Document:

Exhibit
10.12

	
  CONFIDENTIAL
  TREATMENT REQUESTED

  
	
  —

  
	
  CONFIDENTIAL
  PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN SEPARATELY FILED
  WITH THE SECURITIES AND EXCHANGE COMMISSION

  

 

 

WAFERING
SUPPLY AND SALES AGREEMENT

 

THIS
AGREEMENT, made
and entered into in           ,
Philippines, this           th
day of            2007 by and
between:

 

First
Philec Solar Corp.,
a corporation duly organized and existing under the laws of the Philippines,
with offices at First Philippine Industrial Park, hereinafter referred to as
Supplier;

 

- and -

 

SUNPOWER
PHILS. MFG., LTD,
a foreign corporation duly licensed to do business in the Philippines, with
office address at 100 East Trade Avenue, Laguna Technopark Inc., Biñan, Laguna,
hereinafter referred to as Purchaser.

 

WITNESSETH:

 

WHEREAS, First Philippine Electric Corporation
and Purchaser have entered into a Joint Venture Agreement dated                                         
(the “JV Agreement”) to form the Supplier;

 

WHEREAS, pursuant to the JV Agreement, the purpose
of Supplier, inter alia, is to provide wafering services to Purchaser;

 

WHEREAS, the Parties desire to enter into an
Agreement pursuant to which Supplier shall provide wafering services to
Purchaser;

 

NOW THEREFORE, in
furtherance of the foregoing premises and in consideration of the mutual
covenants and obligations hereinafter set forth and in the JV Agreement, and
based on the consideration set forth in the JV Agreement, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound hereby, do agree, as follows:

 

1.                                      Definition
of Terms

 

In this Agreement the following
expressions shall have the following meanings:

 

1.1                             “Semi-Annual Firm Forecast” shall
have the meaning set forth in Section 3.7.

 

 

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1.2                             “Affiliate” shall mean with respect
to Purchaser, any other corporation or entity directly or indirectly (through
one or more intermediaries) controlling, controlled by, or under common control
with such Purchaser (including any subsidiary).

 

1.3                             “Contract Year” shall mean the
period of twelve (12) consecutive months beginning from January 1 and ending
December 31.  For the first year of
operation, it shall mean to refer to the Start-up Date and ending December 31
of the first year of operation. 
Notwithstanding the foregoing, if this Agreement expires or is
terminated before the end of any Contract Year, such last Contract Year shall
end of the date of such expiration or termination.

 

1.4                             “Delivery” shall have the meaning
set forth in Sections 2.1, 3.7.1, 4.1 and 5.2.

 

1.5                             “Delivery Point” shall have the
meaning set forth in Section 2.1.

 

1.6                             “Initial Schedule” shall have the
meaning set forth in Section 3.1.

 

1.7                             “Initial Term”
shall have the meaning set forth in Section 8.1.

 

1.8                             “Mark-up”
shall mean an agreed percentage  to be
applied to the sum of the variable cost and fixed cost for wafering services by
the Supplier.

 

1.9                             “Minimum Yield”
shall mean a percentage amount equal to the minimum number of good wafers
expected to be produced per millimeter of good ingot used divided by the
theoretical number of wafers that can be produced per millimeter of good ingot.  The theoretical number of wafers that can be
produced is equal to the length of the ingot divided by the wireguide roller
pitch.

 

1.10                       “Non-SP Ingot”
shall mean the Silicon Ingot purchased or taken by
Supplier from a source other than Purchaser.

 

1.11                       “Non-SP Silicon Wafers”
shall mean Silicon wafers, sliced, manufactured and/or produced substantially
from Non-SP Ingot.

 

1.12                       “Product” shall mean silicon ingot
that are already sliced or cut into wafers that meet the specifications of
Purchaser.

 

1.13                       “Renewal Term” shall have the meaning set forth in Section 9.1.

 

 

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1.14                       “Representatives” shall have the meaning set forth in Section 8.2.

 

1.15                       “Requirements” shall have the meaning set forth in Section 5.1.

 

 

1.16                       “Specifications” shall mean the
physical, technical and functional requirements, as each of such requirements are set forth on Annex “A” hereto for both the SP
Ingot and SP Silicon Wafers.

 

1.17                       “SP Ingot” shall mean the Silicon Ingot consigned, purchased or taken by Supplier pursuant to this Agreement.

 

1.18                       “SP Silicon Wafers” shall mean Silicon wafers, sliced, manufactured
and/or produced substantially from SP Ingot.

 

1.19                       “Start-up Date”  shall mean the date on which Supplier’s installed capacity is sufficient to meet
the Purchaser’s first quarter demand (as shown in the table in Section 3.1) as
certified in writing by Supplier and Purchaser in accordance with Purchaser’s
specifications.

 

1.20                       “Target
Price” shall have the meaning set forth in Sections 3.1 and 3.2.

 

1.21                       “Target
Utilization” shall have the meaning set forth in Sections 2.5
and 3.13.

 

1.22                       “Yield”
shall mean a percentage
amount equal to the number of actual good wafers produced per millimeter of
good ingot used divided by the theoretical number of wafers that can be
produced per millimeter of good ingot used. 
The theoretical number of wafers that can be produced is equal to the
length of the ingot divided by the wireguide roller pitch.

 

 

2.0                                 Ingot Supply
Arrangement

 

2.1                             Subject
to the terms and conditions described herein, commencing on the Start-up Date,
Purchaser shall guarantee to supply and deliver by consignment to Supplier SP Ingots (based on the Semi-Annual Confirmed
Silicon Ingot Delivery Schedules (“Semi-Annual Delivery Schedule”)
corresponding to the relevant Semi-Annual Firm Forecast, a copy corresponding
to the Semi-Annual Delivery Schedule for the first Semi-Annual Firm Forecast is
hereto attached as Annex “B”) and the JVC shall take delivery of the SP Ingots
from Purchaser. Delivery Point shall be at JVC warehouse.

 

 

***                           CONFIDENTIAL MATERIAL REDACTED AND
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3

 

2.2                             The
quality of the Ingots shall be in accordance with the Ingot specifications of
Purchaser, a copy of which is attached hereto as “Annex A”, which may be
amended from time to time by the parties. 
Defective ingots shall not be counted as delivered SP ingots.

 

2.3                             The
Parties shall, from time to time, update and adjust the Semi-Annual Delivery
Schedule corresponding to the relevant Semi-Annual Firm Forecast to insure the
attainment of the agreed utilization of the JV wafering capacity as shown in
Table 1 of Section 3.1.

 

2.4                             SP and
Non-SP ingots must be properly segregated by the Supplier to ensure proper
handling and accounting.

 

2.5                             In case
Supplier is unable to meet its target utilization by a shortfall in the
delivery of actual sliced wafers against the forecast for each quarter and such
shortfall is due to the following:

 

a)                                      failure of
Purchaser to supply the requisite number of SP ingots in accordance with the
applicable Delivery Schedule; or

b)                                     due to lower
actual wafering demand not attributable to Seller or Section 3.7.1 (a) and (b).

 

Supplier shall allow
Purchaser to make up for the shortfall during the next succeeding two (2)
quarters.  If Purchaser fails to do so, Purchaser shall compensate
Supplier in accordance with the following:

 

	
  % shortfall vs forecast

  	
   

  	
   

  
	
  for the 3 quarters

  	
   

  	
  Compensation

  
	
   

  	
   

  	
   

  
	
  ***%

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  
	
  >***% up to ***%

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  
	
  >***%

  	
   

  	
  ***

  

 

For this purpose, fixed cost
per unit is understood to refer to the actual fixed cost divided by the
forecast volume. The elements of fixed cost are limited to actual depreciation
of equipment, facilities expense, fixed utilities  cost and labor allocated to Purchaser.

 

The capacity is deemed used
if sold or utilized to third party customers. Supplier shall notify Purchaser
if capacity is to be sold or utilized by third 

 

 

***                           CONFIDENTIAL MATERIAL REDACTED AND
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4

 

party customers and Supplier
may proceed to do so if no written contrary advice is received from Purchaser
within three (3) days from notice. Purchaser may deny such use or utilization
only if Purchaser will be making use of Supplier’s capacity and for no other
reason.

 

3.0                                 SP Silicon
Wafer Supply and Purchase Arrangement

 

3.1                             Subject to the terms and conditions described herein, Supplier hereby agrees to supply and
deliver to Purchaser, and Purchaser hereby agrees to purchase and take, the SP Silicon Wafers sliced or
manufactured by Supplier that meet the order and Specifications of Purchaser in
accordance with the following rates and 5 year schedule (the “Initial Schedule”)
see Table I

 

Table I — Five- year Silicon Wafer Supply Schedule 

 

	
  Year

  	
   

  	
  Quarter

  	
   

  	
  Forecast

  Wafers

  (K units)

  	
   

  	
  Minimum

  Yield

  	
   

  	
  Mark-up

  	
   

  	
  Target

  Price

  	
   

  
	
  2008

  	
   

  	
  Q308

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q408

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  2009

  	
   

  	
  Q109

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q209

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q309

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q409

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  2010

  	
   

  	
  Q110

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q210

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q310

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q410

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  2011

  	
   

  	
  Q111

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q211

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q311

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q411

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  2012

  	
   

  	
  Q112

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q212

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q312

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q412

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
  2013

  	
   

  	
  Q113

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  
	
   

  	
   

  	
  Q213

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  	
  ***

  	
   

  

 

3.2                             At the
beginning of each quarter, an initial price (“Initial Price”) shall be
determined based on the cost forecast of Supplier for the applicable quarter
using the following formula:

 

 

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Price
:                                        (***% x cost
per unit x applicable Mark-up)

 

Plus

 

(***% x Target Price)

 

Where:                                                       a) cost per
unit is total sum of the wafering manufacturing cost allocated to Purchaser, excluding
cost of silicon loss, compensation under Section 3.15  and that portion of the JV’s fixed cost
attributable to the event under Section 3.15, divided by the total number of
Products.  The cost of silicon loss
represents the cost of additional SP Ingot lost corresponding to the difference
between the minimum yield and actual yield in the event that the actual yield
is less than the applicable target yield provided in the table above. (For this
purpose silicon loss associated with defective incoming ingot shall not be
borne by the JVC and shall not form part of this formula).  The fixed cost attributable to the event
under Section 3.16 is equivalent to the actual fixed cost divided by the
confirmed demand multiplied by the difference between the confirmed demand and
quantity of wafers delivered for the quarter.

 

With respect to computing
the Initial Price, it is understood that this is based on an estimate of the
cost per unit.

 

A sample computation is
hereto attached as Annex “C.”

 

b) The Target Price shall be
based on the target standard cost of $*** plus ***% mark-up.

 

c) Prices shall be “ex-works” and shall be expressed up to three (3) decimal
places.

 

3.3                             Supplier
shall be entitled to be paid the Initial Price for every good Product delivered
to the Purchaser.

 

 

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3.4                             At the
end of each quarter, the Actual Price shall be calculated using the formula in
par. 3.2 based on the Supplier’s actual cost per unit for the preceding
quarter.  If the Actual Price is
different from the Initial Price, a reconciliation of the Total Billings for
the quarter must be made.  The
reconciliation must show the following:

 

Total Billings using Initial
Price

Less:

Total Quantities of Product
Delivered for the Qtr x Actual Price

 

Any resulting difference
must be covered by an adjustment billing or credit note issued to the
Purchaser. Total Billings shall mean the sum of Supplier’s total invoices to
Purchaser for the quarter.

 

 

3.5                             In the
event the actual yield is less than the applicable Minimum Yield in the above
table, the Supplier shall credit or deduct from its invoices *** (***%) percent
of the actual cost of SP Ingot corresponding to the difference between the
actual yield and the Minimum yield.  The
actual cost of the SP Ingot is understood to be net of the resale value of the
Silicon materials.

 

3.6                             The above
Forecast Wafers as shown in Table 1 in Section 3.1 are the indicative Product
demand by Purchaser of which the first six months is firm and guaranteed by the
Purchaser upon Supplier’s confirmation of the available capacity for the first
six months.  Supplier must confirm and
guarantee the availability of capacity to meet the first six months demand not
later than March 15, 2008.

 

3.7                             The
following governs Purchaser’s forecasts and Supplier’s shortfalls in capacity:

 

3.7.1      Subsequent
to the first six months of the Schedule and every 180 days thereafter, Purchaser
may provide a revised 5 year demand forecast (“5-year Forecast”) of which the
first six months, subject to Supplier’s confirmation, shall be firm and
guaranteed (the “Semi-Annual Firm Forecast”). Supplier must confirm and
guarantee the availability of capacity to meet the first half year demand not
later than 90 days before the start of the relevant six months.  “Firm and guaranteed” means that Purchaser
will purchase and take delivery of the total number of wafers stated in the
Semi-Annual Firm Forecast.   The
Semi-Annual Firm Forecast shall, likewise be taken by the Supplier for purposes
of capacity build up plan and

 

 

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equipment purchase plan. Each
Semi-Annual Firm Forecast shall not be lower than the installed capacity of
Supplier for the duration of this Agreement except in the following cases:

 

a)                                      Market
condition is such that the worldwide silicon solar cell

demand of Purchaser and its
Affiliates is substantially reduced; and

b)                                     the JVC
wafering price is consistently higher compared to the actual wafering price of
at least 3 other wafering suppliers of Purchaser for a period of 3 consecutive
quarters, provided that this become operative only after two (2) years from
execution of this Agreement on Q1, Year 2011.

 

3.8                             In case of a shortfall in Supplier’s
guaranteed capacity resulting in its inability to satisfy the volume order(s)
of Purchaser, Purchaser shall allow Supplier to make up for the
shortfall during the next succeeding two (2) quarters. If Supplier fails to do
so, Supplier agrees to compensate the Purchaser in accordance with the
following:

 

	
  % shortfall vs guaranteed
  capacity

  	
   

  	
  Compensation

  
	
   

  	
   

  	
   

  
	
  ***%

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  
	
  >***% up to ***%

  	
   

  	
  ***

  
	
   

  	
   

  	
   

  
	
  >***%

  	
   

  	
  ***

  

 

 

For this purpose,
incremental cost is understood to refer to the Purchaser’s actual landed cost
for going to third party supplier less Supplier’s price ex-works. A shortfall is deemed to occur when Supplier’s
actual wafers delivered is less than Purchaser’s confirmed demand and is due to
causes other than a shortage of SP ingots. 
It shall be determined through a quarterly review by Supplier and
Purchaser.

 

For purposes of computing
the incremental cost, Purchaser’s comparable landed cost shall be capped at ***
percent (***%) of Supplier’s price.

 

3.9                             Not later
than the 15th day of each month, Purchaser should provide a rolling
forecast covering the succeeding six (6) months to enable Supplier to plan its
production schedule.

 

 

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3.10                       All confirmations required under this Section shall be in writing.  If no such confirmation is received within
the prescribed period, the capacity or demand is deemed confirmed.

 

3.11                       Supplier shall hold for safekeeping and account
all SP Ingot tails, wings, broken wafers, reject or non-conforming wafers and
all other residual silicon materials. 
Purchaser shall periodically collect them for sale to third parties.

 

3.12                       Finished wafers shall be delivered by
Supplier to Purchaser on a daily basis.

 

3.13                       Supplier shall be the preferred supplier of
wafers for Purchaser. In  the event that
Purchaser has an increased demand for wafers, 
Purchaser will give first priority to Supplier to meet such demand.  In the case of a decreased demand for wafers,
Purchaser shall give first priority to Supplier with respect to any of its orders.  The foregoing is without prejudice to, and
does not affect, Purchaser’s other obligations in this Agreement particularly
on its firm and guaranteed orders and guaranteed target utilization.

 

3.14                       The parties agree to make corresponding
adjustments in the pricing formula in the event of an extraordinary increase or
decrease amounting to at least ***% in the price of silicon carbide,
polyethylene glycol, or wire.

 

 

4.                                       Invoices and
Payment

 

4.1                             As soon
as reasonably practicable after each Delivery under this Agreement, Supplier shall issue an invoice to Purchaser for the Products that were
the subject of the Delivery.  Each such
invoice shall contain the following information specific to the Delivery:

(i)                                     an invoice
number for tracking purposes;

(ii)                                  the applicable
Purchaser Order number (if provided by
Purchaser);

(iii)                               the quantity of
Products shipped;

(iv)                              the date of
shipping;

(v)                                 the shipping
destination and

(vi)                              the applicable
purchase price.

 

Invoices may be sent by any
normally reliable means, including electronically, facsimile, hand-delivery or
other methods.

 

 

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4.2                             In the event that
Purchaser does not dispute the purchase price set forth in an invoice within
ten (10) working days from receipt thereof, Purchaser shall pay such purchase
price within thirty (30) days after Purchaser’s receipt of such invoice. Late
payments shall earn interest equivalent to the rate of interest currently being
paid by Supplier for its loans..

 

4.3                             In case
Purchaser disputes the amount billed in any invoice, Purchaser shall pay the
undisputed portion of the invoice, and the Parties shall engage in good faith
discussions to resolve such dispute within five (5) days from the written
request of any party.  If such dispute is
not resolved within ninety (90) days after Purchaser’s receipt of the invoice,
either Party may resolve the dispute by arbitration in accordance with Section
10.7.

 

4.4                             All
payments by Purchaser hereunder shall be made in United States dollars by wire transfer of the applicable payment
into the bank account notified by Supplier to Purchaser in the invoice, or to
such other bank account notified by Supplier to Purchaser in writing.

 

 

4.5                             Each
Party shall be responsible for all sales, use, excise, value-added or
other taxes, tariffs, duties or assessments levied or imposed at any time
against it by any Governmental Authority.

 

 

5.0                                 Quality; Defects; Inspection

 

5.1                             An inspection of each
shipment of the Products shall be made by Purchaser in accordance with sound
business practice upon Delivery.  The final inspection of the Products shall be
performed by Purchaser at its manufacturing
facility within *** days
of receipt of the same.  In the event
that any Product fails to meet the Specifications, Purchaser shall notify
Supplier in writing within *** days of such finding, and Supplier
shall remedy such damage or defect
as set forth in Section 6.2.  Purchaser shall be deemed to have accepted
the Products if no such notice is received by Supplier after *** days.

 

Purchaser and Supplier
shall work towards accrediting Supplier as a dock-to-stock vendor of Purchaser

 

5.2                             Supplier
shall permit Purchaser (or an independent
quality control auditor reasonably acceptable to Supplier) to inspect the
Supplier’s facilities from time to time on at
least *** Days’ notice to Supplier for the purpose of

 

 

***                           CONFIDENTIAL MATERIAL REDACTED AND
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10

 

determining whether the
Product meets the Specifications and that
Supplier is otherwise complying with its obligations under this Agreement.

 

 

6                         Warranties;
Limitation of Liability

 

SP Products

 

6.1                                 Supplier
represents and warrants that all Products supplied by Supplier under this
Agreement shall be (i) free from liens and defects in title that prevent their
distribution to or by Purchaser and
(iii) free from any defects in materials and workmanship. 
Supplier further represents and warrants that the Products sold by
Supplier to Purchaser as the Products conforming to the Specifications shall
meet the Specifications.

 

6.2                                 Without prejudice to any
other rights Purchaser may have under this Agreement, if Supplier’s warranty in Section 6.1 is breached,
Purchaser, at Purchaser’s sole option, may by written notice (i) demand and
receive a refund/credit of the applicable purchase price (or the portion of the
purchase price applicable to the returned Products) upon the return (at
Supplier’s sole cost) of all or a portion of the Products which fail to conform to Supplier’s warranty in
Section 6.1 and/or (ii) demand and receive replacement for the
Products which fail to conform to Supplier’s warranty in Section 6.1

 

6.3                                 In case
Purchaser exercises its right to return all or a portion of the Products
pursuant to Section 6.2, Supplier shall immediately repay the applicable
purchase price (or the portion of the purchase price applicable to the returned
Products) by wire transferring such purchase price into a bank account
designated by Purchaser or credit the amount against future deliveries, and
Supplier shall bear and pay all banking charges related to such payment.  In case Purchaser exercises its right to
demand replacement pursuant to Section 6.2, Supplier shall, as soon as
practicable, deliver (or cause to be delivered) the replacement to the location
designated by Purchaser, and Supplier shall bear and pay all fees and expenses
associated with such delivery.

 

SP Ingots

 

6.4                                 Purchaser
warrants that all SP Ingots supplied by Purchaser under this Agreement shall be
(i) free from liens and defects in title that prevent their distribution to or by Supplier and (iii) free from any defects in materials
and workmanship.  Purchaser further represents and
warrants that the Ingots

 

 

***                           CONFIDENTIAL MATERIAL REDACTED AND
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11

 

consigned by Purchaser to Supplier as conforming to
the Specifications shall meet the Specifications.  Supplier shall establish a materials review
board with respect to exceptional ingot lots which do not meet the
Specifications that will decide on how the non-conforming ingots will be
treated.

 

Breach and Damages

 

6.5                                 Notwithstanding
any provision to the contrary, neither party shall be responsible or liable for
any breach of this Agreement attributable to the other party and neither party
shall be entitled to seek or receive any remedies against the other in case the
breach by a party is attributable to the defaulting party or its subsidiaries.

 

6.6                                 Except as
specifically provided in this Agreement, in no event shall either party be
liable to the other party for any special, exemplary, punitive, indirect,
incidental or consequential damages whether arising out or contract, tort,
strict liability or otherwise resulting from or related to this Agreement
(Whether or not a party knew or should have known the possibility of any such
damages).

 

 

7                         Confidentiality

 

7.1                Confidential Information.  The terms and
conditions of this Agreement and any information
provided by one Party to the other Party which has been indicated as
confidential shall be deemed confidential information (the “Confidential Information”).

 

7.2                Restrictions On Use and
Disclosure.  Once any Confidential Information is provided by a Party to the other
Party, the receiving Party shall, and shall cause its respective
directors, officers, principals, members, employees, consultants, contractors,
agents and representatives (collectively, “Representatives”)
(i) not to deliver, divulge, disclose
or communicate, or permit to be delivered, divulged, disclosed or communicated,
to any third party, other than its permitted contractors under this Agreement,
in any manner, directly or indirectly, any Confidential Information of the disclosing Party, (ii) to disclose or
give access to, or permit to be disclosed or given access to, any such
Confidential Information, only to those of its Representatives that have a need
to know such Confidential Information, (iii) to ensure that
such Representatives are bound in writing to confidentiality obligations
applicable to the Confidential Information on terms no less strict than those
set forth in this Section 7, and (iv) to take all other
necessary or 

 

 

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                               advisable
actions to preserve the confidentiality and security of the Confidential
Information of the disclosing Party.  For avoidance of any doubt, the Parties may
disclose any Confidential Information, including this Agreement, to the credit
rating agencies to the extent deemed necessary and requested by such agencies,
subject to the restrictions and covenants stated in (iii) and (iv) of this
Section 7.2.

 

7.3                Exclusions.  The restrictions contained in Section 7.2
shall not apply to information of the disclosing Party that (i) is or becomes
generally known to the public through no fault of the receiving Party including
without limitation any acts or omissions of the receiving Party in violation of
this Agreement, (ii) is disclosed to the receiving Party without obligation of
confidentiality by a third person who has a right to make such disclosure and
the receiving Party is able to document the independent source, (iii) was in
the possession of the receiving Party at or prior to the time of receipt from
the disclosing Party, as evidenced by contemporaneous, corroborated written
records, without being subject to another confidentiality agreement or (iv) is
independently developed without reliance on Confidential Information.

 

7.4                Compelled Disclosure.  If a receiving Party or its Representatives
is requested or required to disclose any Confidential Information of the disclosing
Party otherwise than in accordance with this Agreement by a Governmental Authority or pursuant to any applicable laws,
regulations, or judicial orders, including without limitation
any disclosures in connection with filings with the U.S. and Philippine Securities
and Exchange Commission, NASDAQ, the Philippine
Stock Exchange or otherwise, such receiving Party shall provide
the disclosing Party with prompt prior written notice of such request or
requirement prior to disclosing the Confidential Information.

 

7.5                Press Releases.  Except as permitted under this Section 7, neither Party shall issue any press release or
make any public announcement which includes or otherwise uses the name of the
other Party, or relates to this Agreement or to the performance hereunder in
any public statement or document, without the prior review and written approval
of the other Party, which approval shall not be unreasonably withheld or
delayed.  Any such review shall be
completed as soon as practicable, but in any event within five (5) Business
Days of receipt of the proposed statement or document.

 

 

8                         Term, No
Exclusivity and Termination

 

8.1                Term and No Exclusivity.  Subject to
Section 8.3 below, this Agreement shall commence upon the Execution Date and shall
remain in full force for five (5) 

 

 

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13

 

                               years from the Start-up Date, unless earlier terminated
pursuant to Section 8.2 (the “Initial Term”).  The Initial Term,
upon expiration, shall be renewed upon mutual agreement
(the “Renewal Term”), subject to the Parties’ agreement on price and other material terms and conditions
of the Agreement.  The Parties shall
commence good faith negotiations of the new terms and conditions for the
Renewal Term and shall attempt to agree on the terms and conditions of the
Renewal Term at least six (6) months prior to the expiration of the Initial
Term.

 

The parties
acknowledge that subject to the provisions herein, this Agreement is not
exclusive, and Supplier is free to supply wafering services to other customers
and Purchaser is free to purchase wafering services from other providers.

 

8.2                Termination.

 

8.2.1                        Mutual
Agreement.  This Agreement
may be terminated at any time upon mutual agreement of the Parties.

 

8.2.2                        Unilateral For
Certain Events.  Either
Party shall have the right to terminate this Agreement upon termination of the
Joint Venture Agreement.  In addition,
Supplier shall have the right to terminate this Agreement if Purchaser fails to
pay the applicable purchase price as required under this Agreement, and fails to cure such breach within
sixty (60) days after the delivery by Supplier to Purchaser of notice to cure
such breach.

 

8.2.3                        Bankruptcy/Insolvency.  If a Party (or its creditors or any other eligible party) files for its
liquidation, bankruptcy, reorganization, composition, dissolution or other
similar proceedings or arrangement, or if such
Party is unable to pay any material debts   as they become due, has explicitly or
implicitly suspended payment of any debts as they became due (except debts
contested in good faith), or if the creditors of the such Party have taken over its management, or if the relevant financial institutions
have suspended clearing house privileges with regard to such Party, then the other Party shall be entitled to immediately
terminate this Agreement.

 

8.2.4                        Effect of Termination.  The orders that have been
accepted, the SP Ingot which Supplier has already received (or will receive in
accordance with accepted orders) and the SP Ingots that have already been
sliced into Products by Supplier as well as the Parties’ 

 

 

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14

 

                                                respective
obligations with respect thereto shall survive termination of this
Agreement.  The expiration or termination
of this Agreement shall not relieve the Parties of any obligations accruing
prior to such termination, and any such termination shall be without prejudice
to the rights of either Party against the other conferred on it by this
Agreement.   In addition, the provisions
of Sections 4, 7, 8 and 9  shall survive
expiration or termination of this Agreement for any reason as long as necessary
to permit their full discharge.

 

8.2.5                        Effectiveness of Agreement.  The
Parties hereby acknowledge and agree that this Agreement takes effect upon
execution and this Agreement shall terminate concurrently with the termination of the JV Agreement.

 

 

9.             Miscellaneous

 

9.1              Force Majeure.  Neither Party shall be responsible for
suspension of its performance (other than any obligation to make payments)
under this Agreement if such suspension is caused by fortuitous events as
defined by Article 1174 of the New Civil Code, or by fire, flood, strikes,
riots, terrorism, acts of war, , or compliance with applicable
laws, rules or regulations of any governmental authority or by compliance
with any order or decisions of any court, board or other governmental authority
or by any cause beyond the reasonable control of such Party.

 

9.2              Entire Agreement.  Subject to the Joint Venture Agreement, this
Agreement (including the Schedules hereto) and the agreements, documents and
instruments to be executed and delivered pursuant to the JV Agreement are
intended to embody the final, complete and exclusive agreement between the
Parties with respect to the matters addressed herein; are intended to supersede
all prior agreements, understandings and representations written or oral, with
respect thereto; and may not be contradicted by evidence of any such prior or
contemporaneous agreement, understanding or representation, whether written or
oral.

 

9.3             Modifications.  This Agreement shall not be modified,
amended, canceled or altered in any way, and may not be modified by custom,
usage of trade or course of dealing, except by an instrument in writing signed
by both Parties.  All amendments or
modifications of this Agreement shall be binding upon the Parties despite any
lack of consideration so long as the same shall be in writing and executed by
the Parties.

 

 

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15

 

9.4             Waiver.  The performance of any obligation required of
a Party hereunder may be waived only by a written waiver signed by the other
Party, and such waiver shall be effective only with respect to the specific
obligation described.  The waiver by
either Party of a breach of any provision of this Ingot Supply Agreement by the
other Party shall not operate or be construed as a waiver of any subsequent
breach of the same provision or another provision of this Agreement.

 

9.5              Export Controls.  Neither Party shall commit any act or cause
any person to commit any act which would violate any applicable export control
laws, rules or regulations, and each Party will take any and all actions within
its ability to assure compliance with such laws, rules or regulations.  The Parties shall not, directly or
indirectly, export, re-export or transship the Product and/or technical data
for such Product in violation of any applicable export control laws promulgated
and administrated by the government of any country having jurisdiction over the
Parties or the transactions contemplated herein.

 

9.6              Severability.  In the event that any term, condition or
provision of this Agreement is held to be or become invalid or be a violation
of any applicable law, statute or regulation, the same shall be deemed to be
deleted from this Agreement and shall be of no force and effect and the
Agreement shall remain in full force and effect as if such term, condition or
provision had not originally been contained in this Agreement.  The validity and enforceability of the other
provisions shall not be affected thereby. 
In such case or in the event that this Agreement should have a gap, the
Parties hereto shall agree on a valid and enforceable provision completing this
Agreement, coming as close as possible to the economic intentions of the
Parties.  In the event of a partial
invalidity the Parties agree that this Agreement shall remain in force without
the invalid part.  This shall also apply
if parts of this Agreement are partially invalid.

 

9.7             Governing Law and Dispute Resolution.  This Agreement, and the rights and
obligations of the Parties hereunder, shall be interpreted and governed in
accordance with the laws of the Philippines, without regard to conflict of laws
principles.    Any disputes incapable of
being resolved by mutual agreement of the Parties shall be handled in
accordance with the JV Agreement.

 

9.8            Notices.  All notices, demands, requests, consents or
other communications hereunder shall be in writing and shall be given by
personal delivery, by express courier, by registered or certified mail with
return receipt requested, or by facsimile, to the Parties at the addresses
shown below, or to such other address as may be designated by written notice
given by either Party to the other Party. 
Unless conclusively proved otherwise, all notices, demands, requests,
consents or other communications hereunder shall be deemed effective upon
delivery if 

 

 

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16

 

                        personally delivered, five
(5) days after dispatch if sent by express courier, fourteen (14) days after
dispatch if sent by registered or certified mail with return receipt requested,
or confirmation of the receipt of the facsimile by the recipient if sent by
facsimile.  

 

	
  To Supplier:

  	
   

  
	
   

  	
   

  
	
   

  	
  First Philec Solar Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Email:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  With a copy to:

  	
   

  
	
   

  	
   

  
	
  To First
  Philec:

  	
   

  
	
   

  	
   

  
	
   

  	
  First Philippine Electric Corporation

  
	
   

  	
  2nd Floor, Benpres Building

  
	
   

  	
  Exchange Road corner Meralco Avenue

  
	
   

  	
  Pasig City, Philippines

  
	
   

  	
   

  
	
   

  	
  Attention: Managing Director — Electronics
  Division

  
	
   

  	
  Fax: 632-490-0116

  
	
   

  	
   

  
	
  To Purchaser:

  	
   

  
	
   

  	
   

  
	
   

  	
  SunPower Philippines Mfg
  Ltd

  
	
   

  	
  100 East Main Ave.

  
	
   

  	
  LTI, Binan, Laguna

  
	
   

  	
  Philippines

  
	
   

  	
   

  
	
   

  	
  Attention: VP Manufacturing Operations or Finance
  Director

  
	
   

  	
  Fax: 632- 841-9720

  
															

 

9.9               Assignment.  This Agreement may not be assigned or
otherwise transferred by either Party, in whole or in part, whether voluntary,
or by  operation of law, except, with
respect to Purchaser, in connection with a permitted assignment and transfer
under the JV Agreement.  Subject to the
foregoing, this Agreement shall 

 

 

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17

 

                        be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns.

 

9.10   Third Party Benefits.  This Agreement shall be binding upon, and
inure to the benefit of, each of the Parties and their respective successors
and permitted assigns.  Nothing contained
in this Agreement, express or implied, shall be deemed to confer any right or
remedy upon, or obligate any Party to, any person or entity other than the
Parties and their respective successors and permitted assigns.

 

9.11   Remedies.  The remedies described in this Agreement are
not exclusive remedies, and upon breach of this Agreement, either Party shall
be entitled alternatively or cumulatively to any available remedy against the
other Party under the applicable law (including remedies available under this
Agreement).  Each Party shall have the
right to enforce this Agreement and any of its provisions by injunction,
specific performance or other equitable relief without prejudice to any other
rights and remedies that such Party may have for a breach of this Agreement.

 

9.12   No Partnership or Agency.  Nothing in this Agreement (as opposed to the
JV Agreement separately) shall be construed as creating a joint venture,
partnership, agency, employment relationship, franchise relationship or taxable
entity between the Parties, and neither Party shall have the right, power or
authority to create any obligation or duty, express or implied, on behalf of
the other Party, it being understood that the Parties are independent
contractors vis-à-vis one another.

 

9.13   Captions.  The section headings and captions contained
herein are for purposes of reference and convenience only and shall not in any
way affect the meaning or interpretation of this Agreement.

 

9.14   Number and Gender.  Whenever used in this Agreement, the singular
terms shall include the plural and the plural the singular, and the use of any
gender shall be applicable to all genders.

 

9.15   English
Language.  The official language of this Agreement is
English.  All contract interpretations,
notices and dispute resolutions shall be in English.  Any attachments or amendments to this
Agreement shall be in English. 
Translations of any of these documents shall not be construed as
official or original versions of such documents.

 

9.16   Counterparts.  This Agreement may be executed in
counterparts or duplicate originals, both of which shall be regarded as one and
the same 

 

 

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18

 

                        instrument, and which shall be the official and governing version in the
interpretation of this Agreement.

 

 

IN
WITNESS WHEREOF,
the parties hereto have caused the foregoing instrument to be executed by the
duly authorized officers and/or representatives of the parties hereto at the place
and on the date first above written.

 

	
  FIRST PHILEC SOLAR CORP.

  	
  SUNPOWER PHILS. MFG., LTD

  
	
  By:

  	
  By:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ DANILO C. LACHICA

  	
   

  	
   

  	
  /s/ GREGORY D. REICHOW

  	
   

  	
   

  
	
  DANILO C. LACHICA

  	
  GREGORY D. REICHOW

  
	
  President

  	
  Vice-President for
  Manufacturing Operations

  
						

 

 

 

IN THE PRESENCE OF:

 

	
   

  	
   

  
	
  /s/ illegible

  	
   

  	
   

  	
  /s/ illegible

  	
   

  	
   

  
						

 

 

 

 

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ANNEX A

 

 

 

***

 

 

 

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Annex B

First Semi Annual Delivery Schedule (Ingots)

 

	
  Quarter

  	
   

  	
  Estimated Delivery (Mtons)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Q308

  	
   

  	
  ***

  	
   

  
	
  Q408

  	
   

  	
  ***

  	
   

  

 

 

 

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ANNEX C
— SAMPLE COMPUTATION

 

 

 

 

	
  Pricing Formula:

  	
  (***% x cost per unit x
  applicable Mark-up)

  	
   

  
	
   

  	
                  Plus

  	
   

  
	
   

  	
  (***% x Target Price)

  	
   

  
	
   

  	
   

  	
   

  
	
  Sample  Computation:

  	
   

  	
   

  
	
   

  	
  Where:

  	
  Target Price = $***

  	
   

  
	
   

  	
   

  	
  Cost per unit = $***

  	
   

  
	
   

  	
   

  	
  Applicable Mark-up = ***%

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Price       =

  	
  (***% x cost per unit x
  applicable Mark-up)

  
	
   

  	
   

  	
  Plus

  	
   

  
	
   

  	
   

  	
  (***% x Target price)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
                  = (***% x *** x ***) + (***% x ***)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
                  = (***) + (***)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
                  = ***

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Price      = $***

  	
   

  	
   

  	
   

  
						

 

 

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COMMISSIONEXHIBIT 10.2

 

[*] designates portions
of this document that have been omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.

 

PROGRAM AGREEMENT

 

THIS PROGRAM AGREEMENT (“Agreement”)
is made this 19th day of September, 2007 by and between Republic
Bank & Trust Company (“Republic”), a
Kentucky corporation, with its principal office at 601 W. Market Street,
Louisville, KY  40202, and Jackson Hewitt
Inc. (“JHI”), a Virginia corporation, with
its principal office at 3 Sylvan Way, Parsippany, NJ  07054.

 

RECITALS

 

WHEREAS, JHI (i) is the franchisor of the Jackson Hewitt Tax
ServiceÒ tax preparation system to independently owned and operated franchisees (“Franchisees”) and (ii) through Tax Services of America,
Inc., a wholly owned subsidiary, owns and operates Jackson Hewitt Tax Service
locations (“Corporate Stores,” and together
with Franchisees, “EROs”); and

 

WHEREAS, the EROs provide income tax return
preparation with electronic filing and related services to customers; and

 

WHEREAS, Republic offers products to customers of
tax service companies; and

 

WHEREAS, Republic desires to offer and provide certain
financial products to customers of certain EROs designated by JHI from time to
time, and JHI desires that Republic provide such services, on the terms and
subject to the conditions hereinafter set forth (the “Program”);
and

 

WHEREAS, Republic
desires, and JHI agrees to provide, its marketing and training services and
personnel in connection with and to devote support and additional resources in
support of the Program; and

 

WHEREAS, simultaneous
with the execution of this Agreement Republic shall enter into a technology
services agreement with Jackson Hewitt Technology Services LLC (“JHTSL”) in connection with Republic administering and
offering the Program (“Technology Services
Agreement”).

 

NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:

 

TERMS AND CONDITIONS

 

1.                                      ERO Participation; General Terms

 

1.1.                              Definitions

 

(a)           “Business Day” shall mean any day that is not a Saturday,
Sunday, legal holiday or any day recognized by the Federal Reserve Bank as a
legal holiday.

 

(b)           “Customer” shall mean a Jackson Hewitt Tax Service customer
that was also a customer of a financial institution that provided financial
products facilitated by EROs and such customer received a RAL, a funded Federal
AR, or a funded State AR from such other financial institution. For purposes of
this definition, joint borrowers or joint recipients of such a financial
product shall constitute one “Customer” and a customer that receives both a RAL
or funded Federal AR and a funded state AR shall count as two “Customers”.

 

 

[*] designates portions
of this document that have been omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.

 

(c)           “Financial Product” shall mean any product offered by
Republic under the Program, including, without limitation, a RAL, Money Now
Loan, Federal or state AR, and any similar or modified product offered from
time to time, or other product agreed to by the parties in accordance with
Section 3.1 hereof.

 

(d)                   “Tax Season” shall mean the period beginning on January 2 of
a calendar year and ending on the last day an individual is permitted to file a
federal income tax return with the Internal Revenue Service (“IRS”) without the taxpayer requesting an extension,
typically April 15 of such calendar year.

 

1.2           ERO Participation.

 

Republic and JHI agree to offer the Program to those
EROs designated by JHI from time to time as provided in Article 2 hereof. JHI
shall require all EROs designated to participate in the Program to enter into
separate agreements with Republic, on an annual basis in advance of the
relevant Tax Season (as defined herein), in a form to be mutually agreed to by
JHI and Republic, and with such changes thereto as the parties, from time to
time, shall agree (the “Republic Financial
Product Agreement”) and to facilitate the offer of Financial Products
to customers of such EROs in accordance with the terms thereof. JHI shall
further require all EROs designated to participate in the Program to (i) sign
the Republic Financial Product Agreement; (ii) retain copies of all signed
Republic Financial Product Agreements; and (iii) deliver, electronically or via
US Mail, all executed copies of the Republic Financial Product Agreement to
Republic prior to the first day of each Tax Season.

 

2.                                      Limited Exclusivity.

 

2.1           ERO
Locations.

 

(a)                                  Republic
shall be the sole, exclusive and designated Financial Product provider for the
ERO locations as set forth in, or as determined by JHI in accordance with the
terms of, this Agreement. To the extent an ERO location is designated by JHI as
a Republic location for a Tax Season (and any related period of time), then
such ERO location shall not be permitted to accept applications for Financial
Products (or products substantially similar thereto) during the same Tax Season
on behalf of any financial institution other than Republic without the prior
written approval of Republic.

 

(b)                                 For
Tax Season 2008, Republic shall offer, and shall be the sole and exclusive
provider of, Financial Products to Jackson Hewitt Tax Service customers of all
locations operated as Corporate Stores located only in the following states:  [*] (the “Designated ERO Locations”).

 

(c)                                  For
all Tax Seasons (and related periods) after Tax Season 2008 under this
Agreement, JHI shall determine the ERO locations at which Republic shall be the
sole, exclusive and designated Financial Product provider, whether by state,
ERO or otherwise, for such Tax Season, subject to the other terms and
conditions of this Agreement, including Section 2.2 hereof. JHI shall
provide notice of such designation to Republic no later than the [*] prior to such applicable Tax
Season.

 

2

 

[*] designates portions
of this document that have been omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.

 

(d)                                 Notwithstanding
anything herein to the contrary, designations made herein, if made by state, shall
be modified by and subject to the requirements of the multi-state operations of
an ERO as defined by processing center and may result in certain locations,
whether within designated states or outside designated states, being excluded
or included, as the case may be, in the list of designated locations for Republic
under the Program in any given Tax Season.

 

2.2.                              ERO Designations.

 

(a)                                  For
Tax Season 2008, the parties agree that Republic shall be the sole and exclusive
Financial Product provider under the Program for the Designated ERO Locations.

 

(b)                                 For
Tax Season 2009, JHI shall designate Republic as the sole and exclusive Financial
Product provider under the Program for the Designated ERO Locations (or equivalent
locations); provided, however, that JHI may, with Republic’s mutual
understanding and agreement, also designate Republic as the sole and exclusive
Financial Product provider under the Program for EROs [*], the “Additional 2009 Designations” and, collectively with the
Designated ERO Locations (or equivalent locations), the “2009
Designated ERO Locations”). The parties shall mutually agree on the
percentage of Additional 2009 Designations by  [*].
[*].

 

(c)                                  For
Tax Season 2010, JHI shall designate Republic as the sole and exclusive
Financial Product provider under the Program for the Designated ERO Locations
(or equivalent locations); provided, however, that JHI may, [with Republic’s
mutual understanding and agreement], also designate Republic as the sole and
exclusive Financial Product provider under the Program for EROs [*], the “Additional 2010 Designations”). The parties shall mutually
agree on the percentage of Additional 2010 Designations by [*]. [*].

 

(d)                                 All
management personnel of ERO locations designated by JHI shall be subject to
approval by Republic, in advance, through Republic’s ERO underwriting
guidelines.

 

3.                                      Financial Products.

 

3.1.                              Product Offering.

 

(a)                                  Products Generally. Republic shall offer and provide
Financial Products to customers of designated EROs, on the terms and subject to
the conditions set forth herein, and such other products and services as the
parties may, from time to time agree.

 

3

 

[*] designates portions
of this document that have been omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.

 

(b)                                 Financial Product Definitions:

 

(i)                                     “Refund Anticipation Loan” or 
“RAL” shall mean a loan to a Customer
based upon, among other things, the Customer’s anticipated federal income tax
return refund (as identified in IRS Form 8453 or similar form), subject to any
limitations that may be imposed thereon due to the application of certain
underwriting criteria or other factors.

 

(ii)                                  “Money Now Loan” means a loan based upon, among other things,
the Customer’s anticipated federal income tax return refund (as identified in
IRS Form 8453 or similar form), with proceeds of such loan available on the
same day the loan is approved by Republic, offered during a Tax Season.

 

(iii)                               “Assisted Refund” or “AR” shall mean a non-loan financial
product through which a Customer’s federal and/or state income tax refund (as
identified in IRS Form 8453 and any applicable state tax form, respectively) is
deposited into an account established by Republic and (i) disbursed, net of
authorized fees and charges, to the Customer by (x) check or (y) debit card, or
(ii) disbursed, net of authorized fees and charges and via an automated
clearing house credit (“ACH”) to the Customer’s designated bank account.

 

(c)                                  State Products. Republic shall provide AR services to all Applicants
requesting the same, if approved, with respect to all states whose taxing
authority accepts state income tax returns electronically and disburses refund
amounts via direct deposit. 

 

(d)                                 Product Development. Republic and JHI may agree, from time
to time, to develop and add additional financial products to the Program. The
description of such additional products and the terms and conditions governing
their offer shall be set forth in separate agreement between Republic and JHI,
and if agreed to shall be included in the definition of Financial Products
under this Agreement.

 

4.                                      Fees.

 

Fees. In
consideration of the rights granted to Republic herein and the performance of
services and expenses incurred by JHI in connection with the Program, Republic
shall pay to JHI fees as follows:

 

(a)                                  For
the 2008 Tax Season, Republic shall pay to JHI [*].

 

(b)                                 For
the 2009 Tax Season, Republic shall pay to JHI [*]. To the extent that JHI has
designated Republic to be the Financial Product provider under the Program for
any Additional 2009 Designations, as set forth in Section 2.2(b), Republic
shall pay to JHI an additional fee [*].

 

4

 

[*] designates portions
of this document that have been omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.

 

(c)                                  For
the 2010 Tax Season, Republic shall pay to JHI [*]. To the extent that JHI has
designated Republic to be the Financial Product provider under the Program for
any Additional 2010 Designations, as set forth in Section 2.2(c), Republic
shall pay to JHI an additional fee [*].

 

(d)                                 The
above fees shall be due and paid in three monthly installments each Tax Season
as follows:  [*] on the second to last
Business Day of January; [*] on the last business day of February; and [*] on
the last business day of March.

 

(e)                                  All
payments due from Republic to JHI pursuant to this Article 4 shall be paid by
wire transfer per written instructions signed by JHI’s Chief Financial Officer.
Republic shall make all payments as provided in such written instructions
unless JHI provides Republic revised payment instructions in an original
written notice that is signed by any two (2) of the following officers of JHI:  (i) Chief Financial Officer and Treasurer,
(ii) General Counsel, (iii) Controller, and (iv) Vice President – Treasury
& Investor Relations. Subject to the requirements set forth in the
preceding sentence, JHI shall have the right to direct Republic to make
payments directly to other entities or third parties.

 

(f)                                    The
parties agree that JHI shall have no right to any fees earned by Republic in
connection with its offering of Financial Products. The parties agree that Republic
is the sole owner of the Financial Products made under the Program.

 

5.                                      RAL Eligibility.

 

The parties agree that only those Jackson Hewitt Tax
Service customers that apply for a Financial Product from Republic (“Applicants”) whose federal income tax returns are filed
electronically and such return sets forth an anticipated federal income tax
refund shall be eligible to receive a RAL. An Applicant who meets the foregoing
requirements shall nevertheless be subject to underwriting criteria developed
by Republic.

 

6.                                      JHI’s Obligations and Procedures.

 

JHI agrees, in connection with the
operation of the Program, to: (i) conduct such advertising; (ii) prepare forms
and other written materials; (iii) cause its EROs to be equipped with computer
equipment and hardware; (iv) maintain personnel; (v) train such personnel and
EROs with respect to the Program Guidelines (as defined in Section 7.7); and
(vi) take such other actions, in each case as reasonably necessary to advertise
and accommodate the facilitation of Financial Products to Applicants at its
expense, as well as the following specific duties:

 

6.1.                              [*].

 

6.2.                              Preparation and Filing of Returns. JHI shall require EROs
participating in the Program to prepare and/or collect and file with the
appropriate taxing authorities federal and state income tax returns for
Customers.

 

5

 

6.3.                              Application Process. JHI shall require participating EROs to
require that each Applicant (i) complete and sign an application in a form
developed by Republic and reviewed by JHI prior to each Tax Season (the “Application”), which application may also include a loan
agreement (the “Loan  Agreement”)
and a disclosure statement meeting the requirements of the federal
Truth-in-Lending Act (the “Disclosure Statement”),
and (ii) is given a copy of any and all disclosures required to be provided
pursuant to applicable State or local law (“State Disclosure
Documents”). The Application shall include, among other things, a
request for certain information and certifications, as well as an
authorization, signed by the Customer, to (A) use the tax return information
for the application process in accordance with Section 301.7216-3(b) of the U.S.
Treasury Department regulations and (B) allow Republic to repay any delinquent
RAL or Money Now Loan with the proceeds of the Financial Product obtained
pursuant to the Application. Participating EROs shall be responsible, pursuant
to the terms of the Republic Financial Product Agreement, for ensuring that the
Application is complete and accurately reflects all material information
received from the Customer, including social security number(s); provided,
however, if the ERO uses commercially reasonable due diligence and fraud
prevention measures in accordance with the Program Guidelines, neither JHI nor
the ERO shall be held responsible for false or inaccurate information provided
by Customers.

 

6.4.                              Completion of IRS Form 8453. In connection with each Application,
JHI shall require each participating ERO to complete IRS Form 8453 and the
direct deposit designation in the electronic portion of the Applicant’s federal
(and state, if applicable) income tax return which shall include information
provided by Republic (such as the applicable Republic check routing number and
Customer account number) and shall name Republic as the financial institution. The
forms shall be signed by an employee of the ERO and by the Customer, and shall
also indicate that the account is a checking account and that the source is “other”.
JHI shall cause the same information to be contained in the appropriate data
field as part of the income tax return electronically filed by the ERO.

 

6.5.                              Customer Copies. JHI shall require each participating ERO to
timely provide to each Applicant a signed copy of the Application, Loan
Agreement, Disclosure Statement, and State Disclosure Documents (which may be
combined into one form), signed IRS Form 8453 or similar form, together with
any other agreements or documents that Republic reasonably may require, as
identified to and reviewed by JHI prior to each Tax Season; provided that Republic
shall be solely responsible for the form and content of all of the
aforementioned documents, subject to JHI review prior to each Tax Season, and
for their compliance with applicable laws, rules and regulations (“Applicable Law”).

 

6.6.                              Retention and Handling of Documents.

 

(a)                                  Retention. JHI shall require each participating ERO to
retain a copy of the signed Application, Loan Agreement and Disclosure
Statement, State Disclosure Documents, if any, as well as a copy of the federal
and state income tax returns, in the Customer’s file maintained by them for a
period of five years following the preparation and filing thereof (after which
time such documents may be discarded). At the reasonable request of Republic,
JHI shall cause EROs to deliver to Republic a copy of any Application.

 

(b)                                 Tax Returns. For fraud detection, underwriting and
collection purposes, subject to JHI’s receipt of the Customer’s consent as
provided in Section 7216 of the Internal Revenue Code, JHI shall provide to Republic
electronic copies of each Republic Customer’s electronically filed federal
income tax return, in the format prescribed by the IRS, simultaneously with or
promptly after the Application information is transmitted to Republic.

 

6

 

[*] designates portions
of this document that have been omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.

 

6.7.                              Lost Checks. If a Republic Customer notifies an ERO that a
check disbursed by it has become lost, or that he or she has not received a
check mailed by Republic within 14 days, then JHI shall require the ERO and
Customer to immediately request Republic to stop payment thereon and complete
any required documentation, including an indemnification bond, in a form
satisfactory to Republic. When Republic receives the request, the completed indemnification
bond and any other documentation required by Republic, a new check will be
issued at Republic’s sole discretion. All issuing and re-issuing of checks,
including a waiting period, if applicable, will be at Republic’s sole discretion.

 

6.8.                              Collection Assistance. At the reasonable request of Republic,
and subject to Applicable Law, JHI shall provide reasonable assistance to Republic
in the collection of past due RALs. Such assistance may include, among other
things, providing updated addresses and phone numbers for Customers, to the
extent permitted by law.

 

6.9.                              JHTSL. JHI and Republic acknowledge and agree that JHTSL shall
provide certain technology expertise, software modification and implementation
and processing services, personnel and related support to JHI, Republic and
EROs in connection with the Program pursuant to the terms and conditions of the
Technology Services Agreement.

 

7.                                      Republic’s Obligations and Procedures.

 

7.1.                              Processing of Applications. Republic shall, on each day
during the Term, process Applications and provide Financial Products with
respect thereto for all Applications received electronically in accordance with
Republic’s underwriting criteria in effect at that time (as the same may be
amended from time to time by the mutual consent of the parties) and in
accordance with industry standards; provided that Republic shall use
commercially reasonable efforts to process (i) Money Now Loan Applications and
any other similar instant Financial Product within three minutes of receipt of
such Application from JHI and (ii) RAL Applications within two hours (if a
credit bureau is employed to evaluate the creditworthiness of a RAL applicant,
then within eight hours; if there is a positive match to the Office of Foreign Assets
Control List, then within twelve hours) after having received from JHI an
acknowledgment of the due filing of the related tax return, together with any
corresponding debt indicator, as received from the IRS. The foregoing process
times shall, in each case, be met [*] of the time (i.e., a [*] service level). Notwithstanding
the foregoing, Republic shall not accept any Applications at any time if Republic
(i) receives notification from the IRS that an ERO is under investigation, (ii)
reasonably suspects fraudulent activity originating through an ERO, or (iii)
considers loan delinquencies on RALs originating through an ERO to be
unacceptable, in its reasonable discretion. Republic shall be responsible for
decisions made by it to approve or deny loan Applications, including, without
limitation, the provision to applicants of adverse action notices or other
notices required by Applicable Law.

 

7

 

7.2.                              Disbursement/Check Print Authorizations. Republic shall
promptly communicate disbursement authorizations to JHI (i) immediately upon
approval of a Money Now Loan or RAL or (ii) for other Financial Products upon
receipt of and after processing IRS or state refund pre-note files to the
extent such practice does not violate any applicable bank regulations, provided
that federal and state funding shall be released by Republic no later than the
effective date designated by the IRS or applicable state taxing authority,
respectively. Republic shall be responsible for all disbursement/check
authorizations issued by it, including losses incurred as a result of its
issuance of duplicate or multiple check print authorizations or checks issued
by Republic in error or with information inconsistent with the information in
the disbursement request received from JHI. JHI agrees to cooperate with
Republic in the recovery all duplicate checks. Additionally, the ERO shall be
responsible for and indemnify Republic for any losses incurred as a result of
printing duplicate checks from a single check print authorization; provided,
however, that such ERO shall have no indemnity obligations if the ERO complies
with the requirements set forth in the Program Guidelines regarding check print
authorizations and duplicate checks.

 

7.3.                              Establishment of Accounts; Availability of Funds.

 

(a)                                  Republic
shall establish and maintain at Republic a segregated account for the benefit
of Republic Customers (each, a “Deposit Account”),
which account shall conform to the requirements of 12 C.F.R. 330.5 so as to
afford such Customers FDIC insurance with respect to such Deposit Accounts. Upon
notification to JHI that a RAL has been approved or that an AR has been funded,
Republic shall transfer the amount of the net loan proceeds or net refund,
respectively, to the Deposit Account. All disbursements to Republic Customers
shall be drawn on the Deposit Account and shall be paid promptly upon
presentment. Republic shall make all disbursements in the manner elected by the
Republic Customer, as set forth in the Application and Loan Agreement. Republic
shall have the right to offset against the Deposit Account all fees and charges
authorized by the Republic Customer to be paid to Republic, the ERO or
otherwise  pursuant to such Customer’s Application
and Loan Agreement for a Financial Product in an amount up to the amount of the
Financial Product.

 

(b)                                 Upon
notification to JHI that an AR has been funded, Republic shall transfer funds
via ACH from the Deposit Account into the account designated for receipt
thereof by the Republic Customer. If the ACH transfer is not successful, then Republic
shall disburse the refund via a check drawn on the Deposit Account and printed
by the Republic Customer’s ERO or mailed directly by Republic.

 

(c)                                  Republic
shall have sufficient funds available at all times to pay all disbursements
authorized by Republic under the Program.

 

7.4.                              Deduction of Additional Charges; Timing and Order of Disbursements.

 

(a)                                  Republic
shall remit payment to the appropriate ERO of all fees and charges authorized
by Customers to be paid to such ERO (e.g., tax preparation and other fees) upon
funding of non-loan type Financial Products and upon approval of loan-type Financial
Products. The foregoing shall be set forth in greater detail in the applicable Republic
Financial Product Agreement between such ERO and Republic and in the Program
Guidelines.

 

8

 

(b)                                 All
Financial Product disbursements shall be made to the Customer net of all
authorized fees, deductions or charges. If Republic receives a state tax refund
before the IRS tax refund, then any and all Republic and ERO fees may be
deducted from the state refund prior to disbursement to the Customer, unless
otherwise prohibited by law. If an IRS or state tax refund deposit is received
in an amount less than anticipated, then disbursements will be made in the
following order: first, to cover fees owed to Republic; second, to cover ERO
fees; third, to pay any outstanding RAL obligations the Customer may have; and
fourth, to pay the Customer disbursement.

 

(c)                                  If
the Customer’s refund received from the IRS exceeds the total amount owed
pursuant to the RAL, or if after a RAL is denied, the return is accepted by the
IRS and a direct deposit is made to the Deposit Account, then Republic shall
send a disbursement authorization record in the amount of the excess or the
deposit, respectively (after adjusting for and posting fees), to JHI. If the
refund is less than the amount anticipated, then Republic shall notify the ERO
and the Customer of such shortfall, and demand prompt payment to Republic of
the outstanding amount.

 

7.5.                              Establishment of Fees and Underwriting Criteria. The pricing,
fees, and terms  for the Program shall be
developed for each Tax Season by Republic in consultation with JHI, provided,
however, that in the event Republic and JHI cannot agree on the pricing and
fees for the Financial Products, Republic’s decision will control, subject to
the parameters set forth in this Section. The underwriting criteria for the
Financial Products will be developed by Republic and may be modified from time
to time at Republic’s sole discretion. The pricing, fees, terms and
underwriting criteria must be commercially reasonable, substantially similar to
the pricing, fees and terms of financial product programs offered in other
Jackson Hewitt Tax Service offices, and within regulatory guidelines, based on
the best information available that Tax Season, including IRS prior-year
funding trends, competitive product offerings and Customer and ERO behavior. Republic
acknowledges that Jackson Hewitt Tax Service operates through multiple
locations and not all of which are subject to the terms of this Agreement. Toward
that end, notwithstanding anything herein to the contrary, Republic agrees that
it will accommodate commercially reasonable requests of JHI with respect to the
Program to ensure that JHI’s programs are not inconsistent and impractical or
unduly burdensome. Republic alone shall be responsible for all expenses
associated with accommodating any requests agreed to as of the date of this
Agreement, and if Republic agrees to accommodate a request that has not been
agreed upon by the parties as of the date of this Agreement, the parties will
mutually agree to the allocation of cost of the request. The pricing, fees and terms
shall be set forth in writing and agreed to by the parties no later than
November 1st preceding each Tax Season during the Term. The
underwriting criteria will be set by Republic no later than November 30th preceding
each Tax Season during the Term.

 

9

 

[*] designates portions
of this document that have been omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.

 

7.6.                              Development of Forms/Materials. Republic shall develop
reasonable program guidelines for the offering, marketing, receipt and
processing of Applications, the making of loans and the delivery of Financial
Product proceeds (“Program Guidelines”)
and shall create and distribute to JHI for its prior review forms to be used by
participating EROs of each of the following: the Application, Loan Agreement,
Disclosure Statement, and disbursement checks. For the avoidance of doubt, the
term “Program Guidelines” shall not include Guidelines or other materials that
are developed by JHI, including, without limitation, materials that are
developed by JHI and reviewed by Republic pursuant to Section 11.1 hereof
or otherwise. Republic may create solicitation, marketing and promotional
materials relating to the Program, each of which shall be subject to JHI’s
prior review. Republic shall provide such assistance as JHI reasonably may
request in connection with the preparation and dissemination to Customers of
State Disclosure Documents. Republic covenants and agrees that the Program Guidelines
and all documents and materials provided by it hereunder (including, without
limitation, the Application, Loan Agreements, Disclosure Statements,
disbursement checks, solicitation materials and marketing and promotional
materials) shall comply with Applicable Law.

 

7.7.                              Screening. [*]  Republic
shall provide to JHI the text of any disclosures required by Applicable Law to
be provided to Customers. The results of such screening process shall be set
forth in an electronic file and shall be presented in such form as JHI shall reasonably
determine. Responsibility for the cost of activities undertaken pursuant to
this Section 7.8 shall be determined by the mutual agreement of the
parties.

 

7.8.                              Check Stock. Republic shall provide and distribute to each
participating ERO an adequate supply of consecutively numbered checks upon
which they may affix a facsimile signature of an authorized Republic signatory
as provided by Republic, and shall promptly replenish such stock upon the ERO’s
request at no charge, unless the ERO requests overnight delivery (in which case
the ERO shall pay for such delivery).

 

7.9.                              Reports. Republic shall provide weekly reports to JHI
describing all ACH transmissions from the IRS to Republic and all paid items,
and covering such other matters and in such form as JHI reasonably may request.
Republic covenants and agrees that each such report will be true, correct and
complete in all respects and all such reports shall be available to JHI on a
secure website on a real-time basis.

 

7.10.                        Applicable Law. Without limiting or conditioning the
obligations of JHI and the EROs to comply with Applicable Law, Republic shall consider
reasonable steps proposed by JHI to address concerns raised by JHI with respect
to the operation of the Program and the facilitation of Financial Products as
it relates to JHI and EROs being in compliance with Applicable Law or potential
violations of Applicable Law.

 

7.11.                        Additional Products. Upon terms to be agreed by the parties,
Republic shall facilitate the offering of such additional products as JHI and Republic
may develop. Notwithstanding anything to the contrary contained herein, if Republic
does not offer any participating ERO all financial product(s) being facilitated
by EROs that are not under the Program, then JHI may make alternative
arrangements to provide for such product(s) to be facilitated by such ERO
through an alternative financial product provider.

 

10

 

[*] designates portions
of this document that have been omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.

 

7.12.                        Loan Denial Notice. Republic shall send a proper loan denial
notice under the Equal Credit Opportunity Act, Regulation B and other
Applicable Laws to each applicant whose loan request was declined by Republic.

 

7.14                           ERO Designations. Republic agrees that it will offer and
provide Financial Products to Customers of the EROs designated by JHI pursuant
to Section 2.2 hereof in accordance with the terms and conditions of this
Agreement.

 

7.15                           Fraud Detection. Republic shall cooperate with JHI in
developing and implementing procedures to detect Fraudulent Activity in the
Program. Republic shall immediately inform JHI when it suspects Fraudulent Activity
originating through an ERO and JHI shall inform Republic of the actions it
takes in response to such notification. Furthermore, JHI agrees to take additional
action as requested by Republic in reference to any participating ERO’s Fraudulent
Activity, to the extent commercially reasonable. As used herein, “Fraudulent
Activity” means [*].

 

8.                                      Representations, Warranties and Covenants.

 

8.1.                              JHI
represents and warrants to Republic that JHI is a corporation in good standing
under the laws of its jurisdiction of incorporation and is duly qualified to
transact business in each jurisdiction in which the operation of its business
or the ownership of its properties requires such qualification (except where
the failure to so qualify would not have a material adverse effect on its
business). Republic represents and warrants to JHI that Republic is a Kentucky
state chartered bank in good standing under the laws of its jurisdiction of
incorporation and is duly qualified by Kentucky and the Federal Deposit
Insurance Corporation to transact business in each jurisdiction in which the
operation of its business or the ownership of its properties requires such
qualification (except where the failure to so qualify would not have a material
adverse effect on its business). Each party represents and warrants to the
other that (i) its execution and delivery of this Agreement does not and will
not violate its Certificate of Incorporation or charter or breach or constitute
a default under any agreement or arrangement to which it is a party; (ii) it
has the legal right to enter into and perform its obligations hereunder; (iii)
its execution and delivery hereof has been duly authorized by all necessary
corporate action on its part and this Agreement constitutes its legal and
binding agreement, enforceable against it in accordance with its terms; and (iv)
its Marks (as defined below) do not infringe upon the intellectual property
rights of any third party.

 

8.2.                              Republic
covenants to and agrees with JHI that it shall comply with all Applicable Laws,
rules and regulations in connection with the offer and sale of Financial
Products and the performance of its obligations under this Agreement. Without
limiting the foregoing, Republic covenants and agrees that its evaluation and
processing of Applications, its provision and documentation of loans, the fees
charged by it for such loans and its activities involving the collection of
outstanding RALs shall comply with all applicable state and federal laws, rules
and regulations, including, without limitation, the Truth-In-Lending Act (15
U.S.C. Sec 1601-1667), the Equal Credit Opportunity Act (15 U.S.C. Sec.
1691-1691f), the Electronic Fund Transfer Act (15 U.S.C. 1693, et seq.) and
other applicable provisions of the Consumer Credit Protection Act (15 U.S.C
Sec. 1601).

 

11

 

8.3.                              Each
party further covenants to and agrees with the other that it shall fulfill its
obligations hereunder in a diligent and timely fashion, consistent with the
best practices in the industry; that all hardware, software, processes and
procedures each party uses in providing the services hereunder are owned or
properly licensed to such party and will not violate the trademark or copyright
rights, right of publicity or privacy of, or constitute libel or slander
against, or involve plagiarism or violate any other rights of, any person or
entity and that such party’s use of them will comply with all Applicable Laws;
that all processing systems, software and hardware, and policies or procedures
used by each party and all rules and protocols covering such party’s employees,
agents and independent contractors providing services hereunder, contain
protections and security enhancements, consistent with industry standards, and
provide safeguards and system protections, consistent with industry standards,
to prevent hacking, viruses, security breaches, loss of data, any breach of the
Gramm-Leach-Bliley Act and applicable regulations promulgated thereunder, any
breach of the confidentiality provisions hereof, identity theft and fraud
against JHI and Customers effecting transactions contemplated by this
Agreement.

 

8.4                                 JHI
covenants to and agrees with Republic that it shall comply with all applicable
Program Guidelines and Applicable Law in connection with the performance by it
of its obligations under this Agreement. JHI shall comply in all material
respects, and shall instruct EROs to comply, with all Program Guidelines provided
by Republic in advance of each Tax Season and Applicable Law concerning the
preparation and processing of Applications.

 

8.5                                 JHI
agrees that each participating ERO must have an Electronic Filer’s
Identification Number (“EFIN”).

 

9.                                      Term and Termination.

 

9.1.                              Term. This Agreement shall be effective upon its execution
and applicable to the Program for Tax Seasons 2008, 2009 and 2010 and all
related periods. This Agreement shall terminate and expire on October 31, 2010,
unless extended by written agreement of the parties (the “Term”).

 

9.2.                              Termination by Either Party. Either party may at its option
terminate this Agreement upon twenty (20) days’ prior written notice if (i) the
other party has materially breached any of the terms hereof and has failed to
cure such breach within such twenty day time period; (ii) the continued
operation of the Program or the electronic filing program is no longer
commercially feasible or practical, or no longer provides the same opportunity,
to the terminating party due to legal, legislative or regulatory
determinations, enactments or interpretations or significant external events or
occurrences beyond the control of the terminating party; provided, however,
that in the case of clause (ii), the parties shall first mutually endeavor in
good faith to modify the Program in a manner resolving the problems caused by
legal, legislative or regulatory or external events or occurrences; or (iii)
immediately upon receipt of written notice of termination of the Technology
Services Agreement; provided however if it is ultimately determined that the
Technology Services Agreement was wrongfully terminated, then such party shall
be liable for wrongful termination under this Agreement. In addition, either
party may terminate this Agreement immediately upon notice to the other party,
upon (x) the filing by or against the other party of any petition in bankruptcy
or for reorganization or debt consolidation under the federal bankruptcy laws
or under comparable law; (y) the other party’s making of an assignment of all
or substantially all of its assets for the benefit of creditors; or (z)
application of the other party for the appointment of a receiver or trustee of
its assets.

 

12

 

[*] designates portions of this document that
have been omitted pursuant to a request for confidential treatment filed
separately with the Securities and Exchange Commission.

 

9.3.                              Termination
by JHI. JHI may terminate this Agreement immediately after a good
faith discussion as to alternatives if Republic’s processing systems are not
available for any reason (including any Force Majeure Event, as defined in Section 14.2)
for two (2) consecutive days or more during any Tax Season, or for 30
consecutive days or more during any other time.

 

9.4.                              Termination
by Republic. [*].

 

9.5.                              Continuation
of Program. In the event of a termination of the Program under this
Agreement during a Tax Season, both parties shall continue to provide the
Program through the end of such Tax Season, unless otherwise agreed in writing
by the parties or prohibited by law or regulation, and all the relevant
provisions of and obligations under this Agreement and the Technology Services
Agreement shall survive until such obligations have been completed including
any payment obligations for such Tax Season. In addition, either party may elect
to discontinue providing the Program during a Tax Season if the termination is
due to an event with respect to the other party described in the last sentence
of Section 9.2 occurs or an event with respect to Republic described in
the last sentence of Section 9.4 occurs.

 

10.                               Ownership
of Loans.

 

The parties agree that Republic will be the sole owner of the Financial
Products loans made under the Program. In addition, Republic shall have the
authority to transfer or assign such loans at any time, provided that Republic
shall continue to be liable for any violation of law of such transferee or
assignee. Without limiting the foregoing, (i) any such transfer or
assignment (a) shall comply with all Applicable Laws, rules and
regulations, and (b) shall not cause Republic to breach any of its
representations or obligations hereunder, and (ii) the transferee or
assignee shall (a) represent, warrant and covenant to comply with all
Applicable Laws, rules and regulations in the servicing and collection of
such loans, (b) agree to provide customer service at a level at least as
high as that offered by Republic and (c) demonstrate to Republic’s
reasonable satisfaction the ability to comply with such representations,
warranties and covenants.

 

11.                               Marketing
and Other Materials.

 

11.1.                       Review. Each party shall have the right to review and
approve all marketing materials used to promote the Program (in all events such
review to be completed within [*] of receipt thereof) and approval shall not be
unreasonably withheld. The parties agree to negotiate in good faith to resolve
any differences and to agree upon mutually agreeable alternative language
within two (2) Business Days after either party notifies the other of its
disapproval. Republic shall review such materials for compliance with
Applicable Laws specifically relating to the offering of Financial Products
(e.g., compliance with Regulation Z) and JHI may rely on such review;
provided, however, that JHI agrees to indemnify Republic for any damages
incurred by Republic due to JHI’s failure to adopt any revisions required by
Republic for such materials to comply with Applicable Laws specifically
relating to the offering of Financial Products. For the avoidance of doubt,
Republic may, but shall have no responsibility to, review such materials for
compliance with Applicable Laws relating to the offering of goods and services
generally, including, without limitation, federal and state laws regulating
misleading, unfair or deceptive statements, acts or practices or unfair
competition. JHI shall be responsible for the compliance of such materials with
all other Applicable Laws, including, without limitation, the Applicable Laws
described in the preceding sentence, and Republic may rely on JHI’s
review.

 

13

 

11.2.                       License. During the Term and subject to the terms and
conditions of this Agreement, each party grants to the other a non-exclusive,
non-assignable right and license to use, reproduce and display its names,
trademarks, service marks, trade names, service names or logos (“Marks”), solely in connection with the marketing, making and
processing of Financial Products to Customers in connection with the Program. Neither
party shall adopt or use, or seek to register, without the other party’s prior
written consent, any variation of such other party’s Marks, or any mark similar
thereto or likely to be confused therewith. Any and all goodwill arising from
either party’s use of the Marks of the other party shall inure solely to the
benefit of such other party, and neither during nor after the termination or
expiration of this Agreement shall either party assert any claim to the other party’s
Marks or associated goodwill. Neither party shall use the Marks of the other
party for any purpose except those specifically set forth herein. All rights in
and to the Marks of a party which are not specifically granted to the other
party herein shall remain with such party

 

12.                               Confidential
Information.

 

12.1.                       Confidentiality Rights of the Parties. The parties hereto
understand that implementation and operation of the Program involves the use of
certain systems, computer programs, marketing, product development, risk
management, strategy data and other information, including business information
and trade secrets (“Proprietary Information”), that are proprietary to the
respective parties. Each party shall safeguard all Proprietary Information made
available to it by the other party, taking reasonable precautions to withhold
the same from disclosure to the same extent that it would take to safeguard its
own confidential information and data. Such Proprietary Information shall not
include information which is (i) shown to have been known by the receiving
party prior to disclosure to it by the other party, (ii) generally known
to others engaged in the same trade or business as the furnishing party, (iii) available
to the public through no act or omission by the receiving party or its
representatives or professional advisors, or (iv) which is rightfully
obtained by the receiving party from third parties (other than professional
advisors or other representatives) without restriction of confidentiality. In addition
to the foregoing, Republic specifically agrees not to make copies of or to
disclose to any other person or firm, other than to employees of Republic who
need-to know such information in order to perform Republic’s obligations
under this Agreement and who have agreed to be bound by this Article 12,
any Proprietary Information (including, without limitation, the names of EROs
or Customers or any other identifying information obtained through its
relationship with JHI as set forth in this Agreement) for any purpose other
than performing its obligations hereunder. The foregoing sentence shall not
preclude Republic from using its own records of loans which were declined under
the Program as reference material in the event any Customer whose Application was
declined subsequently applies directly to Republic for a loan. Upon the
termination or expiration of this Agreement or the earlier written request of
the furnishing party, the parties will return to any furnishing party all
Proprietary Information received in connection with this Agreement and certify
in writing to such furnishing party that such receiving party has not retained
any copies of such Proprietary Information.

 

12.2.                       Privacy. No party shall make any unauthorized disclosure of
or use any personal information of individual consumers which it receives from
the other party or on the other party’s behalf other than to carry out the
purposes for which such information is received, and each party shall comply,
to the extent applicable, with the requirements of the implementing regulations
of Title V of the Gramm-Leach Bliley Act of 1999, specifically including, 16
Code of Federal Regulations, Chapter I, Subchapter C, Part 313.11 and
313.13. JHI and Republic shall each adopt and maintain a comprehensive privacy
policy with respect to its handling of the personal information of individual
Customers submitted by such Customers to JHI (through the EROs) and to Republic.
JHI’s and Republic’s privacy policy shall be available on their respective
Internet web sites and each shall comply with the provisions of their
respective privacy policies.

 

14

 

[*] designates portions of this document that
have been omitted pursuant to a request for confidential treatment filed
separately with the Securities and Exchange Commission.

 

13.                               Indemnification.

 

13.1.                       Indemnification by JHI. JHI shall indemnify, defend and hold
harmless Republic, its affiliates and their respective officers, directors and
employees 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 Republic in connection with any third party claim,
dispute, controversy or litigation (individually a “claim”) arising out of or
resulting from (i) JHI’s violation of Applicable Law (except when such
violation is directly caused by JHI’s compliance with Program Guidelines); (ii) any
material breach by JHI of any representation, warranty, covenant or agreement hereunder
or (iii) the negligence or willful misconduct of JHI in connection with
the performance by it of its obligations under this Agreement. [*]. JHI agrees
to cooperate with all reasonable requests from Republic for information and
documents necessary to investigate any Fraudulent Activity.

 

13.2.                       Indemnification by Republic. Republic shall indemnify,
defend and hold harmless JHI, its affiliates, and their respective 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 any of them in connection
with any third party claim, dispute, controversy or litigation (individually, a
“claim”) arising out of or resulting from (i) the Program Guidelines; (ii) the
administration, offer and sale of Financial Products pursuant to the Republic
Financial Product Agreement and the Program Guidelines hereunder; (iii) any
violation or alleged violation of Applicable Law (including, without
limitation, the Federal Truth in Lending Act or any regulation of the Federal
Reserve Board or other applicable federal or state banking or consumer finance
laws or regulations) by Republic, the Financial Products offered by Republic or
the Program Guidelines, (iv) the use of the names, trademarks, service
marks, trade names, service names, and logos of Republic in any materials
produced hereunder and approved by Republic in connection with the Program; (v) any
material breach by Republic of any representation, warranty, covenant or
agreement hereunder; or (vi) the negligence or willful misconduct of
Republic in connection with the performance by it of its obligations under this
Agreement.

 

13.3.                       Procedures. The indemnitee shall promptly notify the
indemnitor in writing of any claim that may be the subject of
indemnification under this Article 13, and shall promptly tender to the
indemnitor sole control of the defense and any settlement thereof; provided,
however, that the failure of an indemnitee to so notify the indemnitor shall
not relieve the indemnitor of its indemnification obligations hereunder to the
extent that such failure does not actually prejudice the indemnitor with
respect to such claim; and provided, further that the indemnitor shall not
compromise or settle any claim or action without the prior approval of the
indemnitee. The indemnitee shall have the right (but not the obligation) to
defend such action or proceeding by retaining attorneys of its own selection to
represent it at the indemnitor’s reasonable expense; provided that the
indemnitor shall in all events have the right to participate in such defense;
and provided further that the indemnitee shall not compromise or settle any
such claim or action without the prior approval of the indemnitor.

 

15

 

14.                               Limitation
of Liability.

 

14.1.                       Consequential Damages. No party will be liable to the other
party for incidental, special, indirect or consequential damage, or loss of profits,
income, use or other benefits, arising out of or in connection with the
performance of its obligations under this Agreement or any failure of such
performance; unless such damage or loss is subject to the indemnification
provisions of this Agreement or arises from that party’s gross negligence or
willful misconduct.

 

14.2.                       Force Majeure. Notwithstanding any other provision herein to
the contrary, either party shall be excused from performance hereunder for
failure to perform any of the obligations if (i) such failure to perform occurs
by reason of any of the following events (“Force Majeure Events”): act of God,
fire, flood, storm, earthquake, tidal wave, communications failure, sabotage,
war, military operation, terrorist attack, national emergency, mechanical or
electrical breakdown, general failure of the postal or banking system, civil
commotion, strikes, or the order, requisition, request or recommendation of any
governmental agency or acting governmental authority, or either party’s
compliance therewith or government proration, regulation, or priority, or any
other similar cause beyond either party’s reasonable control and (ii) such
Force Majeure Event is beyond such party’s reasonable control. The party
excused from performance shall be excused from performance (i) only after
notice from the party whose performance is impaired, (ii) only during the
continuance of the Force Majeure Event and (iii) only for so long as such
party continues to take reasonable steps to mitigate the effect of the Force Majeure
Event and to substantially perform despite the occurrence of the Force
Majeure Event. The party whose performance is not impaired may terminate
this Agreement by giving notice to the other party after two (2) consecutive
days’ failure of performance during any Tax Season or upon thirty (30)
consecutive days’ failure of performance at any other time, effective
immediately upon written notice to such party.

 

15.                               Commitment
to Negotiation; Mediation and Arbitration of Disputes.

 

15.1.                       Negotiation. Except with respect to either party’s wrongful
use of the Marks of the other party for which the aggrieved party may seek
injunctive or such other relief as such aggrieved party may deem
appropriate, or litigation brought against JHI by third parties, neither party
shall institute any proceeding in any court or administrative agency or any
arbitration to resolve a dispute between the parties before that party has
sought to resolve the dispute through direct negotiation with the other party.
If the dispute is not resolved within three weeks after a demand for direct
negotiation, the parties shall then attempt to resolve the dispute through
mediation and/or arbitration as provided in this Article 15.

 

16

 

15.2.                       Scope of Arbitration. Except for either party’s wrongful use
of the Marks for which the aggrieved party may seek injunctive or such
other relief as such aggrieved party may deem appropriate, or litigation
brought against JHI by third parties, all controversies, disputes or claims
between JHI and Republic (and any owners, guarantors, affiliates and employees
of Republic, if applicable, but in no event shall any of such owners,
guarantors, affiliates and employees be deemed third-party beneficiaries of
this Agreement), arising out of or related to: (i) this Agreement or any
other related agreement between JHI and Republic, or any provision of any such
agreements; (ii) the relationship of the parties; (iii) the validity
of this Agreement or any other related agreement between JHI and Republic or
any provision of any such agreements; or (iv) any problem arising from the
undertakings hereunder, will be submitted for mediation, as set forth below in Section 15.3
and, in the event mediation is not demanded by a party or does not result in a
resolution of the dispute, for binding arbitration in accordance with the rules of
the American Arbitration Association on demand of either party. Republic agrees
to cause its owners, guarantors, affiliates and employees of Republic reasonably
likely to be involved in such controversies, disputes and claims to agree to be
bound by the provisions of Sections 15.2, 15.3, 15.4, 15.5 and 15.6 hereof.

 

Such arbitration proceeding will be conducted
at a mutually agreeable location and will be heard by a panel of three
arbitrators in accordance with the then current Commercial Arbitration Rules of
the American Arbitration Association, provided that the Federal Rules of
Evidence shall be applicable to the arbitration hearing and any evidence obtained
for or presented at the hearing and that the arbitrators shall be attorneys
familiar with the Federal Rules of Evidence. All other matters relating to
arbitration will be governed by the Federal Arbitration Act (9 U.S.C. §§ 1
et seq.) and not by any state arbitration law.

 

The decision and award of the arbitrators
will be binding and conclusive upon both JHI and Republic, and enforceable in
any court of competent jurisdiction. The arbitrators have the right, in their
discretion, to award or include in the award any lawfully appropriate relief
(including, punitive damages) and to assess costs or expenses to one or both
parties and may award attorneys’ fees and legal costs to the prevailing
party as part of such award, provided that the arbitrator will not have
the right to declare any Mark generic or otherwise invalid.

 

JHI and Republic agree to be bound by the
provisions of any limitation on the period of time in which claims must be
brought under Applicable Law or this Agreement, whichever expires earlier. JHI
and Republic further agree that, in connection with any such arbitration
proceeding, each must submit or file any claim which would constitute a
compulsory counterclaim (as defined by Rule 13 of the Federal Rules of
Civil Procedure) within the same proceeding as the claim to which it relates.
Any such claim which is not submitted or filed as described above will be
forever barred.

 

Each party agrees that arbitration will be
conducted on an individual, not a class-wide, basis, and that an arbitration
proceeding between JHI and Republic may not be consolidated with any other
arbitration proceeding between JHI and any other person, corporation, limited
liability company or partnership, provided that JHI or Republic may consolidate
any arbitration proceeding commenced under this Section 15.2 with any
arbitration proceeding commenced by JHI, JHTSL or Republic under any other
agreement executed in connection herewith, including, without limitation, the
Technology Services Agreement.

 

Notwithstanding anything to the contrary
contained in this Section, JHI and Republic shall each have the right in a
proper case to obtain temporary restraining orders and temporary or preliminary
injunctive relief from a court of competent jurisdiction; provided, however,
that JHI or Republic must contemporaneously submit the dispute for arbitration
on the merits as provided herein and the submission to the court shall not
waive the right to arbitration.

 

17

 

15.3.                       Mediation. If a dispute is not resolved by direct
negotiation, as provided hereinabove, either party may demand mediation. In
the event mediation is demanded, it shall take place with a mediator to be
agreed upon by the parties. In the event the parties are unable to agree upon a
mediator, one will be appointed by the AAA. The mediation will take place at a
mutually agreeable location. A demand for mediation will not preclude a party
from filing a demand for arbitration, but the parties will agree to a stay of
any arbitration proceedings for a period of a minimum of three months from the
date mediation is demanded to permit the mediation to take place.

 

15.4.                       Governing Law. All matters relating to arbitration will be
governed by the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.). Except to
the extent governed by the Federal Arbitration Act, the United States Trademark
Act of 1946 (Lanham Act, 15 U.S.C. §§1051 et seq.), or other federal law, this
Agreement and all claims arising from the relationship between JHI and Republic
will be governed by the laws of the state of New York without regard to its
conflict of laws principles.

 

15.5.                       Consent to Jurisdiction. Each party agrees that the other
party may institute any action against it (which is not required to be
arbitrated hereunder) and any action to confirm or to enforce an arbitration
award hereunder in any state or federal court of competent jurisdiction and
irrevocably submits to the jurisdiction of such courts and waives any objection
it may have to either the jurisdiction of or venue in such courts.

 

15.6.                       Waiver of Jury Trial. JHI and Republic irrevocably waive
trial by jury in any action, proceeding or counterclaim, whether at law or in
equity, brought by either of them against the other party.

 

16.                               No
Joint Venture.

 

This Agreement or any acts pursuant hereto shall not constitute a joint
venture or create a partnership, agency or employment relationship between the
parties. Except as expressly provided in this Agreement, no party shall have,
or hold itself out as having, any right, power or authority to act or create
any obligation, express or implied, on behalf of the other.

 

17.                               Audit
Rights.

 

17.1.                       During the
Term and for a period of one year thereafter, Republic shall (a) maintain
reasonably adequate books and records with respect to any fees or compensation
to be provided to JHI hereunder and otherwise with respect to its obligations
hereunder; (b) upon reasonable written request, provide access to such
books and records to JHI and its authorized agents (including, but not limited
to, its auditors); and (c) cooperate with, and provide to, JHI and such
agents such assistance as they reasonably may require. JHI shall pay for
the expenses associated with the conduct of such audit, provided that if such
audit reveals an underpayment by Republic of more than five percent (5%) of any
amount due hereunder, then Republic shall, promptly upon JHI’s request, tender
the amount of such underpayment to JHI and reimburse JHI for such audit
expenses.

 

18

 

17.2.                       During the
Term and for a period of one year thereafter, JHI and all EROs shall (a) maintain
reasonably adequate books and records with respect to the Program pursuant to Section 2.2(c) hereof,
including without limitation information regarding EROs and ERO locations, and
otherwise with respect to its obligations hereunder; (b) upon reasonable
written request, provide access to such books and records to Republic and its
authorized agents (including, but not limited to, its auditors); and (c) cooperate
with, and provide to, Republic and such agents such assistance as they
reasonably may require. Republic shall pay for the expenses associated
with the conduct of such audit, provided that if such audit reveals an
inaccurate calculation of Customers of more than five percent (5%) for any Tax
Season, then JHI shall, promptly upon Republic’s request, reimburse Republic
for such audit expenses. In addition, JHI acknowledge and agree that JHI and
the EROs shall be subject to audit and review by Republic and the banking
agencies having jurisdiction over Republic to the extent provided by law.

 

17.3                          JHI
agrees that Republic may audit all participating EROs, during and after
Tax Season, for the purposes of maintaining compliance with the Program Guidelines.
Any such audits shall be conducted during the ERO’s regular business hours upon
reasonable notice.

 

18.                               Survival.

 

Upon the expiration or termination of this Agreement in accordance with
the provisions of Article 9, no party shall remain liable to the other,
except with respect to Articles 4 (to the extent JHI’s right to receive payment
has accrued), 6.5(a), 12.1, 12.2, 13.1, 13.2, 13.3, 14.1, 14.2, and Articles
15, 17, this Article 18, and Article 19, all of which shall survive
the expiration and termination hereof. Further, no party shall remain liable to
the other beyond two (2) years after the termination of this Agreement
with respect to Articles 13.1, 13.2 or 13.3.

 

19.                               Miscellaneous.

 

19.1.                       Assignment. This Agreement is binding on, and shall inure to
the benefit of, the parties hereto and their respective successors and
permitted assigns. Neither party may assign its rights or obligations
under this Agreement (other than in the context of a change in control of a
party) without the prior written consent of the other party.

 

19.2.                        Notices.    All
notices and other communications under this Agreement shall be in writing and may be
given by any of the following methods:  (a) personal
delivery against a signed receipt; (b) facsimile transmission (with
confirmation of receipt as provided below); (c) registered or certified
mail, postage prepaid, return receipt requested; or (d) overnight delivery
service. Notices shall be sent to the appropriate party at its address or
facsimile number given below (or as such other address or facsimile number for
such party as shall be specified by notice given hereunder):

 

If to Republic:

 

Republic Bank & Trust Company

601 W. Market Street

Louisville, KY 40202

Attn:                    William Nelson

Managing Director

 

with a copy to:

 

Republic Bank & Trust Company

601 W. Market Street

Louisville, KY 40202

Attn:                    General Counsel

 

19

 

If to JHI:

 

Jackson Hewitt Inc.

3 Sylvan Way

Parsippany, NJ 07054

Attn:                    Bill San Giacomo

Group Vice President, Financial Products

 

with a copy to:

 

Jackson Hewitt Inc.

3 Sylvan Way

Parsippany, NJ 07054

Attn:                    Office of the General Counsel

 

All such notices and communications shall be
deemed delivered upon (a) actual receipt thereof by the addressee, (b) actual
delivery thereof to the appropriate address, or (c) in the case of a
facsimile transmission, upon transmission thereof by the sender and issuance by
the transmitting machine of a confirmation slip confirming that the number of pages constituting
the notice have been transmitted without error. In the case of notices sent by
facsimile transmission, the sender shall contemporaneously dispatch a copy of
the notice to the addressee at the address(es) indicated above by an overnight
courier service. However, such mailing shall in no way alter the time at which
the facsimile notice is deemed received.

 

19.3.                       Severability; Construction. The parties agree that if any
provision of this Agreement shall be determined by any court of competent
jurisdiction to be void or otherwise unenforceable, then such determination
shall not affect any other provision of this Agreement, all of which other
provisions shall remain in effect. If any provision were capable of two
constructions, one of which would render the provision valid and the other
invalid, then the provision shall have the meaning that renders it valid. In
the event that any provision hereof pertaining to fees, commissions or
underwriting criteria is held to be invalid, then the parties shall endeavor in
good faith the redesign the Program or the terms thereof in a manner consistent
with the intent and economic effect of this Agreement.

 

19.4.                       Waiver. No waiver of any breach of this Agreement shall be
effective unless in writing and signed by an authorized representative of the
waiving party. The waiver of any breach hereof shall not operate or be
construed as a waiver of any other or subsequent breach.

 

19.5.                       Integration; Subordination of JHI Obligations. This
Agreement, together with the Exhibits hereto and all agreements or documents
related hereto or delivered hereunder and the Technology Services Agreement
express fully the entire understanding and agreement of the parties concerning
the subject matter hereof, and all prior understandings or commitments of any
kind, whether oral or written, including, without limitation, the Letter
Agreement, concerning such subject matter are hereby superseded (other than
those obligations which, by their terms and nature, survive termination or
expiration). Whenever it states in this Agreement that JHI shall cause the EROs
to perform any act or do any thing, and such performance is also required
of the ERO by the terms of the Republic Financial Product Agreement by and
between the ERO and Republic, the provisions of the Republic Financial Product
Agreement shall control and JHI’s obligations shall be subordinate to the
obligations of the ERO.

 

19.6.                       Amendment. This Agreement may not be amended or
modified other than by a written agreement executed by both parties.

 

20

 

19.7.                       Headings. Headings used in this Agreement are for
convenience of reference only and do not define, interpret, describe the scope
of or otherwise affect any provision hereof.

 

19.8.                       Counterparts. This Agreement may be executed in one or
more counterparts (including via facsimile), each of which shall be deemed an
original and all of which, taken together, shall be deemed one and the same
instrument.

 

19.9.                       Further Assurances. From time to time following the
execution of this Agreement, each party agrees to do such things and execute
and deliver such documents as may reasonably be necessary to effectuate
the intent and purposes of this Agreement.

 

19.10.                 No Third Party Beneficiaries. This Agreement has been made
for the sole benefit of Republic and JHI and is not intended to, and shall not,
confer any benefit or rights upon, nor may it be enforced by, any other
person.

 

19.11.                 Publicity; Disclosure. Neither party shall issue any press
release relating to this Agreement without the prior consent of the other party.
Each party hereto shall be permitted to disclose this Agreement to the extent
such party determines that such disclosure is required by applicable law.

 

19.12                    Joint Marketing. The Parties shall engage in joint marketing
activities pursuant to Section 7.7 of this Agreement and any other joint
marketing agreement that may be entered into from time to time.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

21

 

IN WITNESS WHEREOF, this Agreement has been
executed and delivered by a duly authorized officer of each party as of the
date set forth above.

 

 

	
  REPUBLIC BANK & TRUST COMPANY

  	
   

  	
  JACKSON HEWITT INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ William Nelson

  	
   

  	
  By

  	
  /s/ Bill San Giacomo

  
	
   

  	
  William Nelson

  	
   

  	
   

  	
  Bill San Giacomo

  
	
   

  	
  Managing Director

  	
   

  	
   

  	
  Group Vice President, Financial

  
	
   

  	
   

  	
   

  	
   

  	
  Products

  

 

22

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