BANK CARD MERCHANT AGREEMENT TERMS AND CONDITIONS
These Bank Card Merchant Agreement Terms and Conditions (these “Terms and Conditions”) are an integral part of the Bank Card Merchant Agreement among PayFacto USA, Inc, a Delaware limited liability company, located at 6016 204th St. SW, Suite A, Lynnwood, WA 98036 (“Processor”), Community Federal Savings Bank, a Savings Association located at 5 Pennsylvania Plaza, 14th Floor, New York, NY 10001 (“Member Bank”), and the legal entity or sole proprietorship identified on Page 1 of the Bank Card Merchant Agreement Application (hereinafter “Merchant” and such Bank Card Merchant Agreement Application, the “Application”) having its principal office at the address specified on Page 1 of the Bank Card Merchant Agreement Application (hereinafter “Merchant Address”). The Processor and Member Bank are collectively referred to as “Bank,” and may jointly or individually assert or exercise any rights or remedies provided to Bank hereunder. Processor and Member Bank reserve the right to allocate Bank’s duties and obligations amongst themselves, as they deem appropriate in their sole discretion. Member Bank may delegate certain or all of its duties to an affiliate of the Member Bank at any time, without notice to Merchant. Member Bank may be changed, and its rights and obligations assigned to another party by Bank at any time without notice to Merchant.
The Bank Card Merchant Agreement, together with these Bank Card Merchant Agreement Terms and Conditions, the Application and any and all addenda, schedules, exhibits and other documents that are made a part of the Bank Card Merchant Agreement by attachment, incorporation by reference or otherwise, (including without limitation, the Operating Regulations) are collectively referred to in these Terms and Conditions as “the Agreement” or “this Agreement.” As an integral part of the Agreement, Bank and Merchant hereby agree as follows :
A- Bank participates in programs affiliated with American Express (“American Express”) MasterCard International Inc. (“MasterCard”), VISA U.S.A. Inc. (“VISA”), Discover (“Discover”), and certain similar entities (collectively, “Associations”), including, but not limited to, those appearing on the pricing section of this Agreement and any network providing PIN-based debit card transaction services (collectively, “Other Networks” and collectively with Associations, “Card Networks”; each Association or Other Network may be individually referred to as “Card Network”) that enable holders of MasterCard, VISA, Discover and Other Networks cards (collectively “Cards”)
B- Merchant wishes to participate in the Card Networks’ systems by entering into contracts with any person authorized to use the Cards or the accounts established in connection with the Cards (collectively “Cardholders” or individually “Cardholder”) for the sale of goods and services through the use of Cards.
NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual promises hereinafter set forth, the parties agree as follows:
1- Rules and Regulations.
Merchant agrees to participate in Card Networks’ systems in compliance with, and subject to, the by-laws, operating regulations and/or all other rules, policies and procedures of such Card Networks (collectively “Operating Regulations”). Merchant agrees to participate in the Card Networks in compliance with, and subject to, the Operating Regulations. Without limiting the foregoing, Merchant agrees that it will fully comply with any and all confidentiality and security requirements of the USA Patriot Act (or similar law, rule or regulation), Card Networks, including but not limited to, the Payment Card Industry Data Security Standard, the VISA Cardholder Information Security Program, the MasterCard Site Data Protection Program, and any other program or requirement that may be published and/or mandated by the Card Networks. The Operating Regulations may prohibit Bank from providing Merchant with a copy of the Operating Regulations and such prohibition shall not alter or limit Merchant’s obligation to comply with the Operating Regulations. Merchant expressly acknowledges and agrees that it is assuming the risk of compliance with all provisions of the Operating Regulations, regardless of whether Merchant has possession or knowledge of those provisions. Merchant shall take all steps necessary to review and obtain all publicly available information that relates to or references the Operating Regulations including, without limitation, all information available on the Card Networks’ internet sites, and to educate itself and its employees on all provisions thereof. For purposes of this Agreement, “Service” or “Services” shall mean any and all services provided by Bank pursuant to this Agreement, as described herein. Other defined terms and Services applicable to this Agreement may be contained in addenda, exhibits, schedules, or amendments (collectively, “General Addenda”) to this Agreement, including but not limited to the Additional Services Pricing, as may be modified from time to time by Bank. The parties agree that such General Addenda shall be incorporated into and made part of this Agreement.
2- Acceptance of Cards.
A. Merchant will honor any valid Card properly tendered for use that falls within Merchant’s designated categories of acceptance, check each Card for validity and currency, and examine one or more Card security features before completing a Card transaction. For purposes of this Agreement, “transaction” means any sale of goods and services, or credit for such, from Merchant for which the customer makes payment through the use of any Card and which is presented to Bank for collection. Merchant may not discriminate between payment Cards within a payment network on the basis of the Card issuer that issued the presented payment Card. When accepting any Card and completing any Card transaction, Merchant shall follow all procedures and rules in the Operating Regulations, including but not limited to, obtaining authorization for all sales transactions. In the event Bank for whatever reason is unable to obtain, or due to system delays chooses not to wait to obtain, authorization from the applicable Card Network, Merchant agrees to accept Cards for transactions, exclusive of duly notified surcharges, over the advertised price as a condition of Card acceptance, unless the Laws require Merchant be permitted to engage in such practice. Merchant shall not establish minimum or maximum transaction dollar value for Signature-Debit or PIN-debit or Card sales as a condition for accepting such Card. However, Merchant may set a minimum transaction dollar value for the acceptance of a Card that is a credit card, only to the extent that: (i) such minimum dollar value does not exceed $10; (ii) such minimum dollar value is the same for all issuers or payment card networks; and (iii) complies with all Operating Regulations. If Merchant is a federal agency or institution of higher education, Merchant may set a maximum dollar value for the acceptance of Cards that are credit cards, to the extent that such maximum dollar value is the same for all Issuers or payment card networks, subject to restrictions set forth in the Operating Regulations. Merchant will obtain prior authorization for the total amount of a transaction via electronic terminal, gateway or other compliant and certified device before completing any transaction, and Merchant will not process any transaction that has not been authorized. Merchant will follow all instructions received during the authorization process. Upon receipt of an authorization approval, Merchant may consummate only the transaction for which it has received authorization. Where authorization is obtained, Merchant will be deemed to warrant the true and matching identity of the customer as the Cardholder. Any transaction that is not properly authorized is made with full recourse and may be charged back to Merchant. Unless otherwise permitted under the Operating Regulations, Merchant may not attempt to obtain an authorization by successively decreasing the sale amount. On the date of the transaction and prior to honoring any Card, Merchant agrees to obtain an authorization on all transactions for the total amount of the transaction by physically sliding or inserting the Card through the Card reader of the equipment (or tapping the EMV Card in the case of an EMV transaction) thereby causing the equipment to electronically read a magnetically encoded stripe or EMV chip on the reverse side of each Card, except Card-Not-Present transactions. Any transaction that cannot be authorized electronically through the equipment or manually key entered is subject to additional authorization requires required by Bank and/or Card Networks. Merchant shall obtain an authorization prior to completing a Card-Not-Present transaction in compliance with the terms of this Agreement and the Operating Regulations. If Merchant’s point-of-sale terminal or equipment is not EMV chip-enabled technology, Merchant may be held liable for card-present fraud. EMV acceptance requires an EMV enabled standalone terminal or point of sale system. Bank is able to process EMV transactions, which may help reduce fraud. Authorizations are not a guarantee of acceptance or payment of the sales draft or that the transaction will not be subject to dispute or chargeback. Authorizations do not waive any provisions of this Agreement or otherwise validate a fraudulent transaction or a transaction involving the use of an expired or otherwise invalid Card. Bank may at its option “stand-in” for such entities and authorize the sales transaction based on criteria established by Bank, and Merchant remains responsible for such sales transaction in accordance with this Agreement. Merchant shall note each authorization and authorization number obtained in the appropriate place on the sales record. All sales records and credit records will be on a form or format acceptable to Bank and in compliance with Operating Regulations and shall include: (i) the Cardholder’s signature, (ii) the signature of the authorized user (if different), (iii) the date, (iv) a description of the merchandise sold or services rendered, and (v) the total amount of the transaction. At least one copy of the sales record or credit record will be delivered to the Cardholder. Merchant will enter the data related to a sales or a return transaction into a computer terminal or magnetic stripe reading terminal and transmit daily transactions to Bank (or its duly assigned processor) no later than the close of business on the date the transactions are completed (unless otherwise permitted by the Operating Regulations). This process will be referred to as a batch close. Failure to do so may result in the assessment of transaction penalties. Merchant shall also follow the Operating Regulations and any other procedures that Bank may notify you of in writing from time to time with respect to clearing and settlement files. Merchant shall not prepare more than one sales draft for a single sale or for a single item and shall include all items or goods and services purchased in a single transaction in the total amount on a single sales draft except: (i) for purchases in separate departments of a multiple department store; (ii) for installment payments; or (iii) for delayed or amended charges governed by the Operating Regulations for travel and entertainment merchants and transactions. Merchant shall not submit duplicate transactions. All sales records delivered to Bank by Merchant will represent obligations of a Cardholder in amounts set forth therein for merchandise sold or services rendered only and shall not involve any element of credit for any other purpose. Merchant represents that as of the date any sales record is delivered to Bank, Merchant has no knowledge or notice, or any reason to know of a fact, that would impair the validity of the sales record or its collectability. Merchant shall not make any special charge or extract any special agreement, condition, or security from a Cardholder in connection with any sales transaction. The presentment of sales drafts to Bank for collection and payment is Merchant’s agreement to sell and assign its right, title and interest in each sales draft completed in conformity with Bank’s acceptance procedures and shall constitute an endorsement by Merchant to Bank of such sales drafts. Merchant hereby authorizes Bank to supply such endorsement on Merchant’s behalf. Merchant agrees that this Agreement is a contract of financial accommodation within the meaning of Bankruptcy Code (11 U.S.C. § 365) as amended from time to time. Merchant shall establish, maintain, and disclose to Cardholders a fair and consistent policy for the exchange or return of merchandise, give proper credit or refund for all such exchanges or returns and issue credit records for amounts due the Cardholder. All disputes between Merchant and any Cardholder relating to any transaction will be settled between Merchant and the Cardholder. The Bank bears no responsibility for such transactions. Merchant must not require a Cardholder, as a condition for honoring a Card, to sign a statement that waives the Cardholder’s right to dispute the transaction with the Card issuer or Card Network. For purpose of this Agreement, “sales draft” means the paper form, approved in advance by Bank, whether such form is electronically or manually imprinted, evidencing a sale transaction.
B. Cardholder Identification and Card Examination. Merchant agrees to swipe or imprint the Card, or where applicable, insert the EMV enabled chip Card into a reader, and only allow Cardholders to purchase Merchant’s goods and/or services. Merchant will identify the Cardholder and check the expiration date and signature on each Card. Merchant will not honor any Card if: (i) the Card has expired; (ii) the signature on the sales draft does not correspond with the signature on the Card; (iii) the account number embossed on the Card does not match the account number on the Card’s magnetic stripe (as printed in electronic form); or (iv) the Card was declined as a result of an authorization attempt. Merchant may not require a Cardholder to provide personal information, such as a home or business telephone number, a home or business address; or a driver license number as a condition for honoring a Card unless permitted by the Laws and the Operating Regulations. Merchant will use reasonable, best efforts and peaceful means to recover any Card if: (i) Merchant is advised by Bank, the issuer of the Card or the designated voice authorization center to retain it; or (ii) if Merchant has reasonable grounds to believe the Card is counterfeit, fraudulent or stolen, or not authorized by the Cardholder. NOTE: The obligation of Merchant imposed by this section to retain or recover a Card does not authorize a breach of the peace or any injury to persons or property, and Merchant will hold Bank harmless from any claim arising from any injury to person or property, or other breach of the peace in connection with the retention or recovery of a Card.
C. If appropriately indicated herein, Merchant shall be a Limited Acceptance Merchant, which means that Merchant has elected to accept only certain Visa and Mastercard card types as indicated on the Application, or via later notification. Bank has no obligation other than those expressly provided under the Operating Regulations and applicable law as they may relate to limited acceptance. Bank’s obligations do not include policing card types at the point of sale. Merchant will be solely responsible for the implementation of its decision for Limited Acceptance, including, but not limited to, policing the card type(s) of transactions at the point of sale submitted for processing by Bank. Should Merchant submit a transaction for processing for a card type it has indicated it does not wish to accept, Bank may process that transaction and Merchant will pay the applicable fees, charges, and assessments associated with that transaction. Solely for Merchant’s convenience, a general [and non-exhaustive] description of Visa and Mastercard card types are: (i) Consumer Credit – a consumer credit card issued by a U.S. issuer or a commercial credit card issued by a non-U.S. issuer; this category does not include Visa or Mastercard branded signature-based debit cards; (ii) Consumer Debit – a Visa or Mastercard branded signature-based debit card (including certain stored-value and prepaid cards); and (iii) Commercial – a Visa or Mastercard branded credit card issued by a U.S. issuer that bears the descriptive term “Business Card”, “Corporate Card”, “Purchasing Card”, “Fleet Card”, or similar descriptive term indicated pursuant to the Operating Regulations.
D. Processing Transactions and Statement Review. It is Merchant’s responsibility to ensure that it and its employees use Services in accordance with the Operating Regulations, the data security standards established by PCI-DSS, from time to time, the operating manual and procedures of the Card Networks, and all Laws related to Cardholder Data (as defined by PCI-DSS). Merchant acknowledges that it is its responsibility to obtain the most recent versions of, and that it has reviewed, the Operating Regulations, the data security standards, and the operating manual and procedures, and Merchant acknowledges that it has reviewed them. Merchant will not process Transactions prohibited by the Laws, the Operating Regulations, or this Agreement. Merchant is responsible for managing its business operations and the actions of its employees (or any other person that uses the Services). Merchant will not use services provided by Bank to process transactions for another person, entity or merchant. Merchant agrees that each transaction: (i) will be in the ordinary course of your business; (ii) not involve a cash advance (unless as authorized by the Operating Regulations); and (iii) not cover an existing debt or a dishonored check or debt. Merchant will not accept Card-Not-Present transactions unless it receives Bank’s prior written consent. Merchant statements are available for review using an electronic reporting system that Bank may make available to Merchant from time to time or, if elected by Bank, in paper form, and it is Merchant’s obligation to review such statements. Merchant will review all of the transactions listed on the statement, and tell Bank in writing within 30 days of receipt in the case of paper statements, or within 30 days of the transaction date for activity viewed electronically, about any concerns, including suspected omissions, incorrect debits or inaccurate transactions or fees. If Merchant does not receive a statement or if Merchant is unable to view transaction activity or statement electronically, it must promptly notify Bank. If Merchant fails to provide notice of any error, concerns, inaccuracies or omissions related to a statement within 30 days of receipt of such statement, Merchant agrees that all transactions and statement activity, including fees, listed on the statement are correct and Merchant releases Bank from any claim relating to any activity or transaction listed on the statement and any item suspected to be missing from the statements.
E. These terms are in addition to any other terms applicable to chargebacks. Merchant and guarantor(s) are fully liable for all chargebacks. Merchant will pay to Bank upon presentation the value of all chargebacks. Authorization is granted by Merchant to Bank to offset from incoming transactions and to ACH debit the Designated Account, the Reserve Account or any other account held at Bank or at any other financial institution the amount of all chargebacks. Merchant will fully cooperate in complying with the Operating Regulations regarding chargebacks. Merchant agrees that failure to pay a chargeback upon such presentation shall be considered a material breach of this Agreement and Merchant, in addition to any other remedies which may be exercised by Bank, shall be charged a late fee of the maximum allowed by the Laws. Merchant agrees to accept for chargeback any transaction or sale for which the Cardholder disputes the validity of the transaction or sale according to the Operating Regulations, or Bank determines that Merchant has in any way failed to comply with the Operating Regulations, this Agreement or Bank’s procedures, including, but not limited to, the following: (i) sales draft is illegible, not signed by the Cardholder or has not been or cannot be presented to Bank within the required time frame(s); (ii) sales draft does not contain the Imprint of a valid unexpired Card; (iii) an authorization has not been obtained and/or a valid authorization number has not been correctly and legibly recorded on the sales draft; (iv) sales draft is a duplicate of a prior transaction or is the result of two or more transactions generated on one Card for a single sale; (v) Cardholder alleges that he or she did not participate in the sale, authorize the use of the Card, receive goods or services purchased, or receive a required credit adjustment, or disputes the quality of the goods or services purchased; (vi) price of goods or services on the sales draft differs from the amount which Merchant presents for payment; (vii) transaction results from an Internet, mail, phone or preauthorized order and the Cardholder disputes entering into or authorizing the transaction or the transaction has been made on an expired or non-existing account number; (viii) Bank reasonably believes, within its sole discretion, that Merchant has violated any provision of this Agreement; (ix) Bank reasonably determines that the transaction record is fraudulent or that the transaction is not bona fide or is subject to any claim of illegality, cancellation, rescission, 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; or (x) for whatever reason pertaining to not complying with the Operating Regulations. Notwithstanding any authorization or request from a Cardholder, Merchant shall not initiate a sale transaction in an attempt to collect a chargeback. Merchant agrees to pay chargeback fees as indicated on the Application for chargebacks received by Bank regardless of outcome of a Merchant dispute of such chargeback.
3- Maintenance of Records.
Merchant shall maintain records pertaining to transactions acquired by Bank hereunder for at least a period of one year from the date of the transaction or as otherwise required by the Operating Regulations, and Bank may examine and verify such records at Bank’s option. Merchant shall retain legible paper copies of each transaction for at least ninety (90) days, and further agrees to deliver such paper copy to Bank or to Bank’s designee within any applicable period pursuant to the Operating Regulations, or the Laws. If Merchant fails to retain a paper copy of any such transaction after ninety (90) days, Merchant will retain and deliver to Bank upon request an image of such transaction in a form acceptable to Bank to enable Merchant and Bank to comply with the Operating Regulations, and the Laws. Merchant will be solely responsible for all liabilities arising from any failure to provide an acceptable transaction copy as required herein.
4- Bank’s Responsibilities.
A. Bank will initiate payment to Merchant of the amount of each sales transaction acquired and accepted hereunder after Bank receives payment for such transaction. Notwithstanding anything herein to the contrary, any such payment shall be subject to the terms and conditions of this Agreement, the Operating Regulations, and the Laws. Unless otherwise agreed to in writing by Bank, Merchant shall electronically deliver to Bank, in a format acceptable to Bank, all sales records and credit records within two (2) business days after the transaction date for such record (or such shorter period as required by any Card Network), except (i) in the case of a delayed merchandise delivery, when the sales transaction record shall be delivered within two (2) business days of the merchandise delivery or (ii) as specified otherwise in the Operating Regulations. Merchant agrees that it shall deliver sales records to Bank at least every 24 hours. The preparation and delivery to Bank by Merchant of sales records constitutes an endorsement by Merchant to Bank of each sales transaction evidenced thereby, and Merchant authorizes Bank or its representative to place Merchant’s endorsement on any such sales transaction at any time. Bank may refuse to acquire any sales transaction or claim the amount of which, in whole or in part, it could charge back to Merchant pursuant to this Agreement, if it had acquired the sales transaction or claim. Merchant waives notice of dispute related to any individual sales transaction. Merchant hereby consents to extensions of time granted, or compromises made, with any Cardholder liable on any sales transaction without affecting Merchant’s liability for the same hereunder. Merchant agrees that Bank may set off any amounts due to Bank from amounts due to Merchant, including but not limited to demand deposit accounts and any other amounts due to Merchant from Bank and/or any of its affiliate(s) whether or not such amounts are related to this Agreement.
B. Bank may intercept and settle Merchant transactions directly with other entities processed by Bank. The Services shall be provided in accordance with Bank’s then current systems, standards, and procedures, and Bank shall not be required to perform any special programming, to provide any special hardware or software, or to implement any other system, program, or procedure for Merchant.
C. Bank may honor the request(s) or instruction(s) of any purported representative (whether authorized or unauthorized) of Merchant or its Agent at any time during the term of this Agreement, and Bank may act in reliance upon such request(s) or instruction(s) in connection with Bank’s provision of the Services hereunder.
5- Certain Merchant Responsibilities.
A. Merchant agrees to reacquire and pay Bank the amount of any sales transaction, and Bank shall have the right at any time to charge Merchant’s Account therefore, without notice, in any appropriate situation, including, but not limited to, those relating to such sales transaction or activity where: (i) merchandise is returned, whether or not a credit voucher is delivered to Bank; or (ii) any sales transaction without a valid authorization response; or (iii) the sales transaction is alleged to have been drawn, accepted, or endorsed improperly or without Cardholder’s authority; or (iv) the sales transaction record is illegible; or (v) the Cardholder disputes the sale, quality, or delivery of merchandise or the performance or quality of services covered by the sales transaction; or (vi) the sales transaction was drawn by, or depository credit given to, Merchant in circumstances constituting a breach of any term, condition, representation, warranty, or duty of Merchant hereunder; or (vii) the extension of credit for merchandise sold or services or sales transactions performed was in violation of law or the rules or regulations of any governmental agency, federal, state, local, or otherwise; or (viii) Bank has not received payment for any sales transaction; or (ix) there is an alleged or actual failure of Merchant to comply with the Operating Regulations, the Laws, or the terms of this Agreement; or (x) any Card Network action, including, but not limited to, chargebacks, compliance cases, fines or otherwise; or (xi) as the result of any claims, damages, or losses incurred by Bank as a result of claims asserted by any Cardholder, Card issuer, or Card Network; or (xii) without limitation, any damages or losses incurred by Bank as a result of claims arising from the actions or omissions of Merchant or its affiliates, employees, service providers, owners, or customers. Any operational and/or other Services performed on behalf of Merchant, including but not limited to, production of facsimile drafts in response to copy requests, responses to compliance cases, augmentation of Merchant data for interchange, transaction stand-in, digital draft storage and retrieval, etc. shall in no way affect Merchant’s obligations and liability in this Agreement, including those in the foregoing sentence. Merchant is solely responsible for the defense of and any cost associated with any allegation of non-compliance with the Operation Regulations or Laws made by a Card Network or any third party, and Bank shall have no duty to Merchant in accordance therewith. In order to monitor potential economic hardship or damage to the goodwill of any Card Network, such Card Networks have implemented merchant review programs to identify questionable business activity or merchants whose sales transactions generate excessive Cardholder complaints, chargebacks, other disputes, or undue risk. These review programs include potential fines and handling fees. In the event any fees, fines, or penalties resulting from Merchant’s actions or omissions are levied against Bank for any reason, Merchant shall reimburse Bank on demand or Bank may, at its sole option, charge any of Merchant’s Account for the collection of such amounts.
B. Merchant shall only complete and deliver to Bank sales transactions produced as the direct result of bona fide sales made by Merchant to Cardholders and for only those products and/or services identified on the Application submitted by Merchant to Bank. Merchant shall obtain Bank’s prior written approval before accepting Cards for the purchase of products and/or services not identified on the Application submitted by Merchant to Bank. Merchant is expressly prohibited from processing, factoring, laundering, offering, and/or presenting to Bank sales transactions which are produced as a result of sales made by any person or entity other than Merchant. In the event that Merchant fails to comply with this Section 5, Merchant agrees that Bank shall have the right at any time thereafter to immediately terminate this Agreement without notice to Merchant and setoff any amounts due, or expected to become due, to Merchant.
C. Merchant acknowledges and agrees that all information provided in the Agreement is true and correct. Merchant also acknowledges that Bank 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), and Card Networks. Merchant agrees to fulfill any request from Bank for additional information which may be required or requested by any government agency or Card Network. Notwithstanding the foregoing, Merchant understands that Bank 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 Bank 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 Bank by any governmental agency or body or Card Network.
D. Merchant shall not sell, purchase, provide, or exchange any Cardholder name, address, account number, Cardholder or transaction data, Personal Information or other information to any third party, other than to Member Bank or Card Networks or Processor and, in such case, only for the purpose of completing a sales transaction. Without limiting the foregoing, Merchant shall not provide any such information to its Agent.
E. Merchant must review all reports and invoices prepared by Bank or its agent and made available to Merchant. Bank reserves the right to send some or all of the reports and/or invoices via electronic transmission (e.g., via e-mail) which Bank may change from time to time without notice. Merchant’s failure to reject any report or invoice in writing within ten (10) days from the date the report or invoice is made available to Merchant shall constitute Merchant’s acceptance of the same and a waiver of all disputes related to such report or invoice. If Merchant believes that 1) Bank has failed in any way to provide the Services, 2) any error exists in a report provided to Merchant, 3) any error exists in an amount billed or paid to Merchant, or 4) Merchant’s transactions are not qualifying for the preferred interchange rate or Non-Qualified Surcharge Fee, Merchant agrees to provide Bank with written notice, specifically detailing any alleged failure, within the earlier of thirty (30) days of the date on which the alleged failure or error first occurred and ten (10) days of the date on which the report or invoice containing such alleged failure of error was made available to Merchant; failure to so provide notice shall be deemed an acceptance by Merchant and a waiver of any and all rights to dispute such failure or error. Notwithstanding the foregoing, Merchant shall review all settlement reporting, all requests for Designated Account changes and Merchant shall have an affirmative obligation to confirm initiation of all settlement payments due to Merchant from Bank within three (3) business days, respectively, from the date of the applicable transactions or request for change of the Designated Account. Bank shall bear no liability and have no obligations to correct any errors resulting from Merchant’s failure to comply with the duties and obligations of the preceding sentence.
F. Merchant shall provide Bank with quarterly and audited annual financial statements for Merchant’s business upon request. Financial statements shall be prepared according to generally accepted accounting principles consistently applied and any other financial information as Bank may request as soon as commercially practicable but in no event later than ten(10) business days following any request by Bank.
G. Merchant agrees to comply with all applicable state, federal, and local laws, rules, and regulations (“Laws”) and to assist Bank in complying with all Laws and Operating Regulations applicable to this Agreement. In conformance therewith, Merchant agrees that, under no circumstance, will Merchant store, disclose or use Cardholder data, including without limitation, Personal Information, in violation of the Laws or the Operating Regulations, including, but not limited to, the storage of track-2 data. Neither Merchant nor its Agent shall retain, store, or disclose magnetic-stripe data subsequent to the authorization of a sales transaction. Merchant shall be in full compliance with Operating Regulations, regulations, guidelines and procedures adopted by any Card Network relating to the privacy and security of Cardholder and Card transaction data, including without limitation, the most up-to-date version of the Payment Card Industry Data Security Standard (PCI-DSS), as amended from time to time by the Payment Card Industry Security Standards Council. Detailed information pertaining to aforementioned requirements may be found at https://www.pcisecuritystandards.org. Additional information regarding security requirements may be found on the Card Network’s respective web sites. “Personal Information” means, collectively, “personally identifiable information”, “non-public personal information”, “personal data”, “personal information” and any other similar terms defined by applicable data protection or privacy laws. Merchant will execute and deliver to Bank all instruments Bank deems necessary pursuant to Merchant’s obligations hereunder. Merchant will be solely responsible for the quality, accuracy, and adequacy of all transactions and information supplied hereunder, and will establish and maintain adequate audit controls to monitor the quality and delivery of such data. Merchant warrants to Bank that it has implemented and will maintain secure systems for transmitting information to Bank. Merchant shall allow the auditors (third-party or internal) of Bank or any Card Network to review the documents, files, records, procedures, systems, controls, equipment, and physical assets related to the transactions contemplated herein, including, without limitation, Merchant’s storage and transmittal of Cardholder data, at any reasonable time and upon reasonable notice to Merchant. Merchant will assist such auditors as may be necessary for them to complete their audit. MERCHANT SHALL BE LIABLE FOR ALL FINES, CHARGES AND PENALTIES THAT MAY BE ASSESSED BY ANY REGULATORY AUTHORITY, CARD ASSOCIATION OR PAYMENT NETWORK AS A RESULT OF TRANSACTIONS MADE BY MERCHANT OR MERCHANT’S NONCOMPLIANCE WITH THE PRECEDING REQUIREMENTS OR TERMS OF THIS AGREEMENT. Merchant acknowledges that it may be prohibited from participating in payment network programs if it is determined that Merchant is non-compliant. Merchant acknowledges that Bank may cause Merchant to subject to an audit to verify Merchant’s compliance with the requirements set forth in this Agreement or the Operating Regulations. Merchant must notify Bank within twenty-four (24) hours after becoming aware of: (i) any suspected or actual data security breach; or (ii) any noncompliance by Merchant with the security requirements set forth herein. Merchant shall, at its own expense, perform or cause to be performed (i) an independent investigation of any data security breach of Card or transaction data by an authorized assessor acceptable to Bank; (ii) take all such remedial actions recommended by such investigation, Bank, or Card Network; and (iii) cooperate with Bank in the investigation and resolution of any security breach. Merchant must notify Bank if cards, passcodes, or tools have been stolen or lost. Merchant does not have the right to assign passcodes, cards, or tools to anyone else.
H. Unless otherwise agreed in writing by Bank, all sales transaction, settlement, and other data and information used in connection with the Services shall be provided to Bank in Bank’s then current data formats and by means of Bank’s then current telecommunications configurations and protocols. Merchant shall comply with all time deadlines, equipment, and software maintenance and upgrading requirements reasonably imposed on Merchant by Bank from time to time.
I. Merchant may elect to use a third party as Merchant’s agent (“Agent”) to perform some of Merchant’s obligations under this Agreement. Agents include, but are not limited to, Merchant’s software providers and/or equipment providers. Merchant shall bear all risk and responsibility for conducting Merchant’s own due diligence regarding the fitness of an Agent for a particular purpose and for determining the extent of an Agent’s compliance with the Operating Regulations, and the Laws. Bank may approve or deny the use of an Agent in Bank’s sole discretion and at any time. Merchant acknowledges and agrees that Merchant shall cause its Agent to complete any steps or certifications required by any Card Network (e.g., registrations, PABP, PCI, audits, etc.) or Bank. If an Agent is designated a service provider under any applicable Operating Regulation (as determined by Bank), Merchant shall cause such Agent to cooperate with Bank in completing any due diligence and/or steps required for registration and/or certification. Merchant is solely responsible for any and all applicable fees, costs, expenses and liabilities associated with such steps, registrations, and certifications. Merchant expressly agrees that Bank shall in no event be liable to Merchant or any third party for any actions or inactions of any Agent used by Merchant (even if such Agent is approved, introduced, recommended, or resold by Bank), and Merchant hereby expressly assumes all such liability. Merchant is responsible for ensuring its Agents comply with Operating Regulations, the Laws, and any terms of this Agreement that are applicable to the services or undertakings performed by Agent on behalf of Merchant and/or otherwise applicable to Merchant.
J. Merchant will immediately notify Bank if Merchant decides to use electronic authorization or data capture terminals provided by any entity other than Bank or its authorized designee (“Third Party Terminals”) to process transactions, including leasing a terminal from a third party. If Merchant elects to use Third Party Terminals, (i) the third party providing the terminals will be Merchant’s Agent in the delivery of Card transactions to Bank; and (ii) Merchant assumes full responsibility and liability for any failure of that third party Agent to comply with the Operating Regulations, the Laws, or this Agreement. Bank will not be responsible for any losses or additional fees incurred by Merchant as a result of any error by a third party agent or a malfunction in a Third Party Terminal. Bank reserves the right to prohibit Merchant from using Third Party Terminals for which it does not approve.
K. The use of any software application that has connectivity to the Internet or any external network poses an increased risk, and Merchant assumes all liability for any such risks. If Merchant utilizes software or hardware with a connection to the Internet or an external network and such hardware or software interacts in any capacity with the provision of services contemplated pursuant to this Agreement, Merchant is solely liable without limitation for any and all consequences of such interaction.
L. Merchant agrees to provide Bank with at least thirty (30) days prior written notice of Merchant’s intent to change its business form or entity in any manner (e.g., a change from a sole proprietorship to a corporation), and/or of Merchant’s intent to sell its stock or assets to another entity. In addition, should Merchant, at any time after the Effective Date, wish to change or add additional locations for the receipt of the Services, Merchant shall do so according to Bank’s then-current standards and procedures and subject to Bank’s prior approval. Merchant’s receipt of any Services hereunder after such change or addition shall be deemed a warranty and representation as to the quality and accuracy of such change or addition and Merchant agrees that Merchant will be obligated for such change or addition thereafter pursuant to the terms and conditions of this Agreement. Merchant will notify Bank, within one business day, in event of bankruptcy, receivership, insolvency, or similar condition or action initiated by or against Merchant or any of its parents, affiliates, subsidiaries, or principals (“Financial Condition Change”). Merchant will include Bank as a creditor in Merchant’s bankruptcy proceedings if Merchant has funds due to Bank for any reason including fees, chargebacks or ACH rejects. In event of Financial Condition Change, or if Merchant is aware of future or imminent Financial Condition Change, Merchant will cease all Card acceptance at once and will no longer accept and/or submit Card transactions until Bank has given Merchant permission by Bank to do so after receiving notice of Financial Condition Change. In the event of Financial Condition Change, Merchant will not sell, transfer, or disclose any Cardholder information, inclusive of Card account numbers or Personal Information to any agent, vendors or any other parties. Bank reserves the right to request financial updates, including tax, bank, and financial statements, and upon request for such information by Bank, Merchant shall promptly provide such information. Merchant represents and warrants that any information now provided or otherwise provided in the future to Bank is true, accurate, and complete.
M. “Identity Responsibility Sales” or “Card-Not-Present transactions” shall mean sales transactions completed without the presence of the Cardholder’s Card, including, but not limited to, those made by mail, telephone or electronic commerce. Merchant agrees that it shall not make such sales or transactions unless agreed to by Bank in writing and in advance. In the event Bank approves Identity Responsibility Sale or Card-Not-Present transactions, for each and every Identity Responsibility Sale or Card-Not-Present transactions, Merchant represents and warrants to Bank that the purchaser is the Cardholder and that the name, account number and expiration date appearing on the sales transaction are the same as those embossed on the Cardholder’s Card. The fact that Merchant has obtained authorization for the sales transaction does not alter this representation and warranty of identity or the need for Merchant to perform independent identification. Merchant acknowledges and agrees that it shall be solely responsible for any and all liabilities arising in connection with Identity Responsibility Sales or Card-Not-Present transactions.
N. Virtual Private Network (“VPN”)/Secure Socket Layer (“SSL”) Services. In the event that Merchant uses a VPN or SSL connection to Bank, Merchant acknowledges and agrees that the VPN or SSL communication interface relies on the internet, which is a public IP-based communications network that is subject to disruptions, slowdowns, and outages that cannot be predicted, controlled, or corrected by Bank, and that such occurrences could interfere with the processing of Merchant’s transactions. Merchant acknowledges that Bank shall not provide monitoring, error detection, or related service level measures with respect to the VPN or SSL. Without limiting the generality of the foregoing, any service levels that may be set forth elsewhere in the Agreement shall not apply to the VPN or SSL connection or to transactions transmitted using such connection. Merchant acknowledges that certain communication equipment must be installed and supported in Merchant’s data center(s) and other locations in order to support a VPN or SSL and that Merchant must use equipment that is compatible with the VPN or SSL communication equipment supported by Bank. Merchant shall be solely responsible for secure key exchange and key management (including a process for key revocation when Merchant personnel leave). Merchant shall further ensure that each terminal with a connection to the VPN or SSL shall at all times have a personal firewall installed and active and such firewall is up to date. The VPN services and SSL services shall be provided in accordance with Bank’s standards, which Bank may change from time to time in its sole discretion, and Merchant shall at all times comply with the standards established by both Bank and Card Networks with respect to the VPN and SSL.
O. Optional Services.
From time to time and at Bank’s sole discretion, Bank may offer, and Merchant may decide to utilize, certain products and services provided by a third party (“Optional Services”). In such circumstances, Merchant acknowledges and agrees that the use of an Optional Service is at Merchant’s own risk and that Bank shall have no liability whatsoever related to or arising out of Merchant’s election to use an Optional Service. Merchant acknowledges and agrees that all Optional Services are supplied and supported solely by the applicable third party provider (each, a “Provider) and not Bank and that Bank may, without incurring any liability to Merchant, communicate service or other issues to Providers as documented by Merchant in writing to Bank. Without limiting the generality of the foregoing, Bank shall have no obligation to provide any specific type or level of service to Merchant with respect to the Optional Services, even if such Optional Services are referred or resold to Merchant by Bank. Merchant shall be solely responsible and liable for the performance of the obligations described above and for any fees, fines, damages, losses or expenses arising in connection with Merchant’s possession and/or use of an Optional Service. Merchant shall bear all risk and responsibility for conducting Merchant’s own due diligence regarding the fitness of an Optional Service for a particular purpose and for determining the extent of an Optional Service’s compliance with the Operating Regulations, and the Laws. Bank’s decision to offer an Optional Service shall in no way limit Merchant’s duties and obligations contained in this paragraph. In conformance therewith, Merchant agrees to indemnify and hold Bank harmless for any damage, loss, claim, or liability arising in connection with Merchant’s possession and/or use of any Optional Service. Merchant acknowledges that provision of any Optional Service to Merchant is subject to availability from the applicable Provider, and Bank shall have no obligation to provide any Optional Service to Merchant. Merchant shall not acquire any property or any other right, claim or interest including any patent right or copyright interest in any Providers’ systems or in any of the equipment, software, processes, programs or data utilized by a Provider in connection with such systems other than data and equipment supplied to Merchant for use in connection with such systems. Merchant’s right to use a Provider’s systems and any equipment and software used in connection with an Optional Service shall not be assignable, and Merchant’s duties with respect to them shall not be delegable in any way without prior written consent of the applicable Provider. Each Provider shall have the right to require Merchant to enter into an agreement directly with the applicable Provider prior to the delivery of any software, equipment, or any documentation to such Merchant associated with an Optional Service. The agreement may set forth terms and conditions regarding the use of the software, equipment, and/or documentation by such Merchant which a Provider deems necessary in order to fully protect the proprietary rights of such Provider. Merchant shall observe complete confidentiality with regard to all Provider-owned software and documentation, whether supplied by a Provider directly or through Bank, and Merchant shall not disclose or otherwise permit use of or access to it by any person or entity other than an employee of Merchant with a need to know.
P. In no way limiting the provisions of the immediately preceding section, Merchant agrees to pay Bank all fees and assessments of any nature as imposed by the Providers in connection Merchant’s use of the Optional Services. Merchant acknowledges and agrees that until: (i) the applicable Provider(s) receive written notice from Merchant of the cancellation of all Optional Services and Merchant has returned all equipment and software to the applicable Provider(s); (ii) Bank receives written notice from Merchant wherein Merchant represents and warrants that Merchant has ceased receiving all Optional Services, has notified the applicable Provider(s) of the same and has returned all equipment, property and software to the Providers; and (iii) the Providers no longer assess Bank for Merchant’s receipt of services or possession of equipment or software; Merchant shall continue to be responsible for and pay all amounts assessed by Bank to Merchant for the Optional Services. Until Bank has determined that Merchant has satisfied all of the express conditions set forth in the immediately preceding sentence, Merchant agrees that it shall not, and Merchant hereby waives all rights to, contest, challenge or withhold payment for any fees assessed to Merchant by Bank for Optional Services. Merchant agrees to indemnify and hold Bank harmless from and against any damages, awards, judgments, settlement amounts, fines, penalties, losses, costs and expenses (including reasonable legal fees and expenses and costs of investigation) and other liabilities arising out of any law suit, action, claim, demand, administrative action, arbitration or other legal proceeding brought or asserted against Bank as a result of or in connection with Merchant’s use of Optional Services.
Q. If Merchant will be accepting electronic commerce transactions, Merchant must disclose all of the following information on Merchant’s web site :
i. A complete description of the goods and/or services;
ii. Merchant’s returned merchandise and refund policy;
iii. Merchant’s customer service contact, including electronic mail address and/or telephone number ;
iv. The transaction currency;
v. Any export or legal restrictions;
vi. Merchant’s delivery policy;
vii. Disclosure of Merchant’s outlet country on the same screen as the check-out screen or during the check-out process;
ix. The security method for the transmission of payment data; and
x. Any other information required to be disclosed under the Laws or Operating Regulations.
R. Surcharges. If Merchant chooses to impose a surcharge on Card payments, Merchant may do so only after meeting specific considerations, limitations and requirements as defined by the Card Networks, as well as the requirements of any applicable Law. Requirements and limitations include: (i) Merchant may only impose a surcharge if permitted by, and compliant with, the Laws; (ii) Merchant shall notify Bank and Card Networks no less than 30 days in advance of imposing any surcharge;(iii) Merchant shall publicly disclose its surcharge practices to customers at the store entry point and point of sale; and (iv) any surcharge imposed by Merchant shall not exceed 4% of the underlying transaction amount or surcharge cap as established under applicable Operating Regulations updated from time to time. For information on, and further links to, surcharge considerations, requirements, limitations and Card Network surcharge registration pages, visit https://www.mastercard.us/en-us/business/overview/support/merchant-surcharge-rules.html, http://www.discoversurcharge.com, and http://www.visa.com/merchantsurcharging or such other websites that the Card Networks may make available from time to time. If a Merchant chooses to impose a surcharge, in additions to the requirements set forth above, Merchant must (u) inform the Cardholder that a surcharge is assessed; (v) inform the Cardholder of the surcharge amount or rate; (w) not describe the surcharge as, or inform the Cardholder that the surcharge is, assessed by the Card Network or a Card issuer; (x) include notices, signs, or decals disclosing that Merchant assesses a surcharge. Such notices, signs, or decals must be in a conspicuous location or locations at Merchant’s physical point of sale, or, in the absence of a physical point of sale, prominently during an electronic commerce transaction or communicated clearly in a telephone order so as it can be reasonably assured that all Cardholders presenting a Card will be aware of the surcharge; (y) clearly display or communicate the surcharge disclosure in the transaction environment or process, including (if there is a physical point of sale) at the terminal/cashier’s desk. The disclosure must be of as high a contrast as any other signs or decals displayed. The disclosure at the point of sale must include both: the exact amount or percentage of the surcharge, and a statement that the surcharge is being assessed by Merchant; and (z) for an electronic commerce transaction, a mail/phone order transaction, and an unattended transaction, the Cardholder must be provided the opportunity to cancel the transaction subsequent to the surcharge disclosure.
S. Merchant will prominently display the promotional materials provided by Bank in its place(s) of business. Merchant’s use of promotional materials and use of any trade name, trademark, service mark or logo type (“Marks”) associated with a Card is limited to informing the public that the Card will be accepted at Merchant’s place(s) of business. Merchant’s use of promotional materials and Marks is subject to Bank’s direction and to the Operating Regulations. Subject to prior approval of Bank, Merchant may use promotional materials and Marks only during the term of the Agreement and will immediately cease use and return any inventory to Bank upon termination thereof. Merchant may not use any promotional materials or Marks associated with a Card Network or Bank in any way which suggests or implies that the Card Network or Bank endorses any goods or services other than in the case of the Card Network, the Card services. Merchants will prominently display Card signage provided by Bank in its place(s) of business and the type of signage displayed will be in accordance with the Operating Regulations for Card Networks accepted by Merchant. Merchant shall not use any Marks from Bank without consent and will promptly remove Marks from any of promotional material upon termination of this agreement or notice from Bank.
6- Fees and Other Services.
A. Merchant will pay Bank fees and charges for Services, forms, and/or equipment in accordance with the pricing detailed in this Agreement, any schedules, exhibits, or addenda incorporated or referenced herein, and Bank’s then-current standards. Such fees and charges will be calculated and debited from the account(s) designated by Merchant (a “Designated Account”). Merchant represents and warrants each time Bank debits the Designated Account that it is the owner of the Designated Account and has the authority to grant Bank the authorization to debit the Designated Account. Fees and charges will be assessed to Merchant by Bank on a daily, monthly and/or other periodic basis with such period initially and prospectively determined in Bank’s sole discretion. Bank reserves the right to assess some or all of the fees and charges via a separate or combined Services invoice(s) for Merchant’s use of the Services herein. Bank will charge Merchant for any and all fines, fees, penalties, loss allocations, assessments, registration expenses, certification expenses, and other amounts assessed by third parties (including, but not limited to, certain telecommunication expenses) incurred as a result of Merchant’s or any of its Agent’s actions, omissions, or use of the Services contemplated herein or incurred by Bank on Merchant’s behalf pursuant to the Operating Regulations, the Laws, or this Agreement. In the event any Card Network increases interchange, fees or assessments, Bank may increase Merchant’s fees and charges to reflect such increases without notice to Merchant, and Merchant shall pay such increased fees and charges. Notwithstanding the foregoing, Bank reserves the right to, and may, amend Merchant’s fees and charges from time to time upon notice to Merchant. Bank has the right of recoupment and set-off. Specifically, Bank may offset or recoup any outstanding/uncollected amounts owed by Merchant from: (i) any amounts Bank would otherwise be obligated to deposit into the Designated Account; (ii) any other amounts Bank may owe Merchant under this Agreement or any other agreement; (iii) any funds in the Designated Account, the Reserve Account, or in any account of Merchant at Bank; or (iv) any funds that Merchant acknowledges that in the event of a bankruptcy proceeding, in order for Merchant to provide adequate protection under the bankruptcy code to Bank, Merchant may be required to create or maintain the Reserve Account as required by Bank, and Bank must have the right to offset against the Reserve Account for any and all obligations which Merchant may owe to Bank, without regard to whether the obligations relate to sales drafts initiated or created before or after the filing of the bankruptcy petition.
B. Bank shall have the right to adjust the fees and charges payable by Merchant hereunder as necessary to offset any direct or indirect increase to Bank in the costs of providing its Services hereunder, including, but not limited to (i) if any Card Network interchange, assessment, risk, or other fees change, or (ii) if for any reason Card Network transactions submitted by electronic transmission do not qualify for the lowest electronic interchange fee, or (iii) if the sales drafts submitted are not as anticipated (e.g., Merchant’s average ticket is different than that used by Bank to calculate the discount rate, etc.) or (iv) if sales drafts submitted without electronic transmission exceed five percent (5%) of the total monthly sales drafts processed under this Agreement. For certain non-qualifying transactions, Bank assesses a surcharge of a certain percent of the transaction amount (“Non-Qualified Surcharge Fee”) as set forth in the Application on all sales transactions that fail to qualify at the lowest possible interchange rate based on Merchant’s base rate (e.g., an international transaction) (such transactions are referred to herein as “Non-Qualified Transactions”). Bank reserves the right to, and may, amend the Non-Qualified Surcharge Fee amount from time to time upon notice to Merchant.
C. Merchant shall pay all taxes and other charges imposed by any governmental authority on the services provided under this Agreement. In the event Bank pays such taxes, Merchant shall immediately reimburse Bank, or Bank may, at Bank’s sole option, charge Merchant’s Designated Account(s) for such amounts in Bank’s sole discretion or set off against any amounts owed to Merchant.
D. Bank will initially provide, in accordance with this Agreement, those products and Services indicated by a check mark in appropriate sections of the Application (the “Initial Services”). Merchant acknowledges and agrees that the Initial Services shall always include Services related to Visa or MasterCard credit card transaction processing, and that Merchant shall be solely responsible for any use of such Services, and that Bank shall have no obligation to prevent Merchant from using such Services. If at any time Merchant utilizes any Services other than the Initial Services, such use of such Services shall be provided according to Bank’s standard terms and conditions associated with such Services and Merchant will pay Bank its standard fees and charges for such Services in accordance with Bank’s then-current standards. Merchant’s use of Services other than the Initial Services shall be deemed Merchant’s acceptance of the fees and charges and the terms and conditions associated with such Services (“Additional Services”). Bank may also charge Merchant for any non-specified Service it provides Merchant or expense it incurs on behalf of Merchant (also deemed an Additional Service) in conjunction with Merchant’s receipt of an Additional Service, and Merchant agrees to pay the standard rate for the Additional Services in accordance with Bank’s then-current standards. Merchant shall not dispute, and shall be unconditionally obligated to pay for, any Additional Service charges for any such Additional Service that Merchant has received. Services such as enhancement or customization of any standard services, customized reporting, or special requests will be provided at Bank’s option and on an “as-quoted” basis. Merchant acknowledges and agrees that it shall be solely responsible for all telecommunication lines, equipment, and any related items deemed necessary by Bank in connection with the Initial Services and any Additional Services and for any and all fees, costs, or expenses related to the same, whether incurred by Merchant, Bank, their affiliates, and/or agents; such fees, costs and/or expenses may include, but are not limited to, those associated with, circuits and their installation, software to support Merchant’s operating environment, data transmissions, equipment, and software upgrades, modems, sharing devices, controllers, protocol converters, routers, router maintenance, maintenance, other telecommunication equipment, etc. In the event Merchant uses Optional Services, Bank may collect, and Merchant agrees to pay, all fees and charges associated with the Optional Services, including, but not limited to, those assessed by third parties or Providers related to the use of an Optional Service.
E. If Bank reasonably believes Merchant is not fully compliant with this Agreement, the Operating Regulations (including but not limited to the Payment Card Industry Data Security Standard, the VISA Cardholder Information Security Program, the MasterCard Site Data Protection Program, and any other program or requirement that may be published and/or mandated by the Associations), or any Laws, or in the event Merchant fails to prove such compliance upon request from Bank, Bank reserves the right to charge Merchant a fee, which amount shall be determined in Bank’s sole discretion, until Merchant proves compliance with the Operating Regulations, and the Laws, and Merchant shall pay such amount to Bank. This fee will be in addition to any other amounts due under the Agreement, including but not limited to all fines, fees, penalties, loss allocations, assessments, registration expenses, certification expenses, and other amounts assessed by third parties.
F. Transaction fees are fees charged on each sales draft and each credit draft regardless of the stated total. Subject to the terms of this Agreement, a transaction fee may be charged for any transaction activity that utilizes a point-of-sale (“POS”) device for transmission or reception of data or information, including, but not limited to, signature-based debit card transactions, PIN-based debit card transactions, batch closing, authorizations, and any other communication using the POS device; provided, however, Merchant complies (and ensures the fees comply) with the Laws, Operating Regulations, and this Agreement.
G. Merchant agrees to be responsible for all direct and indirect costs (including but not limited to those incurred by Bank, its affiliates and/or agents) in connection with and/or related to Merchant’s conversion from Bank at the termination of this Agreement and/or related to any conversion or programming effort affecting the Services after Merchant’s initial conversion to Bank.
H. If Bank for any reason advances settlement or any amounts and/or delays the assessment of any fees (individually or collectively a “Float Event”), Bank reserves the right to assess to Merchant, and Merchant shall pay to Bank, a cost of funds associated with the Float Event (which Bank may at its option assess as a transaction surcharge), the amount of which shall be determined by Bank in its reasonable discretion, and which may be changed by Bank from time to time, and such cost of funds shall be effective as of the start of the Float Event and shall be immediately payable by Merchant when assessed by Bank. Notwithstanding, nothing herein obligates Bank to fund or advance any amount under this Agreement.
I. Bank will, in its sole discretion, allow access to Bank’s proprietary and confidential processing services (collectively “PayFacto Services”). PayFacto Services provide reporting detail of Merchant’s use of the services herein. PayFacto Services are subject to change without notice and are solely controlled by Bank. Bank’s only obligation will be to make the PayFacto Services available in accordance with Bank’s then-current timeframes, standards, scheduling, and procedures (“SOP’s”), including, but not limited to, SOP’s for set-up, account access, and suspension of PayFacto Services, and Member Bank will have no liability to Merchant for the PayFacto Services. Bank reserves the right to suspend access to PayFacto Services without notice if Bank reasonably believes that a violation of the SOP’s has occurred, is likely to occur, or for any reason that may present a risk to Bank or Merchant. Merchant shall provide Bank with prompt written notice of all user IDs that are no longer active, should be deleted, and/or should otherwise be changed. Merchant shall be solely responsible for any unauthorized access to PayFacto Services, and Merchant’s data therein including but not limited to unauthorized Merchant employee or agent access, action taken on behalf of Merchant or at the request of any of Merchant’s employees or agents (even if not authorized) and/or failure to notify Bank in writing and independently verify suspension of a password on a user ID or inactivation and/or deletion of a User ID. If Merchant accesses PayFacto Services through a third party (e.g., through the internet, a third party provider, etc.), Bank shall have no responsibility or liability whatsoever for any actions or inactions of such third parties, including but not limited to inability to (i) access the PayFacto Services, (ii) interruption in access to PayFacto Services, or (iii) errors or inaccuracies in data received by Merchant.
J. Virtual Terminal Processor Services and Fees. Bank’s Virtual Terminal Processor Services (the “VT Services”) is an enhancement to Bank’s PayFacto Services. Merchant acknowledges and understands that the VT Services allow Merchant to effectuate Card transactions within the application in accordance with Bank’s standards and procedures. Merchant shall be solely responsible for all authorized or unauthorized use of the VT Services arising out of or related to Merchant’s use of the VT Services including, but not limited to, unauthorized transactions initiated via the use of Merchant’s User ID’s. Merchant acknowledges that use of a software application that has connectivity to the Internet poses an increased risk, and Merchant assumes all liability for such risks. Merchant warrants and represents to Bank that it has implemented and will maintain secure systems for use of the VT Services and the transmission of information to Bank. Merchant further acknowledges and agrees that Bank’s only obligation will be to make the VT Services available on Bank’s system in accordance with Bank’s then-current standards and Bank will have no other responsibility or liability to Merchant for VT Services. Merchant acknowledges and agrees that Bank’s PayFacto Services are required for use of the VT Services and that Bank’s standard terms, conditions, and fees associated with the PayFacto Services shall be and remain in effect. For the purposes of this Agreement, the VT Services shall also be deemed an Additional Service and Merchant shall pay Bank Bank’s then-current standard fees and charges for the VT Services in addition to any other fees and charges for services provided.
K. Bank, upon Merchant’s request and at Bank’s option, may transmit Banking Identification Number (“BIN”) Files to Merchant in accordance with Bank’s standards and according to Bank’s then-current fees and charges. Bank makes no representations or warranties whatsoever with respect to the file, including, but not limited to, the completeness of the file. Merchant must not use BIN file information for any reason other than to identify card type categories at the point of sale. The Merchant must not disclose the BIN information to any third party without prior written consent of Bank. BIN file information is confidential and proprietary information of the relevant Card Network and is subject to the confidentiality provisions of the Agreement. Availability of the BIN file transmission is subject to the Operating Regulations and Bank’s standards and may not be available, or may not be available at all times. Bank may cease providing the foregoing service if, in its sole discretion, it deems that the service violates or may violate the Operating Regulations. Merchant agrees that it shall complete and execute any additional documents as may be required by any Card Network at any time. Additional fees and charges may be charged by Bank associated with the provision of the services described in this paragraph, and Merchant agrees to pay such fees and charges should Merchant elect to receive such services.
7. Term and Termination.
A. This Agreement shall be binding upon Merchant upon Merchant’s execution. The initial term of this Agreement (“Initial Term”) shall begin, and this Agreement shall be binding upon Bank, as of the earliest of (i) the date that Bank accepts this Agreement by issuing Merchant a Merchant Identification Number or (ii) Bank’s processing of any transaction submitted by Merchant. The Initial Term of this Agreement shall be thirty-six (36) months. In any event, after the expiration of the Initial Term, this Agreement shall automatically be renewed for periods equal to the Initial Term (each a “Renewal Term”), unless otherwise provided herein or unless either party gives written notice to the other party at least ninety (90) days prior to the expiration of the then-current term.
B. Merchant shall be in default under this Agreement (“Event of Default”) if: (i) Merchant becomes subject to any voluntary or involuntary bankruptcy, insolvency, reorganization or liquidation proceeding, a receiver is appointed for Merchant, or Merchant makes an assignment for the benefit of creditors, or admits its inability to pay its debts as they become due; or (ii) Merchant or its Agent fails to comply with the Operating Regulations or Laws; or (iii) Merchant or its Agent is in breach of any other terms or conditions of this Agreement whether by reason of its own action or inaction or that of another; or (iv) in the event of irregular card sales or any other circumstances, which, in Bank’s discretion, may increase Bank’s exposure for chargebacks or other financial, reputation, or security risk(s); or (v) Bank reasonably believes that there has been a material deterioration in Merchant’s financial condition; or (vi) any standby letter of credit, if and as may be required pursuant to this Agreement, will be cancelled, will not be renewed, or is not in full force and effect; or (vii) Merchant ceases to do business as a going concern, or there is a change in ownership of Merchant which changes the identity of any person or entity having, directly or indirectly, more than ten percent (10%) of either the legal or beneficial ownership of Merchant, or (viii) Bank’s reasonable determination that fraud is or may be occurring. Upon the occurrence of an Event of Default, Bank automatically, and without notice, shall be entitled to exercise and enforce (in concert with and in addition to any other rights or remedies granted to it herein) any and all of the following rights and remedies: (a) those provided for in Section 7.C. below, (b) cease providing any or all Services to Merchant, (c) establish a Reserve Account, and/or (d) otherwise proceed to collect amounts that are due and owing from Merchant under this Agreement by means of setoff, recoupment, debiting of Bank Affiliate Accounts or any other means authorized by the Laws. In addition, upon the occurrence of an Event of Default, Bank may terminate this Agreement by giving Merchant written notice thereof. Termination of Merchant for any reason shall not relieve Merchant from any liability or obligation to Bank.
C. If, prior to the date on which the then current term of this Agreement is scheduled to expire, either this Agreement is terminated by Bank as specifically permitted by this Agreement, or terminated or breached by Merchant, Merchant shall both (i) pay Bank a $295.00 Early Deconversion Fee for certain costs, such as deletion of Merchant numbers, etc. related to Merchant’s deconversion and (ii) be liable to Bank for liquidated damages in an amount equal to the average monthly revenue payable to Bank as a result of this Agreement for the three calendar months in which such revenue was the highest during the preceding 12 calendar months, or such shorter period if this Agreement has not been in effect for 12 months, multiplied by the number of months remaining during the then current term of this Agreement. Merchant acknowledges and agrees the liquidated damages are fair and reasonable because it is difficult or impossible to estimate Bank’s damages resulting from any breach or improper termination. Merchant shall also reimburse Bank for any damage, loss or expense incurred by Bank including all past due, unpaid and/or future invoices for services rendered by Bank in connection with this Agreement. All amounts due pursuant to this section shall be immediately due and payable by Merchant without notice or demand. Bank shall also have the option to require Merchant to reacquire all outstanding sales transactions acquired by Bank hereunder.
D. Bank may immediately cease providing services to Merchant without notice if (i) Merchant has failed to pay any amount to Bank when due, (ii) in Bank’s opinion, provision of a service to Merchant may be a violation of the Operating Regulations, or the Laws, (iii) Bank is required to cease providing services to Merchant as a result of regulatory action or investigation; (iv) in Bank’s opinion, providing services may jeopardize the safety and soundness of Bank or may result in a reputational, compliance or financial risk to Bank or any Card Network; or (v) Bank believes that Merchant has violated or is likely to violate the Operating Regulations, or the Laws.
8. Authorization, Set-off, Reserve, and Security Interest.
A. Bank’s authority to debit or credit the Designated Account(s) shall remain in effect for a period of two (2) calendar years following any termination of this Agreement, regardless of whether Merchant has notified Bank of an Account Change as defined below. Merchant shall always maintain the Designated Account(s) with funds sufficient to satisfy Merchant’s duties and obligations pursuant to this Agreement whether contingent or accrued. If Merchant desires to change or alter the Designated Account(s) (an “Account Change”), Bank shall use reasonable efforts to effect such Account Change; however, such Account Change shall not be effective until the date on which Bank actually makes such Account Change on Bank’s system. Bank shall not be responsible for checking the accuracy of any Account Change submitted by any purported representative (whether authorized or unauthorized) of Merchant and Bank shall not incur any liability associated with any Account Change unless such change is the result of Bank’s gross negligence or willful misconduct.
B. All amounts due Bank under this Agreement shall be paid without set-off or deduction, and shall be due from Merchant as of the date Bank originates an ACH debit transaction record to Designated Account(s). Any fees not collected from Merchant by Bank when due shall bear interest at highest rate permitted by the Laws.
C. The acceptance by Bank, Bank’s affiliate or other financial institution of Merchant’s closing (or termination of) its Account shall not constitute a mutually agreed upon termination of this Agreement.
D. As a specifically bargained for inducement for Bank to enter into this Agreement with Merchant, Bank shall have the right, exercisable at its option at any time either before or after an Event of Default has occurred, to (i) establish from amounts that otherwise would be payable by Bank to Merchant, including, but not limited to, demand deposit accounts and any other amounts due to Merchant from Bank and/or any of its affiliate(s) whether or not such amounts are related to this Agreement, or to cause Merchant to prepay to Bank, a reserve of funds, in an amount satisfactory to Bank (a “Reserve Account”), to cover any and all amounts which are, or reasonably are anticipated by Bank to become, due to Bank from Merchant, including without limitation amounts arising from or otherwise relating to existing or anticipated chargebacks, fees, fines, returns, monetary awards or other charges and assessments imposed or anticipated to be imposed by any Card Network under the Operating Regulations, or liquidated damages as provided for in Section 7.C. above, or (ii) require Merchant to establish an irrevocable standby letter of credit, including additional and/or replacement letters of credit if required by Bank, with a beneficiary designated by Bank, and which are issued from a financial institution other than Community Federal Savings Bank or any of its affiliates, in a format, with an expiration date, and in an amount acceptable to Bank in its sole reasonable discretion. The Reserve Account shall be maintained in the name of Bank and shall be fully funded by Merchant at all times in an amount determined by Bank, as set forth in (i) above. Funds in the Reserve Account will remain in the Reserve Account until 270 calendar days following the later of termination of this Agreement and Merchant’s last transmission of sales drafts or transaction or credit record to Bank, or chargeback submitted by Cardholder, provided, however, that Merchant will remain liable to Bank, for all liabilities occurring beyond such 270-day period. After the expiration of such 270-day period Merchant must provide Bank with written notification indicating Merchant’s desire of a release of any funds remaining in the Reserve Account in order to receive such funds. Merchant agrees that Merchant will not use these funds in the Reserve Account for any purpose, including but not limited to paying chargebacks, fees, fines or other amounts Merchant owe Bank under this Agreement. Bank will have sole control of the funds in Reserve Account.
E. This Agreement will constitute a security agreement under the Uniform Commercial Code. Merchant grants to Bank a security interest in and lien upon all of the following (collectively, the “Secured Assets”): (i) all funds at any time in the Designated Account, (ii) the Reserve Account, (iii) future sales transactions, (iv) all funds, deposits, deposit accounts, moneys, securities, and other property now or hereafter in the possession of or on deposit with, or in transit to Bank or any other direct or indirect subsidiary or affiliate of Bank, whether held in a general or special account or deposit, whether held jointly with someone else, or whether held for safekeeping or otherwise, excluding, however, all IRA, Keogh, and trust accounts; and (v) all of Merchant’s rights relating to this Agreement including, without limitation, all rights to receive any payments or credits under this Agreement. Merchant warrants and represents that no other person or entity has a security interest in the Secured Assets. These security interests and liens will secure all of Merchant’s obligations under this Agreement and any other agreements between Merchant and Bank, including but not limited to Merchant’s obligation to pay any amounts due to Bank. With respect to such security interests and liens, Bank will have all rights afforded under the Uniform Commercial Code, any other applicable law and in equity. Merchant will obtain from Bank written consent prior to granting a security interest of any kind in the Secured Assets to a third party. In addition to the security interests in the Secured Assets, Bank shall have, a contractual right of setoff against the Secured Assets. Every such right of setoff shall be deemed to have been exercised immediately upon the occurrence of an Event of Default hereunder without any action by Bank or notation in Bank’s records, although Bank may enter such setoff on its books and records at a later time.
9. Indemnification and Limitation of Liability.
A. Merchant shall indemnify and hold harmless Bank, and its directors, officers, employees, affiliates, and agents from and against all proceedings, claims, demands, losses, liabilities, damages and expenses (including but not limited to, any fines, fees, assessments, audit fees, card replacement cost, or penalties levied against Bank by Visa, MasterCard, Discover, any Card issuer, or any Other Network, and attorneys’ and collection fees and expenses) resulting from or otherwise arising out of (i) the Services in this Agreement, (ii) any breach of any term or condition of this Agreement, (iii) any misrepresentation by Merchant herein under this Agreement, (iv) Merchant’s or Merchant’s employees and agents acts or omissions in connection with the services provided pursuant to this Agreement, (v) Merchant’s processing activities and provision of goods and services to Cardholders, (vi) any violation of the Operating Regulations, or the Laws, (vii) any guarantees provided by Bank to any third party for the benefit of Merchant, including without limitation any lease guarantees, (viii) any chargebacks, reversals, unauthorized transactions or any rights exercised by Cardholder in connection with a transaction processed by Bank; (ix) any fines, penalties or fees assessed by a regulatory authority or Card Network in connection with Merchant’s use of the Services; or (x) any infiltration, hack, breach, or violation of the processing system resulting from, arising out of, or in any way related to Merchant’s ability to use of the services provided herein including but not limited to Merchant’s use of an Agent or any other third party processor or system, or Merchant’s ability to connect to the Internet or an external network. This indemnification shall survive the termination of the Agreement.
B. EXCEPT FOR THOSE EXPRESS WARRANTIES MADE IN THIS AGREEMENT, BANK DISCLAIMS ALL WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. MERCHANT hereby Acknowledges that there are risks associated with the acceptance of cards, and Merchant assumes all such risks except as may be expressly set forth herein. Bank shall not be liable for lost profits, lost business or any incidental, special, consequential or punitive damages (whether or not arising out of circumstances known or foreseeable by Bank) suffered by Merchant, its customers, or any third party in connection with the services provided hereunder, even if Bank has been informed of the possibility of such losses or damages. In no event shall Bank be liable for any damages or losses that are wholly or partially caused by Merchant, or Merchant’s employees or agents. In no event shall Bank be liable for any damages or losses that Merchant may sustain as a result of Bank’s exercise of any post-default rights or remedies authorized under Section 7.B. above, so long as Bank, at the time of exercising such rights or remedies, has a good faith reasonable basis to believe that an Event of Default has occurred and is continuing. Bank’s liability related to or arising out of this Agreement shall in no event exceed fees paid to Bank for the particular services in question for the calendar month immediately preceding the date on which any act or omission of Bank for which Merchant alleges liability on the part of Bank. The parties acknowledge that the limitations set forth in this section are integral to the amount of fees charged by Bank for the services provided hereunder, and recognize that if Bank were to assume any further liability beyond that set forth in this section, such fees would be substantially higher. Except as otherwise set forth in this Section 9, Merchant’s exclusive remedy for any and all claims against Bank arising out of or in any way related to the transactions contemplated herein shall be termination of this Agreement. Bank shall not be deemed to be in default under this Agreement or liable for any delay or loss in the performance, failure to perform, or interruption of any Services resulting, directly or indirectly, from errors in data provided by Merchant or others, or any event beyond Bank’s reasonable control including but not limited to international, domestic, or economic terrorism.
C. Except for an action related to Merchant’s failure to pay any amount due hereunder, no cause of action shall be brought by either party more than one (1) year after the cause of action accrued.
D. Merchant represents and warrants to Bank that all information in this Agreement is true, accurate, correct, and complete. Merchant shall immediately notify Bank in writing of any changes to the information in the Agreement, including but not limited to: any additional location or new business, the identity of principals and/or owners, the form of business organization (i.e., sole proprietorship, partnership, etc.), type of goods and services provided, and how sales are completed (i.e., by telephone, mail, or in person at your place of business). Merchant shall provide updated information to Bank within a reasonable time upon request. Merchant shall indemnify, hold harmless, and reimburse Bank for any and all losses and expenses incurred by Bank arising out of a failure to comply with this paragraph. Bank retains the right to review Merchant’s processing activity for conformance to the information provided and to re-price or terminate any services provided to reflect any nonconformance.
Merchant acknowledges that Bank will be providing Merchant with certain confidential information, including but not limited to, this Agreement and information relating to the methods, techniques, programs, devices and operations of Bank and/or or any Card Network (collectively “Confidential Information”). Merchant shall not disclose Confidential Information to any person or entity (other than to those employees and agents of Merchant who participate directly in the performance of this Agreement and need access to such information) and may not use such Confidential Information except in connection with the receipt of Services pursuant to the terms of this Agreement. Without limiting the foregoing, Merchant agrees that it will fully comply with any and all confidentiality and security requirements of the Laws, and the Operating Regulations, including, but not limited to, the Visa Cardholder Information Security Program (“CISP”) and any similar program requirement of any Card Network. Merchant acknowledges receipt of the Privacy Notice, prior to the opening of this account (“Privacy Notice”) and agrees to the terms of the Privacy Notice. Merchant should direct any questions or requests for another copy of the Privacy notice to Customer Service or its primary relationship manager if applicable. Notwithstanding anything to the contrary in the Notice or this Agreement, Bank may share any information provided by Merchant and/or relevant to the Services received by Merchant: (a) with Merchant’s franchisor, Merchant’s franchisee(s), association(s) to which Merchant belongs and/or belonged as of the commencement of this Agreement, (b) any affiliate of Merchant; (c) in response to subpoenas, warrants, court orders or other legal processes; (d) in response to requests from law enforcement agencies or government entities; (e) to comply with applicable laws or regulations; and/or (f) as necessary to provide the Services contemplated Merchant agrees that Bank may include Merchant’s name and/or logo on a list of Bank’s customers, which may be made public by Bank.
CONTINUING UNLIMITED GUARANTY. The provisions contained in Section 11 through 17 below (collectively, “Continuing Unlimited Guaranty”) apply to each person who signs this Agreement as a guarantor (each such person, a “Guarantor”).
11. For the purpose of inducing Bank to provide to Merchant the Services contemplated in the preceding provisions of this Agreement, each Guarantor jointly and severally, hereby absolutely and unconditionally guarantees the prompt and full payment to Bank when due, whether by acceleration or otherwise, of all Obligations, as defined below.
12. The word “Obligations” is used in its most comprehensive sense and includes, without limitation, all indebtedness, debts and liabilities (including principal, interest, late charges, collection costs, attorneys’ fees and the like) of Merchant to Bank, either created by Merchant alone or together with another or others, primary or secondary, secured or unsecured, absolute or contingent, liquidated or unliquidated, direct or indirect, whether evidenced by note, draft, agreements of guaranty or otherwise, whether now existing or hereinafter arising, and any and all renewals of, extensions of or substitutes therefor. The word “Obligations” shall include, but not be limited to, all obligations of payment, obligations of indemnification, and indebtedness owed by Merchant to Bank arising from or related to the transactions or services contemplated in this Agreement and all performance obligations of Merchant under this Agreement.
13. Guarantor hereby promises that if one or more of the Obligations are not paid promptly when due or performed when required, Guarantor will, upon request of Bank, pay the Obligations to Bank, irrespective of any action or lack of action on Bank’s part in connection with the acquisition, perfection, possession, enforcement, or disposition of any or all Obligations or any or all security therefor or otherwise, and further irrespective of any invalidity in any or all Obligations, the unenforceability thereof or the insufficiency, invalidity, or unenforceability of any security therefor. Guarantor’s obligations hereunder shall not be affected, modified, or impaired by any counterclaim, set-off, deduction, or defense based upon any claim the Guarantor may have against Merchant or Bank, except payment or performance of the Obligations.
14. Guarantor waives notice of any and all acceptances of this Continuing Unlimited Guaranty. Guarantor waives presentment, demand, protest, notice of protest, and notice of dishonor or other nonpayment of any and all Obligations and further waives notice of sale or other disposition of any collateral or security now held or hereafter acquired by Bank. Guarantor agrees that no extension of time, whether one or more, nor any other indulgence granted by Bank to Merchant, or to Guarantor, or any of them, and no omission or delay on Bank’s part in exercising any right against, or in taking any action to collect from or pursue Bank’s remedies against Merchant or Guarantor, or any of them, will release, discharge or modify the duties of Guarantor. Guarantor agrees that Bank may, without notice to or further consent from Guarantor, release or modify any collateral, security, or other guaranties, and no such action will release, discharge, or modify the duties of Guarantor hereunder. This is a guaranty of payment and not of collection, and Bank shall not be required or obligated, as a condition of the Guarantor’s liability, to make any demand upon or to pursue any of its rights against Merchant, or to pursue any rights which may be available to it with respect to any other person who may be liable for the payment of the Obligations, or to pursue, exhaust or preserve any of its rights or remedies with respect to any collateral, security or other guaranties given to secure the Obligations, or to take any action of any sort, prior to demanding payment from or pursuing its remedies against Guarantor. Guarantor hereby waives all defenses based upon suretyship or impairment of collateral. After any default hereunder, Bank may apply and/or set off against amounts due it hereunder any deposits, account balances or other credits of Guarantor in the possession of or in transit to Bank, and Guarantor hereby grants Bank a security interest in all of the foregoing.
15. The obligations of the Guarantor hereunder, if more than one, shall be joint and several. This Continuing Unlimited Guaranty is secured by the property described in any collateral security documents that the Guarantor executes and delivers to Bank and by such other collateral as previously may have been or may in the future be granted to Bank to secure any obligations of the Guarantor to Bank. This Continuing Unlimited Guaranty shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, transferees and assignees. Each Guarantor expressly authorizes (i) Bank to collect any amounts that are at any time due and owing from Guarantor to Bank under this Continuing Unlimited Guaranty by debiting any checking, savings or other deposit account that Guarantor at any time maintains with Bank or with any affiliate of Bank (any such account, a “Guarantor Account”) and (ii) any affiliate of Bank to collect any amounts that are at any time due and owing from Grantor to such affiliate by debiting any Guarantor Account.
16. This Continuing Unlimited Guaranty shall be interpreted and construed in accordance with and governed by the laws of the State of New York. Guarantor agrees that any legal suit, action or proceeding arising out of or relating to this Continuing Unlimited Guaranty may be instituted in a state or federal court of appropriate subject matter jurisdiction in the State of New York; waives any objection which he may have now or hereafter to the venue of any such suit, action or proceeding; and irrevocably submits to the jurisdiction of any such court in any such suit, action or proceeding; provided, however, that nothing contained herein shall prevent Bank from bringing any action or exercising any rights under this Continuing Unlimited Guaranty within any other state or country. Guarantor agrees that service of process may be made, and personal jurisdiction over Guarantor obtained, by serving a copy of the Summons and Complaint upon Guarantor at its address set forth in the Agreement in accordance with the applicable laws of the State of New York.
17. GUARANTOR HEREBY WAIVES THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS CONTINUING UNLIMITED GUARANTY.
18. Prohibited and High Risk Transactions.
IMPORTANT: FAILURE TO COMPLY IN FULL WITH THE TERMS OF THIS AGREEMENT MAY RESULT IN THE MERCHANT BEING ADDED TO THE CONSOLIDATED TERMINATED MERCHANT FILE (MATCH) AND MERCHANT EXPRESSLY ACKNOWLEDGES AND AGREES THAT PROCESSOR AND/OR BANK MAY ADD MERCHANT TO THE MATCH LIST.
A- Fraud Transactions. Merchant will not, under any circumstances, present for processing, directly or indirectly, any transaction Merchant knows or should know to be fraudulent or not authorized by the Cardholder. Merchant must not request or use a Card for any purpose other than as payment for goods and services.
B- Factoring/Transaction Laundering. Merchant will not, under any circumstances, process for, or present for processing, directly or indirectly, any transaction not originated as a result of a bona-fide Card transaction directly between Merchant and Cardholder. Merchant will not present any sales drafts on behalf of another website, online merchant, company, person, source or entity. Failing to adhere to this will result in immediate termination, legal action or levying of fines as determined by the Card Networks.
C- Lawful Purposes. Merchant will not, under any circumstance, engage in any transaction, or use Card acceptance and transaction capabilities for selling goods and/or providing services prohibited by local, hyper-local, state, federal, international and other Laws included, but not limited to, the USA PATRIOT Act, Bank Secrecy Act, consumer protection laws and the U.S. Tax Code. Merchant will not submit any transactions prohibited by any Operating Regulations. Perpetrators of fraud or fraudulent transactions may be referred to state and/or federal law enforcement agencies.
D- Cash Payments. Merchant will not, under any circumstances accept cash, checks or other negotiable items from any Cardholder and forward a transaction in connection with the Services, as a purported payment or deposit to an account maintained by the Cardholder.
E- Cash Advances. Merchant will not submit, deposit or process any transaction for the purpose of obtaining or providing a cash advance. Merchant will not submit any transaction that involves a Card owned or controlled by Merchant for the purpose of obtaining a cash advance or deposit of funds into Merchant’s own Designated Account.
F- Refinancing Existing Debt. Merchant will not accept a Card to collect or refinance an existing debt that: (i) has been deemed uncollectible by Merchant providing the associated goods or services; (ii) represents any other pre-existing indebtedness by Cardholder, including collection of delinquent accounts on behalf of other parties; or (iii) represents the collection of a dishonored check. Further, Merchant must not accept Cardholder payments for previous Card charges.
G- Operating Regulations. Merchant shall comply with the Operating Regulations, as amended from time to time. Merchant is required to review the latest versions of Operating Regulations, as applicable to Merchant’s obligations under this Agreement.
H- Merchant will fully cooperate with Bank and each Card Network in the event that Bank or any Card Network determines that there is a substantial risk of fraud arising from Merchant’s access to Card processing networks or Services provided under this Agreement. Merchant will take whatever action(s) Bank or any Card Network reasonably deem necessary in order to protect Bank, such Card Network, its members and Cardholders. Neither Bank nor any Card Network and any of their respective personnel will have any liability to Merchant for any action taken in good faith.
I- Prohibited Transactions. Merchant will not submit any telemarketing (inbound or outbound) sales transactions or any other transactions using the Services that Bank or any Card Network deems to be high risk, unless Merchant obtains Bank’s prior written consent. Such consent will be subject to Bank’s final approval and may be revoked by Bank without prior notice. Merchant may be subject to Card Network registration and reporting requirements. If Merchant processes any such transactions without Bank’s prior approval, Merchant may be terminated immediately and Bank may suspend funds and/or require Merchant to establish a Reserve Account. Merchant acknowledges and agrees that Bank may modify or add to the list of prohibited transactions, and Merchant shall comply with any prohibitions related to submitting transactions to Bank that Bank provides to Merchant from time to time.
J- Service Provider may terminate this Agreement in the event Merchant violates any terms or conditions set forth in this Section 18.
MISCELLANEOUS TERMS AND CONDITIONS. The following terms and conditions shall also apply.
A- All notices, requests, demands and other communications to be delivered by Merchant hereunder—unless otherwise specified— shall be in writing and shall be delivered to Bank via certified mail, postage prepaid or reputable overnight courier to Bank at the following address: Community Federal Savings Bank, Attention: Director, Card Services, 5 Pennsylvania Plaza, 14th Floor, New York, NY 10001. Notices so delivered shall be deemed given upon Bank’s actual receipt thereof.
B- All notices, requests, demands and other communications to be delivered by Bank hereunder—unless otherwise specified— shall be in writing and shall be delivered to Merchant via facsimile, ordinary mail, certified mail, reports, or reputable overnight courier. Notices, so delivered shall be deemed given: (i) for facsimile when transmission confirmation is obtained, (ii) for ordinary mail and certified mail, on the fifth calendar day following mailing, (iii) for reports when transmitted by Bank, and (iv) for reputable overnight courier, on the first business day following submission to the courier.
20. Requirements Contract.
This Agreement is a “requirements contract” which means that Bank shall be Merchant’s exclusive provider for all services contemplated herein. Prior to any Merchant termination or non-renewal, Merchant warrants that before entering into any agreement with any third party for the services provided contemplated herein, Bank shall have the right of first refusal of entering into agreements with Merchant for all such services under the substantially similar terms and conditions (except for the length of the term) in lieu of Merchant entering into such agreement with a third party. In the event Merchant fails or refuses to abide by the provisions of this paragraph, Merchant shall pay to Bank on demand an amount equal to five (5) times the revenues received by Bank in connection with its processing services hereunder for the one (1) full year period prior to termination or non-renewal. Merchant acknowledges that this provision does not constitute a penalty, but is reasonable compensation to Bank for Merchant’s failure to comply with this provision.
21. Bank Affiliate Accounts/Account Debiting Authorization.
In addition to any other rights or remedies that may be available to Bank or any of its affiliates, by entering into this Agreement, Merchant expressly authorizes (i) Bank to collect any amounts that are at any time due and owing from Merchant to Bank under this Agreement by debiting any checking, savings or other deposit account that Merchant at any time maintains in any affiliate of Bank (any such account, a “Bank Affiliate Account”) and (ii) any affiliate of Bank to collect any amounts that are at any time due and owing from Merchant to such affiliate by debiting any Bank Affiliate Account or any checking, savings or other deposit account that Merchant maintains with Bank.
Bank may amend this Agreement. Bank will inform Merchant of a proposed change in a periodic statement or other notification method pursuant to the notification section of this Agreement. Merchant will be deemed to have agreed to any such amendment if Merchant continues to present transactions to Bank after five (5) days following receipt (deemed or actual) of the notice. Notwithstanding the previous sentence, changes to fees authorized by this Agreement will be effective immediately upon notice to Merchant (deemed or actual), unless a later effective date is provided.
This Agreement may be assigned by Bank, but may not be assigned by Merchant directly or by operation of law, without the prior written consent of Bank. For the avoidance of doubt, a change in the control of any voting shares of Merchant shall constitute an assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, transferees and assignees.
24. Independent Contractors.
Bank and Merchant will be deemed independent contractors and none will be considered an agent, joint venturer or partner of the other.
25. No Third-Party Beneficiary.
This Agreement is for the benefit of, and may be enforced only by, Bank and Merchant and their respective successors and permitted transferees and assignees, and is not for the benefit of, and may not be enforced by, any third party.
26. Credit Inquiries and Financial Examination and Inspections.
Merchant authorizes Bank to make credit inquiries considered necessary in order to review the acceptance and continuation of this Agreement. This authority is granted to Bank at any time during which Merchant owes any obligation, or the services remain in place, to Bank and may survive the term of the Agreement. Such inquiries shall include, but are not limited to, a credit check of the business including its proprietor, principal owners or officers. If requested to do so by Bank, Merchant shall provide written consent of any individual for which an inquiry has been or is to be made if such individual did not execute this Agreement. Merchant, its principal owner(s) and guarantor(s) acknowledge that Bank is required by Law (Section 326, USA PATRIOT Act of 2001) to inquire with the Office of Foreign Asset Control (OFAC) of the U.S. Treasury Department if Merchant, its principal owner(s), proprietor(s), officer(s) or Guarantor(s) are present on any lists maintained by OFAC prior to accepting Merchant. Merchant agrees to permit Bank to occasionally inspect locations to confirm that Merchant has or is adhering to the terms of this Agreement and is maintaining the proper facilities, equipment, inventory, records and license or permit(s) (where necessary) to conduct its business. However, nothing in this paragraph shall be interpreted as a waiver of Merchant’s obligation to comply in all respects with the terms of this Agreement. Merchant authorizes Bank to audit Merchant’s records, systems, processes or procedures to confirm compliance with this Agreement, as amended from time to time. If Merchant processes dollar volumes in excess of $100,000 in any month, Merchant shall cooperate with Bank in performing annual financial reviews by presenting up-to-date financial statements, tax returns and bank statements in order to assure Bank that Merchant maintains a favorable capital position, liquidity, stability, business practices and general financial condition to fulfill the responsibilities tied to high volume Card processing.
27. Employee and Agent Actions.
Merchant is responsible for the acts or omissions of its employees and agents including but not limited to such acts or omissions as such relate to the use of the services provided by Bank herein.
The failure of Bank to object to or take any affirmative action with respect to any conduct by Merchant which is in violation, breach or default of the terms hereof, shall not be construed as a waiver thereof, nor of any future breach or subsequent violation, breach or default.
If any provision of this Agreement is determined to be illegal or invalid, such illegality or invalidity of that provision will not affect any of the remaining provisions and this Agreement will be reasonably construed as if such provision is not contained in the Agreement.
30. Right to Receive Payment.
Bank shall have the sole right to receive payment on sales transactions acquired by Bank and Merchant agrees not to sue or to make any collections thereon except as may be specifically authorized by Bank in writing or until such sales transaction is reacquired by, or charged back to Merchant.
31. Governing Law, JURY WAIVER, JURISDICTION. This Agreement is entered into, governed by, and construed pursuant to the laws of the State of New York without regard to conflicts of law provisions. Merchant irrevocably agrees to all of the following: (i) that any legal suit, action or proceeding arising out of, in any way relating to this Agreement, or pertaining in any way to the relationship between Merchant and Bank shall be exclusively instituted in a state or federal court of appropriate subject matter jurisdiction in New York, NY; (ii) a waiver all rights to a trial by jury; and (iii) a waiver of any objection which Merchant may have now or hereafter to the venue of any such suit, action or proceeding; and irrevocably submits to the jurisdiction of any such court in any such suit, action or proceeding. Notwithstanding the foregoing, nothing contained herein shall prevent Bank from bringing any action or exercising any rights under this Agreement within any other state or country. Merchant irrevocably agrees that service of process may be made, and personal jurisdiction over Merchant obtained, by serving a copy of the Summons and Complaint upon Merchant at its address set forth in this Agreement in accordance with the applicable laws of the State of New York.
32. Headings and Construction.
The headings used in this Agreement are inserted for convenience only and will not affect the interpretation of any provision. The language used will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party.
33. Attorney’s Fees.
Merchant will be liable for and will indemnify and reimburse Bank for all attorney’s fees and other costs and expenses paid or incurred by Bank in the enforcement of this Agreement, or in collecting any amounts due from Merchant to Bank, or resulting from any breach by Merchant of this Agreement including but not limited to in-house counsel fees (billed at $250 per hour) or fees paid to third-parties for collections activities.
Any and all provisions of this Agreement that impose or could be construed to impose a continuing obligation, duty, or requirement upon Merchant including but not limited to duties of indemnification and/or account maintenance shall survive the expiration or termination, for any reason, of the Agreement.
35. Other Networks.
Merchant’s election to receive Services from any Other Network may require the execution of an agreement (an “Other Merchant Agreement”) between an Other Network and Merchant. The parties acknowledge and agree that Other Merchant Agreement with any Other Network shall be deemed separate and independent agreements solely between such Other Network and Merchant, and that Bank shall not be responsible for any Other Network of Merchant breach of such Other Merchant Agreements. Bank bears no liability whatsoever for terms and conditions of Other Merchant Agreements and Bank’s liability for Services subject to an Other Merchant Agreement shall be limited both (i) as otherwise provided herein, and (ii) Services actually provided by Bank. Bank may, in its sole discretion, cease to provide any Services for Other Networks. If Merchant for any reason begins receiving any Services in connection with any Other Network, Bank may route Other Network transactions according to its standards and at its sole discretion. Merchant agrees that it has or will, prior to commencing participation in each Other Network, obtain all necessary approvals and execute any applications and/or agreements necessary for, required by or affecting Merchant’s participation in such Other Network(s). In addition, Merchant shall obtain such other approvals or execute such other documents as may be required from time to time in connection with Merchant’s participation in such Other Networks. Merchant agrees to participate in Other Network(s) in compliance with, and subject to, the Operating Regulations. Merchant agrees to pay all fees, fines, assessments and penalties as they are currently in effect or may be changed from time to time, imposed by the Other Network(s), whether billed directly to Merchant by such Other Network(s) or through Bank or its affiliates or agents. Bank may allocate any such fees, fines, assessments or penalties in such manner as it deems advisable in its sole discretion. Merchant attests that all POS terminals are operating with unique keys as mandated by Other Networks.