EXHIBIT 10.7
ADDENDUM NO. 1
TO
TAX REFUND FUNDING AGREEMENT
(FOR 1998 TAX SEASON)
This Addendum No. 1 To Tax Refund Funding Agreement (For 1998 Tax
Season (the "Addendum") is to the Tax Refund Funding Agreement of September
29, 1997 (the "Agreement"), which is by and among First Republic Bank, a
Pennsylvania banking corporation ("First Republic"), Hewfant Inc., a Virginia
corporation ("Hewfant") and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc., a Virginia corporation
(which, together with its affiliates and franchisees (each an "Affiliate"),
as applicable, is referred to as "JHTS").
This Addendum designates the provider of Bank Products, provides the
various fees and charges to be imposed on taxpayers by the Bank, JHTS and
Hewfant during the 1998 Tax Season on those Bank Products, how and when those
fees and charges are to be disbursed, and the number of Bank Products to be
provided by Hewfant for such Tax Season. This Addendum supersedes and entirely
replaces any prior Addendum and will be the only Addendum in effect for the 1998
Tax Season. Capitalized terms used in this Addendum are as defined in the
Agreement.
1. BANK. First Republic designates County Bank of Rehoboth Bank, Delaware in
participation with First Republic, as the Bank that will offer the Bank
Products.
2. BANK PRODUCTS. Hewfant will use reasonable efforts to provide First
Republic with approximately 300,000 Bank Products during the 1998 Tax Season.
3. LOAN LIMITS. Bank will make no RALs under the Program for less than Two
Hundred Dollars ($200) or for more than Four Thousand Dollars ($4,000). These
RAL limitations are inclusive of all fees authorized pursuant to the Agreement.
4. BANK FEES AND CHARGES. The following fees and charges shall apply to all
ACRs and RALs during the 1998 Tax Season:
a. ACR Handling Fee $24.00
b. Bank Fee
Category Rate or Charge Loan Limit
A NON-EIC 4% maximum $86 $4,000
B EIC 4% $3,300
C New Customer $51 $ 750
The ACR Application Fee and Electronic Filing Fee, if any, shall be determined
by each JHTS affiliate originating ACR/RAL transactions. The ACR Application
Fee determined by a JHTS affiliate shall be the same whether the Taxpayer
applies for an ACR alone or an ACR and a RAL. In no instance may a JHTS
affiliate charge any other fee or consideration in connection with the
application for, or processing and disbursement of a RAL.
5. ALLOCATION AND REMITTANCE OF ACR HANDLING FEES.
From the ACR Handling Fee collected by Bank for each ACR (or ACR and
RAL) when the Taxpayer's federal tax refund is deposited by the IRS into the
Taxpayer's Deposit Account at Bank, $3.50 shall be set aside by Bank in an
interest bearing account for payment to the JHTS office that generated the ACR
Application, which is to be paid to JHTS on the last day of April and any
balance on the last day of July for remittance to such JHTS office, $13.55 shall
be paid to Hewfant via ACH each Friday during each Tax Season and once a month
thereafter and $6.95 shall be paid to Bank.
6. BANK FEES; LOAN LOSS RESERVE.
a. From the Bank Fee charged the Taxpayer in connection with each RAL
which is collected by Bank, $1.50 shall be paid to Hewfant for services rendered
in connection with the application, documentation, processing, disbursement, and
administration of the RAL Program and $3.00 shall be paid to First Republic for
its services in connection with providing Loans to Taxpayers under the RAL
Program. Payment to Hewfant shall be made via ACH each Friday during the Tax
Season and once a month thereafter.
b. During the Tax Season Bank will deposit into the Reserve Account at
First Republic the entire Bank Fee for each RAL for which the IRS deposited the
Taxpayer's refund in a Deposit Account at Bank, less the amounts paid to Hewfant
and First Republic above. The Reserve Account will be used to cover Delinquent
RALs. In the event there is any excess, it shall be paid to JHTS as provided
below.
c. On or before July 31, 1998, First Republic will be paid from the
Reserve Account, the total amount of Delinquent RALS as of July 31, 1998. If
the amount on deposit is not sufficient to pay all Delinquent RALS, the
deficiency shall be paid 65% by Hewfant and JHTS and 35% by Bank.
d. On or about July 31, 1998, all sums remaining in the Reserve Account,
after providing for the Bank's loan losses incurred during the Tax Season, shall
be paid to JHTS. All collections recovered by Bank on delinquent RALs prior to
July 31, 1998, shall be deposited to the Reserve Account and, subsequent to July
31, 1998, shall be paid 65% to Hewfant and 35% to Bank. If the RAL program
results in deficits, JHTS and Hewfant will pay 65% of such deficits to First
Republic
e. Notwithstanding anything herein to the contrary, the parties shall
periodically review the RALs during the Tax Season and may prudently and
appropriately adjust the fees and charges for the RALs, the amounts reserved or
to be reserved in the Reserve Account, and the amounts distributed or to be
distributed, to reflect the actual performance of the RALs portfolio.
7. MISCELLANEOUS.
a. Except as specifically provided in this Addendum, by signing below the
parties intend the Agreement to remain in full force and effect.
b. By signing below, Hewfant and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc. consent to this
Addendum to the Agreement.
c. By signing below, First Republic consents to this Addendum to the
Agreement.
d. To facilitate execution, this Addendum may be executed in counterparts
by the parties and shall be binding when duly executed signatures of each party
appear on one or more counterparts delivered to the other parties. All
counterparts shall collectively constitute a single Addendum.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have caused their duly authorized representatives to execute this
Addendum To Tax Refund Funding Agreement (For 1997 Tax Season) as of
September 29, 1997.
FIRST REPUBLIC BANK
By: ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Typed Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
HEWFANT INC.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Typed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Typed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
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REVISION NO. 1
TO
ADDENDUM NO. 1
TO
TAX REFUND FUNDING AGREEMENT
(FOR 1998 TAX SEASON)
This Revision No. 1 To Addendum No. 1 To Tax Refund Funding Agreement
(For 1998 Tax Season) (the "Revision") is to Addendum No. 1 To Tax Refund
Funding Agreement of September 29, 1997 ("Addendum No. 1") to the Tax Refund
Funding Agreement of the same date (the "Agreement"), which is by and among
First Republic Bank, a Pennsylvania banking corporation ("First Republic"),
Hewfant Inc., a Virginia corporation ("Hewfant") and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc., a
Virginia corporation (which, together with its affiliates and franchisees (each
an "Affiliate"), as applicable, is referred to as "JHTS").
This Revision To Addendum No. 1 modifies and amends the various fees
and charges to be imposed on taxpayers by the Bank, JHTS and Hewfant during the
1998 Tax Season on the Bank Products.
1. BANK FEES AND CHARGES. The following fees and charges shall apply to all
ACRs and RALs during the 1998 Tax Season:
a. ACR Handling Fee $24.00
b. Bank Fee
Category Rate or Charge Loan Limit
A NON-EIC 4%, maximum $86 $4,000
B EIC 4% $2,150
C New Customer/EIC $51 $ 750
The ACR Application Fee and Electronic Filing Fee, if any, shall be determined
by each JHTS affiliate originating ACR/RAL transactions. The ACR Application
Fee determined by a JHTS affiliate shall be the same whether the Taxpayer
applies for an ACR alone or an ACR and a RAL. In no instance may a JHTS
affiliate charge any other fee or consideration in connection with the
application for, or processing and disbursement of a RAL.
2. MISCELLANEOUS.
a. Except as specifically provided in this Revision, by signing below the
parties intend the Agreement, as amended by Addendum No. 1, to remain in full
force and effect.
b. By signing below, Hewfant and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc. consent to this
Revision to Addendum No. 1.
c. By signing below, First Republic consents to this Revision to Addendum
No. 1.
d. To facilitate execution, this Revision may be executed in counterparts
by the parties and shall be binding when duly executed signatures of each party
appear on one or more counterparts delivered to the other parties. All
counterparts shall collectively constitute a single Addendum.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have caused their duly authorized representatives to execute this
Revision No. 1 To Addendum No. 1 To Tax Refund Funding Agreement (For 1998 Tax
Season) as of October 23, 1997.
FIRST REPUBLIC BANK
By: ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Typed Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
HEWFANT INC.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Typed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Typed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
2
TAX REFUND FUNDING AGREEMENT
This Tax Refund Funding Agreement (the "Agreement") is made this
29th day of September, 1997, by and among First Republic Bank, a Pennsylvania
banking corporation ("First Republic"), Hewfant Inc., a Virginia corporation
("Hewfant"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc., a Virginia corporation (which, together
with its affiliates and franchisees (each an "Affiliate"), as applicable, is
referred to as "JHTS").
DEFINITIONS
"Addendum No. 1" means an addendum to this Agreement, adopted by the
parties for any Tax Season while this Agreement remains in effect, which
specifies the fees and charges for the Bank Products imposed on Taxpayers during
that Tax Season and the duties and obligations of the parties regarding the
disbursement thereof. The provisions of the Addendum No. 1 applicable to the
current Tax Season are incorporated into this Agreement as if contained herein.
"Application" means the document by which a Taxpayer applies for an
ACR and, at the election of the Taxpayer, a RAL.
"ACR" or "Accelerated Check Refund" means a program offered by Bank
using electronic or other filing by which a Taxpayer requests his or her federal
income tax refund be deposited directly into the Taxpayer's Deposit Account at
Bank.
"ACR Application Fee" means the nonrefundable fee charged by the local
JHTS office for processing an ACR Application.
"ACR Handling Fee" means the fee charged by Bank for opening the
Deposit Account, processing and accounting for the refund to a Taxpayer by the
IRS, disbursing the tax preparation and ACR Application Fees due the local JHTS
office generating the ACR, and providing and processing the ACR check.
"Bank" means First Republic or any other financial institution that
First Republic designates to offer the Bank Products in participation with First
Republic, as indicated in Addendum No. 1.
"Bank Fee" means the finance charge imposed by Bank for making a
Refund Anticipation Loan.
"Bank Products" include the ACRs and/or RALs.
"Business Day" means any day, other than a Saturday, Sunday or legal
holiday, on which the Bank is open for business.
"Delinquent RAL" means an outstanding RAL that has not been paid in
full within 23 days after the date the RAL check was issued.
"Deposit Account" means the deposit account established in Bank for a
Taxpayer by Bank, and into which the IRS will deposit the Taxpayer's refund.
"Electronic Filing Fee" means the fee charged by the local JHTS office
for electronically filing income tax returns prepared by preparers other than
▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
"IRS" means the Internal Revenue Service.
"Program" means the system developed by First Republic, JHTS and
Hewfant to provide ACRs and RALs to Taxpayers.
"RAL" or "Refund Anticipation Loan" means a loan secured by a
Taxpayer's federal income tax refund.
"Reserve Account" means an interest bearing account at Bank into which
Bank will deposit the Bank Fee received when the tax refund is deposited by the
IRS for each RAL issued.
"Hewfant ACR Account" means an interest bearing account at Bank into
which Bank will deposit a sum as specified in the Addendum for each ACR when the
Taxpayer's federal income tax refund is deposited by the IRS into the Deposit
Account.
"Hewfant RAL Account" means an interest bearing account at Bank into
which Bank will deposit a sum as specified in the Addendum for each RAL when the
Taxpayer's federal income tax refund is deposited by the IRS into the Deposit
Account.
"Taxpayer" means a JHTS customer for any of its services. It refers
both to individual taxpayers filing individual returns and to joint taxpayers
filing joint returns.
"Tax Season" in any calendar year means the period from the first day
in that year that the IRS permits electronic filing through April 30th of that
year.
"Tax Preparation Fee" means the fee charged by the local JHTS office
for preparing and electronically filing a tax return.
INTRODUCTION
WHEREAS, JHTS operates a tax preparation business that features
electronic filing of federal and selected state income tax returns; and,
WHEREAS, First Republic, Hewfant and JHTS have established a Program
through which Taxpayers are offered ACRs and RALs through selected banks; and,
WHEREAS, Bank desires to be one of the banks to offer ACRs and RALs to
JHTS customers on the terms and conditions provided in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained in this Agreement, and other good and valuable consideration, the
receipt of which is hereby acknowledged, all of the parties agree as follows:
AGREEMENT
1. DUTIES OF JHTS AND HEWFANT - ACR PROGRAM
As to each Taxpayer electing to apply for participation in the ACR Program,
Hewfant or JHTS, as applicable, shall have the following obligations:
a. JHTS will complete and have the Taxpayer (and the Taxpayer's spouse if
the return is a joint return) execute: (1) an ACR Application on a form which
Hewfant will have printed at its expense from artwork supplied by Bank and
approved by Hewfant and (2) an IRS Form 8453 (U.S. Individual Income Tax
Declaration for Electronic Filing), which JHTS will execute as the
preparer/transmitter, which Form 8453 JHTS will supply at its expense. Bank's
name and routing transit number shall be preprinted in Part II of Form 8453 and
a depositor account number consisting of a prefix specified by Bank, and a
suffix consisting of the Taxpayer's social security number, which shall be
verified by JHTS (or the social security number of the primary Taxpayer, in the
case of a joint return) shall be inserted by JHTS in Part II in Form 8453.
b. JHTS will inspect one form of signed picture identification, and use
its best efforts to inspect a second form of signed photo identification from
each Taxpayer to verify the identity of the Taxpayer. If joint Taxpayers are
both present, JHTS will inspect one form of picture identification from each.
The identification shall be from among the following:
i. a clearly identifiable school picture ID card;
ii. a valid U.S. Passport;
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iii. a valid resident alien card that contains a photograph;
iv. a valid driver's license containing a photo ID;
v. a current military ID card;
vi. a state ID card;
vii. an Indian Affairs card; or
viii. a union membership ID.
c. Hewfant will cooperate with JHTS in submitting the Taxpayer's federal
income tax return to the IRS electronically. JHTS will file the hard copy of
IRS Form 8453 with the IRS in accordance with IRS regulations.
d. After electronically transmitting or mailing the Taxpayer's income tax
return to the IRS and receiving the IRS acknowledgment, JHTS will electronically
transmit to Bank and Hewfant: (1) the Taxpayer's name; (2) the Taxpayer's
address; (3) the Taxpayer's social security number; (4) the amount of the
Taxpayer's federal income tax refund as computed by JHTS; (5) the location code
of the JHTS office at which the Taxpayer applied for an ACR; and (6) the amount
of all fees owing to JHTS and Bank from the Taxpayer which the Taxpayer
authorized Bank to withhold from the Taxpayer's refund and pay to JHTS.
e. Upon receiving notice from Bank that a Taxpayer's refund has been
deposited at Bank, Hewfant shall assist JHTS to prepare an ACR check by
completing a blank cashier's check form supplied by Bank at Bank's expense, and
completing and affixing thereon a laser generated facsimile signature authorized
by Bank. Such check shall be in the amount of the tax refund less the ACR
Handling Fee, the Tax Preparation Fee, the Electronic Filing Fee, if any, the
ACR Application Fee, and any other sum that the Taxpayer authorized Bank to
withhold from the ACR check and pay to third parties. This check shall be made
available to the Taxpayer by JHTS at the JHTS office at which the Taxpayer
applied for the ACR following JHTS's receipt of confirmation from Bank that the
tax refund has been deposited into the Taxpayer's account at Bank.
f. JHTs will retain original ACR Applications for twenty-five (25)
months, and send to Bank copies of ACR Applications within five (5) days of
Bank's request. JHTS will retain copies of such records associated with the ACR
Program, and the electronic filing of the Taxpayer's federal income tax return
as the IRS may from time to time require or direct.
g. JHTS will use its best efforts to retain copies of such records
associated with the ACR Program and the electronic and mail filing of the
Taxpayer's federal income tax return as the IRS may from time to time require or
direct.
2. BANK'S DUTIES - ACR PROGRAM
Bank will have the following duties with respect to each Application for an
ACR transmitted to it by Hewfant or JHTS:
a. At the time Hewfant or JHTS notifies Bank of an application for an
ACR, Bank will open a Deposit Account in the name of Taxpayer in which the
Taxpayer's refund will be deposited by the IRS. Bank shall provide a form to
JHTS to be executed by a Taxpayer granting Bank the right to offset such refund
from the Deposit Account when it is electronically deposited by the IRS for all
JHTS fees and Bank's fees.
b. Upon receipt of the Taxpayer's refund from the IRS, Bank shall remit
the Tax Preparation Fee, the Electronic Filing Fee, if any, the ACR Application
Fee, and any other sum that Taxpayer has authorized Bank to pay pursuant to the
ACR Application by: (a) transferring the amount of the Tax Preparation Fee, the
Electronic Filing Fee, if any, and the ACR Application Fee, via ACH, to the
account of the JHTS office that generated the ACR Application; and (b) notifying
Hewfant each day, either electronically or on magnetic diskette, of each tax
refund received for which an ACR check should be issued, together with the name
and social security number of the Taxpayer, the amount of
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the Tax Preparation Fee, the Electronic Filing Fee, if any, the ACR
Application Fee, and any other sum remitted for such Taxpayer to a third
party, pursuant to the ACR Application, and the location code of the JHTS
office at which the particular Taxpayer applied for an ACR.
c. While this Agreement is in effect, subject to the approval of Hewfant
and JHTS, Bank will designate, pursuant to the provisions of Paragraph 19.I, the
amount of the ACR Handling Fee, which fee shall be provided in the Addendum and
be in effect for one (1) calendar year. Bank may change the ACR Handling Fee
for any subsequent calendar year during the term of this Agreement by November 1
of the prior calendar year only according to the provisions of Paragraph 19.I of
this Agreement.
3. ALLOCATION OF ACR HANDLING FEES
The ACR Handling Fees shall be allocated and remitted as provided in
Addendum No. 1.
4. DUTIES OF HEWFANT AND JHTS - RAL PROGRAM
As to each Taxpayer electing to apply for participation in the RALs
Program, Hewfant or JHTS, as applicable, will do the following:
a. Perform those duties specified in Subparagraphs 1.a, 1.b and 1.c of
this Agreement.
b. After electronically transmitting the Taxpayer's income tax return to
the IRS and receiving the IRS acknowledgment, JHTS will electronically transmit
to Bank and Hewfant: (1) the Taxpayer's name; (2) the Taxpayer's address; (3)
the Taxpayer's social security number; (4) the amount of the Taxpayer's federal
income tax refund as computed by JHTS; (5) the location code of the JHTS office
at which the Taxpayer applied for a RAL; and, (6) the amount of all fees owing
to JHTS from the Taxpayer which the Taxpayer authorized Bank to withhold from
the RAL proceeds and pay to JHTS. JHTS shall instruct its Affiliates that, in
no instance, may a separate charge be imposed by an Affiliate related to the
application for or processing and disbursement of a RAL other than the ACR
Application, Electronic Filing, if any, and Tax Preparation Fees and that the
ACR Application Fee charged by an Affiliate shall be the same whether the
Taxpayer applies for an ACR alone or an ACR and RAL.
c. On each Business Day during the term of this Agreement, Hewfant will
process each Application for a RAL transmitted to it on that day in accordance
with Bank's program eligibility and credit underwriting standards then in effect
for such RALs and in accordance with an ASCII or other acceptable record of
uncreditworthy persons provided by Bank, and will notify JHTS electronically
within two (2) hours after it receives the application as to whether the RAL
should be made based on Bank's eligibility and credit underwriting standards.
Bank shall independently evaluate each Application for a RAL.
d. Unless notice is received by JHTS from Bank electronically within two
(2) hours after Bank received the Application that a Taxpayer's application for
a RAL has not been approved by Bank, upon receipt of electronic notice from
Hewfant that a Taxpayer's RAL should be made, in accordance with an ASCII or
other acceptable file of ineligible customers to be supplied by Bank, JHTS shall
prepare a disbursement check for the RAL by completing a blank cashier's check
form supplied by Bank at Bank's expense, and completing and affixing thereon a
laser generated facsimile signature authorized by Bank. Such ACR check shall be
for the amount of the RAL less the Bank Fee that the Taxpayer authorized Bank to
withhold from the RAL, and less the Tax Preparation, Electronic Filing, if any,
ACR Application, and ACR Handling Fees, and any other applicable fees that the
Taxpayer authorized Bank to withhold from the RAL and pay to JHTS.
e. JHTS will also complete a Proceeds Disbursement Authorization and
Truth-in-Lending Disclosure and Loan And Security Agreement (the "Disclosure")
on a form which shall be a perforated stub of the blank ACR cashier's check form
supplied by Bank at Bank's expense. JHTS shall then deliver such Disclosure and
check promptly to the Taxpayer and provide Bank with a listing of all checks
issued on a particular Business Day and, if not on that day, JHTS will use
every effort to provide this information as soon as possible. This listing
shall identify ACR checks issued by amount, date issued and check number.
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f. If a Taxpayer's RAL Application is denied for any reason, Hewfant will
provide an ASCII or other acceptable record of such Taxpayer, and forward it to
Bank on a regular basis. Hewfant will also complete and send the appropriate
written Notice of Adverse Action in the form prepared or approved by Bank to
Bank, which Bank will review and forward to the Taxpayer. Pursuant to the
Taxpayer's Application, the Taxpayer will then receive an ACR check and shall
have deducted from the refund deposited by the IRS all of the tax
preparation/filing fees of JHTS as well as the ACR Application Fee, ACR Handling
Fee, and sums paid to third parties, but not the Bank Fee.
g. Upon receiving oral or written notice from a Taxpayer that the
Taxpayer no longer desires to obtain a previously approved RAL, JHTS shall not
deliver the Bank ACR check to the Taxpayer or, if the check has already been
delivered or mailed to the Taxpayer, shall advise the Taxpayer to return the ACR
check to JHTS, marked "VOID" as a result of a Taxpayer cancellation. The
Taxpayer shall then be deemed to have applied for an ACR and shall be liable for
the same fees as specified in Paragraph 4.(h) above when the new ACR check is
issued.
h. JHTS will retain original RAL Applications, copies of Disclosures and
Notices of Adverse Action for 25 months, and send individual original
Applications so retained to Bank within five (5) days after Bank's request for
them. JHTS will retain copies of such records associated with the RALs and ACRs
and the electronic filing of Taxpayer's federal income tax return as the IRS may
from time to time require or direct.
i. JHTS and Hewfant will mail up to three letters in the form adopted by
Bank and on Bank's stationary to effect collection of delinquent RALs. All RALs
that are 90 or more days delinquent may be referred by Bank to a collection
agency.
5. BANK'S DUTIES - RALS PROGRAM
Bank will have the following duties with respect to each Application for a
RAL transmitted to it by Hewfant:
a. On each Business Day during the term of this Agreement, Bank will
evaluate each Application for a RAL transmitted to it on that day in accordance
with its underwriting standards then in effect for such RALs and will notify
Hewfant electronically within two hours after it receives the application if the
Application is not approved. Bank will not accept any application from a JHTS
Affiliate if Bank receives notification from the IRS that the Affiliate is under
investigation, or Bank reasonably suspects fraudulent activity originating
through the Affiliate, or if, for any reason, delinquencies on RALs originating
through the Affiliate are considered unacceptable.
b. On the Business Day Bank receives notification, prior to a mutually
agreed upon cut-off time, that a disbursement check, including check number and
amount, has been issued, Bank will remit, via ACH directly to the bank account
of the local JHTS office that generated the fees, the Tax Preparation Fee, the
Electronic Filing Fee, if any, the ACR Application Fee, and any other applicable
fees.
c. To enable Hewfant and JHTS to identify the fees remitted by Bank, on a
daily basis, Bank will also supply to Hewfant electronically with respect to
each fee remitted that day: (a) the name and social security number of each
Taxpayer for whom Bank remitted fees; (b) the amount of the Tax Preparation Fee,
Electronic Filing Fee, if any, ACR Application Fee, and any other applicable fee
remitted for each Taxpayer; and (c) the location code of the JHTS office at
which the particular Taxpayer applied for a RAL.
d. All loan disbursement checks delivered to Taxpayers shall be cashier's
ACR checks drawn on a loan disbursement account established by Bank, and shall
be paid promptly upon presentment, unless Bank reasonably believes that it has a
valid defense to the payment of such check. On a daily basis Bank will supply
to Hewfant electronically a listing of all ACR checks issued in connection with
RALs that have cleared.
e. Bank will open a Deposit Account for each Taxpayer at Bank. Bank
shall have the right to offset such refund when it is electronically deposited
by the IRS against the total of the loan disbursement check previously delivered
to the Taxpayer, plus the Tax Preparation Fee, Electronic Filing Fee, if any,
the RAL Application Fee, the Bank Fee, the ACR Application Fee, the ACR Handling
Fee, and any other applicable fees or deductions authorized by the Taxpayer. If
the Taxpayer's refund exceeds the total of such amounts, Bank will promptly pay
the excess amount to Taxpayer, provided that any such amount is at least $1.00.
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f. While this Agreement is in effect, subject to approval of Hewfant and
JHTS, Bank will designate, pursuant to the provisions of Paragraph 19.i., the
amount of the Bank Fees that are "Finance Charges" (as this term is defined in
Federal Reserve Board Regulation Z), which Bank Fees shall be provided in
Addendum No. 1 and be in effect for one (1) calendar year. Bank may change the
Bank Fees designated by Bank by November 1 of the year before the calendar year
in which the Bank Fees will be effective. Bank agrees to indemnify JHTS and
Hewfant with regard to compliance with law as provided in the Indemnification
Agreement appended hereto as Exhibit "B".
6. BANK FEES AS LOAN LOSS RESERVE
The Bank Fee for the RALs shall be reserved against losses on the RALs,
applied against such loan losses and disbursed as provided in Addendum No. 1.
7. BLANK CHECK STOCK
JHTS will use the blank cashiers' ACR check stock provided by Bank, and
will complete and affix laser generated facsimile signatures thereto only as
authorized by Bank for the purposes described in this Agreement. JHTS shall use
reasonable care to safeguard the blank ACR check stock supplied to it by Bank
until each ACR check form is given to the appropriate Taxpayer, but JHTS shall
not be responsible for any loss that occurs in connection with an ACR check
after it is given to the Taxpayer. If a blank ACR check form should be
discovered to have been lost, stolen or given to a person other than the proper
Taxpayer, JHTS shall promptly report that fact to Bank. Upon termination of
the Agreement, JHTS shall account to Bank for unused blank ACR check stock and
return all unused ACR check stocks to Bank. JHTS shall maintain and transmit to
Bank a record of ACR check stock or number issued to each Affiliate. JHTS shall
also destroy all facsimile specimens.
8. WARRANTIES OF HEWFANT AND JHTS
Hewfant and, as applicable, JHTS, warrant and continue to warrant to Bank
that:
a. JHTS will maintain such computer software as is necessary to
facilitate the Program, including error checking and fraud detection routines.
b. Hewfant will use its best efforts to provide Bank with at least the
number of Bank Products for each Tax Season as specified in the Addendum for
that Tax Season, which shall be about fifty percent (50%) of the Bank Products
provided by JHTS to all of its participating RAL lenders in that Tax Season.
c. For Application data transmitted by JHTS to Hewfant, the data
originates from bona fide Program Applications actually signed and submitted by
the named applicants, copies of which along with copies of the RAL Disclosure
were provided to the Taxpayers at the time of application.
d. With respect to each Application, JHTS has obtained the required forms
of identification, signatures and certifications from each Taxpayer and has no
knowledge that any Taxpayer has provided inaccurate data.
e. Hewfant and JHTS are not aware of any reason why any Taxpayer's income
tax refund would not be made in the amount submitted by JHTS to Hewfant and
Bank.
f. All charges and sums which Hewfant or JHTS authorizes Bank to deduct
from the proceeds of an ACR or RAL made under the Program are owed to JHTS or
others by the appropriate Taxpayer and the Taxpayer has authorized deduction of
the charges or others from the ACR or RAL proceeds.
g. All ACR checks completed by JHTS and other funds received from Bank
for payment to Taxpayers will be delivered or mailed by JHTS to the appropriate
Taxpayer.
h. JHTS has complied and will continue to comply with all applicable
laws, regulations, procedures and interpretations thereof relating to the
payment of federal income tax and the preparation of federal income tax returns
and has complied and will continue to comply with all applicable laws and
regulations relating to the arranging for RALs in anticipation of the receipt of
federal income tax refunds and the marketing and advertising of such
arrangements.
6
This warranty does not extend to those laws and regulations as to which First
Republic has given its warranty under Section 9.
i. The blank loan disbursement ACR check stock and facsimile specimen
provided by Bank to JHTS will be used only as authorized by Bank for purposes
described in this Agreement and the blank ACR check stock will be returned, if
unused, by September 1 of the calendar year for which those ACR checks have been
prepared for use.
j. These warranties shall survive the termination of this Agreement.
9. WARRANTIES OF FIRST REPUBLIC
First Republic warrants to Hewfant and, as applicable, to JHTS, that (i)
the evaluation and processing of Program Applications, the making and
documentation of RALs to Taxpayers under the Program and the fees charged by
Bank for such RALs will comply with all applicable state and federal laws and
regulations, including without limitation, the federal Truth-In-Lending Act (15
U.S.C. 1601 et seq.), but excepting those laws and regulations as to which JHTS
has given its warranty under Paragraph 8.h, and (ii) it has sufficient capital
to fund the RALS provided by Hewfant to it in any Tax Season. These warranties
shall survive the termination of this Agreement.
10. GUARANTY OF RALS
To induce First Republic, either itself or through a designee Bank, to make
RALs to Taxpayers referred by JHTS and Hewfant pursuant to this Agreement,
Hewfant and JHTS, jointly and severally, agree to enter into the Suretyship
Agreement appended hereto as Exhibit "A."
11. TERM AND TERMINATION
a. The term of this Agreement shall begin on the date first written above
and shall terminate on October 31, 1999, unless extended as provided below.
b. Any party may terminate this Agreement upon written notice to the
others as provided in this Agreement. Such notice, to be effective, must be
given during the period of April 1st to June 30th of any calendar year, and
shall be effective to terminate this Agreement as of the then applicable
termination date as it may have been extended and reextended. If this Agreement
is not terminated during the period of April 1st to June 30th in any calendar
year, the termination date of this Agreement shall automatically be extended by
one year. Otherwise, this Agreement may be terminated by any party upon fifteen
(15) days written notice if: (a) applicable laws, regulations, or IRS
procedures governing the making of RALs and ACRs make (or are claimed by an
enforcement authority to make) the continued operation of the Program of
questionable legality, either generally or in any area; or (b) the IRS ceases to
permit JHTS to file income tax returns electronically or the Treasury Department
ceases to deposit income tax refunds directly into accounts of Taxpayers with
Bank. However, this Agreement may not be so terminated if either ACRs or RALs
may still lawfully be offered to Taxpayers by Bank.
c. Performance of duties which by their terms contemplate performance
after the date of termination shall be completed in accordance with this
Agreement. Such duties include, but are not limited to, collection of
delinquencies, dispersal of proceeds, payments, and the like.
12. OWNERSHIP OF LOANS
Bank, Hewfant and JHTS agree that Bank will be sole owner of the RALs made
under the Program. First Republic, in consultation with Hewfant, will set
credit underwriting standards to evaluate applications for Program loans from
time to time. First Republic may supply Hewfant no later than December 31 prior
to any Tax Year, with an ASCII record of the names and social security numbers
of all Taxpayers for which it will not authorize any RAL for that Tax Year,
provided that this record is not excessive in size as determined by JHTS and
Hewfant.
13. LOAN LIMITS
The maximum and minimum RAL loan amounts shall be as provided in the
Addendum.
7
14. JHTS FRANCHISEES (AFFILIATES)
a. JHTS may from time to time arrange for independently owned offices
franchised by or affiliated with JHTS ("Affiliates") to participate in the
Program without such Affiliates having a direct agreement with Bank.
b. JHTS agrees that such Affiliates will execute agreements requiring
them to perform the duties and make the representations and warranties of
Hewfant and JHTS to Bank with respect to RAL and ACR Applications submitted
through and processed by them.
c. Each Affiliate is responsible for any and all blank check forms which
are provided to that Affiliate pursuant to this Program. In the event that
blank ACR check forms that have been forwarded to an Affiliate have been or are
presumed to have been lost, stolen or given to a person other than the proper
Taxpayer, the Affiliate is responsible for any and all resultant loss, and the
Affiliate will indemnify the Bank against such loss. If the Affiliate is unable
or unwilling to indemnify Bank within 60 days of receipt of Bank's demand for
indemnification, JHTS agrees that it shall be responsible for the actions of
such Affiliates with respect to this Agreement and such Affiliates shall be
deemed to be offices owned by JHTS for all purposes hereof, including without
limitation the warranties of JHTS hereunder and JHTS shall indemnify the Bank
for such loss.
15. PARTICIPATION
First Republic may, from time to time, sell and assign one or more
participation interests in the ACRs and RALs generated under the Program, and
the participants to whom participation interests are sold may sell
sub-participation interests; provided, however, that any financial institution
purchasing a participation interest of more than 25% in any Program RALs shall
act as a continuing surety and indemnitor of all of Bank's obligations under
this Agreement.
16. MARKETING AND OTHER MATERIALS
a. Hewfant will develop marketing materials in connection with the
Program. First Republic will have the right to review promptly and approve all
marketing materials produced by Hewfant in connection with the Program, provided
that First Republic's approval is not unreasonably withheld. First Republic
will develop certain other written materials (including collection letters and
loan denial letters) for use in connection with the Program. Hewfant and JHTS
will have the right to promptly review and approve such materials if they are
meant for external use, provided that Hewfant's and JHTS's approvals are not
unreasonably withheld.
b. Each party hereto owns and may use in connection with the Program
certain trade and service marks. No party shall use the other's marks in any
manner except to the extent and in the manner expressly authorized in writing by
the other.
17. CONFIDENTIAL INFORMATION
Each party hereto shall safeguard all data and other information made
available to it by the other parties which is of a confidential nature, taking
reasonable precautions to withhold the same from disclosure to the same extent
that it would safeguard its own confidential information and data. Such
confidential information shall not include information which is otherwise
generally available to the public, or rightfully obtained by or from third
parties. Upon the termination of this Agreement, the parties shall return all
such confidential information and certify in writing that no copies are
retained. The undertakings of this Paragraph 17 shall survive the termination
of this Agreement.
18. INDEMNIFICATION
Hewfant and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, jointly and severally on the one part, and
First Republic individually on the other (herein, each an "Indemnitor"), shall
indemnify the other against any liabilities and expenses, including legal fees,
incurred by the other in connection with any claims, disputes, controversies or
litigation arising out of (a) the failure of such Indemnitor to perform its
duties and responsibilities under this Agreement, as it may be extended,
renewed, modified or amended or (b) any breach of the Indemnitor's warranties
made under this Agreement, as it may be extended, renewed, modified or amended.
The indemnifying party shall have the right to control any action for which
indemnity is required herein, through knowledgeable and experienced counsel of
its choice; provided, however, that
8
at the indemnitee's option, the indemnitee may participate in and contribute
to such action and appoint its own counsel at any time, all of which shall be
at such indemnitee's cost and expense. The liability of Hewfant and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ hereunder shall jointly be limited to 65% of the liability and
expenses for which such indemnification is being sought hereunder. This
indemnity shall survive the termination of this Agreement. A copy of the
form of Indemnification Agreement is appended hereto as Exhibit "B."
19. MISCELLANEOUS
a. This Agreement is binding on the parties hereto and their successors.
Each party may assign its rights and delegate its obligations hereunder to any
of its direct corporate parents, to any of its wholly-owned subsidiaries or to
any affiliate. Other than as explicitly stated in this paragraph, this
Agreement cannot be assigned to any party without the express written consent of
all other parties, except that First Republic may designate another Bank to
offer the Bank Products in participation with First Republic and may also sell
and assign one or more participation interests in the Bank Products at any time
and from time to time pursuant to Paragraph 15 above without notice to or the
consent of the other parties.
b. This Agreement shall be governed by and interpreted under the internal
laws of the State of Delaware and, to the extent applicable, the United States
of America.
c. Notice, when required under this Agreement, shall be given in writing
by first class U.S. Mail, postage prepaid, addressed as follows:
If to BANK: First Republic Bank
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to JHTS: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Hewfant: Hewfant Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Notice properly given under the provisions of this Paragraph shall be deemed
given on the day following the day when placed in the mails.
d. The failure of any party to insist upon another party's compliance
with or performance of any term or condition of this Agreement shall not be
deemed a waiver of such term or condition, and no waiver shall be binding upon
any party unless in writing and signed by such party, and shall then be binding
only for that particular instance.
e. The parties agree that if any provision of this Agreement shall be
determined to be void by any court of competent jurisdiction, then such a
determination shall not affect any other provision of this Agreement, all of
which provisions shall remain in effect. If any provision is capable of two
constructions, one of which would render the provision valid, then the provision
shall have the meaning which renders it valid.
f. This writing constitutes the entire agreement among the parties. This
Agreement may be amended or supplemented only by a writing duly executed by
authorized representatives of the parties.
g. It is expressly understood and agreed that it is not the intention or
purpose of this Agreement to create nor shall the same be construed as creating
any type of agency, partnership or joint venture.
h. From time to time First Republic, its designated Bank and/or its or
their banking examiners or auditors may perform physical audits of blank Bank
ACR check stock, Program Application forms, copies of Taxpayers' 8453 Forms, and
delinquency summaries by JHTS Affiliates in Hewfant's or JHTS's possession.
Hewfant and JHTS will
9
permit First Republic, its designated Bank, and/or its or their banking
examiners or auditors, access to Hewfant's and/or JHTS's premises and records
for the purpose of such audits, and will cooperate with Bank in connection
with such audits.
i. This Agreement may not be modified or amended without the written
consent of JHTS., Hewfant and Bank. Any changes in terms or fees must be
decided upon each year no later than December 1 or shall continue to remain in
effect. Fees established on that date shall be as provided in the Addendum for
the next Tax Season and may not be changed at any other time without the
express, written consent of all parties.
j. To facilitate execution, this Agreement may be executed in
counterparts by the parties and shall be binding when duly authorized signatures
of each party appear on one or more counterparts delivered to the other parties.
All counterparts shall collectively constitute a single Agreement.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused their duly authorized representatives to execute this
Agreement as of the day and year first written above.
Attest: FIRST REPUBLIC BANK
------------------------------------
BY: ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
(SEAL)
Typed Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
Attest: HEWFANT, INC.
------------------------------------
BY: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
(SEAL)
Typed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Attest: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ INC.
------------------------------------
BY: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
(SEAL)
Typed Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
