diff --git a/package.json b/package.json
index 5294655..d77dd7a 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "@blockrun/franklin",
-  "version": "3.23.0",
+  "version": "3.23.1",
   "description": "Franklin Agent — The AI agent with a wallet. Spends USDC autonomously to get real work done. Pay per action, no subscriptions.",
   "type": "module",
   "exports": {
diff --git a/src/agent/error-classifier.ts b/src/agent/error-classifier.ts
index 1c6ca85..341f839 100644
--- a/src/agent/error-classifier.ts
+++ b/src/agent/error-classifier.ts
@@ -65,6 +65,17 @@ export function classifyAgentError(message: string): AgentErrorInfo {
   // `Exa /v1/exa/search failed (402): {"error":"Payment verification failed",...}`.
   // Classify BEFORE the generic 'payment' branch below since the body
   // contains both 'payment' and 'verification failed'.
+  //
+  // Treated as transient with a small retry budget: real-world telemetry
+  // (2026-05-28 audit) shows the gateway intermittently rejects valid
+  // signed payments under burst load — identical prompts succeed 5s
+  // later. Most plausible root cause is a nonce-cache race in the
+  // gateway's replay protection. Retrying re-signs with a fresh nonce on
+  // each attempt (llm.ts derives a new nonce per request), so a retry
+  // is NOT a replay. Three attempts is enough to ride out the blip
+  // without burning tokens on a model whose wallet is genuinely
+  // misconfigured (clock skew, wrong chain) — those failure modes are
+  // deterministic and will exhaust the budget quickly.
   if (includesAny(err, [
     'verification failed',
     'payment verification',
@@ -75,8 +86,8 @@ export function classifyAgentError(message: string): AgentErrorInfo {
     'replay protection',
   ])) {
     return {
-      category: 'payment_rejected', label: 'PaymentRejected', isTransient: false, maxRetries: 0,
-      suggestion: 'The gateway rejected your signed payment. Run `franklin balance` to confirm funds + chain. Common causes: clock skew (resync system clock), wrong chain selected (use `/chain` to switch), or stale nonce (the same retry will fail). Switch to a free model with `/model free` to keep working.',
+      category: 'payment_rejected', label: 'PaymentRejected', isTransient: true, maxRetries: 3,
+      suggestion: 'The gateway rejected your signed payment. If this keeps happening: run `franklin balance` to confirm funds + chain. Common causes: clock skew (resync system clock), wrong chain selected (use `/chain` to switch). Transient blips are auto-retried.',
     };
   }
 
diff --git a/src/agent/loop.ts b/src/agent/loop.ts
index 4ee6a96..e9ff4e3 100644
--- a/src/agent/loop.ts
+++ b/src/agent/loop.ts
@@ -1710,13 +1710,21 @@ export async function interactiveSession(
         }
 
         // ── Payment failure: auto-fallback to free models ──
-        // Track payment-failed models for the entire session — unlike transient errors,
-        // 402s will keep failing until the user adds funds. Also handles
-        // payment_rejected (signature verified-and-rejected by gateway):
-        // same fallback path, but the suggestion text in classifier guides
-        // the user toward clock-skew / chain-mismatch fixes rather than
-        // "add funds."
-        if (classified.category === 'payment' || classified.category === 'payment_rejected') {
+        // 'payment' (insufficient funds / 402): session-permanent blacklist —
+        // the wallet won't refill mid-session, so retrying the same model
+        // just wastes a turn. Record to elo so the router learns to avoid it.
+        //
+        // 'payment_rejected' (signed payment rejected by gateway): only
+        // fall back FOR THIS TURN — do NOT add to paymentFailedModels and
+        // do NOT record to elo. The retry budget from the transient path
+        // above (3 attempts) has already been exhausted at this point;
+        // this fallback just lets the user keep working. The next user
+        // turn resets to baseModel (see top of outer loop) so a single
+        // gateway nonce-race blip can't permanently demote the user to
+        // free models for the whole session — that's the bug audited
+        // 2026-05-28 from telemetry showing 28/468 PaymentRejected with
+        // identical prompts succeeding 5s apart.
+        if (classified.category === 'payment') {
           turnFailedModels.add(config.model);
           paymentFailedModels.set(config.model, Date.now());
           // Bound the Map so long sessions don't leak. LRU-evict oldest by timestamp.
@@ -1742,6 +1750,26 @@ export async function interactiveSession(
           }
         }
 
+        if (classified.category === 'payment_rejected') {
+          turnFailedModels.add(config.model);
+          const nextFree = pickFreeFallback(lastRoutedCategory, turnFailedModels);
+          if (nextFree) {
+            const oldModel = config.model;
+            config.model = nextFree;
+            config.onModelChange?.(nextFree, 'system');
+            const reason = `gateway rejected payment [${classified.label}] — will retry ${oldModel} next turn`;
+            // Reset retry counter — the transient path above already burned
+            // this turn's budget on the rejected model; the free fallback
+            // model gets its own (mirrors the rate_limit fallback below).
+            recoveryAttempts = 0;
+            onEvent({
+              kind: 'text_delta',
+              text: `\n*${formatModelSwitch(oldModel, resolvedModel, reason, nextFree)}*\n`,
+            });
+            continue; // Retry with next model
+          }
+        }
+
         // ── Rate-limit / quota: auto-fallback to a different provider ──
         // Per-day TPM caps (Anthropic) won't clear in this session; per-second
         // limits already had their backoff retry above and still failed. In
diff --git a/src/commands/start.ts b/src/commands/start.ts
index 6b124c7..0b15dbd 100644
--- a/src/commands/start.ts
+++ b/src/commands/start.ts
@@ -576,7 +576,15 @@ async function runWithInkUI(
     runExitBackgroundTasks(sessionHistory, agentConfig).catch(() => {});
   }
 
-  disconnectMcpServers().catch(() => {});
+  // Await MCP shutdown with a bounded timeout — previously fire-and-forget,
+  // which left stdio child processes alive and (combined with no explicit
+  // process.exit() below) was the root cause of the "I quit but the
+  // process is still running" report (audited 2026-05-28). A misbehaving
+  // MCP server must not be able to pin shutdown, so cap the wait at 2s.
+  await Promise.race([
+    disconnectMcpServers().catch(() => {}),
+    new Promise<void>((r) => setTimeout(r, 2000)),
+  ]);
 
   // Session summary — delta vs. snapshot at session start
   try {
@@ -607,6 +615,15 @@ async function runWithInkUI(
   }
 
   console.log(chalk.dim('\nGoodbye.\n'));
+
+  // Explicit exit. Without this, lingering keep-alive sockets (bootstrap
+  // learnings importer, panel HTTP server, gateway client agents) and any
+  // FRANKLIN_EXTRACT_ON_EXIT background promise can hold the event loop
+  // open for seconds-to-minutes after the UI tears down — the user sees
+  // "Goodbye." but `ps` still shows the process, and a subsequent
+  // `franklin` invocation races with the zombie. Force a clean exit. Any
+  // explicit error paths above set process.exitCode = 1 — preserve it.
+  process.exit(process.exitCode ?? 0);
 }
 
 async function runExitBackgroundTasks(
@@ -703,6 +720,14 @@ async function runWithBasicUI(
 
   ui.printGoodbye();
   flushStats();
+
+  // Same explicit-exit reasoning as runWithInkUI — bounded MCP shutdown
+  // then hard exit so background promises can't pin the process alive.
+  await Promise.race([
+    disconnectMcpServers().catch(() => {}),
+    new Promise<void>((r) => setTimeout(r, 2000)),
+  ]);
+  process.exit(process.exitCode ?? 0);
 }
 
 // ─── Panel auto-start ──────────────────────────────────────────────────────
diff --git a/test/local.mjs b/test/local.mjs
index 487981a..b3dc315 100644
--- a/test/local.mjs
+++ b/test/local.mjs
@@ -2677,20 +2677,28 @@ test('streamCompletion: 429 response with Retry-After header tags the error mess
 // Verified 2026-05-04 in a screenshot: ExaSearch failed with
 // `(402): {"error":"Payment verification failed","details":"Ver…}`. Same
 // HTTP status as a "payment required" challenge but a different remedy:
-// the user's signed payment was rejected, not absent. Same retry won't
-// help — must fix clock skew / chain / nonce.
-
-test('classifier: Payment verification failed → payment_rejected with chain/clock-skew tip', async () => {
+// the user's signed payment was rejected, not absent.
+//
+// Audited 2026-05-28: empirically intermittent — telemetry showed 28/468
+// PaymentRejected with identical prompts succeeding 5s later. Most
+// plausible root cause is a nonce-cache race in the gateway's replay
+// protection under burst load. Each retry re-signs with a fresh nonce
+// (llm.ts derives a new nonce per request), so a retry is NOT a replay.
+// Hence transient with a small retry budget. Deterministic failure
+// modes (clock skew, wrong chain) exhaust the budget quickly and fall
+// through to the same fallback path.
+
+test('classifier: Payment verification failed → payment_rejected, transient with small retry budget', async () => {
   const { classifyAgentError } = await import('../dist/agent/error-classifier.js');
 
   // Gateway-shape body, exact match for the live failure.
   const live = classifyAgentError('Exa /v1/exa/search failed (402): {"error":"Payment verification failed","details":"Ver..."}');
   assert.equal(live.category, 'payment_rejected');
   assert.equal(live.label, 'PaymentRejected');
-  assert.equal(live.maxRetries, 0, 'must not auto-retry — same signature stays rejected');
+  assert.equal(live.isTransient, true, 'must auto-retry — gateway nonce-race blips need a fresh-nonce retry');
+  assert.equal(live.maxRetries, 3, 'small budget — enough to ride out a burst-load blip, not enough to thrash on a real misconfig');
   assert.match(live.suggestion ?? '', /clock skew/i, 'suggestion should mention clock skew');
   assert.match(live.suggestion ?? '', /chain/i, 'suggestion should mention chain');
-  assert.match(live.suggestion ?? '', /\/model free/i, 'suggestion should offer free-model escape');
 
   // Other variant phrasings the gateway might use.
   for (const msg of ['signature mismatch', 'invalid x-payment header', 'nonce reuse detected']) {