ACH THIRD-PARTY SENDER SERVICE TERMS

 

Section 1.  THE SERVICE.

These ACH Third-Party Sender Service Terms (the “Service Terms”) set forth the terms under which Customer may act as a Third-Party Sender to transmit Credit and/or Debit Entries through Bank by means of the Automated Clearing House Network (“ACH”) (the “Service”). These Service Terms supplement the ACH Origination Service Terms. The Service is also subject to the General Provisions of the Treasury Management Terms and Conditions Agreement (the “Agreement”) as if fully incorporated herein and all Applicable Laws. In the event of a conflict between these Service Terms and other terms in the Agreement, including the ACH Origination Service Terms, these Service Terms shall control. Unless otherwise defined herein, any capitalized terms shall have the meaning as set forth in the Agreement or the Nacha Operating Rules and Guidelines (the “Rules”), as applicable. Any reference to the Agreement herein shall be deemed to include these Service Terms.

Section 2.  REGISTRATION OF THIRD-PARTY SENDER; REPRESENTATIONS AND WARRANTIES.

Customer understands that Bank must register Customer as a Third-Party Sender with Nacha and agrees to fully cooperate in that process.  Customer hereby remakes, as a Third-Party Sender, the representations, warranties and covenants made in the ACH Origination Service Terms.  Customer hereby represents, warrants and covenants that Bank is hereby authorized to originate Entries on behalf of each Originator for which Customer acts as a Third-Party Sender to the Receivers’ accounts, and hereby makes to Bank all additional representations and warranties made by a Third-Party Sender to an Originating Depository Financial Institution (“ODFI”) under the Rules.  

Section 3.  REQUIREMENTS AS TO ORIGINATORS.

a) Customer agrees that, before permitting an Originator to originate any Entries directly or indirectly through Customer or Bank, Customer shall enter into a binding agreement with each Originator (“ACH Agreement”) that (i) authorizes Bank to originate Entries on behalf of the Originator to Receivers’ accounts; (ii) restricts Entries by impermissible SEC Codes or otherwise restricts Entries as set forth in the ACH Origination Service Terms; (iii) the ACH Agreement binds the Originator to comply with the Rules and contains at least the same provisions as between Bank and Customer, including, without limitation, authorization requirements, the audit rights of the Bank set forth in the ACH Origination Service Terms, and will be responsible for verifying the proper authorization and execution of all such agreements, which must be executed by authorized signers of Originators; (iv) the Originator must agree not to originate Entries that violate Applicable Laws; (v) includes terms that permit Customer to terminate or suspend the ACH Agreement for any breach of the Rules or as required for Customer, as Third-Party Sender, to comply with the Rules; and (vi) permits Customer and Bank to audit the Originator’s compliance with the ACH Agreement and the Rules.  The ACH Agreement must be agreed for use by Bank and satisfy all of the requirements of the Rules prior to use by Customer; provided, that Bank’s review and agreement shall not be relied upon by Customer as confirmation that the ACH Agreement complies with Applicable Laws and the Rules.

b) Prior to executing an ACH Agreement with an Originator, Customer shall have conducted an investigation appropriate to the degree of risk associated with the Originator and in accordance with Bank’s due diligence requirements, including, as deemed necessary, physical inspection of the Originator’s premises, and Originator’s data security and customer identification processes, and Customer shall have verified through such investigation that the Originator conducts a legal bona fide business operation and has the proper facilities, equipment, and inventory, and, where necessary, licenses and permits to do business.  At the request of Bank, Customer will provide photographs taken of the Originator’s premises, inventory, or product, and/or a credit bureau report on principals of the business.  As part of its investigation, Customer must confirm whether an Originator is itself acting as a Third-Party Sender, which would make the Originator a “Nested Third-Party Sender” as defined under the Rules.  Bank does not permit use of the Service by or on behalf of Nested Third-Party Senders and Customer agrees not to use the Service to initiate Entries on behalf of any Originator that is a Nested Third-Party Sender.

c) Upon Bank’s request, Customer shall provide Bank with the following information pertaining to each Originator for which it initiates Entries:  name; principal business activity; street address; telephone number; employer identification number; name and telephone number of the principal; date of the ACH Agreement; and summary of Customer’s due diligence.  Bank shall have the right, in its sole discretion, to refuse to accept Entries from any such Originators.  Customer shall, following periodic requests from Bank, provide to Bank any information considered to be reasonably necessary to identify each Originator on whose behalf Customer initiates Entries hereunder within two (2) Business Days of Bank’s request.

d) At all times, Customer shall be responsible for supervising and overseeing each Originator’s performance under the applicable ACH Agreement and shall be responsible for their respective compliance with Applicable Laws, including the Rules.  

e) Customer shall establish, implement and periodically review exposure limits for Originators and establish policies and procedures to: (i) monitor the Originators’ origination and return activity across multiple Settlement Dates and require corrective action if Return Rates exceed the requirements of the Rules; and (ii) enforce restrictions on the types of Entries that may be originated and enforce exposure limits, each as established by Bank from time to time.

Section 4.  TRANSMITTAL OF ENTRIES BY CUSTOMER.  

Customer will initiate Entries as provided in the ACH Origination Service Terms.  Customer, on behalf of Originators, authorizes Bank to originate the types of Entries submitted by Customer as a Third-Party Sender on behalf of an Originator to Receivers’ accounts; provided, where required, such Entries are in compliance with the formatting and other requirements set forth in the Rules, the ACH Origination Service Terms, the Operational Instructions and any other documentation provided to Customer by Bank; and Bank agrees to originate and transmit such Entries in accordance with these Service Terms.  For each Entry for which Customer is not the Originator, Customer represents and warrants that it will not transmit to Bank any Entries that violate the Rules or Applicable Laws or that are otherwise restricted by Bank, and represents and warrants that the Originator of the Entry has agreed to assume the responsibilities of an Originator under the Rules and has acknowledged that the Originator may not initiate Entries that violate the Rules or Applicable Laws.

Section 5.  OBLIGATIONS OF CUSTOMER AS A THIRD-PARTY SENDER UNDER THE RULES.  

In addition to any other duties, responsibilities, warranties, representations and liabilities under other sections of the Agreement, for each and every Entry transmitted by Customer as a Third-Party Sender to Bank, Customer represents and warrants to Bank and agrees that Customer, as a Third-Party Sender, shall: (a) perform all of the duties, including, but not limited to, the duty to identify Originators; (b) assume all of the responsibilities, including, but not limited to, the responsibilities of ODFIs and Originators; (c) make all of the warranties, including, but not limited to, the warranties of ODFIs, the warranty that each Originator has agreed to assume the responsibilities of an Originator under the Rules and is legally able to do so; (d) 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 Third-Party Sender in accordance with the Rules; and (e) limit the dollar value and types of the Entries that are transmitted to Bank by Customer as Third-Party Sender as set forth in the Operational Instructions.  Customer further represents and warrants to Bank and agrees that Customer will not use the Service to initiate Entries on behalf of any Nested Third-Party Sender.

Section 6.  LIMITS ON ACH ENTRIES OR FILES.  

In addition to the limitations set forth in the Operational Instructions, Bank may place additional limits on the amount or the type of Credit Entries or Debit Entries that Customer may originate in a file, batch or any single Entry.  Such limit will be communicated by Bank to Customer from time to time and Customer hereby agrees to communicate any such limitations to each Originator and ensure that all Entries originated by Customer comply with such limitations.  Bank reserves the right to modify limits at its sole discretion.

Section 7.  ANNUAL SELF-ASSESSMENT.  

Customer must conduct an annual audit of Customer’s compliance with the Rules and an annual self-assessment as to data security and as to compliance with the Rules and maintain the results for review by Bank for not less than six (6) years.  Customer agrees to provide documentation supporting such audit and self-assessment within five (5) Business Days of request from Bank.  

Section 8.  TERMINATION.  

In addition to Bank’s termination rights under the Agreement, Bank has the right to terminate or suspend these Service Terms or any Originator of Customer for any breach of the Rules or as required for Bank to comply with the Rules or if any Originator of Customer is determined to be a Nested Third-Party Sender.   

Section 9.  INDEMNIFICATION.  

In addition to all other indemnification obligations under the Agreement, Customer agrees to indemnify, defend and hold Bank harmless from and against any and all Losses that arise directly or indirectly from use of the Service by or on behalf of any Originator or Nested Third-Party Sender, including the failure of any Originator or Nested Third-Party Sender to perform its obligations under Applicable Laws, including the Rules.  Customer acknowledges that Bank does not permit use of the Service to initiate Entries by or on behalf of Nested Third-Party Senders and agrees to indemnify, defend and hold harmless Bank from and against any Losses arising from or related to use of the Service by or on behalf of a Nested Third-Party Sender.

Section 10.  PAYMENT.  

Customer, as a Third-Party Sender, shall maintain sufficient Available Funds in the Accounts to cover its payment obligations under these Service Terms and agrees to pay Bank for each ACH Transaction originated by Customer as Third-Party Sender on behalf of any Originator for which Bank is not paid.