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Independent Sales Agent (ISA) Agreement
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WHEREAS, ISA desires to solicit merchants to enter into Merchant Agreements with or on behalf of National Processing for Payment Processing Services in return for compensation mutually agreeable to the parties; and
WHEREAS, National Processing agrees to compensate ISA for its services on the terms and conditions set forth in this Agreement.
NOW THEREFORE, for good and adequate consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Definitions. Except as otherwise indicated, and unless the context otherwise clearly requires, the following terms shall have the following meanings in this Agreement: (a) “Confidential Information” means all proprietary, secret or confidential information, software, or data relating to either party and their operations, employees, products or services, clients, customers or potential customers (including Merchants), and includes Merchant pricing and marketing plans related to the Payment Processing Services, as well as the terms of this Agreement. All data and information related to Merchants and Transactions will be deemed the Confidential Information of National Processing. Confidential Information shall not include information that (i) is known to the receiving party at the time it receives Confidential Information; (ii) has become publicly known through no wrongful act of the receiving party; (iii) has been rightfully received by the receiving party from a third party authorized to make such communication without restriction; or (iv) has been approved for release by written authorization of the disclosing party. (b) “Customer” means the person or entity to whom a Payment Instrument is issued or who is otherwise authorized to use a Payment Instrument. (c) “ISA Account” means that deposit account designated by ISA with a financial institution that is a member of the Federal Reserve Automated Clearing House into which all funds owed to ISA pursuant to this Agreement are deposited by National Processing, in accordance with this Agreement. (d) “Marks” means all trade names, trademarks, service marks, logo types or any other similar mark or identification of a party. (e) “Member” means that Payment Brand member financial institution designated by National Processing. (f) “Merchant” means a business referred by ISA to National Processing pursuant to this Agreement, which executes a Merchant Agreement with National Processing following the Effective Date, and such Merchant Agreement is accepted by National Processing. (g) “Merchant Agreement” means National Processing’s merchant application and agreement executed by a Merchant and approved by National Processing for providing Payment Processing Services. (h) “Merchant Loss” means any loss incurred by National Processing or Member for any reason attributable to a Merchant, including but not limited to losses due to uncollected chargebacks, fines, and Merchant fraud. (i) “Pass-Through Costs and Interchange” means (i) amounts charged by MasterCard, Visa, and other networks or Payment Brands (including interchange fees, dues and assessments, and debit network fees) in connection with the Merchant’s Transactions, (ii) any costs that National Processing is charged by its vendors and other third party providers, including gateway fees, surcharges, customer specific setup fees, tariff line rates, data circuit charges and any other rates charged to National Processing by a communications common carrier, postage costs (at the 1st class rate), courier costs and costs of forms, (iii) costs incurred as a result of governmental or regulatory changes, (iv) costs associated with new programs or services, and (v) third party equipment-related charges. Pass-Through Costs and Interchange will also include increases in the fees set forth on Exhibit A to reflect higher costs of managing or implementing services and programs then in effect. (j) “Payment Brand” means Visa U.S.A., Inc. (“Visa”), MasterCard International, Incorporated (“MasterCard”), DFS Services, LLC (“Discover”), American Express Travel Related Services Company, Inc. (“American Express”), and any other association, card payment brand, Payment Instrument issuer, debit network or payment methodology or system having proprietary rights to and clearing and oversight responsibilities with respect to any Payment Instrument used to effect payment-related transactions for which any Payment Processing Services are provided pursuant to this Agreement. (k) “Payment Instrument” means a payment card, an account, or evidence of an account, authorized and established between a Customer and a Payment Brand and accepted by merchants from Customers as payment for a good or service. Payment Instruments include, but are not limited to, credit and debit cards, stored value cards, loyalty cards, electronic gift cards, authorized account or access numbers, paper certificates and credit accounts. (l) “Payment Processing Services” means (i) all services necessary to authorize, data capture, and process (and when permitted by the applicable Payment Brand, settle and reconcile) transactions effected by Merchants with Customers using Payment Instruments, and (ii) other related products and services. (m) “Processing Fees” means all fees and charges received by National Processing for services performed hereunder as set forth in Exhibit A to this Agreement, with the exception of Pass-Through Costs and Interchange, and all charges for taxes and interest. (n) “Residuals” means the amount of compensation payable to ISA hereunder for the performance of its services based on collected Merchant revenue under this Agreement as set forth in Exhibit A attached hereto. (o) “Rules” means all bylaws, rules, operating regulations, policies, procedures and guidelines issued by the Payment Brands, Member, National Processing and all other applicable rules, regulations and requirements of providers, banks, institutions, organizations, associations, or networks which govern or affect any services provided by ISA, and all state and federal laws, rules and regulations which govern or otherwise affect the activities of ISA or National Processing, including, but not limited to, those of the National Automated Clearing House Association (“NACHA”) and the Federal Trade Commission (“FTC”), as any or all of the foregoing may be amended and in effect from time to time. (p) “Term” has the meaning set forth in Section 6.1 hereof. (q) “Transaction” means any transaction that makes use of any Payment Processing Service provided to a Merchant under its Merchant Agreement, including without limitation, any interaction between a Customer and a Merchant, any authorization attempt, credit, closing and capturing daily sales batches. (r) “Underwriting Policy” means the then current credit and risk policies established by National Processing relating to the establishment of Merchant accounts and the provision of the Payment Processing Services, as the same may be amended from time to time.
2. ISA Responsibilities.
2.1 Duties to Market Services. ISA agrees, on a non-exclusive basis, to promote the Payment Processing Services and solicit potential Merchants to enter into Merchant Agreements with National Processing in accordance with the Rules. ISA shall make no representations or warranties regarding National Processing or the Payment Processing Services other than as specifically provided herein. ISA shall market the Payment Processing Services only to bona fide and lawful businesses and in accordance with this Agreement and the Underwriting Policy. ISA will assist potential Merchants in completing all documentation required for application to receive Payment Processing Services. ISA agrees to leave a signed copy of the Merchant Agreement with each Merchant after such documents have been signed by the Merchant.
2.2 Promotion of Services. All advertising and/or sales materials used by ISA shall be (i) prepared by ISA at ISA’s expense, (ii) in compliance with the Rules and applicable law, and (iii) approved by National Processing before being used. ISA will only promote the Payment Processing Services in accordance with the Rules. ISA shall not require any Merchant to purchase or acquire any other goods, programs or services from ISA or any other party in order to receive Payment Processing Services.
2.3 Merchant Agreements. Each Merchant Agreement must be on the form provided by National Processing. Neither ISA nor any of ISA’s sales representatives shall make any changes or modifications to any Merchant Agreement without the prior written consent of National Processing. National Processing reserves the right to amend or change in any manner the Merchant Agreement to be used by ISA, including changes to the discount rate, transaction fees and all other fees due from Merchants. ISA acknowledges and agrees that all rights to and interests in the Merchant Agreements and the Payment Processing Services provided by National Processing will be owned by National Processing and Member, free and clear of any interest, claim, lien or security interest of ISA. ISA may not transfer, assign, sell, or exchange any Merchant Agreement. ISA will not encumber any Merchant Agreement, nor represent to any third party that it has any right of ownership of any Merchant Agreement. Further, ISA acknowledges and agrees that all Merchant Agreements, Merchant accounts, records, documentation, and the information contained therein are the property of and are owned by National Processing and are considered National Processing’s Confidential Information.
2.4 Merchant Pricing. ISA agrees to submit all pricing schedules and other exhibits, schedules, attachments, addenda and the like included with or made a part of the Merchant Agreement to National Processing for review and approval prior to use. All Merchant fees must be clearly and conspicuously disclosed to the Merchant in writing prior to any payment or application and approved by National Processing. ISA agrees to comply with all National Processing pricing policies and the Rules and applicable laws with regard to Merchant pricing and may not engage in any pricing scheme that negatively reflects on National Processing and/or results in a loss. All losses due to ISA’s pricing error will be deducted from Residuals.
2.5 Merchant Information. ISA will promptly notify National Processing in writing of any adverse information that ISA receives relating to a Merchant, particularly including information regarding a Merchant’s financial condition, use of Payment Instruments for any purpose other than payment for the bona fide sale of goods and services, and changes in a Merchant’s method of doing business or types of goods or services or any other information relating to Merchant that would have a material effect on Merchant’s ability to comply with the terms of its Merchant Agreement. ISA will reasonably assist National Processing in resolving disputes with Merchants. ISA represents that all information submitted to National Processing (including information contained on any merchant application and/or site inspection) is true, accurate, complete, and not misleading and that all physical sites of Merchants have been visited and examined by ISA or a mutually acceptable third party in accordance with National Processing’s Underwriting Policy and the Rules. Any information provided by ISA to National Processing that is knowingly false or misleading will be considered a material breach of this Agreement. ISA shall request existing and prospective Merchants solicited by ISA to furnish National Processing and/or Member with such financial and other information as National Processing and/or Member may from time to time request.
2.6 Financial Information; Audits. National Processing and Member may conduct financial and procedural audits of ISA to confirm compliance with this Agreement and the Rules. ISA agrees to provide National Processing with ISA’s financial statements and tax returns, within 30 days of National Processing’s written request. Such financial statements shall be prepared in accordance with reasonable accounting principles. If ISA fails to furnish such information, then National Processing may withhold payments due under Section 4.1 until ISA complies. ISA also shall provide such other information concerning ISA’s business and ISA’s compliance with the terms and provisions of this Agreement as National Processing may reasonably request no later than 5 business days from the receipt of such request or such shorter period of time if required by Member or a Payment Brand. ISA and the undersigned official of ISA each authorize National Processing to obtain from third parties financial and credit information relating to ISA and the undersigned official of ISA in connection with National Processing’s determination whether to accept this Agreement and National Processing’s continuing evaluation of the financial and credit status of ISA and the undersigned official of ISA. During the Term and thereafter for as long as ISA is receiving Residuals, upon at least 5 business days advance written notice and during business hours, ISA shall also provide to National Processing or its representatives reasonable access to ISA’s facilities and records for the purpose of performing an audit of ISA’s books and/or records related to the terms of this Agreement, the operation of ISA’s business and ISA’s performance of services hereunder as required by the Rules or Member. ISA shall bear the sole cost and expense of audits and inspections conducted or required by any regulatory authority or Payment Brand, including without limitation the annual inspections Member is required to perform under the Rules.
2.7 Adverse Changes. ISA will notify National Processing within 15 days following any material adverse change in ISA’s financial condition or any event which could be reasonably expected to result in a material adverse change in ISA’s financial condition, including the initiation of litigation by governmental or regulatory authorities or other third parties against ISA or its principals.
2.8 Merchant Training; Supplies. ISA will train Merchants on the procedures and Rules necessary to comply with the operation and use of the Payment Processing Services from National Processing. Prior to the conclusion of such training, ISA will confirm that Merchants are capable of using the Payment Processing Services. ISA shall ensure each Merchant has the equipment and related supplies necessary to utilize the Payment Processing Services. ISA will immediately notify National Processing of any Merchant dispute or other matter known to it that requires escalation to National Processing.
2.9 Other Products and Services; Equipment. ISA shall be permitted to enter into a separate agreement with any Merchant with respect to (i) services unrelated to the Payment Processing Services, or (ii) the sale of, lease and/or rental of point of sale terminals and other hardware and software. National Processing will have no responsibility or liability with regard to equipment leased or sold to Merchants by ISA or another third party. ISA will install and maintain all such equipment. In addition, ISA will train Merchants on terminal use.
2.10 Acceptance of Merchants. ISA acknowledges and agrees that National Processing reserves the right, in its sole discretion to (i) accept or decline Merchants based upon its Underwriting Policy, (ii) cease processing Merchant transactions at any time in accordance with the terms of the Merchant Agreement, and (iii) except as otherwise restricted by this Agreement, determine, in its sole discretion, any products and services related to Payment Processing Services that ISA may offer to Merchants.
2.11 Conduct of Business. ISA will conduct its business in an ethical and professional manner and will comply with all laws, rules and regulations and the Rules applicable to its activities under this Agreement, which include, but are not limited to, solicitation of Merchants and promotion of the Payment Processing Services.
2.12 Background Check. ISA hereby represents that none of its principals, officers or directors are party to any pending litigation or Payment Brand proceeding that would have material effect on this Agreement. Each of ISA’s principals, officers and directors will submit to a background check as deemed appropriate by National Processing. ISA authorizes National Processing, or any creditor bureau or credit/criminal reporting agency employed by National Processing or any agents of National Processing, to investigate the references given to National Processing by ISA and to check the credit/criminal reporting agency’s files. ISA will perform a background check on all ISA sales representatives. ISA acknowledges that National Processing may also conduct a background check on all such sales representatives.
2.13 Sales Offices. ISA represents and warrants that it has provided to National Processing the identity and location of each of ISA’s current sales offices. ISA shall promptly provide National Processing with written notice of any additions, closures or changes in the identity or location of any of its sales offices. ISA will not delegate any of ISA’s rights or obligations under this Agreement to any other persons or entity except (i) to an entity for whom this Agreement permits ISA to contract, (ii) with whom ISA has contracted in accordance with this Agreement and (iii) whom National Processing has approved in writing.
2.14 Sales Representatives. ISA will report to National Processing the name, address, and sales office location of all sales representatives that market National Processing’s Payment Processing Services on behalf of ISA to prospective Merchants. ISA will update such report monthly as new sales representatives are added or as sales representatives are terminated. ISA will actively and diligently monitor its sales representatives to ensure compliance with applicable laws and the Rules. ISA will take immediate action to rectify any non-compliant activity, or activity which could cause harm to National Processing’s or Member’s reputation or business. ISA will be responsible for ensuring that all sales representatives comply with the terms of this Agreement and the Rules, and ISA will be liable for their failure to comply. National Processing may terminate an ISA representative in National Processing’s system on written notice to ISA.
2.15 Payment Brand Rights. ISA agrees that the Payment Brands have the right, either in law or in equity, to enforce any provision of the Rules and to prohibit ISA’s conduct that creates a risk of injury to the Payment Brands or that may adversely affect the integrity of the Payment Brands’ systems and/or information. ISA will refrain from taking any action that would have the effect of interfering with or preventing an exercise of such right by a Payment Brand.
2.16 Data Security Standards. ISA agrees to comply with, and to take reasonable efforts to ensure that Merchants comply with, all privacy and security requirements under the Payment Card Industry Data Security Standard (“PCI DSS”), as well as any other security guidelines or requirements established by the Payment Brands and applicable law with regard to ISA’s and Merchant’s use, access, and storage of Customer information. ISA agrees to implement the safeguards set forth in the Rules to prevent unauthorized disclosure of and access to Customer Information. If a breach of security results in unauthorized disclosure of or access to Customer information, ISA will take appropriate measures to stop the intrusion; report on the intrusion to National Processing as soon as possible, but no later than 24 hours after discovery of the intrusion; take actions requested by National Processing, Member or a Payment Brand, if any, to mitigate such unauthorized disclosure; subsequently report the corrective action taken by ISA in response to the intrusion; and provide reasonable assistance to National Processing and National Processing’s third party providers, if applicable to support any mandatory disclosures about the intrusion required by applicable law.
2.17 Third Party Gateway Providers. If ISA offers Merchants the products and services of a third party gateway provider (“Third Party Gateway Provider”) to assist Merchants with processing Transactions, then ISA will notify National Processing in writing of all such Third Party Gateway Providers and provide National Processing and/or Member with the information and documentation necessary to register such Third Party Gateway Providers with the Payment Brands, as required. All Third Party Gateway Providers must comply with the Rules, including but not limited to the PCI DSS. ISA will certify the Third Party Gateway Providers’ compliance with all requirements imposed on the applicable level for such Third Party Gateway Providers in accordance with PCI DSS requirements. ISA acknowledges and agrees that neither National Processing nor Member are parties to agreements with the Third Party Gateway Providers regarding such Third Party Gateway Providers’ products and services and that as between National Processing and ISA, ISA is solely responsible for the actions or inactions of the Third Party Gateway Providers, including any security breach of such Third Party Gateway Provider’s processes and systems.
3. National Processing Responsibilities.
3.1 Services. National Processing will use commercially reasonable efforts to provide to Merchants the Payment Processing Services, as applicable; provided, however, that nothing in this Agreement shall create, directly or indirectly, any obligation on the part of National Processing to provide services (including the timing of delivery of such services) that it is unable to provide under its agreement with Member.
3.2 Approval of Merchants. National Processing shall review each prospective Merchant referred by ISA to determine, in its sole discretion, whether the Merchant meets National Processing’s underwriting requirements.
3.3 Payment of Residuals; Residual Statements. National Processing shall provide ISA with monthly reports related to the calculation of Residuals and provide compensation to ISA in accordance with Section 4.
3.4 Merchant Disputes. National Processing and Member retain the right to resolve disputes with Merchants arising under the Merchant Agreements even if such resolution would result in a reduction of or refund of fees to the Merchants. National Processing and Member will monitor the Merchants’ activity on a portfolio basis.
3.5 Loss Liability. National Processing shall be responsible for all Merchant Losses, provided that ISA shall be 100% liable if such Merchant Losses (i) arise from or are related to ISA’s indemnification obligations set forth in Section 9.1, (ii) incurred by a Merchant for which ISA does not submit a site inspection in accordance with the Underwriting Policy or the Rules, or (iii) are attributable in whole or part to (A) the misrepresentation, fraud, willful or intentional acts or omissions or gross negligence of ISA or any of ISA’s sales representatives, or the failure of any of such parties to comply with applicable laws or the Rules; (B) the breach of any provision of this Agreement by ISA or any of ISA’s sales representatives; or (C) a misrepresentation or omission by a Merchant of which ISA knew.
4. Payment of Residuals.
4.1 Residuals. National Processing will pay to ISA by ACH transfer to the ISA Account an amount equal to the Residuals based on amounts finally paid to and received by National Processing for Merchants that continue to process through National Processing pursuant to this Agreement. National Processing’s obligation to pay the Residuals shall arise only at such time as National Processing receives payment from its respective third party payors relating to such Merchants. Residuals will be calculated by National Processing based on the fees set forth on Exhibit A. National Processing may only amend Exhibit A to reflect Pass-Through Costs and Interchange, and any such amendments or changes shall become part of this Agreement and be fully effective 30 days after ISA is notified thereof. If ISA disputes any Residuals paid to it, ISA must submit written notification to National Processing that a dispute exists and specify in detail the nature of the dispute no later than 30 days after the date of payment. If ISA fails to submit the required written notification within the prescribed time period, the parties hereby agree that a dispute no longer exists and ISA will be deemed to have unconditionally accepted the Residuals for all services rendered during the time period for which the Residuals relates. Efforts by National Processing to assist ISA in investigating such matters will not create any obligations to continue such investigation or assist with any investigation in response to any future notices of possible adjustments that are not timely submitted. ISA shall hold the compensation plan set forth in Exhibit A in strict confidence.
4.2 Payment of Residuals. National Processing will pay to ISA by ACH transfer to the ISA Account an amount equal to the Residuals based on amounts finally paid to and received by National Processing for Merchants that continue to process through National Processing pursuant to this Agreement, payable in arrears on or about the last day of each month following the month in which processing occurred. At the time of each remittance to ISA, National Processing will deliver to ISA a statement detailing the computations used by National Processing in arriving at the Residuals. National Processing will pay Residuals to ISA with respect to a Merchant during the Term and after its termination so long as National Processing continues to receive payments from the respective third party payors relating to such Merchant; provided, however, that ISA’s right to receive any Residuals will immediately cease (i) if this Agreement is terminated by National Processing pursuant to Section 6.2, (ii) upon the occurrence of any Event of Default (as defined below) either during the Term or after its termination, (iii) if National Processing is prohibited to pay Residuals by Member or a Payment Brand, or (iv) if Residuals fall below $50 per month for any consecutive 12-month period.
4.3 ISA Account. ISA will supply National Processing with all information necessary for National Processing to remit payment of Residuals to the ISA Account and ISA shall promptly notify National Processing of any changes to the ISA Account. ISA authorizes National Processing to deposit funds directly into the ISA Account, and National Processing will automatically debit the ISA Account for all amounts owed by ISA related to or arising from its obligations under this Agreement. All undisputed amounts that are unpaid when due under this Agreement shall bear interest at the rate of one percent (1%) per month (but in no event more than the highest rate of interest legally allowable) on such delinquent amount from its due date until the date of payment.
4.4 Recourse. Notwithstanding any provision set forth herein, ISA acknowledges and agrees that National Processing shall have full recourse against ISA for: (a) any Residuals previously paid on any fees which are subsequently refunded to the Merchant; (b) monies owed by ISA to National Processing for any reason, including but not limited to equipment, sales, supplies, and/or marketing materials, (c) any negative amounts for fees that are not collected from Merchants, (d) any errors or inaccuracies in amounts previously paid to ISA under this Agreement, or (e) any Minimum Monthly Fee shortfall. ISA further agrees such recourse shall not be limited to withholding Residuals or debiting the ISA Account, but at National Processing’s sole discretion, National Processing may initiate other actions to recover such monies.
4.5 Sale of Residuals. If during the Term of this Agreement, or for any period thereafter in which ISA receives Residuals from National Processing hereunder, ISA makes available for acquisition through merger, stock sale, asset sale, assignment or any other transaction any of its right to receive Residuals, ISA must first offer National Processing the opportunity to acquire ISA’s interest in the Residuals, upon terms and conditions offered to the third party, or as reflected in an offer received from a third party. National Processing shall then have 30 days from receiving ISA’s offer within which to accept or decline ISA’s offer or match the offer received from a third party. If National Processing matches the third party’s offer, ISA shall sell the Residuals to National Processing. National Processing’s failure to respond timely will be deemed National Processing’s rejection of the offer. Following the offer to National Processing, any sale of Residuals to any third party must be pursuant to terms and conditions substantially similar to the terms and conditions previously offered to National Processing, and to a third party approved in writing by National Processing. The third party purchasing the Residuals will take assignment of this Agreement as part of the transaction. ISA shall not be eligible to offer any portion of its Residuals to a third party during the Term of this Agreement if it is in material violation of any provision of this Agreement. ISA understands that all conversion costs incurred by National Processing will be borne by ISA, and that ISA must inform National Processing 90 days prior to the assignment date.
5. Representations and Warranties of Agent. ISA hereby represents and warrants to National Processing as follows:
(a) If other than a sole proprietorship, ISA is duly organized, validly existing and in good standing under the laws of the state of its organization and is duly authorized to do business in each other state in which ISA’s business, including marketing of the Payment Processing Services, which make such authorization necessary or required. (b) The person signing this Agreement has the full power and authority to execute, deliver and ensure ISA’s performance of this Agreement. This Agreement is valid, binding and enforceable against ISA in accordance with its terms and no provision requiring ISA’s performance is in conflict with ISA’s obligations under any other agreement to which ISA is a party or by which it is bound. (c) Neither the execution and delivery by ISA of this Agreement nor the performance of this Agreement by ISA will violate any applicable law, rule or regulation or the Rules. The performance of this Agreement by ISA will not violate ISA’s charter or by-laws, or any contract or other instrument to which it is a party or by which it is bound and will not violate any outstanding judgment, order, injunction, law, rule or regulation to which it is subject. (d) There are no actions, suits, claims, governmental investigations or proceedings instituted, pending or, to the knowledge of ISA, threatened against ISA or against any asset, interest or right of ISA, that would, if determined adversely to ISA, have a material adverse effect on ISA or would materially adversely affect the ability of ISA to perform its obligations under this Agreement. (e) None of ISA’s officers, directors, owners, partners, or principals, as applicable, has been subject to a felony or a decree, injunction or judgment in any proceeding or lawsuit alleging fraud or deceptive practices. Neither ISA nor any of its employees or sales representatives engages or has engaged in any activity or pattern of activity that could cause material, irreparable harm to National Processing. (f) Neither ISA nor any of its officers, directors, owners, partners, or principals, as applicable, nor any other person performing ISA’s obligations under this Agreement has been deregistered or otherwise terminated by any Payment Brand or Member. (g) ISA agrees that it will notify National Processing and Member in the event that any of these representations and warranties becomes false during the Term.
6. Term; Termination.
6.1 Term. The initial term of this Agreement shall be for a period of 3 years, commencing on the Effective Date, unless otherwise earlier terminated as provided herein (the “Initial Term”). This Agreement shall be automatically renewed for additional terms of 1 year each (each a “Renewal Term” and, together with the Initial Term, the “Term”), unless either party notifies the other no later than 90 days prior to the end of the then current term that it does not wish to renew this Agreement or unless otherwise provided herein.
6.2 Termination by National Processing. National Processing may terminate this Agreement immediately upon notice to ISA in the following circumstances: (a) Any determination by National Processing in its commercially reasonable discretion that ISA or any of its sales representatives has engaged in fraud, misrepresentation relating to any matter subject to this Agreement, or any activity or pattern of activity that has caused or may cause material, irreparable harm to National Processing or Member. (b) If any circumstances arise regarding ISA or its business that create harm or loss of goodwill to National Processing or Member or any Payment Brand.
6.3 Termination by Either Party. Either party may terminate this Agreement for an Event of Default. An “Event of Default” means (i) either party fails to pay the other party when due any amount due under this Agreement and such failure continues for a period of 15 days after written notice has been sent to the non-paying party, (ii) any representation or warranty made by either party proves to have been false or misleading in any material respect as of the date made, or becomes false or misleading at any time, (iii) either party fails to observe any material obligation or covenant specified in this Agreement, and such failure is not cured within 30 days of receipt of written notice from the non-breaching party, or (iv) either party (A) files for bankruptcy, receivership, insolvency, reorganization, dissolution, liquidation or any similar proceeding, (B) has such a proceeding instituted against it and such proceeding is not dismissed within 60 days, (C) makes an assignment for the benefit of its creditors or an offer of settlement, extension or composition to its creditors generally; or (D) a trustee, conservator, receiver or similar fiduciary is appointed for that party or substantially all of that party’s assets.
6.4 Automatic Termination. This Agreement will automatically terminate if: (i) any Payment Brand prohibits National Processing from providing, or prohibits Member from allowing National Processing to provide, the services set forth in this Agreement, (ii) Member is no longer a member of Visa or MasterCard, or (iii) it becomes impossible or impractical for National Processing to perform its obligations under this Agreement by reason of changes in laws or the Rules which this Agreement cannot reasonably be modified to accommodate.
7. Effect of Termination.
7.1 Continuing Obligations. Termination by either party shall not relieve either party from any obligation accrued through the date of termination. Upon termination of this Agreement, ISA shall return to National Processing all marketing materials, price lists, merchant lists, equipment, supplies and any other property or Confidential Information of National Processing in ISA’s possession at the time of termination.
7.2 Certain Post-Termination Rights. No termination of this Agreement will affect: (i) any Merchant Agreement in effect as of the date of termination, or (ii) any right of National Processing with regard to the collection of fees owed, or ISA’s liabilities. ISA will fully cooperate with National Processing throughout the remaining term of each Merchant Agreement.
7.3 Payment of Residuals. Payment of Residuals after termination of this Agreement shall be in accordance with Section 4.2 hereof.
8.1 Confidentiality. Neither party shall disclose to any third party the Confidential Information of the other party and shall not use any such Confidential Information for any purpose other than to perform such party’s obligation under this Agreement. Each party agrees to treat Confidential Information with the same degree of care and security as it treats its most confidential information, but in no circumstance less than a reasonable degree of care. Each party may disclose such Confidential Information to employees and agents who require such knowledge to perform services under this Agreement, provided that such employees and agents are subject to obligations of confidentiality in regards to the protection of the Confidential Information no less binding than those set forth herein. In the event either party receives a subpoena or other validly issued administrative or judicial process requesting Confidential Information, the recipient shall promptly notify the other party of such receipt and, to the extent reasonable permit the disclosing party to contest such requirement, and thereafter, comply with such subpoena or process to the extent permitted by law.
8.2 Marks. (a) During the Term of this Agreement, National Processing grants to ISA a limited, non-exclusive license to use the name “National Processing” and its Marks when performing its obligations under this Agreement. ISA understands and agrees that this Agreement shall not confer, and ISA shall not obtain, any other right to National Processing’s Marks by virtue of such use. ISA will not take any action that jeopardizes National Processing’s proprietary rights or acquire any right in National Processing’s Marks, except the limited use rights specified in this Agreement. ISA shall not use or register, directly or indirectly, any trademark, service mark, trade name, copyright, company name or other proprietary or commercial right which is identical or confusingly similar to National Processing’s and/or any third party provider’s Marks. Upon expiration or termination of this Agreement, ISA will immediately cease all display, advertising and use of all National Processing Marks and will not thereafter use, advertise or display any trademark, trade name or product designation which is, or any part of which is, similar to or confusing with any Mark or with any trademark, trade name or product designation associated with National Processing or the Payment Processing Services. (b) ISA acknowledges and agrees that Visa, MasterCard and any other Payment Brand are the sole and exclusive owners of their respective Marks. ISA further acknowledges and agrees that no right, title or interest in such Payment Brand Marks is being conveyed to ISA, that ISA will not contest the ownership of any Payment Brand Mark, and that Visa, MasterCard and any such other Payment Brand may at any time immediately and without advance notice prohibit ISA from using their respective Marks. ISA shall not use any Payment Brand Mark on marketing materials, such as business cards or letterhead, and shall not suggest, imply, or in any manner create an impression that it is a member or an authorized representative of Visa or MasterCard or any other Payment Brand, or that Visa or MasterCard or any other Payment Brand endorses in any way ISA or the card program services it provides pursuant to this Agreement. If ISA breaches any Rules, then National Processing, Member and/or any Payment Brand may immediately and without advance notice prohibit ISA from performing any service or activity relating to the use of its respective Marks and the operation of the Payment Brands.
8.3 Non-Solicitation. During the Term and for the longer of (i) three years after termination of this Agreement or (ii) as long as National Processing pays Residuals in accordance with Section 4.1 hereof, neither ISA, nor any of its principals, officers, directors, agents, representatives, or entity in which such principal, officer or director has any interest, will directly or indirectly, (A) solicit or endeavor to obtain as a customer for itself or for any third party or contract with, any Merchant for Payment Processing Services or related services, or (B) induce, encourage or assist any Merchant in breaching or terminating its Merchant Agreement with National Processing, without the prior written consent of National Processing. Further, during the Term and for the longer of (i) three years after termination of this Agreement or (ii) as long as National Processing pays Residuals in accordance with Section 4.1 hereof, ISA shall not, directly or indirectly, solicit or make any offer of employment to any employee of National Processing without its prior written consent.
8.4 Records. ISA may not sell, transfer, or disclose any materials that contain Customer account numbers, personal information or card transaction information to third parties, including in the event of its failure, including bankruptcy, insolvency, or other suspension of business operations. In the event that ISA’s business fails or ceases to exist, ISA is required to return to National Processing all such information or provide proof of destruction of this information to National Processing.
8.5 Remedies. The parties acknowledge that any breach of this Section 8 by ISA will result in irreparable and continuing damage to National Processing and, therefore, in addition to any other remedy which may be afforded by law, any breach or threatened breach of this Section 8 may be prohibited by restraining order and/or injunction or any other equitable remedies of any court of competent jurisdiction, without the need for a bond. The rights, remedies and benefits herein expressly specified are cumulative and not exclusive of any right, remedies or benefits which either party may otherwise have by contract or by law.
9. Additional Terms and Obligations.
9.1 Indemnification. ISA agrees to indemnify, defend and hold National Processing, Member, the Payment Brands, and their respective employees, officers, agents, directors, members and permitted assigns harmless from and against any loss, liability, action, proceeding, damage, penalty, claim or expense (including reasonable attorneys’ fees and costs of defense) (collectively, “Indemnification Losses”) suffered or incurred, directly or indirectly, by any of them as a result of (a) any misrepresentations or false statements with regard to the terms and conditions of this Agreement or the Payment Processing Services by ISA or any of its officers, directors, representatives, agents or employees; (b) any negligence or fraud by ISA or any of its officers, directors, representatives, agents or employees; (c) any warranty or representation made by ISA or any of its officers, directors, representatives, agents or employees being false or misleading; (d) the failure of any ISA Third Party Gateway Provider used by ISA to comply with the Rules or applicable law or performance of its obligations to Merchants; (e) any failure by ISA or any of its officers, directors, representatives, agents or employees to fully comply with the Rules or applicable law; (f) any breach by ISA or any of its officers, directors, representatives, agents or employees related to the performance of ISA’s obligations under this Agreement or its services to Merchants; or (g) a breach of non-public information from ISA’s or its Third Party Gateway Providers’ systems. In addition, ISA shall reimburse National Processing for any and all fines and penalties imposed upon National Processing and/or Member by a Payment Brand or any regulatory authority as a result of any action, inaction, negligence or fraud by ISA or any of its officers, directors, agents, representatives or employees.
9.2 Disclaimer of Warranties. EXCEPT FOR THOSE EXPRESS WARRANTIES MADE IN THIS AGREEMENT, NATIONAL PROCESSING MAKES NO WARRANTIES, CONDITIONS, REPRESENTATIONS, INDEMNITIES OR GUARANTEES TO ISA WITH RESPECT TO ITS PERFORMANCE OF THIS AGREEMENT OR ANY NATIONAL PROCESSING PRODUCT OR SERVICE, WHETHER EXPRESS OR IMPLIED, ARISING BY LAW, CUSTOM OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND NATIONAL PROCESSING DISCLAIMS ALL SUCH WARRANTIES AND ISA HEREBY EXPRESSLY WAIVES ALL SUCH WARRANTIES EXPRESSED AND IMPLIED. FURTHER, NATIONAL PROCESSING DOES NOT REPRESENT OR WARRANT THAT ITS SERVICES, INCLUDING THE MERCHANT SERVICES, WILL MEET ANY PARTICULAR STANDARDS OR REQUIREMENTS OR BE UNINTERRUPTED OR ERROR FREE.
9.3 Limitation of Liability; Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL NATIONAL PROCESSING BE LIABLE FOR LOSS OF REVENUE OR PROFITS, EXPENSE OR INCONVENIENCE, OR ANY OTHER SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND (WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE) IN CONNECTION WITH OR ARISING OUT OF NATIONAL PROCESSING’S PERFORMANCE OR NON-PERFORMANCE (INCLUDING BREACH) UNDER, OR OTHERWISE ARISING IN CONNECTION WITH, THIS AGREEMENT, OR CAUSED BY THE USE, MISUSE OR INABILITY TO BENEFIT FROM ANY OF THE SERVICES, WHETHER ON ACCOUNT OF NEGLIGENCE OR OTHERWISE, EVEN IF NATIONAL PROCESSING HAS BEEN ADVISED, KNEW OR SHOULD HAVE KNOWN OF THE POSSIBILITY OF SUCH DAMAGES. Except for National Processing’s obligation to pay Residuals due under this Agreement, the total liability of National Processing for any and all causes arising from or in connection with this Agreement, whether arising out of negligence, breach of contract, tort or otherwise, shall not exceed the lesser of (i) proven direct damages, or (ii) the amount of aggregate Residuals paid to ISA hereunder for the 3 month period immediately prior to the event giving rise to damages. The limitations set forth in this Section shall apply whether or not the alleged breach or default is a breach of a fundamental condition or term, or a fundamental breach, or if any limited warranty or limited remedy fails of its essential purpose.
9.4 Set-Off Rights. National Processing shall have the right, without presentation, demand, protest, notice of protest, or other notice of dishonor of any kind, all of which are hereby expressly waived, to set-off against any amount owed from National Processing to ISA for any obligation of ISA or any amount ISA owes to National Processing under this Agreement or any other agreement between ISA and National Processing.
9.5 Tax Liability. All expenses and tax liabilities resulting from ISA’s performance under this Agreement will be ISA’s sole responsibility. ISA agrees to pay such taxes timely and to report the revenue derived from this Agreement in a manner consistent with ISA’s relationship set forth in this Agreement. ISA agrees that if any government entity claims that any taxes are due on ISA’s behalf, ISA will defend National Processing against such claims and indemnify and hold National Processing harmless from any Indemnification Losses sustained by National Processing because of such claims.
10.1 Entire Understanding, Amendment. This Agreement, including the Exhibits which are incorporated by reference, sets forth the entire understanding of the parties relating to its subject matter, and all other understandings, written or oral, are superseded. Except as otherwise provided in this Agreement, this Agreement may not be amended except in a writing executed by all parties. Facsimile and electronic writings shall be deemed sufficient for all purposes under this Agreement.
10.2 10.2 Notices. All notices and other communications required or permitted under this Agreement shall be in writing and given by personal delivery, telecopy (confirmed by a mailed copy), or first class mail, postage prepaid, addressed as follows: (a) If to National Processing: National Processing LLC Attention: President 1020 W 600 S #300 Lindon, UT 84042 Email: (b) If to ISA: Attention: Email:
10.3 Severability. If any provision of this Agreement is illegal, the invalidity of such provision will not affect any of the remaining provisions, and this Agreement will be construed as if the illegal provision is not contained in this Agreement. This Agreement will be deemed modified to the extent necessary to render enforceable the remaining provisions.
10.4 No Waiver of Rights. No failure or delay on the part of any party in exercising any right under this Agreement will operate as a waiver of that right, nor will any single or partial exercise of any right preclude any further exercise of that right.
10.5 Assignment; Successors and Assigns. Subject to Section 4.5, ISA may not assign any of its rights or obligations under this Agreement, either directly or by operation of law, without the prior written consent of National Processing and any unauthorized attempted assignment will be null and void. ISA acknowledges and agrees that Payment Processing Services may be subcontracted to third parties by National Processing.
10.6 Successors and Assigns. Subject to and unless otherwise provided in this Agreement, this Agreement shall be binding upon, and inure to the benefit of, the successors, executors, heirs, representatives, administrators, and permitted assigns of the parties.
10.7 Third Party Beneficiaries. Except as expressly set forth herein, this Agreement is for the benefit of, and may be enforced only by, National Processing and ISA and their respective successors and permitted transferees and assignees, and is not for the benefit of, and may not be enforced by, any third party. Notwithstanding the foregoing, ISA acknowledges and agrees that (i) Member is considered a third-party beneficiary under this Agreement, (ii) this Agreement confers rights and remedies upon Member as set forth herein, (iii) Member may perform and/or enforce any and all rights and/or obligations of National Processing hereunder except as prohibited by the Rules, and (iv) Member has all rights and authority granted to it by the Rules.
10.8 Prevailing Party. The prevailing party in any action arising out of this Agreement shall be entitled to its reasonable attorneys’ fees and costs.
10.9 Governing Law; Venue; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the laws of the State of Utah (without regard to conflicts of laws principles). The parties hereby consent to the sole and exclusive jurisdiction to the state and federal courts located in Utah County, Utah for any dispute arising out of this Agreement. THE PARTIES SPECIFICALLY WAIVE THE RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY DISPUTE ARISING OUT OF THIS AGREEMENT, OR BETWEEN THE PARTIES FOR ANY REASON.
10.10 Relationship of the Parties. National Processing and ISA will be deemed to be independent contractors and will not be considered to be an agent, servant, joint venturer or partner of the other. ISA is not authorized to make any warranty or representation on behalf of National Processing or Member except as specifically authorized by this Agreement. ISA agrees that it shall not represent to any person that it is the agent of National Processing, nor shall it fail to correct any misunderstanding as to its status in relation to National Processing.
10.11 Construction. The headings used in this Agreement are inserted for convenience only and will not affect the interpretation of any provision. All sections mentioned in this Agreement refer to section numbers of this Agreement. The language used will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party.
10.12 Force Majeure. Neither party will be liable to the other for any failure or delay in its performance of this Agreement if such failure or delay arises out of causes beyond the control and without the fault or negligence of such party.
10.13 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, and such counterparts shall together constitute one and the same instrument. A scanned, facsimile, or duplicate copy of this Agreement executed by the parties shall be treated as and/or constitute an original. Each undersigned below warrants and represents that he or she is a duly authorized representative of the legal entity on behalf of which he or she is executing this Agreement.
10.14 Survival. The rights and obligations of the parties hereto which by their nature would continue beyond the termination or cancellation of this Agreement shall survive any such termination or cancellation including the following: Sections 1, 2.3, 2.5 (as long as ISA is receiving Residuals), 2.6 (as long as ISA is receiving Residuals), 3.5, 4, 7, 8, 9 and this Section 10.
|*Lifetime Residual Revenue||75%||90%|
|**Referral Override Bonus||5%||10%|
|High Risk Residual Split||50%||60%|
|***Number of Processing Accounts||1-9||10+|
* Based on net revenue. Your entire book of business will be paid at the residual tier you achieve.
** 5%-10% Residual Referral Override Bonus for ISOs & Agents that you refer (Earn 5%-10% of your referred agents net revenue)
*** Total number of Accounts. Each account must be processing $3,000 or more per month to qualify for tier advancements. Residual will still be paid out on accounts processing less than $3000/month.
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