The Online Banking Agreement and Disclosure (“Agreement”) describes your rights and obligations as a user of the Online Banking (“Service”) and Bill Payment (“Bill Payment”) services.  It also describes the rights and obligations of The Bank of Kentucky, Inc. (“Bank”).  Please read this Agreement carefully.  By requesting and using one of these Services, you agree to comply with the terms and conditions of this Agreement.

Definitions:

The following definitions apply in this Agreement.

1. “Authorized User” refers to a person with authority (with respect to the account);

2. “Online Banking” is the internet-based service providing access to your Bank account(s);

3. “Online Account” means the Bank account from which you will be conducting transactions using a Service;

4. “Password” is the customer-generated code selected by you for use during the sign-on.

5. “User-ID” is your social security number.

6. “We”, “us”, or “Bank” refer to The Bank of Kentucky, Inc. which offers the Services and which holds the accounts accessed by the Services and

7. “You” or “your” refers to the owner of the account or the authorized user.

Online Banking Services

Online Banking Services are those services that allow you to access your accounts, utilized online bill payment services and initiate certain transactions from your account.  You will gain access to your Online Accounts through the use of your User-ID and Password.  You may access your Online Accounts 24 hours a day, seven (7) days a week.  However, availability of the Services may be suspended for brief periods of time for purposes of maintenance, updating and revising of software.

For purposes of transactions, the Bank’s business days are Monday through Friday, excluding holidays and weekends.  All Online Banking transaction requests received after 6:00 p.m. EST on business days and all transactions which are requested on Saturdays, Sundays, or holidays on which the Bank is closed, will be processed on the Bank’s next business day.

Online Banking Services include but are not limited to:

• Account Access – you may view all your accounts online

• Transfer funds between specified checking, savings and loan accounts – you may make one-time transfers or schedule future or recurring transfers such as transfers to make loan payments.

NOTE:  Because regulations require the Bank to limit preauthorized transfers (including Online Banking transfers), the following limitations apply:

• Savings Accounts – you can make no more than six (6) transfers per month by preauthorized or automatic transfer or by telephone or Online Banking
• Money Market Accounts – you can make no more than six (6) transfers per month by preauthorized or automatic transfer or by telephone or Online Banking and no more than three (3) of these six (6) may be by check, draft or debit card.

• Review account activity history – two (2) months of history are maintained online for your review

• Viewing images online – you may view an image of documents online that are identified with a line under the check or serial number.

• Additional Services – new services may be introduced for Online Banking from time to time.  By using these services when they come available, you agree to be bound by the rules that will be made available to you concerning these services.

Passwords

When you apply for Online Banking Services you will select a Password to be used by you to access your accounts and make transfers between accounts through the Online Banking system.  It is very important that you select a Password that only you will remember and not contain easy information about you that could easily be compromised.  You are responsible for keeping your Password and Online Account information confidential.  In order to protect yourself against fraud, you should adhere to the following guidelines:

• Do not give our your User-ID, Password, or account information;

• Do not leave your computer unattended while you are in the Bank’s Online Banking site;

• Never leave your account information within range of others; and

• Do not send privileged account information (account number, Password, etc.) in any public or general e-mail system.

You may change your Password at any time while in the Online Banking system; select User Options and then Change Password.  You must remember that your Password is always eight (8) characters in length.  Within the eight (8) characters you must have at least one (1) capital letter, one (1) lower case letter and (1) number.

Under no circumstances should a Bank employee request your password through Online Banking, over the Internet or through other contact.  Do not respond to any such request, even if the person claims to represent the Bank.

If you suspect any fraudulent activity on your account, call the Bank immediately at 859-372-9755 between the hours of 8:00 a.m. to 5:00 p.m. EST, Monday through Friday.  Telephoning the Bank is the best way of minimizing your losses and liability.

If you forget your Password you may call the Bank and have your Password reset.

Business Accounts

If you are a business, any Authorized User of your business is authorized on such terms, conditions, and agreements as we may require to:

• Enter into this Agreement, as amended from time to time;
• Access each account of yours in any manner and for any purpose available through the Service, whether now available or available at some time in the future; and
• Use any Online banking service in any manner and for any purpose available through the Service, whether now available or available at some time in the future.

Bill Payment Service

If you elect to use Bill Payment Services, you may use Online Banking to make bill payments.  A checking account is required for this service.  Funds for all Bill Payments will be debited from your specified checking account on the day the payment is scheduled to be transmitted to the receiver.  All online banking payments require sufficient time for the receiver to process the payment and credit your account.  We recommend at least five (5) business days for payments paid by check and three (3) days for payments sent electronically.  We are not liable for any service fees or late charges levied against you by payees you select to receive payments through the Bill Payment service.

You may not make payment to federal, sate or local tax agencies or payments of alimony, child support or other government fees or court-directed payments using the Bill Payment service.

You agree to promptly notify us at the address set forth in the section entitled “Electronic Fund Transfer Provisions for Consumers” if you receive notice from a payee that a payment you made using Bill Payment has not been completed or remains unpaid.  We will not be liable to you for any damages to the extent that your failure or delay in notifying us that a bill payment was not made prevents us from avoiding or alleviating such damages.

You are responsible for any monetary loss or penalty (e.g. non-sufficient funds fee) that you may incur due to lack of sufficient funds or other conditions that may prevent the withdrawal of funds from your account to pay a bill payment that you have requested.

You agree to notify us in writing if you decide to discontinue the Bill Payment service.

Schedule of Fees

The Bank offers the benefits and convenience of the Online Banking and Bill Payment Services to you free.

Statements

You will continue to be mailed periodic statements for your account(s) with the regularity provided for in the applicable depositor or loan agreements.

Electronic Fund Transfer Provisions for Consumers

These provisions are only applicable to online electronic fund transfers that credit or debit a consumer’s checking, savings or other asset account and are subject to the Federal Reserve Board’s Regulation E (an “EFT”).  When applicable, the Bank may rely on any exceptions to these provisions which are contained in Regulation E.  All terms that are not defined in this Agreement but which are defined in Regulation E shall have the same meaning when used in this section.

The following determines your liability for any unauthorized EFT or any series of related unauthorized EFTs:

1. If you notify the Bank within two (2) business days after your Password was lost or stolen, your liability will not exceed $50.00 or the amount of the unauthorized EFTs that occur before notification, whichever is less;
2. If you fail to notify the Bank within two (2) business days after your Password was lost or stolen, your liability will not exceed the lesser of $500.00 or the total of:
3. • $50.00 or the amount of unauthorized EFTs that occur within the two (2) business days; and
   • the total of authorized EFTs which occur during the two (2) days before notification to the Bank, provided the Bank establishes that these EFTs would not have occurred had the Bank been notified within that two-day period.
4. You must report an unauthorized EFT that appears on your periodic statement, no later than 60 days of transmittal of the statement to avoid liability for subsequent transfers.  Your liability will not exceed the amount of the unauthorized EFTs that occurred within the 60-day period.  You may also be liable for the amounts as described in sections 1 and 2 above.
5. If the report is made orally, we will require that you send the complaint or question in writing within 20 business days.  We will notify you with the results of the investigation within 10 business days and will correct the error promptly.  If more time is needed, however, we may take up to 45 days to investigate a complaint or question.  If this occurs, we will credit your account within 10 business days for the amount you think is in error.  This will allow you to use the money during the time it takes us to complete our investigation.  If your complaint or question is not received in writing within 10 business days, we may not credit your account until the investigation is completed.  If an alleged error involves an electronic fund transfer outside a state or territory or possession of the United States, the applicable time periods for action by us are 20 business days (instead of 10) and 90 calendar days (instead of 45).  If we determine that no error occurred, we will send you a written explanation within three (3) business days after the investigation is complete.  You may request copies of the documents that used in the investigation.
6. You may notify the Bank by telephone, writing, or by email using the Contact Us provided in the Online Banking site.  Notification by general e-mail to report an unauthorized transaction is not secure and therefore not advised.

In case of errors or questions regarding Online Banking, call 859-372-9755 or write to us at:  Attn: Electronic Banking Services, P. O. Box 577, Florence, KY  41022-0577.  We must hear from you at the telephone number or address listed above, no later than 60 days after we sent you the FIRST statement on which the problem or error appears.  We will need:  Your name and account number; a description of the error or the transfer in question and an explanation concerning why you believe it is an error or need more information; and the dollar amount of the suspected error and date on which it occurred.

Liability

This section explains our liability to you only to the extent that any other agreements, notices or disclosures have not separately disclosed our liability.  In no event shall we liable to you for failure to provide access to your Online Banking accounts.  Unless otherwise required by applicable law, we are responsible for performing the Online Banking service as delineated in this Agreement.  We will be liable for the amount of any material losses or damages incurred by you and resulting directly from our gross negligence.

We will not be liable to you in the following instances:

1. If through no fault of the Bank, you do not have enough money in your account to make the transfer;
2. If circumstances beyond our control (such as fire, flood, power outage, equipment or technical failure or breakdown) prevents the transfer despite reasonable precautions that we have taken;
3. If there is a hold on your account, or if access to your account is blocked, in accordance with banking policy;
4. If your funds are subject to a legal proceeding or other encumbrance restricting the transfer;
5. If your transfer authorization terminates by operation of law;
6. If you believe someone has accessed your accounts without your permission and you fail to notify the Bank immediately;
7. If we have received incomplete or inaccurate information from your or a third party involving the account or transfer
8. If we have a reasonable basis for believing that unauthorized use of your Password or account has occurred or may be occurring or if you default under this Agreement, the deposit account agreement, a credit agreement or any other agreement with us, or if we or you terminate this Agreement.

IN NO EVENT SHALL WE HAVE ANY LIABILITY TO YOU OR ANY THIRD PARTY FOR ANY INDIRECT, SPECIAL OR CONSEQUENTAIL DAMANGES RESULTING FROM OR ARISING OUT OF THIS AGREEMENT.

You agree to indemnify, defend and hold us, our directors, officers, employees and agents harmless against any third party claim, demand, suit, action or other proceeding and any expenses related to an Online Banking account.

We are not liable for any loss or liability resulting from failure of your equipment or software, or that of an internet browser provider, such as Netscape or Microsoft, by an internet access provider, or by an online service provider, nor will we be liable for any direct, indirect, special or consequential damages resulting from your access to or failure to access an Online Banking account.

The Bank is not responsible for any electronic virus or viruses that you may encounter.  We suggest that you routinely scan your PC using a virus protection product.  An undetected virus may corrupt and destroy your programs, files, and your hardware.

General Terms and Conditions

In addition to this Agreement, you and the Bank agree to be bound by and comply with the requirements of the agreements applicable to each of your Online Accounts.  Your use of the Online Banking Service is your acknowledgement that you have received these agreements and intend to be bound by them.  You should review other disclosures including the charges that may be imposed for electronic fund transfers or the right to make transfers listed in the fee schedules accompanying those disclosures and the fee schedule contained in this Agreement.

The Bank may modify the terms and conditions applicable to the Services from time to time.  We may send any notice to you via e-mail and you will have to be deemed to have received it in three days after it is sent.  The revised terms and conditions hall be effective at the earliest date allowed by applicable law.  We reserve the right to terminate this Agreement and your use of the Services in whole or in part at any time without prior notice.

We may assign this Agreement to an affiliate of the Bank or any successor in interest in the event of a merger, reorganization, change of control, acquisition or sale of all or substantially all assets of the business to which this Agreement is related without the other party’s prior written consent.

Unless otherwise required by applicable law, any notice or written communication given pursuant to this Agreement may be sent to you electronically.

We will only disclose information to third parties about your account or transfers you make under the following circumstances:

• where it is necessary for the provision of Online Banking and for completing transfers;
• in order to verify the existence and condition of your account for a third party, such as a credit bureau or merchant;
• in order to comply with government or court orders, or other reporting requirement;
• if you give us your permission;
• to the Bank affiliated companies.

Governing Law

This Agreement is governed by the laws of the United States and the Commonwealth of Kentucky, including, but not limited to, the Uniform Commercial Code of Kentucky.