Company Authorization Agreement Terms and Conditions

Customer agrees to the terms and conditions of this Agreement by signing a Company Authorization Agreement, which incorporates these terms and conditions. These terms and conditions govern Company's use of KP's services. Capitalized terms used in the Company Authorization Agreement and the following terms and conditions but not immediately defined have the meaning given to them in the definitions section below.

KP: Kotapay, a division of First International Bank & Trust, a banking institution organized and existing under the laws of the State of North Dakota. Member FDIC, acting as Origination Depository Financial Institution ("ODFI")

Processor: Third-Party Processor identified on the New Client Information Form / Company Authorization Agreement

Company: Company identified on the New Client Information Form / Company Authorization Agreement

Transactee: Company's Employee or customer

ACH: Automated Clearing House: the system through which electronic transactions flow

Nacha: National Automated Clearing House Association: the governing body which defines the Rules and Regulations and file formats required to transfer money via the ACH system

Bank: A depository financial institution including, but not limited to a commercial bank, savings bank or credit union

Transfer: A debit (withdrawal of money) or credit (deposit of money)

I. Services Provided

1.0 Company has authorized Processor to create and transmit ACH files to KP for the purpose of transferring funds through the Automated Clearing House (ACH) pursuant to the terms of this Agreement, an agreement with Processor, the rules of Nacha, and any applicable local, state, federal or international laws and regulations for various purposes including, but not limited to, providing direct deposit of payroll for Company's employees, transfers of funds for flexible benefits plans, tax impounding or any other reason Company may desire to transfer funds electronically through the ACH, which purposes have been approved by KP. Company stipulates that any action that KP takes hereunder is pursuant to the apparent authority of Processor and Company, its agents, assigns, officers, directors, and employees. KP shall provide a separate letter to Processor specifying the types and amounts of ACH activities for which Processor and Company are approved to process, which letter is incorporated into and made a part of this Agreement. Processor and Company specifically confined to processing only such approved types and amounts of ACH activity, or such other types of ACH activity as specifically approved in writing by KP, and Processor agrees not to submit any other types of transactions.

1.1 COMPANY UNDERSTANDS THAT KP PROVIDES ITS SERVICES ONLY TO PROCESSOR AND COMPANY TO FACILITATE THE MOVEMENT OF FUNDS THROUGH THE ACH. ALL FUNDS TO BE TRANSFERRED, WHETHER PAYROLL, FLEX BENEFITS, OR FOR ANY OTHER REASON, MUST BE PRE-FUNDED AND FULLY GUARANTEED BY PROCESSOR AND COMPANY. PROCESSOR AND COMPANY UNDERSTAND AND AGREE THAT KP HAS NO DIRECT FINANCIAL INTEREST IN THE DEBITS AND CREDITS PROVIDED PURSUANT TO THIS AGREEMENT, THAT KP IS ONLY PROVIDING A SERVICE FOR A FEE, AND THAT KP IS NOT A GUARANTOR OF FUNDS FOR SERVICES PERFORMED. ALL RISK OF LOSS AND LIABILITY TO ANY PERSON OR ORGANIZATION ARISING OUT OF THE SERVICES FURNISHED HEREUNDER SHALL BE THAT OF PROCESSOR AND COMPANY, AND NOT THAT OF KP.

II. Automated Transfers

2.0 Company represents and warrants it will have sufficient funds on hand in the bank account disclosed herein to honor all transfer instructions received and processed by KP. Company and Processor authorize KP to correct any transfer of funds, as allowed by Nacha rules, if the transfer was not properly funded or honored by Company, Transactees, or Company’s bank without any liability to KP. Processor and Company shall be liable to KP for all damages/losses incurred, including costs, attorney’s fees, and other expenses, as a result of their failure to have adequate funds. Processor and Company hereby authorize KP to transfer funds from any account, including any reserve account, if available, to reimburse KP for all said losses upon notice to Company and Processor, as applicable. Moreover, if further collection attempts are required, all KP's collections costs including, but not limited to, attorney's fees, will be charged to Processor and Company.

2.1 KP may refuse to follow Processor's or Company’s payment instructions if:

     a) KP has not received a wire transfer to fund the dollar amount of a future transfer;

     b) KP reasonably believes that the Company's or Transactee's Bank will return, reverse, or otherwise dishonor a transfer to or from a Company's or Transactee's Bank account;

     c) KP reasonably believes that Processor's or Company's funds on deposit are insufficient to cover the amount of funds to be transferred; or

     d) For any other reason KP deems reasonable, including any of the reasons listed in Section 5.4(a) below as basis for immediate termination.

2.2 If any transfer from Processor, Company, or Transactee account is dishonored, contested, deemed unauthorized or requested to be redeposited or retraced for any reason, reversed by Processor, Company, Transactee and/or their Banks, or is otherwise erroneous, KP:

     a) May, if allowed by Nacha rules, make a correcting entry to any corresponding credit or debit issued to Processor, Company, Transactee or any other party without liability to Processor, Company or Transactee or any other party;

     b) May require Processor to wire funds to KP by no later than 2:00 pm Central Time the day Processor and/or Company were notified of said error;

     c) May re-submit the item and charge Processor and/or Company a late fee; and

     d) Is authorized by Processor to make withdrawals from any Processor account, including, if available, any reserve account.

If further collection attempts are required, Processor shall pay all of KP's collections costs including, but not limited to, attorney's fees and court costs.

2.3 Company and Processor represent and warrant that all debit and credit entries have been and will be pre-authorized pursuant to a valid authorization, and that such authorization is of record. Company and Processor further represents and warrants that it will provide KP with a copy of any such authorization upon KP's request. Company and Processor will indemnify and hold KP harmless for any failure by Company or Processor to have or provide authorizations of record. Processor, Company and/or Transactee have 60 days from the transaction date to notify KP, in writing, of any discrepancies or errors with a transaction processed through KP. This 60-day limitation includes, but is not limited to, alleged errors in amounts, erroneous transactions, and/or revocation of authority. The Processor, Company and/or Transactee must notify KP telephonically and in writing of the alleged error, and include the following information:

     a) Processor's name, address and contact;

     b) Company transaction processed with Company's Fed Tax ID Number;

     c) The name, account number and ABA number of the transaction in question;

     d) The dollar amount of the transaction in question; and

     e) A description and explanation of the error.

2.4 Processor and Company understand, agree, and acknowledge that as part of the ACH process, once Processor or Customer instruct KP to cause funds to be debited from the accounts of Processor, Company, or Transactee, (i) such funds shall be placed in one or more KP settlement accounts; (ii) KP shall be the only entity authorized on such accounts; and (iii) such funds shall be owned by Processor, but in an account under the name of KP for the benefit of Processor. Processor and Company further acknowledges that such KP accounts shall be subject to set off by KP for any debts owed by Processor to KP.

2.5 The processing time limitations that are applicable to this Agreement are located on the following website: www.kotapay.com/calendar. Processor acknowledges and agrees that KP may modify such time limitations as reasonably necessary to perform the necessary services hereunder and comply with Nacha rules.

III. Liability and Indemnification

3.0 To the extent that KP's ability to provide equipment, facilities or personnel necessary to perform services under this Agreement is delayed, reduced, or interrupted by an event beyond KP's control including, but not limited to, acts of God, public enemy, inclement weather, interruption of communications systems for any reason, physical damage to KP's premises, labor disputes, orders or directives of any governmental or quasi-governmental authority, KP shall not be required to perform its obligations under this Agreement or be liable to Processor, Company or Transactee for any failure to perform.

3.1 PROCESSOR AND COMPANY SHALL INDEMNIFY AND HOLD KP HARMLESS FROM ANY AND ALL CLAIMS, LIABILITY, LOSS, DAMAGES, COSTS OR EXPENSES, INCLUDING COURT COSTS AND REASONABLE ATTORNEY FEES, ARISING OUT OF: (a) A BREACH OF ANY AGREEMENT BETWEEN OR AMONG KP, PROCESSOR AND COMPANY, INCLUDING BUT NOT LIMITED TO ANY BREACH OF REPRESENTATIONS AND WARRANTIES; (b) A FAILURE BY PROCESSOR OR COMPANY TO COMPLY WITH ANY GOVERNING RULE, INCLUDING THE RULES OF NACHA, AND OTHER RULES, REGULATIONS, AND LAWS; (c) A FRAUDULENT, WRONGFUL, ILLEGAL OR NEGLIGENT ACT OR OMISSION BY COMPANY, PROCESSOR OR ANY OF THEIR OWNERS, EMPLOYEES, AGENTS, AFFILIATED ENTITIES, INDEPENDENT CONTRACTORS, OR END-CUSTOMERS (CUMULATIVELY, “RELATED PARTIES”); (d) ANY UNAUTHORIZED TRANSMISSION BY PROCESSOR, COMPANY, OR RELATED PARTIES OF DATA, (e) ANY UNAUTHORIZED ENTRY BY PROCESSOR, COMPANY, OR RELATED PARTIES OF INFORMATION INTO THE ACH NETWORK, (f) ANY USE BY PROCESSOR, COMPANY, OR RELATED PARTIES OF THE SERVICES PROVIDED BY KP, (g) ANY SERVICES PROVIDED BY KP TO PROCESSOR, COMPANY, OR RELATED PARTIES, INCLUDING BUT NOT LIMITED TO, CLAIMS OF THE CUSTOMERS, EMPLOYEES, OR OTHER TRANSACTEES OF PROCESSOR AND COMPANY THAT A TRANSFER WAS UNAUTHORIZED OR THAT AN ACCOUNT CONTAINED INSUFFICIENT FUNDS, OR RELATING TO THE ISSUANCE OF A STOP PAYMENT ORDER, AS WELL AS ANY CLAIM ASSERTED BY ANY TAXING AUTHORITY WHOSE CREDITS MAY HAVE BEEN REVERSED OR BY ANY BANK THAT MAY HAVE SUFFERED DAMAGE OR LOSS BECAUSE OF INSUFFICIENT FUNDS OF COMPANY, EXCEPT WHERE THE CLAIM, LOSS, DAMAGES, COSTS OR EXPENSES AROSE OUT OF KP’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; AND (h) ANY INQUIRY BY ANY LAW ENFORCEMENT, REGULATORY, OR ADMINISTRATIVE AGENCY, WHETHER, LOCAL, STATE, FEDERAL, FOREIGN OR SELF-REGULATORY ORGANIZATION, INCLUDING BUT NOT LIMITED TO A CIVIL INVESTIGATIVE DEMAND, SUBPOENA, OR ANY OTHER FORMAL OR INFORMAL REQUEST FOR INFORMATION OR DOCUMENTS REFERRING OR RELATING TO PROCESSOR, COMPANY, OR THEIR RELATED PARTIES.

3.2 Processor and Company authorizes KP to make withdrawals, at any time, from any Processor or Company account, including, if available, any reserve account, to cover any claims, liability, loss, damages, costs or expenses, including court costs and reasonable attorney fees as described above, incurred by KP. KP may indefinitely retain reserve or other funds in KP’s possession following termination of the Parties’ contractual arrangement until KP determines, in its sole discretion, that KP has not presently incurred and does not anticipate incurring any claims, liability, damages, costs or expenses, including court costs and reasonable attorney’s fees, arising out of KP’s performance of this Agreement.

3.3 Processor and Company shall have no right to cancel or amend any entry after its receipt by KP. At Processor's request, KP shall use reasonable efforts to cancel or amend an entry prior to transmittal to the ACH, but KP shall have no liability if such cancellation or amendment is not effectuated.

3.4 KP is not responsible for the actions of Processor, Company, or others with respect to the amount, accuracy, and timeliness of transmittals or authorization of entries received from Processor or generated on behalf of Processor, Company or end customers. The acts of any other person or organization including, without limitation, banks or other financial institutions, or transmission facilities, shall not be deemed the acts of KP. Processor shall hold KP harmless from any transfers KP makes upon the direction of Processor or Company (including end customer-initiated transactions) when such direction is without proper authority and/or is in error.

3.5 KP's Liability to Processor, Company, Transactee, and any other person or entity, shall in no event exceed the actual charges received by KP for the effected transaction. In no event shall KP be liable for consequential, special or punitive damages or loss of profits.

3.6 Confidentiality: Each party hereto acknowledges and agrees that it may obtain certain confidential information from the other in the course of performance hereof. Such information includes, but is not limited to, pricing and technical information, operating procedures, and other information pertaining to the business and customers of each party (“Confidential Information”). Such Confidential Information does not include: (a) information that is publicly available; (b) information received from a third party not in violation of any confidentiality obligation; (c) information already known by the receiving party at the time of the disclosure; (d) independently developed information; and (e) information suggesting or indicating that a transfer of funds by Processor, Company or Transactee through KP has been returned, reversed, claimed to be unauthorized or otherwise contested. Each party agrees: (i) to maintain the confidentiality of the other’s Confidential Information, using efforts no less protective than such party uses in the protection of its own information; (ii) not to disclose such information to any third party, except auditors and regulators, or as otherwise required by law; (iii) not to use such information for any purpose whatsoever other than for its performance hereunder; and (iv) to return all Confidential Information to the other party upon request.

3.7 Third Parties: This Agreement is solely for the benefit of the undersigned and may not be relied upon or enforced by any third party.

IV. Fees

4.0 Pursuant to the terms of the Processor Agreement, Processor has authorized KP to electronically collect all sums of money due KP for services provided. In the event KP is unable to collect all sums of money due KP from the Processor and/or KP has discontinued processing transactions for Processor, and Company agrees to continue services from KP for any pending or future transactions, KP may contact Company to make arrangements for collection of all sums of money due KP pursuant to the terms and conditions of this Agreement.

4.1 In case of a correcting entry, or other costs, expenses, or losses that KP may incur in processing items for Processor or Company, the Processor and Company agree that KP may submit the item for payment, and Processor and/or Company will be charged an amount including a late fee as provided herein and/or later supplemented. If further collection attempts are required, all KP's costs, expenses, and losses, including attorney's fees will be charged to Processor and Company. Further, Processor and Company authorize KP to transfer all amounts due to KP from Processor or Customer accounts, including reserve accounts, if available, to reimburse KP for all losses.

4.2 Processor and Company agree that any interest that may accrue on all funds transferred to KP's settlement account(s) are the property of KP.

V. Miscellaneous

5.0 Entire Agreement: This Agreement, any addenda, or other documents specifically incorporated herein, constitute the entire Agreement between the Parties and correctly describes the Parties’ mutual understanding of this Agreement. Any and all oral or written agreements, representations or understandings between the Parties entered into or made prior to or made contemporaneously with the effective date of this Agreement have been incorporated into this Agreement or were revoked, released or terminated before the effective date of this Agreement. No modifications, deletions, additions, or amendments to this Agreement shall be binding on KP unless the same are reduced to writing and the writing is signed by KP. All of the terms of this Agreement are subject to the approval of KP and unless KP has executed this Agreement, such approval has neither been obtained nor granted.

5.1 Relationship of Parties: KP, Processor and Company intend their relationship be that of independent contractors. In no event (other than for KP to act for the benefit of Processor and Company under Section 1.0 herein) shall KP or Processor be deemed an agent, partner or joint venturer of the other or have the authority to bind the other in any way, nor shall KP or Company be deemed an agent, partner or joint venturer of the other or have the authority to bind the other in any way. Nothing herein shall be construed to grant Processor, Company, Transactee, or any other person or entity, any right, title, interest or license in or to KP’s name, trademarks, or other proprietary information, and Processor, Company, Transactee shall not use its name, trademarks or information without KP’s prior written consent.

5.2 Document Execution: The Parties to this Agreement agree to execute whatever additional documents are reasonably necessary to carry out the terms and effect of this Agreement.

5.3 Governing Law: This Agreement shall be governed by the laws of the State of North Dakota; Nacha; and applicable state and federal law including, but not limited to, the regulations of the Board of Governors of the Federal Reserve System and the operating circulars of the Federal Reserve System Banks; the Electronic Funds Transfer Act of 1978 and amendments thereto; North Dakota’s adoption of the Uniform Commercial Code – Funds Transfer Act; North Dakota Century Code Section 41-04.1; and the Foreign Assets Control Regulations. The Parties to this agreement also stipulate and agree that disputes regarding this Agreement shall be venued and filed and are subject to the exclusive jurisdiction of the United States Federal District Court for the Southeast Division of the State of North Dakota, Fargo, North Dakota or the District Court for Cass County, Fargo, North Dakota.

5.4 Default and Remedies:

     a) Processor/Company: Processor and/or Company shall be deemed to be in default, permitting KP to immediately terminate this Agreement in accordance with the notice procedure described below, if KP determines in its sole discretion that Processor or Company, or any of their Related Parties: (a) have failed to comply with any term or condition of this Agreement, where bound; (b) have not provided KP with honored funds; (c) have violated any governing rule, including, without limitation, the rules of the Nacha system, and other rules, regulations, or laws; (d) have engaged in a fraudulent, wrongful, illegal or negligent act or omission; (e) have been made the subject of any inquiry by any law enforcement, regulatory, or administrative agency, whether local, state, federal, international or self-regulatory organization; (f) have misrepresented any fact to KP, whether in connection with an application to KP for processing services, during a subsequent audit of Processor or Company, or at any other time; (g) pose a credit risk to KP; or (h) refuse to provide information that would enable KP to make a determination as to (a) through (g). Additionally, Processor has an affirmative duty to inform KP immediately of any inquiry by any law enforcement, regulatory, or administrative agency once it has a credible basis for believing that such an inquiry has commenced. Consistent with this duty, Processor must furnish to KP copies of any subpoenas, civil investigative demands, requests for information, as well as any reports of findings and cease and desist orders (or their equivalent), except where expressly prohibited by law. Failure to satisfy this duty to notify shall represent a separate basis for immediate termination. KP shall provide Processor with notice of termination by e-mail, telephone or fax, followed up by letter correspondence to be issued within ten (10) days of the date thereof.

     b) KP: In the event that KP fails to comply with any term or condition of this Agreement, Processor or Company may terminate this Agreement upon five (5) days' written notice provided to KP pursuant to Section 5.11, with the five (5) days' notice of termination of Agreement commencing upon KP's actual receipt of the notice of termination.

5.5 Non-Default Termination of Agreement: Any time while this Agreement is in effect, and during which neither party is in breach of this Agreement, either party may terminate this Agreement upon fifteen (15) days’ notice of termination, to be provided pursuant to Section 5.11. In the event that KP terminates this Agreement pursuant to this provision, Processor and Company shall be allowed to process items for up to sixty (60) days following such notice upon such terms and conditions as are mutually agreed upon by Processor and KP.

5.6 Effect of Termination: Processor and Company’s representations, warranties, obligations and duties shall survive termination of this Agreement and Processor and Company shall continue to indemnify and hold KP harmless, and shall be liable to KP for all sums of monies due and payable hereunder to KP. KP may retain all Processor or Company funds in KP’s possession, including reserve accounts, following termination of this Agreement until such time as KP determines, in its sole, reasonable discretion, that it has no present or anticipated claim for indemnification from Processor or Company. Provided, however, that a determination by KP that there is no present or anticipated claim for indemnification will in no way affect Processor or Company’s continuing obligation to indemnify and hold KP harmless.

5.7 Term of this Agreement: The term of the Agreement will be for one (1) year from the date of this Agreement unless this Agreement is subsequently supplemented or replaced. This Agreement will automatically renew for subsequent successive periods of one (1) year thereafter, unless either party provides the other party with written notice of termination at least fifteen (15) days prior to the end of any succeeding term of this Agreement.

5.8 Account Authorization: Company authorizes Processor and or KP to initiate electronic debit and or credit entries to and from the bank account disclosed on agreement, and to/from any other bank accounts subsequently identified by Processor/Company in writing. Company understands that adjustment entries may be made to this account (and subsequently identified accounts) to ensure an accurate and balanced accounting of all transactions. This authorization will remain in effect until Company cancels the authorization in writing.

5.9 Financial Reporting: Within 30 days of demand, Company agrees to provide KP with updated financial information regarding Company, including, but not limited to, Company’s most recent and current balance sheet, income statement, bank statement, and, if requested, state and federal tax return.

5.10 Change in Ownership or Address: Company shall provide KP with notice of any change in its ownership at least 21 days prior to the effective date of such change. Company shall provide KP with all relevant information regarding the change of ownership. If Company is not a publicly held corporation, Company will provide KP with the names of all owners of Company. If Company is a publicly held corporation, Company shall provide KP with the name and address of, and information regarding the corporate entity acquiring the stock and/or assets of Company. If the change in ownership results in the creation of a new entity, Company shall provide KP with all applicable information regarding the new entity, including, but not limited to, Company’s certificate of authority (or its equivalent) to transact business, taxpayer identification and related information, and Company shall be required to execute a new Company Authorization Agreement. Within 15 days of its receipt of a Change in Ownership notice from Company, KP shall have the right, in its sole discretion, to terminate this Agreement by delivery of written notice pursuant to Section 5.11.

5.11 Notification: 5.11 Notification: All notices or other communications required or permitted hereunder shall be in writing and shall be effective upon the earliest of: (a) personal service, (b) upon receipt if mailed, (c) the next business day, if sent by overnight courier within the United States, or (d) upon confirmation (including electronic verification) of receipt addressed:

If to KP:

Attention: Risk Department

3247 47th Street South

Fargo, ND 58104

If to Processor: 

To the location/fax number/e-mail as set forth on its ACH Application.

If to Company:

To the location/fax number/e-mail as set forth on its Client Information Form.

Notice may be given at such other addresses, as may hereafter be furnished in writing by the respective parties, if given in the manner required above.

VI. Representations and Warranties

6.0 Authorization by Processor: Company represents and warrants that the execution and delivery of this Agreement by Company, and the performance by it of the transactions contemplated herein, have been duly and validly authorized by all requisite corporate actions of Company; this Agreement has been duly executed and delivered by Company; and this Agreement constitutes the valid and binding obligation of Company, enforceable against Company in accordance with its terms. In addition, Company possesses all governmental approvals required to carry on its business as now conducted and all such governmental approvals are in full force and effect.

6.1 Organization, Existence, and Good Standing of Processor: Company represents and warrants that it is duly organized, validly existing, and in good standing under the laws of the jurisdiction where it was created and any jurisdiction where it is conducting business, with all requisite company power and authority to own, lease, and operate its properties, to carry on its business as now being conducted, and to execute, deliver, and perform its obligations under this Agreement and any other documents related thereto to which it is a party, and to consummate the transactions contemplated hereby.

6.2 No Conflicts: Company represents and warrants that the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby do not and will not contravene, conflict with, or result in any violation of or default under any provision of the certificate of where it was created, any resolution adopted by the Processor, or any mortgage, indenture, lease, loan or credit agreement, or other contract, applicable law, or governmental approval applicable to Company, or any order which affects or binds Company. No governmental approval, and no consent or approval of any other person, is required on the part of Company in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

6.3 Litigation: Company represents and warrants that there is no actual or pending litigation (i) that has been commenced by or against Company that relates to or may affect Company’s right to consummate the transactions contemplated by this Agreement, or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, this Agreement or the transactions contemplated hereby.

6.4 Compliance with Laws: Company represents and warrants that Company and Related Parties have complied with, and will remain in compliance with, all laws, regulations, and rules, whether state, local, federal, self-regulatory or foreign, that are or were applicable to Company and Related Parties. Company specifically agrees not to originate transfers or entries that violates the laws of the United States. Company further represents and warrants that it has not received any notice or other communication (whether written or oral) from any governmental authority or any other person regarding any actual, alleged, or potential violation of, or failure to comply with, any law, regulation or rule.

6.5 Compliance with U.C.C 4A as Provided by Nacha Operating Rules - Provisional Payment Disclosure: Credit given by KP to Company with respect to an ACH credit entry is provisional until KP receives final settlement for such entry through a Federal Reserve Bank. If KP does not receive such final settlement, Company is hereby notified and agrees that KP is entitled to a refund of the amount credited to Company in connection with such entry, and the party making payment to Company via such entry (i.e. the originator of the entry) shall not be deemed to have paid Company the amount of such entry.

6.6 Notice Disclosure: Under the operating rules of Nacha, KP is not required to give next-day notice to Company of receipt of an ACH item, and KP will not do so. However, KP will continue to notify Company of the receipt of payments in the periodic statements provided by KP to Company.

6.7 Choice of Law Disclosure: KP may accept on Company's behalf payments to Company's account which have been transmitted through one or more ACH and which are not subject to the Electronic Fund Transfer Act, and Company’s rights and obligations with respect to such payments shall be construed in accordance with and governed by the laws of the State of North Dakota and Nacha rules and regulations.

6.8 Compliance with ERISA: Company represents and warrants, when applicable, that it is responsible for the administration of any flexible benefit plan/cafeteria plan/ERISA plans and for compliance with all rules, requirements, regulations and laws regarding those plans (whether relating to compliance, taxation or any other subject), and that KP is only providing electronic means to transfer funds and nothing more. Company hereby indemnifies and holds KP harmless from any and all liabilities that may arise from Company’s failure to properly manage, obtain authorization, fund, or otherwise operate and institute a flexible benefit plan.

6.9 Electronic Funds Transfer Act (15 U.S.C. § 1693): Company represents and warrants that it has been fully advised by its financial institutions, and that all of the Transactees having funds transferred to or from financial accounts pursuant to this Agreement are fully advised of and aware of (i) their rights, remedies and responsibilities pursuant to the Electronic Funds Transfer Act found at 15 U.S.C. § 1693, including, but not limited to, the right to receive documentation, the right to stop payment, and the right to stop pre-authorized transfers; and (ii) any charges for electronic funds transfers. Company further represents and warrants that it is in full compliance with the Electronic Funds Transfer Act.

6.10 Authorization: Company represents and warrants that all debit and credit entries have been and will be pre-authorized pursuant to a valid authorization, and that such authorization is of record. Company further represents and warrants that it will provide KP with a copy of any such authorization upon KP’s request. Company will indemnify and hold KP harmless for any failure by Company to have or provide authorizations of record.

6.11 Provision of Contact Information: Company represents and warrants that Company has installed a system whereby Company or Transactees may contact Processor and/or Company via a telephone number, e-mail address, and a physical address so Company and/or Transactee may contact a person and seek resolution of any dispute. Moreover, in the event that Company and/or Transactee are unable to resolve any dispute or are unable to contact Processor and/or Company to resolve a dispute, Company acknowledges that Processor and Company have provided, or will promptly provide, Company and/or Transactee with the name, address, and telephone number of KP.

6.12 Nacha Rules: Company represents, warrants and acknowledges that it is bound by the Nacha Operating Rules, that it is (and will remain) in compliance with such Rules, including, but not limited to, any maximum thresholds set by Nacha for Unauthorized Returns, Administrative Returns and Overall Returns, and that it assumes the responsibilities of an Originator under such Rules.

VII. Security Procedures

7.0 Authorized Representative: Company agrees to designate Authorized Representatives to act on Company’s behalf, who shall have the authority to authorize all actions necessary in the preparation and generation of the entries for the benefit of Company. Company agrees that KP shall not be under a duty to inquire as to the authority or propriety of any instructions given to KP by the Processor, Company or any of the Processor or Company’s Authorized Representatives, and KP shall be entitled to rely upon all ACH instructions conveyed by such Authorized Representatives to KP whether or not the Processor or Company has actually authorized such instructions. KP shall not be liable for any loss, cost, expense or other liability arising out of any such instructions

7.1 Compliance: Company agrees to remain in compliance with the rules and requirements of the Office of Foreign Assets Control Department (OFAC). Company agrees to identify its customers and/or employees, each or both of which are applicable pursuant to law, to the extent necessary to comply with the Parties’ obligation to comply with the OFAC, including identification of beneficial owners. For more information on OFAC, please see the following sites

• http://www.treasury.gov/resource-center/sanctions/Pages/default.aspx
• http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx
• https://www.occ.treas.gov/topics/compliance-bsa/bsa/index-bsa.html

7.2 Authentication: Company agrees that KP may send notices and other communications, including user IDs, password(s), and other methods of authentication, to the current address shown in KP’s records, whether or not that address includes a designation for delivery to the attention of any particular individual. Company further agrees that KP will not be responsible or liable to the Processor, Company, or any other party, in any way, if information is intercepted by an unauthorized person, either in transit or at the Processor or Company’s place of business, unless the interception was caused by KP’s breach of reasonable security measures under the circumstances. The Company agrees to: (1) keep the Processor’s/Company’s passwords and authentication methods and strictly confidential, providing it only to Authorized Representatives on the Processor’s/Company’s account(s); (2) instruct each person to whom the Processor/Company gives passwords and authentication methods that he or she is not to disclose it to any unauthorized person; and (3) immediately notify KP for the assignment of a new password or authentication method if the Processor/Company believes a password or authentication method may have become known by an unauthorized person.

KP WILL HAVE NO LIABILITY TO THE PROCESSOR OR COMPANY FOR ANY UNAUTHORIZED PAYMENT OR TRANSFER MADE USING THE PROCESSOR’S/COMPANY’S PASSWORDS AND/OR AUTHENTICATION METHODS THAT OCCUR BEFORE THE COMPANY HAS NOTIFIED KP OF POSSIBLE UNAUTHORIZED USE AND KP HAS HAD ANOPPORTUNITY TO ACT ON THAT NOTICE WITHIN A REASONABLE TIME. KP may suspend or cancel the Processor’s/Company’s password(s) or authentication method(s) without receiving any notice from the Processor/Company if KP suspects a password or authentication method is being used in an unauthorized, illegal or fraudulent manner.

7.3 Right To Audit: Company acknowledges and agrees that KP, and/or any regulatory authority with supervisory authority over KP, may at any time, at their discretion, audit Company’s compliance with: (a) the terms of this Agreement; (b) the Nacha Operating Rules; and (c) any applicable local, state, federal, and foreign regulations or law. Company agrees that the cost of the audit will be paid by Processor, and the audit report will be the property of KP, with a copy supplied to Company. Company further agrees that it will remedy all matters identified in the audit report within 21 days of the date of the audit report and provide to KP written verification of this remediation. KP may, at its sole discretion, permit an extension of this 21-day period.

7.4 Acknowledgment of Security Procedures: Unless KP agrees with Company in writing to a different security procedure than is set forth herein, Company acknowledges and agrees that the authenticity of payment orders will be verified using the procedures set forth above. Further, Company agrees that such security procedures are commercially reasonable.

7.5 Internal Security Procedures: Company agrees to (i) adopt and implement commercially reasonable policies, procedures and systems to receive, store, transmit and destroy Consumer-Level ACH Data in a secure manner and to protect against data breaches; and (ii) implement commercially reasonable policies, procedures and systems to detect the occurrence of a data breach within its respective organization. The term “Consumer-Level ACH Data” means a bank account number together with a bank routing number, or a customer’s name together with a customer’s social security number. Processor further agrees to comply with any prevention, detection, investigation, and escalation (notification) requirements of any Nacha policies relating to ACH data breach notification requirements and any applicable state or federal laws.