Terms and Conditions

Positive Pay, Payee-Positive Pay and Reverse Positive Pay Services

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THE SERVICE

Positive Pay, Payee Positive Pay and Reverse Positive Pay services are designed to detect check fraud.

I. Positive Pay and Payee Positive Pay

In accordance with the applicable Operational Instructions, prior to placing checks in circulation that are drawn on the Account(s), the Customer shall provide Bank with a record (“Check Issue File”) which Bank will match against checks presented. Bank may pay and charge to the Account(s) each presented check that matches by check serial number and amount of check shown in any current or previous Check Issue File. For Positive Pay, the Check Issue File shall contain a check serial number and exact dollar amount for each check. For Payee Positive Pay, in addition to the check serial number and exact dollar amount, the Payee name will also be provided on the Check Issue File for verification. Customer assumes full responsibility for the timely and accurate submission of the Check Issue File and data to Bank.

Exception Checks (checks presented to Bank that are drawn on the Account(s) and either do not exactly match, or appear to be a duplicate of, a check included in the Check Issue File for such Account(s)) are identified and a report describing exception checks (“Exception Report’) is provided to Customer. For Payee Positive Pay, checks that include the terms “Attention” or “Care of” (or any abbreviations thereof) in the payee field will not be considered Exception Check.

Bank will pay (charge to the Account(s)) or return (to the depository bank) Exception Checks pursuant to Customer’s instructions (“Pay Request” and “Return Request”) or pursuant to ONLY ONE of the following default selections regardless of how many Accounts Customer maintains:

Return Default. If Return Default Option is selected, Bank shall return to the depository bank any Exception Check drawn on the Account(s), unless Customer issues a timely Pay Request to Bank in the manner prescribed in the applicable Operational Instructions.

Pay Default. If Pay Default option is selected, Bank shall pay and charge to the Account(s) any Exception Check drawn on the Account(s) unless the Customer issues a timely Return Request to Bank in the manner prescribed in the applicable Operational Instructions.

Bank shall not be obligated to comply with any Pay Request or Return Request received after a deadline, or in a format, medium, or place not designated in the applicable Operational Instructions, but shall treat such a Pay Request or Return Request as though it had not been received. Bank will notify Customer of the availability of the Exception Report by e-mail sent to the address(es) specified for that purpose in the applicable Operational Instructions. If Customer does not make the necessary Pay Request or Return Request by the deadline specified in the applicable Operational Instruction (“Deadline”), Bank will use the default option as specified by Customer. Customer acknowledges that pay or return decisions must be based on the Exception Report. The failure of Customer to receive the e-mail transmission for any reason does not affect Customer's responsibility to make the appropriate Pay Request or Return Request by the Deadline.

Bank may rely upon the contents of each Check Issue File and is not responsible for detecting any Customer error contained in any Check Issue File, Pay Request or Return Request sent by Customer to Bank.

Customer agrees that the security procedures set forth herein or otherwise adopted in connection with the use of this service are commercially reasonable and that any transmission of a Check Issue File, Pay Request or Return Request using Customer's user identification number and password is deemed to be authorized by Customer.

Customer will provide Bank with test data (checks, issue file, or other transmission), if applicable, at least two (2) weeks prior to the implementation of Positive Pay or Payee Positive Pay Service.

For Customers who enroll in Positive Pay, checks presented over-the-counter for cash will be verified by Bank at the time of presentment, and checks presented over-the-counter for deposit will be verified by Bank after the close of business on the date of presentment.

For Customers who enroll in Payee Positive Pay, checks presented over-the-counter for cash will be verified by Bank at the time of presentment and checks presented over-the-counter for deposit will be verified by the Bank after the close of business on the date of presentment. However, if checks with the same serial number and dollar amount but different “Payee” name are identified in two different Check Issue Files the Bank cannot perform a verification of the “Payee” name when those checks are presented over-the-counter for cash. In those situations where the Bank cannot perform a verification of the “Payee” name the Positive Pay verification process will be conducted and only the serial number and dollar amount will be verified at the time of presentment.

In no event shall Bank be liable for: (i) any check paid over-the-counter if, at the time the check was reviewed by the teller, it did not appear as an Exception Check; (ii) anycheck not paid over-the-counterbecause it appeared to be an Exception Check when the check was reviewed by the teller; or (iii) any check paid over-the-counter on any day for which Customer requested Bank to remove the Positive Pay or Payee Positive Pay service.

Bank is authorized to pay any check listed in the Check Issue File. Customer may place a VOID or CANCEL request on a check listed on the Check Issue File for any check not issued or listed in error, but only if the check remains in Customer’s possession. If a check listed in the Check Issue File has been lost or stolen or otherwise cannot be accounted for, Customer must place a timely STOP PAYMENT order on such check. Unless Customer places a timely STOP PAYMENT order on a lost, stolen or missing check that is listed in the Check Issue File, Bank is not liable for any such check that is paid from the Account(s).

Except as expressly provided otherwise herein, if Bank pays an Exception Check in accordance with the Pay Default option selected by Customer or in accordance with a Pay Request issued by Customer, such payment shall be proper, and Customer waives any right Customer may have to assert that the Exception Check was not properly payable. If Bank returns an Exception Check in accordance with the Return default option selected by Customer or in accordance with a Return Request issued by Customer, the dishonor shall be proper, and Customer waives any right Customer may have to assert that the return was improper.

Customer agrees that Bank has exercised ordinary care if Bank pays or returns an Exception Check consistent with the provisions of the Agreement. Bank's liability for wrongful dishonor of an Exception Check shall be limited to the damages for wrongful dishonor recoverable under U.C.C. Articles 3 and 4. If an Exception Check is paid improperly, Bank will be liable to Customer for the lesser of the amount of the improperly paid Exception Check or Customer's actual damages resulting from such improper payment. Bank retains the right to assert Customer's failure to exercise reasonable care. Bank retains the right to assert the defense that Customer has sustained no actual damages because Bank's payment of the Exception Check discharged Customer’s indebtedness.

Anything to the contrary herein notwithstanding, Bank shall have no liability to Customer for wrongful dishonor when Bank, acting in good faith, returns an Exception Check if: (a) Bank reasonably believed the Exception Check was not properly payable; (b) there are insufficient Available Funds on deposit in the Account(s); or (c) Bank is required to do so by the service of legal process on Bank or the instructions of regulatory or government authorities or courts.

II. Reverse Positive Pay

Bank will send Customer a daily check presentment report file (“Presentment Report”). It is Customer’s responsibility to review the Presentment Report and communicate to Bank, in a manner acceptable to Bank, its decision on whether to “Pay” or “Do Not Pay and Return” such checks. If Customer fails to communicate its decision prior to the deadline specified in the applicable Operational Instruction (“Deadline”),, the checks in the Presentment Report will be automatically paid.

Bank is not responsible for detecting any Customer error contained in any “Pay” request or “Do Not Pay and Return” request sent by Customer to Bank.

Customer agrees that the security procedures set forth herein or otherwise adopted in connection with the use of this service are commercially reasonable and that any transmission of a “Pay” request or “Do Not Pay and Return” request using Customer's user identification number and password is deemed to be authorized by Customer.

For Customers who enroll in Reverse Positive Pay, checks presented over-the-counter for deposit will be provided for Customer’s review on the following business day. The Reverse Positive Pay service is not available for checks presented over-the-counter for cash. The only way to ensure that such check is not paid by Bank is for Customer to place a timely STOP PAYMENT order; otherwise, such checks may be cashed if Bank’s standard protocols are met.

III. Miscellaneous

Customer agrees to provide Bank ten (10) voided sample checks from each Account for purposes of verifying accuracy, validity, and quality of the MICR (Magnetic Ink Character Recognition), and/or payee name fields on checks, and paper quality. Service will commence upon acceptance of sample checks and notification by Bank that all implementation steps are complete.

Bank is not required to maintain signature cards for any Account and, regardless of whether Bank maintains signature cards, in no event shall Bank be obligated to inspect any check for the presence or authenticity of any signature, or determine whether or not the signature is authorized.

If Customer suffers a loss under this Agreement, Bank assigns to Customer any claim that Bank has against a depository or collecting bank to recover the loss, including any claim for breach of warranty under the applicable provisions of Article 4 of the U.C.C.