Special Provisions Commercial Services - Popular

Special Provisions for Commercial Services

BANCO POPULAR

BANCO POPULAR DE PUERTO RICO SPECIAL PROVISIONS FOR COMMERCIAL SERVICES TABLE OF CONTENTS

I. WEB CASH MANAGEMENT SERVICES ("WCM SERVICE") ..................... 1 II. ELECTRONIC FUNDS TRANSFER THROUGH THE

AUTOMATED CLEARING HOUSE SERVICE ("ACH TRANSFER SERVICE") ................................................................... 2 III. ACCOUNT RECONCILIATION SERVICE ("RECONCILIATION SERVICE") ................................................................ 6 IV. LOCKBOX SERVICE ...................................................................................... 7 V. TELEPAGO POPULAR SERVICE .............................................................. 8 VI. COLLECTION MANAGEMENT SERVICE ................................................. 9 VII. PAYMENT STATION SERVICE ................................................................... 11 VIII. MULTIPAGO POPULAR SERVICE ........................................................... 12 IX. GENERAL PROVISIONS ............................................................................ 13

COM-934A / 10-13 (PDF)

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This Agreement between Banco Popular de Puerto Rico (the "Bank") and the commercial customer ("You" or the "Commercial Customer") identified in the Account Opening Addendum of the Commercial Deposit Accounts Agreement ("Account Agreement") in effect between You and the Bank establishes the terms and conditions through which the Bank will provide You different Commercial Services ("Services") that are or will be linked to the commercial accounts (the "Account"). To receive the Services, it is essential to maintain an Account. These special provisions are part of, and supplement, the Account Agreement in effect between You and the Bank. In the event, there are differences related to the Services between what is set forth in this Contract and the provisions of the Account Agreement, what is set forth in this Contract will prevail.

I. WEB CASH MANAGER SERVICE ("WCM SERVICE")

A. Description of the WCM Service

Service that offers access to the management of our business accounts to obtain information about balances and transactions performed through Internet. In addition to the WCM basic Service, the following modules are available: transfers among accounts, stop payment orders, wire transfers, special reports, processing of ACH transactions and balances of bank accounts maintained with other financial institutions. You must decide in the Commercial Services Addendum included herein and that is part of these terms and conditions ("Commercial Services Addendum"), the modules You need, but it is required You contract the basic service if You want to have access through the WCM service to any of the additional modules.

B. Terms and Conditions Applicable to the WCM Service

1. The Bank will periodically update, during bank business hours, the data in the WCM Service that the Bank must provide. However, the Bank does not assume responsibility for updating said data at a specific time during the day or subject to a pre-established daily schedule. The Bank is not responsible for the accuracy or updating of the data provided by other financial institutions.

2. You will be responsible for acquiring, and providing maintenance to, a computer terminal and Internet access through your provider to have access to the WCM Service. You must make sure that they are totally compatible with the specifications of the WCM Service regarding hardware, software and for the transmission of data described in the Commercial Services Addendum.

3. To access the WCM Service, the Bank will provide the user code and the password for the exclusive access to the Service. The Bank will also provide an access token to those employees designated to authorize ACH transactions or wire transfers.

4. You will be responsible for notifying the Bank who should the Bank designate as WCM Service Administrator. The Administrator will be responsible for defining the accesses for the users. The Administrator (i) will make certain that only the Company-authorized employees have access to the Service, will regularly validate the lists of active users and will make the necessary changes when the company makes changes in the role of its employees; (ii) will confirm that the accounts of users who have been dismissed, transferred or unauthorized be removed from the system opportunely; (iii) will make certain that the functions are duly segregated in the system to reduce the possibility of internal fraud; and (iv) will make certain to retain the token assigned to the employee when that person is dismissed, transferred or unauthorized by the company.

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5. If payment transactions are originated through Web Cash Manager`s ACH Module, the Bank may freeze the funds available in your account from the date the transaction is received until the effective date of the transaction. Therefore, you will not have these funds available for any other purposes. This process, ensures the funds at the time the payment transaction is processed. The Bank will reserve the right to modify this condition from time to time by prior notification.

II. ELECTRONIC FUNDS TRANSFER THROUGH THE AUTOMATED CLEARING HOUSE SERVICE ("ACH Transfer Service")

A. Description of the ACH Transfer Service

The ACH Transfer Service (Automated Clearing House) is an electronic transactions network that allows commercial customers to originate commercial transfers from their bank accounts to thirds. These transactions between banks may be either payments (credits) or collections (debits). You will be responsible for transactions originated by employees who are authorized to have access to send payment instructions to the Bank. They will be able to generate collections and payments for your commercial account, therefore they are considered to be an authorized signature to process electronic payment transactions from your account. The Bank will not be responsible for validating the authority of employees authorized by you to make electronic payment transactions from your account.

B. Terms and Conditions Applicable to the ACH Transfer Service

1. You commit yourself to strictly comply with all National Automated Clearing House Association ("NACHA"), as well as all applicable federal and local laws that apply to all transactions made through this Service. In particular, with the Electronic Transfer Act, Regulation E of the Federal Reserve and Chapter 47 of the Puerto Rico Commercial Transactions Act.

2. In addition, You commit Yourself to keep updated regarding changes in your obligations under these rules by periodically reviewing the information published by NACHA in its web page at and its publications, such as the Corporate Rules.

3. In relation to the transactions originated by the client and transmitted to the Bank through the ACH Transfer Service, the Commercial Customer guarantees the following to the Bank:

a. The Commercial Customer will transmit the transactions to the Bank according to the instructions and the format set forth in the ACH Transfer Service Addendum, included herein and that is part of these terms and conditions ("Commercial Services Addendum"), and within the limits set forth in said Commercial Services Addendum. In this way, allows the bank to originate entries on your behalf.

b. The Commercial Customer relieves the Bank from any responsibility regarding any omission, discrepancy or error in the customer data registry.

c. Each person who identifies himself as recipient of the transaction has authorized the transaction for the amount and the effective date indicated in the entry (the "Authorization"). You commit Yourself to file the Authorization for at least two years after the customer has revoked the authorization.

d. The debit transaction, if approved and contracted: (a) will be for the amount that on the settlement date is due and payable; (b) will be made as specified in the Authorization or is a correction of a previously transmitted transaction; and (c) does not exceed any applicable limit.

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e. The Commercial Customer guarantees that he has the Authorization from the beneficiary for each transaction and that it has not been revoked or ended by your commercial customer or individual or due to a stipulation of law, order or regulation.

f. The Commercial Customer will provide to the Bank, when so requested, the original or copy of the original, or recording of recipient customer Authorization. You must deliver the Authorization within the established time frame. For transactions among businesses and individuals, You must deliver the Authorization within two (2) days of the request.

g. The Commercial Customer accepts the responsibility of verifying that the Bank has received the transmission within 30 minutes of having sent it. The Bank will not be responsible for electronic data transmissions not received.

h. The Commercial Customer commits himself to deliver the originated files at least two days prior to the effective date on or before 4:00 p.m. Thus, the Bank may disburse the transactions on time to the Clearing House to be processed by other institutions.

4. The Commercial Customer will maintain at all times su cient funds to cover the totality of the processed transactions. The Bank is under no obligation to process electronic transfers if there are no funds in the account. If they are processed, and if there are not su cient funds in the Account at due time, the account will be overdraft and the terms and conditions of the Deposit Accounts Agreement will apply.

5. The Commercial Customer has no right to cancel or amend an entry once the Bank receives it. However, if the Bank allows it and if the Commercial Customer complies with the Bank procedures and the NACHA rules to cancel or amend entries, the Bank will use reasonable efforts to cancel or amend it if it has not been disbursed, but it has no obligation to do so and will not incur in any responsibility. The Commercial Customer will pay or indemnify the Bank for any expense, loss or damage related to the cancellation or amendment of the entry or with the efforts to cancel or amend it. The Commercial Customer will pay or indemnify the Bank for any expense, loss or damage related to the cancellation or amendment of the entry or for the efforts to cancel or amend it.

6. The Commercial Customer must originate prenotifications before sending a payment or collection transaction. Once the prenotification is sent, he may not send a payment or collection transaction within the first six days after the due date of the prenotification. If notifications of change arise, the originator must make the necessary changes before making the payment or collection instruction.

7. The Commercial Customer admits that the Bank offered to provide information about the available electronic services for the ACH Transfer Service. These services provide the adequate and complete security measures, including, without being understood as a limitation: access code for the user, access authority levels to originate and transmit data, capacity to establish function segregation in the Commercial Customer internal processes, unique access code for the Commercial Customer with the Bank, process to transmit transformed data files, and token to authenticate the Authorization in order to reduce the possibility of fraud in the transmission. You will be responsible and commit Yourself to indemnify and hold harmless the Bank for any claim, lawsuit, cost, fees, loss or expense of any nature to which the Bank may be subjected for any claim regarding the established commercial security procedure.

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8. The Commercial Customer may transmit or receive through ACH certain additional data (ACH Addenda). The Bank will convert any data provided by the Commercial Customer, or received on his behalf, in the formats specified in the rules of the applicable payment system. The Commercial Customer admits and accepts that there are limits regarding the amount of data that may be transmitted as ACH Addenda.

9. In cases of files or transactions erroneously originated, the Commercial Customer may use the Reversal mechanism. This transaction may be originated, in accordance with the rule, within the first five (5) days after the effective date of the original transaction.

10. The Bank assumes no responsibility for any stipulation or use of ACH Addenda once the Bank has transmitted it. You guarantee that all the data You provide the Bank to be transmitted as ACH Addenda will be complete and correct and that the intention is that it be transmitted to the third party recipient that the Commercial Customer has designated only for internal purposes of that third party and, to the best of his knowledge, will be thus used.

11. The Bank will process each transaction according the account number registered in the transaction file the Commercial Customer sends the Bank.

12. The Bank will be under no obligation to process fund transfers that the Commercial Customer transmit through the ACH Service that do not comply with NACHA Rules and the terms and conditions of this Service Agreement, the Account Agreement or the Commercial Services Addendum.

13. The Bank will notify the Commercial Customer the reception of returned transactions, notifications of changes and other returns not later than one (1) business day after receiving it, or as the NACHA Rules so require. The Bank is under no obligation to reprocess returned transactions. The Bank will report them through the special reports provided through Web Cash Manager. The Bank commits itself to have the funds available to the individual customers, not commercial, at the earliest hour on the effective date, as established by the rule.

14. The Bank may audit or request auditing evidence from the originating company to ensure compliance with NACHA rules.

15. In the event of a failure or delay in the ACH system, the Bank may, at its sole discretion, select to use any other transaction-processing method with a similar time frame for collection and compensation.

16. The Bank may end or suspend the service at any time if it understands there is no compliance with ACH network rules established by the National Clearing House Association (NACHA).

17. You admit and express that You have been provided orientation by the Bank regarding your obligations under the rules of the International ACH Transactions ("IAT") issued by NACHA in conformity with the O ce of Foreign Assets Control ("OFAC") guidelines.

18. The Company will be responsible for any earning or loss and the risks associated with changes in foreign currency related to the payments processed through IAT.

19. The company commits itself to indemnify and hold harmless the Bank for any responsibility regarding any fine or penalty that may be imposed to the Bank as a result of, or in relation with, the non-compliance by the enterprise of any law or regulation applicable by NACHA.

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20. You admit and express that the Bank has provided You orientation in relation with the risk associated with this service. Thus, during the interview process a service addendum will be completed providing details of the limits to be established regarding risk. Three limits will be defined. Two of them are operational, and the third regards risk. The operational limits are maximum currency limits per file. The next one is the maximum currency limit per day and both by type of payment. The third is the risk limit through different days. This last one is established during the interview process and requires approval. During the approval process, it may change depending on the risk.

21. According to NACHA, ACH transactions are codified according to the method used to obtain the authorization to credit or debit a business or individual account. This is known as standard entry class. The following table provides a list of these codes that may be originated through different mechanisms. You, together with your relationship o cer, must select the authorized codes in the Service Addendum.

PPD- Credits ? Document signed by the individual

PPD- Debits ? Document signed by the individual

CCD- Credits ? Document signed by the company

CCD- Debits ? Document signed by the company

WEB- Debits ? Authorized through Internet (Checkout)

TEL- Debits ? Authorized through the telephone (Call Center Pay)

C. Fee Reversal and Rejected Transactions

The Commercial Customer agrees to allow the Bank to debit the Deposit Account for fee reversal or rejected transactions that may occur for any valid reason under Regulation E of the Federal Reserve and/or NACHA Rules as applicable and as they may be amended or substituted. The valid reasons include, but are not limited to: insu cient funds, closed account, inexistent account, account not found, invalid account number, stop payment, uncollected funds, claim by client for unauthorized transaction, branch sold to another financial institution, deceased customer, account does not allow transactions, duplicate entry, or unauthorized transaction.

The Commercial Customer may originate reverse transactions, only and exclusively of transactions previously originated. The customer may only originate these transactions within the first five (5) days after the due date of the original transaction.

The Commercial Customer will receive a rejected transactions report on a daily basis. You expressly admit that non-compliance with these rules may result in the imposition of considerable fines. You commit Yourself to indemnify and hold harmless the Bank for any responsibility regarding any fine or penalty that may be imposed to the Bank as a result of, or in relation with, non- compliance on the part of the Commercial Customer of his obligations under NACHA rules.

D. Alternative Process

Refresh Process ? Occasionally, because of internal situations of the customer, if a payment instruction to the Bank does not arrive timely, the Bank, at the request of the customer, may perform this internal process to make the funds available to the employees. This charge is broken down in Addendum I and is charged per occurrence.

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III. ACCOUNT RECONCILIATION SERVICE ("Reconciliation Service")

A. Description of the Reconciliation Service

Through the Reconciliation Service, the Bank will be able to provide any of the following Services:

Consolidated Reconciliation

The Bank provides matching reports of data regarding checks originated with the data from paid checks reflected in the statement cycle. You must provide the detail of the checks issued for the period. We provide a report with the data in ascending order by check number, issue date, amount and date the check was paid.

Partial Reconciliation

The Bank provides reports of checks paid in a list in ascending order by check number, amount and payment date.

Deposit Reconciliation

The deposit reconciliation provides data of all the deposits by locality, amount and date, in addition to other debits and credits. You must request deposit slips identified by a specific code for each unit or salesperson in conformity with your needs and specifications.

Check Management / Simple Check

The Bank will produce, at the monthly statement cutoff date of your Account, a CD ROM with the images of the paid checks (front and back) as well as of the deposit slips that include checks processed during the monthly cycle corresponding to that account statement.

Positive Pay

The Bank will process your issued check files delivered by the Commercial Customer before 4:00 p.m. each banking business day, effective the next business day. The Bank will verify the checks presented for payment after the effective date of processing of your issued checks file.

B. Terms and Conditions Applicable to the Reconciliation Service

1. The Bank will require that you prepare a data file with the information of issued checks. You will submit to the Bank the data file in accordance with the Bank's instructions and specifications.

a. In relation with the data in the issued checks, You guarantee the Bank, the following:

i. Each registry will be made in due time and in conformity with the issue of the check.

ii. The data files will be sent on the dates, time and through the method established by the Bank.

iii. The Bank will produce and will send you the reports (Exceptions Report) of the items identified for reasons such as duplicated payment, amount of the payment differs from the issued amount, serial number in zero and lack of issue, in conformity with the transmission or delivery and frequency stipulated between the Bank and Commercial Customer.

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2. The Bank will include the electronic report with all the transactions processed during the monthly cycle corresponding to the Account Statement. You will be able to electronically access the bank report. This report that the Bank provides electronically is an informative document and does not substitute the periodic Account Statement of the Account the Bank sends You.

3. You will review the Exceptions Report and will provide the Bank the instructions to return a check or item within the service time frame established by the Bank. The transmission of the notice of your instructions to return a check or item will be made on the dates and business hours established by the Bank in the Account Reconciliation Service calendar.

4. The Bank will pay or return every check or item included in the Exceptions Report in accordance with your instructions within the service time frame established by the Bank:

a. If You selected the option to return every check or item included in the Exceptions Report (Default Return), the Bank WILL NOT pay (return) the check to the issuing bank unless You instructed the Bank to pay the check.

b. If You selected the option to pay every check or item included in the Exceptions Report (Default Pay), the Bank will pay the check, unless You instructed the Bank to return the check.

IV. LOCKBOX SERVICE

A. Description of the Lockbox Service

Through the Lockbox Service, You authorize the Bank to rent, on Your behalf, a post o ce box of the U.S. Postal Service ("USPS") to be used as Your post o ce box to receive payments.

B. Terms and Conditions Applicable to the Lockbox Service

1. The Bank will rent from the USPS a post o ce box on behalf of the Commercial Customer to receive payments through the Lockbox Service. The Bank will debit annually from the Commercial Customer?s Account the rent payment. Said payment may vary in conformity with USPS policies. Rent renewal is automatic.

2. The Commercial Customer authorizes the Bank to serve as its agent for unlimited and exclusive access to the Lockbox to pick up the mail deposited in it.

3. The Bank will pick up all the mail addressed to the Lockbox according to the regular pick up schedule established by the Bank's Mail Processing Department.

4. The Commercial Customer shall provide its customers a notice with the Lockbox address, or shall instruct its customers to send their payments to that address. In addition, You shall provide Your customers a payment coupon that contains the payment information in an Optical Character Recognition (OCR) reading line and that the account number contains a check digit validation.

5. The Bank may receive bill payments in money orders or checks issued to the order of the Commercial Customer, but will not process cash payments. The Bank shall process full or partial payments of bills without determining whether the bill is overdue or past due.

6. In the event cash or checks issued to the order of any person other than the Commercial Customer is received in the Lockbox, the Bank will return such payment to the Commercial Customer without processing it.

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7. The Commercial Customer authorizes the Bank to endorse, on behalf of the Commercial Customer, but without recourse to the Bank, all the items cleared by any person to the order of the Commercial Customer and that are received in the Lockbox.

8. The Bank shall endorse all items duly cleared to the order of the Commercial Customer and shall deposit them to the account indicated in the Lockbox Service Addendum, included herein and that is part of these terms and conditions ("Lockbox Service Addendum"), the same day they are received, subject to the provisions regarding the availability of funds on the Deposit Account Agreement.

9. The Bank shall send to the Commercial Customer the following reports or documents:

a. All the items received the Bank determines are not duly issued to be deposited in the Account.

b. Instruments payable to other people, corporations, partnerships or businesses, whether or not endorsed to the Commercial Customer.

c. Any correspondence received together with the checks.

d. Any item the Bank determines, at its sole discretion, needs the special attention of the Commercial Customer.

10. The Bank shall remit to the Commercial Customer the payment data processed or their images, as set forth in the Lockbox Service Addendum, the data pertaining to the bills received and processed by the Bank, and the reports, in accordance with the delivery method selected by the Company in the Lockbox Service Addendum.

11. The Commercial Customer is committed to notify the Bank thirty (30) days prior about any change in its payment coupons or bills. It shall detail in writing what specifically is being changed and must provide all the related documentation, in addition to 100 coupons or bills for the related test runs. The Bank shall evaluate and will provide the Commercial Customer a price quote for the changes for approval.

12. If contracted in the Service Addendum, the Bank shall have available on a daily basis the processed payments file, and the Commercial Customer shall be responsible for picking it up. The Bank shall maintain the files available for a period of seven (7) business days.

V. TELEPAGO POPULAR SERVICE

A. Description of the TelePago Popular Service ("TelePago Service")

Through the TelePago Service, You can offer Your customers the convenience of making payments by means of the telephone or Internet using the Bank's electronic payment processing service, known as TelePago Popular. Payments are consolidated on a daily basis, and a detail of them is provided through a special report in our Web Cash Manager system (if You have contracted with the Bank this Web Cash Manager Service) or an electronic file is provided so You may update your accounts receivable.

B. Terms and Conditions Applicable to the TelePago Service

1. The Bank will debit the deposit account of Your customer at the Bank, in conformity with the electronic, verbal or written instructions of that customer for the processing of the bills paid to the Commercial Customer. The Bank will

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