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12.SE'IT'LEMENT ACCOUNT.
<br />12.1 Settlement Acen int Required. Merchant must maintain a Settlement Account
<br />in Merchant's name in satisfactory condition at a depository institution under arrangements
<br />acceptable to Bank. The Settlement Account will be subject to the provisions Or Section 14
<br />of this Merchant Agreement.
<br />12.2 Minimum Balance. Merchant agrees to maintain a minimum balance Orlando in
<br />the Settlement Account as Bank may specify to Merchant in writing from time to time.
<br />12.3 Provisional Credits. Subject to the terms and conditions of this Merchant
<br />Agreement, Bank agrees to provisionally credit Merchant for each Transaction that Bank
<br />nccepts from Merchant. Merchant agrees that Bank may charge the Settlement Account for
<br />the amount of any Transaction processed render this Merchant Agreement, or any
<br />agreement Bank may have with any Merchant Affiliate, that results in a Chargeback, or for
<br />any Credit Transaction Receipt or otter reimbursement or Processing Pees to which Bank
<br />may be waited
<br />12.4 Audits and Adjustments. Merchant agrees that Bank may audit all Transaction
<br />calculations and that Bank shall have the right, without notice, to make withdrawals,
<br />deposits, or other adjustments to or from the Settlement Account for any deficiencies or
<br />overages.
<br />125 Errors and Disputes. Bank shall presume that any amounts the Bank pays to or
<br />debits from Merchant are correct unless Merchant disputes these by sending Bank written
<br />notice within thirty days of the date of the applicable statement containing any disputed
<br />payments or debits.
<br />12.6 POS Equipment. if Merchant chooses to rent or lease POS Equipment from
<br />Processor or utilizes software provided by Processor for use in processing Transactions,
<br />Merchant agrees to pay Processor: (a) a pre - determined monthly rental fee; (b) any initial
<br />upfront costs as required; and (c) all applicable taxes rot such POS Equipment or software
<br />utilization.
<br />12.7 Settlement Account Closure. If the Settlement Account is closed, Bank or its
<br />designated representative may terminate this Merchant Agreement, effective immediately,
<br />upon written or oral notice (with written confirmation in the event of oral notice) unless
<br />Merchant opens another Settlement Account acceptable to Bank. Merchant may change
<br />the Settlement Account upon prior written approval by Bank, which approval will not be
<br />unreasonably widtheld.
<br />12.8 ACII Authorization. Merchant authorizes Bank or its agents or designated
<br />representatives to butiate debit and credit entries and adjustments to the Settlement
<br />Account or the Reserve Account (described in Section 13 of this Merchant Agreement)
<br />through the ACH settlement process for amounts due under this Merchant Agreement.
<br />This authorization will remain in full fares and effect unit] termination of the Merchant
<br />Agreement and the full and final payment of of obligations of Merchant due under this
<br />Merchant Agreement. Merchant acknowledges and agrees that it has been provided with
<br />the ACH Terms and Conditions located at www .transfirstcom /doeuments.htnl and
<br />agrees to be bound by all applicable terms and provisions of the ACH 'Perris and
<br />Conditions, ACH Addendum, nil other ACH Rules and any other applicable association or
<br />rework rules and regulations, in effect from time to time. Merchant acknowledges and
<br />agrees that Bank will not be liable for any delays in receipt of finds, any failure by
<br />Merchant to receive funds, or errors fn debit or credit entries coastal by Merchant, or third
<br />panics, including but not limited to any Card Association or any financial irradiation.
<br />13. ADDITIONAL COLLATERAL SECURITY; RESERVE ACCOUNT.
<br />As a condition for providing Card Program services, Merchant may be required to
<br />provide additional collateral security for Merchant's obligations hereunder, which
<br />additional collateral security stall be of a kind, and in amounts, satisfactory to Brunk in
<br />Bank's sole discretion, and which shall be in addition to all other collateral provided for in
<br />Section 14 hereof. Such additional collateral security may include, fur example, (a) a letter
<br />of credit, if issued in an amount and on terms acceptable to Bank by a letter of credit
<br />turning bank acceptable to Bank, or (b) the pledge to Bank of a certificate of deposit owned
<br />by Merchant in amount satisfactory to Bank and provided all agreements (including
<br />agreements of third patties) in form and substance satisfactory to Bank and all (flings
<br />and/or other actions necessary in order to perfect in Bank a continuing first priority security
<br />interest therein on terms acceptable to Bank, we entered into, made and /or taken as the case
<br />may be. Bank may require that all or any part of the additional collateral take the form of a
<br />Reserve Account, established as hereinafter set forth in this Section 13, at any time when
<br />(i) this Merchant Agreement, or the provision of Card Program services hereunder, shall
<br />have terminated for any reason or any party hereto shall have given notice of termination
<br />thereof, or (if) them shall have occurred an event which entitles Bank to terminate this
<br />Merchant Agreement or the provision of Card Program services hereunder or which, with
<br />the giving of notice and/or the passage of time would entitle Bank to terminate this
<br />Merchant Agreement or the provision of Card Program services hereunder, and Merchant
<br />has not provided alternative additional collateral security of a kind, and in amounts,
<br />satisfactory to Bank as set forth above In this Section, or (iii) nether (i) nor (it) above in
<br />this Section is applicable, but Bank has determined that additional collateral security is
<br />required, has requested that Merchant provide same, and Merchant has failed to provide
<br />alternative additional collateral security of a kind, and in amounts satisfactory to Bank as
<br />set forth above in this Section. Any Reserve Account that is established shall be subject to
<br />the terms and conditions ofSeolum 14 and all other terms and conditions ofthis Agreement
<br />relating to the "Reserve Account ". Whenever Bank requires that additional collateral
<br />security take the form of a Reserve Account, the following provisions of this Section 13
<br />shall apply:
<br />13.1 Reserve During Term of Merchant Agreement.
<br />(a) Merchant may be required to deposit, of Merchant Bank may deposit by
<br />deducting from any payment due to Merchant or from any funds in the Settlement Account
<br />or any other deposit account of Merchant, into an account maintained by Merchant Bank
<br />(m at another approved depository institution) (the "Reserve Account "), initially or at any
<br />time in the future as requested by Bank, sums sufficient to satisfy Merchant's current
<br />and/or future obligations as determined by Bank in Its sole and absolute discretion.
<br />(b) The Reserve Account will be separate from the Settlement Account.
<br />Merchant shall have no right of withdrawal from the Reserve Account. The Reserve
<br />Account shall be under rite sole control of Merchant Bank, and Processor shall not have
<br />access to or hold funds in the Reserve Account. Any and all earnings from deposits or file
<br />Merchant to the Reserve Account shall be the sole property of the Bank.
<br />13.2 Reserve Account Deposits.
<br />(a) At any time in Bank's sole and absolute discretion, Bank may (i) designate
<br />the minimum balance required to be deposited in the Reserve Account, (ii) require that the
<br />amount on deposit in the Reserve Account be increased, (iii) require that the Merchant
<br />deposit, or Merchant Bank may deposit for Merchant into the Reserve Account a
<br />percentage of, or a fixed amount fain each Transaction processed, or (iv) otherwise
<br />determine the amount to be deposited in the Reserve Account. Bank at its sole and
<br />absolute discretion may require that each month Merchant deposit, or Merchant Bank may
<br />deposit by deducting from any payment due to Merchant or from any funds in the
<br />Settlement Account or any other deposit account of Merchant sums into the Reserve
<br />Account no later than the twentieth day of the month. Bank shall notify the Merchant as to
<br />the amount of the funds to be deposited each month
<br />(b) Merchant acknowledges and agrees that the Reserve Account may contain
<br />both funds deposited by the Merchant and funds of other merchants of the Bank.
<br />133 Deductions from Reserve Account. If funds are not available is the Settlement
<br />Account, Bank without prior notice to Merchant may deduct from the Reserve Account any
<br />obligation of Merchant to Bank trader this Merchant Agreement, including all Processing
<br />Fees, Chmgebtmks, Credit Transaction Receipts, Damages, and any and all additional fees,
<br />and sums sufficient to reimburse Bank for the amount of any fines, penalty amounts and
<br />charges due the Card Associations.
<br />13.4 Replenishment of Reserve Account Deficiencies. Whenever the balance in the
<br />Reserve Account is less than the minimum balance required, or is otherwise deficient,
<br />Merchant Bank Wray, without prior notice, deposit the deficiency into the Reserve Account
<br />by reducing any payment to Merchant required by this Merchant Agreement or deduct the
<br />deficiency from the Settlement Account or any other deposit account of Merchant with
<br />another depository institution (including accounts of general partners if Merchant is a
<br />partnership) and deposit it into the Reserve Account. Merchant authorizes deductions from
<br />its accounts by ACI I entry, sight draft, preauthorized check, reverse wire, or otherwise as
<br />Bank deems appropriate under the circumstances. In addition, Merchant will deposit any
<br />deficiency into the Reserve Account within one Business Day after receiving Bank's oral
<br />or written request. Without limiting Bank's remedies, Merchant's failure to deposit any
<br />deficiency on time will permit Bank, without advance notice, to suspend or cease
<br />Processing additional 'transaction Receipts and Credit Transaction Receipts. Bank will
<br />give Merchant written notice orally suspension or cessation of processing.
<br />13.5 Additions to Reserve Account. If Bank has reason to believe that Merchant
<br />may be liable to customers or to Bank for Chargebacks exceeding the balance in the
<br />Reserve Account, Merchant Bank may: (a), immediately place in the Reserve Account
<br />payments due to Merchant and/or stop processing transactions for Merchant until such time
<br />as the extent of Merchant's obligations to Bank, or Merchant's liability for Chargebacks, or
<br />Merchant's liability to customes are known, and Bank no longer deems itself insecure,
<br />and/or (b) demand from Merchant an amount that in Bank's judgment is needed to ensure
<br />payment of Merchant's obligations and liabilities. Merchant's failure to pay any amount
<br />will permit Merchant Bank or Processor or its designated representative to terminate this
<br />Mercham Agreement immediately without advance notice.
<br />13.6 Reserve Account After Merchant Agreement Terminates. Merchant Bank
<br />any continue to hold or deposit funds in the Reserve Account after termination of this
<br />Mercham Agreement, regardless of whether nomination is by Merchant or Bank Upon
<br />termination of the Merchant Agreement by Merchant or Bank, Bank may retain sufficient
<br />funds to satisfy any and all Processing Pees, Chargebacks, Credit Transaction Receipts,
<br />Damages, and any and all additional fees, and sums sufficient to reimburse Bank for the
<br />amount of any fines, penalty amounts and charges due the Card Associations. If no fiends
<br />have been deposited into the Reserve Account before termination, Bank, at Bank's option,
<br />may notify Merchant to deposit funds into the Reserve Account upon termination of this
<br />Merchant Agreement. All provisions which apply to a pre- termination Reserve Account
<br />will apply after termination, including replenishment of deficiencies. The funds will be
<br />held by Bank or its designated agent for a period of not less than one hundred eighty days
<br />from the date of the last Transaction processed under the Merchant Agreement, plus the
<br />period of any warranty, guarantee, and/or return policy an goods and/or services sold,
<br />Bank will return the balance in the Reserve Account to Merchant after Bonk reasonably
<br />determines that the risk of Chargebacks and other processing Fees has ended and after
<br />deducting all amounts that Merchant owes to Bank under this Merchant Agreement or any
<br />other agreement.
<br />14. SECU RITY INTEREST.
<br />14.1 Merchant's Grant of Security Interest.
<br />(a) To secure Merchant's performance of its obligations under this Merchant
<br />Agreement, and any other agreement with Bank, Merchant grants Bank a security interest
<br />in each Transaction and its proceeds, the Settlement Account, the Reserve Account and any
<br />other deposit account of Merchant with a financial institution, whether now existing or
<br />established in the future, and in the proceeds oral[ these accounts, any fonds due Merchant
<br />from Bank and any of Merchant's property held by Bank. Bank may enforce there security
<br />interests without notice or demand The security interests granted under this Merchant
<br />Agreement will continue after this Merchant Agreement terminates, until Mercham
<br />satisfies all its obligations to Bank
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