Frost Bank Business Payments Agreement

This Business Payments Agreement (the “Agreement”) provides information about the business payment service (“Payments”) offered by Frost Bank (“Frost”, “Bank”, “we”, or “us”) and governed by this Agreement (“Payment Service” or “Service”). The Service allows you to pay your beneficiaries via Payments initiated through the Bank’s Online Banking Services or Mobile Banking Services, as more fully defined in the Frost Online Banking Agreement and Disclosure (the “Online Banking Agreement”). 

Enrollment in Payment Service. Enrollment in the Service requires that you sign this Agreement, Bank’s E-SIGN Disclosure & Agreement, you complete any other required forms, and you submit all forms to Bank. You will be able to use the Service after Bank has had a reasonable time to review and implement all required forms and authorizations.

In consideration of the mutual covenants hereafter contained, you and Bank agree as follows: 

1.  The Service. We agree to provide you the ability to originate business Payments from your eligible accounts to your beneficiary’s eligible accounts through Bank’s Online Banking Services or Mobile Banking Services. You authorize us to act on your instructions to debit one or more of your specified eligible deposit accounts at Bank and transfer funds from such deposit accounts for credit to any other eligible account with us, or to an eligible account at another bank, in accordance with the terms and conditions stated herein.

YOU HEREBY ACKNOWLEDGE AND AGREE THAT BANK HAS THE RIGHT TO TEMPORARILY, PERMANENTLY OR INDEFINITELY SUSPEND, REVOKE OR TERMINATE YOUR ACCESS TO THE SERVICES PROVIDED UNDER THIS AGREEMENT AT ANY TIME, FOR ANY REASON OR NO REASON, AND WITHOUT PRIOR NOTICE TO YOU.

2.  Relation to Other Frost Agreements. You understand that this Agreement and all amendments and modifications to it, are a supplement and in addition and made subject to, and cumulative with, all existing written agreements, if any, governing the relationship between you and Bank, and the account(s) and other services related to or needed to facilitate the Service provided under this Agreement, including but not limited to: the Online Banking Agreement, the terms of Bank’s Deposit Account Agreement and Other Disclosures (“Deposit Agreement”), Treasury Management Services Procedures, Terms and Conditions (the “Treasury Management Agreement”), funds transfer agreement(s), loan account agreement(s), the applicable deposit disclosures, Bank’s schedule of fees, and Bank’s policy regarding availability of funds (collectively, the “Governing Agreement(s)”).

You acknowledge and agree that your execution of this Agreement does not alter any terms or conditions of the Governing Agreements, and should any inconsistency exist or arise between the terms of this Agreement and the terms of any other Governing Agreement (as applicable to you), this Agreement will control, but only to the extent of the inconsistency. If there is any inconsistency between this Agreement and any applicable law, rule or regulation, the terms of this Agreement will prevail to the extent any such law, regulation or rule may be modified by agreement.

3.  Liability for Payments.

(a)  Errors In Information. YOU UNDERSTAND AND AGREE THAT YOU AND NOT BANK WILL CONTROL THE BENEFICIARY INFORMATION FOR ALL PAYMENTS. IF ANY PAYMENT REQUEST OR INSTRUCTION BY YOU DESCRIBES THE INTENDED RECIPIENT OF FUNDS INCONSISTENTLY BY NAME AND ACCOUNT NUMBER YOU AGREE THAT PAYMENT BY THE RECEIVING BANK (WHICH MAY BE BANK) MAY BE MADE ON THE BASIS OF ACCOUNT NUMBER ALONE EVEN IF THAT ACCOUNT IS NOT OWNED BY THE PERSON OR ENTITY NAMED IN THE PAYMENT REQUEST OR INSTRUCTION. IF ANY PAYMENT REQUEST OR INSTRUCTION IDENTIFIES AN INTERMEDIARY BANK OR PAYEE’S BANK INCONSISTENTLY BY NAME AND IDENTIFYING NUMBER, YOU AGREE THAT BANK MAY RELY SOLELY ON THE IDENTIFYING NUMBER AS THE PROPER IDENTIFICATION OF THE INTERMEDIARY BANK OR THE PAYEE’S BANK, EVEN IF IT IDENTIFIES A BANK DIFFERENT FROM THE BANK YOU IDENTIFIED BY NAME OR YOU USED THE BANK’S ONLINE BANKING SERVICES OR MOBILE BANKING SERVICES TO FIND THE IDENTIFYING NUMBER FROM A NAME YOU PROVIDED. TO THE EXTENT PERMITTED BY APPLICABLE LAW, YOU ACKNOWLEDGE AND AGREE THAT YOUR OBLIGATION TO PAY BANK THE AMOUNT OF THE FUNDS TRANSFER PURSUANT TO THE PAYMENT REQUEST OR INSTRUCTION WILL NOT BE EXCUSED IN ANY CIRCUMSTANCE DESCRIBED ABOVE AND THAT BANK WILL NOT BE LIABLE FOR ANY ERRORS OR LOSSES RESULTING FROM ANY ERRORS IN OR CHANGES TO THE BENEFICIARY INFORMATION PROVIDED BY YOU. YOU HEREBY ACKNOWLEDGE AND AGREE THAT BANK IS NOT RESPONSIBLE FOR DETECTING ANY ERROR, IN BENEFICIARY INFORMATION OR OTHERWISE, IN ANY INDIVIDUAL PAYMENT.

(b)  Your Liability for Payment Requests. You agree to be bound by any Payment request, or request to amend, revoke, cancel, adjust or reverse such request, whether or not authorized, if such request complies with all procedures set forth in this Agreement.

IN THE EVENT THAT A PAYMENT REQUEST IS UNAUTHORIZED BUT EFFECTIVE PURSUANT TO THE PROCEDURES SET FORTH IN THIS AGREEMENT, BANK IS ENTITLED TO ENFORCE OR RETAIN PAYMENT FOR THE PAYMENT FROM YOU UNLESS YOU CAN PROVE THAT THE PAYMENT WAS NOT CAUSED, DIRECTLY OR INDIRECTLY, BY A PERSON (I) ENTRUSTED AT ANY TIME WITH DUTIES TO ACT ON YOUR BEHALF WITH RESPECT TO SUCH PAYMENT OR THE PROCEDURES SET FORTH IN THIS AGREEMENT, OR (II) WHO OBTAINED ACCESS TO YOUR TRANSMITTING FACILITIES OR WHO OBTAINED, FROM A SOURCE CONTROLLED BY YOU AND WITHOUT AUTHORITY OF BANK, INFORMATION FACILITATING A BREACH OF THE PROCEDURES SET FORTH IN THIS AGREEMENT, REGARDLESS OF HOW THE INFORMATION WAS OBTAINED OR WHETHER YOU WERE AT FAULT.

(c)  Honoring Payment Requests.

(i)    General. Bank will only accept an Payment request that is made in accordance with the requirements stated in this Agreement and in the Governing Agreement(s). Bank will be under no obligation to honor, either in whole or in part, an Payment request for funds transfer that: (i) exceeds your Available Balance (as defined in the Deposit Agreement) in your account with us, even if Bank has done so in the past; (ii) is not in accordance with any condition requested by you and agreed to in writing by Bank; (iii) involves funds subject to a hold, dispute or other legal process preventing their withdrawal; (iv) violates, in the sole discretion of Bank, any provision of any present or future risk control program of the Federal Reserve or any other applicable federal or state regulation or law; (v) does not comply with any other requirement stated in this Agreement or any Bank policy, procedure or practice; (vi) violates any daily transaction limits, or any dollar amount transaction limits, that Bank has established for security and risk control purposes; and/or (vi) Bank has reasonable cause not to honor for the protection of Bank or you.

(ii)    Insufficient Account Balances for Funds Transfer. If your account does not contain a sufficient Available Balance to accomplish your Payment request (including any related fees), Bank may: (i) cancel the Payment request; (ii) elect to dishonor any item or transaction that creates a negative Current Balance (as defined in the Deposit Agreement) and for which Bank has no duty to notify you prior to dishonoring any Overdraft (as defined in the Deposit Agreement), even if Bank has paid Overdrafts on your behalf in the past; (iii) execute the Payment request; and/or (iv) require you to pre-fund any Payment request prior to the settlement date or effective date of such request.  If, in our sole discretion, we create an Overdraft to complete an Payment request, you agree to repay us upon demand the amount of the Overdraft together with interest on the Overdraft amount, with such interest not to exceed the maximum rate allowed by law. Bank may execute an Payment request and create an Overdraft, but Bank is not obligated to do so. You hereby authorize Bank to charge any of your accounts with us at any time for the amount of any Overdraft and any related interest due. If Bank cancels your Payment as stated in (i) above, an email notification of the cancelation will be sent to you.

(d)  Confirmation; Account Notifications. Periodic account statements provided to you by Bank will notify you of (i) the execution of each Payment request and all debits or credits to your account(s) held by Bank, and (ii) amounts debited by Bank from your account(s) for payment of fees for the services provided under this Agreement. You agree that Bank will not be required to provide any other notice, besides the periodic account statements referenced in this subsection, of the execution of any Payment request, debits, credits or charges. If you contact Bank to request notification of the execution of funds transfers, or Payment requests, by any other means, and Bank, at its option and in its sole discretion, agrees to accommodate such request, you agree that Bank will not be liable for failure to deliver such notification to you by such other means.  

(e)  Account Reconciliation; Notification of Discrepancies. You agree to notify us as soon as possible of any discrepancies or any other objections of any type or nature between your records and any periodic account statement, and any relevant facts pertaining to a potentially unauthorized or erroneous Payments or other funds transfers of any kind. If you fail to notify us of any such discrepancy or objection within thirty (30) days after the date that the relevant periodic account statement was made available to you by Bank, you expressly agree that Bank shall not be liable for any loss or liability with respect to such discrepancies or objections. Your failure to notify the Bank of any such discrepancies within this time period may also result in you forfeiting any interest potentially due on the amount of the unauthorized or erroneous funds transfer due to your failure to provide notification.

(f)  Use of Third-Party Service Providers. You acknowledge and agree that Bank may use, at its sole discretion, either directly or indirectly, one or more third-party service providers, licensors and/or suppliers (“Service Providers”) to provide services, procedures and/or products necessary for the administration and execution of Payments under this Agreement. Bank, in our sole discretion, may change any Service Provider, without cause and without notice to you. You acknowledge and agree that any Service Provider is an independent contractor and not Bank’s agent for any purpose.

4.  Security Procedures. You must be an active Online Banking Services or Mobile Banking Services user with a valid User ID and personal Password (as those terms are defined in the Online Banking Agreement) to use the Payment Service provided under this Agreement. You agree that Bank will initiate an Payment request and debit your account after a successful sign on to Online Banking Services or Mobile Banking Services with the User ID and personal Password for your account and the provision of any additional user identification, password or authorization code that may be provided to you or requested from you.

Bank will consider any Payment request made after successful sign on to Online Banking Services or Mobile Banking Services, and otherwise in accordance with these security procedures, to be duly authorized, and Bank will carry out any instruction given regardless of the identity or lack of authority of the individual who is actually accessing the Payment Service. As provided in Section 3(b) of this Agreement, you agree to be responsible for any Payment request issued in your name using these security procedures, whether or not you actually authorized the transfer. You also understand and agree that you are solely responsible for maintaining security and control of and safeguarding your User ID, personal Password and any one-time passcode, and shall use security for such items comparable to the security and control you would use for cash or a mechanical check-signing machine, but in no event less than reasonable security and control in the circumstances. Bank shall not be liable for failing or refusing to process, or any delay in processing, an Payment request if you fail to provide any of this information to us.

You acknowledge that we offer funds transfer services in person at certain of our branches that may provide a higher level or different type of security for your accounts, and you can use that option instead of the Payment Service provided under this Agreement. You acknowledge and agree that the use of the security procedures described in this Agreement is commercially reasonable and appropriate for you and is a satisfactory method of verifying the authenticity of Payment requests initiated for your account. You understand that these security procedures are intended to verify the Payment request has been properly authorized and is not intended to detect errors in the contents of your Payment request or instruction by you. 

We may impose stricter security procedures for any particular funds transfer you make under Payment Service, without prior notice to you, but we have no obligation to do so. If we choose to impose stricter security procedures, we will not be liable to you for any delays or losses, and we will not be obligated to impose such stricter security procedures in the future.

5.  Fraud, Regulatory and Compliance Reviews. All payments made through the Payment Service are subject to review for fraud, regulatory or compliance purposes, and such review may result in a transaction being delayed or rejected. Bank shall have no liability to you for any such delay or rejection. You are responsible for monitoring your Payment transactions. 

6.  Payment Services. Bank participates in the Payment Network, which is a batch processing, store-and-forward system. Transactions received by Bank during the day are stored and processed later in a batch mode.

(a)    The Payment Network. The Payment Network consists of: (a) Originators who initiate the transaction (the “Entry”); (ii) Originating Depository Financial Institutions (the “ODFI”) that receive payment instructions from Originators and forward them to the Payment Operator; (iii) the Payment Operator (normally the Federal Reserve Bank) which is a central clearing facility that receives and forwards transactions to Financial Institutions; (iv) Receiving Depository Financial Institutions (the “RDFI”) that post the transactions to the accounts of their depositors; and (v) Receivers of transactions which are companies or persons who have authorized the Entry to their account.

(b)    Rules. Uniform Commercial Code Article 4A (“Electronic Funds Transfers”) states, as adopted in Texas (as Section 4A.501 of the Texas Business and Commerce Code), that the rights and obligations of a party to a funds transfer may be varied by agreement of the affected party. Under this general exception in the Uniform Commercial Code, the operation of the Payment Network is governed by NACHA’s Operating Rules and Operating Guidelines (the “NACHA Rules”). You acknowledge that you have obtained access to the NACHA Rules and will regularly obtain and review updates to the NACHA Rules. You hereby agree to comply with all NACHA Rules (including, but not limited to, Payment rules) as now existing or subsequently amended. You hereby understand and agree that Bank is only able to provide Payment Services to you via Bank’s role as both an ODFI and RDFI, as applicable, under the NACHA Rules, that Bank must comply with all of the NACHA Rules in order to provide Payment Services, and that Bank’s compliance with the NACHA Rules includes, but is not limited to, immediately suspending or ceasing any Payment Services provided to you if Bank must, in Bank’s sole and absolute discretion, take such action against you to comply with NACHA Rules and to avoid or mitigate any fines or penalties being assessed against Bank by NACHA for your Payment activities. In addition to the other rights that Bank has under this Agreement, you understand and acknowledge that Bank has the right to audit you with respect to your compliance with the Payment Service Specific Provisions of this Agreement and with respect to your compliance with NACHA Rules. You must use the appropriate SEC code for each Entry that you originate, and you must comply with all NACHA Rules (including, but not limited to, authorization rules) regarding the appropriate SEC code used to originate an Entry.

(c)    Origination. Bank, as an ODFI, agrees to provide Payment origination services to allow you to be an Originator of Payment Entries pursuant to the terms of this Agreement.

7.  Payment Services Approval Process.

(a)    Bank Approval and Monitoring of your Payment Operations Risk. You may be required to undergo Bank’s screening and risk analysis process regarding your proposed Payment operations. In addition, should Bank decide to conduct screening and risk analysis, after any initial approval for Payment Services by Bank, Bank may also, from time-to-time and in its sole discretion, undertake additional Payment operations credit and risk analysis monitoring activities that are deemed necessary, in Bank’s sole and absolute discretion, while Bank is providing Payment Services to you. You agree to cooperate with Bank regarding any ongoing risk analysis activities by Bank, including providing financial or other documents in a timely manner upon Bank’s request, and taking any risk mitigation or other Payment Entry origination procedures as required by Bank.

8.  Delivery of Entries. You shall submit Entries to Bank through Bank’s Online Banking Services or Mobile Banking Services.

(a)    Effective Date. You shall specify the date on which you desire each Entry to be Settled (the “Effective Entry Date”). The Effective Entry Date specified for all Entries must be Business Days. The first Effective Entry Date for an Entry must be scheduled within one (1) year after the Business Day such Entry(s) is received by Bank. The Effective Entry Date will be displayed on-screen when you schedule an Payment.

(b)    Recurring Transfers. You may schedule recurring Payments (“Recurring Transfer(s)”) to an beneficiary’s eligible account to be made on fixed intervals (including, but not limited to, weekly, every two (2) weeks or monthly), for the same amount. The Effective Entry Date of the first Recurring Transfer must be scheduled within one (1) year after the Business Day such Entry(s) is received by Bank. If the Effective Entry Date of a Recurring Transfer falls on a day that is not a Business Day, the request will be executed on the next Business Day. You may choose to have the Recurring Transfers terminate on a specified date, or after a specified number of payments. You may amend or cancel future Recurring Transfers which are not in process.

(c)    Sensitive Information. YOU ACKNOWLEDGE AND AGREE THAT ANY REQUESTS SENT VIA E-MAIL OR OTHER ELECTRONIC COMMUNICATION TO BANK THROUGH AN UNSECURED ELECTRONIC NETWORK ARE IN VIOLATION OF BANK AND NACHA POLICY AND PROCEDURES. YOU UNDERSTAND AND AGREE THAT BANK IS NOT LIABLE FOR ANY LOSS OR DAMAGE INCURRED BY YOU WHEN AN UNAUTHORIZED PERSON GAINS ACCESS TO ANY SUCH E-MAIL OR OTHER ELECTRONIC COMMUNICATION. YOU AGREE TO INDEMNIFY AND HOLD BANK HARMLESS IF BANK ACTS WITH ORDINARY CARE IN GOOD FAITH BY RESPONDING TO ANY E-MAIL OR OTHER ELECTRONIC COMMUNICATION PURPORTED TO BE SENT BY YOU. BANK’S IMPLEMENTATION OF ITS NORMAL PROCEDURES REGARDING RECEIPT AND MAINTENANCE OF CONFIDENTIAL INFORMATION CONSTITUTES ITS EXERCISE OF DUE CARE.

9.  Exposure, Transaction and Daily Limits.

(a)  Transaction Limit. The maximum Payment amount is $5,000.00 per transaction. At Your request and subject to approval by Bank in its sole discretion, Bank may increase the maximum Payment amount to $25,000.00 per transaction. The minimum Payment amount is $1.00 per transaction. Bank may adjust these limits at any time in our discretion with notice to you.

(b)  Daily Limit. We may limit the amount of Payments you can send in one (1) day. 

10.  Processing, Transmittal and Settlement by Bank.

(a)    Processing. Except as otherwise provided in these Payment Services provisions, Bank shall (i) process Entries received from you conforming to the requirements of the NACHA Rules; (ii) transmit such Entries as ODFI to the Payment Operator; and (iii) settle such Entries as provided in the NACHA Rules.

(b)    Transmitting Credit Entries. Bank will transmit credit Entries by the deadline of the Payment Operator two (2) Business Days prior to the Effective Entry Date shown in such Entries. Payment Service Credit Entries are subject to the NACHA Rules, which generally dictate that credit is given provisionally by the RDFI to the Payment Receiver for the Entry, until the RDFI has received final settlement through the Payment network. If the RDFI does not receive such payment for such Entry, then under the NACHA Rules, the RDFI is entitled to a refund from the Receiver in the amount of the credit to the Receiver’s Account and the Originator of the Payment credit Entry will not be considered to have paid the amount of the credit Entry to the Receiver.

(c)    Transmitting Debit Entries. Should Bank decide to offer such capability, Bank may transmit debit Entries designated for one-day settlement to the Payment Operator for one-day settlement by the deadline of the Payment Operator one (1) Business Day prior to the Effective Entry Date shown in such Entries.

(d)    On Us Entries. All Entries received for debit/credit to an account maintained with Bank (“On-Us Entries”) will be treated in accordance with this Section and as otherwise provided for in this Agreement.

(e)    Settlement. 

(i)    Credit Entries. You authorize Bank to debit your account for Payment credit Entries processed for you on the date the Payment credit Entry file is effective.

(ii)   Debit Entries. Bank shall credit your Account for the amounts of debit Entries processed for you hereunder on the settlement date for such Entries; it being expressly understood, however, that each credit to your Account on account of a debit Entry is provisional until Bank receives final settlement for such Entry, and Bank may charge-back to your Account the amount of any debit Entry credited to your Account for which Bank does not, for any reason, receive final settlement.

(f)    Amendments to Entries. You authorize Bank to credit your Account for any amount received by Bank by reason of the return or cancellation of any credit Entry transmitted by Bank for which Bank has previously received payment (such credit to your Account to be made on the date Bank receives such amount), and to debit your Account for the amount of any returned debit Entry (such debit to your Account to be made upon receipt by Bank of the returned Entry), and to debit or credit (as applicable) your Account for any amendments made to Entries or for corrected Entries resubmitted.

11.  Rejection of Entries. Bank may reject any Entry (or group of Entries) which does not comply with, and/or is not submitted in accordance with, the requirements of this Agreement, or which contains an Effective Entry Date more than one (1) year after the Business Day such Entry(s) is received by Bank. Bank shall also have the right to reject any Entry (including On-Us Entries) for any reason for which an Entry may be returned under the NACHA Rules. Bank shall have the right to reject any Entry if you have failed to comply with any of its account balance obligations under these Payment Services provisions. Bank will notify you of any such rejection by any method of notification authorized under this Agreement, no later than the Business Day such Entry would otherwise have been transmitted by Bank to the Payment Operator, as provided in Section 10 of these Payment Services provisions. Bank shall have no liability to you by reason of the rejection of any such Entry or the fact that such notice is not given at an earlier time than that provided for herein.

12.  Cancellation, Amendment or Correction of Entries. You shall have no right to cancel or amend any Entry on the scheduled payment date after the Entry is designated as in process in the Business Payments section. However, Bank will use reasonable efforts to act on a request for cancellation or amendment of an Entry received from you prior to Bank’s transmission of the Entry to the Payment Operator or, in the case of an On-Us Entry, prior to Bank’s debit/credit of the Entry to a Receiver’s account, but Bank shall have no liability if such cancellation or amendment is not affected. If you discover that an Entry initiated by or on your behalf was in error, you may notify Bank of such error, however, such notification must be provided to Bank within twenty-four (24) hours after discovery of the error and must be provided by such means of notification as is authorized under this Agreement. You shall send or deliver to the Receiver written notice of such correction and the reason therefore prior to requesting the correction. You shall indemnify Bank from and against any Claims, demands, loss, liability or expense, including attorney’s fees and costs, resulting directly or indirectly from compliance by Bank with any request for cancellation, amendment or correction of an Entry, whether or not the cancellation, amendment or correction is affected. All requests for cancellation, amendment or correction of Entries must be made by you in compliance with the Security Procedures for such requests as set forth herein.

13.  Returned Entries.

(a)    Notification to you. Except as modified below in subsection (b) applicable to Bank providing systematic reclear for certain returned items, Bank will notify you of Bank’s receipt of a returned Entry (or group of Entries) from the Payment Operator in accordance with the notice procedures authorized under this Agreement no later than one (1) Business Day after the Business Day of such receipt, and will debit/credit your Account for the returned Entry(s) and provide confirmation thereof to you.

(b)    Notifications of Change. Bank will notify you of all notifications of change received by Bank relating to Entries transmitted by you by sending a copy of such notification of change to you no later than two (2) Business Days after Bank’s receipt thereof. You must make the changes specified in the notification of change prior to initiating another Entry to the Receiver’s account. Bank will compare each originated record to notifications of change and will replace data to correct returned items before distribution. You will have the opportunity to correct any information in returned entries and the Bank will only replace data for notifications that have not been acted on.

(c)    Resubmission. You shall assume the sole responsibility for remaking and resubmitting said Entry(s) in accordance with the requirements of this Agreement or otherwise handling the payments due the Receiver(s), unless the return was due to an error in the processing of such Entry(s) by Bank and sufficient data is available to Bank to permit it to remake and resubmit such Entry(s), in which event Bank will remake and resubmit such Entry(s). Bank assumes no other responsibility with respect to such returned Entries except for an Entry retransmitted by you in accordance with the requirements of this Agreement and the NACHA Rules, Bank shall have no obligation to retransmit a returned Entry to the Payment Operator if Bank complied with the requirements of this Agreement with respect to the original Entry. You agree Bank will only resubmit such returns one time and that Bank will not collect return fees from the Receiver. You may specify a minimum and/or maximum returned Entry amount to be processed by Bank. For Entry(s) returned for stop payment of corrective action, resubmission shall be your sole responsibility. You agree that any reinitiation for returns due to stop payment will only be submitted after such reinitiation has been authorized by the Receiver. Also, prior to the reinitiation of Entry(s) returned for other reasons, you agree you have taken necessary corrective action to remedy the reason for the Entry’s return.

(d)   Returned Payment Entry Warning Notices. Bank reserves the right to routinely monitor and submit reports to NACHA regarding your historic Payment Entry return levels and dollar amounts. Under the NACHA Rules, if your Payment Entry return levels exceed certain parameters, then Bank, as the ODFI, is instructed to take certain actions to mitigate your unacceptable levels or dollar amounts of Payment Entry returns. You understand and agree that in order to protect itself from risks, and to inform its customers of problems with returned Payment Entries, Bank may implement an “Excessive Payment Returns Warning Notice and Escalation Procedure,” whereby Bank may inform you of your excessive Payment Entry return levels or dollar amounts, as determined by Bank in its sole discretion, and you agree to take all steps requested by Bank immediately to decrease the levels and/or dollar amounts of your Payment returns. If you fail to comply with the required actions as outlined by Bank in any “Excessive Payment Returns Warning Notice,” then such failure to comply shall be deemed to be a material violation of this Agreement, and Bank may, in its sole and absolute discretion, immediately terminate Payment Services to you.

(e)    Fees For Unauthorized Payment Debit Returns. If you originate an Payment debit Entry that is subsequently returned by the RDFI as unauthorized, you understand that Bank as the ODFI must pay an “Unauthorized Entry Fee” to the RDFI. In the event that such Unauthorized Entry Fee is charged to Bank as the ODFI for any Payment debit Entry that you originate, you understand and acknowledge that Bank may pass such fee through to you, and such fee shall be offset from your Account(s). Such fee is in addition to any Payment Return Fee Bank may charge.

14.  Customer Representations; Indemnity. You represent to Bank and agree that:

(a)    Receiver Authorizations for Credit Entries. Each person shown as the Receiver on a credit Entry received by Bank from you has, by an authorization agreement in accordance with the NACHA Rules, authorized the initiation of such Entry and the crediting of the Receiver’s account in the amount and on the Effective Entry Date shown on such Entry, and has authorized the initiation, if necessary, of debit Entries and adjustments for any credit Entries made in error to the Receiver’s account;

(b)    Receiver Authorizations for Debit Entries. Each debit Entry received by Bank from you is for a sum due and owing to you by the Receiver of such debit Entry or is for a sum specified by such Receiver to be paid to you, or is a correction of a previously submitted erroneous credit Entry, and such Receiver has duly authorized such Entry by an authorization agreement in accordance with the NACHA Rules. Without limiting the foregoing, reinitiation of any debit Entry previously returned for stop payment has been authorized by the Receiver;

(c)    Effective Authorizations. Each such authorization with respect to an Entry is operative at the time of transmittal or debiting/ crediting by Bank as provided herein; and at the time each Entry is processed by Bank, you have no knowledge of revocation by such Receiver of such authorization, and you have no knowledge of any revocation by such RDFI of its agreement to accept such Entry, or any knowledge that such Receiver’s authorization for such Entry has been terminated, in whole or in part, by operation of law or otherwise;

(d)    Types of Entries. Entries transmitted to Bank by you are limited to those types of Entries identified to you by Bank;

(e)    Payment NACHA Rules. You shall be bound by and comply with the NACHA Rules as in effect from time to time, including, without limitation, the provision thereof making payment of an Entry by the RDFI to the Receiver provisional until receipt by the RDFI of final settlement for such Entry; and you specifically acknowledge that you have received notice of this NACHA Rule 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 you shall not be deemed to have paid the Receiver the amount of the Entry. In addition, you acknowledge that you are bound by all of the NACHA Rules regarding error resolution procedures for Receivers (including those regarding erroneous Entries), Receiver authorization and return issues (including investigation and proper handling of Written Statement of Unauthorized Debit), and that you or any of your third-party Payment processors have policies and procedures in place to investigate and resolve Receiver stop payment and revocation of authorization issues in accordance with NACHA Rules;

(f)    Legal Obligations. You shall perform your activities under this Agreement in accordance with all applicable laws and regulations, including without limitation the regulations of OFAC of the U.S. Department of the Treasury. IN ADDITION TO THE INDEMNIFICATION OF BANK BY YOU AS SET FORTH ELSEWHERE IN THIS AGREEMENT, IN THE EVENT THAT YOU, OR A THIRD-PARTY AGENT ACTING ON YOUR BEHALF AND WITH AUTHORITY FROM YOU, IS THE ORIGINATOR OF PAYMENT ENTRIES AND FAILS TO PERFORM ITS OBLIGATIONS AS AN ORIGINATOR UNDER THE NACHA RULES, YOU HEREBY INDEMNIFY BANK FROM ANY AND ALL CLAIMS, DEMANDS, LOSSES, LIABILITY OR EXPENSE, INCLUDING ATTORNEYS’ FEES, FINES, PENALTIES AND ANY OTHER COSTS THAT RESULT DIRECTLY OR INDIRECTLY FROM THE FAILURE OF YOU OR YOUR THIRD-PARTY AGENT TO PERFORM ITS OBLIGATIONS UNDER THE NACHA RULES; and

(g)    No Third-Party Processing. You represent and warrant that you do not engage in any activities that would cause you to fall within the definition of “Third Party Processor” under NACHA Rules. You understand that NACHA Rules require Bank to register all “Third Party Processor” customers with NACHA. In the event that you misrepresent your activities to Bank and are conducting activities that would qualify you as a “Third Party Processor” under NACHA Rules, and Bank incurs any fines, fees, or other penalties from NACHA regarding failure to register you as a “Third Party Processor,” you agree to pay any fines, fees or penalties imposed on Bank by NACHA as a result of your misrepresentation.

15.  Express Limitations on Bank’s Liability. You understand and expressly assume all risks related to Bank immediately suspending or terminating your Payment Services under this Agreement, including, but not limited to, Bank immediately suspending or terminating your Payment Services due to your non-compliance with Bank’s requirements as set forth in any “Excessive Payment Returns Warning Notice.” YOU UNDERSTAND AND EXPRESSLY ACKNOWLEDGE AND AGREE THAT, IN ADDITION TO THE LIMITATIONS ON LIABILITY SET FORTH ELSEWHERE IN THIS AGREEMENT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BANK SHALL NOT BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, LOSS OF REVENUE OR ANTICIPATED PROFITS OR FOR ANY INDIRECT LOSS THAT CUSTOMER MAY INCUR OR SUFFER IN CONNECTION WITH BANK TERMINATING YOUR PAYMENT SERVICES IN ACCORDANCE WITH THIS AGREEMENT.)

16.  Pre-notification. Notwithstanding anything to the contrary in the NACHA Rules, you shall provide to Bank, three (3) Business Days prior to initiation of any new Entry, a pre-notification record which shall include Receiver’s name, identification number, account number, RDFI’s routing transit number, and zero-dollar amount. If your pre-notification record is rejected by an RDFI and you are so notified, you must correct the reason for rejection, resubmit another pre-notification record, and wait the prescribed three (3) Business Days before submitting any further Entries for the Receiver(s) in question.

17.  Data Retention. You shall retain data on file adequate to permit the remaking of Entries for one (1) year following the date of the Payment Entry transmittal by Bank as provided herein and shall provide such data to Bank upon Bank’s request.

18.  Limitation of Liability; Indemnification.

(a)  Limitation of Liability. To the extent permitted by law, and except for the remedies provided expressly herein for breach of this Agreement, you agree that Bank will have no liability whatsoever for any loss, damage, or claim (collectively, a “Claim”) arising out of the performance of or non­performance of any service in accordance with the terms of this Agreement, EVEN IF SUCH CLAIM ARISES, IN WHOLE OR IN PART, FROM BANK’S NEGLIGENCE, but excluding any claim arising from Bank’s gross negligence or willful misconduct. Bank’s duties and responsibilities to you are strictly limited to those described in this Agreement, except with respect to any provisions of the law which cannot be varied or waived by agreement. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BANK WILL NOT BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL, OR PUNITIVE DAMAGES (INCLUDING WITHOUT LIMITATION, LOSS OF REVENUE OR ANTICIPATED PROFITS) OR FOR ANY INDIRECT LOSS THAT YOU MAY INCUR OR SUFFER IN CONNECTION WITH THE SERVICES PROVIDED UNDER THIS AGREEMENT (EVEN IF BANK HAS BEEN INFORMED OF THE POSSIBILITY OF SUCH DAMAGES), INCLUDING WITHOUT LIMITATION, ATTORNEYS’ FEES. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, BANK MAKES NO WARRANTIES OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, ABOUT ANY OF THE SERVICES OFFERED IN THIS AGREEMENT AND HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE OR NON-INFRINGEMENT. To the fullest extent permitted by applicable law, and without limiting the generality of the foregoing, Bank shall not be liable at any time to you or any other person or entity for loss, charge, fee, penalty, expense or other damage resulting from any failure or delay of the performance of Bank’s responsibilities under this Agreement which is caused or occasioned by any act or thing beyond Bank’s reasonable control, including, without limitation, epidemic, pandemic, legal restraint, interruption of transmission or communication facilities, equipment failure, electrical or computer failure, war, emergency conditions, acts of God, fire, storm, or other catastrophe, or inability to obtain or delay in obtaining funds transfer services, Internet access, electronic transfers, or electronic file exchange, or refusal or delay by a Service Provider or another bank or financial institution. In addition, Bank shall be excused from any failure or delay in executing a transaction hereunder, if such execution would result in the violation of any applicable state or federal law, rule, regulation, or guideline. To the fullest extent permitted by applicable law, you agree that Bank shall not have any liability whatsoever for any loss caused by the act, error, or omission of you or any other person, including, without limitation, NACHA, any Service Provider any Internet access service provider, any Federal Reserve bank or transmission or communications facility or any intermediary or receiving financial institution, and no such person shall be deemed Bank’s agent. You understand and agree that the fees charged for the performance of the service(s) provided by Bank under this Agreement have been established in contemplation of these limitations on liability.

(b)  Indemnification. TO THE EXTENT PERMITTED BY LAW, YOU AGREE TO INDEMNIFY, DEFEND, RELEASE AND HOLD HARMLESS BANK AND ITS AFFILIATES, DIRECTORS, OFFICERS, BENEFICIARYS, AND AGENTS, INDIVIDUALLY AND COLLECTIVELY, FROM AND AGAINST ANY DAMAGE, LOSS, OR LIABILITY, INCLUDING WITHOUT LIMITATION FINES, PENALTIES, REASONABLE ATTORNEYS’ FEES AND COURT COSTS (COLLECTIVELY, A “LOSS”) WHICH RESULT, DIRECTLY OR INDIRECTLY, FROM BANK’S PROVIDING YOU SERVICES UNDER THIS AGREEMENT, EVEN IF SUCH LOSS ARISES, IN WHOLE OR IN PART, FROM BANK’S NEGLIGENCE, BUT EXCLUDING ANY LOSS ARISING FROM BANK’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, UNLESS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR THE GOVERNING AGREEMENT(S).
  
 (c) Erroneous Instructions. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY AND TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BANK WILL NOT BE LIABLE FOR ANY INSTRUCTION, PAYMENT REQUEST, AMENDMENT OR CANCELLATION, OR ANY LOSS ARISING THEREFROM , ERRONEOUSLY TRANSMITTED BY YOU OR ANYONE ON YOUR BEHALF OR CONTAINING AN ERROR IN CONTENT AS PROVIDED BY YOU OR ANYONE ON YOUR BEHALF, REGARDLESS OF WHETHER BANK FOLLOWED PROCEDURES SET FORTH IN THIS AGREEMENT. Nothing in this paragraph is intended to limit in any way the provisions in favor of Bank under Section 3 of this Agreement.

19.  Additional Terms and Conditions.

(a)  Fees. You agree to pay such funds transfer fees imposed from time to time in accordance with our customary pricing policies, and to reimburse us for any direct or indirect funds transfer charges or expenses incurred by us, including but not limited to any access charge from a communications system, telex transmission charges, transfer commissions, and correspondent bank charges.  Such fees, charges or expenses shall be paid by our debiting your account with us or, at our option, through account analysis and balance requirements.

(b)  No Extension of Credit. Nothing in this Agreement nor any course of dealing between you and Bank constitutes a commitment or obligation of Bank to lend money to you or obligates Bank to extend any credit to you, to make a loan to you, or otherwise to advance funds to you for any Payment contrary to Bank’s published availability schedule or any other Governing Agreement.

(c)  Termination. Except as otherwise provided in Section 1 above, this Agreement may be terminated at any time without prior notice from Bank, provided that in the event of such termination, Bank shall notify you after such termination as soon as reasonably possible. Termination of this Agreement shall not terminate Section 18 of this Agreement, and nothing in this paragraph is intended to limit in any way the provisions in favor of Bank under Section 3 of this Agreement.

(d)  Authority To Execute Agreement. You expressly represent and warrant to Bank that: (i) it is within the undersigned’s power and authority to enter into and execute this Agreement on your behalf; (ii) undersigned’s actions in entering into this Agreement have been duly authorized and approved by you in accordance with all necessary actions; and (iii) that this Agreement shall be legally binding on you after the undersigned’s execution of this Agreement.

20.  Amendments. Bank may change, modify or add to this Agreement from time to time. If no federal or state law specifically governs an amendment, then at least ten (10) days prior to the effective date of the amendment, we will deliver notice to you of the amendment as provided for under this Agreement. Notwithstanding the foregoing and to the extent permitted by applicable law, Bank may amend any term of this Agreement without prior notice or obligation to you: (i) if a Service Provider changes any term without providing Bank sufficient prior notice to enable Bank to timely notify you; (ii) for security reasons; (iii) to comply with applicable law or regulation; or (iv) as otherwise expressly provided in this Agreement. Your use of the Services provided for under this Agreement following the effective date of any amendment(s) shall constitute your acceptance of and agreement to the amendment(s). If you do not agree to the changes as set forth in an amendment, you may choose to terminate the services offered hereunder by discontinuing further use and following the termination provision found at Section 19(c). Unless otherwise provided for herein, this Agreement may not be amended or modified by you unless agreed to in writing by Bank.

21. Agreement and Acknowledgement. By clicking “I Agree” and consenting to this Agreement, You represent and warrant: (i) You have read, understood, and agree to the terms of this Agreement; (ii) You consent to receive electronic communication, have your records electronically stored and use electronic signatures with us (each as Frost may allow), as stated in this Agreement; and (iii) the devices you will use to access the electronic communications meet the system requirements to access information and to retain information as stated in this Agreement.
If you DO NOT want to consent to receiving electronic communications, PLEASE EXIT NOW. You understand that if you DO NOT want to consent to receiving electronic communications, you should NOT proceed.