Exhibit 10.12
MANAGEMENT SERVICES AGREEMENT
OF
INFITEQ, LLC
TABLE OF CONTENTS
Section 1: Definition of Terms
Section 2: Services to be Provided
Section 3: Delivery of Documents
Section 4: Management Services
Section 5: Performance Requirements
Section 6: Compensation
Section 7: Integration and Bundling of INFITEQ Functional Member Services
Section 8: Limitation of Liabilities, Indemnification
Section 9: Term, Renewal
Section 10: Termination for Convenience
Section 11: Termination for Cause
Section 12: Amendments
Section 13: Confidentiality
Section 14: Other Business and Activities of ▇▇▇▇▇▇▇▇
Section 15: Negation of Membership or Joint Venture
Section 16: Miscellaneous
LIST OF EXHIBITS
Exhibit A: Delineation of ▇▇▇▇▇▇▇▇ Management Services and INFITEQ
Operating Expenses
Exhibit B(i): Management Services Compensation - Fee Schedule
Exhibit B(ii): Management Services Compensation - Service Tiers
Exhibit C: Ramp-up Phase Governance Criteria
Exhibit D(i): Ramp-up Phase Revenue Distribution
Exhibit D(ii): Revenue Flow Model - General
Exhibit E: Customer Service Model
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MANAGEMENT SERVICES AGREEMENT
This MANAGEMENT SERVICES AGREEMENT ("Agreement") is made as of the 15th
day of January, 1998, between ▇▇▇▇▇▇▇▇ - ▇▇▇▇▇▇▇▇, Inc. ("▇▇▇▇▇▇▇▇"), a Texas
Corporation, and INFITEQ, LLC. ("INFITEQ"), a Delaware limited liability
corporation.
RECITALS
WHEREAS, INFITEQ has been established for the purpose of engaging in the
business of providing services to depository institutions relating to cash
management and other related check processing and check collection functions;
and INFITEQ will not engage in any business or activity not authorized for a
bank holding company.
WHEREAS, INFITEQ desires that ▇▇▇▇▇▇▇▇ provide, and ▇▇▇▇▇▇▇▇ is willing
to provide, certain management services to INFITEQ during the term of this
Agreement; NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. DEFINITION OF TERMS. The following terms used in this Agreement
shall have the following meanings (unless otherwise
expressly provided herein).
(a) "BOARD OF MANAGERS" shall mean the Board of Managers of
INFITEQ.
(b) "BUSINESS PLAN" shall mean the annual projected
revenues, expenses, and general volume, customer, and
product assumptions that comprise the operating budget
of INFITEQ as approved by the Board of Managers.
(c) "CUSTOMER CONTRACT" shall mean the master agreement
between INFITEQ and the respective customer for
services.
(d) "EXECUTIVE COMMITTEE" shall mean the Executive
Committee of INFITEQ.
(e) "FUNCTIONAL MEMBER" shall mean any institution that is
performing a Board of managers approved functional role
for, or service through, INFITEQ. Functional Members
may also be referred to as "Owner Providers" in the
exhibits to this Agreement.
(f) "SPONSOR MEMBER" shall mean ▇▇▇▇▇▇▇▇, Fiserv, UPS WWL,
or NPC.
(g) "MANAGEMENT SERVICES" shall mean those services
provided pursuant to the management and operation of
INFITEQ's day-to-day business as more fully set forth
in Section 4 and in Exhibit A of this Agreement.
(h) "OPERATING EXPENSES" shall mean those expenses,
separately accounted for and payable by INFITEQ,
associated with the operation of INFITEQ as
specifically set forth in EXHIBIT A to this Agreement.
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(i) "MANAGEMENT FEE" shall mean those fees, separately
accounted for and payable by INFITEQ, associated with
the management of INFITEQ as specifically set forth in
EXHIBIT B(i) to this Agreement.
(j) "RAMP-UP PHASE" shall mean the interim period after
formation where INFITEQ revenues will not be sufficient
to cover expenses incurred to provide adequate
Management Services under contract, as specifically set
forth in EXHIBIT C to this Agreement.
(k) "REVENUE FLOW MODEL" shall mean the method of revenue
distribution within INFITEQ as set forth in EXHIBIT
D(i).
(l) "WORKING AGREEMENTS" shall mean the multi-party service
level agreements that are anticipated to be put in
place with each Customer Contract.
2. SERVICES TO BE PROVIDED. ▇▇▇▇▇▇▇▇ agrees to render the services
and undertake the duties set forth in Sections 4 and 5 of
this Agreement, for the compensation and on the terms herein
provided.
3. DELIVERY OF DOCUMENTS. Each of the parties will make, execute,
acknowledge and deliver such other instruments and
documents, and take all such other actions, as the other
party may reasonably request and as may reasonably be
required in order to effectuate the purposes of this
Agreement and to carry out the terms hereof.
4. MANAGEMENT SERVICES. Subject to the supervision, direction, and
approval of the Board of Managers and/or the Executive
Committee of INFITEQ, ▇▇▇▇▇▇▇▇ will operate, manage, direct
and supervise the ongoing conduct of INFITEQ's day-to-day
business from and after the effective date of this Agreement
including without limitation to the following:
(a) Contracting for and purchasing on behalf of INFITEQ all
services and goods to be used in connection with the
operation of INFITEQ's business;
(b) With written Functional Member consent, putting into
effect all advertising or other business solicitation
activities and all business policies with respect to
such advertising or solicitation activities;
(c) Negotiating and entering into contracts on behalf of
INFITEQ with such other service providers and
independent contractors to perform services for INFITEQ
in connection with the operation of INFITEQ's business,
consistent with Section 10.12 of the Limited Liability
Company Operating Agreement and subject to exclusive
right of first refusal by current Sponsor Members
performing like services, and supervising the
administration and monitoring the performance of all
work performed and
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services rendered by such other service providers and
independent contractors under all such contracts;
(d) Negotiating and entering into contracts on behalf
INFITEQ with depository institutions whereby INFITEQ
contracts to provide funds management and related
services to such customers and supervising the
administration and monitoring the performance of all
work performed and rendered under such contracts and
the Customer Contracts;
(e) Establishing pricing and packaging for INFITEQ
services;
(f) Undertaking general product development and management
responsibilities of integrated INFITEQ product
offerings, including planning product and services
enhancements and preparation of business proposals to
be presented to the Board of Managers, Executive
Committee, and pertinent standing committees of
INFITEQ, but excluding product development and/or
management of individual functional Member products;
(g) Providing general relationship management of INFITEQ
client base to ensure continuity of quality and
service;
(h) Providing strategic market advice and service direction
for each INFITEQ line of business;
(i) Providing sufficient sales and sales support resources
to achieve INFITEQ revenue and profit objectives as
stipulated in the INFITEQ Business Plan. ▇▇▇▇▇▇▇▇ will
produce a Monthly Sales Report, Prospective Business
Report and Report of sales activities which will be
provided to each INFITEQ partner. These reports will
include completed sales, identified prospects and
projected value of sales from each. The Report of
Sales Activities will be a summary of sales calls by
sales representative.
▇▇▇▇▇▇▇▇ will establish sales objectives for each sales
representative for each of the services offered by the
INFITEQ partners. These sales objectives will be
consistent with the INFITEQ Business Plan and will be
provided to the INFITEQ partners.
(j) Coordinating implementation of Customer Contracts,
including project planning among Functional Members,
depository institutions and customers and INFITEQ;
(k) Preparing and executing contingency plans as required;
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(l) Providing customer service as a central point of
contact for INFITEQ customers to resolve issues not
resolved by primary service vendors as set forth in
EXHIBIT E in this Agreement;
(m) Monitoring the performance quality of Functional
Members and recommending any needed changes to Customer
Contract(s) and/or Working Agreements to the Executive
Committee;
(n) Maintaining office facilities for INFITEQ (which may be
in the offices of ▇▇▇▇▇▇▇▇);
(o) Coordinating the preparation and distribution of
materials for meetings of the Board of Managers and
committees thereof, as well as advisory groups or
committees;
(p) Furnishing financial advice and services, including
preparation of operating budgets for INFITEQ;
(q) Providing a centralized billing process, and preparing
monthly financial reports;
(r) Coordinating the provision of legal advice and counsel
to INFITEQ;
(s) Coordinating the preparation of reports to INFITEQ's
shareholders of record; and
(t) Generally assisting in all aspects of INFITEQ's
operations.
5. PERFORMANCE REQUIREMENTS.
(a) In performing all services under this Agreement,
▇▇▇▇▇▇▇▇ shall (i) act subject to the supervision and
direction of the Board of Managers and/or the Executive
Committee; (ii) consult and coordinate with legal
counsel for INFITEQ, as necessary and appropriate, and
(iii) advise and report to INFITEQ and its legal
counsel, as necessary or appropriate, with respect to
any compliance or other matters that come to its
attention.
(b) ▇▇▇▇▇▇▇▇ shall consult with the keep INFITEQ advised
concerning all material aspects of ▇▇▇▇▇▇▇▇'▇
activities with respect to the management and operation
of INFITEQ. ▇▇▇▇▇▇▇▇ shall cause INFITEQ to prepare
and furnish to each Member financial statements of
INFITEQ including a balance sheet as of the end of each
calendar quarter, a statement of income for such
calendar quarter, and statements of Members' equity and
changes in financial position. Such statements will be
audited on an annual basis by INFITEQ's independent
audit firm.
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(c) ▇▇▇▇▇▇▇▇ may submit proposals for its services to be
remarketed through INFITEQ to the Board of Managers or
Executive Committee and shall abstain form voting with
respect to such proposals.
(d) ▇▇▇▇▇▇▇▇ shall hire full-time employee(s) as such
employee(s) become appropriate or necessary in order to
conduct the operations of INFITEQ, subject to Executive
Committee approval during the Ramp-up Phase.
(e) Each year, ▇▇▇▇▇▇▇▇ shall prepare a business Plan and
operating budget to be approved by the Board of
Managers. ▇▇▇▇▇▇▇▇ shall prepare monthly operating
budgets for INFITEQ for the first year of the term of
this Agreement, which shall be consistent with the
Business Plan, to be approved by the Board of Managers.
Included in the Business Plan will be sales object by
product with the expected revenues for the year for
each product. It will also include the sales staffing,
training, promotion, advertising and trade show plans
for the INFITEQ sales force that will be required to
meet the objectives. Also included in the Business
Plan will be a list of speeches and trade show
visibility programs that support sales of INFITEQ
partner services. ▇▇▇▇▇▇▇▇ will provide each INFITEQ
partner with a list of required marketing collateral
with sufficient lead-time to supply such materials to
support trade shows and other events.
During the term of this Agreement, the timing and
frequency of reporting by ▇▇▇▇▇▇▇▇ will be determined
by the Executive Committee. Modification of the
Business Plan and/or operating budgets may be made
quarterly and approved by the Board of Managers or
Executive Committee, as appropriate.
6. COMPENSATION. For the services to be rendered and the facilities
to be furnished by ▇▇▇▇▇▇▇▇, as provided for in this
Agreement, ▇▇▇▇▇▇▇▇ shall be compensated by INFITEQ in
accordance with the following terms:
(a) During the Ramp-up Phase, INFITEQ shall pay to ▇▇▇▇▇▇▇▇
each month a Management Fee as set forth in Exhibit ▇.
▇▇▇▇▇▇▇▇ may request m0onthly run-rate adjustments from
the Executive Committee as warranted by increased
business activity within INFITEQ. The monthly
Management Fee is subject to the provisions set forth
in EXHIBIT C to this Agreement. In addition to the
monthly Management Fee, incremental revenues above
Functional Member delivery prices to INFITEQ will be
distributed according to the guidelines set forth in
EXHIBIT D(i).
(b) After the Ramp-up Phase of INFITEQ, this Agreement will
convert fully to the "percent of revenue" Management
Fee Compensation Schedule as set forth in EXHIBIT B(i)
to this Agreement. After the Ramp-up Phase,
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incremental revenues above Functional Member prices to
INFITEQ will be distributed according to the guidelines
set forth in Exhibit D(ii).
(c) All INFITEQ Operating Expenses will be a part of the
budget submitted for approval to the Board of Managers,
by ▇▇▇▇▇▇▇▇, under Section 5 of this agreement.
Expenses incurred by ▇▇▇▇▇▇▇▇, without such Board
approval, which would cause INFITEQ to be in a negative
equity position, shall be the responsibility of
▇▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇▇ shall also submit an invoice and supporting
documentation for any INFITEQ Operating Expenses
directly incurred in the prior month for immediate
reimbursement. The Invoice for prior month's Operating
Expenses to be reimbursed and current month Management
Fees will coincide.
(d) In addition to the amounts described above, ▇▇▇▇▇▇▇▇
shall be paid a 10% commission fee on any additional
capital raised from all new Board of Manager approved
Functional Members.
(e) In the event of any alteration in the Revenue Flow
Model, compensation and revenue flows for Customer
Contracts in place at the time such resolution is
approved by the Board of Managers shall remain in
effect.
(f) For its pre-formation activities between July 1, 1997,
and November 30, 1997, INFITEQ shall pay to ▇▇▇▇▇▇▇▇ a
one-time fee of $277,500, which will be payable within
30 days of formation, provided that INFITEQ funds are
available.
7. INTEGRATION AND BUNDLING OF INFITEQ FUNCTIONAL MEMBER SERVICES.
to maximize INFITEQ revenue potential, ▇▇▇▇▇▇▇▇, or a
subsidiary or affiliate of ▇▇▇▇▇▇▇▇, will seek to
integrate and bundle various INFITEQ Functional Member
services. ▇▇▇▇▇▇▇▇ will identify INFITEQ integration
investment requirements to the Functional Members for
both individual and collective development
opportunities. If, upon formal presentation of the
proposed investment required, the INFITEQ Functional
Member(s) decline(s) to invest or, within 30 days, have
not stated an intention to participate, then ▇▇▇▇▇▇▇▇
can seek outside capital investment, subject to
approval by the Board of Managers. Such investors will
have full claim on any incremental profits generated
from the integrated capabilities in accordance with the
INFITEQ Revenue Flow Model set forth in EXHIBIT D(ii)
to this Agreement.
8. LIMITATION OF LIABILITIES; INDEMNIFICATION.
(a) INFITEQ shall indemnify, defend and hold ▇▇▇▇▇▇▇▇
harmless from and against any losses arising out of or
relating to (i) any default, breach, violation or non-
performance by INFITEQ of any covenant, condition or
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agreement of INFITEQ contained in this Agreement, (ii)
any breach of the representation and warranties of
INFITEQ contained in this Agreement, or any document,
undertaking or certificate required by INFITEQ pursuant
hereto, (iii) any negligent acts or omissions or
willful misconduct by or on behalf of INFITEQ in the
course of fulfilling the obligations of INFITEQ
hereunder, (iv) subject to the terms of this Agreement,
any and all payments made by ▇▇▇▇▇▇▇▇ to third parties
on behalf of INFITEQ, and (v) all reasonable fees and
expenses incurred in the enforcement of this indemnity
by ▇▇▇▇▇▇▇▇; provided that INFITEQ shall not be
required to indemnify ▇▇▇▇▇▇▇▇ for any losses to the
extent that they are caused by the willful misconduct,
bad faith, or gross negligence of ▇▇▇▇▇▇▇▇ in
connection with the performance of its services under
this Agreement. ▇▇▇▇▇▇▇▇ shall not be liable for any
action taken or omitted in good faith at the request or
direction of the Board of Managers of INFITEQ or any
committee thereof in connection with the performance of
▇▇▇▇▇▇▇▇'▇ duties under this Agreement. ▇▇▇▇▇▇▇▇ shall
also not be liable for actions taken or omitted in good
faith in reliance on advice received from its or
INFITEQ's legal counsel, independent public accountants
or other professional advisors.
(b) ▇▇▇▇▇▇▇▇ shall indemnify, defend and hold INFITEQ
harmless from and against any losses arising out of or
relating to (1) any default, breach, violation or non-
performance by ▇▇▇▇▇▇▇▇ of any covenant, obligation,
condition or agreement of ▇▇▇▇▇▇▇▇ contained in this
Agreement, (ii) any breach of the representations and
warranties of ▇▇▇▇▇▇▇▇ contained in this Agreement, or
in any document, undertaking or certificate required by
▇▇▇▇▇▇▇▇ pursuant hereto, (iii) any negligent acts or
omissions or willful misconduct by or on behalf of
▇▇▇▇▇▇▇▇ in the course of fulfilling the obligations of
▇▇▇▇▇▇▇▇ hereunder, and (iv) all reasonable fees and
expenses incurred in the enforcement of this indemnity
by INFITEQ, provided that ▇▇▇▇▇▇▇▇ shall not be
required to indemnify INFITEQ for any losses to the
extent that they are caused by the willful misconduct,
bad faith or gross negligence of INFITEQ.
(c) Each party's indemnification rights shall be their sole
remedy with respect to a party's losses resulting from
third party liabilities. Each party's right to damages
shall be limited to compensatory damages, and no party
to this Agreement shall be liable for any indirect,
special, punitive or consequential damages.
(d) Notwithstanding any other provisions of this Agreement,
▇▇▇▇▇▇▇▇ shall not be liable for any loss suffered by
INFITEQ in connection with the performance of
▇▇▇▇▇▇▇▇'▇ obligations and duties under this Agreement
unless INFITEQ has initiated a legal or arbitration
proceeding with respect to such loss within three (3)
years of the occurrence of the event, action or failure
to act giving rise to such loss.
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(e) Any dispute or controversy arising between ▇▇▇▇▇▇▇▇ and
INFITEQ in connection with the interpretation or
enforcement of this Agreement shall be settled
exclusively by binding arbitration in Dallas, Texas in
accordance with the rules of the American Arbitration
Association then in effect and judgment upon the award
rendered may be entered in any court having
jurisdiction thereof.
9. TERM, RENEWAL. Subject to earlier termination as provided in
this Agreement, this Agreement shall become effective on the
date herein and shall remain in force and effect for a term of
ten (10) years, and shall automatically renew thereafter for
successive two (2) year periods, subject to termination by
either party at the end of the original term or any extension
thereof by the giving of written notice of nonrenewal at least
120 days prior to the end of the original term or the extension
thereof, as applicable.
10. TERMINATION FOR CONVENIENCE.
(a) During the Ramp-up Phase, INFITEQ shall not be able to
terminate this Agreement except for cause as provided
in Section 11.
(b) After the Ramp-up Phase, either party may terminate
this Agreement, with or without cause, upon not less
than 180 days prior written notice to the other party.
In no event shall INFITEQ terminate this Agreement for
convenience prior to one year after the effective date
of formation, as defined in the Limited Liability
Company Operating Agreement.
(c) In the event of any termination of INFITEQ pursuant to
this Section 10, in addition to all other amounts owing
to ▇▇▇▇▇▇▇▇ through the date of termination as provided
herein, ▇▇▇▇▇▇▇▇ shall be entitled to reimbursement for
any reasonable and documented expenses actually incurred
in connection with a mutually agreed upon unwind period.
▇▇▇▇▇▇▇▇ shall use its commercially reasonable efforts to
mitigate all reasonable and documented expenses. ▇▇▇▇▇▇▇▇
shall additionally be entitled to continue to receive any
management services revenue in accordance with the Revenue
Flow Model as described in Exhibit D(ii), for any Customer
Contracts as long as those Customer Contracts are in effect.
The provisions set forth in this paragraph apply to all
parts of Section 10 and a termination pursuant to
Section 11(e).
(d) In the event of termination by ▇▇▇▇▇▇▇▇ pursuant to this
Section 10, INFITEQ shall be entitled to reimbursement for
any reasonable and documented expenses actually incurred in
connection with a mutually agreed upon unwind period.
INFITEQ shall use its commercially reasonable efforts to
mitigate, and permits ▇▇▇▇▇▇▇▇ as INFITEQ's agent to
mitigate, all reasonable and documented expenses.
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(e) Upon any termination hereunder, each party shall deliver to
the other party all property, documents, books and records,
including related software, of the other party then in its
custody or possession. ▇▇▇▇▇▇▇▇ shall cooperate with
INFITEQ and any successor provider of management services
selected by INFITEQ in the orderly transfer and assumption
of the management responsibilities of INFITEQ.
(f) Except as provided in the Limited Liability Company
Operating Agreement of INFITEQ, the rights and obligations
of ▇▇▇▇▇▇▇▇ as a Functional Member of INFITEQ shall not be
affected by the termination of this Agreement.
(g) ▇▇▇▇▇▇▇▇ agrees that subsequent to the expiration of this
Agreement, ▇▇▇▇▇▇▇▇ shall provide, for a reasonable period
of time, but not to exceed six (6) months without being
subjected to additional premium, such management services
as are reasonably requested by INFITEQ, at a fee to be
mutually agreed upon by INFITEQ and ▇▇▇▇▇▇▇▇.
(h) In the event of the acquisition of substantially all
other assets or voting securities of INFITEQ by another
entity, this Agreement shall remain in full force and
effect.
11. TERMINATION FOR CAUSE. Either party may terminate this Agreement
for cause if the other party:
(a) materially breaches any material provision of this
Agreement and, after notice of such breach, shall have
failed to cure such breach within thirty (30) days after
notice of such breach is given to the breaching party; or
(b) commits an act of willful misconduct, gross negligence or
fraud. Such termination may be effected by giving the other
party written notice of termination, which notice shall
specifically identify the act upon which termination is
based; or
(c) has a petition filed against it for an involuntary
proceeding under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, and such
petition shall not have been dismissed within sixty (670)
days of filing; or a court having jurisdiction shall have
appointed a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official of such party for
any substantial portion of its property, or ordered the
winding up or liquidation of its affairs; or
(d) commences a voluntary proceeding under any applicable
bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall have made any general
assignment for the benefit of creditors, or shall have
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failed generally to pay its debts as they became due.
The defaulting party agrees that, if any of the events
specified in subsections (b) or (c) of this Section 11
shall occur, it shall give written notice thereof to the
other party within seven (7) days following occurrence of
such event. Upon receipt of such notice, or upon becoming
aware of a default the other party may, in its sole
discretion, terminate this Agreement immediately upon
deliver of a written notice of such termination to the
defaulting party; or
(e) in the case of ▇▇▇▇▇▇▇▇, in the event of a merger or
acquisition by a entity resulting in a change of control
in ▇▇▇▇▇▇▇▇ (a change of control shall occur if the merger
or acquisition results in a significant change of the
current management structure and in the acquiring entity
owning 51% or more of the total stock of ▇▇▇▇▇▇▇▇); ▇▇▇▇▇▇▇▇
shall use its best efforts to notify the Board prior to any
such change of control; the Board shall then have not more
than 15 days from the date of notification to decide whether
to terminate this Agreement pursuant this clause (e);
provided, however, that a termination pursuant to this
clause shall require the affirmative vote of at lest
two-thirds of the Board of Managers; and provided, further,
▇▇▇▇▇▇▇▇ becoming a publicly held company will not be
considered a change of control; or
(f) in the event this Agreement is terminated by INFITEQ
pursuant to this Section 11, ▇▇▇▇▇▇▇▇ shall be entitled
to costs for services expended through the effective
date of such termination. Termination of ▇▇▇▇▇▇▇▇
Management Services shall be separate and apart from
the Customer Contracts and associated revenues ▇▇▇▇▇▇▇▇
has as a Functional Member.
12. AMENDMENTS. No provision of this Agreement may be changed,
discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the
change discharge or termination is sought.
13. CONFIDENTIALITY. All books, records, information and data
pertaining to the business of INFITEQ and INFITEQ's prior,
present or potential shareholders and customers that are
exchanged or received pursuant to the performance of ▇▇▇▇▇▇▇▇'▇
duties under this Agreement shall remain confidential and shall
not be disclosed to any other person, except as specifically
authorized by INFITEQ or as may be required by law.
14. OTHER BUSINESS AND ACTIVITIES OF ▇▇▇▇▇▇▇▇. Except to the extent
necessary to perform ▇▇▇▇▇▇▇▇'▇ obligations under this Agreement,
nothing herein shall be deemed to limit or restrict the right of
▇▇▇▇▇▇▇▇ or any employee of ▇▇▇▇▇▇▇▇ to engage in any other
business or to devote time and attention to the management or
other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any
other corporation, firm, individual or association; provided,
however, that during the term of this Agreement, ▇▇▇▇▇▇▇▇ agrees
not to engage in any activities which are functionally
competitive with the
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services to be provided by INFITEQ. INFITEQ acknowledges that
the persons employed by ▇▇▇▇▇▇▇▇ to assist in the performance
of ▇▇▇▇▇▇▇▇'▇ duties under this Agreement are not required to
devote their full time to such service and nothing contained in
this Agreement shall be construed to the contrary.
15. NEGATION OF MEMBERSHIP OR JOINT VENTURE. Nothing contained in
this Agreement shall constitute, or be construed to be or to
create, a partnership, joint venture or lease between ▇▇▇▇▇▇▇▇
and INFITEQ.
16. MISCELLANEOUS.
(a) Any notice or other instrument authorized or required
by this Agreement to be given in writing to INFITEQ or
▇▇▇▇▇▇▇▇ shall be sufficiently given if addressed to be
that party and received by it at its office set forth
below or at such other place as it may from time to
time designate in writing.
Attention:
To INFITEQ: To ▇▇▇▇▇▇▇▇:
___________________ ▇▇▇▇▇▇▇▇ - ▇▇▇▇▇▇▇▇, Inc.
___________________ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
___________________ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(b) This Agreement shall extend to and shall be binding
upon the parties hereto and their respective successors
and permitted assigns; PROVIDED, HOWEVER, that this
Agreement shall not be assignable without the written
consent of the other party; except that ▇▇▇▇▇▇▇▇ shall
have the absolute right to assign this Agreement to a
subsidiary or affiliate. In the event that ▇▇▇▇▇▇▇▇
assigns this Agreement to an affiliate or subsidiary,
there shall be no unaffiliated third-party owner in
such entity without the written consent of the Board of
Managers of INFITEQ.
(c) This Agreement shall be construed in accordance with
the laws of the State of Texas.
(d) This Agreement may be executed in any number of
counterparts each of which shall be deemed to be a
original and which collectively shall be deemed to
constitute only one instrument.
(e) The captions of this Agreement are included for
convenience of reference only and in no way define or
limit any of the provisions hereof or otherwise affect
their construction or effect.
(f) Sections 8, 10(c), 10(e), 10(g), 11(f), 13, and 16 shall
survive termination of this Agreement.
11
(g) This Agreement constitutes the entire agreement between the
parties hereto with respect to the matters described herein.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed and delivered by their duly authorized officers as of the
date first written above.
INFITEQ, LLC
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, Inc. Fiserv Solutions, Inc.
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. Baltmasar
------------------------------ ----------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇. Baltmasar
------------------------------ -------------------------------
Title: Chairman Title: Executive Vice President
------------------------------ ------------------------------
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, Inc., as Member
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇
------------------------------
Title: Chairman
------------------------------
UPS Worldwide Logistics, Inc., as member
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: SVP Chief Operating Officer
------------------------------
National Processing Company, as member
By: /s/ ▇▇▇▇▇ ▇. Zork
---------------------------------
Name: ▇▇▇▇▇ ▇. Zork
Title: Executive Vice President
------------------------------
12
Exhibit A
DELINEATION OF ▇▇▇▇▇▇▇▇ MANAGEMENT SERVICES
AND INFITEQ OPERATING EXPENSES
Management Services INFITEQ Operating Expenses
------------------- --------------------------
(1) Buyer/Seller of INFITEQ Services (1) Financial Mgmt/Reporting
(2) Functional Partner (2) CEO/CFO Allocations
Development/Management (3) Audit/Tax
(3) Product Development/Mgmt (4) INFITEQ Legal
(4) Relationship Management (5) Insurance/Risk Management
(5) General Sales (6) Marketing and Promotion
(6) Sales Support of INFITEQ - Tradeshows/Public Relations
Customer Base - Brochures/Collateral
(7) Customer Service - Internet/Intranet Development
(8) Implementation Support/Mgmt
(9) Performance Tracking
(10) Billing/Collections
(11) General Management Duties for
Day-to-Day Operations
Notes:
- Management Services Fees shall be paid as set forth in exhibit B(i)
- INFITEQ Operating Expenses, as approved by the Executive Committee, shall
be paid directly from an INFITEQ account specifically designated for
this purpose. As the paying agent, ▇▇▇▇▇▇▇▇ shall provide a detailed
accounting of all Operating Expenses on a monthly basis.
- During the Ramp-up phase, INFITEQ Operating Expenses will be paid from
funds held in the INFITEQ capital account.
- The intent of the methods stated above is to equitably allocate INFITEQ
Operating Expenses amongst Functional Members relative to the benefit
received; however, the Executive Committee may review at any time
these methods in their entirety, or for specific situations, and
implement alternate methods as it sees fit.
13
Exhibit B(i)
MANAGEMENT SERVICES COMPENSATION
- FEE SCHEDULE
Projected Categories of
Management Services Requirements Percent of Provider Revenue
-------------------------------- ---------------------------
I. "Off-the-Shelf" Customer 4%-Management content illustrated
Contracts in Exhibit B(ii)
3%-Discounted Provider pricing
and/or minimal ▇▇▇▇▇▇▇▇
management content.
II. Integrated Customer Contracts 7%-Management content illustrated
in Exhibit B(ii)
5%-Discounted Provider pricing
and/or reduced ▇▇▇▇▇▇▇▇
management content
III. Product Development/Integration by Compensation for ▇▇▇▇▇▇▇▇ Product
Management Services to be determined
on a project-by-project basis.
IV. Service Warehouse Development Compensation for ▇▇▇▇▇▇▇▇ Management
Services to be determined on a
project-by-project basis. Members
may or may not elect to participate
in the funding of the Service
Warehouse development.
NOTES:
- DISCOUNTED PROVIDER PRICING is defined as less than acceptable minimum
Provider margins (e.g. 10%) for services in a given Customer Contract.
- "OFF-THE-SHELF" Customer Contracts, as illustrated in Exhibit B(ii), are
defined as single Provider Customer Contracts where ▇▇▇▇-up opportunities
are considered minimal.
- INTEGRATED Customer Contracts, as illustrated in Exhibit B(ii), are defined
as multi-Provider Customer Contracts where ▇▇▇▇▇▇▇▇ has bundled services
from two or more Providers of INFITEQ including additional tangible
services and/or software, consulting, or training services to be provided
to a Customer or Client Bank. Integrated Customer Contracts will require
more ▇▇▇▇▇▇▇▇ management Services, and thus entail higher management
compensation rates.
14
Exhibit B(i)
- Providers will contribute the percent of revenue stated above only to the
extent that INFITEQ ▇▇▇▇-up over cost of service from the Provider does not
meet the agreed upon rate of compensation.
- SERVICE WAREHOUSE is defined as the information management system which
will support INFITEQ service offerings. The Service Warehouse will be
funded out of additional capital raised from Sponsor Members and new
Functional Members that elect to participate in its funding.
15
Exhibit B(ii)
MANAGEMENT SERVICES COMPENSATION
- SERVICE TIERS
Select participation
of investment by
partners Service Warehouse
Development
Project Product Development/
Budget Integration by Product
TBD (MORE PARTNER SPECIFIC)
5-7% of
Provider Revenue
--------------------------------------------------------------
More Integrated Customer Contracts - Mgmt Services
-------------------------------------------------------
- Product Development/Mgmt - Implementation
- Sales Support of INFITEQ Support/Mgmt
Customers - Customer Service
- Financial Partner Mgmt - Buyer/Seller of Services
--------------------------------------------------------------
3 - 4% of
Provider
Revenue
--------------------------------------------------------------------------
"Off-the-Shelf" Customer Contracts - Management Services
--------------------------------------------------------
- General Sales Lead Dev. - Billing/Collection - Marketing/PR
- Relationship Mgmt - Performance Tracking (Dev./Mantime)
- General Management - Product Packaging
- Customer Service (minimal)
--------------------------------------------------------------------------
16
RAMP-UP PHASE GOVERNANCE CRITERIA
- Commencing December 1997 and continuing through the Ramp-up Phase.
INFITEQ shall pay to ▇▇▇▇▇▇▇▇ each month a Management Fee equal to $45,000
per month to be paid the first week of each month. ▇▇▇▇▇▇▇▇ will also be
reimbursed for out-of-pocket expenses up to $10,000 per month. Expenses
exceeding $10,000 per month shall require prior Executive Committee
pproval.
- In general, the Ramp-up Phase is the pre-defined period of time where
INFITEQ revenues will not be sufficient to cover required Operating
Expenses and management Services Fees.
- The Executive Committee can authorize either termination of the Ramp-up
Phase or adjustments to the INFITEQ Operating Budget based on any of the
following criteria:
- INFITEQ revenues are sufficient to cover ▇▇▇▇▇▇▇▇ Management Services
Fees (a minimum of $75,000 per month) and INFITEQ Operating Expenses
- INFITEQ capital account balance has no remaining working capital
- Twenty-four months has expired since the date of formation of INFITEQ
- Ramp-up Phase operating budget will be reviewed monthly by the Executive
Committee of INFITEQ.
- Working capital requirements during the Ramp-up Phase will be determined
by the following calculation:
(A) INFITEQ Cost of Goods Sold {Provider Price(s)}
(B) ▇▇▇▇▇▇▇▇ Management Services Fees
(C) INFITEQ Operating Expenses
INFITEQ REVENUE - (A) - (B) - (C) = RAMP-UP PHASE MONTHLY
WORKING CAPITAL REQUIREMENT
17
RAMP-UP PHASE REVENUE DISTRIBUTION
Scenario Scenario B Scenario C
-------- ---------- ----------
Off-the-Shelf Integrated (▇▇▇▇-Up) Integrated (Value Based)
[GRAPH]
SCENARIO A SCENARIO B SCENARIO C
---------- ---------- ----------
- Scenario A - Scenario B - Scenario C
represents a revenue represents a revenue represents a revenue
stream from a stream from a stream from a
Customer Contract Customer Contract Customer contract
where ▇▇▇▇▇▇▇▇ may where ▇▇▇▇▇▇▇▇ has where ▇▇▇▇▇▇▇▇ has
not be able to ▇▇▇▇ bundled services bundled services
up services from one from 2 Providers, from two Providers
Provider due to but is not able to and provided
price sensitivities ▇▇▇▇ up the training and
in the market. Any aggregate Provider implementation
▇▇▇▇-up over the Prices more than 5% support as part of
Provider price due to price the aggregate
▇▇▇▇▇▇▇▇ is able to sensitivities in the Provider Price to
achieve will flow market. INFITEQ.
directly to
▇▇▇▇▇▇▇▇.
18
SCENARIO A SCENARIO B SCENARIO C
(CONTINUED) (CONTINUED) (CONTINUED)
----------- ----------- -----------
- Management - Revenues from the - ▇▇▇▇▇▇▇▇ is able
Services Fees are 5% ▇▇▇▇-up flow to ▇▇▇▇ up the
for "off-the-shelf" directly to ▇▇▇▇▇▇▇▇ aggregate Provider
scope, and will be for Management Price by 4% to the
4% of Provider Services Fees. INFITEQ customer.
revenue as set forth In addition to the
in EXHIBIT B(i). - In order to 4% ▇▇▇▇-up, ▇▇▇▇▇▇▇▇
Providers distribute satisfy the "% of is able to develop a
rebates equivalent Revenue" Management float sharing
to 4% of Provider Fee compensation arrangement with the
revenue to ▇▇▇▇▇▇▇▇ requirements set INFITEQ customer
during the Ramp-up forth in EXHIBIT because of
Phase. B(i), Providers, at significant value
their option, may associated with the
either: (a) integrated offering
distribute rebates (e.g. significant
equivalent to 2% of revenue increase
Provider revenue to opportunities).
▇▇▇▇▇▇▇▇, (b) offer
INFITEQ reduced - Revenues from the
processing fees for 4% ▇▇▇▇-up and float
this particular flow directly to
transaction which ▇▇▇▇▇▇▇▇. Revenues
may be acceptable to from the ▇▇▇▇▇▇▇▇
the customer and Provider Services of
INFITEQ, but may training and
still result in a implementation
lower margin to support also flow
INFITEQ than 5%, or directly to
(c) decline to bid. ▇▇▇▇▇▇▇▇.
- "% of Revenue"
Management Fee
compensation
requirements for
integrated services
(i.e. 7% of Provider
Revenue as set forth
in EXHIBIT B(i)) are
met because of
additional float
sharing revenue
▇▇▇▇▇▇▇▇ is able to
negotiate with the
INFITEQ customer as
part of contract
term
19
Exhibit D(ii)
REVENUE FLOW MODEL - GENERAL
[GRAPH]
20
Exhibit E
CUSTOMER SERVICE MODEL
[GRAPH]
21
