Master Loan Agency Agreement - Goleta National Bank and Ace Cash Express Inc.
MASTER LOAN AGENCY AGREEMENT
This Master Loan Agency Agreement ("Agreement") is made on August 11, 1999 (the
"Effective Date"), by Goleta National Bank, a national banking association
("GNB"), and Ace Cash Express, Inc., a Texas corporation ("Ace"). GNB and Ace
are collectively referred to in this Agreement as the "Parties."
A. GNB's business, as a national bank, includes making loans.
B. GNB's business includes issuing cards that permit electronic access to
bank accounts at GNB.
C. Ace's business includes the operation of locations at which various
retail financial services are offered and sold by Ace ("Locations").
D. The Parties believe that it is beneficial for them to enter into
arrangements under which GNB will make loans to Ace's customers at
various Locations, GNB will issue cards to borrowers to access the loan
proceeds in those borrowers' accounts at GNB, Ace will serve as
administrative agent for GNB at various Locations in processing those
loans, and Ace will purchase participations in those loans made by GNB.
In consideration of the foregoing and the mutual covenants set forth in this
Agreement, the Parties hereby agree as follows:
ARTICLE I-- LOANS AND AGENCY
1.1 Bank Loans. This Agreement describes and governs the Parties'
relationship regarding Bank Loans. A "Bank Loan" is a loan or extension
of credit by GNB:
(a) to a potential borrower who submits a loan application to GNB
for a short-term loan and who, in GNB's judgment, meets the
Credit Criteria (as defined below in this Section 1.1),
(b) with a stated term of no more than 33 calendar days (but with
up to three Renewals, as described and defined in Section
1.2), and
(c) that is funded by GNB's credit to the borrower's deposit
account at GNB that may be accessed electronically only by the
borrower's use of a Card (as defined below in this Section
1.1).
The "Credit Criteria" are the credit criteria that must be satisfied by
a potential borrower to be eligible for a Bank Loan (including a
Renewal), which have been established by GNB and are set forth on
Exhibit A to this Agreement, as such credit criteria may be amended by
GNB from time to time in its sole discretion by at least 90 days' prior
Notice (as defined below in this Section 1.1) to Ace (with each such
<PAGE>
amendment to be evidenced by a superseding Exhibit A); except that if
the Office of the Comptroller of the Currency or the Board of Governors
of the Federal Reserve System (the "Bank Regulatory Authority")
requires or recommends that GNB change the Credit Criteria within 90
days, GNB shall give that Notice to Ace as far in advance of the change
as is reasonably practicable. A "Card" is a plastic card issued to a
borrower by GNB that, with the corresponding personal identification
number ("PIN"), permits electronic access to the borrower's deposit
account at GNB into which the Bank Loan is funded. A "Notice" is a
written communication that complies with Section 11.3.
1.2 Terms of Bank Loans. The Bank Loans shall be made on the following
terms:
(a) Each initially funded Bank Loan must be in the amount
(exclusive of interest or fees) of $100, or in any $50
increment above $100, up to a maximum of $500.
(b) No more than one Bank Loan may be outstanding to any borrower
at one time.
(c) An initially funded Bank Loan may be renewed by GNB up to
three consecutive times, for up to 33 calendar days each, only
if, at the time each such renewal of a Bank Loan (a "Renewal")
is requested, the borrower (i) satisfies the Credit Criteria
applicable to that Renewal, (ii) pays all interest accrued
(but not yet paid) to date on the principal amount of the Bank
Loan, and (iii) repays at least five percent of the principal
amount of the then outstanding Bank Loan.
(d) The interest charged to the borrower for a Bank Loan may be up
to the maximum rate of interest that GNB may charge from time
to time under applicable law.
GNB may (in its sole discretion) modify the terms of the Bank Loans set
forth in this Section 1.2 upon Notice to Ace at least 90 days before
the modification or, if the Bank Regulatory Authority requires or
recommends that GNB modify the terms within 90 days, then as soon as
reasonably practicable after that requirement or recommendation by the
Bank Regulatory Authority. Except as otherwise provided in this
Agreement, neither Party may charge a prospective borrower or a
borrower any fee or other amount in connection with a Bank Loan
(including a Renewal) or any other aspect or transaction described in
this Agreement relating to a Bank Loan (including the issuance of a
Card and the establishment or maintenance of a borrower's deposit
account). Nothing in this Agreement, however, affects a Party's right
to charge for any service or services rendered to its customers (who
may also be prospective borrowers or borrowers) not in connection with
any other transactions described in this Agreement relating to Bank
Loans.
1.3 Agency Appointment. GNB hereby appoints Ace as GNB's agent, at the
Locations at which Ace may legally so serve, to facilitate and provide
administrative services regarding the Bank Loans in accordance with the
terms of this Agreement. Ace hereby accepts that appointment and agrees
<PAGE>
to so serve as agent in accordance with the terms of this Agreement. In
addition, Ace may invite franchisees of Ace or Ace's affiliates to
enter into arrangements substantially similar to those in this
Agreement, including serving as GNB's agents at their respective retail
financial services locations to facilitate, and provide administrative
services regarding, the Bank Loans ("Participating Franchisees") if all
Participating Franchisees enter into an agreement with GNB similar to
this Agreement; Ace agrees that it shall be and remain liable for all
acts or omissions to act of all Participating Franchisees as GNB's
agent under that agreement.
1.4 GNB Lending Activities. For or in connection with the Bank Loans, GNB
shall:
(a) Establish, maintain, and monitor the Credit Criteria.
(b) Provide to Ace appropriate application forms for Bank Loans,
in electronic or paper format as agreed by the Parties.
(c) Review and evaluate each completed application for a Bank Loan
transmitted by Ace for a prospective borrower, and approve or
deny that request within * after transmission of the
application.
(d) Create and maintain such forms of disclosure to prospective
borrowers and borrowers as may be required by applicable law.
(e) Create and maintain appropriate documentation as may be
required by applicable law in the event that a loan
application is denied.
(f) Create and maintain appropriate documentation for Bank Loans
and provide it (through Ace) to each prospective borrower
whose loan application has been approved by GNB, including an
authorization from each borrower to allow GNB to grant Ace
access to that borrower's information as contemplated by
Section 5.1.
(g) Establish a deposit account at GNB for each borrower under a
Bank Loan, and create appropriate account documentation and
provide it (through Ace) to the borrower.
(h) Fund the amount of the Bank Loan into the borrower's deposit
account at GNB.
(i) Issue a Card (including the corresponding PIN) to the borrower
under Bank Loans thereby enabling the borrower to access the
borrower's GNB Bank account.
---------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
<PAGE>
(j) Develop (to the extent not yet developed) and maintain
credit-evaluation and decision-making software at GNB's loan
approval center ("Credit Software") that communicates with
Ace's POS Software (as defined in Section 1.5) at each
Location at which Bank Loans are offered, and maintain a
national toll-free telephone access number for the purpose of
that electronic communication.
(k) Take all such other actions, other than those to be performed
by Ace under this Agreement, as may be required or reasonably
appropriate to make Bank Loans.
(l) Reimburse Ace for all legal fees and expenses reasonably
incurred by Ace in excess of $ * per year during the
effectiveness of this Agreement for review of the
documentation used in connection with Bank Loans for
compliance with applicable bank and lending laws, rules and
regulations.
1.5 Agent Services. Ace shall, at GNB's reasonable direction in accordance
with the terms of this Agreement, as GNB's agent at each Location at
which Bank Loans are offered:
(a) Obtain (if necessary) and maintain a PIN keypad, a magnetic
card reader that can read the Cards, POS Software (as defined
below in this Section 1.5), and the ability to connect to
GNB's loan approval center through GNB's national toll-free
telephone access number, all in such form as is reasonably
acceptable to GNB.
(b) Maintain signage reasonably acceptable to GNB indicating the
availability of Bank Loans and, if the application forms are
in paper format, copies of application forms for Bank Loans.
(c) Provide GNB's application forms for Bank Loans to prospective
borrowers who so request.
(d) Upon request, assist each prospective borrower in completing
an application form and transmit that completed application
form for a Bank Loan to GNB for evaluation.
(e) Deliver to each prospective borrower the appropriate form(s)
of legally required disclosure (prepared by GNB).
(f) Submit to each prospective borrower whose loan application has
been approved by GNB the documentation required by GNB for a
Bank Loan, or deliver to each prospective borrower whose loan
application has been denied the loan denial documentation
prepared by GNB.
---------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
<PAGE>
(g) To the extent required by GNB, deliver to GNB the borrower's
signed loan documentation (including the Bank Loan application
and the promissory note) for a Bank Loan * after approval of
the Bank Loan, with the delivery cost from Ace's regional
office to (or as directed by) GNB to be paid by GNB.
(h) Provide to each borrower GNB's forms to establish an account
at GNB, assist (as requested) each borrower in completing the
forms, deliver a Card (including the corresponding PIN) to
each borrower under a Bank Loan as directed by GNB, and (to
the extent required by GNB) deliver to GNB the borrower's
signed Card and account authorization documents ( * after the
execution of these documents, with the delivery cost from
Ace's regional office to GNB to be paid by GNB).
(i) Establish a bank account with Wells Fargo Bank (or another
bank that is a part of the syndicate of banks lending to Ace)
into which Ace will deposit payments regarding Bank Loans,
including principal and interest and fees (other than the Ace
Administrative Fee, as defined below in this Section 1.5)
received from borrowers (the "Bank Loan Repayment Account").
(j) Accept payments of Bank Loans as reasonably directed by GNB,
and corresponding interest and fees (other than the Ace
Administrative Fee), by or on behalf of borrowers and make the
amounts so received available to GNB, no later than the next
business day, for GNB to initiate a debit entry through the
Automated Clearinghouse system against the Bank Loan Repayment
Account; and transmit to GNB the paying borrower's name, GNB
Bank account number, and amount paid immediately upon Ace's
receipt (at a Location or otherwise) or any form of payment
(whether paid by cash, check, or Automatic Clearinghouse
transmission).
(k) To the extent GNB does not require delivery by Ace of the loan
documentation or Card and account authorization documentation,
GNB hereby appoints Ace as custodian of all such
documentation, and Ace shall maintain that documentation in
safekeeping for the benefit of GNB.
Ace shall develop or cause to be developed software, integrated with
Ace's point-of-sale system at each such Location (the "POS System"), by
which data and documents regarding Bank Loans or applications for Bank
Loans may be transmitted to and received from GNB's loan approval
center; that software actually developed by Ace is "POS Software." The
only fee that Ace (for itself) may charge a prospective borrower or a
borrower in connection with any Bank Loan or related transactions
described in this Agreement is a one-time fee per person of up to $ *
to establish an administrative relationship with Ace regarding any Bank
Loans (the "Ace Administrative Fee"). GNB shall have no right to any
Ace Administrative Fee.
---------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
<PAGE>
1.6 Exclusivity. Subject to Section 8.4(d), the Parties' relationship shall
be exclusive during the effectiveness of this Agreement in accordance
with the following:
(a) After the Testing Period (as defined in Section 1.7(f)), Ace
shall not, directly or indirectly, offer in any of the
Locations, anywhere in the United States of America, any
short-term loan that is the same as or substantially similar
to the Bank Loans (including any deferred check deposit
service or product or similar "payday advance" permitted under
applicable check-cashing statutes); except that (i) when Ace
is unable, in light of applicable operational (including
contractual) and regulatory requirements, to offer Bank Loans
at a Location, Ace may offer short-term loans substantially
similar to the Bank Loans, including payday advances, at that
Location, and (ii) if any regulatory authority having
jurisdiction over the check-cashing and related businesses of
Ace requires or recommends that Ace cease to offer Bank Loans
at any Location or Locations, Ace may cease to offer Bank
Loans at that Location or those Locations and may offer
short-term loans substantially similar to the Bank Loans,
including payday advances, at that Location or those
Locations. The Parties acknowledge that Ace's and its
affiliates' franchisees are not bound by this Agreement, and
may continue to offer such short-term loans without regard to
this Agreement, unless they become Participating Franchisees
as provided in Section 1.3.
(b) GNB shall not, directly or indirectly, anywhere in the United
States of America, offer or provide any Bank Loan or any
short-term loan that is the same as or substantially similar
to the Bank Loans through or with any other person; except GNB
may make any short-term loan that is the same as or
substantially similar to the Bank Loans to borrowers who apply
in person at an office of GNB or to the limited extent
required by applicable banking regulations.
(c) Ace shall use commercially reasonable efforts to make Bank
Loans available in all of its Locations as soon as reasonably
practicable in light of operational and regulatory
considerations.
(d) The Parties anticipate that Ace will submit for GNB's approval
completed applications satisfying the Credit Criteria for at
least * Bank Loans (including Renewals) during each Year (as
defined below in this Section 1.6(d)) commencing with the
second Year after the Testing Period (the "Annual Application
Number").
---------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
<PAGE>
If Ace submits for GNB's approval during a Year, commencing
with the second Year, a number of completed applications
satisfying the Credit Criteria for Bank Loans (including
Renewals) that is * % of the Annual Application Number, then
the Parties' exclusivity commitment, and (accordingly) the
stated term of this Agreement in Section 4.1, shall be
extended for an additional Year after the expiration date of
this Agreement theretofore in effect. A "Year" is a
consecutive 12-month period after the Testing Period that
begins on the day after the Testing Period expires and on each
anniversary of that day during the Term.
(e) If Ace does not, however, submit for GNB's approval completed
applications satisfying the Credit Criteria for at least *
Bank Loans (including Renewals) during any Year, commencing
with the second Year, then GNB may, within 30 days after the
end of such Year, give Ace Notice of intent to terminate the
Parties' continued exclusivity commitment under this Section
1.6. If, within 90 days after that Notice of intent to
terminate exclusivity, Ace does not submit to GNB completed
applications satisfying the Credit Criteria for at least *
Bank Loans (including Renewals), then the Parties shall have
no further exclusivity commitment under this Section 1.6. The
termination of the Parties' exclusivity commitment shall not,
however, affect the then effective stated term of this
Agreement in Section 4.1.
1.7 Software Development. To facilitate the process for Bank Loans
described in this Agreement, the Parties shall cooperate in developing
the Credit Software and the POS Software as follows:
(a) Ace will provide GNB information regarding the POS System for
review and evaluation by or on behalf of GNB.
(b) GNB will provide Ace information regarding the software that
will serve as the basis for the Credit Software for review and
evaluation by or on behalf of Ace.
(c) The Parties will establish and agree upon the functionality
requirements for the POS Software and the Credit Software.
Each Party shall cooperate, at its own expense, with any
reasonable request made by or on behalf of the other Party in
connection with that other Party's development of its software
(i.e., the POS Software or the Credit Software, as the case
may be).
(d) The POS Software developed by Ace shall be Ace's property, and
no ownership rights in or to that POS Software are granted or
transferred to GNB (or any subsidiary of GNB) in this
Agreement or by GNB's (or any GNB subsidiary's) access to or
use of the POS Software under this Agreement. The Credit
Software developed by GNB shall be GNB's property, and no
ownership rights in or to that Credit Software are granted or
transferred to Ace in this Agreement or by Ace's access to or
use of the Credit Software under this Agreement.
---------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
<PAGE>
(e) Information provided by one Party to or for the benefit of the
other Party under this Article 1.7 shall be Confidential
Information in accordance with Article VII and may not be used
for any purpose other than as provided in this Article 1.7.
(f) Upon completion of the POS Software and the Credit Software,
the Parties will cooperate to (i) conduct initial tests of the
POS Software and the Credit Software at Ace's corporate
headquarters and GNB's loan approval center, (ii) conduct a
beta test of the POS Software and the Credit Software at a
Location, and (iii) test the POS Software and the Credit
Software in one or two Ace markets before offering Bank Loans
in other Locations. The time period in which all such testing
will occur is the "Testing Period," and the Testing Period
shall expire on the date on which Bank Loans are first offered
at 150 Locations or the first anniversary of the Effective
Date, whichever is earlier.
1.8 Training. The Parties shall conduct training sessions for Ace's
personnel regarding the proper use of equipment and the proper
procedures to be followed in connection with offering and processing
Bank Loans and applications for Bank Loans. That training will be
provided at Ace's regional locations and corporate office with such
frequency and on such schedule as the Parties shall determine.
1.9 Collection of Bank Loans. Contemporaneous with this Agreement, the
Parties are entering into a Collection Servicing Agreement, under which
is Exhibit B to this Agreement. To the extent that the terms of the
Collection Servicing Agreement conflict with the terms of this
Agreement, the terms of this Agreement shall control.
1.10 Advertising.
(a) Ace may, at its own expense, advertise and promote the
availability of Bank Loans. For this purpose, GNB hereby
grants Ace a nonexclusive and nontransferable license, during
the effectiveness of this Agreement, to use GNB's trade names,
trade marks, service marks, and logos (whether or not
registered or protected or protectible) ("GNB Marks"). All
uses of the GNB Marks must be approved in advance by GNB, such
approval not to be unreasonably withheld or delayed. A list of
current GNB Marks is set forth on Exhibit C to this Agreement.
GNB is not granting to Ace any, and shall retain ownership of
the GNB Marks. Ace shall discontinue all uses of the GNB Marks
upon the expiration or termination of this Agreement.
<PAGE>
(b) GNB may, at its own expense, advertise and promote the
availability of Bank Loans through the Locations at which Bank
Loans are offered. For this purpose, Ace hereby grants GNB a
nonexclusive and nontransferable license, during the
effectiveness of this Agreement, to use Ace's trade names,
trademarks, service marks, and logos (whether or not
registered or protected or protectible) ("Ace Marks"). All
uses of the Ace Marks must be approved in advance by Ace, such
approval not to be unreasonably withheld or delayed. A list of
current Ace Marks is set forth on Exhibit C to this Agreement.
Ace is not granting to GNB any, and shall retain ownership of
the Ace Marks. GNB shall discontinue all uses of the Ace Marks
upon the expiration or termination of this Agreement.
ARTICLE II-- LOAN PARTICIPATION
2.1 Participation Agreement. Contemporaneous with this Agreement, the
Parties are entering into a Master Loan Participation Agreement under
which GNB agrees to sell to Ace, and Ace agrees to purchase from GNB, a
* % participation in each of the Bank Loans made by GNB. That Master
Loan Participation Agreement is Exhibit D to this Agreement.
ARTICLE III-- REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1 Representations and Warranties by GNB. GNB represents and warrants to
Ace as follows:
(a) GNB has full legal right, power and authority to enter into
and perform this Agreement.
(b) This Agreement has been duly authorized, executed and
delivered by GNB and constitutes the legal, valid and binding
agreement of GNB.
(c) No consent, approval, authorization or order of any
governmental agency or authority, except those disclosed to
Ace in writing by GNB, is required to be obtained by GNB to
permit it to perform its obligations under this Agreement.
(d) There is no order, action, suit, proceeding, claim,
arbitration or investigation by any person, including any
governmental authority, pending, issued or outstanding against
GNB as a party or, to the knowledge of GNB, threatened against
GNB that challenges GNB's right to execute, deliver, perform
under or consummate the transactions described in this
Agreement.
---------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
<PAGE>
(e) To the extent related to the services offered and provided by
GNB under this Agreement:
(i) all federal, state and local laws and regulations
have been complied with in all material respects
relating to this Agreement;
(ii) any and all licenses, permits and other
authorizations required of GNB by federal, state or
local laws (the "GNB Authorizations") have been
obtained, are in full force and effect and are valid
under applicable federal, state and local laws; and
(iii) the continuation, validity and effectiveness of all
of the GNB Authorizations shall not be impaired or
adversely affected by the terms hereof.
(f) The Confidential Information of Ace previously provided by GNB
has been kept secret and has not been disclosed by GNB to any
person who is not under a written agreement with GNB or other
legal obligation to hold such Confidential Information in
confidence.
3.2 Covenants by GNB. GNB covenants with ACE as follows:
(a) GNB will cooperate with Ace regarding any inspections or
investigations by any governmental agency or authority that
may occur during the Term (as defined in Article IV).
(b) GNB will promptly give Notice to Ace of any order, action,
suit, proceeding, claim, arbitration, or investigation by any
person, including any governmental authority, that is filed,
issued, or threatened against GNB that challenges GNB's legal
right to perform its obligations under this Agreement.
(c) GNB will maintain the effectiveness of all of the GNB
Authorizations, or will obtain new or additional GNB
Authorizations, as necessary to permit it to perform its
obligations under this Agreement.
(d) When developed, the Credit Software will not, to the best
knowledge of GNB, infringe upon the proprietary rights,
including patent, copyright or trade-secret rights, of any
other person.
(e) The Credit Software will accurately receive, provide and
process date/time data (including calculating, comparing and
sequencing) from, into and between the 20th and 21st
centuries, including the years 1999 and 2000, and leap-year
calculations and will not malfunction, cease to function or
provide invalid or incorrect results as a result of date/time
data.
<PAGE>
(f) GNB will pay Ace the portion of the ATM charges received by
GNB described in, and in accordance with, Exhibit E to this
Agreement.
(g) GNB shall comply in all material respects with all legal and
regulatory requirements, including bank and lending laws,
rules, and regulations, imposed on or applicable to it in
connection with the performance of its obligations and its
other activities under this Agreement.
3.3 Representations and Warranties by Ace. Ace represents and warrants to
GNB as follows:
(a) Ace has full legal right, power and authority to enter into
and perform this Agreement.
(b) This Agreement has been duly authorized, executed and
delivered by Ace and constitutes the legal, valid and binding
agreement of Ace.
(c) No consent, approval, authorization or order of any
governmental agency or authority, except those disclosed to
GNB in writing by Ace, is required to be obtained by Ace to
permit it to perform its obligations under this Agreement.
(d) There is no order, action, suit, proceeding, claim,
arbitration or investigation by any person, including any
governmental authority, pending, issued or outstanding against
Ace as a party or, to the knowledge of Ace, threatened against
Ace that challenges Ace's right to execute, deliver, perform
under or consummate the transactions described in this
Agreement.
(e) To the extent related to the services offered and provided by
Ace under this Agreement:
(i) all federal, state and local laws and regulations
have been complied with in all material respects
relating to this Agreement;
(ii) any and all licenses, permits and other
authorizations required of Ace by federal, state or
local laws (the "Ace Authorizations") have been
obtained, are in full force and effect and are valid
under applicable federal, state and local laws; and
(iii) the continuation, validity and effectiveness of all
of the Ace Authorizations shall not be impaired or
adversely affected by the terms hereof.
(f) The Confidential Information of GNB previously provided to Ace
has been kept secret and has not been disclosed by Ace to any
person who is not under a written agreement with Ace or other
legal obligation to hold such Confidential Information in
confidence.
<PAGE>
3.4 Covenants by Ace. Ace covenants with GNB as follows:
(a) Ace will cooperate with GNB regarding any inspections or
investigations by any governmental agency or authority that
may occur during the Term.
(b) Ace will promptly give Notice to GNB of any order, action,
suit, proceeding, claim, arbitration, or investigation by any
person, including any governmental authority, that is filed,
issued, or threatened against Ace that challenges Ace's legal
right to perform its obligations under this Agreement.
(c) Ace will maintain the effectiveness of all of the Ace
Authorizations, or will obtain new or additional Ace
Authorizations, as necessary to permit it to perform its
obligations under this Agreement.
(d) When developed, the POS Software will not, to the best
knowledge of Ace, infringe upon the proprietary rights,
including patent, copyright or trade-secret rights, of any
other person.
(e) The POS Software will accurately receive, provide and process
date/time data (including calculating, comparing and
sequencing) from, into and between the 20th and 21st
centuries, including the years 1999 and 2000, and leap-year
calculations and will not malfunction, cease to function or
provide invalid or incorrect results as a result of date/time
data.
(f) Ace will pay GNB the fees for the Cards and the Loan
Participation Pfocessing Fees described in, and in accordance
with, Exhibit E to this Agreement; Ace shall have no right to
any such fees.
(g) As GNB's agent with respect to Bank Loans, Ace will follow
GNB's reasonable instructions in accordance with the terms of
this Agreement.
(h) Ace shall comply in all material respects with all legal and
regulatory requirements, including check-cashing laws, rules,
and regulations, imposed on or applicable to it in connection
with the performance of its obligations and its other
activities under this Agreement.
<PAGE>
ARTICLE IV-- TERM AND TERMINATION
4.1 Term of Agreement. Unless earlier terminated as provided in Section
4.2, this Agreement shall expire at 11:59:59 p.m., Central Time, on the
later of (a) the fifth anniversary of the date on which the Testing
Period expires or (b) the date on which the exclusivity period provided
by Section 1.6 expires. As used herein, the "Term" of this Agreement
begins on the date hereof and shall continue until this Agreement
expires or is terminated earlier under Section 4.2.
4.2 Termination. A Party may terminate this Agreement as follows:
(a) Either Party may terminate this Agreement immediately upon
Notice if:
(i) the other Party makes a general assignment of all or
substantially all of its assets for the benefit of
creditors;
(ii) the other Party applies for, consents to or
acquiesces in the appointment of a receiver, trustee,
custodian or liquidator for its business or all or
substantially all of its assets, including a
receivership or custody relationship imposed by a
governmental or quasi-governmental regulatory
authority; or
(iii) the other Party files a voluntary petition for relief
under the United States Bankruptcy Code or other
bankruptcy or insolvency laws; or
(iv) an involuntary bankruptcy or insolvency petition
filed against the other Party is not dismissed within
90 days.
(b) Either Party may terminate this Agreement on ten business
days' Notice upon the other Party's refusal or failure to make
any payment due under this Agreement which is not cured within
such ten business-day period. Such termination shall be
effective immediately upon expiration of such cure period
unless the defaulting Party cures such default within the
applicable cure period.
(c) Either Party may terminate this Agreement upon 30 business
days' Notice upon the occurrence of any material breach or
default by the other Party under this Agreement (other than as
described in Section 4.2(b)) which is not cured within such 30
business-day period.
(d) Ace may terminate this Agreement upon 60 business days' Notice
if any change in the Credit Criteria or in the terms of the
Bank Loans (stated in Section 1.2) by GNB, in Ace's judgment,
has adversely affected or would adversely affect the market
for Bank Loans.
(e) Either party may terminate this Agreement upon 30 business
days' Notice if the Bank Regulatory Authority requires or
recommends that GNB cease making Bank Loans, in whole or in
part, as provided for under this Agreement, or imposes such
conditions on GNB's making of Bank Loans as would have a
material adverse effect on GNB's ability to make Bank Loans as
provided for under this Agreement, as confirmed to Ace by
GNB's bank regulatory counsel.
<PAGE>
4.3 Restrictions on Termination. A Party may not terminate this Agreement
if the event or circumstance described in Section 4.2 upon which that
Party would rely in so terminating, was caused by that Party's breach
of or default under this Agreement. Termination rights to the Party
under Section 4.2 are not exclusive of any other right or remedy
available to or granted to a nonbreaching or nondefaulting Party under
this Agreement.
4.4 Change of Control. Each Party agrees to Notify the other Party if the
first Party's board of directors votes or consents to change, or to
recommend to that Party's shareholders that they vote or consent to
change, the control of that Party or its business. Regardless of any
change and any Notice thereof in accordance with the preceding
sentence, the Parties will remain obligated under this Agreement until
this Agreement expires or is terminated according to its terms.
4.5 Post-Termination Obligations. Upon the expiration or termination of
this Agreement, each Party will remit to the other Party all amounts
owing to such Party at the time of such expiration or termination. Each
Party will also remain liable until it has fulfilled all of its
obligations to the other Party that arose or accrued before the
expiration or termination date.
ARTICLE V-- ACCESS; INSPECTION RIGHTS
5.1 Loan Databases.
(a) GNB shall maintain a database of information regarding all
Bank Loans, including information regarding the borrower's
name, the Card number associated with the borrower's deposit
account, the balance in such account, the Bank Loan funding
and payment history, and the Location (or, if applicable, the
Participating Franchisee location) through which the Bank Loan
was originated and facilitated. GNB shall allow Ace access to
that database at any time during the Term and shall coordinate
with Ace regarding any software and hardware necessary to
access such database.
(b) Ace shall maintain a database of information regarding the
payment history of all Bank Loans, including information
regarding the paying borrower's name, GNB Bank account number,
and amount paid. Ace shall allow GNB access to that database
at any time during the Term and shall coordinate with GNB
regarding any software and hardware necessary to access such
database.
5.2 Inspection Rights. During the Term, but no more often than once each
calendar year during the Term (or more often only as necessary to
comply with requirements of the Bank Regulatory Authority or of any
regulatory authority having jurisdiction over the check-cashing and
related businesses of Ace or if there is a material discrepancy
identified through the electronic monitoring of the databases described
in Section 5.1), either Party may request an inspection of the
<PAGE>
financial or other books and records of the other Party relating to
this Agreement by giving at least 30 days' prior Notice to the other
Party. Any such inspection shall be conducted only during the regular
business hours of the other Party, or at such other reasonable time to
which the other Party may consent, and without any unreasonable
disruption of the other Party's business operations. If, based upon the
results of any such inspection, a Party claims or intends to claim any
additional funds are owing from the other Party, then (a) such Party
shall, within ten business days after its receipt of the results of
that inspection, submit to the other Party a copy of the results of
that inspection, and (b) the other Party shall have ten business days
to review and, if it chooses, object to those results by giving notice
of its objection to the Party conducting the inspection. Any Dispute
regarding the results of that inspection that is not resolved by the
Parties' agreement within ten business days after the other Party's
notice of objection to the inspecting Party shall be settled in
accordance with Section 8.6. The disputed results of any inspection
shall not be binding on the other Party for purposes of this Section
5.2 until the Dispute has been resolved by the Parties' agreement or in
accordance with Section 8.6. The cost of such inspection shall be paid
by the inspecting Party.
ARTICLE VI-- NONSOLICITATION
6.1 Nonsolicitation. During the Term and the first year after the
expiration or termination of this Agreement, a Party may not directly
or indirectly solicit for employment or employ any employee of the
other Party or any of the other Party's affiliates or induce or attempt
to induce any employee of the other Party or any of the other Party's
affiliates to terminate that employee's employment relationship; except
that:
(a) general solicitations of employment published in journals,
newspapers, or other publications of general circulation and
not specifically directed toward any employee or group of
employees of the other Party or any of the other Party's
affiliates shall not be deemed a violation of this Section
6.1; and
(b) a Party shall not be prohibited from employing any person who
contacts that Party or any of that Party's affiliates on that
person's own initiative and without any solicitation, directly
or indirectly, by that Party or any of that Party's
affiliates.
ARTICLE VII-- CONFIDENTIAL INFORMATION
7.1 Confidential Information. Each Party shall keep confidential the
following information ("Confidential Information") acquired by it under
or in connection with this Agreement:
(a) Information relating to the other Party's business, financial
condition or performance, or operations that the other Party
treats as confidential or proprietary.
<PAGE>
(b) Copies of records and other information obtained from that
Party's examination of the other Party's records under Article
V.
(c) The terms and performance of, any breach under, or any Dispute
(as defined in Section 8.6) regarding this Agreement.
(d) The Parties' conduct, decisions, documents, and negotiations
as part of, and the status of, any proceedings to resolve any
Dispute.
(e) Any other information, including the POS Software and the
Credit Software and the information used in the development or
implementation of the POS Software and the Client Software,
whether in a tangible medium or oral and whether proprietary
to the other Party or not, that is marked or clearly
identified by the other Party as confidential or proprietary.
A Party may not use any of the other Party's Confidential Information
other than as required to perform its obligations or exercise its
rights and remedies, including as part of the resolution of any
Dispute, under this Agreement.
7.2 Excluded Information. A Party has no obligation under this Article
VII regarding any information, including information that would
otherwise be Confidential Information, to the extent that the
information:
(a) is or becomes publicly available or available in the industry
other than as a result of any breach of this Agreement or any
other duty of that Party; or
(b) is or becomes available to that Party from a source that, to
that Party's knowledge, is lawfully in possession of that
information and is not subject to a duty of confidentiality,
whether to the other Party or another person, violated by that
disclosure.
7.3 Standard of Care. Each Party shall use at least the same degree of
care in maintaining the confidentiality and restricting the use of the
other Party's Confidential Information as that Party uses with respect
to its own proprietary or confidential information, and in no event
less than reasonable care.
7.4 Permitted Disclosures. A Party may disclose Confidential
Information to its officers, directors, agents, or employees as
necessary to give effect to this Agreement. Each Party shall inform
each of those persons to whom any Confidential Information is
communicated of the obligations regarding that information under this
Article VII and impose on that person the obligation to comply with
this Article VII regarding the Confidential Information. Each Party
shall be responsible for any breach of that Party's obligations under
this Article VII by its officers, directors, agents, or employees.
<PAGE>
7.5 Required Disclosures. Each Party may disclose Confidential
Information in response to a request for disclosure by a court or other
governmental authority, including a subpoena, court order, or
audit-related request by a taxing authority, if that Party:
(a) promptly Notifies the other Party of the terms and the
circumstances of that request;
(b) cooperates with the other Party's reasonable instructions (if
any) to resist or narrow that request;
(c) furnishes only information that, according to advice of its
legal counsel, that Party is legally compelled to disclose;
and
(d) uses commercially reasonable efforts to obtain an order or
other reliable assurance that confidential treatment will be
accorded the information disclosed.
A Party need not comply with these conditions to disclosure, however,
to the extent that the request or order of the governmental authority
in effect prohibits that compliance. A Party may also disclose
Confidential Information without complying with these conditions to the
extent that the Party is otherwise legally obligated to do so (for
example, to comply with applicable securities and/or banking laws), as
confirmed by advice of counsel.
7.6 Title to Information. The Confidential Information of a Party
disclosed by it to the other Party under this Agreement shall remain
the property of the disclosing Party; nothing in this Agreement grants
or conveys to the other Party any ownership rights in, or (except as
expressly stated in this Agreement) rights to use or license, any of
that Confidential Information.
7.7 Survival; Return. The obligations under this Article VII shall
continue on and after the expiration or termination of this Agreement.
Upon request of the disclosing Party upon or after the expiration or
termination of this Agreement, the other Party shall return or, if
requested by the disclosing Party, destroy the Confidential Information
of the disclosing Party that it holds. The requested return or
destruction shall include removal or deletion of Confidential
Information from all data bases and magnetic media of the other Party.
<PAGE>
ARTICLE VIII-- INDEMNIFICATION AND REMEDIES
8.1 Indemnification by GNB. GNB shall indemnify Ace and its officers,
directors, agents, attorneys and affiliates (collectively, "Ace
Indemnified Persons") against, and hold Ace and the Ace Indemnified
Persons harmless from, the following:
(a) * of all losses, claims, obligations, demands, assessments,
penalties, liabilities, costs (including reasonable attorneys'
fees and expenses) and damages asserted against Ace or any Ace
Indemnified Person or incurred by Ace or any Ace Indemnified
Person (collectively, "Ace Losses") by reason of, resulting
from, or relating to any Third-Party Claims (as defined below
in this Section 8.1) asserted against Ace or any Ace
Indemnified Person, except any Third-Party Claims described in
Section 8.1(b) or Section 8.1(c).
(b) All Ace Losses by reason of, resulting from, or relating to
any Third-Party Claims asserted against Ace or any Ace
Indemnified Person based on any Infringement (as defined below
in this Section 8.1) or alleged Infringement by any of the GNB
Marks or the Credit Software.
(c) All Ace Losses by reason of, resulting from, or relating to
any Third-Party Claims asserted against Ace or any Ace
Indemnified Person in which, or in connection with which, GNB
or any GNB Indemnified Person (as defined in Section 8.2)
admits or acknowledges, or any court or other governmental
authority or arbitrator finds or otherwise determines, that
GNB or any GNB Indemnified Person has committed (by act or
omission) any willful misconduct.
GNB shall not be obligated to indemnify Ace or any Ace Indemnified
Person, or hold Ace or any Ace Indemnified Person harmless from, any
Ace Losses by reason of, resulting from, or relating to any Third-Party
Claims (i) based on any Infringement or alleged Infringement by any of
the Ace Marks or the POS Software, or (ii) in which, or in connection
with which, Ace or any Ace Indemnified Person admits or acknowledges,
or any court or other governmental authority or arbitrator finds or
determines, that Ace or any Ace Indemnified Person has committed (by
act or omission) any willful misconduct. A "Third-Party Claim" is any
claim of liability asserted against a Party by any person other than
Ace or any Ace Indemnified Person or GNB or any GNB Indemnified Person
arising out of a Bank Loan or the services or products provided under
this Agreement by either Party. "Infringement" means any infringement
of any copyright established in, infringement of any patent duly issued
in, or misappropriation of any trade secret protected in the United
States of America.
---------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
<PAGE>
8.2 Indemnification by Ace. Ace shall indemnify GNB and its officers,
directors, agents, attorneys and affiliates (collectively, "GNB
Indemnified Persons") against, and hold GNB and the GNB Indemnified
Persons harmless from, the following:
(a) * of all losses, claims, obligations, demands, assessments,
penalties, liabilities, costs (including reasonable attorneys'
fees and expenses) and damages asserted against GNB or any GNB
Indemnified Person or incurred by GNB or any GNB Indemnified
Person (collectively, "GNB Losses") by reason of, resulting
from, or relating to any Third-Party Claims asserted against
GNB or any GNB Indemnified Person, except any Third-Party
Claims described in Section 8.2(b) or Section 8.2(c).
(b) All GNB Losses by reason of, resulting from, or relating to
any Third-Party Claims asserted against GNB or any GNB
Indemnified Person based on any Infringement or alleged
Infringement by any of the Ace Marks or the POS Software.
(c) All GNB Losses by reason of, resulting from, or relating to
any Third-Party Claims in which or in connection with which,
Ace or any Ace Indemnified Person admits or acknowledges, or
any court or governmental authority or arbitrator finds or
otherwise determines, that Ace or any Ace Indemnified Person
has committed (by act or omission) any willful misconduct.
Ace shall not be obligated to indemnify or hold harmless GNB or any GNB
Indemnified Person regarding any GNB Losses by reason of, resulting
from, or relating to any Third-Party Claims (i) based on any
Infringement or alleged Infringement by any of the GNB Marks or the
Credit Software, or (ii) in which, or connection with which, GNB or any
GNB Indemnified Person admits or acknowledges, or any court or other
governmental authority or arbitrator finds or otherwise determines,
that GNB or any GNB Indemnified Person has committed (by act or
omission) any willful misconduct.
8.3 Defense of Certain Third-Party Claims. Each Party shall promptly give
Notice to the other Party of any Third-Party Claim asserted against the
notifying Party (though the failure to give any such Notice shall not
affect any rights or remedies of the Parties or any GNB Indemnified
Person or any Ace Indemnified Person except to the extent that such
failure impairs or prejudices the defense of the Third-Party Claim). If
a Third-Party Claim is asserted against either Party, any GNB
Indemnified Person, or any Ace Indemnified Person and GNB does not
acknowledge or admit any indemnification obligation under Section
8.1(b) or Section 8.1(c), then:
---------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
<PAGE>
(a) Ace shall be entitled to assume and conduct the defense and
settlement of that Third-Party Claim, with counsel chosen by
Ace, though no such settlement shall be binding on GNB or any
GNB Indemnified Person without its written consent, which may
not be unreasonably withheld or delayed;
(b) subject to Section 8.3(c), Ace shall treat that Third-Party
Claim as subject to Sections 8.1(a) and 8.2(a); and
(c) if it is subsequently determined in accordance with Section
8.6 or by the Parties' agreement that the Third-Party Claim is
subject to Sections 8.1(b), Section 8.1(c), Section 8.2(b), or
Section 8.2(c) (rather than Sections 8.1(a) and 8.2(a)) then
the responsibility for Ace Losses or GNB Losses, or both,
shall be allocated in accordance with the applicable provision
or provisions of Sections 8.1 and 8.2.
Nevertheless, if Ace acknowledges or admits its indemnification
obligation under Section 8.2(b) or Section 8.2(c), Ace need not comply
with Section 8.3(b) and need not obtain the consent of GNB or any GNB
Indemnified Person to any settlement.
8.4 Force Majeure.
(a) Neither Party shall be in breach or default of its obligations
under this Agreement to the extent that delay or failure in
its performance is caused by an act of God, fire, flood,
severe weather conditions, utilities or telecommunications
failures, materials shortage, unavailability of
transportation, government ordinance, laws, regulations or
restrictions, events of war or civil disorder or any other
cause beyond the reasonable control of that Party. However,
nothing in this Section 8.4 shall relieve any Party from its
obligations to make payments to the other Party as provided in
this Agreement.
(b) If a Party anticipates any excusable delay or failure under
Section 8.4(a), it shall promptly Notify the other Party of
the anticipated delay or failure, the anticipated effect of
that delay or failure and any actions that are being or are to
be taken to alleviate or overcome the cause of the delay or
failure.
(c) If a Party is claiming an excusable delay or failure under
Section 8.4(a), it shall use commercially reasonable efforts
to alleviate or overcome the cause of the delay or failure as
soon as possible.
(d) If a Party is unable to perform due to an excusable delay or
failure under Section 8.4(a), and such delay or failure
continues for more than 72 hours, then the exclusivity
restrictions of Section 1.6 binding on the Party entitled to
performance shall be suspended until the Party whose
performance is impaired can again fully perform its
obligations.
<PAGE>
8.5 Insurance. The Parties shall make good faith efforts to obtain
insurance against loss for acts or omissions to act by the Parties as
provided for in this Agreement. To the extent the Parties mutually
determine that insurance covering Third-Party Claims is available on
commercially reasonable terms (including premium costs), the Parties
will obtain and maintain such insurance coverage during the Term. The
amount of the insurance coverage will be as mutually determined by the
Parties. The premium costs for that insurance policy shall be paid * by
Ace and * by GNB. The Parties shall be designated loss payees under
that insurance policy in accordance with their respective
responsibility regarding Third-Party Claims under this Article VIII.
8.6 Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement, or the breach or validity hereof
("Dispute"), shall be settled by final and binding arbitration in
accordance with the Rules for Commercial Arbitration (the "Rules") of
the American Arbitration Association ("AAA") in effect as of the date
of the Dispute and in accordance with the following subsections of this
Section 8.6. (In the event of any inconsistency between the Rules and
the arbitration provisions of this Section 8.6, the latter shall
control.)
(a) The arbitration shall be conducted by a sole arbitrator who
has experience in or is otherwise familiar with the kinds of
business to which this Agreement relates and is not, and has
not been, an affiliate or a family member of either Party. In
the event an arbitrator who has such experience or familiarity
cannot be found, then the Parties shall appoint an arbitrator
who is mutually satisfactory to them. Such arbitrator shall be
appointed by the Parties within 15 days from the filing of the
Demand and Submission in accordance with Section 7 of the
Rules. If the Parties fail to agree upon a sole arbitrator
within such 15-day period and fail to agree to an extension of
such period, the arbitration shall be conducted by a sole
arbitrator appointed by the AAA in accordance with Section 14
of the Rules. The arbitrator appointed shall be knowledgeable
in the subject matter of the Dispute.
(b) The place of arbitration shall be Phoenix, Arizona, and the
final decision or award of the arbitrator shall be issued at
the place of arbitration. The arbitrator may, however, call
and conduct hearings and meetings at such other places as (i)
the Parties hereby may agree or (ii) the arbitrator may, on
the motion of a Party, determine to be necessary to obtain
significant testimony or evidence.
(c) The arbitrator shall have the power to authorize all forms of
discovery (including depositions, interrogations and document
production) on a showing of particularized need that the
requested discovery (i) is likely to lead to material evidence
needed to resolve the controversy and (ii) is not excessive in
scope, timing, or cost.
---------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
<PAGE>
(d) The arbitrator shall not have the power to (i) rule upon or
grant any extension, renewal or continuance of this Agreement,
(ii) award damages or other remedies expressly prohibited by
this Agreement, or (iii) grant interim injunctive relief
before rendering the final decision or award. Nevertheless,
either of the Parties may apply for and obtain temporary or
provisional injunctive relief from any court having
jurisdiction over one or both of the Parties or their assets
regarding any violation or alleged violation by the other
Party of its obligations under this Agreement.
(e) The final decision or award of the arbitrator shall be made as
soon as reasonably practicable after the appointment of the
arbitrator under Section 8.6(a). Such a final decision or
award may include (i) recovery of actual damages for violation
of any obligations under this Agreement or of governing law or
(ii) injunctive relief against threatened or actual violations
of any obligations under this Agreement or of governing law.
(f) The final decision or award of the arbitrator shall be final
and binding on the Parties, and judgment upon such final
decision or award may be entered in any court having
jurisdiction over one or both of the Parties or their assets.
The Parties specifically waive any right they may have to
apply to any court for relief from the provisions of this
Agreement or from any decision of the arbitrator made before
the final decision or award of the arbitrator.
(g) Subject to the final decision or award of the arbitrator, each
of the Parties shall bear an equal portion of the arbitrator's
fees and expenses, and each shall bear all of its own
expenses. The arbitrator shall have the power, however, to
award recovery of all fees and expenses (including attorneys'
fees, administrative fees, arbitrator's fees and court costs)
to the prevailing Party in the arbitration.
8.7 Equitable Relief. To the extent that monetary relief is not a
sufficient remedy for any breach of this Agreement, or upon any breach
or impending breach of Articles VI or VII, the non-breaching Party
shall be entitled to injunctive relief as a remedy for that breach or
impending breach by the other Party, in addition to any other remedies
granted to the non-breaching Party in this Agreement. That injunctive
relief shall be sought through arbitration in accordance with Section
8.6, except as permitted by Section 8.6(d).
8.8 Waiver of Remedies. No forbearance, delay, or indulgence by either
Party in enforcing this Agreement shall prejudice the rights or
remedies of that Party. No waiver of a Party's rights or remedies
regarding a particular breach of this Agreement constitutes a waiver of
those rights or remedies, or any other rights or remedies, regarding
any other or any subsequent breach of this Agreement.
<PAGE>
8.9 Survival. The rights, remedies, and obligations under this Article VIII
shall continue on and after the expiration or termination of this
Agreement.
8.10 Certain Damages. Under no circumstance shall a Party be liable under
this Agreement for any punitive or exemplary damages (however
described) or for any consequential, indirect, special or incidental
damages (however described), even if a possibility those damages was
disclosed or otherwise known to that Party. A Party may not claim or
receive as damages in any claim or proceeding against the other Party
alleging that other Party's breach or default of this Agreement any
amounts paid or incurred by the claiming Party in fulfilling its
indemnification obligations in connection with Third-Party Claims in
accordance with Sections 8.1 through 8.3.
8.11 Interest on Past Due Amounts. All amounts due under this Agreement, but
remaining unpaid for 30 days after Notice of non-payment (if so elected
by the Party entitled to the payment), shall bear interest at a rate
per annum equal to the prime rate set forth in the Money Rates section
of The Wall Street Journal plus two percent (2%) until those amounts
are paid in full.
ARTICLE IX-- PREEMPTIVE AND REFUSAL RIGHTS
9.1 Preemptive and Refusal Rights Agreement. Contemporaneous with this
Agreement, the Parties and Electronic Paycheck, LLC, a California
limited liability that is a subsidiary of GNB, are entering into a
Preemptive and Refusal Rights Agreement, which is Exhibit F to this
Agreement.
ARTICLE X-- SERVICE LEVEL AGREEMENT
10.1 Service Level Agreement. Contemporaneous with this Agreement, the
Parties are entering into a Service Level Agreement, which is Exhibit G
to this Agreement.
ARTICLE XI-- MISCELLANEOUS
11.1 Parties' Relationship. The Parties are independent, and this Agreement
does not create or evidence a partnership or joint venture between the
Parties. Each Party is solely responsible for its own employees,
including the compensation and the actions or omissions of those
employees, and neither Party has any authority with respect to the
other Party's employees.
11.2 Governing Law. California law governs this Agreement and the rights and
obligations of the Parties under this Agreement, including the validity
or enforcement and the construction or interpretation of this
Agreement.
11.3 Notices. Each notice, request, demand, and other communication from one
Party to the other under this Agreement must be in writing and
delivered in person or by courier or sent by certified mail, overnight
mail, or facsimile, in any case prepaid by the notifying Party, and
must be addressed as follows:
<PAGE>
If to Ace:
Ace Cash Express, Inc.
1231 Greenway Drive
Suite 800
Irving, Texas 75038
Facsimile: (972) 582-1430
Attention: Jay B. Shipowitz,
Chief Financial Officer
If to GNB:
Goleta National Bank
5827 Hollister Avenue
Goleta, California 93117
Facsimile: (805) 683-2082
Attention: Llewellyn W. Stone,
President and Chief Executive Officer
A Party may change its address for this purpose by giving Notice of
that change to the other Party in accordance with this Section 11.3.
Each Notice delivered or sent as provided above in this Section 11.3
will be deemed given, received, and effective on the date of actual
receipt (or refusal) by the addressee.
11.4 Assignment. This Agreement shall be binding on each of the Parties and
their respective permitted successors and permitted assigns. Neither
Party may assign its rights or obligations under this Agreement without
the prior written consent of the other Party, except that:
(a) the consent of the other Party may not be unreasonably
withheld or delayed if the proposed assignment is to a person
that is capable of performing the assigning Party's
obligations under this Agreement, and
(b) this restriction on assignment will not apply to a merger,
consolidation, or share exchange by a Party or the transfer of
the capital stock of a Party unless that transaction will
render that Party incapable of performing its obligations
under this Agreement.
Nothing in this Section 11.4 or otherwise in this Agreement prohibits
the assignment of a Party's right to receive amounts due under this
Agreement or Ace's grant of a security interest or lien in its rights
under this Agreement to its secured creditors. Any purported assignment
in violation of this Section 11.4 is void and ineffective.
<PAGE>
11.5 Interpretation and Certain Definitions. This Agreement is the result of
the Parties' negotiations, and no provision of this Agreement is to be
construed for or against either Party because of the authorship of that
provision. In the interpretation of this Agreement, except as otherwise
stated or the context otherwise requires:
(a) "business day" means any Monday through Friday, excluding any
such day on which national banks are authorized to be closed;
(b) "person" means an individual or natural person; a corporation,
partnership, limited liability company, trust, association, or
other entity of any kind; or a government, court, or
governmental agency or authority;
(c) "including" or "include" does not denote or imply any
limitation;
(d) "Article" refers to an Article of this Agreement, and
"Section" refers to a Section of this Agreement;
(e) "affiliate" means a person that directly or indirectly through
one or more intermediaries controls, is controlled by, or is
under common control with another person (and for this purpose
"control" and correlative terms means the power to direct the
management and affairs of a person);
(f) the singular includes the plural, and visa versa, and each
gender includes each of the others;
(g) captions or headings in this Agreement are only for reference
and are not to be considered in interpreting this Agreement;
and
(h) each Exhibit is an integral part of this Agreement.
11.6 Severability. If any part of this Agreement is or becomes invalid, it
is or will be severed from the rest of this Agreement and the rest of
this Agreement remains or will remain in effect so long as (i) the
continued effectiveness of the rest of this Agreement will not impose
or result in any substantial economic detriment to either Party or (ii)
the Parties amend this Agreement as necessary to preserve their
underlying economic or financial arrangements.
11.7 Integration; Amendment. This Agreement, together with its Exhibits, is
the entire agreement between the Parties relating to the subject matter
of this Agreement and supersedes all prior agreements or understandings
regarding that subject matter. This Agreement may be amended or
modified only by a writing signed by the Parties.
<PAGE>
11.8 Counterpart Signatures. This Agreement may be signed in counterparts,
with the same effect as if both Parties had signed the same paper; all
counterparts are to be construed together to be one, and the same,
document.
SIGNATURES:
ACE CASH EXPRESS, INC.
By: /s/ Jay B. Shipowitz
-------------------------------------------
Name: Jay B. Shipowitz
Title: Senior Vice President and
Chief Financial Officer
GOLETA NATIONAL BANK
By: /s/ Llewellyn W. Stone
-------------------------------------------
Name: Llewellyn W. Stone
Title: President and Chief Executive Officer
EXHIBIT A -- Credit Criteria
EXHIBIT B -- Collection Servicing Agreement
EXHIBIT C -- GNB marks and Ace marks
EXHIBIT D -- Master Loan Participation Agreement
EXHIBIT E -- Schedule of Interest and Fees
EXHIBIT F -- Preemptive and Refusal Rights Agreement
EXHIBIT G -- Service Level Agreement
<PAGE>
EXHIBIT A
CREDIT CRITERIA
*
---------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
<PAGE>
EXHIBIT B
COLLECTION SERVICING AGREEMENT
This COLLECTION SERVICING AGREEMENT ("Agreement"), dated as of
August 11, 1999, is between Goleta National Bank, a national banking association
(the "Lender"), and Ace Cash Express, Inc., a Texas corporation (in its capacity
as Servicer, the "Servicer").
WHEREAS, pursuant to the Master Loan Agency Agreement dated as
of August11, 1999 (the "Master Agreement") the Lender has agreed to make certain
short-term loans ("Loans") to borrowers who satisfy the "Credit Criteria" as
that term is defined in the Master Agreement; and
WHEREAS, the Servicer is willing to service the Loans pursuant
to the terms hereof.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "including" means "including without limitation."
Section 1.2 References. All section references, unless otherwise
indicated, shall be to Sections in this Agreement.
Section 1.3 Terms. The defined terms used herein are defined on
Schedule B.
ARTICLE II
SERVICING OF LOANS
Section 2.1 Appointment and Acceptance; Responsibility for Loan
Servicing. Ace Cash Express, Inc. is hereby appointed as Servicer pursuant to
this Agreement. Ace Cash Express, Inc. accepts such appointment and agrees to
act as the Servicer pursuant to this Agreement. The Servicer shall be obligated
to perform such duties and only such duties as are specifically set out in this
<PAGE>
Agreement and in the Master Agreement, and no implied duties or obligations on
the part of the Servicer shall be read into this Agreement. This Agreement shall
expire or terminate on the 90th day following the expiration or termination of
the Master Agreement. Servicer hereby waives any fee or payment from Lender for
its services under this Agreement.
(a) The Servicer will have the obligation to service and make
collections on the Loans. The Lender, at the written request of the Servicer,
will provide the Servicer with any powers of attorney or other documents
necessary or appropriate, as mutually agreed to by the Servicer and the Lender,
to enable the Servicer to carry out its servicing duties hereunder.
Section 2.2 General Duties. The Servicer will service and enforce the
Loans subject to the provisions of this Agreement. The Servicer will perform the
specific duties set forth in Schedule A (as may be amended and in effect from
time to time) and such other duties described in this Agreement (collectively,
the "Loan Services"). The Servicer will service and collect amounts owing on the
Loans with reasonable care, using that degree of skill and attention that the
Servicer exercises with respect to comparable assets that it services for its
own account. The Servicer will, subject to the provisions of this Agreement,
follow its customary standards, policies, and procedures in connection with such
servicing and collection. The Servicer shall commence or participate in a legal
proceeding (including a bankruptcy proceeding) relating to or involving a Loan
(a "Loan Legal Proceeding") promptly following any default in payment on such
Loan, subject to the reasonable consent and approval of Lender. If the Servicer
commences or participates in a Loan Legal Proceeding in accordance with this
Section 2.2, the Servicer is authorized and empowered by the Lender, pursuant to
this Section 2.2, to execute and deliver, on behalf of itself and the Lender,
any and all instruments of satisfaction or cancellation, or partial or full
release or discharge, and all other notices, demands, claims, complaints,
responses, affidavit or other document or instruments in connection with any
such proceedings. If the Servicer is legally prohibited from commencing a legal
proceeding to enforce a defaulted Loan, then the Servicer will retain an
attorney qualified to take legal action in the appropriate court.
Section 2.3 Collection Efforts. The Servicer will use reasonable
efforts to collect all payments called for under the terms and provisions of the
Loans as and when the same become due, and will follow those collection
procedures which it follows with respect to all comparable assets that it
services for its own account, subject to any reasonable direction of the Lender.
The Servicer shall not, subject to Section 2.4, consent to amend, waive, modify
or otherwise vary any provision of a Loan.
Section 2.4 Modification of LoansSection Modification of Loans. The
Servicer shall notify the Lender upon receipt of any request to amend, waive,
modify, extend or otherwise vary the terms of a Loan, and follow the reasonable
instructions of the Lender with respect to any such request or with respect to
any other matter which requires the consent of the Lender.
<PAGE>
Section 2.5 Notice of DefaultSection Notice of Default. The Servicer
and the Lender shall follow such procedures as they may agree to implement
regarding any notice of the occurrence of any default under any Loan, provided
such procedures shall provide, at a minimum, for periodic reporting of Loans in
default. Each party shall maintain its own system for monitoring such defaults.
Each party shall, in addition to periodic reporting, on the reasonable request
of the other party, provide summary information regarding the Loans such party's
records indicate are in default. In the event that the Servicer becomes aware of
a failure by an Obligor to make a payment on a Loan when due, the Servicer shall
follow the agreed upon procedures and, if required thereby, promptly commence
activities as required pursuant to Section 2.2 and 2.3 hereof without the need
for any additional notice or instructions related thereto from Lender.
ARTICLE III
COOPERATION OF SERVICER
Section 3.1 Servicer to Cooperate with Lender. The Servicer shall, at
the request of the Lender, provide the Lender with such information and reports
relating to the Loans as the Lender may reasonably require for the proper and
efficient performance by the Lender of its obligations under this Agreement and
the Master Agreement; provided that the Servicer shall not be required to
provide such information if to do so would be contrary to any applicable law or
regulation.
ARTICLE IV
DELEGATION BY THE SERVICER
Section 4.1 General. The Servicer may not, other than as expressly
provided in Section 4.2, subcontract or delegate the provision or performance of
the Loan Services.
Section 4.2 Appointment of Delegates. The Servicer (the "Delegating
Party") may, with the consent of the Lender (not to be unreasonably withheld or
delayed), enter into agreements with one or more other agents or representatives
(including any Affiliate of the Delegating Party) to perform all or a portion of
the Loan Services, provided that the Servicer shall remain liable to the Lender
for acts or omissions to act of any subcontractor, delegatee, agent or
representative. All actions of such agent or representative taken pursuant to
such a delegation agreement will be taken as an agent of the Delegating Party
with the same force and effect as though performed by the Delegating Party.
Section 4.3 Notice of Appointment. The Delegating Party shall, prior to
the appointment of the agent or representative pursuant to Section 4.2, provide
written notice to the parties hereto of such appointment.
Section 4.4 Enforcement of Rights by Delegating Party . The Lender may
require the Delegating Party to enforce any right which such Delegating Party
may have against such agent or representative arising from the provision or
performance of such delegated duties by such agent or representative.
<PAGE>
Section 4.5 Further Assurancee. The Lender will furnish the Delegating
Party, and the Delegating Party will furnish any agents or representatives, with
any powers of attorney and other documents necessary or appropriate to enable
the Delegating Party or such agent or representative, as applicable, to carry
out the Loan Services under this Agreement, as mutually agreed to by the
Servicer and the Lender.
ARTICLE V
COLLECTIONS
Section 5.1 Collection of Money. Except as otherwise expressly provided
in the Master Agreement, (i) the Servicer, on behalf of the Lender, may demand
payment or delivery of, and shall receive and collect, directly and without
intervention or assistance of any fiscal agent or other intermediary, all money
and other property payable on any Loan, and (ii) all moneys received by the
Servicer shall be held in trust for the benefit of the Lender. The Servicer,
acting on behalf of the Lender, shall apply all such money as provided in the
Master Agreement.
Section 5.2 Establishment of Accounts. The Servicer shall establish and
maintain such accounts and sub-accounts as described in, and in accordance with
the terms of, the Master Agreement on behalf of the parties specified therein.
ARTICLE VI
ARTICLE LIMITATION ON LIABILITY
Section 6.1 Consequential Damages. Notwithstanding anything to the
contrary set forth herein: (i) the Servicer shall not have any obligations under
this Agreement other than those specifically set forth herein, and no implied
obligations shall be read into this Agreement; and (ii) in no event shall the
Servicer be liable under or in connection with this Agreement for indirect,
special, or consequential losses or damages of any kind, including lost profits,
even if advised of the possibility thereof and regardless of the form of action
by which such losses or damages may be claimed.
Section 6.2 Limitation on Liabilities. Neither the Servicer nor any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken in good faith by it or them under or in connection
with this Agreement, except for its or their own negligence or willful
misconduct and except as provided in Section 4.2 hereof.
Notwithstanding anything to the contrary set forth herein,
in no event shall the Servicer be liable for payment from its own funds for (i)
any taxes on or by reference to any Loans or payments thereon or (ii) any
alleged duty to make advances or (iii) except as set forth in the Master
Agreement, any amount paid or to be paid by or for the account of the Lender.
<PAGE>
ARTICLE VII
ARTICLE REPRESENTATIONS AND WARRANTIES
(a) The Servicer represents and warrants to the Lender that:
(1) such party is a Texas corporation validly existing and in
good standing under the laws of the State of Texas;
(2) such party has the power and authority to make, execute,
deliver and perform its obligations under this Agreement, and has taken all
necessary corporate action to authorize its execution, delivery and performance
of this Agreement;
(3) this Agreement constitutes the legal, valid and binding
obligation of such party, enforceable against such party in accordance with its
terms, except as may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles of general application; and
(4) the execution and delivery of this Agreement by such party
and its fulfillment of or compliance with the terms and conditions of this
Agreement does not and shall not, in any manner which would materially adversely
affect its ability to perform its obligations under this Agreement, result in a
breach of, or constitute a default under (i) any term, condition or provision of
such party's charter or by-laws; (ii) the terms or provisions of any material
indenture agreement, deed or trust, contract or other agreement or instrument to
which such party is a party or by which such party is bound; or (iii) any law,
rule, regulation, order, judgment or decree of any court or governmental
authority having jurisdiction over such party which materially and adversely
affects the ability of such party to perform its obligations.
(b) The Lender represents and warrants to the Servicer that:
(1) such party is a banking association duly established,
validly existing and in good standing under the laws of the United States;
(2) such party has the power and authority to make, execute,
deliver and perform its obligations under this Agreement, and has taken all
necessary corporate action to authorize its execution, delivery and performance
of this Agreement;
(3) this Agreement constitutes the legal, valid and binding
obligation of such party, enforceable against such party in accordance with its
terms, except as may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles of general application; and
<PAGE>
(4) the execution and delivery of this Agreement by such party
and its fulfillment of or compliance with the terms and conditions of this
Agreement does not and shall not, in any manner which would materially adversely
affect its ability to perform its obligations under this Agreement, result in a
breach of, or constitute a default under (i) any term, condition or provision of
such party's charter or by-laws; (ii) the terms or provisions of any material
indenture, agreement, deed or trust, contract or other agreement or instrument
to which such party is a party or by which such party is bound; or (iii) any
law, rule, regulation, order, judgment or decree of any court or governmental
authority having jurisdiction over such party which materially and adversely
affects the ability of such party to perform its obligations.
ARTICLE VIII
COVENANTS
Section 8.1 Covenants of the ServicerSection Covenants of the Servicer.
The Servicer, in addition to its duties and obligations set forth elsewhere in
this Agreement or the Master Agreement, hereby covenants with the Lender that:
(a) Performance of Duties and Obligations. It will give such time and
attention and will exercise such skill, care and diligence and allocate
sufficient resources as is necessary for the proper performance of its
obligations under this Agreement in accordance with the standards imposed by and
the terms of this Agreement.
(b) Instructions from the Lender. It will, subject to the provisions of
the Master Agreement, comply with all reasonable directions, orders and
instructions which the Lender may from time to time give in accordance with the
terms of this Agreement and the Master Agreement, provided that it shall not be
obligated to act on any such instructions if it believes it has not received
sufficient information to enable it to act and it shall not be liable for any
failure to act on any such instructions in such circumstances.
(c) Applications and Filings. It will prepare and submit in a timely
manner all applications and filings as may be necessary to enable it to comply
with its duties and obligations under this Agreement and the Master Agreement.
(d) Maintenance of Records and Files. It will, at its own cost and
expense, maintain all records and files required to be maintained by it pursuant
to this Agreement and the Master Agreement in accordance with its customary
procedures.
(e) Compliance with Law. It will comply, in all material respects, with
all material laws and regulations of any Governmental Authority applicable to it
in connection with the performance of its obligations under this Agreement;
provided that the Servicer, as the case may be, may contest any such law or
regulation in any reasonable manner which will not materially and adversely
affect the value of the Loans.
<PAGE>
(f) Use of Endorsement. Servicer will not use the authority granted to
it to endorse items made payable to Lender for any purpose or in any manner
other than in connection with the collection of Loans hereunder.
ARTICLE IX
ARTICLE EXPENSES
Section 9.1 Payment of Certain Expenses of Servicer. The Servicer
shall be responsible for payment of all normal and customary expenses of
collection, but shall be reimbursed for any extraordinary expenses relating to a
Loan Legal Proceeding that Lender specifically requests be undertaken to collect
a Loan.
ARTICLE X
MISCELLANEOUS
Section 10.1 Amendment. This Agreement may be amended from time to time
by the Servicer and the Lender for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement,
provided such amendment must be in writing and signed by the Servicer and the
Lender to be effective.
Section 10.2 Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California and the obligations, rights,
and remedies of the parties under the Agreement shall be determined in
accordance with such laws.
Section 10.3 Notices. All notices, demands, certificates, requests and
communications hereunder ("notices") shall be in writing and in English and
shall be effective (a) upon receipt when sent through the registered or
certified mail, return receipt requested, postage prepaid, with such receipt to
be effective the date of delivery indicated on the return receipt, (b) on the
date personally delivered or delivered by courier to the party to which sent or
(c) on the date received by legible telecopier transmission with a confirmation
of receipt, in all cases addressed to the recipient as follows:
<PAGE>
(i) If to the Servicer:
Ace Cash Express, Inc.
1231 Greenway Drive
Suite 800
Irving, Texas 75038
Fax No.:(972) 582-1430
Attention: Chief Financial Officer
(ii) If to the Lender:
Goleta National Bank
5827 Hollister Avenue
Goleta California 93117
Fax No: (805) 683-2082
Attention: Chief Executive Officer
Each party hereto may, by notice given in accordance herewith to each the other
party hereto, designate any further or different address to which subsequent
notices shall be sent.
Section 10.4 Severability of Provisions. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Loans; except
that the continued effectiveness of the other provisions of this Agreement will
be conditioned on their not imposing or resulting in any substantial economic
detriment to either party or on the parties' amending this Agreement as
necessary to preserve their underlying economic or financial arrangements.
Section 10.5 Third Party Beneficiaries. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. The parties hereto hereby manifest their
intent that no third party shall be deemed a third-party beneficiary of this
Agreement, and specifically that the Obligors are not third-party beneficiaries
of this Agreement.
Section 10.6 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.
Section 10.7 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
<PAGE>
Section 10.8 Incorporation by Reference . The Lender and the Servicer
hereby agree that the provisions of Articles V through VIII of the Master
Agreement, are hereby incorporated by reference, including the indemnification
and arbitration provisions set forth therein. To the extent that the terms of
this Agreement conflict with the terms of the Master Agreement, the terms of the
Master Agreement shall control
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
GOLETA NATIONAL BANK, as Lender
By: /s/ Llewellyn W. Stone
-----------------------------------------------------
Name: Llewellyn W. Stone
Title: President and Chief Executive Officer
ACE CASH EXPRESS, INC.,
As Servicer
By: /s/ Jay B.Shipowitz
-----------------------------------------------------
Name: Jay B. Shipowitz
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
SCHEDULE A
LOAN SERVICES
I. LOAN SERVICES
The Servicer's duties with respect to the Loans will include:
(a) monitoring receipt and taking reasonable action consistent with
procedures developed by Servicer and Lender to facilitate payments on Loans;
(b) if requested by Lender, notifying the Lender as promptly as
practicable as to any payments due but not received or any defaults by the
Obligors;
(c) undertaking enforcement procedures with respect to payments in
arrears in accordance with Sections 2.2 and 2.3 of this Agreement;
(d) providing the information to the Lender required under this
Agreement; and
(e) performing all such other services as are incidental to the above
services and as are from time to time agreed upon with the Lender, including the
services described in Section 1.5(i) and Section 1.5(j) of the Master Agreement.
<PAGE>
SCHEDULE B
DEFINITIONS
"Affiliate" - a Person that directly or indirectly through one or more
intermediaries controls, is controlled by, or is under common control with
another Person (and for this purpose "control"and correlative terms means the
power to direct the management and affairs of a Person)
"Agreement" - as defined in the Recitals
"Delegating Party" - as defined in Section 4.2
"Lender" - as defined in the Recitals
"Loan Services" - as defined in Section 2.2
"Loan Legal Proceeding" - as defined in Section 2.2
"Loans" - as defined in the Recitals
"Master Agreement" - as defined in the Recitals
"notices" - as defined in Section 10.3
"Obligor" shall mean the individual obligated to repay a Loan
"Person" shall mean any individual, corporation, business trust, association,
company, partnership, joint venture, governmental entity or any other legal
entity
"Servicer" - as defined in the Recitals
<PAGE>
EXHIBIT D
MASTER LOAN
PARTICIPATION AGREEMENT
This Master Loan Participation Agreement (the "Agreement") is made as
of the 11th day of August, 1999, between Goleta National Bank, a national
banking association (hereinafter called "GNB") and Ace Cash Express, Inc., a
Texas corporation (hereinafter called "Participant").
WHEREAS, GNB may hereafter extend credit to various individual
borrowers (hereinafter referred to as "Obligors") whose obligations to GNB are
evidenced by a Promissory Note and other loan documents ("Loan Documents"),
samples of which are attached hereto as Exhibit A (such extensions of credit are
hereinafter referred to collectively as "Bank Loans");
WHEREAS, as a result of its independent review, Participant has agreed
to purchase an undivided interest in the Bank Loans upon the terms and
conditions of this Agreement, which is intended to govern the purchase and sale
of an undivided interest in each Bank Loan, the administration of the Bank
Loans, the procedures upon default by any Obligor and other related matters; and
WHEREAS, Participant desires to purchase, and GNB desires to sell to
Participant, an * undivided percent (* %) interest in each of the Bank Loans.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, GNB and Participant hereby
mutually agree as follows:
1. GNB agrees to sell to Participant, from time to time, and
Participant agrees to purchase from GNB, from time to time, an
* undivided percent ( * %) interest in each and every Bank
Loan made by GNB.
2. The purchase price for each Bank Loan purchased by Participant
shall be * percent (* %) of the principal amount of such Bank
Loan ("Purchase Price"). In no event shall Participant acquire
any participation in a Bank Loan related to an overdraft or
funding by Lender in excess of the approved Bank Loan.
3. Within five (5) business days after the execution of this
Agreement, Participant will establish an account or accounts
(the "Account") at a bank chosen by Participant for the
exclusive purpose of the transactions contemplated by this
Agreement.
---------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
<PAGE>
4. The Purchase Price for each Bank Loan shall be transferred
from the Account to GNB * and * percent (* %) of any payment
of fees, interest or principal received by GNB on such Bank
Loan shall be transferred to the Account * by GNB; provided
however, that if any instrument representing payment of the
fee, principal or interest on a Bank Loan is later dishonored,
rescinded or revoked, or GNB, for any reason, fails to receive
good funds, then the credit to the Account of Participant
shall be transferred to GNB.
5. GNB shall be responsible for administering the Bank Loans,
collecting all payments (principal, interest, late fees, or
receipts resulting from the liquidation of any collateral) and
disbursing to Participant its share of all amounts received.
6. GNB hereby represents, warrants and covenants that it shall
exercise that degree of ordinary care that would be exercised
by bankers or financiers, in the industry, in administering a
Bank Loan in accordance with the usual practices and
procedures employed by GNB on similar loans for its own
account taking into consideration the size of the Bank Loan,
creditworthiness of the applicable Obligor, other credit
extended to the applicable Obligor and other matters
customarily taken into account in underwriting and
administering similar loans in the ordinary course of GNB's
business. GNB hereby represents, warrants and covenants that
it shall use reasonable efforts, consistent with the efforts
GNB utilizes in connection with loans for its own account, to
insure that the Loan Documents are enforceable in accordance
with their terms, comply with regulatory requirements related
thereto, and provide customary rights and remedies to the
holder thereof.
7. In the event of a default in the payment of principal,
interest or fees due on a Bank Loan by Obligor, GNB shall not
be required to remit Participant's share thereof until
collected. GNB shall, subject to the standard set forth in
Section 6, have discretion with respect to the collection of
any defaulted Bank Loan and may employ the services of agents,
including Participant, to assist it in these collection
efforts.
8. Participant shall pay the "Expenses," related to the
collection or enforcement of a defaulted Bank Loan unless
otherwise provided in this Agreement or other Agreements
between the parties. The term "Expenses" shall mean all
reasonable out of pocket expenses incurred by GNB or any agent
of GNB, which may be Participant, in connection with the
collection of a Bank Loan including, but not limited to,
outside attorneys' fees, and all other costs and expenses
typically incurred by a lender in connection with the
collection of a similar loan.
---------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
<PAGE>
9. GNB, or a custodian appointed by it, shall retain in trust
physical possession of the Loan Documents and any other
documents or instruments in its physical possession relating
to the Bank Loans in accordance with the terms of this
Agreement for the account of GNB and Participant as owners
thereof. Any person, firm or corporation may deal with GNB
concerning the Bank Loans in the same manner as if GNB were
the sole owner thereof and no participation therein were
outstanding.
10. GNB, or its agents, shall maintain customary books and records
relating to the Bank Loans, which shall be made available to
Participant or its duly authorized agents at all reasonable
times for the purposes of inspection, examination or audit
upon three business days' written notice from Participant to
GNB.
11. GNB and Participant shall share any losses (but not
unreimbursed Expenses) with respect to any defaulted Bank Loan
in accordance with their respective interests in such Bank
Loan (i.e. percent * (* %) of such loss shall be borne by
Participant and * percent (* %) shall be borne by GNB).
12. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an
instrument in writing signed by both of the parties.
13. This Agreement may be executed in several counterparts, each
of which shall constitute an original, but all of which
together shall constitute but one instrument.
14. Each notice, request, demand, and other communication under
this Agreement must be in writing and delivered in person, or
by courier, or sent by certified mail, overnight mail, or
confirmed facsimile, in any case prepaid by notifying party,
and must be addressed as follows:
---------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
<PAGE>
If to GNB:
Goleta National Bank
5827 Hollister Avenue
Goleta, California 93117
Facsimile: (805) 683-2082
Attn: Mr. Llewellyn W. Stone, President and
Chief Executive Officer
If to Participant:
Ace Cash Express, Inc.
1231 Greenway Drive, Suite 800
Irving, Texas 75308
Facsimile: (972) 582-1430
Attn: Mr. Jay B. Shipowitz, Chief Financial Officer
Notices shall be deemed to be delivered, given and effective
on the date of delivery. A party may change its address for
this purpose by giving notice of that change to the other
party in accordance with this Section 14. Each notice
delivered or sent as provided above will be deemed given,
received, and effective on the date of actual receipt (or
refusal) by the addressee.
15. This Agreement shall be construed fairly as to both parties
and not in favor of or against either party, regardless of
which party prepared this Agreement.
16. This Agreement shall be construed and interpreted in
accordance with the laws of the State of California. This
Agreement shall be governed by and construed in accordance
with the laws of the State of California. Any dispute,
controversy or claim arising out of or relating to this
Agreement, or the breach or validity hereof ("Dispute"), shall
be settled by final and binding arbitration in accordance with
the Rules for Commercial Arbitration (the "Rules") of the
American Arbitration Association ("AAA") in effect as of the
date of the Dispute and in accordance with the following
subsections of this Section 16. (In the event of any
inconsistency between the Rules and the arbitration provisions
of this Section 16, the latter shall control.)
(a) The arbitration shall be conducted by a sole
arbitrator who has experience in or is otherwise
familiar with the kinds of business to which this
Agreement relates and is not, and has not been, an
affiliate or a family member of either Party. In the
event an arbitrator who has such experience or
familiarity cannot be found, then the Parties shall
appoint an arbitrator who is mutually satisfactory to
them. Such arbitrator shall be appointed by the
Parties within fifteen (15) days from the filing of
the Demand and Submission in accordance with Section
<PAGE>
7 of the Rules. If the Parties fail to agree upon a
sole arbitrator within such 15-day period and fail to
agree to an extension of such period, the arbitration
shall be conducted by a sole arbitrator appointed by
the AAA in accordance with Section 14 of the Rules.
The arbitrator appointed shall be knowledgeable in
the subject matter of the Dispute.
(b) The place of arbitration shall be Phoenix, Arizona,
and the final decision or award of the arbitrator
shall be issued at the place of arbitration. The
arbitrator may, however, call and conduct hearings
and meetings at such other places as (i) the Parties
hereby may agree or (ii) the arbitrator may, on the
motion of a Party, determine to be necessary to
obtain significant testimony or evidence.
(c) The arbitrator shall have the power to authorize all
forms of discovery (including depositions,
interrogations and document production) on a showing
of particularized need that the requested discovery
(i) is likely to lead to material evidence needed to
resolve the controversy and (ii) is not excessive in
scope, timing, or cost.
(d) The arbitrator shall not have the power to (i) rule
upon or grant any extension, renewal or continuance
of this Agreement, (ii) award damages or other
remedies expressly prohibited by this Agreement, or
(iii) grant interim injunctive relief before
rendering the final decision or award. Nevertheless,
either of the Parties may apply for an obtain
temporary or provisional injunctive relief from any
court having jurisdiction over one or both of the
Parties or their assets regarding any violation or
alleged violation by the other Party of its
obligations under this Agreement.
(e) The final decision or award of the arbitrator shall
be made as soon as reasonably practicable after the
appointment of the arbitrator under Section 16(a).
Such a final decision or award may include (i)
recovery of actual damages for violation of any
obligations under this Agreement or of governing law
or (ii) injunctive relief against threatened or
actual violations of any obligations under this
Agreement or of governing law.
(f) The final decision or award of the arbitrator shall
be final and binding on the Parties, and judgment
upon such final decision or award may be entered in
any court having jurisdiction over one or both of the
Parties or their assets. The parties specifically
waive any right they may have to apply to any court
for relief from the provisions of this Agreement or
from any decision of the arbitrator made before the
final decision or award of the arbitrator.
<PAGE>
(g) Subject to the final decision or award of the
arbitrator, each of the Parties shall bear an equal
portion of the arbitrator's fees and expenses, and
each shall bear all of its own expenses. The
arbitrator shall have the power, however, to award
recovery of all fees and expenses (including
attorneys' fees, administrative fees, arbitrator's
fees and court costs) to the prevailing Party in the
arbitration.
17. If any provision of this Agreement shall be declared to be
unenforceable or invalid, the remainder of this Agreement
shall not be affected thereby, and each term and provision of
this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
18. Time is of the essence of this Agreement and every provision
hereof in which time of performance is a factor.
19. Neither the execution of this Agreement, the sharing of the
Loan Documents, nor any agreement to share in the Bank Loans
is intended to create a partnership or joint venture between
Participant and Lender.
20. Except as specifically provided in Section 21 of this
Agreement, none of the provisions of this Agreement shall
inure to the benefit of any Obligor or any person other than
Participant and Lender.
21. GNB acknowledges that Participant's interest in each and every
Bank Loan made by GNB (i.e., Participant's participation
interest) is subject to a first priority security interest in
favor of Wilmington Trust Company, a Delaware banking
corporation ("Trustee"), pursuant to the terms of (i) that
certain Amended and Restated Assignment of Deposit Accounts
and Security Agreement, dated as of July 31, 1998, by and
between Participant and Trustee, for the ratable benefit of
the beneficiaries from time to time a party to the Collateral
Trust Agreement (as hereinafter defined), as the same may be
amended, modified or extended from time to time, and (ii) that
contain Amended and Restated Collateral Trust Agreement, dated
as of July 31, 1998, by and among Participant, Wells Fargo
Bank (Texas), National Association, a national banking
association, as Agent, Principal Life Insurance Company, an
Iowa corporation, Travelers Express Company, Inc., a Minnesota
corporation, and Trustee, as the same may be amended, modified
or extended from time to time (the "Collateral Trust
Agreement"). Notwithstanding any provision of this Agreement
to the contrary, any payments to be made to Participant (in
that capacity and not as loan servicing agent) under this
Agreement shall, upon receipt of written notice by GNB from
Trustee, be paid directly to Trustee at its principal office
in Wilmington, Delaware, for application pursuant to the
Collateral Trust Agreement. GNB is entitled to rely upon and
<PAGE>
is authorized and directed to follow all written instructions
of Trustee contained in any notice described in the preceding
sentence, and GNB shall have no duty to inquire as to the
authorization or authenticity of any such instructions. GNB
further acknowledges that Participant's rights in this
Agreement may be assigned to Trustee as additional collateral
security for the beneficiaries from time to time a party to
the Collateral Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers as of the day and year first
above written.
GOLETA NATIONAL BANK
By: /s/ Llewellyn W. Stone
----------------------------------------------------
Name: Llewellyn W. Stone
Title President and Chief Executive Officer
ACE CASH EXPRESS, INC.
By: /s/ Jay B. Shipowitz
----------------------------------------------------
Name: Jay B. Shipowitz
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT E
SCHEDULE OF INTEREST AND FEES
1. Interest. GNB will charge the borrower interest on each Bank Loan including
each Renewal, which interest will be shared by GNB and Ace in accordance with
the participation percentage of the corresponding Bank Loan as set forth in that
certain Master Loan Participation Agreement by and between GNB and Ace.
2. Loan Participation Processing Fee. GNB will charge Ace (and not the
borrower), and Ace will pay to GNB, a Loan Participation Processing Fee for
processing the out participation of each Bank Loan (including each Renewal) to
Ace equal to the sum of (a) * (*) of all interest charged to the borrower on
each Bank Loan (including each Renewal) plus (b)*(*). The Loan Participation
Processing Fee will be charged by GNB and paid by Ace at the time interest is
actually paid by the borrower on each Bank Loan (including each Renewal).
3. Card Fee. GNB will charge Ace and Ace will pay to GNB, not later than 60 days
from the date of delivery of the Card to the Ace Location, * (*) for each Card
so delivered.
4. ATM Charges. Borrowers who access the Bank Loan proceeds with the Card
through an automated teller machine will pay all costs charged by the ATM in
addition to GNB's charge of * (*) per withdrawal (the "Withdrawal Fee"). There
will be no charge for disbursement of Bank Loan proceeds at a Location at which
Bank Loans are offered. GNB will pay Ace a commission equal to *(*) for each
Withdrawal Fee collected by GNB, which commission will be paid not later than
the fifteenth (15th) day of the month immediately following the month in which
the Withdrawal Fee is collected.
---------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
<PAGE>
EXHIBIT F
PREEMPTIVE AND REFUSAL RIGHTS AGREEMENT
*
---------------
* Confidential treatment has been requested for certain portions of this
document pursuant to an application for confidential treatment sent to the
Securities and Exchange Commission. Such portions are omitted from this filing
and filed separately with the Securities and Exchange Commission.
<PAGE>
EXHIBIT G
SERVICE LEVEL AGREEMENT
Servicing Agreement
Goleta National Bank will operate or cause to be operated a facility to
authorize loans described in this agreement. The facility will include computer
servers that electronically authorize and process transactions.
Operation of Computer System
The authorization computer system will be expected to operate 24 hrs/day 7
days/week with scheduled maintenance to take place during off peak hours. Any
scheduled down times will not be planned to exceed 2 hours and will be announced
at least 24 hours prior to such down time.
Unscheduled Down Time
Computer Systems Fail. As a result Bank will have in place prudent backup
systems that can be started within 15 minutes of failure when staffed and within
30 minutes of failure during un-staffed times. If the system failure is expected
to exceed 5 minutes, then Bank will allow the manual authorization of loans
through telephone calls and/or fax to the Bank's designated servicing office.
Staffing Hours (Pacific Time) Testing Period After Testing
----------------------------- -------------- -------------
Monday-Friday 7am - 6pm 6am - 9pm
Saturday 8am - 4pm 7am - 9pm
Sunday Closed 7am - 5pm
Non-Staffed Hours
Bank Representatives will be on call through an Answering Service 24 hours for
emergencies during non-staffed hours at a designated toll free telephone number
to be announced later.
AGREED to this 11th day of August, 1999, by the undersigned.
GOLETA NATIONAL BANK
By: /s/ Llewellyn W. Stone
---------------------------------------
Name: Llewellyn W. Stone
Title: President and Chief Executive Officer
ACE CASH EXPRESS, INC.
By: /s/ Jay B. Shipowitz
---------------------------------------
Name: Jay B. Shipowitz
Title: Senior Vice President and
Chief Financial Officer