EXHIBIT 10.12
FIRST USA MERCHANT SERVICES, INC.
CREDIT CARD PROCESSING SERVICES AGREEMENT
SCHEDULE A
MERCHANT NAME: ONSALE, Inc.
MERCHANT AGREEMENT CONTRACT NUMBER: 700963
The average value of MERCHANT's CREDIT CARD transactions will be $200.00.
MERCHANT will process approximately 10,000 CREDIT CARD transactions annually.
PROCESSING FEES
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Per CREDIT CARD SALES DRAFT and CREDIT $.25
Monthly Minimum** $150.00
BANK CARD Discount Rate
(includes CARD FEEs and Authorizations) 2.00%
Voice Authorization No Charge
ACH (Automated Clearing House) Funds Transfer No Charge
Weekly Statements No Charge
24 Hour Processing Support No Charge
Per MCI and VISA CHARGEBACK Processed/Represented $5.00
Collection, Pre-Arbitration & Compliance $10.00
Postage, Supplies, Equipment & Other Services Charged as used
Supplemental Products Listing Available
**If total monthly fees are greater than the Monthly Minimum specified above, no
Minimum will apply. If total monthly fees are less than the Monthly Minimum
specified above the difference shall be charged on the last calendar day of
the month.
If on any business day, MERCHANT's NET PROCEEDS are negative, any such amounts
shall be collected from MERCHANT's designated bank account via ACH.
Set Up Fees:
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Computer to Computer Direct Access (CPU) Set up $250.00
Negative Balance
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MERCHANT shall be charged a fee against NET PROCEEDS after the number of
Negative Balances for a calendar month has exceeded two (2) based on the
following schedule.
Negative Balance Amount Fee Per Occurrence
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$0 - $300.00 $ 25.00
$301.00 - $700.00 $ 50.00
$701.00 - $1,000.00 $ 75.00
$1,001.00 - $5,000.00 $100.00
$5,001.00 - $10,000.00 $200.00
$10,001.00 + $300.00
If a Negative Balance results when any fees are assessed, section 7 shall
apply.
FIRST USA MERCHANT SERVICES, INC.
CREDIT CARD PROCESSING SERVICES AGREEMENT
SCHEDULE A (continued)
MERCHANT NAME: ONSALE, Inc. AGREEMENT NUMBER: 700963
RESERVE ACCOUNT
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We shall withhold from BANK CARD SALES DRAFTs, a percent (Prepayment Percentage)
and/or a Prepayment, as indicated below, that shall be credited to a RESERVE
ACCOUNT, against which CHARGEBACKs are assessed. We shall credit a compensating
dividend to the RESERVE ACCOUNT and provide to MERCHANT a periodic accounting
which, relates by month: i) the amount of BANK CARD SALES DRAFTs, submitted, ii)
the Prepayments made (including compensating dividends), iii) the amounts of
CHARGEBACKs which relate to and reverse the specific SALES DRAFTs submitted and
iv) the resulting RESERVE ACCOUNT balance. On a monthly basis, and no later than
fifteen (15) days following the sixth _______ calendar month in arrears, we
shall rebate to MERCHANT any remaining balance in the RESERVE ACCOUNT that
exists for the sixth month prior to a current reporting period, subject to all
other terms and conditions herein.
If any periodic accounting shows that a RESERVE ACCOUNT balance associated with
any given month, becomes or is projected to become negative, we shall replenish
the RESERVE ACCOUNT by suspending any rebates due MERCHANT and/or withholding
from NET PROCEEDS the amounts necessary to eliminate such negative position.
Upon notice from us, MERCHANT shall repay any remaining amounts due within one
(1) business day by wire transfer. We may increase the Prepayment Percentage as
it appears to be necessary to avoid negative positions.
Prepayment Percentage 3%
Activity Parameters
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Maximum Average Ticket of $200.00
Daily Weekly
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Total BANK CARD SALES DRAFTs $5,700.00 $40,000.00
Total BANK CARD CREDITs $200.00 $1,400.00
In any case wherein MERCHANT exceeds the above parameters, FIRST USA shall
make every reasonable attempt to contact the MERCHANT and advise MERCHANT of
such occurrence, and FIRST USA may exercise its rights under paragraph 21.
Failure to contact MERCHANT or exercise any rights of FIRST USA, in no way
waives any rights or remedies of FIRST USA under this AGREEMENT at any time.
Your signature on two copies of this Addendum that you return to us indicates
your understanding and acceptance of its terms and incorporation by reference in
the FIRST USA MERCHANT SERVICES, INC. CREDIT CARD PROCESSING SERVICES AGREEMENT.
Agreed and Accepted by: Agreed and Accepted by:
/s/ ▇▇▇▇ ▇▇▇▇▇▇
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Date June 16, 1996 Date
ONSALE, INC. FIRST USA MERCHANT SERVICES, INC.
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MERCHANT LEGAL NAME (Print or Type)
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Address (Print or Type)
/s/ ▇▇▇▇ ▇▇▇▇▇▇
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By (authorized signature) By (authorized signature)
▇▇▇▇ ▇. ▇▇▇▇▇▇, CFO ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Group Manager
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By, Name, Title (Print or Type) By, Title (Print or Type)
FIRST USA MERCHANT SERVICES, INC.
CREDIT CARD PROCESSING SERVICES AGREEMENT
GUARANTY ADDENDUM
MERCHANT NAME: ONSALE, Inc. AGREEMENT NUMBER: 700963
To induce First USA Merchant Services, Inc. (hereinafter referred to as FIRST
USA) to enter into the annexed Credit Card Processing Service Agreement
(hereinafter the AGREEMENT) in conjunction with card companies and clearing
banks as their terms are defined in the AGREEMENT, and for good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
undersigned (____________________ if more than one) unconditionally guarantees,
in accordance with the terms hereof and without any prior written notice, the
prompt payment of any liability or indebtedness to FIRST USA when due.
The undersigned further agrees to indemnify and save FIRST USA harmless against
all costs and expenses, including reasonable attorney's fees, incurred in the
collection of any of the above obligations.
The undersigned hereby waives notice of the acceptance of this Guaranty and of
any future advances and extensions or renewals made in reliance hereon, and also
waives notice of presentment, demand, dishonor, and protest of any note or other
obligations to FIRST USA and any other notices of any description in connection
with this Guaranty.
The liability of the undersigned is absolute and unconditional and shall not be
reduced or terminated by the granting of any indulgence to, or compromise or
settlement with any person(s) who may be liable for the obligations to FIRST
USA, nor by any release, exchange, substitution, or impairment of collateral for
such obligations. FIRST USA shall have no duty to collect or protect any
collateral or income therefrom, nor to preserve any rights against other
parties, and may immediately proceed under ________________ default without
first resorting to any other guaranty, collateral, or other source of payment.
This instrument shall operate as a continuing guaranty and will remain in full
force and effect until withdrawn by a written notice delivered to, and accepted
by FIRST USA, but such withdrawal shall in no way release or diminish the
undersigned's liability incurred under this instrument on account of the balance
due on obligations and liabilities to FIRST USA at the time of such withdrawal
or which are contingent or not then due.
This instrument is intended to take effect as a sealed instrument and shall
become effective immediately upon signing by the undersigned. This instrument
and all rights and remedies of the parties shall be determined as to their
validity, construction, effect and enforcement, and in all other respects of the
same or different nature, by the laws of the State of Texas.
This Guaranty is given for the benefit of ONSALE, Inc.
GUARANTOR: GUARANTOR:
Software Partners, Inc. S. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Individual (type or print) Individual (type or print)
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Address Address
/s/ ▇▇▇▇ ▇▇▇▇▇▇ /s/ S. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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By (signature) By (signature)
June 16, 1996 June 16, 1996
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Date Date
2.00%
FIRST USA MERCHANT SERVICES, INC.
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CREDIT CARD PROCESSING SERVICES AGREEMENT
In consideration of the mutual promises herein made and the mutual benefits to
be derived from this AGREEMENT, the undersigned direct marketer or merchant
(hereinafter referred to as the MERCHANT, "you" or "your") and FIRST USA
MERCHANT SERVICES, INC., a Nevada corporation, having its principal office at
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (hereinafter referred to as FIRST USA,
"we", "our" or "us") mutually agree to the following terms and conditions:
1. INTRODUCTION: We facilitate the funds transfer between the various CARD
ORGANIZATIONs and you for Telephone. Mail and Store CARD SALEs you make to
your CARDHOLDER customers. In a manner similar to the way personal checks are
cleared, your CREDIT CARD funds are cleared according to the various CARD
ORGANIZATIONs rules and regulations and federal, state and local law. It is
the purpose of this AGREEMENT to establish the legal relationship and
contractual duties required of the parties in this AGREEMENT in order to
comply with such rules, regulations and law.
2. DEFINITIONS:
. AGREEMENT refers to this Credit Card Processing Services Agreement and
any schedule attached hereto.
. APPLICATION is your statement of the characteristics of your account that
you have prepared and submitted to us to induce us to enter into this
AGREEMENT with you and that has induced us to process your CREDIT CARD
transactions under the terms and conditions of this AGREEMENT.
. BANK ACCOUNT is your account in your bank to which we will transfer your
NET PROCEEDS.
. BANK CARD is either a MasterCard or VISA CREDIT CARD or such other credit
card as we may hereafter designate in our sole and exclusive discretion.
. CARD FEE is the interchange of assessments charged by a CARD ORGANIZATION
or the discount charge to the company. This fee will increase or decrease
as a result of any changes in the fees or assessments set by the various
CARD ORGANIZATIONs.
. CARDHOLDER is the person to whom the CREDIT CARD is issued and who is
entitled to use the CREDIT CARD.
. CARD ISSUER is the bank that issues BANK CARDs or the T&E CARD company
that issues T&E CARDs.
. CARD ORGANIZATION is a T&E CARD company or a BANK CARD interchange
system.
. CARD SALE is a CREDIT CARD sale made by you to a valid CARDHOLDER as of
the SALE DATE. Each order you receive is a single CARD SALE unless the
goods or services ordered cannot be delivered or completed at one time,
in which case each partial deposit, delivery or completion is a letter
CARD SALE.
. CHARGEBACK is a charge against a SALES DRAFT you previously presented.
. CREDITs are submitted by you to us to offset specific SALES DRAFTs
previously presented to you.
. CREDIT CARD is both the plastic card or other evidence of the charge
account issued by a CARD ORGANIZATION to the CARDHOLDER and the charge
account number designated on the card, either of which you accept from
your customers as payment for their purchases from you.
. CREDIT NET AMOUNT is the amount of the CREDITs less the CARD FEE.
. LICENSED PROGRAMS are our proprietary computer programs that we provide
for your use pursuant to the requirements of this AGREEMENT, including
without limitation, for the purpose of transmitting and receiving
telecommunicated date to us.
. MERCHANDISE RETURN POLICY is that policy established by you for the
issuance of CREDITs to offset specific SALES DRAFTs.
. MERCHANT is the party to this AGREEMENT contracting with FIRST USA whose
correct legal name, legal identity, legal and business address or
addresses and all trade names and styles are set forth in the APPLICATION
and Schedule "A" hereto annexed.
. NET PROCEEDS is the net debit or credit amount. It is (1) the SALES DRAFT
NET AMOUNT (2) Less the CREDIT NET AMOUNT (3) Less the CHARGEBACK AMOUNT
(4) Less the PROCESSING FEES (5) Less the amounts to be credited to the
RESERVE ACCOUNT.
. NON-QUALIFICATION SURCHARGE is an amount added to your CARD FEES that is
the difference between the BANK CARD base interchange rate and the
QUALIFYING RATES for those SALES DRAFTs which do not qualify for the
QUALIFYING RATES.
. PROCESSING FEES are the fees we charge you for our services as specified
in Schedule "A" as may be amended from time to time.
. QUALIFYING RATES are the reduced CARD FEES charged by CARD ORGANIZATIONs
for certain transactions which qualify under the rules of the CARD
ORGANIZATIONs.
. RESERVE ACCOUNT is an account that we may establish on our records for
our accounting requirements and benefit pledged by you to secure payment
to us of any and all amounts which may be due from you to us and for the
benefit of your CARDHOLDER customers. Any and all funds credited to the
RESERVE ACCOUNT may be comingled with our general funds, and will be
subject to disbursement only by us. You have no interest in the reserve
amount until your receipt thereof. The reserve amount shall secure our
PROCESSING FEES and any other sums as may be due to us. CHARGEBACKs and
CREDIT NET AMOUNTs and the claims of CARDHOLDERs arising from CARD SALEs,
and you hereby grant to us a security interest in all funds in our
possession at any time.
. RETRIEVAL REQUEST is a request for information on behalf of a CARDHOLDER
or CARD ISSUER relating to a claim or complaint concerning a CARD SALE
you have made.
. SALE DATE is the effective date of the CARD SALE at which time you have
performed all principal obligations to the CARDHOLDER in connection with
a transaction such as shipment or delivery of goods or services.
. SALES DRAFT is a transaction representing a CARD SALE which you submit to
us for authorization and payment.
. SALES DRAFT NET AMOUNT is the SALES DRAFT amount less the CARD FEE.
. T&E CARD is a Travel and Entertainment CREDIT CARD issued by American
Express, ▇▇▇▇▇ ▇▇▇▇▇▇▇, Diner's Club, JCB, or such other T&E CARD as we
may hereafter designate in our sole and exclusive discretion.
3. THE RELATIONSHIP: To induce us to perform that which is required of us
pursuant to this AGREEMENT and to secure your prompt, punctual and faithful
performance and all and each of your obligations pursuant to this AGREEMENT,
you hereby assign and pledge to us each SALES DRAFT now or hereafter
presented to us and the proceeds thereof including, without limitation, any
and all sums held by us in the RESERVE ACCOUNT. In consideration thereof,
pursuant to the terms and conditions of this AGREEMENT, we agree to
facilitate the funds transfer between the various CARD ORGANIZATIONS and you
for Telephone, Mail and Store CARD SALES you make to your CARDHOLDER
customers in accordance with the terms and conditions of this AGREEMENT.
4. SALES DRAFT: Each CARD SALE shall be evidenced by a single SALES DRAFT
furnished in format and in a manner acceptable to us and completed with the
SALE DATE, the amount and a brief description of goods and services sold or
of the deposit tendered is sufficient detail to identify the transaction.
5. PRESENTMENT: You agree that, except as otherwise agreed in writing, all SALES
DRAFTs and CREDITs arising from CARD SALEs made by you will be presented to
us for processing in accordance with the terms of this AGREEMENT. You shall
present SALES DRAFTs to us within three (3) business days of the SALE DATE,
and you shall present CREDITs to us within three (3) business days of the
date you receive return merchandise, cancellation of service, or a price
adjustment notice from the CARDHOLDER. Such SALES DRAFTs and CREDITs shall be
presented in a format and in a manner acceptable to us and in compliance with
the rules of the CARD ORGANIZATIONS.
We shall make an electronic authorization request, but only if you have not
otherwise provided an authorization, for every BANK CARD transaction and for
those T&E CARD transactions which exceed the floor limit set for you by the
relevant T&E CARD company. We reserve the right not to accept any SALES DRAFT
presented by you if we are unable to obtain an authorization, if it is
illegible, if we reasonably determine that it is or will become uncollectable
from the CARDHOLDER to which the SALES DRAFT would otherwise be charged, or
if we determine that the SALES DRAFT was prepared in violation of any
provision of this AGREEMENT.
Subject to CHARGEBACK and other rights, your presentation to us of your SALES
DRAFTs shall be final, and you hereby authorize us to convey all SALES DRAFTs
and CREDITs to the appropriate CARD ORGANIZATION.
6. QUALIFICATION FOR QUALIFYING RATES: We shall process all SALES DRAFTs in a
manner so that each transaction will have the potential to qualify for the
CARD ORGANIZATIONS' QUALIFYING RATES. For those SALES DRAFTs which cannot
qualify, the base interchange rate will apply and your PROCESSING FEES will
include a NON-QUALIFICATION SURCHARGE for those transactions. In the event
that we determine that an excessive amount of SALES DRAFTs do not qualify, we
may review your internal procedures relating to acceptance of CREDIT CARDS,
and we may notify you of new procedures you should adopt. For purposes of
this AGREEMENT, an excessive number of SALES DRAFTs which do not qualify for
QUALIFYING RATES is 2 per 100 SALES DRAFTs.
7. PAYMENTS FOR SALES DRAFTS: For BANK CARD transactions, we will initiate
transfer of the NET PROCEEDS to your BANK ACCOUNT not later than three (3)
business days following our receipt of your qualified SALES DRAFTs and
CREDITs. In accordance with the Uniform Commercial Code, you agree that the
transfer of NET PROCEEDS to your BANK ACCOUNT shall continue provisional
credit only for your SALES DRAFTs so long as any CARDHOLDER has a dispute or
challenge with respect to the SALES DRAFT for any reason.
To the extent the NET PROCEEDS for any day are negative, we may pursue one
or more of the following options: (i) debit your BANK ACCOUNT for the amount
of the negative balance; (ii) delay presentation of your CREDITs until you
make a payment to us of a sufficient amount to cover the negative balance;
(iii) request (either orally or in writing) payment for such amounts; (iv)
collect the negative balance from any of your accounts at your BANK or at
any other financial institution without notice to you. You agree to resolve
any negative balance within one (1) business day of our advice to you of a
negative balance.
For T&E CARD transactions, we will electronically forward the SALES DRAFT,
including the required authorization code, to the appropriate T&E CARD
company. Except to the extent we provide settlement services for JCB or
Diner's Club/▇▇▇▇▇ ▇▇▇▇▇▇▇ transactions, your receipt of the proceeds due
you will be governed by whatever agreement you have with that T&E CARD
company, and we do not bear any responsibility for their performance.
8. ACCOUNTING: Within three (3) business days following the close of a business
day on which activity is submitted to us, we will supply a detailed
statement describing the elements of your NET PROCEEDs and your T&E CARD
transactions for that business day. We will not be responsible for any error
which you do not bring to our attention within thirty (30) days from date of
such statement.
9. CARD ORGANIZATION RULES AND REGULATIONS AND FEDERAL, STATE AND LOCAL LAW: In
signing this AGREEMENT you agree to comply with all rules and regulations of
the CARD ORGANIZATIONs. You also agree to comply with all provisions of
federal, state and local law affecting CREDIT CARED transactions. Any
failure by you to comply with a CARD ORGANIZATION's rules and regulations or
federal, state or local law applicable to any aspect of any CREDIT CARD
transaction will be a breach of this AGREEMENT which will authorize us to
terminate the AGREEMENT immediately and without prior notice to you.
10. YOUR WARRANTIES: You warrant and represent the following and reaffirm such
warranties and representations each time you present a SALES DRAFT:
(a) You shall abide by the conditions of this AGREEMENT for all SALES
DRAFTs and CREDITs presented to us.
(b) All statements made on your APPLICATION for this AGREEMENT are true as
of the date of your execution of this AGREEMENT. You have no reason to
suspect any fact or circumstance not specified therein which, if known
to us, might prevent us from executing this AGREEMENT.
(c) You will promptly advise us of any materially adverse changes in that
information provided in your APPLICATION and of a material, adverse
change in your financial condition.
(d) You do not do business under a trade name or style not previously
disclosed to us and that there has been no change in the nature of your
business or the product lines that you sell not previously disclosed to
us.
(e) All SALES DRAFTs and CREDITs you present to us are genuine and arise
out of a bona fide Telephone, Mail or Store CARD SALES of merchandise
or service by you and do not involve the use of a CREDIT CARD for any
other purpose of the remaining or existing obligations of the
CARDHOLDER.
(f) You have title to all SALES DRAFTs you present to us, there are no lens
or other encumbrances on them, and you have the authority to present
the SALES DRAFTs to us for submission to the CARD ORGANIZATIONs.
(g) No SALES DRAFT is subject to any dispute, set-off or counterclaim.
(h) SALES DRAFTs presented to us under this AGREEMENT have not and will not
be presented for payment anywhere else.
(i) Each SALES DRAFT delivered to us represents a valid obligation for the
amounts set forth therein.
(j) All statements on each SALES DRAFT are true, and you have no knowledge
or facts which would impair the validity or collectibility of the
amount of the SALES DRAFT.
(k) You have performed all of your principal obligations with respect to
each SALES DRAFT including shipment of the order to the CARDHOLDER in
connection with the transaction to which the SALES DRAFT pertains.
(l) Each SALES DRAFT is drawn on a purchaser who actually is the CARDHOLDEr
and to whom you have actually sold the goods or services and delivered
them according to the CARDHOLDER's instructions.
(m) Goods described in each SALES DRAFT are your sole property and are free
from all liens and encumbrances.
(n) You make no CARD SALEs when only a part of the consideration due is
paid through use of a CREDIT CARD except pursuant to a policy
previously submitted in writing to us.
(o) You prepare one and only one SALES DRAFT per CARD SALE.
(p) The CARD SALES you make pursuant to this AGREEMENT do not violate your
charter or by-laws or any applicable federal, state or local laws or
regulations.
(q) You do not require a minimum transaction amount below which you refuse
to honor otherwise valid CREDIT CARDs.
(r) You do not increase the price or impose any other fee upon any customer
who uses a CREDIT CARD for payment of any transaction.
(s) You do not sell, purchase, provide, or exchange CREDIT CARD account
number information in any form whatsoever other than to us or pursuant
to an official government request.
(t) You have made no representations or warranties for the issuance of
CREDIT except as it states in your MERCHANDISE RETURN POLICY which has
been previously submitted to us in writing.
11. LIABILITY FOR BREACH OF WARRANTIES: If any of your representations or
warranties in your APPLICATION, herein or any paper or documents submitted
to us should be untrue, this AGREEMENT may be terminated by us, in our sole
discretion, immediately and without prior notice.
12. ADVERTISING: You will inform the public in all your advertising material of
the CREDIT CARDs that you honor.
13. MERCHANDISE RETURN POLICY: You shall maintain a fair policy with regard to
the exchange, return and adjustment of merchandise purchased by CREDIT CARD
transactions. Such policy shall be applied equally to all customers and
shall be posted in your establishment or otherwise disclosed to customers.
Such policy may include a refusal to accept items sold at a special rate or
discount for return, except that CARD SALEs involving non-returnable
merchandise shall include a notation to that effect on the SALES DRAFT.
The terms and conditions of your MERCHANDISE RETURN POLICY shall be
submitted to us in writing prior to the effective date of this AGREEMENT and
any change in the terms and conditions of your policy shall be submitted in
writing to us not less than thirty (30) days prior to such change. We may
refuse to process any CARD SALE made in accordance with a MERCHANDISE RETURN
POLICY not acceptable to us.
14. REFUNDS AND CARDHOLDER PAYMENTS: Unless required by law, you will not give
cash refunds to any CARDHOLDER in connection with a CARD SALE. If you allow
a price adjustment, return of merchandise or cancellation of services in
connection with a CARD SALE, you will instead prepare and delivery to us a
CREDIT within three (3) business days of the date you receive return
merchandise, cancellation of service, or a price adjustment notice from the
CARDHOLDER, which you will complete in a format and in a manner acceptable
to us. The amount of the CREDIT may not exceed the amount shown as the total
on the original SALES DRAFT except by the exact amount required to
reimburse the CARDHOLDER for postage that the CARDHOLDER paid to return
merchandise in accordance with a policy that you apply consistently to all
of your customers.
You will not accept cash or any other payment or consideration from a
customer in return for preparing a CREDIT to be deposited to the customer's
CREDIT CARD account.
15. FIRST USA POLICIES, PROCEDURES, FORMS AND FORMATS: You agree to comply with
our policies, procedures, forms requirements and data processing formats for
timely and secure processing of CREDIT CARD transactions under this
AGREEMENT. We may notify you of a change in our policies, procedures, forms
or formats from time to time, and you agree to comply with any such change.
16. RETRIEVAL REQUESTS: We will send you any RETRIEVAL REQUEST that we cannot
satisfy with the information we have on file concerning a CARD SALE. If you
notify us in writing of the resolution of your investigation of such a
RETRIEVAL REQUEST within three (3) business days after you receive it, we
will take the appropriate steps required to reduce the probability of the
CARD ISSUER issuing an unjustified CHARGEBACK. You acknowledge that your
failure to comply with a RETRIEVAL REQUEST in accordance with the respective
CARD ORGANIZATION rules may result in a non-reversible CHARGEBACK of the
subject transaction.
17. CHARGEBACKS: We shall recreate or retrieve all sales information needed to
process CHARGEBACKs with respect to SALES DRAFTs presented to us. You will
keep the original order information from which the SALES DRAFTs are derived
and will furnish the same to us upon request. We will keep the SALES DRAFT
information itself for you.
Except as provided in Section 25 with respect to our obligation to indemnify
you for certain claims, you shall have full responsibility for any such
CHARGEBACK. In no event shall the fact that authorization was obtained by
you deemed to be our representation that a particular CREDIT CARD
transaction is in fact a valid, authorized or undisputed transaction entered
into by the CARDHOLDER or an authorized user of the CREDIT CARD. You may
receive a CHARGBACK from the CARDHOLDER or CARD ISSUER for numerous reasons
under the CARD ORGANIZATION rules: however, the following is a list of some
of the most common reasons for CHARGEBACKS:
(a) For return or non-delivery of goods or services.
(b) Where authorization was required and not obtained.
(c) Where the CARD SALE date is after the CREDIT CARD's expiration date.
(d) Where you have received notice that the CREDIT CARD is not honored.
(e) Where the SALES DRAFT is executed or accepted fraudulently, or where you
knew or should have known the transaction was fraudulent.
(f) If we do not receive your response to a RETRIEVAL REQUEST within three
(3) business day period.
(g) Where the purchaser disputes sales of goods or services, or execution of
SALES DRAFT or claims that the sale price is subject to any set-off,
defense or counterclaim.
(h) Where a CARDHOLDER refuses to make payment for a SALES DRAFT because in
the CARDHOLDER's good faith opinion, a claim or complaint has not been
resolved, or have been resolved by you but in an unsatisfactory manner.
(i) Where the sale or extension of credit is in violation of any law.
(j) Where you have breached any of the terms or conditions of this AGREEMENT
including, but not limited to, a breach of any warranty or
representation, specified in Section 10.
(k) Where the CREDIT CARD was not presented, the CARDHOLDER denies making
the purchase, and the merchandise was sent to an address other than that
of a CARDHOLDER.
(l) Where the sale or extension of credit was subject to a MERCHANDISE
RETURN POLICY not submitted to us as required by the terms of this
AGREEMENT or had been rejected by us.
You are not allowed to re-submit for processing any CARD SALE that
previously has been charged back to you.
In the event we determine that an excessive amount of CHARGEBACKs are being
received by you, we may review your internal procedures relating to
acceptance of CREDIT CARDS and we may notify you of new procedures you
should adopt and/or notify you of a new rate at which we will charge you to
process your CHARGEBACKs or this AGREEMENT may be terminated by us, in our
sole discretion, immediately and without prior notice. For purposes of this
AGREEMENT an excessive number of CHARGEBACKs is one (1) CHARGEBACK per 100
SALES DRAFTs or the total amount of CHARGEBACKs is greater than or equal to
one percent (1%) of the total SALES DRAFT NET AMOUNTs on a rolling thirty
(30) day basis.
18. RECORDS RETENTION: YOU ARE REQUIRED TO STORE ORIGINAL DOCUMENTATION OF EACH
TRANSACTION FOR AT LEAST SIX (6) MONTHS FROM THE DATE OF THE RESPECTIVE
TRANSACTION, AND MUST RETAIN COPIES OF ALL SUCH DATA FOR AT LEAST THREE (3)
YEARS FROM THE DATE OF THE RESPECTIVE TRANSACTION. You are not allowed to
charge any fee for the creation or storage of these copies. We may require
you to deliver original SALES DATA to us rather than storing it.
19. CLAIMS OF CARDHOLDER CUSTOMERS: You acknowledge and agree to be estopped
from denying that to the extent that we have paid or may be called upon to
pay a CHARGEBACK or CREDIT for or on the account of a CARDHOLDER customer
and reimbursement of such payment is not made by you as provided in this
AGREEMENT, then and in that event for the purpose of obtaining reimbursement
of such sums paid or anticipated to be paid, we shall have all of the rights
and remedies of such CARDHOLDER customers under applicable federal, state or
local law. We shall be authorized to assert any and all such claims in our
own name for and on behalf of any such CARDHOLDER customer individually or
all such CARDHOLDER customers as a class.
20. GRANT OF SECURITY INTEREST: To secure your obligations to your customers and
to us to abide by the conditions of this AGREEMENT, to ship the ordered
merchandise to the CARDHOLDER, and to pay CHARGEBACKs, you grant a
continuing security interest in, and assign to us, all of the new owned or
hereafter acquired (and all products and proceeds thereof) accounts,
inventory, general intangibles, cards, chattel paper, fixtures, instruments,
documents of title, documents, securities, books, records, papers, and
information relating to the same and/or to your business, trade secrets,
computer programs, customer lists, tax refunds, and liens, guaranties,
rights, remedies, and privileges pertaining to any of the foregoing and
hereby authorize us to sign financing statements on your behalf to evidence
the security interest granted herein.
21. RESERVE ACCOUNT: In the event of the occurrence or threat of a material,
adverse change in financial condition or of another event as the result of
which we, in our sole discretion, deem ourselves insecure or have reasonable
grounds to believe that we may be liable to third parties for credit
extended to you or that you may be liable to your customers for any reason
whatsoever, we shall have the right (a) to immediately place payments due
you in the RESERVE ACCOUNT and/or stop processing transactions for you until
such time as the extent of your obligation to us, our liability to third
parties and your liability to your customers is known and we no longer deem
ourselves insecure and (b) to demand from you an amount that our experience
dictates to assure payment of such liability. Your failure to pay such
amount shall allow us to terminate this AGREEMENT immediately and without
notice.
22. INFORMATION ABOUT MERCHANT'S BUSINESS: You agree to furnish us within five
(5) days' whatever financial statements and information concerning MERCHANT
or your parent, subsidiary and affiliated entities as we may from time to
time request. Without prior notice (but during your normal business hours),
FIRST USA's duly authorized representatives may visit your business
premises, and may examine your books and records that pertain to your sales
and/or leases made by honoring CARDs, including without limitation your
books and records concerning all SALES DATA presented to us for credit. You
and your principals, officers, partners or proprietors, as the case may be,
agree to provide us at least thirty (30) days' prior written notice of your
or their intent to change in any way the basic nature of your business,
including, without limitation, any change in the manner in which you accept
CARDs and any change in your product line. If we, in our sole discretion,
determine such a change in the nature of your business material to our
relationship with you, we may refuse to process CARD SALEs made pursuant to
such change and we may terminate this AGREEMENT. You will also give us
prompt notice of any potential material adverse change to your business. You
agree to provide us with prompt written notice if MERCHANT or any of your
parent, subsidiary or affiliated entities is the subject of any voluntary or
involuntary bankruptcy or insolvency petition or proceeding.
23. CONFIDENTIALITY: In performing the services described in this AGREEMENT, we
may have access to and receive disclosure of certain information about you
which you designate to be proprietary including, but not limited to,
information about your customers such as lists, sales, etc. We agree that
such information is to be used solely in connection with our obligations
pursuant to this AGREEMENT, and that we shall receive such information in
confidence and not disclose such information to any third party. We shall,
however, be permitted to advertise the fact that you are using our
processing services. We shall use our best efforts to ensure compliance with
the terms of this Section 23 by our employees and shall restrict the number
of our employees with access to this information. Furthermore, all employees
of FIRST USA and its affiliates are required to sign a confidentiality
statement as a condition of employment.
In performing the services described in this AGREEMENT, you may receive
access to and disclosure of certain confidential information about us which
we designate to be confidential or proprietary. You agree that such
information is to be used solely in connection with your obligations
pursuant to this AGREEMENT, and that you shall receive such information in
confidence and not disclose such information to any third party. You shall
use your best efforts to ensure compliance with the terms of this Section 23
by your employees and shall restrict the number of your employees with
access to this information.
In addition, you will exercise reasonable care to prevent disclosure of
CARDHOLDER information, including, but not limited to, storing all media
containing CREDIT CARD numbers in an area limited to selected personnel.
Prior to discarding material containing CARDHOLDER information, you will
destroy it in a manner rendering the data unreadable. If at any time you
determine that the CARDHOLDER information has been compromised, you must
notify us immediately and assist us in notifying the proper parties as we
deem necessary.
24. LICENSED PROGRAMS: All programs which we provide to you now and in the
future are proprietary to us and licensed to you on a non-exclusive basis
governed by, and only for the term of, this AGREEMENT. You acknowledge that
the license granted herein is limited exclusively to your use and that you
do not have the right to sub-license any of the LICENSED PROGRAMs in either
their original or modified form. The original and any copies of LICENSED
PROGRAMs, in whole or in part, which are made by you, shall be our property.
You may modify any LICENSED PROGRAM in machine readable form for your own
use and merge it into other program material to form an updated work,
provided that, upon termination of this AGREEMENT, the LICENSED PROGRAM will
be completely removed from the updated work and treated as if permission to
modify had never been granted.
FIRST USA GRANTS NO WARRANTIES, EITHER EXPRESS OR IMPLIED, ON ANY LICENSED
PROGRAM OR ANY SERVICE PROVIDED UNDER THIS AGREEMENT, INCLUDING ALL IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN NO
EVENT WILL FIRST USA BE LIABLE FOR CONSEQUENTIALLY OR INCIDENTAL DAMAGES
EVEN IF FIRST USA HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
25. INDEMNITY: We agree to indemnify you from any liability, loss or expense
arising out of any claim or complaint by CARDHOLDER related to the
maintenance of the CARDHOLDER's account by us or any failure by us to
properly maintain the CARDHOLDER's account. This indemnification does not
apply to any claim or complaint relating to merchandise or service sold by
you or your failure to resolve a payment dispute. We agree to indemnify you
from any loss due to our mismanagement of funds transferred to you in your
behalf.
You agree to indemnify us from any liability, loss or expense arising out of
any claim, complaint, offset or CHARGEBACK made by a CARDHOLDER with respect
to any SALES DRAFT for merchandise or services which are the subject of any
CARD SALE made by you. Also, you agree to indemnify us or any loss caused by
your violation of a CARD ORGANIZATION's rules or regulations or federal,
state or local laws.
26. EVENTS OF DEFAULT: Upon the occurrence of any one or more of the following
events of default, we may terminate this AGREEMENT without notice or demand,
in addition to which we may exercise our rights and remedies upon default,
as set forth hereinafter. The occurrence of any such event of default shall
also constitute, without notice or demand, a default under all other
agreements, if any, between us and instruments and papers given to us by
you.
(a) Your failure to pay when due any amount then owing by you to us;
(b) Your failure to promptly, punctually, and faithfully perform or
discharge any of your obligations to us;
(c) The determination by us that any representation or warranty now or
hereafter made by you to us, whether herein or in any other document,
instrument, agreement or paper was not true or accurate when given;
(d) The occurrence of any event of default under any agreement between you
and us or instrument or paper now or hereafter given to us by you,
notwithstanding that we may not have exercised our rights upon default
under any such other agreement, instrument, or paper;
(e) Any act by, against, or relating to you, or your property or assets,
which act constitutes the application for, counsel to, or sufferance of
the appointment of a receiver, trustee, or other person pursuant to
court action or otherwise, over all or any part of your property; the
granting of any trust mortgage or execution of an assignment for the
benefit of your creditors, or the occurrence of any voluntary or
involuntary liquidation or extension of debt agreement for you; the
admission by you or your inability to pay your debts as they mature
adjudication of insolvency relation to you; the entry of an order for
relief or similar order with respect to you in any proceeding pursuant
to any federal statute dealing with bankruptcy (hereinafter generally
the "Bankruptcy Code"; the filing of any complaint, application, or
person against you initiating any matter in which you are or may be
granted any relief from its debts pursuant to the Bankruptcy Code or
pursuant to any other insolvency statute or procedures; the calling or
sufferance of a meeting of your creditors; the meeting by you with a
formal or information creditors' committee; the offering by or entering
into by you of any composition, extension or other arrangement seeking
relief or extension of your debts; or the initiation of any other
judicial or non-judicial proceeding or agreement by, against, or
including you which seeks or intends to accomplish a reorganization or
arrangement with creditors;
(f) The entry of any judgment against you which seeks or intends to
accomplish a reorganization or arrangement with creditors;
(g) The service of any process upon us seeking to attach or garnish by mesne
or trustee process any of your funds in our possession;
(h) Your death, termination of existence, dissolution, winding up, or
liquidation;
(i) The occurrence of any event or circumstance with respect to you and/or
the SALES DRAFTs such that we deem ourselves insecure;
(k) Your business failure; or a material, adverse change in your financial
condition;
(l) The existence of your liabilities in excess of the fair market value of
your assets (excluding intangible assets);
(m) The occurrence of any of the foregoing events of default with respect to
any guarantor to us of this AGREEMENT, as if such guarantor were "you"
described therein.
27. RIGHTS AND REMEDIES UPON DEFAULT: Upon the occurrence of any event of
default, and at any time thereafter, we shall have all of the rights and
remedies as provided in the AGREEMENT and of a secured party upon default
under the Uniform Commercial Code, in addition to which we may sell or
otherwise dispose of the SALES DRAFTs and other collateral and apply the
proceeds thereof for application towards (but not necessarily in complete
satisfaction of) the obligations due to us or for which we may be liable to
third parties, including without limitation CARDHOLDER customers. You shall
remain liable to us for any deficiency remaining following such application.
The proceeds shall be applied toward your obligations to us in such order
and manner as we determine in our sole discretion, any statute, certain or
vague, to the contrary notwithstanding.
28. FEES. You agree to pay us for the services set forth in Schedule A in
accordance with the pricing schedule set forth therein. You acknowledge that
such pricing is based on your representation as to your volume of credit
card transactions, method of processing, type of business, and interchange
qualification criteria as represented in your APPLICATION. To the extent
your actual volumes, method, type and criteria differ from this information,
we may modify the pricing set froth on Schedule A.
In addition to the above, from time to time, we may change our fees, charges
and discounts resulting from increases in CARD FEES or the charges of any
third party vendor by giving you notice of the change. Any price change that
is caused by changes in the CARD FEES will be applicable to you as of the
effective date established by the CARD ORGANIZATION. As to any price change
not cause by CARD ORGANIZATION increases, we will provide you with at least
thirty (30) days' notice of the effective date of this price change. Your
presentation of any SALES DRAFT to us after the effective date will
constitute your acceptance of the new prices.
If you terminate this AGREEMENT prior to the expiration of the original or
any renewal term, you agree that the future harm to us would be difficult to
calculate. Accordingly, in the event of your early termination of the
AGREEMENT, in order to compensate us for our loss and not as a penalty, you
agree to pay to us as liquidated damages an amount calculated by multiplying
the average monthly PROCESSING FEES from the prior six (6) months by the
number or months remaining in the contract term. Such amount will be funded,
to the extent possible, according to the same methods for collecting amounts
due under Section 7 hereof.
29. TERMINATION: This AGREEMENT shall remain in effect for two (2) years and
shall automatically be extended for successive one (1) year terms until
terminated by either party upon ninety (90) days' written notice; provided
that we may terminate without such notice to the extent otherwise set forth
herein or if a CARD ORGANIZATION notifies us that it is unwilling to
continue accepting your SALES DRAFTs. All references to termination in this
AGREEMENT are governed by the provision of this Section 29.
Termination shall not affect either party's respective rights and
obligations under this AGREEMENT as to CREDIT CARD transactions entered into
before termination, nor shall it affect either party's rights and
obligations under Sections 7, 11, 17,21, 23, 25, 27 and 29, all of which
shall constitute without limit as to time.
Upon termination, you shall return all materials or supplies issued by us as
part of this AGREEMENT and we will discontinue the maintenance of your
information and will return any relevant data to you except that we will
continue to maintain that information which is required by the regulations
of the respective CARD ORGANIZATIONs and which would be impossible for you
or your agent to maintain.
Upon termination by either party for any reason, you shall fund a RESERVE
ACCOUNT to cover yet unbilled processing costs plus an amount equal to the
actual CHARGEBACK experience determined as a percentage of the prior six (6)
months multiplied by the gross deposits of the prior four (4) months or
reasonably anticipated future CHARGEBACKs, at our discretion. Such RESERVE
ACCOUNT will be funded, to the extent possible, with NET PROCEEDS otherwise
payable to you under Section 7 hereof. To the extent such NET PROCEEDS are
insufficient, you will fund the RESERVE ACCOUNT directly within one (1)
business day of the request according to the same methods for funding a
negative balance under Section 7 of this AGREEMENT. We will refund to you
any remaining monies in your RESERVE ACCOUNT no later than 365 days after
termination or such longer time within which any customer is entitled to a
CHARGEBACK pursuant to the rules and regulations of the CARD ORGANIZATIONS
or federal, state or local law applicable thereto.
30. GENERAL:
PARAGRAPH HEADINGS: The paragraph headings of this AGREEMENT are for
convenience only and shall not be deemed to define, limit or describe the
scope or intent of this AGREEMENT.
EFFECTIVE DATE: This AGREEMENT shall become effective when accepted by an
authorized signatory of FIRST USA.
CREDIT CHECK: Your authorized signature on this AGREEMENT authorizes us to
initiate any credit check deemed necessary of MERCHANT and proposed
Guarantors.
SUCCESSORS AND ASSIGNS: This AGREEMENT binds you and us and our respective
heirs, representatives, successors and assigns.
ASSIGNMENT: You may not assign or transfer your rights or delegate your
responsibilities under this AGREEMENT without our prior written consent.
SEVERABILITY: Should any provision of this AGREEMENT be determined to be
invalid or unenforceable under any law, rule or regulation, such
determinations shall not affect the validity or enforceability of any other
provision of this AGREEMENT.
WAIVERS: No term or condition of this AGREEMENT may be waived unless a
written waiver is signed by both parties.
ENTIRE AGREEMENT: No amendments to this AGREEMENT may be made except in
writing signed by both parties.
NOTICES: All notices must be given in writing and either hand delivered or
mailed first class, postage prepaid 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. If said notice is to First USA, in addition to the
address below, a copy of the notice shall also be sent to First USA Merchant
Services, Inc., Attn: General Counsel, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇.
GOVERNING LAW: This AGREEMENT will be governed by and construed in
accordance with the laws of the State of Texas. Any action, proceeding,
litigation or arbitration relating to or arising from this Agreement shall
be brought in Dallas County, Dallas, Texas.
ATTORNEY'S FEES: In any action by FIRST USA to enforce an obligation under
this AGREEMENT, MERCHANT shall be liable and pay all costs, expenses and
reasonable attorney's fees.
Your signature on two copies of this AGREEMENT that you return to us indicates
your understanding and acceptance of its terms and conditions. We will then
indicate our acceptance of the AGREEMENT by returning one fully executed copy to
you, and two signed copies of Schedule A or other Addenda that are incorporated
herein.
Agreed and Accepted by: Agreed and Accepted by:
June 16, 1996
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Date Date
ONSALE, INC. FIRST USA MERCHANT SERVICES, INC.
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MERCHANT LEGAL NAME (Print or Type)
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
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Address (Print or Type)
▇▇. ▇▇▇▇ ▇▇ ▇▇▇▇▇
------------------------------------
City, State, Zip (Print or Type)
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ CFO
------------------------------------ ------------------------------------
By (authorized signature) By (authorized signature)
▇▇▇▇ ▇. ▇▇▇▇▇▇ CFO ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Group Manager
------------------------------------ ------------------------------------
By, Name, Title (Print or Type) By, Name, Title (Print or Type)
REVISION 12/95
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* To Be Completed By First USA Merchant Services, Inc. upon acceptance *
* and return to Merchant *
* *
* Your Merchant Agreement Contract Number is: 700963 *
* -------------- *
* *
* Your Merchant Processing Identification Number Will Be Provided At *
* Time of Processing Set Up *
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