ERO Agreement

This agreement (the “Agreement”) is made between Fort Knox Financial Services Corporation (the “Company”) and the tax preparer, electronic return originator or electronic return transmitter, as the case may be (the “ERO”), in order to govern the ERO’s participation in the Electronic Refund Program (the “Program”) offered by the Company.  The Company will utilize the services of the Ohio Valley Bank Company (the “Bank”) to facilitate the provision of certain products to taxpayers under the Program.

The parties agree as follows:

1.        Term.  This Agreement shall become effective when the ERO first files a taxpayer application (the “Application”) on behalf of the taxpayer and it is received by the Company, and shall remain in effect until all 12/31/2009, or the Company otherwise terminates this Agreement pursuant to the terms hereof.  The signatures of the parties shall not be required to render this Agreement binding as the terms and conditions are agreed upon with the performance of the parties as set forth.  

2.        The Program.  A qualified taxpayer, acting with the ERO, as the taxpayer’s agent, may apply for a financial product offered through the Program by submitting a taxpayer application (the ‘Application’) in such form as is specified by the Company from time to time.  The ERO shall review the Application in its entirety with the taxpayer and ensure the Application is signed and is properly completed in all respects.  It is understood by the ERO that the taxpayer Application may be denied for any reason by the Company or by the Bank, and that the maximum allowable amount for a RAL shall be determined by the Company and the Bank on an annual basis.

3.        Representations and Warranties of ERO.  The ERO represents and warrants to the Company and to the Bank as follows:

3.1     The ERO will fully and accurately oversee the completion of the Application and will deliver copies of the application and disclosures to the taxpayer.

3.2     The ERO will comply with applicable state and federal laws, regulations, and circulars with respect to the Program and to tax preparation for taxpayers and will use reasonable due diligence to ascertain the accuracy of all Application and tax returns prepared.

3.3     The ERO is in material compliance with all federal and state laws and rules, regulations and administrative orders of all state and local commissions, agencies and authorities, which are applicable to the ERO, and the operation of the ERO’s business.  Furthermore, the ERO possesses all permits, memberships, contract, licenses and identification numbers necessary to conduct its business.

3.4     The execution, delivery and performance of this Agreement by the ERO has been fully authorized, and will not result in any violation of, conflict with, or result in a default under, any agreement, instrument, undertaking, judgment, decree, order, statute, role or governmental regulation applicable to the ERO.

4.        Agreement of the ERO. 

4.1     If the ERO or any of its officers, directors, shareholders, or employees has ever been, or subsequently is denied its request by the Internal Revenue Service (“IRS”) for an Electronic Filing Identification Number (“EFIN”), the ERO shall immediately notify the Company.

4.2     The ERO will utilize the software package developed by the Company in order to participate in the Program.  The ERO hereby agrees to be bound by and comply with all the terms and conditions with regard to the use of the software package, which may be required by the Company.  The ERO acknowledges that the Company makes no representation or warranty regarding the accuracy or completeness of any information furnished to the ERO as part of the software package, including but not limited to reports and other databases.  Neither the Company nor the Bank shall have any liability to the ERO or its clients by reason of any information contained within or created by the software package being incomplete or inaccurate.  THE COMPANY DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE, WITH RESPECT TO THE SOFTWARE PACKAGE.  THE COMPANY’S LIABILITY IN CONNECTION WITH THE SOFTWARE PACKAGE SHALL IN NO EVENT EXCEED THE AMOUNT PAID BY THE ERO FOR THE LICENSE TO THE SOFTWARE PACKAGE AND IN NO EVENT SHALL THE COMPANY BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES, LOST PROFITS, SPECIAL DAMAGES OR ANY OTHER DAMAGES OR EXPENSES (EVEN IF THE COMPANY HAD BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES).  THIS PARAGRAPH SHALL SURVIVE TERMINATION OF THIS AGREEMENT. 

4.3     The ERO agrees to follow the policies and procedures existing from time to time regarding the Program, including the Users Manual and Getting Started Guide (the “Guidelines”), a copy of which will be provided to the ERO, the provisions of which are made a part of this Agreement.  The Company reserves the right, in its sole discretion, to amend or supplement the Guidelines from time to time and to establish additional or alternative policies and procedures relating to the Program.  Such amendments or supplements will be provided to the ERO in writing.

4.4     The ERO agrees to serve as agent to its taxpayer clients who apply for a Product.

4.5     The ERO shall not assist anyone in fraudulently obtaining a Product, and shall notify the Company immediately of any attempt to obtain a Product by fraud.  The ERO, its officers, directors and employees (or similarly situated persons) shall be jointly and severally liable to the Company and to the Bank for any losses incurred by the Company or by the Bank for the failure of the ERO to use all reasonable fraud prevention measures.  The ERO shall provide that the fees, which are withheld from the taxpayer’s refund (or RAL) and paid to the ERO on behalf of a taxpayer, are listed on the Application and authorized by the taxpayer to be deducted from the taxpayer’s refund or RAL and are solely related to the preparation or filing of the tax return.  

4.6     The ERO agrees that it shall supply the Company with original copies of the Application signed by the taxpayer upon the request of the Company within (3) three business days of the request, and will comply with any request for access to ERO’s records for audit purposes by the Company.  Further, the ERO will retain all Applications pursuant to the retention requirements set out in the Guidelines

4.7     The ERO must inspect at least one government-issued picture identification for each client named on the Application and keep a copy of the identification in the client’s file. The ERO must also verify the social security number for both the primary and secondary filers and all dependent children listed on the tax return and retain a copy of such documentation in the client’s file.  

4.8     Upon the earlier of (i) the termination of this Agreement, or (ii) the cessation by the ERO of submission of Applications, the ERO shall promptly return to the Company any Confidential Information (as hereinafter defined) of the Company, including all forms and documents designed or used in connection with the Program, and shall shred all voided, damaged, unused documents and checks.

4.9     The ERO acknowledges that it will have custody of ERC checks, RAL checks, overage checks, blank checks, voided checks, and other checks, and agrees to keep a detailed log accounting for each voided, damaged, and lost check.  Such log shall be furnished to the Company upon request.  The ERO agrees that voided and damaged checks shall be shredded on a weekly basis.  The ERO will store the check and/or Cash Card supplies in a secure, locked area in the same manner as cash. Only authorized personnel should be allowed access to checks and/or Cash Cards. Checks handed out to taxpayers must have the check stub attached. ERO shall reimburse the Company the amount of each check that is stolen by an employee of ERO, given to the incorrect client, duplicated, or reported lost and/or voided by the ERO’s office if (i) the check has cleared the Bank and (ii) the Company is otherwise unable to recover such funds. The ERO further agrees to use, complete, handle, and disburse checks strictly in accordance with the requirements set forth in this Agreement and in the Guidelines.  In addition, the ERO shall not deliver duplicate checks of the same amount to the taxpayer.  In such event, the Company may charge the ERO $10 for each such occurrence.  

4.10  The ERO shall not deliver a RAL check to the taxpayer unless the Truth-In-Lending Disclosures are attached and printed thereon.  In the case of RAL proceeds being direct deposited to the taxpayer’s bank account or being delivered in the form of a Cash Card, the Truth-In-Lending Disclosures must be presented by ERO to and signed by the taxpayer along with completion of the Application.

4.11  The ERO shall be responsible for assisting the Company or the Bank in the event the Company or the Bank wish to make contact with the taxpayer.

4.12  The ERO agrees that the Company, at its discretion, may request a credit report of the ERO or its officers to determine eligibility for acceptance or continuation of the ERO with the Program.

4.13  The ERO agrees that if its relationship with the Company is in conjunction with ERO’s affiliation with a service bureau or tax preparation software provider, the Company may share information regarding the ERO with such service bureau or tax preparation software provider.

5      Covenants of the Company

5.1   The Company shall promptly respond to inquiries of the ERO and its employees regarding the Program and the status of any of the financial products offered through this Program.  The Company shall reasonably assist the ERO by providing information on how to complete the Application.

5.2   Fees withheld from taxpayers, rebates and incentives will be paid directly to the ERO unless there is an agreement between a Service Bureau and an ERO authorizing the ERO fees and charges, rebates and incentives to be paid to the Service Bureau.  Fees withheld on ERO's behalf will be deposited according to the instructions from the ERO (or Service Bureau, if applicable).  ERO rebates and incentives may be withheld by the Company to offset against losses attributed to negligence or fraud by the ERO.   The fees due from the taxpayer to the ERO shall be paid to the ERO (or Service Bureau, if applicable) upon the funding of a RAL, or after the refund is received from the IRS or state taxing authority, provided however, the amount of the total fees paid to the ERO may be limited to $1000 per taxpayer.  The ERO understands and acknowledges that its fees are the obligation of the taxpayer, not the Company or the Bank, and that the ERO shall look solely to the taxpayer to recover any fees in excess of the amount withheld from the RAL proceeds, or the amount of the refund received from the IRS or state taxing authority.

6.        Status of the Parties.

6.1     In performing their responsibilities pursuant to this Agreement, the relationship between the Company and the ERO is that of independent contractors.  This Agreement shall not be constructed to create a relationship of partner or joint venture or other relationship hereto as employee or agent of the other.  No party hereto shall represent that its relationship with the other is anything but that of an independent contractor.

6.2     Any third parties used by the ERO to performance of its responsibilities under this Agreement shall be deemed to be an agent of the ERO and not an agent of the Company.  The ERO shall be fully responsible for the acts or omissions of any such third party with respect to their services and performance.

7.        Termination

7.1     The Company may without any liability to the ERO or its taxpayer clients, suspend, terminate, or change the Program, in its entirety, or partially, at any time, for any reason whatsoever, including, but not limited to legal, regulatory or operational problems, or any combination thereof, make the Program economically impractical or infeasible in whole or in part.

7.2     The Company may, without any liability to the ERO may terminate this Agreement for any one or more of the following: (i) If  the ERO or any of its officers, directors, shareholders or employees has ever been denied a request to the IRS for an Electronic Filing Identification Number and a reasonable explanation for such denial, judges in the sole discretion of the Company has not been furnished to the Company; (ii) a violation by the ERO of any provision of this Agreement or any policy or procedure contained herein or in the Guidelines; (iii) the ERO elects to wind up or dissolve its operations or is involuntarily wound up and dissolved, or becomes insolvent, incurs a material adverse change in its financial condition, makes an assignment for the benefit of creditors, files a voluntary petition in bankruptcy for its reorganization or is adjudicated as bankrupt or insolvent; (iv) termination of the Program by the Company; (v) if any fraudulent returns are submitted for payment under the Program by the ERO; or (vi) ERO misappropriates or fails to deliver any funds to the Company, Ohio Valley Bank Co., or to any taxpayer. 

7.3     The ERO may terminate this Agreement at any time in writing, or by ceasing to forward Application.  However, this agreement shall remain in effect until all transactions initiated under the Program have been finally completed for the applicable tax filing year.   Amounts owed from the ERO to the Company shall remain due and payable after termination by either party.

8.        Miscellaneous.

8.1     The Company and the Bank, without any liability to ERO, may withhold any fees, payments or rebates due to the ERO and/or terminate this Agreement in the event the ERO violates any provision of this Agreement or any policy or procedure contained herein or in the Guidelines or if any fraudulent returns are submitted for payment under the Program by ERO.   The ERO shall be responsible for, and shall in all cases indemnify and hold the Company and the Bank harmless from, any losses, including attorney fees, resulting from ERO’s failure to adhere to the terms of this Agreement.

8.2     Each Party to this Agreement will bear all expenses connected with its performance of its obligations under this Agreement, and no party will have the right to incur any expense or liability on behalf of any other party.

8.3     The Company shall not be liable to the ERO or its clients or agents for any consequential, incidental, indirect or special damages, or the loss of profits, income or other benefits, arising out of or in connection with this Agreement or the services performed hereunder.

8.4     The ERO shall indemnify, hold harmless and reimburse the Company, the Bank, and their respective officers, directors, employees and agents, for all expenses and costs, reasonable attorney fees, judgments, penalties, damages, direct expenses and other payments in connection with any claims, disputes, controversies or litigation with respect to (i) anything wrongfully done or not done by the ERO, (ii) the violation of any laws, rules or regulations applicable to the ERO in connection with the submission of the Application, or (iii) the ERO’s violation of this Agreement.

8.5     In performing its obligations pursuant to this Agreement, the ERO may, with or without consent, gain access to certain confidential proprietary information about the Program, including the Company’s marketing philosophies and objectives, competitive advantages and disadvantages, technological development, sales volumes, information relating to the Company’s software, names, addresses of the Company’s and the ERO’s customers, or other information which the Company reasonably considers confidential and/or proprietary (collectively referred to herein as “Confidential Information”).  ERO agrees to maintain as proprietary and confidential all such Confidential Information and further agrees not to use such Confidential Information, nor to disclose such Confidential Information to any third party, except in performing its obligations pursuant to this Agreement and as authorized by taxpayers.  Section 501(b)(3) of the Gramm-Leach-Bliley Act states that information security standards much include various safeguards to protect against not only “unauthorized access to” but also the “use of” Confidential Information relating to taxpayers that could result in “substantial harm or inconvenience to any customer.”  Confidential Information includes, but is not limited to, taxpayer’s names, social security numbers, dates of birth, addresses, number of months at address, phone numbers, financial information, bankruptcy information, employer names and phone numbers.  ERO will utilize its best efforts to protect all Confidential Information and to that extent utilize appropriate means including, but not limited to, firewalls, intrusion protection systems, encrypted data transfer, and software security controls to protect all Confidential Information.  ERO warrants to the Company that such reasonable and appropriate safeguards are and will remain in place.  ERO will immediately provide the Company notice of any breach resulting in unauthorized intrusion(s) of the Confidential Information and shall specify the corrective action taken by ERO.  ERO shall assess the nature and scope of an incident and specifically identify the Confidential Information that has or may have been improperly accessed or misused.  ERO shall take appropriate steps to contain and control any incident of breach of security relating to the Confidential Information and agrees upon request to indemnify the Company for any loss or costs associated with any breach of security or unauthorized disclosure.  This provision shall survive termination of this agreement.

8.6     Upon termination of this Agreement, all completed Application shall continue to the property the Company and the rights, agreements, representations and warranties of the parties pursuant to this Agreement, shall survive termination.

8.7     This Agreement may not be assigned by any party without prior written consent of the other party.

8.8     If any provision of this Agreement shall be prohibited by or deemed invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity; the remainder of such provisions or the remaining provisions of this Agreement shall remain enforceable.  Any headings or captions are intended solely for convenience or reference purposes and shall not constitute part of this Agreement.

8.9     This Agreement will be governed by federal law and the law of the Commonwealth of Kentucky without regard to the conflict of laws provisions hereof, and shall be binding upon the parties and their respective successors and assigns.  The parties to this Agreement agree to submit exclusively to courts of jurisdiction in the commonwealth of Kentucky for all purposes of enforcing or construing this Agreement, or commencing any actions to enforce or construe this Agreement.

8.10  This Agreement contains the entire understanding of the parties hereto with respect to the subject matter of this Agreement.  There are no restrictions, promises, warranties, covenants or undertakings other than those expressly stet forth herein.  This Agreement supersedes all prior agreements and understandings between the parties with respect to such matter.

8.11  Except as otherwise provided in this Agreement, the remedies provided herein shall be cumulative and shall not preclude the assertion by either party of any rights or any other remedies against the other party.  Neither party shall be deemed to have waived, not be stopped from asserting, any of its rights, powers or remedies under this Agreement unless such waiver is approved in writing by the waiving party.

8.12  The Bank is an intended third-party beneficiary of ERO’s agreements, duties and obligations under this Agreement.