Exhibit 10.12


 


PLATINUM OVERDRAFT


 


MANAGEMENT AGREEMENT


 


FOR


 


COMMUNITY FIRST BANKSHARES


FARGO, NORTH DAKOTA


 

















 


CERTAIN
INFORMATION HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT UNDER RULE 24B-2.


 


PLATINUM OVERDRAFTSM MANAGEMENT
AGREEMENT


 


This Agreement
dated to be effective as of the last date written below (the “Effective Date”),
is between Alex Sheshunoff Management Services, L.P., a Texas limited partnership
(“ASM”), whose principal offices are located at 2801 Via Fortuna, Suite 600,
Austin, Texas 78746, and the financial institution identified as “Client” on
the attached Detail Schedule.


 


1.                                       BACKGROUND


 


1.1                                 ASM offers a suite of services and products known
generally as the Platinum OverdraftSM Management Program (the “Program”) to financial
institutions that offer deposit accounts. 
Program services and products implement a deposit account overdraft
coverage program, including financial projections and tracking services,
recommendations on organizational structure and staffing, data processing
systems and reporting services, operations policies and procedures, compliance
guidance, training services, and overdraft collections management, implementing
computer programs, and other management services, as more fully described
below, and in a paper prepared by ASM relating to OCC Interpretive Letter #914,
a copy of which has been previously provided to Client.


 


1.2                                 Client desires to implement the Program, on the
terms and conditions set out in this Agreement.


 


NOW THEREFORE,
in consideration of the premises and the terms and conditions set forth below,
ASM and Client hereby agree as follows.


 


2.                                       DELIVERABLES


 


ASM will
deliver to Client the services and products which comprise the Program,
including:


 


a.                                       Financial and operational projection and planning, including estimates of
incremental pre-tax profit from implementing the Program, and calculation of
Client’s baseline (pre-Program) expense, revenue and profit figures for
purposes of the fee calculations under this Agreement, in accordance with the
definitions in Section 5 below.


 


b.                                      Recommendations and implementation assistance on organizational structure,
job descriptions and staffing for use of the Program.


 


c.                                       Recommendations and implementation assistance on product definitions,
account features and set-up for accounts covered by the Program.


 


d.                                      Implementation assistance on use of the Program’s overdraft collections
process, procedures and methods.


 


e.                                   Computer
hardware recommendations and installation of proprietary software for use as
part of the Program (the "Program Software").  A separate Platinum
OverdraftSM Management Software Agreement, (the
"Program Software License")


 


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a copy of which is attached as the Program
Software License Schedule, governs the relationship of Client and ASM with
respect to the Program Software.


 


f.                                         Recommendations and implementation assistance on customer communication
planning, activities, and budget.


 


g.                                      Recommendations and implementation assistance on compliance standards,
analysis and language.


 


h.                                      Training and training materials on Program Software use and Program
operations.


 


i.                                          Recommendations as appropriate on further activities and “best practice”
measures whole implementation enhance non-interest income opportunities.


 


j.                                          Post-Implementation Period Support. 
Post-Implementation Period Support is defined as:


 


•                                          Daily
conference calls during the first week of the implementation period.


 


•                                          Weekly
conference calls thereafter for a month.


 


•                                          Monthly
conference calls for the next 60 days.


 


•                                          Access
by phone, as needed, to the ASM Program Project Manager (defined below) to
address questions or issues as they relate to Program.


 


•                                          On-site
assistance as jointly agreed to by both parties.


 


3.                                       IMPLEMENTATION
PERIOD


 


ASM shall begin the Program Implementation Period within 60 days after
the Effective Date.  ASM projects a
period of 16 weeks will be necessary to complete implementation of the
overdraft management program, provided Client furnish sufficient resources for
the implementation effort.  This
includes Client’s time commitment to and performance of systems work and
coordination of a number of functions, including collections, consumer lending,
deposit operations, branch management, finance, compliance, audit, training,
marketing, product management, human resources and customer service.  To that end:


 


a.                                       Client and ASM shall each designate an individual who will have principal
responsibility for managing initial Program implementation, including assuring
that its respective responsibilities in implementing the Program are timely met
(the “Program Project Managers”).


 


b.                                      Client and ASM shall promptly schedule and hold a cross-functional team
planning kickoff meeting, including the Program Project Managers, at Client’s
offices.


 


c.                                       Client and ASM shall promptly approve a detailed project plan and schedule
developed by the Program Project Managers for initial Program implementation,


 


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and shall make
all reasonable efforts to complete all implementation tasks within the approved
schedule.


 


d.                                      Client and ASM shall hold regular conference calls during the
implementation period to conduct project status reviews, including but not
limited to monthly conference calls including appropriate Client and ASM
management and the Program Project Managers.


 


e.                                       Client’s and ASM’s Program Project Managers shall confer at such other
times as they may deem appropriate during the implementation period to assure
necessary communication and coordination to complete implementation and resolve
any issues arising in the implementation process.


 


f.                                         Client shall promptly furnish, at its own cost, all computer and related
equipment (including but not limited to workstations, servers, central
processing units and peripherals) necessary for installation and operation of
the Program Software for Program purposes.


 


g.                                      Client and ASM shall prepare a list identifying the recommendations Client
will put into effect during the operational phase of the Program.


 


h.                                      ASM will deliver a written, dated completion notice, signed by the ASM
Program Project Manager, to Client’s Program Project Manager when Client makes
the Program available to its customers. 
The date that Client makes the Program available to its customers shall
serve as the “Operational Date.”  The
completion notice shall also state the date on which the Start-Up Period
(defined below) ends, and the date on which the Compensation Period (defined
below) begins.


 


4.                                       OPERATIONAL
PERIOD


 


4.1                                 Definitions:


 


•                                          Operational
Date:  The first day that Client
makes the Program available to its customers.


 


•                                          Operational
Period:  The time from the
Operational Date until Client ceases to use the Program to offer services to
its customers.


 


•                                          Start-Up
Period:  The period of time between
the Operational Date and the first day of the Compensation Period (defined
below).  The Start-Up Period will begin
on the Operational Date and end on the first day of the next calendar month
after Client has operated the Program for a minimum of 120 days.  (For example, if the Operational Date is
March 15, then the Start-Up Period will end on July 31).


 


•                                          Compensation
Period:  The period of time
beginning on the first day of the first calendar month that begins 120 or more
days after the Operational Date, and ending the number of months specified in
the Detail Schedule as


 


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the number of Compensation Months. 
(For example, if the Operational Date is March 15, then the Compensation
Period begins on August 1.)


 


4.2                                 On the 120th day of the Start-Up Period
(or the next regular business day thereafter, if the 120th day falls
on a non-business day), the Program Project Managers and other representatives
of Client and ASM, as they deem appropriate, shall conduct a final review
meeting by conference telephone call to review Start-Up Period operations.


 


4.3                                 Within 15 calendar days following the last day of
each month during the Start-Up Period and the Compensation Period, Client shall
deliver to ASM a complete copy of the monthly performance tracking report for
that month (the “Monthly Report”).


 


4.4                                 ASM shall provide post-implementation support for
Client’s Program operations on an as-needed basis, as agreed upon by Client and
ASM.


 


5.                                       FEES
AND EXPENSES


 


5.1                                 Capitalized terms used in this Section 5 and not
defined elsewhere in this Agreement shall have the following meanings:


 


•                                          Actual
Expenses:  The total of the
following expenses, as applicable, attributed to operation of the Program in
Covered Categories and actually incurred during the month in question, as
approved by ASM.  No overhead will be
included in Actual Expenses.


 


a.                                       Charge-offs, less recoveries on overdrawn accounts older than 60 days,
adjusted for charge-offs of existing overdraft balances over 60 days at Program
commencement, but excluding accounts with deficit balances of 60 days or more
at the beginning of the Compensation Period.


 


b.                                      Mailing expenses and expenses for additional staff required for the
Program operation which exceed Baseline Expenses.


 


c.                                       Direct marketing expenses for Program Operation which exceed Baseline
Expenses, as approved by Client and ASM.


 


d.                                      A fraction of the Start-Up Costs and Reimbursables incurred in the
Implementation Phase, whose numerator is 1 and whose denominator is the number
of Compensation Months specified in the Detail Schedule.


 


e.                                       Reimbursables invoiced by ASM in the month in question.


 


f.                                         Other direct miscellaneous expenses ASM and Client agree upon.


 


•                                          Actual
Performance:  Actual Revenues for
the month in question minus Actual Expenses for the month in question.


 


•                                          Actual
Revenues:  All Covered Category
revenues during the month in question, less any waivers or refunds of fees.


 


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•                                          Baseline
Expenses:  The figure, developed by
ASM and agreed to by Client on the basis of Client’s average monthly expenses
attributable to Covered Categories preceding the Implementation Period, to
serve as the monthly baseline for calculating Actual Expenses for the Covered
Categories.  Client’s Chief Financial
Officer is the only party authorized to approve the Baseline Expenses for Client.


 


•                                          Baseline
Performance:  Baseline Revenues
minus Baseline Expenses.


 


•                                          Baseline
Revenues:  The figure, developed by
ASM and agreed to by Client on the basis of Client’s revenues in Covered
Categories, less any waivers or refunds of fees, during three years of
operations preceding the Implementation Period, to serve as the monthly
baseline for calculating Program Performance. 
Should Client decide to raise its NSF fee, this figure shall be adjusted
to accurately reflect the revenue increase generated by the higher fee.  Client’s Chief Financial Officer is the only
party authorized to approve the Baseline Revenues for Client.


 


•                                          Covered
Category:  A category of
non-interest income generated by Client’s operations (e.g., NSF and overdraft
fee income) on which recommendations delivered by ASM and accepted by Client
under this Agreement are applied as part of Program operations.


 


•                                          Fee
Percentage:  The Fee Percentage
stated on the Detail Schedule for the month in question.


 


•                                          Program
Performance:  Actual Performance for
the month in question minus Baseline Performance.


 


•                                          Reimbursables:  ASM’s expenses for travel, lodging, meals
and other reasonable and customary business expenses incurred in connection
with rendering services to Client under this Agreement.  Client shall have the right, at its sole
discretion, to refuse to pay any Reimbursables in the event Client believes
they are unreasonable.


 


•                                          Start-Up
Costs:  Client’s one-time
non-capital costs for operations and system changes made during the
Implementation Phase to implement the Program, plus reasonable depreciation of
computer equipment, non-Program Software licenses and other capital acquired to
operate the Program, as agreed by Client and ASM.


 


5.2                                 Client shall pay ASM a Program Implementation
Period Fee for services rendered during the Program Implementation Period in
the amount and according to the payment schedule stated in the Detail
Schedule.


 


5.3                                 No fees shall accrue or be payable with respect to
the Start-Up Period.


 


5.4                                 Client shall pay ASM a monthly fee calculated by
multiplying Program Performance for the month in question times the applicable
Fee Percentage.  If Program


 


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Performance for the month in
question is zero or less, then no fee shall accrue or be payable for that month.


 


5.5                                 Upon execution of this Agreement, Client shall
prepay to ASM the Fee Deposit specified in the Detail Schedule.  No interest shall accrue on the Fee
Deposit.  Each month, ASM shall apply a
portion of the Fee Deposit (“Month’s Deposit”) to the monthly fees as they
become payable, until the full deposit amount has been applied.  The amount of each Month’s Deposit shall be
equal to the amount of the Fee Deposit multiplied by a fraction whose numerator
is 1 and whose denominator is the number of Compensation Months specified in
the Detail Schedule.  If a
Month’s Deposit exceeds the fee payable for that month, the excess shall be
added to the next succeeding Month’s Deposit for application in the next
succeeding month.  If aggregate fees
accruing during the Compensation Period total less than the total Fee Deposit,
ASM shall refund the difference to Client at the end of the Compensation
Period.


 


5.6                                 Fees for each month (net of the Month’s Deposit)
shall be due and payable to ASM on or before the 20th calendar day
following the end of the month for which they accrue, together with the
applicable Monthly Report Client is required to deliver to ASM under Section
4.3.  ASM will accept payment for fees
either by check or wire transfer.


 


5.7                                 Client shall pay all invoices from ASM for
Reimbursables upon receipt.


 


6.                                       CONFIDENTIALITY
AND NONCOMPETITION


 


6.1                                 ASM acknowledges that information disclosed by
Client to enable ASM to implement the Program will include confidential and
proprietary information.  All
information which Client identifies to ASM as Client’s confidential and
proprietary information at the time of disclosure will be deemed “Client’s
Confidential Information” (unless the information is or becomes publicly
available through no action of ASM). 
ASM agrees not to disclose any part of Client’s Confidential Information
to any third party, and not to use Client’s Confidential Information for any
purpose other than performing ASM’s obligations under this Agreement.  On Client’s request at the termination or expiration
of this Agreement, ASM will return all copies of Client’s Confidential
Information to Client.  ASM shall not be
in breach of its obligations under this Section 6 if it develops modifications
to the Program in response to, based on or related to concepts ASM develops as
a result of exposure to Client’s Confidential Information.


 


6.2                                 Client acknowledges that terms extended by ASM to
Client under this Agreement are confidential and valuable trade secrets of
ASM.  Client agrees not to disclose any
provisions of this Agreement to any third party.


 


6.3                                 Client acknowledges that the Program is
proprietary to ASM and its licensors, and includes confidential and proprietary
information, including but not limited to the Program Software, methods and
materials on promotion, collections, customer service, training, compliance,
legal, organizational structure, staffing and peer overdraft financial
comparisons, and is protected by copyright, trade secret and trademark law
(“ASM’s Confidential Information”). 
Client agrees not to disclose any part of ASM’s Confidential Information
to any third party, and not to use ASM’s Confidential Information for any
purpose other than for Client’s own business operations.  Client further agrees not to duplicate the
Program materials


 


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except as necessary for its
operation of the Program in accordance with this Agreement, and that upon
termination or expiration of this Agreement, Client will return all such
materials to ASM.


 


6.4                                 Each party acknowledges and agrees that its
failure to comply with the confidentiality requirements and use restrictions
set forth in this Section 6 will result in irreparable injury to the other
party, and that the injured party shall be entitled to injunctive and other
equitable relief without proof of damages.


 


6.5                                 During the term of this Agreement, and for two
years after this Agreement has expired or been terminated, Client shall not
offer to another third party financial institution a program of account
overdraft management or provide any services in connection with account
overdraft management that would be competitive to ASM’s program other than
pursuant to a license agreement with ASM. 
This Section 6.5 shall not prohibit Client from providing account
overdraft management services to its own customers following termination of
this Agreement for any reason, except that Client shall continue to be
obligated to compensate ASM under the terms of this agreement if Client
continues to operate the Program during the Compensation Period.  Client may provide services to its own
customers directly, or may enter into a service agreement with an alternative
overdraft account management provider. 
Client warrants that the term and extent of this Section 6.5 are reasonable.


 


7.                                       REPRESENTATIONS,
WARRANTIES, DISCLAIMERS


 


7.1                                 ASM
represents to Client that (a) it has reviewed compliance of the Program with
applicable federal law and regulations, (b) it believes the Program complies
with applicable federal law and regulations, and (c) it is not aware of any
instance of a financial institution failing to comply with applicable federal
law and regulations on account of its implementation of the Program.


 


7.2                                 Client acknowledges that although ASM provides, as
a part of the Program, information, recommendations and other consultation
services on matters that may be subject to state and federal laws and
regulations, ASM cannot give legal advice. 
Client agrees that it will not rely on ASM to assure Client’s compliance
with any applicable state or federal laws and regulations or other legal
requirements (“Applicable Legal Requirements”).  Client further acknowledges that ASM has advised Client to
obtain, and that Client agrees to obtain, its own legal counsel to assure that
the Program, and its implementation and operation by Client, complies with all
Applicable Legal Requirements.  Client’s
adoption and effectuation of any recommendation or other Program element shall
constitute Client’s warranty to ASM that Client has determined, with the
assistance of necessary and appropriate legal counsel, that adoption and
effectuation of the recommendations and other Program elements complies with
all Applicable Legal Requirements.


 


7.3                                 ASM DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES,
EXPRESS OR IMPLIED, EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, INCLUDING ALL
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY.


 


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7.4                                 ASM SHALL NOT BE LIABLE FOR ANY FAILURE OF THE
PROGRAM OR OF CLIENT AND ITS IMPLEMENTATION OR OPERATION OF THE PROGRAM TO
COMPLY WITH ANY APPLICABLE LEGAL REQUIREMENTS, NOR SHALL ASM BE LIABLE FOR ANY
FAILURE OF THE PROGRAM OR ITS IMPLEMENTATION OR OPERATION TO PROVIDE ANY
PARTICULAR RESULT.  IN NO EVENT SHALL ASM’s
LIABILITY UNDER THIS AGREEMENT EXCEED THE FEES PAID BY CLIENT TO ASM
HEREUNDER.  IN NO EVENT SHALL ASM BE
LIABLE FOR ANY INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE
DAMAGES.


 


8.                                       TERM
AND TERMINATION


 


8.1                                 The
term of this Agreement shall begin on the Effective Date and shall expire on
the last day of the Operation Period, unless earlier terminated as permitted
below.


 


8.2                                 If either party commits a material, uncured breach
of any of its obligations under this Agreement, then the other party may
terminate this Agreement by written notice, provided that the terminating party
has first given the breaching party written notice of the breach and a 30 day
period within which to cure the breach.


 


8.3                                 Except as provided below, on termination or expiration
of this Agreement, Client’s license to use and implement the Program shall
automatically terminate or expire.  If
Client continues the Program Software License in force and effect, then Client
may continue to use the Program, subject to the provisions of Sections 6 and 7,
which shall survive termination or expiration of this Agreement.  Modifications to this Agreement, if any,
specified as such in the Detail Schedule shall be deemed a part of this
Agreement for all purposes, and shall supersede the provisions of the main body
of this Agreement only to the extent specified in the Detail Schedule.


 


9.                                       MISCELLANEOUS


 


9.1                                 Client
shall not recruit or hire any ASM employee who is or was assigned to perform
services for Client under this Agreement without the prior written consent of
the President or CEO of ASM until at least one (1) year after the expiration of
the term of this Agreement.  If, with
ASM’s written consent, Client hires any ASM employee who is or was assigned to
perform services for Client under this Agreement, then client shall pay ASM
$250,000 within 30 days of the date of such hiring, as a fee for the additional
benefit obtained by Client.


 


9.2                                 This Agreement shall be binding on the parties and
on their respective successors and assigns. 
Notwithstanding the foregoing, this Agreement is not assignable by
either party, with the exception that ASM may assign it to a related
implemented affiliate.  Any attempt to
assign this Agreement despite the foregoing prohibition shall be void.


 


9.3                                 The parties will attempt to settle any claim or
controversy arising out of this Agreement through consultation and negotiation
in good faith and a spirit of mutual cooperation.  Any arbitration shall take place in Travis County, Texas, if
initiated by Client and in Fargo, North Dakota, if initiated by ASM.  Neither party may unreasonably withhold
consent to the selection of a mediator. 
The parties will share the costs of the mediation equally.  Any dispute which the


 


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parties cannot resolve through
negotiation or mediation within 45 days of the date of the initial demand for
it by one of the parties may then be submitted to the courts for resolution as
provided below.  The use of mediation
will not be construed under the doctrine of laches, waiver or estoppel or
affect adversely the judicial proceedings if (a) good faith efforts to resolve
the dispute under these procedures have been unsuccessful or (b) interim relief
from a court is necessary to prevent serious and irreparable injury.


 


9.4                                 This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas, excluding its conflicts of
laws provisions if any matter is originated by Client.  If any matter is originated by ASM, this
agreement shall be governed by and construed in accordance with the laws of the
State of North Dakota, excluding its conflicts of laws provisions.  Jurisdiction and venue for any matter shall
be in the federal and state courts sitting in Travis County, Texas, if initiated
by Client and in Fargo, North Dakota, if initiated by ASM.


 


9.5                                 The failure of either party to enforce its rights
under this Agreement at any time for any period shall not be construed as a
waiver of such rights.  If any provision
of this Agreement is determined to be illegal or unenforceable, that provision
will be limited or eliminated to the minimum extent necessary so that this
Agreement shall otherwise remain in full force and effect and enforceable.  Headings herein are for convenience of reference
only and shall in no way affect interpretation of the Agreement.


 


9.6                                 Neither party shall have liability or be deemed in
breach of this Agreement because of an act or omission resulting from an event
beyond the party’s reasonable control, including but not limited to acts of
God, acts or omissions of Internet providers, the Internet, equipment failure
of parties or their affiliates, acts or omissions of communication carriers or
suppliers, or natural disasters.


 


9.7                                 Neither party has the right or authority to, and
shall not assume or create any obligation of any nature whatsoever on behalf of
the other party or bind the other party in any respect whatsoever.


 


9.8                                 Notices shall be deemed given:  (a) when delivered personally; (b) when sent
via facsimile (and confirmed by delivery of the actual document by U.S. mail or
commercial express courier); (c) 3 days after deposit in the U.S. Mail,
registered or certified mail, return receipt requested, postage prepaid; or (d)
1 business day after deposit with a commercial express courier for next
business day delivery, with written verification of receipt.  All communications will be sent to the
addresses set forth on the cover sheet of this Agreement or such other address
as may be designated by a party by giving written notice to the other party
pursuant to this paragraph.


 


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EXECUTED by the parties to
effective as of the last date written below.


 


 


	
  ALEX SHESHUNOFF MANAGEMENT

  SERVICES, L.P.

  	
   

  	
  Client:  COMMUNITY FIRST BANKSHARES

  FARGO, NORTH DAKOTA

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ David W. Furnace 

  	
   

  	
  By:

  	
  /s/ Dan M. Fisher

  
	
   

  	
  Name:

  	
   

  	
  David W. Furnace

  	
   

  	
   

  	
  Name:

  	
   

  	
  Dan M. Fisher

  
	
   

  	
  Title:

  	
   

  	
  Managing Director

  	
   

  	
   

  	
  Title:

  	
   

  	
  CIO

  
	
  Date: 

  	
  10/8/03

  	
   

  	
  Date:

  	
  9/30/03

  
														



 


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CERTAIN
INFORMATION HAS BEEN DELETED FROM THIS EXHIBIT AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT UNDER RULE 24B-2.


 


PLATINUM OVERDRAFTSM MANAGEMENT AGREEMENT


 


Detail Schedule


 


	
  Client

  	
   

  	
  Community
  First Bankshares

  	
   

  
	
  Type of
  financial institution and jurisdiction under whose laws formed

  	
   

  	
  National
  Bank

  Primary Regulator:  Office of the
  Comptroller of the Currency

  	
   

  
	
  Address of
  Client’s principal offices

  	
   

  	
  520 Main
  Avenue

  Fargo, ND  58124

  	
   

  
	
  Agreement
  Effective Date

  	
   

  	
  September
  26, 2003

  	
   

  
	
  Compensation
  Months (§§4.1, 5.1d and 5.5)

  	
   

  	
  24 months

  	
   

  
	
  Program
  Implementation Period Fee (§5.2)

  	
  Amount

  	
   

  	
  [***]

  	
   

  
	
  Payment
  Schedule

  	
   

  	
  N/A

  	
   

  
	
  Fee Deposit
  amount (§5.5)

  	
   

  	
  [***]

  	
   

  
	
  Fee
  Percentage (§§5.1 and 5.5)

  	
  Months 1
  through 12

  	
   

  	
  [***]

  	
   

  
	
  Months 13
  through 24

  	
   

  	
  [***]

  	
   

  
	
  Months 25
  through 36

  	
   

  	
  N/A

  	
   

  
	
  Modifications
  to Agreement

  	
   

  	
  N/A