Section 1. THE SERVICE.

These Controlled Disbursement Service Terms (the “Service Terms”) set forth the terms and conditions under which Bank provides Customer with daily reporting of all Checks via the Commercial and Small Business Banking Digital Portal (the “Service”). 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, these Service Terms shall control. Unless otherwise defined herein, any capitalized terms shall have the meaning as set forth in the Agreement. Any reference to the Agreement herein shall be deemed to include these Service Terms. 

Section 2. IMPLEMENTATION.  

The Service requires Customer to establish a “Controlled Disbursement Account” against which Customer can write Checks and a separate “Funding Account” in which Customer agrees to maintain sufficient balances to fund Check clearing activity in the Controlled Disbursement Account. The precise amount of funds needed to cover the clearings is automatically transferred to the Controlled Disbursement Account from the Funding Account as designated on the applicable Operational Instructions. In addition, Customer can sign up to receive a Controlled Disbursement report alert notification. During the implementation process, Customer agrees to provide to Bank’s satisfaction ten (10) voided sample Checks from each Account for purposes of checking and verifying accuracy, validity, and quality of the MICR (Magnetic Ink Character Recognition) fields on Checks and paper quality.

Section 3. PROCESSING.

(a) Customer will be notified on each Business Day of the total amount of Checks drawn on the Controlled Disbursement Account and the total amount that will be debited from the Funding Account by one of the methods designated on the applicable Operational Instructions. In providing the Service, Customer understands that Bank relies on clearing information that Bank receives from the applicable Federal Reserve Bank or other clearing entity, the accuracy and timeliness of which Bank does not control and for which Bank assumes no responsibility or liability. Checks drawn on the Controlled Disbursement Account that are presented over-the-counter may not appear in the total amount to be debited from the Funding Account that Business Day, and will instead appear in the debit total for the next Business Day. 

(b) Customer agrees to maintain a balance in the Funding Account sufficient to offset the total amount of Checks presented against the Controlled Disbursement Account. Customer agrees that Bank may debit the Funding Account for such amount and transfer the same into the Controlled Disbursement Account each Business Day. Bank reserves the right to require Customer to maintain a specified minimum balance in the Funding Account. Customer acknowledges that Bank is not obligated to provide overnight or daylight funding for any shortfall in the Controlled Disbursement Account unless Bank has agreed in writing to provide such funding.

(c) Customer agrees that, without notification, Bank may return Customer’s Checks drawn on Customer’s Controlled Disbursement Account for any reason including, but not limited to, insufficient funds in Customer’s Funding Account, alleged forgeries, or items in controversy.

(d) Customer acknowledges that only Checks can be drawn against a Controlled Disbursement Account. Automated Clearing House (ACH) debit or credit transactions cannot be applied to a Controlled Disbursement Account and will not be processed. Customer agrees to hold Bank harmless for any Losses incurred by Customer as a result of Customer’s failure to redirect any ACH transactions to proper accounts with no ACH restrictions.

Section 4. OPTIONAL LINE OF CREDIT DRAW SERVICE.

In connection with the Service, Customer has the option of linking an eligible line of credit maintained with Bank (“LOC”) to the Funding Account to cover deficiencies in the Funding Account by drawing against the LOC. With this option, Customer authorizes Bank to make an automatic draw on Customer’s LOC in an amount sufficient to cover any deficiency in the Funding Account, or up to the maximum amount available under the LOC, whichever is less. This method of obtaining a draw against the LOC shall be in addition to any method set forth in the line of credit agreements(s), promissory note(s), security agreement(s) or other agreement governing the LOC (collectively, the “Credit Agreement”). Bank shall not utilize the LOC to cover any deficiency in the Funding Account or Controlled Disbursement Account after the maximum amount available under the LOC has been advanced. Bank is not obligated to follow the foregoing procedures if any default exists under the Credit Agreement. Further, Bank specifically reserves its right of offset as to the Funding Account and any other legal rights it has with respect thereto, and Customer acknowledges that Bank is not obligated to draw against the LOC to fund a deficiency in the Funding Account prior to exercising such rights.