Submerchant Agreement

This Sub-Merchant Agreement is made among Payline Data Services, LLC,
on behalf of itself and its affiliates (“PayFac”) having its principal
office at 225 W Wacker Drive Suite 550, Chicago, IL 60606 and the
person or entity set forth in the Merchant Application (“Sub-Merchant”)
having its principal office at the location set forth on the Merchant
Application. PayFac and Sub-Merchant hereby agree as follows:

 

I. PayFac and/or Member Bank participate in programs affiliated with
MasterCard, VISA, Discover, and Other Networks which enable holders of
Cards to purchase goods and services from selected merchants located in
the United States by use of their Cards.

II. Sub-Merchant wishes to use the Service to allow Cardholders to
purchase goods and services, as set forth on the Merchant Application,
through the use of Cards.

NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual promises hereinafter set forth, the parties agree as follows:

1. Definitions.

For the purposes of this Agreement, the following terms shall have the
meanings set forth below:

Account
shall mean an open checking account at a financial institution
acceptable to PayFac which Member Bank, PayFac or their agents can
access through the ACH system.

Account Change
means a change in the Account or the financial institution where the
Account is located.

ACH
shall mean the Federal Reserve’s Automated Clearing House (“ACH”)
system.

Agreement
means this Sub-Merchant Agreement, the Merchant Application, and each
exhibit, schedule, and addendum attached hereto or referencing this
Agreement, as well as all documents and other materials incorporated
herein by reference.

Association
means VISA, MasterCard, Discover, or any Other Network, as the same are
defined herein.

Bank Rules
means the Bank Card Merchant Rules and Regulations, as amended from
time to time, which are attached to this Agreement as Schedule A and
incorporated into this Agreement by reference

Cardholder
shall mean any person authorized to use a Card or the accounts
established in connection with a Card.

Cards
shall mean MasterCard, VISA, Discover and Other Network cards, account
numbers assigned to a Cardholder or other forms of payment accepted by
PayFac, for which pricing is set forth in this Agreement or on the
Merchant Application.

Data Incident
shall mean any alleged or actual compromise, unauthorized access,
disclosure, theft, or unauthorized use of a Card or Cardholder
information, regardless of cause, including without limitation, a
breach of or intrusion into any system, or failure, malfunction,
inadequacy, or error affecting any server, wherever located, or
hardware or software of any system, through which Card information
resides, passes through, and/or could have been compromised.

Discover
shall mean Discover Financial Services, LLC.

Event of Default
shall mean each event listed in Section 16.

Float Event
shall mean a circumstance where PayFac, for whatever reason, advances
settlement or any amounts and/or delays the assessment of any fees.

Force Majeure Event
shall mean errors in data provided by Sub-Merchant or others, labor
disputes, fire, weather or other casualty, power outages, and funding
delays, however caused, governmental orders or regulations, or any
other cause, whether similar or dissimilar to the foregoing, beyond
PayFac’s or Member Bank’s reasonable control.

Initial Term
shall mean three years from the 1st day of the calendar month following
the later of the date PayFac executes this Agreement or the first date
that Sub-Merchant is capable of receiving the Services from PayFac.

Member Bank
shall mean a member of VISA, MasterCard and/or Other Networks, as
applicable, that provides sponsorship services in connection with this
Agreement. As of the commencement of this Agreement, the Member Bank
shall be Fifth Third Bank, an Ohio banking corporation, located at 38
Fountain Square Plz, Cincinnati, OH 45202.

Merchant Application
shall mean the attached application in the form approved by PayFac
setting forth, among other material terms, the name, address, and
pricing of Sub-Merchant.

Merchant Supplier
shall mean a third party used by Sub-Merchant or PayFac in connection
with the Services received hereunder, including but not limited to,
software providers, equipment providers, and/or third party processors.

MasterCard
shall mean MasterCard International, Inc.

Operating Regulations
means the by-laws, operating regulations and/or all other rules,
guidelines, policies and procedures of VISA, MasterCard, Discover,
and/or Other Networks, and all other applicable rules, regulations and
requirements of PayFac, Member Bank, processors, banks, institutions,
organizations, associations, or networks which govern or affect any
services provided under this Agreement, and all state and federal laws,
rules and regulations which govern or otherwise affect the activities
of Sub-Merchant, including, but not limited to, those of the National
Automated Clearing House Association (“NACHA“) and the Federal
Trade Commission (“FTC“), as any or all of the foregoing may be
amended and in effect from time to time.

Other Network
shall mean any network or card association other than VISA, MasterCard,
or Discover that is identified in this Agreement or any subsequent
amendment to this Agreement and in which Sub-Merchant participates
hereunder.

PCI
shall mean the Payment Card Industry Data Security Standard.

Service
shall mean any and all services described in, and provided by PayFac or
Member Bank to Sub-Merchant pursuant to this Agreement, including but
not limited to the authorization, settlement, and capture services for
the acceptance of Cards as further described herein.

VISA
shall mean VISA USA, Inc.

2. Bank Rules and Operating Regulations.
Sub-Merchant acknowledges receipt and review of the Bank Rules,
attached as Schedule A. Sub-Merchant agrees to fully comply with all of
the terms and obligations in the then current Bank Rules, as changed or
updated by PayFac from time to time, at PayFac’s sole reasonable
discretion with notice in accordance with PayFac’s standard operating
procedures. Sub-Merchant agrees to accept Cards in compliance with, and
subject to, the Operating Regulations including but not limited to the
Operating Regulations set forth by Visa and MasterCard. Without
limiting the foregoing, Sub-Merchant agrees that it will fully comply,
and to the extent practicable will assure all its employees,
contractors, third party providers, Merchant Suppliers, and affiliates
comply, with any and all confidentiality and security requirements of
the USA Patriot Act (or similar law, rule or regulation), VISA,
MasterCard, Discover, and/or Other Networks, including but not limited
to PCI, the VISA Cardholder Information Security Program, the
MasterCard Site Data Protection Program, and any other program or
requirement that may be published and/or mandated by the Associations.
Should any Operating Regulation(s) not be publicly available or
otherwise made available to the Sub-Merchant such unavailability shall
not alter or limit Sub-Merchant’s obligation to comply with the
Operating Regulations. Notwithstanding PayFac’s assistance in
understanding the Operating Regulations, Sub-Merchant expressly
acknowledges and agrees that it is assuming the risk of Sub-Merchant’s
and its employees, contractors, third party providers, and affiliates
compliance with all provisions of the Operating Regulations, regardless
of whether Sub-Merchant and/or its employees, contractors, third party
providers, and affiliates have possession of those provisions. Both
MasterCard and VISA make excerpts of their respective Operating
Regulations available on their internet sites.

3. Application; Change in Business.
Sub-Merchant represents that all information supplied to PayFac in
connection with its Merchant Application, in any other request for
services, or in response to any inquiry by PayFac, whether provided by
Sub-Merchant or a third party is complete, accurate, and not
misleading. Sub-Merchant agrees to provide PayFac with 30 days prior
written notice of Sub-Merchant’s intent to change its business form or
entity in any manner (e.g., a change from a limited liability company
to a corporation), of Sub-Merchant’s intent to sell its stock or assets
to another entity, and/or of any change in Sub-Merchants business or
operations which would cause any information provided by Sub-Merchant
to PayFac to be incorrect, incomplete, or misleading, or which would
have a material effect on Sub-Merchant. Sub-Merchant agrees to provide
additional information to PayFac upon PayFac’s request.

4. Card Acceptance.
When accepting any Card and completing any Card transaction,
Sub-Merchant shall follow all procedures and rules in the Bank Rules
and the Operating Regulations. In the event PayFac or Member Bank for
whatever reason is unable to obtain, or due to system delays chooses
not to wait to obtain, authorization from an Association, PayFac may at
its option “stand-in” for such entities and authorize the sales
transaction based on criteria established by PayFac and Member Bank,
and Sub-Merchant remains responsible for such sales transaction in
accordance with this Agreement. Sub-Merchant has identified to PayFac
the products and/or services for which it intends to accept Cards as
payment. Sub-Merchant agrees that it shall only complete and deliver to
PayFac sales transactions produced as the direct result of bona fide
sales made by Sub-Merchant to Cardholders for such identified products
and/or services, unless otherwise agreed by PayFac in writing and
acknowledges that Sub-Merchant is expressly prohibited from presenting,
and will not present, sales transactions for any purposes related to
any illegal or prohibited activity, including but not limited to
money-laundering or financing of terrorist activities.

5. Transaction Processing
PayFac will, or will cause Member Bank or a third party provider to initiate payment
to Sub-Merchant of the total face amount of each sales transaction
acquired and accepted hereunder, subject to the terms and conditions of
this Agreement, the Bank Rules, the Operating Regulations, and
applicable law, after PayFac receives payment for such sales
transactions. Unless otherwise agreed to in writing by PayFac,
Sub-Merchant shall electronically deliver to PayFac and in a format
acceptable to PayFac all credit vouchers and sales transaction records
within two (2) business days after the applicable transaction date (or
such shorter period as determined by the applicable Association),
except (i) in the case of a delayed merchandise delivery, when the
sales transaction record shall be delivered within two (2) business
days of the merchandise delivery or (ii) as specified otherwise in the
Bank Rules. Sub-Merchant agrees that it shall deliver sales transaction
records to PayFac at least every business day. The preparation and
delivery to PayFac by Sub-Merchant of sales transactions shall
constitute an endorsement to PayFac by Sub-Merchant of each sales
transaction, and Sub-Merchant authorizes PayFac or its representative
to place Sub-Merchant’s endorsement on any sales transaction at any
time. PayFac may refuse to acquire any sales transaction or claim the
amount of which, in whole or in part, it could charge back to the
Sub-Merchant pursuant to this Agreement, if it had acquired the sales
transaction or claim. Sub-Merchant acknowledges and agrees that PayFac
is not responsible for any action or inaction taken by the financial
institution or other entity that issued the Card(s) to the Cardholders
or the provider of such Card(s). Sub-Merchant agrees that PayFac may
set off any amounts due to PayFac from amounts owed to Sub-Merchant,
including but not limited to any amounts owed to Sub-Merchant from
PayFac and/or any of its affiliate(s).

6. Sales Transactions.
Sub-Merchant will not submit any sales transaction to Payfac: (a) that
adds any surcharge to the transaction, except to the extent authorized
by the Operating Regulations or applicable law, (b) that adds any tax
to the transaction, unless applicable law expressly allows for the
Sub-Merchant to impose a tax (any tax amount, if allowed, must be
included in the transaction amount and not collected separately), (c)
that represents the refinancing or transfer of an existing Cardholder
obligation that is deemed to be uncollectible or arises from the
dishonor of a Cardholder’s personal check or from the acceptance of a
Card at a terminal that dispenses scrip, (d) that is not a valid
transaction between the Sub-Merchant and a bona fide Cardholder, (e)
that Sub-Merchant knows or should have known to be fraudulent or not
authorized by the Cardholder, or that it knows or should have known to
be authorized by a Cardholder colluding with the Sub-Merchant for a
fraudulent purpose, (f) until after the products are shipped the
services are performed, and/or the Sub-Merchant has completed the
transaction, unless the Sub-Merchant has obtained Cardholder consent
for a recurring transaction, (g) where a valid authorization was
required but not obtained, (h) where multiple authorizations for
amounts less than the total sale amount have been obtained, (i) which
results in a disbursement of cash or cash equivalent to a Cardholder,
or (j) that establishes a maximum dollar sale transaction amount,
except to the extent authorized by the Operating Regulations.

7. Refund Transactions.
Sub-Merchant will not submit any refund or other credit transaction to
PayFac: (a) that does not correlate to an original sales transaction
from the Cardholder, (b) that exceeds the amount shown as the total on
the original sale transaction, unless the excess represents the exact
amount required to reimburse the Cardholder for postage paid by the
Cardholder to return merchandise in accordance with a policy applied
consistently by the Sub-Merchant to all its customers, (c) for returned
products that were acquired in a cash purchase from the Sub-Merchant,
(d) that would cause an overdraft, (e) more than three (3) business
days following either: (i) a regulatory requirement granting a
Cardholder’s right to a refund; or (ii) a non-disputed Cardholder
request.

8. Other Prohibited Activities.
Sub-Merchant will not: (a) use any Cardholder data or other transaction
data for any purpose not authorized by this Agreement, (b) disclose any
Cardholder data or other transaction data to any person or entity
except for necessary disclosures to affected Cardholders, and through
PayFac to affected Association entities, (c) provide to PayFac any
inaccurate, incomplete, or misleading information, (d) fail to provide
PayFac with timely notification of events that have caused or could
cause material changes in the Sub-Merchant’s ability to fulfill its
obligations under this Agreement, including but not limited to (i)
adverse changes in Sub-Merchant’s financial health; (ii) adverse
changes in Sub-Merchant’s business conditions or environment; or (iii)
actions by governmental or non-governmental agencies, (e) transfer or
attempt to transfer its financial liability by asking or requiring
Cardholders to waive their dispute rights, (f) submit transactions on
behalf of another person or entity, (g) submit transactions for its
locations other than those locations in the United States.

9. Exception Items.
Sub-Merchant agrees to reacquire and pay PayFac the amount of any sales
transaction, and PayFac shall have the right at any time to charge
Sub-Merchant’s Account therefore with notice in accordance with
PayFac’s standard operating procedure, for any return (whether or not a
credit voucher is delivered to PayFac), chargeback, compliance case,
any other Association action, or if the extension of credit for
merchandise sold or services or sales transactions performed was in
violation of law or the rules or regulations of any governmental
agency, federal, state, local or otherwise; or if PayFac has not
received payment for any sales transaction, notwithstanding PayFac’s
prior payment to Sub-Merchant for such sales transaction. Not limiting
the generality of the foregoing, Sub-Merchant agrees that any
operational and/or other Services performed on behalf of Sub-Merchant,
including but not limited to, production of facsimile drafts in
response to copy requests, response to compliance cases, augmentation
of Sub-Merchant data for interchange, transaction stand-in, digital
draft storage and retrieval, etc. shall in no way affect Sub-Merchant’s
obligations and liability in this Agreement including those in the
foregoing sentence. Sub-Merchant may instruct PayFac in the defense of
chargebacks, compliance cases and similar actions, and Sub-Merchant
agrees that it will promptly provide any such instructions to PayFac.
When PayFac has determined it has all necessary information and
instructions, Sub-Merchant hereby authorizes PayFac to resolve
chargebacks and respond to retrieval requests and other inquiries
without further consulting Sub-Merchant.

10. Merchant Suppliers.
Sub-Merchant may use one or more Merchant Suppliers in connection with the Services
and/or the processing of some or all of its Card transactions. In no
event shall Sub-Merchant use a Merchant Supplier unless such Merchant
Supplier is compliant with PCI and/or the Payment Application Data
Security Standard (“PA-DSS”), depending on the type of Merchant
Supplier, as required by the Operating Regulations. Sub-Merchant
acknowledges and agrees that Sub-Merchant shall cause its Merchant
Supplier to complete any steps or certifications required by any
Association (e.g., registrations, PA-DSS, PCI, audits, etc.).
Sub-Merchant shall cause its Merchant Supplier to cooperate with PayFac
in completing any such steps or certifications (if applicable), and in
performing any necessary due diligence on such Merchant Supplier.
Sub-Merchant shall be solely responsible for any and all applicable
fees, costs, expenses and liabilities associated with such steps,
registrations, and certifications. Sub-Merchant shall bear all risk and
responsibility for conducting Sub-Merchant’s own due diligence
regarding the fitness of any Merchant Supplier(s) for a particular
purpose and for determining the extent of such Merchant Supplier’s
compliance with the Bank Rules, the Operating Regulations, and
applicable law. Sub-Merchant expressly agrees that neither PayFac nor
Member Bank shall in any event be liable to Sub-Merchant or any third
party for any actions or inactions of any Merchant Supplier used by
Sub-Merchant, even if PayFac or Member Bank introduced and/or
recommended the use of such Merchant Supplier to Sub-Merchant, or never
objected to the use of such Merchant Supplier, and Sub-Merchant hereby
expressly assumes all such liability.

11. Cardholder Information.
Sub-Merchant shall not disclose, sell, purchase, provide, or exchange Cardholder
name, address, account number or other information to any third party
other than to PayFac and Member Bank or an Association for the purpose
of completing a sales transaction unless specifically permitted by the
Operating Regulations. Sub-Merchant represents and warrants that
neither it nor Merchant Suppliers shall retain or store any portion of
the magnetic-stripe data subsequent to the authorization of a sales
transaction, nor any other data prohibited by the Operating
Regulations, the Bank Rules, and/or this Agreement. Sub-Merchant will
take all available steps and precautions to prevent fraud, theft, and
misappropriation of Cardholder data, including but not limited to fully
complying with all PCI requirements. Sub-Merchant is responsible for,
and shall control, the conduct of its employees, contractors, Merchant
Suppliers, and representatives.

12. Term.
This Agreement is binding on Sub-Merchant on the date executed by
Sub-Merchant. This Agreement will be binding on PayFac on the earlier
of the date PayFac executes this Agreement or the date PayFac accepts
this Agreement by issuing Sub-Merchant a merchant identification
number, and shall continue for the Initial Term. Except as hereafter
provided, unless either party gives written notice to the other party
at least 90 days prior to the expiration of any term, the Agreement
shall be automatically extended for additional periods equal to the
Initial Term. Notwithstanding anything to the contrary contained in
this Agreement, an Association may terminate, limit the terms of, or
enforce this Agreement at any time. All obligations of Sub-Merchant
incurred or existing under this Agreement as of the date of
termination, shall survive such termination.

13. PayFac Fees.
Sub-Merchant agrees to pay PayFac the fees, expenses and all other amounts set forth in the
Agreement including, but not limited to, the transaction fees, monthly
fees, discount rates, and other product fees set forth on the Merchant
Application. PayFac may change or add fees and/or charges upon notice
to Sub-Merchant in accordance with PayFac’s standard operating
procedure, and such fees and/or charges shall be immediately payable by
Sub-Merchant when assessed by PayFac. In the event PayFac changes or
adds its fees and/or charges pursuant to the immediately preceding
sentence (“Fee Change“), Sub-Merchant may, subject to the
following provisions, terminate the Agreement upon 60 days advance
written notice to PayFac provided PayFac receives such written notice
from Sub-Merchant of its intention to so terminate within 90 days of
the date the Fee Change becomes effective. Upon PayFac’s receipt of
Sub-Merchant’s written notice pursuant to the immediately preceding
sentence, PayFac and Sub-Merchant shall have 30 days to come to a
mutually agreeable resolution to the Fee Change, and, in the event a
resolution is reached or PayFac rescinds or waives the Fee Change,
Sub-Merchant shall not have the right to terminate this Agreement as a
result of the Fee Change and this Agreement shall remain in full force
and effect notwithstanding Sub-Merchant’s written notice to terminate.
Sub-Merchant acknowledges and agrees that this Section shall not be
intended or construed to permit Sub-Merchant to terminate the Agreement
as a result of a change or increase in fees from third parties and/or
in pass through fees as referenced in this Agreement or the Merchant
Application.

14. Third Party Assessments.
Notwithstanding any other provision of this Agreement, Sub-Merchant
shall be responsible for all amounts imposed or assessed to
Sub-Merchant, PayFac, and/or Member Bank in connection with this
Agreement by third parties such as, but not limited to, an Association,
and Merchant Suppliers (including telecommunication companies). Such
amounts include, but are not limited to, fees, fines, assessments,
penalties, loss allocations, etc. Any changes or increases in such
amounts shall automatically become effective upon notice to
Sub-Merchant in accordance with PayFac’s standard operating procedure
and shall be immediately payable by Sub-Merchant when assessed by
PayFac. In the event of a Float Event, PayFac reserves the right to
assess to Sub-Merchant, and Sub-Merchant shall pay to PayFac, a cost of
funds associated with the Float Event (which PayFac may at its option
assess as a transaction surcharge), the amount of which shall be
determined by PayFac in its reasonable discretion, and which may be
changed by PayFac from time to time, and such cost of funds shall be
effective as of the start of the Float Event and shall be immediately
payable by Sub-Merchant when assessed by PayFac.

15. Exclusivity. PayFac and Member Bank reserve
PayFac and Member Bank reserve
the right to enter into other agreements pertaining to the Services
with others persons and/or entities, including without limitation other
merchants. The parties agree that PayFac shall be the exclusive
provider of Services to Sub-Merchant for all of its locations.

16. Default. The following events shall be
The following events shall be
considered an “Event of Default”:

(i) Sub-Merchant becomes subject to any voluntary or involuntary
bankruptcy, insolvency, reorganization or liquidation proceeding, a
receiver is appointed for Sub-Merchant, or Sub-Merchant makes an
assignment for the benefit of creditors, or admits its inability to pay
its debts as they become due; or

(ii) Sub-Merchant fails to pay or reimburse the fees, expenses or
charges referenced herein when they become due; or

(iii) Sub-Merchant violates the Operating Regulations, the Bank Rules
or applicable law; or

(iv) Sub-Merchant is subject to any adverse legal or regulatory actions
by governmental or non-governmental entities; or

(v) Sub-Merchant fails to remediate and resolve risks identified by
PayFac in accordance with Section 33; or

(vi) PayFac reasonably believes that there has been a material
deterioration in Sub-Merchant’s financial condition; or

(vii) any standby letter of credit, if and as may be required pursuant
to Section 23, will be cancelled, will not be renewed, or is not in
full force and effect; or

(viii) Sub-Merchant is no longer in good standing with any Association,
an Association prohibits PayFac from providing the Services under this
Agreement, an Association instructs PayFac to cease allowing
Sub-Merchant to use the Services, Member Bank instructs PayFac to cease
allowing Sub-Merchant to use the Services (or PayFac’s agreement to
provide the Services with Member Bank is terminated), or certain of
PayFac’s Merchant Suppliers instruct PayFac to cease allowing
Sub-Merchant to use the Services; or

(ix) Sub-Merchant ceases to do business as a going concern, or there is a change in ownership of
Sub-Merchant which changes the identity of any person or entity having,
directly or indirectly, more than 30% of either the legal or beneficial
ownership of Sub-Merchant; or

(x) Sub-Merchant is otherwise in default of any terms or conditions of
this Agreement whether by reason of its own action or inaction or that
of another, and fails to cure such default within thirty (30) days of
PayFac’s notice of default.

Upon the occurrence of an Event of Default, PayFac, Member Bank, or
certain of PayFac’s Merchant Suppliers may at any time thereafter
terminate this Agreement by giving Sub-Merchant written notice thereof.
Termination of this Agreement for any reason shall not relieve
Sub-Merchant from any liability or obligation to PayFac or Member Bank.
If, prior to the date on which the then current term of this Agreement
is scheduled to expire, either this Agreement is terminated by PayFac
or Member Bank as specifically permitted by this Agreement, or
Sub-Merchant for any reason discontinues receiving the Services from
PayFac (except as may be specifically permitted by this Agreement),
Sub-Merchant shall be liable to PayFac for liquidated damages in an
amount equal to the average monthly revenue less interchange and
Association pass through fees payable to PayFac as a result of this
Agreement for the three calendar months in which such revenue was the
highest during the preceding 12 calendar months, or such shorter period
if this Agreement has not been in effect for 12 months, multiplied by
the number of months remaining during the then current term of this
Agreement. Sub-Merchant recognizes and agrees that the liquidated
damages are fair and reasonable because it is not possible to establish
the actual increase in volume and activity by Sub-Merchant during the
term of this Agreement. Sub-Merchant shall also reimburse PayFac for
any damage, loss or expense incurred by PayFac as a result of a breach
by Sub-Merchant, including any damages set forth in any addendum and/or
schedule and/or exhibit hereto and including all past due, unpaid
and/or future invoices for services rendered by PayFac in connection
with this Agreement. All such amounts shall be due and payable by
Sub-Merchant upon demand. PayFac shall also have the option to require
Sub-Merchant to reacquire all outstanding sales transactions acquired
by PayFac hereunder. In addition to, and not in limitation of the
foregoing, PayFac may refuse to provide the Services in the event it
has not been paid for the Services as provided herein.

17. PayFac Nonperformance.
In the event Sub-Merchant, in good faith, reasonably believes that PayFac has
substantially failed to provide the Services, other than as a result of
a failure by Sub-Merchant (or any Merchant Supplier or other third
party acting at the request of or on behalf of Sub-Merchant) to perform
any obligation under the Agreement or any Force Majeure Event,
Sub-Merchant agrees to notify PayFac in writing within 10 days of the
date upon which such failure first occurred. Sub-Merchant agrees that
such notice shall be sent in accordance with the terms of this
Agreement, and shall specifically describe the nature of such failure
by PayFac, specify the date such failure first occurred and
specifically reference this section.

PayFac will attempt to resolve such failure within 60 days of PayFac’s
actual receipt of such notice from Sub-Merchant. Should PayFac not
resolve such failure within the cure period described in the foregoing
sentence, Sub-Merchant may terminate this Agreement upon 90 days prior
written notice to PayFac, provided PayFac actually receives such notice
of termination within 30 days after the end of such cure period.

18. Taxes.
Any sales, use, excise or other
taxes (other than PayFac’s income taxes) payable in connection with or
attributable to the Services provided to the Sub-Merchant per this
Agreement shall be paid by Sub-Merchant. PayFac may, but shall not have
the obligation to, directly or indirectly pay such taxes. In the event
PayFac pays such taxes, whether directly or indirectly, Sub-Merchant
shall immediately reimburse PayFac or PayFac may, at PayFac’s sole
option, charge Sub-Merchant’s Account.

19. Binding on Successors; Assignment.
This Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
administrators, successors, transferees and assignees. Neither this
Agreement nor any interest herein may directly or indirectly be
transferred or assigned by Sub-Merchant, in whole or in part, without
the prior written consent of PayFac, which will not be unreasonably
delayed or withheld. Sub-Merchant will remain liable for any amounts
owed under this Agreement after an unauthorized transfer or assignment
by Sub-Merchant, even if PayFac continues to provide Services to such
transferee or assignee. This Agreement is for the benefit of, and may
be enforced only by, PayFac, Member Bank and Sub-Merchant and their
respective successors and permitted transferees and assignees, and is
not for the benefit of, and may not be enforced by, any third party.

20. Notices.

(a) All notices, requests, demands and other communications to be
delivered by Sub-Merchant hereunder unless specified otherwise herein
shall be in writing and shall be delivered by nationally recognized
overnight carrier, registered or certified mail, postage prepaid, to
PayFac at the address listed for PayFac in the preamble of this
Agreement, Attention: General Counsel/Legal Department.

(b) All notices, requests, demands and other communications to be
delivered by PayFac or Member Bank hereunder unless specified otherwise
herein shall be in writing and shall be delivered by email, facsimile,
statement message, nationally recognized overnight carrier, or
registered or certified mail, postage prepaid, to Sub-Merchant at the
Sub-Merchant address provided above, Attention President/Owner;

or to such other address or to such other person as either party shall
have last designated by written notice to the other party.

Notices, etc., so delivered shall be deemed given upon receipt, or, if
such statement has been provided by PayFac by statement message, such
notice shall be deemed delivered upon Sub-Merchant’s ability to access
such relevant statement.

21. Unenforceable Provision.
If any term or provision of this Agreement or any application thereof shall be invalid
or unenforceable, the remainder of this Agreement and any other
application of such term or provision shall not be affected thereby.

22. Payment.
Sub-Merchant shall always
maintain an open Account. Sub-Merchant irrevocably authorizes PayFac to
debit and/or credit the Account to settle any and all fees and other
amounts due PayFac under this Agreement, and such authority shall
remain in effect for as long as Sub-Merchant may have any obligation to
pay PayFac for any amount under this Agreement, whether before or after
termination of this Agreement, regardless of whether Sub-Merchant has
notified PayFac of an Account Change as defined below. Sub-Merchant
shall always maintain the Account with sufficient cleared funds to meet
its obligations under this Agreement. In the event Sub-Merchant desires
an Account Change, Sub-Merchant shall give PayFac 30 days prior written
notice in accordance with the provisions of Section 20 of any such
change, and PayFac shall use reasonable commercial efforts to effect
such Account Change; however, such Account Change shall not be
effective until the date on which PayFac actually makes such Account
Change on PayFac’s system. In no event shall PayFac have any liability
for any amounts directed to an Account that has been designated by any
purported representative of Sub-Merchant or its Merchant Supplier at
any time during the term of this Agreement, regardless of any Account
Change. All amounts due PayFac under this Agreement shall be paid
without set-off or deduction, and shall be due from Sub-Merchant as of
the date PayFac originates an ACH debit transaction record to
Sub-Merchant’s Account. Any fees not collected from Sub-Merchant by
PayFac when due shall bear interest at one (1) percentage point per
month but in no event more than the highest rate permitted by law. The
acceptance by PayFac, PayFac’s affiliate or other financial institution
of Sub-Merchant’s closing (or termination of) its Account shall not
constitute a mutually agreed upon termination of this Agreement. PayFac
and Member Bank are hereby authorized by Sub-Merchant to charge the
amount of daily chargebacks and fees i) against each day’s sales
transactions ii) against any reserves; or iii) by making an ACH debit.

23. Reserve; Letter of Credit.
As a specifically bargained for inducement for PayFac to enter into
this Agreement with Sub-Merchant, for the purposes of providing a
deposit and a source of funds to pay PayFac for any and all amounts
owed by Sub-Merchant, PayFac at its option reserves the right to i)
establish from amounts payable to Sub-Merchant hereunder, and/or cause
Sub-Merchant to pay to PayFac, a reserve of funds satisfactory to
PayFac to cover anticipated fees, chargebacks, returns, any other
applicable assessments and any other actual or anticipated liabilities
incurred by PayFac or Member Bank on behalf of Sub-Merchant and/or ii)
require Sub-Merchant to establish an irrevocable standby letter of
credit, including additional and/or replacement letters of credit if
required by PayFac, with a beneficiary designated by PayFac, and which
are issued from a financial institution other than Member Bank or any
of its affiliates, that is acceptable to PayFac, in a format, with an
expiration date, and in an amount acceptable to PayFac in its sole
discretion. Additionally, PayFac shall have the right to debit the
Account to establish or maintain funds in the reserve account. Member
Bank or PayFac may deposit into the reserve account funds they would
otherwise be obligated to pay Sub-Merchant, for the purpose of
establishing or maintaining the reserve account in accordance with this
Section, if they determine such action is reasonably necessary to
protect their interests. All reserve funds shall be maintained in an
account owned by PayFac or Member Bank at Member Bank (or other
depository institution approved by PayFac) and shall remain in such
account (unless withdrawn by PayFac or Member Bank in accordance with
this Agreement) until each of the following has occurred: (a) this
Agreement has been terminated, and (b) Sub-Merchant has paid in full
all amounts owing or that could ever be owed under this Agreement,
including without limitation, all outstanding/uncollected amounts and
potential chargebacks. Member Bank or PayFac shall have sole control of
the reserve account. Member Bank or PayFac may, at any time, require
that the amount on deposit in the reserve account be increased.
Sub-Merchant understands and agrees that if Sub-Merchant is required to
establish a reserve account Sub-Merchant has an obligation under this
Agreement to maintain at all times a balance in the reserve account
sufficient to protect PayFac against losses resulting from transactions
initiated by Sub-Merchant. In no event shall Sub-Merchant be entitled
to a return of any sums remaining in the reserve account before 270
days following the effective date of termination of this Agreement. In
the event Sub-Merchant fails to establish, for any reason whatsoever, a
reserve and/or a letter of credit as required above, PayFac shall have
all of the rights and remedies available to PayFac in this Agreement,
including but not limited to exercising the rights and remedies of
PayFac in Section 16.

In the event Sub-Merchants sales transactions (“Daily Proceeds”) after
charge backs, refunds, reserve withholdings, fees, and settlement
payments for any given fiscal day are less than zero ($0), the
overdraft fees set forth in this Agreement will be charged to
Sub-Merchant. PayFac may fund overdrafts, liabilities and/or reserve
deficits by initiating deductions from subsequent Daily Proceeds. If
such collections are inadequate, PayFac may, at its option, obtain the
required sums by making an ACH debit from the Account or reserve
account or by directing Member Bank to make an ACH debit from Account
or reserve account. In addition, PayFac may i) require that
Sub-Merchant make a wire transfer to the Account within one (1) banking
business day of notice; ii) collect under any guaranty; iii) make
set-offs against any obligations owed by PayFac to Sub-Merchant or any
of its affiliates; and iv) take any other action
authorized by law. Neither PayFac nor Member Bank is obligated to
process refunds or chargebacks that will cause an overdraft. Member
Bank or PayFac may, without notice to Sub-Merchant, withdraw from and
apply deposits in the reserve account against any outstanding amounts
Sub-Merchant owes under this Agreement or any other agreement between
Sub-Merchant and Member Bank or PayFac. Also, PayFac or Member Bank may
debit the reserve account to exercise their rights under this Agreement
to collect any amounts due to Member Bank or PayFac, including without
limitation rights of set-off and recoupment.

24. Special Obligations

Without limiting Sub-Merchant’s other obligations set forth in this
Agreement and in the Operating Regulations, PayFac and Sub-Merchant
acknowledge and agree Sub-Merchant is subject to the following: (i)
Sub-Merchant is liable for all transactions submitted in connection
with this Agreement, including but not limited to all acts, omissions,
cardholder disputes, and other cardholder customer service-related
issues related to Sub-Merchants, (ii) Sub-Merchant must not submit,
process, or deposit transactions on behalf of any other person or
entity, (iii) PayFac and/or Member Bank reserve the right to
immediately terminate and/or hold all funds of Sub-Merchant upon the
belief that Sub-Merchant will owe amounts to PayFac under this
Agreement or of fraudulent activity or other activities as specified in
the Operating Regulations or Bank Rules, or if the Sub-Merchant is
outside the credit policy approved by PayFac, or if requested by a
Member Bank, Association or governmental entity, (iv) Sub-Merchant
operates and accepts transactions only in the United States, (v)
Sub-Merchant has never been terminated at the direction of the
Associations and/or a government agency, (vi) Sub-Merchant is not
engaged in any illicit or illegal activity, (vii) Sub-Merchant will
only process transactions for the services and goods set forth on the
Merchant Application and sold directly by Sub-Merchant, in accordance
with all Operating Regulations and Bank Rules, (viii) PayFac may refuse
to process any or all transactions for any Sub-Merchant in PayFac’s
reasonable discretion, and (ix) Sub-Merchant agrees that Sub-Merchant,
and not PayFac, shall be responsible for resolving any issues,
problems, or disputes with cardholders.

In the event Sub-Merchant is anticipated to process more than $100,000
in Visa transactions or more than $1,000,000 in MasterCard transactions
in any twelve month period, as such amount may be adjusted by Visa and
MasterCard from time-to-time, Sub-Merchant will be required to execute
a direct processing agreement with Member Bank and/or one of PayFac’s
Merchant Suppliers, as designated by PayFac.

25. Indemnification.
Subject to the other limitations, terms and conditions of this Agreement, PayFac shall
indemnify, defend, and hold harmless Sub-Merchant, and its directors,
officers, employees, affiliates and agents from and against all third
party proceedings, claims, losses, damages, demands, liabilities and
expenses whatsoever, including all reasonable legal and accounting fees
and expenses and all reasonable collection costs, incurred by
Sub-Merchant, its directors, officers, employees, affiliates and agents
to the extent resulting from or arising out of PayFac’s gross
negligence, or willful misconduct. Sub-Merchant shall indemnify,
defend, and hold harmless PayFac, and its directors, officers,
employees, affiliates and agents from and against all proceedings,
claims, losses, damages, demands, liabilities and expenses whatsoever,
including all reasonable legal and accounting fees and expenses and all
reasonable collection costs, incurred by PayFac and/or Member Bank, its
directors, officers, employees, affiliates and agents resulting from or
arising out of the Services in this Agreement, Sub-Merchant’s
processing activities, the business of Sub-Merchant or its customers,
any sales transaction acquired by PayFac or Member Bank, any
noncompliance with the Bank Rules and/or the Operating Regulations (or
any rules or regulations promulgated by or in conjunction with the
Associations) by Sub-Merchant, Sub-merchants, or their agents
(including any Merchant Supplier), any issue, problems, or disputes
between Sub-Merchant and any customer, any Data Incident, any
infiltration, hack, breach, or violation of the processing system of
Sub-Merchant, Merchant Supplier, or any other third party processor or
system, or by reason of any breach or nonperformance of any provision
of this Agreement on the part of the Sub-Merchant, or its employees,
agents, Merchant Suppliers, or customers. The indemnification of each
party shall survive the termination of the Agreement.

26Review of Settlement Activity and Reports; Notice of Failure by
PayFac
.

Reports are provided either in a mailed statement or online by PayFac
in accordance with its standard operating procedures and include an
accounting for each currency with supporting detail of transaction
activity, Daily Proceeds, reserves and funds transfers for transaction
settlement services. It is Sub-Merchant’s obligation to print and
retain reports provided online, PayFac makes no guaranty as to
availability and may remove such reports from its online portal at any
time. Reports shall be upgraded, enhanced and/or modified by PayFac in
its sole discretion.

Sub-Merchant agrees that it shall review all reports, notices, and
invoices prepared by PayFac or its agent and made available to
Sub-Merchant including but not limited to reports, notices, and
invoices provided via PayFac’s online reporting tool. PayFac reserves
the right to send some or all of the reports and/or invoices and/or
notices of any pricing changes permitted under this Agreement via
electronic transmission (e.g., via e-mail) which PayFac may change from
time to time upon notice to Sub-Merchant in accordance with PayFac’s
standard operating procedure. Sub-Merchant expressly agrees that
Sub-Merchant’s failure to notify PayFac that Sub-Merchant has not
received settlement funds within five business days from the date that
settlement was due to occur, or fails to reject any report, notice, or
invoice within thirty business days from the date the report or invoice
is made available to Sub-Merchant, shall constitute Sub-Merchant’s
acceptance of the same. In the event Sub-Merchant believes that PayFac
has failed in any way to provide the Services, Sub-Merchant agrees to
provide PayFac with written notice, specifically detailing any alleged
failure, within 30 days of the date on which the alleged failure first
occurred.

27. Choice of Law; Jurisdiction; Venue.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Illinois without regard to
conflicts of law provisions. The parties hereby consent and submit to
service of process, personal jurisdiction, and venue in the state and
federal courts in Cook County, Illinois, and select such courts as the
exclusive forum with respect to any action or proceeding arising out of
or in any way relating to this Agreement, and/or pertaining in any way
to the relationship between Sub-Merchant and PayFac. SUB-MERCHANT AND
PAYFAC HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY MATTER UNDER,
RELATED TO, OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTIONS OR
RELATIONSHIPS CONTEMPLATED HEREBY.

28. Limit of Liability; Force Majeure.
EXCEPT FOR THOSE EXPRESS WARRANTIES MADE IN THIS AGREEMENT, PAYFAC AND
MEMBER BANK DISCLAIM ALL WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY
EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. SUB-MERCHANT HEREBY ACKNOWLEDGES THAT THERE ARE
RISKS ASSOCIATED WITH THE ACCEPTANCE OF CARDS AND SUB-MERCHANT HEREBY
ASSUMES ALL SUCH RISKS EXCEPT AS MAY BE EXPRESSLY SET FORTH HEREIN.
Without limiting the foregoing, PayFac shall not be liable for lost
profits, lost business or any incidental, special, consequential or
punitive damages (whether or not arising out of circumstances known or
foreseeable by PayFac) suffered by Sub-Merchant, its customers or any
third party in connection with the Services provided hereunder. In no
event shall PayFac be liable for any damages or losses that are wholly
or partially caused by the Sub-Merchant, or its employees, agents, or
Merchant Suppliers. In addition, in no event shall PayFac be liable for
any damages or losses that are wholly or partially caused by PayFac, or
its employees, agents that should have been reported to PayFac pursuant
to Section 23, or that first occurred, whether or not discovered by
Sub-Merchant, more than 30 days prior to PayFac’s receipt of written
notice from Sub-Merchant. PayFac’s liability related to or arising out
of this Agreement shall in no event exceed an amount equal to the
lesser of (i) actual monetary damages incurred by Sub-Merchant or (ii)
fees paid to and retained by PayFac for the particular Services in
question for the three calendar months immediately preceding the date
on which PayFac received a written notice from Sub-Merchant detailing
PayFac’s material nonperformance under this Agreement. PayFac shall not
be deemed to be in default under this Agreement or liable for any delay
or loss in the performance, failure to perform, or interruption of any
Services resulting, directly or indirectly, from a Force Majeure Event.
Upon such an occurrence, performance by PayFac shall be excused until
the cause for the delay has been removed and PayFac has had a
reasonable time to again provide the Services. No cause of action,
regardless of form, shall be brought by either party more than 1 year
after the cause of action arose, other than one for the nonpayment of
fees and amounts due PayFac under this Agreement. Any restriction on
PayFac’s liability under this Agreement shall apply in the same manner
to Member Bank. In the event Sub-Merchant has any claim against Member
Bank arising in connection with the Services, rights, and/or
obligations defined this Agreement, Sub-Merchant shall proceed against
PayFac (subject to the limitations and restrictions herein), and not
against Member Bank, unless otherwise specifically set forth in the
Operating Regulations.

29. Controlling Documents.
This Agreement (including all addenda and schedules and exhibits hereto and all
documents and materials referenced herein) supersedes any and all other
agreements, oral or written, between the parties hereto with respect to
the subject matter hereof, and sets forth the complete and exclusive
agreement between the parties with respect to the Services and, unless
specifically provided for herein, other services are not included as
part of this Agreement. If there is a conflict between the Sub-Merchant
Agreement and an addendum or schedule or exhibit hereto, the addendum
or schedule or exhibit shall control. If there is a conflict between
the Bank Rules and this Agreement, the Bank Rules shall prevail. If
there is a conflict between Operating Regulations and this Agreement,
the Operating Regulations shall prevail. If there is a conflict between
the Operating Regulations and the Bank Rules, the Operating Regulations
shall prevail.

30. PayFac’s Right to Suspend or Cease Services.
PayFac may suspend or cease providing any Service in this
Agreement to Sub-Merchant if, in PayFac’s reasonable opinion (i) such
Service violates or would violate the Operating Regulations, Bank
Rules, or any federal, state or local statute or ordinance or any
regulation, order or directive of any governmental agency or court,
(ii) Sub-Merchant is accused by any federal, state or local
jurisdiction of a violation of any applicable statute or ordinance or
any regulation, order or directive of any governmental agency or court,
or if PayFac reasonably believes, based upon the opinion of its legal
counsel, that Sub-Merchant is in violation of any of the foregoing,
(iii) Sub-Merchant creates an undue financial, security, regulatory or
other risk to PayFac, Member Bank or the Associations, and/or (iv) such
Service is in connection with a transaction that is high risk, outside
of PayFac’s underwriting criteria, or likely to result in a chargeback.
PayFac may also suspend or cease providing any Service in this
Agreement to Sub-Merchant if directed to do so by Member Bank. Should
Sub-Merchant not process sales transactions through PayFac’s system for
a period of one year or more, PayFac may remove Sub-Merchant from
PayFac’s systems without notice, without relieving Sub-Merchant from
any of Sub-Merchant’s obligations under this Agreement.

31. Conversion; Deconversion.
Sub-Merchant shall, at Sub-Merchant’s sole expense, take all necessary steps to, and
shall, promptly convert to PayFac’s system for the Services in this
Agreement not later than 30 days after the execution of this Agreement
by PayFac. Sub-Merchant’s obligation to pay any fees and expenses
incurred by PayFac, including those fees and expenses from third
parties, in connection with Sub-Merchant’s conversion, shall remain the
sole responsibility of Sub-Merchant. Sub-Merchant agrees to be
responsible for all direct and indirect costs (including but not
limited to those incurred by PayFac, its affiliates and/or agents) in
connection with and/or related to Sub-Merchant’s conversion from PayFac
at the termination of this Agreement and/or related to any conversion
or programming effort affecting the Services after Sub-Merchant’s
initial conversion to PayFac.

32. Confidential Information.

(a) Confidential Information Supplied by PayFac. Sub-Merchant
acknowledges that PayFac will be providing Sub-Merchant with certain
confidential information, including but not limited to, this Agreement
and information relating to the finances, systems, methods, techniques,
programs, devices and operations of PayFac, Member Bank, and/or the
Associations. Sub-Merchant shall not disclose any such confidential
information to any person or entity (other than to those employees and
Merchant Suppliers of Sub-Merchant who participate directly in the
performance of this Agreement and need access to such information).
Without limiting the foregoing, Sub-Merchant agrees that it will fully
comply with any and all confidentiality and security requirements of
the USA Patriot Act (or similar law, rule or regulation), VISA,
MasterCard, Discover, and/or Other Networks.

(b) Sub-Merchant Information. PayFac will treat the confidential
information of Sub-Merchant disclosed by Sub-Merchant to PayFac in
accordance with PayFac’s privacy policies, which may be updated or
amended from time-to-time at PayFac’s sole discretion. Additionally,
PayFac may disclose any and all information about Sub-Merchant to
Member Bank, any Association, and any Merchant Supplier regardless of
any other prior, contemporaneous, or subsequent agreement to the
contrary between PayFac and Sub-Merchant. Sub-Merchant should direct
any questions or requests about PayFac’s privacy policies to a PayFac
customer service representative or Sub-Merchant’s primary relationship
manager, if applicable. Notwithstanding anything to the contrary in any
privacy policy adopted or maintained by PayFac or in this Agreement,
PayFac may use, disclose, share and retain any information provided by
Sub-Merchant and/or relevant to the Services, during the term and
thereafter: (a) with Sub-Merchant’s franchisor, Sub-Merchant’s
franchisee(s), association(s) to which Sub-Merchant belongs and/or
belonged as of the commencement of this Agreement, (b) any affiliate of
Sub-Merchant; (c) in response to subpoenas, warrants, court orders or
other legal processes; (d) in response to requests from law enforcement
agencies or government entities; (e) to comply with applicable laws or
regulations; (f) with PayFac’s affiliates, partners and agents, (g) to
perform analytic services for Sub-Merchant, PayFac and/or others
including but not limited to analyzing, tracking and comparing
transaction and other data to develop and provide insights for such
parties as well as for developing, marketing, maintaining and/or
improving PayFac’s products and services; and/or (h) to offer or
provide the Services hereunder.

(c) Miscellaneous. The parties acknowledge that the injury that
would be sustained by the disclosing party as a result of the other
party’s violation of this Section 29 cannot be compensated solely by
money damages, and therefore agrees that the disclosing party shall be
entitled to seek injunctive relief and any other remedies as may be
available at law or in equity in the event of a violation of the
provisions contained in this Section 29. The restrictions contained in
this Section 29 shall not apply to any information which becomes a
matter of public knowledge, other than through a violation of this
Agreement or other agreements between the parties.

(d) Publicity. Sub-Merchant agrees that PayFac may issue a press
release after the execution of this agreement and/or after the
conversion of Sub-Merchant to PayFac’s Services. In any event,
Sub-Merchant acknowledges and agrees that PayFac may make public the
execution of this Agreement by Sub-Merchant and/or any of
Sub-Merchant’s affiliates, and/or the Services that may be or have been
provided under the Agreement. Sub-Merchant agrees that PayFac may
include Sub-Merchant’s name and logo on a list of PayFac’s customers,
which may be made public. Sub-Merchant agrees that, upon PayFac’s
request, Sub-Merchant will provide testimonial information related to
the Services received by Sub-Merchant hereunder.

33Financial Statements; Risk Mitigation; Insurance.
If at any time Sub-Merchant is not a publicly traded company,
Sub-Merchant shall provide PayFac with an audited financial statement
for Sub-Merchant’s most recent fiscal year end and/or quarterly
financial statements prepared and certified by Sub-Merchant’s chief
financial officer within 15 days of PayFac’s request therefore.
Additionally, in the event either i) PayFac’s risk monitoring of
Sub-Merchant indicates a risk of loss or regulatory concern to PayFac
and/or Member Bank or ii) PayFac is required to do so by Member Bank or
an Association, Sub-Merchant shall a) provide any documentation PayFac
requires to verify Sub-Merchant’s business operations, b) modify its
business practices or c) take any risk mitigation steps necessary as
identified by PayFac.

During the term of this Agreement (except as expressly provided
otherwise), Sub-Merchant shall maintain the types of insurance coverage
identified below covering Sub-Merchant activities and obligations
(including and those of its affiliates, agents and subcontractors)
under this Agreement:

(a) Commercial General Liability (CGL) Insurance with reasonable limits
per occurrence based on Sub-Merchant’s business type and operations for
bodily injury, personal injury and property damage;

(b) Crime Insurance, including third party crime coverage, with
reasonable limits per occurrence based on Sub-Merchant’s business type
and operations covering the loss of money, securities or other property
of PayFac, Member Bank and/or its customers resulting from forgery or
the unlawful taking of such by any current or former employee of
Sub-Merchant or that of its affiliates, agents or subcontractors; with
such insurance to be maintained for 2 years post the term of this
Agreement; and,

(c) Errors & Omissions (E&0) Insurance with reasonable limits
per claim and in aggregate based on Sub-Merchant’s business type and
operations. Such coverage must include (i) Professional Liability
Insurance covering actual or alleged acts, errors or omissions
committed by the Sub-Merchant, its employees, affiliates, agents and
subcontractors; and (ii) Computer Security/Privacy Liability covering
actual or alleged acts, errors or omissions committed by the
Sub-Merchant, its employees, affiliates, agents and subcontractors,
including the unauthorized use/access of computer systems, defense of
any regulatory action involving a breach of privacy, failure to protect
confidential information (personal and commercial information) from
disclosure, and breach expense coverage (e.g. forensic, notification,
ID theft, credit monitoring, call center, and legal costs and expenses)
, whether or not required by any statute, law or regulation.

PayFac and Member Bank (and their parents and affiliates) will be named
as additional insureds under CGL and E&O policies and loss payees
under crime policies. Policies will be subject to the terms and
conditions and exclusions that are usual and customary for such
insurance types, will be primary over insurance of PayFac and Member
Bank, require waiver of subrogation against PayFac and Member Bank by
insurers, and will expressly provide coverage for claims by PayFac and
Member Bank. Coverage must include the following: blanket contractual
liability, products and completed operations, independent contractors,
severability of interest and waiver of subrogation against all parties’
names as additional insureds. Policies will not limit claims by one
insured versus another. Sub-Merchant shall be responsible for all
claims expenses and loss payments within the policy deductible or
self-insurance retention. Certificates of Insurance evidencing such
coverage shall be furnished to PayFac upon request by PayFac. Such
certificates shall provide for not less than thirty 30 days written
notice to PayFac prior to policy cancellation, non-renewal, or material
change. PayFac, in its sole discretion, reserves the right to require
additional and/or replacement coverage in the event of a material
change in the financial and/or business operations of Sub-Merchant.

34. No Waiver.
If either party waives in writing an unsatisfied condition, representation, warranty, undertaking or
agreement (or portion thereof) set forth herein, the waiving party
shall thereafter be barred from recovering, and thereafter shall not
seek to recover, any damages, claims, losses, liabilities or expenses,
including, without limitation, legal and other expenses, from the other
party in respect of the matter or matters so waived. Except as
otherwise specifically provided for in this Agreement, the failure of
any party to promptly enforce its rights herein shall not be construed
to be a waiver of such rights unless agreed to in writing. Any rights
and remedies specifically provided for in any addendum or schedule or
exhibit are in addition to those rights and remedies set forth in this
Agreement and/or available to PayFac and Member Bank at law or in
equity.

35. Compliance with Law.

Sub-Merchant represents and warrants to PayFac that it will comply with
all applicable federal, state and local laws and regulations in
connection with Sub-Merchant’s receipt of the Services and/or
applicable to Sub-Merchant’s business operations. PayFac will comply
with federal, state and local laws and regulations applicable directly
to PayFac in its provision of the Services.

36. Security, Data Incidents.
Sub-Merchant will be solely responsible for the security, quality,
accuracy, and adequacy of all transactions and information supplied
hereunder, and will establish and maintain adequate audit controls to
monitor the security, quality, maintenance, and delivery of such data.
Without limiting the generality of the foregoing, Sub-Merchant warrants
to PayFac that it has implemented and will maintain secure systems for
maintaining and processing information and for transmitting information
to PayFac. Neither PayFac nor Member Bank shall have any liability
whatsoever for the security or availability of any communications
connection used in connection with the Services provided hereunder.
Sub-Merchant acknowledges that PayFac is responsible only for the
security of its own proprietary systems, and not for the systems of any
third party, including without limitation any Merchant Supplier.
Sub-Merchant shall notify PayFac immediately if Sub-Merchant becomes
aware of or suspects a Data Incident. Sub-Merchant agrees to fully
cooperate with PayFac and any Association with respect to any
investigation and/or additional requirements related to a suspected
Data Incident.

37. Audits.
At any reasonable time upon reasonable notice to Sub-Merchant,
Sub-Merchant shall allow auditors, including the auditors of any
Association or any third party designated by PayFac or the applicable
Association, to review the files held and the procedures followed by
Sub-Merchant at any or all of Sub-Merchant’s offices or places of
business. PayFac agrees that should it conduct an audit which is not
required by the Operating Regulations or applicable law or is not
requested by an Association, Member Bank or a regulatory agency, such
audit will be at PayFac’s sole expense; otherwise the audit shall be at
Sub-Merchant’s expense. Sub-Merchant will assist such auditors as may
be necessary for them to complete their audit. In the event that a
third-party audit is requested by an Association, Member Bank or
regulatory agency, and/or required by the Operating Regulations or
applicable law, PayFac may, at its option, and at Sub-Merchant’s sole
expense, either retain a third party to perform the audit, or require
that Sub-Merchant directly retain a specific third party auditor. If
PayFac requires that Sub-Merchant directly retain the auditor,
Sub-Merchant shall arrange immediately for such audit to be performed,
and will provide PayFac and the Associations with a copy of any final
audit report.

38. System Requirements and Upgrades.
Sub-Merchant agrees that the Services shall be provided in accordance
with PayFac’s then current systems, standards and procedures and that
PayFac shall not be required to perform any special programming, to
provide any special hardware or software or to implement any other
system, program or procedure for Sub-Merchant. Unless otherwise agreed
in writing by PayFac, all sales transaction, settlement and other data
and information used in connection with the Services shall be provided
in PayFac’s then current data formats and by means of PayFac’s then
current telecommunications configurations and protocols. PayFac may
make changes in the Services based upon, but not limited to,
technological developments, legislative or regulatory changes, or the
introduction of new services by PayFac. Sub-Merchant shall comply with
all time deadlines, equipment and software maintenance and upgrading
requirements which PayFac may reasonably impose on Sub-Merchant from
time to time.

39. Title to the Services.
Sub-Merchant agrees it is acquiring only a nontransferable,
non‑exclusive right to use the Services. PayFac shall at all
times retain exclusive title to the Services, including without
limitation, any materials delivered to Sub-Merchant hereunder and any
invention, development, product, trade name, trademark, service mark,
software program, or derivative thereof, developed in connection with
providing the Services or during the term of this Agreement.

40. Limited Acceptance.
If so indicated below, Sub-Merchant acknowledges and agrees that it
wishes to be a Limited Acceptance Sub-Merchant, which means that
Sub-Merchant has elected to accept only certain VISA/MasterCard card
types as indicated below, or via later notification. Sub-Merchant
further acknowledges and agrees that PayFac has no obligation other
than those expressly provided under the Operating Regulations and
applicable law as they may relate to limited acceptance and that
PayFac’s obligations do not include policing card types at the point of
sale. As a Limited Acceptance Sub-Merchant, Sub-Merchant will be solely
responsible for the implementation of its decision for Limited
Acceptance. Sub-Merchant will be solely responsible for policing, at
the point of sale, the card type(s) of transactions it submits for
processing by PayFac. Should Sub-Merchant submit a transaction for
processing for a card type it has indicated it does not wish to accept,
PayFac may process that transaction and Sub-Merchant will pay the
applicable fees, charges, and assessments associated with that
transaction. For Sub-Merchant’s convenience, a general description of
VISA/MasterCard card types are:

a. Consumer Credit – a consumer credit card issued by a U.S. Issuer or
a commercial credit card issued by a non-U.S. Issuer; this category
does not include VISA or MasterCard branded signature-based debit
cards.

b. Consumer Debit – a VISA or MasterCard branded signature-based debit
card (including certain stored-value and prepaid cards).

c. Commercial – a VISA or MasterCard branded credit card issued by a
U.S. Issuer that bears the descriptive term “Business Card”, “Corporate
Card”, “Purchasing Card”, “Fleet Card”, or similar descriptive term
indicated pursuant to the Operating Regulations.

Only if checked below, Sub-Merchant wishes to be a Limited Acceptance
Sub-Merchant, which means that Sub-Merchant will accept only the
VISA/MASTERCARD card types indicated below:

VISA Credit Cards

VISA Debit Cards (signature based)

MasterCard Credit

MasterCard Debit Cards (signature based)

38. Security Interest and Setoff.
This Agreement will constitute a security agreement under the Uniform
Commercial Code. Sub-Merchant grants to PayFac a security interest in
and lien upon: (a) all funds at any time in the Account, regardless of
the source of such funds, (b) all funds at any time in any reserve
account, regardless of the source of such funds, (c) present and future
sales drafts, (d) any amount which may be due to Sub-Merchant under
this Agreement, including but not limited to all rights to receive any
payments or credits under this Agreement, (e) the proceeds thereof, and
(e) all inventory, cash, receivables, intellectual property, and other
assets held by Sub-Merchant (collectively, the “Secured Assets”), to
secure all of Sub-Merchant’s obligations under this Agreement and any
other agreements now existing or later entered into between
Sub-Merchant, PayFac, and/or Member Bank, including but not limited to
its obligation to pay any amounts due and owing to PayFac or Member
Bank. With respect to any Secured Assets maintained by Member Bank,
Sub-Merchant authorizes Member Bank to comply with all demands made by
PayFac with respect to the Secured Assets without further consent or
direction from Sub-Merchant, and Member Bank agrees to comply with the
same. This security interest may be exercised by PayFac without notice
or demand of any kind by making an immediate withdrawal or freezing the
Secured Assets. As such, PayFac has control and a perfected security
interest in the Secured Assets with Member Bank. Pursuant to Article 9
of the Uniform Commercial Code, as amended from time to time, PayFac
has control over and may direct the disposition of the Secured Assets,
without further consent of Sub-Merchant. Sub-Merchant represents and
warrants that no other person or entity has a security interest in the
Secured Assets. With respect to such security interests and liens,
PayFac will have all rights afforded under the Uniform Commercial Code,
any other applicable law and in equity. Sub-Merchant acknowledges that
PayFac may file a UCC-1 Financing Statement or any other financing
statement or document against the Secured Assets, and Sub-Merchant
agrees to execute such financing statements or other documents to
evidence PayFac’s security interest. Sub-Merchant will obtain from
PayFac written consent prior to granting a security interest of any
kind in the Secured Assets to a third party. If a third party has an
existing security interest in the Secured Assets, Sub-Merchant agrees
to obtain a waiver from such third party acknowledging PayFac’s prior
preferred interest in a form satisfactory to PayFac. Sub-Merchant
agrees that this is a contract of recoupment and PayFac is not required
to file a motion for relief from a bankruptcy action automatic stay to
realize on any of the Secured Assets. Nevertheless, Sub-Merchant agrees
not to contest or object to any motion for relief from the automatic
stay filed by PayFac or Member Bank. Sub-Merchant authorizes PayFac and
appoints PayFac its attorney in fact to sign its name to any financing
statement used for the perfection of any security interest or lien
granted hereunder. In addition to the security interest in the Secured
Assets, PayFac shall have a contractual right of setoff and right of
recoupment against the Secured Assets.

PayFac’s contractual right of setoff and right of recoupment means that
PayFac may offset any outstanding/uncollected amounts owed to it from:
any amounts it would otherwise be obligated to deposit into the Account
and from any other amounts PayFac or Member Bank may owe Sub-Merchant
under this Agreement or any other agreement. Every such right of setoff
shall be deemed to have been exercised immediately upon the occurrence
of an Event of Default hereunder without any action by PayFac or
notation in the PayFac’s records, although PayFac may enter such set
off on its books and records at a later time. Sub-Merchant warrants and
represents that no other person or entity has a security interest in
the Secured Assets. If a bankruptcy proceeding is filed by or against
Sub-Merchant under the Bankruptcy Code (whether the petition is filed
voluntarily and/or involuntarily), it waives any applicable protection
related to the automatic stay provisions of 11 U.S.C. §362 (or any
replacement section) and consents to an appropriate reserve of funds
being established between the parties pursuant to this Agreement or by
Court Order. In furtherance of the foregoing, Sub-Merchant acknowledges
that in order to provide adequate protection under Bankruptcy Code
§ 362 to PayFac, Sub-Merchant must create or maintain the reserve
account as required by PayFac, and PayFac will have the right to offset
against the reserve account for any and all obligations which
Sub-Merchant may owe to PayFac, without regard to whether the
obligations relate to sales drafts initiated or created before or after
the filing of the bankruptcy petition.

39. Modification of Agreement.
Except as provided in this Agreement, this Agreement including any addendum or
schedule or exhibit hereto shall only be modified or amended by an
instrument in writing signed by Sub-Merchant and PayFac. Any changes,
additions, stipulations or deletions, including lining out, by
Sub-Merchant, except where indicated by a space to be filled in (e.g.,
the space for Sub-Merchant’s name and address), shall not be deemed to
be agreed to or binding upon PayFac unless agreed to in writing in the
form of an amendment signed by each party hereto. Sub-Merchant agrees
that PayFac may amend this Agreement upon notice to Sub-Merchant in
accordance with PayFac’s standard operating procedures if such
amendment is required: (a) in order to add additional Association
requirements, (b) by Member Bank, or (c) by PayFac’s Merchant Supplier.

41. Headings and Construction. The headings used in this Agreement are inserted for convenience only
and will not affect the interpretation of any provision. Sub-Merchant
and PayFac each acknowledge that the limitations and exclusions
contained in this Agreement have been the subject of active and
complete negotiation between the parties and represent the parties’
voluntary agreement. The parties agree that the terms and conditions of
this Agreement shall not be construed in favor of or against any party
by reason of the extent to which any party or its professional advisors
participated in the preparation of this document.

42. Authorization. Each of the parties hereto represents and warrants on behalf of
Each of the parties hereto represents and warrants on behalf of
itself that it has full power and authority to enter into this
Agreement; that the execution, delivery and performance of this
Agreement has been duly authorized by all necessary corporate, limited
liability company or partnership or other appropriate authorizing
actions; that the execution, delivery and performance of this Agreement
will not contravene any applicable by‑law, corporate charter,
operating agreement, partnership or joint venture agreement, law,
regulation, order or judgment; that execution, delivery and performance
of this Agreement will not contravene any provision or constitute a
default under any other agreement, license or contract which such party
is bound; and, that this Agreement is valid and enforceable in
accordance with its terms.

43. Remedies.
The rights and remedies conferred upon PayFac and Member Bank in this
Agreement are not intended to be exclusive of each other or of any
other rights and remedies of PayFac and Member Bank under this
Agreement, at law, or in equity. Rather, each and every right of PayFac
and Member Bank in this Agreement, at law, or in equity will be
cumulative and concurrent and in addition to every other available
right and remedy

44. Counterparts.
This Agreement may be executed and delivered in counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.

45. Facsimile and Electronic Signatures.
Sub-Merchant and PayFac agree that electronic signatures will have the
same legal effect as original (ie. ink) signatures and that an
electronic, scanned, facsimile, or duplicate copy of such signatures
will be deemed an original and may be used as evidence of execution

46. Member Bank.
The PayFac and Member Bank may jointly or individually assert or
exercise any rights or remedies provided to PayFac or Member Bank
hereunder. PayFac and Member Bank reserve the right to allocate the
duties and obligations assigned hereunder to PayFac between themselves,
as they deem appropriate in their sole discretion. Member Bank has
certain obligations to Sub-Merchant pursuant to the Operating
Regulations. In the event of any conflict between this Agreement and
the Operating Regulations on the subject of Member Bank’s obligations,
the Operating Regulations shall control. As of the commencement of this
Agreement, Member Bank shall be Fifth Third Bank, an Ohio banking
corporation, located in Cincinnati, Ohio. PayFac is entering into this
Agreement on behalf of and as an agent of Member Bank. The Member Bank
may delegate certain or all of its duties to an affiliate of the Member
Bank at any time, without notice to Sub-Merchant. The Member Bank may
be changed, and its rights and obligations assigned to another party by
PayFac at any time without notice to Sub-Merchant.

 



 

Schedule A

Bank Card Merchant Rules and Regulation

All capitalized terms not defined below will have the meanings ascribed
in the Sub-Merchant Agreement.

Good Busi
ness Practices That Will Help Reduce Your Processing Costs

· Use an imprinted sales ticket with signature for all “key
entered” transactions. This will assist you with issues such as
chargebacks.

· Close and settle your sales transactions daily. This will help
reduce those instances where “Mid-Qualified” or “Non-Qualified”
discount rates are assessed.

· Balance your Merchant Account, processing statements from
PayFac, Member Bank, Associations, and Merchant Suppliers, and your
sales slips to assure that you are receiving anticipated funds in a
timely fashion, as more fully described below. Because of the number of
parties involved in the processing of credit card and other electronic
transactions, the only way to ensure that you receive all funds is by
balancing each day’s sales tickets against daily ACH deposits.

· Respond within the acceptable time frame to retrievals and/or
chargebacks in order to assure the most favorable outcome possible.

· Do not call the voice authorization center for services other
than authorization.

· Settle disputes with your customers before they reach
“chargeback” status. A chargeback is like a returned check, it is
expensive and time consuming.

· Read your Merchant Processing Agreement and these Bank Rules
closely and thoroughly.

· Shipping products overseas without a card present should be
closely monitored. Merchant has little ability to prevent a chargeback
in this type of situation.

· You should carefully reconcile sales tickets against deposits
daily, particularly in the following situations: installation of new
equipment, new downloads, adding new products to your terminal, power
outages, change in your Merchant Account.

 

1. Honoring Cards

A. Sub-Merchant shall honor all Cards when presented in accordance with
these Bank Rules for the purchase of goods or services or in processing
a request for credit resulting from such a transaction, by an
authorized holder of a Card without imposing any special conditions not
required by any Operating Regulations. However, if Sub-Merchant does
not deal with the public at large (for example, if Sub-Merchant’s
business is a private club), Sub-Merchant is required to honor a valid
Card only if presented by a cardholder who has purchasing privileges or
a membership with Sub-Merchant.

B. Cardholder Identification. Sub-Merchant will identify the Cardholder
and check the expiration date and signature on each Card. Sub-Merchant
will not honor any Card if: (i) the Card has expired; (ii) the
signature on the sales draft does not correspond with the signature on
the Card; or (iii) the account number embossed on the Card does not
match the account number on the Card’s magnetic stripe (as printed in
electronic form) or the account number is listed on a current
Electronic Warning Bulletin file. Unless permitted under the Operating
Regulations, Sub-Merchant will not require a Cardholder to provide
personal information, such as a home or business telephone number, a
home or business address, or a driver’s license number, as a condition
for honoring a Card.

C. Responsibility for Transactions. Sub-Merchant is responsible for
ensuring that the Cardholder understands that the Sub-Merchant is
responsible for the transaction, including goods or services that are
the subject of the transaction, and for related customer service,
dispute resolution, and performance of the terms and conditions of the
transaction. Sub-Merchant must prominently and unequivocally inform the
Cardholder of the identity of the Sub-Merchant at all points of
interaction so that the Cardholder readily can distinguish the
Sub-Merchant from any other party such as a supplier of goods or
services to the Sub-Merchant.

D. Card Recovery. Sub-Merchant will use reasonable, best efforts to
recover any Card: (i) on Visa Cards, if the printed four digits above
the embossed account number do not match the first four digits of the
embossed account number; (ii) if advised by Member Bank (or its
designee), the issuer of the Card or the designated voice authorization
center to retain it; (iii) if Sub-Merchant has reasonable grounds to
believe the Card is counterfeit, fraudulent or stolen, or not
authorized by the Cardholder; or (iv) for MasterCard Cards, the
embossed account number, indent printed account number and/or encoded
account number do not agree, or the Card does not have a MasterCard
hologram on the lower right corner of the Card face. This obligation
upon Sub-Merchant in no way authorizes a breach of the peace or any
injury to persons or property, and Sub-Merchant will hold PayFac and
Member Bank harmless from any claim arising from any injury to person
or property or other breach of peace.

E. Surcharges. Sub-Merchant will not add any amount to the posted price
of goods or services offered as a condition of paying with a Card,
consistent with the Operating Regulations. Provided Sub-Merchant is in
compliance with the Operating Regulations, this paragraph does not
prohibit Sub-Merchant from offering a discount to induce a person to
pay by cash, check or similar means rather than by using a Card.

F. Return Policy. Sub-Merchant will properly disclose to the
Cardholder, at the time of the transaction and in accordance with the
Operating Regulations, any limitation Sub-Merchant has on accepting
returned merchandise.

G. No Claim Against Cardholder. Sub-Merchant will not have any claim
against, or right to receive payment from a Cardholder unless Member
Bank or PayFac refuses to accept the sales draft or revokes its prior
acceptance of the sales draft (after receipt of a chargeback or
otherwise). Sub-Merchant will not accept any payments from a Cardholder
relating to previous charges for merchandise or services included in a
sales draft, and if Sub-Merchant receives such payment, Sub-Merchant
will promptly remit such payment to Member Bank. Sub-Merchant may not
reimburse a Cardholder in cash or check for any transaction.

H. Disputes With Cardholders. Sub-Merchant must ensure that the
Cardholder understands that Sub-Merchant is responsible for the
transaction, for any related customer service, dispute resolution, and
performance of the terms and conditions of the transaction. All
Disputes between Sub-Merchant and any Cardholder relating to any
transaction will be settled between Sub-Merchant and the Cardholder.
Neither PayFac nor Member Bank bears any responsibility for such
transactions. Sub-Merchant shall not require a Cardholder to waive his
or her rights to dispute the transaction as a condition of the sale.

I. Employee Actions. Sub-Merchant is responsible for its employees’
actions while in Sub-Merchant’s employ.

J. Prohibitions on Card Acceptance. Sub-Merchant may not do any of the
following: (i)require a Cardholder to complete a postcard or similar
device that includes the Cardholder’s account number, expiration,
signature or any other account-related data in plain view when mailed;
(ii) add any tax to a transaction, unless applicable law expressly
requires Sub-Merchant to impose a tax, and in such event the tax amount
must be included in the transaction amount and not collected
separately; (iii) request or use an account number for any purpose
other than as payment for goods or services, except as permitted by the
Operating Regulations; (iv) disburse funds in the form of travelers
cheques, if the sole purpose is to allow cardholder to make a cash
purchase of goods or services from Sub-Merchant, (v) permit a
Cardholder to purchase travelers cheques, or other similar item, if the
sole purpose is to allow the Cardholder to make a cash purchase of
goods or services from Merchant; (vi) accept a Card to collect or
refinance an existing debt that has been deemed uncollectible; (vii)
enter into interchange a transaction that represents collection of a
dishonored check; (viii) require a Cardholder to waive his/her rights
to dispute a transaction as a condition of sale; (ix) accept Cardholder
payments for previous Card charges incurred at the Merchant location;
(x) submit for payment into interchange any transaction that may in the
sole discretion of a Card Organization, damage the goodwill of such
Card Organization or reflect negatively on a Card Organization’s
brands; (xi) add any surcharge to a transaction; (xii) enter into
interchange any transaction receipt for a transaction that was
previously charged back to Member Bank and subsequently returned to
Sub-Merchant, irrespective of Cardholder approval (Sub-Merchant may
pursue payment from the customer outside of the Card Organization
system); (xiii) accept a Card for the purchase of Scrip; or (xiv)
accept a Visa Electron Card or a Visa TravelMoney Card for manual cash
disbursement. Sub-Merchant may establish a minimum sale amount as a
condition for honoring Cards, provided that the minimum transaction
amount does not differentiate between Card Organizations and/or issuers
and the minimum transaction amount does not exceed $10.00 (or any
higher amount established by applicable law or the Operating
Regulations). Unless otherwise set forth below or otherwise allowed by
the Operating Regulations, Sub-Merchant may not establish a
maximum sale amount as a condition for honoring Cards. Sub-Merchant may
establish a maximum sale amount as a condition for honoring Cards if
Sub-Merchant is a department, agency or instrumentality of the U.S.
Government, a corporation owned or controlled by the U.S. Government,
or Sub-Merchant’s primary business is reflected by one of the following
MCCs: 8220 (Colleges, Universities, Professional Schools and Junior
Colleges), 8244 (Schools, Business and Secretarial), or 8249 (Schools,
Trade and Vocational), provided that the maximum transaction amount
does not differentiate between Card Organizations and/or issuers.

K. Security Features. Sub-Merchant is required to examine the Card
security features prior to completing a sale. Sub-Merchant should
examine the Card to be sure there has been no tampering to the
signature panel. Specific Card security features are as follows:

i. Visa:

a. The “DOVE” hologram should appear to fly when tilted.

b. All Visa account numbers begin with a “4” and can be up to 19 digits
long.

c. The first four digits of the embossed account number match the four
digits printed on the account number of the Card.

d. The “V” to the right of the expiration date should be a special
letter (a “Flying V” not a normal “V”).

ii. MasterCard:

a. The MasterCard Global hologram or the Debit MasterCard hologram and
the MasterCard brand mark stacked within a retaining line, or the
MasterCard brandmark without a retaining line if the hologram is on the
back.

b. All MasterCard account numbers are 16 digits long.

c. The first four digits of the embossed account number match the four
digits printed on the account number of the Card. The last four digits
of the account number are embossed over the hologram.

iii. Discover Network: (certain valid devices (e.g., radio frequency
enabled Cards, key fobs, contactless Cards, and JCB, CUP and DCI Cards)
may not display the features described below).

a. Card numbers are at least 16 digits embossed on the front of the
Card.

b. The word DISCOVER or DISCOVER NETWORK will appear in ultraviolet ink
on the front of the Card when it is held under an ultraviolet light.

c. An overprint on the signature panel reads Discover Network.

d. The Discover Network three-dimensional hologram, bearing a distinct
circular shape and images of a globe pierced by an arrow, water and
stars on a repetitive pattern background (the “Discover Network
Hologram”),appears on the front of certain Discover Network Cards. The
hologram reflects light and appears to move as the Card is rotated.

When an Electronic Cash Register or Electronic Draft Capture terminal
reads the magnetic stripe on the Card, Sub-Merchant must check the Card
account number on the terminal (if displayed) against the account
number embossed on the Card or follow such other security check as is
mandated by PayFac from time to time. If the Card is read with a
terminal that displays the Card number and the sales draft is printed,
Sub-Merchant shall verify that the account number displayed on the
terminal and the printed card numbers on the sales draft match the
embossed numbers on the face of the Card. In the event that they do not
match, the sale must not be completed. Failure to follow these checks
and procedures will expose Sub-Merchant to chargebacks. If the terminal
is programmed to require Sub-Merchant to key the last 4 or more digits
of each Card used for a sale, and the terminal indicates that the
numbers keyed are not the same as those present on the Card, the sale
must not be completed.

L. Advertising. Sub-Merchant must display Visa, MasterCard, Discover
Network and any other applicable Card issuer, Debit Network and EBT
Network decals and program marks on promotional materials that PayFac
furnishes, including, if applicable, the JCB, CUP, DCI and/or Electron
symbol, in equal prominence near the point-of-sale devices and as
otherwise required by the Operating Regulations. Sub-Merchant’s use of
the promotional materials of Visa, MasterCard, Discover Network or any
other Association or State will not indicate, directly or indirectly,
that Visa, MasterCard, Discover Network or any other Association or
State endorse any goods or services other than their own and
Sub-Merchant may not refer to Visa, MasterCard, Discover Network or any
other Association or State in stating eligibility for Sub-Merchant’s
products or services. Each Association shall retain all ownership of
its respective intellectual property and may prohibit or limit the use
of such intellectual property by Sub-Merchant at any time.

M. Acceptance Procedures. Sub-Merchant may ask or incent its customers
to use alternative forms of payment other than a Visa or MasterCard.
Discounts can be offered on alternate card brands, card types or
payment types. Card brand or payment method preference can be promoted,
as well as the ability to inform Sub-Merchant’s customers of the costs
associated with accepting a particular card type or brand.

i. MasterCard Specific Requirements. Sub-Merchant may request or
encourage a customer to use a payment card with an acceptance brand
other than MasterCard or other form of payment or a Card of a different
product type (e.g., traditional cards, premium cards, rewards cards)
than the Card the consumer initially presents. Sub-Merchant may do so
by methods that include, but are not limited to:

a. offering the customer an immediate discount from the list, stated,
or standard price, a rebate, a free or discounted product or service,
or any other incentive or benefit if the customer uses a particular
payment card with an acceptance brand other than MasterCard or other
particular form of payment;

b. offering the customer an immediate discount from the list, stated,
or standard price, a rebate, a free or discounted product or service,
or any other incentive or benefit if the customer, who initially
presents a MasterCard, uses instead another payment card or another
form of payment;

c. expressing a preference for the use of a particular payment card or
form of payment;

d. promoting the use of a particular general purpose payment card with
an acceptance brand other than MasterCard or the use of a particular
form or forms of payment through posted information, through the size,
prominence, or sequencing of payment choices, or through other
communications to customers (provided that Sub-Merchant abides by the
MasterCard trademark standards relating to the display of its marks);
or

e. communicating to customers the reasonably estimated or actual costs
incurred by Sub-Merchant when a customer uses particular payment cards
or forms of payment or the relative costs of using different general
purpose payment cards or forms of payment.

Sub-Merchant may engage in the point of sale practices that are
described above, or any other substantially equivalent practices,
provided such practices conform with and adhere to the Operating
Regulations.

ii. Visa Specific Requirements. Sub-Merchant may steer customers to use
a particular network brand, such as Visa or MasterCard; to a type of
payment card, such as a “non-reward” credit card; or to another
preferred form of payment. Sub-Merchant may also encourage a customer
who initially presents a Visa card to use a payment card with a
different network brand, a different type of payment card, or a
different form of payment. Sub-Merchant may engage in any of the
following steering activities:

a. offering a customer a discount or rebate, including an immediate
discount or rebate at the point of sale;

b. offering a free or discounted product;

c. offering a free or discounted or enhanced service;

d. offering the customer an incentive, encouragement or benefit;

e. expressing a preference for the use of a particular brand or type of
general purpose card or a particular form of payment;

f. promoting a particular brand or type of general purpose card or a
particular form or forms of payment through posted information, through
the size, prominence or sequencing of payment choices, or through other
communications to a customer;

g. communicating to a customer the reasonably estimated or actual costs
incurred by Sub-Merchant when a customer uses a particular brand or
type of general purpose card or a particular form of payment or the
relative costs of using different brands or types of general purpose
cards or different forms of payment; or

h. engaging in any other practices substantially equivalent to these,
provided such practices conform with and adhere to the Operating
Regulations.

Sub-Merchant is not required to display the Visa mark in a size as
large as other payment marks. Sub-Merchant may promote acceptance
brands other than Visa through the size, prominence, or sequencing of
payment choices. However, Sub-Merchant must continue to respect a
cardholder’s ultimate decision to pay with Visa: Sub-Merchant still has
an obligation to accept for payment properly presented Visa cards,
including rewards cards. In addition, surcharging of Visa cards and
steering among Visa cards based on the issuing bank are not permitted
and Sub-Merchant must ensure that its steering practices are not
performed in a confusing manner.

iii. American Express Specific Requirements. If Sub-Merchant accepts
American Express cards, it must comply with the American Express rules
regarding card acceptance. Sub-Merchant should review its agreement
with American Express for further details on the requirements for
American Express card acceptance.

2. Authorization.

A. Required on all Transactions. Sub-Merchant will obtain a prior
authorization via electronic terminal or similar device before
completing any transaction, including MO/TO transactions. Sub-Merchant
will follow any instructions received during such authorization
process. Upon receipt of authorization, Sub-Merchant may consummate
only the transaction authorized and must note on the sales draft the
authorization number. Where authorization is obtained, Sub-Merchant
will be deemed to warrant the true identity of the customer as the
Cardholder. If Sub-Merchant receives a negative authorization response,
Sub-Merchant may not complete the sale and may be requested to recover
the Card, if Sub-Merchant can do so by reasonable and peaceful means.
If Sub-Merchant does recover the Card, Sub-Merchant should notify the
voice authorization center and ask for further instructions.
Transactions will be deemed invalid on Cards that are expired, whether
or not an authorization has been obtained. For electronic commerce
transactions, Sub-Merchant must attempt to obtain the Card expiration
date and forward it as part of the authorization request. Sub-Merchant
may not, after receiving a negative response or decline on an
authorization request, split the sale amount into multiple transactions
in order to obtain a valid authorization for each one so that the
separate transactions total the original dollar amount of the sale.

B. Effect. Authorizations are not a guarantee of acceptance or payment
of the Card transaction and will not waive any provision of this
Agreement or otherwise validate a fraudulent transaction or a
transaction involving the use of an expired Card. Obtaining an
authorization will not assure payment to Sub-Merchant for a Card
transaction. The fact that an authorization is obtained by Sub-Merchant
will not affect PayFac’s or Member Bank’s right thereafter to revoke
the authorization of a Card transaction or to charge back the
transaction to Sub-Merchant. In no event will the fact that an
authorization is obtained by Sub-Merchant be deemed to be PayFac’s or
Member Bank’s representation or warranty, either express or implied,
that the particular Card transaction is in fact a valid, authorized or
undisputed transaction entered into by the Cardholder.

C. Unreadable Magnetic Stripes. If Sub-Merchant authorizes and present
Card transactions electronically and Sub-Merchant’s terminal is unable
to read the magnetic stripe on the Card, Sub-Merchant will obtain an
imprint of the Card and the Cardholder’s signature on the imprinted
draft before presenting the sales draft to Member Bank and PayFac for
processing.

D. Procedures. If an unsigned Card is presented at the point of sale,
Sub-Merchant must request that Cardholder provide proof of
identification and sign the card before completing the sale. Details of
the identification provided must be placed on the sales draft unless
prohibited by local law. If the Cardholder refuses to do so, the sale
must not be completed. In any of the following cases, Sub-Merchant
shall obtain authorization from the voice authorization center,
designated or approved by PayFac or Member Bank, before completing a
sales transaction:

i. paper merchants whose sales exceed Sub-Merchant’s floor limit as
established by PayFac or Member Bank, or amended from time to time;

ii. an unsigned Card is presented;

iii. if Sub-Merchant believes the Card may be counterfeit or stolen or
that the sale is in some other manner suspicious or unusual,
Sub-Merchant should state to the voice authorization clerk, “This is a
Code 10” and await further instruction; or

iv. in any other circumstances established by PayFac or Member Bank or
stated in the Operating Regulations and/or this Agreement.

E. If Sub-Merchant is approved to utilize batch authorization by
PayFac, Sub-Merchant may obtain batch authorization for certain sales
after such sales have occurred provided, however, that authorization
for each transaction is obtained by end of the calendar day upon which
such sale was initiated and that Sub-Merchant does not presort the
batch by account number or BIN. Further, Sub-Merchant explicitly agrees
that it will be responsible for any fines, fees, chargebacks,
assessments, and declined or disputed transactions that may result from
using a batch authorization process.

3. Sales Drafts.

A. Forms. Sub-Merchant will use a sales draft to document each Card
transaction. Each sales draft will be legibly imprinted with: (i)
Merchant’s name, identification number, and city and state; (ii) the
information embossed on the Card presented by the Cardholder (either
electronically or manually); (iii) the date of the transaction (iv) a
brief description of the goods or services involved; (v) the
transaction authorization number; (vi) the total amount of the sale
(including any applicable taxes) or credit transaction; and (vii)
adjacent to the signature line, a notation that all sales are final, if
applicable. If Sub-Merchant uses an electronic terminal to print sales
drafts, the account number must be truncated on the cardholder copy of
the sales draft. This means that only the last 4 digits of the account
number may appear. The entire expiration date must be suppressed on
receipts provided to cardholders.

B. Signatures. Sales drafts must be signed by the Cardholder. The
requirement for the Cardholder’s signature on the sales draft will only
be waived if the Card transaction is a valid MO/TO or electronic
commerce card transaction, which fully complies with the requirements
set forth in this Agreement, or if otherwise permitted by the Operating
Regulations.

C. Delivery and Retention of Sales drafts. Sub-Merchant will deliver a
complete and legible copy of the Sales draft or credit voucher to the
Cardholder at the time of the transaction. Sub-Merchant shall store all
Sales drafts and transaction records in a limited access area for at
least 1 year after the date of sales. Sub-Merchant will retain the
Merchant copy of the Sales draft or credit memorandum for at least 12
months following the date of completion of the transaction for Visa
Card transactions, at least 18 months following the date of completion
of the transaction for MasterCard Card transactions and at least 3
years following the date of completion of the transaction for Discover
Network Card transactions (or such longer period as the Operating
Regulations may require), which documentation must be maintained in a
secure manner in accordance with Sub-Merchant’s obligations under the
Agreement. Sub-Merchant will submit to PayFac or Member Bank a legible
copy of a Sales draft if any Card issuer requests such retrieval.
Sub-Merchant’s deadline for providing PayFac or Member Bank a legible
copy of the requested Sales draft will be ten (10) days after the date
of the Card issuer’s retrieval request, as specified in the notice from
PayFac or Member Bank. Unless specifically permitted by PayFac, goods
and services purchased must be delivered to Cardholder at the time of
sale. Sub-Merchant shall not disclose a Cardholder’s account
information or any other personal information to third parties other
than Sub-Merchant’s agents for the purpose of completing the
transaction or as specifically required by the Laws or by the Operating
Regulations.

D. Electronic Transmission. If Sub-Merchant utilizes electronic
authorization and/or data capture services, Sub-Merchant will enter the
data related to a sales or credit transaction into a computer terminal
or magnetic stripe reading terminal no later than the close of business
on the date the transaction is completed. If Sub-Merchant provides its
own electronic terminal or similar device, such terminals must meet
PayFac’s requirements for processing transactions. Information
regarding a sales or credit transaction transmitted with a computer or
magnetic stripe reading terminal will be transmitted by Sub-Merchant to
PayFac or its agent in the form PayFac from time to time specifies or
as required under the Operating Regulations. If Member Bank or PayFac
requests a copy of a Sales draft, credit voucher, or other transaction
evidence, Sub-Merchant will provide it within 3 business days following
the request. If Sub-Merchant’s terminal cannot successfully read the
magnetic stripe, Sub-Merchant must imprint the Card, even if it is a
key entered transaction. Sub-Merchant must imprint the Card on the same
Sales draft containing the remainder of the transaction information and
the Cardholder signature. Failure to obtain a signed and imprinted
Sales draft when a transaction is not captured by swiping through a
magnetic stripe reader will expose Sub-Merchant to a chargeback
regardless of the authorization that may or may not be received.
Failure to read the magnetic stripe on the Card may result in a
discount rate tier downgrade.

E. Daily Settlement of Transactions. Sub-Merchant must Batch Out each
POS terminal every day. Failure to Batch Out daily will delay the
deposit of funds. “Batch Out” is the process by which Sub-Merchant
totals and settles all transactions, on each POS terminal, which
occurred before PayFac’s designated cutoff time and transmits the
information to PayFac. In all cases, Sub-Merchant must present the
record within 3 business days (2 business days for Electron Cards)
after the transaction date, unless otherwise permitted by the Operating
Regulations. Transactions contained in an untimely Batch Out may be
refused, held for a 180 day period, become subject to chargeback or be
transferred to a Reserve Account and held in accordance with the terms
of the Agreement. Sub-Merchant is responsible for resubmitting a Batch
Out or ticket if the POS terminal fails to properly Batch Out or if
sales ticket data does not process through the normal payment cycle.
PayFac is not liable to Sub-Merchant for amounts it did not collect,
including but not limited to amounts collected by Merchant Suppliers.

4. Chargebacks.

Failure to comply with the Operating Regulations will reduce PayFac’s
or Member Bank’s ability to reverse chargebacks and increase the
likelihood of Sub-Merchant receiving a chargeback. Sub-Merchant may be
subject to a chargeback on sales for a minimum period of 180 days from
the date the sale was entered into the Association’s processing system.
PayFac may hold funds from Sub-Merchant’s account to cover any
chargebacks for the later of 270 days following the effective date of
termination of this Agreement or 180 days from the date of
Sub-Merchant’s last chargeback. PayFac or Member Bank will mail all
chargeback documentation to the address provided by Sub-Merchant or, at
PayFac’s or Member Bank’s election, provide such information to
Sub-Merchant electronically. Sub-Merchant agrees to respond promptly to
all chargebacks. If PayFac or Member Bank elects, at its discretion, to
take action on chargebacks after the Association time limits have
expired, such action shall be done at additional cost. Sub-Merchant
will not redeposit sales that have been previously charged back and not
represented. This restriction applies whether or not the Cardholder
consents to such activity. If Sub-Merchant receives a chargeback for an
international Cardholder, Sub-Merchant is responsible for any currency
conversion differences in the dollar amount. Sub-Merchant will be
charged the fee indicated on the Merchant Application for each
chargeback.

5. Chargeback Reasons.

A. Summary. The summary of reasons for chargebacks include, but are not
limited to, any one of the following:

i. an invalid Card account number submitted by Sub-Merchant;

ii. neither the Cardholder nor a person authorized by the Cardholder
received the goods or services requested;

iii. the Cardholder received the good or services but disputes the
quality;

iv. the Cardholder never received credit for a returned item or a
canceled order;

v. the Cardholder was charged incorrectly;

vi. the amount of the sale exceeded the floor limit and an
authorization was not obtained or was denied;

vii. the sale was authorized but not for the correct amount;

viii. the authorization code provided is invalid;

ix. the Card was expired at the time of the sale or had not reached its
effective date;

x. the sales draft was not signed. An exception will be made where
MO/TO sales are permitted by PayFac;

xi. the Card issuer has information that a Merchant fraud has occurred;

xii. the Card account number and the amount of sale is missing from
sales draft or is illegible;

xiii. the sales draft bears the imprint of a Card which to the
Associations is a counterfeit Card because the Card is not embossed in
accordance with the standards set forth in the Operating Regulations,
even if the sale was authorized.

6. Chargeback Monitoring Programs.

A. If Sub-Merchant exceeds a 1% chargeback to interchange ratio for all
incoming chargebacks for a particular location Sub-Merchant is
considered an excessive chargeback merchant and may be subject to an
Association’s monitoring programs. Sub-Merchant is responsible for
monitoring its monthly chargeback percentage and developing chargeback
reduction plans as required by the Associations. Excessive chargeback
activity for an unreasonable period of time may result in termination
of this Agreement. Sub-Merchant must pay Member Bank or PayFac for any
fine or charge levied by the Associations on Member Bank, Merchant
Supplier, PayFac, or Sub-Merchant as a result of Sub-Merchant’s
chargeback activity. This section may be amended from time to time as a
result of action by the Associations.

B. Other Monitoring Programs. If Sub-Merchant is identified by certain
Association monitoring programs, PayFac or Member Bank’s ability to
reverse chargebacks may be severely restricted. Certain monitoring
programs review the number of lost, stolen and counterfeit Cards
accepted by Sub-Merchant in the normal course of business and the
percentage of Cards used for sales that were not read electronically by
terminals or Electronic Cash Registers. The purpose of these programs
is to reduce the use of lost, stolen, fraudulent, and counterfeit
Cards. In the event that Sub-Merchant is identified under these
programs as exceeding the acceptable threshold value of such Cards,
Sub-Merchant may become liable for chargebacks and sales on lost,
stolen, or counterfeit Cards regardless of the Card acceptance
procedures followed, and this Agreement may be terminated by PayFac or
Member Bank and/or PayFac or Member Bank may immediately cease
providing services to Sub-Merchant without notice.

C. Excessive Activity. Sub-Merchant’s presentation to PayFac of
Excessive Activity will be a breach of the Agreement and cause for
immediate termination. “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
Sub-Merchant’s Card transactions or returns in excess of 3% of the
average monthly dollar amount of sales drafts. Sub-Merchant authorizes,
upon the occurrence of Excessive Activity, Member Bank and PayFac 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.

7. Credits.

A. Credit Memoranda. Sub-Merchant will issue a credit memorandum,
instead of making a cash advance, a disbursement or a cash refund on
any Card transaction. Member Bank will debit the Merchant Account for
the total face amount of each credit memorandum submitted to PayFac.
Sub-Merchant will not submit a credit relating to any sales draft not
originally submitted to PayFac, nor will Sub-Merchant submit a credit
that exceeds the amount of the original sales draft. Sub-Merchant will,
within the time period specified by applicable law, provide PayFac with
a credit memorandum or credit statement for every return of goods or
forgiveness of debt for services which were the subject of a Card
transaction.

B. Revocation of Credit. Member Bank or PayFac may refuse to accept any
sales draft or revoke its prior acceptance of a sales draft in the
following circumstances: (i) the transaction giving rise to the sales
draft was not made in compliance with this Agreement and the Operating
Regulations; (ii) the Cardholder disputes his/her liability to Member
Bank for any reason, including but not limited to those chargeback
rights enumerated in the Operating Regulations; or (iii) the
transaction giving rise to the sales draft was not directly between
Sub-Merchant and the Cardholder. Sub-Merchant will pay Member Bank or
PayFac, as appropriate, any amount previously credited to Sub-Merchant
for a sales draft not accepted by Member Bank or PayFac or, where
accepted, is subsequently revoked.

C. Returns. If Sub-Merchant agrees to credit a Cardholder for any
merchandise or service that was the subject of a sale, Sub-Merchant
must provide a credit transaction receipt using the same Card as in the
original sale. Such credit shall not exceed the original sale amount.
Sub-Merchant shall not make any cash refund on sales. Sub-Merchant may
limit the acceptance of returned merchandise or establish a policy to
make price adjustments for any sale provided proper disclosure is made
and purchased goods and services are delivered to the Cardholder at the
time of the sale. Proper disclosure means the words “NO REFUND,”
“EXCHANGE ONLY,” or “IN STORE CREDIT ONLY” are printed in large letters
near the signature line on all copies of the sales draft prior to
obtaining the Cardholder’s signature on the sales draft. Sub-Merchant
may stipulate other special circumstances or terms of the sale on the
sales draft. For each credit transaction, Sub-Merchant must be able to
provide PayFac or Member Bank with evidence of the original purchase.

D. Fraud and Factoring. Sub-Merchant agrees that, except as otherwise
contemplated herein or otherwise permitted by PayFac, Sub-Merchant will
use the services provided by PayFac only for its own internal and
proper business purposes and will not resell, directly or indirectly,
any of the services or any portion thereof to any third party.
Sub-Merchant will not present for processing or credit, directly or
indirectly, any transaction not originated as a result of a Card
transaction directly between Sub-Merchant and a Cardholder or any
transaction Sub-Merchant knows or should know to be fraudulent or not
authorized by the Cardholder. Perpetrators of fraudulent transactions
will be referred to law enforcement officials. Sub-Merchant will not
sell or disclose to third parties Card account information other than
in the course of performing its obligations under this Agreement.
Sub-Merchant will not deposit any sales draft representing the
refinancing of an existing obligation of a Cardholder. In addition to
PayFac’s and Member Bank’s ability to establish and maintain a Reserve
Account, Sub-Merchant agrees that PayFac may, within its sole
discretion, suspend the disbursement of sales draft funds for any
reasonable period of time required to investigate suspicious or unusual
deposit activity. Upon completion of PayFac’s investigation, PayFac may
transfer such sales draft funds into a reserve account. PayFac and
Member Bank will have no liability for any losses Sub-Merchant may
attribute to any suspension of funds disbursement. Sub-Merchant further
agrees that engaging in the aforementioned activity may result in the
incurrence of research fees and may be grounds for termination of this
Agreement.

8. Other Types of Transactions.

A. Mail Order and Telephone Order. Sub-Merchant may not solicit or
accept mail orders or telephone orders or any transaction in which the
Cardholder and Card are not present (“MO/TO”) without prior written
authorization from PayFac. MO/TO transactions completed without prior
written consent of PayFac or Member Bank will be a breach of this
Agreement and cause for immediate termination in addition to any other
remedies available under the Operating Regulations. Sub-Merchant may be
required to use an address verification service (“AVS”) on MO/TO
transactions and are encouraged to use AVS even if not required. AVS is
not a guarantee of payment and the use of AVS will not waive any
provision of this Agreement or validate a Fraudulent Transaction.
Sub-Merchant will obtain the expiration date of the Card for a MO/TO
transaction and submit the expiration date when obtaining authorization
of the Card transaction. For MO/TO transactions, Sub-Merchant will type
or print legibly on the signature line of the sales draft the following
applicable words or letters: mail order or “MO” or telephone order or
“TO”. If Sub-Merchant is specifically authorized by PayFac or Member
Bank to accept MO/TO sales, no sale shall be submitted for processing
prior to the shipping of the product or the provision of services
purchased by the Cardholder. If Sub-Merchant supplies goods and/or
services under a preauthorization order, Sub-Merchant shall not charge
a Cardholder for goods after receiving notice from a Cardholder that
the authorization for goods or services is canceled. The shipping
documents indicating the address the goods were shipped to and a
signature of an individual (even Cardholder) will not normally be
sufficient to reverse an “Unauthorized Purchaser” reason code.
Sub-Merchant assumes the risk associated with accepting MO/TO sales
transactions.

B. Recurring/Quasi Cash Transactions. Sub-Merchant may not accept
transactions where the goods or services are performed periodically
without PayFac’s consent. If Sub-Merchant receives such consent, it
must obtain a written request from the Cardholder for such goods and
services 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. Sub-Merchant will not complete any recurring transaction
after receiving: (i) a cancellation notice from the Cardholder, (ii)
notice from PayFac or Member Bank indicating that Sub-Merchant may not
accept such transaction, or (iii) a response that the Card is not to be
honored. Sub-Merchant must print legibly on the sales draft the words
“Recurring Transaction”. Sub-Merchant shall not accept sales for
processing that are classified as “QuasiCash Transactions” including
but not limited to the sale of casino gaming chips, money orders,
opening deposits on financial or other accounts, wire transfer money
orders, or the issuance of scrip. Sub-Merchant shall not accept a Card
or use a Visa and MasterCard processing terminal to issue script
exchangeable for cash, products, or services as a result of a sale.
Sub-Merchant must not submit for payment into interchange any
transaction that represents the refinancing or transfer of an existing
Cardholder obligation that is deemed to be uncollectible, or that
arises from the dishonor of a Cardholder’s personal check.

C. Multiple Sales Drafts. Sub-Merchant will include a description and
total amount of goods and services purchased in a single sales
transaction on a single sales draft or transaction record, unless: (i)
partial payment is entered on the Sales draft or transaction record and
the balance of the transaction amount is paid in cash or by check at
the time of transaction, or (ii) a sales draft represents an advance
deposit in a Card transaction completed in accordance with this
Agreement and the Operating Regulations. If the total amount of both
sales drafts exceeds the floor limit, authorization must be obtained.
The use of multiple Cards for one purchase is permissible as long as an
individual sales draft is used for each Card. The use of multiple sales
on one Card, for one purchase, is not permitted.

D. Deposits.

i. Prior Consent. Sub-Merchant will not accept for payment by Card any
amount representing a deposit or partial payment for goods or services
to be delivered in the future without the prior written consent of
PayFac. The acceptance of a Card for payment or partial payment of
goods or services to be delivered in the future without prior consent
will be deemed to be a breach of this Agreement and cause for immediate
termination in addition to any other remedies available under the
Operating Regulations.

ii. Acceptance. If Sub-Merchant has obtained prior written consent,
then Sub-Merchant will complete such Card transactions in accordance
with this Agreement and the Operating Regulations. Cardholders must
execute one sales draft upon making a deposit with a Card and a second
sales draft upon paying the balance. Sub-Merchant will note upon the
sales draft the words “deposit” or “balance” as appropriate.
Sub-Merchant will not deposit the sales draft labeled “balance” until
the goods have been delivered to Cardholder or Sub-Merchant has fully
performed the services.

E. Future Delivery. Sub-Merchant will not present any sales draft or
other memorandum to Member Bank or PayFac for processing (whether by
electronic means or otherwise) which relates to the sale of goods or
services for future delivery without PayFac’s prior written
authorization. If Member Bank or PayFac have previously given such
consent, Sub-Merchant represents and warrants to Member Bank and PayFac
that Sub-Merchant will not rely on any proceeds or credit resulting
from such transactions to purchase or furnish goods or services.
Sub-Merchant will maintain sufficient working capital to provide for
the delivery of goods or services at the agreed upon future date
independent of any credit or proceeds resulting from sales drafts or
other memoranda taken in connection with future delivery transactions.

F. Electronic Commerce Transactions.

i. Electronic Commerce. Sub-Merchant must obtain the consent of PayFac
to process electronic commerce (“EC”) transactions, and Sub-Merchant
may process such transactions only if the transactions comply with the
Payment Card Industry Security Standard requirements set forth below.
If Sub-Merchant submits EC transactions without PayFac’s consent,
PayFac may immediately terminate the Agreement. Sub-Merchant
understands that transactions processed via EC are high risk and
subject to a higher incidence of chargebacks. Sub-Merchant must not
refuse to complete an EC transaction using a MasterCard card solely
because the Cardholder does not have a digital certificate or other
secured protocol. Sub-Merchant is liable for all chargebacks and losses
related to EC transactions, whether or not: a) EC transactions have
been encrypted; and/or b) Sbu-Merchant has obtained the consent of
PayFac to engage in such transactions. Encryption is not a guarantee of
payment and will not waive any provision of this Agreement or otherwise
validate a fraudulent transaction. Sub-Merchant is responsible for
contracting with a third party payment engine, payment gateway or other
internet service provider. Sub-Merchant must ensure that such third
parties transmit sales drafts to PayFac and Member Bank in an
acceptable format and in compliance with the Operating Regulations,
including but not limited to PCI’s Data Security Standards. All
communication costs related to EC transactions are Sub-Merchant’s
responsibility. Sub-Merchant understands that PayFac will not manage
the EC telecommunications link and that it is Sub-Merchant’s
responsibility to manage that link. All EC transactions will be settled
by Member Bank into a depository institution of the United States in
U.S. currency.

ii. Requirements. For goods to be shipped on EC transactions,
Sub-Merchant may obtain authorization up to 7 calendar days prior to
the shipment date. Sub-Merchant need not obtain a second authorization
if the sales draft amount is within 15% of the authorized amount
provided that the additional amount represents shipping costs. Further,
Sub-Merchant’s website must contain all of the following information:
a) complete description of the goods or services offered, b) returned
merchandise and refund policy, c) customer service contact, including
electronic mail address and/or telephone number, d) transaction
currency (such as U.S. or Canadian dollars), e) export or legal
restrictions, if known, and f) delivery policy. If Sub-Merchant stores
Cardholder account numbers, expiration dates, and other personal
Cardholder data in a database, Sub-Merchant must follow Association
guidelines on securing such data.

iii. Cardholder Information Security Program. If Sub-Merchant accepts
EC transactions, it must: install and maintain a working network
firewall to protect data accessible via the Internet, keep security
patches up-to-date, encrypt stored data and data sent over open
networks, use and update anti-virus software, restrict access to data
by business “need-to-know”, assign a unique ID to each person with
computer access to data, not use vendor-supplied defaults for system
passwords and other security parameters, track access to data by unique
ID, regularly test security systems and processes, maintain a policy
that addressed information security for employees and contractors, and
restrict physical access to Cardholder information.

iv. Physical Address. If Sub-Merchant accepts EC transactions, its
website must include the physical address of its permanent
establishment, along with its country of domicile, either:

a. On the same screen view as the checkout screen used to present the
total purchase amount, or

b. Within the sequence of webpages the Cardholder accesses during the
checkout process.

v. Sub-Merchant acknowledges and agrees that it will only submit
Electronic Commerce Card transactions in U.S. Dollars that arise from a
Cardholder’s purchase over the Internet. If software is to be purchased
by Sub-Merchant, Sub-Merchant will be responsible for sublicensing fees
and all other fees for software and the software program utilized by
Sub-Merchant that enables Sub-Merchant to connect to and maintain
communication between Sub-Merchant, the Internet and PayFac.
Sub-Merchant will, at all times, maintain in effect a sublicense
agreement for any such software. Sub-Merchant agrees to use any such
software and the software program properly and for the purposes for
which it was intended.

G. Merchant Supplier Transactions.

i. Authorization. Upon Sub-Merchant’s request, PayFac will provide
access to authorization and/or data capture services for Merchant
Supplier transactions, such as American Express, and all settlement and
chargeback obligations and similar financial responsibilities arising
from Sub-Merchant’s transactions involving Merchant Suppliers will be
governed exclusively by Sub-Merchant’s agreement with such Merchant
Suppliers. Sub-Merchant must enter into a separate agreement with such
Merchant Suppliers and must abide by the terms and conditions of such
Merchant Suppliers. Neither PayFac nor Member Bank are responsible for
funding such transactions. The terms of this Agreement will apply to
Merchant Suppliers. PayFac may notify Sub-Merchant in writing of the
fees applicable to Merchant Supplier transactions. Merchant Suppliers
separately invoice Sub-Merchants for their services, and their fees are
not necessarily included in this Agreement (including the Merchant
Application). Any applicable fees and charges for third party services
will be disclosed by the applicable Merchant Supplier and may be
subject to adjustment in accordance with the Merchant Supplier’s terms
and conditions. Additionally, PayFac charges a transaction fee for such
transactions in addition to those fees charged by Merchant Suppliers
(see the Merchant Application). Sub-Merchant’s acceptance of cards,
bearing the symbols of organizations other than the Debit Networks or
the Card Organizations, such as American Express and transmission of
such card transactions to PayFac will constitute Sub-Merchant’s
agreement to the terms of this Agreement with regard to such cards.
Termination of Sub-Merchant’s Agreement with PayFac does not
automatically terminate Sub-Merchant’s agreement with Merchant
Suppliers.

ii. Information. PayFac and Member Bank reserve the right and
Sub-Merchant agrees and consents to allow PayFac and Member Bank to
share Sub-Merchant’s credit report and credit history with all Merchant
Suppliers. Changes made to this Agreement, such as address or ACH
changes, do not automatically make the same changes for the Merchant
Supplier. Sub-Merchant must contact the Merchant Supplier to make the
changes. PayFac is neither liable nor responsible for such changes. If
false data is provided to PayFac or the Sub’Merchant’s Account has had
any suspected fraudulent activity, PayFac reserves the right to share
such false or suspected fraudulent information with other financial
entities and processors.

iii. Statements. Sub-Merchant must reconcile its sales tickets for each
Merchant Supplier’s transactions against deposits to its bank account
daily. Each Merchant Supplier provides its own statement, and
Sub-Merchant is responsible for reviewing each statement and resolving
all issues regarding the transactions directly with that Merchant
Supplier. Each Merchant Supplier sets its own rates and fees for its
services, and may adjust such rates and fees in accordance with
Sub-Merchant’s agreement with such Merchant Supplier. PayFac and Member
Bank are not liable or responsible for these transactions and have no
legal access to such transactions.

iv. JCB. The following special provisions apply (notwithstanding any
contrary provision in this Agreement) to Sub-Merchant’s JCB Card
transactions: (i) Sub-Merchant must retain original sales drafts and
credit vouchers for at least 120 days after the transaction and must
retain microfilm or legible copies of sales drafts and credit vouchers
for at least three (3) years after the transaction; (ii) for purposes
of Sub-Merchant’s chargeback liability with respect to JCB Card
transactions, an Authorization obtained on a transaction does not
override any chargeback reason which may apply to the item; (iii) if
Sub-Merchant processes JCB Card transaction data electronically,
Sub-Merchant’s account number must be included in the JCB Card
transaction data transmitted to PayFac, in addition to the other
information required to be included on each sales draft or credit
voucher; (iv) if Sub-Merchant is a lodging merchant, JCB Cardholders
must be allowed to cancel reservations at resort establishments until
4:00 p.m. on the scheduled arrival date; and (v) by contracting for JCB
settlement services, Sub-Merchant authorizes JCB to publish
Sub-Merchant’s name, address and telephone number in JCB solicitation
materials.

H. Age Restricted Products. If Sub-Merchant is engaged in the sale of
age restricted products such as alcoholic beverages, tobacco products,
weapons and/or any other applicable age-restricted products or
services, Sub-Merchant must comply fully with all local, state and
federal laws governing the distribution of age-related products.
Sub-Merchant certifies herein that it will implement age verification
procedures governing the sale of such products, including age
verification of each customer against an official government records
database before entering certain transactions into the credit card
payment system. For face-to-face sales, Sub-Merchant will require the
signature of the Cardholder. To verify legal age, Sub-Merchant will
also require the Cardholder to present a valid, government-issued photo
identification card in the same name and address as the Cardholder. For
sales made via mail, telephone and/or the Internet, Sub-Merchant will
(1) only deliver age-restricted products to the name and address listed
as belonging to the Cardholder, and (2) require, without exception, the
signature of the Cardholder, as well as presentation of a valid,
government-issued photo identification card in the same name and
address as the card holder to verify legal age upon delivery of the
merchandise. Failure to abide by all applicable age verification laws
may result in fines and/or loss of credit card merchant charge
privileges, as well as termination of Sub-Merchant’s account with
PayFac and Member Bank.

9. Cash Transactions.

Sub-Merchant shall not receive money from a Cardholder and subsequently
prepare a credit voucher for the purpose of depositing to the
Cardholder’s account. Cash disbursement by Sub-Merchant to a Cardholder
is not permitted. Additionally, Sub-Merchant shall not make any cash
advance to an employee, principal, or family member of Merchant, who is
a Cardholder. Sub-Merchant will not accept sales from Cardholders where
the primary purpose of the transaction is for the provision of working
capital to business and not the purchase of goods and/or services from
the business.

10. Third Parties.

A. Services. Sub-Merchant may be using special services or software
provided by a third party to assist Sub-Merchant in processing
transactions, including authorizations and settlements, or accounting
functions. Sub-Merchant is responsible for ensuring compliance with the
requirements of any third party in using their products. This includes
making sure Sub-Merchant has and complies with any software updates.
PayFac has no responsibility for any transaction until that point in
time when PayFac receives data about the transaction.

B. Use of Terminals Provided by Others. Sub-Merchant will notify PayFac
immediately if Sub-Merchant decides to use electronic authorization or
data capture terminals or software provided by any entity other than
PayFac or its authorized designee (“third party terminals”) to process
transactions. If Sub-Merchant elects to use third party terminals,
Sub-Merchant agrees (i) the third party providing the terminals will be
Sub-Merchant’s agent in the delivery of Card transactions to Member
Bank via a data processing network; and (ii) to assume full
responsibility and liability for any failure of that third party to
comply with the Operating Regulations or the Agreement. Neither Member
Bank nor PayFac will be responsible for any losses or additional fees
incurred by Sub-Merchant as a result of any error by a third party
agent or a malfunction in a third party terminal.

11. Vehicle Rental Authorization Procedures.

A. Estimate. A special authorization procedure is available if
Sub-Merchant estimates the transaction amount based upon Cardholder’s
intended rental length at time of rental, the applicable rental rate,
tax, and/or mileage rates. Such estimated transaction amount shall not
include ancillary charges representing amounts to cover potential
vehicle damages or insurance deductible when Cardholder waives
insurance at time of rental.

B. Procedures. Special terminal downloads may be required in order to
qualify for certain rates on Vehicle Rental transactions. Sub-Merchant
shall record on the sales draft the date, amount, and all authorization
approvals obtained. Sub-Merchant shall disclose to Cardholder the
amount authorized at the time of rental. Subsequent Authorization:

i. If no authorization was obtained at the time of rental and
Sub-Merchant, based upon Cardholder’s actual charges, later estimate
that the transaction amount will exceed the applicable floor limit,
Sub-Merchant may obtain an Authorization approval code for the new
estimated amount.

ii. Sub-Merchant may obtain authorization for additional amounts (above
any amount not authorized) on the car rental pickup date or prior to
the car rental return date. Additional authorization is not necessary
if the sales transaction does not exceed the sum of the authorized
amounts plus 15% of the sum of the authorized amounts.

12. Paper Processing Merchants.

Paper processing merchants shall authorize by using the established
floor limits. Any Sub-Merchant that wishes to accept a sales
transaction that is under the established floor limits, and that is not
authorized, is liable for the resulting chargebacks from those Card
numbers listed on the Electronic Exception File. In the case of a
Sub-Merchant depositing paper drafts, such drafts shall be deposited
with PayFac or Member Bank within 5 days of the sale date.

13. Travel and Entertainment (“T&E”) Merchants.

A merchant whose primary function is to provide travel related services
shall be referred to as a Travel & Entertainment (“T&E”)
Merchant. These include, but are not limited to, car rental, lodging,
and central reservation services. A T&E Merchant may process
delayed or amended charges if the Cardholder has consented to be liable
for those charges. These charges may NOT include charges for loss,
theft, or damage.

14. T&E Services.

A. Services. T&E Merchants may participate in any of the following
Visa T&E Services:

  • Priority CheckOut Service
  • T&E Advance Deposit Service
  • T&E Cash Disbursement Service
  • Visa Reservation Service

B. Visa Priority CheckOut Service: Sub-Merchant agrees to:

i. accept all Visa Cards in accordance with this Agreement;

ii. have Cardholder complete, sign, and return a Priority CheckOut
Agreement (“PCO Agreement”) which includes the Cardholder’s mailing
address;

iii. complete a sales draft which includes the total sales amount and
the words “Priority CheckOut” on the signature line;

iv. review the completed PCO Agreement and ensure the account number
matches the account number on the sales draft if applicable;

v. comply with normal authorization and deposit requirements;

vi. at the Cardholder’s request, Sub-Merchant must mail the sales draft
copy, the itemized bill, and the signed PCO Agreement to the Cardholder
within 3 business days of the Cardholder’s departure; and

vii. Sub-Merchant must retain the itemized bill and signed PCO
Agreement for a minimum of 6 months after the transaction date.

C. T&E Advance Deposit Service: Sub-Merchant agrees to:

i. accept all Visa Cards in accordance with this Agreement;

ii. obtain the Cardholder name, account number, expiration date on the
Card, telephone number, mailing address, scheduled date of
arrival/embarkation/rental, and intended length of stay/term/rental;

iii. determine the advance deposit amount, which is the cost of the
intended length of stay, cost of the cruise, or cost of the intended
term of rental, not to exceed 14 days;

iv. apply the deposit amount to the total obligation;

v. provide: (1) reservation confirmation code to the Cardholder
advising that it be retained, (2) advance deposit amount, and (3)
cancellation policy requirements;

vi. advise the Cardholder the accommodations will be held according to
the reservation and provide written confirmation if requested;

vii. advise the Cardholder that Sub-Merchant will retain the deposit
amount if the Cardholder has not canceled the reservation within the
specified time frames;

viii. Sub-Merchant must not charge for a no show transaction;

ix. complete the sales draft including advance deposit amount,
Cardholder name, mailing address, telephone number, account number,
expiration date, the words “Advance Deposit” on the signature line,
confirmation code, scheduled date of arrival/embarkation/rental, and
the date and time the cancellation privileges, if any, expire without
forfeiture;

x. follow normal authorization procedures;

xi. mail a sales draft copy and cancellation policy to the Cardholder
within 3 business days of the sales date;

xii. accept all Cardholder cancellations within the time limits
specified by Sub-Merchant;

xiii. upon cancellation, Sub-Merchant shall complete a Credit
Transaction Receipt with the information set out in (ix) above and
include the cancellation code. Sub-Merchant must deposit the Credit
Transaction Receipt within 5 days of the transaction date and mail a
copy to the Cardholder within 3 days of the transaction date of the
Credit Transaction Receipt;

xiv. for a lodging merchant, if the reserved accommodations are
unavailable, Sub-Merchant must provide the Cardholder the following
services without charge: (1) refund the entire advance deposit amount,
(2) a copy of the Credit Transaction Receipt to the Cardholder, (3)
comparable accommodations at an alternate establishment for the number
of nights specified in the reservation not to exceed 14 nights or until
the reserved accommodations become available, (4) two three-minute
telephone calls, (5) message forwarding to the alternate establishment,
(6) transportation to the alternate establishment and return to the
original establishment and, if requested, daily transportation to and
from the alternate establishment and Sub-Merchant’s location;

xv. for a car rental merchant if the reserved vehicle is unavailable,
Sub-Merchant must provide the Cardholder the following services without
charge: (1) refund the entire advance deposit amount, and (2) provide a
comparable vehicle for the number of days specified in the reservation,
not to exceed 14 days or until the reserved vehicle becomes available.

xvi. for a Cruise Line Merchant if the reserved accommodations are
unavailable, and no comparable accommodations are available on the
ship, the Merchant may offer: (1) a comparable cruise within the same
approximate sailing dates and number of sailing days specified in the
reservation, (2) any extra nights’ accommodations or air fare to a
different port city necessitated by the Cardholder’s acceptance of
alternate accommodations. The Sub-Merchant must refund the entire
T&E deposit amount, if comparable accommodations are not available
or the Cardholder does not accept the offered accommodations. The
Merchant must provide a credit receipt to the Cardholder and the
Merchant must provide all of the following without charge, (1) one
night’s hotel accommodation, if required, (2) transportation to the
hotel as well as the airport, (3) Airline transportation to the airport
nearest the Cardholder’s residence, (4) reasonable out-of-pocket
expenses incurred by the Cardholder because the guaranteed
accommodations were not available.

D. T&E Cash Disbursement Service: Sub-Merchant may make cash
disbursement to a registered Visa Gold or Platinum Cardholder under the
following conditions:

i. Cardholder indicates at registration the intent to pay for services
with a Visa Card;

ii. Before disbursement, Sub-Merchant reviews positive identification,
and, if permitted by applicable law, record type and number on the
sales draft;

iii. Sub-Merchant completes an 80 column Cash Disbursement sales draft
or a 51 column Cash Disbursement T&E Sales draft that includes the
Cardholder’s positive identification or a Cash Disbursement Record;

iv. Sub-Merchant does not disburse more than $250.00 during the
Cardholder’s stay. Cash availability may limit cash disbursements; and

v. Sub-Merchant must not include any additional fees or charges except
taxes or charges imposed by law on the transaction amount.

E. Visa Reservation Service: Any Sub-Merchant who accepts Cards to
guarantee reservations must do so in accordance with the following
requirements:

i. Sub-Merchant must accept all Visa Cards in accordance with this
Agreement;

ii. Sub-Merchant must obtain the Cardholder’s account number,
expiration date, and name embossed on the Card. Sub-Merchant must quote
to Cardholder the rate of reserved accommodation, Merchant’s name and
address, and the Confirmation Code advising that it be retained. Advise
the Cardholder that if he/she has not checked in by checkout time the
following day after his/her scheduled arrival date or the reservation
was not properly canceled, the Cardholder will be billed for one
night’s lodging plus applicable taxes. If requested, Sub-Merchant will
provide a written confirmation with the above information including the
Visa reservation service provisions relating to the Cardholder’s
obligation, and any other reservation details;

iii. Sub-Merchant must accept all cancellations prior to the specified
time. Sub-Merchant must not require more than 72 hours cancellation
notification prior to the scheduled arrival date. But, if the
Cardholder makes the reservation within 72 hours of the scheduled
arrival date, the cancellation deadline must be no earlier than 6:00
p.m. on the arrival date. If Sub-Merchant requires that the Cardholder
cancel before 6:00 p.m. on the arrival date, Sub-Merchant must mail the
cancellation policy to the Cardholder;

iv. If the reservation is properly canceled, Sub-Merchant must provide
a cancellation code and advise the Cardholder to retain it. If
requested, Sub-Merchant must mail a confirmation of cancellation that
includes the Cardholder name, account number, card expiration date,
cancellation code, and details related to the canceled reservation;

v. If Cardholder has not claimed or canceled the accommodation by the
specified time, the room(s) must be held available in accordance with
the reservation until checkout time the following day. Sub-Merchant may
then complete a Sales draft for 1 night’s lodging plus applicable tax,
indicating the Cardholder’s account number, expiration date, and name
embossed on the Card and the words “No Show” on the Cardholder
signature line. Sub-Merchant must obtain an authorization code for the
no show transaction;

vi. If guaranteed accommodations are unavailable, Sub-Merchant must
provide Cardholder with comparable accommodations as described in
Section 14.C.xiv above. These services shall be provided at no cost to
Cardholder.

15. Preauthorized Health Care Transactions

A. Order Form. Sub-Merchants accepting Preauthorized Health Care
Transactions must have the Cardholder complete an order form containing
the following:

i. a request for the services to be charged to the Cardholder’s
account;

ii. assignment of insurance benefits to Sub-Merchant;

iii. authorization for Sub-Merchant to charge the Cardholder’s account
for only that portion of the bill subsequent to Sub-Merchant’s receipt
of any applicable insurance payment;

iv. duration of time, not to exceed 1 year, for which permission is
granted; and

v. if the Preauthorized Health Care Transaction is renewed, the
Cardholder must provide an updated order form.

B. Procedures. Sub-Merchants accepting Preauthorized Health Care
Transactions must:

i. retain a copy of the order form during the period it is in effect;

ii. provide a copy of the order form upon PayFac or Member Bank’s
request; and

iii. type or print the words “Preauthorized Health Care” on the
signature line of the sales draft; and

iv. submit a sales draft within 90 days of the service date and request
authorization for the amount due upon receipt of notice of adjudication
from Cardholder’s insurance company.

C. Cancellation. Sub-Merchant must not complete a Preauthorized Health
Care Transaction after receiving a decline response or a notice of
cancellation from Cardholder, PayFac or Member Bank.

16. Visa Supermarket Program.

A merchant that wishes to participate in the Visa Supermarket
Incentives Program must first obtain a Supermarket Incentives Agreement
with PayFac or Member Bank.

17. Reserved.

18. Automated Fuel Dispenser

A. Procedures.

i. When an Automated Fuel Dispenser (“AFD”) transaction takes place,
the card must be presented and the entire, unaltered contents of either
Track 1 or Track 2 of the magnetic stripe must be read and transmitted
along with a value of “90” in the POS entry mode code field.

ii. The Merchant name, city, state, and zip code of the station
location where the transaction took place must be included in any
authorization and clearing message.

iii. A transaction receipt must be produced and the transaction must be
cleared within 2 days of the transaction date.

iv. Sub-Merchant must obtain an authorization for the exact amount of
the transaction or use the status check procedure, which requires
Sub-Merchant to request an authorization for no more than $1.00.

v. Sub-Merchant must use the status check procedure if the floor limit
is zero and the actual transaction amount is no more than the maximum
set by Visa and MasterCard, which amounts are currently $125.00 for
Visa transactions and $100.00 for MasterCard transactions.

vi. Sub-Merchant must have an established self-service terminal
operating plan on file with PayFac or Member Bank and must establish a
velocity check program that monitors the volume and frequency of
account transactions.

vii. The transaction ratio of chargebacks to total Visa Interchange for
Merchant must not exceed an average of 0.30% for the previous 6 months.

viii. The transaction ratio of fraud to total Visa Interchange for
Merchant must not exceed an average of 0.40% for the previous 6 months.

ix. Under no circumstances should Sub-Merchant use an arbitrary
estimation of the transaction amount to obtain an authorization.

x. An AFD must not dispense scrip.

xi. Terminals at automated fuel dispensers do not qualify for
theQualified Rate set forth on the Merchant Application. In order to
qualify for the Automated Fuel Dispenser Transaction Rate the
authorization must be obtained within 1 day of the transaction date and
the sale must be for less than the maximum amount set by Visa and
MasterCard, currently $125.00 for Visa transactions and $100.00 for
MasterCard transactions.

B. Programming. PayFac is not responsible for programming or
reprogramming of fuel dispensers.

19. Equipment.

If Sub-Merchant enters into a lease or rental agreement for the use of
credit card processing equipment, Sub-Merchant understands that such
agreement is separate and apart from the Agreement and is subject to
the terms and conditions of the lease or rental agreement. Neither
PayFac nor Member Bank is a party to such leases and neither is
affiliated with the third party institutions. Such leases are typically
non-cancelable 48-month leases. Termination of the Agreement with
PayFac does NOT automatically terminate Sub-Merchant’s equipment lease,
it only terminates Sub-Merchant’s processing agreement with PayFac
and/or Member Bank with respect to payment card processing and any
other electronic transactions that are settled through the Member Bank
as designated on Sub-Merchant’s periodic statement. Sub-Merchant
acknowledges that Sub-Merchant has selected the equipment set forth on
the Merchant Application based upon Sub-Merchant’s own independent
evaluation and is not relying upon any warranty or representation of
any third party, including but not limited to the representations of a
sales representative, regarding the equipment. PayFac is not
responsible for and is not able to provide customer service for
equipment, such as POS devices, installed by and/or operated by any
third party. Sub-Merchant should contact the third party for service of
this equipment. Sub-Merchant shall not allow any third party to
install, remove, or modify any terminal software application of PayFac
or Member Bank without the express written consent of PayFac or Member
Bank.

20. Imprinters.

Sub-Merchant must be in possession of a working imprinter, a supply of
blank sales drafts and an accurate imprinter plate showing
Sub-Merchant’s DBA name, city, state, and Merchant Identification
Number. If Sub-Merchant is not in possession of the above equipment,
Sub-Merchant must contact PayFac to obtain such equipment. Failure to
use the equipment and supplies listed above will seriously increase
Sub-Merchant’s liability for chargebacks. Sub-Merchant must obtain an
imprint of a Card when a Card will not swipe. Obtaining an imprint of a
Card will greatly reduce Sub-Merchant’s chance of a chargeback.

21. Merchant Identification Number.

Sub-Merchant is responsible for ensuring that Sub-Merchant’s Merchant
Identification Number (“MID”) is kept confidential. When a change to
Sub-Merchant’s Account is required, Sub-Merchant must disclose its MID
to the PayFac representative as confirmation that the person requesting
the change has authority to do so. If the person requesting the change
discloses the proper MID, PayFac or Member Bank shall assume that
person has the proper authority to make the change. Sub-Merchant shall
be fully liable for any changes to its Account after disclosure of the
MID. PayFac or Member Bank may request from Sub-Merchant additional
information to further verify Sub-Merchant’s identity.

22. Use of Third Party Terminals and/or Software.

If Sub-Merchant elects to use the terminal of a third party provider of
software (such as POS or Accounting System vendors) to capture and
transmit to PayFac or Member Bank, Sub-Merchant assumes full
responsibility and liability for any failure of such third party
provider to comply with the Operating Regulations. The third party
provider is the source for information regarding authorizations and
reversals that may be needed by PayFac or Member Bank. Certain
reversals require authorization information to reverse. Sub-Merchant is
responsible for obtaining this information from the third party
provider. PayFac and Member Bank are not liable for sales that were not
received by them. In addition, PayFac will not be liable for third
party software or clearing of Association transactions.

THE FOLLOWING RULES APPLY ONLY IF PAYFAC OR MEMBER BANK SETTLES
SUB-MERCHANT’S DISCOVER NETWORK CARD TRANSACTIONS

1. Discover Network Marks.

Sub-Merchant is prohibited from using the Discover Network Program
Marks, as defined below, other than as expressly authorized in writing
by PayFac or Member Bank. “Discover Network Program Marks” mean the
brands, emblems, trademarks, and/or logos that identify Discover®
Network cards. Additionally, Sub-Merchant shall not use the Discover
Network Program Marks other than to display decals, signage,
advertising, and other forms depicting the Discover Network Program
Marks that are provided to Sub-Merchant by PayFac or Member Bank
pursuant to this Agreement or otherwise approved in advance in writing
by PayFac or Member Bank. Sub-Merchant may use the Discover Network
Program Marks only to promote the services covered by the Discover
Network Program Marks by using them on decals, indoor and outdoor
signs, websites, advertising materials and marketing materials;
provided that all such uses by Sub-Merchant must be approved in advance
by PayFac or Member Bank in writing. Sub-Merchant shall not use the
Discover Network Program Marks in such a way that customers could
believe that the products or services offered by Sub-Merchant are
sponsored or guaranteed by the owners of the Discover Network Program
Marks. Sub-Merchant recognizes that it has no ownership rights in the
Discover Network Program Marks. Sub-Merchant shall not assign to any
third party any of the rights to use the Discover Network Program
Marks. Sub-Merchant’s authority to use the Discover Network Program
Marks will terminate immediately upon notice from PayFac, Member Bank
or Discover Network.

2. Priority Check-Out Service.

If Sub-Merchant offers priority check-out services, Sub-Merchant must
comply with the following requirements: (i) require the Cardholder to
sign the registration card at the time of check-in acknowledging
responsibility for all charges, and obtain an authorization for the
estimated amount of the accommodations at check-in; (ii) complete a
sales draft at check-out by entering the total amount of charges
incurred during the stay, including restaurant bills, telephone
charges, convenience bar charges, missing item fees and miscellaneous
expenses; (iii) write the words “Priority Check-out” on the Cardholder
signature line of the sales draft; (iv) obtain a final authorization
code for any additional amounts from the check-in estimate to equal the
total amount to be billed to the Cardholder by following the normal
authorization procedures; and (v) mail (at the address shown on the
registration card) or otherwise deliver a copy of the sales draft and
the itemized lodging bill (portfolio) to the Cardholder within seven
(7) calendar days of check-out.

3. Card Checks.

Card checks are frequently issued to Cardholders by Discover Network.
Sub-Merchant agrees to accept card checks on a basis consistent with
the terms of its policy applicable to acceptance of other payment card
checks. Sub-Merchant should handle these card checks like any other
personal check drawn upon a bank in the United States.

THE FOLLOWING RULES APPLY TO PIN-DEBIT CARD TRANSACTIONS ONLY; CARD
ACCEPTANCE PROCEDURES

1. Honoring PIN-Debit Cards. Sub-Merchant shall not require Cardholders
to provide personal information (such as telephone number or address)
as a condition for honoring a PIN-Debit Card, unless required by the
Operating Regulations. Sub-Merchant may not require or request the
Cardholder’s signature or any other means of verifying the Cardholder’s
identity. Sub-Merchant shall place the PIN Entry Device in an area
accessible by all Cardholders and that will reasonably prevent others,
including Sub-Merchant’s employees, from observing the PIN. Any
penalties incurred by Sub-Merchant for failure to comply with Debit
Network Rules will be Sub-Merchant’s responsibility. Sub-Merchant
assumes exclusive responsibility for the consequences of any oral or
written instructions Sub-Merchant may give to PayFac and/or Member
Bank, for Sub-Merchant’s failure to properly access the services in the
manner prescribed by PayFac or Member Bank, and for Sub-Merchant’s
failure to supply accurate input information. Sub-Merchant will be
responsible for auditing, balancing, verifying and reconciling any
out-of-balance condition, and for notifying PayFac of any errors in the
foregoing after receipt of the applicable report from PayFac or Member
Bank. Sub-Merchant will reject all incorrect reports or output within
two (2) business days after receipt of the reports or output. Note,
also, that neither PayFac nor Member Bank warrant the continuing
availability of any Debit Network.

2. PIN-Debit Card Sales drafts.

A. Procedures. Sub-Merchant shall deliver to the Cardholder at the time
of a sale a true and completed copy of the Sales draft evidencing a
sale involving use of a PIN-Debit Card (“PIN-Debit Sales draft”). The
PIN-Debit Sales draft must comply with the Operating Regulations. The
following information must be included on the PIN-Debit Sales draft:
(i) the PIN-Debit Card account number; (ii) Sub-Merchant’s DBA name;
(iii) Sub-Merchant’s city and state; (iv) the amount of sale; and (v)
the sale date. A PIN-Debit Sales draft shall be made available to the
Cardholder at each terminal. Sub-Merchant may not require or request
the Cardholder to provide or disclose their PIN in any oral or written
manner to the Merchant. Sub-Merchant shall not impose any fee or charge
for a PIN-Debit Card transaction without the prior written consent of
PayFac or Member Bank. If surcharging is approved by PayFac, it must be
a separate line item on the PIN-Debit Sales draft and must be in
compliance with all Debit Networks’ rules and federal and state laws
and regulations. Sub-Merchant shall not process any sale if an
authorization code is not received through the electronic terminal.
When a denial to an authorization request is received, the POS
transaction shall not be completed unless completed as a store and
forward transaction or resubmission transaction. A sale shall not be
completed if Sub-Merchant knows or should know that the sale is
fraudulent or not authorized by the Cardholder.

B. Reversal. A sale may be reversed or voided electronically, but only
if such reversal/void is entered prior to midnight of the calendar day
on which the sale was initiated. To effect a reversal or void,
Cardholder must reenter the PIN, the magnetic stripe reader must read
the card, and Sub-Merchant must transmit the trace number and the exact
dollar amount of the sale to be reversed or voided. A reversal or void
must be initiated at the same Sub-Merchant identified on the PIN- Debit
Sales draft at which the original sale was initiated, but it need not
be initiated at the same POS terminal.

C. Returns. All returns shall be processed in accordance with
Sub-Merchant’s normal procedures except that Sub-Merchant or Cardholder
shall not attempt to reverse a previously approved POS transaction
unless otherwise permitted in accordance with the applicable Debit
Network Rules. Any sale known by Sub-Merchant to be erroneous should be
canceled and re-billed in the Cardholder’s presence.

D. Balance Inquiry. Balance inquiries may be performed only by the
Cardholder at a Cardholder-operated terminal and shall at all times
require the Cardholder to enter the PIN and use the magnetic stripe
reader.

3. Distribution and Storage of Information. Sub-Merchant shall not
disclose a Cardholder’s account information or any other personal
information to third parties other than to its agents for the purpose
of completing the sale or as specifically required by law or by the
Operating Regulations. Sub-Merchant shall store in a limited access
area for at least 1 year after the date of sales all transaction
records, and shall make and retain for at least 2 years the original or
legible microfilm copies of both sides of all transaction records.
Prior to discarding, Sub-Merchant shall destroy or make unreadable all
material containing Cardholder account numbers. There are no voice
authorizations for PIN-Debit Card transactions and no manually
imprinted PIN-Debit Sales drafts. Sub-Merchant may not store the
Cardholder’s PIN in any manner.

4. Promotional Materials. Sub-Merchant will adequately display
promotional materials to inform the public that PIN-Debit Cards will be
honored. All uses by Sub-Merchant of decals, signs, printed and
broadcast materials and other promotional materials must be in
conformity with the requirements of the Debit Networks, PayFac, and
Member Bank. Sub-Merchant will not at any time do, or cause to be done,
any act or deed in any way impairing or intended to impair PayFac’s, an
Associations’, or Member Bank’s exclusive right, title and interest in
and to its respective protected marks.

5. Reversals. Sub-Merchant agrees to pay PayFac or Member Bank for any
Debit Network fees, fines or charges imposed on Sub-Merchant, PayFac,
or Member Bank. Such reimbursement will be accomplished by the debit of
the sum(s) involved from Sub-Merchant’s Account. If PayFac or Member
Bank elects, at its discretion, to take action on reversals after the
Debit Network time limits have expired, such action shall be done at
additional cost. Upon request of a Debit Network, processor, PayFac, or
Member Bank, Sub-Merchant will retrieve and forward to PayFac or Member
Bank, within the time frame required, either the original or a readable
copy of the terminal journal tape or duplicate transaction receipt for
the transaction in question and, if requested, will give the Debit
Network such information from such transaction records as it requests
by telephone. Sub-Merchant will, on request of the Debit Network,
cooperate fully with the Debit Network and the Card issuing participant
in order that the participant may comply with the error resolution
procedures.

6. Sub-Merchant Name and Address. All forms submitted to PayFac or
Member Bank must bear both Sub-Merchant’s corporate and “Doing Business
As” (“DBA”) name.

7. Equipment.

A. Use. Sub-Merchant shall take all necessary steps to ensure that all
POS Terminals and PIN Entry Devices operated in all of its locations:

i. are placed in an area accessible by all Cardholders;

ii. are available for use whenever Sub-Merchant is open for business;

iii. will function with minimal error, meeting all applicable technical
specifications and security regulations; and

iv. will require the Cardholder to enter the Cardholder’s PIN at or
near the check-out location when initiating a POS transaction.

B. Standards. A PIN Entry Device must meet the ANSI standard format
X9.8, 1995 or newer requirements, as they are released. A PIN Entry
Device must comply with the PCI DSS requirements for POS and PED
equipment. Terminals must have a magnetic stripe reader capable of
reading Track 2 on the PIN-Debit Cards. PINs used in conjunction with
any store and forward transaction or Sub-Merchant’s resubmission must
be encrypted and stored within a tamper-resistant security module. If
Sub-Merchant’s authorization system is capable of store and forward, it
must comply with the Debit Networks’ rules and regulations regarding
this capability. PayFac or Member Bank, the Issuer and the Debit
Networks shall not be liable for any losses suffered by Sub-Merchant
arising from the use of the store and forward function. A PIN must
never be logged in any form as a function of software either in the
clear or encrypted.

8. Supply of Information. Sub-Merchant must submit all information
requested by the Debit Networks, PayFac or Member Bank, including but
not limited to lists and mailing addresses of terminals. Sub-Merchant
shall not sell, purchase, provide, or exchange account number
information in any form, including but not limited to, transaction
receipts, carbon copies of transaction receipts, mailing lists, tapes,
to any third party other than to Sub-Merchant’s agents for the purpose
of assisting Sub-Merchant in its business, or to the Debit Networks,
PayFac or Member Bank, or pursuant to a government request.

9. Left PIN-Debit Cards. PIN-Debit Cards that are inadvertently left at
Sub-Merchant;s location must be held under dual control during the time
they are retained. PIN-Debit Cards inadvertently left at Sub-Merchant’s
location may be returned to the Cardholder by Sub-Merchant under the
following conditions: (A) the Card was inadvertently left by the
Cardholder at an on-premise location, (B) the Cardholder requests the
Card within 1 business day, and (C) the Cardholder provides 2 forms of
current identification, at least 1 of which is a photo identification.
If the Cardholder has not requested the Card within 1 business day, the
Card should be destroyed by cutting it in half through the stripe.