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PRELIMINARY MATTERS Parties to Agreement:
Merchant and Guarantor(s), as applicable, have completed and submitted to IMS and Bank an application for services that provides information about Merchant’s business and processing needs (the “Merchant Application”). As part of the Merchant Application, Merchant and Guarantor(s) have certified that they have read, understand and agree that the terms of this Agreement (the “Agreement”) will be binding upon them when and if IMS and Bank approve Merchant’s application to receive requested services. ARTICLE I. GENERAL PROVISIONS. The General Provisions set out in Article I govern the relationship between IMS, Bank and Merchant for all services provided by IMS. The subsequent sections of the Agreement define the terms of service for different IMS service offerings and shall apply to Merchant at such time that the Merchant commences receiving such services. From time to time IMS may offer bundled services as part of a branded offering. The Agreement sections applicable to such branded service offerings are set forth on Exhibit A. All Capitalized Terms not defined within the body of the Agreement have the meanings set forth on Exhibit B to this Agreement. 1.01 Compliance with Rules and IMS Guidelines. Merchant agrees to comply with and be subject to all rules, regulations and guidelines of MasterCard International, Inc., (“MasterCard”), Visa U.S.A., Inc. (“VISA”), JCB, International (“JCB”), Discover® Network (“Discover Network”), American Express (“AMEX”) and NACHA, as they may exist from time to time and as applicable to Merchant’s activities under the Agreement. Merchant also agrees to comply with all guidelines, policies and procedures for services provided to Merchant by IMS from time to time. Additional information and links to locations where Merchant can see or obtain copies of the rules are located at http://www.innovativemerchant.com/support/agreement/index.php. 1.02 Enforcement of Bank Rights by IMS. To the maximum degree permitted by law and by the rules and regulations of MasterCard, VISA, JCB, Discover Network, and NACHA, it is the intention of the parties that the rights of Bank set forth in this Agreement or arising from this Agreement, may be exercised by IMS. 1.03 Warranties of Merchant. Merchant hereby represents and warrants to IMS and Bank at the time of submission of the Merchant Application and during the term of this Agreement that: (a) All information contained in the Merchant Application or any other documents delivered to IMS and/or its Bank in connection therewith is true and complete and accurately reflects Merchant’s business, financial condition and principal partners, owners or officers. (b) Merchant is duly organized and in good standing under the laws of the jurisdiction of its organization, and is duly qualified to conduct business in each jurisdiction where failure to do so would have a material adverse effect on the business. (c) Merchant has the power to execute, deliver and perform this Agreement, and this Agreement is duly authorized, constitutes a valid and binding obligation of Merchant and will not violate any provisions of law, or conflict with any other agreement to which Merchant is subject. (d) Merchant has all licenses, if any, required to conduct its business and is qualified to do business in every jurisdiction where it is required to do so. (e) There is no action, suit or proceeding at law or in equity now pending or to Merchant’s knowledge, threatened by or against or affecting Merchant which would substantially impair its right to carry on its business as now conducted or adversely affect its financial condition or operations. (f) Unless Merchant notifies IMS in writing and is approved (either on the Merchant Application or otherwise) and is approved by IMS, no other processing relationship for any of the services offered by IMS under this Agreement may exist between Merchant and another Card processing institution, for any business run or owned by Merchant. 1.04 Notifications Regarding Changes in Merchant’s Business or Application Information. (a) Merchant must provide IMS and its Bank with immediate notice of its intent to: (i) transfer or sell any substantial part of its total assets, or liquidate; (ii) change the basic nature of its business, including selling any products or services not related to its current business; (iii) change ownership or transfer control of its business; (iv) enter into any joint venture, partnership or similar business arrangement whereby any person or entity not a party to this Agreement assumes any interest in Merchant’s business; or (v) alter in any way Merchant’s approved monthly volume and average ticket. (b) Merchant must immediately notify IMS of any Bankruptcy, receivership, insolvency, levy or similar action initiated by or against Merchant or any of its principals. Merchant will include IMS and/or its Bank on the list of creditors filed with the Bankruptcy Court, whether or not a claim exists at the time of filing. (c) Merchant must notify IMS in writing of any changes to the information in the Merchant Application, including but not limited to a material change to Merchant’s financial condition (within three days of such occurrence), any additional location or new business, a change in the business location or contact information, both physical and email addresses, the identity of principals and/or owners, the form of business organization, type of goods and services provided, and how sales are completed. Merchant must also notify IMS in writing if Merchant sells or closes its business. Except for a change to the financial condition, all such notices must be received by IMS seven days before the change. Merchant will also provide updated information to IMS upon request. (d) Merchant must immediately notify IMS in writing if Merchant is threatened with or becomes party to any action, suit or proceeding at law or in equity that could substantially impair its right to carry on its business or adversely affect its financial condition or operations. (e) Merchant must provide separate notification regarding changes to service providers used by Merchant in connection with IMS-provided services, including but not limited to American Express, and equipment leasing companies. 1.05 Credit and Financial Inquiries: Additional Locations: Inspections. (a) Merchant authorizes Bank and IMS to make, at any time during which Merchant owes any obligation to IMS and/or Bank, any credit inquiries which, in their discretion, may be necessary or prudent. 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 or IMS, Merchant shall provide the written consent of any person for which an inquiry has been or is to be made if such person has not executed this Agreement and will provide any financial statements, income tax and business tax returns and other financial information as Bank or IMS may consider necessary to perform initial or periodic reviews of Merchant’s financial stability and business practices. (b) Merchant agrees to permit Bank or IMS at any time from time to time, to inspect locations to confirm that Merchant has adhered or is adhering to the terms of this Agreement and is maintaining the proper facilities, equipment, inventory, records and licenses or permits (where necessary) to conduct its business. However, nothing in this paragraph shall be deemed to waive Merchant’s obligation to comply in all respects with the terms of this Agreement. (c) Merchant may process transactions only at locations and websites approved by IMS. Additional locations may be added, subject to IMS’ approval. Either Merchant or IMS may delete any location by providing notice as provided in this Agreement. (d) Representatives of IMS and/or its Bank may, during normal business hours, inspect, audit and make copies of Merchant’s books, accounts, records and files pertaining to any payment transactions processed by IMS. 1.06 Guarantor Notifications and Authorizations. The decision of IMS to enter into and continue processing payment transactions for Merchant is based on the financial condition of Guarantor and the ability of Guarantor to guarantee Merchant’s obligations. Accordingly, Guarantor must provide IMS with information regarding changes in his or her contact information and financial circumstances. Guarantor agrees to take the actions required under Section 1.04(b) through (e). Guarantor also authorizes IMS to make ongoing inquiries about Guarantor as detailed in Section 1.5. For purposes of understanding Guarantors obligations and authorizations under this Section, Guarantor will apply the provisions of Section 1.04 and 1.05 to Guarantor by substituting the term Guarantor in place of Merchant where it appears in such sections. (a) Merchant will establish and maintain an Account at a depository institution approved by IMS and/or Bank. Merchant will maintain sufficient funds in the Account to satisfy all obligations, including the fees, Chargebacks and Returns contemplated by this Agreement. Merchant irrevocably authorizes IMS and/or its Bank to debit the Account for fees, Chargebacks, Returns, fines and any other penalties or amounts owed under this Agreement. In the event the Account lacks sufficient funds Merchant and Guarantors authorize IMS and/or Bank, without notice, to debit any bank account in their name(s) or the name of any affiliated entity. Merchant must obtain prior consent from IMS and/or its Bank to change the Account. If Merchant does not obtain such consent, IMS and/or its Bank may immediately terminate this Agreement and may take other action necessary to protect their interests. (b) IMS and/or its Bank will settle all transactions to the Account subject to the terms of this Agreement. Merchant authorizes IMS and/or its Bank to initiate reversal or adjustment entries and initiate or suspend such entries as may be necessary to grant Merchant conditional credit for any entry. (c) IMS or Bank, in its sole discretion shall grant Merchant provisional credit for Transaction amounts, subject to receipt of final payment by IMS and/or its Bank and subject to all Chargebacks and other amounts owed to IMS and/or its Bank under this Agreement. (d) Merchant will promptly examine all merchant statements relating to the Account and immediately notify IMS and/or its Bank in writing of any errors. Merchant’s written notice must include: (i) Merchant name and Account number, (ii) the dollar amount of the asserted error, (iii) a description of the asserted error, and an explanation of why Merchant believes an error exists and the cause of it, if known. That written notice must be received by IMS within 30 days after Merchant received the periodic statement containing the asserted error. Merchant may not make any claim against IMS and/or its Bank for any loss or expense relating to any asserted error for 60 days immediately following receipt of Merchant’s written notice. During that 60 day period, IMS and/or its Bank will be entitled to investigate the asserted error and Merchant will not incur any cost or expense in connection with the asserted error without notifying IMS. (e) Merchant authorizes IMS and/or Bank to initiate debit/credit entries to the Account, as the Account may be changed from time to time and to any other account maintained by Merchant at any institution that is a receiving Bank of ACH, all in accordance with this Agreement. In the event Merchant changes the Account, this authorization will apply to the new Account. This authorization will be effective until both: (i) IMS has received written notification from Merchant terminating this authorization, and (ii) all obligations of Merchant to IMS and/or Bank have been paid in full. Merchant will provide to IMS and its Bank a voided Account check and will fill in the Account numbers on the Merchant’s ACH Business Application. (f) If the Account is closed or is otherwise unavailable to IMS and/or Bank for ACH debit, Merchant and/or Guarantors consent to IMS locating additional deposit accounts or assets by using any means legally available. In this event Merchant and/or Guarantors waive all rights to their privacy in favor of IMS and/or Bank until such time as all unpaid Chargebacks and fees owed to IMS and/or Bank have been paid in full. 1.08 Reserve Account, In addition to any other rights granted to IMS and/or Bank under this Agreement, Merchant hereby authorizes IMS and/or Bank to establish a Reserve Account, with or without prior notice to Merchant, at any time prior to, or after termination of this Agreement, to ensure the recovery of any liabilities owed them or reasonably anticipated by IMS and/or Bank in their sole discretion to be owed by Merchant pursuant to this Agreement. IMS or Bank may also require as a condition of providing continued Services, that Merchant fund and maintain an interest bearing account with Bank (hereinafter called “Bank Reserve Account”) as security against any costs, losses or expenses incurred by Bank or IMS in connection with the provision of Services to Merchant. Merchant’s obligation to maintain such Bank Reserve Account shall survive the termination of this Agreement by a period of 270 days (or longer depending on Merchant’s product and business practices) during which time Bank’s or IMS’ security interest shall continue. Unless the context clearly indicates otherwise, all references in this Agreement to “Reserve Account” apply to both the “Reserve Account” and “Bank Reserve Account.” In addition Merchant further agrees: (a) Liabilities to be paid from the Reserve Account include, but are not limited to those arising out of actual and/or potential post termination Chargebacks, as well as any and all post-termination fees, charges and expenses due or anticipated to be due IMS and/or Bank from Merchant. (b) The Reserve Account shall be in such amount IMS and/or Bank deem reasonable under the circumstances. The Reserve Account may be funded and/or replenished by IMS and/or Bank by withholding or withdrawing from, or freezing all or any part of, the Account and/or any other deposit accounts maintained by Merchant and/or Guarantor at any Bank wherever found by any means available. Unless IMS and/or Bank agree(s) otherwise in writing with Merchant, the Reserve Account shall not bear interest. (c) IMS and/or Bank may enforce its security interest in the Reserve Account without notice or demand being first made to Merchant. IMS’ and/or Banks right to sums owed it by Merchant pursuant to this Agreement, shall in no way be limited by the balance or existence of the Reserve Account. IMS’ rights with respect to the Reserve Account, as well as the security interest granted IMS and/or Bank under this Agreement, shall survive the termination of this Agreement. (d) IMS and/or Bank may exercise their rights under this Agreement to collect any amounts due to IMS and/or Bank including, without limitation, rights of set-off and recoupment. Merchant shall have no right to withdraw funds or debit the Reserve Account. (e) It is stipulated and agreed that the funds placed in the Account, or the Reserve Account are trust fund monies held and “earmarked” for the benefit of IMS and/or Bank as that term has been defined by case law as applied within the United States Bankruptcy Courts. In the event of Bankruptcy proceedings IMS and/or Bank may exercise their rights under this Agreement to debit the Account or the Reserve Account for amounts due IMS and/or Bank regardless of the pre-petition or post petition nature of the amount due IMS and/or Bank. In the event of a Bankruptcy proceeding Merchant also agrees that it will not contest any Motion For Relief From the Automatic Stay which IMS and/or Bank may file to debit the Account and/or Reserve Account. (f) IMS and/or Bank may retain funds in the Reserve Account for as long as Merchant may be liable to make payments under the Agreement. Funds are typically retained in the Reserve Account for a minimum of 270 days from the date of the oldest transaction in question or the date of termination, whichever is longer, and may be retained longer depending on the nature of the Merchant’s transaction activity. IMS and/or Bank will have sole control of the Reserve Account. In the event of a Bankruptcy proceeding IMS and/or Bank do not consent to the assumption of this Agreement. Nevertheless if this Agreement is assumed Merchant agrees that in order to establish assurance of future performance within the meaning of 11 U.S.C. Sec 365, as amended from time to time, Merchant must establish a Reserve Account in an amount satisfactory to IMS and/or Bank. 1.09 Recoupment and Set-Off. IMS and/or Bank have the right of recoupment and set-off. This means that they may offset any outstanding/uncollected amounts owed to them from: (i) any amounts they would otherwise be obligated to deposit into the Account, and (ii) any other amounts merchant may owe Bank and/or IMS under this Agreement or any reporting, or any other agreement. 1.10 Security Interest. To secure Merchant’s performance under this Agreement, including without limitation Merchant’s obligations arising out of Chargebacks or Returns, Merchant hereby grants pursuant to the California Uniform Commercial Code, to IMS and Bank a security interest in Merchant’s electronic terminal, printer, imprinter and imprinter plate. Further, Merchant and/or Guarantor(s) grants to IMS and/or Bank, a security interest in all Sales Drafts, ACH deposits, credit drafts, and in all deposit accounts and Reserve Accounts, regardless of source, wherever found, standing in the name of Merchant and/or Guarantor’(s), including any affiliated companies of Merchant and/or Guarantor, whether established or designated and maintained pursuant to this Agreement or not, as well as in the proceeds of those deposits. In the event of Merchant’s default in payment of Chargebacks or Returns, Merchant and Guarantor(s) stipulate: (i) that all personal Bank accounts standing in their names shall be subject to this Agreement and ACH debit, and (ii) all ACH debits, whether made against Merchant’s Account or a Guarantor’s personal account shall bear a commercial account code designation (CCD) for purposes of electronic collection via the ACH system, and (iii) Merchant and/or Guarantor irrevocably consent to IMS and/or Bank’s using any means available to locate such deposit accounts until such time as all amounts due have been paid. IMS and/or Bank may enforce this security interest as applicable by: (a) Making an immediate debit/charge via the ACH system to any deposit account standing in the name or names of Merchant and/or Guarantor(s), without notice or demand of any kind; and/or interrupting the electronic transmission of funds to any account through the Automated Clearing House (ACH) system; (b) Freezing the entire Account, without notice or demand of any kind, upon IMS and/or Bank’s and IMS’ determination that Merchant has breached any term of this Agreement; (c) Taking possession of any or all of Merchant’s Sales Drafts, verification and confirmation of Transactions; (d) Taking possession of any and/or all of Merchant’s electronic terminals, printers, imprinters and imprinter plates. (e) By placing a receiver within Merchant’s place of business without notice or bond to intercept and collect all income derived from Merchant’s operations until such time as any indebtedness owed to IMS and/or Bank arising under this Agreement has been satisfied in full; (f) By obtaining either a writ of attachment or a writ of possession without bond pertaining to Merchant and/or Guarantor’s personal property upon a showing of a presumption that Merchant has committed an act of fraud or is about to misappropriate funds to which it is not entitled. Merchant shall provide any statement or notice that IMS and/or Bank determines to be necessary to preserve and protect this security interest. Merchant’s and/or Guarantor’s granting of this security interest in no way limits Merchant’s liabilities to IMS and/or Bank under this Agreement. 1.11 Fiduciary Relationship. As provided in California Financial Code Section 952 as it now exists and as it may be amended from time to time, whenever Merchant and/or Guarantor has a deposit held with any Bank that arose from or is subject to this Agreement, to which, pursuant to this Agreement, Merchant is not entitled, Merchant’s entitlement to such deposit shall be as a fiduciary of IMS and/or Bank until any claim by IMS and/or Bank against Merchant has been resolved. Merchant agrees that its failure to repay, within five (5) calendar days of notification by IMS and/or Bank, funds to which Merchant is not entitled to, shall result in a presumption that Merchant intends to misappropriate such funds. Merchant further agrees that in the event IMS and/or Bank seeks to enforce its rights herein in a court of competent jurisdiction, that any Receivership, Temporary Restraining Order, Preliminary Injunction, Writ of Attachment or Writ of Possession may be issued against Merchant without bond. 1.12 Guarantors. As a primary inducement to IMS and its Bank to enter into this Agreement with Principal and/or the signed Guarantor(s), whether by signing the Merchant Application Agreement form or by acknowledging consent by electronic means, jointly and severally, unconditionally and irrevocably, guarantee the continuing full and faithful performance and payment by Merchant of each of its duties and obligations to IMS and its Bank pursuant to this Agreement, as it now exists or is amended from time to time, with or without notice. Guarantor(s) understands further that IMS and its Bank may proceed directly against Guarantor(s) without first exhausting its remedies against any other person or entity responsible therefore to it or any security held by IMS, its Bank or Merchant. This guarantee will not be discharged or affected by the death of the undersigned, will bind all heirs, administrators, representatives and assigns and may be enforced by or for the benefit of any successor of IMS and/or Bank. Guarantor(s) understand that the inducement to IMS and its Bank to enter into this Agreement is consideration for this guaranty, and that this guarantee remains in full force and effect even if the Guarantor(s) receives no additional benefit from the guaranty. 1.13 Payment of Fees and Other Amounts Owed. (a) Merchant shall pay to IMS and/or Bank the fees and charges set forth on the Merchant Application, Schedule of Fees and fee provisions of this Agreement. Merchant agrees that IMS may collect its fees and other amounts owed under this Agreement by netting against the proceeds of Merchant’s processing activity. The Account will be debited through ACH for such amounts and for any other fees, charges or adjustments incurred by Merchant and associated with processing services. Merchant is obligated to pay all taxes and other charges imposed by any governmental authority on the services provided under this Agreement. IMS and/or Bank have the right to change fees as set forth in this Agreement. (b) Merchant will immediately pay IMS and/or Bank any amount incurred by IMS attributable to this Agreement or any other agreement between Merchant and IMS or any subsidiary or affiliate of IMS, including but not limited to equipment fees, Chargebacks, Returns, fines imposed by a third party, non-sufficient fund fees and ACH debits that overdraw the Account, Reserve Account, or are otherwise dishonored. Merchant authorizes IMS and/or Bank to debit via ACH the Account, the Reserve Account any other Account Merchant has with IMS, an affiliate or subsidiary of IMS, its Bank or at any other financial institution for any amount Merchant owes under this Agreement or under any other contract, note, guaranty, or dealing of any kind now existing or later entered into between Merchant and IMS or any subsidiary or affiliate, whether Merchant’s obligation is direct, indirect, primary, secondary, fixed, contingent, joint or several. In the event such ACH does not fully reimburse IMS and/or Bank for the amount owed, Merchant will immediately pay IMS and/or Bank such amount. (c) In addition to IMS and Bank’s other remedies under this Agreement, if any amounts owed by Merchant under this Agreement and not paid when due, Merchant shall pay IMS and Bank a Late Payment Fee, as set forth in the Merchant Application or Schedule of Fees, plus a finance charge equal to one and one-half percent (1.5%) per month on the unpaid amount, or the highest rate allowable by law, whichever is less, determined and compounded daily from the date due until the date paid. Payment of such Late Payment Fee and finance charges will not excuse or cure any breach or default for late payment. 1.14 Term: Termination. (a) This Agreement shall become effective upon acceptance by IMS and Bank. Any party may terminate this Agreement or one or more services delivered under this Agreement at any time with or without cause by providing written notice to the other parties and such termination will become effective on the date specified by such notice. If Merchant terminates this Agreement, Bank and IMS shall have thirty (30) days from date of receipt of the notice to close Merchant's account. (b) IMS or Bank may terminate this Agreement immediately without prior notice if (i) they have reason to believe that fraudulent Card Transactions or other activity prohibited by this Agreement is occurring at any Merchant location; (ii) such action is taken to prevent loss to Bank, IMS or Card Issuers, (iii) Merchant appears on any Card Association's or Payment Network’s security reporting, or (iv) Bank's Merchant Acceptance Criteria changes. All rights and obligations of the parties existing hereunder as of the effective time of termination shall survive the termination of this Agreement. (c) If Merchant has applied for credit card processing and the Merchant Account is approved by Bank, and if Merchant exercises its option at Merchant’s sole discretion to terminate this Agreement, then Merchant will pay to IMS a termination fee in the amount set forth in the Merchant Application. If your Merchant Application references a “standard termination fee,” a fee of $295 will apply upon your termination of services. (d) Merchant will be assessed a software recovery fee if it: (i) received a free promotional copy of QuickBooks or Quicken software upon entering in this Agreement, and (ii) terminated this Agreement, in its sole discretion, within two years of acceptance by Bank. Such software recovery fee shall be determined by IMS in its sole discretion, but will be no greater than the then current direct price charged by Intuit to the public to purchase the QuickBooks or Quicken software. This software recovery fee shall be in addition to any termination fee set forth in the Merchant Application. (e) If any case or proceeding is commenced by or against Merchant under any federal or state law dealing with insolvency, Bankruptcy, receivership or other debt relief, this Agreement shall simultaneously therewith automatically terminate, and any amounts due to Bank and IMS under this Agreement shall become immediately due and payable, without the necessity of any notice, declaration or other act by Bank or IMS. Notwithstanding such termination, Bank at its sole discretion, may determine that consent to Merchant’s subsequent assumption of this Agreement is in Bank’s and IMS’ best interests. In such event, the assumption will be made under terms and conditions that are acceptable to Bank and comply with the applicable federal or state laws governing such assumption. 1.15 Effect of Termination: All of Merchant’s obligations under this Agreement which arise or are incurred prior to the effective date of termination, shall survive the expiration or termination of this Agreement. 1.16 Third Parties. (a) Merchant may be using special services or software provided by a third party to assist Merchant in processing transactions, including authorizations and settlements, or accounting functions. Merchant is responsible for insuring compliance with the requirements of any third party in using their products. This includes making sure Merchant has and complies with any software updates and ensuring that such software satisfies all security standards required under the Rules (including PA DSS and PCI DSS), as set forth more fully below. IMS has no responsibility for any transaction until that point in time IMS receives data about the transaction. (b) Merchant will notify IMS prior to the use of any electronic authorization or data capture terminal or software provided by any entity other than IMS or its authorized designee (“third party terminals”) to process transactions. If Merchant elects to use such third party terminals, Merchant agrees that the third party provider of the terminal is Merchant’s agent and Merchant is liable for the acts and omission of its agent and the terminals for failing to comply with the Rules, this Agreement and any applicable federal and state law. (c) IMS may provide Merchant with reference links to websites operated by third parties (“Third Party Websites”). These links are provided as a convenience only. Such Third Party Websites are not under the control of IMS. IMS is not responsible for the content of any Third Party Website or any link contained in a Third Party Website. IMS does not review, approve, monitor, endorse, warrant, or make any representations with respect to Third Party Websites, and the inclusion of any link is not and does not imply an affiliation, sponsorship, endorsement, approval, investigation, verification or monitoring by IMS of any information contained in any Third Party Website. Access to any Third Party Website is at Merchant’s own risk, and Merchant acknowledges and understands that linked Third Party Websites may contain terms and privacy policies that are different from those of IMS. IMS is not responsible for such provisions, and expressly disclaims any liability for them. 1.17 Limitation of Liability. (a) MERCHANT AGREES AND ACKNOWLEDGES THAT NEITHER IMS, BANK NOR THE ODFI, AS APPLICABLE SHALL HAVE LIABILITY, EITHER IN TORT, CONTRACT OR IN COMBINATION THEREOF, FOR CLAIMS ARISING FROM TRANSACTIONS PROCESSED UNDER THIS AGREEMENT EXCEPT IN THE CASE OF GROSS OR WILLFUL MISCONDUCT ON THE PART OF IMS, BANK OR ODFI. ANY SUCH CLAIMS ARE SUBJECT TO LIMITATIONS SET FORTH BELOW AND IN NO EVENT SHALL IMS, BANK OR ODFI BE LIABLE FOR SPECIAL, CONSEQUENTIAL, INDIRECT OR EXEMPLARY DAMAGES, INCLUDING LOST PROFITS, REVENUES OR LOST BUSINESS OPPORTUNITIES. (b) The liability, if any, of IMS and/or Bank, under this Agreement whether to Merchant or to any other party, whatever the basis of liability, shall not exceed in the aggregate the difference between (i) the amount of fees paid by Merchant to IMS and/or Bank during the month in which the Transaction out of which the liability arose occurred, and (ii) assessments, Chargebacks, Returns and any offsets authorized under this Agreement against such fees which arose during such month. In the event more than one month was involved, the aggregate amount of IMS and/or Bank’s liability shall not exceed the lowest amount determined in accord with the foregoing calculation for any one month involved. (c) EXCEPT AS EXPRESSLY PROVIDED HEREIN, IMS MAKES NO IMS MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED, REGARDING THE SOFTWARE AND SERVICES, AND NOTHING CONTAINED IN THE AGREEMENT WILL CONSTITUTE SUCH A WARRANTY. IMS DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING THOSE OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT AND TITLE. IMS FURTHER DOES NOT REPRESENT OR WARRANT THAT THE SERVICES WILL ALWAYS BE AVAILABLE, ACCESSIBLE, UNINTERRUPTED, TIMELY, SECURE, ACCURATE, COMPLETE, OR ENTIRELY ERROR-FREE. IMS FURTHER EXPRESSLY DISCLAIMS ANY LIABILITY FOR UNAUTHORIZED ACCESS OF FACILITIES OR TO MERCHANT’S DATA OR PROGRAMS DUE TO ACCIDENT, ILLEGAL OR FRAUDULENT MEANS OR DEVICES USED BY ANY THIRD PARTY, OR OTHER CAUSES BEYOND IMS’ REASONABLE CONTROL. 1.18 Indemnification by Merchant. Merchant agrees to indemnify and hold harmless IMS and/or Bank and ODFI, as applicable, and their affiliates, employees, agents, representatives, members, or stockholders, from and against any and all claims, actions, proceedings, and suits and all related liabilities, damages, settlements, penalties, fines, costs or expenses (including reasonable attorneys' fees and other litigation expenses) arising out of or relating to: (a) any dispute between Merchant and a Cardholder or Checkwriter or customer, or any Sales Draft or ACH deposit paid for by Bank or ODFI; (b) any actual or alleged action or omission by Merchant that would constitute a breach of any representation, warranty, or obligation of Merchant set forth in this Agreement; (c) any damage or loss caused by negligence, fraud, dishonesty or willful misconduct by Merchant or any of its employees, agents or customers; (d) the reliability, accuracy, or legitimacy of payment data submitted by Merchant; (e) any alleged infringement of another party’s intellectual property rights by Merchant; (f) a failure of Merchant to maintain the confidentiality of Cardholder or Checkwriter information; (g) any action IMS or Bank takes against the Account under the Agreement. Merchant will also indemnify and hold harmless the institution at which Merchant maintains the Account for acting in accordance with any instruction from IMS and/or Bank regarding the Account. If Merchant is an agency or instrumentality of a state of the United States and is precluded by the law of Merchant’s state from entering into indemnification obligations, then the obligations under this Section shall apply only to the extent permitted by such state law. This section will survive termination of this Agreement. 1.19 Confidential Information. (a) Obligations of IMS: IMS shall comply with the Rules in how it treats Merchant transaction information. IMS may disclose information relating to Merchant’s sales to financial institutions, Networks and third parties that need the information for a purpose relating to this Agreement and to the IMS agent or referral source, if any, that played a role in establishing Merchant’s relationship with IMS solely for the purpose of computing payment due to such persons. IMS may also disclose information regarding the Merchant as part of an investigation by IMS into Merchant’s compliance with its obligations under this Agreement if IMS determines there is cause to make such an inquiry, or to the extent required by a court or governmental authority, or otherwise as required by law. (b) Obligations of Merchant: Except to the extent specifically permitted by the Rules, the operating rules of NACHA or this Agreement, Merchant shall not disclose any information relating to any Card or POS Transaction , or any Cardholder or Checkwriter, to any person or entity other than IMS, IMS’ employees, agents and independent contractors, and those of Merchant’s employees who have a specific need to know such information except to complete the transaction or as otherwise required or authorized under this Agreement or by law. Merchant shall treat all documents provided by IMS relating to this Agreement as confidential and proprietary and protect them with the same degree of care as Merchant would protect its own confidential and proprietary information, and not less than reasonable care. (c) Proprietary IMS Information. Merchant agrees that this Agreement, and all other user information provided by IMS, the process utilized by IMS for providing services, and all written communications concerning services hereunder are confidential and proprietary information of IMS. Merchant agrees that neither it nor any of its employees, agents, representatives, or independent contractors will disclose any such confidential, proprietary information to any person or entity that is not a party to this Agreement without the express written consent of IMS. 1.20 Safeguarding of Information. (a) Merchant shall be in full compliance with rules, regulations, guidelines and procedures adopted by any Card Association or Payment Network relating to the privacy and security of Cardholder and Card transaction data, including without limitation PA DSS and the PCI DSS, as they may be amended from time to time. Information pertaining to such requirements may be found at https://www.pcisecuritystandards.org. Additional information regarding security requirements is located at www.innovativemerchant.com. (b) Merchant shall be liable for all fines, charges and penalties that may be assessed by any Card Association or Payment Network as a result of Transactions made by Merchant or Merchant’s noncompliance with the preceding requirements. Merchant also acknowledges that it may be prohibited from participating in payment network programs if it is determined that Merchant is non-compliant. Merchant acknowledges that it may be subject to, and IMS and/or Bank retain the right, to conduct or cause to be conducted an audit to verify Merchant’s compliance with the foregoing security requirements. Merchant must notify IMS and/or 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, (i) perform or cause to be performed an independent investigation of any data security breach of Card or Transaction data by an authorized assessor acceptable to IMS and Bank; (ii) take all such remedial actions recommended by such investigation or by IMS, Bank or Visa or MasterCard; and (iii) cooperate with IMS and Bank in the investigation and resolution of any security breach. (c) Merchant will not, under any circumstances, disclose any Cardholder’s account number nor any information relating to any Cardholder’s account number or any Sales Drafts or Credit Vouchers which may have been imprinted with any Card to any person other than IMS or its Bank, or as required by law. Merchant agrees not to store, distribute, copy or otherwise manipulate card account numbers or PINs that appear, are encoded or are otherwise associated with Cards. All electronic commerce Merchants must provide Cardholders with a secure transaction method, such as Secure Sockets Layer (SSL) or 3-D Secure. Further, Merchant agrees to store any material containing Cardholder account information in a secure manner or destroy such information at the proper time in a fashion that renders the data unreadable, and unrecoverable. Neither Merchant nor any of its agents shall retain or store the full contents of any track on the Magnetic-Stripe, or equivalent data on the Contactless Payment chip, subsequent to Authorization of a Transaction. (d) Merchant must notify IMS of any third party agent of Merchant that will have any access to Cardholder data. (e) Merchant understands and agrees that due to requirements of law, Card receipts may not contain (i) more than the last five digits of the credit card account number; and (ii) that the Card receipt may not contain the expiration date. (f) If Merchant sells goods or services on the Internet, Merchant’s web site must contain Merchant’s consumer privacy policy and a description of Merchant’s method of safeguarding consumer transaction data. 1.21 Account Access Password. (a) If Merchant receives a user identification name or password from IMS to access IMS’ database or use services offered by IMS, Merchant will: (i) keep the user identification name and password confidential; (ii) not allow any other entity or person to use the user identification name or password or gain access to IMS’ database; (iii) be liable for all action taken by any user of the user identification name or password; and (iv) promptly notify IMS if Merchant believes the user identification name or password have been used inappropriately or the confidentiality of the information made available through their use has been compromised. (b) Merchant agrees that any loss incurred as a result of any party gaining access to Merchant’s bank account or IMS’ website using information which that party was not authorized to obtain or using such information in a manner not permitted by this Agreement (including but not limited to improper or unauthorized use of the Merchant’s ID number and PIN) shall be the responsibility of Merchant. 1.22 Privacy. IMS and its parent company, Intuit Inc., will have access to the data associated with your use of the service. IMS and Intuit will handle this information in accordance with their privacy policies. For details about IMS's privacy policies, please refer to the IMS Privacy Statement, accessible via www.innovativemerchant.com. 1.23 Feedback. IMS may provide you with a mechanism to provide feedback, suggestions and ideas about IMS products and services (“Feedback”). Merchant agrees that IMS may, in its sole discretion, use the Feedback in any way, including in future modifications of the products and services and any related advertising and promotional materials. Merchant grants IMS a perpetual, worldwide, fully transferable, non-revocable, royalty free license to use, reproduce, modify, create derivative works from, perform, distribute and display for any purpose any information Merchant provides to IMS in the Feedback. 1.24 Modifications to Agreement. IMS or Bank may from time-to-time amend any provision of this Agreement, including those relating discount rates or other fees and charges payable by Merchant, whether such amounts are set forth in the Merchant Application, Schedule of Fees or Fee sections of the Agreement. IMS will provide notice to Merchant of the amendment, and unless specified otherwise, the amended agreement shall become effective at the start of the first billing cycle after IMS has provided notice. Amendments due to changes in either a Card Association’s or Payment Network’s fees, interchange, assessments, Rules, gift card systems or any law or judicial decision will become effective at such time that IMS may specify, which may be sooner than the beginning of the next billing cycle following the date of notice. 1.25 General Fees. If fees are not listed on the Merchant Application or Schedule of Fees to the contrary, the following fees are applicable. Additional fees specific to each service offering are set forth in the Fee sections of the Article of this Agreement defining the terms of that service offering.
* IMS may charge a fee to implement legally enforceable requests for payment of Merchant funds to parties other than Merchant, such as tax levies, payments to secured parties or other legally enforceable payment requests of a similar nature. As set forth above, IMS may modify all fees payable by Merchant under the Agreement, including those detailed in the Merchant Application, Schedule of Fees or the body of the Agreement, by providing notice to Merchant of changes to such fees. 1.26 Additional Services Offered by IMS. From time to time, IMS may offer to Merchant additional products and services which may or may not be related to the processing of credit card Transactions. In the event of such offers, Merchant shall indicate its desire to IMS to decline such offers or be deemed to have accepted the offers and be liable for payment therefore. 1.27 Compliance with Law. Merchant shall comply with all laws applicable to Merchant, Merchant's business and any payment transactions, including without limitation to all Rules, state and federal consumer credit and consumer protection laws, as well as laws for any special services used by Merchant, such as Gift Card and other services. 1.28 Merchant Dispute Notification. Merchant is responsible for the timely reconciliation of all issues related to Services provided under this Agreement. Merchant must submit any dispute to IMS in writing within 60 days of the initial posting of the disputed item to the Merchant Account or appearance of the disputed item on the Merchant’s statement. 1.29 Notices; Consent to Electronic Communications. By applying for services and confirming that it has read the Merchant Agreement, Merchant is confirming to IMS that it has the means to access the internet through its own service provider and download or print electronic communications. Merchant agrees to the receipt of electronic communications by email or by the posting of such information by IMS at one or more of IMS’ sponsored websites, such as www.innovativemerchant.com. Such communications may pertain to the services delivered by IMS, the use of information Merchant may submit to IMS, changes in laws or Rules impacting the service or other reasons, such as amendment of the Merchant Agreement. In addition, all notices and other communications required or permitted under this Agreement by IMS or Bank to Merchant may also be delivered by IMS or its Bank to Merchant either by FAX, overnight carrier or first class mail, postage or other charges prepaid, addressed and transmitted as set forth below. All notices and other communications required or permitted under this Agreement by Merchant to IMS and/or Bank shall be delivered by Merchant to IMS by overnight carrier or certified mail, postage or other charges prepaid, addressed and transmitted as set forth below. Notice by FAX or e-mail shall be deemed delivered when transmitted. Notice by mail or overnight carrier shall be deemed delivered on the first business day after mailing or delivery to the carrier. Following are the addresses for the purposes of notices and other communications hereunder, which may be changed by written notice in accordance with this section: (a) If to IMS and/or Bank, addressed and transmitted as follows: Innovative Merchant Solutions, LLC. (b) If to Merchant, at the address provided as the billing address, or the FAX number or e-mail address and to the contact listed on the Merchant Application. 1.30 Further Assurances. At any time or from time to time upon the request of Bank or IMS, Merchant will execute and deliver such further documents and do such other on, acts as Bank or IMS may reasonably request in order to effectuate fully the purposes of this Agreement. 1.31 Force Majeure. Any delay in or failure of performance by IMS or Bank under this Agreement will not be considered a breach of this Agreement and will be excused to the extent caused by any occurrence beyond their reasonable control, including, but not limited to, acts of God, power outages, failures of the Internet, failures of banking or ACH networks. 1.32 Choice of Law: Jurisdiction. The parties agree that all performances and transactions under this Agreement will be deemed to have occurred in California and that Merchant’s entry into and performance of this Agreement will be deemed to be the transaction of business within the State of California. The parties stipulate that at the option of IMS and/or Bank, that the exclusive venue for any action between them shall be: (i) at the United States District Court, Central District of California located within the County of Los Angeles in the State of California, or (ii) the Van Nuys Judicial District (Municipal Court) or Northwest District (Superior Court) located within the County of Los Angeles. In the event the United States District Court is chosen as the venue and to the extent that federal law is governed by state law, this Agreement shall be construed in accordance with and governed by California law as applied to contracts that are executed and performed entirely in California. In the event that a state court is chosen, the same standard shall apply. 1.33 Jury Waiver. In the event any controversy or claim between or among the parties, their agents, employees, representatives, or affiliates shall arise in any judicial or legal proceeding, each party hereby waives its respective right to trial by jury of such controversy or claim. 1.34 Costs. Merchant will be liable for and will reimburse IMS and/or Bank for all costs paid or incurred by IMS and/or Bank in the enforcement of this Agreement, including but not limited to attorney’s and investigator’s fees, or in collecting any amounts due from Merchant or resulting from any breach by Merchant of this Agreement, or enforcement of any rights of IMS or Bank. 1.35 Publicity. Merchant agrees that IMS may issue a press release or similar public announcement referencing Merchant as a customer of IMS. Merchant also grants to IMS a limited license to use Merchant's and its affiliates’ names, logos, trademarks, service marks or copyrights in any advertising, promotional or instructional materials for IMS or its affiliates’ services. 1.36 Intellectual Property. IMS retains all right, title and interest in and to the services and any related technology utilized by it under or in connection with this Agreement, including but not limited to all associated intellectual property rights. No title to or ownership of any of the foregoing is granted to Merchant or any other entity or person under this Agreement. Merchant will not reverse engineer, disassemble, decompile or otherwise attempt to discover the source code or trade secrets for any of the IMS services or related technology. 1.37 Taxes. Merchant shall promptly pay when due any and all liability or expense relating to the payment of federal, state, and local taxes (other than taxes based in whole or in part upon income attributable to IMS). 1.38 Rights Cumulative. All rights and remedies existing in this Agreement are cumulative to, and not exclusive of, any other rights or remedies available under contract or applicable law. 1.39 Headings. The headings listed after each section number in this Agreement are inserted for convenience only and do not constitute a part of this Agreement and are not to be considered in connection with the interpretation or enforcement of this Agreement. 1.40 Waiver. Failure by Bank or IMS to enforce one or more of the provisions of this Agreement shall not constitute a waiver of the right to enforce the same or other provision in the future. All waivers must be signed by the waiving party. 1.41 Entire Agreement. This Agreement, including the Merchant Application, the Schedule of Fees, the Rules, and Exhibits to this Agreement expresses the entire understanding of the parties with respect to its subject matter and except as provided herein. Reference to “this Agreement” also includes all documents incorporated into this Agreement by reference. 1.42 Severability. If any provision of this Agreement is held invalid or unenforceable by any court of final jurisdiction, it is the intent of the parties that all other provisions of this Agreement be construed to remain fully valid, enforceable and binding on the parties. 1.43 Assignment. This Agreement may be assigned by IMS, but may not be assigned by Merchant, directly or by operation of law, without the prior written consent of IMS and/or Bank. If Merchant nevertheless assigns this Agreement without such consent, the Agreement will be binding upon the assignee. This Agreement shall be binding upon and inure to the benefit of the parties’ respective heirs, and personal representatives for an individual, otherwise its permitted successors and assigns. 1.44 Authorization of Agreement. Merchant represents and warrants that the person signing or electronically authorizing the Agreement is duly authorized to bind Merchant to all provisions of this Agreement and that such person is authorized to execute any documents and to take any action on behalf of Merchant which may be required by IMS now or in the future. Merchant will execute a separate Entity Certification if requested to do so by IMS. Merchant, by its signature, upon its first transmission of Transactions, or first payment of fees acknowledges that it agrees to be bound by this Merchant Agreement as it may be modified from time to time. 1.45 Relationship of the Parties. The parties are independent contractors and nothing in this Agreement shall make them joint ventures, partners, employees, agents or other representatives of the other party. 1.46 Export Restrictions. Merchant acknowledges that any software provided to it by IMS in connection with delivering services is subject to the U.S. Export Administration Regulations (15 CFR, Chapter VII). These laws include restrictions on destinations, end users and end use. 1.47 Counterparts. If copies of this Agreement or any amendments are to be physically signed, this Agreement may be executed and delivered in several counterparts and transmitted by facsimile, a copy of which will constitute an original and all of which taken together will constitute a single agreement. 1.48 General. Merchant is responsible for its employee’s actions while in its employ. The parties do not intend to confer any benefits on any person or entity other than Merchant, IMS and/or Bank. 1.49 Survival. All Sections of this Agreement that by their nature should survive termination or expiration will survive, including, without limitation, accrued rights to payment, indemnification obligations, confidentiality obligations, warranty disclaimers, and limitations of liability.
ARTICLE II. CARD TRANSACTION SERVICES. The following terms and conditions govern card processing services provided by IMS to Merchant. 2.01 Advertising. (a) Merchant will prominently display the promotional materials provided by IMS and its Bank in its place(s) of business. Use of promotional materials and use of any trade name, trademark, service mark or logo type (“Marks”) associated with Card(s) shall be limited to informing the public that Card(s) will be accepted at Merchant’s place(s) of business. Merchant’s use of promotional materials and Marks is subject to the direction of IMS and its Bank. (b) Merchant may use promotional materials and Marks during the term of this Agreement and shall immediately cease their use and return any inventory to IMS and its Bank upon termination of this Agreement. (c) Merchant shall not use any promotional materials or Marks associated with Visa, MasterCard, Discover Network or JCB in any way which implies that Visa, MasterCard, Discover Network or JCB endorses any goods or services other than Card services. 2.01 Warranties of Merchant Regarding Card Transactions. Merchant hereby represents and warrants to IMS and Bank at the time of execution and during the term of this Agreement that: (a) Each Sales Draft presented to IMS’ Bank for collection is genuine and is not the result of any fraudulent transaction and is not being deposited on behalf of any business other than Merchant. Further, Merchant warrants that each Sales Draft is the result of a Card Transaction for the bona fide purchase of goods or services by the Cardholder in the total amount stated on the Sales Draft. (b) Merchant has performed or will perform all of its obligations to the Cardholder in connection with the Card Transaction evidenced thereby. (c) Merchant has complied with IMS and its Bank’s procedures accepting Cards, and the Card Transaction itself shall not involve any element of credit for any other purposes other than as set forth in this Agreement and shall not be subject to any defense, dispute, offset or counter claim which may be raised by any Cardholder under the Rules, the Consumer Credit Protection Act (15 USC 1601), or other relevant state or federal statutes or regulations. (d) Any Credit Voucher which it issues represents a bona fide refund or adjustment on a Card sale by Merchant with respect to which a Sales Draft has been accepted. 2.02 Honoring Cards. (a) Merchant will accept without discrimination, all valid Cards properly presented by Cardholders for payment for goods or services. (b) Merchant shall not establish minimum or maximum amounts for Card sales as a condition for accepting any Card. (c) Merchant shall not require any Cardholder to pay any part of any discount or charge imposed upon Merchant by this Agreement, whether through any increase in price or otherwise require a customer presenting a Card to pay any charge as a condition of sale that is not also required from a customer paying cash However, Merchant may offer discounts to customers for cash purchases. (d) Merchant shall not accept a Card as payment (other than for a mail order, telephone order, or preauthorized sale to the extent permitted under this Agreement), if the person seeking to use the Card does not present the Card to permit Merchant to examine it and obtain an imprint or otherwise use the physical Card to complete the Transaction. 2.03 Card Acceptance. When accepting a Card, Merchant will follow the steps provided by IMS and its Bank for accepting Cards and will: (a) Determine in good faith and to the best of its ability that the Card is valid on its face. (b) Obtain Authorization before completing any Transaction. Where Authorization is obtained, Merchant will be deemed to warrant the true identity of the customer as the Cardholder. (c) Obtain an Imprint of the Card unless the Sales Draft is electronically generated from a swiped transaction or is the result of an Internet, mail, phone or preauthorized order. (d) If your terminal is unable to read the magnetic stripe on the card, you will obtain an imprint of the card and the cardholder’s signature on the imprinted draft before processing the sales draft. (e) Enter a description of the goods or services sold and the price thereof (including any applicable taxes). (f) Obtain the Cardholder’s signature on the Sales Draft and compare that signature to the signature on the Card. (g) Deliver a true and completed copy of the Sales Draft to the Cardholder at the time of delivery of the goods or performance of the services, or if the Sales Draft is prepared by a point-of-sale terminal, at the time of the sale. (h) Offer the Sales Draft to IMS’ Bank for purchase according to the Bank’s procedures and the terms of this Agreement. (i) Legibly reproduce without alteration of the original transaction receipt, the Cardholder’s name, account number, expiration date and the Merchant’s name and place of business if that information is not legibly imprinted on the Sales Draft. Also, for MasterCard transactions, Merchant will legibly reproduce the name of the Card Issuer as it appears on the face of the Card. 2.04 Authorization. (a) Merchant will obtain an Authorization for all Card sales. If Merchant cannot, for any reason, obtain an electronic Authorization, Merchant will request a Voice Authorization from the designated authorization center, and will legibly print the authorization number on the Sales Draft. Fees for voice authorizations are as set forth in the schedule of fees. (b) Merchant shall not request Authorization for a Transaction unless Merchant intends to submit a Transaction for the authorized amount. (c) Merchant acknowledges that an Authorization provides only that the Cardholder account has sufficient credit available to cover the amount of the current sale, that an Authorization is not a guarantee of payment. (d) Merchant will not attempt to obtain Authorization on an expired Card. Transactions will be deemed invalid on Cards that are expired, whether or not Authorization has been obtained. 2.05 Account Monitoring. (a) Merchant acknowledges that IMS and/or Bank will monitor Merchant’s daily deposit activity. The deposit activity must remain consistent to the “approved” monthly volume and average ticket amount approved on the Merchant Application and/or by IMS. IMS may require additional documentation if the Merchant should exceed “approved” monthly volume. Merchant agrees that IMS may not process volumes over the approved monthly volume, and that Merchant is subject to a 5% fee on all monies processed over the approved monthly volume. Merchant agrees that IMS may, within its sole discretion suspend the disbursement of Merchant’s funds for any reasonable period of time required to investigate suspicious or unusual deposit activity. IMS and/or Bank will make good faith efforts to notify Merchant as promptly as is commercially reasonable. IMS and/or Bank shall have no liability for any losses, either direct or indirect, which Merchant may attribute to any suspension of funds disbursement. (b) In the event of unusual Transactions that have been “suspended”, Merchant agrees that a security processing fee not to exceed 110% of the unusual Transaction(s) may be assessed. (c) If a batch is suspended by IMS, Merchant acknowledges that the consumer’s product or service must be delivered just as if the Merchant has been paid. Further, if a batch or a transaction is suspended, Merchant acknowledges that fees associated with the transactions will be charged including security fees. (d) Merchant’s presentation to IMS of Excessive Activity will be a breach of the Agreement and a cause for immediate termination of this Agreement. "Excessive Activity" means, during any monthly period and for any one of Merchant’s terminal identification numbers or merchant identification numbers, Chargebacks and/or retrieval requests in excess of 1% of the average monthly dollar amount of Transactions or returns in excess of 3% of the average monthly dollar amount of Transactions. Merchant authorizes, upon the occurrence of Excessive Activity, IMS and/or Bank to take additional actions as either of them may deem necessary, including, but not limited to, suspension of processing privileges or creation or maintenance of a Reserve Account in accordance with this Agreement. 2.06 Forms. Merchant shall use only such forms or modes of transmission of Sales Drafts and Credit Vouchers as are provided or approved in advance by IMS. 2.07 Equipment. (a) IMS is not in the business of leasing equipment. All leases are between the Merchant and an independent leasing company. However, Merchant is required to verify with IMS the terms of any terminal equipment lease it has entered into in connection with equipment it has obtained for processing transactions under this Agreement. IMS will make reasonable attempts to contact the Merchant and complete the verification. If the lease cannot be successfully verified after these attempts, an ACH debit will be made to the Merchant’s Account for the purchase price of the equipment along with shipping and handling fees and sales tax. (b) Occasionally to meet specific programming requirements, especially in the case of debit card processing, IMS will be required to swap a Merchant’s pre-existing piece of equipment with one provided by IMS. In return for the IMS equipment, Merchant must send to IMS Merchant’s existing equipment of same type and function. This swap must be completed within 30 calendar days from the date Merchant receives IMS’ equipment or the price of equipment, shipping and handling will be debited from Merchant Account (c) Merchant cannot return equipment after 30 days from the receipt. All equipment returns will be assessed a 20% restocking fee. 2.08 Retention and Retrieval of Cards. Merchant shall use its best efforts, by reasonable and peaceful means, to retain or recover a Card when receiving such instructions upon making a request for Authorization. In carrying out such obligation Merchant will not breach the peace or cause any injury to any person or property. 2.09 Personal Information. Merchant may not require Cardholders to provide any personal information as a condition of honoring a Card unless such information is required for delivery of the goods or services or Merchant has reason to believe that the person presenting the Card may not be the actual Cardholder. 2.10 Records; Requests for Copies. Merchant shall retain a paper or microfilm copy of all Sales Drafts and Credit Vouchers and if a mail, phone order or preauthorized order is involved, the Cardholder’s signed Authorization for the Transaction for at least three (3) years after the date of the Transaction. Within three (3) business days of receipt of any written or verbal request by IMS and/or Bank, Merchant shall provide either the actual paper Sales Draft or a legible copy thereof and any other documentary evidence reasonably requested by IMS and/or Bank. A failure of Merchant to deliver the requested documentation in the required time frame may result in the transaction in question being charged back to the Merchant Account and the Merchant losing further representment rights. 2.11 Multiple Transaction Records; Partial Payments: Merchant shall include all goods and services purchased in a single Transaction at one time on a single Sales Draft, except: (i) for purchases in separate departments of a multiple department store; (ii) for installment payment; or (iii) for delayed or amended charges governed by rules for travel and entertainment merchants and transactions. 2.12 Telephone Orders “TO”, Mail Orders “MO”, Preauthorized Orders “PO” and Installment Orders “IO”. (a) Unless Merchant has been approved by IMS or its Bank to accept Internet, mail and phone orders, Merchant warrants that it is a walk-in trade business, located in a retail business place. If Merchant is found to be accepting mail orders, telephone orders, or Internet Transactions without such consent, such charges are subject to chargeback, as provided in this Agreement. When allowed, telephone and Internet orders are permitted only to the extent that the contact is initiated by the Cardholder. (b) If authorized to accept payment by Internet, mail, phone or pre- authorized order, the Sales Draft may be completed without the Cardholder’s signature or an imprint, but in such case Merchant shall create a Sales Draft containing Cardholder account number, expiration date, transaction date, an authorization number, the sale amount and the letters “MO”, “TO”, “PO”, or “IO” as appropriate. In addition, the Merchant’s business name, city and state must be included. Receiving an Authorization shall not relieve the Merchant of liability for Chargeback on any Transaction for which the Merchant did not obtain an imprint and the Cardholders signature. (c) For Approved MO, TO, PO, and IO Merchants, the Merchant must use reasonable procedures to verify that each Card sale is made to a purchaser who actually is the Cardholder or the authorized user of the Card. AVS is recommended and in some cases required. AVS is not a guarantee for payment, and the use of AVS will not waive any provision of this Agreement or otherwise validate a fraudulent transaction. (d) Unless approved in writing by IMS and acknowledged by Bank, Merchant shall not process sales prior to delivery of product or service. If the product is being shipped, the customer must be given the shipping date of the product once the sale is processed. (e) Merchant may limit acceptance of returned merchandise or establish a policy to make price adjustments for any transactions. If a Merchant refund policy prohibits returns under certain circumstances, the Merchant may still receive a Chargeback relating to such sales pursuant to Association rules and regulations. (f) Merchant must not accept credit card sales via “electronic mail” over the Internet. (g) For any recurring transactions, Merchant must obtain a written, or other form of request from Cardholder for such goods and services to be charged to the Cardholder’s account, which request must specify the transaction amounts to be charged to the Cardholder’s account, the frequency of the recurring charge and the duration of time during which such charges may be made. Merchant shall not complete any recurring transaction after receiving a cancellation notice from the Cardholder, the Bank, or a response to an Authorization request, which indicates that the Card is not to be honored. Merchant shall type or legibly print the words “Recurring Transaction” on the signature line of the Sales Draft. Merchant shall provide a copy of written request to Cardholder’s Bank upon request, and shall retain a copy of written request for one year after the agreement between Merchant and Cardholder is terminated. For multi-year agreements, Merchant shall renew written request with Cardholder annually during the 12th month of the current agreement. 2.13 Lodging and Vehicle Rental Transactions. (a) Merchant must estimate and obtain Authorization for the amount of the Transaction based upon the Cardholder’s intended length of stay or rental. Additional Authorization must be obtained and recorded for charges actually incurred in excess of the estimated amount. Some lodging Merchants are eligible to participate in Visa's Advanced Deposit Service Program. Merchants participating in this service must adhere to the Advanced Deposit Service Program rules as set forth by Visa. (b) Regardless of the terms and conditions of any written preauthorization form, the Sales Draft amount for any lodging or vehicle rental Transaction shall include only that portion of the sale, including any applicable taxes, evidencing a bona fide rental of personal property by Merchant to the Cardholder and shall not include any consequential charges. Nothing contained herein is intended to restrict Merchant from enforcing the terms and conditions of its preauthorization form through means other than a Card Transaction. 2.14 Returns and Adjustments: Credit Vouchers. (a) Merchant’s policy for the exchange or return of goods sold and the adjustment for services rendered shall be established and posted in accordance with the Rules. If applicable, Merchant must disclose to a Cardholder before a Card sale is made, that if merchandise is returned: (i) no refund, or less than a full refund, will be given; (ii) returned merchandise will only be exchanged for similar merchandise of comparable value; (iii) only a credit toward purchases will be given; or (iv) special conditions or circumstances apply to the sale (e.g., late delivery, charges, or other noncredit terms). (b) Disclosures must be made on all copies of Sales Drafts in letters approximately 1/4” high in close proximity to the space provided for the Cardholder’s signature on the sales draft and issued at the time of sale. (c) If Merchant does not make these disclosures, a full refund in the form of a credit to the Cardholder’s Card account must be given. Merchant will not refund cash to a Cardholder who paid for the item by Card. (d) Credits must be made to the same Card account number on which the original sale Transaction was processed. (e) If Merchant accepts any goods for return or terminates or cancels any services, in conjunction with each such transaction, Merchant shall have sufficient funds in its account available to IMS and/or bank to cover the amount of the transaction and any related fees. 2.15 Cash Payments. Merchant shall not receive any payments from a Cardholder for charges included in any Transaction resulting from the use of a Card nor receive any payment from a Cardholder to prepare and present a Transaction for the purpose of affecting a deposit to the Cardholder’s Card account. 2.16 Cash Advances. (a) Merchant shall not deposit any Transaction for the purpose of obtaining or providing a cash advance either on Merchant’s Card or the Card of any other party. Merchant agrees that any such deposit shall be grounds for immediate termination. (b) Merchant, shall not under any circumstances obtain Authorization for, nor process a sale on any card that Merchant is not authorized to use. Processing Merchant’s own card is grounds for immediate termination. 2.17 Duplicate Transactions. Merchant shall not deposit duplicate Transactions. Merchant shall be debited for any duplicate Transactions and shall be liable for any Chargebacks which may result therefrom. 2.18 Deposit of Fraudulent Transactions. Merchant shall not accept or deposit any fraudulent Transaction and may not present for processing or credit, directly or indirectly, a Transaction which originated with any other merchant or any other source. Merchant shall not deposit Transactions evidencing sales that were solicited by outbound telemarketing activities. If Merchant deposits any such transactions IMS and/or Bank may hold funds and/or demand a Reserve Account. Perpetrators of fraudulent transactions will be referred to law enforcement officials and may be subject to Card Association penalties. 2.19 Collection of Pre-Existing Debt. Merchant shall not present any Transaction representing the refinancing of an existing obligation of a Cardholder including, but not limited to obligations (i) previously owed to Merchant, (ii) arising from the dishonor of a Cardholder’s personal check, and/or (iii) representing the collection of any other pre-existing indebtedness, including collection of delinquent accounts on behalf of third parties. 2.20 E-Commerce Address Notification. Merchant must display the address of its permanent establishment on its Website. This address should include the country of domicile and should be located either on the checkout screen used to present the total purchase amount to the Cardholder, or within the sequence of Web pages the cardholder accesses during the checkout process. 2.21 Automatic Payment Plan Card Sales. (a) Merchant must be approved by IMS to charge customers via an Automatic Payment Plan. Any transactions in violation of this provision are subject to Chargeback to Merchant. (b) If a Merchant uses the Internet or another electronic process to receive a Cardholder approval of the Automatic Payment Plan, the Merchant must retain all electronic evidence of the Cardholder’s approval of the Automatic Payment Plan. The Cardholder’s approval, whether written or electronic, must include all of the following information:
(c) The first Automatic Payment Plan Card Sale must contain a positive response from the Address Verification System (AVS). If the first payment does not contain this information, all subsequent payments are subject to Chargeback to the Merchant. 2.22 Settlement of Transactions. Bank shall accept from Merchant all valid Sales Drafts deposited by Merchant under the terms of this Agreement and shall present the same to the appropriate Card issuers for collection against Cardholder accounts. Settlement of all Sales Drafts is subject to this Agreement and the Rules. IMS and/or Bank shall provisionally credit the value of collected Sales Drafts to Merchant’s Account and reserve the right to adjust amounts so credited to reflect the value of Chargebacks, fees, penalties, late submission charges, the di |
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