa Cardholder Information Security Standards manual and a Self-Assessment Worksheet can be obtained online at www.visa.com/cisp or from Bank, and a copy of the SDP provisions can be obtained from Bank. Visa and MasterCard may impose restrictions, fines, or prohibit Merchant from participating in Visa or MasterCard programs if it is determined that Merchant is non-compliant. Merchant may be required to comply with an audit to verify compliance with security procedures.

Requirements include: (A) install and maintain a working network firewall; (B) keep security patches up-to-date; (C) encrypt stored data; (D) encrypt data sent across networks; (E) use and regularly update anti-virus software; (F) restrict access to data by business “need to know”; (G) assign a unique ID to each person with computer access; (H) don’t use vendor-supplied defaults for system passwords; (I) track access to data by unique ID; (J) maintain an information security policy; and (K) restrict physical access to Cardholder information.

Transaction Information: Merchant acknowledges that the sale or disclosure of databases containing Cardholder account numbers, personal information, or other Transaction information to third parties is strictly prohibited by the Rules. Unless Merchant obtains consent from Bank and each applicable Card Network, Issuer and Cardholder, Merchant must not use, disclose, sell or disseminate any Cardholder or Card information obtained in connection with a Transaction except for purposes of authorizing, completing and settling Transactions and resolving Chargebacks, retrieval requests or similar issues involving Transactions, or pursuant to a court or governmental agency request, subpoena or order. Merchant shall use proper controls for, limit access to, and render unreadable prior to discarding all records containing Cardholder account numbers and Card imprints. Merchant may not retain or store magnetic stripe data after a Transaction has been authorized. If Merchant stores any electronically captured signature of a Cardholder, Merchant may not reproduce such signature except upon the specific request of Bank. Merchant shall store all media containing Cardholder names, Cardholder account information, and other personal information, as well as Card imprints (such as sales drafts and credit records, auto rental agreements, and carbons) in an area limited to selected personnel and, prior to discarding any such information, destroy it in a manner that renders the data unreadable. Merchant further warrants and agrees that in the event of its failure, including bankruptcy, insolvency, or other suspension of business operations, it will not sell, transfer or disclose any materials that contain Cardholder or Card account numbers, personal information, or Transaction information to third parties, and shall return the information to Bank and provide acceptable proof of destruction to Bank.

Cardholder Information Security Breach

In addition to all other requirements of the Rules and Applicable Law, Merchant shall notify Bank immediately in the event that it becomes aware of any actual or suspected unauthorized access to Cardholder or Card information whether in the custody of Merchant or a Third Party Servicer and to cooperate with Bank, the Card Networks, and any approved third party auditors or assessors as requested by Bank or the Card Networks in association with such actual or suspected security breach.

24. Taxes

Each party hereto shall report its income and pay its own taxes to any applicable jurisdiction. If Bank is required to pay any taxes, interests, fines or penalties owed by Merchant, said amount shall become immediately due and payable by Merchant to Bank. If excise, sale or use taxes are imposed on Transactions, Merchant shall be responsible for the collection and payment thereof. Merchant shall not add any tax to any Transaction unless Applicable Law expressly provides that Merchant is permitted to impose a tax, and any such tax amount, if so allowed, shall be included in the Transaction amount and not collected separately. Bank shall be entitled to recover from Merchant any of said taxes paid by it on behalf of Merchant immediately after payment.

25. Limitation of Liability

In addition to all other limitations on the liability of Bank contained in this Agreement, Bank shall not be liable to Merchant or Merchant’s customers or any other person for any of the following:

• Any loss or liability resulting from the denial of credit to any person or Merchant’s retention of any Card or any attempt to do so;
• Any loss caused by a Transaction downgrade resulting from defective or faulty Equipment, even if such Equipment is owned by Bank;
• The unavailability of Services caused by the termination of contracts with computer hardware vendors, processors or installers, whether terminated by Bank or any other person for any reason;
• Interruption or termination of any Services caused by any reason; or
• Bank’s failure to provide the Services if such failure is due to the act or omission of any third party, including but not limited to an act or omission of a third party vendor of Bank or to any cause or condition beyond Bank’s reasonable control.

BANK SHALL NOT BE LIABLE FOR ANY LOST PROFITS, PUNITIVE, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES TO MERCHANT OR TO ANY THIRD PARTY IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE SERVICES TO BE PERFORMED BY BANK PURSUANT TO THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY THEREOF. MERCHANT ACKNOWLEDGES THAT BANK HAS PROVIDED NO WARRANTIES, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE. BANK MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE SERVICES OR ANY EQUIPMENT IT PROVIDES HEREUNDER. IF THERE ARE ERRORS, OMISSIONS, INTERRUPTIONS OR DELAYS RESULTING FROM BANK’S PERFORMANCE OR ANY FAILURE TO PERFORM, BANK’S LIABILITY SHALL BE LIMITED TO CORRECTING SUCH ERRORS, IF COMMERCIALLY REASONABLE.

NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, OUR CUMULATIVE LIABILITY FOR ALL LOSSES, CLAIMS, SUITS, CONTROVERSIES, BREACHES OR DAMAGES FOR ANY CAUSE WHATSOEVER (INCLUDING, BUT NOT LIMITED TO, THOSE ARISING OUT OF OR RELATED TO THIS AGREEMENT), REGARDLESS OF THE FORM OF ACTION OR LEGAL THEORY, SHALL NOT EXCEED, (I) $50,000; OR (II) THE AMOUNT OF FEES RECEIVED BY BANK PURSUANT TO THIS AGREEMENT FOR SERVICES PERFORMED IN THE IMMEDIATELY PRECEDING 12 MONTHS, WHICHEVER IS LESS. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, BANK IS NOT RESPONSIBLE, AND SHALL HAVE NO LIABILITY, TO YOU IN ANY WAY WITH RESPECT TO NON-BANK SERVICES.

26. Indemnification

Merchant agrees to indemnify and hold Bank, its directors, officers, employees, affiliates and agents harmless from any and all losses, claims, damages, liabilities and expenses, including attorneys’ fees and costs, arising out of any of the following: (i) The Services; (ii) (b) Breach of any term or condition of this Agreement, Applicable Law, or the Rules by Merchant, its employees, agents or Third Party Servicers; (iii)Any action by Bank to collect sums due from Merchant under the Agreement; (iv) (d) Any act or omission of Merchant, its employees, agents, Third Party Servicers or other third parties with which Merchant has contracted;(v)(e) Merchant’s processing activities and provision of goods and services to Cardholders; (vi)(f) The fraud or dishonesty of Merchant or Merchant’s employees, licensees, successors, agents and/or assigns; (vii) (g) Services provided by Merchant’s Internet service provider or other telecommunication services provider or any Third Party Servicer; or (viii)any unauthorized access to any computer system, Cardholder information, Merchant credential, or any point of sale equipment controlled or maintained by Merchant.

27. Credit Investigation and Audit

Bank may audit, from time to time, Merchant’s compliance with the terms of this Agreement. Merchant shall provide all information requested by Bank to complete Bank’s audit. Merchant authorizes parties contacted by Bank to release the credit information requested by Bank, and Merchant agrees to provide a separate authorization for release of credit information, banking relationships, and financial history, if requested by Bank. Merchant shall deliver to Bank such information as Bank may reasonably request from time to time, including without limitation, financial statements and information pertaining to Merchant’s financial condition. Such information shall be provided no later than 10 business days after Bank’s request and shall be true, complete and accurate.

28. Credit Investigation and Audit

If undergoing a forensic investigation, Merchant agrees to fully cooperate with the investigation until completed.

29. Exclusivity

Merchant agrees that Bank shall be the sole provider of the Services to the Merchant and that Merchant will not receive or accept substantially similar services from any third party during the term of this Agreement. The parties understand and agree that Bank is entering into this Agreement and providing the Services and associated rates based in part upon Merchant’s exclusivity obligation. Should Merchant violate this exclusivity obligation then Bank may elect to modify the rates for the Services or terminate this Agreement in its sole discretion.

30. Termination of Agreement by Bank

Bank may terminate this Agreement for any reason or no reason upon at least 30 days’ prior written notice to Merchant. In addition, Bank may terminate this Agreement immediately upon written notice to Merchant upon the occurrence of any of the following (each, an “Event of Default”):
(a) Any information concerning Merchant obtained by Bank is unsatisfactory to Bank, in Bank’s sole discretion.
(b) Any act of fraud or dishonesty is committed by Merchant, its employees or agents, or Bank believes in good faith that Merchant, its employees or agents have committed, are committing or are planning to commit any acts of fraud or misrepresentation.
(c) Chargebacks are excessive, in the opinion of Bank.
(d) There is a breach of any representation or warranty made by Merchant to Bank, or Merchant defaults in the performance of any of its obligations under this Agreement.
(e) Merchant files a petition under any bankruptcy or insolvency law.
(f) Bank determines that the continuation of this Agreement may create harm or the loss of goodwill to Bank or any Card Network.
(g) Merchant fails to maintain sufficient funds in the Operating Account to cover the amounts due to Bank hereunder.
(h) Merchant’s percentage of error Transactions or retrieval requests is excessive in the opinion of Bank.
(i) Any insurance policy obtained by Bank or Merchant relating to Transactions and/or Chargebacks is cancelled or terminated for any reason.
(j) Merchant fails to provide financial statements suitable to Bank on request.
(k) Bank does not or cannot perform its duties under this Agreement and Bank determines that it is not feasible to provide the Services contemplated by this Agreement to Merchant. Bank is not obligated to provide replacement Services if Bank does not or cannot perform.
(l) Any Card Network requests or demands that this Agreement be terminated. Merchant acknowledges the Card Networks’ right to terminate or limit the Agreement in their sole discretion.

Bank may selectively terminate one or more of Merchant’s approved locations without terminating this entire Agreement. In the event of termination, all obligations of Merchant incurred or existing under this Agreement prior to termination shall survive the termination. Merchant’s obligations with respect to any Transaction shall be deemed incurred and existing on the date of such Transaction. In the event Bank terminates this Agreement following any Event of Default, Merchant: (i) agrees that Bank may place Merchant and/or its principals on each Card Network’s “Terminated Merchant File” (or any other list or file serving a similar purpose) and expressly consents to such reporting and waives any claims against Bank for same; and (ii) agrees to indemnify and hold Bank harmless from and against any and all costs, expenses and liabilities incurred by Bank in connection with or arising out of such Event of Default or the Bank’s reporting to the Terminated Merchant File.

31. Termination of Agreement by Merchant

Merchant may terminate this Agreement upon at least 30 days’ prior written notice to Bank if Bank amends the Agreement pursuant to Section 35 to increase the rates, fees or charges Merchant pays hereunder, except that Merchant may not terminate this Agreement if such amendments are due to revised fees or rates that result from a pass through from a Card Network or other Bank third party provider or as a result of Merchant’s violation of Section 28, provided, however, that Merchant’s notice of termination must be received by Bank no later than 60 days after the effective date of such amendment.

32. Early Termination

If (i) Bank terminates this Agreement for an Event of Default, or (ii) Merchant terminates this Agreement other than as provided in Sections 3 and 30 above, before the end of the Initial Term or any Renewal Term, then in addition to any and all other charges or fees due under this Agreement, Bank reserves the right to charge Merchant an “Early Termination Fee”. The Early Termination Fee shall be equal to the greater of either; (i) $500.00, or (ii) the monthly processing fees billed to Merchant averaged over the 6 months immediately preceding such termination (or averaged over less than 6 months if the Agreement is less than 6 months old as of the date of such termination), multiplied by the number of months then remaining in the Initial Term or Renewal Term.

Notwithstanding the foregoing or any other provision in this Agreement or the Merchant Application, the Early Termination Fee shall not exceed the maximum amount set forth by applicable law and shall not be imposed where prohibited by law. For the avoidance of doubt, this Agreement may be terminated by Merchants located in Maryland without the assessment of any fines, penalties, or liquidated damages. Merchant agrees that the Early Termination Fee consists of liquidated damages which are reasonable in light of the difficulty in determining Bank’s damages associated with an early termination of this Agreement.