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O.SIATLEMENT ACCOUNT.
<br />121 Settlement Account Required, Merchant must maintain a Settlement Account
<br />in Merchant's none in satisfactory condition at a repertory institution under arrangements
<br />acceptable to Bank. The Settlement Account will be subject to the provisions of Section 14
<br />ofthis Merchant Agreement.
<br />12.2 Minimum Immuce. Merehon agrees to maintain a minimum halance of ponds in
<br />the Settlement Amount as Bank may specify to Merchant in writing from [into to tittle.
<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 />accepts from Merchant. Merchant agrees that Bank may charge the Settlement Account for
<br />the amount of any Transaction processed under this Merchant Agreement, or any
<br />agreement Bank may have with any Merchant Afthate, that results in a Chargeback, or for
<br />any Credit Transaction Receipt or othm reimbursement or Processing Fees to which Bank
<br />may be entitled.
<br />124 Audits and .Adjustments. Merchant agrees that Batik may audit NI 'transaction
<br />calculations and that Bank Shull 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 />12.5 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 />116 POS Equipment, If Merchant chooses to rent or lease POS Equipment Irons
<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; m) any initial
<br />upfront costs as required, and (e) all applicable taxes for 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 nifty 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 clam prior written approval by Bank, which approval will not be
<br />unreasonably withheld.
<br />12.8 ACH Authorization, Merchant authorizes Bank or its agents or designated
<br />representatives to initiate 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 far amounts due under this Merchant Agreement.
<br />This authorization will remain in full force and effect nail knounalian of the Merchant
<br />Agreement and the full and final payment of all obligations of Merchant due under this
<br />Merchant Agreement Merchant acknowledges and agrees ihm it has been provided with
<br />the ACH Terms and Conditions located at wmv.tmnsfirstemn /tact tents html lad
<br />agrees to be bound by all applicable terms and provisions of the ACH Terms and
<br />Conditions, ACH Addendum, all other ACH Rules and any other applicable association or
<br />network rules and regulations, in effect fire one to time. Merchant acknowledges and
<br />agrees that Bank will not be liable for any delays in receipt of funds, any failure by
<br />Merchant to receive funds, or errors in debit or credit entries caused by Merchant, or third
<br />parties, imohuding but not limited to any Card Association of any financial Institution,
<br />H. 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 shall be of a kind, and in amounts, satisfactory to Bank in
<br />Bark'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, for example, (a) a letter
<br />of credit, if issued in an anonnt and on terms acceptable to Bank by a letter of credit
<br />issuing bank acceptable to Bank, M(b) the pledge to Bank of i certificate of(leposit owned
<br />by Merchant in amount satisfactory to Bank and provided all agreements (including
<br />agreements of third parties) in font and substance satisfactory to Bank and all filings
<br />and /or other actions necessary in older to perfect in Bank a cam inning first priomy security
<br />interest therein on terns acceptable to Bank, are entered into, made and/or taken as the case
<br />may be. Bank may require that all or any part ofahe additional collateral take the form of a
<br />Reserve Account, established as interloper set forth in this Section 13, at any time when
<br />(i) this Merchant Agreement, or the provision of Card Flagons services hereunder, shall
<br />have terminated for any lease,' or any party hereto shall have given notice of termination
<br />thereof, or (it) there 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 titan would entitle Bank to terminate this
<br />Merchant Agreement or the provision of Cud Program services hereunder, and Merchant
<br />ties 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) neither (i) nor (ii) 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 fotth above in this Section. Any Reserve Account that in established shall be subject to
<br />the terms and conditions of Section 14 =dell other terms and conditions or this 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 oTMerclmnt Agreement.
<br />(a) Merchant may be required to deposit, or Merchant Bank may deposit by
<br />deducting from any payment due to Merchant or from any fonds n the Settlement Account
<br />or any other deposit amount of Merchant, into an account maintained by Merchant Bank
<br />(or it another approved depository institution) (tire "Reserve Account"). initially or at any
<br />time in the fume as requested by Bank, sums sufficient to satisfy Merchant's current
<br />andor future obligations as detemnined by Bank in its sole and absolute discretion.
<br />(b) The Reserve Account will be separate train the Settlement Account.
<br />Merchant shall have no right of withdrawal from the Reserve Account The Reserve
<br />.Account shall be under the sole co col of Merchant Bank., and Processor shall riot love
<br />access to or hold funds In file Reserve Account. Any and all earnings from deposits of the
<br />Merchant to the Reserve Account shall be the sole property ofihe Bank.
<br />13.2 Reserve Accomn Deposits.
<br />(a) At any time in Bank's sole and absolute discretion, Bank may It) designate
<br />die minimum balance required to be deposited In the Reserve Account. (ll) require that the
<br />amount on deposit in the Reserve AmrOUm be increased, (iii) require that the Merchant
<br />deposit, or Merchant Bank may deposit for Merchant into the Reserve Account a
<br />percentage oft or a fixed amount train each Transaction processed, or (w) otherwise
<br />demrmine the amount to lie 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 zany 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 lire 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 />13 3 Deductions. from Renmve Account. If funds are not available in the Settlement
<br />Account, Bank without to notice to Merchant may deduct from the Reserve Account any
<br />obligation of Merchant to Bank under this Merchant Agreement, including all Processing
<br />Fees, Chargebacks, Credit Transaction Receipts, Damages, and any and all additional lees,
<br />and sums sufflWIW1 to reimburse Bank for the amount of any fines, penalty amounts aid
<br />charges due the Card Associations.
<br />13A 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 may, 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 fiom 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 ACH entry, sight draft, preauthorized check, reverse wire, or otherwise as
<br />Bank deems appropriate under the circumstances. In addition, Merchant will deposit env
<br />deficiency into the Reserve Account within one Business Day alter receiving Batik's oral
<br />or written request. Without limiting Batik's remedies, Merchant's failure to deposit may
<br />deficiency on time will permit Batik, without advance notice, to suspend or cease
<br />processing additional "transaction Receipts and Credit Transaction Receipts. Bank will
<br />give Merchant written notice of any 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 author stop processing mtrtasetmns for Merchant until such time
<br />as the extent of Merchant's obligations to Bank, or Merchant's liability for Chargebacks, or
<br />Merchants liability to customers 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 tilts
<br />Merchant Agreement immediately without advance notice
<br />13.6 Reserve Account After Mechant Agreement 'Terminates. Merchant Bank
<br />may continue to hold or deposit funds in the Reserve Account after termination of this
<br />Merchant Agreement, regardless of whmhcr termination is by Merchant at Bonk. Upon
<br />tioninaion of the Merchant Agreement by Merchant or Bank, Bank may remit sufficient
<br />funds to satisfy any and all Processing Fees, Chargebacks, Credit Transaction Receipts,
<br />Damages, and any and all additional fees, and sums sufficient to reimburse Bank for the
<br />amount of any times, penalty amounts and charges due the Card Associations. If no rands
<br />have been deposited into the Reserve Account before termination, Banc, at Bank's option,
<br />may notify Merchant to deposit Raids 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 ur its designated agent be a period of not less thin one hundred eighty days
<br />front the date of the last Transaction processed under the Merchant Agreement, plus the
<br />period of any warranty, gnaranlee, and/or return policy on goods Major services sold.
<br />Bank will return the balance in the Reserve Account to Merchant alter Bank reasonably
<br />determines that the risk of Chargebacks and other Processing Pees has ended and after
<br />deducting all amounts that Merchant owes to Bank under this Merchant Agreement or any
<br />other agreement.
<br />14, SECURITY INTEREST.
<br />14.1 Merchant's Grant of Seeurityfateres6
<br />(a) To secure Merchant's performance of its obligations under this Merchant
<br />Agreement, mid any other agreement with Bank, Merchant grants Bank a security interest
<br />in each Tra ea Lion and its Farmers, 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 of all those accounts, any funds due Merchant
<br />from Bank and nay of Merchant's property held by Bank. Bank may enforce these security
<br />interests without notice or demand The security interests granted tinder this Merchant
<br />Agreement will continue alter this Merchant Agreement terminates. until Merchant
<br />s u sties all its obligations to Bank.
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