-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, At1AClfJt5FKgN1BjT9vNbwfzNlQD6P2HI4Xs6vVtomrDkmO3Z8osTSeDBnkk70F aWAsKBs5oOoqGbXZ+pEguA== 0000950172-00-000914.txt : 20000515 0000950172-00-000914.hdr.sgml : 20000515 ACCESSION NUMBER: 0000950172-00-000914 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OFFICIAL PAYMENTS CORP CENTRAL INDEX KEY: 0001094998 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 522190781 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-28187 FILM NUMBER: 630000 BUSINESS ADDRESS: STREET 1: THREE LANDMARK SQUARE CITY: STAMFORD STATE: CT ZIP: 06901-2501 BUSINESS PHONE: 2033564200 MAIL ADDRESS: STREET 1: 2333 SAN RAMON VALLEY BOULEVARD STREET 2: SUITE 450 CITY: SAN RAMON STATE: CA ZIP: 94583 FORMER COMPANY: FORMER CONFORMED NAME: US AUDIOTEX CORP DATE OF NAME CHANGE: 19990914 10-Q 1 - ------------------------------------------------------------------------------ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ to ___________________ Commission File Number 000-28187 OFFICIAL PAYMENTS CORPORATION - ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 52-2190781 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) Three Landmark Square Stamford, CT 06901-2501 - ------------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (203) 356-4200 - ------------------------------------------------------------------------------ (Registrant's telephone number, including area code) 2333 San Ramon Valley Boulevard, Suite 450, San Ramon, CA 94583 - ------------------------------------------------------------------------------ (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ As of May 4, 2000, 21,337,820 shares of the registrant's common stock were issued and outstanding. - ------------------------------------------------------------------------------ OFFICIAL PAYMENTS CORPORATION FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000 TABLE OF CONTENTS ITEM PAGE NUMBER - ---------- ----------- PART I: FINANCIAL INFORMATION Item 1. Financial Statements.................................. 3 Condensed Balance Sheets as of March 31, 2000 December 31, 1999................................... 3 Condensed Statements of Operations for the three- month periods ended March 31, 2000 and 1999......... 4 Condensed Statements of Cash Flows for the three-month periods ended March 31, 2000 and 1999............... 5 Notes to the Condensed Financial Statements........... 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................... 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk........................................... 17 PART II: OTHER INFORMATION Item 1. Legal Proceedings..................................... 18 Item 2. Changes in Securities and Use of Proceeds............. 18 Item 3. Defaults Upon Senior Securities....................... 18 Item 4. Submission of Matters to a Vote of Security Holders............................................... 18 Item 5. Other Information..................................... 18 Item 6. Exhibits and Reports on Form 8-K...................... 19 Signatures.......................................................... 20 Index to Exhibits PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS OFFICIAL PAYMENTS CORPORATION CONDENSED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AMOUNTS) (UNAUDITED)
MARCH 31, DECEMBER 31, 2000 1999 --------- ------------ ASSETS Current assets: Cash ............................................. $ 1,613 $ 1,643 Short-term investments............................ 72,230 78,871 Accounts receivable, net.......................... 1,014 1,135 Prepaid expenses.................................. 1,135 465 Other current assets.............................. 395 384 -------- --------- Total current assets............................ 76,387 82,498 Property and equipment, net......................... 4,261 1,802 Other assets........................................ 289 - --------- --------- Total assets.................................... $ 80,937 $ 84,300 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ................................. $ 479 $ 176 Accrued expenses.................................. 2,854 1,901 Deferred revenue.................................. 89 65 Current portion of notes payable and capital lease obligations.................................... 218 206 --------- --------- Total current liabilities....................... 3,640 2,348 Notes payable and capital lease obligations......... 372 391 --------- --------- Total liabilities............................... 4,012 2,739 --------- --------- Stockholders' equity: Common stock, $.01 par value; 150,000,000 shares authorized; 21,337,820 and 21,262,820 shares issued and outstanding as of March 31, 2000 and December 31, 1999, respectively............. 213 213 Additional paid-in capital........................ 128,823 127,707 Deferred stock-based compensation................. (31,767) (34,964) Accumulated deficit............................... (20,344) (11,395) --------- --------- Stockholders' equity...................... 76,925 81,561 --------- --------- Total liabilities and stockholders' equity.... $ 80,937 $ 84,300 ========= ========= See accompanying notes to condensed financial statements.
OFFICIAL PAYMENTS CORPORATION CONDENSED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ----------------------------------- 2000 1999 ---------- ---------- Revenues: Transaction fees.................................. $ 1,656 $ 728 Other revenues.................................... 168 102 --------- --------- Total revenues................................ 1,824 830 --------- --------- Cost of revenues: Cost of transaction fees.......................... 946 181 Cost of transaction fees to related party......... 487 206 Cost of other revenues............................ 77 19 --------- --------- Total cost of revenues........................ 1,510 406 --------- --------- Gross profit........................................ 314 424 --------- --------- Operating expenses: Sales and marketing............................... 4,446 175 Development costs................................. 482 140 General and administrative........................ 5,234 196 Depreciation and amortization..................... 190 37 Allocated expenses from related party............. 45 - --------- --------- Total operating expenses...................... 10,397 548 --------- --------- Loss from operations................................ (10,083) (124) Other income, net................................... 1,134 3 ---------- --------- Net loss............................................ $ (8,949) $ (121) ========== ========== Basic and diluted net loss per share................ $ (0.42) $ (0.01) ========== ========== Shares used in computing basic and diluted net loss per share............................... 21,303 15,000 ========== ========== See accompanying notes to condensed financial statements.
OFFICIAL PAYMENTS CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, ----------------------------------- 2000 1999 ---------- ---------- Cash flow used in operating activities: Net loss.......................................... $ (8,949) $ (121) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization................ 190 37 Amortization of deferred stock-based compensation................................. 3,197 - Changes in operating assets and liabilities Accounts receivable, net..................... 121 105 Prepaid expenses and other current assets.... (970) (20) Accounts payable and accrued expenses........ 1,256 (333) Deferred revenue............................. 24 (7) ---------- ---------- Net cash used in operating activities...... (5,131) (339) ---------- ---------- Cash flows provided by (used in) investing activities: Proceeds from sale of short-term investments...... 6,641 - Capital expenditures.............................. (2,619) (135) ---------- ----------- Net cash provided by (used in) investing activities.............................. 4,022 (135) ---------- ----------- Cash flow provided by (used in) financing activities: Proceeds from exercise of stock options........... 1,116 - Repayment of notes payable and capital leases..... (37) (32) ---------- ----------- Net cash provided by (used in) financing activities.............................. 1,079 (32) ---------- ----------- Net decrease in cash................................ (30) (506) Cash at the beginning of the period................. 1,643 631 ---------- ----------- Cash at the end of the period....................... $ 1,613 $ 125 Supplement disclosure of noncash activity: Cash paid for interest.............................. $ 6 $ 11 ========== =========== Assets acquired through capital leases.............. $ 30 $ 13 ========== ============ Cash paid for income taxes.......................... $ 83 $ - ========== ============ See accompanying notes to condensed financial statements.
OFFICIAL PAYMENTS CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS Note 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES THE COMPANY Official Payments Corporation was formed as U.S. Audiotex, LLC, a California limited liability company (the "LLC"), on June 26, 1996. U.S. Audiotex Corporation, a Delaware corporation (the "Company"), was formed on August 24, 1999. Effective September 30, 1999, the LLC merged with and into the Company. On October 20, 1999, the Company changed its name to "Official Payments Corporation". The Company provides credit card payment options for consumers to pay personal federal and state income taxes, sales and use taxes, property taxes and fines for traffic violations and parking citations. The Company's business model is unproven and evolving and it is difficult to evaluate the Company's business. The use of credit cards to make payments to government agencies is relatively new and evolving. Because the Company has only a limited operating history, it is difficult to evaluate its business and prospects and the risks, expenses and difficulties that the Company may face in implementing its business model. The Company's success will depend on maintaining its relationship with the Internal Revenue Services (IRS) and on developing additional relationships with state and local government agencies. There are no assurances that the Company will be able to develop new relationships or maintain existing relationships, and the failure to do so could have a material and adverse effect on the business, operating results and financial condition of the Company. BASIS OF PRESENTATION The accompanying condensed financial statements as of March 31, 2000 and December 31, 1999, and the three months ended March 31, 2000 and 1999, are unaudited. The unaudited interim condensed financial statements have been prepared on the same basis as the annual financial statements, and in the opinion of management, reflect all adjustments necessary to present fairly the Company's financial position, results of operations and cash flows as of March 31, 2000 and for the three months ended March 31, 2000 and 1999. These adjustments are of a normal, recurring nature. These condensed financial statements and notes thereto are unaudited and should be read in conjunction with the Company's audited financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. The results for the three months ended March 31, 2000 are not necessarily indicative of the expected results for the year ending December 31, 2000. Certain prior period balances have been reclassified to conform to the current period presentation. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported results of operations during the reporting period. Actual results could differ from those estimates. INVESTMENTS As of March 31, 2000, the Company had short-term investments of $72.2 million. The Company classifies its short-term investments as "available-for-sale." Financial instruments classified as short-term investments include government securities and commercial paper, with maturity dates of less than three months at the date of acquisition. Such short-term investments are recorded at fair value based on quoted market prices, with unrealized gains and losses recorded as other comprehensive income (loss) until realized. At March 31, 2000, no comprehensive income (loss) was reported, as the fair value of the Company's short-term investments equaled the quoted market prices. COMPREHENSIVE INCOME (LOSS) The Company has no components of other comprehensive income (loss). STOCK-BASED COMPENSATION The Company uses the intrinsic value method to account for all of its employee stock-based compensation plans. Expense associated with stock-based compensation is being amortized on a straight-line basis over the vesting period of the individual award consistent with the method described in Accounting Principles Board (APB) Opinion No. 25. REVENUE RECOGNITION Transaction fees are derived from convenience fees paid by consumers for credit card payment services provided by the Company. Convenience fees are charged based on the amount of the payment processed and the type of payment. Transaction fees are recognized in the month the services are provided. Other revenues consist of the sale of customized systems which include software licenses, implementation services, training and post contract support related to these system sales. As vendor specific objective evidence does not exist for each element of the contract, revenues are recognized, under the completed contract method, upon customer acceptance of the software which occurs after installation of the system and the completion of training. Maintenance revenues are deferred based on vendor specific objective evidence and recognized ratably over the contractual term of the maintenance agreement, generally one year. ADVERTISING EXPENSE The cost of advertising is expensed as incurred. Such costs are included in sales and marketing expense and totaled approximately $3.2 million and $7,000 for the three months ended March 31, 2000 and 1999, respectively. Note 2. NET LOSS PER SHARE Basic net loss per share is computed using the weighted-average number of outstanding shares of common stock. Diluted net loss per share is computed using the weighted-average number of shares of common stock outstanding and, when dilutive, potential common shares from options to purchase common stock using the treasury stock method. The following table presents the calculation of basic and diluted net loss per share (in thousands, except share and per share data):
THREE MONTHS ENDED MARCH 31, ----------------------------------- 2000 1999 -------- -------- Net loss......................................... $ ( 8,949) $ (121) ------------ ------------ Weighted-average shares used in computing basic and diluted net loss per common share.......... 21,303,000 15,000,000 ============ ============ Basic and diluted net loss per common share...... $ (0.42) $ (0.01) ============ ============
Basic and diluted net loss per share are computed using the weighted-average number of outstanding shares of common stock. Net loss per share for the three months ended March 31, 2000 does not include the effect of approximately 6,495,000 stock options with a weighted-average exercise price of $6.94 per share because their effects are anti-dilutive. There were no common stock equivalents outstanding as of March 31, 1999. Note 3. PROPERTY AND EQUIPMENT Property and equipment consisted of the following (in thousands):
MARCH 31, DECEMBER 31, ----------------------------------- 2000 1999 -------- -------- Computer equipment.............................. $ 4,430 $ 1,836 Furniture and fixtures.......................... 540 485 --------- --------- 4,970 2,321 Less accumulated depreciation and amortization.. 709 519 --------- --------- $ 4,261 $ 1,802 ========= =========
Note 4. AMORTIZATION OF DEFERRED STOCK-BASED COMPENSATION Amortization of deferred stock-based compensation consists of the following (in thousands):
THREE MONTHS ENDED MARCH 31, ----------------------------------- 2000 1999 -------- -------- Sales and marketing............................. $ 249 $ - Development costs............................... - - General and administrative...................... 2,948 - --------- --------- $ 3,197 $ - ========= =========
Note 5. OTHER INCOME, NET Other income, net, consists of the following (in thousands):
THREE MONTHS ENDED MARCH 31, ----------------------------------- 2000 1999 -------- -------- Interest income................................. $ 1,140 $ 4 Interest expense................................ (12) (11) Other income, net .............................. 6 10 --------- --------- $ 1,134 $ 3 ========= =========
Note 6. SEGMENT INFORMATION The Company adopted the provisions of SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information, in fiscal 1999. SFAS No. 131 supercedes SFAS No. 14, Financial Reporting for Segments of a Business Enterprise, and establishes standards for reporting information about operating segments, products and services, geographic areas, and major customers. The method for determining which information to report is based on the way that management organizes the operating segments within the Company for making operating decisions and assessing financial performance. The Company operates in a single operating segment. The Chief Executive Officer (CEO) has been identified as the Chief Operating Decision Maker because he has final authority over resource allocation decisions and performance assessment. The CEO reviews financial information by disaggregated information about revenues by product for purposes of making operating decisions and assessing financial performance. The financial information reviewed by the CEO is consistent with the information presented in the accompanying statements of operations.
THREE MONTHS ENDED MARCH 31, ----------------------------------- 2000 1999 -------- -------- Revenues by product are Transaction fees: Federal.................................... $ 522 $ 114 State...................................... 283 22 Local...................................... 851 592 Other revenues............................. 168 102 -------- -------- Total revenues............................. $ 1,824 $ 830 ======== ========
Note 7. RECENT ACCOUNTING PRONOUNCEMENTS In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 101 (SAB 101), Revenue Recognition in Financial Statements. SAB 101 provides guidance on applying generally accepted accounting principles to revenue recognition issues in financial statements. In March 2000, the SEC issued Staff Accounting Bulletin No. 101A (SAB 101A), Amendment: Revenue Recognition in Financial Statements. SAB 101A delays the implementation date of SAB 101 for registrants with fiscal years that begin between December 16, 1999 and March 15, 2000. The Company will adopt SAB 101 as required in the second quarter of 2000 and is evaluating the effect that such adoption may have on its results of operations and financial position. In March 2000, the Financial Accounting Standards Board issued FASB Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation, an interpretation of APB Opinion No. 25 (FIN 44). FIN 44 clarifies the application of APB Opinion No. 25 and, among other issues, clarifies the following: the definition of an employee for purposes of applying APB Opinion No. 25; the criteria for determining whether a plan qualifies as a noncompensatory plan; the accounting consequences of various modifications to the terms of previously fixed stock options or awards; and the accounting for an exchange of stock compensation awards in a business combination. FIN 44 is effective July 1, 2000, but certain conclusions in FIN 44 cover specific events that occurred after either December 15, 1998 or January 12, 2000. The Company will adopt FIN 44 as required in the second quarter of 2000 and is evaluating the effect that such adoption may have on its results of operations and financial position. Note 8. SUBSEQUENT EVENTS In April 2000, the Company entered into a sale-leaseback agreement for $1 million in interactive voice response telephone system (IVR) equipment. The sale-leaseback transaction did not result in any profit or loss for the Company because the selling price of the equipment was equal to the cost on the closing date of the agreement. The leased equipment will be accounted for as a capital lease, in accordance with SFAS No. 13, Accounting for Leases. In April 2000, after discussion by the Company's board of directors, Brian W. Nocco, the Company's Chief Financial Officer left the Company to pursue other opportunities. In accordance with the terms of Mr. Nocco's employment agreement, the Company is required to accelerate the vesting of Mr. Nocco's stock options granted in August, September, and November of 1999. As a result, the Company expects to incur a one-time non-cash compensation expense of approximately $3.7 million during the second quarter of 2000. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information in this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. For example, words such as "may", "will", "should", "estimates", "predicts", "potential", "continue", "strategy", "believes", "anticipates", "plans", "expects", "intends", and similar expressions are intended to identify forward-looking statements. Such statements are based upon the current economic environment and current expectations that involve risks and uncertainties, including, but not limited to statements regarding the Company's competitive position, expected operating and financial performance, business model and expected growth of electronic payments to government entities. All forward-looking statements included in this report are based upon information available to the Company as of the date hereof. You are cautioned that these statements are not guarantees of future performance. The Company's actual results and the timing of certain events may differ significantly than those anticipated in, or caused by, any forward-looking statements as a result of certain risks and uncertainties, including, without limitation, the general economic and business conditions, major systems failures, constraints in capacity, rapid technological changes, ability to retain existing government contracts and enter into new government contracts, competitive nature of the market in which the Company competes, the early stages of development of the Company's products, and the lack of widespread market acceptance of the Company's products. A more complete description of these and other risks and uncertainties associated with the Company's business can be found in the Company's filings with the United States Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 1999. The Company does not undertake any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Overview Official Payments Corporation is the leading provider of electronic payment options to government entities enabling consumers to use their credit cards to pay, by internet or the telephone, personal federal and state income taxes, sales and use taxes, property taxes and fines for traffic violations and parking citations. The Company's interactive toll-free telephone number, 1-888-2PAY-TAXSM, allows customers to make payments and receive certain customer service information. The Company's website, at www.8882paytax.comSMand at www.officialpayments.comSM, currently allow consumers to make certain payments through the Internet. The Company's revenues consist primarily of convenience fees, which are transaction fees paid by consumers for using our credit card payment services. For processing personal federal and state income tax payments and property tax payments, the convenience fee charged is a percentage of the payment amount. For processing fines for traffic violations and parking citations, a fixed amount is charged per ticket. The Company also derives a small amount of other revenues from sales of its systems to government entities and other miscellaneous fees such as for maintenance and consulting. In these cases, revenues for software systems sales are recognized upon installation based on vendor-specific objective evidence and revenues for maintenance are recognized ratably over the service period based on vendor-specific objective evidence. Consulting revenues are recognized as the services are performed. The Company's contract with the IRS currently accounts for a significant portion of the Company's revenue. As of January 2000, the Company offered its services for the balance-due and extension payment of personal federal income taxes due on April 17, 2000 and estimated tax payments for the 2000 tax year. In the three months ended March 31, 2000, convenience fees from tax payments to the IRS accounted for approximately 29% of the Company's total revenues. The Company expects that percentage to increase significantly during the second quarter and throughout fiscal year 2000. The IRS has selected the Company to provide electronic payment services with respect to balance-due and extension tax payments for the 2000 tax year, as well as estimated tax payments for the 2001 tax year (with the IRS having the option to renew the Company's services for an additional year). If the IRS does not continue to select the Company to perform this service in subsequent years, the business, operating results and financial position of the Company would be materially and adversely affected. The Company's primary cost of revenues are the merchant discount fee paid to its credit card processors, which is a certain percentage of the total amount paid by the consumer, depending on the credit card used and the type of transaction. The Company also incurs telecommunications costs through its telephone conduit. Although there are no telecommunications costs associated with payments made through the Internet conduit, the Company pays a third party license fee per completed transaction for certain technology used in the Internet conduit. Processing fines for traffic violations and parking citations produces a higher gross margin than processing income tax and property tax payments because the convenience fee as a percentage of fines processed is significantly higher. Operating expenses include sales and marketing expenses, development costs, general and administrative expenses, depreciation and amortization, and allocated expenses from a related party. One of the largest components of these expenses was the amortization of deferred stock-based compensation, which amounted to $3.2 million in the quarter ending March 31, 2000. Sales and marketing expenses consist primarily of advertising expenses and salaries and commissions for sales and marketing personnel. Development costs consist primarily of salaries for engineering personnel and development cost for the Company's customer service application. General and administrative expenses consist primarily of salaries for executive, finance, customer service and administrative personnel. The Company has incurred significant losses since inception and expects to continue to incur losses for the foreseeable future. As of March 31, 2000, the Company had an accumulated deficit of approximately $20.3 million. The Company recorded on its balance sheet a deferred stock-based compensation expense totaling $42.9 million in the third and fourth quarters of 1999. This deferred charge consists of an amount of $10.0 million, representing the guaranteed value of options granted to Thomas R. Evans, the Company's Chairman and Chief Executive Officer, and an amount of $32.9 million, representing the estimated value of the common stock underlying options granted to certain other officers and employees of the Company in August, September and November of 1999 in excess of the exercise price of those options. The $10.0 million deferred charge related to Mr. Evans' options and $28.4 million of deferred charges related to new options granted to other officers and employees is being amortized, on a straight-line basis, over a three-year vesting period, beginning in the third quarter of 1999. $4.5 million of expenses related to options granted to other officers and employees of the Company were expensed upon completion of its initial public offering on November 29, 1999. See Note 4 to the Company's December 31, 1999 audited financial statements. RESULTS OF OPERATIONS The following table sets forth, for the periods illustrated, certain statements of operations data expressed as a percentage of total revenues. The data has been derived from the unaudited financial statements contained in this report, which in management's opinion, have been prepared on substantially the same basis as the audited financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial information for the periods presented. The operating results for any period should not be considered indicative of the results for any future period. This information should be read in conjunction with the financial statements included in this report, as well as the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999.
THREE MONTHS ENDED MARCH 31, ----------------------------------- 2000 1999 -------- -------- STATEMENT OF OPERATIONS DATA: Revenues: Transaction fees................................... 91% 88% Other revenues..................................... 9 12 ------ ------ Total revenues................................. 100 100 ------ ------ Cost of revenues: Cost of transaction fees........................... 52 22 Cost of transaction fees to related party.......... 27 25 Cost of other revenues............................. 4 2 ------ ------ Total cost of revenues......................... 83 49 ------ ------ Gross profit......................................... 17 51 ------ ------ Operating expenses: Sales and marketing................................ 244 21 Development costs.................................. 26 17 General and administrative......................... 287 24 Depreciation and amortization...................... 11 4 Allocated expenses from related party.............. 2 - ------ ------- Total operating expenses....................... 570 66 ------ ------- Income (loss) from operations........................ (553) (15) Other income (expense), net.......................... 62 0 ------ ------- Net income (loss).................................... (491)% (15)% ======= =======
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 REVENUES Total Revenues. Total revenues increased $994,000 to $1.8 million for the three months ended March 31, 2000 from $830,000 for the three months ended March 31, 1999, an increase of 120%. This increase is primarily attributable to increases in revenues generated from processing personal federal and state income tax payments and property tax payments. Federal Transaction Fees. Revenues from processing federal payments are solely related to federal income tax payments for balance-due, extension, and estimated payments. Federal transaction fees increased $408,000 to $522,000 for the three months ended March 31, 2000 from $114,000 for the three months ended March 31, 1999, an increase of 358%. For the three months ended March 31, 2000, the Company processed approximately 10,700 transactions totaling $18.4 million, compared to approximately 3,300 transactions totaling $4.4 million for the three months ended March 31, 1999. The Company believes the increase in revenue from the comparable period in 1999 is primarily the result of increased advertising by the Company, the IRS, and participating credit card companies, as well as the new processing of extension and estimated federal tax payments. On average, the Company charged a 2.8% convenience fee based upon the dollar amount of the IRS payment for processing personal federal income taxes during the three months ended March 31, 2000, as compared to a 2.6% convenience fee in the three months ended March 31, 1999. Federal transaction fees represented 29% of total revenues for the three months ended March 31, 2000 compared to 14% of total revenues for the three months ended March 31, 1999. State Transaction Fees. Revenues from processing state payments are related to state income tax payments for balance-due, estimated and extension personal taxes and sales and use taxes to the states of California, New Jersey, Illinois, Connecticut, Oklahoma, Minnesota and the District of Columbia. State revenues increased $261,000 to $283,000 for the three months ended March 31, 2000 from $22,000 for the three months ended March 31, 1999, an increase of 1,186%. For the three months ended March 31, 2000, we processed approximately 7,600 transactions totaling $9.6 million, compared to approximately 1,000 transactions totaling $782,000 for the three months ended March 31, 1999. The increase in revenues is primarily related to additional state contracts and additional payment services and options provided to existing state contracts. The Company only processed tax payments for the state of California during the three months ended March 31, 1999. On average, the Company charged a 2.9% convenience fee based upon the dollar amount of the payment for processing state income and sales and use taxes during the three months ended March 31, 2000, as compared to a 2.8% convenience fee in the three months ended March 31, 1999. State transaction fees represented 15% of total revenues for the three months ended March 31, 2000 compared to 3% of total revenues for the three months ended March 31, 1999. Local Transaction Fees. Revenues from processing local payments consist of property taxes, traffic violations, parking citations, fax filing, and utility payments. Local revenues increased $259,000 to $851,000 for the three months ended March 31, 2000 from $592,000 for the three months ended March 31, 1999, an increase of 44%. For the three months ended March 31, 2000, we processed approximately 106,400 transactions totaling $23.2 million, compared to approximately 75,800 transactions totaling $16.9 million for the three months ended March 31, 1999. Revenues from processing property tax payments increased $165,000 to $322,000 for the three months ended March 31, 2000 from $157,000 for the three months ended March 31, 1999, an increase of 105%. Revenues from processing fines for traffic violations increased $42,000 to $320,000 for the three months ended March 31, 2000 from $278,000 for the three months ended March 31, 1999, an increase of 15%. Revenues from processing fines for parking citations increased $35,000 to $99,000 for the three months ended March 31, 2000 from $64,000 for the three months ended March 31, 1999, an increase of 55%. Revenues from other transaction fees increased $17,000 to $110,000 for the three months ended March 31, 2000 from $93,000 for the three months ended March 31, 1999, an increase of 18%. The increase in local transaction fees is primarily attributable to the increase in property tax, moving violation, and parking citation clients subsequent to March 31, 1999. Local transaction fees represented 47% of total revenues for the three months ended March 31, 2000 compared to 71% of total revenues for the three months ended March 31, 1999. Other Revenues. Other revenues consist of system sales, maintenance, and consulting revenues. Other revenues increased $66,000 to $168,000 for the three months ended March 31, 2000 from $102,000 for the three months ended March 31, 1999. Other revenues represented 9% of total revenues for the three months ended March 31, 2000 compared to 12% of total revenues for the three months ended March 31, 1999. COST OF REVENUES Cost of Transaction Fees. Cost of transaction fees increased $1.0 million to $1.4 million for the three months ended March 31, 2000 from $387,000 for the three months ended March 31, 1999, an increase of 270%. The largest component of cost of transaction fees, merchant discount fees, increased $651,000 to $982,000 for the three months ended March 31, 2000 from $331,000 for the three months ended March 31, 1999, an increase of 197%. The cost of telecommunication charges for the Company's toll-free interactive telephone system increased $349,000 to $395,000 for the three months ended March 31, 2000 from $46,000 for the three months ended March 31, 1999, an increase of 759%. Other cost of transaction fees increased $46,000 to $56,000 for the three months ended March 31, 2000 from $10,000 for the three months ended March 31, 1999. Cost of transaction fees was 79% of total revenues for the three months ended March 31, 2000, compared to 47% for the three months ended March 31, 1999. The increase in cost of transaction fees is due to primarily one-time telecommunication costs incurred during the recent period in preparation for the anticipated higher volume of federal and state tax payments during the first two weeks in April 2000 and higher volume of federal income tax payments processed, which has a lower gross profit margin than other services provided. Cost of Other Revenues. Cost of other revenues increased $58,000 to $77,000 for the three months ended March 31, 2000 from $19,000 for the three months ended March 31, 1999. The increase in other revenues is primarily attributable to the equipment cost of the sold systems in the three months ended March 31, 2000. OPERATING EXPENSES Sales and Marketing. Sales and marketing expenses increased $4.3 million to $4.4 million for the three months ended March 31, 2000 from $175,000 for the three months ended March 31, 1999. This increase is primarily attributable to a $3.2 million advertising campaign to promote the Company's federal tax payment services and increase brand awareness. The increase is also attributable to amortization of $249,000 for deferred stock-based compensation for options to purchase shares of the Company's common stock at exercise prices below their fair market value at the date of grant which were granted to the Company's sales and marketing employees in August, September, and November 1999. The increase in sales and marketing personnel from March 31, 1999 to March 31, 2000 and sales commission payables also contributed to the increase in sales and marketing expenses. Sales and marketing expenses represented 244% of total revenues for the three months ended March 31, 2000 compared to 21% for the three months ended March 31, 1999. Development Costs. Development costs increased $342,000 to $482,000 for the three months ended March 31, 2000 from $140,000 for the three months ended March 31, 1999. The increase is primarily attributable the increase in engineering personnel from March 31, 1999 to March 31, 2000 and additional consultants contracted during the recent quarter to develop the Company's customer service application. Development costs represented 26% of total revenues for the three months ended March 31, 2000 compared to 17% for the three months ended March 31, 1999. General and Administrative. General and administrative expenses increased $5.0 million to $5.2 million for the three months ended March 31, 2000 from $196,000 for the three months ended March 31, 1999. This increase is primarily attributable to amortization expense of $2.9 million for deferred stock-based compensation for options to purchase shares of the Company's common stock at exercise prices below their fair market value at the date of grant which were granted to the Company's general and administrative employees in August, September, and November 1999. The increase is also attributable to the increase in customer service activities in preparation for the anticipated higher volume of federal and state tax payments during the first two weeks of April 2000. Salary and travel expenses for the Company's general and administrative employees also increased due to the increase in headcount from March 31, 1999 to March 31, 2000. General and administrative expenses represented 287% of total revenues for the three months ended March 31, 2000 compared to 24% for the three months ended March 31, 1999. Depreciation and Amortization. Depreciation and amortization increased $153,000 to $190,000 for the three months ended March 31, 2000 from $37,000 for the three months ended March 31, 1999. The increase is primarily related to an increase in IVR equipment purchased during the recent period in preparation for the anticipated higher volume of federal and state tax payments during the first two weeks of April 2000. During the Company's peak processing period in April 2000, the Company's maximum utilization of its IVR system capacity was approximately 10%, and acccordingly, the Company believes that its IVR system capacity is sufficient to meet its transactional requirements for the foreseeable future and accommodate the expected growth in its business. Depreciation and amortization represented 11% of total revenues for the three months ended March 31, 2000 compared to 4% for the three months ended March 31, 1999. Allocated Expenses from Related Party. Related party expense was $45,000 for the three months ended March 31, 2000. Imperial Bank, a California chartered bank and wholly owned subsidiary of Imperial Bancorp, is the beneficial owner of approximately 56% of the outstanding stock of the Company and charges the Company for human resource and other services, including payroll processing and benefits administration. The Company did not utilize Imperial Bank's services during the three months ended March 31, 1999. OTHER INCOME, NET Other income, net consists of interest income, interest expense and other non-operating expenses. Other income, net increased to $1.1 million for the three months ended March 31, 2000 from $3,000 for the three months ended March 31, 1999. This increase is directly related to higher interest income resulting from higher average cash balances during the recent period, as compared to the first quarter of fiscal year 1999. INCOME TAXES The Company incurred operating losses during the period of its incorporation from September 30, 1999 through March 31, 2000. The Company has recorded a valuation allowance for the full amount of net deferred tax assets, as the future realization of the tax benefit is not currently likely. During 1998, Official Payments was a California limited liability company. Therefore, all tax operating losses were used by the members of the limited liability company on their respective corporate tax returns. LIQUIDITY AND CAPITAL RESOURCES In November 1999, the Company completed the initial public offering of its common stock and realized net proceeds from the offering of approximately $78.7 million. Prior to the offering the Company had financed its operations through private sales of common stock, with net proceeds of $1.2 million, and through bank and shareholder loans. As of March 31, 2000, the Company had $73.8 million in cash and investments, and $72.7 million in working capital. Net cash used in operating activities was $5.1 million and $339,000 for the three months ended March 31, 2000 and 1999, respectively. The cash used in operating activities for the three months ended March 31, 2000 was primarily the result of the Company's net loss offset by non-cash operating expenses (such as amortization of deferred stock-based compensation and depreciation) and an increase in accounts payable and accrued expenses. The cash used in operating activities for the three months ended March 31, 1999 was primarily the result of the Company's net loss and a decrease in accounts payable and accrued expenses. Net cash provided from investing activities was $4.0 million for the three months ended March 31, 2000. Cash provided from investing activities primarily reflects the sale of short-term investments, offset by property and equipment purchases during that period. Net cash used in investing activities was $135,000 for the three months ended March 31, 1999. Cash used in investing activities primarily reflects purchases of property and equipment during that period. Net cash provided by financing activities was $1.1 million for the three months ended March 31, 2000. The cash generated in the recent period was primarily related to the exercise of stock options by one of the Company's directors (although the shares of the Company's common stock so purchased remain subject to a right of repurchase by the Company in accordance with the terms of the Company's 1999 Stock Incentive Plan). Net cash used in financing activities was $32,000 for the three months ended March 31, 1999. The cash used in the three months ended March 31, 1999, was primarily related to the repayment of notes payable and capital lease obligations. The Company expects to experience growth in its operating costs for the foreseeable future in order to execute its business plan, particularly in the areas of web development costs and sales and marketing. The Company also expects to incur expenses to enhance and staff the new corporate headquarters in Stamford, Connecticut. As a result, the Company estimates that these operating costs, as well as other planned expenditures, will constitute a significant use of cash. The Company believes that the current cash resources will be sufficient to meet its working capital and capital expenditures for the foreseeable future. YEAR 2000 IMPACT As of the date of this filing, the Company has not incurred any significant business disruptions as a result of Year 2000 issues. However, while no such occurrence has developed, Year 2000 issues that may arise related to key suppliers and service providers may not become apparent immediately. We have received assurances of Year 2000 compliance from key suppliers. The Company has received assurances from key service providers such as financial institutions and Imperial Bank (which provides transaction processing services and various employee benefits services for the Company) as to their Year 2000 readiness. The Company will continue to monitor its own systems and business partners to identify and address any potential risk situations related to the Year 2000. No assurance can be provided that the Company will not be adversely affected by these suppliers and service providers due to noncompliance in the future. SEASONALITY AND FLUCTUATION OF QUARTERLY RESULTS The Company has generally experienced fiscal quarter over fiscal quarter revenue growth with some seasonal fluctuations, primarily in the second and fourth quarters. This fiscal quarter-over-fiscal quarter revenue growth is due to an increase in the number of government clients and payment services and an increase in utilization rates. The fluctuations in the second and fourth quarter relate primarily to an increase in convenience fees from processing property tax payments, which are generally collected twice a year - in April and December. The sharp increase in revenues in the second quarter is due to processing personal federal and state income tax payments in the month of April. We expect that results for the second quarter of future years will continue to be impacted by the April 15th deadline for paying personal federal and state income taxes. Since the Company does not process balance-due and extension personal federal income tax payments in the third quarter, revenues in that quarter are expected to be lower than in the second quarter. The Company anticipates that its operating expenses will continue to increase due to the expansion of its sales force in order to obtain additional state and municipal clients and the continuous marketing campaign to make consumer users aware of its electronic payment option. If revenues in any quarter do not increase correspondingly with increases in expenses, the Company's results for that quarter would be materially and adversely affected. In addition, as of March 31, 2000, the Company had $31.8 million in deferred stock-based compensation. The Company intends to amortize this amount on a straight-line basis over the remaining of the three-year vesting period. For the foregoing reasons, the Company believes that comparisons of its quarterly operating results are not necessarily meaningful and that its operating results in any particular quarter should not be relied upon as necessarily indicative of future performance. In addition, it is possible that in some future quarters the Company's operating results will be below the expectations of research analyst and investors, and in that case, the price of the Company's common stock is likely to decline. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk The Company's exposure to market risk for changes in interest rates relates primarily to the Company's investment portfolio. The Company does not use derivative financial instruments in its investment portfolio. The primary objective of the Company's investment activities is to preserve principal while maximizing yields without significantly increasing risk. This is accomplished by investing in widely diversified investments, consisting primarily of investment grade securities. Due to the nature of the Company's investments, the Company believes that there is no material risk exposure. All investments are carried at market value, which approximates cost. The table below represents principal amounts and related weighted-average interest rates by year of maturity for the Company's investment portfolio.
FY2000 FY2001 FY2002 FY2003 FY2004 Thereafter Total ------ ------ ------ ------ ------ ---------- ------- Money market fund and cash $ 1,613 $ - $ - $ - $ - $ - $ 1,613 Average interest Rate 5.05% 0.00% 0.00% 0.00% 0.00% 0.00% Investments $ 72,230 $ - $ - $ - $ - $ - $ 72,230 Average interest rate 6.10% 0.00% 0.00% 0.00% 0.00% 0.00% -------- ------- ------- ------- ------- -------- -------- Total cash and investments $ 73,843 $ - $ - $ - $ - $ - $ 73,843 ======== ======= ====== ======= ======= ======== ========
PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company currently is not involved in any material legal proceedings. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS On November 29, 1999, the Company completed the initial public offering of its common stock. The managing underwriters in the offering were Donaldson, Lufkin, & Jenrette, CIBC World Markets and DLJdirect Inc. The shares of the common stock sold in the offering were registered under the Securities Act of 1933, as amended, on a Registration Statement on Form S-1 (No. 333-87325). The Securities and Exchange Commission declared the Registration Statement effective on November 22, 1999. The offering commenced on November 23, 1999 and was completed on November 29, 1999 after the Company had sold all of the 5,750,000 shares of common stock registered under the Registration Statement (including 750,000 shares sold in connection with the exercise of the underwriters' over-allotment option). The initial public offering price was $15.00 per share, resulting in gross proceeds from the initial public offering of $86.2 million. The Company paid a total of $6.0 million in underwriting discounts and commissions and approximately $1.5 million has been incurred for costs and expenses related to the offering. None of the costs and expenses related to the offering were paid directly or indirectly to any director or officer of the Company or their associates, persons owning 10 percent or more of any class of equity securities of the Company or an affiliate of the Company. After deducting the underwriting discounts and commissions and the offering expenses, the estimated net proceeds to the Company from the offering were approximately $78.7 million. The net offering proceeds have been used to make the following payments: approximately $2.9 million for the purchase and installation of computer equipment to expand transaction processing capabilities; approximately $3.2 million for direct marketing and promotional activities; approximately $100,000 for the build-out of the Company's new headquarters offices in Stamford, Connecticut; and approximately $200,000 for general corporate purposes. None of these costs or expenses were paid directly or indirectly to any director or officer of the Company or their associates, persons owning 10 percent or more of any class of equity securities of the Company or an affiliate of the Company. In the future, the Company may also use a portion of its net proceeds to acquire or invest in businesses, technologies, products or services (which amount has not been specifically allocated as of the date hereof). Unused proceeds are invested in short-term investments. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the three months ended March 31, 2000, there were no matters submitted to a vote of security holders through a solicitation of proxies or otherwise. ITEM 5. OTHER INFORMATION On April 25, 2000, the Company's board of directors approved an amendment to the Company's 1999 Stock Incentive Plan (the "Plan") which permits the Compensation Committee of the board of directors to grant options to purchase the Company's common stock to consultants and other independent advisors to the Company, in addition to the Company's key employees and directors (who were the only potential option recipients previously provided for under the Plan). The board of directors determined that it is in the best interest of the Company and its stockholders to have another tool, if necessary, to strengthen the mutuality of interests between the Company and important independent advisors to the Company. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10.1 Contract between Internal Revenue Service and the Company, dated as of March 3, 2000. 10.2 1999 Stock Incentive Plan, as amended 27.1 Financial Data Schedule. (b) Reports on Form 8-K No current reports on Form 8-K were filed during the quarter covered by this report. SIGNATURES In accordance with the requirements of the Securities Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, there unto duly authorized. OFFICIAL PAYMENTS CORPORATION May 12, 2000 By: /s/ Thomas R. Evans ---------------------------- Thomas R. Evans Chairman of the Board and Chief Executive Officer May 12, 2000 By: /s/ Hyunjin F. Lerner ----------------------------- Hyunjin F. Lerner Controller (Chief Accounting Officer) INDEX TO EXHIBITS EXHIBIT NO. DESCRIPTION - -------- ----------- 10.1 Contract between Internal Revenue Service and the Company, dated as of March 3, 2000 10.2 1999 Stock Incentive Plan, as amended 27.1 Financial Data Schedule EX-10 2 EXHIBIT 10.1 - IRS CONTRACT ================================================================================================================================= SOLICITATION/CONTRACT/ORDER FOR COMMERCIAL ITEMS 1. REQUISITION NUMBER PAGE 1 OF I OFFEROR TO COMPLETE BLOCKS 12, 17, 23, 24, & 30 O-O-N8-07-07-A07 001 2. CONTRACT NO. 3. AWARDS/EFFECTIVE 4. ORDER NUMBER 5. SOLICITATION NUMBER 6. SOLICITATION ISSUE TIRNO-00-C-0010 DATE 03/03/00 DATE 7. FOR SOLICITATION a. NAME b. TELEPHONE NUMBER (No collect 8. OFFER DUE DATE/ INFORMATION CALL: calls) LOCAL TIME - --------------------------------------------------------------------------------------------------------------------------------- 9. ISSUED BY CODE irs0088 10. THIS ACQUISITION IS 11. DELIVERY FOR 12. DISCOUNT TERMS FOB DESTINATION Discount 0% INTERNAL REVENUE SERVICE [ ]UNRESTRIC1ED UNLESS BLOCK IS Days: 0 SERVICE [ ]SET ASIDE: % FOR MARKED Net due: 30 A/C PROCUREMENT Suite 700 [ ]SMALL BUSINESS [ ]SEE SCHEDULE 6009 OXON HILL ROAD [ ]SMALL DISAV. BUSINESS ------------------------------------------------ OXON HILL, MD 20745 [ ]8(A) [ ] 13a. THIS CONTRACT IS A RATED SIC: ORDER UNDER DPAS (15 CFR 700) SIZE STANDARD: ------------------------------------------------ 13b. RATING ------------------------------------------------ 14. METHOD OF SOLICITATION [ ]RFQ [ ]IFB [ ]RFP - --------------------------------------------------------------------------------------------------------------------------------- 15. DELIVER TO CODE lRS0088 16. ADMINISTERED BY CODE IRS0088 INTERNAL REVENUE SERVICE INTERNAL REVENUE SERVICE A/C PROCUREMENT Suite 700 A/C PROCUREMENT Suite 700 6009 OXON HILL ROAD 6009 OXON HILL ROAD OXON Hill, MD 20745 OXON HILL, MD 20745 - --------------------------------------------------------------------------------------------------------------------------------- 17a. CONTRACTOR/ CODE 00051397 FACILITY 18. PAYMENT WILL BE MADE BY CODE INV0830 OFFEROR code OFFICIAL PAYMENTS CORPORATION IRS/IRS ADMINISTRAT1VE SERV1CES CENTER 2333 SAN RAMON VALLEY BLVD. #450 PO BOX E SAN RAMON, CA 94553 TELEPHONE # (304) 256-6000 BECKLEY, WV 25802 TELEPHONE NO. - --------------------------------------------------------------------------------------------------------------------------------- [ ]17b. CHECK IF REMITTANCE IS DIFFERENT AND 18b. SUBMIT INVOICES TO ADDRESS SHOWN IN BLOCK 18a UNLESS BLOCK BELOW PUT SUCH ADDRESS IN OFFER IS CHECKED [ ]SEE ADDENDUM - --------------------------------------------------------------------------------------------------------------------------------- 19. 20. 21. 22. 23. 24. ITEM NO. SCHEDULE OF SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT - --------------------------------------------------------------------------------------------------------------------------------- See attached schedule (Attach Additional Sheets as Necessary) - --------------------------------------------------------------------------------------------------------------------------------- 25. ACCOUNTING AND APPROPRIATION DATA 26. TOTAL AWARD AMOUNT (For Govt. Use Only) See Commodity Lines 0.00 - --------------------------------------------------------------------------------------------------------------------------------- [ ]27a. SOLICITATION INCORPORATED BY REFERENCE FAR 52.212-1, 52.212-4. FAR 52.212-3 AND 52.212-5 ARE ATTACHED. ADDENDA [ ]ARE [ ]ARE NOT ATTACHED [ ]27b. CONTRACT/PURCHASE ORDER INCORPORATES BY REFERENCE FAR 52.212-4, FAR 52.212-5 IS ATTACHED. ADDENDA [X]ARE [ ]ARE NOT ATTACHED - --------------------------------------------------------------------------------------------------------------------------------- 28. CONTRACTOR IS REQUIRED TO SIGN THIS DOCUMENT AND RETURN 2 COPIES 29. AWARD OF CONTRACT: REFERENCE _______________ OFFER [X] TO ISSUING OFFICE. CONTRACTOR AGREES TO FURNISH AND DELIVER ALL ITEMS [ ] DATED _________. YOUR OFFER ON SOLICITATION SET FORTH OR OTHERWISE IDENTIFIED ABOVE AND ON ANY ADDITIONAL SHEETS (BLOCK 5), INCLUDING ANY ADDITIONS OR CHANGES SUBJECT TO THE TERMS AND CONDITIONS SPECIFIED HEREIN. WHICH ARE SET FORTH HEREIN, IS ACCEPTED AS TO ITEMS: - ---------------------------------------------------------------------------------------------------------------------------------- 30a. SIGNATURE OF OFFEROR/CONTRACTOR 31a. UNITED STATES OF AMERICA(SIGNATURE OF CONTRACTING OFFICER) /s/ THOMAS R. EVANS /s/ MICHELLE A. LANE - --------------------------------------------------------------------------------------------------------------------------------- 30b. NAME AND TITLE OF SIGNER (Type of print) 30c. DATE SIGNED 31b. NAME OF CONTRACTING 31c. DATE SIGNED OFFICER (Type of print) THOMAS R. EVANS 3/3/2000 MICHELLE A. LANE 202-283-1281 3/3/2000 CHAIRMAN & CEO - --------------------------------------------------------------------------------------------------------------------------------- 32a. QUANTITY IN COLUMN 21 HAS BEEN 33. SHIP NUMBER 34. VOUCHER NUMBER 35. AMOUNT VERIFIED CORRECT FOR [ ]RECEIVED [ ]INSPECTED [ ]ACCEPTED, AND CONFORMS TO THE [ ]PARTIAL [ ]FINAL CONTRACT, EXCEPT AS NOTED - --------------------------------------------------------------------------------------------------------------------------------- 36. PAYMENT 37. CHECK NUMBER 32b. SIGNATURE OF AUTHORIZED GOVT. 32c. DATE [ ]COMPLETE [ ]PARTIAL [ ]FINAL REPRESENTATIVE 38. S/R ACCOUNT NUMBER 39. S/R VOUCHER NUMBER 40. PAID BY - --------------------------------------------------------------------------------------------------------------------------------- 41a. I CERTIFY THIS ACCOUNT IS CORRECT AND PROPER FOR PAYMENT 42a. RECEIVED BY (Print) ------------------------------------------ 41b. SIGNATURE AND TITLE OF CERTIFYING OFFICER 41c. DATE 42b. RECEIVED AT (Location) ------------------------------------------ 42c. DATE REC'D 42d. TOTAL CONTAINERS (YY/MM/DD) ================================================================================================================================= AUTHORIZED FOR LOCATION REPRODUCTION STANDARD FORM 1449(10-95) Presented by GSA-FAR(48CFR)53.212 =================================================================================================================================
SECTION B - CONTRACT TYPE B.1 CONTRACT TYPE This is a FIRM FIXED PRICE CONTRACT for the requirements identified and described in Section C - Contract Terms and Conditions. B.2 CONTRACT PRICING CONTRACT LINE ITEM NUMBERS (CLINs) CLIN DESCRIPTION FIRM FIXED PRICE - ---- ----------- ---------------- 1001 ETA ALTERNATIVE PAYMENT METHODS PILOT CONTRACT BASE PERIOD OR PERFORMANCE FOR FILING SEASON 2001 $0 1002 ETA ALTERNATIVE PAYMENT METHODS PILOT CONTRACT OPTION 1 PERIOD OF PERFORMANCE FOR FILING SEASON 2002 $0 TOTAL CONTRACT PRICE $0 SECTION C - CONTRACT TERMS AND CONDITIONS C.1 CONTRACT TERMS AND CONDITIONS -- COMMERCIAL ITEMS FAR 52.212-4 (MAR 1999)..........................Page 5 C.2 STATEMENT OF WORK - ADDENDUM TO FAR 52.212-4..............Page 9 C.2.1 INTRODUCTION......................................Page 9 C.2.2 GENERAL REQUIREMENTS..............................Page 9 C.2.3 DUTIES AND RESPONSIBILITIES OF THE CONTRACTOR.....Page 9 C.2.4 DUTIES AND RESPONSIBILITIES OF THE GOVERNMENT.....Page 12 C.2.5 DELIVERABLES......................................Page 13 C.2.5.1 FINDINGS REPORT..........................Page 13 C.2.5.2 MARKETING REPORT........................Page 14 C.2.5.3 MONTHLY DEVELOPMENT STATUS REPORT........Page 14 C.2.5.4 DAILY AND MONTHLY PRODUCTION REPORTS.....Page 15 C.2.5.5 CHARGEBACK REPORTS.......................Page 15 C.2.6 SUCCESS DETERMINATION............................ Page 16 C.2.7 SCHEDULE OF PERFORMANCE...........................Page 17 C.2.8 PERFORMANCE REQUIREMENTS..........................Page 17 C.3 AUTHORITY - CONTRACTING OFFICER, CONTRACTING OFFICER'S TECHNICAL REPRESENTATIVE AND CONTRACTOR'S PROJECT MANAGER............................Page 18 C.3.1 ADMINISTRATIVE CONTRACTING OFFICER................Page 18 C.3.2 CONTRACTING OFFICER'S TECHNICAL REPRESENTATIVE....Page 18 C.3.3 PROJECT MANAGER...................................Page 19 C.4 CONTRACT CORRESPONDENCE...................................Page 19 C.5 DISCLOSURE OF INFORMATION--SAFEGUARDS (IRSAP 1052.224-9000)(JAN 1998)................................Page 20 C.6 DISCLOSURE OF "OFFICIAL USE ONLY" INFORMATION SAFEGUARDS (IRSAP 1052.224-70(d)) (DEC 1988).............Page 20 C.7 DISCLOSURE OF INFORMATION--CRIMINAL/CIVIL SANCTIONS (IRSAP 1052.224-71(a)) (JAN 1998)............Page 20 C.8 DISCLOSURE OF INFORMATION--OFFICIAL USE ONLY (IRSAP 1052.224-71(b)) (DEC 1988).................Page 21 C.9 DISCLOSURE OF INFORMATION--INSPECTION (IRSAP 1052.224-72) (DEC 1988)..........................Page 22 C.10 PUBLIC RELEASE OF INFORMATION............................Page 22 C.11 IRSAP 1052.239-9002 - YEAR 2000 WARRANTY - COMMERCIAL SUPPLY PRODUCTS.............................Page 23 C.12 ADDENDUM 1.............................................. Page 24 C.12.1 FAR CLAUSES INCORPORATED BY REFERENCE............Page 24 C.12.2 TERM OF CONTRACT.................................Page 24 C.12.3 OPTION TO EXTEND THE TERM OF THE CONTRACT........Page 24 C.13 CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR EXECUTIVE ORDERS -- COMMERCIAL ITEMS, FAR 52.212-5 (AUG1996) ..............Page 25 SECTION C - CONTRACT TERMS AND CONDITIONS C.1 CONTRACT TERMS AND CONDITIONS -- COMMERCIAL ITEMS FAR 52.212-4 (MAY 1999)(TAILORED) As prescribed in 12.301(b)(3), insert the following clause: Contract Terms and Conditions--Commercial Items (May 1999) (a) Inspection/Acceptance. The Contractor shall only tender for acceptance those items that conform to the requirements of this contract. The Government reserves the right to inspect or test any supplies or services that have been tendered for acceptance. The Government may require repair or replacement of nonconforming supplies or reperformance of nonconforming services at no increase in contract price. The Government must exercise its post-acceptance rights-- (1) Within a reasonable time after the defect was discovered or should have been discovered; and (2) Before any substantial change occurs in the condition of the item, unless the change is due to the defect in the item. (b) Assignment. The Contractor or its assignee's rights to be paid amounts due as a result of performance of this contract, may be assigned to a bank, trust company, or other financing institution, including any Federal lending agency in accordance with the Assignment of Claims Act (31 U.S.C. 3727). (c) Changes. Changes in the terms and conditions of this contract may be made only by written agreement of the parties. (d) Disputes. This contract is subject to the Contract Disputes Act of 1978, as amended (41 U.S.C. 601-613). Failure of the parties to this contract to reach agreement on any request for equitable adjustment, claim, appeal or action arising under or relating to this contract shall be a dispute to be resolved in accordance with the clause at FAR 52.233-1, Disputes, which is incorporated herein by reference. The Contractor shall proceed diligently with performance of this contract, pending final resolution of any dispute arising under the contract. (e) Definitions. The clause at FAR 52.202-1, Definitions, is incorporated herein by reference. (f) Excusable delays. The Contractor shall be liable for default unless nonperformance is caused by an occurrence beyond the reasonable control of the Contractor and without its fault or negligence such as, acts of God or the public enemy, acts of the Government in either its sovereign or contractual capacity, fires, floods, epidemics, quarantine restrictions, strikes, unusually severe weather, and delays of common carriers. The Contractor shall notify the Contracting Officer in writing as soon as it is reasonably possible after the commencement of any excusable delay, setting forth the full particulars in connection therewith, shall remedy such occurrence with all reasonable dispatch, and shall promptly give written notice to the Contracting Officer of the cessation of such occurrence. (g) Invoice. The Contractor shall submit an original invoice and three copies (or electronic invoice, if authorized,) to the address designated in the contract to receive invoices. An invoice must include-- (1) Name and address of the Contractor; (2) Invoice date; (3) Contract number, contract line item number and, if applicable, the order number; (4) Description, quantity, unit of measure, unit price and extended price of the items delivered; (5) Shipping number and date of shipment including the bill of lading number and weight of shipment if shipped on Government bill of lading; (6) Terms of any prompt payment discount offered; (7) Name and address of official to whom payment is to be sent; and (8) Name, title, and phone number of person to be notified in event of defective invoice. Invoices will be handled in accordance with the Prompt Payment Act (31 U.S.C. 3903) and Office of Management and Budget (OMB) Circular A-125, Prompt Payment. Contractors are encouraged to assign an identification number to each invoice. (h) Patent indemnity. The Contractor shall indemnify the Government and its officers, employees and agents against liability, including costs, for actual or alleged direct or contributory infringement of, or inducement to infringe, any United States or foreign patent, trademark or copyright, arising out of the performance of this contract, provided the Contractor is reasonably notified of such claims and proceedings. (i) Payment. Payment shall be made for items accepted by the Government that have been delivered to the delivery destinations set forth in this contract. The Government will make payment in accordance with the Prompt Payment Act (31 U.S.C. 3903) and Office of Management and Budget (OMB) Circular A-125, Prompt Payment. If the Government makes payment by Electronic Funds Transfer (EFT), see 52.212-5(b) for the appropriate EFT clause. In connection with any discount offered for early payment, time shall be computed from the date of the invoice. For the purpose of computing the discount earned, payment shall be considered to have been made on the date which appears on the payment check or the specified payment date if an electronic funds transfer payment is made. (j) Risk of loss. Unless the contract specifically provides otherwise, risk of loss or damage to the supplies provided under this contract shall remain with the Contractor until, and shall pass to the Government upon: (1) Delivery of the supplies to a carrier, if transportation is f.o.b. origin; or (2) Delivery of the supplies to the Government at the destination specified in the contract, if transportation is f.o.b. destination. (k) Taxes. The contract price includes all applicable Federal, State, and local taxes and duties. (l) Termination for the Government's convenience. The Government reserves the right to terminate this contract, or any part hereof, for its sole convenience. In the event of such termination, the Contractor shall immediately stop all work hereunder and shall immediately cause any and all of its suppliers and subcontractors to cease work. Subject to the terms of this contract, the Contractor shall be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges the Contractor can demonstrate to the satisfaction of the Government using its standard record keeping system, have resulted from the termination. The Contractor shall not be required to comply with the cost accounting standards or contract cost principles for this purpose. This paragraph does not give the Government any right to audit the Contractor's records. The Contractor shall not be paid for any work performed or costs incurred which reasonably could have been avoided. (m) Termination for cause. The Government may terminate this contract, or any part hereof, for cause in the event of any default by the Contractor, or if the Contractor fails to comply with any contract terms and conditions, or fails to provide the Government, upon request, with adequate assurances of future performance. In the event of termination for cause, the Government shall not be liable to the Contractor for any amount for supplies or services not accepted, and the Contractor shall be liable to the Government for any and all rights and remedies provided by law. If it is determined that the Government improperly terminated this contract for default, such termination shall be deemed a termination for convenience. (n) Title. Unless specified elsewhere in this contract, title to items furnished under this contract shall pass to the Government upon acceptance, regardless of when or where the Government takes physical possession. (o) Warranty. The Contractor warrants and implies that the items delivered hereunder are merchantable and fit for use for the particular purpose described in this contract. (p) Limitation of liability. Except as otherwise provided by an express or implied warranty, the Contractor will not be liable to the Government for consequential damages resulting from any defect or deficiencies in accepted items. (q) Other compliances. The Contractor shall comply with all applicable Federal, State and local laws, executive orders, rules and regulations applicable to its performance under this contract. (r) Compliance with laws unique to Government contracts. The Contractor agrees to comply with 31 U.S.C. 1352 relating to limitations on the use of appropriated funds to influence certain Federal contracts; 18 U.S.C. 431 relating to officials not to benefit; 40 U.S.C. 327, et seq., Contract Work Hours and Safety Standards Act; 41 U.S.C. 51-58, Anti-Kickback Act of 1986; 41 U.S.C. 265 and 10 U.S.C. 2409 relating to whistleblower protections; 49 U.S.C. 40118, Fly American; and 41 U.S.C. 423 relating to procurement integrity. (s) Order of precedence. Any inconsistencies in this solicitation or contract shall be resolved by giving precedence in the following order: (1) The schedule of supplies/services. (2) The Assignments, Disputes, Payments, Invoice, Other Compliances, and Compliance with Laws Unique to Government Contracts paragraphs of this clause. (3) The clause at 52.212-5. (4) Addenda to this solicitation or contract, including any license agreements for computer software. (5) Solicitation provisions if this is a solicitation. (6) Other paragraphs of this clause. (7) The Standard Form 1449. (8) Other documents, exhibits, and attachments. (9) The specification. (End of clause) C.2 STATEMENT OF WORK - ADDENDUM TO FAR 52.212-4 C.2.1 INTRODUCTION With passage of the Taxpayer Relief Act of 1997, the federal government can accept tax payments via any commercially acceptable means. The purpose of this contract is to implement a convenient method for taxpayers to electronically pay income taxes owed, which will also reduce governmental costs and improve cash flow to the federal government. C.2.2 GENERAL REQUIREMENTS This is a "commercial item" acquisition, as that term is defined in the Federal Acquisition Regulations (FAR) 2.101. The Contractor shall provide an electronic credit card authorization system and shall conduct a program that allows taxpayers to make federal tax payments by means of an interactive voice response (IVR) system and Internet application, respectively, using American Express Card, Discover Card, and MasterCard cards. The Contractor shall enable payment with up to a sixteen digit credit card number and four or six digit expiration date. The Contractor shall ensure that certain edits are performed to confirm the validity of the credit card number and expiration date. The Contractor shall provide an electronic confirmation number as acknowledgement of the completed payment to the taxpayer. The Contractor may charge taxpayers a traditional "merchant fee" for the convenience of having an electronic payment authorized and made. On average, the convenience fee, which may include the Contractor's credit card transaction fee, shall not exceed 3% of the tax payment. The Contractor shall collect and disburse all such fees from the cardholder and post all charges to the cardholder's account. C.2.3 DUTIES AND RESPONSIBILITIES OF THE CONTRACTOR The Contractor's duties and responsibilities during the term of this contract are to: 1. Provide individual federal taxpayers access to the credit card transaction processing networks employed by the Contractor, beginning on January 12, 2001 and ending on January 23, 2002, at a rate equal to or exceeding 95% availability (total number of customers accessing the Contractor's credit card transaction network on the first attempt/total number of attempts). 2. Provide a system that accepts tax year 2000, 1040 balance due payments beginning January 12, 2001 through October 15, 2001. 3. Provide a system that accepts tax year 2000, 4868 balance due payments beginning January 12, 2001 through April 16, 2001. 4. Provide a system that accepts tax year 2001, 1040ES payments beginning March 1, 2001 through January 23, 2002. 5. Provide documentation to the Government (with "limited rights" as defined in the "Rights in Data" clause in Section C.12.1), before the program commences, of the transaction processing networks employed in the program and the networks' interfaces. Networks and interfaces shall be included within functional schematics/specifications describing work processes and data flow from payment initiation, and credit authorization/denial to payment confirmation or rejection. IVR scripts and Internet screens shall be provided to document respective front-end systems' functionality. Configuration control and management shall be exercised and documented as system/functionality changes occur. 6. Provide documentation to the Government (with "limited rights" as defined in the "Rights in Data" clause in Section C.12.1), before the program commences, of capacity analysis; a disaster recovery plan; a security and privacy plan; an application test plan and test reports/certification. 7. Provide necessary systems and data accesses to the Government's representative performing independent verification and validation testing of system's readiness (including, but not limited to, applications testing, stress testing, vulnerability testing and security testing). 8. Provide an accuracy rate of 99% or higher for all transmitted transaction data as provided by the taxpayer. This includes accuracy of electronic payment data resulting from intermediate actions taken by the Contractor necessary for coding, applying, and transmitting payment data. 9. Notify taxpayers of the dollar amounts of all fees to be charged to their credit card and obtain taxpayers' acknowledgements of charges prior to initiating credit authorizations. The Government shall be notified of the method of obtaining taxpayers' acknowledgement before the program commences. 10. Provide taxpayers with confirmation of payment transactions electronically through the payment means (IVR or Internet) used to complete the payment. 11. Provide taxpayers, upon request, with IRS general information in an easily accessible, readable and print-ready form by way of the Contractor's Web site. 12. Provide incident reports of any material network outages, work stoppages, or other payment processing problems. This includes but is not limited to systemic problems related to authorizing credit on-line and human errors that result in duplicate payments or non-payment. The Contractor shall inform the Contracting Officer's Technical Representative (COTR) of all incidents within 24 hours of occurrence or awareness, and shall provide an incident report within 5 business days. Incident reports shall include a description of the incident, the cause, number of taxpayers impacted, duration of the incident, and actions taken by the Contractor to remedy the incident. The Contractor shall comply with the EFTPS Credit Card Bulk Filer Requirements and provide all reports (EDI .X.12) as stated therein. No additional "bulk filer" reports are required. 13. Make reasonable efforts to make any necessary modifications to software, systems, and services in accordance with its commercial business practices to conform to the provisions of IRS regulations promulgated under U.S.C. 6311(d)(1). This contract is considered modified automatically to incorporate by reference the current provisions of such IRS regulations during the life of this contract. 14. Retain credit card authorization logs for 72 months from the date of each transaction. The information in such logs shall include, transaction type, date and time, card member account number and expiration date, amount of transaction, and approval code. This requirement shall survive the life of this contract, and the Government shall have the right to inspect such logs upon reasonable notice to the Contractor. 15. Convert credit card transactions to ACH debit authorizations and settle funds to the Government's designated Treasury Financial Agent (TFA). Any adjustments necessary because of failure to correctly verify and validate credit information shall be the responsibility of the Contractor. The TFA shall initiate one bulk daily debit to the account established for this purpose. 16. Settle all credit card payment transactions in accordance with the following standard timeframes for settlement for each credit card as stated in the applicable merchant agreement: MasterCard funds will be deposited on the 2nd business day after the date of authorization of the transaction. American Express and DiscoverCard funds shall be deposited on the 3rd business day after the date of authorization of the transaction. Any funds held overnight from one business day to the next business day shall be subject to U.S. Treasury penalties and interest. Provide settled credit card payments where the authorization date is less than 11 days prior to the settlement date. American Express and DiscoverCard payments shall be forwarded to the TFA one business day prior to settlement. 17. Forward settlement files to the TFA one business day prior to funds settlement. 18. Provide only guaranteed payments to the Government for taxes owed. 19. Maintain the confidentiality of any information relating to credit card transactions with absolutely no disclosure or use except to the extent authorized by written procedures promulgated by the IRS pursuant to 25 U.S.C. 6311(e)(3). 20. Maintain the confidentiality of any information relating to Federal/State credit card payments completed in a single transaction. This includes absolutely no disclosure or use of information collected during this transaction for any purpose other than processing the transaction to the U.S. Treasury or appropriate State. Information collected during this transaction shall not be disclosed or used for any purpose prohibited by Section 6311 of the Internal Revenue Code. 21. Pay all credit card discount fees and other transaction fees. 22. Provide a merchant descriptor on the taxpayer's credit card statement indicating the tax payment amount as a unique line item entitled "U S Treasury Tax Payment." 23. Provide a merchant descriptor on the taxpayer's credit card statement indicating the convenience fee amount as a unique line item. 24. Provide Marketing Plan and deliverables that support and facilitate public awareness of IRS e-file and electronic payments. This shall include (1) IRS e-file key messages and/or logo; (2) measures for success; (3) method for tracking the number of unique taxpayers that pay electronically as a result of deliverables, and (4) marketing reports (as described in Section C.2.5.2). Also, refer to C.10 regarding public release of information. C.2.4 DUTIES AND RESPONSIBILITIES OF THE GOVERNMENT The Government's, that is, the Internal Revenue Service's, duties and responsibilities during the term of this contract are to: 1. Provide electronic record specifications necessary for funds settlement and posting of tax data related to the credit card payments. 2. Provide no consideration to the Contractor for credit card related transactions. 3. Designate Treasury Financial Agent(s) to act on the Government's behalf for settlement of funds in payment of individual taxes owed. The TFA(s) will have no authority to access accounts, use information, or place requirements on any person or organization to use the taxpayer's credit card to collect any amount beyond what has been authorized by the taxpayer. 4. Provide an electronic copy of General Information for Taxpayers which is required to be made available to taxpayers via electronic means. 5. Provide required reporting formats. 6. Process chargeback actions in accordance with its written procedures. This shall include reimbursing the Contractor for unauthorized charges that are substantiated by the cardholder and approved by the Contractor's duly authorized management representative. The Contractor must have completed and delivered the appropriate IRS chargeback form and supporting documentation to the IRS as described in IRS chargeback procedures. Such chargeback requests shall be processed based on the Contractor's determination of the appropriateness of this action as signified by its authorized claimant's signature. 7. Provide a hyperlink from the IRS Digital Daily Web Site to the Contractor's Web Site. C.2.5 DELIVERABLES The Contractor shall submit the following deliverables in accordance with the schedule outlined in Section C.2.7. C.2.5.1 FINDINGS REPORT The Contractor shall provide an initial and supplemental findings report. A copy of the report shall be provided to the IRS Contracting Officer (CO)(one copy), the Contracting Officer's Technical Representative (COTR) (one copy), and the IRS Program Manager (three copies). The report shall describe: 1. the program features, 2. the conduct and findings of the program as they relate to the Contractor's and any subcontractor's performance (including a summary of all payment transactions, any problems, changes made during the filing season and lessons learned) 3. recommendations for improvement including changes to the Contractor's and/or IRS processes, and 4. practitioner and/or client feedback including customer satisfaction survey results. The initial report will include activity occurring between January and April. The supplemental report will include a summary of the initial report's findings and activity from May through October. C.2.5.2 MARKETING REPORTS The Contractor shall provide an initial and supplemental marketing report in conjunction with the Findings Reports described above. The reports shall contain a narrative description of (1) accomplishments; (2) the number of unique visits to and from the Contractor's Web site by way of a hyperlink established with the IRS; (3) measurement of success (for example, number of unique taxpayers that electronically pay as a result of the marketing campaign); and (4) difficulties/ barriers. The initial report shall include activity occurring between January and April 2001. The supplemental report shall include a summary of the initial report findings and marketing activity from May through October 2001. These reports are subject to inspection, verification and approval by the IRS. C.2.5.3 MONTHLY DEVELOPMENT STATUS REPORTS The Contractor shall provide monthly status reports on the 10th day of each month through the implementation date of the program. The report shall cover the overall progress of the program's development. Copies of the report shall be provided to the IRS Contracting Officer (CO) (one copy) and the Contracting Officer's Technical Representative (COTR) (one copy) and the IRS Program Manager (one copy). The report shall contain the following information: 1. date of report, 2. project manager name, 3. project manager telephone number, fax number and e-mail address, 4. a brief description of the work accomplished, emphasizing the progress made since the last reporting period, 5. a description of any unresolved and/or anticipated problems, if any (include schedule impacts), 6. an estimate of the percent of work accomplished to date; and a statement on the status of the program as it relates to the work breakdown schedule, either confirming that the task is on schedule or explaining the nature and extent of the pending delay. C.2.5.4 DAILY AND MONTHLY PRODUCTION REPORTS The Contractor shall provide daily and cumulative monthly transaction reports. The reports shall cover the post-implementation progress of the program. Daily reports shall be provided no later than 9:00 am Eastern Time and should include all prior day transactions and cumulative volumes. Monthly reports shall be provided by the 10th day of each month and include all prior month transactions and reconcile any adjustments made during that month. Copies of the reports shall be provided to the IRS Contracting Officer (CO)(one copy), the Contracting Officer's Technical Representative (COTR) (one copy) and the Program Manager (one copy) or his/her designee. The report shall contain the following information: 1. date of report, 2. period covered, 3. total number of transactions, 4. dollar amount of transactions, 5. total number of successful attempts, 6. dollar amount of successful attempts, 7. average payment amount, 8. total number of failed attempts, 9. dollar amount of failed attempts, 10. reasons for failed attempts, and 11. customer service activity. Aggregate and cumulative payment volumes as well as counts by payment type shall be provided daily. A report of the number of rejected entities shall also be provided daily. 12. report of 4868 payment entities (primary and secondary) for those taxpayers who indicate a supplemental filing (Form 709) is needed. C.2.5.5 CHARGEBACK REPORTS The Contractor shall provide weekly reports of all chargeback actions identifying the transaction date, dollar amount, action request date, and reason for action. These actions shall be in conformance with chargeback procedures issued by the IRS and meet the definition of chargebacks provided by the Contractor and agreed to by the IRS. These reports shall be delivered to the designated IRS point of contact by close of business each Friday. C.2.6 SUCCESS DETERMINATION The Contractor shall provide a satisfaction survey for a select number of taxpayers participating in the program. Non-users may also be surveyed to determine reasons for non-use and ways to attract additional users. The Contractor will provide this data in their Findings Report (see C.2.5.1). Based on the results of the Year 2001 program and/or findings obtained in the Contractor's survey(s), any survey conducted by the Government and the Contractor's Findings Report, the IRS will (1) determine whether it will exercise an option year to extend the term of the Contract (see C.12.3) and have the Contractor conduct the program for the subsequent tax filing season and (2) negotiate any changes for this option year. C.2.7 SCHEDULE OF PERFORMANCE
- ----------------------------------------------------------------------------------------------- RESPONSIBLE PARTY EVENT DATE - ----------------------------------------------------------------------------------------------- IRS Provide Report Formats March 24, 2000 - ----------------------------------------------------------------------------------------------- Contractor Provide draft project schedule (including requirements, April 19, 2000 development, testing and implementation phases)ect schedule (including requirements, development, testing and implementation phases) - ----------------------------------------------------------------------------------------------- IRS Provide comments on draft Project Schedule May 2, 2000 - ----------------------------------------------------------------------------------------------- Contractor Provide baselined project schedule June 5, 2000 - ----------------------------------------------------------------------------------------------- Contractor Provide marketing plan July 31, 2000 - ----------------------------------------------------------------------------------------------- IRS Provide comments on marketing plan August 24, 2000 - ----------------------------------------------------------------------------------------------- IRS Provide General Information for Taxpayers September 29, 2000 - ----------------------------------------------------------------------------------------------- Contractor Obtain signed contracts with other participating credit September, 29, 2000 card companies, if applicable - ----------------------------------------------------------------------------------------------- IRS Provide revised chargeback procedures October 23, 2000 - ----------------------------------------------------------------------------------------------- Contractor Begin internal feature testing August 1, 2000 - ----------------------------------------------------------------------------------------------- Contractor Obtain bulk filer certification November 15, 2000 - ----------------------------------------------------------------------------------------------- Contractor Complete internal feature testing December 1, 2000 - ----------------------------------------------------------------------------------------------- Contractor Complete full circle integrated test with IRS/TFA December 15, 2000 - ----------------------------------------------------------------------------------------------- Contractor Begin Program (1040 and 4868 payment option January 12, 2001 - ----------------------------------------------------------------------------------------------- IRS Provide hyperlink from the Digital Daily January 12, 2001 Contractor's Web page (which includes 2001 updates) - ----------------------------------------------------------------------------------------------- Contractor Begin 1040ES payment options March 1, 2001 - ----------------------------------------------------------------------------------------------- Contractor End 4868 payment option April 16, 2001 - ----------------------------------------------------------------------------------------------- Contractor Deliver Initial Findings Report June 30, 2001 - ----------------------------------------------------------------------------------------------- IRS Exercise Option Year Decision July 1, 2001 - ----------------------------------------------------------------------------------------------- Contractor End 1040 payment option October 15, 2001 - ----------------------------------------------------------------------------------------------- Contractor Deliver Supplemental Findings Report November 16, 2001 - ----------------------------------------------------------------------------------------------- Contractor End 1040 ES payment option January 23, 2002 - -----------------------------------------------------------------------------------------------
C.2.8 PERFORMANCE REQUIREMENTS 1. The required data fields for each tax payment include: (1) The primary taxpayer's identification number [(first social security number as shown on the tax return for the year for which the payment applies) and secondary SSN if the tax type is 4868 and the taxpayer indicates a supplemental filing is needed]; (2) The first four characters of the last name of the primary taxpayer; (3) The payment type; (4) The tax period (six character date field); (5) The payment amount; (6) The payment or credit authorization date; (7) Daytime telephone number; (8) Unique identification number (such as confirmation number); and (9) Bank account number, if applicable. 3. The Contractor shall comply with the Electronic Federal Tax Payment System (EFTPS) Credit Card Bulk filer Requirements dated May 17, 1999 and Payment by Credit card and Debit Card Temporary Regulations, Section 6311 of the Internal Revenue Code (IRC) and any subsequent updates and revisions. C.3 AUTHORITY - CONTRACTING OFFICER, CONTRACTING OFFICER'S TECHNICAL REPRESENTATIVE AND CONTRACTOR'S PROJECT MANAGER C.3.1 ADMINISTRATIVE CONTRACTING OFFICER The IRS Contracting Officer designated for administering this contract is: Carol Ransom VOICE: (202) 283-1163 FAX: (202) 283-1099 email: carol.a.ransom@m1.irs.gov The Contracting Officer, in accordance with Subpart 1.6 of the Federal Acquisition Regulation, is the only person authorized to make or approve any changes in any of the requirements of this contract, and notwithstanding any clauses contained elsewhere in this contract, the said authority remains solely with the Contracting Officer. In the event the Contractor makes any changes at the direction of any person other than the Contracting Officer, the change will be considered to have been made without authority and not binding on the Government. C.3.2 CONTRACTING OFFICER'S TECHNICAL REPRESENTATIVE The Contracting Officer's Technical Representative (COTR) designated for this contract is: Linda Rickard VOICE: (202) 283-6852 FAX: (202) 283-4786 email: linda.rickard@irs.gov The COTR will represent the Contracting Officer in the administration of technical details within the scope of this contract. The COTR is also responsible for the final inspection and acceptance of all reports, and such other responsibilities as may be specified in the contract. The COTR is not otherwise authorized to make any representations or commitments of any kind on behalf of the Contracting Officer or the Government. The COTR does not have authority to alter the Contractor's obligations or to change the contract specifications, price, terms or conditions. If, as a result of technical discussions, it is desirable to modify contract obligations or the statement of work, changes will be issued in writing and signed by the Contracting Officer. The COTR assignment for this contract may be changed at any time by the Government without prior notice to the Contractor. The Contractor will be notified of the change. C.3.3 PROJECT MANAGER The Contractor's designated Project Manager for this contract is: Steven R. Johnson VOICE: 925-855-5040 FAX: 925-820-0571 Email: sjohnson@officialpayments.com The Contractor shall provide a Project Manager for this contract who shall have the authority to make any no-cost contract, technical, hiring and dismissal decisions, or special arrangements regarding this contract. The Project Manager shall be responsible for the overall management and coordination of this contract and shall act as the central point of contact with the Government. The Project Manager shall have full authority to act for the Contractor in the performance of the required services. The Project Manager, or a designated representative, shall meet with the COTR to discuss problem areas as they occur. The Project Manager, or designated representative, shall respond within four work hours after notification of the existence of a problem. The Project Manager shall be able to fluently read, write, and speak the English language. C.4 CONTRACT CORRESPONDENCE Notwithstanding the Contractor's responsibility for total management during the performance of this contract, the administration of the contract will require maximum coordination between the Government and the Contractor. To promote timely and effective administration, all correspondence pertaining to contractual or administrative matters under the contract shall be addressed to the assigned Administrative Contracting Officer. C.5 DISCLOSURE OF INFORMATION-SAFEGUARDS (IRSAP 1052.224- 9000a) (JANUARY 1998) In performance of this contract, the contractor agrees to comply and assume responsibility for compliance by his/her employees with the following requirements: (1) All work shall be performed under the supervision of the contractor or the contractor's responsible employees. (2) Any return or return information made available shall be used only for the purpose of carrying out the provisions of this contract. Information contained in such material shall be treated as confidential and shall not be divulged or made known in any manner to any person except as may be necessary in the performance of the contract. Inspection by or disclosure to anyone other than an officer or employee of the contractor shall require prior written approval of the Internal Revenue Service. Requests to make such inspections or disclosures should be addressed to the IRS Contracting Officer (3) Should a person (contractor or subcontractor) or one of his/her employees make any unauthorized inspection(s) or disclosure(s) of confidential tax information, the terms of the Default clause (FAR 52.2498), incorporated herein by reference, may be invoked, and the person (contractor or subcontractor) will be considered to be in breach of this contract. C.6 DISCLOSURE OF "OFFICIAL USE ONLY " INFORMATION SAFEGUARDS (IRSAP 1052.224-9000d) (DECEMBER 1988) Any Treasury Department Information made available or to which access is provided, and which is marked or should be marked "Official Use Only", shall be used only for the purpose of carrying out the provisions of this contract and shall not be divulged or made known in any manner to any person except as may be necessary in the performance of the contract. Disclosure to anyone other than an officer or employee of the contractor or subcontractor at any tier shall require prior written approval of the IRS. Requests to make such disclosure should be addressed to the IRS Contracting Officer. C.7 DISCLOSURE OF INFORMATION--CRIMINAL/CIVIL SANCTIONS (IRSAP 1052.224-9001a) (JANUARY 1998) (1) Each officer or employee of any person (contractor or subcontractor) at any tier to whom returns or return information is or may be disclosed shall be notified in writing by the person (contractor or subcontractor) that returns or return information disclosed to such officer or employee can be used only for a purpose and to the extent authorized herein, and that further disclosure of any such returns or return information for a purpose or to an extent unauthorized herein constitutes a felony punishable upon conviction by a fine of as much as $5,000 or imprisonment for as long as five years, or both, together with the costs of prosecution. Such person (contractor or subcontractor) shall also notify each such officer and employee that any such unauthorized future disclosure of returns or return information may also result in an award of civil damages against the officer or employee in an amount not less than $1,000 with respect to each instance of unauthorized disclosure plus in the case of willful disclosure or a disclosure which is the result of gross negligence, punitive damages, plus the cost of the action. These penalties are prescribed by IRC Sections 7213 and 7431 and set forth at 26 CFR 301.6103(n). (2) Each officer or employee of any person (contractor or subcontractor) to whom returns or return information is or may be disclosed shall be notified in writing by such person that any return or return information made available in any format shall be used only for the purpose of carrying out the provisions of this contract and that inspection of any such returns or return information for a purpose or to an extent not authorized herein constitutes a criminal misdemeanor punishable upon conviction by a fine of as much as $1,000.00 or imprisonment for as long as 1 year, or both, together with the costs of prosecution. Such person (contractor or subcontractor) shall also notify each such officer and employee that any such unauthorized inspection of returns or return information may also result in an award of civil damages against the officer or employee in an amount equal to the sum of the greater of $1,000.00 for each act of unauthorized inspection with respect to which such defendant is found liable or the sum of the actual damages sustained by the plaintiff as a result of such unauthorized inspection plus in the case of a willful inspection or an inspection which is the result of gross negligence, punitive damages, plus the costs of the action. The penalties are prescribed by IRC Sections 7213A and 7431. (3) Additionally, it is incumbent upon the contractor to inform its officers and employees of the penalties for improper disclosure imposed by the Privacy Act of 1974, 5 U.S.C. 552a. Specifically, 5 U.S.C. 552a(I)(1), which is made applicable to contractors by 5 U.S.C. 552a(m)(1), provides that any officer or employee of a contractor, who by virtue of his/her employment or official position, has possession of or access to agency records which contain individually identifiable information, the disclosure of which is prohibited by the Privacy Act or regulations established thereunder, and who knowing that disclosure of the specific material is so prohibited, willfully discloses the material in any manner to any person or agency not entitled to receive it, shall be guilty of a misdemeanor and fined not more than $5,000. C.8 DISCLOSURE OF INFORMATION-OFFICIAL USE ONLY (IRSAP 1052.224-9001b) (DECEMBER 1988) Each officer or employee of the contractor or subcontractor at any tier to whom "Official Use Only" information may be made available or disclosed shall be notified in writing by the contractor that "Official Use Only" information disclosed to such officer or employee can be used only for a purpose and to the extent authorized herein, and that further disclosure of any such "Official Use Only" information, by any means, for a purpose or to an extent unauthorized herein, may subject the offender to criminal sanctions imposed by 18 U.S.C. Sections 641and 3571. Section 641 of 18 U.S.C. provides, in pertinent part, that whoever knowingly converts to his use or the use of another, or without authority sells, conveys, or disposes of any record of the United States or whoever receives the same with the intent to convert it to his use or gain, knowing it to have been converted, shall be quilt y of a crime punishable by a fine or imprisoned up to ten years or both. C.9 DISCLOSURE OF INFORMATION-INSPECTION (IRSAP 1052.224-9002) (DECEMBER 1988) The Internal Revenue Service shall have the right to send its officers and employees into the offices and plants of the contractor for inspection of the facilities and operations provided for the performance of any work under this contract. On the basis of such inspection, the Contracting Officer may require specific measures in cases where the contractor is found to be noncompliant with contract safeguards. C.10 PUBLIC RELEASE OF INFORMATION 1. The Contractor shall obtain the written permission of the IRS Program Manager or COTR before releasing or using any information regarding work on the contract. Information including, but not limited to, advertisements, unclassified speeches, articles, press releases, presentations, displays or demonstrations developed or proposed for release to the public must be submitted in their entirety to the Contracting Officer. The Contractor shall request, in writing, permission to release information describing the scope of the information to be released and the purpose for its release. This clause does not affect the Contractor's rights with regard to patents, which are governed by the patent clauses of this contract. 2. In the event of a termination for the convenience of the Government, the Government shall be responsible for press releases, jointly prepared with the Contractor, declaring the termination of the program by the Government. The Government shall consider the contractor's reasonable request for the news media to receive such releases. The Government shall also consider the contractor's reasonable request that it not issue a public release or public announcement of the termination of the contract for the Government's convenience. C.11 IRSAP 1052.239-9002-YEAR 2000 WARRANTY-COMMERCIAL SUPPLY PRODUCTS (JULY 1997) 1. The contractor warrants that each hardware, software, and firmware product provided under this contract and described in (2) and (3) below shall be able to accurately process date data (including, but not limited to, calculating, comparing and sequencing) from, into, and between the twentieth and twenty-first centuries, including leap year calculations, when used in accordance with the product documentation provided by the contractor, provided that all listed or unlisted products (e.g. hardware, software, firmware) used in combination with such listed product properly exchange date data with it. If the contract requires that specific listed products must perform as a system in accordance with the foregoing warranty, then that warranty shall apply to those listed products as a system. The duration of this warranty and the remedies available to the Government for breach of this warranty shall be as defined in, and subject to, the terms and limitations of the contractor's standard commercial warranty or warranties contained in this contract, provided that notwithstanding any provision to the contrary in such commercial warranty or warranties, the remedies available to the Government under this warranty shall include repair or replacement of any listed product whose non-compliance is discovered and made known to the contractor in writing within the time period consistent with this contract's Inspection clause. Nothing in this warranty shall be construed to limit any rights or remedies the Government may otherwise have under this contract with respect to defects other than Year 2000 performance. C.12 ADDENDUM 1 C.12.1 FAR CLAUSES INCORPORATED BY REFERENCE 52.252-2 CLAUSES INCORPORATED BY REFERENCE (FEB 1998) As prescribed in 52.107(b), insert the following clause: Clauses Incorporated By Reference (Feb 1998) This contract incorporates one or more clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. Also, the full text of a clause may be accessed electronically at this/these address(es): http://www.arnet.gov FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSES INCORPORATED BY REFERENCE NUMBER TITLE DATE 52.203-3 GRATUITIES APR 1984 52.209-6 PROTECTING THE JUL 1995 GOVERNMENT'S INTEREST WHEN SUBCONTRACTING WITH CONTRACTORS DEBARRED, SUSPENDED, OR PROPOSED FOR DEBARMENT 52.227-14 RIGHTS IN DATA - GENERAL JUN 1987 (ALT III & IV) C.12.2 TERM OF CONTRACT The term of this contract is from the date of award through the end of month twelve with an option to extend for an additional twelve months period. C.12.3 Option to Extend the Term of the Contract 52.217-9 (Nov 1999) (a) he Government may extend the term of this contract by written notice to the Contractor within 15 calendar days, provided that the Government gives the Contractor a preliminary written notice of its intent to extend at least 60 days before the contract expires. The preliminary notice does not commit the Government to an extension. (b) If the Government exercises this option, the extended contract shall be considered to include this option provision. (c) The total duration of this contract, including the exercise of any options under this clause, shall not exceed 24 months. C.13 CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT STATUTES OR EXECUTIVE ORDERS -- COMMERCIAL ITEMS, FAR 52.212-5 (MAY 1999) (a) The Contractor agrees to comply with the following FAR clauses, which are incorporated in this contract by reference, to implement provisions of law or executive orders applicable to acquisitions of commercial items: (1) 52.222-3, Convict Labor (E.O. 11755); and (2) 52.233-3, Protest after Award (31 U.S.C 3553). (b) The Contractor agrees to comply with the FAR clauses in this paragraph (b) which the contracting officer has indicated as being incorporated in this contract by reference to implement provisions of law or executive orders applicable to acquisitions of commercial items or components: _X_ (1) 52.203-6, Restrictions on Subcontractor Sales to the Government, with Alternate I (41 U.S.C. 253g and 10 U.S.C. 2402). ___ (2) 52.219-3, Notice of Total HUBZone Small Business Set-Aside (Jan 1999). ___ (3) 52.219-4, Notice of Price Evaluation Preference for HUBZone Small Business Concerns (Jan 1999) (if the offeror elects to waive the preference, it shall so indicate in its offer). ___ (4)(i) 52.219-5, Very Small Business Set-Aside (Pub. L. 103-403, section 304, Small Business Reauthorization and Amendments Act of 1994). ___ (ii) Alternate I to 52.219-5. ___ (iii) Alternate II to 52.219-5. _X_ (5) 52.219-8, Utilization of Small Business Concerns (15 U.S.C. 637 (d)(2) and (3)). ___ (6) 52.219-9, Small Business Subcontracting Plan (15 U.S.C. 637(d)(4)). ___ (7) 52.219-14, Limitations on Subcontracting (15 U.S.C. 637(a)(14)). ___ (8)(i) 52.219-23, Notice of Price Evaluation Adjustment for Small Disadvantaged Business Concerns (Pub. L. 103-355, section 7102, and 10 U.S.C. 2323) (if the offeror elects to waive the adjustment, it shall so indicate in its offer). (ii)___ Alternate I of 52.219-23. ___ (9) 52.219-25, Small Disadvantaged Business Participation Program-- Disadvantaged Status and Reporting (Pub. L. 103-355, section 7102, and 10 U.S.C. 2323). ___ (10) 52.219-26, Small Disadvantaged Business Participation Program-- Incentive Subcontracting (Pub. L. 103-355, section 7102, and 10 U.S.C. 2323). _X_ (11) 52.222-21, Prohibition of Segregated Facilities (Feb 1999) _X_ (12) 52.222-26, Equal Opportunity (E.O. 11246). _X_ (13) 52.222-35, Affirmative Action for Disabled Veterans and Veterans of the Vietnam Era (38 U.S.C. 4212). _X_ (14) 52.222-36, Affirmative Action for Workers with Disabilities (29 U.S.C. 793). _X_ (15) 52.222-37, Employment Reports on Disabled Veterans and Veterans of the Vietnam Era (38 U.S.C. 4212). ___ (16) 52.225-3, Buy American Act--Supplies (41 U.S.C. 10). ___ (17) 52.225-9, Buy American Act--Trade Agreements Act--Balance of Payments Program (41 U.S.C. 10, 19 U.S.C. 2501-2582). ___ (18) [Reserved] ___ (19) 52.225-18, European Union Sanction for End Products (E.O. 12849). ___ (20) 52.225-19, European Union Sanction for Services (E.O. 12849). ___ (21)(i) 52.225-21, Buy American Act--North American Free Trade Agreement Implementation Act--Balance of Payments Program (41 U.S.C. 10, Pub. L. 103-187). ___ (ii) Alternate I of 52.225-21. ___ (22) 52.232-33, Payment by Electronic Funds Transfer--Central Contractor Registration (31 U.S.C. 3332). ___ (23) 52.232-34, Payment by Electronic Funds Transfer--Other than Central Contractor Registration (31 U.S.C. 3332). ___ (24) 52.232-36, Payment by Third Party (31 U.S.C. 3332). _X_ (25) 52.239-1, Privacy or Security Safeguards (5 U.S.C. 552a). ___ (26) 52.247-64, Preference for Privately Owned U.S.-Flag Commercial Vessels (46 U.S.C. 1241). (c) The Contractor agrees to comply with the FAR clauses in this paragraph (c), applicable to commercial services, which the Contracting Officer has indicated as being incorporated in this contract by reference to implement provisions of law or executive orders applicable to acquisitions of commercial items or components: [Contracting Officer check as appropriate.] ___ (1) 52.222-41, Service Contract Act of 1965, As Amended (41 U.S.C. 351, et seq.). ___ (2) 52.222-42, Statement of Equivalent Rates for Federal Hires (29 U.S.C. 206 and 41 U.S.C. 351, et seq.). ___ (3) 52.222-43, Fair Labor Standards Act and Service Contract Act--Price Adjustment (Multiple Year and Option Contracts) (29 U.S.C. 206 and 41 U.S.C. 351, et seq.). ___ (4) 52.222-44, Fair Labor Standards Act and Service Contract Act--Price Adjustment (29 U.S.C. 206 and 41 U.S.C. 351, et seq.). ___ (5) 52.222-47, SCA Minimum Wages and Fringe Benefits Applicable to Successor Contract Pursuant to Predecessor Contractor Collective Bargaining Agreement (CBA) (41 U.S.C. 351, et seq.). (d) Comptroller General Examination of Record. The Contractor agrees to comply with the provisions of this paragraph (d) if this contract was awarded using other than sealed bid, is in excess of the simplified acquisition threshold, and does not contain the clause at 52.215-2, Audit and Records--Negotiation. (1) The Comptroller General of the United States, or an authorized representative of the Comptroller General, shall have access to and right to examine any of the Contractor's directly pertinent records involving transactions related to this contract. (2) The Contractor shall make available at its offices at all reasonable times the records, materials, and other evidence for examination, audit, or reproduction, until 3 years after final payment under this contract or for any shorter period specified in FAR Subpart 4.7, Contractor Records Retention, of the other clauses of this contract. If this contract is completely or partially terminated, the records relating to the work terminated shall be made available for 3 years after any resulting final termination settlement. Records relating to appeals under the disputes clause or to litigation or the settlement of claims arising under or relating to this contract shall be made available until such appeals, litigation, or claims are finally resolved. (3) As used in this clause, records include books, documents, accounting procedures and practices, and other data, regardless of type and regardless of form. This does not require the Contractor to create or maintain any record that the Contractor does not maintain in the ordinary course of business or pursuant to a provision of law. (e) Notwithstanding the requirements of the clauses in paragraphs (a), (b), (c) or (d) of this clause, the Contractor is not required to include any FAR clause, other than those listed below (and as may be required by an addenda to this paragraph to establish the reasonableness of prices under Part 15), in a subcontract for commercial items or commercial components-- (1) 52.222-26, Equal Opportunity (E.O. 11246); (2) 52.222-35, Affirmative Action for Disabled Veterans and Veterans of the Vietnam Era (38 U.S.C. 4212); (3) 52.222-36, Affirmative Action for Workers with Disabilities (29 U.S.C. 793); and (4) 52.247-64, Preference for Privately-Owned U.S. Flag Commercial Vessels (46 U.S.C. 1241) (flow down not required for subcontracts awarded beginning May 1, 1996). (End of clause) EX-10 3 EXHIBIT 10.2 - 1999 STOCK INCENTIVE PLAN OFFICIAL PAYMENTS CORPORATION 1999 STOCK INCENTIVE PLAN (AS AMENDED EFFECTIVE AS OF APRIL 25, 2000) SECTION 1. PURPOSE. The purpose of the Official Payments Corporation 1999 Stock Incentive Plan (the "Plan") is to enable Official Payments Corporation (the "Company") to attract, retain and reward certain persons providing valuable service to the Company to strengthen the existing mutuality of interests between such individuals and the Company's stockholders by offering to such eligible persons an equity interest in the Company through the grant of options ("Options" or "Stock Options") to purchase shares of the Company's common stock, par value $.01 per share ("Common Stock") at a specified price per share ("Exercise Price"). SECTION 2. TYPES OF OPTIONS. 2.1 The Plan provides for the grant of Incentive Stock Options and Non-Qualified Stock Options. An "Incentive Stock Option" is a Stock Option that is intended to qualify as an "incentive stock option" under Section 422 of the Internal Revenue Code of 1986 (the "Code"). A "Non-Qualified Stock Option" is a Stock Option that that does not qualify as an "incentive stock option" under Section 422 of the Code. 2.2 Incentive Stock Options and Non-Qualified Stock Options may be granted to key employees of the Company. Outside Directors (as defined below) and Consultants (as defined below) may only be granted Non-Qualified Stock Options under this Plan. For purposes of this Plan, the term "Outside Director" shall mean a director of the Company who is not an officer or employee of the Company, Imperial Bank or U.S. Audiotex, Inc., or any affiliated companies thereof; provided, however, that George L. Graziadio, Jr. shall be deemed to be an Outside Director. For purposes of this Plan, the term "Consultant" shall mean a consultant or other independent advisor to the Company. SECTION 3. ADMINISTRATION. 3.1 The Plan shall be administered by the Company's Board of Directors ("Board" or the "Board of Directors") and a committee composed of two or more Outside Directors of the Board as the Board shall designate (the "Committee"); provided, however, the Plan shall be administered by the Board of Directors with respect to all Stock Options granted to Outside Directors. The members of the Committee shall serve at the pleasure of the Board. 3.2 For purposes of this Plan, the term "Granting Authority" shall mean: (i) the Board of Directors, with respect to Stock Options granted to Outside Directors and (ii) the Committee, with respect to Stock Options granted to key employees and Consultants. The Granting Authority shall have the following authority with respect to Options granted under this Plan: to grant Stock Options to persons eligible to receive them under the Plan; to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall deem advisable; to interpret the terms and provisions of the Plan and any Options granted by it under the Plan; and to otherwise supervise the administration of the Plan. In particular, and without limiting its authority and powers, the Granting Authority shall have full authority and discretion to make the following determinations with respect to the Options granted under this Plan: (a) to determine whether and to what extent Incentive Stock Options and/or Non-Qualified Stock Options will be granted to an eligible key employee hereunder; (b) to select the key employees, Consultants and Outside Directors to whom Options will be granted; (c) to determine the number of shares of Common Stock to be covered by each Option granted hereunder (subject to the limitations contained in the Plan); (d) to determine the Exercise Price, vesting schedule and all other terms and conditions of any Stock Option granted hereunder; (e) to determine the "Fair Market Value" of a share of Common Stock on a given date. For purposes of this Plan and all Options granted hereunder, the term "Fair Market Value" shall mean: (i) the average of the highest and lowest reported sales prices on the date in question (or if there is no reported sale on such date, on the last preceding date on which any reported sale occurred) as reported in the principal consolidated reporting system with respect to securities listed or admitted to trading on the principal United States securities exchange on which the shares of Common Stock are listed or admitted to trading; or (ii) if the Common Stock is not listed or admitted to trading on any such exchange, the average of the bid and offered prices quoted with respect to a share of Common Stock on such date on the National Association of Securities Dealers Automated Quotations System, or, if no such quotation is provided, on another similar system, selected by the Granting Authority, then in use; or (iii) if neither Section 3.2(e)(i) or (ii) is applicable, the Fair Market Value of a share of Common Stock shall be determined by the Granting Authority in such manner as it shall deem appropriate; (f) to provide that the shares of Common Stock received upon the exercise of a Stock Option shall be subject to a Right of First Refusal (described in Section 8 hereof) pursuant to which the option holder shall be required to offer to the Company any shares that the option holder wishes to sell, subject to such terms and conditions as the Granting Authority may specify; and (g) to amend the terms of any Option, prospectively or retroactively; provided, however, that no amendment shall impair the rights of the option holder without his or her written consent. 3.3 The Committee shall grant and administer all Options under the Plan in a manner designed to preserve the deductibility of the compensation resulting from such Options in accordance with Section 162(m) of the Code. The Committee shall have discretion to modify the terms of an Option granted hereunder only to the extent that the exercise of such discretion would not cause the Option to fail to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code. 3.4 All determinations made by the Granting Authority pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company and all participants in the Plan. SECTION 4. STOCK SUBJECT TO PLAN. 4.1 The total number of shares of Common Stock which may be issued under the Plan shall be 6,900,000, of which 6,000,000 shall be available for the grant of Stock Options to key employees and Consultants and 900,000 shall be available for the grant of Stock Options to Outside Directors (all subject to adjustment as provided below). Such shares may consist of authorized but unissued shares or treasury shares. 4.2 To the extent an Option granted under this Plan terminates without the issuance of shares, the shares subject to such Option shall again be available for grant pursuant to an Option under the Plan. Shares of Common Stock equal in number to the shares withheld in payment of the Exercise Price, and shares of Common Stock which are withheld in order to satisfy federal, state or local tax liabilities, shall not count against the above limit, and shall again be available for grant pursuant to an Option under this Plan. 4.3 No key employee shall be granted Stock Options with respect to more than 1,950,000 shares of Common Stock in any calendar year (subject to adjustment as provided in Section 4.4). 4.4 In the event of any merger, reorganization, consolidation, sale of substantially all the Company's assets, recapitalization, stock dividend, stock split, spin-off split-up, split-off distribution of assets or other change in the Company's corporate structure affecting the shares of the Company's Common Stock, a substitution or adjustment, as may be determined to be appropriate by the Committee in its sole discretion, shall be made in the aggregate number of shares of Common Stock reserved for issuance under the Plan, the number of shares as to which Options may be granted to any individual in any calendar year and the number and type of shares subject to outstanding Options; provided, however, that no such adjustment shall increase the aggregate value of any outstanding Option. SECTION 5. ELIGIBILITY. 5.1 Key employees of the Company, including those key employees who are officers and/or directors of the Company, are eligible to be granted Options under the Plan. The Committee, in its sole discretion, may select the key employees who are granted Options under this Plan. 5.2 Consultants who provide service to the Company are eligible to be granted Options under the Plan. The Committee, in its sole discretion, may select the Consultants to be granted Options under the Plan, and the terms and conditions of the Options to such Consultants. 5.3 All Outside Directors of the Company shall be eligible to be granted Options under the Plan. The terms and conditions of the Options granted to Outside Directors shall be determined by the Board of Directors. SECTION 6. STOCK OPTIONS. 6.1 The Stock Options granted under the Plan may be of two types: (i) Incentive Stock Options within the meaning of Section 422 of the Code or any successor provision thereto (which may be granted only to key employees); and (ii) Non-Qualified Stock Options. To the extent that any Stock Option does not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option. 6.2 The maximum number of shares of Common Stock that may be issued under Options intended to be Incentive Stock Options shall be 3,000,000 shares. 6.3 All Stock Options granted under this Plan and the terms and conditions of such Stock Option Options shall be evidenced by a written stock option agreement ("Stock Option Agreement") between the option recipient and the Company. 6.4 Each Stock Option shall be subject to all the applicable provisions of the Plan, including the following terms and conditions, and to such other terms and conditions not inconsistent therewith as the Granting Authority shall determine. (a) Exercise Price. The Exercise Price of each Stock Option granted hereunder will be determined by the Granting Authority at the time of grant and such Exercise Price will be specified in the Stock Option Agreement. Except as provided in Section 6.5 or Section 11, the Exercise Price of a Stock Option may be less than the Fair Market Value of a share of Common Stock subject to the Stock Option on the date of grant. (b) Vesting and Exercisability of Stock Option. Unless otherwise provided by the Granting Authority in the Stock Option Agreement, a Stock Option granted to a key employee, Consultant or Outside Director shall become vested and exercisable over a three-year period as follows: (i) effective on the first anniversary of the date of grant, the Stock Option shall first become vested and exercisable with respect to a maximum of one-third (1/3) of the total shares of Common Stock subject to the Stock Option when granted; and (ii) thereafter, effective commencing on the last day of the first calendar month immediately succeeding the first anniversary of the Stock Option's date of grant and continuing on the last day of each of the next immediately succeeding twenty-three (23) calendar months, the Stock Option shall become vested and exercisable with respect to one-twenty-fourth (1/24th) of the total number of shares of Common Stock subject to the Stock Option which did not become vested and exercisable on the first anniversary of the date of grant; provided, however, a Stock Option shall immediately become 100% vested and exercisable upon the option recipient's death or Disability (as defined below). (c) Option Term. Subject to the provisions of Section 6.5 applicable to Options that are intended to be Incentive Stock Options, the period during which a Stock Option granted hereunder may be exercised shall commence on the date specified by the Granting Authority in the Stock Option Agreement and shall expire on the date specified in the Stock Option Agreement; provided, however, that the term of the Option shall expire on the earliest to occur of: (i) the close of business on the last day of the three- month period commencing on the date of the option holder's termination of employment or service, other than on account of death, Disability, or a Termination for Cause (as defined below); (ii) the close of business on the last day of the one- year period commencing on the date of the option holder's termination of employment or service due to death or Disability; (iii) the date and time when the option holder's employment or service ceases due to a Termination for Cause; and (iv) the day immediately preceding the tenth anniversary of the date the Stock Option was granted. (d) Defined Terms. Unless otherwise provided by the Granting Authority in the Stock Option Agreement, the following terms shall have the following meanings for purposes of the Plan: (i) "Disability" shall mean a condition of total incapacity, mental or physical, for further performance of duty with the Company, which the Committee shall have determined, on the basis of competent medical evidence, is likely to be permanent. (ii) "Termination for Cause" shall mean with respect to an employee or Consultant, as the case may be, that the employee's employment with, or Consultant's service to, the Company has been terminated as a result of the determination by the Board of Directors that such employee or Consultant has committed an act of embezzlement, fraud, dishonesty, or breach of fiduciary duty to the Company, or has deliberately disregarded the rules of the Company which resulted in loss, damage, or injury to the Company, or because the employee or Consultant has made an unauthorized disclosure of any of the secrets or confidential information of the Company, has induced any client or customer of the Company to breach any contract with the Company, has induced any principal for whom the Company acts as agent to terminate the agency relationship, or has engaged in any conduct that constitutes unfair competition with the Company. Notwithstanding the foregoing, if an employee or Consultant is a party to an employment agreement or a consulting agreement governing the terms of his employment or consultancy and such agreement contains a definition of "termination for cause" or a definition of an equivalent term, then for purposes hereof, the term "termination for cause" shall have the meaning ascribed to it in such agreement. (iii) "Termination for Cause" shall mean with respect to an Outside Director, that the service of such Director on the Company's Board of Directors has been terminated due to a "removal for cause" determined in accordance with the Company's By-Laws. (e) Effect of Termination for Cause. No Stock Option granted hereunder, whether or not previously exercisable, shall be exercised after the date and time on which the option holder's employment or service with the Company is terminated in a Termination for Cause. (f) Method of Exercise. Stock Options may be exercised in whole or in part at any time during the Option Term by giving written notice of exercise to the Company specifying the number of shares to be purchased, accompanied by payment of the Exercise Price. Unless otherwise provided by the Granting Authority in the Stock Option Agreement, payment of the Exercise Price may be made in the following manner: (i) in United States dollars by certified check, money order or bank draft made payable to the order of Official Payments Corporation; (ii) delivery of shares of Common Stock that have been owned by the optionee for at least six months; (iii) a cashless exercise (which may be either (A) a broker-assisted cash exercise effected in accordance with rules adopted by the Granting Authority or (B) a direction to the Company to withhold shares of Common Stock, otherwise deliverable to the option holder with respect to the Option, having a Fair Market Value on the date of exercise equal to the Option's Exercise Price); or (iv) in any combination of the foregoing. (g) No Stockholder Rights. An optionee shall not have rights to dividends or any of the other rights of a stockholder with respect to shares subject to a Stock Option until the optionee has given written notice of exercise and has paid the Exercise Price for such shares. (h) Non-transferability. Unless otherwise provided by the Granting Authority in a Stock Option Agreement, (i) Stock Options shall not be transferable by the optionee other than by will or by the laws of descent and distribution, and (ii) during the optionee's lifetime, all Stock Options shall be exercisable only by the optionee or by his or her guardian or legal representative. 6.5 A Stock Option granted to a key employee hereunder that is designated by the Granting Authority to be an Incentive Stock Option shall be subject to the following limitations: (a) A Stock Option granted to a key employee under this Plan will not be considered an Incentive Stock Option to the extent that such Stock Option, together with any earlier Stock Option granted to such employee under this or any other plan of the Company that is intended to be Incentive Stock Option, permits the exercise for the first time in any calendar year of shares of Common Stock having a Fair Market Value in excess of $100,000 (determined at the time of grant); (b) The Exercise Price of an Incentive Stock Option granted to a key employee who, at the time the Stock Option is granted, owns shares of Common Stock comprising more than 10% of the total combined voting power of all classes of stock of the Company shall not be less than 110% of the Fair Market Value of a share, and if a Stock Option designated as an Incentive Stock Option is granted at an Exercise Price that does not satisfy this requirement, the designated Exercise Price shall be observed and the Option shall be treated as a Non-Qualified Stock Option; (c) The term of an Incentive Stock Option granted to a key employee who, at the time the Option is granted, owns shares comprising more than 10% of the total combined voting power of all classes of Common Stock of the Company, shall expire no later than the fifth anniversary of the date on which the Stock Option was granted, and if an Option designated as an Incentive Stock Option shall be granted for an option term that does not satisfy this requirement, the term of the Option shall be observed and the Option shall be treated as a Non- Qualified Stock Option; (d) An Incentive Stock Option that is exercised during its designated term but more than: (i) three (3) months after the termination of employment with the Company, a parent or a subsidiary (other than on account of disability within the meaning of Section 22(e)(3) of the Code) of the key employee to whom it was granted; and (ii) one (1) year after such individual's termination of employment with the Company, a parent or a subsidiary due to disability (within the meaning of Section 22(e)(3) of the Code); (iii) may be exercised in accordance with the terms but shall at the time of exercise be treated as a Non-Qualified Stock Option; and (e) Unless prior written notice is given to the Committee, no individual shall dispose of shares acquired pursuant to the exercise of an Incentive Stock Option until after the later of (i) the second anniversary of the date on which the Incentive Stock Option was granted, or (ii) the first anniversary of the date on which the shares of Common Stock were acquired. SECTION 7. TAX WITHHOLDING. 7.1 Each key employee who has been granted a Non-Qualified Stock Option under this Plan shall be required to make arrangements satisfactory to the Granting Authority regarding payment of, any federal, state, local or other taxes of any kind required by law to be withheld upon the exercise of such Option. The obligations of the Company under the Plan shall be conditioned on such payment or arrangements, and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the employee. 7.2 To the extent permitted by the Committee, and subject to such terms and conditions as the Committee may provide, an employee may elect to have the withholding tax obligation, or any additional tax obligation with respect to any Options hereunder, satisfied by (i) having the Company withhold shares of Common Stock otherwise deliverable to such person with respect to the Option or (ii) delivering to the Company shares of previously acquired Common Stock that has been owned by the option holder for at least six months. 7.3 Each Outside Director and Consultant shall be solely responsible for the payment of all tax obligations resulting from the exercise of any Non-Qualified Stock Option granted to such Outside Director or Consultant under this Plan. SECTION 8. RIGHT OF FIRST REFUSAL. 8.1 In the event that an option recipient who has received shares of Common Stock through the exercise of a Stock Option granted under this Plan (hereinafter, a "Selling Stockholder") proposes to sell, pledge or otherwise transfer to a third party any of such shares, the Company shall have the Right of First Refusal (as set forth in this Section 8) with respect to all (and not less than all) of such shares. The Selling Stockholder shall give a written notice to the Company describing the proposed transfer which shall include the number of shares proposed to be transferred, the proposed transfer price, the name and address of the proposed transferee ("the Transferee") and proof satisfactory to the Company that the proposed sale or transfer will not violate any applicable federal or state securities laws (hereinafter such notice shall be referred to as the "Transfer Notice"). The Transfer Notice shall be signed by both the Selling Stockholder and the proposed Transferee and must constitute a binding commitment of both parties to the transfer of the shares. The Company shall have the right to purchase all, and not less than all, of the shares of the Company's Common Stock on the terms described in the Transfer Notice (subject, however, to any change in such terms permitted under Section 8.2 below) by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date when the Transfer Notice was received by the Company. The Company's rights under this Section 8.1 shall be freely assignable, in whole or in part. 8.2 If the Company fails to exercise its Right of First Refusal within 30 days after the date when it received the Transfer Notice, the Selling Stockholder may, not later than 90 days following receipt of the Transfer Notice by the Company, conclude a transfer of the shares subject to the Transfer Notice on the terms and conditions described in the Transfer Notice, provided that any such sale is made in compliance with applicable federal and state securities laws and not in violation of any other contractual restrictions to which the Selling Stockholder is bound. Any proposed transfer on terms and conditions different from those described in the Transfer Notice, as well as any subsequent proposed transfer by the Selling Stockholder, shall again be subject to the Right of First Refusal and shall require compliance with the procedure described in Section 8.1 above. If the Company exercises its Right of First Refusal, the parties shall consummate the sale of the shares on the terms set forth in the Transfer Notice within 60 days after the date when the Company received the Transfer Notice (or within such longer period as may have been specified in the Transfer Notice); provided, however, that in the event the Transfer Notice provided that payment for the shares was to be made in a form other than cash or cash equivalents paid at the time of transfer, the Company shall have the option of paying for the shares with cash or cash equivalents equal to the present value of the consideration described in the Transfer Notice. 8.3 In the event of the declaration of a stock dividend, the declaration of an extraordinary dividend payable in a form other than stock, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company's outstanding securities without receipt of consideration, any new, substituted or additional securities or other property which are by reason of such transaction distributed with respect to any shares subject to this Section 8 or into which such shares thereby become convertible shall immediately be subject to this Section 8. Appropriate adjustments to reflect the distribution of such securities or property shall be made to the number and/or class of the shares subject to this Section 8. 8.4 In the event that the Company's Common Stock is readily tradable on an established securities market when the Selling Stockholder desires to transfer shares, the Company shall have no Right of First Refusal, and the Selling Stockholder shall have no obligation to comply with the procedures prescribed by Sections 8.1 and 8.2 above. SECTION 9. AMENDMENTS AND TERMINATION. The Board of Directors may discontinue the Plan at any time and may amend it from time to time No amendment or discontinuation of the Plan shall adversely affect any Option previously granted without the option holder's written consent. Amendments may be made without stockholder approval except as required to satisfy the requirements of Section 422 of the Code, with respect to Incentive Stock Options, Section 162(m) of the Code, with respect to performance-based compensation, or the rules and regulations of any stock exchange on which the shares of the Company's Common Stock are then currently traded or listed. SECTION 10. CHANGE OF CONTROL. 10.1 Unless otherwise specified by the Granting Authority in the Stock Option Agreement, in the event of a Change of Control (as defined below) all outstanding Stock Options granted under the Plan shall become fully exercisable. 10.2 "Change of Control" shall be deemed to occur on: (a) the date on which any "person" within the meaning of Section 13(d)(3) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the Rules promulgated thereunder, other than Imperial Bank, Imperial Bancorp, Inc., any affiliate or subsidiary thereof, acquires "beneficial ownership" within the meaning of Rule 13d- 3 of the Exchange Act, directly or indirectly, of securities issued by the Company representing 35% or more of the total combined voting power of all classes of the Company's then-outstanding securities; (b) the date of approval by the stockholders of the Company of an agreement providing for the merger or consolidation of the Company with another corporation where either: (i) the stockholders of the Company, immediately prior to the merger or consolidation, would not "beneficially own" within the meaning of Rule 13d-3 of the Exchange Act, immediately after the merger or consolidation, 50% or more of the total combined voting power of all classes of the Company's then-outstanding securities or (ii) where the members of the Company's Board of Directors, immediately prior to the merger or consolidation, would not, immediately after the merger or consolidation, constitute a majority of the Company's Board of Directors; or (c) the date of approval by the stockholders of the Company of an agreement providing for the sale or other disposition of 50% of the assets of the Company; provided, however, in no event shall an underwritten initial public offering of the shares of the Company's Common Stock registered under the Securities Act of 1933, as amended, in which the gross proceeds to the Company exceed $30,000,000 constitute a "Change of Control." SECTION 11. SPECIAL RULES APPLICABLE TO CERTAIN STOCK OPTIONS. Prior to the date that the shares of the Company's Common Stock are listed or traded on a national securities exchange, any grant of a Stock Option under this Plan to a California resident shall comply with the requirements of Section 25110 of the California Corporate Securities Law Code (the "Code") and the regulations promulgated thereunder (or any successor statutory or regulatory provisions), unless exempt therefrom pursuant to Section 25102 (or any successor provision) or any other exemptions provided in the Code, as amended from time to time. SECTION 12. GENERAL PROVISIONS. 12.1 Each Option under the Plan shall be subject to the requirement that, if at any time the Granting Authority shall determine that (i) the listing, registration or qualification of the Common Stock subject or related thereto upon any securities exchange or under any state or federal law, or (ii) the consent or approval of any government regulatory body or (iii) an agreement by the recipient of an Option with respect to the disposition of Common Stock is necessary or desirable (in connection with any requirement or interpretation of any federal or state securities law, rule or regulation) as a condition of, or in connection with, the granting of such Option or the issuance, purchase or delivery of Common Stock thereunder, such Option shall not be granted or exercised, in whole or in part, unless such listing, registration, qualification, consent, approval or agreement shall have been effected or obtained free of any conditions not acceptable to the Granting Authority. 12.2 Nothing set forth in this Plan shall prevent the Board from adopting other or additional compensation arrangements. Neither the adoption of the Plan nor any Option hereunder shall confer upon any employee of the Company any right to continued employment, and no Option shall confer upon any Outside Director or Consultant any right to continued service as a director or consultant or other independent advisor to the Company, as the case may be. 12.3 Determinations by the Granting Authority under the Plan relating to the form, amount, and terms and conditions of Options need not be uniform, and may be made selectively among persons who receive or are eligible to receive Options under the Plan, whether or not such persons are similarly situated. 12.4 No member of the Board or the Committee, nor any officer or employee of the Company acting on behalf of the Board or the Committee, shall be personally liable for any action, determination or interpretation taken or made with respect to the Plan, and all members of the Board or the Committee and all officers or employees of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination or interpretation. SECTION 13. EFFECTIVE DATE OF PLAN. 13.1 The provisions of the Plan became effective on August 24, 1999, the date that the Plan was adopted by the Company's Board of Directors and approved by its shareholders. 13.2 No Stock Option may be granted under this Plan after August 24, 2009. SECTION 14. GOVERNING LAW. The Plan shall be construed, administered and enforced according to the laws of the State of California without giving effect to the conflict of laws principles thereof, except to the extent that such laws are preempted by federal law. SECTION 15. EXECUTION. Execution to record the amendment of this Plan to incorporate Amendment No. 2 thereto, the Company has caused its authorized officer to execute the same. OFFICIAL PAYMENTS CORPORATION By /s/ Thomas R. Evans ------------------------------------ Thomas R. Evans Chairman and Chief Executive Officer EX-27 4 EXHIBIT 27.1 - FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Official Payment Corporation's quarterly report on Form 10-Q for the period ended March 31, 2000 and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 1,613 72,230 1,074 (60) 0 76,387 4,969 (708) 80,937 3,640 0 0 0 213 76,712 76,925 1,656 1,824 1,433 1,510 10,397 0 12 (8,949) 0 0 0 0 0 (8,949) (0.42) (0.42)
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