This Master Processing Agreement ("Agreement") is made by and between ModernRails, LLC, a Nevada Limited Liability Company, located at 1601 Elm Street, Suite 4310, Dallas, Texas 75201 ("ModernRails") and the entity and/or individual whose name and address are set forth below on the signature page for this Agreement (hereinafter referred to as "Company").
Whereas, the Company has requested ModernRails to permit it to initiate electronic signals for paperless entries through ModernRails to accounts maintained at banks and financial institutions by means of the Automated Clearing House ("ACH"), and other transactions or network systems.
Now, therefore, in consideration of the mutual promises contained herein, it is agreed as follows:
1. Definitions. The following capitalized terms shall have the meanings set forth below when used in this Agreement:
ACH Network means Automated Clearing House Network is a batch processing, store-and-forward system that accumulates and distributes ACH transactions that are received from ODFI (defined below) and are forwarded to the specified RDFI (defined below) according to the specific schedules established by the participants.
ModernRails Policy means ModernRails will not accept an individual or business as a Representative, Client or Customer who is engaged in an unlawful, deceptive or socially unacceptable business practice or activity such as escort services, pornography, multi-level marketing, online gaming, chain letter or pyramid schemes, and telemarketing as determined by ModernRails in its sole discretion.
ACH Transactions means all entries, including but not limited to Debit and Credit Entries (defined below) that are transmitted through the ACH Network.
Credit Entry means an ACH Transaction that is intended to deposit funds into a Receiver's (defined below) account which has been withdrawn from Company's Settlement Account (defined below).
Customer means a debtor who pays an obligation to a Merchant through delivery of a Check or a person who presents a Check made out to the person to a Merchant in a check cashing transaction.
Debit Entry means ACH Transaction that is intended to withdraw funds from a Receiver's account for deposit into Company's Settlement Account (defined below).
NACHA means the National Automated Clearinghouse Association responsible for establishing, revising and enforcing the Operating Rules for the ACH Network.
Receiver means an organization or individual consumer that has authorized Company to initiate an ACH Transaction to an account they maintain with a financial institution (RDFI).
Rules means the current rules and regulations of NACHA and all other financial transaction network and system rules, as in effect from time to time.
ODFI means Originating Depository Financial Institution is the financial institution that receives ACH Transactions from Company through ModernRails and then forwards these transactions to the ACH Network.
Originator means a Company who has contracted with ModernRails to initiate ACH entries, on their behalf, to the ACH Network.
Proprietary Property means all computer programs, trademarks, service marks, patents, copyrights, trade secrets, know-how, and other proprietary rights in or related to ModernRails' products and services are and will remain the sole and exclusive property of ModernRails, whether or not specifically recognized or perfected under applicable law. ModernRails shall own all rights, title and interest, including all intellectual property rights, in and to any improvements to the existing ModernRails products or services and/or any new programs, upgrades, modifications or enhancements developed by ModernRails in connection with rendering any services to Company (or any of its affiliates), even when refinements and improvements result from Company's request.
Processing Schedule means business hours that Company may submit payments for processing.
RDFI means Receiving Depository Financial Institution is the financial institution that receives the ACH.
Settlement Date means the date the deposit of funds for Debit Entries and the extractions of funds for Credit Entries are made.
2. ModernRails will transmit Credit and Debit Entries initiated by the Company to financial transaction networks and systems under terms in the Rules, and this Agreement. Entry types are restricted to those noted by the Company on the Processing Account Information Form and agreed to by ModernRails. ModernRails will provide Company with a User Identification ("ID") for security. Company agrees it will permit only authorized employees to use the ID and initiate entries, and that it is responsible for all entries initiated using the ID.
3. The Company hereby grants to ModernRails the right of access to Company's books and records and agrees to provide assistance at all times during the Term of this Agreement for the purposes of allowing ModernRails and/or its auditors to conduct an audit and/or verify Company's compliance with this Agreement, the NACHA Rules, Guidelines, Applicable Laws and the requirements of the ODFI.
4. Company shall at all times comply with the NACHA Rules and Guidelines and any governing rules and laws applicable to Check 21 transactions. Company shall also comply with all applicable U.S. Federal and state laws in its business and when initiating Entries, including, but not limited to, the requirements of the FTC Act, TSR and all of the laws and regulations Company shall not, among other things, violate any prohibitions promulgated or enforced by the Office of Foreign Assets Control, or act on behalf of, or transmit funds to or from, any party subject to such prohibitions. Company agrees that it has all of the rights, responsibilities, obligations, and liabilities of an "Originator" under the NACHA Rules and Guidelines. Company further agrees to comply with the procedures set forth in any NACHA Rule, Guideline, Applicable Law, or any other document provided to Company or made available to Company regarding proper use of the Services. The specific duties of the Company provided in the following paragraphs of this Agreement in no way limit the foregoing undertaking. Company cannot initiate entries that violate the Rules or Law. Entries initiated by the Company can be rejected by ModernRails if not in compliance with the Rules and Laws. In the event of any conflict between the terms of this Agreement and any Guideline, the terms of this Agreement shall govern. In the event of any conflict between the terms of this Agreement or any Guideline and any NACHA Rule, Applicable Law, the terms of a specific, on point, NACHA Rule, Applicable Law shall govern. Company expressly acknowledges that full compliance by it with the NACHA Rules, Guidelines, and Applicable Laws is essential and material to, ModernRails' ability to provide Services to Company in accordance with this Agreement. ModernRails reserves the right to change such procedures from time to time as it deems reasonable or necessary to provide said Services in an efficient and timely manner, or to conform to changes in the NACHA Rules, Applicable Laws, or other events beyond its control that affect the manner in which such Services can be provided. Except as may be necessary to comply with any NACHA Rule, Guideline, Applicable Law, written notice of any changes shall be given to Company at least thirty (30) days before any such changes become effective. Company agrees to retain all documentary evidence that proves it is compliant with the NACHA Rules, Guidelines, all Applicable Laws for a period of no less than three (3) years, or as otherwise required by any NACHA Rule, Guideline, and Applicable Law. Company shall provide copies of such documentary evidence to ModernRails immediately upon request. Company bears the final responsibility to insure that its policies, procedures and activities meet the requirements of all the NACHA Rules, Guidelines, all Applicable Laws. Company is encouraged to consult counsel regarding compliance with these whenever there is any doubt about compliance.
5. Upon ModernRails request, Company will provide Company quarterly financial statements within 45 days after the end of each fiscal quarter and annual financial statements (audited if requested) within 90 days after the end of each fiscal year. Such financial statements shall be prepared in accordance with generally accepted accounting principles. Company will also provide within five (5) Business Days such other financial statements and other information concerning Company's business and its compliance with the terms and provisions of this Agreement as ModernRails may reasonably request. Company and each guarantor of Company's obligations authorizes ModernRails or any credit bureau or any credit reporting agency employed by one of them or their agents, to obtain from third parties financial and credit information relating to the Company, its principals and such guarantor(s) in connection with a determination whether to accept this Agreement and the continuing evaluation of the financial and credit status of Company. Company also authorizes ModernRails to obtain additional credit reports regarding Company on an annual basis, unless in their sole and absolute discretion, one or more of them determines that it is necessary to periodically obtain Company's credit report on a more than annual basis, in which case Company authorizes them to obtain such additional credit reports. Company will provide ModernRails with written notice of any judgment, writ, warrant of attachment, execution or levy against any substantial part (25% or more in value) of Company's total assets not later than three (3) days after Company becomes aware of same.
6. Neither Company nor any of its affiliates shall reverse engineer, decompile or disassemble the Proprietary Property. Additionally, nothing in these Terms and Conditions shall be construed to provide Company with a license of any third-party proprietary information or property.
7. Before Company initiates any Entry on behalf of a customer, Company shall obtain from the customer such authorization as is required by the Rules and Applicable Laws. Company shall initiate no Entry after such authorization has been revoked. Company shall retain the original or a legible copy of each customer authorization for the period of time specified by the NACHA Rules and Applicable Laws, at least two (2) years unless any provision of the NACHA Rules, Guidelines, Applicable Laws, mandate a longer time period. Company further agrees to promptly furnish a copy of all Customer authorizations if requested by ModernRails. Company shall also retain all documents and information regarding its business activities relevant to this Agreement and establishing compliance with the Agreement, NACHA Rules, Guidelines, and Applicable Laws for a period of no less than three (3) years, or as otherwise required by any Applicable Law. Company agrees to promptly provide any such documents, materials, records, financials, or other information requested by ModernRails.
8. If required, the Company will send pre-notifications 6 days prior to initiating first entry to a particular account. Such notice shall be provided to ModernRails in the format and on the medium provided in the ACH Rules. After the Company has received notice that any such notification has been rejected by a receiving bank, or that a receiving bank will not receive entries without having first received a copy of the authorization signed by its customer, the Company will not initiate any entry to such customers, except the Company may initiate entries after providing the receiving bank with such authorization, within the time limit provided in the Rules.
9. The Company will provide computer readable information only to ModernRails on the mutually agreed upon medium and in the format specified within the Rules when using a program or software supplied by ModernRails.
10. Each entry or file provided by Company shall be delivered to ModernRails in accordance with the Processing Schedule in effect from time to time.
11. ModernRails may impose a cap on the dollar amount of Transactions it will process for Company. These limits may be changed by ModernRails from time to time, upon notice to Company. If Company exceeds the established limits, ModernRails may temporarily suspend Transaction processing or temporarily hold the funds that are in excess of the established limits.
12. ModernRails may require a security deposit or "Reserve Account" to process transactions for Company. The Reserve Account shall be used by ModernRails to offset any returned items, charge-backs or other Company obligations to ModernRails that ModernRails is unable to collect from Company's Settlement account or other means as prescribed herein.
13. In the case that the Company has contracted with ModernRails to act as a Third Party Sender or Third Party Service Provider, in addition to any other duties, responsibilities, warranties, representations and liabilities under this Agreement, for each and every Entry transmitted by Company, Company represents and warrants to ModernRails and agrees that Company shall: (i) perform all of the duties, including, but not limited to, the duty to identify Originators; (ii) assume all of the responsibilities, including, but not limited to, the responsibilities of ODFIs and Originators; (iii) make all of the warranties, including, but not limited to, the warranties of ODFIs and the warranty that Originators have agreed to assume the responsibilities of Originators under the Rules; (iv) make all of the representations; (v) assume all of the liabilities, including, but not limited to, liability for indemnification for failure of an Originator to perform its obligations as an Originator of a Third Party Sender in accordance with the Rules; (vi) have a current agreement with each Originator that requires compliance with all state, federal laws and regulations as well as NACHA Rules and contains provisions for termination; (vii) assign a unique Company Identification Number, in compliance with NACHA Rules, to each Originator; (viii) clearly identify each Originator with a Company Name readily known to the Receiver, in compliance with NACHA Rules.
14. The Company will provide immediately available funds to cover any credit entry or other entry initiated by it that requires funds not later than the Settlement Date applicable thereto. The Company shall make and maintain a deposit amount with ModernRails if requested by ModernRails. The Company and the principals authorize ModernRails to initiate credit checks as ModernRails deems necessary from time to time.
15. The Company will receive immediately available funds for any electronic debit entry initiated by it on the Settlement Date applicable thereto as determined from time to time in accordance with its agreement with ModernRails.
16. If the Company discovers that any entry it has initiated was in error, it may notify ModernRails of such error. If such notice is received before the entry has been delivered to the ACH or other financial transaction network or system ModernRails will utilize its best efforts to initiate an adjusting entry or stop payment of any "on us" credit entry within the time limits provided by the Rules. If such notice from the Company is received after the time provided above, ModernRails will utilize its best efforts on behalf of the Company.
17. In the event any entries are rejected by the ACH or other financial transaction network or system for any reason whatsoever, it shall be the responsibility of the Company to remake such entries; provided, however, that ModernRails shall remake such entries in any case where such rejection by the ACH was due to mishandling of such entries by ModernRails and sufficient data is available to ModernRails to permit it to remake such entries. The Company shall retain and provide ModernRails on request all information necessary to remake any file of entries for three (3) days after the midnight of the Settlement Date.
18. The Company or the principals will promptly provide immediately available funds and authorizes ModernRails or its bank to debit its accounts when notice is received by ModernRails if any credit or debit entry initiated by the Company is rejected or returned by the Receiver, RDFI or other financial institution. Said debit(s) can be in the amount of the rejected amount and all fees, including specifically return of entry fees and charges, which will constitute the indebtedness. For valuable consideration the principals unconditionally guarantee and promise to pay ModernRails or order, on demand, in lawful money of the United States, any and all indebtedness. The principals waive all presentments, demands for performance, notices of non-performance, protests, notices of dishonor and notices of acceptance of this guarantee. The principals further waive all rights of subrogation or set-off, and any suretyship defenses, or defenses of any other kind or nature; and further agree to execute any and all documents at the request of ModernRails to grant a security interest in favor of ModernRails.
19. ModernRails will not be liable for any damage or loss (including, but not limited to, liabilities, costs and expenses) to the Company arising out of the acts or omissions of any third parties, including, but not limited to, the ACH, the National Automated Clearing House Association, or any other financial institution, network or system, any Federal Reserve Bank, any receiving financial institution in which an employee maintains an account, and receiving depository institution or any processor. ModernRails makes no representations or warranties except as expressly stated herein and all other warranties, express or implied, are hereby specifically excluded.
20. The Company will indemnify ModernRails if ModernRails incurs any loss or liability on account of any breach of this Agreement, or with respect to any entries initiated by the Company, of any of the warranties of an originating depository institution contained in the Rules, except due to MODERNRAILS's own negligence. The Company shall be responsible for any entries that may cause (a) an account not belonging to the intended party to be debited, or (b) an account to be debited which was not authorized by the account holder. The Company will initiate a reversal of such entry as soon as possible. ModernRails shall be subrogated to the rights of Company if Company cannot or will not indemnify ModernRails due to any wrongful act of a customer of Company. ModernRails may apply any funds that are available for a Company to any outstanding balance due ModernRails before refunding any amounts to the Company.
21. In addition to all other indemnification obligations in this Agreement, Company shall indemnify, defend and hold harmless ModernRails including their directors, officers, employees and affiliates, from any and all claims, liabilities, losses, damages, fines, costs or expenses (including attorneys' fees and costs) suffered or incurred arising out of, relating to or involving in any way Company's actual or alleged violation (whether past or present) of any NACHA Rule, Guideline, Applicable Law.
22. Representations and Warranties of Company. In addition to all other representations and warranties made in this Agreement, Company represents and warrants the following to ModernRails; now and as of the time it initiates each Entry:
A. As to each Credit Entry submitted by Company: (a) Each person shown as the Receiver on an Entry received by Company or its Third-Party Sender from Company has authorized the initiation of such Entry and the crediting of its account in the amount and on the Effective Entry Date shown on such Entry; (b) Such authorization is operative at the time of transmittal or crediting by Company or its Third-Party Sender as provided herein; (c) Entries transmitted to Company or its Third-Party Sender by Company are limited to those types of credit Entries set forth on the Application and in the Guidelines; (d) The Entry is timely; (e) The Entry is in conformity with the NACHA Rules, Guidelines, Applicable Laws; (f) That, at the time the Entry is transmitted to the ACH Network by Company or its Third-Party Sender, Company does not have actual knowledge of the revocation or termination of the authorization by the Receiver; (g) That the Receiver's authorization is neither inoperative nor ineffective by operation of law, nor has it been terminated by operation of law; (h) That Company has provided all written disclosures required by the NACHA Rules, Applicable Laws to all consumers on whose behalf ModernRails performs any Service; (i) Company will comply with all provisions of the NACHA Rules, Guidelines, Applicable Laws applicable to the Services provided to Company; and (j) Company acknowledges and agrees that all Entries originated as part of a Service shall comply with all Applicable Laws and regulations, including but not limited to, any economic sanctions administered by the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) and shall not act on behalf of, or transmit funds to or from, any party subject to such sanctions.
B. As to each Debit Entry submitted by Company: (a) The Entry is for a sum due and owing to Company/Originator from a Customer or for a sum specified by a Customer to be paid to Company; (b) The Entry is timely; (c) The Entry is forwarded in accordance with an authorization executed by the Receiver and held by the Company/Originator; (d) The Entry is in conformity with the NACHA Rules, Guidelines, Applicable Laws; (e) That, at the time the Entry is transmitted to the ACH Network by Company or its Third-Party Sender, Company does not have actual knowledge of the revocation or termination of the authorization by the Receiver; (f) That the Receiver's authorization is neither inoperative nor ineffective by operation of law, nor has it been terminated by operation of law; (g) The Entry is of a type of debit Entry specified in the Application and the Guidelines; (h) The Company/Originator has complied with the NACHA Rules, Guidelines, Applicable Laws pertaining to the Entry; (i) Company shall be bound by and comply with the NACHA Rules as in effect from time to time, including, without limitation, the provision making payment of an Entry by the RDFI of final settlement for such Entry; and Company specifically acknowledges that it has received notice of the NACHA Rule regarding provisional payment and of the fact that, if such settlement is not received, the RDFI shall be entitled to a refund from the Receiver of the amount credited and Company shall not be deemed to have paid the Receiver the amount of the Entry; (j) Company will comply with all provisions of the NACHA Rules, Guidelines, Applicable Laws applicable to the Services provided to Company; and (k) Company acknowledges and agrees that all Entries originated as part of a Service shall comply with all Applicable Laws and regulations, including but not limited to, any economic sanctions administered by the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) and shall not act on behalf of, or transmit funds to or from, any party subject to such sanctions.
C. Company, including its subsidiaries, predecessors, principals, officers or managing members, has complied with and shall remain in compliance with all NACHA Rules, Guidelines, and Applicable Laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of all Federal, state, local and foreign governments and all Agencies thereof, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against any of them alleging any failure to comply.
D. Company has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes valid and legally binding obligations of Company and is enforceable in accordance with its terms and conditions.
E. Neither the execution or delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will violate any statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government Agency, or court to which Company is subject or any charter of Company, or conflict with or create any right to accelerate, terminate, modify, or cancel or require any notice under any other agreement, or other arrangement to which Company is a party or by which either is bound.
F. Company has provided to ModernRails a copy of any and all government or Agency inquiries or complaints regarding Company or any of its subsidiaries, predecessors, principals, officers or managing members.
G. The information, authorizations, documents, reports, financial statements, and other documentation provided by Company pursuant to this Agreement are correct, accurate, and complete and do not contain any untrue or misleading statement or fact.
H. The representations and warranties made by Company in this Agreement shall survive termination of this Agreement and the termination of processing services provided by Third-Party Sender.
I. ModernRails in their sole and absolute discretion, has the right to immediately suspend or terminate processing for Company and/or this Agreement if Company, Third-Party Sender, the ODFI or any applicable Agency believes that Company has breached these representations and warranties, any other representations and warranties made elsewhere in this Agreement, or has initiated any unauthorized Entries.
J. Company agrees to indemnify, hold harmless and defend ModernRails, including their directors, officers, employees and affiliates, for any claims, losses, liabilities, costs, fines or expenses suffered or incurred (including attorneys' fees and costs) relating to, arising out of or involving any actual or alleged breach of these representations and warranties, any other representations and warranties made elsewhere in this Agreement, or unauthorized Entries.
K. If Company breaches these representations and warranties, any other representations and warranties made elsewhere in this Agreement, or has initiated any unauthorized Entries, Company acknowledges that ModernRails will suffer irreparable harm and the total amount of monetary damages for any injury to them will be impossible to calculate and therefore are an inadequate remedy. Accordingly, ModernRails may (i) seek temporary and permanent injunctive relief against Company, or (ii) exercise any other rights and seek any other remedies to which Company. This Paragraph shall survive any expiration or termination of the Agreement.
23. In addition to all other indemnification obligations in this Agreement, which shall not be limited or modified in any way by this Paragraph, Company agrees to indemnify, defend and hold harmless ModernRails, including their respective directors, officers, employees, and affiliates, against any and all claims, liabilities, losses, demands, damages, fines, expenses or costs of any kind, including attorneys' fees and costs of litigation, arising out of, relating to or involving any breach of this agreement, third party or governmental actions resulting from (i) Company's actual or alleged negligence, fraudulent or willful misconduct or that of Company's directors, officers, affiliates, agents or employees, (ii) any and all fines and/or liabilities imposed against ModernRails, for a NACHA Rules violation caused by an action or omission of Company or that of Company's directors, officers, affiliates, agents or employees, regardless of whether the violation was unintentional or inadvertent, (iii) Company's actual or alleged breach of any representation, warranty or obligation under this Agreement; (iv) Company’s actual or alleged violation of any Applicable Law, NACHA Rule, Guideline or (v) any other claims (whether actual or alleged) in any way relating to Company's business activities that are the subject of this Agreement. Any damages suffered by ModernRails may be offset by any funds or reserve available to ModernRails from Company.
24. The Company will compensate ModernRails for (a) providing the services referred to herein at the prices set forth on the Fee Schedule attached hereto which may be amended by notice from time to time; (b) credit or other verification by ModernRails; (c) all NSF or other return fees or charges imposed by any financial transaction association including return of entry fees imposed by NACHA, (d) any and all return fees incurred for whatever reason, (e) the amount of (i) any award made pursuant to any arbitration procedures or (ii) any fine assessed by any enforcement panel, in either case against ModernRails or the Company arising out of the performance or breach of this Agreement by the Company; (f) interest on any amounts due ModernRails under clauses (a) through (d) inclusive above at such rate as permitted by law, (g) any reasonable attorney's fees, and (h) costs and expenses of collection as permitted by law.
25. Notwithstanding any other provision of this Agreement, in the event that Company violates any NACHA Rule, Guideline, Applicable Law, or is in breach of the representations and warranties made in this Agreement regarding its compliance with all NACHA Rules, Guidelines, Applicable Laws, or is in breach of any terms of this Agreement, ModernRails may at its sole discretion withhold any funds for a reasonable period of time to allow for investigation and due diligence. The parties agree that ModernRails' damages for Company's violation of any NACHA Rule, Guideline, Applicable Law, or breach of Company's representations and warranties regarding its compliance with all applicable NACHA Rules, Guidelines, Applicable Laws, would be uncertain and difficult to ascertain and that the withholding of funds or proceeds as described in this Paragraph are reasonably related to ModernRails' risk and are a reasonable estimate of the damages which ModernRails would in fact suffer in the event of Company’s failure to comply with all NACHA Rules, Guidelines, Applicable Laws, or Company's breach of its representations and warranties regarding its compliance with the NACHA Rules, Guidelines, or Applicable Laws.
26. In the event the Company incurs any loss due to mishandling of a particular entry or entries, ModernRails' liability to the Company shall be limited to (a) liability for its own negligence or willful misconduct; and (b) the amount recoverable by ModernRails from the ACH or other financial transaction network or system, or any third party pursuant to the Rules or any indemnity agreement. In no event is ModernRails liable for any consequential, incidental, special, punitive or indirect loss or damage which Company may incur or suffer in connection with this Agreement, including without limitation loss or damage from subsequent wrongful dishonor from ModernRails’ acts or omissions pursuant to this Agreement.
27. This Agreement is terminable on ninety (90) days written notice by either party, provided that applicable portions of this Agreement shall remain in effect with respect to any entries initiated by the Company prior to any termination, particularly the authorization to debit the account of the Company or principals for up to ninety (90) days for rejected items and fees, and the compensation and exculpatory provisions of paragraphs 11, 12, 13 and 14 of this Agreement. Either the processing of entries or this Agreement or both is terminable by ModernRails immediately for cause with all the applicable portions as stated above surviving any termination of this Agreement.
28. Company may not assign this Agreement or any of its rights or duties hereunder without ModernRails' prior written consent. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns. It is not for the benefit of any other person or entity, and no other person or entity shall have any rights against ModernRails or Company hereunder.
29. This Agreement shall be construed in accordance with and governed by the laws of the State of Texas; and the parties consent to jurisdiction in any competent court in the State of Texas in the event of legal action.
30. The Company and the principals acknowledge that neither the ACH or any other financial transaction network or system may be used for transactions in violation of U.S. law, including the sanctions laws administered by the Office of Foreign Asset Control (OFAC).