**Exhibit10.23**

 

SANTA BARBARA BANK & TRUST

5770 Oberlin Drive

San Diego, CA 92121

 

 

March 14, 2005

 

 

Jackson Hewitt Inc.7 Sylvan WayParsippany, NJ 07054

 

 

Gentlemen:

 

Reference is made to theProgram Agreement, dated as of May 5, 2004, by and between Santa Barbara Bank& Trust and Jackson Hewitt Inc. (the “Agreement”).  The parties hereby agree that the Agreement isamended as follows:

 

Exhibits A, B, C and D (the “Exhibits”)attached hereto shall be the Exhibits to the Agreement for the 2005 Tax Seasonand are hereby made a part of the Agreement.  Except to the extent modified herein, theAgreement shall remain in full force and effect according to the terms thereof.

 

Kindly indicate youracceptance of the foregoing terms by signing on the signature line set forthbelow.

 

Very truly yours,

 

SANTA BARBARA BANK &TRUST

 

 
| By:                                        | /s/ Richard H. Turner |   |
|--------------------------------------------|-----------------------|--------|
| Name: Richard H. Turner                    |
| Title: Senior Vice President               |
|                                       |
|                                       |
| Accepted and agreed to:                    |
|                                       |
| JACKSON HEWITT INC.                        |
|                                       |
|                                       |
| By:                                        | /s/ Bill SanGiacomo   |   |
| Name: Bill SanGiacomo                      |
| Title: Vice President – Bank Products |
|                                            |                       |        |  |

 

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**Exhibit A**

**to**

**Program Agreement BetweenSanta Barbara Bank & Trust and Jackson Hewitt Inc.**

 

SANTA BARBARA BANK & TRUST

2005 BANK PRODUCT AGREEMENT

 

**THIS AGREEMENT IS BEING PROVIDED TOYOU ELECTRONICALLY AS PART OF THE ENROLLMENT PROCESS WITH SANTA BARBARA BANK *&*TRUST (SBBT).  YOU MUST AGREE TO THE FOLLOWING TERMS ANDCONDITIONS BEFORE YOU CAN BE ACCEPTED INTO SBBT’S REFUND ANTICIPATION LOANPROGRAM (PROGRAM) AND SUBMIT AN APPLICATION FOR AN SBBT REFUND ANTICIPATION LOAN(RAL), ACCELERATED CHECK, CASH OR CASH CARD REFUND (ACR), ACCELERATED DIRECTDEPOSIT (ADD) OR HOLIDAY LOAN.  PLEASEREAD THIS AGREEMENT CAREFULLY.**

 

BACKGROUND: SBBT is a nationally chartered bank thatprovides RALs, ACRs, ADDs and holiday loans (collectively, with other productsthat may be developed by SBBT from time to time, “Bank Products”) to qualifyingtaxpayers based upon the amount of their expected Fedoral or State income taxrefund.  SBBT Bank Products are offeredto taxpayers (“Clients”) through Jackson Hewitt Tax Services franchisees.  This Agreement is by and between you (“you” or“Participant”) and SBBT, and sets forth your rights and obligations vis a visSBBT in connection with the Program.

 

I.  GRANT OFRIGHT TO OFFER BANK PRODUCTS.  SBBT herebygrants Participant the right, on SBBT’s behalf and on the terms and subject tothe conditions set forth herein, to offer Bank Products to Clients and tocharge application fees relating thereto.  SBBT has the sole right to establish theterms, conditions and fees of all Bank Products.

 

II. PARTICIPANT’S REPRESENTATIONS AND WARRANTIES.  Participant makes thefollowing representations, warranties and acknowledgements to SBBT as of thedate of this Agreement and at all times during the term hereof as follows:

 

2.1  Independent Contractor.  Participant is an independent contractor.  Neither this Agreement nor any actions takenpursuant hereto shall constitute a jointventure nor create a partnership, agency or employment relationship between theparties.

 

2.2  Right to Participate.  Participant understands that Participant’sinitial and continued right to participate in the Program is subject to SBBT’sapproval.

 

2.3.  ValidEFIN.  Participant has a current andvalid Electronic Filer Identification Number (EFIN) issued by the InternalRevenue Service (IRS).  Participantunderstands that he or she shall be deemed by SBBT to be the originator of allincome tax returns accepted by Participant and that, as such, Participant isrequired to process all returns under his or her own EFIN.  Participant further understands that he/shewill be suspended from the Program immediately upon notice if he/she acceptstax returns for electronic filing without a valid EFIN.

 

2.4  ExcessiveLoan Loss.  Participant understands andagrees that if he/she generates excessive loan loss (determined in SBBT’s solediscretion), then Participant may be immediately suspended from the Programupon notice.  Participant furtherunderstands that SBBT shall consider requests for re-acceptance into theProgram on a case-by-case basis, and shall make determinations with respectthereto based upon: (i) subsequent recoveries of loan losses through IRS directdeposits or other means, (ii) the completeness and accuracy of loandocumentation, and (iii) such other factors deemed relevant by SBBT.  For purposes of this Agreement, any loan notpaid in full seven days after its expected refund date (expected refund datebeing approximately 10-17 days after the IRS acknowledgment date), shall bedeemed “delinquent” by SBBT and shall be used in calculating loan loss ratios.

 

III. PARTICIPANT’S DUTIES AND OBLIGATIONS.  Participant covenants and agrees with SBBT asfollows:

 

3.1 Compliance.  Participant agrees tocomply with all procedures and requirements relating to the Program provided bySBBT prior to the 2005 tax season, including those set forth in the 2005 BankProgram User Manual available for printing and downloading on JHNet.

 

3.2  Completionof Applications; Proper Identification.  Participantshall exercise due care in, and shall be solely responsible for, accuratelyinputting and submitting with each RAL/ACR/ADD application (“Application”) allmaterial information, including social security number(s), received fromClients.  Participant shall exercise duediligence in ensuring that the Client has presented two forms of properidentification, as defined in the Application, and shall properly verify thesocial security numbers of primary and secondary filers as well as alldependent children listed on the tax return.

 

3.3.  ValidIncome Documents.  Participant agrees tocarefully scrutinize each income document, such as W-2s and Form 1099s, toensure that they have been issued by a valid entity.  Participant shall not accept questionabledocuments or file any return relating thereto.

 

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3.4 Unacceptable practices: ERO shall comply with both the letter and spiritof Fair Lending laws that govern financial institutions.  Specifically, ERO shall not engage in anyunacceptable practices, including but not limited to the following: tellingconsumers they must apply for a bank product in order to receive their refund,charging excessive fees or fees unrelated to the preparation and filing of atax return or bank product, failing to provide the consumer with any requiredbank product disclosures, requiring a consumer to sign disclosures beforereading them, intentionally misrepresenting any material fact concerning thebank’s products or its program including pricing or timing of disbursements,or, intentionally steering a consumer to a RAL when that customer has expresseda desire for a different product.  An EROwho engages in unacceptable practices may be suspended from the Program at thediscretion of SBBT.  A list ofunacceptable practices is provided in the Bank Program User Manual, however, itremains the sole discretion of SBBT to determine whether or not an ERO hasengaged in behavior that SBBT deems to be “unacceptable”.

 

3.5.  False RALInformation.  Participant shall notknowingly assist any person in fraudulently obtaining a Bank Product and shallnot knowingly transmit false or incomplete information on RAL, ACR or ADDrecords to SBBT.  Participant agrees tonotify SBBT immediately if he/she becomes aware of any attempt to obtain a BankProduct by fraud or pursuant to any untrue or false tax return.  Any breach by Participant of its obligationsunder this Section 3.4 shall, and any suspicion of fraud by SBBT amongParticipant’s Bank Product requests may, result in Participant’s immediatesuspension from the Program upon notice.  Further, Participant agrees to pay to SBBT theamount of any RAL that is not collected by SBBT if such failure is the resultof (i) Participant’s knowing assistance of a Client’s fraud, or (ii)Participant’s failure to accurately submit Application information to SBBT asreceived from a Client.  Participantshall pay all such amounts within 30 days after notice from SBBT.

 

3.6  Completedand Signed Tax Return.  Participant shallcomplete the direct deposit designation in the electronic portion of theClient’s Federal (and State, if applicable) income tax return.  The direct deposit designation shall includeinformation provided by SBBT (including the SBBT check routing number andclient account number), and shall name SBBT as the financial institution.  The designation shall also indicate that theaccount is “checking” and that the source is “other.” Participant shall causethe same information to be contained in the appropriate data fields as part ofthe electronically filed return. Participant shall obtain the Client’s signature on an e-filed tax returnvia a completed and signed IRS Form 8453 or by using the Client’s self selectPIN (Personal Identification Number).

 

3.7  ClientCopies.  Participant shall deliver toeach Client a signed copy of the Application, Loan Agreement and DisclosureStatement (each, as provided by SBBT), together with any other agreements ordocuments that SBBT reasonably may require, as identified and provided toParticipant.

 

3.8  Document Retention.  Participant shall retain with respect to eachClient a signed copy of the Application, Loan Agreement and DisclosureStatement, together with copies of all the tax returns, W-2s, and (to theextent feasible) taxpayer identifications, for a period of five (5) years, and,upon request, shall deliver the same to SBBT within 48 hours.

 

3.9  Secure Check Storage.  Participant understands that, if printingchecks on site, he/she will have the care and custody of consecutively numberedSBBT checks upon which Participant may affix an SBBT facsimile signature of anauthorized SBBT signatory.  Participantagrees to store the check supplies in a secure, locked area in the same manneras it stores cash, and to allow access to authorized personnel only.  Participant acknowledges that mishandling ofcheck supplies may be cause for immediate suspension from the Program.

 

3.10  Lost/Stolen/Voided Checks:  Participant shall reimburse SBBT, within 30days of notice, the amount of each SBBT cashier’s check that is stolen by anemployee of Participant, given to the incorrect Client or reported lost and/orvoided by the Participant’s office if (i) the check has cleared SBBT and (ii)SBBT is otherwise unable to recover such funds.

 

3.11  Compliance with Laws; Client Consents.  Participant shall comply with all applicablelaws, rules and regulations (including, without limitation, applicable Statelicensing requirements) relating to the preparation and transmission of incometax returns and his/her performance under this Agreement.  Participant accepts full responsibility forobtaining Client consents, on behalf of**SBBT,in connection with the offer and sale of Bank Products.

 

IV.  SBBT’SDUTIES AND OBLIGATIONS,

 

4.1  Processing Applications.  SBBT shall timely process Applications inaccordance with industry standards and provide Bank Products with respect toall Applications received electronically from Participant according to SBBT’scredit criteria, as in effect from time to time.  SBBT shall establish such credit criteria, aswell as bank fees relating to Bank Products, in its sole discretion.  SBBT shall disburse RALs and tax refunds toClients in accordance with the terms set forth in the Application and LoanAgreement.

 

4.2  Check Stock.  SBBT shall provide and distribute to Participantthe necessary check stock to participate in the Program, and shall replenishsuch stock promptly upon Participant’s request (provided, however, that ifParticipant requests overnight delivery, then Participant shall pay the cost ofsuch delivery).

 

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4.3  ACH FeePayments: SBBT shall pay all fees owing to Participant as set forth in the RALor ACR/ADD records received by SBBT via automated clearing house (“ACH”) creditto the bank account designated by Participant to Jackson Hewitt Inc.  Such funds shall be withheld from the BankProduct and paid (i) on the business day following receipt of the checkreconciliation file by SBBT, in the case of an approved RAL, or (ii) uponSBBT’s receipt of the IRS tax refund, in the case of an ACR or ADD.  Notwithstanding the foregoing, Participant authorizesSBBT to accept and act in accordance with instructions SBBT receives fromJackson Hewitt Inc. to pay Participant fees to Jackson Hewitt Inc. wheneverJackson Hewitt Inc. claims that such monies are owed.

 

4.4.  Fees on Denied RALs.  If SBBT denies a RAL, then the request will beconverted automatically to an ACR application, and Participant’s fee will becollected and disbursed upon funding of the return by the IRS.  If SBBT denies a RAL due to an outstandingRAL debt, then SBBT shall pay the Participant’s fees at the time the RAL isdenied.

 

4.5.  Collection of Outstanding ParticipantFees.  SBBT shall not reimburseParticipant fees on unfunded ACRs or ADDs.  Notwithstanding the foregoing, SBBT agrees toact as a third party debt collector on behalf of Participant to collect anyoutstanding tax preparation or other Participant fees of a prior Client.  To the extent any such collection efforts aresuccessful, Participant fees, if any, will be deducted from the proceeds of aBank Product (after deduction of all bank fees and charges and after deductionof a 10% charge) and paid to Participant.  Participant will be responsible forsubstantiating any disputed debts.  This Section 4.5shall survive the termination or expiration of this Agreement.

 

4.6  Compliancewith Laws.  SBBT covenants and agreesthat all Program documentation (including the Application, Loan Agreement,Disclosure Statement, disbursement checks and marketing materials, if any)provided to Participant, and SBBT’s performance under this Agreement, shallcomply with applicable laws, rules and regulations.

 

V.  TERM.

 

5.1  Term.  This Agreement shall become effective on thedate Participant executes and delivers the same to Jackson Hewitt Inc. and shallcontinue until December 31, 2005.

 

5.2 Termination.  This Agreement maybe terminated by SBBT immediately upon notice to Participant if Participant hasbreached any of the representations made, or has materially defaulted in theperformance of any of his/her obligations, hereunder.

 

VI.  PRIVACY. No party shall make any unauthorized disclosure of or use any personalinformation of Clients that it receives from the other or on the other’s behalfother than to carry out the purposes for which such information is received,and each party shall comply, to the extent applicable, with the requirements ofthe implementing regulations of Title V of the Gram-Leach-Bliley Act of 1999,specifically including 16 Code of Federal Regulations, Chapter 1, Subchapter C,Parts 313.11 and 313.13.

 

VII.  INDEMNITY.

 

7.1 Indemnification by Participant.  Participantshall indemnify, defend and hold harmless SBBT and its officers, directors,employees and agents, from and against any and all expenses and costs(including reasonable attorney’s fees and court costs) or liabilities(including amounts paid in settlement) incurred by SBBT in connection with anyclaim, dispute, controversy or litigation arising out of or resulting from anybreach by Participant of any of his/her representations or obligationshereunder.

 

7.2  Indemnification by SBBT.  SBBTshall indemnify, defend and hold harmless Participant and his/her officers,directors, employees and agents, from and against any and all expenses andcosts (including reasonable attorney’s fees and court costs) or liabilities(including amounts paid in settlement) incurred by any of them in connectionwith any claim, dispute, controversy or litigation arising out of or resultingfrom (i) the offer and sale of Bank Products hereunder (excluding acts oromissions by Participant in connection with such offer and sale); (ii) anyviolation or alleged violation of applicable law (including, withoutlimitation, the Truth-in-Lending Act or any regulation of the Federal ReserveBoard or other applicable Federal or State banking or consumer finance laws orregulations); or (iii) any breach by SBBT of any of its representations orobligations hereunder.

 

VIII.  OTHERAGREEMENTS.

 

8.1  Exclusivity. Participant agrees not to submit applications for any Bank Products, orany products substantially similar thereto, on behalf of any Client (which term shall include both the husband and wifewith respect to taxpayers filing jointly) to any entity other than SBBT whileparticipating in the Program.  Any breachof this Section 8.1 will result in Participant’s immediate suspension fromthe Program upon notice to Participant.

 

8.2  Participant Incentives.  Participant acknowledges and agrees that,except as expressly provided herein, Participant shall not be entitled to, andSBBT shall not pay, any compensation in connection with the Program.  SBBT understands and agrees that Participantmay charge application or other fees in connection with the sale of BankProducts to Clients in amounts determined by Participant.  The parties further acknowledge that JacksonHewitt Inc. may determine whether to offer Participant an incentive

 

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program and that the availability of any suchprogram, and the terms thereof, shall be made in Jackson Hewitt Inc.’s solediscretion.

 

8.3  Rights ofAccess.  Participant hereby grants toSBBT access to its offices upon notice, for the purpose of performing physicalinspections of SBBT check stock, Application forms, Clients’ Forms 8453 and anyother record reasonably related to the Program, and to observe the operation ofthe Program and the procedures followed by office personnel.

 

8.4  Ownershipof Loans.  SBBT shall be the sole ownerof RALs made under the Program.  SBBTshall have the authority to transfer or assign such loans at any time.

 

8.5  Limitationof Liability.  Neither party shall beliable to the other for incidental, special, indirect or consequential damageor loss of profits or other benefits, arising out of or in connection with theperformance (or failure thereof) of its obligations hereunder, unless suchdamage or loss arises from that party’s gross negligence or wilful misconduct.

 

8.6  Excusable Delay.  No party shall be liable to any other partyfor any delay in performance or nonperformance of its obligations under thisAgreement where such delay or nonperformance is caused by circumstances or actsbeyond its control, including failure of communication lines, equipment orsystems of third parties; acts of God; civil disturbances, war or otherviolence; strikes or labor disputes.

 

8.7  Attorneys’ Fees.  The non-prevailing party will pay all costsand expenses, including reasonable attorneys’ fees and court costs, incurred bythe prevailing party to enforce this Agreement, including collection of amountsowed under this Agreement.

 

8.8  Notices.  Any notice required or permitted to be givenhereunder shall be in writing and shall be deemed to have been given on thedate of delivery, if made personally or by facsimile transmission, or on thesecond business day after mailing, if mailed by registered or certified mail,return receipt requested.  Notices shall besent to SBBT at the address set forth below, and to Participant at the addresson file at Jackson Hewitt Inc.

 

8.9  Integration.  This Agreement expresses the entireunderstanding and agreement of the parties concerning to the subject matterhereof, and supercedes all prior agreements, understandings, arrangements orcommitments with respect to such subject matter, written or oral, including(without limitation) any agreements to which Participant and SBBT may be aparty prior to the date hereof, each of which are hereby void and of no furtherforce and effect (except to the extent certain provisions therein by theirterms or nature survive termination or expiration).

 

8.10  Rights of Jackson Hewitt.  Nothing in this Agreement is intended to norshall limit any rights or remedies of Jackson Hewitt Inc. in connection withthe Program or the offer thereof. Jackson Hewitt Inc. is expressly made a third party beneficiary of thisAgreement, and shall be entitled to enforce the provisions hereof.

 

By signing below, I certify that I have been approvedby the IRS to prepare and electronically file income tax returns and that Ihave a current and valid EFIN.  I acknowledgethat I have read, understand and agree to be bound by all of the terms andconditions set forth in this Agreement.  Ifurther authorize SBBT to check my credit record through any nationallyrecognized credit bureau.

 
| Processing Center |   |      | Entity No. |   |   |
|-------------------|--------|-----------|------------|--------|--------|
|              |   |      |       |   |
|              |   |
| Printed Name      |   | Signature | Date       |
|                   |        |           |            |        |        |  |  |  |

 

**Notice:** A signed copy of this Agreement must bereceived by Jackson Hewitt Inc. before you can be activated in the Program.

 

On behalf of SBBT:

 

 
| /s/Richard H. Turner            |   |
|---------------------------------|--------|
|                            |
| Richard H. Turner               |
| Senior Vice President           |
| Santa Barbara Hank & Trust. |
| 1021 Anacapa Street, 3rd Floor  |
| Santa Barbara, CA 93101         |

 

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**Exhibit B**

**to**

**ProgramAgreement BetweenSanta Barbara Bank & Trust and Jackson Hewitt Inc.**

 

**Pricing andLoan Ranges**

 

**SantaBarbara Bank & TrustMarch 14, 2005**

 

1.1.                              I.  Refund Anticipation Loan “RAL”

 
| **LOAN  AMOUNT RANGES**             | ** ** | **SBBT Finance Charge** | ** ** |
|-------------------------------------|------------|-------------------------|------------|
| ** **                          | ** ** | ** **              | ** ** |
| ***RAL  Loan Amount Between:***     | ** ** | ** **              | ** ** |
| Sum of All Fees + $1 - $7,000       | ** ** | **3.00% of  Loan**      | ** ** |
| Minimum Fee                         | ** ** | **$**                   | **10**     | ** ** |
| Maximum Fee                         | ** ** | **$**                   | **80**     | ** ** |
| Surcharge on RALs if EIC is claimed | ** ** | **$**                   | **10**     | ** ** |
|                                |       |                    |       |
| Money Now* loan up to $1100         |       | **$**                   | **35**     |   |

 

**II. Accelerated Check Refund “ACR”/AssistedDirect Deposit “ADD”**

 
| All Amounts: |   | **$** | 25 |   |
|--------------|--------|-------|----|--------|

 

**III. Federal Tax Refund Limit**

 
| Minimum  Refund Amount:      | ** ** | Sum of All Fees + $1 | ** ** |
|------------------------------|------------|----------------------|------------|
| Maximum Refund Amount - ACR: |       | $                    | 999,999    |   |
| Maximum Refund Amount - RAL: |       | $                    | 9,999      |   |

 

*Product features andpricing are subject to change****atthe discretion of Santa Barbara Bank & Trust with reasonable advance noticeto Jackson Hewitt.*

 

3

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**Exhibit C**

**to**

**Program Agreement**

**Between**

**Santa****Barbara Bank & Trust and****Jackson****Hewitt Inc.**

**March 14,2005**

 

**I.  Source of Fees**

 

1.  SBBT shall collect the following handling fees(“Handling Fees”) on Bank Products originating fromEROs:

 

$25 per fundedACR or RAL

$10 per fundedState ACR

$35 per fundedMoney NowSM loan

 

A funded BankProduct is one with respect to which SBBT receives all or part of the Customer’sexpected refund from the IRS or state taxing authority sufficient to pay theapplicable Handling Fee.

 

2.  In addition to the applicable Handling Fee, afinance charge shall be charged to each Customer obtaining a RAL approved bySBBT.  The finance charge shall be apercentage (determined each year) of the total RAL dollar amount.  SBBT shall, within one business day followingthe receipt of the IRS direct deposit of the Customer’s refund, disburse to JHI$.75 of the finance charge associated with each RAL approved by SBBT by ACHdirect deposit to JHI’s bank account (as identified by JHI) or as otherwisedirected (the “Finance Fee”).  Except as specificallyset forth in Section II (C) below, SBBT shall bear sole responsibility forloan losses.

 

**II.  Disbursements**

 

Inconsideration of the services provided by JHI under this Agreement, SBBT shallpay the following amounts to JHI, except in jurisdictions that the partiesagree prohibit such payment:

 

**A.  Handling Fee Disbursements**

 

1.   TheHandling Fee shall be disbursed pursuant to the following schedule:

 
| For each  funded ACR and RAL: |   | $      | 7.20 to SBBT |   |
|-------------------------------|--------|--------|--------------|--------|
|                          |   | $      | 17.80 to JHI |   |
|                          |   |   |         |   |
| For each  funded State ACR:   |   | $      | 5.00 to SBBT |   |
|                          |   | $      | 5.00 to JHI  |   |

 

2.  The foregoing fees shall be disbursed withinone business day following the receipt of the IRS direct deposit of theCustomer’s refund.  Payments shall bemade using ACH direct deposit to JHI’s bank account (as identified by JHI) oras otherwise directed.

 

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**B. RAL— Fixed Rebate**

 

1. SBBT shall pay to JHI for each RALapproved by SBBT an amount equal to: (i) $ 16.00 (the “RAL Fixed Rebate”) and(ii) the amount of the RAL finance charge in excess of $75, if any (the “RAL Fee”).

 

2. Payments of the RAL Fixed Rebate amountspursuant to clause (i) above shall be disbursed within one business dayfollowing the approval of each RAL application and payments of amounts of theRAL Fee pursuant to clause (ii) above shall be paid no later than April 15of each tax year.  Payments shall be madeusing ACH direct deposit to JHI’s bank account (as identified by JHI) or asotherwise directed.

 

**C. RAL —Performance Adjustments**

 

1. Forpurposes of this Agreement, the following terms shall have the followingmeanings:

 

“DelinquencyAmount” means the total dollar value of all outstanding and unpaid RALsissued by SBBT pursuant to the Program in the current calendar year.

 

“Loan Yield”means with respect to any calendar year, the amount equal to the quotient of(i) the Yield Amount, divided by (ii) the total dollar value of all RALs issuedby SBBT pursuant to the Program in such calendar year.

 

“Loan DelinquencyRate” means with respect to any calendar year, the amount equal to thequotient of (i) the Delinquency Amount, divided by (ii) the total dollar valueof all RALs issued by SBBT pursuant to the Program in such calendar year.

 

“ThresholdAmount” means with respect to any calendar year, one percent of the totaldollar value of all RALs issued by SBBT pursuant to the Program in suchcalendar year.

 

“YieldAmount” means with respect to any calendar year, the amount equal to (i)the gross amount of all finance charges assessed by SBBT in respect of SBBTapproved RALs pursuant to the Program in such calendar year, minus (ii) anamount equal to the sum of (x) the aggregate Finance Fee for such calendaryear, (y) $3.75 for each RAL included in the Finance Fee calculation, and (z)the aggregate RAL Fee for such year.

 

2. The partiesagree that except as specifically provided for below in subparagraph (a) ofthis Section 11.C.2, SBBT shall be shall be entitled, after fulfillment ofits payment obligations to JHI pursuant to the other provisions of this ExhibitC, to retain all other amounts earned in connection with the Program.  The parties agree that except as specificallyprovided for below in subparagraph (b) of this Section II.C.2, SBBT shallbe responsible for all loan losses.  Theparties further agree that notwithstanding the provisions of the precedingsentence, nothing herein shall affect SBBT’s payment obligation to JHI or JHI’sright to receive from SBBT, the Handling Fee or RAL Fixed Rebate or RAL Feepayments set forth in paragraphs A and B of this Section II, JHI’s fixedshare of the finance charge pursuant to Section I (2), or the fees setforth in Section III of this Exhibit C.

 

(a) ExcessLoan Yield.  With respect to eachcalendar year during the term of this Agreement, if the Loan Yield exceeds theLoan Delinquency Rate for a particular calendar year, each measured as of December 31of such calendar year, by more than 100 basis points, then SBBT shall pay to JHI50% of the amount equal to the difference between (i) the Yield Amount and (ii)the sum of the Delinquency Amount and the Threshold Amount for such calendaryear.  Amounts, if any, payable to JHIpursuant to the preceding sentence shall be paid within five business daysfollowing December 31 of such calendar year.

 

2

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(b) ExcessiveLoan Delinquency.  With respect toeach calendar year during the term of this Agreement, if the Delinquency Amountexceeds the Yield Amount for a particular calendar year, each measured as of July 1of such calendar year, then JHI and SBBT shall each fund 50% of the amount equal to thedifference between the Delinquency Amount and the Yield Amount for suchcalendar year within five business days following such date.  In such event, all amounts recovered by SBBTbetween July 1 and December 31 of such calendar year, with respect toRALs issued in such calendar year, calculated as of December 31 of suchcalendar year, shall be shared equally between the parties and paid to JHIwithin five business days following such December 31st; provided, however,that the amount payable to JHI pursuant to this sentence shall not exceed theamounts payable by JHI pursuant to the immediately preceding sentence.

 

**III. Prior and Current YearLoans**

 

SBBT shallcooperate with other RAL issuing banks to require the collection of outstandingRALs it originated in prior years in connection with the Program to the extentthose collection efforts do not violate law.

 

Notwithstandingany provision herein to the contrary, the amount of any outstanding RALs thatis collected by or paid to SBBT during calendar year 2005 that was originatedduring or prior to the 2004 filing season shall be deposited into a collectionaccount and disbursed by SBBT on the last business day of each month asfollows: 65% to JHI and 35% to SBBT; provided, however, that for the 2005filing season JHI shall not receive less than an amount equal to the product of* *$2.00multiplied by the number of RALs issued by SBBT pursuant to the Program in 2005. For calendar years subsequent to 2005,such RALs collected by or paid to SBBT shall be disbursed by SBBT as follows:65% to JHI and 35% to SBBT.

 

With respectto each calendar year during the term of this Agreement commencing with the2006 filing season, SBBT shall pay to JHI an amount (the “Additional Amount”)equal to the product of $2.00 multiplied by the number of RALs issued by SBBTpursuant to the Program during such calendar year (the “Measurement Year”);provided that one of the two following tests shall be met before any payment shallbe made to JHI:

 

(a) the Loan Yield for such Measurement Yearexceeds the Loan Delinquency Rate for such Measurement Year by at least 50basis points as of April 30th of such Measurement Year; or

 

(b) the Loan Yield for such Measurement Yearexceeds the Loan Delinquency Rate for such Measurement Year by at least 60basis points as of December 31 of such Measurement Year.

 

In the eventboth of the tests set forth in (a) and (b) are not met, JHI shall also beentitled to the Additional Amount if: the Loan Yield for such Measurement Yearexceeds the Loan Delinquency Rate for such Measurement Year by at least 60basis points measured as of any date through December 31 of the year nextsucceeding such Measurement Year, after taking into account any and all collectionsmade by or paid to SBBT in such next succeeding year through such date withrespect to the RALs issued by SBBT in such Measurement Year.

 

In addition tothe foregoing, provided that an Additional Amount is otherwise earned for aMeasurement Year in accordance with above, then with respect to such AdditionalAmount and such Measurement Year, if an amount equal to 25% of the total amountof RALs issued in the calendar year immediately preceding such Measurement Yearand collected by or paid to SBBT in such Measurement Year (the “CrossCollection Amount”) is greater than such Additional Amount for such MeasurementYear, then SBBT shall pay to JHI the Cross Collection Amount in lieu of theAdditional Amount, or the difference between such Cross Collection Amount andsuch Additional Amount if such Additional Amount has previously been paid.  SBBT shall disburse such funds to JHI withinfive business days of the December 31 of the year in which the first ofthe above three tests is met.

 

**IV. Rightof First Refusal for New Bank Products.**

 

JHI shall offer SBBT a right of first refusalto develop and/or provide New Bank Products.  JHI shall be permitted to develop,independently or in connection with a third party, new products/services orprograms, in its discretion.  Withrespect to New Bank Products that are similar to existing Bank Products, suchNew Bank Product must be in response to a party determining that thecontinuation of such existing Bank Product is reasonably likely to bedetrimental to a party hereto due to legislative, regulatory or other legalissues.  Upon delivery by JHI to SBBT ofa request for a New Bank Product, SBBT shall have thirty (30) business days torespond to any such offer, stating its

 

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intention to provide or not provide therequested New Bank Product.  If SBBTagrees to provide the New Bank Product, then JHI and SBBT will negotiate ingood faith to mutually agree on an acceptable time frame for development,testing and implementation of the New Bank Product, including costs and fees ofthe New Bank Product.  If the parties donot reach such mutual agreement within thirty days of SBBT agreeing to providesuch New Bank Product or SBBT does not respond within the original thirty (30)day period, then JHI shall be permitted to delete EROs from this Agreement and,if it determines to do so, arrange for such EROs to align with another bank orother vendor for all of the EROs tax related financial product needs.

 

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**Exhibit D**

**toProgram Agreement**

**Between**

**SantaBarbara Bank & Trust and Jackson Hewitt Inc.**

**March 14,2004**

 

 

SBBT’s obligation to reimburse JHI forexpenses incurred by it in connection with the activities described in Section 11.3of this Agreement shall be subject to a yearly maximum limitation, as describedon this Exhibit D which may be amended on a yearly basis pursuant to the mutualagreement of both parties.

 

Aggregate Maximum Limitation:$3.6 million

 

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