Exhibit 10.46

 

PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS, WHICH ARE MARKED BY ASTERISKS (“***”).

 

(CHASE PAYMENTECH LOGO) [t83198003.jpg]

 

THIRD PARTY PAYMENT PROCESSOR AGREEMENT

 

THIS THIRD PARTY PAYMENT PROCESSOR AGREEMENT (the “Agreement”), dated as of the
Effective Date, is entered into by and among JPMorgan Chase Bank, N.A., a
national banking association (“Member”), Paymentech, LLC, a Delaware limited
liability company (“Paymentech”, “we”, or “us”), and USA Technologies, Inc., an
entity duly organized under the laws of the Commonwealth of Pennsylvania (“TP3”,
“you”, or “your”).

 

WHEREAS, Member is a member of the Payment Brands and, through Member,
Paymentech is authorized to process the Payment Brand Transactions; and

WHEREAS, TP3 is (or will be prior to the submission of any Transaction)
registered as a third party service provider with the applicable Payment Brands;
and

WHEREAS, TP3 wishes to submit Transaction Records for itself and on behalf of
certain business enterprises meeting the qualifications and restrictions set
forth herein (including in Schedule B) (referred to herein individually and
collectively as a “Merchant”) in accordance with the terms and conditions of
this Agreement and the Payment Brand Rules (the “Program”).

ACCORDINGLY, in consideration of the mutual promises made and the mutual
benefits to be derived from this Agreement, Paymentech, Member, and TP3 agree to
the following terms and conditions intending to be legally bound:

 

1. Acceptance of Payment Instruments. Regardless of whether a Transaction Record
is generated by TP3 or by Merchant, all Transaction Records processed pursuant
to this Agreement shall be deemed TP3’s Transactions. Only Transaction Records
generated within the United States shall be submitted under this Agreement.

 

1.1 Exclusivity. Paymentech shall be TP3’s exclusive provider of Transaction
processing services (including, without limitation, the authorization,
conveyance, and settlement of Transactions) in the United States for at least
250,000,000 million transactions per year throughout the pendency of this
Agreement, including all transactions made by Customers making a purchase with a
Payment Instrument issued by Chase. TP3 will tender to Paymentech all
Transaction Records generated from the Merchants’ Transactions via electronic
data transmission according to Paymentech’s formats and procedures.

 

1.2 Certain Payment Acceptance Policies.

(a)       Each Transaction must be evidenced by its own Transaction Receipt
completed in accordance with Payment Brand Rules. All Transaction Receipts must
comply with Payment Brand Rules and, at a minimum, contain (i) the Transaction
date; (ii) a brief description of the goods or services sold, returned. or
cancelled; (iii) the price of the goods or services, including applicable taxes,
or amount of any credit or adjustment; (iv) the Customer name; (v) the
Merchant’s name in a manner recognizable to Customers; (vi) TP3’s name in
conjunction with the Merchant’s name (e.g., “TP3 * Merchant”); (v) the
Merchant’s address; (vi) the Merchant’s customer service telephone number; (vii)
any applicable terms and conditions; and (viii) any other information required
by the Payment Brand Rules or local law. TP3 shall ensure that each Merchant
provides a complete copy of the Transaction Receipt to the Customer, as required
by the Payment Brand Rules. A Merchant shall offer the Transaction Receipt in
paper format to the extent required by applicable law, and may also offer the
Transaction Receipt in electronic format; provided that such electronic
Transaction Receipts must comply with all applicable provisions of the Payment
Brand Rules.

(b)       Neither TP3 nor Merchant shall require the Customer to pay the fees
payable by TP3 under this Agreement.

(c)       Neither TP3 nor Merchant shall issue Refunds for Transactions by cash
or a cash equivalent (e.g., check) unless required by law or permitted by the
Payment Brand Rules.

 

Page 1 of 35

 

 

(d)       Unless permitted by the Payment Brand Rules, neither TP3 nor Merchant
shall engage in any practice that unfavorably discriminates against or provides
unequal treatment of any Payment Brand relative to any other Payment Brand.

(e)       Except where expressly permitted by law or the Payment Brand Rules,
TP3 nor Merchant shall set a dollar amount above or below which Merchant refuses
to honor otherwise valid Payment Instruments.

(f)        If applicable, TP3 or Merchant shall examine each Payment Instrument
physically presented at the point of sale to determine that the Payment
Instrument presented is valid and has not expired. If applicable, TP3 shall
exercise reasonable diligence to determine that the authorized signature on any
Payment Instrument physically presented at the point of sale corresponds to the
Customer’s signature on the Transaction Receipt.

(g)       With respect to any Transaction for which a Customer is not physically
present at the point of sale, such as in any on-line, mail, telephone,
pre-authorized, or recurring Transaction, TP3 or Merchant must (i) have notified
Paymentech on its Application or otherwise obtained Paymentech’s prior written
approval of TP3’s or Merchant’s intention to conduct such Transactions; and (ii)
have appropriate procedures in place to ensure that each Transaction is made to
a purchaser who actually is the Customer. TP3 acknowledges that under certain
Payment Brand Rules, neither TP3 nor Merchant can rebut a Chargeback where the
Customer disputes making the purchase and TP3 does not have an electronic record
(e.g., “swiping” or “tapping” a Payment Instrument) or physical imprint of the
Payment Instrument.\

(h)       TP3 and Merchant agrees to accept all categories of Visa and
MasterCard Payment Instruments (i.e., debit and credit cards), unless TP3 or
Merchant has notified Paymentech on its Application or otherwise in writing of
its election to accept one of the following “limited acceptance” options: (i)
all Visa and MasterCard consumer credit cards and Visa and MasterCard commercial
credit and debit cards; or (ii) Visa and MasterCard debit cards only (but no
credit cards). Notwithstanding the election of one of the foregoing limited
acceptance options, TP3 and Merchant must honor all foreign bank-issued Visa or
MasterCard Payment Instruments. If TP3 or Merchant elects one of the limited
acceptance categories: (Y) appropriate signage must be displayed to indicate the
limited acceptance category; and (Z) Paymentech, at its option, may process any
Transactions submitted to Paymentech outside of the limited acceptance category,
in which case such Transactions will be assessed the applicable interchange fees
plus any additional fees/surcharges assessed by Paymentech or the Payment
Brands.

(i)        Neither TP3 nor Merchant shall split a single Transaction into two or
more Transactions to avoid or circumvent authorization limits or monitoring
programs.

(j)        Neither TP3 nor Merchant shall accept Payment Instruments for the
purchase of scrip.

(k)       Neither TP3 nor Merchant shall require a Customer to complete a
postcard or similar device that includes the Customer’s Payment Instrument
account number, expiration date, or any other account data in plain view when
mailed.

(l)        Neither TP3 nor Merchant shall add any tax or surcharge to
Transactions, unless applicable law expressly requires a TP3 or a Merchant be
permitted to impose the tax or surcharge. If any tax or surcharge amount is
allowed, such amount shall be included in the Transaction amount and shall not
be collected separately.

(m)      Neither TP3 nor Merchant shall request or use a Payment Instrument
account number for any purpose except as payment for its goods or services,
unless required by the Payment Brand Rules in order to support specific services
offered by the Payment Brands.

 

1.3 Payment Brand Rules; Compliance with Laws. TP3 agrees to comply, and to
ensure that all Merchants comply, with all applicable Payment Brand Rules, and
such other procedures as Paymentech or the Payment Brands may from time to time
prescribe with respect to TP3 (or payment service providers), Merchants,
Transactions, or the Program. TP3 shall take all actions necessary throughout
the term of the Agreement to insure its (and, as necessary, each Merchant’s)
compliance with applicable federal, state and local laws, statutes, ordinances,
governmental rules and regulations, as they may be enacted or amended from time
to time relating to the Program and the Transactions submitted to Paymentech.

 

1.4 Registration Requirements; Registered Services.

TP3 acknowledges that it must register with all applicable Payment Brands prior
to entering Transactions into Interchange. Paymentech shall facilitate such
registration, subject to the following terms and conditions:

(a)       TP3 agrees to fully cooperate with Paymentech with respect to all
applicable Payment Brand registration requirements, to provide all information
required in connection with such registration, and to update Paymentech promptly
(but in any event within five (5) Business Days) in writing of any subsequent
change in such information, including any change in TP3’s principals or
owner(s), any changes to TP3’s business structure, corporate name, any trade
name(s) or “doing business as” name(s) being used by TP3, or any changes in
TP3’s use of Service Providers with access to Payment Instrument Information.
TP3 shall pay all initial and subsequent fees and costs associated with such
registrations and any renewals. TP3 agrees and understands that its ability to
provide services to Merchants involving the storage, processing, or transmission
of Payment Instrument Information is subject to TP3’s continued valid
registration with the Payment Brands and TP3’s compliance with the Payment Brand
Rules and Security Standards as set forth in this Agreement. TP3 understands and
agrees that registration is specific to Paymentech and the Member only, and a
separate registration is required (at separate cost) for any other
relationship(s) TP3 may have.

 

Page 2 of 35

 

 

(b)       To become registered, TP3 must deliver the following documentation to
Paymentech, as applicable, prior to signing any Merchant to the Program or
submitting any Transactions into Interchange: (i) applicable registration forms
from Visa and MasterCard; (ii) supporting documentation to assist Paymentech in
performing (or evidence in support of the fact that Paymentech has already
conducted) a comprehensive risk and financial review of TP3; (iii) a
comprehensive list of all existing Merchants, if applicable, in an electronic
format specified by Visa and MasterCard; and (iv) Security Standards Compliance
Validation Documentation.

(c)       With respect to registration, TP3 represents and warrants that it
performs only those services it has identified in its Security Standards
Compliance Validation Documentation. TP3 further represents and warrants that it
will immediately, or within three (3) Business Days at the latest, notify
Paymentech in writing if it performs any services in addition to those
identified in the Security Standards Compliance Validation Documentation. Upon
the Effective Date, TP3 shall provide Paymentech with a list of all its current
Service Providers. “Security Standards Compliance Validation Documentation”
encompasses the following Security Standards Compliance Validation Documents, to
be provided by TP3 to Paymentech: (i) Report on Compliance (ROC), (ii) Executive
Summary of the ROC, (iii) Attestation of Compliance form, (iv) Self-Assessment
Questionnaire (SAQ), and/or (v) any other documentation which Paymentech may
reasonably request or require in order to validate TP3’s registration and
compliance with the Payment Brand Rules and/or the Security Standards.

 

1.5 Requirements for Certain Transactions. With respect to each Transaction
submitted to us for processing, (i) TP3 shall ensure that TP3 and each Merchant
meets each of the following requirements, and (ii) TP3 represents and warrants
that, to the best of its knowledge, each of the following requirements is met:

(a)       The Transaction Record represents payment or refund of payment, for
the bona fide sale or lease of the goods, services, or both, which Merchant or
TP3 has provided in the ordinary course of business. 

(b)       The Transaction Record represents an obligation of the Customer for
the amount of the Transaction. 

(c)       The Transaction Record does not involve any element of credit for
payment of a previously dishonored Payment Instrument or for any other purpose
than payment for a current transaction. The Transaction does not represent
payment for a previous Transaction or charge incurred at the Merchant or a
Transaction that was previously charged back by the Customer, irrespective of
Customer consent or approval. 

(d)       Except in the case of approved installment or pre-payment plans, the
goods have been shipped or provided (or made available) or the services have
been actually rendered to the Customer. 

(e)       The Transaction Record is free from any material alteration not
authorized by the Customer. 

(f)        The amount charged for the Transaction is not subject to any dispute,
setoff, or counterclaim. 

(g)       Neither TP3 nor the Merchant nor any of their employees has advanced
any cash to the Customer (except as authorized by the Payment Brand Rules) or to
TP3 or to any of its representatives, agents, or employees in connection with a
Transaction, nor has TP3 or Merchant accepted payment for effecting credits to a
Customer. 

(h)       The Merchant is free to sell the goods or services related to each
Transaction. 

(i)        All refunds shall be in accordance with all applicable
return/cancellation policies, which have been previously submitted to Paymentech
in writing as provided in Section 3, and which are available to the Customer and
not subject to any other representations or agreements. 

(j)        Any Transaction submitted to credit a Customer’s account represents a
refund or adjustment to a Transaction previously submitted to Paymentech. 

(k)       Neither TP3 nor Merchant has knowledge or notice of any information
that would indicate that the enforceability or collectability of the subject
Transaction Record is in any manner impaired. The Transaction Record is in
compliance with all applicable laws, ordinances, and regulations. The
Transaction Record is originated in compliance with this Agreement and
applicable Payment Brand Rules. 

(l)        For a Transaction where the Customer pays in installments or on a
deferred payment plan, a Transaction Record has been prepared separately for
each installment or deferred payment on the date(s) the Customer agreed to be
charged. All installments and deferred payments, whether or not they have been
submitted to Paymentech for processing, shall be deemed to be a part of the
original Transaction. 

 

Page 3 of 35

 

 

(m)      Neither TP3 nor Merchant knows or should have known the Transaction to
be fraudulent, illegal, damaging to the Payment Brand(s), unauthorized by the
Customer, or otherwise in violation of any provision of this Agreement or any
Payment Brand Rule.

(n)       For recurring Transactions, TP3 or Merchant must (i) obtain the
Customer’s consent to periodically charge the Customer on a recurring basis for
the goods or services purchased; (ii) retain this consent for the duration of
the recurring services and provide it upon request to Paymentech or the issuing
bank of the Customer’s Payment Instrument; and (iii) retain written
documentation specifying the frequency of the recurring charge and the duration
of time during which such charges may be made. TP3 shall not submit any
recurring transaction after receiving: (i) a cancellation notice from the
Customer; or (ii) notice from Paymentech or any Payment Brand (via authorization
code or otherwise) that the Payment Instrument is not to be honored. TP3 shall
include in its Transaction Data the electronic indicator that the Transaction is
a recurring Transaction.

 

1.6 Requirements for Merchants. TP3 agrees that Paymentech shall have the right
at any time, in its sole discretion: (i) to refuse to process Transactions for
any Merchant and to require TP3 to decline, or terminate immediately, such
Merchant’s participation in the Program if Paymentech reasonably believes the
Merchant is acting in violation of the Payment Brand Rules or applicable law, or
in the event there is a material increase in anticipated risk presented by such
Merchant; (ii) to condition continued processing for any Merchant upon TP3
establishing, funding, and maintaining a Reserve Account, in an amount specified
by Paymentech, specific to each Merchant; and (ii) to take or require TP3 to
take any other measures as may be reasonably required by Paymentech in order to
minimize the risk associated with any Merchant, comply with applicable Payment
Brand Rules, or comply with any applicable legal or regulatory requirements.
With respect to each Merchant, TP3 shall enter into a legally binding contract
that satisfies the requirements set forth in the Payment Brand Rules and this
Agreement regarding the processing of Transactions. Paymentech hereby reserves
the right to review and audit the TP3-Merchant Processing Agreement to ensure
compliance with Member and Paymentech policies, this Agreement or other
agreements between you and us, Payment Brand Rules, the Security Standards, and
any other applicable legal or regulatory requirements, or otherwise to ensure
that we have no liability under such agreement. Without limiting the generality
of the foregoing, each such agreement shall specify that TP3 is collecting and
processing Transactions and Transaction Records on behalf of and as agent for
such Merchant and shall require Merchant to (i) comply with the applicable
Payment Brand Rules and Security Standards, (ii) comply with any applicable
state, federal, and local laws, ordinances, governmental rules, and regulations
relating to the Program and/or the Transactions submitted to Paymentech.

 

1.7 Requirements for TP3. TP3 shall comply with all requirements and agreements
outlined in Schedule B. Schedule B, including its attachments, may be amended by
Paymentech upon 30 days’ prior written notice to TP3, if needed in order to
comply with applicable law, Payment Brand Rules or JPMC policies. TP3 shall also
comply with all requirements and agreements outlined in Schedule E (Remediation
Plan), if applicable. TP3 shall require that all Merchants execute any and all
applications and documentation Paymentech and the Payment Brands may require
from time to time. TP3 agrees to each of the obligations, terms, and conditions
set forth in Schedule B hereto, including, but not limited to, requiring that
TP3 (and, as necessary, each Merchant) is in full compliance with applicable
federal, state, and local laws, statutes, ordinances, governmental rules and
regulations, the Payment Brand Rules, Paymentech and Member legal, credit,
compliance or other policies, procedures, and practices as in effect from time
to time. To the extent required by the Payment Brand(s), TP3 must be registered,
and maintain such registration, as a third party service provider with such
Payment Brand(s). With respect to all Merchants, TP3 agrees to provide to
Paymentech the data described on Schedules B hereto, and such other information
as Paymentech may reasonably request from time to time to enable it to track and
evaluate the Program’s success and to meet Paymentech’s compliance and reporting
obligations to the Payment Brands, in such a timeframe as required on Schedule
B. TP3 shall assume full financial liability, and be fully liable to Paymentech,
for Transactions submitted on behalf of Merchants, as well as for any disputed
Transactions, credits, or customer service-related expenses, Chargebacks, or
fraud. TP3 shall be responsible for its and its Merchants’ compliance with all
Payment Brand Rules and other Payment Brand requirements, applicable state,
federal, and local laws, ordinances, governmental rules, and regulations that
may be applicable to either TP3 or Merchants as a result of the Program.

 

Page 4 of 35

 

 

1.8 Commercial Entities. TP3 agrees and understands that the Payment Brand Rules
require that, in addition to any contract between Merchant and TP3, Paymentech
must enter into a written agreement with each Merchant having Visa annual sales
greater than $100,000 or MasterCard annual sales greater than $1,000,000 (a
“Commercial Entity”) and that such requirements shall be included in either a
separate agreement or in the TP3 Merchant Processing Agreement. TP3 shall
promptly notify Paymentech of any Merchant which it has reason to believe may be
or is likely to become a Commercial Entity, but such requirement shall not
affect TP3’s obligation to enter into an agreement with a Merchant as required
by Section 1.5. At any time and from time to time, Paymentech shall be entitled
to designate any Merchant as a Commercial Entity which Paymentech reasonably
believes will meet the criteria outlined above, and to require, either directly
or through TP3, such Merchant to execute an agreement with Paymentech in a form
substantially similar to the form attached hereto as Schedule C, with such
changes as the Payment Brands may require from time to time. With respect to
each Merchant entity that Paymentech designates as a Commercial Entity, TP3
shall collect and forward all information requested by Paymentech to comply with
Paymentech’s or Member’s legal or compliance obligations, Payment Brand Rules as
well as Paymentech’s or Member’s then current policies, including, without
limitation, its credit policies. Exercise of any right by Paymentech against any
Merchant or TP3 shall not preclude Paymentech, in its sole discretion, from
enforcing its right against, or recovery fromTP3.. Any Merchant having annual
MasterCard sales greater than $1,000,000 must receive settlement funds directly
from Paymentech as required by current Payment Brand Rules. TP3 will assist
Paymentech in obtaining appropriate documentation pertaining to the settlement
account from such Merchants.

 

2.   Authorizations.

 

2.1 Obtaining Authorizations. TP3 is required to obtain authorization/approval
codes through Paymentech, in accordance with this Agreement, for all
Transactions. TP3 acknowledges for itself and on behalf of the Merchants that an
authorization/approval code of a Transaction indicates only (i) that the Payment
Instrument contains a valid account number; and (ii) that the Customer’s Payment
Instrument has an available credit balance sufficient for the amount of the
Transaction at the time the authorization is given, but does not constitute a
representation from Paymentech, Member, a Payment Brand, or a card issuing bank
that a particular Transaction is a valid or undisputed transaction entered into
by the actual Customer.

 

2.2 Lack of Authorization. Paymentech reserves the right to refuse to process
any Transaction Record submitted by TP3 (i) unless a proper
authorization/approval code is recorded, (ii) that Paymentech reasonably
determines is or may become uncollectible from the Customer to which the
Transaction would otherwise be charged, or (iii) that was prepared in violation
of any provision of this Agreement or the Payment Brand Rules.

 

3.   Refunds and Adjustments.

 

3.1 Disclosure of Refund Policy. TP3 is required to ensure that TP3 and all
Merchants each maintain a fair policy with regard to the refund, return, or
cancellation of merchandise or services and adjustments of Transactions. TP3 is
also required to ensure that TP3 and each Merchant discloses its refund, return,
or cancellation policy to Paymentech and to Customers.

 

3.2 Changes to Policy. Any change in a refund, return, or cancellation policy
must be submitted to us, in writing, not less than fourteen (14) days prior to
the effective date of such change. Paymentech reserves the right to refuse to
process any Transaction Record made subject to a revised refund, return, or
cancellation policy of which Paymentech has not been notified in advance.

 

3.3 Procedure for Refunds/Adjustments. If TP3 or the Merchants allow a price
adjustment, return of merchandise, or cancellation of services in connection
with a Settled or Conveyed Transaction, TP3 will prepare and deliver to us a
Transaction Record reflecting such refund/adjustment within three (3) days of
receiving the request for such refund/adjustment. The amount of the
refund/adjustment cannot exceed the amount shown as the total on the original
Transaction Record except by the exact amount required to reimburse the Customer
for postage that the Customer paid to return merchandise. TP3 is not allowed to
accept cash or any other payment or consideration from a Customer in return for
preparing a refund to be deposited to the Customer’s account; nor may cash
refunds be given to a Customer in connection with a Settled or Conveyed
Transaction, unless permitted or required by law.

 

4.   Settlement.

 

4.1 Submission of Transaction Record. TP3 is required to submit the Transaction
Record no later than the next business day immediately following the day that
such Transaction Record is originated. Failure to do so can result in higher
interchange fees and other costs and increased Chargebacks. For debit card
transactions that are credits to a Customer’s account, TP3 agrees to submit such
Transaction Record within twenty-four (24) hours of receiving the authorization
for such credit. Unless otherwise indicated on Schedule A, TP3 will be solely
responsible for all communication expenses required to facilitate the submission
and transmission of all Transaction Records to Paymentech.

 

Page 5 of 35

 

 

4.2 TP3’s Bank Account(s). Unless it has been agreed to by the parties that
Paymentech will directly fund a Commercial Entity for its respective Transaction
settlement funds, TP3 must maintain (a) one or more “for the benefit of” (FBO)
accounts designated to receive funds related to the settlement of all Commercial
Entities’ Transactions; and (b) one or more FBO accounts designated to receive
funds related to the settlement of all other Merchants’ Transactions. All FBO
accounts must be compliant with all applicable laws pertaining to such accounts,
held at a bank that is a member of the Automated Clearing House (“ACH”) system
or the Federal Reserve wire system, and established in accordance with Schedule
D attached hereto and incorporated herein by reference. TP3 must not, under
Generally Accepted Accounting Principles (GAAP), account for funds in the FBO
accounts as their own funds. Furthermore, TP3 must designate at least one bank
account for the debit of any fees and costs associated with Paymentech’s
processing of the Transactions or for other obligations and liabilities of TP3
or the Merchants under this Agreement. All FBO and bank accounts designated by
TP3 pursuant to this Section 4.2 shall be collectively referred to herein as
“Settlement Account”. During the term of this Agreement, and thereafter until we
notify TP3 that all monies due from TP3 and all Merchants under this Agreement
have been paid in full, TP3 agrees not to close the Settlement Account without
giving Paymentech at least five (5) days’ prior written notice and substituting
another Settlement Account. TP3 is solely liable for all fees and costs
associated with the Settlement Account and for all overdrafts. TP3 authorizes
Paymentech to initiate electronic credit and debit entries and adjustments to
the Settlement Account or applicable bank account at any time without regard to
the source of any monies therein. Paymentech will not be liable for any delays
in receipt of funds or errors in Settlement Account entries caused by third
parties, including, but not limited to, delays or errors by the Payment Brands
or TP3’s bank.

 

4.3 Conveyed Transactions. To the extent that TP3 submits any Conveyed
Transactions for processing by Paymentech and TP3 or the Merchant does not have
a valid agreement in effect with the applicable Payment Brand, TP3 hereby
authorizes Paymentech, at Paymentech’s option, to submit such Transactions to
the applicable Payment Brand, and to share with the applicable Payment Brand
such information from the Application, or otherwise provided to Paymentech by
TP3 or Merchant, as may be required in order to approve acceptance of such
Payment Instrument as method(s) of payment. Subject to such approval, TP3 agrees
to the applicable Payment Brand’s standard terms and conditions with respect to
such method(s) of payment. Upon the transmission of such Conveyed Transactions
to Paymentech, the Conveyed Transaction will be forwarded to the appropriate
Payment Brand. Payment of the proceeds due for such Conveyed Transaction will be
governed by the agreement with that Payment Brand, and Paymentech bears no
responsibility for performance of such agreement. Even if a valid authorization
for a Conveyed Transaction is obtained, Paymentech is not liable for errors in
Settlement Account entries relating to the funding of those Conveyed
Transactions, including delays caused by TP3, Merchant, third parties, the
Payment Brands, or TP3‘s or Merchant’s bank.

 

4.4 Transfer of Settlement Funds. For all Settled Transactions, Paymentech will
process the Transaction Records to facilitate the funds transfer between the
various Payment Brands, TP3, and Merchant. Promptly after receiving credit for
such Transaction Record, Paymentech will provide provisional credit to the
Settlement Account for the proceeds. The proceeds payable shall be equal to the
amounts received by Paymentech in connection with the Transaction Record less
the sum of the following: (i) all fees, imposed by Paymentech or any third
parties passed through to TP3, charges, and discounts set forth in Schedule A;
(ii) all Chargebacks; (iii) all equipment charges (if any); (iv) all Customer
refunds, returns, and adjustments; and (v) all Reserve Account amounts; (vi) any
funds Paymentech may pay directly to a Merchant if direct funding is required by
the Payment Brand Rules; and (vii) any fees, charges, fines, assessments,
penalties, or other liabilities that may be imposed on Paymentech or the Member
from time to time by the Payment Brands and all related costs and expenses
incurred by Paymentech pursuant to this Agreement. Paymentech also reserves the
right to withhold or offset from the proceeds owed to TP3 or any Merchant by
Paymentech any or all amounts owed by TP3 or a Merchant to Paymentech or its
affiliates under any other agreement between you and Paymentech. TP3 agrees that
amounts set forth above, and any other amounts are due and payable by TP3 at the
time the related services are rendered and may be imposed on a daily basis if
Paymentech so determines; that all Reserve Account amounts due from TP3
hereunder are payable upon establishment; and that the related Chargebacks,
Customer refunds and adjustments, fees, charges, fines, assessments, penalties,
and all other liabilities are due and payable when Paymentech receives notice
thereof from the Payment Brands or any third party, or otherwise pursuant to
this Section 4.4. In the event Paymentech does not deduct such amounts from the
proceeds payable, TP3 agrees to pay all such amounts immediately without any
deduction or offsets. Alternatively, at Paymentech’s sole option, Paymentech may
debit the Settlement Account or the Reserve Account for such amounts at any
time. Without limiting the foregoing or Paymentech’s rights under Section 7.2 or
Section 10, if a Payment Brand notifies Paymentech or the Member that it or they
intend to impose any fine, fee, or penalty as a result of excessive Chargebacks
or TP3’s acts or omissions (including, without limitation, failure to fully
comply with any Payment Brand Rules), Paymentech may suspend the processing of
the Transactions upon at least 10 days prior notice.

 

Page 6 of 35

 

 

4.5 Negative Balances. To the extent the proceeds from Settled Transactions do
not represent sufficient credits or the Settlement Account does not have a
sufficient balance to pay amounts due under this Agreement (in connection with
either TP3’s or Merchant’s Transactions), in addition to any other rights and
remedies Paymentech may have under this Agreement (including termination),
Paymentech may pursue one or more of the following options: (i) demand and
receive immediate payment for such amounts from TP3; (ii) debit the Settlement
Account or Reserve Account for the amount of the negative balance; (iii)
withhold or offset any or all settlement payments until all amounts are paid;
(iv) delay presentation of refunds ; and (v) pursue any other remedies available
at law or in equity. Furthermore, if the amount represented by Transaction
Records in any day is negative due to refunds or credits being submitted in
excess of the proceeds from the Transactions, TP3 shall provide sufficient funds
prior to the submission of the Transaction Records to prevent the occurrence of
a negative balance.

 

4.6 Reserve Account. If: (i) there is a material, adverse change in TP3’s or a
Merchant’s financial condition; (ii) TP3 or Merchant is in material default of
this Agreement; (iii) TP3 or Merchant changes its billing practice in relation
to the provision or shipment of merchandise or fulfillment of service or changes
refund procedures currently in place, and fails to notify Paymentech in advance;
(iv) TP3 or Merchant is receiving excessive Chargebacks (as defined in Section
7.2 below); (v) TP3 or Merchant significantly alters the nature of its business
or product lines; or (vi) Paymentech has reasonable grounds to believe that it
may be or become liable to third parties for the provisional credit extended to
TP3 or Merchant or that TP3 or Merchant may be liable to Customers, Payment
Instrument issuing banks, or the Payment Brands, or (vii) Paymentech has
reasonable grounds to believe that it may be subject to any additional
liabilities, including, without limitation, any fines, fees, or penalties
assessed by any of the Payment Brands, arising out of or relating to
Transactions, the Program, Chargebacks, a Merchant or TP3’s failure to comply
with this Agreement, any of the Payment Brand Rules, or the Security Standards
(as defined in Section 17), Paymentech may suspend or delay payments during
investigation of the issue and/or designate an amount of funds Paymentech must
maintain in order to protect it against the risk of, among other things,
existing, potential, or anticipated Chargebacks and to satisfy the other
obligations under this Agreement (such funds being hereinafter referred to as
the “Reserve Account”), which may be funded in the same manner as provided for
negative balances in Section 4.5. The Reserve Account will contain sufficient
funds to cover any unbilled processing costs plus our estimated exposure based
on reasonable criteria for Chargebacks, returns, unshipped merchandise and/or
unfulfilled services, and all additional liabilities anticipated under this
Agreement, including, but not limited to, Chargebacks, fines, fees, and
penalties as set forth in Section 4.4. Paymentech may (but is not required to)
apply funds in the Reserve Account toward, and set off any funds that would
otherwise be payable against, the satisfaction of any amounts which are or may
become due from TP3 or a Merchant pursuant to this Agreement. The Reserve
Account will be held and controlled by Paymentech and TP3 will have no legal
right or interest in the funds in the Reserve Account; provided, however, that
upon satisfaction of all of obligations under this Agreement, Paymentech will
pay to TP3 any funds then remaining in the Reserve Account. Any funds in the
Reserve Account may be commingled with other funds, and need not be maintained
in a separate account, but will be tracked and accounted for separately by
Paymentech. Effective upon establishment of a Reserve Account, TP3 irrevocably
grants to Paymentech a security interest in any interest TP3 has now or may
later acquire in any and all funds, together with the proceeds thereof, that may
at any time be in the Reserve Account and that would otherwise be payable to TP3
pursuant to the terms of this Agreement. TP3 agrees and agrees to cause Merchant
to execute and deliver to Paymentech such instruments and documents (including,
without limitation, security agreements and releases) that Paymentech may
reasonably request to perfect and confirm the security interest in the Reserve
Account.

 

5.            Accounting. Paymentech will supply a detailed statement reflecting
the activity for TP3’s account(s) by online-access (or otherwise if agreed to by
both parties). Paymentech will not be responsible for any error that TP3 does
not bring to Paymentech’s attention within one hundred and eighty (180) days
from the date of such statement. TP3, for itself and on behalf of Merchant,
acknowledges and agrees that it is TP3’s and the Merchants’ respective
responsibility to ensure its secure online access.

 

Page 7 of 35

 

 

6.            Retrieval Requests.

 

6.1 Records. TP3 agrees to store and retain each Transaction Record in
compliance with the Payment Brand Rules.

 

6.2 Response to Retrieval Requests. Paymentech will send TP3 any Retrieval
Request that it cannot satisfy with the information it has on file concerning
any Settled Transaction. In response, TP3 must provide, in writing by certified
or overnight mail or by confirmed fax (or by other means as agreed to by
Paymentech), the resolution of the investigation of such Retrieval Request and
include legible copies of any documentation required by the Retrieval Request
within seven (7) days after it is sent (or such shorter time as the Payment
Brand Rules may require). TP3 acknowledges that failure to timely fulfill a
Retrieval Request and in accordance with Payment Brand Rules may result in an
irreversible Chargeback.

 

7.            Chargebacks.

 

7.1 Chargeback Reasons. TP3 or Merchant may receive a Chargeback from a Customer
or Payment Brand for a number of reasons under the Payment Brand Rules. The
following are some of the most common reasons for Chargebacks; in no way is this
intended to be an exhaustive list of possible Chargeback reasons:

  (1) Failure to issue a refund to a Customer upon the return of or failure to
provide the applicable goods or services.

  (2) A required authorization/approval code was not obtained.

  (3) The Transaction Record was prepared incorrectly or fraudulently.

  (4) TP3 did not respond to a Retrieval Request within 7 days or any shorter
time period required by the Payment Brand Rules.

  (5) The Customer disputes the Transaction or the authenticity of the signature
on the Transaction Record or Payment Instrument, or claims that the Transaction
is subject to a set-off, defense, or counterclaim.

  (6) The Customer refuses to make payment for a Transaction because in the
Customer’s good faith opinion, a claim or complaint has not been resolved, or
has been resolved in an unsatisfactory manner.

  (7) The credit or debit card comprising the Payment Instrument was not
actually presented at the time of the Transaction or an electronic record or
physical imprint of such Payment Instrument was not obtained, and the Customer
denies making the purchase. The TP3 acknowledges, for itself and on behalf of
Merchant, that, under these circumstances, the fact that an
authorization/approval code was obtained does not mean that a particular
Transaction is a valid or undisputed transaction entered into by the actual
Customer.

 

7.2 Excessive Chargebacks. If TP3 or Merchant are receiving an excessive amount
of Chargebacks, as determined by the Payment Brands from time to time, in
addition to other remedies under this Agreement, Paymentech may take the
following actions: (i) review TP3’s or Merchant’s internal procedures relating
to acceptance of Payment Instruments and notify TP3 or Merchant of new
procedures which should be adopted to avoid future Chargebacks; (ii) collect
from TP3 (pursuant to Section 4.6) an amount determined by us to be sufficient
to cover anticipated Chargebacks and all related fees, penalties, expenses, and
fines; (iii) terminate this Agreement or the agreement between Paymentech and
Merchant; or (iv) refuse to process for Merchant’s Transactions . TP3 also
agrees to pay any and all penalties, fees, fines and costs assessed against TP3,
A Merchant, Paymentech, and/or Member relating to TP3’s or a Merchant’s
violation of this Agreement, a Commercial Entity Agreement or the Payment Brand
Rules with respect to the acceptance of Payment Instruments, Transactions, or
Excessive Chargebacks under this Section.

 

7.3 Claims of Customers. TP3 agrees that it will have full liability to
Paymentech for all Chargebacks, regardless of whether TP3 receives payment or
reimbursement from the Merchants therefore, and TP3 acknowledges that the funds
provided to TP3 by Paymentech with respect to any Transaction represent only a
provisional credit, and remain subject to potential Chargebacks. To the extent
Paymentech has paid or may be called upon to pay a Chargeback, refund, or
adjustment for or on the account of a Customer and TP3 does not immediately
reimburse Paymentech as provided in this Agreement, then for the purpose of
obtaining reimbursement of such sums paid or anticipated to be paid, Paymentech
shall have all of the rights and remedies of such Customer under applicable
federal, state, or local laws and TP3 (for itself and on behalf of the
Merchants) authorizes Paymentech to assert any and all such claims in
Paymentech’s own name for and on behalf of any such Customer individually or all
such Customers as a class.

 

Page 8 of 35

 

 

8.            Display Of Payment Brand Marks. TP3 is prohibited from using the
Payment Brand Marks, as defined below, other than as expressly authorized by the
Payment Brands or the Payment Brand Rules. TP3 shall also ensure that Merchant’s
use of the Payment Brand Marks shall only be as authorized and in accordance
with all requirements of this Section and the Payment Brand Rules. Payment Brand
Marks or Marks mean the brands, emblems, trademarks, and logos that identify a
Payment Brand. Additionally, and except as authorized by the Payment Brands, TP3
shall not use the Payment Brand Marks other than to display decals, signage,
advertising, and other forms depicting the Payment Brand Marks that are provided
to TP3 (i) by the Payment Brands; (ii) by Paymentech pursuant to this Agreement;
or (iii) as otherwise approved in writing by Paymentech. TP3 may use the Payment
Brand Marks only to promote the services covered by the Payment Brand Marks by
using them on decals, indoor and outdoor signs, advertising materials, and
marketing materials; provided, that all such uses must be consistent with
Payment Brand Rules. TP3 has no ownership rights in the Payment Brand Marks and
shall not assign to any third party the rights to use the Payment Brand Marks.
The right to use the Payment Brand Marks pursuant to this Agreement terminates
simultaneously with the termination of this Agreement.

 

9.            Fees.

 

9.1 Schedule A. TP3 agrees to pay Paymentech for the services as set forth in
Schedule A in accordance with this Agreement, regardless of whether TP3 receives
payment or reimbursement from the Merchants therefor. Unless otherwise expressly
stated in Schedule A, pricing is based on all Transactions qualifying under the
Payment Brand Rules for the lowest Payment Brand interchange rates. For
Transactions that do not qualify for the best rate, the Payment Brands may
dictate that the Transaction is subject to a “downgrade”, which will result in
TP3 being charged a higher rate than the qualified rate shown on Schedule A.
Fees payable under this Agreement that contain a fraction of a cent will be
rounded up to the next full cent.

 

9.2 Price Changes.

(a)           Paymentech may modify the pricing on Schedule A upon thirty (30)
days’ prior written notice to TP3. If TP3 does not agree with the new pricing,
TP3 may terminate this Agreement upon 120 days’ notice to Paymentech.

(b)           In addition, Paymentech may change its fees, charges, and
discounts resulting from (i) changes in Payment Brand fees (such as interchange,
assessments, and other charges); (ii) changes in pricing by any third party
provider of a product or service used by TP3 or a Merchant; or (iii) fees which
are added by a Payment Brand or card issuer. Such new prices will be applicable
as of the effective date established by the Payment Brand or third party
provider. For clarity, any price changes made pursuant to this Section 9.2(b)
shall not give rise to a termination right by TP3.

 

10. Termination.

 

10.1 Term. This Agreement takes effect upon the earlier of (a) Paymentech’s
signature hereto; or (b) the date Paymentech processes TP3’s first Transaction
submitted pursuant to this Agreement and continues for five (5) years from such
date. Unless otherwise terminated by either party as provided in this Agreement,
this Agreement will automatically renew for successive one-year terms. Either
party may give notice of non-renewal of this Agreement in writing no more than
ninety (90) days and no less than thirty (30) days prior to any expiration date.

 

10.2 Events of Default. If any of the following events shall occur (each an
“Event of Default”):

    (a) any transfer or assignment in violation of Section 14.4 of this
Agreement by either party;

    (b) irregular Transactions submitted by TP3 (either for itself or on behalf
of Merchant) that materially increase the anticipated risk and which have not
been previously disclosed and approved by Paymentech, excessive Chargebacks
related to TP3 or Merchant;

    (c) any representation or warranty in this Agreement is breached in any
material respect or was or is incorrect in any material respect when made or
deemed to be made;

    (d) TP3 fails in any material respect to perform any of its obligations with
respect to the funding or establishing of a Reserve Account, as detailed in
Section 4.6;

    (e) material breach of Section 1.1 by either party;

    (f) Either party fails in any material respect in performance or observance
of any term, covenant, condition, or agreement contained in this Agreement,
including the attached Schedule B, without limitation, compliance with Payment
Brand Rules and Security Standards;

 

Page 9 of 35

 

 

    (g) a case or other proceeding shall be commenced by or against TP3 or
Paymentech or Member in any court of competent jurisdiction seeking relief under
the Bankruptcy Code or under any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up, or adjustment of debts, the
appointment of a trustee, receiver, custodian, liquidator, or the like of TP3 or
Paymentech or Member, or of all or any substantial part of the assets, domestic
or foreign, of TP3 or Paymentech or Member, and such case or proceeding shall
continue undismissed or unstayed for a period of sixty (60) consecutive days, or
an order granting the relief requested in such case or proceeding against TP3 or
Paymentech or Member (including, without limitation, an order for relief under
the Bankruptcy Code) shall be entered;

    (h) Paymentech, in its reasonable discretion, deems TP3 to be financially
insecure, such that TP3 is unable to meets its obligations under this Agreement;

    (i) any Payment Brand (i) notifies Paymentech or Member that it is no longer
willing to accept Transactions from TP3 or support TP3’s registration with the
Payment Brands as a third party service provider; or (ii) requires Paymentech or
Member to terminate or limit this Agreement;

    (j) TP3 or any person owning or controlling TP3’s business is listed in one
or more databases of terminated or high risk merchants maintained by the Payment
Brands;

    (k) TP3 engages in conduct that creates or could tend to create harm or loss
to the goodwill of any Payment Brand, Paymentech, or Member;

    (l) for a period of more than sixty (60) consecutive days, TP3 does not
transmit Transaction Data to Paymentech;

    (m) TP3 fails to comply with Section 15.15

    (n) Paymentech’s Transaction processing services under this Agreement fail
to conform to generally accepted standards for such services in the Transaction
processing industry;

    (o) TP3 engages in conduct that causes or could cause Paymentech or Member
to be in violation of the Payment Brand Rules; or

    (p) TP3 fails in any material respect to perform any of the obligations
outlined in Schedule E.

 

then, the non-defaulting party may terminate this Agreement by providing the
defaulting party with written notice of termination. Following receipt of such
notice, and solely for termination based on subsections (c), (f) and (n) , the
defaulting party shall have thirty (30) days to cure the Event of Default, and
the Agreement shall terminate in the event such cure is not effected by the end
of such period. No cure period shall be provided when termination is based any
other Event of Default.

 

If this Agreement is terminated by Paymentech for TP3’s default hereunder, TP3
acknowledges that Paymentech may be required to report TP3’s business name and
the names and other identification of its principals to the Payment Brands.

 

10.3 Other Events. In addition to the remedies above and any rights Paymentech
may have under this Agreement, and without limiting such other rights and
remedies, Paymentech may upon 5 days prior notice to TP3 suspend the processing
of some or all of TP3’s Transactions upon: (a) an occurrence of an Event of
Default by TP3; (b) an occurrence of an event of default by Merchant, as defined
in the applicable Commercial Entity Agreement; (c) receipt by Paymentech of
notice that a Payment Brand intends to impose any fine or penalty as a result of
excessive Chargebacks or TP3’s or a Merchant’s acts or omissions; or (d) receipt
by Paymentech of objections or concerns expressed by a Payment Brand which
render Paymentech’s continued processing of TP3’s Transactions unduly
burdensome, impractical, or risky.

 

10.4 Termination of Merchants. Paymentech may require TP3 to immediately
terminate a Merchant for fraudulent activity, a material violation of the
Payment Brand Rules or applicable law relating to the Program or Transactions
submitted to Paymentech for processing, actions which create or could tend to
create harm or loss to the goodwill of any Payment Brand, Paymentech, or Member;
or any other conduct by Merchant which creates reputational risk to Paymentech
or Member.

 

10.5 Account Activity After Termination; Termination Reserve. The provisions
governing processing and settlement of Transactions, all related adjustments,
fees, and other amounts due from TP3, and the resolution of any related
Chargebacks, disputes, or other issues involving Transactions, will continue to
apply even after termination of this Agreement, with respect to all Transactions
made prior to such termination or after such termination, as described below.
After termination of this Agreement for any reason whatsoever, TP3 shall
continue to bear total responsibility for all Chargebacks, fees, fines,
assessments, credits, and adjustments resulting from Transactions processed
pursuant to this Agreement and all other amounts then due or which thereafter
may become due to Paymentech or Member under this Agreement or which may be due
to Paymentech before or after such termination to either Paymentech or Member.
If TP3 submits Transaction Data to Paymentech after the date of termination,
Paymentech may, at its sole discretion and without waiving any of its rights or
remedies under this Agreement, process such Transaction Data in accordance with
and subject to all of the terms of this Agreement.

 

Page 10 of 35

 

 

Upon notice of termination of this Agreement, Paymentech may estimate the
aggregate dollar amount of anticipated Chargebacks, Refunds, and anticipated
risks that Paymentech reasonably anticipates subsequent to termination, and TP3
agrees to immediately deposit such amount in its Settlement Account, or
Paymentech may withhold such amount from settlement funds in order to establish
a Reserve Account pursuant to and governed by the terms and conditions of this
Agreement.

 

11.          Indemnification. The indemnities provided under this Section 11
shall survive the termination of this Agreement.

 

11.1 Paymentech. Paymentech agrees to indemnify TP3 and its affiliates,
officers, directors, employees, and agents from any losses, liabilities, and
damages of any and every kind (including, without limitation, costs, expenses,
and reasonable attorneys’ fees) arising out of any third party or Customer
complaint, claim, demand or cause of action, or Chargeback related to (i) any
failure by Paymentech to properly safeguard the Customer’s account information,
(ii) Paymentech’s failure to deliver funds in accordance with Section 4.4 herein
(which relates to settlement payments due from us for Transaction Records), or
(iii) any voluntary or involuntary bankruptcy or insolvency proceeding by or
against Paymentech, or (iv) Paymentech’s noncompliance with this Agreement or
the Payment Brand Rules. This indemnification does not apply to any claim or
complaint relating to TP3’s or Merchant’s failure to resolve a payment dispute
concerning merchandise or services sold by Merchant or TP3’s or Merchant’s
negligence or willful misconduct.

 

11.2 TP3. TP3 agrees to indemnify Paymentech, Member, and their respective
affiliates, officers, directors, employees, agents, and sponsoring banks from
any claims, actions, arbitrations, judgments, losses, liabilities, and damages
of any and every kind (including, without limitation, costs, expenses, and
reasonable attorneys’ fees) caused by, resulting from, arising out of, or in any
way relating to (i) any claim, complaint, dispute, return, refund, or Chargeback
with respect to any Transaction or Transaction Record submitted by TP3, (ii)
TP3’s or Merchant’s noncompliance with this Agreement (specifically including
any provision of Schedules B), a Commercial Entity Agreement, or the Payment
Brand Rules, a breach of a representation or warranty made by TP3, and failure
to comply with the Security Standards or any fines, fees, or penalties assessed
against Paymentech by any of the Payment Brands arising out of or relating to
TP3’s or Merchant’s Transactions or Chargebacks , (iii) any intentional or
negligent misrepresentation by TP3 as to the type of business conducted by a
Merchant, (iv) any voluntary or involuntary bankruptcy or insolvency proceeding
by or against TP3 or Merchant, (iv) TP3’s or any Merchant’s failure to comply
with applicable laws and regulations, including, without limitation, the receipt
requirements of the Electronic Funds Transfer Act, or any action or omission by
TP3 or Merchant which causes Paymentech, any Payment Brand, or any Payment
Instrument-issuing bank to be in violation of any such applicable laws and
regulations. This indemnification does not apply to any claim or complaint to
the extent caused by Paymentech or Member’s negligence or willful misconduct.

 

12.          Transaction Record And Payment Instrument Information. Financial
information and other information about TP3 and the Merchants, Transaction
Records, and other information that TP3 provides to Paymentech may be shared by
Paymentech with its affiliates subject to the provisions of this Agreement and
Payment Brand Rules. Paymentech will not otherwise disclose or use such
information for any purpose whatsoever other than (i) as necessary to process
the Transactions or otherwise provide services and maintain TP3’s account
pursuant to this Agreement; (ii) to detect, prevent, reduce, or otherwise
address fraud, security, or technical issues; (iii) to enhance or improve
Paymentech’s products and services generally; or (iv) as otherwise required or
permitted by the Payment Brands or applicable law. Paymentech may prepare, use,
and/or share with third parties, aggregated, non-personally identifiable
information derived from Transaction Records of all of Paymentech’s customers or
specific segments of Paymentech’s customers.

 

TP3 acknowledges and understands, for itself and on behalf of Merchant, the
importance of compliance with the Security Standards, such as those relating to
the storage and disclosure of Transaction Record and Payment Instrument
Information. Therefore, TP3 will, and will ensure that Merchants, exercise care
to prevent disclosure or use of Payment Instrument Information, other than (i)
to TP3’s agents and contractors for the purpose of assisting TP3 in completing a
Transaction, (ii) to the applicable Payment Brand, or (iii) as specifically
required by law. Furthermore, TP3 acknowledges and understands that its use of
any fraud mitigation or security enhancement solution (e.g., encryption product
or service), whether provided to TP3 by Paymentech or by a third party, in no
way limits TP3’s obligation to comply with the Security Standards or TP3’s
liabilities set forth in this Agreement.

 

Page 11 of 35

 

 

TP3 is allowed by the Payment Brand Rules to store only certain Payment
Instrument Information (currently limited to the Customer’s name, Payment
Instrument account number, and expiration date) and is prohibited from storing
additional Payment Instrument Information, including, without limitation, any
security code data such as CVV2, CVC2, and PIN data, and any magnetic stripe
track data. TP3 will store all media containing Payment Instrument Information
in an unreadable format wherever it is stored and in an area limited to selected
personnel on a “need to know” basis only and, prior to either party discarding
any material containing Payment Instrument Information, the party will destroy
it in a manner rendering the account numbers unreadable. If at any time TP3
determines that Payment Instrument Information has been compromised, TP3 will
notify Paymentech immediately and assist in providing notification to such
parties as may be required by law or Payment Brand Rules, or as Paymentech
otherwise reasonably deems necessary.

 

TP3 agrees to comply with all Security Standards, as defined in Section 17. TP3
further agrees to provide upon Paymentech’s request with such tests, scans, and
assessments of TP3’s compliance with Security Standards as required by the
Payment Brands.

 

TP3 must notify Paymentech of its and any Merchant’s use of a Service Provider
and, to the extent required by each Payment Brand, all Service Providers must be
(i) compliant with all Security Standards applicable to Service Providers, and
(ii) registered with and/or recognized by such Payment Brand(s) as being so
compliant. TP3 agrees to exercise due diligence to ensure that all of its and
Merchant’s Service Providers, agents, business partners, contractors, or
subcontractors with access to Payment Instrument Information, maintain
compliance with the Security Standards. To the extent required by each Payment
Brand, all Payment Applications, or software involved in processing, storing,
receiving or transmitting of Payment Instrument Information used by TP3 or a
Merchant, shall be (i) compliant with all Security Standards applicable to such
Payment Applications or software, and (ii) registered with and/or recognized by
such Payment Brand(s) as being so compliant.

 

TP3 understands that failure of it or a Merchant to comply with the Payment
Brand Rules, including the Security Standards, or the compromise of any Payment
Instrument Information, may result in assessments, fines, and/or penalties by
the Payment Brands, and TP3 agrees to indemnify and reimburse Paymentech
immediately for any such assessment, fine, or penalty imposed on us or the
Member and any related loss, cost, or expense incurred by Paymentech or the
Member. If any Payment Brand requires a forensic examination of TP3 or a
Merchant or any of their respective Service Providers, agents, business
partners, contractors, or subcontractors due to a data security compromise event
or suspected event, including without limitation, Chargeback, fraud, or data
security compromise events or such other events that the Payment Brands include
in the Payment Brand Rules (“Data Security Compromise Event”), TP3 shall
cooperate (and shall cause Merchants and all applicable Service Providers to
cooperate) with such forensic examination until it is completed (including,
without limitation, the engagement of an examiner acceptable to the relevant
Payment Brand). Notwithstanding the foregoing, the Payment Brands may directly
engage, or demand that Paymentech engage, an examiner on behalf of TP3 or a
Merchant in order to expedite the investigation of the Data Security Compromise
Event. In either scenario, TP3 agrees to pay for all costs and expenses related
to such forensic examination (including any attorneys’ fees and other costs
relating to such forensic examination).

 

By executing this Agreement, TP3 represents that, in the event of its failure,
including bankruptcy, insolvency, or other suspension of business operations,
TP3 will not sell, transfer, or disclose any materials that contain Transaction
Record or Payment Instrument Information to third parties. TP3 must return such
information to Paymentech or provide Paymentech with acceptable proof of its
destruction.

 

13.          Information About TP3’s Business.

 

13.1 Additional Financial Information. Upon five (5) days’ written notice, TP3
agrees to furnish to Paymentech (i) its most recently prepared financial
statements and credit information and (ii) if applicable, its three (3) most
recent filings with the SEC.

 

Page 12 of 35

 

 

13.2 Audit Rights. With prior notice and during normal business hours,
Paymentech’s duly authorized representatives may visit TP3’s business premises
and may examine TP3’s books and records that pertain to Transaction Records or
compliance with this Agreement.

 

13.3 Other Information. TP3 agrees to provide us at least thirty (30) days’
prior written notice of its or a Merchant’s intent to change product lines or
services, its trade name, or the manner in which it accepts Payment Instruments.
If Paymentech determines such a change is material to our relationship with TP3,
Paymentech may refuse to process any Transaction Records made subsequent to the
change following 5 days prior notice to TP3. TP3 agrees to provide Paymentech
with prompt written notice if TP3 or a Merchant is the subject of any voluntary
or involuntary bankruptcy or insolvency petition or proceeding.

 

14.          Disclaimer; Limitation of Damages. Subject to Section 5, Paymentech
will, at its own expense, correct any Transaction Data to the extent that such
errors have been caused by Paymentech or by malfunctions of Paymentech’s
processing systems. Under no circumstances will Paymentech’s financial
responsibility for its failure of performance under this Agreement exceed the
total fees paid to Paymentech under this Agreement (net of Payment Brand fees,
third party fees, interchange, assessments, penalties, and fines) for the twelve
(12) months prior to the time the liability arose; provided, however, that the
foregoing limitation shall not apply to Paymentech’s indemnification obligations
under Section 11.1. EXCEPT AS OTHERWISE PROVIDED FOR IN THIS AGREEMENT, AND
EXCEPT WITH RESPECT TO TP3’S OR A MERCHANT’S FAILURE TO COMPLY WITH THE SECURITY
STANDARDS AND EXCEPT WITH REPSECT TO ALL OF THE INDEMNIFICATION OBLIGATIONS OF
EACH PARTY UNDER SECTION 11, IN NO EVENT WILL ANY PARTY, ITS RESPECTIVE
DIRECTORS, OFFICERS, EMPLOYEES, OR AFFILIATES, BE LIABLE FOR SPECIAL,
INCIDENTAL, CONSEQUENTIAL, OR PUNITIVE DAMAGES, REGARDLESS OF THE FORM OF ACTION
AND EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, OR ANY LOSS, THEFT,
DISAPPEARANCE, OR DAMAGE TO DATA TRANSMITTED ELECTRONICALLY IN CONNECTION WITH
THIS AGREEMENT. ANY FINES, FEES, PENALTIES, OR ASSESSMENTS IMPOSED BY THE
PAYMENT BRANDS RELATED TO TP3’S OR MERCHANT’S ACCEPTANCE OF PAYMENT INSTRUMENTS
SHALL NOT BE DEEMED TO BE CONSEQUENTIAL DAMAGES. ALL PARTIES ACKNOWLEDGE THAT
THIS IS AN AGREEMENT FOR COMMERCIAL SERVICES. THE UNIFORM COMMERCIAL CODE DOES
NOT APPLY AND PAYMENTECH AND MEMBER HEREBY DISCLAIM ANY AND ALL WARRANTIES,
EXPRESS OR IMPLIED, MADE TO MERCHANT OR ANY OTHER PERSON, REGARDING QUALITY,
SUITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR OTHERWISE
(REGARDLESS OF ANY COURSE OF DEALING, CUSTOM, OR USAGE OF TRADE) OF ANY SERVICES
PROVIDED UNDER THIS AGREEMENT OR ANY GOODS PROVIDED INCIDENTAL TO SUCH SERVICES.

 

15.          Miscellaneous.

 

15.1 Taxes. Unless TP3 is otherwise exempt, and, if applicable, provide a valid
exemption certificate, TP3 agrees to pay any taxes imposed on the services,
equipment, intellectual property, supplies, and other goods purchased or
tangible property provided under this Agreement, and TP3 authorizes Paymentech
to increase the amount we collect from TP3 to reflect any and all assessments or
other taxes imposed on Paymentech as a result of the services provided to TP3
under this Agreement, if any.

 

15.2 Application and Credit Check. TP3 represents and warrants that statements
made on the Application for this Agreement are true as of the date of execution
of this Agreement. TP3 agrees to promptly update any changes thereto during the
term of this Agreement. TP3’s signature on this Agreement authorizes Paymentech
to perform any credit check deemed necessary with respect to TP3 and its
directors, officers, affiliates, principals, and guarantors (if applicable).

 

15.3 Section Headings. The section headings of this Agreement are for
convenience only and do not define, limit, or describe the scope or intent of
this Agreement.

 

Page 13 of 35

 

 

15.4 Assignment. TP3 may not assign or transfer this Agreement, by operation of
law, merger, or otherwise, without Paymentech’s prior written consent. In the
event of such transfer or assignment, the party to whom the Agreement was
transferred or assigned shall be bound to the terms and conditions of this
Agreement to the same extent as if Paymentech, Member and such assignee or
transferee, as the case may be, entered into an agreement identical to this
Agreement on the effective date of such transfer or assignment. Upon notice to
Merchant, another Payment Brand member may be substituted for Member under whose
sponsorship this Agreement is performed and for whom Paymentech is acting as
agent hereunder. Subject to Payment Brand Rules, Paymentech may assign or
transfer this Agreement and its rights and obligations hereunder and may
delegate its duties hereunder, in whole or in part, to any third party, whether
in connection with a change in sponsorship, as set forth in the preceding
sentence, or otherwise, without notice to or consent of Merchant. No assignee
for the benefit of creditors, custodian, receiver, trustee in bankruptcy, debtor
in possession, sheriff or any other officer of a court, or other person charged
with taking custody of a party’s assets or business, shall have any right to
continue or to assume or to assign this Agreement.

 

15.5 Parties; Public Statements. This Agreement binds TP3 and its respective
heirs, representatives, and permitted and approved successors (including those
by merger and acquisition) or assigns. This Agreement binds us and our
respective heirs, representatives, successors, and assigns. TP3 represents and
warrants that its execution of and performance under this Agreement (i) in no
way breaches, contravenes, violates, or in any manner conflicts with any of its
other legal obligations, including, without limitation, its corporate charter or
similar document or any agreement between TP3 and any third party or any
affiliated entity; (ii) has been duly authorized by all necessary action and
does not require any consent or other action by or in respect of any third
party; and (iii) that the person signing this Agreement on TP3 ‘s behalf is duly
authorized to do so. In providing services to TP3, we will not be acting in the
capacity of agent, partner, or joint venturer; we are acting solely as an
independent contractor. TP3 will not, without Paymentech’s prior written consent
in each instance, issue any media release, or make any other public announcement
or public disclosure relating to this Agreement and/or the Program, except as
may be approved in writing by the Paymentech and/or agreed by Paymentech
pursuant to a separate written agreement between the parties. Notwithstanding
the foregoing sentence or anything else set forth in the Agreement, TP3 may
disclose this Agreement or the Program or any of the terms thereof pursuant to
the requirements of any securities law or regulation, including the Securities
Exchange Act of 1934, as amended (the “Act’), and the regulations promulgated
thereunder. In any such event, TP3 shall use its best efforts to provide an
opportunity to Paymentech to review and comment upon such disclosure. If TP3 is
required to file a copy of this Agreement with the Securities and Exchange
Commission under the Act or any regulation promulgated thereunder, TP3 shall
seek confidential treatment by the Securities and Exchange Commission of
information in the Agreement that is determined by TP3 to be confidential (in
accordance with the rules promulgated under the Act).

 

15.6 Severability. Should any provision of this Agreement be determined to be
invalid or unenforceable under any law, rule, or regulation, including any
Payment Brand Rule, such determination will not affect the validity or
enforceability of any other provision of this Agreement.

 

15.7 Waivers. No term or condition of this Agreement may be waived except
pursuant to a written waiver executed by the party against whom such waiver is
sought to be enforced.

 

15.8 Entire Agreement. The Payment Brand Rules, Application, and all schedules
and attachments to this Agreement are made a part of this Agreement for all
purposes. This Agreement represents the entire understanding between TP3 and
Paymentech with respect to the matters contained herein and supersedes any prior
agreements between the parties. This Agreement shall prevail over the terms of
any agreement governing the Settlement Account or any agreement between TP3 and
Merchant. The parties acknowledge and agree (i) that this Agreement applies only
to Transaction Records generated within the United States; and (ii) that this is
a contract for commercial services.

 

15.9 Notices. Except as otherwise provided in this Agreement, all notices must
be given in writing and either hand delivered, faxed, mailed first class,
postage prepaid, sent via electronic mail transmission, or sent via overnight
courier (and will be deemed to be given when so delivered or mailed) to the
addresses set forth below or to such other address as either party may from time
to time specify to the other party in writing.

 

15.10 Governing Law; Waiver of Jury Trial. This Agreement will be governed by
and construed in accordance with the laws of the State of Texas without
reference to conflict of law provisions. Any action, proceeding, litigation, or
mediation relating to or arising from this Agreement must be brought by
Paymentech against TP3 in the county and state of TP3’s principal office as
indicated below, and by TP3 against Paymentech exclusively in Dallas County,
Dallas, Texas. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
WAIVE ANY RIGHTS EITHER OF THEM MAY HAVE TO CONTEST JURISDICTION OR VENUE. THE
PARTIES HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS EITHER
OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON,
ARISING OUT OF, OR IN CONNECTION WITH THIS AGREEMENT.

 

Page 14 of 35

 

 

15.11 Force Majeure. Neither party will be liable for delays in processing or
other nonperformance caused by such events as fires, telecommunications
failures, utility failures, power failures, equipment failures, labor strife,
riots, war, terrorist attack, nonperformance of our vendors or suppliers, acts
of God, or other causes over which the respective party has no reasonable
control, except that nothing in this Section 15.11 will affect or excuse your
liabilities and obligations for Chargebacks, refunds, or unfulfilled products
and services.

 

15.12 Amendment and Consents. Any provision of this Agreement may be amended,
but only if the amendment is in writing and signed by all parties. In order to
be effective, any consent required under this Agreement must be in writing and
signed by the party granting the consent.Notwithstanding the foregoing, in the
event the terms of this Agreement must be amended pursuant to a change required
by law, the Payment Brand Rules or any third party regulatory or governmental
entity with jurisdiction over the matters described herein, such amendment will
be effective upon thirty (30) days prior notice to TP3. TP3’s electronic
signature or continued submission of Transactions following such notice will be
deemed to be TP3’s acceptance of such amendment.

 

15.13 Counterparts and Electronic Signature. This Agreement may be executed in
several counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. A signature received via
facsimile or electronically via email shall be as legally binding for all
purposes as an original signature.

 

15.14 Survival. The provisions of Sections 1.7, 4.2, 4.4, 4.5, 4.6, 6.1, 7,
10.4, 10.5, 11, 12, 14, 15, and 16 shall survive the termination of this
Agreement.

 

15.15 Federal Income Tax Reporting. Pursuant to 26 USC 6050W Paymentech is a
“payment settlement entity”, obligated to collect and report certain taxpayer
information to the United States Internal Revenue Service.  Therefore, in
conjunction with the execution of this Agreement, TP3 shall provide Paymentech
with the appropriate taxpayer certification documentation, via Internal Revenue
Service (IRS) Form W-9 (or the appropriate versions of Form W-8, if
applicable).  TP3 shall promptly notify Paymentech if there are any changes in
this information.  Paymentech may deduct withholding taxes, if any, from
proceeds payable to TP3 where required under applicable law.  Paymentech may, in
accordance with applicable law and from time to time during the term of this
Agreement, request TP3 to recertify its taxpayer certification hereunder. 
Furthermore TP3 shall be responsible for any penalties related to the reporting
obligations of Paymentech hereunder to the extent such penalties accrue based on
the actions or inactions of TP3 provided that there has been reasonable notice
from Paymentech. 

 

To the extent Paymentech does not directly fund Merchants for the settlement
proceeds of Transactions processed hereunder, the parties agree that Paymentech
shall have no tax reporting obligations whatsoever for any Merchants which
submit transactions through TP3 under this Agreement. Therefore, TP3 agrees to
comply with any information reporting requirements under any Federal or State
laws related to the payment by TP3 to Merchant of settlement proceeds from
Transaction processed pursuant to this Agreement, including, without limitation,
Internal Revenue Code (IRC) Section 6050W and similar laws enacted by any state
or other taxing jurisdiction.  TP3 agrees that TP3 has sole responsibility for
gathering, storing and reporting all required Merchant and Transaction data to
comply with such laws and TP3 agrees to fully indemnify and hold Paymentech and
Member harmless against any applicable taxes, fines and penalties related to
such compliance and reporting. 

 

To the extent Paymentech does directly fund Merchants for the settlement
proceeds of Transactions processed hereunder, TP3 shall assist Paymentech with
the collection of appropriate taxpayer certification documentation from all
applicable Merchants (via IRS Form W-9 or W-8). Unless otherwise provided herein
or agreed to by the parties, Paymentech has sole responsibility for complying
with all tax reporting obligations related to the payment by Paymentech to
Merchant of settlement proceeds from Transaction processed pursuant to this
Agreement, including, without limitation, Internal Revenue Code (IRC) Section
6050W and similar laws enacted by any state or other taxing jurisdiction.  

 

15.16 No Third Party Beneficiaries. This Agreement confers no rights on any
person not a signatory hereof, including, without limitation, any Merchant.

 

Page 15 of 35

 

 

16. Definitions.

“Application” is a statement of TP3’s financial condition, a description of the
characteristics of TP3’s business or organization, and related information TP3
has previously or concurrently submitted to Paymentech, including credit and
financial information, to induce Paymentech to enter into this Agreement and
that has induced Paymentech to process Transactions under the terms and
conditions of this Agreement.

“Chargeback” is a reversal of a Transaction previously presented to Paymentech
pursuant to Payment Brand Rules.

“Conveyed Transaction” is any Transaction conveyed to a Payment Brand for
settlement by such Payment Brand directly to TP3 or Merchant.

“Customer” is the person or entity to whom a Payment Instrument is issued or who
is otherwise authorized to use a Payment Instrument.

“Effective Date” means the date this Agreement takes effect pursuant to Section
10.1.

“JPMC” means J.P. Morgan Chase & Co. and its affiliates.

“Member” is JPMorgan Chase Bank, N.A. or other entity providing sponsorship to
Paymentech as required by all applicable Payment Brands. Member is a principal
party to this Agreement and your acceptance of Payment Brand products is
extended by the Member.

“Payment Brand” is any payment method provider whose payment method is accepted
by Paymentech for processing, including, but not limited to, Visa, U.S.A., Inc.,
MasterCard International, Inc., Discover Financial Services, LLC and other
credit and debit card providers, debit network providers, electronic check and
ACH payments, gift card and other stored value and loyalty program providers.
Payment Brand also includes the Payment Card Industry Security Standards Council
and the Electronic Payments Association (NACHA).

“Payment Brand Rules” are the bylaws, rules, and regulations, as they exist from
time to time, of the Payment Brands, including, without limitation, any
operating principles (including without limitation the TP3 Risk Management
Standards and Operating Procedures identified in Schedule C of this Agreement),
as may be revised from time to time by the Payment Brands in their sole
discretion.

“Payment Application” is a third party application that is involved in the
authorization or settlement of Transaction Record.

“Payment Instrument” is an account, or evidence of an account, authorized and
established between a Customer and a Payment Brand, or representatives or
members of a Payment Brand that TP3 or Merchant accepts from Customers as
payment for a good or service. Payment Instruments include, but are not limited
to, credit and debit cards, electronic check and ACH payments, stored value
cards, loyalty cards, electronic gift cards, authorized account or access
numbers, paper certificates and credit accounts.

“Payment Instrument Information” is information related to a Customer or the
Customer’s Payment Instrument, that is obtained by TP3 or Merchant from the
Customer’s Payment Instrument, or from the Customer in connection with his or
her use of a Payment Instrument (for example a security code, a PIN number, or
the customer’s zip code when provided as part of an address verification
system). Without limiting the foregoing, such information may include the
Payment Instrument account number and expiration date, the Customer’s name or
date of birth, PIN data, security code data (such as CVV2 and CVC2) and any date
read, scanned, imprinted, or otherwise obtained from the Payment Instrument,
whether printed thereon, or magnetically, electronically or otherwise stored
thereon. For the avoidance of doubt, the data elements that constitute Payment
Instrument Information shall be treated according to their corresponding
meanings as “cardholder data” and “sensitive authentication data” as such terms
are used in the then current PCI DSS.

“Paymentech”, “we”, “our”, and “us” is Paymentech, LLC, a Delaware limited
liability company, having its principal office at 14221 Dallas Parkway, Dallas,
Texas 75254.

“Retrieval Request” is a request for information by a Customer or Payment Brand
relating to a claim or complaint concerning a Transaction.

“Security Standards” are all rules, regulations, standards or guidelines adopted
or required by the Payment Brands or the Payment Card Industry Security
Standards Council relating to privacy, data security and the safeguarding,
disclosure and handling of Payment Instrument Information, including but not
limited to the Payment Card Industry Data Security Standards (“PCI DSS”), visa’s
Cardholder Information Security Program (“CISP”), Discover’s Information
Security & Compliance Program, American Express’s Data Security Operating
Policy, MasterCard’s Site Data Protection Program (“SDP”), Visa’s Payment
Application Best Practices (“PABP”), the payment Card Industry’s Payment
Application Data Security Standard (“PA DSS”), MasterCard’s POS Terminal
Security program and the Payment Card Industry PIN Entry Device Standard, in
each case as they may be amended from time to time.

“Service Provider” is any party that processes, stores, receives, transmits, or
has access to Payment Instrument Information TP3’s behalf or any Merchant’s
behalf, including, but not limited to, TP3’s or Merchants’ agents, business
partners, contractors, and subcontractors.

 

Page 16 of 35

 

 

“Settled Transaction” is a Transaction conducted between a Customer and TP3 (on
behalf of Merchant) utilizing a Payment Instrument in which consideration is
exchanged between the Customer and Merchant for the purchase of a good or
service or the return of refund of such purchase and the dollar amount of such
Transaction is settled by the Payment Brand through Paymentech to TP3 or the
Merchant’s settlement account.

“Transaction” is a transaction conducted between a Customer and a Merchant
utilizing a Payment Instrument in which consideration is exchanged between the
Customer and Merchant, and which is submitted to Paymentech by TP3.

“Transaction Record” is the written or electronic record of a Transaction,
including but not limited to an authorization code or settlement record
submitted to Paymentech for processing.

 

IN WITNESS WHEREOF, the undersigned parties have duly executed this Agreement. 

          Agreed and Accepted by:   Agreed and Accepted by:      
USATECHNOLOGIES, INC.   PAYMENTECH, LLC for itself and on behalf of JPMORGAN
CHASE BANK, N.A. TP3 Legal Name         /s/Stephen P. Herbert   /s/*** By
(authorized signature)   By       Stephen P. Herbert, Chairman/CEO   ***    
Print Name and Title   Print Name and Title       4/22/15   April 24, 2015 Date
  Date       100 Deerfield Lane, Suite 140   ***     Address   Address      
Malvern, PA 19355   *** City, State Zip   City, State Zip

 

To Be Completed By Paymentech, LLC
Your Agreement Contract Number is: ___248258 -
540133____________________________
Your Processing Identification Number Will Be Provided At Time of Processing Set
Up

 

Page 17 of 35

 

 

Schedule A

Pricing Schedule

***

 

Page 18 of 35

 

 

SCHEDULE B

TP3 Risk and Compliance Obligations

 

TP3 agrees it will provide, comply and cooperate with Paymentech as follows:

 

1.          TP3 Platform - TP3 agrees to provide the required information to
support and certify to the TP3 Platform. The TP3 Platform requirements, include,
but are not limited to, inclusion in transaction data of needed specifications
for unique Merchant ID, as well as other data fields, such as Merchant name, tax
id, MCC, status, and owner records (the Required Specifications are attached
hereto as Exhibit B-1). Once certified to the TP3 Platform, in the event there
are issues identified by Paymentech or by TP3 with data feeds or other errors,
TP3 will remediate the issue within thirty (30) business days.

 

2.          Sanctions Screening - Paymentech will perform sanctions screening of
all prospective Merchants. If the screening indicates that the prospective or
existing Merchant or its owner(s) are on a sanctions list, TP3 will research and
provide additional demographic information, as may be requested by Paymentech,
and will provide the results of such research to Paymentech within three (3)
Business Days. TP3 shall ensure that a prospective Merchant listed on a
sanctions list shall not be permitted to be a Merchant. In addition, if an
existing Merchant is found on a sanctions list, Paymentech will notify TP3 and
TP3 must terminate such Merchant within three (3) Business Days.

 

3.          MATCH/TMF

3.1        Screening. As required by the Payment Brands, TP3 will perform
MATCH/TMF screening on all of its Merchants. Each prospective Merchant and its
owner(s) must be cleared against Visa’s TMF and MasterCard’s MATCH files before
TP3 enters into an agreement with or processes any transactions for a Merchant.
If the initial query indicates that the prospective Merchant or its owner(s) are
on the MATCH or TMF lists, TP3 will research and determine if Merchant is a true
match and will provide the results of such query and research to Paymentech
within three (3) Business Days. TP3 shall ensure that a prospective Merchant
listed on the TMF or MATCH File is not permitted to be a Merchant.

3.2        Termination. If a decision is made to terminate a Merchant and MATCH
or TMF Criteria is met (MATCH/TMF Criteria is determined by the respective
Payment Brand and will be provided to TP3 by Paymentech upon request), TP3 will
report such decision to terminate to Paymentech and will provide to Paymentech,
within three (3) Business Days of the date in which the decision to terminate
was made, information sufficient to permit Paymentech to add Merchant to
MATCH/TMF within the time frame required by MasterCard and Visa.

 

4.          CIP / KYC Requirements -TP3 is required to implement and maintain
appropriate CIP/KYC procedures with respect to all of its Merchants. Paymentech
will review, evaluate and examine the TP3’s policies and procedures for customer
identification to determine if they are adequate, meet all legal/regulatory
obligations of the TP3, and can result in a reasonable conclusion that the TP3
knows its customers.  If the TP3’s policies are determined to be less than
adequate, or do not meet their legal/regulatory obligations, TP3 agrees to
remediate and correct any noted deficiencies in its policies and procedures
within thirty (30) Business Days or within such other mutually acceptable time
frame as may be agreed between the parties if it is not commercially reasonable
for TP3 to correct such deficiencies within thirty (30) Business Days. TP3
agrees to provide Paymentech with the resulting data it obtains through its
CIP/KYC process in a format and manner that is acceptable to Paymentech. TP3
also agrees to maintain the resulting CIP/KYC data/documentation in its records
for at least seven (7) years. Any change in TP3’s CIP/KYC policies and
procedures must be submitted to us, in writing, not less than thirty (30) days
prior to the effective date of such change.

 

5.          Prohibited Merchant Types - The Prohibited Businesses and Business
Activities, Prohibited Merchants, and Prohibited Transactions, which are
identified in the attached Exhibit B-2, shall not be supported in the Program,
and TP3 shall implement and maintain appropriate procedures to prevent the
processing of transactions on behalf of such merchants and transaction types.
TP3 shall notify Paymentech promptly in the event that it has reason to believe
that any Merchant or any Merchant’s activities or Transactions fall within any
of the Prohibited Businesses and Business Activities, Prohibited Merchants, and
Prohibited Transactions set forth in Exhibit B-2.

 

6.          TP3 Transaction Monitoring - TP3 is required to perform transaction
monitoring on all of its Merchants’ transactions and to provide Paymentech with
the resulting data in a manner and format that is acceptable to Paymentech. TP3
agrees to provide its policies and procedures to Paymentech, for review.
Paymentech will to determine the adequacy of the TP3’s due diligence and
transaction monitoring policies, procedures, and processes and will advise TP3
on any changes or improvements that may be required. TP3 agrees to remediate and
correct any noted deficiencies in its policies and procedures within thirty (30)
Business Days or within such other mutually acceptable time frame as may be
agreed between the parties if it is not commercially reasonable for TP3 to
correct such deficiencies within thirty (30) Business Days. In addition, in the
event that unusual activity is detected by TP3’s transaction monitoring policies
and procedures, TP3 will escalate and notify Paymentech in accordance to the
Risk Escalation Quick Reference Guide (attached hereto as Exhibit B-3) and will
investigate and provide Paymentech with a completed Risk Escalation Form
(attached hereto as Exhibit B-4) showing the results of its investigation to
Paymentech within three (3) Business Days.

 

Page 19 of 35

 

 

7.          Escalations and Investigations – In the event that Paymentech
detects unusual activity, potentially prohibited activity or Paymentech becomes
aware of circumstances that indicate a potential legal or regulatory issue with
respect to TP3 or a Merchant, TP3 agrees to work with Paymentech in good faith
and agrees to provide any information which may be requested by Paymentech in
order to permit Paymentech to perform its own investigation and resolution of
potential legal and/or regulatory violations or other questionable behavior
pertaining to TP3 or TP3’s Merchants.

 

8.          Onsite Compliance Validations - TP3 will permit Paymentech to come
onsite at the inception of this Agreement and on an on-going basis, as requested
by Paymentech, thereafter, to review TP3’s compliance with the requirements and
obligations contained in this Agreement. These requirements include access to
the requested information contained in this Schedule B, as well as the
information and documentation required to complete the attached Third Party
Payment Processor Due Diligence Certification (attached as Exhibit B-5), which
TP3 will be required to execute, following such initial and yearly onsite,
attesting to the compliance requirements contained therein.

 

8.1During the onsite visit, a TP3 Questionnaire will be completed and will
include the following questions about the TP3. TP3 agrees to provide information
and documentation to Paymentech sufficient, as determined by Paymentech, to
allow Paymentech to make the following determinations and evaluations:

 

a.Paymentech will determine the geographies of the TP3’s physical presence and
significant business operations, customers, vendors, suppliers, transaction
activities, and income/revenues 

b.Paymentech will obtain and evaluate the TP3’s annual report/financial
statement for any AML/sanctions risks

c.Paymentech will determine whether the TP3 has obtained all necessary state
licenses, registrations, and approvals

d.Paymentech will determine whether the TP3 has procedures in place to meet
requirements of regulations implementing the Unlawful Internet Gambling
Enforcement Act of 2006 

e.Paymentech will determine if the TP3 is also an MSB; if so, the information
outlined in Section 8.2 below, is also required

f.Paymentech will determine if the TP3 intends to use its JPMC products and
services on behalf of its customers;

g.Paymentech will gather information regarding the TP3’s AML record,
particularly related to any recent regulatory actions, tax avoidance issues
and/or fines/penalties issued by a government agency. 

h.Paymentech will determine whether the TP3 re-sells its services to a third
party (e.g., an agent or provider of Independent Sales Organization (ISO)
opportunities or gateway arrangements) or provides processing on behalf of other
intermediaries through its accounts or services at JPMC.

i.Paymentech will require to gather information about the TP3’s customers,
including the average number and  types

j.Paymentech will determine whether the TP3 will be depositing Remotely Created
Checks (RCCs) generated on behalf of customers into its JPMC account

k.Paymentech will assess TP3’s customer complaints (if applicable) Paymentech
will identify if the TP3 uses more than one bank to process its customers’
payments and whether the TP3 has a history of moving from one bank to another
within a short period of time

l.Paymentech will review and discuss independent audit results

m.Paymentech will obtain a list of the TP3’s customers, including name, address,
to screen names for sanctions

 

Page 20 of 35

 

 

n.Paymentech will validate directly or indirectly that the TP3’s customers are
legitimate businesses. Direct validation is performed by obtaining the TP3s new
customers’ information in accordance with JPMC requirements and performing CIP
and name screening

o.Paymentech will determine if any of the TP3’s customers are prohibited
according to JPMC’s Global KYC Standards or risk tolerance

p.Paymentech will review and evaluate information related to the TP3’s return
history at JPMC, including rates of return for ACH debit transactions and check
deposits per month

q.Paymentech will obtain information on the TP3’s customers’ sales channels
(e.g., Internet or store locations).

r.Paymentech will determine the swiping versus keying volume for credit card
transactions and charge-back activity if JPMC processes the card activity.

s.For TP3s who offer services via mobile/smart phone/tablet POS, the following
must also be obtained and evaluated:

s.1Paymentech will review of the TP3's device security and encryption
capabilities

s.2Paymentech will review of the TP3’s ability to validate location, IP address
and/or Political Time Zone device functionality to identify transaction
origination

 

8.2In the event the TP3 is also an Money Service Business (“MSB”), or becomes an
MSB at a later date, then TP3 (also referred to as “MSB” in this Section 8.2)
also agrees to provide information and documentation to Paymentech sufficient,
as determined by Paymentech, to allow Paymentech to make the following
determinations and evaluations:

 

A.Paymentech will review and assess the MSB’s operations, its size, dollar
volumes, types of services, type/nature of customers, and internal control
procedures

 

B.Paymentech will evidence that the MSB is registered in the jurisdiction and in
compliance with any licensing requirements

 

C.Paymentech will review the MSB’s agent oversight procedures and AML training
materials used with employees and agents

 

D.Paymentech will obtain and document whether the MSB is acting as a principal
or as an agent for another principal MSB.  If acting as principal, obtaining a
list of agents and their locations when the agents are receiving services
directly or indirectly through the principal’s JPMC account.  If acting as
agent, obtaining the principal’s name and screening it against the OFAC and
other countries’ sanctions lists (as applicable), the JPMC Internal Name
Screening Lists, and negative media

 

E.Paymentech will obtain and documenting sufficient information to form a
reasonable understanding of the MSB’s agent types

 

F.Paymentech will determine and evaluate the MSB’s ownership

 

G.Paymentech will document information known or reasonably available publicly
regarding the MSB customer’s reputation and AML record, particularly related to
any recent fines or penalties issued by a government agency.

 

H.Paymentech will validate the name and address of the person residing in the US
and authorized to be agent to accept service of legal process; applicable if the
MSB is located outside the US but is doing business wholly or substantially
within the US

 

I.Paymentech will determine and understand the nature and duration of JPMC’s
relationship with the MSB and any of its subsidiaries and affiliates

 

J.Paymentech will determine the nature of MSB’s business, anticipated activity,
types of products and services offered and the locations and markets served by
the MSB.

 

K.Paymentech will review the MSB’s AML compliance program by obtaining a
completed AML questionnaire form and considering the extent to which the program
is reasonably designed to detect and prevent money laundering

 

Page 21 of 35

 

 

L.If a foreign MSB (defined as an MSB that is located outside of the United
States), then Paymentech will evaluate the AML environment and supervisory
regime of the jurisdiction that issued the charter or license, and to the extent
that information regarding such jurisdiction is reasonably available, of the
jurisdiction in which any company which is an owner is incorporated or
chartered.

 

Page 22 of 35

 

 

Exhibit B-1

 

***

 

Page 23 of 35

 

 

Prohibited Business Types

 

Exhibit B-2

 

Prohibited Merchants

 

The following merchant types are considered Prohibited in part due to image
concerns, Association prohibition, unlawful activity and extreme high risk which
increases potential liability above and beyond that which is expected in the
normal course of business. These types of products and services may also have a
history of creating a high level of fraud and chargeback activity. Applications
from these merchant types will not be considered and should not be solicited.

 

Prohibited Merchants include but are not limited to:

o***

 

Page 24 of 35

 

 

Exhibit B-3

RISK ESCALATION QUICK REFERENCE GUIDE

SUSPICIOUS ACTIVITY/TRANSACTIONS

Fraudulent merchant applications, sales, credits, or other transactions;

Excessive fraud related chargebacks;

Identity theft;

Merchant victimized from fraud scam and activity exceeds ***;

Accounts linked to other known fraudulent activity or fraud related accounts;

Merchant attempting to refund all transactions;

Merchant is victim of unauthorized access into their terminal, and activity
exceeds $25,000;

Merchant is a victim of employee theft via refunds exceeding *** if employee is
identified, *** if not identified;

Merchant Collusion exceeding ***;

Any money laundering activity regardless of termination; and

Unauthorized fraud transactions are confirmed directly from Cardholders

 

NOTE: This not an all inclusive list. Its purpose is to provide some thoughts
and examples of activity that would warrant an escalation. Each case stands on
its own and may have a unique set of circumstances that may not be listed above.

 

 

ESCALATION EVENT TYPES Event Type Dollar
Threshold Timeframe Internal/Insider fraud No monetary amount

Immediately escalate TBD

 

Money Laundering No monetary amount

Immediately escalate TBD

 

Suspect Known

 

*** or more CPS Requires: No later than 5 business days after event
identification.   No Suspect *** or more CPS Requires: No later than 5 business
days after event identification.   Supplemental No monetary amount

Immediately upon detection.

 

Correction No monetary amount

Immediately upon detection of error.

 

 

NARRATIVE - IMPORTANT REMINDERS Do Don’t

Write the narrative in MS Word and use the Grammar/ Spell check feature

 

Write the 5 essential elements:

1.     Who is conducting the criminal or suspicious activity?

 

2.     What type of suspicious activity occurred?

 

3.     When were the significant dates in the case?

 

4.     Where did the suspicious activity take place?

 

5.     Why does the institution think the activity is suspicious?

Insert tables, files, or documents in the narrative field

 

Use non-factual information, personal opinions, and/or bank jargon, e.g.,
chargebacks; retrieval requests; and other industry specific terms

 

Use capitalized letters throughout the entire narrative

 

State, “additional information is available upon request” or “please contact me
for further information.”

 

Write in the first person

 

 

 

Page 25 of 35

 

  

Exhibit B-4

 

TP3 Risk Escalation Form User ID #: Discovery Date of Activity: Date Submitted
to Paymentech: Submitted By: User Information True/Owner Name: Residence
Address: City: State: ZIP Code: Email Address: Residence Tel #: Date of Birth:
SSN: Cell Phone #: None     Account Information Account/User Name: Business
Address:   City: State: ZIP Code: Business Tel #:   Activation Date: First
Transaction Date: Freeze Date: Deactivation Date: Bank Name: Routing #: Account
#: Usage Information MCC Code: Device Information Number of Devices: Device #1:
UDID: Transaction Information GPV: $ Number Of Successful Transactions: Number
Of Unsuccessful Transactions: Number Of Chargebacks: Total Dollar Value of
Received Chargebacks: $ Total Dollar Value of Frozen Collateral: $ Additional
Account Notations

Why was action taken on the account?

If a merchant questionnaire was submitted, what was supplied? 

Relevant public information:

Relevant background information:

Notes from the overall payment activity:

Notes from chargebacks/refunds/tipping:

Relevant account connections:

Shared card activity (if applicable):

Summary of why the account is being escalated:

         

 

Page 26 of 35

 

  

Exhibit B-5

 

THIRD PARTY PAYMENT PROCESSOR

CERTIFICATION

 

This certification is a JPMorgan Chase Bank, N.A. (“JPMC”) requirement for all
third party processors including clients that process payments for their
affiliates through their JPMC deposit accounts. This form is intended to
facilitate JPMC’s compliance with applicable Anti-Money Laundering (AML) laws
and regulations. This form should be updated whenever the below named Client
makes changes in their Due Diligence Program that would affect the accuracy of
the information provided in this certification. As used in this form, the term
“Customer” means the Client’s customer, affiliate or other third party whose
payments are being transmitted or otherwise processed through the Client’s
account at JPMC.

 

TO BE COMPLETED BY A SENIOR MANAGER OR COMPLIANCE OFFICER

 

Legal Name of Client:
_______________________________________________________________

 

TIN: __________________

 

I am an authorized officer, member, manager, director or other authorized
official of the above-named client (the “Client”). I hereby certify that the
following information:

 

1.    Does the Client have a duly authorized Compliance Officer?

 Yes ☐      No ☐

 If “Yes”, list the following:

 Name: ___________________________ Title: ____________________________

 

1.    Does the Client maintain risk-policies, procedures, and a system of
internal controls to assure ongoing Customer Due Diligence validating the
legitimacy of the Customers’ businesses such as conducting background checks?

Yes ☐      No ☐

 

2.    Does the Client maintain a written Customer Identification Program (“CIP”)
that includes the validation of the identity of Customers through a particular
process or tool?

Yes ☐      No ☐

If “Yes”, please describe below:

____________________________________________________________________________________________________________

____________________________________________________________________________________________________________

____________________________________________________________________________________________________________

____________________________________________________________________________________________________________

 

3.     Does the Client conduct AML training for employees involved in AML
functions?

Yes ☐      No ☐

 

 

Page 27 of 35

 

 

4.    Does the Client independently test for compliance with the program and
applicable laws?

Yes ☐      No ☐

If “Yes”, list the following:

Date of last independent test: ______________________

Name of Entity who conducted the test: _________________________________

 

5.   Does the Client perform transaction monitoring to assess and manage the
risks associated with processing third party payments to identify potentially
suspicious activity, including ACH debit returns (including unauthorized
returns), and if applicable, charge-backs or other returns?

Yes ☐      No ☐

 

6.    Does the Client immediately report to JPMC any activity or transaction of
a Customer that the Client suspects or becomes aware that such activity or
transaction may be of an illegal or illegitimate nature?

Yes ☐      No ☐

 

7.    Does the Client conduct OFAC sanctions screening?

Yes ☐      No ☐

 

8.    Has the Client provided JPMC with a list of Customers’ names, addresses,
taxpayer identification numbers, and principal business activities?

Yes ☐      No ☐

 

9.    Does the Client notify JPMC of new customers including the name, address,
taxpayer identification number, principal business activity, and does the Client
collect customer identification due diligence and screening on such customers
prior to submission?

Yes ☐      No ☐

 

10.  Can the Client verify they do not have any prohibited customer types (as
identified to the Client by JPMC) transacting through JPMC accounts?

Yes ☐      No ☐

 

11.  Can the Client verify they do not permit its Customers to resell services
to any parties as related to transactions through JPMC accounts or services?

Yes ☐      No ☐

 

12.  Can the Client verify they do not have any relationships with money service
businesses, financial institutions, payment processors or any other
intermediaries that may be executing payments on behalf of third parties through
Client’s accounts at JPMC?

Yes ☐      No ☐

 

13.  Can the Client verify they do not have any Customers that are involved in
gaming where transactions are processed through JPMC accounts?

Yes ☐      No ☐

 

Page 28 of 35

 

 

14.  Has the Client provided JPMC with a Regulation GG Unlawful Internet
Gambling Certification for any U.S. dollar accounts?

Yes ☐      No ☐

 

The undersigned further certifies that he/she has read and understands this
Certification, that the statements made in this Certification are complete and
correct in all material respects, and that he/she is authorized to execute this
Certification on behalf of the Client. 

Authorized Certifying Signature: Date: Printed Name: Title: Address: Phone
Number:

 

Page 29 of 35

 

 

Schedule C

(Commercial Entities Agreement)

 

This Commercial Entity User Agreement (“CEA”) is provided to all Program
Participants that are Commercial Entities (as defined by Visa and MasterCard)
and open an account with USA Technologies, Inc. (“USA Technologies). Each such
entity or person receiving this CEA is referred to herein as “Merchant” and may
be referred to herein as “you” and/or “your”. This CEA constitutes your separate
legally binding contract for credit and debit card processing for payment
transactions between (1 ) you, as a Commercial Entity; and (2) Paymentech, LLC
on behalf of itself and JPMorgan Chase Bank, NA (collectively, “Paymentech”).
Paymentech shall be a third-party beneficiary of, and may enforce any provisions
of, or cease providing credit and debit card processing services under, the USA
Technologies ePort Connect Services Agreement (“ePCSA”), entered into by and
between Merchant and USA Technologies, which sets forth requirements regarding
credit and debit card payments, all of which are incorporated in this CEA by
reference. In this CEA “we”, “us” and “our” refer to Paymentech.

 

By signing the USA Technologies Payment Processing Services Agreement, the
Merchant agrees to this CEA which is included in the ePCSA as Exhibit A.
Merchant agrees to the terms and conditions of this CEA and any documents
incorporated by reference. Merchant further agrees that this CEA forms a legally
binding contract between Merchant and Paymentech. Any rights not expressly
granted herein are reserved by Paymentech.

 

1.     Purpose of this CEA. When your customers pay you, they may have the
option of paying you through funding sources including a credit card funded
payment. Since you may be the recipient of a credit card funded payment, Visa
U.S.A., Inc. and Visa International (“Visa”) and MasterCard International
Incorporated (“MasterCard”) (collectively the “Networks”) require that you enter
into a direct contractual relationship with a bank that is a Merchant of the
Networks. By entering into the CEA, you are fulfilling the Network rule of
entering into a direct contractual relationship with a Merchant bank, and you
are agreeing to comply with Network rules as they pertain to payments you
receive through USA Technologies.

 

2.     Network Rules. The Networks require that you comply with all bylaws,
rules and regulations of the Networks, as may be applicable to you and your
payment transactions and as are in effect from time to time (“Network Rules”).
You understand that Paymentech may be required to modify this CEA in order to
comply with the requirements imposed by the Network Rules. You may use the logos
of the Networks only in the manner authorized by the Networks and to indicate
that Visa and MasterCard cards are accepted as methods of payment.

 

3.     Merchant represents, warrants, and covenants that, to the best of its
knowledge, each Transaction:

(a)represents payment for or Refund of a bona fide sale or lease of the goods,
services, or both, which Merchant has the legal right to sell and which is
provided by Merchant in the ordinary course of its business;

(b)is not submitted on behalf of a third party;

(c)represents a current obligation of the customer solely for the amount of the
Transaction;

(d)does not represent the collection of a dishonored check or the collection or
refinancing of an existing debt;

(e)represents goods that have been provided or shipped, or services that have
actually been rendered, to the customer;

(f)is free from any material alteration not authorized by the customer;

(g)or the amount thereof, is not subject to any dispute, setoff, or
counterclaim;

(h)if such Transaction represents a credit to a customer’s payment card, is a
refund for a Transaction previously submitted under the ePCSA; and

 

Page 30 of 35 

   

 

(i)complies with applicable laws and all applicable Network Rules.  (j) 

 

4.     Furthermore, Merchant represents, warrants, and covenants that, to the
best of its knowledge, Merchant has not

 

(k)disbursed or advanced any cash to the customer (except as authorized by the
Card Brand Rules) for itself or to any of its representatives, agents, or
employees in connection with the Transaction;

(l)accepted payment for effecting credits to a customer or a customer’s payment
card;

(m)made any representation or agreement for the issuance of Refunds except as
stated in Merchant’s Refund Policy;

(n)been provided with any information that would lead Merchant to believe that
the enforceability or collectibility of the Transaction is in any manner
impaired; and

(o)submitted any Transaction that Merchant knows or should have known to be
either fraudulent, illegal, damaging to the Network(s), not authorized by the
customer, or otherwise in violation of any provision of this CEA, applicable
law, or Network Rules.

 

5.     Discrimination. Merchant agrees that it shall not engage in any
acceptance practice that discriminates against or discourages the use of Visa or
MasterCard in favor of any other card brand.

 

6.     Access to Cardholder Data. Merchant may receive Cardholder Data in
connection with services provided under this Agreement. Merchant agrees that (i)
it will not use the Cardholder Data for any purpose that it knows or should know
to be fraudulent or in violation of any Network Rules; (ii) it will not sell,
purchase, provide or exchange in any manner or disclose Cardholder Data to
anyone other than its acquirer, Visa or MasterCard (as applicable) or in
response to a government request; and (iii) it will be compliant with the
Payment Card Industry Data Security Standards (PCI DSS) and will cooperate in a
forensic investigation if so required.

 

7.     Merchant Identification. Merchant agrees to prominently and unequivocally
inform the cardholder of the identity of the Merchant at all points of
interaction.

 

8.     Chargebacks. Merchant shall use all reasonable methods to resolve
disputes with the cardholder. Should a chargeback dispute occur, Merchant shall
promptly comply with all requests for information from USA Technologies or
Paymentech. Merchant shall not attempt to recharge a cardholder for an item that
has been charged back to the cardholder, unless the cardholder has authorized
such actions.

 

9.     Merchant’s Refund Policy Must Be Clearly Communicated. If Merchant limits
refund/exchange terms or other specific conditions for Card sales, Merchant’s
policy must be clearly provided to the cardholder prior to the sale and as part
of the sale confirmation process.

 

10.   Term and Termination. This CEA is effective upon the date Merchant
accepted the ePCSA and continues so long as Merchant uses the service or until
terminated by Merchant or Paymentech, provided that those terms which by their
nature are intended to survive termination (including without limitation,
indemnification obligations and limitations of liability) shall survive. This
CEA may be terminated by Paymentech at any time based on a breach of any of
Merchant’s obligations under this Agreement or the ePCSA, or based on the
termination of the payment processing relationship between USA Technologies and
Paymentech. This CEA will terminate automatically upon any termination or
expiration of Merchant’s ePCSA.

 

11.   Indemnification. Merchant agrees to indemnify and hold Paymentech harmless
from and against all losses, liabilities, damages and expense: (a) resulting
from any breach of any warranty, covenant or agreement or any misrepresentation
by Merchant under this Agreement; (b) arising out of Merchant’s or its
employees’ negligence or willful misconduct, in connection with Card
transactions or otherwise arising from Merchant’s provision of goods and
services to customers; (c) arising out of Merchant’s use of the payment
processing services; or (d) arising out of any third party indemnifications
Paymentech is obligated to make, or liabilities or other obligations Paymentech
may incur, as a result of Merchant’s actions (including indemnifications of or
liabilities to, any Network or Issuing Bank). Paymentech agrees to indemnify and
hold Merchant harmless from and against all losses, liabilities, damages and
expenses: (a) resulting from any breach of any warranty, covenant, or agreement
or any misrepresentation under this Agreement; or (b) arising from our gross
negligence or willful misconduct in connection with this Agreement.

 

Page 31 of 35 

   

 

12.   Assignment/Amendments. This CEA may not be assigned by Merchant without
the prior written consent of Paymentech. Paymentech may assign its rights under
this CEA without Merchant’s consent. This CEA may be amended by the parties only
upon mutual written agreement. Notwithstanding the above, Paymentech may amend
this CEA to comply with Network and regulatory regulations upon written notice
to Merchant.

 

13.   Warranty Disclaimer. This CEA is a service agreement. We disclaim all
representations or warranties, express or implied, made to Merchant or any other
person, including without limitation, any warranties regarding quality,
suitability, merchantability, fitness for a particular purpose or otherwise of
any services or any goods provided incidental to the services provided under
this CEA to the extent permitted by law.

 

14.   Limitation of Liability.  Except as provided otherwise in this CEA, in no
event shall Paymentech or Merchant, or their respective affiliates, directors,
officers, employees, agents or subcontractors, be liable for an indirect,
consequential, incidental or punitive damages arising out of or related to this
CEA or the payment services, including without limitation any inability, delay
or errors in using the service.  In addition, notwithstanding anything in this
CEA to the contrary, Paymentech’s cumulative liability for all losses, claims,
suits, controversies, breaches or damages for any cause whatsoever (including,
but not limited to, those arising out of or related to this CEA) and regardless
of the form of action or legal theory, and whether or not arising in contract or
tort, shall not exceed $25,000.

 

15.     Chase Paymentech may:

(a)share information related to Merchant’s Transactions and other information
provided by Merchant with Chase Paymentech’s affiliates;

(b)use or disclose information related to Merchant’s Transactions:

i.as necessary to process Merchant’s Transactions or otherwise provide Services
and maintain Merchant’s account pursuant to this Agreement;

ii.to detect prevent, reduce, or otherwise address fraud, security, or technical
issues;

iii.to enhance or improve Chase Paymentech’s products and Services generally; or

iv.as required or permitted by the Card Brands or applicable law; and

(c)prepare, use, or share with third parties, aggregated, non-personally
identifiable information derived from Transactions of all of Chase Paymentech’s
customers or specific segments of Chase Paymentech’s customers.

 

16.   General Provisions. This CEA will be binding upon and will inure to the
benefit of the parties’ respective representatives, successors, and assigns.
This CEA may not be amended except by Paymentech upon notice to you, and your
continued use of USA Technologies’ services after such notice constitutes your
acceptance of such amendment. The failure of a party to this CEA to object to or
to take affirmative action with respect to any conduct of the other party that
is in violation of the terms of this CEA will not be construed as a waiver
thereof, or as waiver of any future breach or subsequent wrongful conduct. If
any term or condition of this CEA should be held invalid by a court, arbitrator,
or tribunal of competent jurisdiction in any respect, such invalidity will not
affect the validity of any other term or condition hereof. If any term or
condition of this CEA should be held to be unreasonable as to time, scope, or
otherwise by such a court, arbitrator, or tribunal, it will be construed by
limiting or reducing it to the minimum extent so as to be enforceable under then
applicable law. This CEA will be governed by and construed in accordance with
the laws of the State of Texas, without regard to its choice of law rules. This
CEA and all referenced documents and rules constitute the entire understanding
between you and Paymentech and supersede any and all agreements or
understanding, whether in writing or otherwise, relating specifically to the
subject matter hereof.

 

Page 32 of 35 

   

 

SCHEDULE D

FBO ACCOUNTS

 

An FBO account may be set up as the funding account (Settlement Account) for
Merchants, provided that the account meets the following terms and conditions:

 

•An FBO account is the Merchant’s designated account for funding and the funds
in the account belong to the Merchant.

•Funds pooled in an FBO account remain the property of each Merchant associated
with that account and are not the property of TP3.

•The Merchant retains the right at all times to designate the use and
disposition of the funds in the pooled account and can request funds be
transferred to another account they control, or they can immediately access the
funds in the pooled account by their own direction.

•An agreement is present to delineate the TP3 as the agent of the Merchant for
purposes of the FBO account.

•The account represents a custodial arrangement and funds in the pooled FBO
account are accounted for by TP3 as “off balance sheet” and are not commingled
or accounted for as TP3’s funds or subject to the benefit of any of TP3’s
creditors.

•Escheatment process is in place and unclaimed fund are escheated to the state
as required by state law and are not retained by TP3.

 

Page 33 of 35 

   

 

SCHEDULE E

TP3 Remediation Plan

 

TP3 agrees to demonstrate its compliance with the following terms or provide the
following information to Paymentech on or before the deadlines provided below:

 

1)TP3 must have documented CIP Policies and Procedures which include the method
used to perform CIP validation (validation of customers identity); documentation
if identity if verified, as well as documentation and actions that must be taken
when discrepancies are found; and an action plan for escalation and termination,
when appropriate. 

Deadline for Remediation: ***

Incremental Steps:  Documented updates should be complete by April 2015.  Once
completed, Paymentech will review and determine if compliance is met

 

2)TP3 must perform OFAC screening and other applicable sanctions screening. TP3
must document how OFAC/sanctions screening s are being performed using their
internal tools, as well as detailing how investigations and escalations will be
done if and when a hit gets generated.

Deadline for Remediation: ***

Incremental Steps:  Paymentech will need credit application form as documentary
evidence, as well as copies of updated policies and procedures referencing
internal OFAC checks and detailing how investigations / escalations will be
performed.  USA Tech will need to define a process on how screening will be done
for existing portfolio which has yet to be performed. 

 

3)TP3 will need to develop an internal transaction monitoring system capable of
detecting unusual and/or egregious transaction behavior.

Deadline for Remediation: ***

Incremental Steps: An approach document detailing requirements, timelines,
identifying a vendor, and  sizing of the project.

  

4)TP3 processes transactions using a mobile device.  TP3 must put controls in
place to determine Geo-location of the mobile device and must put controls in
place to test the security and encryption of the mobile device being used.

Deadline for Remediation: ***

Incremental Steps: For mobile, one of two options must be decided: (1) Using
Paymentech’s mobile device that has already been validated for Geo-location and
security controls or (2) Paymentech would not be able to support TP3’s
mobile-specific transactions and TP3 would need to agree not to submit them to
Paymentech for processing.

 

5)TP3 must designate an AML Compliance officer.

Deadline for Remediation: ***

Incremental Steps:  David DeMedio has been assigned

 

6)TP3 must have AML Training for its employees.

Deadline for Remediation: ***

Incremental Steps:  Training to be developed and timeline created for employees
 

 

7)TP3 must put system in place to perform MATCH/TMF screening on all of its
Merchants TP3 must also have a documented procedure designed and implemented
which will appropriately handle investigations and escalations when a potential
MATCH/TMF hit occurs.

Deadline for Remediation: ***

Incremental Steps: USA Tech to develop MATCH policies and procedures when
inquiries have a potential MATCH, detailing Service Level Agreements of 3
Business Days for investigations.  In the event a merchant investigation does
result in a true MATCH, steps will need to be outlined such as proper
notification to Paymentech within 3 Business Days along with steps communicated
to terminate the Merchant or decline the prospective merchant.  In the event USA
Tech decides to terminate a Merchant which  meets MATCH criteria, USA Tech must
notify Paymentech with (3) Business Days and provide the required information
detailed by MATCH requirements. 

 

Page 34 of 35 

   

 

8)TP3 must provide a copy of their internal policies and procedures relating to
the Unlawful Internet Gambling Enforcement Act of 2006.  TP3 must demonstrate
that it is aware of this act and attest to how they prevent its applicability or
comply with its mandates.

Deadline for Remediation: ***

Incremental Steps: Document provided by USA Tech, awaiting feedback from
Compliance

 

9)TP3 must provide verification or sufficiently demonstrate they are registered
as a PSP with Visa and are registered as a PF for MasterCard. 

Deadline for Remediation: ***

In Process with ***

 

Page 35 of 35