<PAGE>
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1996
---------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
Commission file number 0-14468.
--------
First Oak Brook Bancshares, Inc.
- --------------------------------------------------------------------------------
(Exact Name of registrant as specified in its charter)
Delaware 36-3220778
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1400 Sixteenth Street, Oak Brook, Illinois 60521
- --------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 571-1050
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- -------
Indicate number of shares outstanding of each of the issuer's classes of common
stock, as of April 30, 1996.
Class A 1,839,706
- ------------------------------- -------------------------------
CLASS NUMBER OF SHARES
Common 1,523,136
- ------------------------------- -------------------------------
CLASS NUMBER OF SHARES
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. Financial Information
- ------------------------------
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets
March 31, 1996 and December 31, 1995 3
Condensed consolidated statements of income
Three months ended March 31, 1996 and 1995 5
Condensed consolidated statements of cash flows
Three months ended March 31, 1996 and 1995 7
Notes to condensed consolidated financial
statements -- March 31, 1996 9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 11
Part II. Other Information
- ---------------------------
Item 1. Legal Proceedings *
Item 2. Changes in Securities *
Item 3. Defaults upon Senior Securities *
Item 4. Submission of Matters to a Vote of Security Holders *
Item 5. Other Information *
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
- ----------
</TABLE>
* Not applicable
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---------- -------------
<S> <C> <C>
Assets
- ------
Cash and due from banks $ 39,872 $ 37,406
Federal funds sold 7,000 -
Interest-bearing deposits with banks 3,689 105
Securities held to maturity, at
amortized cost (fair value, $137,077
and $130,214 for March 31, 1996
and December 31, 1995) 136,306 128,020
Securities available for sale, at
fair-value 124,684 128,172
Loans, net of unearned discount 378,558 362,728
Less allowance for loan losses (4,053) (3,932)
-------- --------
Net loans 374,505 358,796
-------- --------
Premises and equipment, net 17,557 17,899
Other assets 8,911 7,704
-------- --------
Total assets $712,524 $678,102
======== ========
</TABLE>
3
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE INFORMATION)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---------- -------------
Liabilities
- -----------
<S> <C> <C>
Noninterest-bearing demand deposits $130,317 $128,236
-------- --------
Interest-bearing deposits:
Savings deposits and NOW accounts 194,181 191,963
Money market accounts 28,674 26,594
Other time deposits 236,923 208,293
-------- --------
Total interest-bearing deposits 459,778 426,850
-------- --------
Total deposits 590,095 555,086
-------- --------
Securities sold under agreements
to repurchase 52,695 54,657
Treasury, tax and loan demand notes 7,074 6,045
Federal Home Loan Bank advances 3,500 3,500
Other liabilities 4,993 5,052
-------- --------
Total liabilities 658,357 624,340
-------- --------
Shareholders' Equity
- --------------------
Class A Common Stock (aggregate
liquidation preference of $11,603) 3,677 3,677
Common Stock 3,390 3,390
Surplus 10,368 10,368
Unrealized gain (loss) on securities
available for sale, net of taxes (442) 356
Retained earnings 37,907 36,704
Less cost of shares in treasury,
171,027 common shares (733) (733)
-------- --------
Total shareholders' equity 54,167 53,762
-------- --------
Total liabilities and
shareholders' equity $712,524 $678,102
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Interest income:
Interest on loans $ 8,543 $ 7,669
Interest on securities:
U.S. Treasury and Government agencies 2,974 2,753
Obligations of states and political
subdivisions 704 760
Other securities 91 88
Interest on Federal funds sold and
securities repurchased under
agreements to resell 112 111
Interest on deposits with banks 3 2
------- -------
Total interest income 12,427 11,383
------- -------
Interest expense:
Interest on savings deposits and
NOW accounts 1,761 1,982
Interest on money market accounts 209 215
Interest on other time deposits 3,249 2,162
Interest on Federal funds purchased
and securities sold under
agreements to repurchase 670 640
Interest on Treasury, tax and loan
demand notes 90 50
Interest on Federal Home Loan Bank
advances 42 68
------- -------
Total interest expense 6,021 5,117
------- -------
Net interest income 6,406 6,266
Provision for loan losses 330 300
------- -------
Net interest income after provision for
loan losses $ 6,076 $ 5,966
------- -------
</TABLE>
5
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
(IN THOUSANDS EXCEPT SHARE INFORMATION)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Other income:
Service charges on deposit accounts $ 604 $ 575
Trust fees 168 127
Other operating income 351 302
Investment securities gains (losses) 11 -
------- -------
Total other income 1,134 1,004
------- -------
Other expenses:
Salaries and employee benefits 2,963 2,693
Occupancy expense 342 331
Equipment expense 423 430
Data processing fees 379 400
Professional fees 76 54
Postage, stationery and supplies 185 223
Advertising and business development 397 336
FDIC premiums 1 284
Other operating expenses 439 438
------- -------
Total other expenses 5,205 5,189
------- -------
Income before provision for income taxes 2,005 1,781
Provision for income taxes 476 370
------- -------
Net income $ 1,529 $ 1,411
======= =======
Earnings per common share and common
equivalent share $ .44 $ .41
======= =======
Dividends per share:
Class A Common $ 0.0900 $0.0750
Common $ 0.0750 $0.0625
Weighted average number of common shares
and common share equivalents 3,446,923 3,427,266
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
6
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,529 $ 1,411
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, discount accretion, premium
amortization and amortization of
intangibles 943 877
Provision for loan losses 330 300
Gains on securities available for sale (11) -
Increase in other assets (1,017) (26)
Increase in other liabilities 124 339
-------- --------
Net cash provided by operating activities 1,898 2,901
-------- --------
Cash flows from investing activities:
Purchases of securities held to maturity (14,789) (15,373)
Purchases of securities available for sale (45,390) -
Proceeds from maturities of securities
held to maturity 3,498 25,277
Proceeds from sales and maturities of
securities available for sale 50,250 5,679
Increase in loans (16,039) (3,100)
Additions to premises and equipment (128) (272)
-------- --------
Net cash used in investing activities (22,598) (12,211)
-------- --------
Cash flows from financing activities:
Increase (decrease) in demand deposits 2,081 (1,100)
Increase (decrease) in savings and
NOW accounts 2,218 (18,370)
Increase in money market accounts 2,080 702
Increase in time deposits 28,630 21,967
Increase (decrease) in Treasury, tax
and loan demand notes 1,029 (5,318)
Repayment of Federal Home Loan Bank - (2,500)
advances
Decrease in Securities sold under
agreements to repurchase (1,962) (7,331)
Dividends paid (326) (233)
-------- --------
Net cash provided by (used in) financing
activities 33,750 (12,183)
-------- --------
</TABLE>
7
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Net increase in cash and cash equivalents 13,050 2,929
Cash and cash equivalents at beginning
of period 37,511 36,301
------- -------
Cash and cash equivalents at end of period $50,561 $39,230
======= =======
Supplemental disclosures:
Interest paid $ 6,329 $ 5,075
Income taxes paid - -
======= =======
</TABLE>
8
<PAGE>
FIRST OAK BROOK BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
1. Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the rules and regulations of the
Securities and Exchange Commission. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring items) considered necessary
for a fair presentation have been included. Operating results for the three
month period ended March 31, 1996 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1996. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for
the year ended December 31, 1995.
2. Commitments and Contingent Liabilities:
In the normal course of business, there are various outstanding commitments
and contingent liabilities, including commitments to extend credit, which
are not reflected in the financial statements. The Company's exposure to
credit loss in the event of nonperformance by the other party to the
commitments and lines of credit is limited to their contractual amount. Many
commitments to extend credit expire without being used, or, in the case of
credit cards, the Company, at its discretion, may cancel any credit card
line. Additionally, some credit card lines are drawn down and paid off
monthly. Therefore, the amounts stated below do not necessarily represent
future cash commitments. These commitments are subject to the same credit
policy as followed for loans recorded in the financial statements.
The summary of these commitments to extend credit follows (in thousands):
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Commercial $ 62,066 $ 62,225
Home equity 60,848 59,536
Credit card 301,571 313,523
</TABLE>
9
<PAGE>
3. Shareholders' Equity:
Shares authorized, issued and outstanding are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
Preferred Stock, Series B,
no par value:
Authorized 100,000 100,000
Issued None None
Outstanding None None
Class A Common Stock,
$2.00 par value:
Authorized 4,000,000 4,000,000
Issued 1,838,786 1,838,682
Outstanding 1,838,786 1,838,682
Common Stock,
$2.00 par value:
Authorized 3,000,000 3,000,000
Issued 1,695,083 1,695,187
Outstanding 1,524,056 1,524,160
</TABLE>
Each share of Class A Common stock is entitled to one-twentieth of one vote
and a cash dividend of at least 120% of the dividend declared on the Common
stock. Holders of the Class A Common stock, upon liquidation of the Company,
are entitled to receive an aggregate amount per share equal to the $6.31
offering price of the Class A Common stock before any amount is paid to
holders of the Common stock.
The Common stock is convertible into Class A Common stock on a one-for-one
basis at any time.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Earnings Highlights
- -------------------
Net income for the first quarter of 1996 was $1,529,000 compared with $1,411,000
earned in the first quarter of 1995, an increase of 8%. Earnings per share for
the first quarter of 1996 were $.44 as compared to $.41 for 1995.
Key performance indicators for the 1996 first quarter show a return on average
assets of .88% compared with .93% for the 1995 first quarter. For the first
quarter of 1996, the return on average shareholders' equity was 11.26% compared
with 13.10% for the same quarter of 1995.
Net interest income is the difference between interest earned on loans and
investments and interest paid on deposits and other interest-bearing
liabilities. Net interest income, on a tax-equivalent basis, increased $119,000
or 2%. This increase is attributable to a 13% increase in average earning
assets offset by a 10% decrease in the net interest margin. The net interest
margin for the first quarter of 1996 was 4.27% compared to 4.76% for the same
period last year.
The compression of the net interest margin was the result of the following:
. During the first quarter of 1995, the prime rate was adjusted upwards from
8.50% to 9%, averaging 8.83%, while in 1996 the prime rate declined from
8.50% to 8.25%, averaging 8.34%. In a declining interest rate environment,
the Company experienced margin compression due to the difference in timing
of the repricing of assets and deposit liabilities.
. The cost of interest bearing deposits increased 29 basis points from the
first quarter of 1995 to 1996. Retail consumers showed a strong preference
for higher yielding CD's over shorter-term, lower yielding savings and money
market accounts. The first quarter 1996 average balance for savings and
money market accounts declined $19 million compared to first quarter 1995,
while the first quarter 1996 average balance for time deposits increased $65
million compared to first quarter 1995. Competitive pressure among Chicago
area banks kept CD rates relatively high.
11
<PAGE>
Average balances and effective interest yields and rates on a tax equivalent
basis for the first quarters of 1996 and 1995 were as follows (dollars in
thousands):
<TABLE>
<CAPTION>
1996 1995
-------------------- --------------------
Average Effective Average Effective
Balance Yield Balance Yield
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Federal funds sold $ 8,368 5.38% $ 7,570 5.95%
Interest-bearing
deposits with banks 251 4.81 142 5.71
Investment securities 259,001 6.30 245,749 6.46
Loans 366,885 9.41 310,134 10.07
-------- ---- -------- -----
Total earning assets/
yield $634,505 8.08% $563,595 8.44%
======== ==== ======== =====
Interest-bearing
deposits $443,088 4.74% $397,338 4.45%
Short-term debt 59,586 5.13 52,811 5.30
Long-term debt 3,500 4.83 5,944 4.64
-------- ---- -------- -----
Total interest-bearing
liabilities/cost of
funds $506,174 4.78% $456,093 4.55%
======== ==== ======== =====
Net interest margin 4.27% 4.76%
==== =====
Net interest spread 3.30% 3.89%
==== =====
</TABLE>
Average loans for the first quarter of 1996 grew 18% or $57 million in
comparison to the first quarter of 1995. The increase was primarily in real
estate (residential mortgages and construction loans) and indirect auto loans.
Credit card growth was constrained as a result of vigorous competition from
companies with far greater marketing resources.
Based on management's review of the adequacy of the loan loss reserve, the
provision for loan losses was increased to $330,000 for the first quarter of
1996. The increase was to reserve for the growth in the loan portfolio and
increased credit card charge offs.
Total other income increased $130,000 or 13%. Service charges on deposit
accounts increased $29,000 primarily due to an increase in service charges and
fees on personal accounts. Trust fees increased $41,000 primarily due to an
increase in assets under management. The discretionary assets under management
have grown $6 million to $73 million. Excluding investment security gains, the
remaining increase in other operating income of $49,000 was primarily due to
increased fee income from the sale, through a third party, of mutual funds and
merchant credit card processing fees.
12
<PAGE>
Other expenses rose only $16,000. Salaries and employee benefits rose $270,000
due to upgrading of staff, normal salary increases and higher benefit payments.
The Company invested in these positions to enhance customer sales and service
and expand business development opportunities.
Advertising and business development costs increased $61,000 primarily due to
the advertising of retail products and increased business development expenses.
FDIC premiums decreased $283,000 due to lower assessments. The FDIC premium was
lowered to $500 per quarter for well capitalized banks, effective January 1,
1996.
Asset Quality
- -------------
Asset quality remains excellent, with nonperforming assets (nonaccrual loans,
renegotiated loans, loans past due 90 days or more and still accruing) totaling
only $260,000. Net chargeoffs for the first quarter of 1996 totaled $209,000 or
.06% of average loans outstanding. The allowance for loan losses to total loans
was 1.07%.
The following table summarizes the Company's nonperforming assets (in
thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ -----------
<S> <C> <C>
Nonaccrual $ 0 $ 0
Loans which are past due
90 days or more 260 104
----- -----
Total nonperforming loans 260 104
Other real estate owned - -
----- -----
Total nonperforming assets $ 260 $ 104
===== =====
Nonperforming loans to loans
outstanding .07% .03%
Nonperforming assets to loans
outstanding and other real
estate owned .07% .03%
Allowance for loan losses to
nonperforming loans 15.59x 37.81x
</TABLE>
The Company also holds, in other assets, surplus property which was formerly
used as Oak Brook Bank's drive-up facility in Oak Brook, Illinois. Oak Brook
Bank leased the property in May, 1992 for $64,000 net per year for five years to
McDonald's Corporation. Oak Brook Bank, at any time until May 31, 1997, shall
have the option to require the lessee to purchase the property, which has a book
value of $238,000, for the price of $800,000.
13
<PAGE>
Capital
- -------
Shareholders' equity remains strong at $54.2 million. The unrealized loss on
securities available for sale at March 31, 1996 is $442,000 compared to $356,000
gain at December 31, 1995.
The Company and its subsidiary bank's Tier 1, total risk-based capital and
leveraged ratios are in excess of minimum regulatory guidelines and also exceed
the FDIC criteria for "well capitalized" banks. The following table shows the
capital ratios of the Company and its subsidiary bank as of March 31, 1996 and
the minimum ratios for "well capitalized" banks. The Federal regulators exclude
the after-tax unrealized gain/loss on securities available for sale from these
ratios.
<TABLE>
<CAPTION>
Well Company Oak Brook
Capitalized Consolidated Bank
------------ ------------- ----------
<S> <C> <C> <C>
Tier 1
Risk-based (greater or equal to) 6% 13.11% 11.31%
Total Capital
Ratio (greater or equal to) 10% 14.08% 12.29%
Tier 1 Capital
leverage (greater or equal to) 5% 7.71% 6.69%
</TABLE>
Liquidity
- ---------
Effective management of balance sheet liquidity is necessary to fund growth in
earning assets and to pay liability maturities, depository customers' withdrawal
requirements and shareholders' dividends.
The Company has numerous sources of liquidity including a significant portfolio
of shorter term assets, readily marketable investment securities, its deposit
base, and access to borrowing arrangements. Available borrowing arrangements
are summarized as follows:
Oak Brook Bank:
. Informal Federal funds lines of $49,500,000 with seven correspondent banks.
. Reverse repurchase agreement lines of $50,000,000 with two brokerage firms.
. Advances up to $18,475,000 from the Federal Home Loan Bank of Chicago. The
$3,500,000 advance that was outstanding at March 31, 1996 was paid on April
1, 1996.
14
<PAGE>
Parent Company:
. Revolving credit arrangement for $5,000,000. The line is currently unused and
will mature on May 1, 1997. It is anticipated to be renewed annually.
. The parent company also had cash, short-term investments, and other readily
marketable securities totaling $7,832,000 at March 31, 1996.
15
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
Exhibit (10.1) Loan agreement between First Oak Brook Bancshares,
Inc. and LaSalle National Bank dated December 1, 1991
and Amendments dated January 31, 1993, March 31, 1994
(Exhibit 10.1 to the Company's Form 10-K Annual
Report for the year ended December 31, 1994,
incorporated herein by reference) Amendment thereto
dated April 1, 1996 filed herewith.
Exhibit (10.2) Data Processing Agreement between First Data Resources
Inc. and Oak Brook Bank dated November 22, 1991.
(Exhibit 10.3 to the Company's Form 10-K Annual Report
for the year ended December 31, 1994, incorporated
herein by reference. Amendment thereto dated March 1,
1996 filed with the Company's Form 10-K Annual Report
for the year ended December 31, 1995, incorporated
herein by reference) Amendment thereto dated April 1,
1996 filed herewith.
Exhibit (27) Financial Data Schedule
(B) Reports on Form 8-K
None
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST OAK BROOK BANCSHARES, INC.
--------------------------------
(Registrant)
Date May 7, 1996 /S/RICHARD M. RIESER, JR.
----------------- ---------------------------------
Richard M. Rieser, Jr.,
President, Assistant
Secretary, and Director
Date May 7, 1996 /S/ROSEMARIE BOUMAN
----------------- ---------------------------------
Rosemarie Bouman,
Vice President, Chief
Financial Officer and
Chief Accounting Officer
17
<PAGE>
Exhibit (10.1)
FOURTH AMENDMENT TO REVOLVING CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO REVOLVING CREDIT AGREEMENT (this "Amendment") dated
as of April 1, 1996, is between FIRST OAK BROOK BANCSHARES, INC. (the "Company")
and LASALLE NATIONAL BANK (the "Bank").
R E C I T A L S:
WHEREAS, the parties have previously entered into a Revolving Credit Agreement
dated as of December 1, 1991, as amended by that certain First Amendment dated
as of January 31, 1993, that certain Second Amendment dated as of March 31,
1994, and that certain Third Amendment dated as of April 1, 1995 (collectively,
the "Agreement"); and
WHEREAS, at the present time the Company requests, and the Bank is agreeable
to amending the Agreement pursuant to the terms and conditions hereinafter set
forth:
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
hereinafter set forth, it is agreed by the parties hereto as follows:
1. DEFINITIONS. All capitalized terms used herein without definition shall
have the respective meanings set forth in the Agreement.
2. AMENDMENTS TO AGREEMENT.
2.1 Amendment to Section 1. Section 1 is amended by deleting the
reference to the date "April 1, 1996" and inserting a reference to the date "May
1, 1997" in substitution therefor.
2.2 Replacement of Exhibit A. Exhibit A attached to the Agreement is
hereby deleted in its entirety and Exhibit A attached hereto is hereby
substituted therefor.
3. WARRANTIES. To induce the Bank to enter into this Amendment, the Company
warrants that:
3.1 Authorization. The Company is duly authorized to execute and deliver
this Amendment and is and will continue to be duly authorized to borrow monies
under the Agreement, as amended hereby, and to perform its obligations under the
Agreement, as amended hereby.
3.2 No Conflicts. The execution and delivery of this Amendment and the
performance by the Company of its obligations under the Agreement, as amended
hereby, do not and will not conflict with any provision of law or of the charter
or by-laws of the Company or of any agreement binding upon the Company.
<PAGE>
3.3 Validity and Binding Effect. The Agreement, as amended hereby, is a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other similar laws of general application affecting
the enforcement of creditors' rights or by general principles of equity limiting
the availability of equitable remedies.
3.4 No Default. As of the closing date hereof, no Event of Default under
Section 9 of the Agreement, as amended by this Amendment, or event or condition
which, with the giving of notice or the passage of time, shall constitute an
Event of Default, has occurred or is continuing.
3.5 Warranties. As of the closing date hereof, the representations and
warranties in Section 6 of the Agreement are true and correct as though made on
such date, except for such changes as are specifically permitted under the
Agreement.
4. CONDITIONS PRECEDENT. This Amendment shall become effective as of the
date above first written after receipt by the Bank of the following documents:
(a) This Amendment duly executed by the Company; and
(b) A Replacement Promissory Note in the form of Exhibit A attached hereto
duly executed by the Company.
5. GENERAL.
5.1 Law. This Amendment shall be construed in accordance with and
governed by the laws of the State of Illinois.
5.2 Successors. This Amendment shall be binding upon the Company and
LaSalle and their respective successors and assigns, and shall inure to the
benefit of the Company and the Bank and its successors and assigns.
5.3 Confirmation of Loan Agreement. Except as amended hereby, the
Agreement shall remain in full force and effect and is hereby ratified and
confirmed in all respects.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first above written.
LASALLE NATIONAL BANK FIRST OAK BROOK BANCSHARES, INC.
By: /S/JOHN GIUFFRE By: /S/ROSEMARIE BOUMAN
--------------------- --------------------------
Its: Vice President Its: Vice President and
--------------------- -------------------------
Chief Financial Officer
------------------------
<PAGE>
REVOLVING CREDIT NOTE
$5,000,000.00 as of April 1, 1996
FIRST OAK BROOK BANCSHARES, INC., (the "Maker), for value received, promises
to pay to the order of LASALLE NATIONAL BANK (the "Bank") the lesser of: the
principal sum of Five Million Dollars ($5,000,000.00), or the aggregate unpaid
principal amount outstanding under that certain Revolving Credit Agreement dated
December 1, 1991 between the Maker and the Bank, as amended by that certain
First Amendment dated March 31, 1993, that certain Second Amendment dated March
31, 1994, that certain Third Amendment dated April 1, 1995, and that certain
Fourth Amendment of even date herewith (the "Loan Agreement") made available by
the Bank to the Maker at the maturity or maturities and in the amount or amounts
as stated on the records of the Bank together with interest (computed on actual
days elapsed on the basis of a 360 day year) on any and all principal amounts
outstanding hereunder from time to time from the date hereof until maturity.
Interest shall be payable at the Maker's option at the rates and times set forth
in the Loan Agreement. In no event shall any principal amount have a maturity
later that May 1, 1997.
This Revolving Credit Note shall be available for direct advances and for
Bankers' Acceptances.
Principal and interest shall be paid to the Bank at its office at 120 South
LaSalle Street, Chicago, Illinois, or at such other place as the holder of this
Note may designate in writing to the undersigned. This Note may be prepaid in
whole or in part as provided for in the Loan Agreement.
This Note evidences indebtedness incurred under the Loan Agreement (and if
amended, under all amendments thereto) to which reference is hereby made for a
statement of the terms and conditions under which the due date of the Note or
any payment thereon may be accelerated. The holder of this Note is entitled to
all of the benefits and security provided for in said Loan Agreement.
The undersigned agrees that in any action or proceeding instituted to collect
or enforce collection of this Note, the amount endorsed by the Bank on the
reverse side of this Note shall be prima-facie evidence of the unpaid principal
balance of this Note.
This Note is in substitution for, and not in repayment of, that certain
Revolving Credit Note, dated as of April 1, 1995, in the amount of
$5,000,000.00, executed by the Maker in favor of the Bank.
FIRST OAK BROOK BANCSHARES, INC.
By: /S/ROSEMARIE BOUMAN
-------------------------
Its: Vice President and
------------------------
Chief Financial Officer
------------------------
<PAGE>
EXHIBIT (10.2)
AMENDMENT TO SERVICE AGREEMENT
This Amendment to Service Agreement made and entered into this 1st day of
April 1996 by and between Oak Brook Bank, 1400 Sixteenth Street, Oak Brook,
Illinois 60521 ("Buyer") and First Data Resources Inc., 7301 Pacific Street,
Omaha, Nebraska 68114 ("FDRI").
W I T N E S S E T H :
WHEREAS, Buyer and FDRI heretofore entered into a Service Agreement dated
as of November 22, 1991 as amended by Amendments to Service Agreement dated
September 2, 1994, March 1, 1996, April 1, 1996 (the "Service Agreement"); and
WHEREAS, Buyer and FDRI now desire to amend the Service Agreement as
hereinafter more particularly set forth;
NOW THEREFORE, Buyer and FDRI hereby agree as follows:
1. Sections 2.1, 2.2, 2.3, 2.4 and 2.5 of the Service Agreement are
hereby amended to read as follows, effective March 1, 1996 (hereinafter referred
to as the "Effective Date"):
"2.1 FDRI's fees and charges for the services provided hereunder,
during Processing Year 5, are set forth in Exhibit 'B'.
2.2 During Processing Year 6, FDRI shall be allowed to increase any
or all of the prices set forth in Exhibit 'B' by an amount not to
exceed 2% of those charged during Processing Year 5. During Processing
Year 7, FDRI shall be allowed to increase any or all of the prices set
forth in Exhibit 'B' by an amount not to exceed 3% of those charged
during Processing Year 6. During each Processing Year of the Renewal
Period after Processing Year 7, FDRI shall be allowed to increase any
or all of the prices set forth in Exhibit 'B' by an amount not to
exceed the percentage change in the Consumer Price Index ('CPI')
during a period described below; provided, however, that in no event
shall such increase exceed 4% nor be less than 0%. For purposes of
this paragraph, the CPI shall be the index compiled by the United
States Department of Labor's Bureau of Labor Statistics, Consumer
Price Index for All Urban Consumers (CPI-U) having a base of 100 in
1982-84, using that portion of the index which appears under the
caption 'All Items.' The percentage change in the CPI shall be
calculated, and notification given to Buyer ninety (90) days in
advance of the effective date of said increase, by comparing the CPI
using a twelve (12) month period ending three (3) months prior to
notification to Buyer and expressing the increase in said CPI through
the twelve (12) month period as a percentage.
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2.3 (I) To facilitate the payment of processing fees and any other
fee, tax, interest payment, charge or amount due or payable to FDRI
under this Agreement, Buyer will provide FDRI with access to a bank
account of Buyer's funds not requiring signature including notifying
FDRI of the demand deposit account number and transit routing number
for the account. FDRI may draw upon the bank account to pay fees,
taxes, interest payments, charges, or any other amount due or payable
to FDRI under the terms of this Agreement. The detailed records of the
amounts drawn on the account of Buyer will be provided by FDRI to
Buyer on a monthly basis.
(ii) On the tenth (10th) business day of each month during the
Processing Year, FDRI will debit the account of Buyer for the amount
of $20,000.00 in lieu of debiting the actual processing fees and other
amounts owed to FDRI by Buyer for such month (hereinafter referred to
as the 'Mid-Month Progress Payment'). On the fifth (5th) business day
of each month, FDRI will reverse the Mid-Month Progress Payment and
debit the account for the actual processing fees and other amounts for
the immediately preceding month as adjusted for any credits due to
Buyer. The amount of the Mid-Month Progress Payment will remain
constant through the conclusion of the Processing Year. At the
conclusion of each Processing Year, the amount of the Mid-Month
Progress Payment will be recalculated based upon fifty percent (50%)
of the average monthly billing during the just completed Processing
Year.
2.4 (a) In each Processing Year of this Agreement after Processing
Year 4, Buyer will pay FDRI processing fees equivalent to at least 85%
of the processing fees paid for services during the previous
Processing Year. In no event in any Processing Year shall Buyer pay
FDRI less than $265,000.00 in processing fees. For purposes of this
Section 2.4, processing fees shall include: (I) all fees and charges
(prior to any Cardholder Growth Incentive Rebate or Merchant Growth
Incentive Rebate which may be paid to Buyer by FDRI pursuant to
Section 2.5) set forth in Exhibit 'B', with the exception of (a) off-
line (non-system generated) embossing service fees, and (b) data
circuit charges, postage, courier and other 'pass-through' fees; and
(ii) all fees and charges (with the exception of any set-up fees) paid
to FDRI by Buyer pursuant to the Behavior Scoring and Adaptive Control
Service Agreement subsequently or contemporaneously herewith entered
into among Buyer, FDRI and Fair, Isaac and Company, Inc.
(b) Anything in paragraph (a) above to the contrary
notwithstanding, in the event that all or essentially all of the
merchant accounts of Buyer (the 'Merchant Accounts') should, during
the remaining term of this Agreement, be acquired by a third party
which third party has in effect, at the time of such acquisition, a
written data processing services agreement with FDRI the remaining
term of which is equal to or longer than the remaining term of this
Agreement, then FDRI hereby agrees to do the following: (iii) with
respect to FDRI's calculation of the minimum processing fees due FDRI
by Buyer pursuant to paragraph (a) above for the Processing Year in
which such termination occurs (the 'Termination Year'), FDRI agrees to
adjust the amount of the minimum processing fees due during the
Termination Year, reducing such amount based upon the number of whole
calendar months of the Termination Year during
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which FDRI continued to process such Merchant Accounts on behalf of
Buyer and the portion of Buyer's aggregate processing fees for such
Processing Year which were generated by the Merchant Accounts, and
(ii) with respect to FDRI's calculation of the minimum processing fees
for the Processing Year immediately following the Termination Year,
FDRI shall omit all processing fees which were generated by the
Merchant Accounts during the Termination Year. Buyer agrees to give
FDRI prompt written notice of any such acquisition.
2.5 Upon the conclusion of each Processing Year of this Agreement,
FDRI shall calculate: (I) the total amount of the Cardholder
Processing Fees paid by Buyer to FDRI during the Processing Year, and
(ii) the total amount of the Merchant Processing Fees paid by Buyer to
FDRI during the Processing Year. In the event that Buyer pays to FDRI,
during any Processing Year, Cardholder Processing Fees in excess of
$550,000.00 and/or Merchant Processing Fees in excess of $125,000.00,
then within forty five (45) days following the conclusion of such
Processing Year, FDRI agrees to pay to Buyer a 'Cardholder Growth
Incentive Rebate' and/or a 'Merchant Growth Incentive Rebate', as
applicable.
1. The Cardholder Growth Incentive Rebate shall be an amount
equivalent to a percentage of the total amount of Cardholder
Processing Fees paid by Buyer to FDRI during such Processing
Year, calculated as follows:
Amount of Cardholder Processing
Fees During the Processing Year Percentage Rebate
--------------------------------- -----------------
$ 0 - $550,000.00 0%
$550,000.01 - $650,000.00 2%
$650,000.01 - $750,000.00 2.5%
$750,000.01 - $850,000.00 3%
$850,000.01 - $950,000.00 3.5%
$950,000.01 - over 4%
By way of example, if Buyer pays to FDRI, during a Processing
Year, $700,000.00 in Cardholder Processing Fees, then the amount
of the Cardholder Growth Incentive Rebate for such Processing
Year shall be $17,500.00 ($700,000.00 x 2.5%).
2. The Merchant Growth Incentive Rebate shall be an amount
equivalent to a percentage of the total amount of Merchant
Processing Fees paid by Buyer to FDRI during such Processing
Year, calculated as follows:
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Amount of Merchant Processing
Fees During the Processing Year Percentage Rebate
------------------------------- -----------------
$ 0 - $125,000.00 0%
$125,000.01 - $175,000.00 5%
$175,000.01 - $375,000.00 15%
$375,000.01 - $675,000.00 20%
$675,000.01 - over 25%
For purposes of this Section 2.5, Cardholder Processing Fees shall
include all processing fees (as defined in Section 2.4) which relate
to Buyer's cardholder servicing, and Merchant Processing Fees shall
include all processing fees which relate to Buyer's merchant
servicing. Notwithstanding the foregoing: (I) any service items which
apply equally to both Buyer's cardholder servicing and Buyer's
merchant servicing shall, unless otherwise indicated, be considered
Cardholder Processing Fees for purposes of this Section 2.5, and (ii)
Cardholder Inquiries (as set forth in Exhibit 'B', Section III - a of
this Agreement) shall, for purposes of this Section 2.5, be considered
Merchant Processing Fees. Cardholder Processing Fees and Merchant
Processing Fees shall not consider any Growth Incentive Rebate paid to
Buyer by FDRI pursuant to the provisions of this Section 2.5."
2. Section 2.7 and Exhibits "C" and "E" of the Service Agreement are
hereby deleted in their entirety, effective upon the Effective Date.
3. The first sentence of the second paragraph in Section 5.1 of the
Service Agreement is hereby amended to read as follows, effective upon the
Effective Date:
"In no event, however, shall the cumulative liability of FDRI to Buyer
and its employees for any and all damages of any nature whatsoever
during any Processing Year after Processing Year 4 exceed $265,000.00
or the amount of the processing fees (as defined in Section 2.4) paid
to FDRI by Buyer during the previous Processing Year, whichever is
greater."
4. Sections 6.1 and 6.2 of the Service Agreement are hereby amended to
read as follows, effective upon the Effective Date:
"6.1 This Agreement shall continue in effect for an additional period
of five (5) Processing Years (Years 5, 6, 7, 8 and 9), commencing on
March 1, 1996 and ending on February 28, 2001 (the 'Renewal Period').
For purposes of this Agreement, a Processing Year shall mean a twelve
(12) month period commencing on the first day of March and ending on
the last day of February. Processing Year 5 shall commence on March 1,
1996.
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6.2 This Agreement shall automatically be extended and FDRI shall
provide all services set forth in this Agreement for consecutive
periods of one (1) Processing Year each ('Extension Periods') unless
either party gives the other written notice at least six (6) months
prior to the termination date of the Renewal Period or the then
current Extension Period of its intention to not allow this Agreement
to be so extended. During each such Extension Period, FDRI shall be
allowed to increase any or all of the prices set forth in Exhibit 'B'
by an amount calculated in the manner set forth in Section 2.2."
5. Section 10.2 of the Service Agreement is hereby amended to read as
follows, effective upon the Effective Date:
"10.2 Buyer agrees that, during the remaining term of this Agreement,
FDRI shall be Buyer's sole and exclusive provider of all transaction
card services set forth in Exhibits 'A' and 'B' of this Agreement,
including without limitation any commercial card (herein defined as
any MasterCard or VISA related (I) small business card account, (ii)
purchasing card account or (iii) corporate travel and expense card
account) product services offered by FDRI, but excluding any debit
card or home banking program offered by Buyer. Notwithstanding the
foregoing, the following shall apply:
(a) With the exception of commercial card services, for any
products or services not currently offered by FDRI under this
Agreement, Buyer shall have the right to perform for itself or
have a third party perform any such services for Buyer, provided,
that Buyer shall, prior to receiving any such services from a
third party, review and discuss with FDRI any comparable service
and pricing then currently offered by FDRI;
(b) If any new merchant of Buyer (herein defined as any merchant
which is not currently being processed by FDRI as of the
effective date of this Agreement), following its introduction to
FDRI's merchant data processing products and services, insists
upon utilizing a vendor other than FDRI for its merchant data
processing products or services, then Buyer shall not be
obligated to have FDRI perform the services set forth in this
Agreement for such merchant; provided, that for each electronic
authorization performed by a third party, as indicated on FDRI's
Common Authorization Report, Buyer shall pay FDRI a per Common
Authorization charge, as set forth in Exhibit 'B', Section III -
a of this Agreement, in addition to any other applicable charges
set forth in this Agreement. Buyer shall be required to utilize
FDRI's Common Authorization reporting program in connection with
such services."
6. Article 10 of the Service Agreement is hereby amended by the addition
of the following, effective upon the Effective Date:
"10.7 Buyer shall be responsible for any and all risk of loss to any
tangible item (a) provided by FDRI for Buyer (including without
limitation statements and embossed
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cards) upon the delivery of such items to the U.S. Postal Service or
such other courier as Buyer may select, and (b) provided by Buyer to
FDRI until actual receipt of such items by FDRI. It is expressly
understood that the U.S. Postal Service and any courier selected by
Buyer are the agents of Buyer and not FDRI.
10.8 FDRI will not discriminate against any employee or applicant for
employment because of race, color, religion, sex, national origin,
disability, age or veteran status as ordered by the Secretary of Labor
pursuant to Section 202 of Executive Order 11246, Section 503 of the
Rehabilitation Act of 1973, and Section 402 of the Vietnam Era
Veterans Readjustment Assistance Act of 1974.
10.9 (a) Prior to March 1, 1996, Buyer will review the parameter
settings and options within the FDRI system, as described in the User
Manuals set forth in Exhibit 'A', Section I, and determine that FDRI's
system provides such features and options, which will, if properly
selected by or on behalf of Buyer, allow Buyer to comply with all
applicable federal and state laws and contractual agreements of Buyer.
To the extent that Buyer notifies FDRI of any change in federal and
state law, subject to the limitations set forth below, FDRI agrees to
develop reasonable enhancements to the FDRI system responsive to the
identified change in federal and state law as specifically requested
by Buyer. The obligation of FDRI set forth in the previous sentence is
subject to the following limitations:
(I) the change in federal and state law is generally applicable
to a significant portion of FDRI's client base and does not
relate solely to a requirement or preference of Buyer;
(ii) the responsive enhancement requested by Buyer is consistent
with the response requested by the majority of the affected
client base (Buyer acknowledges that in many instances,
responsive enhancements will be mediated by the Market Area
Advisory Group maintained by FDRI ("MAAG") and agrees that
development of an enhancement approved by the MAAG as
responsive to the change in law shall satisfy FDRI's
obligations under this subsection (a));
(iii) FDRI shall have a reasonable time from the date Buyer
notifies FDRI of the change in law and specifies the
requested enhancement in which to design, code, test and
implement the enhancement (in the determination of
reasonableness, the extent and impact of the change in law
on the FDRI client base, the relative importance of other
enhancements, the complexity of the enhancement, and
related issues of impact and resource allocation shall be
considered and the effective date of the change in law
shall not be determinative); and
(iv) the responsive enhancement requested by Buyer does not
impose a burden on FDRI (or the FDRI system) to determine
the facts not
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<PAGE>
available on the FDRI system, to make legal interpretations
or conclusions, or to in any way shift Buyer's compliance
responsibility to FDRI.
(b) Buyer acknowledges and agrees that it is solely responsible
for monitoring legal developments applicable to the operation of its
business and transaction card operations, interpreting applicable
state and federal laws, determining the requirements for compliance
with all applicable state and federal laws, and maintaining an ongoing
compliance program. Buyer acknowledges that FDRI provides transaction
card processing services to financial institutions chartered and
regulated by various state and federal agencies and nonfinancial
institutions subject to different regulatory oversight such that FDRI
cannot reasonably be expected to monitor or interpret the laws
applicable to its diverse customer base, or provide compliance
services to customers with respect to such laws. Consequently, Buyer
agrees that FDRI has no responsibility to monitor or interpret laws
applicable to Buyer's business, to monitor or review the terms and
conditions of Buyer's transaction card programs or Buyer's selection
of system options and programming, or to assure that Buyer's selection
of any system option or programming (either alone or acting in
conjunction with other system options and programming selected by
Buyer) is consistent with laws applicable to Buyer or the terms and
conditions of Buyer's credit agreements with, or disclosure to, its
cardholders.
(c) FDRI shall be entitled to rely upon and use, without
verification, any and all information, data and instructions any time
submitted to FDRI by Buyer having to do with Buyer or Buyer's
accounts, and FDRI shall have no responsibility or liability
whatsoever for (I) the accuracy or inaccuracy thereof, (ii) the
wording or text authored or submitted by Buyer to FDRI, for materials
to be prepared or for other purposes, (iii) the wording or text
appearing on any forms, transaction cards or other materials furnished
by Buyer to FDRI, or (iv) any noncompliance of such information, data,
instruction, wording or text with applicable laws, rules or
regulations.
(d) If Buyer, in its reasonable determination, concludes that
the enhancement which FDRI developed pursuant to the notification from
Buyer regarding the change in federal or state law, if any, does not
allow Buyer to be in compliance with the applicable federal or state
law, then Buyer shall notify FDRI in writing (the 'Notice'). The
Notice shall specify in reasonable detail Buyer's basis for its
position together with all information regarding the requirements,
which Buyer reasonably needs to be in compliance with the federal or
state law. After receipt of the Notice, FDRI shall provide Buyer with
any alternative enhancements which FDRI can reasonably propose based
on the Notice from Buyer (the 'Alternative'). If Buyer, in its
reasonable determination, concludes that the Alternative does not
allow Buyer to be in compliance with the applicable federal or state
law, then Buyer may elect to terminate this Agreement; provided,
however, that this termination option is exercised within sixty (60)
days after Buyer receives the Alternative, and provided that such
termination shall become effective on a date specified by Buyer, which
date shall not be later than nine
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<PAGE>
(9) months after Buyer's delivery to FDRI of a written notice of its
intention to so terminate this Agreement."
7. Exhibit's "A" and "B" of the Service Agreement are hereby amended to
read as set forth in Attachment I hereto, effective upon the Effective Date.
8. Within sixty (60) days following the execution of this Amendment to
Service Agreement, FDRI shall pay to Buyer a "Signing Bonus" in the amount of
$10,000.00. The Signing Bonus shall be paid to Buyer by FDRI in the form of a
credit against processing fees due FDRI by Buyer for the calendar month during
which the Signing Bonus is payable. Anything in the Service Agreement to the
contrary notwithstanding, in the event that the Service Agreement is terminated,
for whatever reason, prior to February 28, 2001, then Buyer agrees to repay to
FDRI a prorated portion of the Signing Bonus based upon the total number of
calendar months of the Renewal Period (as defined in Section 6.1 of the Service
Agreement) elapsed prior to the effective date of such termination.
9. As hereby amended and supplemented, the Service Agreement shall remain
in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Service Agreement the day and year first above written.
FIRST DATA RESOURCES INC. OAK BROOK BANK
By: /S/ROBIN SGROI By: /S/ROSEMARIE BOUMAN
--------------------------- ----------------------------
Title: Senior Vice President Title: Executive Vice President and
------------------------- Chief Financial Officer
-----------------------------
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ATTACHMENT I
EXHIBIT "A"
-----------
SERVICES
I. THE FOLLOWING DOCUMENTS SPECIFICALLY DESCRIBE THE SERVICES REFERRED TO IN
SECTION II:
User Manuals:
Adjustments
Application Controls
Applications
Authorizations
Authorization Only
Cardholder Account Maintenance
Cardholder Billing
Cardholder New Accounts
Cardholder Non-Monetary Transactions
Cardholder Plastics
Cardholder Select
Cardholder System Features
Chargeback Message Codes
Chargebacks
Client-Defined Screens
Collections
Company Cards
Credit
Customer Inquiry Management System
Customer Inquiry System
Electronic Ticket Capture
Equasion Correspondence
Merchant New Accounts
Merchant Non-Monetary Entry
Merchant Processing
Monetary Entry
PIN Management
Plastics Related Formats
Product Control File
Product Control File Utilities
Reference Manual
Reports Management System
Retail Processing
Retrievals
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Security
Settlement
Strategy Management
System Administration
System Overview
Customer bulletins issued by FDR
II. SERVICES
A. FDRI will provide Buyer with an on-line terminal facility (not the
terminals themselves), on-line access to Transaction Card processing
software, adequate computer time and other mechanical Transaction Card
services as more specifically described in the documents referred to
in Section I.
B. Reports will be made available to Buyer in accordance with FDRI's
Reports Management System (RMS): (I) on hardcopy which shall be
express mailed (overnight delivery) to Buyer from FDRI, (ii) via
remote job entry (RJE) or Network Data Mover (NDM) transmission from
FDRI, and/or (iii) on-line from FDRI, based upon Buyer's needs. Other
pertinent documents shall also be made available to Buyer on hardcopy.
C. Issuer's Clearinghouse Services (ICS): The system whereby FDRI
processes and submits to the Issuer's Clearinghouse Service (ICS), on
behalf of Buyer, information concerning potential and existing
Cardholders in accordance with the operating regulations of MasterCard
and VISA. Inquiries into FDRI's ICS on-line files utilizing FDRI's ICS
on-line transactions by an employee of Buyer via Buyers's CRT
terminals will be counted as a non-monetary transaction. Anything in
this Agreement to the contrary notwithstanding, it is understood and
agreed that FDRI's sole responsibility under the ICS services is to
provide electronic data processing services to Buyer in connection
with Buyer's use of the ICS. FDRI shall not be responsible for and
assumes no responsibility for: (I) any damages, losses or liabilities
whatsoever arising out of the use by Buyer of the ICS data bases,
including any liability or obligation of Buyer arising out of or
related to its compliance with the Fair Credit Reporting Act or any
other applicable federal, state or local law or ordinance; (ii) the
accuracy of any information supplied by Buyer to the ICS or for any
verification of such information based upon reports provided to Buyer
through the ICS; and (iii) Buyer's compliance with the operating
regulations of MasterCard and VISA with respect to the ICS service. IN
ADDITION, BUYER UNDERSTANDS THAT FDRI DISCLAIMS ALL WARRANTIES WITH
RESPECT TO THE USE AND OPERATION OF THE ICS, BOTH EXPRESS AND IMPLIED,
INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY
OR FITNESS FOR ANY PARTICULAR PURPOSE.
D. FDRI shall provide Buyer's ETC Merchants with a 24 hour per day, 7 day
per week, toll-free telephone number through which FDRI will answer
the Merchants' questions
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regarding batch balancing and assist Merchants in reconciling out-of-
balance batches. (Service Plus Help Center) FDRI will also answer the
Merchants' questions regarding terminal operations, ETC procedures and
basic terminal programming procedures. The degree of assistance to be
provided will depend on the type of terminal utilized. FDRI will also
provide assistance in differentiating between network, hardware and
programming problems and recommend an appropriate course of action.
E. FDRI shall provide Buyer and Buyer's Transaction Card Affiliates with
PC Remote Access Services as described in Section III of this Exhibit
"A". In order for Buyer and Buyer's Transaction Card Affiliates to
have access to the PC Remote Access Services, Buyer and Buyer's
Transaction Card Affiliates shall be responsible, at their expense,
for all computer equipment and PC software at Buyer's and Buyer's
Transaction Card Affiliates' locations necessary to so access the
services, as such hardware and software requirements are specified by
FDRI. All communication charges associated with accessing the FDRI
computers and equipment used to provide the PC Remote Access Services
shall be paid by Buyer.
F. FDRI shall, with respect to those telephone area codes where such
service is available, perform electronic point-of-sale ("POS")
authorization services on behalf of Buyer through existing POS
terminals at Buyer's Merchants' locations by the utilization of a
"950" telephone number which will be provided to Buyer's Merchants
(hereinafter referred to as "950 Access Services"). 950 Access
Services shall be performed in accordance with the description of
Dial-Up Point-of-Sale (POS) Inquiries set forth in this Exhibit "A",
and per inquiry prices for 950 Access Services shall be as set forth
in Exhibit "B". Notwithstanding anything in this Agreement to the
contrary, Buyer agrees that FDRI's obligation to provide 950 Access
Services shall automatically terminate without penalty or financial
obligation of any type or kind to FDRI upon the effective date of the
termination of the relationship, for whatever reason, between FDRI and
the third party vendor selected by FDRI to provide FDRI and its Buyers
with 950 Access Services. In the event of such termination, Buyer
shall, upon the effective date of such termination, commence to
receive Local Line or WATS Line (whichever is appropriate) Dial-Up
Point-of-Sale Terminal Inquiry services at the then current rates in
this Agreement for such services.
G. Specific Services are defined in Section IV.
III. DEFINITIONS:
ACCD Downloaded
Account Each selected Cardholder Account of Buyer which is
transmitted to Buyer, or any other third party acting
on Buyer's behalf, for collection purposes in
connection with Buyer's Automated Buyer Calling Device
(ACCD).
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Acquirer Chargeback Each return of a Ticket and receipt of the amount
thereof from an Acquirer to an Issuer as provided for
in the then current MasterCard and VISA rules and
regulations. Acquirer Chargebacks will be forwarded by
FDRI to Buyer for resolution via the On-Line Direct
Sell Chargeback System.
Account-Level Processing
(ALP) - Cardholder
Pricing Account on
File Each account of a Cardholder of Buyer using Account-
Level Processing that remains on Buyer's masterfile on
the last processing day of the calendar month as
defined on the CD-121 Ledger Activity Report or the
equivalent report. ALP Services-Cardholder Pricing
allow Buyer the ability to set, change and monitor
pricing parameters (including but not limited to annual
percentage rate, penalty fees, minimum payment
calculations and annual charges) on a Cardholder
Account automatically at the level of the individual
Account based upon decision tables built by Buyer.
Additional Merchant
Card Types on File Each variety of Transaction Card, other than Mastercard
International, Inc. ("MasterCard") and VISA U.S.A. Inc.
("VISA"), for which a Merchant Account on File accepts
transactions and/or authorizations from Cardholders,
including but not limited to American Express Travel
Related Services Company, Inc. ("Amex"), Discover Card,
Inc. ("Discover"), JCB International Credit Card
Company, Ltd. ("JCB"), and Citicorp Diner's Club Inc.
("Diner's Club").
Address Verification -
Voice Each voice inquiry request received by FDRI from a
Merchant requesting a confirmation of the address of a
Cardholder.
ARU Authorization -
Local Line Inquiry Each audio response unit (ARU) authorization service
provided to a Merchant of Buyer by the use of a touch-
tone telephone and local line telecommunication
services. Buyer shall pay FDRI for each instance during
which FDRI has electronic contact with a Merchant of
Buyer and receives the Merchant number. In addition, if
an audio response unit authorization inquiry results in
a voice inquiry, Merchant request for assistance or a
security action, Buyer will pay FDRI for the audio
response unit authorization and the appropriate voice
and/or security action charge as provided in this
Agreement.
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ARU Authorization -
WATS Line Inquiry Each audio response unit (ARU) authorization service
provided to a Merchant of Buyer by the use of a touch-
tone telephone and WATS line telecommunication
services. Buyer shall pay FDRI for each instance during
which FDRI has electronic contact with a Merchant of
Buyer and receives the Merchant number. In addition, if
an audio response unit authorization inquiry results in
a voice inquiry, Merchant request for assistance or a
security action, Buyer will pay FDRI for the audio
response unit authorization and the appropriate voice
and/or security action charge as provided in this
Agreement.
Assistance Request
(Voice) Each miscellaneous Buyer assistance request from a
Cardholder or Merchant of Buyer that is received by
FDRI's voice authorization center.
Automatic Chargeback Each automatic initiation of a chargeback by the FDRI
System based upon predefined parameters for
transactions involving an expired account plastic, an
account listed in the Combined Warning Bulletin, or an
account which exceeds presentment parameters.
Automatic Rush
Embossing Each rush servicing of a Buyer request for a Cardholder
embossed plastic and/or PIN/Post Mailers through use of
on-line rush program on the FDRI System.
Batch Authorization
Inquiry Each inquiry processed for Merchants of Buyer,
including but not limited to address verification, sent
to FDRI via magnetic tape, tape to tape transmission or
remote job entry (RJE) transmission from Buyer or
Buyer's Merchant.
Batch Header - FDRI
Entered Each summarization of Merchant Tickets deposited by the
Merchant, or by Buyer, and entered by FDRI via hardcopy
received from Buyer.
Batch Header -
Remote/Tape Entered Each summarization of Merchant Tickets deposited by the
Merchant or by Buyer, and entered remotely from Buyer's
terminal(s) or transmitted electronically to FDRI via
magnetic tape or tape transmission from Buyer or a
third party acting on Buyer's behalf.
Braille Embossing Each plastic card for which FDRI has embossed Braille
characters on the front of the plastic.
Card Activation-ANI
Call Each automatic initiation of an on-line transaction in
conjunction with an Automatic Number Identification
(ANI) process via an audio
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response unit (ARU), changing the status of a
Cardholder Account associated with certain newly issued
or reissued plastics (as determined by Buyer), from
"inactive" (under certain parameters) to "active" for
transaction authorization purposes.
Card Activation-ARU
Call-FDRI Each initiation of an on-line transaction by the
confirmation of Buyer requested data captured from
Buyer's Cardholder, via an audio response unit (ARU),
changing the status of a Cardholder Account associated
with certain newly issued or reissued plastics (as
determined by Buyer), from "inactive" (under certain
parameters) to "active" for transaction authorization
purposes.
Card Activation-Buyer
Processed Each entry of an on-line transaction by Buyer to change
the status of a Cardholder Account associated with
certain newly issued or reissued plastics (as
determined by Buyer), from "inactive" (under certain
parameters) to "active" for transaction authorization
purposes.
Card Activation-Voice
Call-FDRI Each entry of an on-line transaction by FDRI, on behalf
of Buyer, in conjunction with the confirmation of Buyer
requested data obtained from the Buyer's Cardholder via
a voice call, changing the status of a Cardholder
Account associated with certain newly issued or
reissued plastics (as determined by Buyer), from
"inactive" (under certain parameters) to "active" for
transaction authorization purposes.
Card Activation
Labeling-General Use Each affixation of a sticker to each embossed plastic
in a Buyer Cardholder embossing run; generic sticker
included at no additional charge.
Card Activation
Labeling-Selective
Use Each affixation of a sticker to each embossed plastic
selectively identified by Buyer; generic sticker
included at no additional charge.
Card Carrier Printing The printing of Buyer's Cardholder information on a
Buyer-specified card carrier form.
Cardholder Account
on File Each account of a Cardholder of Buyer (including but
not limited to charged off and authorization only
accounts) that remains on Buyer's master file at FDRI
on the last processing day of the calendar month as
defined on the CD-121 Ledger Activity Report or the
equivalent report.
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Cardholder Annual
Activity Summary Each annual summarization of activity associated with a
Transaction Card issued by Buyer.
Cardholder Annual
Activity Summary
Detail Storage Each Cardholder Account for which annual activity
summary detail is stored in an electronic format.
Cardholder
Authorization Inquiry Each instance in which the Cardholder records of Buyer
are accessed for an authorization, including but not
limited to personal identification number (PIN)
verification and Cardholder address verification
services, or when the authorization request is switched
to Buyer's location to access the off-site Cardholder
masterfile of Buyer.
Cardholder Hot Call
Fraud Referral Each authorization attempt on a Cardholder Account of
Buyer statused lost/stolen or Code 10 authorization
transaction where FDRI's Fraud Management Voice
Operations conducts an identification process,
instructs the Merchant on the authorization's
disposition and attempts recovery of the Transaction
Card if the Card is identified as Lost/Stolen.
Additionally, FDRI may instruct the Merchant to recover
the Transaction Card and, at Buyer's option based upon
predefined criteria, FDRI shall dispatch the police to
the Merchant location.
Cardholder Hot Call
Referral Each authorization requiring intervention because Buyer
has requested recovery of the account plastic or
positive identification in order to complete the
authorization transaction.
Cardholder Monetary
Transaction Each posting of a monetary transaction to Buyer's
Cardholder Accounts, including but not limited to
sales, returns, cash advances, payments, reversals,
adjustments and annual charges.
Cardholder Monetary/
Non-Monetary
Transaction - FDRI
Entered Each Cardholder Monetary Transaction and Cardholder
Non-Monetary/On-Line Transaction entered by FDRI on
behalf of Buyer, including but not limited to stub
payment entry, non-monetary transactions, monetary
reversals and adjustments and RPS address changes.
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Cardholder New
Accounts - FDRI
Entered Each new account entered by FDRI on Buyer's behalf.
Cardholder Non-Monetary/
On-line Transaction Each entry of non-monetary information subsequently
posted or unposted to a Cardholder masterfile of Buyer,
or an inquiry into the computer records of Buyer and
its Cardholders (potential and existing) by the use of
a terminal, through an ATM, or by tape.
Cardholder Notice Each brief notification to a Cardholder of Buyer
prepared by FDRI's computer at the request of Buyer
based upon Buyer's Product Control File or a CRT entry
request made by an employee of Buyer, including but not
limited to delinquency notices, delinquency statements,
overlimit notices and first activity notices. This
service includes any preparation required for delivery.
Cardholder Statement Each periodic summarization of activity (whether
printed or otherwise) associated with a Transaction
Card issued by Buyer or Buyer's Transaction Card
Affiliates, including but not limited to single
statements, dual statements, and reprints of
information from a CIS Statement currently stored on-
line on the FDRI System. Service includes statement
messaging on original statements and preparation
required for delivery.
Cardholder Statement
Mailing The preparation by FDR for mailing, via the United
States Postal Service, of each Cardholder Statment on
behalf of Buyer.
Cardholder Statement
Insert Each inserting of advertising or other item of
information not contained on a Cardholder Statement
into an envelope containing a Cardholder Statement:
inserts required by state or federal law do not apply.
Carrier Insert/Meter/
Mail Each inserting of a prefolded card carrier, containing
merged Cardholder plastic, into #10 window envelope: a
standard envelope is included.
Check Order Service Daily or monthly downloading of Cardholder data, via
transmission or magnetic tape, to a third party vendor
selected by Buyer for the production of certain items
for Cardholders of Buyer including but not limited to
convenience checks and check re-orders based upon an
on-line request made by an employee of Buyer or
automatically generated by the FDRI System on behalf of
Buyer.
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CIMS FDRI's Customer Inquiry Management System (CIMS) is an
on-line system which provides the means to log, assign
and track Buyer Inquiries. Under CIMS, a Customer
Inquiry shall mean a request for information received
from a Buyer of Buyer either by mail, phone, walk-in or
some other medium. A Workcase is the basic work unit
within CIMS; it represents a Customer Inquiry. Workcase
Option with Variables ("WOV") Services shall also be
available under CIMS at Buyer's option.
CIMS Log-Only Workcase Each Workcase that is entered into CIMS by Buyer for
internal reporting purposes only; no follow-up is
required by Buyer's personnel.
CIMS Regular Workcase Each Workcase that, for whatever reason, requires
review, task completion and/or follow-up by Buyer's
personnel in order to resolve a Customer Inquiry.
CIMS Regular Workcase
Action Each (i) task which is performed in the resolution of a
Regular Workcase or (ii) brief communication that
contains directive, advisory or informative matter
stored within an Action Workcase that is entered by
Buyer's personnel.
CIMS WOV Workcase Each optional Workcase that sends variable information
to a file for downloading to Buyer. Actions may be used
to establish the specific grouping of variables that
will be downloaded to Buyer.
CIS FDRI's Customer Inquiry System (CIS) is an on-line
system for storing and accessing Statement, Detail or
Memo information regarding a Cardholder Account.
CIS Detail Each item of information regarding transactions that
have posted or will post to a Cardholder Statement such
as charges, payments, credits and authorizations not
aged off the Cardholder's file, Cardholder payment
history, and real-time authorizations.
CIS Memo Each summary item, not individually exceeding 65
positions, that is stored with the Buyer's Cardholder
Account information and is accessible by Buyer via
Buyer's CRT terminals.
CIS Statement Each set of statement and detail information regarding
Buyer's Cardholder Accounts that is stored on the FDRI
system and accessible by Buyer via Buyer's CRT
terminals. CIS Statement information includes the
information set forth on a Cardholder Statement such
as, but not limited to, the name, address, account
number, statement date,
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payment date, cycle days, annual percentage rates, and
monthly periodic rates.
Client-Defined Screen
Transaction Each transaction generated by Buyer in connection with
the FDRI product by which Buyer is able to design its
display screens for presentation of on-line material
using multiple screen options based upon its needs.
Company Card Report
Mail Preparation Each set of reports prepared by FDRI for mailing to a
company designated by Buyer in connection with company
card services. For purposes of this Agreement, a set of
reports shall mean all reports of a single company
which are placed in a single envelope for mailing.
Computer to Computer
(CPU) Authorization
Inquiry Each authorization inquiry, including but not limited
to address verification, received in FDRI protocol via
a computer to computer (CPU-to-CPU) interface between
FDRI's computer and the computer of Buyer or Buyer's
Merchant, or via CRT terminals or leased line point-of-
sale terminals that are on the premises of Buyer or
Buyer's Merchant, where FDRI captures the
identification number of Buyer's Merchant.
Confirmation Letter Each daily report prepared by FDRI for use by Merchant
of Buyer to confirm all Ticket transactions received
from Buyer's Merchant and processed the previous day
via Electronic Ticket Capture (ETC) or tape. Service
includes any preparation required for delivery. ETC is
FDRI's proprietary product for electronic data capture
at the point of sale.
Custom Forms Purchased Any paper materials (including but not limited to
inserts, forms and agreements) ordered and purchased by
FDRI on behalf of Buyer in connection with the
Cardholder Statement and Insert services set forth in
this Agreement.
CVV/CVC Verification
Generation Each value calculated and generated in connection with
a Transaction Card pursuant to VISA's Card Verification
Value (CVV) or MasterCard's Card Validation Code (CVC)
directives.
Debit Summary File Each Merchant debit transaction received from Buyer, or
a third party acting on Buyer's behalf, and reported by
FDRI.
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DES PIN Generation Each Data Encryption System (DES) Personal
Identification Number (PIN) created by the FDRI System
in connection with a plastic card produced by FDRI on
behalf of Buyer.
Electronic Draft
Storage Each paper copy of an ETC Ticket received from an ETC
Ticket or tape Merchant of Buyer and stored by FDRI. In
no event shall FDRI be responsible for Tickets not
received in any batch from a Merchant of Buyer.
Embossing Set-Up Each change of the type of card, card carrier, insert
and/or envelope during an input processing run.
Emergency Card or Cash
Replacement Services The capture and processing of information by FDRI's
Fraud Management Voice Operations in the performance of
emergency cash authorization services or for
coordinating the creation and delivery of a replacement
card(s) for Buyer's Cardholder.
ETC Batch Header Each electronic summarization of ETC Ticket
transactions deposited by Buyer or Buyer's Merchant and
delivered to FDRI.
ETC Deposit Summary Each weekly report sent to Merchant of Buyer's
confirming each deposit made during the week by such
Merchant. Service includes any preparation required for
delivery.
ETC Headquarters
Report Each daily or weekly report sent to a headquarters'
location of a Merchant of Buyer's, which contains ETC
or tape transaction information for its individual
Merchant location(s). Service includes any preparation
required for delivery.
ETC Ticket Each electronic ticket of a Merchant of Buyer that is
captured, by means of an electronic process, and
forwarded to FDRI for processing and reporting.
ETC Ticket - Online
Debit Each electronic on-line debit Transaction Card
transaction of a Merchant of Buyer that is captured, by
means of an electronic process, and forwarded to FDRI
for processing and reporting in connection with FDRI's
Acquiring Debit Services.
External Authorization
Processing Each Merchant authorization received from Buyer, or a
third party acting on Buyer's behalf, and reported by
FDRI.
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FDRI LinkUp Services The set-up and monthly service charges associated with
the mailboxes utilized by Buyer to receive and send
electronic mail from and to FDRI.
FDR/Noah Services The set-up, on-line access, file load and other fees
associated with each program of the FDR/Noah Services
utilized by Buyer.
Hot Stamp Plates/
Logos Purchased Each magnesium plate or logo ordered by FDRI on Buyer's
behalf.
Interface Services -
Magnetic Tape
Handling Each receipt of data by FDRI from Buyer or each
forwarding of data to Buyer from FDRI via mailed or
courier delivered magnetic media including, but not
limited to, diskettes and magnetic tapes.
Interface Services -
RJE/NDM Each transmitting or receipt of Buyer's data by FDRI
via a central processing unit to central processing
unit transmission using Remote Job Entry or Network
Data Mover (RJE or NDM).
Interface Services -
Tape to Tape Each transmitting or receipt of Buyer's data by FDRI
via a central processing unit to central processing
unit transmission using a tape to tape interface.
IRS Home Equity Form
1098 Each Internal Revenue Service (IRS) Form 1098 prepared
by FDRI's computer, in accordance with the Buyer's
Product Control File settings or terminal entry made by
Buyer, printed and mailed to Buyer's Cardholder.
Service includes creation of a tape for Buyer's
reporting of Cardholder information to the IRS.
Issuer Chargeback Each return of a Ticket and receipt of the amount
thereof from an Issuer to an Acquirer as provided for
in the then- current MasterCard and VISA international
rules and regulations, or applicable domestic
regulations. Issuer Chargebacks subsequently reversed
by the Acquirer will be forwarded by FDRI to Buyer for
resolution via the On-Line Direct Sell Chargeback
System.
Letter Each letter prepared by FDRI's computer, in accordance
with Buyer's Product Control File settings or CRT entry
requests made by employees of Buyer. Each such Letter
shall have on-line composition and editorial features
and options including signatures, logos, multiple type
faces and additional page letter generation. Service
includes any preparation required for delivery.
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Letter - Additional
Page Each printed output on the reverse side of a Letter
(duplex printing) or each side of each sheet of 8 1/2"
by 11" 24 lb. bond stock accompanying a Letter.
Letter - Certified Mail
Handling Each Letter, with or without Letter Insert, which is
handled separately from Buyer's first class mailings to
provide certified delivery of said item. This does not
include postage.
Letter - Group Samples Each individual or set of Letters prepared by FDRI's
computer, in accordance with Buyer's Product Control
File settings or CRT entry requests made by employees
of Buyer, which is printed and mailed to Buyer in a
draft format for Buyer's review and approval.
Letter - Insert Each inserting of advertising or other item of
information not contained on a Letter, including but
not limited to generic reply envelopes, into a windowed
envelope containing a Letter.
Letter - Priority
Mailing Each Letter, with or without Letter Insert, which is
handled separately from Buyer's first class mailings to
provide next day delivery of said item.
Letter - Set-up,
Revision or Deletion Each addition, deletion or change, performed by FDRI on
behalf of Buyer, of a Buyer's Letter format or inputs
including but not limited to digitized signatures and
logos of Buyer.
Lost/Stolen Account
Management and
Investigation Investigative services relating to Buyer's Cardholder
lost or stolen accounts including but not limited to
lost/stolen account research; fraudulent activity
investigation; Cardholder interviews; manual
adjustments, chargebacks, and retrievals; and fraud and
counterfeit reporting.
Lost/Stolen Account
Processing Automatic actions, relating to the processing of a
Cardholder's Account statused as lost or stolen,
required to prompt Buyer fraud/security
representatives, record the representatives
directive(s) and request that a Cardholder Account
number be listed in the appropriate Combined Warning
Bulletin; automatically report the cardholder's Account
number to Visa and MasterCard's Authorization Exception
System, if applicable; systematically, based upon
Buyer's pre-defined parameters, initiate the set-up of
a new Cardholder Account; reconcile transactions posted
but not yet statemented at the
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time of the Cardholder's reporting, including but
limited to the transfer of valid transactions to the
Cardholder's replacement account and identification and
recording of non-valid transactions as fraudulent;
automatically request approved reissue of account
plastic(s) and suspend reissue of account(s) not
approved for review by Buyer; and automatically update
the Cardholder's phone number in the Cardholder
masterfile from the lost/stolen report.
Lost/Stolen Account
Transaction
Management System Each transaction posting to a Cardholder Account of
Buyer statused as lost or stolen which is automatically
identified and reported to an on-line work queue from
which Buyer may initiate on-line transactions to
produce a transaction adjustment, a chargeback, or a
ticket retrieval request; issue an affidavit of fraud
or forgery to Buyer's Cardholder; and/or report a
fraudulent transaction to Visa or MasterCard.
Lost/Stolen Report -
FDRI Entered Each report of a lost or stolen Transaction Card from
the Cardholder of Buyer which is processed by FDRI's
Fraud Management Voice Operations. Reports entered on-
line immediately change the external status and block
authorization requests on the Cardholder Account.
Service includes lost/stolen reports received via
collect call, telegram and telex.
Merchant 12B Letter A letter sent directly to a Merchant of Buyer
requesting a Retrieval.
Merchant Account on
File Each account of a Merchant of Buyer that remains on
Buyer's masterfile at FDRI on the last processing day
of the calendar month as defined on the MM-101 Merchant
Profitability report or an equivalent.
Merchant Computer
Letter Each Letter to a Merchant of Buyer prepared by FDRI's
computer at the request of Buyer based upon Buyer's
Product Control File or CRT entry requests made by
employees of Buyer. Each such Letter shall have on-line
composition and editorial features and the option of
multiple page letter generation. This service includes
any preparation required for delivery.
Merchant Hot Call
Referral Each authorization referral from a Merchant of Buyer,
in connection with a non-FDRI processed financial
institution's Transaction Card, for which FDRI's Fraud
Management Voice Operations intervenes to recover the
account plastic or complete the authorization
transaction.
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Merchant Letter
Additional Page Each printed output on the reverse side of a Merchant
Computer Letter (duplex printing) or each side of each
sheet of 8 1/2" by 11" 24 lb. bond stock accompanying a
Merchant Computer Letter.
Merchant Letter Insert Each inserting of advertising or other item of
information not contained on a Merchant Computer
Letter, including but not limited to generic reply
envelopes, into a windowed envelope containing a
Merchant Computer Letter.
Merchant New Account -
FDRI Entered Each new Merchant account of Buyer entered by FDRI on
Buyer's behalf.
Merchant Non-Monetary/
On-line Transaction -
FDRI Entered Each Merchant Non-Monetary/On-line Transaction related
to Buyer's Merchant which is entered by FDRI on Buyer's
behalf.
Merchant Non-Monetary/
On-Line Transaction Each entry and subsequent posting or unposting of
information to the Merchant Masterfile or an inquiry
into the computer records of Buyer and its Merchants by
the use of a terminal or tape.
Merchant Plates/
Plastics Each plastic card or metal plate for which FDRI has
mechanically raised personalized characters in
accordance with Buyer's Product Control File settings
and Merchant masterfile.
Merchant Statement Each periodic summarization of activity (whether
printed or otherwise) associated with a Merchant
Account of Buyer. Service includes any preparation
required for delivery.
Merchant Ticket - FDRI
Entered Each Ticket from Buyer's Merchant that is transacted by
a Cardholder from any Bank Identification Number (BIN),
Interbank Card Association (ICA) or other Transaction
Card system identification number and entered by FDRI
on Buyer's behalf.
Merchant Ticket -
Remote/Tape Entered Each Ticket from Buyer's Merchant that is transacted by
a Cardholder from any Bank Identification Number (BIN),
Interbank Card Association (ICA) or other Transaction
Card system identification number, and entered remotely
from Buyer's terminal(s) or via magnetic tape or tape
transmission to FDRI by Buyer or a third party acting
on Buyer's behalf.
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Microfiche Each page of microfiche provided to Buyer by FDRI.
Service includes any preparation required for delivery.
Non-Standard Job Run Each scheduled daily, weekly or monthly production of a
data set on behalf of Buyer that is in addition to the
standard data outputs produced by the FDRI System.
On-Line Access and
Retrieval System
(OARS) Services Each page of Reports Management System (RMS) reports
which is stored by FDRI for on-line viewing and
printing by Buyer's personnel. Storage of data by FDRI
shall be for a period of sixty (60) days. Buyer, at its
option, may elect to utilize any or all of the OARS
Services, CD-ROM Services and/or Microfiche Services
for the same RMS reports. Notwithstanding anything in
this Agreement to the contrary, Buyer is responsible
for determining the acceptance of the OARS Services and
the technology to be used under this Agreement to
provide the OARS Services under state and Federal
regulations, including but not limited to signature
verification and the admissibility of documents into
evidence. It is Buyer's responsibility to keep written
or microform records, if such are required under state
and Federal regulations because of the limited
acceptance or admissibility of the OARS Services or the
technology to be used under this Agreement to provide
the OARS Services.
On-Line Credit Bureau
Report Request The transmission or receipt of credit application or
existing account information via video display
terminals at Buyer's location to any of the principal
credit bureaus presently interfaced to FDRI with which
Buyer has established a written relationship that is in
effect at all times during the term of this Agreement
in order to determine the credit worthiness of an
applicant/account. Anything in this Agreement to the
contrary notwithstanding, in the event that Buyer's
relationship(s) with all of the principal credit
bureaus supported pursuant to this Agreement should be
terminated at any time during the term of this
Agreement, then FDRI's obligation to provide Credit
Bureau Report Requests shall automatically be
terminated, without penalty or financial obligation of
any type or kind to FDRI, on the effective date of the
termination of Buyer's relationship(s) with such
principal credit bureaus.
Output Records Each Cardholder or Merchant record produced from the
FDRI system that is delivered to Buyer or a third party
acting on Buyer's behalf, including but not limited to
Buyer-selected personal identification
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numbers (PINs), credit balance refund checks and on-
line report printing.
PC Remote Access
Service Product by which Buyer and Buyer's Transaction Card
Affiliates may access the FDRI System via a personal
computer at Buyer's or the Affiliate's office in order
to allow employees of Buyer or the Affiliate to perform
certain terminal functions, including but not limited
to the accessing of Cardholder or Merchant Account
data, the entry of information concerning Buyer's
Accounts and the uploading/downloading of data
regarding Buyer's Accounts.
PIN/Post Mailer
Processing Each Personal Identification Number (PIN), and
associated PIN notice form, or mail verification form
(POST Mailer), related to Buyer's Cardholder. Service
includes any preparation required for delivery
including generic PIN form.
PIN/Post Mailer
Production Edits The edit functions performed on a PIN/Post Mailer
before printing. The service includes Mailer method
changes, Mailer address changes, Mailer mail date
changes and Mailer deletions.
PINpoint Inquiry Each transaction selection (more than one selection may
be made during a call) made by a Cardholder of Buyer
which accesses the Cardholder's account records for
selected information by the use of a touch-tone
telephone.
Plastic to Carrier
Match/Merge The electronic scanning of the account number on
Buyer's card carrier and the account number on the
magnetic stripe (OCR line optional) of Buyer's
plastics. Upon verification of match, insert from 1-4
matched plastic cards into carrier as per control line
specifications and then burst, trim and fold carrier.
Plasticard Agent/
Strategy Inserting
Set-Up Each set-up due to a change in Buyer's Plasticard
Insert at the agent/strategy level.
Plasticard Bulk
Packaging 3 Digit
Sort The separation from the production run of accounts from
individual systems, principals, agents or grouping of
zip codes through the use of designated mail codes.
Includes sorting to a 3-digit level.
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Plasticard Bulk
Packaging 5 Digit
Sort The separation from the production run of accounts from
individual systems, principals, agents or grouping of
zip codes through the use of designated mail codes.
Includes sorting to a 5-digit level.
Plasticard Bulk
Packaging - Basic
Sort The separation from the production run of accounts from
individual systems, principals, agents or grouping of
zip codes through the use of designated mail codes.
Plasticard Expedited
Turnaround Accelerated mailing of all of Buyer's daily issue
plastics.
Plasticard Forms
Purchased Each item of paper material ordered by FDRI on behalf
of Buyer including but not limited to card carriers,
inserts and envelopes.
Plasticard Hot Stamping Each plastic card of Buyer's Cardholders whose image is
heat-pressed from a magnesium plate made by FDRI with
camera-ready art furnished by Buyer.
Plasticard Indent
Printing Each plastic card of Buyer's Cardholders that FDRI has
used impact printing on its back.
Plasticard Inserting The inserting of each accompanying piece of materials
into a #10 windowed envelope along with a pre-folded
card carrier containing a merged Cardholder plastic.
Excludes inserts required by state or Federal law.
Buyer supplies inserts.
Plasticard Job
Processing Each scheduled daily receipt of a Buyer's off-line
Cardholder Account information, including logging onto
the system and setting up control reports for each
input.
Plasticard Mail
Assembly The matching of like carriers into one or more
packages.
Plasticard Mail
Handling Mail preparation and handling fees associated with non-
first class mailings of Buyer's Cardholder and Merchant
plastics.
Plasticard Mail
Integration The mixture by FDRI of a mail item containing an
embossed plastic with several other types of mailing
items prior to their delivery to the United States
Postal Service for mailing. Anything in this Agreement
to the contrary notwithstanding, Buyer understands and
agrees that, with respect to any embossed plastics for
which FDRI provides Plasticard Mail Integration
Services, the normal turnaround for the mailing of such
embossed plastics shall, for purposes of this
Agreement, be delayed by one (1) business day.
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Plasticard Manual Rush
Emboss - 2 Day Rush servicing (between 24 and 96 hours) of Buyer
request for an embossed Cardholder plastic and/or
PIN/POST Mailer received from hardcopy, fax or mail,
reports or requests. Includes manual embossing, carrier
printing, hand inserting and other services required to
prepare the plastic for delivery, and applies to any
piece handled separately from Buyer's Standard
Embossing services.
Plasticard Manual Rush
Emboss - Same Day Rush servicing of Buyer request for an embossed
Cardholder plastic received from hardcopy, fax or mail,
reports or requests where FDRI mails or delivers the
plastic to a courier during the same day of the Buyer's
request. Includes manual embossing, carrier printing,
hand inserting and other services required to prepare
the plastic for delivery, and applies to any plastic
piece handled separately from Buyer's Standard
Embossing services.
Plasticard Purging Each removal of a card package and/or printed PIN/POST
Mailer from the delivery/mail stream prior to delivery
to Buyer or Buyer's Cardholder.
Plastics Purchased Each item of plastic stock ordered by FDRI on behalf of
Buyer.
POS Authorization - 950
Access Each dial-up point-of-sale terminal inquiry serviced by
FDRI for Merchants of Buyer by the use of a dial-up
point-of-sale terminal and 950 telecommunication
services. Buyer shall pay FDRI for each instance during
which FDRI had electronic contact with a Merchant of
Buyer and receives the Merchant number.
POS Authorization -
Local Line Inquiry Each dial-up point-of-sale terminal inquiry serviced by
FDRI, including but not limited to address
verification, for Merchants of Buyer by the use of a
dial-up point-of-sale terminal and local line
telecommunication services. Buyer shall pay FDRI for
each instance during which FDRI had electronic contact
with a Merchant of Buyer and receives the Merchant
number.
POS Authorization - WATS
Line Inquiry Each dial-up point-of-sale terminal inquiry serviced by
FDRI, including but not limited to address
verification, for Merchants of Buyer by the use of a
dial-up point-of-sale terminal and WATS line
telecommunication services. Buyer shall pay FDRI for
each instance during which FDRI had electronic contact
with a Merchant of Buyer and receives the Merchant
number.
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Potential Chargeback
Queue Each recording and display in an on-line work queue of
transactions posting to a Cardholder Account of Buyer
that exceed a Merchant's floor-limit and cannot be
matched to an authorization record.
Premier Authorization
Inquiry Each interactive touch tone authorization inquiry
serviced by FDRI for Merchants of Buyer. Buyer shall
pay FDRI for each instance during which FDRI has
electronic contact with a Merchant of Buyer and
receives the Merchant number. In addition, if a Premier
authorization inquiry results in a Voice Authorization
Inquiry, Merchant request for assistance or a security
action, Buyer will pay FDRI for the Premier
authorization and the appropriate voice and/or security
action charge as provided in this Agreement.
Referral Queue Each recording and display in an on-line work queue of
a Cardholder Authorization Referral to which a Merchant
has failed to respond.
Referral Recovery Each referral authorization message handled by FDRI on
behalf of Buyer's Merchant.
Retrieval Each request serviced by FDRI in response to a request
for a Merchant Ticket or copy of the same stored at
FDRI, on behalf of Buyer, or available through
MasterCom services. Retrieval services can include but
are not limited to the manual fulfillment of the
request by an FDRI representative or the use of a
MasterCom or VISA workstation, modem, scanner and
proprietary system developed by MasterCard or VISA to
enable the storage and transfer of documents as
electronic images for retrieval purposes. With regard
to the latter, FDRI will (a) receive, via a MasterCom
or VISA workstation located at FDRI's premises, a copy
of a Ticket image previously requested from an Acquirer
by Buyer or a notification from MasterCard or VISA that
the Acquirer has failed to return a Ticket image within
the time period permitted by MasterCard or VISA rules,
(b) mail a copy of the Ticket image or notification to
Buyer within two (2) days following receipt of the
Ticket image or notification and (c) transmit Buyer's
acceptance or rejection of each Ticket to MasterCard or
VISA following receipt of Buyer's written instructions
on acceptance or rejection of such Ticket. Following
receipt by FDRI of a request on the MasterCom or VISA
system for a facsimile of a Ticket previously acquired
by Buyer and stored at FDRI, FDRI will retrieve the
Ticket or a facsimile thereof and within five (5) days
of receiving the request forward an image of such
Ticket to the requesting party utilizing a MasterCom or
VISa workstation located at FDRI's premises. Following
receipt by FDRI of a request on the MasterCom or VISA
20
<PAGE>
system for a facsimile of a Ticket previously acquired
by Buyer and stored away from FDRI's premises, FDRI
will (a) mail a request to the custodian of the Ticket
within two (2) days and (b) utilizing a MasterCom or
VISA workstation located at FDRI's premises forward an
image of such Ticket to the requesting party within two
(2) days after the receipt of a facsimile of such
Ticket from the custodian.
Returned Account
Plastics Immediately
Delivered (RAPID) For each undeliverable Transaction Card, FDRI will
research and attempt to reroute to the Cardholder's new
address. FDRI will also enter the address change on the
Cardholder masterfile. Returned Transaction Cards of
Cardholders for which no new address is available, and
those which Buyer elects not to reroute, shall be
destroyed.
RMS Report - Hardcopy Each FDRI Reports Management System (RMS) report
provided to Buyer by FDRI via hardcopy. Service
includes any preparation required for delivery.
RMS Reports - On-Line
View Each FDRI Reports Management System (RMS) report
provided to Buyer by FDRI via the FDRI on-line system.
RMS Reports - RJE/NDM Each FDRI Reports Management System (RMS) report
provided to Buyer by FDRI via remote job entry (RJE) or
Network Data Mover (NDM).
Service Plus Help Call Each instance in which a Merchant of Buyer calls the
Service Plus Help Center.
Service Plus Registered
Merchant Each Merchant location of Buyer participating in the
Service Plus Help Center program.
Standard Embossing
Services Each plastic card for which FDRI has mechanically
raised personalized characters prepared at the request
of Buyer based upon Buyer's Product Control File or a
CRT entry request made by an employee of Buyer, or in
response to a receipt of a magnetic tape or
transmission from Buyer of embossing files in a format
defined by FDRI. Includes up to three lines of alpha-
numeric font and one line of OCR font on a ".030"
plastic, the recording and verifying of data on the
Transaction Card's magnetic stripe, and tipping the
plastic
21
<PAGE>
through the placement of a contrasting color plastic
film on the raised embossed characters
Transaction Level
Processing (TLP)
Promotional Balance
on File The monthly charge for each promotional purchase
balance, associated with a Cardholder Account of Buyer
(several promotional purchase balances may exist at the
same time for the same Cardholder Account), which
remains on the FDRI System on the last processing day
of the calendar month, as defined on the CD-121 Ledger
Activity Report or the equivalent report (e.g. - the
CD-621 Report ).
Ultragraphics Each logo placed on the front of Buyer's Transaction
Cards through the use of a thermal image process.
Vault Storage The inventory and storage of plastics procured through
a source other than FDRI.
Voice Authorization
Inquiry Each Merchant authorization request received by FDRI
through voice inquiries from Merchants of Buyer,
including collect calls, or via telegrams and telexes
from countries outside of the United States.
22
<PAGE>
EXHIBIT "B"
-----------
PAYMENT
I. REIMBURSEMENTS AND ASSESSMENTS
a. The communications data circuit, including the reoccurring service
charge, service termination fees and required modem(s) (data sets) at
Buyer's location(s) and FDRI, terminal(s) and any other directly
associated expenses, shall be at Buyer's expense. The data circuit cost
will be no greater than that associated with a point-to-point digital
data circuit(s) based on the tariffs of FDRI's primary carrier. One time
costs related to the installation of the circuit, as specified by such
tariffs, will also be paid by Buyer. The actual circuit speed and
ensuing cost will be determined by Buyer's communications requirements.
b. Buyer shall be responsible for and billed directly for any MasterCard,
VISA or other Transaction Card dues, fees and assessments. Buyer shall
reimburse FDRI for Base Access Fees incurred by FDRI on behalf of Buyer.
(IN -3513)
c. Buyer shall pay all courier expenses associated with the transportation
of reports and documents from Buyer to FDRI and from FDRI to Buyer.
d. FDRI agrees to act as an agent on behalf of Buyer and Buyer shall
reimburse FDRI for the purchase on Buyer's behalf of the postage
required to mail Cardholder Statements, Merchant Statements, collection
notices, letters and other materials mailed by FDRI on behalf of Buyer
and Buyer's Transaction Card Affiliates. The amount reimbursed by Buyer
to FDRI for postage while this Agreement is in effect will be: (i) the
then current first class postage rate for mailings not qualifying for
the pre-sorted rebate or (ii) based upon the monthly rate of all
mailings of the particular location of FDRI from which the mailings were
sent that qualify for the discount pre-sorted rate and the number of
mailings sent on behalf of Buyer from that location during the month,
the then current discount pre-sorted rate. (IN - 7401, 7671)
e. For each Reward processed by FDRI, Buyer shall reimburse FDRI for the
amount of the Reward payment to the Merchant, plus any additional fees
or charges to which FDRI is entitled under applicable MasterCard and
VISA rules and regulations in connection with the processing of such
Reward. A Reward shall mean each monetary payment made to a Merchant for
the recovery of a statused Transaction Card of Buyer, which payment is
processed by FDRI in accordance with the reward schedule established by
MasterCard and VISA for card pick-up. (IN -7915)
f. Buyer shall reimburse FDRI for special service set-up/certification fees
and charges, training fees and programming fees including but not
limited to the lock box retainer fee and set up/training charges
associated with FDRI's Remittance Processing Services, Customer Inquiry
Management System (CIMS) Services, PIN Management System Services,
Extended CIS Services, Application Processing Services, PC Remote Access
Services, Account-Level Processing (ALP) Services, Online Access and
Retrieval System (OARS) Services, Acquiring Debit Services, Transaction
1
<PAGE>
Level Processing (TLP) Services, ANI Card Activation Services and other
services requiring special programming or training. Prices for such
services shall be provided by FDRI upon Buyer's request.
g. Buyer shall reimburse FDRI for destroyed forms, product service selects,
network control requests, equipment sales, supplies and documentation
manuals.
<TABLE>
<CAPTION>
II. SERVICE FEES
a. CARDHOLDER FEES
IN Item Per Item Charge
-- ---- ---------------
<S> <C> <C>
7204 Cardholder Account on File $ .0175 /month/account
7260 Account-Level Processing (ALP) - Cardholder
Pricing Account on File Quote /month/account
on ALP
2836 Transaction Level Processing (TLP) Promotional
Balance on File (monthly)
Ratio of Total Promotional Balances
on File for Buyer to Total Cardholder
Gross Active Accounts on File for Buyer
Upon the Conclusion of a Calendar Month
(Expressed as a Percentage)
----------------------------------------
0.00% - 10.00% .2000
10.01% - 20.00% .1700
20.01% - 30.00% .1400
30.01% - over .1000/month/promotional
balance
7205 Cardholder Statement .1381 /statement
7240 Cardholder Statement Mailing .0735 /statement
7206 Cardholder Statement Insert .0112 /insert
7207 Letter .1600 /letter
Letter Optional Services:
7208 -Letter Insert .0155 /insert
7209 -Letter Additional Pages .0830 /item
7210 -Letter Priority Mailing .1040 /item
7211 -Letter Certified Mail Handling .4695 /item
7212 -Letter Group Samples .0830 /item
7213 -Letter Set-Up, Revision or Deletion
(1/2 hour minimum) 65.0000 /hour
7214 Cardholder Notice .1200 /item
7215 Cardholder Monetary Transaction .0128 /item
7216 Cardholder Non-Monetary/Online Transaction .0090 /transaction
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
7223 Cardholder Monetary/Non-Monetary
Transaction - FDRI Entered Quote /transaction
7224 Cardholder New Accounts - FDRI Entered Quote /account
7311 CIS Statement .0076 /statement stored
per month
7312 CIS Detail .0012 /detail stored per
month
7219 CIS Memo .0008 /memo stored per
month
7232 CIMS Regular Workcase .1239 /workcase
7233 CIMS WOV Workcase Quote /workcase
7234 CIMS Log-Only Workcase .0450 /workcase
7255 CIMS Regular Workcase Action .0196 /item
7222 On-Line Credit Bureau Report Request .4300 /request
3510 Cardholder Authorization Inquiry .0138 /inquiry
7217 Issuer Chargeback 1.1500 /chargeback
7226 PINpoint Inquiry .5000 /inquiry
7227 Cardholder Annual Activity Summary .3025 /summary
7228 Cardholder Annual Activity Summary Detail Storage .0563 /account
7230 Company Card Report Mail Preparation .3700 /set of reports
7231 IRS Home Equity Form (1098)
Number of IRS Home Equity Forms
1098 During a Processing Year
-------------------------------
0 - 2,500 1.2500**
2,501 - 5,000 1.1000
5,001 - 10,000 .9500
10,001 - 20,000 .8500
20,001 - over .7500 /form
7236 ACCD Downloaded Account .0160 /account
7237 Check Order Service .0515 /account
7316 Client-Defined Screen Transaction .0035 /transaction
7600 Embossing Set Up 3.0000 /series of like plastics
7601 Standard Embossing Services .2300 /plastic embossed
7602 Card Carrier Printing No Charge /carrier
7603 Plastic to Carrier Match/Merge No Charge /plastic
7604 Carrier Insert/Meter/Mail No Charge /carrier
7605 Vault Storage .0194 /plastic levied upon
receipt of shipment
7606 Plasticard Mail Handling .4506 /account plus postage
7608 PIN/Post Mailer Processing .0900 /account
7670 PIN/Post Mailer Production Edits Quote /edit
7663 DES PIN Generation .0416 /DES PIN generated
7609 Plasticard Manual Rush Emboss - Same Day 28.1727 /account
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
7610 Plasticard Manual Rush Emboss - Two Day 4.5076 /account
7611 Automatic Rush Embossing 13.5229 /account
7640 Plasticard Expedited Turnaround Quote /plastic
7612 Hot Stamp Plates/Logos Purchased Quote
7613 Plasticard Hot Stamping .0600 /plastic
7614 Ultragraphics .1125 /plastic
7615 Plasticard Purging .1126 /account
7616 Plasticard Inserting .0115 /insert
7617 Plasticard Mail Integration .0437 /item
7618 Plasticard Job Processing 33.8072 /tape
7619 Plasticard Agent/Strategy Inserting Set-Up Quote /set up
7620 Plasticard Indent Printing .0250 /plastic
7621 Braille Embossing 5.0000 /plastic
7622 Card Activation Labeling-General Use .0587 /plastic
7623 Card Activation Labeling-Selective Use .0880 /plastic
7624 CVV/CVC Generation Verification .0100 /calculated value
7625 Plasticard Bulk Packaging - Basic Sort Quote /account
7633 Plasticard Bulk Packaging - 3-Digit Sort Quote /account
7634 Plasticard Bulk Packaging - 5-Digit Sort Quote /account
7626 Plasticard Mail Assembly Quote
7627 Plasticard Forms Purchased Quote
7628 Plastics Purchased Quote
7900 Lost/Stolen Account Processing 2.2500 /account processed
7901 Lost/Stolen Report - FDRI Entered 5.9776 /report
7902 Cardholder Hot Call Referral 3.5915 /referral
7904 Cardholder Hot Call Fraud Referral 14.2640 /referral
7905 Emergency Card or Cash Replacement Services .0027 /account on file
7906 Returned Account Plastics Immediately
Delivered (RAPID) 2.6313 /plastic
7907 Automatic Chargeback 2.0579 /chargeback initiated
7908 Lost/Stolen Account Management and Investigation 16.0000 /accounts reported
lost or stolen
7909 Lost/Stolen Account Transaction Management System .5636 /transaction
7910 Potential Chargeback Queue .0558 /account in queue
per day
7911 Referral Queue .0600 /account in queue
per day
7912 Card Activation-Voice Call-FDRI 1.2500 /transaction
7913 Card Activation-ARU Call-FDRI .5100 /transaction
7923 Card Activation-ANI Call-FDRI Quote /transaction
7914 Card Activation Buyer Processed .0424 /transaction
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
b. MERCHANT FEES
IN Item Per Item Charge
-- ---- ---------------
<S> <C> <C>
5700 Merchant Account on File $ .5075 /month/account
5701 Additional Merchant Card Types On File .2431 /month/account
5702 Merchant Statement .0790 /statement
5703 Merchant Ticket-FDRI Entered .1100 /item
5704 Merchant Ticket-Remote/Tape Entered .0500 /item
5705 Batch Header-FDRI Entered .1100 /header
5706 Batch Header-Remote/Tape Entered .0500 /header
5707 Acquirer Chargeback 1.6500 /chargeback
5708 Retrieval 2.4000 /retrieval
5712 Merchant Non-Monetary/Online Transaction .0680 /transaction
5713 Merchant New Account-FDRI Entered Quote /account
5726 Merchant Non-Monetary/Online
Transaction-FDRI Entered Quote /transaction
5727 Merchant 12B Letter .7500 /letter
5770 Merchant Computer Letter .1500 /letter
5771 Merchant Letter Insert .0155 /insert
5772 Merchant Letter Additional Page .0830 /page
5714 ETC Ticket .0280 /item
5715 ETC Ticket-Online Debit Quote /item
5717 ETC Batch Header .0300 /header
5718 ETC Headquarters Report .1200 /report
5719 Electronic Draft Storage .0800 /item
5720 ETC Deposit Summary .5000 /summary
5721 Confirmation Letter .1800 /letter
5722 Service Plus Registered Merchant 1.3000 /merchant location
5723 Service Plus Help Call 1.7000 /call
3501 Voice Authorization Inquiry .8000 /inquiry
3502 POS Auth-Local Line Inquiry .1000 /inquiry
3503 POS Auth-WATS Line Inquiry .1000 /inquiry
3504 POS Auth-950 Access .0900 /inquiry
3505 ARU Auth-Local Line Inquiry .2800 /inquiry
3506 ARU Auth-WATS Line Inquiry .4000 /inquiry
3507 Computer to Computer (CPU) Authorization Inquiry .0500 /inquiry
3508 Batch Authorization Inquiry .0335 /inquiry
3516 Premier Authorization Inquiry .6200 /inquiry
3517 External Authorization Processing .0165 /record
3518 Debit Summary File .0100 /transaction
3519 Address Verification - Voice Quote /request
7607 Merchant Plates/Plastics .5549 /plate or plastic
7903 Merchant Hot Call Referral 4.5076 /referral
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
c. NON-SPECIFIC FEES
IN Item Per Item Charge
-- ----- ---------------
<S> <C> <C>
3509 Referral Recovery $ 2.3000 /referral
3515 Assistance Request (Voice) 2.5000 /request
7229 Output Records .0515 /data record
7402 Non-Standard Job Run 50.0000 /data set
7403 RMS Reports-Hardcopy .0200 /page
7404 RMS Reports-RJE/NDM .0168 /page
7405 RMS Reports-On-Line View .0180 /page
7406 Microfiche 1.0000 /page
7413 Online Access and Retrieval System (OARS) Services Quote /page
7411 Interface Services-RJE/NDM 5.1500 /transmission
7412 Interface Services-Tape to Tape 13.0000 /transmission
7408 Interface Services-Magnetic Tape Handling 28.0000 /tape
7407 PC Remote Access Service (500 minute
per month minimum per user i.d. number)
Total Minutes of Usage
During a Calendar Month
-----------------------
500 - 750 .2400
751 - 1,250 .2100
1,251 - 1,500 .1900
1,501 - over .1800 /minute
7637 Custom Forms Purchased Quote
FDR/Noah Cardholder Program:
-Initial Preparation, Set-Up
and Training 3,900.0000
5600 -Monthly On-Line Access Fee (includes
access to FDRI/Noah one day per week)
First 100,000 accounts .0210 /account
($500 minimum/month)
100,001 to 500,000 accounts .0125 /account
additional accounts beyond 500,000 .0057 /account
5612 -Monthly Update of File
80,000 and fewer accounts .0120 /account
over 80,000 accounts 700.0000 plus $.0035/account
($2,850 maximum/month)
FDR/Noah Merchant Program
-Initial Preparation and Set-Up 500.0000
5603 -Monthly On-Line Access Fee (one
day per week) 300.0000 plus $.0270/account
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
5602 -Monthly Update of File .0100/account
($75 minimum/month)
FDR/Noah STATS Program
5613 -Initial Preparation and Set-Up 900.0000
5614 -Monthly File Loads 120.0000 /month
-Monthly On-Line Access Fee (one
day per week) 25.0000 /megabyte
($25 minimum/month)
FDR/Noah Product Control File Frogram
5612 -Initial Preparation and Set-Up 600.0000
-Monthly File Loads 400.0000 /month
-Monthly On-Line Access Fee (one
day per week) 100.0000 plus $15/100 agents
FDR/Noah Rejected Application File Program
5612 -Initial Preparation and Set-Up 650.0000
-Monthly File Loads 120.0000 /month
-Monthly On-Line Access Fee (one
day per week) 25.0000 /month retained
FDR/Noah Annual Activity Summary Program
5612 -Initial Preparation and Set-Up 500.0000
-Monthly, Quarterly or Annual File Loads .0050 /account/load
($250 minimum/load)
-On-Line Access Fee (one day per week):
Monthly .0200 /account
Quarterly .0250 /account
Yearly .0300 /account
($250 minimum/period)
FDR/Noah Risk Management Application Program
5612 -Initial Preparation, Set-Up and Training 3,900.0000
-Daily Table Load for Three Tables 200.0000 /day
-Monthly On-Line Access Fee (5 days
per week only) 52.50 /megabyte
-Formulation of Additional Stored
Commands or Table Redesign 100.0000 /hour
</TABLE>
d. For purposes of the billing of RMS Reports: (i) if Buyer's standard (or
default) setting for a particular report is "0", then all pages of RMS
On-Line View, RMS Hardcopy and RMS RJE of such report provided by FDRI
to Buyer shall be billed to Buyer at the prices above, or (ii) if
Buyer's standard (or default) setting for a particular report is a value
other than "0", then each page of the RMS On-Line View of such report
provided by FDRI to Buyer shall be at no charge and each page of RMS
Hardcopy and RMS RJE of such report shall be billed to Buyer at the
prices above.
e. FDRI will generate embossing information based upon Buyer's Product
Control File (or, at Buyer's option, receive embossing information via
tape from Buyer), use such information to
7
<PAGE>
prepare the embossed plastic and mail the embossed plastic on behalf of
Buyer to its Cardholder at the Cardholder's then current address.
f. If a Merchant of Buyer attempts to use its normal line to obtain an
authorization and the Merchant is unable to use such line and uses
another line, Buyer shall pay FDRI at the rate charged for the line used
by the Merchant.
g. Local lines for authorization services are available in the cities
listed on-line under a TC-400 transaction.
h. The price above for POS 950 Access is based upon response times
associated with a Merchant POS device utilizing a 1200 bit per second
(bps) data line. In the event that Buyer's Merchants which elect to
receive 950 Access from FDRI hereunder operate a Merchant POS device
utilizing a data line with less than a 1200 bps capability, then FDRI
shall have the right, at its sole discretion, to increase at any time
the price then currently being charged to Buyer for 950 Access in
connection with the 950 Access Inquiries generated by any such
Merchants. 950 Access is available to certain telephone number prefixes,
listed by area code, as set forth in FDRI's then current list of such
prefixes. Such list shall be provided to Buyer upon request.
i. The prices set forth in paragraph b above are based upon the data lines,
WATS lines and other rates charged to FDRI by the communications common
carrier as of May 1, 1995 and are subject to change if such data lines,
WATS lines or other rates charged to FDRI are increased by the
communications common carrier prior to the signing of this Agreement by
FDRI.
j. For the uploading or downloading of information to or from the FDRI
System via the PC Remote Access Services, Buyer shall, in addition to
charges set forth above, pay FDRII $6.50 for each such upload or
download of information.
k. The FDR/Noah Cardholder Program is required in order to obtain the other
FDR/Noah Programs.
l. For multiple day on-line access to the FDR/Noah Cardholder, Merchant,
STATS, Product Control File, Rejected Application File and Annual
Activity Summary Programs, multiply the one-day on-line access fee by
the following:
<TABLE>
<CAPTION>
Number of Consecutive Business
Days of Access Per Week Multiplication Factor
------------------------------ ---------------------
<S> <C>
2 1.5
3 1.7
4 1.9
5 2.1
</TABLE>
8
<PAGE>
m. During the period for which Buyer elects to receive FDR/Noah Cardholder
and Merchant Program services (hereinafter referred to as the "FDR/Noah
Usage Period"), FDRI hereby agrees to discount the amount to be paid to
FDRI by Buyer monthly for the FDR/Noah Cardholder and Merchant Program
services set forth in paragraph c above based upon the number of years
of the FDR/Noah Usage Period. The amount of such discount shall be as
follows:
<TABLE>
<CAPTION>
Number of Years of the
FDR/Noah Usage Period Percentage Discount
---------------------- -------------------
<S> <C>
1 year 0%
2 years 12.5%
3 years 20%
4 years or more 30%
</TABLE>
In the event that such services are terminated for any reason prior to
the conclusion of the FDR/Noah Usage Period, then, upon the effective
date of such termination, FDRI shall calculate the actual number of
whole years of the FDR/Noah Usage Period which have elapsed, and the
appropriate Percentage Discount which should have been applied. Based
upon such calculations, FDRI shall then calculate the actual amount
owed to FDRI in accordance with the FDR/Noah Cardholder and Merchant
Programs during such period. If, during such period, Buyer paid FDRI
less than the amount owed to FDRI based upon the actual number of whole
years of the FDR/Noah Usage Period which have elapsed, and the
appropriate Percentage Discount, then Buyer shall pay FDRI the amount
which has been underpaid. FDRI shall submit to Buyer an invoice for
such amount within sixty (60) days after the effective date of the
termination of this Agreement, and such invoice shall be due and
payable by Buyer upon receipt.
n. FDR/Noah On-Line Access Fee charges set forth in paragraph c above are
based upon the actual amount of disk space used. Size approximations
are available upon request.
o. For purposes of the TLP Services set forth in paragraph a above, Gross
Active Accounts on File shall be as set forth on the CD-121 Ledger
Activity Report or the equivalent report (e.g. - the CD-621 Report).
III. Commencing on the effective date of this Agreement, Buyer shall pay FDRI
for each annual volume-sensitive service ("Service") at the rate indicated
by "**". Upon the expiration of each Processing Year, FDRI shall calculate
the actual volume of each item of Service during such Processing Year and
then determine the appropriate price per item of each Service. Based upon
such calculation, FDRI shall then calculate the total amount of processing
fees owed by Buyer to FDRI during such Processing Year. If, during any
Processing Year, Buyer shall have paid FDRI more or less than the amount
owed to FDRI based upon the above calculations, then FDRI shall issue a
credit to Buyer for any amounts due Buyer under this Section or invoice
Buyer for any amounts due FDRI, as appropriate. The fees charged for each
item of Service during each subsequent Processing Year shall be based upon
the previous Processing Year's volumes.
9
<PAGE>
IV. For purposes of this Exhibit "B": (i) "IN" means the item number for
such service or product and (ii) "Quote" means this Agreement does not
contemplate the use of this service or product, but FDRI shall, on the
request of the Buyer, provide a price for such service or product.
V. For any services performed by FDRI at Buyer's direction which are
neither set forth in this Exhibit nor covered by a separate agreement,
Buyer shall pay FDRI for such services at FDRI's then current standard
rates.
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND> This schedule contains summary financial information extracted from
SEC Form 10-Q and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 39,872
<INT-BEARING-DEPOSITS> 3,689
<FED-FUNDS-SOLD> 7,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 124,684
<INVESTMENTS-CARRYING> 136,306
<INVESTMENTS-MARKET> 137,077
<LOANS> 378,558
<ALLOWANCE> 4,053
<TOTAL-ASSETS> 712,524
<DEPOSITS> 590,095
<SHORT-TERM> 63,269
<LIABILITIES-OTHER> 4,993
<LONG-TERM> 0
<COMMON> 7,067
0
0
<OTHER-SE> 47,100
<TOTAL-LIABILITIES-AND-EQUITY> 712,524
<INTEREST-LOAN> 8,543
<INTEREST-INVEST> 3,769
<INTEREST-OTHER> 115
<INTEREST-TOTAL> 12,427
<INTEREST-DEPOSIT> 5,219
<INTEREST-EXPENSE> 6,021
<INTEREST-INCOME-NET> 6,406
<LOAN-LOSSES> 330
<SECURITIES-GAINS> 11
<EXPENSE-OTHER> 5,205
<INCOME-PRETAX> 2,005
<INCOME-PRE-EXTRAORDINARY> 2,005
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,529
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
<YIELD-ACTUAL> 4.27
<LOANS-NON> 0
<LOANS-PAST> 260
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,932
<CHARGE-OFFS> 247
<RECOVERIES> 38
<ALLOWANCE-CLOSE> 4,053
<ALLOWANCE-DOMESTIC> 4,053
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
