Marketing And Servicing Agreement

EXHIBIT 10.1 (a)


MARKETING AND SERVICING AGREEMENT


This Marketing and Servicing Agreement (this "AGREEMENT"), dated as of the 21st day of October, 2002, is by and between Republic Bank & Trust Company, a Kentucky state-chartered bank ("BANK") and ACE Cash Express, Inc., a Texas corporation ("COMPANY").


WHEREAS, COMPANY is a duly authorized and validly existing Texas corporation, authorized to do business in the states of Texas, North Carolina and Pennsylvania;


WHEREAS, BANK is a Kentucky state-chartered bank insured by the Federal Deposit Insurance Corporation and is authorized under applicable Kentucky and federal law to engage in the TRANSACTIONS (as defined below) referred to herein;


WHEREAS, BANK agrees that during the term of the AGREEMENT, BANK will deal with COMPANY with respect to TRANSACTIONS (as defined below) for all CUSTOMERS (as defined below) located in the MARKET (as such term is defined hereinbelow) at the time of the TRANSACTION;


WHEREAS, COMPANY agrees that BANK shall have the first and exclusive right to all TRANSACTIONS originated in the MARKET by COMPANY stores up to a maximum of $*, exclusive of TRANSACTIONS rejected by the BANK, at such time when COMPANY, using commercially reasonable efforts, is able to terminate COMPANY'S arrangements existing on the date hereof to offer and provide TRANSACTIONS or any product that is the same as or substantially similar to the TRANSACTIONS within the MARKET;


WHEREAS, the BANK acknowledges that franchisees of COMPANY and its affiliates are not bound by this AGREEMENT, and may continue to offer TRANSACTIONS and similar products without regard to this AGREEMENT and the franchisees of the COMPANY located in the MARKET are set forth on Exhibit F as updated from time to time;


WHEREAS, in accordance with its established underwriting and other criteria as may be amended from time to time, BANK desires to engage in the TRANSACTIONS in compliance with Kentucky Revised Statutes ("KRS") Chapter 368; and


- ---------- * 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.


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WHEREAS, COMPANY desires to market and service the TRANSACTIONS on the BANK's behalf.


NOW, THEREFORE, in consideration of the foregoing and of the mutual promises contained in this AGREEMENT, and other valuable consideration, the sufficiency of which is hereby acknowledged, and intending to be legally bound, BANK and COMPANY (together, the "PARTIES") agree as follows:


1. DEFINITIONS.


(a) "ADVERSE ACTION NOTICE" shall be defined as an appropriately completed notice in compliance with Regulation B and applicable law required to be provided to CUSTOMERS whose TRANSACTIONS are not approved by the BANK in its sole discretion.


(b) "APPLICANT" shall be defined as a prospective CUSTOMER seeking to take advantage or otherwise participate in the PROGRAM.


(c) "APPLICATIONS" shall be defined as each of the forms filled out by a CUSTOMER seeking to take advantage of the PROGRAM as such forms may be amended or modified from time to time.


(d) "BANK DEPOSIT ACCOUNT" shall be defined as that bank account held at a bank or banks designated by BANK and made known to COMPANY and into which BANK shall deposit, via Automated Clearing House Network or other electronic entries, as permitted by applicable law, the amounts set forth on each REPAYMENT CHECK and the daily receipts otherwise collected by COMPANY for the benefit of BANK and applied to the TRANSACTIONS.


(e) "BANK INDEMNIFIED PARTIES" shall be defined as BANK and its holding company, and their officers, directors, employees, representatives, agents and attorneys.


(f) "BANK INTELLECTUAL PROPERTIES" shall be defined as the name, trade name, trademarks, service marks and logos of BANK.


(g) "BANK POLICIES" shall be defined as the reasonable and lawful practices, policies and procedures established by BANK and communicated in writing to COMPANY from time to time with respect to the TRANSACTIONS, a current copy of which is attached hereto as Exhibit D.


(h) "CONFIDENTIAL INFORMATION" shall be defined as all documents, materials, information about trade secrets, agreements, products, services, licenses, costs, sales and pricing information, and any other information that is generally


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not known in the trade or may not be known generally or publicly, and other information related to this AGREEMENT which shall have been obtained during the course of the negotiations leading to, and during the performance of, this AGREEMENT, excepting those items excluded from this definition by Section 9(c) of this AGREEMENT.


(i) "CUSTOMER" shall be defined as any person who participates in the PROGRAM.


(j) "CUSTOMER INFORMATION" shall be defined as all information derived from TRANSACTIONS or APPLICATIONS about any of the CUSTOMERS or the APPLICANTS, including, without limitation, names, addresses, demographic information and financial information.


(k) "DISCLOSURES" shall be defined as all information required to be provided to an APPLICANT or CUSTOMER under federal, state or local law.


(l) "COMPANY INDEMNIFIED PARTIES" shall be defined as COMPANY and its parents, subsidiaries and affiliates, and each of their officers, directors, employees, representatives, agents and attorneys.


(m) "EVENT OF DEFAULT" shall be defined as set forth in Section 7(b).


(n) "FEES" shall be defined as the marketing and servicing fees set forth on Exhibit A attached hereto.


(o) "HARMFUL ACTS" shall be defined as any fraud, theft, dishonesty, defamation, or other willful misconduct of any party to this AGREEMENT, or any PARTY'S officers, employees, directors or agents.


(p) "LOSSES" shall be defined as claims, losses, liabilities, damages, penalties, demands, judgments, settlements, costs and expenses, including reasonable attorneys' fees.


(q) "MARKET" shall mean the states listed on Exhibit C.


(r) "NET CHARGE OFFS" shall mean for any calendar quarter the actual charge offs of principal (which shall consist of the Total of Payments less the Finance Charge, as those terms are used in the Notes) of the TRANSACTIONS plus all FEES paid to COMPANY on the TRANSACTIONS in question less any prior charge offs collected during the calendar quarter; except in the case of NSF charge offs, in which case NET CHARGE OFFS shall consist of the Total of Payments, as that term is used in the Notes, less any prior charge offs collected during the calendar quarter.


- ---------- * 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.


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(s) "NOTES" shall be defined as those promissory notes or similar negotiable instruments which may be made by a CUSTOMER to evidence and secure the CUSTOMER'S obligations under any TRANSACTION.


(t) "PROGRAM" shall be defined as the totality of the activities in connection with the TRANSACTIONS as contemplated under this AGREEMENT.


(u) "PROMOTIONAL MATERIALS" shall be defined as all such letters, advertising, direct mail communications and promotional materials incorporating BANK INTELLECTUAL PROPERTIES and all related designs, artwork, logos, slogans, copy and other similar materials.


(v) "REPAYMENT CHECKS" shall be defined as checks issued by a CUSTOMER as security for and in repayment of the TRANSACTIONS.


(w) "RESTRICTED PARTY" shall be defined as any party who is bound by Section 9 of this AGREEMENT with regard to the CONFIDENTIAL INFORMATION, including, without limitation, all agents, employees, officers, directors and other third-party agents of any of the PARTIES hereto.


(x) "TRANSACTIONS" shall be defined as the BANK'S deferred deposit transactions in which, for consideration, the BANK will accept a check and hold the check for a period of time prior to deposit or presentment in accordance with an agreement with the maker of the check.


(y) "TRANSACTION DOCUMENTS" shall be defined as (i) all original APPLICATIONS and copies of all ADVERSE ACTION NOTICES and other documents relating to rejected APPLICATIONS; (ii) Automated Clearing House debit authorizations and disclosures, as permitted by applicable law, (iii) authorizations from each CUSTOMER to allow the BANK to grant COMPANY access to CUSTOMER INFORMATION, and (iv) originals or copies, as applicable, of all APPLICATIONS, NOTES, DISCLOSURES, REPAYMENT CHECKS and other documents provided to or received from CUSTOMERS.


(z) "TRANSACTION LOSS RATE" shall have the meaning set forth in Exhibit A.


2. INCORPORATION OF RECITALS.


The recitals set forth above are incorporated herein by reference.


3. BANK'S SERVICES.


(a) BANK in its sole discretion shall determine all of the conditions, Program criteria that must be satisfied by CUSTOMERS to be eligible to enter into a


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TRANSACTION, terms and features of the TRANSACTIONS, including, without limitation, amounts, FEES and charges, limits, standards and all other terms and conditions of the TRANSACTIONS. Bank shall prepare the form of all TRANSACTION DOCUMENTS. BANK shall enter into the TRANSACTIONS with all APPLICANTS who seek to take advantage of deferred deposit services offered by BANK and marketed by COMPANY and who, in the sole discretion of the BANK, meet such Program criteria, standards and other qualifications as contemplated in Section 4(c)(ii) of this AGREEMENT; provided that BANK shall not be required to enter into a TRANSACTION if it reasonably believes that the TRANSACTION or its solicitation will violate or has violated any applicable law. Neither COMPANY, nor BANK, nor their respective employees shall state or suggest to APPLICANTS that TRANSACTIONS are made with or approved by COMPANY or that COMPANY (or any employee or agent of COMPANY) can improve or otherwise influence an APPLICANT's prospect of entering into the TRANSACTION. BANK may reject any TRANSACTION or TRANSACTIONS at any time, in its sole discretion.


(b) COMPANY acknowledges that all rights of ownership in the TRANSACTIONS and the TRANSACTION DOCUMENTS are and remain the sole property of BANK, and COMPANY shall have no ownership rights to such TRANSACTIONS or TRANSACTION DOCUMENTS during the term of this AGREEMENT. Furthermore, COMPANY shall not in any way fund, or purchase any share or "participation interest" in any TRANSACTION.


(c) In its sole discretion, BANK may sell, transfer, grant an interest in, or otherwise assign any TRANSACTION, or any portion of any TRANSACTION, to a third party or parties. Any sale, transfer or assignment by BANK of any such TRANSACTION shall comply with applicable law.


(d) BANK shall forward to COMPANY, via facsimile, with a copy by first-class mail, within one (1) business day of receipt any written notices it receives that bankruptcy proceedings have been initiated with respect to any CUSTOMER.


4. COMPANY'S SERVICES.


(a) General Duties of COMPANY; Standards of Performance: COMPANY shall perform all services reasonably required to market and service the TRANSACTIONS of BANK in the MARKET, including without limitation the establishment of retail outlets in number and location determined by COMPANY in its sole discretion, where APPLICANTS may submit APPLICATIONS and receive DISCLOSURES required by applicable law (if any) and where CUSTOMERS may execute and deliver the TRANSACTION DOCUMENTS and deliver REPAYMENT CHECKS or other payment on the TRANSACTIONS. To facilitate deposit by the BANK of the REPAYMENT CHECK into the BANK DEPOSIT ACCOUNT via Automated Clearing House Network entries or other electronic payment, as permitted by applicable law, COMPANY shall provide the BANK, on or after the date the NOTE evidencing a


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TRANSACTION becomes due, information from each REPAYMENT CHECK including the ABA routing number, the check account number, the check number and the check amount. In lieu thereof, COMPANY shall accept any CUSTOMER payments remitted to COMPANY in cash in prepayment of the TRANSACTION and shall deliver an amount equal to such CUSTOMER cash payments to BANK via Automated Clearing House Network entries, as permitted by applicable law, on the next business day after receipt of such cash payments. In marketing the TRANSACTIONS and performing its services hereunder, COMPANY shall at all times and in all respects comply with applicable laws, rules and regulations. Before initiating any marketing efforts for the TRANSACTIONS in the MARKET, COMPANY shall agree with BANK on a mutually agreeable protocol for communicating with the appropriate regulatory authorities, and shall cooperate with BANK in implementing the TRANSACTION program and protocols contemplated hereby. Further, COMPANY shall use the documentation prepared by BANK and follow the BANK POLICIES. COMPANY shall train and supervise its employees to act in conformity with the BANK POLICIES and the requirements of applicable laws, rules and regulations.


(b) Marketing of TRANSACTIONS:


(i) BANK hereby authorizes COMPANY during the term of this AGREEMENT to market TRANSACTIONS to prospective CUSTOMERS. BANK hereby grants to COMPANY a nonexclusive license to use the BANK INTELLECTUAL PROPERTIES during the term of this AGREEMENT in connection with this AGREEMENT on letters, print advertisements, direct mail, the Internet, television and radio communications and other advertising and PROMOTIONAL MATERIALS; provided, however, COMPANY shall submit all PROMOTIONAL MATERIALS to BANK for its written approval prior to any use thereof. If BANK fails to reject any proposed PROMOTIONAL MATERIALS within five (5) business days of receipt of the request for approval, such PROMOTIONAL MATERIALS shall be deemed approved by BANK. All rights not expressly granted to COMPANY herein are reserved by BANK. Regardless of whether they incorporate the BANK INTELLECTUAL PROPERTIES, all advertising and PROMOTIONAL MATERIALS for the TRANSACTIONS (A) shall prominently identify BANK as maker of the TRANSACTIONS, (B) shall be accurate, (C) shall not be misleading, (D) shall comply with all applicable laws, rules and regulations for use in the time, place and manner specified and (E) shall be submitted to BANK for prior approval, which shall not be unreasonably delayed.


(ii) In connection with COMPANY's performance of its obligations under this AGREEMENT, it is expressly agreed that (A) BANK shall not hold any ownership or leasehold interest in any COMPANY store or any personal property located therein, except for REPAYMENT CHECKS, NOTES, TRANSACTION DOCUMENTS, and cash in an amount equal to the funds received by COMPANY in repayment of TRANSACTIONS that COMPANY has not transmitted to BANK as contemplated by this AGREEMENT; and (B) no BANK employees shall work in any COMPANY store except for BANK agents who may examine COMPANY stores from


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time to time for compliance with BANK POLICIES and other aspects of this AGREEMENT.


(c) Servicing of TRANSACTION Applications:


(i) BANK also hereby authorizes COMPANY to obtain TRANSACTION applications from APPLICANTS, using the form of APPLICATION prepared by BANK. COMPANY shall make APPLICATIONS available to prospective APPLICANTS and shall not discourage any prospective APPLICANT from submitting an APPLICATION and shall provide reasonable assistance to each prospective APPLICANT in completing an APPLICATION. COMPANY shall not discriminate against or discourage any APPLICANT in any aspect of the process on any "prohibited basis," as such term is defined in the Equal Credit Opportunity Act (ECOA), Regulation B and KRS Chapter 344.


(ii) Based solely upon the underwriting standards and PROGRAM criteria adopted by BANK from time to time, a current copy of which is attached as Exhibit E hereto, and applied to the information provided by APPLICANTS to BANK in the APPLICATIONS and such other credit-related information as obtained by COMPANY at the direction of BANK, or by BANK directly, BANK shall determine whether to enter into a TRANSACTION with an APPLICANT. BANK shall review and evaluate completed APPLICATIONS and approve CUSTOMERS who satisfy the Program criteria within a commercially reasonable time after receipt of the APPLICATION from COMPANY. BANK shall, either itself or through its designated agent, communicate to COMPANY its decision on any APPLICATION. COMPANY shall provide an ADVERSE ACTION NOTICE to any APPLICANT whose APPLICATION is rejected by BANK. For APPLICANTS whose APPLICATION is approved by the BANK, the BANK shall fund the payment to the CUSTOMER in the amount of the REPAYMENT CHECK, less all applicable fees and expenses, by a check or other negotiable instrument drawn on a depository account in Kentucky designated by the BANK. BANK shall honor and pay any properly payable check or other negotiable instrument drawn on any of BANK'S depository accounts validly issued in connection with TRANSACTIONS approved by the BANK.


(iii) The CUSTOMERS obligations under the TRANSACTION shall be evidenced by a NOTE containing the DISCLOSURES and secured by a REPAYMENT CHECK.


(iv) COMPANY shall (A) deliver a copy of the NOTE to the CUSTOMER; (B) obtain from the CUSTOMER the executed NOTE; (C) obtain from CUSTOMER his or her REPAYMENT CHECK dated the date of the TRANSACTION and made payable to BANK; and (D) maintain on behalf of BANK, separate and apart from COMPANY's own assets and records, the REPAYMENT CHECK and NOTE.


(d) Collection of TRANSACTIONS.


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(i) BANK hereby authorizes COMPANY to service the TRANSACTIONS by, among other things, (1) using commercially reasonable efforts, including the use of direct debits to a CUSTOMER'S depository account via the Automated Clearing House Network as permitted by applicable law, to collect payments on the TRANSACTIONS at and after maturity thereof on behalf of BANK; (2) accurately recording and reporting the payments of funds from CUSTOMERS and transmitting such payments to BANK in accordance with this AGREEMENT; and (3) making remittance to and settlement with BANK in accordance with this AGREEMENT. In collecting payments owed under the NOTES, COMPANY shall comply in all respects with applicable law, rules and regulations. Without limiting the generality of the foregoing, COMPANY shall not, explicitly or implicitly, make any threats of criminal prosecution in connection with debt collection, or otherwise engage in any practices or actions that violate any applicable laws, rules or regulations.


(ii) COMPANY shall service the TRANSACTIONS at all times in accordance with the terms of this AGREEMENT and the DISCLOSURES and the BANK POLICIES. BANK shall notify COMPANY in writing at least ten (10) business days prior to any change in the BANK POLICIES, unless such changes are required sooner by applicable laws, rules or regulations.


(iii) On or after the date the NOTE evidencing a TRANSACTION becomes due, COMPANY shall provide the BANK, information from each REPAYMENT CHECK including the ABA routing number, the check account number, the check number and the check amount and BANK shall deposit and transfer the amount of the REPAYMENT CHECK to the BANK DEPOSIT ACCOUNT via Automated Clearing House Network entries or other electronic payment as permitted by applicable law. In lieu thereof, COMPANY shall deliver to BANK via Automated Clearing House Network entries, as permitted by applicable law, all cash received by COMPANY from CUSTOMERS representing repayment of TRANSACTIONS on the next business day after receipt of such repayment.


(iv) COMPANY shall be responsible for any deficiency between the amount of cash reported by COMPANY as collected on TRANSACTIONS and the amount of cash actually received in repayment of TRANSACTIONS. Any excess amounts of cash shall be the property of the COMPANY.


(e) Reports; Access to Stores, Books and Records and Employees:


(i) During the term of this AGREEMENT, COMPANY shall promptly provide to BANK or its agents data submissions and reports reasonably required by BANK in order to maintain effective internal controls and to monitor results under this AGREEMENT, including without limitation the performance of the TRANSACTIONS and COMPANY's obligations hereunder. Such reports shall include a daily report showing those TRANSACTIONS originated through COMPANY,


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outstanding and repaid each day, as agreed upon by BANK and COMPANY, as well as COMPANY's monthly compliance review checklists and all periodic internal audit reports for stores marketing and servicing the TRANSACTIONS.


(ii) COMPANY shall, as reasonably required by BANK, but no more often than quarterly, provide BANK with its most recent unaudited financial statements and its annual audited financial statements.


(iii) COMPANY, on behalf of the BANK and without an ownership interest by COMPANY, shall maintain and retain possession of the TRANSACTION DOCUMENTS for the term of the AGREEMENT and any additional period required by applicable law. Except as otherwise allowed by Section 9 of this AGREEMENT, COMPANY agrees to use such TRANSACTION DOCUMENTS solely to service the TRANSACTIONS and to segregate all such TRANSACTION DOCUMENTS, and all document files and records which relate to the services provided by COMPANY hereunder from COMPANY's other files and records.


(iv) The TRANSACTION DOCUMENTS shall be held by COMPANY on behalf of BANK, pursuant to BANK'S record retention requirements, as more particularly set forth in the BANK POLICIES attached hereto as Exhibit D and incorporated herein by reference, and Bank has and shall continue to have constructive possession and legal title to such documents, files and records. At such time or times as BANK may reasonably request, and at BANK's cost, COMPANY shall promptly deliver all copies of TRANSACTION DOCUMENTS to BANK at its headquarters or such other location or locations as BANK shall direct. All such documents shall be maintained segregated from other books and records of COMPANY and otherwise in such a manner as to facilitate their inspection by and delivery to BANK, if so requested.


(v) During the term of this AGREEMENT and at all times thereafter, BANK and banking agencies with regulatory authority over BANK shall have reasonable access to COMPANY stores, to the books and records of COMPANY (to the extent that such books and records pertain to the TRANSACTIONS), to the officers, employees and accountants of COMPANY, and to copies of TRANSACTION DOCUMENTS, all for the same purposes of ensuring that COMPANY is carrying out the BANK POLICIES and is otherwise complying fully with its obligations under this AGREEMENT. Such access shall include permission to maintain employees on the premises of COMPANY during regular business hours to audit COMPANY's services contemplated by this AGREEMENT.


(vi) In addition, and not as a limitation of the foregoing, BANK shall have the right at COMPANY's expense, provided that the aggregate expense to COMPANY shall not exceed $25,000 per year, from time to time during the term of this AGREEMENT, to conduct reasonable outside audits in any given year and other reasonable audits and/or compliance reviews of the services provided hereunder, and the records generated thereunder; provided, that such audit and review rights shall be


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conducted during normal business hours in a manner which does not unreasonably interfere with COMPANY's normal business operations and CUSTOMER and employee relations.


(f) FEES and Costs: In consideration for COMPANY's performance of its obligations under this AGREEMENT, BANK shall pay COMPANY the FEES, as such FEES may be changed from time to time by mutual agreement of the parties. Such FEES shall be paid by BANK to COMPANY on or before the 5th business day following transmittal of the INVOICE, as defined by, and containing the information required by, Exhibit A. COMPANY will be responsible for all costs, expenses and taxes (of whatever nature or authority) associated with its stores and its services under this AGREEMENT, including, without limitation but by way of example, rental and occupancy costs; costs of up-fit and leasehold improvements; equipment costs; processing costs; printing costs; maintenance costs; staffing costs; taxes assessed to or against COMPANY; signage costs; insurance and advertising costs.


(g) Procedures and Protocols. Notwithstanding any provision herein to the contrary, the parties hereto agree that the Procedures and Protocol in the form and substance of Exhibit B attached hereto and incorporated herein by reference which shall govern the operations and management of the TRANSACTIONS. Exhibit B may be reviewed periodically and shall only be amended or modified by letter agreement which shall not necessitate or effect a modification or amendment to this AGREEMENT but which said amendment or modification shall be incorporated herein by reference.


5. REPRESENTATIONS, WARRANTIES AND COVENANTS.


(a) BANK hereby represents and warrants to COMPANY as of the date hereof that:


(i) BANK is a duly organized Kentucky state-chartered bank
validly existing under the laws of the Commonwealth of
Kentucky, and is currently authorized to conduct its
business as described in this AGREEMENT in the states of
Texas and North Carolina and anticipates being
authorized to conduct its business as described in this
Agreement in the state of Pennsylvania. The deposits of
BANK are insured by the FEDERAL DEPOSIT INSURANCE
CORPORATION up to applicable limits. BANK has the
corporate power and authority and all requisite
licenses, permits and authorizations to execute and
deliver this AGREEMENT and perform its obligations
contemplated hereunder;


(ii) BANK is authorized under applicable law to enter into
the TRANSACTIONS as contemplated by this AGREEMENT.


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The Transactions and the documents prepared by BANK in
connection with the TRANSACTIONS currently comply with
all federal, state and local laws, statutes and
regulations and any and all licenses, permits and other
authorizations required of BANK in connection with the
TRANSACTIONS by federal, state or local laws, statutes,
and regulations (the "BANK AUTHORIZATIONS") have been
obtained, are in full force and effect and are valid
under applicable federal, state and local laws and the
continuation, validity and effectiveness of all of the
BANK AUTH ...