EXHIBIT 10.26
AGREEMENT
between
FISERV SOLUTIONS, INC.
5718 Westheimer, Suite 200
Houston, Texas 77057
and
FRANKLIN BANK, SSB
9800 Richmond, Suite 680
Houston, TX 77042
 
Date: January 1, 2006
(FISERV LOGO) [h35420h3542001.gif]

 

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AGREEMENT dated effective as of January 1, 2006 (“Agreement”) between FISERV
SOLUTIONS, INC., a Wisconsin corporation (“Fiserv”) and a wholly-owned
subsidiary of FISERV, INC., and FRANKLIN BANK, a State Savings Bank (“Client”)
for Data Account Processing Services.
 
     Fiserv and Client hereby agree as follows
     1. Term. The initial term of this Agreement is forty eight (48) months
ending on January 1, 2010, and, unless written notice of non-renewal is provided
by either party at least 120-180 days prior to expiration of the initial term,
this Agreement will automatically renew for additional term(s) of one (1) month
and continue to be in effect until service is terminated except Fiserv Houston’s
then current premium rates and fees for month-to-month processing(125% of
Standard Rates) will apply. Client agrees to give Fiserv six months notice of
termination.
     2. Services. (a) Services Generally. Fiserv, itself and through its
affiliates, agrees to provide Client, and Client agrees to obtain from Fiserv
services (“Services”) and products (“Products”) (collectively, “Fiserv
Services”) described in the attached Exhibits:
     Exhibit A — Account Processing Services
The Exhibits set forth specific terms and conditions applicable to the Services
and/or Products, and, where applicable, the Fiserv affiliate so performing.
Client may select additional services and products from time to time by
incorporating an appropriate Exhibit to this Agreement.
     (b) Implementation Services. Fiserv will provide services (i) to convert
Client’s existing applicable data and/or information to the Fiserv Services;
and/or (ii) to implement the Fiserv Services. These activities are referred to
as “Implementation Services”. Client agrees to cooperate with Fiserv in
connection with Fiserv’s provision of Implementation Services and to provide all
necessary information and assistance to facilitate the conversion and/or
implementation. Client is responsible for all out-of-pocket expenses associated
with Implementation Services. Fiserv will provide Implementation Services as
required in connection with Fiserv Services.
     (c) Training Services. Fiserv shall provide training, training aids, user
manuals, and other documentation for Client’s use, as Fiserv finds necessary to
enable Client personnel to become familiar with Fiserv Services. If requested by
Client, classroom training in the use and operation of Fiserv Services will be
provided at a training facility designated by Fiserv. All such training aids and
manuals remain Fiserv’s property.
     3. Fees for Fiserv Services. (a) General. Client agrees to pay Fiserv fees
outlined in the Exhibits.
     (b) Additional Charges. Fees for out-of-pocket expenses, such as telephone,
microfiche, courier, and other charges incurred by Fiserv for goods or services
obtained by Fiserv on Client’s behalf shall be billed to Client at cost. Such
out-of-pocket expenses may be changed from time to time upon notification of a
fee change from a vendor/provider. The Fees do not include, and Client shall be
responsible for, furnishing transportation or transmission of information
between Fiserv’s service center(s), Client’s site(s), and any applicable
clearing house, regulatory agency, or Federal Reserve Bank. Upon request by
Client, Fiserv shall provide the detailed documentation for all additional
charges.
     (c) Taxes. Fiserv shall add to each invoice any sales, use, excise, value
added, and other taxes and duties however designated that are levied by any
taxing authority relating to the Fiserv Services (“Taxes”). In no event shall
“Taxes” include taxes based upon the net income of Fiserv.
     (d) Payment Terms. Fees are due and payable monthly upon receipt of
invoice. In the event any amounts due remain unpaid beyond the 45th day after
payment is due, Client shall pay a late charge of .5% per month, except for
amounts legitimately in dispute. Client agrees that it shall neither make nor
assert any right of deduction or set-off from Fees on invoices submitted by
Fiserv for Fiserv Services.
     4. Access to Fiserv Services. (a) Procedures. Client agrees to comply with
applicable regulatory requirements and procedures for use of Services
established by Fiserv.
     (b) Changes. Fiserv continually reviews and modifies Fiserv systems used in
the delivery of Services (the “Fiserv System”) to improve service and comply
with government regulations, if any, applicable to the data and information
utilized in providing Services. Fiserv reserves the right to make changes in
Services, including but not limited to operating procedures, type of equipment
or software resident at, and the location of Fiserv’s service center(s). Fiserv
will provide Client with at least 45 days prior notice of any material change
that affects Client’s normal operating procedures, reporting, or service costs
prior to implementation of such change.
     (c) Communications Lines. Fiserv shall order the installation of
appropriate communication lines and equipment
 

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to facilitate Client’s access to Services. Client understands and agrees to pay
charges relating to the installation and use of such lines and equipment.
     (d) Terminals and Related Equipment. Client shall obtain necessary and
sufficient terminals and other equipment, approved by Fiserv and compatible with
the Fiserv System, to transmit and receive data and information between Client’s
location(s), Fiserv’s service center(s), and/or other necessary location(s).
Fiserv and Client may mutually agree to change the type(s) of terminal and
equipment used by Client.
     5. Client Obligations. (a) Input. Client shall be solely responsible for
the input, transmission, or delivery to and from Fiserv of all information and
data required by Fiserv to perform Services unless Client has retained Fiserv to
handle such responsibilities, as specifically set forth in the Exhibits. The
information and data shall be provided in a format and manner approved by
Fiserv. Client will provide at its own expense or procure from Fiserv all
equipment, computer software, communication lines, and interface devices
required to access the Fiserv System. If Client has elected to provide such
items itself, Fiserv shall provide Client with a list of compatible equipment
and software. Client agrees to pay Fiserv’s standard fee for recertification of
the Fiserv System resulting therefrom.
     (b) Client Personnel. Client shall designate appropriate Client personnel
for training in the use of the Fiserv System, shall supply Fiserv with
reasonable access to Client’s site during normal business hours for
Implementation Services and shall cooperate with Fiserv personnel in their
performance of Services.
     (c) Use of Fiserv System. Client shall (i) comply with any operating
instructions on the use of the Fiserv System provided by Fiserv; (ii) review all
reports furnished by Fiserv for accuracy; and (iii) work with Fiserv to
reconcile any out of balance conditions or discrepancies. Client shall determine
and be responsible for the authenticity and accuracy of all information and data
submitted to Fiserv.
     (d) Client’s Systems. Client shall be responsible for ensuring that its
systems are Year 2000 compliant and otherwise capable of passing and/or
accepting date formats from and/or to the Fiserv System.
6. Ownership and Confidentiality. (a) Definition.
(i) Client Information. “Client Information” means: (A) confidential plans,
customer lists, information, and other proprietary material of Client that is
marked with a restrictive legend, or if not so marked with such legend or is
disclosed orally, is identified as confidential at the time of disclosure (and
written confirmation thereof is promptly provided to Fiserv); and (B) any
information and data concerning the business and financial records of Client’s
customers prepared by or for Fiserv, or used in any way by Fiserv in connection
with the provision of Fiserv Services (whether or not any such information is
marked with a restrictive legend).
(ii) Fiserv Information. “Fiserv Information” means: (A) confidential plans,
information, research, development, trade secrets, business affairs (including
that of any Fiserv client, supplier, or affiliate), and other proprietary
material of Fiserv that is marked with a restrictive legend, or if not so marked
with such legend or is disclosed orally, is identified as confidential at the
time of disclosure (and written confirmation thereof is promptly provided to
Client); and (B) Fiserv’s proprietary computer programs, including custom
software modifications, software documentation and training aids, and all data,
code, techniques, algorithms, methods, logic, architecture, and designs embodied
or incorporated therein (whether or not any such information is marked with a
restrictive legend).
(iii) Information. “Information” means Client Information and Fiserv
Information. No obligation of confidentiality applies to any Information that
the receiving party (“Recipient”) (A) already possesses without obligation of
confidentiality; (B) develops independently; or (C) rightfully receives without
obligation of confidentiality from a third party. No obligation of
confidentiality applies to any Information that is, or becomes, publicly
available without breach of this Agreement.
     (b) Obligations. Recipient agrees to hold as confidential all Information
it receives from the disclosing party (“Discloser”). All Information shall
remain the property of Discloser or its suppliers and licensors. Information
will be returned to Discloser at the termination or expiration of this
Agreement. Fiserv specifically agrees that it will not use or dispose of any
non-public personal information about Client’s customers in any manner
prohibited by Title V of the Gramm-Leach-Bliley Act, the Fair and Accurate
Credit Transactions Act, or the regulations promulgated thereunder. Recipient
will use the same care and discretion to avoid disclosure of Information as it
uses with its own similar information that it does not wish disclosed, but in no
event less than a reasonable standard of care. Recipient may only use
Information in accordance with the purpose of this Agreement. Recipient may
disclose Information to (i) employees and employees of affiliates who have a
need to know; and (ii) any other party with Discloser’s written consent. Before
disclosure to any of the above parties, Recipient will have a written agreement
with such party sufficient to require that party to treat Information in
accordance with this Agreement. Recipient may disclose Information to the extent
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by law. However, Recipient agrees to give Discloser prompt notice so that it may
seek a protective order. The provisions of this sub-section survive any
termination or expiration of this Agreement.
     (c) Residuals. Nothing contained in this Agreement shall restrict Recipient
from the use of any ideas, concepts, know-how, or techniques contained in
Information that are related to Recipient’s business activities (“Residuals”),
provided that in so doing, Recipient does not breach its obligations under this
Section. However, this does not give Recipient the right to disclose the
Residuals except as set forth elsewhere in this Agreement.
     (d) Fiserv System. The Fiserv System contains information and computer
software that are proprietary and confidential information of Fiserv, its
suppliers, and licensors. Client agrees not to attempt to circumvent the devices
employed by Fiserv to prevent unauthorized access thereto, including, but not
limited to, alterations, decompiling, disassembling, modifications, and reverse
engineering thereof.
     (e) Information Security. Fiserv shall implement and maintain appropriate
measures designed to meet the objectives of the guidelines establishing
standards for safeguarding non-public Client customer information as adopted by
any federal regulatory agencies having jurisdiction over Client’s affairs.
Fiserv shall notify the Client of any breach of the security of the data
following discovery, if the personal information was, or is reasonably believed
to have been acquired by an unauthorized person. Personal information is defined
as an individual’s first name or first initial and last name in combination with
any one or more of the following data elements, when either the name or the data
elements are not encrypted. (1) United States Social Security Number.
(2) Drivers License Number or government issued identification card number. (3)
Account Number, credit or debit card number, in combination with any required
security code, access code, or password that would permit access to an
individual’s financial account. (4) Protected Health Information (PHI) which is
any individually identifiable health information.
     (f) Confidentiality of this Agreement. Fiserv and Client agree to keep
confidential the prices, terms and conditions of this Agreement, without
disclosure to third parties.
     7. Regulatory Agencies, Regulations and Legal Requirements. (a) Client
Files. Records maintained and produced for Client (“Client Files”) may be
subject to examination by such Federal, State, or other governmental regulatory
agencies as may have jurisdiction over Client’s business to the same extent as
such records would be subject if maintained by Client on its own premises.
Client agrees that Fiserv, is authorized to give all reports, summaries, or
information contained in or derived from the data or information in Fiserv’s
possession relating to Client when legally required to do so by an authorized
regulatory or government agency. Fiserv will provide prior notice to the Client
of government agency request unless prohibited by law or regulation.
     (b) Compliance with Regulatory Requirements. Client agrees to comply with
applicable regulatory and legal requirements, including without limitation:
(i) submitting a copy of this Agreement to the appropriate regulatory agencies
prior to the date Services commence;
(ii) providing adequate notice to the appropriate regulatory agencies of the
termination of this Agreement or any material changes in Services;
(iii) retaining records of its accounts as required by regulatory authorities;
(iv) obtaining and maintaining, at its own expense, any Fidelity Bond required
by any regulatory or governmental agency; and
(v) maintaining, at its own expense, such casualty and business interruption
insurance coverage for loss of records from fire, disaster, or other causes, and
taking such precautions regarding the same, as may be required by regulatory
authorities.
     8. Warranties. (a) Fiserv Warranties. Fiserv represents and warrants as of
the Effective Date and throughout the term of this Agreement that:
          (i)(A) Services will conform to the specifications set forth in the
Exhibits; (B) Fiserv will perform Client’s work accurately provided that Client
supplies accurate data and information, and follows the procedures described in
all Fiserv documentation, notices, and advices; (C) Fiserv personnel will
exercise due care in provision of Services; (D) the Fiserv System will comply
and will be enhanced and maintained in compliance with, in all material
respects, all applicable Federal laws and regulations including but not limited
to the Sarbanes-Oxley Act of 2002, governing the Fiserv System and the Services;
and (E) the Fiserv System is Year 2000 compliant. In the event of an error or
other default caused by Fiserv personnel, systems, or equipment, Fiserv shall
correct the data or information and/or reprocess the affected item or report
within a commercially reasonable time frame at no additional cost to Client.
Client agrees to supply Fiserv with a written request for correction of the
error (“Correction Request”) within 7 days after Client’s receipt of the work
containing the error. If Client’s Correction Request is supplied to Fiserv more
than 7 days after Client’s receipt of the work containing the error but within
7 days of Client’s commercially reasonable discovery of the error, Fiserv shall
correct the data or information within a commercially reasonable time frame at
no additional cost to Client; however, correction of the data or

 

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information may be done programmatically but no reprocessing will be done. Work
reprocessed due to errors in data supplied by Client, on Client’s behalf by a
third party, or by Client’s failure to follow procedures set forth by Fiserv
shall be billed to Client at Fiserv’s then current time and material rates; and
(ii) it owns or has a license to furnish all equipment or software comprising
the Fiserv System. Fiserv shall indemnify Client and hold it harmless against
any claim or action that alleges that the Fiserv System use infringes a United
States patent, copyright, or other proprietary right of a third party. Client
agrees to notify Fiserv promptly of any such claim and grants Fiserv the sole
right to control the defense and disposition of all such claims. Client shall
provide Fiserv with reasonable cooperation and assistance in the defense of any
such claim.
THE WARRANTIES STATED ABOVE ARE LIMITED WARRANTIES AND ARE THE ONLY WARRANTIES
MADE BY FISERV. FISERV DOES NOT MAKE, AND CLIENT HEREBY EXPRESSLY WAIVES, ALL
OTHER WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. THE STATED EXPRESS WARRANTIES ARE IN LIEU OF ALL LIABILITIES
OR OBLIGATIONS OF FISERV FOR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE
DELIVERY, USE, OR PERFORMANCE OF FISERV SERVICES.
     (b) Client Warranties. Client represents and warrants that: (i) no
contractual obligations exist that would prevent Client from entering into this
Agreement; (ii) it has complied with all applicable regulatory requirements; and
(iii) Client has requisite authority to execute, deliver, and perform this
Agreement. Client shall indemnify and hold harmless Fiserv, its officers,
directors, employees, and affiliates against any claims or actions arising out
of (iv) the use by Client of the Fiserv System in a manner other than that
provided in this Agreement; and (v) any and all claims by third parties through
Client arising out of the performance and non-performance of Fiserv Services by
Fiserv, provided that the indemnity listed in clause (v) hereof shall not
preclude Client’s recovery of direct damages pursuant to the terms and subject
to the limitations of this Agreement.
     9. Limitation of Liability. (a) General. IN NO EVENT SHALL FISERV BE LIABLE
FOR LOSS OF GOODWILL, OR FOR SPECIAL, INDIRECT, INCIDENTAL, OR CONSEQUENTIAL
DAMAGES ARISING FROM CLIENT’S USE OF FISERV SERVICES, OR FISERV’S SUPPLY OF
EQUIPMENT OR SOFTWARE, REGARDLESS OF WHETHER SUCH CLAIM ARISES IN TORT OR IN
CONTRACT. CLIENT MAY NOT ASSERT ANY CLAIM AGAINST FISERV MORE THAN 2 YEARS AFTER
SUCH CLAIM ACCRUED. FISERV’S AGGREGATE LIABILITY FOR ANY AND ALL CLAIMS OR
OBLIGATIONS RELATING TO THIS AGREEMENT SHALL BE LIMITED TO THE TOTAL FEES PAID
BY CLIENT TO FISERV FOR THE FISERV SERVICE RESULTING IN SUCH LIABILITY IN THE 6
MONTH PERIOD PRECEDING THE DATE THE CLAIM ACCRUED. FISERV’S AGGREGATE LIABILITY
FOR A DEFAULT RELATING TO THIRD PARTY EQUIPMENT OR SOFTWARE SHALL BE LIMITED TO
THE AMOUNT PAID BY CLIENT FOR THE EQUIPMENT OR SOFTWARE.
     (b) Lost Records. If Client’s records or other data submitted for
processing are lost or damaged as a result of any failure by Fiserv, its
employees, or agents to exercise reasonable care to prevent such loss or damage,
Fiserv’s liability on account of such loss or damages shall not exceed the
reasonable cost of reproducing such records or data from exact duplicates
thereof in Client’s possession.
     10. Disaster Recovery. (a) General. Fiserv maintains a disaster recovery
plan (“Disaster Recovery Plan”) for each Service. A “Disaster” shall mean any
unplanned interruption of the operations of or inaccessibility to Fiserv’s
service center in which Fiserv, using reasonable judgment, requires relocation
of processing to a recovery location. Fiserv shall notify Client as soon as
possible after Fiserv deems a service outage to be a Disaster. Fiserv shall move
the processing of Client’s standard services to a recovery location as
expeditiously as possible and shall coordinate the cutover to back-up
telecommunication facilities with the appropriate carriers. Client shall
maintain adequate records of all transactions during the period of service
interruption and shall have personnel available to assist Fiserv in implementing
the switchover to the recovery location. During a Disaster, optional or
on-request services shall be provided by Fiserv only to the extent adequate
capacity exists at the recovery location and only after stabilizing the
provision of base services. Upon Client’s request, Fiserv will provide Client
with a copy of the Disaster Recovery Plan Summary.
     (b) Communications. Fiserv shall work with Client to establish a plan for
alternative communications in the event of a Disaster.
     (c) Disaster Recovery Test. Fiserv shall test the Disaster Recovery Plan at
least annually. Client agrees to participate in and assist Fiserv with such
test, if requested by Fiserv. Upon Client request, test results will be made
available to Client’s management, regulators, auditors, and insurance
underwriters.
     (d) Client Plans. Fiserv agrees to release information necessary to allow
Client’s development of a disaster recovery plan that operates in concert with
the Disaster Recovery Plan.
     (e) No Warranty. Client understands and agrees that the Disaster Recovery
Plan is designed to minimize, but not eliminate, risks associated with a
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service center(s). Fiserv does not warrant that Fiserv Services will be
uninterrupted or error free in the event of a Disaster; no performance standards
shall be applicable for the duration of a Disaster. Client maintains
responsibility for adopting a disaster recovery plan relating to disasters
affecting Client’s facilities and for securing business interruption insurance
or other insurance necessary for Client’s protection.
     11. Termination. (a) Material Breach. Except as provided elsewhere in this
Section 11, either party may terminate this Agreement in the event of a material
breach by the other party not cured within 90 days or in the case of regulatory
noncompliance, not cured within 60 days following written notice stating, with
particularity and in reasonable detail, the nature of the claimed breach.
     (b) Fiserv Insolvency. Client may, upon written notice to Fiserv, terminate
this Agreement in the event that Fiserv commits an act of bankruptcy or becomes
the subject of any proceeding under the Bankruptcy Code.
     (c) Failure to Pay. In the event any invoice remains unpaid by Client
45 days after due, or Client deconverts any data or information from the Fiserv
System without prior written consent of Fiserv, Fiserv, at its sole option, may
terminate this Agreement and/or Client’s access to and use of Fiserv Services.
Any invoice submitted by Fiserv shall be deemed correct unless Client provides
written notice to Fiserv within 30 days of the invoice date specifying the
nature of the disagreement.
     (d) Remedies. Remedies contained in this Section 11 are cumulative and are
in addition to the other rights and remedies available to Fiserv under this
Agreement, by law or otherwise.
     (e) Defaults. If Client:
(i) defaults in the payment of any sum of money due and fails to remedy such
breach as set forth in Section 11(b);
(ii) breaches this Agreement in any material respect or otherwise defaults in
any material respect in the performance of any of its obligations and fails to
cure such breach as set forth in Section 11 (a); or
(iii) commits an act of bankruptcy or becomes the subject of any proceeding
under the Bankruptcy Code or becomes insolvent or if any substantial part of
Client’s property becomes subject to any levy, seizure, assignment, application,
or sale for or by any creditor or governmental agency;
then, in any such event, Fiserv may, upon written notice, terminate this
Agreement and be entitled to recover from Client as liquidated damages an amount
equal to the present value of all payments remaining to be made hereunder for
the remainder of the initial term or any renewal term of this Agreement. For
purposes of the preceding sentence, present value shall be computed using the
“prime” rate (as published in The Wall Street Journal) in effect at the date of
termination and “all payments remaining to be made” shall be calculated based on
the average bills for the 3 months immediately preceding the date of
termination. Client agrees to reimburse Fiserv for any expenses Fiserv may
incur, including reasonable attorneys’ fees, in taking any of the foregoing
actions.
     (f) Convenience. Client may terminate this Agreement during the initial
term, by paying a termination fee based on the remaining unused term of this
Agreement, the amount to be determined by multiplying the average of Client’s
monthly invoices for each Fiserv Service received by Client during the three
(3) month period preceding the effective date of termination (i) by 100% times
the remaining months of the term if terminated in year 1, (ii) by 80% times the
remaining months of the term if terminated in year 2, and (iii) by 40% times the
remaining months of the term if terminated in year 3, and (iv) by 40% times the
remaining months of the term if terminated in year 4, plus any applicable third
party costs existing on Fiserv’s books on the date of termination. Client may
terminate this Agreement during any renewal term by paying a termination fee
based on the remaining unused term of any renewal term the amount to be
determined by multiplying the average of Client’s monthly invoices for each
Fiserv Services received by 30% times the remaining months of the renewal term
plus any third party costs existing on Fiserv’s books on the date of
termination. Client understands and agrees that Fiserv losses incurred as a
result of early termination of the Agreement would be difficult or impossible to
calculate as of the effective date of termination since they will vary based on,
among other things, the number of clients using the Fiserv System on the date
the Agreement terminates. Accordingly, the amount set forth in the first
sentence of this subsection represents Client’s agreement to pay and Fiserv’s
agreement to accept as liquidated damages (and not as a penalty) such amount for
any such Client termination. Provide, however, Client’s termination of this
Agreement based upon Fiserv’s material breach pursuant to Section 11(a) or
Fiserv’s insolvency pursuant to Section 11(b) shall not be deemed to be subject
to the provisions of this Section 11 (f) or any other termination fee, penalty
or liquidated damages provision set forth in this Agreement or any Exhibit .
     (g) Return of Data Files. Upon expiration or termination of this Agreement,
Fiserv shall furnish to Client such copies of Client Files as Client may request
in a commercially readable format along with such information and assistance as
is reasonable and customary to enable Client to deconvert from the Fiserv
System, provided, however, that Client consents and agrees and authorizes Fiserv
to retain Client Files until (i)

 

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Fiserv is paid in full for (A) all Services provided through the date such
Client Files are returned to Client; and (B) any and all other amounts that are
due or will become due under this Agreement; (ii) Fiserv is paid its then
standard rates for the services necessary to return such Client Files; (iii) if
this agreement is being terminated, Fiserv is paid any applicable termination
fee pursuant to subsection (d), (e), or (f) above; and (iv) Client has returned
to Fiserv all Fiserv Information. Unless directed by Client in writing to the
contrary, Fiserv shall be permitted to destroy Client Files any time after
180 days from the final use of Client Files for processing.
     (h) Miscellaneous. Client understands and agrees that Client is responsible
for the deinstallation and return shipping of any Fiserv-owned equipment located
on Client’s premises.
     12. Dispute Resolution. (a) General. Except with respect to disputes
arising from a misappropriation or misuse of either party’s proprietary rights,
any dispute or controversy arising out of this Agreement, or its interpretation,
shall be submitted to and resolved exclusively by arbitration under the rules
then prevailing of the American Arbitration Association, upon written notice of
demand for arbitration by the party seeking arbitration, setting forth the
specifics of the matter in controversy or the claim being made. The arbitration
shall be heard before an arbitrator mutually agreeable to the parties; provided,
that if the parties cannot agree on the choice of arbitrator within 10 days
after the first party seeking arbitration has given written notice, then the
arbitration shall be heard by three arbitrators, one chosen by each party, and
the third chosen by those two arbitrators. The arbitrators will be selected from
a panel of persons having experience with and knowledge of information
technology and at least one of the arbitrators selected will be an attorney.
Discovery shall not be permitted. A hearing on the merits of all claims for
which arbitration is sought by either party shall be commenced not later than
60 days from the date demand for arbitration is made by the first party seeking
arbitration. The arbitrator(s) must render a decision within 10 days after the
conclusion of such hearing. Any award in such arbitration shall be final and
binding upon the parties and the judgment thereon may be entered in any court of
competent jurisdiction.
     (b) Applicable Law. The arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. §§ 1-16 and the Federal Rules of Evidence. The
arbitrators shall apply the substantive law of the State of Texas, without
reference to provisions relating to conflict of laws. The arbitrators shall not
have the power to alter, modify, amend, add to, or subtract from any term or
provision of this Agreement, nor to rule upon or grant any extension, renewal,
or continuance of this Agreement. The arbitrators shall have the authority to
grant any legal remedy available had the parties submitted the dispute to a
judicial proceeding.
     (c) Situs. If arbitration is required to resolve any disputes between the
parties, the proceedings to resolve the first such dispute shall be held in
Houston, Texas, the proceedings to resolve the second such dispute shall be held
in Austin, Texas, and the proceedings to resolve any subsequent disputes will
alternate between Houston, Texas and Austin, Texas.
     13. Insurance. Fiserv carries the following types of insurance policies:
(i) Comprehensive General Liability in an amount not less than $1 million per
occurrence for claims arising out of bodily injury and property damage;
(ii) Commercial Crime covering employee dishonesty in an amount not less than
$5 million;
(iii) All-risk property coverage including Extra Expense and Business Income
coverage; and
(iv) Workers Compensation as mandated or allowed by the laws of the state in
which Services are being performed, including $1 million coverage for Employer’s
Liability.
     14. Audit. Fiserv employs an internal auditor responsible for ensuring the
integrity of its processing environments and internal controls. In addition, as
may be required by law or regulation, Fiserv provides for periodic independent
audits of its operations. Fiserv shall provide Client with a copy of the audit
of the Fiserv service center providing Services within a reasonable time after
its completion and shall charge each client a fee based on the pro rata cost of
such audit. Upon request from Client, Fiserv will provide detailed documentation
on the calculations of the pro rata cost of the audit. Fiserv shall also provide
a copy of such audit to the appropriate regulatory agencies, if any, having
jurisdiction over Fiserv’s provision of Services.
     15. General. (a) Binding Agreement. This Agreement is binding upon the
parties and their respective successors and permitted assigns. Neither this
Agreement nor any interest may be sold, assigned, transferred, pledged, or
otherwise disposed of by either party, whether pursuant to change of control or
otherwise, without the other party’s prior written consent except that Fiserv
shall have the right to assign, transfer or pledge this Agreement or any of its
interest to an Affiliate. “Affiliate” means an entity that owns more than 50% of
Fiserv; an entity that is more than 50% owned by the same entity that owns more
than 50% of Fiserv; an entity of which Fiserv owns more than 50% (“Subsidiary”);
or an entity that is more than 50% owned by a Subsidiary. Notwithstanding the
foregoing, Client may assign this Agreement to a financial institution acquiring
Client with written notice to Fiserv of the assignment if the surviving legal
entity of said acquisition has a net worth greater than Client at the time of
the acquisition. Client agrees that Fiserv may subcontract any Services to be
performed hereunder. Any such subcontractors shall be required to

6

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comply with all applicable terms and conditions and any such subcontracting
shall not relieve Fiserv of any of its responsibilities hereunder.
     (b) Entire Agreement. This Agreement, including its Exhibits, which are
expressly incorporated herein by reference, constitutes the complete and
exclusive statement of the agreement between the parties as to the subject
matter hereof and supersedes all previous agreements with respect thereto.
Modifications of this Agreement must be in writing and signed by duly authorized
representatives of the parties. Each party hereby acknowledges that it has not
entered into this Agreement in reliance upon any representation made by the
other party not embodied herein. In the event any of the provisions of any
Exhibit are in conflict with any of the provisions of this Agreement, the terms
and provisions of this Agreement shall control unless the Exhibit in question
expressly provides that its terms and provisions shall control.
     (c) Severability. If any provision of this Agreement is held to be
unenforceable or invalid, the other provisions shall continue in full force and
effect.
     (d) Governing Law. This Agreement will be governed by the substantive laws
of the State of Texas, without reference to provisions relating to conflict of
laws. The United Nations Convention of Contracts for the International Sale of
Goods shall not apply to this Agreement.
     (e) Force Majeure. Neither party shall be responsible for delays or
failures in performance resulting from acts reasonably beyond the control of
that party.
     (f) Notices. Any written notice required or permitted to be given hereunder
shall be given by: (i) Registered or Certified Mail, Return Receipt Requested,
postage prepaid; (ii) confirmed facsimile; or (iii) nationally recognized
courier service to the other party at the addresses listed on the cover page or
to such other address or person as a party may designate in writing. All such
notices shall be effective upon receipt.
     (g) No Waiver. The failure of either party to insist on strict performance
of any of the provisions hereunder shall not be construed as the waiver of any
subsequent default of a similar nature.
     (h) Financial Statements. Fiserv shall provide Client and the appropriate
regulatory agencies so requiring a copy of Fiserv, Inc.’s audited consolidated
financial statements.
     (i) Prevailing Party. The prevailing party in any arbitration, suit, or
action brought against the other party to enforce the terms of this Agreement or
any rights or obligations hereunder, shall be entitled to receive its reasonable
costs, expenses, and attorneys’ fees of bringing such arbitration, suit, or
action.
     (j) Survival. All rights and obligations of the parties under this
Agreement that, by their nature, do not terminate with the expiration or
termination of this Agreement shall survive the expiration or termination of
this Agreement.
     (k) Exclusivity. Prior to the termination of the agreement Client agrees
that Fiserv shall be the sole and exclusive provider of the services that are
the subject matter of this Agreement. For purposes of the foregoing, the term
“Client” shall include Client affiliates. Client agrees not to enter into an
agreement with any other entity to provide these services (or similar services)
during the term of this Agreement without Fiserv’s prior written consent. If
Client acquires another entity, the exclusivity provided to Fiserv hereunder
shall take effect with respect to such acquired entity as soon as practicable
after termination of such acquired entity’s previously existing arrangement for
these services. If Client is acquired by another entity, the exclusivity
provided to Fiserv hereunder shall apply with respect to the level or volume of
these services provided immediately prior to the signing of the definitive
acquisition agreement relating to such acquisition and shall continue with
respect to the level or volume of these services until any termination or
expiration of this Agreement.
     (l) Recruitment of Employees. Each party agrees not to hire the other
party’s employees during the term of this Agreement and for a period of 6 months
after any termination or expiration thereof, except with the other party’s prior
written consent.; provided, however, that the foregoing shall not apply to the
hiring of any non-Hiring Party’s employee who respond to a public advertisement
not directed at such employee.
     (m) Publicity. Client and Fiserv shall have the right to make general
references about each other publicly and the type of services being provided
hereunder to third parties, such as auditors, regulators, financial analysts,
and prospective customers and clients. The parties shall mutually agree on a
press release relating to the execution of this Agreement. In conjunction with
this, the party initiating such release shall give the other party a reasonable
opportunity to review and comment on the content thereof prior to its release.
     (n) Independent Contractors. Client and Fiserv expressly agree they are
acting as independent contractors and under no circumstances shall any of the
employees of one party be deemed the employees of the other for any purpose.
This Agreement shall not be construed as authority for either party to act for
the other party in any agency or other capacity or to make commitments of any
kind for the account of or on behalf of the other except as expressly authorized
herein.

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the date indicated below.

      For Client:
 
    FRANKLIN BANK, S.S.B.
 
   
By
   
 
   
 
   
Name
   
 
   
 
   
Title
   
 
   
 
   
Date
   
 
   

      For Fiserv:
 
    FISERV SOLUTIONS, INC.
 
   
By
   
 
   
 
   
Name
   
 
   
 
   
Title
   
 
   
 
   
Date
   
 
   

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Exhibit A
Account Processing Services
     Client agrees with Fiserv as follows:
     1. Services. Fiserv will provide Client the Account Processing Services
(“Account Processing Services”) specified in Exhibit A — 1. In the event of a
conflict between the terms of this Exhibit A and the Agreement, this Exhibit A
shall control.
     2. Fees. Client shall pay Fiserv fees and other charges for Account
Processing Services specified in Exhibit A — 2. Fees for Fiserv Services may be
changed annually effective each January 1 beginning in the year 2007 upon
30 days notice to Client. Each change shall be limited to the change in the
Consumer Price Index for All Urban Consumers (CPI-U) for the 12-month period
preceding each January 1, or 3%, whichever is less. Fiserv will deliver to
Client the notification of the fee change.
     3. Responsibility for Accounts. Client shall be responsible for balancing
its accounts each business day and notifying Fiserv immediately of any errors or
discrepancies. Provided that Client immediately notifies Fiserv of any
discrepancy in Client’s accounts, Fiserv shall, at its expense, promptly
recompute accounts affected by discrepancies solely caused by the Fiserv Systems
or provide for another mutually agreeable resolution. Fiserv will use its
commercially reasonable efforts to correct errors attributable to Client or
Client’s other third party servicers. Reconstruction of error conditions
attributable to Client or to third parties acting on Client’s behalf will be
done at Fiserv’s then current rates.
     4. Annual Histories. Fiserv currently maintains annual histories, where
applicable, for its clients. These histories can be used to reconstruct Client
Files in an emergency. However, in order to permit prompt and accurate
reconstruction of accounts, Client agrees to retain at all times and make
available to Fiserv upon request the most recent data printout(s) received from
Fiserv, together with copies or other accurate and retrievable records of all
transactions to be reflected on the next consecutive printout(s).
     5. Hours of Operation. Account Processing Services will be available for
use by Client during standard Fiserv business hours, excluding holidays, as
specified in Exhibit A — 3. Account Processing Services may be available during
additional hours, during which time Client may use Services at its option and
subject to additional charges.
     6. Protection of Data. (a) For the purpose of compliance with applicable
government regulations, Fiserv has an operations backup center, for which Client
agrees to pay the charges indicated in Exhibit A — 2. Copies of transaction
files are maintained by Fiserv off premises in secured vaults.
     (b) Fiserv provides systems security utilizing commercially reasonable
standards to protect Client Files from unauthorized access in compliance with
applicable governmental regulations.
     (c) Upon Client providing access to Client Files through Client’s
customers’ personal computers or voice response system, Client agrees to
indemnify and hold harmless Fiserv, its officers, directors, employees, and
affiliates against any claims or actions arising out of such access to Client
Files or any Fiserv files (including the files of other Fiserv clients) or the
Fiserv System or other Fiserv systems.
     7. Processing Priority. Fiserv does not subscribe to any processing
priority; all users receive equal processing consideration.
     8. Forms and Supplies. Client assumes and will pay the charges for all
customized forms, supplies, and delivery charges.
     9. Regulatory Supervision. By entering into this Agreement, Fiserv agrees
that regulatory agencies having authority over Client’s operations shall have
the authority and responsibility provided to the regulatory agencies pursuant to
the Bank Service Corporation Act, 12 U.S.C. 1867(C) relating to services
performed by contract or otherwise.
 
IN WITNESS WHEREOF, the parties hereto have caused this Exhibit A to the
Agreement to be executed by their duly authorized representatives as of the date
indicated below.

              FRANKLIN BANK S.S.B.   FISERV SOLUTIONS, INC.
By
 
 
  By  
 
Name
 
 
  Name  
 
Title
 
 
  Title  
 
Date
 
 
  Date  
 

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Exhibit A-1
Account Processing Services
Fiserv Responsibilities
     Fiserv will provide Client with the following Account Processing Services:
Base Services:

A.   Account Processing

  •   DDA     •   NOW/MMA     •   Savings     •   IRAs     •   Time Deposits    
•   Loans     •   Closed Accounts     •   Customer Records

B.   Additional Services

  •   Commercial Account Analysis     •   Cash Management Module     •   CIS /
Profitability     •   On-Line NSF and Return Deposit Item Processing     •  
On-Line Report Writer(e-infosource)     •   General Ledger System     •   ACH,
ATM, Debit Card Processing     •   Optical File Creation     •   Credit Bureau
Data Extracts     •   Disaster Recovery Hot-Site Participation     •   Child
Support Data Extract     •   Annual SAS70 for Account Processing

Network Support Services:

  •   Data Communication Circuits from Fiserv’s account processing center to the
point of connectivity to the Client’s Network.

Training:

  •   Refresher training available on request.

Client Support:

  •   Staffing and maintenance to undertake investigations, inquiries, and
problem resolution associated with the Application Processing Services software.
    •   Applications support personnel will be available to assist and support
Client’s support services staff.

Third Party Software:

  •   Evaluation, selection, licensing, and procurement of maintenance for third
party application software (to be operated by Fiserv on Client’s behalf) as
mutually agreed by Fiserv and Client.     •   Obtain any necessary consents to
utilize third party software licensed to Client as of the Effective Date, which
consents shall be provided to Fiserv (the obtaining of such consents shall be a
condition precedent to performance by Fiserv of its obligations).     •  
Advising Fiserv of any connections, upgrades, or enhancements that become
available from third party vendors so that they may be installed on a mutually
agreeable schedule and in accordance with the third party vendor’s recommended
time schedule.     •   Providing Fiserv with a complete copy of all license and
maintenance agreements related to third party software.

10

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Exhibit A-2
Account Processing Services Fees
Fiserv agrees to provide the services defined in Section I below for a fixed fee
of $83,820.00 per month calculated on a base of 108,852 accounts at $.77 per
open account. January of each year, beginning in 2007, the per open account fee
will be adjusted for CPI changes as defined in Exhibit A, Paragraph 2. The fixed
fee for the subsequent year will be calculated by multiplying the number of open
accounts as of December 31st times the adjusted per open account fee. The number
of accounts, for any acquisition with a scheduled conversion date, will be added
to the number of Open Accounts, as of the December 31st, to determine the total
number of accounts.

     
I
  Standard Services Included In the Monthly Fixed Fee:

  A.   Account Processing:

  •   Demand Deposit Accounts     •   NOW and Money Market Accounts     •  
Extra Cycle On-Line History (DDA/NOW/MMA)     •   Savings Accounts     •   Time
Deposits     •   IRA Accounts     •   Mortgage Loans (IRFS) (Until merged with
CLS)     •   CLS (Combined Loan System)     •   Customerfile Customer Records  
  •   Closed Accounts

  B.   Other Services:

  •   Commercial Analysis System     •   Cash Management System     •   CIS /
Profitability     •   NSF Online w/Post Decision Notices     •   e-InfoSource
System     •   General Ledger with Online, Autopost, Departmental Accounting,
Application Interface Balancing     •   General Ledger Eleven (11) Months Extra
History Retention     •   Credit Bureau Data Extracts (3) per month (per loan
system)     •   Twenty-Four Hour Online for Telephone Banking     •   Child
Support Data Tape     •   Return Deposit Item System     •   Optical File
Creation     •   Annual SAS70 for Account Processing     •   Disaster Recovery
Hot-site Participation     •   ICSA Certification/Firewall     •   Laserview
Software Maintenance     •   Extended IE Online Hours (9PM)     •   Internet
Banking Extract File (S1)     •   S1 Refresh File     •   IPS/Sendero Monthly
Extract Files     •   Extract Files for WNC Forced Insurance     •   E-Safe Safe
Deposit Box System     •   E-Calls Message Tracking System

  C.   Electronic Transaction Services:

  •   ACH Origination/Receiving     •   ATM Transaction Processing     •   Debit
Card Auto Ordering     •   Debit Card Hold Processing

    11    

 

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  D.   ATM System Processing:

  •   ATM Driving / Monitoring (Direct Connect)     •   ATM Terminal Surcharge  
  •   PIX     •   ATM End Point Settlement     •   Pulse System Interchange    
•   Plus Duality

     
II
  Special Processing Request, Pass-troughs and Additional Services will be
provided at standard rates for the requested service or product.
 
   
III
  Conversion Services:

                Conversion fees for accounts added to Fiserv Houston through
Acquisition will be:

  •   All inclusive, flat fee of $20,000 per conversion during the initial term
of this agreement.

Fiserv shall charge a one-time conversion fee of $20,000 to convert the Core
Applications (Deposits, Loans and Safe Deposit Boxes) of the Acquisitions to the
then current Fiserv system used by Client. Services included will be planning,
mapping, programming, converting and balancing of the core applications. Data
file extracts for check orders and debit card orders will be considered part of
the conversion. Request for special programming to change data on the system
will be done at current rates.
Fiserv Training Department will provide 32 hours of class room training plus
five (5) books per training topic as part of this conversion fee. Travel
expenses for the trainers will be in addition to the fixed fee. This fee will
include on-site Customer Support for up to three people for no more than ten
working days. Travel expenses for the support personnel will be in addition to
the fixed fee.

     
IV
  Acquisition Agreement:

If an institution acquired by Client, by either merger or asset acquisition, is
processed by Fiserv Houston then Fiserv Houston will waive any termination fees
referenced in such institution’s contract with Fiserv for Account Data
Processing.
If Client acquires a bank that has a contract with Fiserv or its Affiliate for
account processing services (the “Acquired Contract”), Fiserv or its Affiliate
will waive 50% of the applicable termination for convenience fee (up to
$250,000) with respect to the account processing services under the Acquired
Contract if each of the following criteria are met:

     
 
  (1) Account Processing Services continue to be processed in a Fiserv
outsourcing environment.
 
  (2) This Agreement shall be amended, if necessary, to extend the termination
date to be at least one year from the first month Client is billed for
processing the acquired accounts.
 
  (3) The revenue for account processing of the acquired bank’s accounts for the
first month after conversion is at least 80% of the account processing revenue
under the Acquired Contract for the month immediately prior to the acquisition.

     
V
  Customerfile Software:

     Customerfile software enhancements and custom programming will be provided
based on the following:

  •   Enhancement request, accepted for inclusion in a future release of the
software, will be done at no cost to Client.     •   System changes requested by
Client that must be programmed and implemented independent of a software
release, will be charged the published per-hour rate or a flat fee will be
negotiated at the time the request is presented. The per-hour rate is published
annually in the Optional Products and Services fee schedule.

                        12    

 

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Exhibit A-2

     
VI
  Fiserv agrees Client may contract with another Fiserv Business Unit to provide
application processing. In the event that Client contracts with another Fiserv
Business Unit, Client may terminate the applicable portion of this Agreement
without payment of any termination fee or penalty to Fiserv Solutions, Inc. In
the event that Client determines that the service provided cannot be adequately
processed on Customerfile but Client does not contract with another Fiserv
Business Unit, Client may terminate the applicable portion of this Agreement
with the payment of a pro rata portion of the termination fee defined in
Paragraph 11(f). Client and Fiserv agree to move the processing of Mortgage
Loans from the IRFS (ML) System to Customerfile CLS. After one year processing
on CLS, should Client deem the CLS application to not be suitable for processing
Mortgage Loans, then Client may terminate the applicable portion of this
Agreement. Prior to the exercise of this option the client will provide Fiserv
an opportunity to make CLS suitable by submitting a written notice of system
deficiencies. Fiserv will have six months from date of notification to make
corrections. If Fiserv cannot bring the level of performance up to ML standards
then Client can provide a written notice of discontinuance and terminate the
applicable portion of this Agreement without early termination fees as stated
above.
VII
  Fiserv will waive the Monthly Fixed Fee, as defined in this exhibit, for the
first six months of the initial term of this agreement.

                        13    

 

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Exhibit A-3
Hours of Operation
     The Fiserv Account Processing Center will be in operation for on-line
Account Processing Services in accordance with the following:

     
Monday
  7:00 A.M. — 7:00 P.M.
Tuesday
  7:00 A.M. — 7:00 P.M.
Wednesday
  7:00 A.M. — 7:00 P.M.
Thursday
  7:00 A.M. — 7:00 P.M.
Friday
  7:00 A.M. — 7:00 P.M.
Saturday
  7:00 A.M. — 2:00 P.M.

     All times stated are in accordance with prevailing local times for the
Fiserv Account Processing Center. The Fiserv Account Processing Center will
observe national holidays, and will be closed for on-line operations.

                        14    

 

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Exhibit A-4
Performance Standards
Client agrees to deliver, or cause to be delivered, all data input, including
Item Processing data, balanced and ready for posting by Midnight of each
processing day. In the event this time is not met Fiserv Houston Account
Processing cannot assume responsibility to meet the Performance Standards
defined below.
     A. On-line Availability — Fiserv and Client agree that the availability of
the e-view on-line (on-line) is critical to the client’s business operation.
On-line access will be available to the client twenty-four (24) hours except for
scheduled or preventative maintenance. Each business day prior to 7 AM the
online is interrupted for a few minutes to replace the online files with updated
information following the nightly update and each business day after 7 PM the
online is interrupted for a few minutes to extract the transactions that have
accumulated during the online business day. Preventive maintenance will not be
scheduled during normal online processing hours. Events that are out of the
control of Fiserv, such as telephone line problems, Client controlled equipment
or a disaster is declared by Fiserv, will not be considered as chargeable
incidents.
     In the event Fiserv should not make the 7 AM deadline or have unscheduled
online interruptions in excess of 8 times per month then Client may present a
report of these incidents to Fiserv Houston. Fiserv agrees to review this list
and credit Client $50.00 for each incident that was caused by, or could have
been prevented by, Fiserv Houston.
     B. Report Availability — Fiserv’s standard of performance for report
availability shall be that all Critical Daily Information shall be available in
Franklin’s FTP Critical Daily Information shall be 7:00 AM. Events that are out
of the control of Fiserv, such as telephone line problems, Client controlled
equipment or a disaster is declared by Fiserv, will not be considered as
chargeable incidents.
     In the event Fiserv should not make the 7 AM deadline in excess of 4 times
per month then Client may present a report of these incidents to Fiserv Houston.
Fiserv agrees to review this list and credit Client $50.00 for each incident
that was caused by, or could have been prevented by, Fiserv Houston.
     C. Response Time — Fiserv’s standard of performance for response time shall
be that the daily response time for 98% of transactions shall be 4 seconds on
average as determined from measurements taken over a Measurement Period. A
transaction shall mean a basic deposit, withdrawal, or monetary transaction. The
measurement shall begin when the last data element has been transmitted from the
central processor and shall end when the first data element has been received at
the controller. Fiserv will log and retain a record of response time maintaining
appropriate analytical reports. Fiserv will work with Client and third party
vendors to ensure commercially reasonable response time.
     D. Client Inquiries — All Client inquiries will be acknowledged by Fiserv
within 2 hours of request. A plan for resolution of the inquiry will be
completed by Fiserv within 24 hours of the inquiry unless a mutually agreeable
time is accepted by Fiserv and Client.

                        15