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Terms and Conditions (Merrick)

MERCHANT PROCESSING AGREEMENT TERMS AND CONDITIONS

These terms and conditions herein, together with the Merchant Application constitute the "Merchant Processing Agreement” and apply to the merchant identified in the Merchant Information section on the first page of the Merchant Application ("Merchant”) who has applied to use the merchant processing services of Payment Alliance International, Inc. ("Processor”), and, with respect to Card Association products, Merrick Bank Corporation ("Bank”), which is a member of Visa and MasterCard. For purposes of these terms and conditions, Bank and Processor shall collectively be referred to herein as "Service Provider”. The Merchant Processing Agreement, including these terms and conditions, will become effective upon Service Provider’s approval of Merchant. In consideration of the covenants set forth below, Merchant and Service Provider agree as follows:

ARTICLE 1 – CARD TRANSACTIONS

1.01 Honoring Cards: a) Merchant, whether dealing with the public or otherwise, shall honor, in a non-discriminatory manner, all valid Discover ® , MasterCard or Visa credit or debit cards processed hereunder ("Cards”) of the type(s) indicated in the Merchant Application when properly presented as payment in connection with bona fide, legitimate business transaction; b) Although Merchant may discount cash purchases, it shall not, subject to Section 1.10(f)(4), impose upon Cardholders at the time of sale or otherwise, any surcharge, whether through an increase in price or otherwise, including any surcharge that may be imposed upon Merchant by Service Provider; c)Merchant shall not establish minimum or maximum transaction amounts for the acceptance of Cards; d)Merchant shall not require the holder of a Card ("Cardholder”) to provide identification information such as telephone number, address or driver’s license number as a condition of completing a transaction unless permitted by applicable law, rule or regulation ("Law”) and required by the bylaws, rules or regulations of DFS Services LLC ("Discover”), MasterCard International, Inc. ("MasterCard”) or Visa U.S.A. Inc. ("Visa” and collectively with Discover and MasterCard, the "Card Associations” and the bylaws, rules or regulations of the Card Associations, the "Operating Regulations”); e)Merchant may not make a photocopy of a Card under any circumstances nor request that the Cardholder provide a photocopy of the Card as a condition for honoring same; f)Merchant cannot establish any special conditions for accepting a Card; g)Any tax required to be collected must be included in the total transaction amount and not collected in cash; h) Merchant cannot submit any transaction representing the refinance or transfer of an existing Cardholder obligation, including, but not limited to: (a) obligations previously owed to Merchant; (b) obligations representing the collection of any other pre-existing indebtedness, including collection of delinquent accounts on behalf of third parties or (c) any other existing Cardholder obligation deemed uncollectible; i)Merchant cannot submit a transaction or sale that has been previously charged back; j)Merchant must deliver at least one copy of the sales slip evidencing a sale Card transaction (a "Sales Draft”) or the credit slip from Merchant evidencing any refund or price adjustment to be credited to a Cardholder account (a "Credit Slip”) to the Cardholder; and k)Merchant cannot submit a transaction or sale to cover a dishonored check.; and l) Merchant cannot submit a transaction or sale for an unlawful Internet gambling transaction.

1.02 Advertising: a) Subject to exceptions for private clubs, Merchants who do not deal with the public, vehicle leasing companies at airport locations, transportation companies subject to government regulation, or Merchants expressly exempted from Card Issuers’ Regulations, Merchant shall prominently display advertising or promotional material provided by Service Provider (or as otherwise required) solely to inform the public that Cards are honored at Merchant’s place of business; b) Merchant shall not display or use advertising or promotional materials containing Bank’s name or symbol; c) Merchant shall have the right to use or display the proprietary names and symbols associated with Cards only while this Agreement is in effect, or until Merchant is notified earlier by Service Provider or any Card Association to cease such usage, and upon such notification or upon termination or expiration of this Agreement, Merchant shall return all inventory of promotional materials to Service Provider; d) Merchant shall comply with all applicable Operating Regulations concerning the use of service marks and copyrights owned by the Card Associations; e) Merchant shall use the proprietary names and symbols associated with Cards only to indicate that Cards are accepted for payment and shall not indicate, directly or indirectly, that Service Provider or any Card Association endorses Merchant’s products or services; and f)Merchant shall not refer to Service Provider or any Card Association in stating eligibility for its products, services, or memberships.

1.03 Card Examination: a) Merchant agrees to carefully examine any Card security features (such as any hologram) included on the Card, compare the embossed account number on the face of the Card with the account number indented on the signature panel; check the validity date and expiration date of the Card; and shall not honor any invalid or expired Card without proper, prior authorization; b) Where the magnetic stripe on the Card is read in connection with a transaction, Merchant shall compare the embossed account number on the Card to the number displayed or printed by the terminal to verify they are the same; c) Except for mail orders, telephone orders or pre-authorized transactions, Merchant shall not complete a transaction without presentation of the Card by the Cardholder and proper examination by the Merchant of the Card; d)If the signature panel on the Card is blank, Merchant shall, in accordance with Section 1.01(d): 1) Review the positive identification to confirm identity. Such identification must consist of a current, official government identification document (such as a passport or driver’s license) bearing Cardholder’s signature; 2) Indicate such positive identification (including any serial numbers and expiration date) on the sales draft if the transaction is a Discover or Visa transaction, and if permitted by law. (Such information shall not be recorded for MasterCard transactions); 3) Require Cardholder to sign the signature panel before completing the transaction; and 4) Request authorization; and e) In the case of a Visa Card, Merchant shall compare the printed issuing bank identification number, which is directly above the first four digits of the embossed account number. If the printed number and the embossed number do not match, Merchant shall call the voice authorization number and request a "code 10” operator.

1.04 Authorization: a ) Before honoring any Card, Merchant shall request authorization from Processor’s designated authorization center if: 1) The total amount of the transaction (including any applicable taxes) exceeds the then applicable floor limit (for vehicle leasing transactions, Merchant must estimate the amount of the transaction based upon the Cardholder’s intended length of rental and request authorization if the estimated transaction amount exceeds the applicable floor limit. Upon return of the rental vehicle, additional authorization must be obtained and recorded for charges actually incurred in excess of the estimated amount authorized); when multiple airline tickets are purchased at the same time using the same account number, Merchant may obtain authorization for each ticket individually; and when a transaction is completed in partial payment of a purchase, authorization is required for the portion of the purchase effected with the Card, regardless of the applicable floor limit; 2) Merchant desires to make delayed presentment of the transaction record; 3)The account number does not receive a positive response from the account number verification service provided to Merchant (if Merchant does not obtain a positive account number verification, or authorization, the transaction shall be subject to chargeback as set forth in Section 2.07); 4) The signature panel of the Card does not contain the Cardholder’s signature; the Cardholder’s signature on the Sales Draft is questionable or Merchant believes the Card maybe counterfeit or stolen, or there are other unusual or suspicious circumstances; or 5) The transaction is other than a mail or telephone order and involves: 1) a handwritten sales draft that does not contain the Card or Merchant plate imprint; 2) presentation of a Card that is not signed; or 3) presentation of an expired Card. b) Where authorization is required for reasons other than because the amount of the transaction exceeds the applicable floor limit, Merchant must contact Processor’s designated authorization center by telephone and advise the authorization center of the specific reason for the authorization request and await instructions; c) Authorization numbers, or positive account number verification response codes, as appropriate, shall be printed legibly in the designated area on the sales slip; d) If authorization is denied, Merchant shall not complete the transaction and shall use its best efforts by reasonable and peaceful means to follow any instructions from the authorization center; e) Merchant shall be liable to Service Provider, regardless of any authorization, if Merchant completes a transaction when the Cardholder is present but does not have his Card, the Cardholder does not sign the sales slip, the signature on the sales slip does not match the signature appearing on the Card, or the signature panel on the Card is blank; f)In no event shall an authorization be deemed to be Service Provider’s representation that the particular transaction is in fact a valid, authorized or undisputed transaction entered into by the Cardholder or an authorized user of the Card; g) Where authorization is requested for any transaction involving suspicious or unusual circumstances the Merchant shall call and request a "code 10” authorization from Processor’s designated authorization center; h) An authorization for a restaurant transaction in which a gratuity is added to the sales slip by the Cardholder is valid if the total transaction amount is within 20% of the authorization amount; and i) If authorization is obtained for the estimated amount of a car rental transaction, Merchant shall disclose of Cardholder such amount authorized on the rental date.

1.05 Retention and Retrieval of Cards: Merchant shall use its best efforts, by reasonable and peaceful means, to retain or recover a Card: a)IfMerchant receives a negative response from the account number verification service, and until Merchant receives further instruction from Processor’s designated authorization center; or b)While making an authorization request: 1) If Merchant is advised to retain the Card in response to an authorization request; 2) Where the embossed account number, indent printed account number and/or encoded account number do not match, or an unexpired Card does not have the appropriate hologram on the Card face; or 3)If the Merchant has reasonable grounds to believe the Card is counterfeit, fraudulent or stolen. The obligation of Merchant to retain or recover a Card imposed by this section does not authorize a breach of the peace or any injury to persons or property, and Merchant will hold Service Provider harmless from any claim arising from any injury to person or property or other breach of the peace. If a recovered Card is retained by a law enforcement agency, Merchant shall forward a legible copy of the front and back of the Card to Service Provider.

1.06 Completing the Transaction Record: Except as provided below, Merchant agrees to do all of the following when honoring a Card: a) To enter on the Sales Draft the transaction date, a description of the goods or services sold, and the price thereof (including any applicable taxes) in detail sufficient to identify the transaction; b) To obtain the signature of the Cardholder on the Sales Draft after the transaction amount is identified in the "total” column; c) To compare the signature on the Sales Draft and the signature panel of the Card, and if the Card has a photograph of the Cardholder, to verify identity, and if either identification is uncertain or the account numbers are not the same or Merchant otherwise questions the validity of the Card, to not complete the transaction and to retain the Card in accordance with Section 1.05, above. d)to deliver a true and completed copy of the Sales Draft to the Cardholder at the time of delivery of the goods or performance of the services or for point of transaction terminal transactions, at the time of the transaction; e) For transactions which originate at and are data captured using point-of-sale transaction terminals. Merchant must include the following on the Cardholder copy or the sales draft: i) The Cardholder account number; ii) Merchant’s name; iii) Merchant’s location code or city and state; iv) The amount of the transaction; and v) The transaction date. f) Transaction records must be produced for all transactions which originate at and are data-captured using automated dispensing machines or limited-amount terminals, except for transactions which originate at magnetic-stripe-reading telephones. Such transaction records must include at least the following information: i) The Cardholder account number; ii) Merchant’s name; iii) The magnetic-stripe-reading terminal location code or city and state; iv) The amount of the transaction; and v) The transaction date. 

1.07 Multiple Transaction Records; Partial Consideration: a) Merchant must include on one transaction record the entire amount due for the transaction, except in the following instances: 1) The transaction involves purchases made in separate departments of a multi-department store (these would be multiple transactions); 2) The transaction involves delayed or amended charges for a vehicle rental transaction in which: i) The Cardholder consented to be liable for such charges; and ii) such charges consist of ancillary or corrected charges such as taxed or fuel fees, and not charges for loss, theft, damage, or traffic violations; 3) Merchant sends the Cardholder a copy of the amended or add-on Sales Draft (Sales Draft for such delayed or amended charges may be deposited without the Cardholder signature provided that Merchant has Cardholder’s signature on file, and the words "SIGNATURE ON FILE” are entered onto the signature panel of the sales draft); 4) The Cardholder pays a portion of the transaction amount in cash, by check, with any other Card, or any combination of such payments at the time of the transaction; provided, that that Merchant obtains authorization for each part of the transaction effected with a Card; b) Merchant agrees not to divide a single transaction between two or more transaction records to avoid authorization limits or restrictions. c) For sales processed at electronic POS terminals, multiple items individually billed to the same account will not be considered a violation of this Agreement if separate authorizations are obtained for each item. d) In a delayed delivery transaction whereby Cardholder makes a deposit toward the full amount of the sale, Merchant must execute two separate Sales Drafts (each completed as required by Operating Regulations), the first for a deposit and the second for payment of the balance upon delivery of the merchandise or the performance of the Services. For Discover or Visa transactions, Merchant must obtain separate authorizations for each of the two Sales Drafts. Merchant must assign the separate authorization number to each Sales Draft, respectively. Merchant must note on such Sales Drafts the words "delayed delivery,” "deposit” or "balance” as appropriate, and the authorization dates and approval codes. For MasterCard transactions, Merchant must obtain one authorization but note on both sales slips the words "delayed delivery,” "deposit” or "balance” as appropriate, and the authorization date and approval code. e) If Merchant processes recurring transactions and charges a Cardholder’s account periodically for recurring goods or services (e.g., monthly insurance premiums, yearly subscriptions, annual membership fees, etc.), the Cardholder shall complete and deliver to Merchant a written request for such goods or services to be charged to this account. The written request must at least specify the transaction amounts, the frequency of recurring charges, and the duration of time for which the Cardholder’s
permission is granted. If the recurring transaction is renewed, the Cardholder must complete and deliver to Merchant a subsequent written request for the continuation of such goods or services to be charged to the Cardholder’s account. Merchant may not complete a recurring transaction after receiving a cancellation notice from the Cardholder or issuing bank or after a request for authorization has been denied. Merchant must obtain an authorization for each transaction and write "recurring transaction” (or "P.O.” for MasterCard transactions) on the sales slip in lieu of the Cardholder’s signature. A recurring transaction or pre-authorized transaction may not include partial payments for goods or services purchased in a single transaction. Merchant may not impose a finance charge in connection with a recurring transaction or pre-authorized order.

1.08 Telephone Order, Mail Orders, Pre authorized Orders, and Installment Orders: a) If the transaction is a telephone order (TO) mail order (MO), or pre authorized order (PO), the Sales Draft may be completed without a Cardholder’s signature, however Merchant shall: 1) Print legibly on the Sales Draft sufficient information to identify the Card issuer, Merchant and the Cardholder, including: Merchant’s name and address, the Card issuers’ name or trade style, ICA number and bank initials (if any), the account number, the expiration date and any effective date on the Card, the Cardholder’s name, and any company name, and 2) Print legibly on the signature line of the Sales Draft the letter "TO”, ”MO” or "PO” (recurring transaction for Discover or Visa transaction), as appropriate. 3) Obtain authorization for every sale for MO and TO transactions, authorization must be obtained no more than 7 calendar days before the transaction date. Merchant shall attempt to obtain the expiration date of the Card as part of the authorization inquiry. b) On any non imprinted or expired Card transaction, Merchant shall be deemed to warrant the Cardholder’s true identity as an authorized user of the Card, whether or not authorization is obtained, unless Merchant obtains and notes legibly on the Sales Draft independent evidence of the customer’s true identity. c) In connection with a recurring transaction (or pre-authorized order) pursuant to which goods or services are delivered to or performed for a Cardholder periodically, Merchant agrees to the following conditions: 1) Merchant must obtain a written request from the Cardholder that the recurring transaction is charged to the Cardholder’s account; 2) The written request must specify the amount of the recurring transaction (or allow space for Cardholder to specify a minimum and maximum amount if the recurring transactions are to be for varying amounts), the frequency of the recurring charges, and the length of time for which the pre authorized order is to remain in effect; 3) Before renewing a preauthorized order, Merchant must obtain a subsequent written request from the Cardholder containing the information listed above; 4) Merchant must not deliver goods or perform services covered by a pre authorization order after being advised that the pre authorization has been canceled or that the Card is not being honored; 5) Except as provided in Section 1.07, a recurring transaction may not include partial payments to Merchant for goods or services purchased in a single transaction, or for periodic payments of goods or services on which Merchant assesses additional finance charges; and 6) Merchant must inform Cardholder that he has the right to receive, at least 10 days prior to each scheduled transaction date, written notice of the amount and date of the next charge. Cardholder may elect to receive the notice - For every charge, Only when the transaction amount does not fall within the specified range shown on the order form, or
only when the transaction amount will differ from the most recent charges charge by more than an agreed upon amount. d) Merchant may offer Cardholders an installment payment option for its mail/telephone order merchandise subject to the following conditions: 1) Merchant’s promotional material must clearly disclose the installment terms, including but not limited to: i) Whether the plan is available only for selected items or for the total amount or any order; ii) How shipping and handling charges and applicable taxes will be billed. The material also must advise Cardholders who are not billed in the transaction currency of the Merchant that the installment billing amounts may vary due to fluctuations in the currency conversion rates; iii) Merchant may add no finance charges. The sum of the installment transactions may not exceed the total sales price of the merchandise on single transaction bases; iv) Authorization is required for each installment transaction. Merchant’s floor limit is zero; v) Merchant may not deposit the first installment transaction with Bank until the merchandise is shipped. Subsequent installment transactions must be deposited: at intervals of 30 days or more or on the anniversary date of the transaction {i.e. the same date each month}; and vi) In addition to Merchant’s name, an appropriate installment transaction descriptor (e.g. 1 of 5, 2 of 5) must be included in the Merchant name field of the clearing record.

1.09 Vehicle Rental Transactions: Regardless of the terms and conditions of any written pre-authorization form, the Sales Draft amount for any vehicle rental transaction shall include only that portion or the transaction, including any applicable taxes, evidencing a bona fide renting of personal property by Merchant to a Cardholder and shall not include any consequential charges. Nothing herein is intended to restrict Merchant from enforcing the terms and conditions of its pre authorization form through means other than a Card transaction.

1.10 Returns and Adjustments; Credit Slips: a) Merchant's policy for the exchange or return of goods sold and the adjustment for services rendered will be established and posted in accordance with operating regulations of the applicable Card Association's regulations. Any change in Merchant’s return or cancellation policy must be submitted in writing to Service Provider not less than 14 days prior to the change. Service Provider may refuse to process any Sales Draft made subject to a revised return or cancellation policy of which Bank has not been notified as required herein; b) If with respect to any transaction, any merchandise is accepted for return or any services are terminated or canceled, or any price adjustment is allowed by the Merchant (other than involuntary refunds by airlines or other carriers when required by applicable tariffs and except where otherwise required by Law). Merchant shall not make any cash refund to the Cardholder but shall deliver promptly to Processor a Credit Slip evidencing such a refund or adjustment; c) Each Credit Slip shall be signed and dated by Merchant and include the transaction date, a description of the goods returned, services canceled or adjustment made and the amount or the credit in sufficient detail to identify the transaction and the embossed data from the Card and Merchant’s imprinter plate; d)The refund or adjustment shall be indicated on a Credit Slip and may not exceed the original transaction amount; e) The Merchant may limit its return, adjustment, refund or exchange policies if (i) in accordance with Proper Disclosure (defined below) and (ii) the related purchased goods or services are delivered to the Cardholder at the time of the transaction. If Proper Disclosures are not made, Merchant must provide a full refund in the form of a credit to the Cardholder’s Card account; f) "Proper disclosure” by the Merchant, which must be made at the time of the transaction, shall be made by printing the following words or similar wording on all copies of the sales slip or invoice being presented to the Cardholder for signature in letters approximately 1/4 inch high and in close proximity to the space provided for the Cardholder’s signature: 1) "NO REFUND” for a Merchant which may not accept merchandise in return or exchange and may no tissue a refund to a Cardholder. 2) "EXCHANGE ONLY” for a Merchant which may accept merchandise in immediate exchange for similar merchandise of a price equal to the amount of the original transaction. 3) "IN STORE CREDIT ONLY” for a Merchant which may accept merchandise in return and deliver to the Cardholder an In-store credit for the value of the merchandise returned which may be used only in the Merchant’s place(s) of business. 4) A Merchant may, if permitted by Law, stipulate special circumstances for which it shall assess a surcharge for the use of a Card; provided that the relevant Sales Draft contains such special terms of the transaction(s). g) Merchant acknowledges that Merchant may be liable for chargeback even if Proper Disclosures are made, as a result of consumer protection laws and the Operating Regulations. h) Merchant must deliver to the Cardholder a true and completed copy of the Credit Slip to the time of the credit transaction. Merchant shall not process a Credit Slip without having completed the related sales transaction with the Cardholder and in no event may the credit exceed the amount of the original transaction.

1.11 Cash Payments: Merchant shall not receive any cash payments from a Cardholder for charges included on any transaction record resulting from the use of any Card, nor receive any cash payments from a Cardholder to prepare and present a Credit Slip for the purpose of affecting a deposit to the Cardholder’s account.

1.12 Cash Advances: Unless expressly authorized in writing by Service Provider, Merchant agrees not to make any cash advance to a Cardholder, either directly or by deposit to the Cardholder’s account. Contribution to charitable and political organizations, tax payments, insurance premium payments, alimony and child support payments, and court costs and fines shall not be considered cash advances or withdrawals. Merchant may not accept any Card at a scrip terminal.

1.13 Duplicate Transactions: Merchant may not deposit duplicate transactions. Service Provider may debit Merchant for any adjustments for duplicate transactions and Merchant is liable for any chargeback resulting therefrom.

1.14 Disclosure and Storage of Cardholder Account Information: a) Disclosure. Unless Merchant obtains consents from Service Provider and each applicable Card
Association, Card Issuing Bank and Cardholder, Merchant must not use, disclose, sell or disseminate any Cardholder information obtained in connection with a Card transaction (including the names, addresses and Card account numbers of Cardholders) except for purposes of authorizing, completing and settling Card transactions and resolving any chargebacks, retrieval requests or similar issues involving Card transactions, other than pursuant to a court or governmental agency request, subpoena or order. b) Safeguards. Merchant will maintain appropriate administrative, technical and physical safeguards for all non-public, sensitive information about a Cardholder, including any combination of Cardholder name plus the Cardholder’s social security number, driver’s license or other identification number or credit or debit card number, or other bank account number ("Cardholder Information”). These safeguards will (i) insure the confidentiality of Cardholder Information; (ii) protect against any anticipated threats or hazards to the security or integrity of Cardholder Information; (iii) protect against unauthorized access to or use of Cardholder Information that could result in substantial harm or inconvenience to any Cardholder; and (iv) properly dispose of all Cardholder Information to ensure no unauthorized access guidance. Such safeguards shall include (but not be limited to):1) Merchant and any agent of Merchant shall store in a secure area limited to selected personnel and prior to discarding, shall destroy in a manner rendering data unreadable all material containing Cardholder account number card imprints, such as sales Drafts and Credit Slip, car rental agreements and carbons and will not store CVV/CVC numbers. 2) Merchant or any agent of Merchant shall not retain or store magnetic stripe data subsequent to the authorization of a transaction. 3) If Merchant stores any electronically captured signature of a Cardholder, Merchant may not reproduce such signature except upon Service Provider’s specific request. c) Compliance with Operating Regulations. Merchant represents, warrants and covenants that it is and will remain throughout the term of this Agreement in compliance with Operating Regulations related to data security, data integrity and the safeguarding of Cardholder Information including the Payment Card Industry Data Security Standard ("PCI”), Discover Information Security Compliance ("DISC”), MasterCard’s Site Data Protection Program ("SDP”), and Visa’s Customer Information Security Program ("CISP”), in effect and as may be amended, supplemented or replaced. Merchant will cause all of its service providers, subcontractors and agents to comply with PCI, SDP, DISC and CISP requirements at all times. Merchant will report any non-compliance immediately to Service Provider. To accomplish the foregoing, Merchant will encrypt all debit, credit or stored value card numbers whether in storage, transport or backup and will not store data security codes on its systems, network or software. d) Annual Certification. If requested by Service Provider, Merchant will provide an annual certification to Service Provider in a form acceptable to Service Provider) certifying compliance with the data security provisions of this Agreement, including compliance with applicable Card Association requirements such as PCI, SDP and CISP. Merchant will provide annual certifications for Merchant’s service providers, subcontractors and agents. e) Response to Unauthorized Access. Merchant will notify Service Provider within 24 hours after it knows of any breach in security resulting in an unauthorized access to Cardholder Information. Merchant will provide any assistance that Service Provider, the issuing bank of any Cardholder, and their regulators and the Card Associations deem necessary to contain and control the incident to prevent further unauthorized access to or use of Cardholder Information. Such assistance may include, but not be limited to, preserving records and other evidence and compiling information to enable Service Provider and the issuing bank(s) or the Card Associations to investigate the incident and provide assistance and cooperation to: (a) file suspicious activity reports (as applicable); (b) notify their regulators (as applicable); and (c) notify the affected Cardholder (as required). Unless the unauthorized access was due to Service Provider’s acts or omissions, Merchant will bear the cost of notifying affected Cardholder. f) Miscellaneous. Merchant may not make a claim against Service Provider or hold Service Provider liable for the acts or omissions of other merchants, service providers, Card Associations, financial institutions or others that do not have a written contractual relationship with Service Provider or over which Service Provider has no control. These provisions supplement, augment and are in addition to obligations of indemnification, audit, confidentiality and other similar provisions contained in this Agreement. This Section 1.14 and each of its subsections will survive this Agreement’s termination. Merchant may not store in any system or in any manner discretionary Card read data including without limitation CVV2 data, PIN data, address verification data or any other information prohibited by the Operating Regulations. Merchant acknowledges that it will not obtain ownership rights in any information relating to and derived from Card transactions.

ARTICLE II – PRESENTMENT PAYMENT AND CHARGEBACK

2.01 Transmission of Data: In lieu of depositing paper Sales Drafts and Credit Slips with Processor, Merchant may transmit to Processor, in the form of magnetic tape or electronic data, as specified and acceptable to Service Provider, all data required to appear on the Sales Draft or Credit Slip. The term "sales data” as used herein shall mean the data transmitted by Merchant contained in a Sales Draft or the electronic or magnetic tape record that is the equivalent of such Sales Draft. The term "credit data” as used in this Agreement shall mean the data transmitted by Merchant contained in a Credit Slip or the electronic or magnetic tape record which is equivalent thereto. All data (transaction records) transmitted shall be pre-sorted and organized in a form and format approved and/or instructed in advance by Service Provider. All references to "sales slips” "Sales Drafts” and "credit slips” in this Agreement shall be deemed to include transaction records transmitted by paper, electronically or on magnetic tape.

2.02 Presentment of Transaction Records to Service Provider: a) Merchant may designate a third party who does not have a direct Agreement with Service Provider as its agent for delivering transactions data-captured at the point of sale by such agent if Merchant elects to use such agent. Merchant agrees to the following conditions (for purposes of Section 2.02, "Merchant” includes any such permitted agent): 1)Merchant must provide satisfactory notice to Service Provider that Merchant chooses to exercise the option specified above; 2) The obligation of Service Provider to reimburse Merchant for transactions is limited to the amount (less the applicable or appropriate discount fee) delivered by Merchant’s designated Agent; and 3) Merchant is responsible for its agent’s failure to comply with applicable Card Issuer Regulations and any other applicable Card Association, rules or regulations, including, but not limited to, any violation resulting in a chargeback or other fee, fine or penalty. b)Merchant shall present all sales data relevant to a transaction, except that 1) Merchant shall present no sales data until goods have been shipped or the services have been performed and Merchant has otherwise performed all of its principal obligations to the Cardholder in connection with the transaction unless the Cardholder agreed to a delayed delivery of goods and proper disclosures were made at the time of the transaction; 2) When Merchant requests and receives authorization for delayed presentment and legibly prints on the Sales Draft the authorization number and the words "Delayed Presentment”, Merchant must present the sales data within the permitted period for delayed presentment (not to exceed 30 calendar days). 3) If Merchant is obligated by law to retain a Sales Draft or return it to a buyer upon timely cancellation, Merchant must present the sales data within 10 bank business days after the date of the transaction; and 4) When Merchant has multiple locations or offices and accumulates transaction records at a central facility, Merchant must present the transaction records to Processor within 20 calendar days after the transaction date. Merchant with multiple locations must deliver the transaction records in such manner that Service Provider is able to identify the transactions originating at each location. c) Merchant shall deliver all credit data to Processor within 3 bank business days after the credit transaction date, except if Merchant has multiple locations as described in (b)(4) above, Merchant must deliver the credit data to Processor within 7 business days after the transaction date. d) Merchant shall not present to Service Provider, directly or indirectly, any transaction record that Merchant knows or should have known: to be fraudulent or not authorized by the Cardholder; results from transaction outside Merchant’s normal course of business; that results from a transaction not involving Merchant; that contains the account number of a Card account issued to Merchant; or was not the result of a transaction between Merchant and Cardholder. If Merchant deposits any of the foregoing transactions, Service Provider may: (a) immediately terminate this Agreement; (b) withhold funds and demand an escrow as provided in this Agreement; (c) report Merchant to Visa, Discover, and MasterCard under the terms of this Agreement. Merchant’s employees’ actions are chargeable to Merchant under this Agreement. e) If the transmission of sales data or credit data from Merchant to Processor is in the form of magnetic tape or electronic data, Merchant shall preserve a copy of the sales and credit slips as per Section 3.03. f) Merchant is prohibited from re-depositing any transaction which has previously been charged back and subsequently returned to Merchant. This prohibition applies with or without the Cardholder’s consent of the Merchant’s actions. Merchant may, at its option, pursue payment from the Cardholder in such event.

2.03 Acceptance and Discount: Subject to the provisions of any Agreement of Merchant hereunder and of any chargeback right, Service Provider agrees to accept valid transaction records from Merchant during the term of this Agreement and to pay Merchant the total amount represented by the transaction records less any percentage discount and fees agreed to by the parties. In this regard, Merchant understands and agrees that any fee or charge provided herein is that which is to be initially applicable and imposed and such fees and charges may be increased or otherwise amended from time to time by Service Provider with or without advance notice to Merchant except as otherwise herein specifically provided. Any payment made by Service Provider to Merchant shall not be final but shall be subject to subsequent review and verification by Service Provider and may be subject to chargeback until the chargeback period expires.

2.04 Insecurity: Notwithstanding Section 2.03, Service Provider may withhold payment to Merchant or prohibit Merchant’s withdrawal of funds then on deposit with Service Provider for any of the following reasons: a) Service Provider is suspicious of any transaction records; b) Merchant’s volume of sales exceeds a stipulated amount or amounts that are typically generated during a particular period; c) Merchant’s average ticket amount exceeds a stipulated amount or amounts that are typically generated during a particular period; d)Merchant does not swipe Cards through electronic terminals; e) Merchant fails to authorize transaction(s); f) Service Provider receives excessive retrieval requests or processes excessive credits against Merchant’s account as to prior activity; g) Excessive chargebacks are debited against Merchant’s account as prior activity; or h) If for any other reason Service Provider reasonably determines that withholding funds or preventing withdrawals of funds previously deposited with Service Provider is necessary to cover anticipated charges from Merchant’s Card activities.

2.05 Endorsement: Merchant agrees to sell and assign all its right, title and interest in each any transaction record Merchant presents to Service Provider in conformity with Service Provider's acceptance procedures and Merchant further agrees that Merchant shall be deemed to have endorsed in Service Provider’s favor any transaction records Merchant presents to Service Provider and Merchant hereby authorizes Service Provider to supply such endorsement on Merchant’s behalf.

2.06 Chargeback: a) Under any one or more of the following circumstances, Service Provider has accepted, and Merchant shall repay Service Provider the amount represented by the transaction record as well as any other fees or fines imposed by a Card Association with respect to Merchant’s acts or omissions: 1) The transaction record or any material information on a Sales Draft (such as the account number, expiration date of the Card, Merchant description, transaction amount, or date) is illegible, incomplete, is not endorsed, or is not delivered to Service Provider within the required time limits; 2) The transaction received a negative account verification service response (or would have received a negative account verification service response if Merchant had contacted the service on the transaction date) and Merchant did not reject the transaction or receive prior authorization for the transaction, as applicable; 3) The Sales Draft does not contain the required imprint of a Card that was valid, effective, and unexpired on the transaction date; 4) The transaction was one for which prior credit authorization was required and prior credit authorization was not obtained, or a valid authorization number is not correctly and legibly included on the transaction record; 5) The transaction record is a duplicate of an item previously paid, or is one of two or more transaction records generated in a single transaction in violation of this Agreement; 6) The Cardholder disputes the execution of the transaction record, the sale, delivery, quality, or performance of the goods or services purchased, or alleges that a credit adjustment was requested and reissued or that a credit adjustment was issued by Merchant but not posted to the Cardholder’s account; 7) The price of the goods or services shown on the transaction record differs from the amount shown on the copy of the sales slip or the receipt delivered to the customer at the time of the transaction; 8) Service Provider reasonably determines Merchant has violated any term, condition, covenant, warranty, or other provision of this Agreement in connection with the transaction record or the related transaction; 9) Service Provider reasonably determines the transaction record is fraudulent or that the related transactions were not a bona fide transaction in Merchant’s ordinary course of business, or is subject to any claim of illegality, cancellation, recession, avoidance, or offset for any reason whatsoever, including without limitation negligence, fraud, or dishonesty on the part of Merchant or Merchant’s Agents or employees; 10) The transaction record arises from a mail or telephone order transaction which the Cardholder disputes entering into or authorizing, or which involves an account number that never existed or that has expired and has not been renewed; 11) Merchant fails to provide any Sales Draft or Credit Slip to Service Provider in accordance with Section 3.01 of this agreement. 12) Any other Merchant transaction charged back to Service Provider for whatever reason pursuant to Card Issuer Regulations. b) In the event Merchant believes a chargeback to be improper, Merchant must notify Service Provider of this in writing within ten (10) calendar days of the date of the chargeback or forfeit its right to contest the chargeback. c) If Merchant’s Chargeback Percentage for any line of business exceeds the estimated industry Chargeback Percentage (as defined below), Merchant shall, in addition to the chargeback fees and any applicable chargeback handling fees or fines, pay Processor an excessive chargeback fee for all chargebacks occurring in such month in such line(s) of business. Each estimated industry Chargeback Percentage is subject to change from time to time by Service Provider in order to reflect changes in the industry Chargeback Percentages reported by Discover, Visa or MasterCard. Merchant’s "Chargeback Percentage” shall mean the larger of (y) the total Discover, Visa or MasterCard chargeback items in any line of business in any calendar month divided by the number of Discover, Visa or MasterCard transactions, as applicable, in that line of business submitted that month, or (z) the total dollar amount of Discover, Visa or MasterCard chargebacks in any line of business received in any calendar month divided by the total dollar amount of Merchant’s Discover, Visa or MasterCard transactions, as applicable, in that line of business submitted in that month.

2.07 Fees; Adjustments; Collection of Amounts Due: a) Merchant shall be charged fees for the Services, which shall be calculated and payable pursuant to this Agreement and any additional pricing supplements. Merchant acknowledges that the fees agreed to are based on the assumption that Merchant’s transactions will qualify for certain reduced interchange levels (Merchant’s Anticipated Interchange Levels), as set by the applicable Card Association. If a transaction fails to qualify for Merchant’s Anticipated Interchange Levels, then the Card Association will downgrade the transaction and process it at a more costly interchange level for which it does qualify. In that event, Merchant may be charged a Non-Qualified Interchange Fee, which is the difference between the interchange fee associated with the Anticipated Interchange Level and the interchange fee associated with the interchange level at which the transaction actually was processed; plus, any applicable non-qualified surcharge for each non-qualifying transaction, the amount of which shall be set forth in Merchant’s fee schedule or the applicable interchange rate plus any fees under this Agreement. b) If applicable based upon the pricing hereunder, all authorization fees will be charged for each transaction that Merchant attempts to authorize. All capture fees will be charged for each transaction that Merchant transmits to Processor for settlement. c) The fees for services set forth in this Agreement are based upon assumptions associated with the anticipated annual volume and average transaction size for all services as set forth in this Agreement and Merchant’s method of doing business. If the actual volume or average transaction size are not as expected or if Merchant significantly alters Merchant’s method of doing business, Processor may adjust Merchant’ discount fee and transaction fees without prior notice. d) The fees for services set forth in this Agreement may be adjusted to reflect increases or decreases by Card Associations in interchange, assessments and other Card Association fees or to pass through increases charged by third parties for on-line communications and similar items. All such adjustments shall be Merchant’s responsibility to pay and shall become effective upon the date any such change is implemented by the applicable Card Association or third party. e) Subject to any notice requirements and termination rights, Processor may also increase our fees for Services for any other reason by notifying Merchant fifteen (15) days prior to the effective date of any such change. f) If Merchant receives settlement funds by wire transfer, Processor may charge a wire transfer fee per wire. g) To the extent the Automated Clearing House (ACH) settlement process is used to effect debits or credits to Merchant’s Settlement Account, Merchant agrees to be bound by the terms of the operating rules of the National Automated Clearing House Association, as in effect from time to time. Merchant hereby authorizes Service Provider to initiate credit and debit entries and adjustments to Merchant’s account ("Merchant’s Settlement Account”) through the ACH settlement process and/or through direct instructions to the financial institution where Merchant’s Settlement Account is maintained for amounts due under this Agreement and under any agreements with Service Provider for any related services, as well as for any credit entries in error. Merchant hereby authorizes the financial institution where Merchant’s Settlement Account is maintained to affect all such debits and credits to Merchant’s account. This authority will remain in full force and effect until Service Provider has given written notice to the financial institution where Merchant’s Settlement Account is maintained that all monies due under this Agreement and under any other agreements with Service Provider for any related services have been paid in full. Merchant shall execute and deliver to Service Provider such other instruments, contracts or agreements Service Provider deems reasonably necessary to affect this subsection (g). h) If Merchant believes any adjustments should be made with respect to Merchant’s Settlement Account, Merchant must notify Service Provider in writing within 45 days after any debit or credit is or should have been affected. If Merchant notifies Service Provider after such time period, Service Provider may, in Service Provider’s discretion, assist Merchant, at Merchant’s expense, in investigating whether any adjustments are appropriate and whether any amounts are due to or from other parties, but Service Provider shall not have any obligation to investigate or effect any such adjustments. Any voluntary efforts by us to assist Merchant in investigating such matters shall not create any obligation to continue such investigation or any future investigation.

2.08 Description of Fees: a) Discount Fees. The discount fees set forth in the Merchant Application shall be paid by Merchant to Service Provider, subject to Card Association’s Pricing Rules. Swiped consumer creditor check card transactions that are electronically authorized and closed in a daily batch and include all minimum authorization and transaction information as required for Discover, Visa Custom Payment Service ("CPS”) or MasterCard Merit III interchange programs. MO/TO &Internet Qualified Rate: Mail Order, Telephone Order or Internet keyentered transaction where the card is not present and an Address Verification Service is required. Must be a consumer credit or check card transaction and is electronically authorized and closed in a daily batch and includes all minimum authorization and transaction information as required for CPS Card not Present or CPS Key-Entered or MasterCard Key-Entered interchange programs. Mid-Qualified (Retail only): Includes consumer credit and check card transactions that are (1) key-entered, (2) not settled within two business days, (3) made with cards that have missing or unreadable magnetic strip data, (4) made using a Visa Rewards card at a T&E merchant, (5) made when the card is not present. This amount is in addition to the qualified discount and transaction fee. Non-Qualified (Retail, MO/TO & Internet): All credit and check card transactions that do not meet the requirements of the other rate categories. Also includes any transactions made on any Visa Corporate and Signature card types, MasterCard Commercial or World Card card types or any foreign cards. This amount is in addition to the qualified discount and transaction fee. b) Other Fees. The additional fees set forth in the Merchant Application shall be paid by Merchant to Service Provider, subject to Operating Regulations relative to pricing.

c) Penalty Fees. Service Providers, for the following reasons, may charge a penalty fee on a one time or transactional basis: 1) Batches not closed within two (2) business days of the earliest transaction date in the batch; 2)Non-authorized transactions over floor limit; 3) Credit cards not swiped through POS terminal; 4) Terminal did not read the entire content of the magnetic stripe or transaction did not meet Card Association requirements for the best interchange fee; and 5) Actual monthly processing volume exceeds approved monthly volume in this Agreement.

2.09 NON-QUALIFIED SURCHARGES/OTHER FEES: Merchant pricing appears in the Card Services Fee Schedule of the Merchant Application. T&E merchants (airline, car rental, cruise line, fast food, lodging, restaurant, travel agent, transportation) 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 you on your monthly statement. The most predominant market sectors and applicable non-qualified surcharge rates appear below. Most non-qualified surcharges can be avoided by using a product that supports authorization and market data requirements established by the card associations and that are subject to change from time to time. Some non-qualified surcharges occur on specific types of cards (including without limitation Visa Rewards Card, Visa Signature Card, Visa Signature Preferred Card, Visa Infinite Card, MasterCard Rewards Card, MasterCard World Card, MasterCard World Elite Card and "foreign" cards issued outside the United States). Unless your Card Services Fee Schedule specifically addresses commercial cards (i.e., Business Cards, Corporate Cards, Fleet Cards, GSA Cards, Purchase Cards), you will be billed back for the higher cost of acceptance of commercial cards, unless you are primarily a business-to-business supplier with corresponding pricing based on acceptance of commercial cards. The card associations require that information from the original authorization, including a lifecycle identifier, be retained and returned with subsequent authorizations and/or the settled transaction data. The card associations validate this information as part of the clearing and settlement process. If authorization data is not retained and returned at settlement, then the transaction will not clear as priced and will incur NQS. The items listed in this Section 2.09 are not and are not intended to be a comprehensive list of all instances in which non-qualified surcharges may apply. Nonqualified surcharges may apply in additional situations. All non-qualified surcharges include additional fees assessed by the applicable card association and Payment Alliance; Intl. Merchant will also be assessed (a) Cross-Border fees and a U.S. Acquirer Support fee for international MasterCard and Maestro transactions and (b) an International Service Assessment fee for international Visa transactions. These fees, which are applicable to transactions between Merchant and a MasterCard, Maestro or Visa cardholder, as applicable, outside the United States, are in addition to any fees stated on the Merchant Application and will be displayed as a separate item on Merchant’s monthly statement. Merchant will also be assessed a per transaction access fee for Visa, MasterCard and Discover transactions, which will be displayed as a separate item on Merchant’s monthly statement and may include fees by both the applicable card association and Payment Alliance, Intl. Merchant may also be assessed a PCI fee, which will appear as a separate item on Merchant’s monthly statement. This fee is assessed by Payment Alliance, Intl. in connection with Payment Alliance, Intl.’s efforts to comply with the PCI Data Security Standard and does not ensure Merchant’s compliance with the PCI Data Security Standard or any law, rule or regulation related to cardholder data security. The payment of such fee shall not relieve Merchant of its responsibility to comply with all rules and regulations related to cardholder data security, including without limitation the PCI Data Security Standard.

ARTICLE III – MISCELLANEOUS

3.01 Imprinters and Terminals: Merchant shall keep all imprinter(s) and terminal(s) used to process Card transactions in good working order and shall notify Processor prior to any change in imprinted or programmed information.

3.02 Forms: Merchant shall use only such forms or modes of transmission for sales data and credit data as are provided or approved in advance by Processor, and Merchant shall not use forms or equipment provided by Processor other than in connection with Card transactions hereunder.

3.03 Records; Merchant’s Business: a) Merchant is responsible for retaining and providing copies of all transactions in accordance with the Operating Regulations. b) Merchant agrees to immediately notify Service Provider of any Merchant location(s) added after the date of this Agreement, and agrees to the establishment of a separate processing account for said location(s). In addition, Merchant will notify Service Provider immediately if it intends to (a) transfer or sell any substantial part of its total assets, or liquidate; (b) change the basic nature of its business, including selling any products or services not related to its current business; (c) change ownership or transfer control of its business; (d) enter into any joint venture, partnership or similar business arrangement whereby any person or entity not a party to this Agreement assumes any interest in Merchant's business; (e) alter in any way Merchant's approved monthly volume, average, or maximum ticket; or (f) changes its return policies or to another fulfillment house different from those identified in Merchant Application. Merchant will notify Service Provider promptly in writing if it becomes subject to any voluntary or involuntary bankruptcy or insolvency petition or proceeding. Merchant’s failure to provide notice as required above may be deemed a material breach and will be sufficient grounds for termination of Merchant and for Service Provider’s exercise of all its rights and remedies provided by this Agreement. If any change listed above occurs, Service Provider may immediately terminate this Agreement.

3.04 Request for Copies: a) Within 1 business day of receipt of any request by Service Provider, Merchant shall provide to Service Provider either the actual paper transaction record, if requested by Service Provider, or a legible copy thereof (in size comparable to the actual paper transaction records), and any other documentary evidence available to Merchant and reasonably requested by Service Provider to meet its obligations under law (including its obligations under the fair credit billing act) or otherwise to respond to questions concerning Cardholders accounts. b) For purposes of retrieval or records, Merchant must retain Sales Draft and Credit Slips by reference number within date sequence. c) If Merchant does not provide a requested copy of sales slip(s) to Service Provider within the time frame specified, in addition to other rights and remedies available to Service Provider under this Agreement: 1) Service Provider may charge Merchant a penalty fee; 2) Service Provider may charge Merchant the transaction amount of the requested sales slip; and 3)Service Provider may, at its option, charge Merchant the transaction amount of the requested sales slip at the time of the request. Such amount will be reimbursed to the Merchant upon delivery of a valid and correct sales slip.

3.05 Indemnification of Service Provider: Merchant shall defend, indemnify and hold Service Provider harmless from all claims, liabilities, losses (including but not limited to those arising from fraud or similar activities whether or not Merchant participated in any way), and expenditures (including but not limited to investigation expenses, research time, attorney’s fees and other costs of defense whether or not provided by Service Provider’s personnel or others) (collectively, "Losses”) arising out of, relating to or resulting from, either directly or indirectly: (a) a breach of the security of the system safeguarding Cardholder Information resulting in unauthorized access to Cardholder Information; (b) a breach of any representation, warranty or term of this Agreement, including, but not limited to, the data security provisions by Merchant, or any service provider, subcontractor or agent of Merchant; (c) the negligence, gross negligence or willful misconduct of Merchant in the performance of its obligations under this Agreement, including, but not limited to, the data security provisions; (d) any violation by Merchant of or failure by Merchant to comply with any Law or Operating Regulation; (e) otherwise relating to or arising out of any Card transaction, (f) Merchant’s failure to comply with any of its obligations under this Agreement, (g) Service Provider’s acts or omissions under this Agreement, including, as a consequence of Service Provider’s own negligence, or (h) all third party claims arising from the foregoing. In addition, at any time deemed necessary in Service Provider’s sole discretion, Service Provider may require an increase in the sums held in reserve, or if no reserve has been previously provided, may require that sums beheld in reserve from sums otherwise due Merchant in order to protect Service Provider and its agents against potential claims, liabilities, and Losses. Notwithstanding the foregoing however, Service Provider shall not be obligated to apply such reserve and may instead require prompt payment, indemnity and/or contribution directly from Merchant. The indemnification provisions herein shall survive the termination of this Agreement. 

3.06 Terms, Termination, MATCH (formerly Combined Terminated Merchant Files "CTMF”) and CMNF: a) The initial term of this Agreement shall be three (3) years from the date herein. Thereafter, the agreement will automatically renew for additional three (3) year terms, unless Merchant notifies Processor of its intention not to renew the Agreement at least ninety (90) days prior to the end of the Agreement term then in effect. Merchant’s obligations under this Agreement remain in full force and effect relative to all debt purchased under this Agreement. b)This Agreement maybe terminated at any time by Service Provider, without cause, and notice to the Merchant of such termination may take place after termination. c)Without limiting the applicability of Section 3.06(b), above, Service Provider may terminate this Agreement in its sole discretion, effective immediately, upon written or verbal notice, or by closing Merchant’s POS terminal, if Service Provider determines that any of the following conditions exists: (i) Merchant has violated any provision of this Agreement; (ii) there is a material adverse change in Merchant’s financial condition; (iii) if any case or proceeding is commenced by or against Merchant under any federal or state law dealing with insolvency, bankruptcy, receivership or other debt relief or Merchant is unable to pay its debts when they come due; (iv) any information which Merchant provided to Service Provider, including Application information, was false, incomplete or misleading when received; (v) at any time during the term of this Agreement, Merchant’s Chargeback Percentage exceeds Card Association requirements or 1%, or chargebacks exceed 3% of any monthly dollar amount of total transactions; (vi) an overdraft in the settlement account exists for more than three days; (vii) Merchant or any of Merchant’s officers or employees has been involved in processing transactions arising from fraudulent or otherwise unauthorized transactions; (viii) Merchant is or will be unable or unwilling to perform its obligations under this Agreement or applicable law; (ix) Merchant has failed to timely pay Service Provider any amount due; (x) Merchant has failed to promptly perform or discharge any obligation under its settlement account or the Reserve Account; (xi) any of Merchant’s representations or warranties made in connection with this Agreement was not true or accurate when given; (xii) Merchant has defaulted on any agreement it has with the Bank or the Processor; (xiii) Service Provider is served with legal process seeking to attach or garnish any of Merchant’s funds or property in Service Provider’s possession, and Merchant does not satisfy or appeal the legal process within 15 days of such service; (xiv) any Card Association rules are amended in any way so that the continued existence of this Agreement would cause Service Provider to be in breach of those rules; (xv) any guaranty supporting Merchant’s obligations is revoked, withdrawn, terminated or altered in any way; (xvi) if any circumstances arise regarding Merchant or its business that create harm or loss of goodwill to any Card Association; (xvii) termination is necessary to prevent loss to Service Provider or Card issuers; (xviii) Merchant’s type of business indicated on the Application or as conducted by Merchant could endanger the Service Provider’s safety or soundness; (xix) Merchant’s owner, officer, guarantor, or corporate entity has a separate relationship with the Service Provider and that relationship is terminated, (xx) Merchant appears on any Card Association's security reporting; or (xxi) Service Provider’s security for repayment becomes impaired. c)Upon the effective date of any termination hereunder, Merchant’s rights hereunder to make Card transactions, to deposit transaction records with Processor, and to use sales slip forms, credit slip forms, promotional material, and any other items provided by Service Provider hereunder shall cease, but Merchant’s obligations in connection with any transaction record accepted by Service Provider (whether before or after such termination), including without limitation Merchant’s chargeback obligations and liability for Card Association fines, fees or penalties, which shall survive termination. In connection with any bankruptcy or insolvency, any account or security held by Service Provider will not be subject to any preference, claim or stay by reason of bankruptcy or similar law. The parties expressly agree that the acquisition of Card Transactions hereunder is a financial accommodation and if Merchant becomes a debtor in any bankruptcy or similar proceeding, this Agreement may not be assumed or enforced by any other person and Service Provider will be excused from performance hereunder. Upon termination, any amounts due to Service Provider will accelerate and be immediately due and payable, without any notice, declaration or other act whatsoever by Service Provider. d) Merchant expressly acknowledges that a MATCH file is maintained by Visa and MasterCard containing information on Merchants terminated for one of more reasons specified in Visa or MasterCard Operating Regulations. Such reasons generally include, but are not limited to: fraud, counterfeit paper, unauthorized transaction, excessive chargebacks or suspect activity. Merchant acknowledges that Processor is required to report the Merchant business name and the names of its principals to the MATCH (or to similar collective databases) when Merchant is terminated due to one or more of the foregoing reasons. Merchant expressly agrees and consents to such reporting by Service Provider in the event of the termination of this Agreement due to one or more of such reasons. Merchant waives and will hold harmless Service Provider from any claims that Merchant may raise as a result of Service Provider’s MATCH file reporting. e) Merchant expressly acknowledges that a Consortium Merchant Negative File ("CMNF”) is maintained by Discover containing information on Merchants terminated for one of more reasons specified in Discover Operating Regulations. Such reasons generally include, but are not limited to; fraud, counterfeit paper, unauthorized transaction, excessive chargebacks or highly suspect activity. Merchant acknowledges that Processor is required to report the Merchant business name and the names of its principles to the CMNF when Merchant is terminated due to one or more of the foregoing reasons. Merchant expressly agrees and consents to such reporting by Service Provider in the event of the termination of this Agreement due to one or more of such reasons. Merchant waives and will hold harmless Service Provider from any claims that Merchant may raise as a result of Service Provider’s CMNF file reporting.

3.07 No Warranties; Limitation of Liability: a) THIS AGREEMENT IS A SERVICE AGREEMENT. SERVICE PROVIDER DISCLAIMS ALL REPRESENTATIONS OR WARRANTIES, EXPRESS OF IMPLIED MADE TO YOU OR ANY OTHER PERSON, INCLUDING WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY, SUITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE OF ANY SERVICES OR ANY GOODS PROVIDED INCIDENTAL TO THE SERVICES PROVIDED UNDER THIS AGREEMENT. b) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL SERVICE PROVIDER, ITS AFFILIATES OR ANY OF ITS RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS, BE LIABLE UNDER ANY THEORY OF TORT, CONTRACT, STRICT LIABILITY, OR OTHER LEGAL THEORY FOR LOST PROFITS, LOST REVENUES, LOST BUSINESS OPPORTUNITIES, EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES, EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES, REGARDLESS OF WHETHER SUCH DAMAGES WERE FORSEEABLE OR WHETHER ANY PARTY OR ANY ENTITY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. c)Merchant agrees to release Service Provider from any Losses suffered or incurred by Merchant or any third party on behalf of Merchant relating to, arising out of or as a result of this Agreement, any Card transaction, Merchant’s failure to comply with any of its obligations under this Agreement, or as a result of Service Provider’s acts or omissions under this Agreement, including, as a consequence of Service Provider’s negligence. d) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, SERVICE PROVIDER’S CUMULATIVE LIABILITY FOR ALL LOSSES, CLAIMS, OR CONTROVERSIES, BREACHES OR ANY DAMAGES FOR ANY CAUSE WHATSOEVER (INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT OF OR RELATED TO THIS AGREEMENT) AND REGARDLESS OF THE FORM OF ACTION OR LEGAL THEORY SHALL NOT EXCEED THE AMOUNT OF FEES RECEIVED BY SERVICE PROVIDER (NOT INCLUDING ANY PASS-THROUGH FEES) PURSUANT TO THIS AGREEMENT IN THE SIX (6) MONTHS IMMEDIATELY PRECEDING THE EVENT GIVING RISE TO THE LIABILITY. 

3.08 Supplementary Documentation; Fees: All reference herein to this "Agreement” shall collectively include Operating Regulations, current schedules, amendments, Merchant Application, change notices, addendum, appendices and attachments and associated reference materials, all or which are incorporated herein by reference and made a part of this Agreement as if fully set forth. Merchant agrees to pay the fees and charges identified in this Merchant application or in any other schedule of fees and charges provided to Merchant, which may be amended from time to time as provided herein.

3.09 Compliance with Law: Merchant shall comply with all Laws applicable to Merchant, its business and any Card transaction, including without limitation all state and federal consumer credit and consumer protection statutes and regulations. Further Merchant agrees to follow all requirements of this Agreement in connection with each Card transaction and to comply with all applicable Operating Regulations, as amended from time to time. In the event of any conflict between this Agreement and the Operating Regulations, the Operating Regulations shall control. Failure to comply with any of the Operating Regulations may result in fines or penalties or termination of this Merchant Agreement. Merchant shall be responsible for any fines or penalties levied by the Card Associations against the Service Provider which relate in any way to Merchant’s obligations under this Agreement. 

3.10 Modification: This Agreement is subject to such modifications, changes, and additions as may be required, or deemed by Service Provider to be required by reason of any Laws, judicial decision, Operating Regulations, or the regulation or ruling of any federal agency having jurisdiction over Service Provider or Merchant or as deemed necessary by Service Provider in its sole discretion.

3.11 Changes in Transmission Mode: The means of transmission indicated below shall be the exclusive means utilized by Merchant for the transmission of sales data or credit data to Service Provider. Merchant shall give Service Provider at least thirty (30) days prior written notice of Merchants desire to deliver and deposit actual Sales Drafts and Credit Slips or otherwise to alter any material in respect to Merchants medium of transmission of sales data and credit data to Service Provider. Following termination, Merchant shall upon request provide Service Provider with all original and microfilm copies required to be retained as of the date of termination.

3.12 Early Termination: If Merchant terminates this Agreement before the end of the initial three (3) year term or during any subsequent term or if this Agreement is otherwise terminated for any reason (other than the end of the initial or any subsequent term or the material uncured breach by Service Provider), Merchant is obligated to immediately pay Service Provider, as liquidated damages, an early termination fee of $250.00 plus the amount equal to the monthly average of all fees paid to Service Provider over the past six months multiplied by six (6) to be paid within 3 days of termination. Merchant agrees that these damages are not a penalty but are a reasonable computation of the financial harm caused by the termination of this Agreement. 

3.13 Independent Sales Organization/Member Service Provider: a) Merchant acknowledges that: 1) Service Provider may use a third party, an Independent Sales Organization (ISO), or a Member Service Provider (MSP) operating under applicable Card Issuer Regulations; and 2) Without express prior, written approval from Processor, no ISO, MSP, or any other third party has the authority to either (i) execute this Agreement on Service Provider’s behalf or (ii) alter the terms of this Agreement.

3.14 Security Interest; Set Off and Reserve Account: a) This agreement shall constitute a Security Agreement under the Uniform Commercial Code. To secure all obligations of Merchant to Service Provider arising from this Agreement, Merchant hereby grants Service Provider a first lien security interest in all deposits, regardless of source, to Merchant’s checking account (specified in the Merchant application including but not limited to 3 deposit accounts listed under Service Provider references) and the Reserve Account and all proceeds of said deposits. Service Provider’s rights under said security interest maybe exercised by Service Provider without notice or demand of any kind by making an immediate withdrawal from or freezing said account upon Service Provider’s reasonable determination that a breach of any obligation or Merchant under this Agreement has occurred for any reason specified in Section 2.04. The exercise of Service Provider’s rights pursuant to this security interest shall be in addition to any other rights of Service Provider under this Agreement. Service Provider shall also have the right to require Merchant to furnish such other and different security as Service Provider shall deem appropriate in its sole discretion in order to secure Merchant’s obligations under this Agreement. Merchant agrees to execute any documents or take any actions required in order to comply with and perfect the security interest under this paragraph. Service Provider may, at any time there is an obligation owing from Merchant to Service Provider, set on any such amounts against any deposit balances or other money now or hereafter owed Merchant by Service Provider without notice or demand of any kind.b) Reserve Account 1) Establishment. Merchant may be required to, or Service Provider may, on Merchant’s behalf, establish and maintain a non-interest bearing deposit account ("Reserve Account”) at Bank initially or at any time in the future as required in good faith by Service Provider, with sums sufficient to satisfy Merchant’s current and future obligations as determined by Service Provider. Service Provider may establish a Reserve Account by depositing incoming items into such Reserve Account if it determines in good faith a reserve is necessary, included but not limited to a determination that transactions are outside of the risk parameters indicated by Merchant in the Merchant Processing Agreement. Merchant authorizes Service Provider to debit Merchant’s checking account (specified in the Merchant application including but not limited to 3 deposit accounts listed under Service Provider references) to establish or maintain funds in the Reserve Account. Service Provider may deposit into the Reserve Account any funds it would otherwise be obligated to pay to Merchant hereunder, for the purpose of establishing or maintaining the Reserve Account in accordance with this Section, if it determines such action is reasonably necessary to protect its interests. 2) Authorizations. Service Provider may, with out notice to Merchant, apply deposits in the Reserve Account against any outstanding amounts Merchant owes under this Agreement or any other agreement between Merchant and the Service Provider. Also, Service Provider may exercise its rights under this Agreement to collect any amounts due to Service Provider including, without limitation, rights of setoff and recoupment. 3) Funds. Funds in the Reserve Account will remain in the Reserve Account until Two Hundred and Seventy (270) days following termination of this agreement, provided, however, that Merchant shall remain liable to Service Provider for all liabilities occurring beyond such Two Hundred and Seventy (270) day period. Service Provider will have sole control of the Reserve Account. c) Set-off. In addition to any other rights hereunder, Service Provider shall have the right to setoff an amount equal to any obligations owed hereunder against any amounts owed to Merchant at any time, whether arising under this Agreement or otherwise.

3.15 General: a)The paragraph headings and captions contained in this agreement are for convenience only, and should not be deemed to define, limit or describe the scope or intent of this agreement to the extent that they conflict with the Substance of this Agreement. b)This Agreement shall be binding upon and insure to the benefit of the parties hereto and their successors and assigns; provided, however this Agreement may not be assigned by Merchant without the written consent of Service Provider. Any such assignment by Merchant without Service Provider’s prior written consent shall be null and void. c) Should any provision of this Agreement contravene any Law, or should any provision of this Agreement otherwise be held invalid, or unenforceable by a court or other body of competent jurisdiction, then each such provision shall be amended to make it consistent with applicable Law or, if necessary, automatically terminated and performance hereof by both parties waived, and all other provisions of this Agreement then in effect shall nevertheless remain in full force and effect. d)No failure by Service Provider to insist upon strict performance of any term or obligation set forth in this Agreement or to exercise any right or remedy under this Agreement nor acceptance of full or partial performance during continuance of default hereunder, shall constitute a waiver of any such term, obligation, right or remedy, or a waiver of any such default by Service Provider. e) This agreement shall be governed and construed exclusively in accordance with the laws of the state of Kentucky without reference to its conflicts of laws rules. f) In any action related to this Agreement, the party who does not prevail shall pay to the prevailing party all costs, expenses and reasonable attorneys’ fees. g) Service Provider may amend the terms of this Agreement, including without limitation changes in fees and/or fee schedules, at any time by providing a writing (which may be delivered via written or electronic notice, in a statement update or otherwise) setting forth the amendment. Service Provider shall endeavor, depending upon legal and business practicalities, to provide up to 10 days notice prior to the effective date of any such amendment. h) All notices or other communications required to be given by either party shall be in writing and shall be effective when hand delivered or sent by United States mail, postage prepaid (or, in the case or Service Providers when provided in electronic format, whether or not included with a Merchant Statement) and shall be deemed to be given when sent electronically (in the case of Service Providers), hand delivered or upon deposit in the mail as indicated. Notices shall be addressed to the parties at the address identified below, or such other address as may be specified by either party by notice to the other party. i) Service Provider may appoint an Agent(s) to do or take any actions that maybe done or taken by Service Provider under this Agreement. j) Merchant acknowledges and agrees that the term Service Provider does not include Bank for the purposes of Discover transactions. k) This Agreement is intended by the parties as a final expression of and a complete and exclusive statement of the terms of this Agreement there being no conditions to the enforceability of this Agreement. This Agreement may not be supplemented or modified except in writing as provided in this Agreement. Service Provider may assign, in whole or in part, this Agreement without consent or notice to Merchant in its sole discretion.

3.16 Electronic Debit/Credit Authorization: Merchant authorizes Bank or third party in accordance with this Agreement, to initiate debit/credit entries to Merchant’s deposit account, as indicated on Merchant Processing Agreement. This authorization is to remain in full force and effect until Service Provider has received written notification from Merchant of its termination, in such a manner as to afford Service Provider reasonable opportunity to act on it and all obligations of Merchant to Service Provider that have arisen under this Agreement have been paid in full. This authorization extends, but is not limited, to such entries to this account which concern discount fees, transaction fees, chargebacks, penalties, service fees, return item fees, lease, rental and purchase charges involving Point-Of-Sale ("POS”) and credit card Imprint equipment. 

3.17 Merchant Representations and Warranties; IRS Tax Reporting: Merchant represents and covenants that: (a) all information contained in the Merchant Application or any other documents delivered to Service Provider in connection therewith is true and complete and properly reflects Merchant's business, financial condition and principal partners, owners or officers; (b) Merchant has power to execute, deliver and perform this Agreement, and this Agreement is duly authorized, and will not violate any provisions of law, or conflict with any other agreement to which Merchant is subject; (c) Merchant holds all licenses, if any, required to conduct its business and is qualified to do business in every jurisdiction where it is required to do so; (d) there is no action, suit or proceeding at law or in equity now pending or to Merchant's knowledge, threatened by or against or affecting Merchant which would substantially impair its right to carry on its business as now conducted or adversely affect its financial condition or operations; (e) each Sales Draft presented to Service Provider for collection is genuine and is not the result of any fraudulent or prohibited Transaction or is not being deposited on behalf of any business other than Merchant as authorized by this Agreement; (f) each Sales Draft is the result of a bona fide Card Transaction for the purchase of goods or services from Merchant by the Cardholder in the total amount stated on the Sales Draft; (g) Merchant has performed or will perform all of its obligations to the Cardholder in connection with the Card Transaction evidenced thereby; (h) Merchant has complied with Service Provider 's procedures for accepting Cards, and the Card Transaction itself does not involve any element of credit for any other purposes other than as set forth in this Agreement, and is not subject to any defense, dispute, offset or counterclaim which may be raised by any Cardholder under the Operating Regulations, the Consumer Credit Protection Act (15 USC §1601) or other relevant state or federal statutes or regulations; and (i) any Credit Slip which it issues represents a bona fide refund or adjustment on a Card sale by Merchant with respect to which a Sales Draft has been accepted by Bank. In addition, Merchant acknowledges and agrees that all information provided in the Merchant Agreement is true and correct. Merchant also acknowledges that Service Provider may be required to report certain information regarding Merchant, including, but not limited to, Merchant’s TIN, Entity Name, DBA, processing volume, and principal's Social Security Number to governmental agencies such as the Internal Revenue Service (IRS). Merchant agrees to fulfill any request from Service Provider for additional information which may be required or requested by any government agency. Merchant acknowledges that Service Provider may be required to withhold processing funds and forward such funds to the IRS as a result of incorrect information provided by Merchant or at the direction of a government agency. Merchant expressly agrees and releases Service Provider from any and all liability hereunder resulting from incorrect information being submitted to any government agency and/or the withholding of funds. Merchant is responsible for any fines or penalties which may be assessed to Merchant and/or Service Provider.

3.18 Contact Information: Payment Alliance International, Inc.’s mailing address is 1665 Palm Beach Lakes Blvd., Suite 200, West Palm Beach, FL 33401 and its telephone number is [866-207-7489]. Merrick Bank Corporation’s mailing address is 135 Crossways Park Drive North, Suite A, Woodbury, NY 11797 and its phone number is [800-267-2256]. The Bank is the only entity approved to extend acceptance of Visa and MasterCard products directly to you and it must be a party to this Agreement. Some of the Bank’s important responsibilities are (i) educating Merchants on pertinent Visa and MasterCard Operating Regulations, (ii) being responsible for and providing settlement funds to you and (iii) being responsible for all funds held in reserve that are derived from settlement. Some of Your important responsibilities are to (i) ensure compliance with Cardholder data security and storage requirements in the Operating Regulations and Payment Card Industry Data Security Standards, (ii) maintain fraud and chargebacks below thresholds, (iii) review and understand the terms of the Agreement(s) and (iv) comply with Operating Regulations.

3.19 Records: In addition to any records Merchant routinely furnishes to Service Provider under this Agreement, Merchant will preserve a copy of actual paper Sales Drafts and Credit Slips and any written authorization of the Cardholder for at least two years after the date Merchant presents the related transaction to Service Provider.

3.20 Marketing of Non-Bankcard Services: From time to time, Service Provider may offer to Merchant certain additional products and services which may or may not be related to the processing of credit card Transactions. If such offers are made, Merchant may decline the offers or be deemed to have accepted the offers and be liable for payment therefore. 

3.21 Force Majeure: The parties will be released from liability hereunder if they fail to perform any obligation where the failure occurs by reason of any act of God, fire, flood, storm, earthquake, tidal wave, communications failure, sabotage, war, military operation, terrorism, national emergency, mechanical or electronic breakdown, civil commotion or the order, requisition, request or recommendation of any governmental authority, or either party’s compliance therewith, or governmental regulation, or priority, or any other similar cause beyond either party’s reasonable control.

3.22 No Third Party Beneficiary: No other person or entity may be deemed to be a third party beneficiary of this Agreement.