Cash Services Agreement

CASH SERVICES AGREEMENT


This agreement (the "AGREEMENT") is made to be effective as of December 17, 2002, by and between ACE CASH EXPRESS, INC., a Texas corporation ("ACE") and TEXAS CAPITAL BANK, NATIONAL ASSOCIATION ("TEXAS CAPITAL").


WITNESSETH:


A. ACE has leased a series of cash disbursement Self-Service Machines (individually, an "SSM" and collectively, "SSMS") from Diebold Credit Corporation or Diebold, Incorporated, or both, or other lessees acceptable to Texas Capital ("LESSORS") which are located in the offices of H&R Block Tax Services, Inc. ("H&R") listed on EXHIBIT A hereto, as amended with the consent, in its sole discretion, of Texas Capital ("COVERED SSMS")


B. ACE and Texas Capital desire that, among other things, Texas Capital furnish the U.S. currency, which for purposes of this Agreement shall include (i) all cash in Covered SSMs, (ii) any Texas Capital cash in the vault of its Contractor (defined below) or otherwise in Contractor's possession or control that was requested by ACE from Texas Capital in connection with this Agreement, and (iii) any Texas Capital cash in the vaults of its Correspondents (defined below) or otherwise in any Correspondent's possession or control that was requested by ACE from Texas Capital in connection with this Agreement (collectively, the "CASH").


C. Cash will be used to stock the Covered SSMs in order to permit cash withdrawals therefrom by customers of H&R pursuant to tax refund and tax loan checks cashed in the Covered SSMs ("ICB CHECKS") issued by Imperial Capital Bank ("ICB") as advance fundings of income tax refunds.


D. In order to facilitate the availability of Cash under this Agreement, Texas Capital may, from time to time, deposit U.S. currency into the vaults of its correspondents listed on ANNEX III hereto (each a "CORRESPONDENT" and collectively, the "CORRESPONDENTS").


E. Ten (10) of the Covered SSMs will permit Cash withdrawals without use of ICB Checks (the "Non-Check SSMs") and reimbursement for such Cash withdrawals shall be pursuant to an electronic presentment agreement satisfactory to Texas Capital and subject to appropriate intercreditor agreement with U.S. Bank National Association and DZ Bank AG Deutsche Zentral-Genossenschaftbank Frankfurt am Main, as Administrative Agent.


NOW THEREFORE, in consideration of the premises herein contained and other good and valuable considerations, the receipt and sufficiency of which are hereby acknowledged, the undersigned agree as follows:


1. Services


(a) Texas Capital will provide Texas Capital's Cash to be loaded by its Contractor (defined below) into Covered SSMs for disbursement to H&R customers that cash ICB checks. No ownership of the Cash or any ICB Checks shall accrue, transfer or otherwise inure to ACE or any of its agents or affiliates.


CASH SERVICES AGREEMENT


(b) All handling of Non-Vault Cash (defined below), including all loading and unloading of any of the Cash into or out of any of the Covered SSMs and all counting and verification of Cash before it is placed in machine cassettes and after its removal from machine cassettes for transfer to the Correspondents, shall be performed by Loomis Fargo & Co. ("CONTRACTOR") for Texas Capital pursuant to a contract with Texas Capital. "NON-VAULT CASH" means Cash that is not in a Correspondent's vault.


(c) ACE has leased the Covered SSMs from Lessors and has entered into an SSM servicing agreement pursuant to which Lessors service and maintain the Covered SSMs. Neither Texas Capital nor any of its agents shall have any responsibility for the repair, maintenance, care, or servicing of the Covered SSMs.


(d) All of the Cash, ICB Checks, Settlement Funds (hereinafter defined), Collection Account (hereinafter defined) and Fee/Expense Account (hereinafter defined) are, and shall remain, the property of Texas Capital and shall be treated by Texas Capital as its asset. Texas Capital shall have full title, use, rights and benefits of and to the Cash and ICB Checks during the time that they are in the possession, custody or control of Contractor or any Correspondent or stored in any Covered SSM and, in the case of Cash, until such time as the Cash is dispensed from any of the Covered SSMs to customers of H&R in accordance with this Agreement and the operating procedures described on ANNEX I hereto. Neither the Cash, ICB Checks, Settlement Funds, Collection Account nor the Fee/Expense Account shall at any time become the property of ACE or any of its agents. Neither the Cash, ICB Checks nor the Settlement Funds shall be commingled with any other cash or accounts in the possession, custody or control of Contractor or ACE. ACE confirms and agrees that neither it nor any affiliate has any interest or any other right in the Cash, ICB Checks, Settlement Funds, Collection Account, EP Amounts (hereinafter defined), or Fee/Expense Account. "SETTLEMENT FUNDS" means an amount equal to the aggregate of any and all Settlement Amounts (hereafter defined) at any time, and from time to time, now or hereafter required to be remitted to the Reserve Account in accordance with SUBPARAGRAPH 5(d) of this Agreement.


(e) ACE shall not have access to, or use of, any of the Cash after delivery of the Cash to Contractor, whether during transportation or storage by Contractor or any Correspondent or while it is stored in the machine cassettes in the Covered SSMs, except that Lessors, the SSM servicing contractor, shall be allowed to provide scheduled and unscheduled repair and maintenance to the Covered SSMs in accordance with the terms of Operating Agreement between Lessors and ACE (collectively, as amended, renewed, extended, or restated, the "OPERATING AGREEMENT"). Once any of the Cash is delivered by Texas Capital to Contractor or any Correspondent, it shall only be transported or stored by Contractor or a Correspondent and finally placed in one of the Covered SSMs pursuant to the terms of the Cash Vault Services Agreement dated May 1, 1999 (as amended), and the Armored Car Service Agreement dated May 1, 1999 (as amended) (collectively the "CONTRACTOR AGREEMENT") by and between Texas Capital and Contractor and the Operating Agreement.


(f) During the term of this Agreement, the only U.S. currency to be placed in any of the Covered SSMs shall be Texas Capital's Cash. None of the Cash shall be placed in any SSMs other than the Covered SSMs.


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(g) Texas Capital may, for the purposes of reporting pursuant to Regulation D of the Federal Reserve Board (12 CFR Section 204), treat the Cash under this Agreement as "vault cash" on a continuous basis, and no other financial institution (including Correspondents) shall report, treat or consider such funds as "vault cash" for any similar reporting purposes.


(h) Any and all Cash, ICB Checks and Settlement Funds collected or received by ACE shall be held by ACE in trust, custody and safekeeping for the benefit of Texas Capital. ACE shall have no claim to, nor right of withdrawal of, Cash or Settlement Funds except to deliver such funds to the Reserve Account in accordance with PARAGRAPH 5(d). The services provided in this Agreement are in the nature of a bailment by Texas Capital for the mutual benefit of the parties hereto and not as a transfer of ownership or any other property interest. The Cash, ICB Checks and Settlement Funds shall not be subject to any manner of lien, security interest, attachment or other process or agreement created by, or relating to the property of, ACE or any of its affiliates, nor shall ACE or any of its affiliates intentionally take any action that could cause the Cash, ICB Checks or Settlement Funds to be treated as property of ACE or any affiliate, nor shall ACE or any affiliate intentionally take any action that could cause the Cash, ICB Checks or Settlement Funds to be treated as property of ACE's or any affiliate's estate in a bankruptcy proceeding. It is expressly agreed between ACE and Texas Capital that ACE shall take all necessary and reasonable steps to identify and protect Texas Capital's property rights in the Cash, ICB Checks and the Settlement Funds. ACE and Texas Capital expressly agree that ACE has no possessory or ownership rights to the Cash, ICB Checks and the Settlement Funds under Section 541 of the Bankruptcy Code, 11 U.S.C. Section 541.


(i) Upon written notice from Texas Capital, ACE shall use all commercially reasonable efforts to comply or arrange for compliance with any regulatory requirement imposed upon Texas Capital with respect to Covered SSMs and the security of the Cash, ICB Checks and the Settlement Funds subject to this Agreement, and with respect to any record-keeping or reporting requirement imposed on Texas Capital relating to the Cash, ICB Checks and the Settlement Funds, including, without limiting the generality of the foregoing, the provisions of the regulations of the Office of the Comptroller of the Currency, regarding minimum security devices and procedures, 12 C.F.R. Section 21.1, and the provisions of the Bank Protection Act, as amended, 12 U.S.C. Section 1882 et seq., as such provisions relate to the Covered SSMs in off-premises locations. ACE shall fully cooperate with Texas Capital by furnishing all information required by Texas Capital to meet such regulatory requirements. In the event Texas Capital is or becomes subject to any legal or regulatory notice or action which could adversely affect ACE's uninterrupted operation of the Covered SSMs, Texas Capital shall, if not otherwise prohibited by law or regulation, notify ACE of such event and shall, use commercially reasonable efforts to continue performance of Texas Capital's obligations under this Agreement.


(j) Contractor will provide to Texas Capital and ACE (1) a strap counting report each time it picks up Cash from a Correspondent verifying the Cash received, and (2) a report of Cash removed from Covered SSMs each time Cash is picked up from Covered SSMs.


2. Delivery of the Cash


(a) Subject to the availability of sufficient U.S. currency to Texas Capital, Texas Capital will cause to be made available to Contractor or Correspondents, or both, the Cash


3 CASH SERVICES AGREEMENT


required to stock the Covered SSMs (or be available for restocking) in the amount requested by ACE, which amount shall not exceed: (i) * ($*) per Covered SSM; or (ii) the aggregate sum of One-Hundred Million Dollars ($100,000,000.00) which shall include, for purposes of computing the aggregate amount, ICB Checks for which Texas Capital shall not have received funds, unreimbursed amounts of Cash withdrawn from Non-Check SSMs ("EP Amounts") and all Cash. Notwithstanding the foregoing, in no event shall Cash in any Non-Check SSM exceed * ($*) and no Cash shall be placed in any Non-Check SSM if, for any reason whatsoever, the unreimbursed amount due to Texas Capital for Cash withdrawals from Non-Covered SSMs is outstanding later than the first business day after receipt of funds by U.S. Bank National Association or is greater than the aggregate amount then held by Texas Capital in the Reserve Account.


(b) ACE shall provide Texas Capital's Correspondents with a request to deliver to Contractor (which, solely with respect to currency, shall be for a specified number of bundles) via the Correspondent's fax or touch-tone cash ordering service two (2) business days before the business day Cash is to be supplied to Contractor that specifies the amount and denomination of Cash to be supplied to Contractor that is required to replenish the supply of currency and coin in the Covered SSMs and will simultaneously send a file to Texas Capital's electronic cash ordering service and to Contractor a confirmation of the order listing the amount, Correspondent to whom the request was made, denominations of cash ordered and machine locations to which the Cash will be delivered. In the event that ACE desires to change the amount of Cash to be supplied from the amount reflected on the order, ACE shall provide Texas Capital, Contractor and the applicable Correspondents a change request reflecting the changed amount by 9:00 a.m. (Central Standard Time) on the business day immediately preceding the business day that the Cash is to be delivered to a Contractor. For the purposes of this Agreement, "BUSINESS DAY" means any day on which the offices of Texas Capital are open to the public for carrying on substantially all business functions, other than Saturday or Sunday. Cash requested by ACE will be delivered on the later of (i) two business days after the business day on which the Cash is requested by ACE or (ii) the first business day following the business day on which the applicable Federal Reserve Bank (defined hereinafter) or Correspondent makes such Cash available to Contractor for the benefit of Texas Capital. At the time of Cash delivery, Contractor shall pick up any ICB Checks in the Covered SSMs for delivery to Texas Capital within 48 hours. In addition, at the time of Cash delivery to a Covered SSM, any Cash then remaining in such Covered SSM shall be removed by Contractor for redelivery to the Correspondents as provided herein and in Contractor's agreement with Texas Capital.


(c) In the event the Federal Reserve Bank or any branch offices thereof (collectively, "FEDERAL RESERVE Bank") or a Correspondent cannot supply Texas Capital with the volume of fit U.S. currency and coin required to meet the currency needs of the Covered SSMs, Texas Capital shall use its best commercially reasonable efforts to obtain as much of such currency and coin as possible to meet such currency and coin needs.


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* 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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3. Redelivery of the Cash to Texas Capital


(a) Texas Capital may demand, at any time without notice or qualification, and direct Contractor and each Correspondent to the effect that the Cash and ICB Checks then stored in the Covered SSMs or otherwise in the possession, custody or control of Contractor or a Correspondent be delivered to Texas Capital or its designee by Contractor or a Correspondent; provided, however, Texas Capital shall use commercially reasonable efforts to give ACE prior notice of such delivery request to allow Contractor to collect and deliver the Cash to the applicable Correspondent or Texas Capital's designee in an orderly fashion. Funds delivered to Texas Capital pursuant to this PARAGRAPH 3 shall in no event exceed the balance of all undispensed Cash stored in the Covered SSMs and ICB Checks in the SSMs or otherwise in the possession, custody or control of Contractor and the Correspondents. ACE shall be responsible for taking all commercially reasonable action necessary to ensure that Lessors and H&R cooperate with redelivery of Cash and delivery of ICB Checks to Contractor once Texas Capital has directed Contractor to redeliver the same to the Correspondent.


(b) Texas Capital shall not be liable for any damages incurred by ACE due to the redelivery of the Cash to Texas Capital as provided in PARAGRAPH 3(a) above, nor for the resulting inability of customers of H&R to use the Covered SSMs because they then contain no currency or coin.


(c) In lieu of the provisions of PARAGRAPH 3(a) above, Texas Capital may elect to receive from ACE (upon ACE's agreement thereto) good funds in an amount equal to the undispensed Cash and ICB Checks stored in the Covered SSMs and in the possession, custody or control of Contractor or the Correspondents, delivered to the Main Office of Texas Capital, by wire transfer or any other mutually agreed-upon method.


(d) Non-Vault Cash removed by Contractor from Covered SSMs shall, after counting by Contractor, be returned to the applicable Correspondent's vault for credit to Texas Capital's account with such Correspondent. It is anticipated that such return shall generally occur at the same time as Contractor picks up the next Cash order placed by ACE with such Correspondent.


4. SSM Transactions


The Cash loaded in each Covered SSM (other than Non-Check SSMs) may be dispensed from Covered SSMs only to customers of H&R by means ICB Checks and no Cash in any Covered SSM may be dispensed except to customers of H&R pursuant to a special personal identification number of the customer provided by H&R.


5. Settlement for Cash Disbursements


(a) On each business day following the initial delivery of the Cash to any Covered SSM, ACE will deliver electronically to Texas Capital, at its central cash vault, a report substantially in the form attached hereto as EXHIBIT B or as otherwise agreed in writing between ACE and Texas Capital (the "DAILY REPORT") describing the cash withdrawal transactions occurring at Covered SSMs since the delivery of the previous Daily Report, including without limitation, a statement of (i) the total number of transactions involving the withdrawal of Cash from the Covered SSMs, (ii) the amount of Cash contained in the Covered SSMs, (iii) the total


5 CASH SERVICES AGREEMENT


Cash dispensed from the Covered SSMs, (iv) the total number of ICB Checks deposited in each Covered SSM, and (v) any other information Texas Capital may reasonably require to verify the amount of Cash stored in the Covered SSMs and in the possession, custody or control of Contractor (together, the "DAILY CASH POSITION").


(b) The Daily Report and any related data shall contain sufficient detail and specificity to allow Texas Capital to accurately determine each day the Daily Cash Position. Texas Capital may also rely upon Contractor's reports and its Correspondents' on-line account reports in reconciling Cash and its Daily Cash Position.


(c) All ICB Checks shall be delivered to Texas Capital by Contractor and shall be deposited into a segregated account established at Texas Capital (the "COLLECTION ACCOUNT") Each business day, Texas Capital shall reconcile the amounts in the Collection Account, including the difference between the amount Texas Capital collects for honoring ICB Checks through the Covered SSMs and the amount dispensed to H&R customers in Cash through Covered SSMs (the "SETTLEMENT AMOUNT") as reflected on the Daily Report. With respect to the Non-Check SSMs, Texas Capital shall accept a wire for reimbursement that is transmitted pursuant to a data file request made by ACE. ACE covenants and agrees that any such data file shall segregate, with machine identification, ICB Cash withdrawn from Non-Check SSMs.


(d) The Settlement Amount shall be withdrawn on a daily basis by Texas Capital and deposited into a special non-interest bearing reserve account (the "RESERVE ACCOUNT") established at Texas Capital and pledged by ACE to Texas Capital pursuant to a pledge and account control agreement to secure ACE's performance under this Agreement and each agreement related hereto, including but not limited to the payment of all fees and expenses incurred by Texas Capital related to Contractor expenses, legal fees and expenses, insurance expenses and courier expenses. The Reserve Account will be held by Texas Capital until the Final Settlement (defined hereinafter). To the extent that any ICB Checks are unpaid for any reason after the normal collection process or Texas Capital is not reimbursed the first business day after Cash is withdrawn from Non-Check SSMs, Texas Capital is irrevocably authorized to debit such amounts directly against the Reserve Account. If after any unpaid ICB Checks are charged against the Reserve Account and the remaining balance in the Reserve Account is equal to or exceeds $1,000,000, ACE shall be authorized to collect such ICB Checks for its own account.


(e) After delivery by ACE of an officer's certificate from an authorized officer covered by ACE's directors' and officers' general liability policy certifying the accuracy of the reconciled amount within such period and that there has been no breach by ACE of this Agreement, ACE will be paid the Reserve Account minus (i) $1,000,000, (ii) all fees earned by Texas Capital during such period and (iii) all expenses incurred by Texas Capital during such period from the Reserve Account based on calculations as of the 15th day of each calendar month and the first day of each calendar month commencing on January 15, 2003 through the Final Settlement, the payments for such periods to be delivered to ACE no later than two business days after the end of each such period, provided that in no case shall Texas Capital be required to reduce the Reserve Account below $1,000,000.


(f) Texas Capital may also establish any number of other accounts at Texas Capital for the administrative convenience of Texas Capital. Specifically, Texas Capital will establish a


6 CASH SERVICES AGREEMENT


Fee/Expense Account (the "FEE/EXPENSE ACCOUNT") against which Texas Capital will charge on the 15th day of each calendar month and the first day of each calendar month all known fees and expenses owing to Texas Capital pursuant to this Agreement and all of the other agreements related hereto. Funds transferred into the Fee/Expense Account shall be transferred from the Reserve Account and to the extent the Reserve Account balance falls below $1,000,000 as a result of such transfer, ACE shall replenish the Reserve Account to an amount equal to or exceeding $1,000,000 by 11:00 a.m. on the business day following the business day on which the Reserve Account balance fell below $1,000,000. Notwithstanding any other provision in this PARAGRAPH 5(e), to the extent that ACE is in breach of this Agreement or any agreement related hereto or this Agreement has been terminated or any reason, Texas Capital may transfer funds into the Fee/Expense Account from the Collection Account or the Reserve Account and collect such fees as frequently as Texas Capital deems appropriate.


(g) Prior to the final settlement (the "FINAL SETTLEMENT") of each of the accounts described in this PARAGRAPH 5, ACE shall provide to Texas Capital a certificate of an authorized officer of ACE who is covered by ACE's directors' and officers' and general liability policy but not by the insurance policy attached as EXHIBIT C hereto certifying that (i) ACE has used its best efforts, by contacting ICB and taking other commercially appropriate action, to determine that there are no outstanding and unpaid ICB Checks that will not be paid for any reason, (ii) ACE has contacted Lessors to determine that there are no additional fees or expenses owing to Lessors, (iii) to the best of such officer's knowledge, there are no unpaid fees owing under this Agreement (other than fees owed directly to Texas Capital for its services under this Agreemen ...