EX-10.1 CASH SERVICES AGREEMENT

 

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                                                                    EXHIBIT 10.1

 

                             CASH SERVICES AGREEMENT

 

         This Cash Services Agreement (the "AGREEMENT") is made to be effective

as of December 30, 2003, by and between ACE CASH EXPRESS, INC., a Texas

corporation ("ACE") and TEXAS CAPITAL BANK, NATIONAL ASSOCIATION ("TEXAS

CAPITAL").

 

                                   WITNESSETH:

 

         A.       ACE owns or leases a series of cash disbursement Self-Service

Machines (individually, an "SSM" and collectively, "SSMs") for the disbursement

of cash which are located in the offices of H&R Block Tax Services, Inc. ("H&R")

listed on EXHIBIT A hereto ("COVERED SSMs").

 

         B.       ACE and Texas Capital desire that, among other things, Texas

Capital furnish the U.S. currency and coin which for purposes of this Agreement

shall include (i) all cash in Covered SSMs and (ii) any Texas Capital cash in

the Contractor vault or otherwise in Contractor 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 ("ICB CHECKS") issued by Imperial Capital Bank ("ICB") as advance

fundings of income tax refunds.

 

         D.       Texas Capital and various correspondent banks (each, a

"CORRESPONDENT BANK") will distribute the Cash to H&R.

 

         NOW THEREFORE, in consideration of the premises herein contained and

other good and valuable consideration, the receipt and sufficiency of which are

hereby acknowledged, the undersigned agree as follows:

 

         1.       Defined Terms. As used in this Agreement, the following terms

shall have the meanings set forth below:

 

         "ACE" means Ace Cash Express, Inc., a Texas corporation.

 

         "Armored Car Service Agreement" means that certain Armored Car Service

         Agreement dated as of May 1, 1999 (as amended) by and between Texas

         Capital and Contractor.

 

         "Business Day(s)" 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" has the meaning set forth in the introductory paragraph hereto.

 

         "Cash Collection Account" means a segregated account established by

         Texas Capital at Texas Capital's Correspondent Banks.

 

                                                         CASH SERVICES AGREEMENT

 

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         "Cash Vault Services Agreement" means that certain Cash Vault Services

         Agreement dated as May 1, 1999 (as amended) by and between Texas

         Capital and the Contractor.

 

         "Check Collection Account" means a segregated account established by

         Texas Capital at Texas Capital's Correspondent Banks.

 

         "Contractor" means Loomis Fargo & Co.

 

         "Contractor Agreements" means collectively, the Armored Car Service

         Agreement and the Cash Vault Services Agreement.

 

         "Correspondent Bank" has the meaning set forth in the introductory

         paragraph hereto.

 

         "Correspondent Delivery Request" means a request by ACE directly to

         Texas Capital to furnish and replenish the Covered SSMs with Cash from

         a Correspondent Bank.

 

         "Correspondent Redelivery Request" means a request by ACE, directly to

         Texas Capital, to redeliver Cash and/or funds from collected ICB

         Checks, previously delivered by Contractor to a Correspondent Bank, to

         Texas Capital.

 

         "Covered SSMs" has the meaning set forth in the introductory paragraph

         hereto.

 

         "Daily Cash Position" has the meaning set forth in Paragraph 6(a).

 

         "Daily Report" means a report substantially in the form attached hereto

         as Exhibit B or as otherwise agreed to in writing between ACE and Texas

         Capital.

 

         "Fee/Expense Account" means a special non interest bearing account at

         Texas Capital against which Texas Capital will deposit Settlement

         Funds, charge fees and expenses or any other amounts owing to Texas

         Capital pursuant to this Agreement and all of the other related

         agreements.

 

         "Final Settlement" means with regards to all parties to this Agreement

         and other related agreements, the closing settlement of each and every

         account, including all fees and expenses, all Cash and other funds, and

         all obligations and duties owed which are subject to this Agreement.

 

         "H&R" has the meaning set forth in the introductory paragraph hereto.

 

         "ICB" has the meaning set forth in the introductory paragraph hereto.

 

         "ICB Checks" has the meaning set forth in the introductory paragraph

         hereto.

 

         "Operating Agreement or Operating Agreements" means that certain

         Operating Agreement between Diebold and ACE dated as of September 29,

         1999 (as amended, renewed, extended, or restated).

 

                                                         CASH SERVICES AGREEMENT

 

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         "Overdraft" means a negative position or insufficient funds available

         in any account, including insufficient account funds as the result of a

         Correspondent Delivery Request in excess of the amount of funds

         available to ACE to fund the Covered SSMs or as the result of a

         Correspondent Redelivery Request to Texas Capital from a Cash

         Collection Account or a Check Collection Account in excess of the

         amount of Cash or the Collected ICB Checks.

 

         "Protection Period" has the meaning set forth in Paragraph 2(b).

 

         "Reserve Account" means a special non-interest bearing reserve account

         with Texas Capital in an amount not less than $1,000,000.00 at any time

         during the term of this Agreement; provided, however, at the start of

         the Protection Period such amount shall be reduced to $100,000 to be

         used to protect Texas Capital against Overdrafts in any Check

         Collection Account.

 

         "Service Provider of Service Providers" means Diebold and/or the other

         equipment service providers listed on Annex 1.

 

         "Settlement Amount" means 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.

 

         "Settlement Funds" means an amount equal to the aggregate of any and

         all Settlement Amounts at any time, and from time to time, now or

         hereafter required to be remitted to Texas Capital for posting in

         accordance with SUBPARAGRAPH 6(d) of this Agreement.

 

         "SSM or SSMs" has the meaning set forth in the introductory paragraph

         hereto.

 

         "Texas Capital" means Texas Capital Bank, National Association.

 

         "Texas Capital Collection Account" means the relationship between ACE

         and Texas Capital in which Texas Capital records transactions of

         certain Cash furnished, certain Cash received, and certain funds

         received from the collection of ICB Checks by it pursuant to this

         Agreement on its ledgers at Texas Capital. Such funds which are

         received by Texas Capital are 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.

 

         2.       Services

 

         (a)      Texas Capital will perform the transaction described above and

will provide Texas Capital's Cash to be loaded by its Contractor, into Covered

SSMs to be disbursed 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.

 

                                                         CASH SERVICES AGREEMENT

 

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         (b)      During the term of this Agreement (and upon and after Final

Settlement, until August 31, 2004, the "PROTECTION PERIOD") ACE shall maintain a

Reserve Account which shall be pledged to Texas Capital pursuant to a pledge and

account control agreement to secure ACE's performance under this Agreement and

each related agreement including, but not limited to the payment of all fees and

expenses incurred by Texas Capital.

 

         (c)      All handling of the Cash, including all loading and unloading

of any of the Cash into or out of any of the Covered SSMs, shall be performed by

Contractor, pursuant to a contract between Contractor and Texas Capital.

 

         (d)      ACE has purchased or leased the Covered SSMs from the Service

Providers and has entered into a SSM servicing agreement with each Service

Provider pursuant to which the Service Providers 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.

 

         (e)      All of the Cash, ICB Checks, Settlement Funds, the Cash

Collection Account, the Check Collection Account and Fee/Expense Account 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 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 II hereto. Neither the Cash, ICB Checks,

Settlement Funds, the Cash Collection Account, the Check 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 it has no interest or any

other right in the Cash, ICB Checks, Settlement Funds, the Cash Collection

Account, or the Check Collection Account. ACE's interest in the Fee/Expense

Account is limited to funds therein less all expenses and all fees due to Texas

Capital. Any such interest of Ace in the Fee/Expense Account shall exist only

after all funds and accounts have been settled and agreed to by Texas Capital

not sooner than the date of the Final Settlement.

 

         (f)      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 while it is stored in the machine cassettes in the Covered SSMs,

except that the Service Providers, shall be allowed to provide scheduled and

unscheduled repair and maintenance to the Covered SSMs in accordance with the

terms of each Operating Agreement. Once any of the Cash is delivered by Texas

Capital to Contractor, it shall only be transported or stored by Contractor and

finally placed in one of the Covered SSMs pursuant to the terms of the

Contractor Agreements and the Operating Agreements.

 

         (g)      During the term of this Agreement, the only currency and coin

to be placed in any of the Covered SSMs shall be the Cash. None of the Cash

shall be placed in any SSMs other than the Covered SSMs.

 

                                                         CASH SERVICES AGREEMENT

 

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         (h)      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 shall report, treat or consider such funds as "vault cash"

for any similar reporting purposes.

 

         (i)      Any and all Cash, ICB Checks and Settlement Funds collected or

received by ACE shall be held by ACE in 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 Texas Capital for posting in

accordance with PARAGRAPH 6(d). The services provided in this Agreement are in

the nature of a bailment for the mutual benefit of the parties hereto. 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, nor shall ACE intentionally take any actions

which could cause the Cash, ICB Checks or Settlement Funds to be treated as

property of ACE, nor shall ACE intentionally take any action which could cause

the Cash, ICB Checks or Settlement Funds to be treated as property of ACE'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.

 

         (j)      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 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 SSMs in off-premises locations. ACE shall

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.

 

         3.       Delivery of the Cash

 

         (a)      Subject to the availability of sufficient currency and coin to

Texas Capital, Texas Capital will cause to be made available to Contractor the

Cash required to stock the Covered SSMs (or be available for restocking) in the

amount requested by ACE, which amount shall not exceed: (i) * Dollars ($*) per

Covered SSM; or (ii) the aggregate sum of One-Hundred Forty

 

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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.

 

                                                         CASH SERVICES AGREEMENT

 

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Million Dollars ($140,000,000.00) which shall include ICB Checks that have not

been collected and Cash.

 

         (b)      ACE shall provide Texas Capital with a Correspondent Delivery

Request to deliver to Contractor (which, solely with respect to currency, shall

be for a specified number of bundles) via Texas Capital's electronic cash

ordering service one (1) Business Day before the Business Day Cash is to be

supplied to Contractor which 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. 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 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 Contractor. Cash requested by ACE will

be delivered on the later of (i) one Business Day after the Business Day on

which the request by ACE is received by Texas Capital or (ii) the first Business

Day following the Business Day on which the applicable Correspondent Bank makes

such Cash available to Contractor.

 

         (c)      In no event shall Texas Capital be expected to provide Cash

until (i) ACE places a Correspondent Delivery Request for Cash to the applicable

Correspondent Bank, (ii) ACE provides to Texas Capital the same detailed

information provided to the Correspondent Bank in conjunction with the

Correspondent Delivery Request, and (iii) ACE, the Correspondent Bank and Texas

Capital collectively agree to the amount of funds to be delivered. Any requests

by ACE to Correspondent Banks without prior notification to Texas Capital shall

be considered a breach of this Agreement, and neither the Service Providers, the

Correspondent Banks, nor Texas Capital shall be obligated to honor any such

requests. In the event ACE desires to replenish the Covered SSMs with Cash from

a Correspondent Bank, ACE shall deliver a Correspondent Delivery Request in

accordance with PARAGRAPH 3(b) above, and Texas Capital, in its sole and

absolute discretion, may elect whether to honor a Correspondent Redelivery

Request.

 

         (d)      In the event a Correspondent Bank or any branch offices

thereof 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.

 

         (e)      ACE agrees that any Cash ordered pursuant to a Correspondent

Delivery Request will at no time result in an Overdraft.

 

         4.       Redelivery of the Cash to Texas Capital

 

         (a)      Texas Capital may demand, at any time without notice or

qualification, and direct Contractor 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 be delivered to Texas Capital or its designee by

Contractor; 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 Texas Capital or its designee in an orderly

fashion. Funds delivered to Texas Capital pursuant to this PARAGRAPH 4 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,

 

                                                         CASH SERVICES AGREEMENT

 

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custody or control of Contractor. ACE shall be responsible for taking all

actions reasonably necessary to ensure that the Service Providers and H&R

cooperate with redelivery of the Cash and delivery of ICB Checks by Contractor

once Texas Capital has directed Contractor to redeliver the same.

 

         (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

4(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 4(a) above, Texas

Capital may elect to receive a Correspondent Delivery Request of 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, delivered to the

Main Office of Texas Capital, by wire transfer or any other mutually agreed upon

method.

 

         (d)      ACE shall be responsible for notifying Texas Capital to

redeliver funds, including Cash, collected ICB Checks and other funds from fees,

from the Correspondent Banks to Texas Capital. Funds which represent Cash,

collected ICB Checks and other funds from fees, may be redelivered to Texas

Capital upon receipt of a Correspondent Redelivery Request made directly to

Texas Capital in accordance with PARAGRAPH 4(a).

 

         (e)      ACE agrees that in no event shall it make a Correspondent

Redelivery Request to Texas Capital which shall cause or result in an Overdraft

in any Cash Collection Account or Check Collection Account.

 

         5.       SSM Transaction

 

         The Cash loaded in each Covered SSM may be dispensed from Covered SSMs

only to customers of H&R by means ICB Checks and pursuant to a special personal

identification number of the customer provided by H&R.

 

         6.       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 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 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.

 

                                                         CASH SERVICES AGREEMENT

 

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         (c)      All Cash delivered to Texas Capital by Contractor shall be

deposited into a Cash Collection Account. Pursuant to a Correspondent Redelivery

Request as described in PARAGRAPH 4, Texas Capital shall reconcile the amounts

in the Cash Collection Accounts and withdraw the Cash from the Cash Collection

Accounts. Each withdrawal from a Cash Collection Account shall then be posted by

Texas Capital to the Texas Capital Collection Account. The Cash may be

redelivered to ACE by Texas Capital pursuant to a Correspondent Delivery Request

in accordance with PARAGRAPH 3(b) or held by Texas Capital until the Final

Settlement.

 

         (d)      All ICB Checks delivered to Texas Capital by Contractor shall

be deposited into a Check Collection Account. Pursuant to a Correspondent

Redelivery Request as described in PARAGRAPH 4, Texas Capital shall reconcile

the amounts in the Check Collection Accounts and withdraw the Cash representing

the collected ICB Checks from the Check Collection Accounts. Each withdraw from

a Check Collection Account shall then be posted by Texas Capital to the Texas

Capital Collection Account. From the Cash from collected ICB Checks, Texas

Capital shall withdraw the Settlement Amount and deposit it to the Fee/Expense

Account. Cash from the collected ICB Checks may be redelivered to ACE by Texas

Capital pursuant to a Correspondent Delivery Request in accordance with

PARAGRAPH 3(b) or held by Texas Capital until the Final Settlement. Texas

Capital agrees to allow Cash from collected ICB Checks in the Check Collection

Account to be combined into the Cash in the Cash Collection Account on a daily

basis.

 

         (e)      Texas Capital may also establish any number of other accounts

at Texas Capital for the administrative convenience of Texas Capital, including

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

may be transferred by Texas Capital from the Settlement Funds posted to the

account of Texas Capital in accordance with this Agreement or any other account

of ACE referenced in this Agreement, 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 6(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 Cash

Collection Account, the Check Collection Account or the Reserve Account and

collect such fees as frequently as Texas Capital deems appropriate.

 

         (f)      Prior to the Final Settlement, 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 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 each Service Provider to determine that there

are no additional fees or expenses owing to any such Service Provider, (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 Agreement) or any agreement related hereto, and (iv) to the best of such

officer's knowledge, no employee, officer or director of ACE has had access to

any

 

                                                         CASH SERVICES AGREEMENT

 

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Cash, ICB Checks or any Covered SSM other than officers and employees covered by

the insurance policy attached as EXHIBIT C hereto. Within two Business Days

after ACE has provided the referenced officer's certificate, all accounts have

been reconciled, all fees and expenses of Texas Capital have been paid by ACE,

all ICB Checks have been collected by Texas Capital, Contractor has delivered to

Texas Capital all Cash and ICB Checks from the Covered SSMs and all Cash

supplied to ACE during the term of the Agreement have been returned to Texas

Capital in an amount not less that the amount of Cash provided by Texas Capital

to ACE during the term of this Agreement, Texas Capital shall complete the

process of Final Settlement and deliver to ACE the remaining balance, if any, in

the Reserve Account (less $100,000 which shall be retained by Texas Capital for

Overdraft protection in the Check Collection Accounts until August 31, 2004, and

on September 1, 2004, Texas Capital shall deliver to ACE the remaining balance,

if any, in the Reserve Account, and any ICB Checks that have been returned but

not yet delivered to ACE) and all other accounts maintained pursuant to this

Agreement. Notwithstanding anything contained in this PARAGRAPH 6, ACE will

remain responsible to Texas Capital and Texas Capital shall remain responsible

to ACE for any fees or expenses that are related to this Agreement or any

agreement related hereto and that are identified after Final Settlement. To the

extent that any such fees or expenses are identified, the obligated party shall

pay all such fees and expenses within two Business Days of receipt of notice of

same. Both ACE and Texas Capital shall endeavor to complete the Final Settlement

process within 30 calendar days after the earlier of the expiration or

termination of this Agreement.

 

         7.       Risk of Loss

 

         Upon deposit of the Cash by Contractor, or an ICB Check by a customer

of H&R into a Covered SSM, ACE shall bear all risk of loss and all liability

with respect to any of the Cash, ICB Checks and any and all activities related

to the use of the Covered SSMs including, but not limited to, loss due to theft,

damage, or destruction of the Cash and ICB Checks, malfunction of any Covered

SSM, injuries incurred or torts inflicted directly or indirectly related to the

use of any Covered SSM or the receipt of Cash or the misfeasance or malfeasance

of ACE its agents or employees, excepting, however, losses directly attributable

to Contractor. Texas Capital and ACE shall each cooperate with and comply with

all reasonable requests by each other for documents, statements or any other

proofs relating to any claims for reimbursement or recovery from other persons.

 

         In the event of any loss with respect to any of the Cash, ICB Checks

and any and all activities related to the use of the Covered SSMs including, but

not limited to, loss due to bad checks, chargebacks, theft, damage, or

destruction of the Cash and ICB Checks, ACE shall (i) notify Texas Capital of

such loss by 11:00 a.m. on the following Business Day, and (ii) wire the amount

of the loss to the Reserve Account. Upon receiving such notice, Texas Capital

shall (and ACE hereby authorizes Texas Capital to) immediately charge the

Reserve Account for the amount of the loss. In the event that this shall cause

the Reserve Account to have a balance of less than $1,000,000, ACE shall by

11:00 a.m. on the following Business Day deposit sufficient funds into the

Reserve Account to obtain a minimum balance of $1,000,000.

 

                                                         CASH SERVICES AGREEMENT

 

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         8.       Indemnity

 

         (a)      Regardless of the existence or continuation of an insurance

policy related to any of the matters described in this PARAGRAPH 8, ACE shall

indemnify, defend and hold harmless Texas Capital from, for and against any and

all losses, costs (including but not limited to legal and consulting fees and

expenses), expenses, claims, damages, suits, causes of action, and judgments

suffered by, asserted against, or recovered from Texas Capital as a result of

the transactions contemplated in this Agreement or breach of this Agreement by

ACE or otherwise in connection with or as a result of this Agreement or any

related documents, including but not limited to accidental loss, theft or

mysterious disappearance of any of the Cash or ICB Checks, or both, or losses of

or the failure of ICB to honor any ICB Check, however caused, THE NEGLIGENCE OF

TEXAS CAPITAL, EXCEPT FOR ANY LOSS RESULTING FROM THE SOLE NEGLIGENCE OR WILLFUL

MISCONDUCT OF TEXAS CAPITAL OR ITS EMPLOYEES, AGENTS (OTHER THAN ACE) OR

REPRESENTATIVES, including, but not limited to, any loss resulting from the

operation or maintenance of the Covered SSMs, including any malfunctions

thereof, or losses resulting from actions of any Service Provider, but excluding

losses directly attributable to Contractor.

 

         (b)      In addition to the indemnification set forth in PARAGRAPH 8(a)

above, ACE agrees to indemnify, defend and hold harmless Texas Capital, its

officers, directors, employees and agents from, for and against any and all

losses, costs, claims, damages, suits, causes of action, and judgments suffered

by, asserted against, or recovered from Texas Capital or liabilities or

penalties (including, but not limited to, any penalties imposed by any

governmental entity or agency) and expenses (including, but not limited to,

reasonable attorneys' fees) suffered or incurred by Texas Capital as a result of

or arising out of, or attributed, directly or indirectly, to the performance or

non-performance of any services or of any obligation under this Agreement by

ACE, its agents (including all Service Providers) or employees, but excluding

losses directly attributable to Contractor.

 

         9.       Fees and Expenses

 

         Fees and expenses under this Agreement shall be determined and payable

in accordance with the provisions of ANNEX III hereto.

 

         10.      Examinations and Audits

 

         (a)      ACE shall allow Texas Capital and its designees, including any

regulatory or supervisory body to which Texas Capital is subject, to examine and

audit such book, records, reports from audits conducted by ACE or its agents

regarding the Cash, ICB Checks and the Covered SSM facilities which Texas

Capital or its designees may reasonably deem appropriate in order to determine

compliance with the terms of this Agreement, the Operating Agreement and

applicable laws and regulations. ACE shall have the right to have an employee or

agent present at all times during any examination or audit of its records or

facilities. Such routine examinations and audits shall be conducted during ACE's

normal business hours, if commercially possible. In the event of any financial

discrepancies, Texas Capital's records of the amounts disbursed, amounts

received by Texas Capital and amounts owed by ACE to Texas Capital shall be

presumptively correct, absent manifest error in computation.

 

                                                         CASH SERVICES AGREEMENT

 

                                       10

<PAGE>

 

         (b)      Texas Capital shall allow ACE and its designees, to examine

and audit such books, records and reports related to the ICB Checks and any of

the accounts established by Texas Capital or the Contractor in connection with

this Agreement.

 

         11.      Insurance

 

         ACE shall maintain and furnish written evidence, including a

Certificate of Insurance, of insurance in the form attached hereto as EXHIBIT C

and such other insurance policies as may be reasonably requested by Texas

Capital, provided that such policy attached as EXHIBIT C shall (i) be in the

minimum amount of $15,000,000, (ii) have a deductible of no more than

$1,000,000, (iii) provide that Texas Capital shall receive no less than 30 days

written notice prior to the effectiveness of any policy change or cancellation

and (iv) shall provide that Texas Capital may pay any unpaid premium under the

policy such that the policy remains in effect.

 

         12.      Term; Termination; Survival

 

         This Agreement shall be effective from the date of execution and shall

continue until the earlier to occur of: (i) May 1, 2004; or (ii) termination by

either party as provided in this PARAGRAPH 12. This Agreement may be terminated

upon the occurrence of any of the following conditions:

 

         (a)      By either party immediately:

 

         (1)      upon written notice from the non-breaching party to the

breaching party, in the event of material breach of any provision of this

Agreement (other than those events described in PARAGRAPHS 12(b) and 12(c)

below), if such material breach has not been cured within 24 hours of an earlier

written notice specifying the nature of the breach;

 

         (2)      in the event that either party to this Agreement shall: (i)

commence a voluntary case or other proceeding seeking liquidation,

reorganization or other relief with respect to itself or its debts under any

bankruptcy, insolvency or other similar law now or in the future in effect, (ii)

seek the appointment of a trustee, receiver, liquidator, custodian or other

similar official of it or any substantial part of its property, (iii) make a

general assignment for the benefit of creditors, (iv) fail generally to pay its

debts as they become due, or (v) take any corporate action to authorize any of

the foregoing; or

 

         (3)      in the event that an involuntary case or other proceeding

shall be commenced against either party to this Agreement seeking liquidation,

reorganization or other relief with respect to it or its debts under any