-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JKGUy1JvNgcFbVzNxZyPuW0EULu/clUB97qFlBmNYP1sZYfBgV8n25wHNRcpg0ji GaP95PvFaGwkvjeUE6ylEg== 0000950134-02-013418.txt : 20021105 0000950134-02-013418.hdr.sgml : 20021105 20021105165647 ACCESSION NUMBER: 0000950134-02-013418 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20021025 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACE CASH EXPRESS INC/TX CENTRAL INDEX KEY: 0000849116 STANDARD INDUSTRIAL CLASSIFICATION: FUNCTIONS RELATED TO DEPOSITORY BANKING, NEC [6099] IRS NUMBER: 752142963 STATE OF INCORPORATION: TX FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20774 FILM NUMBER: 02810140 BUSINESS ADDRESS: STREET 1: 1231 GREENWAY DR STE 800 CITY: IRVING STATE: TX ZIP: 75038 BUSINESS PHONE: 2145505000 MAIL ADDRESS: STREET 1: 1231 GREENWAY DR #800 CITY: IRVING STATE: TX ZIP: 75038 FORMER COMPANY: FORMER CONFORMED NAME: ACE CASH EXPRESS INC DATE OF NAME CHANGE: 19921016 8-K 1 d00906e8vk.htm FORM 8-K Ace Cash Express, Inc.
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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

October 25, 2002
(Date of earliest event reported)

ACE CASH EXPRESS, INC.

(Exact name of registrant as specified in its charter)
         
Texas
(State or other jurisdiction of
incorporation)		   0-20774
(Commission file number) 		  75-2142963
(I.R.S. employer
identification no.)

1231 Greenway Drive, Suite 600
Irving, Texas 75038
(Address of principal executive offices)

(972) 550-5000
(Registrant’s telephone number,
including area code)

Not Applicable
(Former Name or Former Address,
if Changed Since Last Report)

 

Item 5. Other Events
Item 7. Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
EX-10.1 Stipulation and Consent
EX-10.2 Consent Order
EX-10.3 Amendment to Master Loan Agency Agreement

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Item 5. Other Events

     On October 25, 2002, the Registrant (“ACE”) entered into an agreement with the Office of the Comptroller of the Currency (the “OCC”), and on November 1, 2002, ACE entered into an agreement with Goleta National Bank (“GNB”), to end the arrangement under which GNB offers short-term loans at ACE’s stores (“Bank Loans”) by December 31, 2002. ACE’s agreement with the OCC was in the form of a Stipulation and Consent to the Issuance of a Consent Order (the “Stipulation”), and its agreement with GNB was in the form of Amendment Number 3 to their Master Loan Agency Agreement (the “Amendment”).

     GNB and ACE entered into their arrangement in August 1999. Under the arrangement, (1) ACE acts as GNB’s agent to process applications for Bank Loans at ACE’s stores and to service and collect Bank Loans, (2) ACE purchases a 90% participation in the Bank Loans from GNB, and (3) from April 1, 2001 until October 31, 2002, ACE was responsible for 90%, and GNB was responsible for 10%, of the losses and expenses incurred by them from most third-party claims regarding the Bank Loans. Bank Loans have been offered at almost all of ACE’s stores since May 2000. Increasing scrutiny of the arrangement by the OCC over the past year, however, made it increasingly more difficult and expensive for ACE and GNB to continue the arrangement while satisfying the OCC’s concerns. In addition, new state legislation and regulations and the approach of regulators in certain states have prompted ACE to cease offering Bank Loans at approximately 210 of ACE’s stores, in eight states, over the past seven months. Bank Loans are currently offered at approximately 730 of ACE’s stores.

     As the result of the Stipulation, the OCC issued a Consent Order dated October 25, 2002 (the “Consent Order”) that requires ACE to, among other things:

  •   end the arrangement with GNB by December 31, 2002,
 
  •   indemnify 100%, instead of the existing 90%, of GNB’s losses and expenses incurred on or after November 1, 2002 from certain third-party claims regarding Bank Loans, including pending lawsuits,
 
  •   pay a $250,000 civil money penalty to the OCC, and
 
  •   submit to the OCC any future proposal of ACE to provide services to a national bank and obtain a no-objection determination from the OCC.

Under the Consent Order, ACE may continue to service and collect outstanding Bank Loans after December 31, 2002 (although no Bank Loans may be made or renewed after that date).

     The Amendment provides that:

  •   ACE will indemnify 100%, instead of the existing 90%, of GNB’s losses and expenses incurred on and after November 1, 2002, from certain third-party claims regarding Bank Loans, including pending lawsuits,
 
  •   GNB will transfer its credit-scoring software to ACE in exchange for $10,000 in cash,
 
  •   GNB will transfer its ownership interest in ePacific, Incorporated, a loan servicing company, to ACE in exchange for $15,000 in cash, and

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  •   ACE will continue to service and collect outstanding Bank Loans on and after December 31, 2002, under the terms of the Collection Servicing Agreement between ACE and GNB, as amended.

     The Stipulation, the Consent Order, and the Amendment follow discussions during at least the past nine months between ACE and GNB, and between each of them and the OCC, regarding the OCC’s concerns about the arrangement. Those concerns related to certain risks to GNB that the OCC believed were posed by GNB’s short-term loan program and the arrangement with ACE. In August 2002, it was discovered that certain Bank Loan files had been mistakenly discarded from an ACE store in Virginia. The OCC notified ACE that the loss of those files, even if inadvertent, could result in charges of violating certain information-maintenance and -protection provisions of federal law. In the Stipulation and the Consent Order, the OCC and ACE compromised and settled all issues related to that matter; the OCC agreed not to file any charges or institute any proceedings, and ACE did not admit or deny any wrongdoing.

     In light of the cessation of the arrangement, ACE plans to offer at most of its stores, instead of the Bank Loans, other short-term loans or deferred-deposit-transaction services made in accordance with state law and regulations. ACE intends to make this transition by December 31, 2002 or as soon thereafter as is practicable. ACE believes that it will be able to offer an alternative loan service or product in approximately 90% of the stores at which Bank Loans are currently offered. ACE anticipates that this transition will give it a more settled legal and regulatory framework for offering loan services and will avoid the federal-state jurisdiction issues that are a subject of various pending lawsuits.

     ACE is in the process of obtaining the licenses necessary to permit it to offer short-term loans or engage in deferred-deposit transactions, where state laws permit and ACE does not already have such a license. ACE currently holds licenses in 13 states that permit it to offer a state-regulated short-term loan or similar service in over 700 stores.

     ACE currently expects that the transition will result in somewhat higher loan-related expenses, to effect the cessation of the arrangement and to more broadly implement an alternative loan service or product, and in somewhat lower loan-related revenues, especially in the third and fourth quarters of its current fiscal year, ending June 30, 2003. ACE cannot yet estimate the scope of those changes. Nevertheless, ACE believes that, if it can make the transition as anticipated, its overall net income for its current fiscal year should not be materially affected by the transition. This is because ACE will be entitled to 100%, instead of 90%, of the loan fees and interest from the alternative loan services or products offered at its stores and because the operating expenses of the alternative loan services or products should be less than those incurred for the Bank Loans.

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     ACE’s increased level of indemnification of GNB regarding the Bank Loans will require it to pay 10% more than it would otherwise have paid in the future to defend or resolve the pending lawsuits, and any other proceedings that may arise, regarding the Bank Loans. ACE cannot estimate the amount that may be required to satisfy that obligation. ACE currently provides services to only one national bank (other than GNB), which relate to a stored-value card, and the OCC has not objected to that arrangement. ACE does not expect that the OCC’s right to review any future proposed services of ACE to a national bank will have any significant effect on ACE’s business.

     ACE’s agreements in the Stipulation, the Consent Order, and the Amendment do not result from any doubts that ACE has about the legal bases for the arrangement or reflect any change in its determination to vigorously defend the pending legal proceedings. ACE believes that the recent favorable decision of the U.S. District Court of the Southern District of Indiana, in the Hudson v. Ace Cash Express, Inc. lawsuit, has confirmed its legal position and strengthened its resolve to defend that position.

Forward-looking Statements

     The statements made above in this Report contain certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are generally identified by the use of words such as “expect,” “anticipate,” “estimate,” “believe,” “intend,” “plan,” “should,” “would,” and terms with similar meanings.

     Although ACE believes that the current views and expectations reflected in these forward-looking statements are reasonable, those views and expectations, and the related statements, are based on the assumptions of ACE’s management and are inherently subject to risks, uncertainties, and other factors, many of which are not under ACE’s control and may not even be predictable. Any inaccuracy in the assumptions, as well as those risks, uncertainties, and other factors, could cause the actual results to differ materially from those projected in the forward-looking statements. Those risks, uncertainties, and factors include, but are not limited to: the matters described in ACE’s Annual Report on Form 10-K for its fiscal year ended June 30, 2002, and its other public filings; ACE’s relationships with Travelers Express Company, Inc. and its affiliates, and with ACE’s bank lenders; ACE’s relationship with Goleta National Bank and the cessation of that relationship; federal and state governmental regulation of check-cashing, short-term consumer lending, and related financial services businesses; the results of litigation regarding short-term consumer lending activities; theft and employee errors; the availability of adequate financing, suitable locations, acquisition opportunities and experienced management employees to implement the ACE’s growth strategy; increases in interest rates, which would increase ACE’s borrowing costs; the fragmentation of the check-cashing industry and competition from various other sources, such as banks, savings and loans, short-term consumer lenders, and other similar financial services entities, as well as retail businesses that offer products and services offered by ACE; the terms and performance of third-party products and services offered at ACE locations; and customer demand and response to products and services offered at ACE locations.

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     ACE does not assume, but expressly disclaims, any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in ACE’s views or expectations, or otherwise. ACE makes no prediction or statement about the performance of ACE’s Common Stock.

Item 7. Financial Statements and Exhibits.

  (a)   Not Applicable.
 
  (b)   Not Applicable.
 
  (c)   Exhibits.

             
      10.1     Stipulation and Consent to the Issuance of a Consent Order between Ace Cash Express, Inc. and the Office of the Comptroller of the Currency dated October 25, 2002.
             
      10.2     Consent Order issued by the Office of the Comptroller of the Currency In the Matter of Ace Cash Express, Inc., Irving, Texas, as Agent and Bank Service Provider for Goleta National Bank, Goleta, California, dated October 25, 2002.
             
      10.3     Amendment Number 3 to Master Loan Agency Agreement, with the corresponding Amendment Number 1 to Collection Servicing Agreement, dated November 1, 2002, between Ace Cash Express, Inc. and Goleta National Bank.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
    ACE CASH EXPRESS, INC
     
Dated: November 5, 2002   By:   /s/ JOE W. CONNER
       
        Joe W. Conner
Senior Vice President and
Chief Financial Officer

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EXHIBIT INDEX

         
Exhibit No.       Description
     
10.1       Stipulation and Consent to the Issuance of a Consent Order between Ace Cash Express, Inc. and the Office of the Comptroller of the Currency dated October 25, 2002.
         
10.2       Consent Order issued by the Office of the Comptroller of the Currency In the Matter of Ace Cash Express, Inc., Irving, Texas, as Agent and Bank Service Provider for Goleta National Bank, Goleta, California, dated October 25, 2002.
         
10.3       Amendment Number 3 to Master Loan Agency Agreement, with the corresponding Amendment Number 1 to Collection Servicing Agreement, dated November 1, 2002, between Ace Cash Express, Inc. and Goleta National Bank.

  EX-10.1 3 d00906exv10w1.txt EX-10.1 STIPULATION AND CONSENT EXHIBIT 10.1 UNITED STATES OF AMERICA DEPARTMENT OF THE TREASURY OFFICE OF THE COMPTROLLER OF THE CURRENCY - ------------------------------------------- IN THE MATTER OF: ) ACE Cash Express, Inc. ) Irving, Texas ) Agent and Bank Service Provider for: ) AA-EC-02-19 Goleta National Bank ) Goleta, California ) - ------------------------------------------- STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER The Comptroller of the Currency of the United States of America ("Comptroller") is prepared to initiate cease and desist and civil money penalty proceedings against ACE Cash Express, Inc., Irving, Texas ("ACE") pursuant to 12 U.S.C. Section 1818(b) and (i). ACE, in the interest of cooperation and settlement, consents to the issuance of a Consent Order, dated October 25, 2002 ("Order"); In consideration of the above premises, the Comptroller, through his authorized representative, and ACE, through its duly elected and acting President and Chief Operating Officer ("President"), hereby stipulate and agree to the following: ARTICLE I Jurisdiction (1) Goleta National Bank, Goleta, California, ("Bank") is a national banking association chartered and examined by the Comptroller pursuant to the National Bank Act of 1864, as amended, 12 U.S.C. Section 1 et seq. Accordingly, the Bank is an "insured depository institution" as that term is defined in 12 U.S.C. Section 1813(c)(2). (2) ACE's performance of services for the Bank is subject to regulation and examination by the OCC to the same extent as if such services were being performed by the Bank itself on its own premises, pursuant to 12 U.S.C. Section 1867(c). (3) ACE is an agent of the Bank and is an "institution-affiliated party" of the Bank as that term is defined in 12 U.S.C. Section 1813(u). (4) The Comptroller is "the appropriate Federal banking agency" regarding ACE pursuant to 12 U.S.C. Section 1813(q). Therefore, ACE is subject to the authority of the Comptroller to initiate and maintain cease and desist and civil money penalty proceedings pursuant to 12 U.S.C. Sections 1818(b) and (i), and 1867(c). (5) Through a Master Loan Agency Agreement dated August 11, 1999, as amended, the Bank initiated a program with ACE (the "Program") whereby the Bank would make short-term consumer loans ("Bank Payday Loans") to consumers at ACE's various retail locations throughout the United States. The Bank Payday Loans are or have been offered at ACE locations in approximately 24 states and the District of Columbia. The loans are made by the Bank, and, pursuant to 12 U.S.C. Section 85, the Bank charges an interest rate permissible under the laws of the United States for national banks located in the State of California. Shortly after origination, ACE purchases a 90-95% participation in the loans from the Bank. Subject to the Bank's supervision and direction, ACE performs marketing, servicing and collecting on the loans. As reflected in past statements, the Comptroller has substantial policy concerns regarding programs of this type. As described in the Order, the Program is being terminated. 2 ARTICLE II Agreement (1) ACE, without admitting or denying any wrongdoing, hereby consents and agrees to the issuance of the Order by the Comptroller. (2) ACE agrees that the Order shall be deemed an "order issued with the consent of the . . . institution-affiliated party" as that phrase is used in 12 U.S.C. Section 1818(h)(2) and further agrees that this Order shall become effective upon its issuance and shall be fully enforceable by the Comptroller under the provisions of 12 U.S.C. Section 1818(i). Notwithstanding the absence of mutuality of obligation, or of consideration or of a contract, the Comptroller or his designee may enforce any of the commitments or obligations herein or within the Order undertaken by ACE under its supervisory powers, including 12 U.S.C. Section 1818(i), and not as a matter of contract law. ACE expressly acknowledges that neither ACE nor the Comptroller has any intention to enter into a contract. (3) ACE also expressly acknowledges that no officer or employee of the Office of the Comptroller of the Currency ("OCC") has statutory or other authority to bind the United States, the U.S. Treasury Department, the OCC, or any other federal bank regulatory agency or entity, or any officer or employee of any of those entities to a contract affecting the OCC's exercise of its supervisory responsibilities. ARTICLE III Waiver (1) By executing the Order, ACE waives: (a) the right to the issuance of a Notice under 12 U.S.C. Section 1818(b) or (i); 3 (b) all rights to a hearing and a final agency decision pursuant to 12 U.S.C. Section 1818(b) or (i) and 12 C.F.R. Part 19; (c) all rights to seek judicial review of the Order; (d) all rights in any way to contest the validity of the Order; and (e) any and all claims for fees, costs or expenses against the Comptroller or any of his agents or employees, related in any way to this enforcement matter or the Order, whether arising under common law or under the terms of any statute including but not limited to the Equal Access to Justice Act, 5 U.S.C. Section 504 and 28 U.S.C. Section 2412. (2) ACE shall not cause, participate in or authorize the Bank or any national bank (or any subsidiary or affiliate thereof) to incur, directly or indirectly, any expense for the payment of the civil money penalty under the Order or any legal (or other professional) expense relative to the negotiation and issuance of the Order; and, in accordance with 12 C.F.R. Section 7.2014, ACE shall not, directly or indirectly, obtain or accept any indemnification (or other reimbursement) from the Bank or any national bank (or any subsidiary or affiliate thereof) with respect to such amounts. (3) It is hereby agreed that the provisions of the Order constitute a full settlement and final disposition of cease and desist and civil money penalty proceedings contemplated by the Comptroller. The Comptroller agrees not to institute further proceedings for any acts, omissions or violations that occurred prior to the date of the Order. (4) It is further agreed that the provisions of the Order shall not be construed as an adjudication on the merits. 4 (5) ACE understands that nothing herein shall preclude any proceedings brought by the Comptroller to enforce the terms of the Order, and that nothing herein constitutes, nor shall ACE contend that it constitutes, a waiver of any right, power or authority of any other representatives of the United States or agencies thereof, including the Department of Justice, to bring other actions deemed appropriate. (6) Nothing in this Stipulation and Consent or the Order shall be construed to be and is not intended to imply an admission or denial by ACE as to any fact, finding, conclusion, issue of law, or violation of law, nor shall compliance with the Order constitute or be construed as an admission or denial by ACE of any fact, finding, conclusion, issue of law, or violation of law. ACE's agreement to terminate its participation in the Program pursuant to this Stipulation and Consent and the Order does not constitute an admission or denial with respect to ACE's activities prior to the effective date of the Order. IN TESTIMONY WHEREOF, the undersigned, authorized by the Comptroller as his representative, has hereunto set his hand on behalf of the Comptroller. /s/ DAVID D. GIBBONS October 25, 2002 - ----------------------------------------- ------------------------------- David D. Gibbons Date Deputy Comptroller Special Supervision / Fraud Division IN TESTIMONY WHEREOF, the undersigned, as the duly elected and acting President and Chief Operating Officer of ACE, has hereunto set his hand on behalf of ACE. /s/ JAY B. SHIPOWITZ October 25, 2002 - ----------------------------------------- ------------------------------- Jay B. Shipowitz Date President and Chief Operating Officer ACE Cash Express, Inc. 5 EX-10.2 4 d00906exv10w2.txt EX-10.2 CONSENT ORDER EXHIBIT 10.2 UNITED STATES OF AMERICA DEPARTMENT OF THE TREASURY OFFICE OF THE COMPTROLLER OF THE CURRENCY - -------------------------------------------- IN THE MATTER OF: ) ACE Cash Express, Inc. ) Irving, Texas ) ) Agent and Bank Service Provider for: ) AA-EC-02-19 ) Goleta National Bank ) Goleta, California ) - -------------------------------------------- CONSENT ORDER ACE Cash Express, Inc., Irving, Texas ("ACE"), by and through its duly elected and acting President and Chief Operating Officer ("President"), has executed a "Stipulation and Consent to the Issuance of a Consent Order" dated October 25, 2002, that is accepted by the Comptroller of the Currency ("Comptroller" or "OCC"). By this Stipulation and Consent, which is incorporated by this reference, ACE has consented to the issuance of this Consent Order ("Order") by the Comptroller. Pursuant to the authority vested in him by the Federal Deposit Insurance Act, as amended, 12 U.S.C. Section 1818(b) and (i)(2), the Comptroller hereby orders that: ARTICLE I CESSATION OF PAYDAY LENDING AND INDEMNIFICATION (1) Beginning November 15, 2002, and on an ongoing basis thereafter, ACE shall notify all applicants seeking to originate, renew or rollover any short-term consumer loan made by Goleta National Bank, Goleta, California ("Bank"), hereinafter referred to as "Bank Payday Loans", that ACE will no longer provide services related to the origination, renewal and rollover of Bank Payday Loans on or after January 1, 2003, in any state or in the District of Columbia. (2) Not later than January 1, 2003, ACE shall cease providing any services to the Bank related to the origination, renewal or rollover of Bank Payday Loans in all states and the District of Columbia. (3) Notwithstanding paragraphs (1) and (2) of this Article, ACE may continue to provide services to the Bank related to the servicing and collection of Bank Payday Loans originated, renewed or rolled over before January 1, 2003; provided that, the due date is not extended for more than five (5) days, and no new funds are advanced on any Bank Payday Loan on or after January 1, 2003. (4) On or before November 1, 2002, ACE shall assume, indemnify, and hold the Bank harmless for one hundred percent (100%) of the costs, expenses, legal fees, damages, and related liabilities from third-party claims in accordance with the terms of Section 8.2(a) of the Master Loan Agency Agreement between the Bank and ACE dated August 11, 1999, as amended ("Master Loan Agreement"). ACE shall comply with this requirement by executing an amendment to the Master Loan Agreement with the Bank, which Amendment shall include, inter alia, an increase in the percentage of Section 8.2(a) to one hundred percent (100%) from either ninety-five percent (95%) or ninety percent (90%), respectively, and a reduction in the percentage of Section 8.1(a) to zero percent (0%) from either five percent (5%) or ten percent (10%), respectively. Thereafter, the Master Loan Agreement shall not be further amended or modified without the prior written consent of the Comptroller. 2 ARTICLE II FUTURE ACTIVITIES (1) Effective immediately, ACE shall not enter into any agreement, written or oral, to provide services to any national bank or to any subsidiary of a national bank, including but not limited to the marketing, origination, servicing or collection of payday loans offered through a national bank or subsidiary thereof, without first obtaining the prior written determination of no objection from the OCC. (2) Any request to obtain a prior written determination of no objection, as required by paragraph (1) of this Article, shall: (a) be made at least ten (10) business days prior to entering into any agreement referenced in paragraph (1) of this Article; (b) be made in writing to the Director of Special Supervision/Fraud, Office of the Comptroller of the Currency, 250 E Street, Washington, DC 20219; and (c) include a full and complete description of the services to be performed by ACE, the name(s) of the national bank(s) and/or subsidiary(ies) for which the services will be provided, and a copy of any draft contract(s) governing the relationship between ACE and such national bank(s) and/or subsidiary(ies). (3) The Director of Special Supervision/Fraud will respond to any written request pursuant to paragraphs (1) and (2) of this Article within ten (10) business days, provided that the ten-day period shall not commence until ACE has complied with paragraph 2(c) and the Director has notified ACE in writing that the request is deemed to be complete. 3 ARTICLE III FILE ACCESS AND DOCUMENT RETENTION (1) Effective immediately and continuing for so long as this Order remains outstanding, ACE shall make available at the request of the Bank any information or documentation in ACE's possession, custody or control that relates to any applicant of a Bank Payday Loan obtained by ACE as a result of the Master Loan Agreement, or any other agreement between ACE and the Bank existing on or before December 31, 2002. (2) For purposes of this Order, the term "applicant" shall be defined as any person who has applied for a Bank Payday Loan, regardless of whether the loan has been approved, denied, cancelled, renewed, rolled over, or withdrawn. (3) Prior to the disposal or destruction of any Bank Payday Loan records, ACE shall secure the written authorization of the Bank. In addition, ACE shall not dispose of or destroy any records relating to Bank Payday Loans prior to the end of any applicable statutory or regulatory period requiring the retention of such records, and shall only dispose of or destroy such records in a manner that is in conformance with the applicable Bank policies and procedures in effect as of the date of this Order. ARTICLE IV CIVIL MONEY PENALTY ORDER (1) Without admitting or denying any wrongdoing, ACE hereby consents to the payment of a civil money penalty in the amount of two hundred fifty thousand dollars ($250,000), which shall be paid upon execution of this Order. ACE shall make payment in full by check made payable to the Treasurer of the United States and shall deliver the payment to: 4 Comptroller of the Currency, P.O. Box 73150, Chicago, Illinois 60673-7150 with a copy of the check sent to Director, Enforcement & Compliance Division, Office of the Comptroller of the Currency, 250 E Street, SW, Washington, DC 20219. (2) This Order shall be enforceable to the same extent and in the same manner as an effective and outstanding order that has been issued and has become final pursuant to 12 U.S.C. Sections 1818(h) and (i) (as amended). ARTICLE V CLOSING (1) It is expressly and clearly understood that if, at any time, the Comptroller deems it appropriate in fulfilling the responsibilities placed upon him by the several laws of the United States of America to undertake any action affecting ACE or any national bank (or subsidiary or affiliate thereof), except as set forth elsewhere herein (including the Stipulation and Consent) nothing in this Order shall in any way inhibit, estop, bar or otherwise prevent the Comptroller from so doing. (2) Any time limitations imposed by this Order shall begin to run from the effective date of this Order. Such time limitations may be extended in writing by the Director for Special Supervision/Fraud for good cause upon written application by ACE. (3) The provisions of this Order are effective upon issuance of this Order by the Comptroller, through his authorized representative whose hand appears below, and shall remain effective and enforceable, except to the extent that, and until such time as, any provisions of this Order shall have been amended, suspended, waived or terminated in writing by the Comptroller. 5 (4) This Order is intended to be, and shall be construed to be, a final order issued pursuant to 12 U.S.C. Section 1818(b) and (i)(2), and expressly does not form, and may not be construed to form, a contract binding on the Comptroller or the United States. (5) The terms of this Order, including this paragraph, are not subject to amendment or modification by any extraneous expression, prior agreements or arrangements or negotiations between the parties, whether oral or written. IT IS SO ORDERED, this 25th day of October, 2002. /s/ DAVID D. GIBBONS - ---------------------- David D. Gibbons Deputy Comptroller Special Supervision/Fraud Division 6 EX-10.3 5 d00906exv10w3.txt EX-10.3 AMENDMENT TO MASTER LOAN AGENCY AGREEMENT EXHIBIT 10.3(a) AMENDMENT NUMBER 3 TO MASTER LOAN AGENCY AGREEMENT This Amendment Number 3 to Master Loan Agency Agreement (this "Amendment") is made as of this 1st day of November, 2002, by and between Goleta National Bank, a national banking association ("GNB"), and Ace Cash Express, Inc., a Texas corporation ("Ace"), with regard to the following: A. GNB and Ace entered into that certain Master Loan Agency Agreement dated August 11, 1999, as amended by that certain Amendment Number 1 to Master Loan Agency Agreement dated March 29, 2001, and by that certain Amendment Number 2 to Master Loan Agency Agreement dated June 30, 2001 (the "Agreement"). B. Section 11.7 of the Agreement permits GNB and Ace to amend the Agreement by a writing signed by them. C. GNB and Ace, after consultation with the Bank Regulatory Authority, have mutually determined that it is in their respective best interests to (i) provide for termination of the Agreement effective December 31, 2002, or such later date as the Bank Regulatory Authority may permit (the date of termination of the Agreement being the "Termination Date"), though certain provisions of the Agreement as specified herein shall survive the termination of the Agreement, (ii) provide that Ace will indemnify GNB for 100% of certain losses on and after November 1, 2002, and (iii) amend the Agreement in certain other respects. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, GNB and Ace hereby agree as follows: 1. Section 1.6 of the Agreement is hereby amended to read as follows: "1.6 No Exclusivity. On and after November 1, 2002, the Parties' relationship shall not be exclusive; consequently, on and after November 1, 2002, Ace may offer, for its own account or for the account of others, any loans (whether or not similar to Bank Loans) at any of its Locations, and GNB may offer and provide any loans (whether or not similar to Bank Loans) through or with any other person." 2. Section 1.9 of the Agreement is hereby amended to read as follows: "1.9 Collection of Bank Loans. Contemporaneous with this Agreement, the Parties are entering into a Collection Servicing Agreement, under which Ace is appointed as servicer to collect and enforce the Bank Loans. That Collection Servicing Agreement, as amended by Amendment Number 1 to Collection Servicing Agreement, is Exhibit B to this Agreement. To the extent that the terms of the Collection Servicing Agreement, as amended, conflict with the terms of this Agreement, the terms of this Agreement shall control." 3. The first sentence of Section 4.1 of the Agreement is hereby amended to read as follows: "4.1 Term of Agreement. Unless otherwise terminated as provided in Section 4.2, this Agreement shall terminate at 11:59 p.m., Central Time, on December 31, 2002, or on such later date as the Bank Regulatory Authority may permit (the date of termination of this Agreement being the "Termination Date"). Notwithstanding the termination of this Agreement on the Termination Date, all of the provisions of the Amendment (as provided in Section 19 thereof) and the following provisions of this Agreement shall continue in effect after the Termination Date: Section 4.5, Section 6.1, Article VII, Article VIII (as amended in this Amendment) except for Section 8.5 which is terminated, Article XI, each other provision that by its terms continues in effect after the expiration or termination of this Agreement and each other provision of the Agreement to the extent necessary to give full effect to the provisions that survive termination of this Agreement as provided herein." 4. Section 8.1(a) of the Agreement is hereby amended to read as follows: "(a) Five percent (5%) of all losses, claims, obligations, demands, assessments, penalties, liabilities, costs (including reasonable attorneys' fees and expenses) and damages asserted against Ace or any Ace Indemnified Persons or incurred by Ace or any Ace Indemnified Persons (collectively, "Ace Losses") by reason of, resulting from, or relating to any Third-Party Claims (as defined below in this Section 8.1) asserted against Ace or any Ace Indemnified Persons if the Third-Party Claims arise out of one or more Bank Loans made or services or products provided under this Agreement solely from the Effective Date and prior to April 1, 2001, except any Third-Party Claims described in Section 8.1(b) or Section 8.1(c); and ten percent (10%) of all Ace Losses by reason of, resulting from, or relating to any Third-Party Claims asserted against Ace or any Ace Indemnified Persons if the Third-Party Claims arise out of one or more Bank Loans made or services or products provided under this Agreement solely from April 1, 2001 and prior to November 1, 2002, except any Third-Party Claims described in Section 8.1(b) or Section 8.1(c); and for purposes of this Section 8.1(a), (i) each Renewal of a Bank Loan shall be deemed made on the date the Bank Loan was originally made or funded by GNB and (ii) except as provided in Section 8.1(b) or Section 8.1(c), the foregoing percentages of Ace Losses to be indemnified by GNB shall apply regardless of when any Third-Party 2 Claims are asserted or arise and regardless of when the Ace Losses are suffered or incurred. Notwithstanding the foregoing, GNB shall not be required to indemnify Ace or any Ace Indemnified Persons against, or hold Ace or any Ace Indemnified Persons harmless from, any Ace Losses by reason of, resulting from, or relating to any Third-Party Claims (except any Third-Party Claims described in Section 8.1(b) or Section 8.1(c)) that are incurred on or after November 1, 2002, regardless of the date that the Bank Loan to which such Third-Party Claim relates was made or the date the Third-Party Claim is asserted or arises. (Stated in another way, GNB's indemnification obligation under the terms of this Section 8.1(a), subject to the exceptions provided in Sections 8.1(b) and 8.1(c), shall be zero percent (0%) of Ace Losses that are incurred on or after November 1, 2002.)" 5. Section 8.1(c) of the Agreement is hereby amended to read as follows: "(c) All Ace Losses (i) by reason of, resulting from, or relating to any Third-Party Claims asserted against Ace or any Ace Indemnified Person in which, or in connection with which, GNB or any GNB Indemnified Person (as defined in Section 8.2) admits or acknowledges, or any court or other governmental authority or arbitrator finds or otherwise determines, that GNB or any GNB Indemnified Person has committed (by act or omission) any willful misconduct, (ii) relating to the failure or alleged failure of GNB to have, hold or maintain any or all GNB Authorizations necessary to permit GNB to perform its obligations under and in accordance with the terms of this Agreement, and (iii) consisting of all civil money penalties and similar amounts assessed against GNB by the Bank Regulatory Authority and any and all other fines or penalties imposed on GNB by any other federal regulatory authority. For purposes of this Section 8.1, an Ace Loss that results from the incurrence by Ace of professional fees or related expenses will be deemed to be "incurred" on the date that the services were rendered or the related expense was incurred, in each case regardless of the date that an invoice covering such services or expense was rendered. For the avoidance of doubt, Section 8.1 does not apply to, and Ace shall continue to be responsible for, and GNB shall not indemnify Ace or any Ace Indemnified Persons with respect to, (i) any credit losses incurred by Ace as a result of its ownership of Bank Loans (or portions thereof) or (ii) any civil money penalties or similar amounts assessed against Ace by the Bank Regulatory Authority and any and all other fines or penalties imposed on Ace by any other regulatory authority. For the avoidance of doubt, any finding or determination by a court, regulatory authority, or arbitrator that GNB's originating, renewing, denying or collecting Bank Loans with Ace as its agent was in violation of 12 U.S.C. Section 24 or 12 U.S.C. Section 85, or regulations issued pursuant thereto, shall not constitute a failure by GNB to have, hold or maintain any or all GNB Authorizations necessary to permit GNB to perform its obligations as required under this Agreement." 3 6. Section 8.2(a) of the Agreement is hereby amended to read as follows: "(a) Ninety-five percent (95%) of all losses, claims, obligations, demands, assessments, penalties, liabilities, costs (including reasonable attorneys' fees and expenses) and damages asserted against GNB or any GNB Indemnified Persons or incurred by GNB or any GNB Indemnified Persons (collectively, "GNB Losses") by reason of, resulting from, or relating to any Third-Party Claims asserted against GNB or any GNB Indemnified Persons if the Third-Party Claims arise out of one or more Bank Loans made or services or products provided under this Agreement solely from the Effective Date and prior to April 1, 2001, except any Third-Party Claim described in Section 8.2(b) or Section 8.2(c); and ninety percent (90%) of all GNB Losses by reason of, resulting from, or relating to any Third-Party Claims asserted against GNB or any GNB Indemnified Persons if the Third-Party Claims arise out of one or more Bank Loans made or services or products provided under this Agreement solely from April 1, 2001 and prior to November 1, 2002, except any Third-Party Claims described in Section 8.2(b) or Section 8.2(c); and for purposes of this Section 8.2(a), (i) each Renewal of a Bank Loan shall be deemed made on the date the Bank Loan was originally made by GNB and (ii) except as provided in Section 8.2(b) or Section 8.2(c), the foregoing percentages of GNB Losses to be indemnified by Ace shall apply regardless of when any Third-Party Claims are asserted or arise and regardless of when the GNB Losses are suffered or incurred. In addition, Ace shall indemnify GNB and any GNB Indemnified Persons against, and hold GNB and any GNB Indemnified Persons harmless from, one hundred percent (100%) of any GNB Losses by reason of, resulting from, or relating to any Third-Party Claims (except any Third-Party Claims described in Section 8.2(b) or Section 8.2(c)) that are incurred on or after November 1, 2002, regardless of the date that the Bank Loan to which such Third-Party Claim relates was made or the date such Third-Party Claim is asserted or arises." 7. Section 8.2(c) of the Agreement is hereby amended to read as follows: "(c) All GNB Losses (i) by reason of, resulting from, or relating to any Third-Party Claims in which or in connection with which, Ace or any Ace Indemnified Person admits or acknowledges, or any court or governmental authority or arbitrator finds or otherwise determines, that Ace or any Ace Indemnified Person has committed (by act or omission) any willful misconduct, (ii) relating to the failure or alleged failure of Ace to have, hold or maintain any or all Ace Authorizations necessary to permit Ace to perform its obligations under and in accordance with the terms of this Agreement, (iii) consisting of all civil money penalties and similar amounts assessed against Ace by the Bank Regulatory Authority and any and all other fines or penalties imposed on Ace by any other regulatory 4 authority, and (iv) resulting from claims by Bank Loan customers or applicants to the extent that such GNB Losses are attributable to (x) GNB giving such notices as may be required by the Bank Regulatory Authority to Bank Loan customers or applicants to the effect that their Bank Loan files may have been destroyed or lost or cannot be located or (y) the destruction or loss of, or the inability to locate such files. For purposes of this Section 8.2(a), a GNB Loss that results from the incurrence by GNB of professional fees or related expenses will be deemed to be "incurred" on the date that the services were rendered or the related expense was incurred, in each case regardless of the date that an invoice covering such services or expense was rendered. For the avoidance of doubt, this Section 8.2 does not apply to, and GNB shall continue to be responsible for, and Ace shall not indemnify GNB or any GNB Indemnified Parties with respect to, (i) any credit losses incurred by GNB as a result of its ownership of Bank Loans (or portions thereof), or (ii) any civil money penalties or similar amounts assessed against GNB by the Bank Regulatory Authority and any and all other fines or penalties imposed on GNB by any other federal regulatory authority." 8. The following subsection (d) is added to Section 8.3: "(d) Each Party obligated to provide indemnity hereunder shall promptly discharge its obligations in that regard including, without limitation, the prompt payment or reimbursement of all attorneys' fees and expenses, and the prompt payment of all fines, penalties and judgments, unless such fine, penalty or judgment is appealed and all necessary appeal bonds have been posted." 9. GNB will, at its expense, give such notice(s) as may be required by the Bank Regulatory Authority to Bank Loan customers or applicants to the effect that their Bank Loan files may have been lost or cannot be located. GNB will deliver to Ace, at least three days before any such notice is sent, a copy of the form of such notice. 10. (a) After the Termination Date, each Party shall allow the other Party access to the database of information regarding Bank Loans and/or the payment history of Bank Loans, as applicable, maintained by such Party (pursuant to Section 5.1(a) of the Agreement with respect to Ace and pursuant to Section 5.1(b) of the Agreement with respect to GNB) and shall coordinate with the other Party regarding access to or the use of any software and hardware necessary to access such database. If a Party wants physical (as opposed to electronic) access to the other Party's database pursuant hereto, it must request such access by giving at least 15 days' prior Notice to the other Party. Any such access shall be only during the regular business hours of the other Party, or at such time to which the other Party may consent, and without any unreasonable disruption of the other Party's business operations, and only to the full extent permitted by applicable law. Neither Party shall impose any cost upon the other in connection with access to the physical records or database. Ace shall cooperate in all reasonable respects with GNB to permit it to carry out any Bank Loan file audit required of GNB by the Bank 5 Regulatory Authority, and Ace shall bear the expenses Ace incurs in connection therewith. GNB may request, by at least 15 days' Notice to Ace, that Ace prepare and send to GNB, at GNB's expense, a print out of Ace's database of information regarding Bank Loans and/or the payment history of Bank Loans. Ace will comply with that request as soon as reasonably practicable (taking into account the scope of the requested material). (b) After the Termination Date, either Party may request an inspection of the financial or other books and records of the other Party relating to this Agreement by giving at least 30 days' prior Notice to the other Party. Any such inspection shall be conducted only during the regular business hours of the other Party, or at such other reasonable time to which the other Party may consent, and without any unreasonable disruption of the other Party's business operations. The cost of such inspection shall be paid by the inspecting Party. 11. After the Termination Date, Ace may continue to use Confidential Information of GNB to the extent reasonably necessary in its efforts to collect Bank Loans. 12. At the request of GNB, Ace will deliver to GNB all completed applications for and other documentation signed by Borrowers relating to Bank Loans, all account authorization documents and all other documents relating to Bank Loans (other than documents used in its Bank Loan collection activities and files, if any, which are not in the possession or control of Ace or its affiliates). GNB shall pay the cost of each such delivery (except for deliveries of any Bank Loan files required for GNB to conduct the Bank Loan file audits required of GNB by the Bank Regulatory Authority, the cost of which deliveries shall be paid by Ace). With respect to each such document delivered to GNB by Ace, GNB shall maintain such document through the date that all applicable statutes of limitations have run with respect to the Bank Loan to which such document relates and, to the full extent permitted by applicable law, shall allow Ace access to such document from time to time as reasonably requested by Ace. GNB shall have the right to return each such document to Ace for retention by Ace, provided that GNB shall pay the cost of the return delivery of each such document to Ace. To the extent that Ace retains any such document, Ace shall maintain such document through the date that all applicable statutes of limitations have run with respect to the Bank Loan to which such document relates and shall allow GNB access to such document from time to time as reasonably requested by GNB. To the extent that either GNB or Ace retains any such document after the date that all applicable statutes of limitations relating to the Bank Loan to which such document relates the party holding such document shall be entitled to destroy such document, at any time after 30 days after it gives the other party written notice of its intent to destroy such documents, unless the party receiving such notice requests in writing that such documents be delivered to it. Neither Party shall impose any cost upon the other in connection with access to the documents relating to Bank Loans. Ace shall cooperate in all reasonable respects with GNB to permit it to carry out any Bank Loan file audit required of GNB by the Bank Regulatory Authority, and Ace shall bear the expenses Ace incurs in connection therewith. 13. All Bank Loan Operating Manuals in the possession of Ace shall, pursuant to Section 7.7 of the Agreement, be returned to GNB promptly after the Termination Date if theretofore requested by GNB. To the extent GNB does not request the return to it of Bank Loan Operating Manuals by the Termination Date, Ace shall be entitled to destroy any Bank Loan Operating Manuals in its possession. 6 14. Promptly following the Termination Date, GNB hereby authorizes Ace to destroy all blank loan and account applications containing GNB's name, and all Card inventory and all PIN numbers, in Ace's possession. 15. Promptly after the Termination Date, and in any event within 15 business days after receipt of an invoice therefor, (i) Ace shall pay to GNB all unpaid Loan Participation Processing Fees described in Exhibit E to the Agreement, (ii) GNB will pay to Ace the portion of the ATM charges received by GNB described in Exhibit E to the Agreement and (iii) either Party will pay to the other the amount, if any, necessary to cause all expenses of lobbying and related activities accrued but unpaid as of November 1, 2002 to be shared by the Parties in accordance with Sections 3.2(i) and 3.4(k) of the Agreement. 16. All documents, files and records relating to Ace's Bank Loan collection activities, and all intellectual property of Ace relating thereto, shall remain the property of Ace following the Termination Date, but shall be accessible by GNB in accordance with the provisions of this Amendment. 17. Ace will pay GNB, not later than ten (10) days after an invoice from GNB therefor (which invoice may not precede the Termination Date), the sum of $10,000 in cash for the transfer of the Credit Software as of the day after the Termination Date. GNB acknowledges and agrees that, upon such payment, Ace shall not owe any amount to GNB for Ace's use of the Credit Software, whether before or after the Termination Date, with respect to any loan other than a Bank Loan. 18. Each Party shall be responsible for the expenses it incurs in entering into this Amendment and, except as specifically provided for in this Amendment, the expenses it incurs in implementing the terms of this Amendment. 19. All of the provisions of this Amendment shall survive and continue in effect after the Termination Date. 20. GNB hereby withdraws its letter dated May 9, 2002 to Ace indicating its intent under Section 1.2 of the Agreement to modify the terms of the Bank Loans to comply with the laws of each state in which GNB currently offers Bank Loans. 21. GNB will continue to participate in all current litigation relating to or arising out of the activities of Ace pursuant to the Agreement and will not unreasonably withhold GNB's participation in future litigation relating to or arising out of the activities of Ace pursuant to the Agreement, as requested by Ace. Ace agrees, pursuant to its indemnification obligation contained in Section 8.2 of the Agreement, to reimburse GNB for any reasonable out-of-pocket expenses (including travel and lodging, but not including the compensation of any GNB employees) incurred as a result of this participation. 7 22. GNB will, as of the day after the Termination Date, (i) cause its parent company, Community West Bancshares, Inc. ("CWB"), to transfer 100% of its ownership interest in ePacific Incorporated, a Delaware corporation ("ePacific"), which consists of 300,000 shares of common stock of ePacific, and all rights related thereto (the "Shares"), free and clear of all liens and other encumbrances (except for obligations under the ePacific Incorporated Stockholders Agreement dated March 30, 2000 (the "ePacific Agreement")), to Ace; and (ii) transfer to Ace, free and clear of all liens and other encumbrances, all of GNB's right, title and interest in all of the Credit Software, all developments and improvements thereof in process, and all related goodwill, all "as is" without any representation or warranty, including (without limitation) any warranty of fitness for a particular purpose. The transfer of the Credit Software will be in consideration of (even if not simultaneous with) the payment from Ace to GNB described in Section 17 of this Amendment. Each of GNB and ACE agrees to use, and GNB agrees to cause CWB to use, its commercially reasonable best efforts, at its own expense, to give the notices and follow the other procedures, or to obtain a waiver of those notices and other procedures, required under the ePacific Agreement, as a condition to CWB's transfer of the Shares to Ace. The transfer of the Shares will be in exchange for the payment from Ace to CWB of $0.05 per Share which shall be paid contemporaneously with CWB's tender of the Shares to Ace. Ace acknowledges that should the other stockholders of ePacific exercise their "co-sale" rights under the ePacific Agreement, that may frustrate the intent of the Parties by preventing CWB from selling all of the Shares to Ace. However, any failure by CWB to sell all the Shares to Ace because of the exercise of co-sale rights under the ePacific Agreement, so long as Ace receives a total of 300,000 shares of common stock of ePacific against the payment of $0.05 per share, shall not constitute a breach or default of GNB of this Amendment or the Agreement. The number of shares of ePacific and the price per share shall be adjusted as necessary to reflect any stock split, reverse stock split, or other recapitalization of ePacific common stock after the date of this Amendment. Further, if CWB becomes unable to sell or transfer the Shares to Ace under this Section 22 because of actions taken by ePacific or any of its stockholders (other than Ace), notwithstanding GNB's and CWB's commercially reasonable best efforts to effect that sale and transfer, CWB's inability shall not be deemed an excuse for Ace not to perform its indemnification obligations to GNB and any GNB Indemnified Persons under Section 8 of the Agreement. Should ePacific or any of its stockholders (other than Ace) commence legal action against CWB and/or GNB to prevent or prohibit the sale and transfer of the Shares to Ace hereunder, Ace and GNB agree that the expenditure by GNB and CWB, in the aggregate, of up to $5,000 in legal fees and other expenses in connection with defending any such action shall constitute GNB's and CWB's commercially reasonable best efforts for purposes of this paragraph. 8 23. Promptly after the Termination Date, Ace will remove from all of its Locations all advertising and/or other materials containing GNB Marks related to Bank Loans. 24. The Parties agree to take all further actions necessary on or prior to the Termination Date to amend all other agreements between them regarding the Agreement to reflect the fact that from and after the Termination Date, GNB will not originate or renew any Bank Loans and Ace will not act as GNB's agent to originate or renew any Bank Loans, but will continue to service and collect all Bank Loans theretofore originated or renewed. 25. Except as set forth in this Amendment, all terms used herein that are defined in the Agreement shall have the respective meanings set forth in the Agreement. 26. This Amendment may be signed in counterparts with the same effect as if both Parties had signed the same paper; all counterparts are to be construed together to be one and the same document. IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be duly executed by their respective officers as of the day and year first above written. GOLETA NATIONAL BANK By: /s/ LYNDA NAHRA -------------------- Lynda Nahra President and Chief Executive Officer ACE CASH EXPRESS, INC. By: /s/ JAY B. SHIPOWITZ ----------------------------- Jay B. Shipowitz President and Chief Operating Officer 9 EXHIBIT 10.3 (b) AMENDMENT NUMBER 1 TO COLLECTION SERVICING AGREEMENT This Amendment Number 1 to Collection Servicing Agreement (this "Amendment") is made as of this 1st day of November, 2002, by and between Goleta National Bank, a national banking association (the "Lender"), and Ace Cash Express, Inc., a Texas corporation (in its capacity as Servicer, the "Servicer"), with regard to the following: A. The Lender and the Servicer entered into that certain Master Loan Agency Agreement dated August 11, 1999, as amended by that certain Amendment Number 1 to Master Loan Agency Agreement dated March 29, 2001, and Amendment Number 2 to Master Loan Agency Agreement dated June 30, 2001 (as so amended, the "Master Agreement"), and contemporaneously with the execution of this Amendment, they are amending the Master Agreement by that certain Amendment Number 3 to Master Loan Agency Agreement of even date herewith. B. The Lender and the Servicer entered into that certain Collection Servicing Agreement dated August 11, 1999 (the "Servicing Agreement"). C. Section 10.1 of the Servicing Agreement permits the Lender and the Servicer to amend the Servicing Agreement by a writing signed by them. D. The Lender and the Servicer wish to amend the Servicing Agreement to provide for a more extended effectiveness of the Servicing Agreement, as amended, after the expiration or termination of the Master Agreement, as amended, and to clarify the obligation of the Servicer to apply amounts received on any Loan after the expiration or termination of the Master Agreement, as amended. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth, the Lender and the Servicer hereby agree as follows: 1. The fourth sentence of Section 2.1 of the Servicing Agreement is amended to read as follows: "This Agreement shall survive the expiration or termination of the Master Agreement until no further Loans made by the Lender, as contemplated by the Master Agreement, remain outstanding or unpaid; however, Servicer shall remain liable thereafter for its own negligence or willful misconduct, and that of its subcontractors, delegates, agents and representatives, if any, to the extent provided by the terms of this Agreement." 2. The last sentence of Section 5.1 of the Servicing Agreement is hereby amended to read as follows: "The Servicer, acting on behalf of the Lender, shall apply all such money as provided in the Master Agreement or, if the Master Agreement has expired or been terminated, as provided under the terms of the Master Agreement in effect immediately preceding that expiration or termination, except as the Lender and the Servicer may otherwise agree." 3. Section 10.3 of the Servicing Agreement is hereby amended to substitute "Suite 600" for "Suite 800," and "President and Chief Operating Officer" for "Chief Financial Officer," in the address for any notice, demand, certificate, request, or other communication to the Servicer. 4. Except as set forth in this Amendment, all terms used herein that are defined in the Servicing Agreement shall have the respective meanings set forth in the Servicing Agreement. 5. Except as amended hereby, the Servicing Agreement is hereby affirmed in its entirety. 6. This Amendment may be signed in counterparts with the same effect as if both parties hereto had signed the same paper; all counterparts are to be construed together as one and the same document. IN WITNESS WHEREOF, the Lender and the Servicer have caused this Amendment to be duly executed by their respective officers as of the date set forth in the first paragraph hereof. GOLETA NATIONAL BANK By: /s/ LYNDA NAHRA --------------------------- ACE CASH EXPRESS, INC. By: /s/ JAY B. SHIPOWITZ --------------------------- 2 -----END PRIVACY-ENHANCED MESSAGE-----