NYC E-commerce proposal

City of New YorkE-Commerce Service Provider

PIN # MDC-06-2000

March 10, 2006

Proposal Presented by

13700 Oakland AvenueHighland Park, Michigan 48203

www.budco.com

http://www.budco.com/

Graphic bar created by BCS goes on the top of every page except title page.However, graphic bar is not included on divider pages when BCS creates the divider pages.

Introduction

Budco brings outstanding qualifications to every aspect of this complex, demanding undertaking for NYC Marketing. We understand the realities and opportunities inherent in an online branded merchandise program. We are ideally positioned to meet and exceed both brand and business objectives.

We appreciate this opportunity to showcase our credentials and look forward to continuing the examination of our resources throughout the selection process.

Budco Consumer Direct, Inc. spearheads our branded merchandise capacity. They are dedicated to managing branded merchandise initiatives and staffed with specialists who know this business inside out.

Our consumer direct team are experts at combining the art and science of branded merchandise. Both are essential to conducting a successful program.

Art is the selection of quality products … the touch, feel and “good hand” so essential to appropriate representation of NYC brands. Art also involves presentation of merchandise in an appealing manner that attracts attention and encourages purchase. Art is finding intriguing, brand-appropriate items that top the “buy-it-now” list.

Science is the rigorous application of research and testing to every facet of the undertaking. Science includes the segmentation of audiences, the analysis of purchase behavior and the refinement of sales and marketing techniques. Science is the forecasting of revenues and the management of expenses so crucial to a successful program.

2


Budco Delivers

We have the experience and infrastructure to handle large-scale merchandise programs. Budco’s e-commerce experience began in 1997, when we were one of the originating companies for the Jeep Provisions program. We have built and managed similar e-commerce applications for several other clients, detailed later in this proposal.

Budco Consumer Direct, Inc. is backed by the rest of the 750-person strong Budco organization, allowing us to provide an integrated, single-source merchandise solution. In addition to streamlining the supply chain, our in-house capabilities save NYC Marketing time, money and complexity.

As you will discover, Budco encompasses the full range of merchandise resources in-house. Our inventory ordering and management structures are particularly noteworthy because they allow us to be efficient, effective and quality-driven.

The Budco Logistics System (BLS) is our proprietary inventory management platform. Using this architecture, all functions are integrated into a single, end-to-end model. As merchandise is selected and held in inventory, we use BLS to catalog what we have and where it is located in our warehouse. Upon receipt, products are assigned a bar code license plate that is used to track location as long as the item remains in our possession. As orders are received, processed, picked and packed for shipment, BLS updates in real-time what we have in stock.

For consumer ordering, we use Ecometry software, the system of choice for some of the largest catalogers in the world. For ordering, consumers log on to the Web site, follow the links to the various merchandise categories and use the shopping cart functionality to make a purchase. Ecometry accepts credit card payments and logs orders on to the Budco Logistics System for processing and fulfillment.

Our performance statistics for branded merchandise fulfillment are enviable – 99.2% of all orders are fulfilled within 24 hours of order processing. The very small percentage of remaining orders are out the door within 48 hours of receipt.

Our warehouse structures are state-of-the-art. Six-high racking allows more material to be stored in less space, while temperature and humidity controls keep items in pristine condition. Access to our warehouses is limited and strictly controlled. High-value items are placed in locked cages or the locked vertical lift module. Our horizontal carousel is a sophisticated mechanism with rotating shelves that delivers selected items to the operator based on reading bar codes.

We’re excited about the opportunity to associate our world-class organization with the world’s greatest city. Please read on.

3


Let’s Get Started!

We have organized our proposal response to best present a logical flow of information. If you have any questions, please feel free to contact:

Donna JacobAccount ExecutiveBudco13700 Oakland AvenueHighland Park, MI 48203(313) 957-5060

Table of Contents

Business StrategyBudco can deliver real customers to a virtual merchant

Scope of ServicesBudco has the expertise to handle all areas of responsibilities

Payment StructureBudco’s financial commitment to ensure success

This Is BudcoThere’s more to Budco than meets the eye

AttachmentsRequired proposal forms and information

4


Business StrategyBudco can deliver real customers to a virtual merchant.

5


Our Strengths Against NYC Marketing’s Program Needs

As we have demonstrated with the execution of similar programs we manage for other clients, Budco’s strengths mirror the necessary requirements to successfully deliver branded merchandise.

Budco encompasses the many resources required by the NYC Marketing program in-house, such as: Internet and database services, Web site design and hosting, creative, warehousing, order processing and fulfillment, Contact Center, reporting and financial management.

Budco has a Consumer Direct Marketing division already in place. Our professional staff brings years of hands-on experience to catalog and custom program sales. Our processes are well-respected, as evidenced by the satisfied branded merchandise customers we serve.

Budco is ISO 9001:2000-certified and uses quality processes to ensure complete customer satisfaction. We are committed to continuous improvement, constantly refining the effectiveness of what we do.

We pursue ongoing systems and process improvements for one reason – to benefit our customers. For example, continuing innovations in systems and processes allow Budco to flawlessly process the increased consumer shipments that always occur during the holiday shopping season. During the most recent 2005 holidays we did this without a single inquiry relative to late delivery of packages. That’s a record we’re proud of, and promise to continue.

6


Branded Merchandise Experience

Budco, in one form or another, has been managing branded merchandise programs for almost ten years. We have had a role in supporting clients in a variety of ways using our warehousing, fulfillment, IT, digital printing and creative competencies to support branded merchandise programs for a number of domestic and foreign automotive clients. Our experience in non-automotive areas includes the pharmaceutical, health care and communications, spirits and entertainment industries.

Two program examples:

Automotive Branded Merchandise ProgramOur goal is to extend reach and recognition of multiple brands through a comprehensive merchandise program. We produce and manage all aspects of this activity, which includes merchandise selection and purchase, warehousing, management, catalog development, order processing and fulfillment. Working with our client, we have achieved excellent growth over an earlier, ASI-based effort. At present, we receive 65,000 orders annually and generate $12 million annually in sales.

Extended Service Plan (ESP) Marketing and SalesBudco markets ESP to vehicle owners who didn’t buy coverage at the dealership. We manage a multifaceted process to solicit purchase, including contacting owners via personalized direct mail and e-mail campaigns, selling contracts through the Budco Contact Center and managing the Installment Payment Program. We send four million mailings per year, resulting in $10 million annual sales. Furthermore, our work contributes to improved customer satisfaction with the ownership experience and increases customer repurchase of our client’s products.

7


Web Site Analysis

Any success that Budco and NYC Marketing hope to have in this endeavor will rely on strong analysis of the “field of play.” Understanding who’s out there, what they’re selling and how they’re selling it will be vital information that will help us as we move forward.

At this very preliminary stage, Budco has identified key direct competitors, none of whom seem to have much traffic, or the traffic they are receiving is being fed from another source. For example, there are many Yahoo- and eBay-based stores that are selling NYC merchandise; however, we cannot get accurate readings on the rankings of these stores due to the fact that they are hidden away as sub-domains off of the parent sites. This skews their numbers.

The traffic ranking of the few stores that we did find range in rank from 1,345,657 to 107,250. The site that ranked 107,250 (nycwebstore.com), is an exception to the rule, and far exceeds the rankings of the other sites. The good news is that they are only taking advantage of about a dozen possible avenues for marketing, leaving a wide array of missed marketing opportunities.

Based on this information, and information gathered from non-direct competitors (such as lapolicegear.com, navyonline.com, etc.), it is evident that the only merchants that are displaying any sort of positive traffic flow are either a direct affiliate of the parent organization’s site, an independent that sells many different types of merchandise, or are part of a larger site like eBay or Yahoo.

This is good news for NYC Marketing. This means that the sites that are “unofficially” selling merchandise are not marketing well, or using offline methods of marketing. This leaves a lot of room to surpass the competition.

Budco research has uncovered over 300 possible marketing outlets and opportunities that we can capitalize on.

The key to success in marketing this venture online is going to be search engine marketing, link trades and interest-based sites that will allow us to list our services on their site. Based on rankings of the competitors, this seems to be the primary avenues of traffic onto their sites … and not one of them capitalizes on these methods effectively!

8


Search Engine Marketing

In Internet marketing, search engine marketing, or SEM, is a set of marketing methods to increase the visibility of a Web site in search engine results pages (SERPs).

The three main methods are:

Search engine optimization refers to the efforts to improve rankings for relevant keywords in search results. The goal is for the Web site to contain the latest trends and updates in order to become the first available to the visitor. It’s an ongoing process that involves rectifying the Web site structure and content so that they can be easily read and understood by the search engine’s software programs.

Search engine advertising involves paying the search engine company for a guaranteed high ranking, usually somewhere in the top ten, or an ad displayed beside or above the main search results. It’s commonly known as pay-per-click advertising.

Paid inclusion also involves paying the search engine company, but in this instance the Web site receives a guaranteed ranking order in their natural search index.

SEM has become the number-one way of marketing online. In the few years that it has been in existence, it has rapidly moved from one way to market Web sites to the primary way. All other methods take a back seat to search engine marketing. In fact, in an Internet Retailer survey last year, only 13% of Web sites reported that they don’t use search engine marketing.

SEM is referred to as reverse direct marketing because customers are actively seeking your business. Consumers are expressing their interest in the product that you sell, unlike in print, radio or TV advertising where you are pushing the message to consumers.

Our efforts are focused on search engine optimization. Because of the specific type of request that will be made by customers “searching” for NYC merchandise (“NYC sweatshirts,” as opposed to just “sweatshirts”), it is our belief that maximizing the relevant keywords will deliver a highly effective search result.

9


Viral Marketing

Viral marketing is a marketing technique that seeks to exploit pre-existing social networks to produce exponential increases in brand awareness through viral processes similar to the spread of an epidemic. It is word-of-mouth delivered and enhanced online; it harnesses the network effect of the Internet and can be very useful in reaching a large number of people rapidly.

A very popular method of viral marketing that Budco will employ for NYC Marketing is an e-zine, an online newsletter that contains information of value, such as tips, hints and news that we believe will be valuable to consumers that also have shown an interest in NYC merchandise. If the recipient finds the information compelling, we invite them to forward it on to others. E-zine publishing has become a very powerful marketing tool for online merchants.

Over time, Budco will compile a significant e-mail database of NYC Marketing customers and visitors. This will provide us with an effective base of “subscribers” to enlist as potential “distributors.” Quarterly, or seasonal, editions that highlight special promotions will be most effective in the viral world.

10


Scope of ServicesBudco has the expertise to handle all areas of responsibility.

11


Electronic Commerce

Budco maintains one of the larger Information Technologies groups in the Midwest. This depth of talent provides the in-house muscle to develop e-commerce solutions here at Budco.

Our clients’ Web sites are hosted in our “Web farm” environment. Our full environment encompasses a development, testing and production environment. The production environment consists of several Sun servers that are load-balanced and monitored for performance spikes. Budco also provides internal and external monitoring of Web applications.

Budco maintains in-house control over all aspects of Web site IT research and development, which streamlines the process and saves our clients time and costs. Plus, since we also maintain our own in-house creative agency, we can easily graphically create or edit Web site visuals as needed.

Overall, this pays off in a more cohesive effort in all facets of the program including e-commerce and Web development.

Budco has in-depth expertise in the area of interactive Internet applications. Budco has provided comprehensive interactive Internet solutions for Ford, UPS, Delta Airlines, Nissan, Infiniti, Disney and other Fortune 1000 companies.

Budco capabilities include the following:

Business-to-business e-commerce solutions (i.e., dealer Web-based: VW eStore, I-Pod application, Ford eStore, DCX eStore)

Business-to-consumer e-commerce solutions (i.e., Ford Centennial, Nissan and Infiniti Merchandise Web sites)

Business-to-employee solutions (i.e., Delta Airlines and UPS Dependent Audit solutions)

Business-to-client solutions (i.e., Budco Extranet Web site)

Business-to-business XML solutions (i.e., Ford Motor contracts)

12


E-Commerce Design

Effective Web sites begin with effective, impactful graphics and thoughtfully designed functionality. Budco, unlike Web-centric companies, maintains a full-service boutique graphic arts capability in-house.

This means we can, in conjunction with our IT-based interactive media group, create an effective merchandising shopping experience that, from a look-and-feel perspective, takes into account the big picture of everything being communicated (print, HTML e-mail, existing branded graphics, TV). This way, we can create a consistent visual environment that is an effective extension of the brand.

13


E-Commerce Technology

Budco uses state-of-the-art technology in support of all e-commerce applications. We utilize an industry standard development methodology (Systems Development Life Cycle – SDLC) approach to the actual analysis, design, development, implementation and maintenance of each application.

Budco has extensive experience with J2EE, and we deliver full J2EE solutions for our clients. Additionally, we deploy our solutions with JSP/JSTL, Java Servlets and Java Data Access Objects. We use JSP/JSTL to facilitate rapid development and ease of deployment. As part of the J2EE family, JSP technology enables rapid development of Web-based applications that are platform independent.

JavaServer Pages technology separates the user interface from content generation, enabling developers to change the overall page layout without significantly altering the underlying dynamic content. JSTL allows our team to use standardized JSP actions, and handle the tasks that need to be executed by most JSP pages, thereby speeding up JSP development.

The Servlets we deploy provide a component-based, platform-independent method for building Web-based applications. We deploy them on a Sun One Application Server. The Servlets we implement have access to the entire family of Java APIs, as well as our Java-based Budco API, which is also used to access enterprise databases using JDBC.

One of the core J2EE design patterns Budco implements is Data Access Object. The DAO implements the access mechanism required to work with the data source. The data source we connect to is Oracle. The business component that relies on the DAO uses the simpler interface exposed by the DAO for its clients. The DAO completely hides the data source implementation details from its clients.

Because the interface exposed by the DAO to clients does not change when the underlying data source implementation changes, this pattern allows the DAO to adapt to different storage schemes without affecting its clients or business components. Essentially, the DAO acts as an adapter between the component and the data source. We implement DAO with our solutions, and connect to the data source via the Budco API and connection pool.

14


Order Processing

We recognize that the overwhelming majority of orders will be through the Web site, but orders can also be accepted by toll-free phone, fax or mail. However received, all orders are entered directly into our order entry database. This order entry database enables us to identify and cross-sell client merchandise and accessories. The system allows for payment on credit card, check, purchase orders and gift certificates. The merchandise fulfillment system interfaces with Budco’s warehouse management system; this process provides multiple delivery options designed to meet the client’s needs.

The Budco Logistics System (BLS), our warehouse management system, is proprietary Oracle-based software that provides management of all inventory and order-processing functions. By integrating warehousing, inventory management, ordering, shipping, tracking and billing into a single system, BLS offers real-time oversight to manage warehouse and fulfillment activity as a single entity, rather than a series of disjointed functions. BLS is linked to our radio frequency tracking system. As orders are processed and items are picked for fulfillment, radio frequency tracking updates BLS with inventory status.

Orders being sent to our horizontal carousel are electronically sorted into the most efficient pick sequence and picked in batches of 12 orders at one time. Orders containing material not housed in the carousel are routed to the appropriate radio frequency directed picking area. The time frame for internal processing can range from same-day to 48 hours, depending on client needs.

Internet, e-mail and phone orders are processed in real-time, unless otherwise designated.

Budco is able to provide customers with very responsive order acknowledgements. We use outbound e-mail for Web and phone order confirmations. Phone orders are confirmed while the customer is on the phone. An order reference number is provided if they should need to contact us for additional information on the order. If the status of the order changes after confirmation, we send out FTC notices and/or e-mail or make a phone call if the situation warrants.

15


Customer Service

Budco currently offers same-day shipping for in-stock merchandise.

BLS is equipped with a rush order feature that systematically processes those orders before non-rush orders. Rush orders are flagged in our system; on-line orders are assigned a rush code, phone orders by the customer service representative receiving the request. This indicates that immediate fulfillment is required. We can take emergency orders up until 1 p.m. ET for fulfillment and shipment that same day. There is no additional charge for rush orders.

Each customer order is assigned an order number. At the time of shipment, every tracking number associated with that order is captured by BLS and transferred into our order entry system. Should a customer report a lost shipment, we have the ability to track each individual package by viewing that customer’s order record while he or she is on the phone.

Consumers placing orders via the Web are informed immediately if an item is on backorder. The Web site will show if an item is out of stock and disables the item from being ordered. Fax or mail users are updated on backorder or out-of-stock items either by e-mail, if we have an address, or by U.S. mail.

All Budco backorder processes are in strict conformance with Federal Trade Commission regulations. We retain data on backordered items for fulfillment once the merchandise arrives in inventory. Since our inventory management system functions in real-time, BLS flags backorders for immediate fulfillment. BLS has a variety of features for monitoring backordered items. Once the item arrives at our warehouse, it is quantified, received and located. Pending backorders can be released in several ways to best suit the situation. We have the option of releasing backorders individually, or on a mass basis.

16


Distribution

Budco determines the shipment’s destination, piece weight, piece dimensions, content, and urgency of the order, all of which factor in determining the best method of delivery.

As one of the largest shippers in the Midwest, we work with all major carriers, including DHL, FedEx, UPS and the U.S. Postal Service. Given our volumes, we are extended discounts by all our shipping partners, which we pass on to our customers.

In the complex world of export shipping, Budco's strength is drawn from our partners. We work with UPS, as well as several international freight forwarders and LTL carriers that act as agents on our behalf for export shipping.

Currently, the necessary export documentation is produced by our shipping system, ConnectShip. The selected shipping partner handles all customs clearance matters, actual transport across borders, the assessment of potential duties and taxes and final delivery to the recipient. Our carefully chosen partners have consistently delivered to meet our quality operating standards time after time.

All of Budco’s warehouses are electronically secured via our badge-reader system. In order to access any one of our warehouses, you must scan your employee badge and enter the associated PIN code in order for the door to unlock. The badge-reader system keeps records of employees who have access to the warehouse, at what time and via which door. We also offer additional levels of security for items of high-value in the form of our High-Security Lock-Up for larger items, and our Secured Vertical Lift Module for smaller items.

Our High-Security Lock-Up is a restricted-access area used to store large and small, high-value items. Budco has 108 pallet locations, as well as a 54-cubic-foot safe. Two separate lock/key systems are accompanied by electronic surveillance to ensure the security of items stored in this area.

Only SOF Supervisors on a merchandising program have access to the Secured Vertical Lift Module (SVLM), and they monitor the entire process of item put-away, order fulfillment and bin replenishment. All movements of these typically small, high-value items, in or out of the SVLM, are carefully verified by the responsible SOF Supervisor.

17


Systems and Reporting

Budco is prepared to provide reports required by NYC Marketing and can customize them to your specifications. While we do ad hoc reporting per client request, we recommend that custom reports be specified during program design.

18


The Budco Team

The New York City e-commerce project team members bring with them invaluable insight as it relates to the quality expectations on the part of our clients.

Some of the key Budco individuals who will be responsible for the NYC account include:

Mike Watson, Vice President, SalesMike oversees a variety of corporate accounts, including automotive, health care, telecommunications and consumer products. He focuses on high-level strategic development and executional design of dialogue-building initiatives to help corporate customers build and foster relationships with their customers. Since joining Budco in 1992, Mike has held positions including Account Manager and Account Director prior to assuming his current role. He is a graduate of Oakland University and holds a Bachelor of Science degree in marketing.

Jim Bevins, Director, National Account GroupJim has responsibility for developing strategies for a variety of clients, including Volkswagen/Audi, Disney, Ameritech, Ford Human Relations Division and others. He has 25 years of special promotions and marketing experience, including substantial work in the branded merchandise field. He is a graduate of Walsh College with a major in business administration.

Donna Jacob, Account ManagerDonna has responsibility for overseeing the Budco Consumer Direct Marketing account team. In this role, she has managed several branded merchandise programs for major automakers. Prior to joining Budco, Donna spent ten years with Ross Roy Canada, supporting marketing initiatives for various clients. She is a graduate of the University of Windsor with a major in marketing.

Greg Rivers, General Manager, Consumer DirectGreg manages multiple consumer catalog programs that sell branded merchandise. Before coming to Budco, Greg spent 14 years with Valassis Communications, Inc., primarily focusing on providing printed promotion for consumer packaged goods companies and franchised retailers. He earned bachelor’s and master’s degrees from Rochester Institute of Technology and Central Michigan University.

Janice Thomas, Merchandise SpecialistJanice adds to the NYC Marketing team her extensive knowledge of apparel and hard goods, both inside and outside promotional products. She has over 23 years of advertising and marketing experience, with 16 years devoted to the promotional products industry. Janice graduated from Oakland University with a BA in communications.

Kevan Kapadia, Senior Web DeveloperKevan brings 10 years of experience, as well as his exceptional skills, training and experience in Web technology to the NYC Marketing team. Kevan has successfully implemented and executed numerous Web-based applications and Web-based marketing initiatives for some major corporations. Kevan is on track to complete his BS in e-Business this year from the University of Phoenix.

19


Payment StructureBudco’s financial commitment to ensure success.

20


The Budco Commitment

We are excited about developing a solid business relationship with NYC Marketing. As “teammates,” we will be driven to meet and exceed all expectations to help both NYC Marketing and Budco realize financial returns that will benefit our partnership.

As your partner, it will be our mission to help you achieve your three primary goals:

Generate revenue Support important city initiatives Market NYC around the world

The difficulty in trying to meet your financial requests in the marketing of your brand, while balancing the investment that we’re being asked to accept, is the uncertainty of exactly what the market is.

Many Intangibles

“If you build it they will come,” may have been the successful mantra running throughout the popular Kevin Costner movie Field of Dreams, but there’s a little more financial risk at stake in this operative.

Because of the unavailability of historical sales results, as well as the uncertainty of the traffic that we can reasonably expect the site to generate, we’re being asked to make a “financial leap of faith” that simply throwing open the cyber-doors will be all it takes to sell what we all hope is popular branded merchandise.

The Financial Unknowns

The lack of relevant historical volume data places us in an information void. Consequently, we do not have enough information to make sound financial projections and business decisions with confidence. This is somewhat challenging, since the financial model that you’ve requested asks that the financial risk be fully borne by your e-commerce provider. Perhaps we can agree upon a financial model allows us to launch a pilot period to establish a sales track record that ultimately leads to the type of royalty financial model that you seek.

21


Year One Pilot Program

We propose a 12-month pilot program whereby a traditional fee-for-service business model is invoked. This will allow NYC Marketing to retain all profits from the sale of their merchandise. In turn, Budco will be paid for only the services we provide.

In conjunction with the fee-for-service model we propose a tiered rebate royalty program. This could be in the form of a quarterly rebate from Budco to NYC Marketing, based on the program volume and a pre-determined percentage of services paid to Budco; the higher the volume, the greater the percentage.

Long Term Program

After the 12-month pilot period we will convert the NYC Marketing e-commerce program to a 100% royalty model once program volumes are established and performance is analyzed.

22


This Is BudcoThere’s more to Budco than meets the eye.

23


This Is Budco

Budco is a full-service marketing services and fulfillment company dedicated to assisting organizations in creating, managing and improving communication with their customers. As The Dialogue Company, we do this by looking at the various points of contact a client may have with their customers and determining the best way to build ongoing relationships. We work with a broad spectrum of companies and implement services using an array of internal marketing competencies.

Established in 1982, Budco is now a $100 million company (gross sales) with 750 permanent employees. Located in Highland Park, Michigan, we are in the center of the metropolitan Detroit area. We are privileged to operate from a 27-acre World Headquarters campus, with two primary facilities:

Budco West, our main building (foreground, left), was new in mid-2000 and encompasses 362,000 square feet. Of that total, 252,000 square feet are devoted to operations and warehousing, and 110,000 square feet to sales, marketing, creative, financial, call center and administrative functions.

The adjacent Budco East was acquired in late 2002 to accommodate our rapid growth, particularly in the warehousing and distribution areas. The facility covers 202,000 square feet.

24


Wide-Ranging Competencies and Customized Solutions

Our marketing competencies cover every aspect of customer dialogue. Frequently, we combine or bundle competencies to create customized products or solutions. We concentrate our efforts in four areas of benefit to our customers: reducing costs, increasing revenue, enhancing loyalty and reducing cycle time. At present, we do business primarily in the automotive, health care, pharmaceutical, retail, and travel and leisure segments. The following are other in-house marketing competencies that we have not discussed earlier in the document. Many of our clients are eager to engage additional Budco competencies over and above their original intentions.

Budco Creative ServicesFrom initial concept through tactical execution, the Creative Services group is a full-service advertising and marketing resource. We offer expertise in many areas: concept development, brand management, broadcast production, design and art direction, print production and copy writing. Our award-winning creative team produces advertising, collateral, direct marketing, point-of-sale, presentation and merchandising materials in print, broadcast, electronic and alternative media. Our experience encompasses retail, consumer and business-to-business arenas.

Budco Financial ServicesThis is our financial clearinghouse, handling customer initiatives that involve financial transactions. Services include cash management, credit card processing, monthly dealer billing, invoicing, accounts payable processing and rebate processing. We also provide financing to consumers for purchase of extended service contracts.

Digital PrintAnchoring our extensive digital print capacity are two Xerox iGen3 color digital presses. With near-offset quality, these printers support marketplace demand for customized one-to-one communications. Additional sophisticated color and black/white equipment allows us to output three million color and 13 million black/white impressions per month. We also provide print-on-demand services in order to tailor materials, volumes and timing to customer order.

25


CD DuplicationWe offer a menu of CD publishing options, from simple duplication using a provided master to complete new program production. CD technology continues to increase in importance as a sales, promotional and training tool, in part because disks are easy to reproduce and cost-effective to distribute. By adding our database capabilities to the production process, Budco can customize content of each CD to individual recipients.

FulfillmentBudco originated as a distribution and fulfillment company and we continue to be a leader in this area. Working in both business-to-business and business-to-consumer segments, we offer everything from bulk distribution of thousands of cartons to Special Order Fulfillment of a single item. Specialized equipment such as moving horizontal and vertical carousels, flow racking and forward pick bins increases the efficiency of our operation. We offer kit assembly and work in both manual and automated modes.

Information TechnologiesOur IT staff is involved with every type of customer initiative and internal operation, from a simple personalized letter, to a centralized database, to providing the central nervous system behind our inventory management and fulfillment expertise. The department is divided into three specialized disciplines: Application Development to design, facilitate and manage specific customer initiatives; IT Operations to oversee servers, the Web farm, tools, connectivity and digital print; and Systems Support to maintain our network structure and connectivity.

Lettershop and FinishingBudco provides a wide range of bindery and finishing services, including collation, cutting, drilling, laminating, punching, shrink-wrapping, stitching and tabbing. Companion lettershop operations encompass personalization, folding, inserting, addressing, labeling and mailing. We house specialized equipment to enable our work in this area, such as high-speed inserting, collating and booklet-making systems, and a smart collator that uses video and bar code technology to handle up to 15 separate items.

26


Printing and ProductionIn addition to digital print services, we offer offset printing in support of specific customer programs. We also manage the work of outside printing companies for more complex jobs.

Mailing ServicesAt present we process and ship three million special orders and mail 20 million letters annually. Another 850,000 packages go out as part of our mail consolidation and management systems. We maintain partnerships with all major carriers and are designated a plant load verification site by the U.S. Postal Service. Using sophisticated software such as ConnectShip to identify the most cost-effective carrier from among selected suppliers and PostalSoft to verify and correct addressing information, we ensure accuracy and cost efficiency.

Research and DevelopmentIn response to the demand for knowledge-based marketing, this department provides high-quality market research services focused on business development, product and service evaluation and strategic planning. By looking at innovative processes that increase the effectiveness of marketing initiatives and employing the power of database design to effectively target markets, we work with customers to improve the performance of their initiatives.

Warehousing and Inventory ManagementHighlights of our warehousing and production expertise include 32 shipping docks, 30-foot-high ceilings to take advantage of the latest storage methods, a climate-controlled environment and limited, secure access to our facilities. At the heart of our leadership is the Budco Logistics System, our proprietary platform for integration of all inventory, order processing, fulfillment and billing functions into a single, end-to-end process. We track all items in all facilities using advanced bar code technology and radio frequency interface to determine real-time location and quantity. These technologies are linked to other Budco competencies for complete control of customer warehousing, fulfillment and distribution work.

27


Quality Processes and The Five Rights

As an ISO 9001:2000-certified company, Budco programs are handled according to our Quality Operating System, or QOS. The QOS process specifies the way work flows through the organization and imposes a set of metrics to track performance against objectives. All work is completed and evaluated in accordance with our strict QOS standards because we know that the key to quality execution is unrelenting attention to detail.

Foundation components of the quality process are a clear determination of customer expectations, the assignment of qualified personnel to handle the project, the definition of a process for completing the project and the delineation of measurables. From advanced planning through process development, implementation and measurement, our emphasis is on continuous improvement.

Because we are dedicated to the delivery of a quality product, we’ve distilled our efforts into what we call The Five Rights. These Rights define what our customers can and should expect from us:

Right Product/Service refers to providing the appropriate process, system or service to meet the customer’s specifications.

Right Customer Handling governs our interactions with customers and specifies thoughtful, professional dealings at all times.

Right Time means we deliver according to mutually acceptable deadlines.

Right Value has to do with defining and meeting expectations relative to price and value.

Right Solution is our commitment to meeting both immediate needs and long-term goals, providing products and services that meet customer needs.

We are dedicated to meeting and exceeding customer expectations. And that’s not a matter of chance. At Budco, we observe the kind of disciplined process that ensures delivery on our commitments – our customers can count on that!

28


Results … Nothing Else Matters

In the final analysis, our entire company is dedicated to a single purpose – delivering Results.

Results that realize long-term customer objectives Results that build ongoing relationships by fostering

dialogue and enabling interaction between companies and their customers

Results that are achieved through flawless execution

Results that increase efficiency and reduce costs

Using a special combination of people, processes, technologies and competencies, Budco Results are both tactical and strategic:

Tactically, our work is consistent, predictable, sustainable and measurable. Only through the application of stringent metrics can we maintain our ISO 9001:2000 standing and continue to earn the high marks that consistently characterize our performance.

Strategically, we understand and participate in the goals of our customers. Whatever the focus – lowering costs, improving customer loyalty, enhancing revenue, increasing sales ― Budco knows how to make a critical difference in outcome, which is what marketing is all about.

Everyone is proud of our ability to deliver Results for our customers. At Budco, Nothing Else Matters is our way of life.

29


AttachmentsRequired proposal forms and information.

30


Financial Statements

31


Attachments D and E

32


Attachment F

33


Attachment G and Addendums

34


Terms and Conditions

35

Documents

NYC E-commerce proposal