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HUMBOLDT
BANK MERCHANT PROCESSING
AGREEMENT
THIS AGREEMENT, hereinafter referred to as the "Agreement"
is made by and between, Humboldt Bank, located at 605 K
Street, Eureka, California 95502, hereinafter referred to as
"BANK", which is represented by Electronic Card Systems,
Inc. a California corporation, hereinafter referred to as
"ECS", and the undersigned merchant, hereinafter referred to
as MERCHANT.
The undersigned, GUARANTOR(S), is also a part as a
continuing guarantor(s) pursuant to the Continuing Guaranty
Provision Contained in the Agreement. The capitalized terms
as used in the Agreement shall have the meanings as set
forth in the accompany MERCHANT APPLICATION ("MERCHANT
APPLICATION") or as set forth herein.
WHEREAS, BANK is engaged in the processing of transactions
which includes, but not limited to, the processing of and
providing for the payment of charges created by holders of
VISA and MasterCard credit cards (hereinafter "Cardholder");
and
WHEREAS, ECS is registered with Visa as an Independent Sales
Organization and registered with MasterCard as a Member
Service Provider, and
WHEREAS, Merchant and Guarantor(s) hereby affirm, represent
and warrant to BANK and Merchant is lawfully engaged in the
business shown on the MERCHANT APPLICATION and is duly
licensed under the laws of the state, county and city in
which it is located to conduct such business, and the
MERCHANT currently accepts, or desires to accept, VISA and
MasterCard credit cards (hereinafter Cards) for the purchase
of goods and services through transactions with
Cardholders
and
WHEREAS, Guarantor(s) hereby confirm that they, individually
and collectively, are a party to this Agreement and the
continuing guaranties provided to BANK to the maximum extent
permitted by law; and
WHEREAS, MERCHANT acknowledges that this Agreement is not
and shall not be effective until MERCHANT’S MERCHANT
APPLICATION has been approved by the BANK and that the
signature of the ECS representative on the MERCHANT
APPLICATION and/or this Agreement only constitutes
acknoledgement of the offer made by the representative on
behalf of and contingent upon the approval of BANK; and
WHEREAS, MERCHANT specifically acknowledges that this offer
shall automatically expire sixty (60) days after the date of
signing by MERCHANT, unless the offer is accepted, approved
and countersigned by BANK, and
WHEREAS, MERCHANT warrants that it has not been terminated
from settlement of Card transactions by any financial
institution or determined to be in violation of any of the
rules and regulations of VISA or MasterCard, except as
specifically disclosed in the MERCHANT APPLICATION; and
WHEREAS, MERCHANT agrees to comply with, and be subject to,
all of the rules and regulations of BANK, VISA, and
MasterCard as they exist now, and may be modified or changed
from time to time (hereinafter the "Rules and Regulations");
and
WHEREAS, MERCHANT acknowledges that any violation of the
Rules and Regulations shall constitute a material breach of
the Agreement and may, at the sole and absolute discretion
of BANK, constitute grounds for terminating this Agreement
and holding all funds on deposit or that can be garnered by
BANK pursuant to any of the provisions of this
Agreement.
NOW, THEREFORE, in consideration of the representations,
covenants and/or promises made herein and in the
accompanying MERCHANT APPLICATION and/or Schedule(s) signed
and submitted by Merchant in connection herewith, the
parties hereby agree as follows:
1. AGREEMENT: This Agreement and all other documents
executed or submitted by MERCHANT in connection herewith, or
incorporated herein by references or referenced in the final
disclosure regarding approval, shall constitute the entire
agreement between BANK and MERCHANT.
2. MERCHANT’S AUTHORITY: MERCHANT specifically warrants
to BANK that MERCHANT has the authority to enter into this
Agreement with BANK and that the person(s) signing for or on
behalf of MERCHANT are specifically authorized and directed
to do so by MERCHANT.
3. TERM: The initial term of this Agreement shall be for one
(1) calendar year, commencing from the date of approval of
execution and notification by BANK and ECS, hereinafter
referred to as the Anniversary Date, and shall automatically
renew annually thereafter on each subsequent Anniversary
Date unless sooner terminated in accordance with provisions
of this Agreement. Merchant specially agrees to a minimum
term of six (6) months and hereby agrees to pay BANK all
fees and charges due BANK pursuant to the provisions of this
Agreement for such minimum term of six (6) months.
4. ACCEPTANCE OF CARDS: MERCHANT agrees to honor all valid
Cards when properly presented as payment by a Cardholder, or
other authorized user, for a bonafide, legal business
transaction. MERCHANT shall use due diligence to verify that
Cardholder is authorized to use the Card presented and that
such Card is not counterfeit and MERCHANT shall obtain an
authorization for each transaction in advance through the
authorization system in accordance with the terms and
conditions of this Agreement. When MERCHANT has information
or reason to believe that a Cardholder has presented a lost,
stolen, fraudulent or counterfeit Card, MERCHANT shall use
its best efforts to retain the Card by peaceful means, and
shall notify the appropriate authorities of the same.
MERCHANT is not authorized to commit any breach of the peace
or to cause any Cardholder any personal injury or to injure
or destroy any property and MERCHANT agrees to examine the
signature on every Card presented, compare the signature on
the Card to the sales draft, check the date on which the
Card becomes valid and the date on which the Card expires
and not to accept any Card that is not yet valid or has
expired. MERCHANT should not establish minimum or maximum
transaction amounts as a condition for honoring Cards or the
card account number. If the actual card is not present
Merchant agrees to abide by the above rules to the extent
possible.
5. COMPLETION OF TRANSACTIONS: MERCHANT agrees to complete
all transactions with the Cardholder or other authorized
user in accordance with the provisions of this Agreement and
the Rules and Regulations as presently in effect and as the
same may be amended from time to time. The Rules and
Regulations are hereby incorporated by reference and made a
part hereof as though fully set forth herein. MERCHANT shall
not, as a regular practice, impose a requirement upon
Cardholders to provide any personal information such as a
home or business telephone number, a home or business
address or driver’s license as a condition of honoring
Cards, unless deemed necessary because of suspicious
circumstances or otherwise required by the Rules and
Regulations or required because of the unique nature of a
specific transaction. MERCHANT shall never utilize the
credit available through individual Cards/or through the use
of the card number to provide cash advances to Cardholder.
Such action will subject MERCHANT to immediate termination
and all funds of MERCHANT, including those in
MERCHANT’s Designated Deposit Account, Identified
Account(s), or any other account, as identified in the
MERCHANT APPLICATION, may be garnered by BANK and placed on
hold pursuant to the provisions of Paragraph 24 herein
below. MERCHANT may not deposit for entry into interchange,
directly or indirectly any card transaction that it knows to
be (i) fraudulent or (ii) not authorized by the cardholder.
With respect to this requirement, the MERCHANT shall be
responsible for the actions of its employees while acting in
its’ employ.
6. POINT OF SALES DEVICES: MERCHANT agrees to use a POS
device, computer or telephone and related equipment approved
by BANK for transmission of all transaction data. MERCHANT
should record each transaction by "swiping" the Card through
the correct programmed POS device whenever Card is present.
If Card is not present, or if Card can not be electronically
read, the card number and expiration date must be manually
entered into the POS device. MERCHANT acknowledges that each
outlet, retail location or business entity is required by
BANK to have its own POS device. MERCHANT understands that
sales authorized at one location cannot be processed through
a terminal at another location unless authorized by BANK. In
the event of a breakdown of the POS device or other system
failure. MERCHANT is to call customer service for
assistance. BANK is not liable for any lost sales as the
result of POS, printing, communications or authorization
system failure. In such cases, MERCHANT shall imprint each
sales draft with the embossed data on each Card and
MERCHANT’s plate on an imprinter and call the
authorization center for a voice authorization in accordance
with Paragraph 8 and obtain Cardholder’s or other
authorized user’s signatures. MERCHANT shall "key-in"
the transaction data to the POS device as soon thereafter as
the POS device and/or system becomes operational. If
MERCHANT uses an electronic printer connected to the POS
device, MERCHANT must also obtain the Cardholder or other
authorized user’s signature on the printed sales
receipt.
7. TAXES: Tax required to be collected by MERCHANT (and
other handling fees) must be included in the total
transaction amount and should not be collected separately in
cash nor processed as an additional transaction.
8. SALES DRAFTS/RECEIPTS: When a card is present, MERCHANT
agrees to prepare an electronically printed sales receipt or
an imprinted sales draft for each transaction. All items,
goods and services purchased in a single transaction shall
be included in the total amount of a sales draft. MERCHANT
shall legibly type or print the following information on
each sales draft: (a) The Cardholder’s name or name of
other authorized user, if applicable; (b) The
Cardholder’s account number and expiration date; (c)
MERCHANT’s name and address as shown on the face of
this Agreement; (d) The date of the transaction; (e) The
total cash price of the sale (including all applicable
state, federal and local taxes); or (1) The amount to be
charged if a partial payment is in cash or by check; or (2)
The amount to be charged if a partial payment is made as a
deposit, installment payment or the balance owing after a
deposit has been made; (f) A brief description of the goods
or services; (g) The words "deposit", "installment", or
"balance" if full payment is to be made in this manner in
various times on different sales drafts; (h) The
authorization code number, and (i) For telephone order
transactions, the letters "TO" shall be typed or legibly
printed on the signature line; for mail order transactions,
the letters "MO" shall be typed or legibly printed on the
signature line; and for recurring transactions, the words
"Recurring Transaction" shall be typed or legibly printed on
the signature line. MERCHANT shall deliver to the Cardholder
a true and completed copy of the sales draft. A transaction
where the Card is not magnetically read or not present may
be subject to increased discount fees if not approved by
Bank or if not properly identified on the application or
subsequent correspondence.
9. MAIL ORDER, TELEPHONE ORDER, CARD NOT PRESENT SALES: When
Card is not present MERCHANT understands that an authorized
transaction does not constitute a guarantee of payment, only
available credit, and may be subject to dispute or
chargeback. MERCHANT understands and acknowledges the
processing of transactions when a Card is not present may be
subject to additional discount fees if unauthorized
software, POS devices or direct data transmission
information results in erroneously transmitted data, or if
MERCHANT did not make the proper disclosure on the MERCHANT
APPLICATION prior to BANK approval. In addition, these types
of transactions where merchandise is to be shipped or
services provided an authorization is considered to be valid
if (i) the authorization is obtained on any day up to seven
calendar days prior to the transaction date and (ii) the
transaction amount does not exceed the authorized amount
plus 15 percent, representing shipping costs. The
transaction date is considered the shipping date. In any
case, all transactions with a transaction date more than 30
days prior to processing date is subject to possible
chargeback.
10. AUTHORIZATION: MERCHANT understands and acknowledges
that the floor limit is zero and that all transactions must
be authorized. In the event that the POS device fails, an
authorization must be obtained through voice back-up.
MERCHANT acknowledges that authorization can not be "forced
in" by reducing the transaction amount to find an approval
authorized amount. Once a transaction is declined, MERCHANT
must wait for next day availability. Failure to abide by
these rules subjects Merchant to possible chargeback,
increase in the discount and/or transaction fees.
11. APPROVED MONTHLY PROCESSING LIMIT: MERCHANT understands
and acknowledges that BANK will assign a monthly sales
processing limit which is not to be exceeded without BANK
authorization. If exceeded, it could, at BANK’s sole
discretion, charge an over limit fee, suspend processing
services, hold the excess processed transactions or charge
an additional discount and/or reserve fee.
12. PAYMENT (ACH): MERCHANT shall at all times maintain an
accessible ACH account that BANK will use to debit and/or
credit funds on a daily or monthly basis. The settlement of
funds is based on the schedule of terms governing the
availability of funds agreed to by MERCHANT. The
availability of funds begins on the first bank business day
following the MERCHANT closing a batch before 5:00 p.m.
Central Standard Time; or if MERCHANT is using a special
processor, the second business day. BANK reserved the right
to divert and hold all funds when BANK is investigating the
breach of warranty by Merchant or has reasonable cause to
believe that MERCHANT may have violated a provision of this
Agreement and/or is engaged in illegal or suspicious
activity. BANK cannot guarantee that timeliness with which
any payment may be credited by MERCHANT’s bank.
MERCHANT understands that, due to the nature of the ACH and
the electronic networks utilized for the movement of funds
and the fact that not all banks belong to the ACH Network,
payment to MERCHANT can be delayed. In such cases, MERCHANT
agrees to establish a depository account at a financial
institution that does belong to the ACH Network and to work
with BANK to help resolve any problems in crediting
MERCHANT’s Designated Account. In the event that a
payment is rejected by MERCHANT’s bank or fails to
arrive within five (5) days from the end of the Funds
Availability Cycle due to problems over which BANK has no
control, BANK shall periodically wire transfer any funds due
MERCHANT until the problem is resolved, such wire transfers
and resolution of all issues shall be solely at the
MERCHANT’s expense. All payments to MERCHANT shall be
made in full, after first deducting therefrom the discount
fee, transaction fee, credits, chargebacks, reserves, lease
payments, rental fees, statement fees, minimum discount fees
or other charges or fees for which MERCHANT is responsible
pursuant to this Agreement. Said charges and fees shall be
deducted from transaction settlement or may be debited
against MERCHANT’s Designated Account, MERCHANT’s
Identified Account(s) or the Identified Account(s) of any
GUARANTOR of this Agreement, at the BANKS’s sole and
absolute discretion. MERCHANT understands and hereby
acknowledges that the discount fee is earned at the time of
sale and is not subject to refund. Not all fees will be
debited on a daily basis, but be subject to a month end
debit to the designated account, or other available
funds.
13. CASH ADVANCES: Merchant shall not use, at its location
or through its electronic terminal MERCHANT’s own
credit card or any credit card which MERCHANT is authorized
to use. Such use is deemed as Cash Advance. Cash Advances,
are prohibited and can result in immediate termination and
the Merchant added to the Combined Terminated Merchant File,
and Match File.
14. DRAFT AND DATA STORAGE RETRIEVAL: The Rules and
Regulations require the presentation of printed or imprinted
sales transactions to issuers upon request. MERCHANT shall
establish a system to store and maintain copies of sales
transactions in such a manner as to forward said information
within twenty-four (24) hours of request. MERCHANT
understands that failure to respond to such a retrieval
request constitutes a violation of this agreement which may
result in a chargeback, assessing a charge back fee and or
establishing a Reserve Account. MERCHANT agrees to preserve
all records pertaining to sales drafts and credits for at
least seven (7) years from the date of the document and to
properly comply with all requests by BANK for production of
said records. MERCHANT further agrees that BANK/ECS or any
authorized representative of BANK or ECS may, during normal
business hours, without prior notice inspect, audit and make
copies of MERCHANT’s books, accounts, records and files
pertaining to any transactions or refunds or adjustments
thereon. Where a card user is not present, Merchant must be
able to create all information as to the origination of the
transaction.
15. RETURNS AND CREDITS; If, with respect to any
transaction, any goods are accepted for return or any
services are refunded, terminated or canceled, or any price
adjustment is allowed by MERCHANT (other than involuntary
refunds by airlines or other carriers when required by
applicable tariffs and except where otherwise required by
law or governmental regulations), MERCHANT shall not make
any cash refund to the Cardholder during the term of this
Agreement, but MERCHANT shall utilize a credit transactions
evidencing such refund or adjustment. MERCHANT must process
the credit transaction within 24 hours but no later than (5)
five business days. MERCHANT shall date each credit item
with the transaction date and include thereon a brief
description of the goods returned, services canceled or
adjustment made and the amount of the credit in sufficient
detail to identify the transaction. One completed copy of
the credit draft shall be delivered to the Cardholder at the
time of each return or cancellation of a transaction. Every
credit issued will be subject to a transaction fee and there
shall be no refund of any fees or charges associated with
the original transaction. MERCHANT shall not, under any
circumstances, during the term of this Agreement, issue cash
for return of goods or cancellations of services where goods
or services were not originally purchased at MERCHANT. With
proper disclosure at the time of the transaction, MERCHANT
may: (a) refuse to accept goods in return or exchange and
refuse to issue a refund to a Cardholder; and (b) accept
returned goods in exchange for the MERCHANT’s promise
to deliver goods or services of equal or greater value
available from MERCHANT at not additional cost to
Cardholder. Proper disclosure shall be deemed to have been
given only if, at the time of the transaction (which is
evidenced with an acknowledged cardholder signature), the
following notice appears on all copies of the sales draft
(or disclosure if card is not present) in legible letters at
least one-quarter (1/4) inch high and in close proximity to
the space provided for the Cardholder’s signature
stating "NO REFUND" or "EXCHANGE ONLY" or "IN STORE CREDIT
ONLY" as applicable, or equivalent language. Even with this
provision being adhered to it does not guarantee avoidence
of chargeback.
16. WARRANTIES BY MERCHANT: MERCHANT warrants and agrees to
fully comply with all federal and local laws, rules and
regulations as amended from time to time. MERCHANT also
warrants not to change the nature of its business as
indicated on the accompanying MERCHANT APPLICATION submitted
herewith or to modify the ownership of the business without
the prior written consent of BANK. As to each transaction
presented to BANK for payment, MERCHANT specifically
warrants that (a) the sales transaction is valid in form and
has been completed in accordance with all applicable
requirements; (b) MERCHANT has delivered goods to the
Cardholder or completed the service described on the sales
transaction in accordance with MERCHANT’s agreement
with the Cardholder, and that MERCHANT has, in inventory,
the goods sold if not delivered at the time of sale; (c)
each sales transaction represents the Cardholder’s
indebtedness for the total amount shown; (d) the Cardholder
has no defense right of offset or counterclaim against
MERCHANT in connection with the purchases of the goods or
services; (e) MERCHANT has not charged Cardholder any
separate or additional fee(s) in connection with the
transaction other than as may be required by law. The
foregoing shall not prohibit MERCHANT from extending
discounts to customers paying by cash, check or any other
means, other than by credit card; (f) MERCHANT warrants to
BANK that each transaction was placed by a person who is the
Cardholder or other authorized user of the Card; (g) all of
MERCHANT’s business locations engage in the same or
substantially similar business activity as that listed on
the accompanying MERCHANT APPLICATION; (h) the percentage of
mail and/or telephone order sales does not exceed five
percent (5%) of all sales made by MERCHANT, unless
specifically discloses in the MERCHANT APPLICATION; (i)
MERCHANT offers no enticements or incentives to Cardholders
in connection with the sale of MERCHANT’s products; (j)
MERCHANT will not use any personal credit card owned by
MERCHANT or any GUARANTOR on the MERCHANT POS device; (k)
MERCHANT uses both the name and address shown on the
Agreement on all sales drafts and does not use any other
name (unless a descriptor is used to further identify the
transaction, and agreed to by BANK); (l) MERCHANT has
included all items of goods and services purchased in a
single transaction and the total amount on a singles sales
draft or transaction record and MERCHANT will not engage in
the practice of "split-ticket" sales; (m) will not submit
any sales transaction that was previously charged back; (n)
shall not submit any sales transaction that was previously
declined. MERCHANT further warrants and agrees that it shall
not, without the Cardholder’s prior written consent,
sell, purchase, provide or exchange Card account information
in the form of sales drafts, mailing lists, tapes or any
other media obtained by reason of a transaction to any third
party other than MERCHANT’s agents for the purpose of
assisting MERCHANT in its business to BANK, to ECS, or
pursuant to any lawful government demand. All media
containing Card account numbers must be stored for three (3)
years in an area limited to selected personnel until
discarded and then must be destroyed in a manner that will
render the data unreadable and unusable.
17. CHARGEBACKS: MERCHANTS will pay to BANK, upon demand,
the face amount of any chargebacks, BANK shall have the
right to debit MERCHANT’s incoming chargebacks, through
a Designated Account, or any other funds of MERCHANT or of
any GUARANTOR in BANK’s direct or indirect control by
reason of the security interest granted to BANK by MERCHANT
pursuant to Paragraph 24 hereinbelow, and to charge back
such sales to MERCHANT in any of the following situations;
(a) Where goods have been returned or services canceled by a
Cardholder and the Cardholder requested a credit card draft
and such credit draft was not processed by MERCHANT within
three (3) business days; (b) Where the purchases has not
been authorized in advance by the authorization center as
required hereunder and the transaction was charged back by
the issuer; (c) Where the transaction is for a type of goods
or service sold other than as disclosed in the MERCHANT
APPLICATION and approved in advance by BANK and the sales
transaction was charged back by the Cardholder or issuer;
(d) Where a Cardholder contends or disputes in writing to
BANK, ECS or the issuer that: (1) Goods or services were not
received by the Cardholder or other authorized user; or (2)
Goods or services received by a Cardholder or other
authorized user do not conform to the description on the
sales draft; or (3) Goods or services were sold in a
misleading fashion or manner by MERCHANT; or (4) Goods or
services were defective; or (5) The dispute reflects a claim
or defense authorized against issuers or creditors by a
governmental agency, a relevant statue or regulation; (e)
Where a sales draft or credit draft was not received by BANK
as required in accordance with Paragraphs 14 and 15 of this
Agreement; (f) Where the sales transaction does not contain
a transaction date or the face of the sales draft show that
such date or dollar amount has been altered or incorrectly
entered and the sales draft is charged back by the issuer;
(g) Where the sales draft contains the imprint description
of a Card other than the Card specified; (h) Where the
transaction was generated through the use of an expired
Card; (i) Where no signature appears on the sales draft (or
the sales draft does not contain the embossed legend from
the Card in the case of a permitted manual data capture
transaction) or MERCHANT failed to obtain specific
authorization in advance from the authorization center to
complete the transaction and/or the Cardholder has certified
in writing to BANK or the issuer that the Cardholder or
other authorized user did not make or authorize such
transaction; (j) Where the signature on the sales draft is
obviously different from the signature appearing on the
signature panel of the Card and the sales draft is charged
back; (k) Where the issuer, BANK or ECS has information or
belief that merchant fraud occurred at the time of the
transaction(s), whether or not such transaction(s) was
properly authorized by the issuer, and the Cardholder
neither participated in nor authorized the transaction(s).
In any other situation where the sales draft was executed or
depository credit was given to MERCHANT in circumstances
constituting a breach of any representation or warranty of
MERCHANT or in violation of the Rules and Regulations,
whether or not a transaction is charged back by the issuer.
If, with respect to any one of MERCHANT’s outlets, the
amount of any Card counterfeit or fraud incidences becomes
excessive, in the sole and absolute discretion of BANK,
MERCHANT may be charged back for all transactions,
terminated immediately without cause, and MERCHANT’s
funds, including but not limited to those incoming
transactions and in MERCHANT’s Designated Account(s),
shall be held pursuant to the provisions of Paragraph 18
below. BANK will provide MERCHANT with any information
possessed by it which may enable MERCHANT to recover from
others the amount of any transaction charged back to
MERCHANT. MERCHANT understands that BANK will assess up to
twenty-five ($25.00) per each chargeback plus the amount of
any chargeback fines or penalties assessed by VISA or
MasterCard against the Bank for transactions arising from
the activities of MERCHANT, or any other charges as may be
established by BANK from time to time. Furthermore, BANK may
assess MERCHANT a fee for processing any fines or penalties
that may be charged by VISA or MasterCard at the sole and
absolute discretion of BANK.
18. CHARGEBACK RESERVE ACCOUNT: Notwithstanding any other
provision of this Agreement or any language to the contrary
contained in the Agreement, BANK reserves the right to
establish, without prior notice to MERCHANT, a non-interest
bearing Chargeback Reserve Account and/or to raise the
Discount Fee or Transaction Fee pursuant to Paragraph 26,
upon BANK’s reasonable determination of the occasion of
any of the following: (a) MERCHANT engages in any processing
of charges which represents an overcharge to the Cardholder
by duplication of charges; (b) any activity designed by
MERCHANT to circumvent a "Call Center" message when
attempting to process a transactions for a Cardholder; (c)
failure by MERCHANT to fully disclose the true nature of its
business to BANK to permit a fully-informed decision as to
the suitability of MERCHANT for processing through BANK; (d)
failure by MERCHANT to fully disclose the true ownership of
MERCHANT’s business entity; (e) processing by MERCHANT
of unauthorized charges; (f) processing by MERCHANT of
charges for any other merchant or third party; (g) MERCHANT
processes any credits through MERCHANT’s POS device to
any VISA or MasterCard account owned or controlled by
MERCHANT or any of its GUARANTORS; (h) any misrepresentation
made by MERCHANT in completion of the MERCHANT APPLICATION
or breach of any other covenant, warranty or representation
contained in the Agreement, including a change of type of
business without prior approval by BANK; (i) MERCHANT has
chargebacks which exceed one percent (1%) of the total
number of transactions completed by MERCHANT in any thirty
(30) day calendar period, such (30) day calendar period not
limited to any specific monthly cycle; (j) excessive number
of requests from consumers or issuing banks from retrieval
of documentation; (k) excessive credits that exceed sale
transactions by ten percent (10%); (L) any form of MERCHANT
financial instability or diminishment of the financial
condition of MERCHANT or any of its GUARANTORS. After
payment or adequate provision for payment is made by BANK
for all obligations on the part of MERCHANT to BANK under
this Agreement, including any and all amounts due for any
lease or rental of any equipment utilized by MERCHANT under
this Agreement and the Rules and Regulations. MERCHANT may
request BANK to disburse to MERCHANT any and all funds
remaining in the Chargeback Reserve Account. Unless
otherwise agreed to by BANK, such funds will not be
disbursed to MERCHANT until the end of one hundred and eight
(180) days from the date of the last chargeback or
transaction. Whichever is later, unless BANK, it its sole
and absolute discretion, has reason to believe the
Cardholder chargeback rights may be longer than such period
of time, in which event BANK with notify MERCHANT of such
fact and BANK will set the date when funds shall be
released. Such notice from Bank will be given to MERCHANT
within one hundred eighty (180) days after the termination
of the Agreement. No funds held in the Chargeback Reserve
Account will accrue or bear interest.
19. FRAUDULENT SALES-FACTORING OR LAUNDERING: MERCHANT shall
never accept or deposit, or enter into MERCHANT’s POS
device, a fraudulent sale or sale made by any other
MERCHANT. Should MERCHANT do so, MERCHANT agrees to pay BANK
a fee of five thousand dollars ($5,000), and MERCHANT may
immediately be terminated by BANK, have all funds placed
into a Chargeback Reserve Account pursuant to Paragraph 17
above and may be placed on the COMBINED TERMINATED MERCHANT
FILE (CTMF) OR MATCH, MERCHANT and GUARANTOR(S) specifically
acknowledge that placement on the CTMF/MATCH may result in
MERCHANT and GUARANTOR(S) never being allowed to settle
transactions again and MERCHANT and GUARANTOR(S) hereby
expressly waive any claims or rights of claim against BANK
and ECS arising from the placement of MERCHANT and/or
GUARANTOR(S) on the CTMF/MATCH.
20. DUE CARE: The performance by BANK of all services called
for in this Agreement shall be consistent with reasonable
industry standards. BANK shall indemnify and hold MERCHANT
harmless from any liability, loss or damage which directly
results from; (a) BANK not complying with the terms and
conditions of this Agreement; or (b) any loss suffered by
MERCHANT as a result of BANK’s negligence. BANK and/or
ECS shall not be liable for any special consequential,
exemplary or, punitive damages. In no event shall
BANK’s and/or ECS’s cumulative liability to
MERCHANT hereunder exceed the amount of the net processing
fees paid by MERCHANT to BANK in the immediately proceeding
calendar month. MERCHANT acknowledges and agrees that the
indemnity hereunder shall not extend to any act or failure
to act by any employee of MERCHANT. BANK and ECS are hereby
authorized by MERCHANT to divulge MERCHANT’s name,
address and telephone number(s) to any third party who has
the reasonable right to know such information.
21. FORCE MAJEURE: The parties to this Agreement shall be
released from liability hereunder for failure to perform any
of the obligations hereunder where such failure to perform
occurs by reason of any act of God, fire, flood, storm,
earthquake, tidal wave, communications failure, sabotage,
war, military operation, national emergency, mechanical or
electronic breakdown, civil commotion or the order,
requisitions, request or recommendation of any governmental
agencies or acting governmental authority or either
party’s compliance therewith, or governmental
procreation, regulation or priority, or any other cause
beyond either party’s reasonable control, whether
similar or dissimilar to such causes.
22. TERMINATION: This Agreement may be terminated by
MERCHANT for any reason or cause whatsoever upon thirty (30)
days prior written notice to BANK provided that MERCHANT has
paid, or agrees to pay, the minimum discount fees and
statement fees for a minimum period of six (6) months from
the Anniversary Date. BANK, in addition to any rights of
immediate termination without notice as may be contained
elsewhere in the Agreement, may terminate this Agreement and
at BANK’s discretion, any other business that is
commonly owned or controlled by MERCHANT for any reason or
cause whatsoever upon thirty (30) days prior written notice
to MERCHANT. Such termination shall become effective on the
later of thirty (30) days from the date such notice is given
in the manner prescribed for notices herein or the date
specified in such notice; provided, however, that in the
event of termination due to breach by MERCHANT of any of the
terms and conditions of this Agreement, such termination
shall become effective upon the giving of such notice by
BANK. Notwithstanding Paragraph 3 notice of termination due
to breach may be given orally or in writing at the
discretion of BANK. This Agreement may also be terminated
effective upon the giving of notice, orally, in writing or
by closing the MERCHANT’s POS device without prior
warning at the discretion of BANK in the event BANK
determines that MERCHANT’s type of business as
indicated on the MERCHANT APPLICATION differs from the
actual type of business MERCHANT operates or the business as
conducted by MERCHANT could endanger the safety and/or
soundness of BANK, the owner, officer or corporate entity
has a separate relationship with BANK and such relationship
has been terminated by BANK, MERCHANT, and/or any of its
GUARANTORS files for bankruptcy or is otherwise shown to be
insolvent and, in the event MERCHANT has chargebacks which
exceed one percent (1%) of the total number of transactions
completed by merchant in any thirty (30) calendar day
period, or in the event MERCHANT owes money to BANK and
fails to make a timely payment thereof. BANK may allow
MERCHANT to process while exceeding chargeback minimums or
any violation while correcting action is being taken by
MERCHANT. This allowence does not waive the provision for
immediate termination.
23. NOTICES: Notices required or permitted under this
Agreement shall be deemed to have been given on the date and
at the time the same shall be deposited in the United States
mail by first class mail, postage prepaid and addressed to
BANK, ECS or MERCHANT at the addresses written on the
MERCHANT APPLICATION or at such other addresses as any other
party may give to the other parties from time to time by
written notice. All obligations of any party to this
Agreement to pay funds to another shall survive any
termination of this Agreement. Nothing herein shall be
construed as relieving MERCHANT of the obligation of the
payment of all minimum discount and statement fees as
provided in Paragraph 26 of this Agreement.
24. SECURITY INTEREST: To secure all obligations of MERCHANT
to BANK arising from this Agreement, MERCHANT hereby grants
BANK a possessory security interest in, and hereby assigns,
conveys, delivers, pledges and transfers to BANK all of
MERCHANT’s right, title and interest in and to, all
deposits, regardless of source and whether or not finally
collected or credited to, and all amounts contained in,
MERCHANT’s Designated Account(s) and all other accounts
now or hereafter established in MERCHANT’s name at
BANK. Said security interest may be exercised by BANK
without notice or demand of any kind. The exercise of this
security interest shall be in addition to any other rights
of BANK under this Agreement or law. BANK shall also have
the right to require MERCHANT to furnish such other and
different security as BANK shall deem appropriate, in
BANK’s sole and absolute discretion, in order to secure
MERCHANT’s obligation under this Agreement. MERCHANT
agrees to execute any documents to take any actions required
in order to comply with, perfect and maintain any security
interest under this paragraph.
25. INDEMNIFICATION: MERCHANT shall indemnify and hold BANK
and ECS and their officers, employees, agents and
independent contractors harmless from any liability, loss,
damage, claim or complaint, and reasonable attorney’s
fees and costs and any reasonable fee imposed by BANK and/or
ECS to cover BANK’s and/or ECS’s administrative
costs incurred, arising out of MERCHANT’s breach of
this Agreement, including but not limited to,
misrepresentation or breach of any covenants or warranties
herein contained.
26. DISCOUNT FEE AND TRANSACTION FEES: Through ACH, Bank
will debit Merchant’s Designated Deposit Account daily
or monthly as applicable for the discount fees and
transaction fees as expressed on the "Schedule of Fees".
BANK shall have the right to change or increase the Discount
Fee and Transaction Fees from time to time in accordance
with Paragraph 23 and 28. Transaction Fee shall mean a fee
charged for each sales and/or credit inquiry or transaction
processed, including but not limited to batch closing, voice
authorizations. Merchant acknowledges that Bank has relied
on this information contained in the MERCHANT APPLICATION
(including but not limited to) the type of business in which
MERCHANT is engaged, the product or services sold, the
average sales or ticket size and projected monthly volume,
the amount of telephone and mail order sales, and the ratio
of keyed (non-swiped transactions) in determining whether to
accept Merchant’s application and in the setting the
Discount Fee and Transaction Fees charges to Merchant,
MERCHANT acknowledges that the Discount Fee quoted in the
MERCHANT APPLICATION is contingent upon MERCHANT using the
correct POS/PC software application, closing batches at
least once every business day, and further understands that
in the event that batches are not closed at least daily,
additional discount may be charged. MERCHANT further
understands that if authorization is not obtained for every
transaction, exactly matching the sales amount, an
additional discount fee may be charged for each transaction.
Additional fees may be assessed for processing of sales or
credit transactions emanating from foreign cardholders.
Hotels and car rental agencies may obtain authorizations
within fifteen percent (15%) of the exact amount of the
sales transactions, for bars, restaurants and nightclubs,
within twenty percent (20%). A Schedule of Fees will be sent
to MERCHANT upon Bank approval.
27. MINIMUM DISCOUNT FEE/STATEMENT FEE: MERCHANT agrees that
a Minimum Discount Fee will be imposed for any month that
the minimum fee is not met. MERCHANT acknowledges that BANK
will assess a ten dollar ($10) monthly statement fee on a
monthly basis. MERCHANT agrees to pay BANK the Minimum
Discount Fee and Monthly Statement Fee for no less than six
(6) months and specifically authorized BANK to debit the
full amount of all unearned Minimum Discount Fees and
Monthly Statement Fees against the MERCHANT’s
Designated Account and/or may Identified Account(s) of the
MERCHANT and/or its GUARANTOR(S) in the event that either
the BANK or the MERCHANT terminate this Agreement prior to
the six month anniversary thereof. All fees will be stated
on the Schedule of Fees, unless separately disclosed as
conditions warrant.
28. EXCEPTION TO QUOTED RATES: MERCHANT acknowledges that
Bank will charge a higher discount fee and/or reserve fee
whenever there is an exception to normal processing as
stated on the MERCHANT APPLICATION.
29. SEVERABILITY: If any part of this Agreement is held
unenforceable or invalid or prohibited by law, the part
shall be deemed stricken therefrom and this Agreement shall
be read and interpreted as though said part did not
exist.
30. WAIVER: Neither the failure nor any delay on the part of
BANK to exercise any right, remedy, power or privilege
hereunder shall operate as a waiver or give rise to an
estoppel nor be construed as an agreement to modify the
terms of this Agreement, nor shall any single or partial
exercise of any right, power or privilege with respect to
any occurrence to be construed as a waiver of such right,
remedy power or privilege with respect to any other
occurrence. No waiver by a party hereunder shall be
effective unless it is in writing and signed by the party
making such waiver, and then such waiver shall apply only to
the extent specifically stated in such writing.
31. ASSIGNMENT AND DELEGATION: This Agreement may be
assigned by BANK but not by MERCHANT without the prior
written consent of BANK.
32. GOVERNING LAW AND VENUE: This Agreement shall be
governed by and construed in accordance with the laws of the
State of California. The parties stipulate that the
exclusive venue for any action between them shall be the
county of Humboldt, California.
33. COMPLIANCE AND DISCLOSURE OF INFORMATION: MERCHANT shall
provide such information and certifications as BANK and ECS
may reasonably require from time to time to determine
MERCHANT’s compliance with the terms and conditions of
this Agreement and the Rules and Regulations. MERCHANT
further agrees to produce and make available for inspection
by BANK or ECS, or their officers, agents or
representatives, such books and records of MERCHANT as BANK
and ECS may deem reasonably necessary to be adequately
informed of the business and financial condition of
MERCHANT, or the ability of MERCHANT to observe or perform
its obligations to BANK pursuant to this Agreement. MERCHANT
further agrees to provide to BANK and ECS from time to time
upon request such information as BANK and ECS may request
including, but not limited to, credit reports, personal
and/or business financial statement, income tax returns, or
other such information as BANK and ECS may request MERCHANT
and each undersigned GUARANTOR grant to BANK and to ECS
continuing authority to conduct credit checks and background
investigations and inquiries concerning MERCHANT,
MERCHANT’s owner(s) and GUARANTOR(S) including, but not
limited to, character and business references and the
financial condition of MERCHANT, MERCHANT’s owner(s)
and GUARANTOR(S). MERCHANT and each undersigned GUARANTOR
expressly authorize BANK and ECS or their agents and
representatives to gather and receive such information from
any and all third parties directly, without further consent
or authorization on the part of MERCHANT or
GUARANTOR(S).
34. AMENDMENTS: No provision of this Agreement may be
amended, modified or waived except by a writing signed by
BANK. This Agreement may be amended by BANK from time to
time upon written notice of change(s) in terms and
conditions. Any amendment to this Agreement shall be
effective on the later of the effective date specified in
the notice mailed to MERCHANT in the manner prescribed for
notices herein.
35. SURVIVAL: All representations, warranties and convenants
shall survive the expiration or termination of this
Agreement.
36. CONSTRUCTION: The captions contained in this Agreement
are for the convenience of the parties and shall not be
construed or interpreted to limit or otherwise define the
scope of this Agreement shall not be deemed to have
originated with either party.
37. COUNTERPARTS: This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original, such counterparts to constitute but one and the
same instrument.
38. ENTIRE AGREEMENT: This Agreement together with the
accompanying MERCHANT APPLICATION signed and submitted by
Merchant in connection herewith, constitute and express the
entire understanding between MERCHANT, BANK and ECS with
respect to the subject matter hereof and supersede all prior
and contemporaneous agreements and understandings,
inducements, or conditions by BANK, ECS, other sales
representative, whether express or implied, oral or written.
Neither this Agreement not any portion or provision hereof
may be amended, modified, or waived except by a writing
specifically indemnified as such and signed by the BANK
and/or ECS.
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