Presented here are the Terms and Conditions for using HMS Merchant Card Processing Services

This Merchant Card Processing Agreement covers card payment processing services among the Merchant that signed the Merchant Application, the Merchant Bank and the Processor. The Processor and the Merchant Bank are collectively referred to as the ďBankĒ. Bound by the Operating Rules, the Processor and Merchant Bank have the privilege to distribute the Bankís responsibilities among themselves based on their discretion. The Merchant Bank or Processor may distinctly or jointly enact the rights provided to the Bank.

The appendices, Operating Guide, Fee Schedule, Merchant Application and the Operating Rules that come together with the Merchant Card Processing Agreement are encompassed by the terms and conditions of the Merchant Agreement and are referred collectively as the ďMerchant Agreement.Ē

Capitalized terms present in the Merchant Agreement which are not clarified here shall be defined in the Operating Guide that is present in the Host Merchant Services Resource Archive: http://www.hostingmerchant.com/about/resources/.

Based on the processing services chosen by Merchant on the Merchant Application and in compliance with the Merchant Agreement and applicable Operating Rules, Merchant consents to partake in the Bankís Card processing program by honoring Cards in compliance with the Merchant Agreement; and providing Credit Transaction Receipts and other electronic data to Bank for the Card Program services provided by Bank.

With regards to Visa Transactions:

Merchant Bank holds the responsibility of directly granting settlement funds to Merchant; Processor has no authority to access or keep the settlement funds.

With regards to MasterCard Transactions:

a) The Merchant Agreement does not hold any effect and may not be altered in any way without the written approval of Merchant Bank.

b) Processor has no right to access any account for funds due to a Merchant or funds kept from a Merchant. Merchant Bank may not assign or transfer an obligation to pay a Merchant.

c) Processor may not extend or transfer to a third party any privilege or duty of Processor which was declared in the Merchant Agreement.

MERCHANTíS APPLICATION AND INFORMATION.

By filling out the Merchant Application, Merchant applies for the Card Program services encompassed by the Merchant Application and the Merchant Agreement. Based on their exclusive judgment, Merchant Bank and Processor may accommodate or decline the Merchant Application. Merchant may only show Transactions to Bank for the activities referred by the Merchant Application.


MERCHANTíS GENERAL RESPONSIBILITIES.


2.1 General. Merchant will strictly adhere to the Merchant Agreement for delivering and processing Transactions with Bank. Bank has the obligation of processing Merchantís Transactions under the Operating Rules for the Card Program services chosen by the Merchant.


2.2 Merchantís Duty towards Othersí Acts. Merchant is solely responsible for fraud or misconduct of Merchantís processors, workers, consultants, contractors and officers. Merchant is solely liable for misuse of Merchantís software or equipment. The Bank may not be held liable for these incursions.


2.3 Electronic Notices and Disclosures. Merchant concurs to accepting written notices and other Documents that are provided to Merchant through the Merchant Agreement. Bank will inform Merchant that a Document is available in the website of the Processor and will provide a link to the specific page that contains the Document. Merchant concurs that it may be notified through the e-mail address given in the Merchant Application. Merchant knows that it must shoulder costs for accessing Documents electronically.


PROCEDURES FOR CARD TRANSACTIONS.



3.1 Honoring Cards.

(a) MasterCard and Visa. Merchant shall become a Limited Acceptance Merchant, which implies that Merchant voted to accept only certain MasterCard and Visa cards as stated in the Merchant Application or later notification. Bank has no other duty except for following the guidelines included in the Operating Rules and applicable laws. Merchant will be completely liable for the enactment of its choice of limited acceptance which includes policing the transactionsí card type(s) at the point of sale.

(b) Discover. If Merchant indicated to accept Discoverģ Card Transactions in the Merchant Application, Merchant must accept Discoverģ Cards at all Merchant establishments. These include transactions for purchase of merchandise, for donations and for Cash Over Transactions. The Merchant must produce a Transaction Receipt for each Discoverģ Card Transaction and provide at least one receipt to the Cardholder.

3.2 Operating Procedures for Transactions.



In acknowledging Cards for paying the Merchantís products, Merchant shall adhere to the rules specified by the Merchant Agreement, which covers the Operating Rules and Operating Guide.

3.3 Submission of Valid Transactions.



(a) Merchant will refer a Transaction to Bank only if Transaction is approved by the Cardholder who used the Card for Transaction. Merchant will not submit:

(a) any Transaction that Merchant considers fraudulent or not consented by the Cardholder;

(b) any Transaction performed outside of Merchantís normal business activity as specified in the Merchant Application; or (c) any Transaction containing the account of Card presented to Merchant or account numbers presented to Merchantís business owners and principals for Transactions that fail to represent the sale of merchandise from Merchant. (b) If the volume of Transactions in the Card-Absent Environment greatly goes beyond the estimated yearly volume stated in the Application or if Bank believes that money laundering or another violation of Operating Rules is being committed, Bank may in its exclusive discernment: (1) reject to process the doubtful Transactions; (2) acknowledge the Transactions and maintain the amount obtained from processing until the questionable Transactions are determined valid or invalid and processed according to the Operating Rules; (3) suspend the interaction with Card-Absent Environment Transactions and/or finish the Agreement; or (4) alter the Agreement to safeguard the Bankís welfare.

3.4 Payments to Merchant for Valid Transactions.

(a) Merchant Bank will grant provisional credit to Merchant for every legit Transaction which Merchant refers to Bank by crediting Merchantís Settlement Account. Merchant Bank has no duty of providing provisional credit to Merchant for invalid or questionable Transactions. Bank may even cease any provisional credit based on Merchant Bankís or Processorís exclusive judgment. Provisional credits given by Merchant Bank to Merchant will be subjected to alteration, inclusive of revocation, depending on Bankís investigation. Provisional credit to Merchant for any Transaction disputed by Cardholder is not final.

(b) Merchant Bank may remove any payment directed towards the Merchant for Credit Transaction Receipt processed for Merchant. Merchant is obligated to quickly reimburse Bank the value exceeding the credit for legit Transactions. If Merchant does not comply, Merchant Bank may just take the liability from the Reserve Account or other funds benefitting the Merchant.

(c) Merchant considers the credits and payments given to Merchant as temporary and eligible for suspension or to adjustments in compliance with the Operating Rules, Operating Guide and Merchant Agreement.

3.5 Retrieval Requests. If Merchant deposits Transactions with Bank through electronic data capture terminal, magnetic tape or electronic transmission, Merchant has the duty to reply to all Retrieval Requests within the duration described by the appropriate Operating Rules.

3.6 Equipment; Supplies; Displays.

(a) Upon Merchantís request, Processor must give Merchant point-of sale equipment (POS Equipment) that Merchant may require for processing and submitting Transactions. Processor must set the POS Equipment to function at the Merchant Outlets according to the Operating Rules. However, Processor has no duty of granting warranties for assuring that the furnished POS Equipment will function according to the Operating Rules. Merchant must give back the equipment supplied by Processor when the Agreement expires.

(b) Third party POS Equipment and related services granted or acquired by Processor under the Merchant Agreement are provided ďAS-IS.Ē However, at the expense of the Merchant, the Processor must utilize sensible professional efforts in assisting the Merchant to make the third party supplier issue any warranty.

(c) Merchant may only use Transaction forms and processing formats that are approved by Bank. The Bank has the right to change the format of the forms. After being informed, Merchant must follow the adjustments. Merchant will only utilize Bank-provided forms for Transactions that will be submitted to Bank.

(d) Merchant has no right to (i) imply that the Bank or Card Association endorses any of Merchantís products and services, (ii) refer to a Bank or Card Association for endorsing eligibility of Merchantís goods, or (iii) utilize any symbol or logo owned by Bank or any Card Association for misleading purposes.

MERCHANTíS WARRANTIES. Instantly after completing the Merchant Application and every time Merchant sends a Transaction, the Merchant guarantees that:

4.1 Merchant has strictly adhered to the Merchant Agreement and all other relevant rules;

4.2 All statements declared in Merchant Application were true by the time Merchant signed the Merchant Application and consented to getting bound by the Merchant Agreement;

4.3 No drastic modifications happen to the details written in the Merchant Application;

4.4 Merchant must not sell an entirely new product line and must not transact using a brand name not mentioned in the agreement

4.5 The Transaction is completely legal and valid, wherein the Merchantís merchandise were purchased using the declared amount in the Transaction Receipt.

4.6 Merchant is entitled to the Transaction Receipt; there are no burdens related to it and Merchant has the right to communicate the Transaction for processing;

4.7 The Transaction is currently not being counterclaimed or disputed;

4.8 The Transaction was never processed before unless permitted by the appropriate Operating Rules;

4.9 All declarations in the Transaction Receipt are valid and Merchant is completely unaware of any violation that may endanger the legitimacy of the Transaction;

4.10 The individual who enacts the Merchant Application as substitute of the Merchant possesses complete authority and capability to take part in the Merchant Agreement;

4.11 The Merchant Agreement serves as the legal ground and source of Merchantís obligation to follow the terms covered by the Agreement;

4.12 Merchant must only deliver Transactions that perfectly complies with the details provided in the Merchant Application and the Merchant Agreement;;

4.13 Merchant has the power and authority to authorize the automatic fund transfer provided in the Merchant Agreement;

4.14 The Merchant owns and manages the Settlement Account, and this account is legitimate for facilitating credit and debit transactions.

4.15 Merchant is not (i) a Sanctioned Person, (ii) identified or suspected by the U.S. Department of State as financier of international terrorism under 22 U.S.C. 2371 or 50 U.S.C. App. 2405(j), (iii) labeled non-cooperative with international anti-money laundering principles by an intergovernmental organization wherein US is a member; (iv) possessing a license issued by a jurisdiction assigned by the U.S. Secretary of Treasury pursuant to 31 U.S.C. 5318A as warranting special measures because of involvement in money laundering; and

4.16 That Merchant will instantly inform Merchant Bank and Processor about significant changes to information inclusive of amendment in Merchantís legal entity, address, type of business and the types of merchandise being offered.

CONFIDENTIALITY; DATA SECURITY.


5.1 Transaction Receipts. Merchant will uphold in a safe and secretive way original and legitimate copies of all issued Transaction Receipts within the last two years or even longer as necessitated by the Operating Rules. Papers containing confidential account numbers must no longer be comprehensible before getting discarded.


5.2 Storage. Merchant will keep the Transaction Receipts in a restricted location that can only be accessed by selected few. After exceeding the duration for obligatory receipt keeping, Merchant must destroy the stored records.


5.3 Merchant Servicers and Agents. Merchant must inform Bank and accept its permission before transacting with any Merchant Servicer or Agent in relation to Merchantís acceptance of Cards or the sending of Transactions to Bank. Merchant is obligated to grant Process and Merchant Bank a minimum of sixty days advance formal notification of Merchantís decision to utilize a Merchant Servicer or Agent. Merchant Bank or Processor may distinctly accept or reject the Merchant Servicer according to their absolute judgment. If the Merchant Servicer or Agent must register or move according to Operating Rules, Merchant shall convince the Merchant Servicer or Agent to comply with the requirements. Merchant must shoulder all expenses and liabilities related to the compliance of the Merchant Servicer or Agent. Bank may not be held responsible for the improper conduct or inaction of Merchant Servicer. If Merchant decides to utilize Third Party Terminals: (a) the third party will be considered the Merchantís Servicer in sending the Transactions to Bank; and (b) Merchant will be wholly accountable for any violation committed by the third party.


5.4 Security. Merchant must assure that the Merchant Servicers and Agents must match the level of protection necessitated by the Merchant and that the Merchant Servicers and Agents must transfer information compliant with: (a) the mandatory format(s) of the Card Associations; (b) the Operating Rules; and (c) the Bankís specifications. Merchant must produce a formal agreement between the Merchant and its Servicer or Agent that demands compliance with the relevant provisions of the data security requirements. Merchant may not hold the Servicer or Agent responsible for any detriment resulting from the Merchantís interaction with the third party. .


5.5 Loss or Theft. Merchant is obligated to quickly inform the Processor and the Merchant Bank of perceived or verified loss or theft of documents containing confidential Card Transaction details and Cardholder Account Numbers. The Merchant may be obliged by Bank or its appointed representatives to grant access to all of Merchantís equipment, procedures and documents for investigation and accounting. The Merchant must pay all of the resulting fees.


5.6 Merchant authorizes Bank to release its name and address to a third party determined by Bank to require such personal details for the Bank to provide the Card Program services dictated in the Merchant Agreement.


5.7 Merchant will not: (a) give Cardholder information (inclusive of Cardholder Account Numbers) or Transaction details to anyone with the exemption of the Bank, Card Associations and Merchant Servicers or Agents; (b) keep Card Magnetic Stripe, CVV, CVV2, CVC2 or CID data before being authorized for a Transaction; (c) vend, buy, give away or swap Card Account information to an ineligible party if not consented by the Cardholder; or (d) share confidential Cardholder data through the phone. .


5.8 Merchant may not vend or give away confidential Cardholder Account information and Transaction information to unauthorized parties. Merchant is obligated to turn over all confidential transaction details to Bank or at least present concrete evidences that such information have already been annihilated.


5.9 Merchant agrees to form a functional protection protocol for securing Cardholder data in compliance with the security programs of Discover, Visa, MasterCard and Payment Card Industry data security requirements. The Bank or Card Associations and their representatives have the authority to check the facilities of Merchant and its Servicer or Agent for strict adherence to the stringent data protection requirements. Bank will not be held liable if Merchant is discovered to fail some security requirements.


5.10 Federal regulations enacted pursuant to the USA PATRIOT Act and other applicable laws oblige business entities, which are related to the Processor, to confirm the identity of all persons who desire to open a bank account. Given this, Merchant must present valid proofs of identification such as passport, driverís license and certification of membership to a legally acknowledged organization.


OPERATING RULES.



6.1 Merchant is obliged to follow the Operating Rules and the subsequent amendments. The Operating Rules may change without the knowledge of the Merchant and the changes will still apply to the Merchant despite the Merchantís ignorance. Merchant who defies the amendment must not accept new Card Transactions that are covered by the change. Operating Rules will be upheld even if they become inconsistent with the Merchant Agreement.

6.2 A debit network may deviate from another in terms of their Operating Rules and the allowed Transactions. Upon the Bankís discernment, the Operating Rules of the debit network with the strictest requirements will be upheld.

MERCHANTíS BUSINESS; OTHER PROCESSORS.


7.1 Compliance with Laws. Merchant will follow the Law, including rules and regulation on completing Transactions, sending Transactions to Bank and laws dealing with money laundering.


7.2 Change in Name or Business. Merchant must provide the Processor and Merchant Bank a written notice at least thirty days before replacing its name, changing its address, modifying its style of management or causing any other major business change.


7.3 Other Processors. Merchant accepts that it will require the Bankís formal consent before taking part in another business organization.


CREDIT REPORTS AND OTHER INFORMATION.


8.1 Reports about Merchant. On a regular basis, Bank may acquire credit and other relevant information about Merchant, its owners and its officers from independent sources such as the customers and the lenders of Merchant.


8.2 Reports from Merchant. Upon Bankís discretion, Merchant will give Bank important information about its current state of business operations, such as tax returns and financial statements. Merchant must comply with Bankís requirements for Bank to properly assess Merchantís compliance with the Merchant Agreement. The confidential information given to Bank can only be used by Bank or Card Associations.


ASSIGNMENT; BANKRUPTCY.


9.1 Assignment. The Merchant Agreement is binding upon the successors of Merchant and Bank. Without the Bankís formal permission, the Merchant cannot legally assign the agreement to another entity.


9.2 Bankruptcy.

(a) Merchant must quickly tell the Bank if insolvency, bankruptcy or another related concern is being petitioned by or against the Merchant. The Merchant is completely aware that Merchant Agreement cannot hold in case of bankruptcy. Bank has the authority to suspend Merchantís continued activity under the agreement.

(b) Merchant fully consents that it must set up a Reserve Account or maintain a formerly set one when undergoing a bankruptcy proceeding. Merchant Bank will gain the authority to setoff against the Reserve Account for all financial liabilities that Merchant owes the Bank.

AMENDMENTS; WAIVERS.


10.1 Amendments. Except if granted by the Merchant Agreement, Bank may amend this agreement whenever

It desires by giving the Merchant fifteen daysí prior notice through: (a) written notice of such revision or (b) posting the change to Processorís website and giving Merchant electronic notice. The amendment will push through except if Bank gets a notice from the Merchant desiring to terminate the Merchant Agreement before the change takes effect. Even earlier than fifteen days, Bank can amend the agreement if it has very reasonable ground for sudden changes, such as Merchantís quickly declining monetary status. For Merchantís proposed amendment to take effect, Bankís appointed officer must authorize and sign such proposal.


10.2 Waivers. Even if Bank fails to enact the Merchant Agreement, its rights will not be waived. All waivers must be made in writing and affixed by the Bankís signature. Waiver for a specific circumstance will not apply for other settings except if the intent is clarified through a signed waiver.


TERM; TERMINATION.


11.1 Term/Renewal. The Initial Term shall cover three years beginning on the date the Merchant Agreement is enacted by Processorís and Merchant Bankís authorized officers. After the Initial Term expires, the Merchant Agreement will be automatically renewed for succeeding one year intervals except if one party informs the other parties of its desire for nonrenewal at least ninety days before the present term ends.


11.2 Termination.


(a) Termination without Cause. Even without providing an explanation; Processor, Merchant Bank or an authorized representative may end the Merchant Agreement upon thirty days advance formal notice.


(b) Termination with Cause by Bank. Processor, Merchant Bank or an authorized representative may immediately end the Merchant Agreement in its total discretion through oral, written or electronic notice to Merchant after Bank observes any of the mentioned circumstances:

(i) Merchant failed to comply with at least one provision of the Merchant Agreement.

(ii) There is drastic variation in the Merchantís business activity or financial status which may eventually result to huge loss for the Bank.

(iii) A bankruptcy petition was submitted by or against the Merchant; the Merchant fails to erase its debts; there is a widespread assignment for the creditors; or the business just got terminated.

(iv) Bank discovers Merchant falsified or submitted misleading information. Enormous detrimental changes after the information were provided also serve as grounds for agreement termination.

(v) Merchant had monthly ratio of Chargebacks to Transactions exceeding 1% or Merchantís Chargebacks went beyond 3% of any monthly amount of Transactions.

(vi) Merchant had excessive overdrafts in its Settlement Account.

(vii) Merchant, its employees or its officers performed fraudulent or illegal transactions with Bank or another party.

(viii) Merchant will fail to enact its duties and responsibilities.

(ix) Merchant was unsuccessful in paying Bank on time.

(x) Merchant was unsuccessful in quickly acting out or discharging a responsibility mandated by the Merchant Agreement, the Reserve Account or the Settlement Account.

(xi) Merchant provided a falsified or erroneous warranty or representation.

(xii) Merchant defaulted on a Bank agreement.

(xiii) Bank is provided with legal process aiming to garnish or attach Merchantís property or money under Bankís possession, and Merchant does not appeal the legal process fifteen days after the process was provided.

(xiv) The Operating Rules are modified in such manner that the continuous presence of the Merchant Agreement will force Bank to violate some Operating Rules.

(xv) Merchantís guaranty for its duties is repealed, withdrawn, modified or ended.

(xvi) A government institution begins a legal proceeding against Merchant.

(xvii) Merchant caused problems that harmed and diminished the goodwill of a Card Association.

(c) Termination for Cause by Merchant. Merchant may end the Merchant Agreement if Bank breaches the agreement and the Bank fails to fix the breach thirty days after Bank receives Merchantís formal notice of such breach.


NOTE: Host Merchant Services donít charge early termination fee.


(e) Merchant Bankís or Processorís rights of termination under this Merchant Agreement are collective. A specific right of termination must not hinder the Bankís authority to end the Merchant Agreement. Termination notice must be given in oral or written format. Formal writing must confirm oral termination.


(f) Upon termination, Merchantís rights to process Transactions and submit them to Bank and to use Transaction forms or other materials granted by Bank will immediately end. Termination of Merchant Agreement will not end the duties and rights of Bank and Merchant with regards to actions performed prior to termination.


SETTLEMENT ACCOUNT.


12.1 Settlement Account Required. Merchant must keep a Settlement Account under its name in a favorable condition at a collecting institution as specified by Bankís requirements.


12.2 Minimum Balance. Merchant must comply with a minimum value in the Settlement Account as specified and regularly updated by the Bank.


12.3 Provisional Credits. As dictated by the terms and conditions, Bank agrees to provide credit to Merchant for each accepted Transaction. Merchant concurs that Merchant Bank may charge the Settlement Account for the value of Transaction implemented under the Merchant Agreement or under Bankís agreement with Merchant Affiliate.


12.4 Audits and Adjustments. Merchant accepts that Bank has the right to audit all its transaction computations. Merchant also acknowledges that Merchant Bank can withdraw, deposit or perform a different adjustment to the Settlement Account.


12.5 Errors and Disputes. Bank must assume that the amount it gives to or debits from Merchant is accurate except if Merchant disputes any payment or debit.


12.6 POS Equipment. If Merchant desires to lease POS Equipment from Processor or rely on Processorís program for processing Transactions, Merchant must agree to pay Processor: (a) a pre-determined monthly rental fee; (b) any necessitated upfront expense; and (c) all appropriate taxes for using POS Equipment or software.

12.7 Settlement Account Closure. After the Settlement Account gets closed, Merchant Bank may eliminate the Merchant Agreement as soon as possible via oral or written notice except if Merchant sets up another Settlement Account that is approved by the Bank.


12.8 ACH Authorization. Merchant grants Merchant Bank or its representatives the authority to start debit and credit entries and perform modifications to the Settlement Account or the Reserve Account using the ACH settlement process. This authority will only end after Merchant successfully pays its dues and after the Merchant Agreement ceases to exist. Merchant accepts to get bounded by the terms and provisions of ACH Rules.


ADDITIONAL COLLATERAL SECURITY; RESERVE ACCOUNT.



As required for performing Card Program services, Merchant may be asked to give additional collateral security for Merchantís obligations. This added collateral security must satisfy the Bankís conditions. Examples of this type of security include (A) letter of credit, and (B) pledge to Bank of a certificate of deposit named under the Merchant and satisfactory of Bankís standards. Bank may necessitate that a Reserve Account will become your supplemental collateral given that : (i) the Merchant Agreement or the provision of Card Program services ceased existing, or (ii) the Bank encountered a strong justification for terminating the agreement and Merchant failed to give an alternative form of security, or (iii) both (i) and (ii) are not applicable but Bank finds it necessary to gain additional collateral but Merchant failed to comply with Bankís requirements.

13.1 Reserve during Term of Merchant Agreement.



(a) Merchant may be obliged to deposit or Merchant Bank may take an amount from what would be paid to Merchant, from the Settlement Account or from any other deposit account owned by Merchant.

(b) The Reserve Account will be disjoint from the Settlement Account, Merchant cannot withdraw from the Reserve Account and it shall only fall under the exclusive control of the Merchant Bank. The Bank is the only eligible entity to benefit from the revenues of the Reserve Account.

13.2 Reserve Account Deposits.



(a) Upon its own decision, the Bank may (i) assign the minimal balance to be placed into the Reserve Account, (ii) necessitate that the content of the Reserve Account be increased, (iii) necessitate the Merchant to deposit a defined percentage of each processed Transaction or (iv) establish the amount to be placed into the Reserve Account.

(b) Merchant recognizes and concurs that the Reserve Account may hold funds coming from the Merchant itself and the deposits of other merchants attached to the Bank.

13.3 Deductions from Reserve Account. If the Settlement Account lacks any fund, Bank may immediately reduce from the Reserve Account any responsibility of Merchant to Bank under the Merchant Agreement, which comprise of Chargebacks, Credit Transaction Receipts, Processing Fees and all other additional expenses for reimbursing the Bank the amount of money to be given to involved Card Associations.


13.4 Replenishment of Reserve Account Deficiencies. When the Reserve Accountís balance drops below the minimum required amount, Merchant Bank may deposit the deficiency into the Reserve Account by reducing any payment to Merchant as required by this Merchant Agreement or deduct the deficiency from the Settlement Account or any other deposit account owned by the Merchant and deposit it into the Reserve Account. Merchant permits reductions from its accounts via ACH entry, preauthorized check, reverse wire or other means deemed viable by the Bank. Aside from this, Merchant must deposit its deficiency into the Reserve Account within one Business Day of accepting the Bankís written or oral notice. If Merchant fails to deposit the required amount, Bank will stop the processing of incoming Transaction Receipts and Bank will formally inform the Merchant about its suspension.


13.5 Additions to Reserve Account. If Bank deems the Merchant accountable to Bank or to clients for Chargebacks going beyond the content of the Reserve Account, Merchant Bank may perform the following: (a) immediately transfer the payments that would be given the Merchant into the Reserve Account and halt the transactions associated with the Merchant indefinitely until the Bank regains its confidence on the Merchant, or (b) require the Merchant to pay an amount that the Bank considers sufficient for taking care of liabilities and obligations. Failure of the Merchant to pay the Bankís imposed amount will result to the termination of Merchant Agreement.


13.6 Reserve Account After Merchant Agreement Terminates. Even after the Merchant Agreement gets terminated, the Merchant Bank may still opt to go on holding or depositing money in the Reserve Account. Bank may retain enough funds to take care of Chargebacks, Processing Fees, Damages, Credit Transaction Receipts and other fees due to Card Associations. If the Reserve Account does not contain any amount by the time the agreement got terminated, Bank may advise the Merchant to deposit funds into Reserve Account. Provisions applicable to the Reserve Account before the termination still hold after the agreement ends. Bank or its authorized agent will hold the funds for a time frame of at least one hundred eighty days after the last accredited transaction. After the bank soundly decides that the processing fees no longer pose any risk, the bank will give the Reserve Accountís balance to the Merchant.


SECURITY INTEREST.


14.1 Merchantís Grant of Security Interest.



(a) To guarantee that the Merchant will perform its duties and responsibilities as dictated by the Merchant Agreement, the Merchant provides the Bank security interest for every transaction and the corresponding proceeds, the Reserve Account, the Settlement Account and the other bank deposits owned by the Merchant. Bank may enact the security interests without informing the Merchant. The security interests will continue existing even if the Merchant Agreement ends.

(b) In addition to this, Bank will have all freedoms provided by the Uniform Commercial Code taking effect from time to time in such other jurisdiction to provide the purposes related to the attachment and perfection of the security interests.

14.2 Perfection of Security Interest. When requested by Bank, Merchant is obligated to produce at least one financing statement or other similar files to confirm the security interests provided to the Bank. Merchant must work together with Bank to acquire a control or similar agreement with a depository institution. Furthermore, Merchant recognizes that its signature in the Merchant Application will be viewed as Merchantís signature for entering a control agreement as elucidated by Article 9 of Uniform Commercial Code.


CUSTOMER CLAIMS. Merchant must reimburse the Bank for the amount expended by the Bank because of the Merchant. If Merchant does not wish or fails to comply, Bank may apply the Cardholdersí rights and make a claim for the behalf of Cardholders.


PROCESSING FEES


16.1 Fee Schedule. Merchant will disburse the Processing Fees identified in the Fee Schedule present in the Merchant Application. Bank may raise the Processing Fees by incorporating new goods or services and by providing the Merchant thirty days advance written notice.


16.2 Card Association Actions. Bank are not obligated to provide the thirty days advance notice in raising the processing fee if any Card Association or similar entity raises the Processing Fees less than thirty days of the date of implementation of the new fees. The bank may strive to inform the Merchant about the added expenses. However, failure to inform the Merchant on time will not postpone the payment date set by the Bank.


16.3 Payment. Processing Fees and other charges owed by Merchant to Bank can be obtained by Merchant Bank from the Reserve or Settlement Account. If the accounts are lacking, the Merchant must pay the bank in the following business day.


INDEMNIFICATION; LIMITATION OF LIABILITY; WARRANTY


17.1 Indemnification. Merchant will not hold the Bank and the people working for it responsible for all claims and demands resulting from the action or inaction of the Merchant, its employees and its Servicers or Agents. If the Bank becomes a subject of any litigation or other legal actions, Merchant must uphold the interest of the Bank, direct the allegations away from the Bank and pay for Bankís expenses resulting from the Actions caused by the Merchant.


17.2 Limitation of Liability. Bank will not be considered accountable for mistakes committed by Merchant Servicers or Agents, third party suppliers of products or service, or clearinghouses. Bank cannot be held liable for loss or delay caused by natural and manmade disasters or any other event beyond the Bankís command. Aside from the duties defined by the Merchant Agreement, bank will not perform any other duty to the Merchant.


BANK SHALL NEVER BE RESPONSIBLE FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR EXEMPLARY DAMAGES. BANK WILL NOT BE HELD LIABLE FOR ANY INTERRUPTION AND LOSS OF PROFITS WHETHER OR NOT SUCH NEGATIVE IMPACTS WERE FORESEEN OR BROUGHT TO THE ATTENTION OF THE BANK. THE BANK SPECIFICALLY DISCLAIMS ALL KINDS OF EXPRESSED OR IMPLIED WARRANTIES, INCLUSIVE OF ANY MERCHANTABILITY OR FITNESS WARRANTY. BANK DOES NOT GUARANTEE THAT THE SERVICES WILL BE FLAWLESS AND UNINTERRUPTED.

NOTICES


Notices being asked by the Merchant Agreement must come in written form and must take effect when sent to (i) Merchant Bank at the address indicated in the Merchant Application and return address on the Merchantís Card processing statements or (ii) Processor at the address provided in the Merchant Application and (iii) Merchant at its residence to which Bank delivers Merchantís statements or at the email address given by Merchant in the Merchant Application.


COLORADO LAW; JURISDICTION; VENUE. The Merchant Agreement is made in Boulder, Colorado and shall therefore be guided by Colorado law. Merchant and Guarantor concur to bring any claim or other litigation coming from the Merchant Agreement in the judicial courts for Boulder County, Colorado. The Merchant and any Guarantor must irreversibly and categorically submit to the jurisdiction of such courts given the said type of litigation. Merchant agrees to receive the legal process via registered mail, email or other methods allowed by a competent court.


ATTORNEY FEES; ARBITRATION


20.1 Attorney Fees. Merchant and/or Guarantor will not consider the Bank liable for the legal issue and will pay the Bank for the Bankís legal expenses and fees related to the implementation or breach of the Merchant Agreement.


20.2
 Arbitration. Merchant, Bank and any Guarantor will resolve any controversy related to the Merchant Agreement through binding arbitration before a lone arbitrator at Denver or Boulder, Colorado. This will proceed in compliance with the Colorado Uniform Arbitration Act. If Merchant and/or Guarantor fail to reach settlement according to Section 20.02 within ten days after Bank delivers a written request for settlement, Bank shall be entitled to start the litigation to fully resolve the dispute.


FINAL AGREEMENT; EFFECTIVE DATE


The Merchant Agreement is the ultimate binding agreement between Merchant and Bank for the indicated Card Program services. This agreement surpasses any previous negotiation or informal agreement. The other provisions will stay applicable even if a provision fails to get enforced. The agreement becomes final upon the Bankís approval and signing of the Merchant Application.


CONTINUING GUARANTY



22.1 As the main incentive for Bank to partake into the Merchant Agreement and to provide the approval for the Merchant Application of Merchant, the Guarantors who affix their signatures into the designated lines on the Merchant Application consent to get bound by the terms and provisions provided by the Merchant Agreement. The Merchant will faithfully perform all the duties and obligations to the Bank as defined by the agreement.

22.2 Merchant and Guarantor(s) further consent to be subjected to the terms and provisions of any Merchant Card Processing Agreement between Bank and any Affiliated-merchant. Merchant and Guarantor(s) unreservedly and irreversibly guarantee the complete payment and performance of all duties and responsibilities owed to Bank by Merchant Affiliate as stated by any Merchant Card Processing Agreement.

22.3 Guarantor(s) recognizes that Bank may renew or extend the Merchant Agreement, change rates, modify charges and fees, or alter the type of services being granted to the Merchant even without the consent of the Guarantor(s). Guarantor(s) must completely know that the Bank may target its attention towards the Guarantor(s) even if it has not yet exhausted its remedies directed towards the Merchant. The Guaranty presented here is a continuing one and it will not be influenced by the release or Merchant or even the death of the Guarantor(s).