ROI MEDIA SOLUTIONS, LLC
September 29, 2004
Xx. Xxxxx Xxxxxxxx
Direct Card Services, LLC
00000 X. Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Re: Amendment to Memorandum of Understanding Dated November 5, 2003
Dear Xxxxx:
This letter shall serve as an amendment (hereinafter the "Amendment")
to that certain Memorandum of Understanding dated November 5, 2003 ("MOU") by
and between ROI Media Solutions, LLC ("ROI") and Direct Card Services, LLC
("DCS"). The purpose of this Amendment to the MOU is to clarify certain rights,
responsibilities, and obligations by and between the parties.
The parties acknowledge and agree that time is of the essence for the
transactions contemplated under the MOU. As a material inducement to ROI's
agreement to enter into the MOU, DCS agreed that it would make available certain
start-up costs and expenses for defined stored value card programs. Likewise, as
a material inducement to DCS to enter into the MOU, ROI agreed that it would
provide certain media partners who would provide media free of cost to promote
the stored value card programs.
DCS hereby agrees to timely provide all necessary funds to implement
the test card programs contemplated by the MOU, and as defined in paragraph 4 of
the MOU, for La Raza Los Angeles and Power 92 Phoenix, such funds shall be
sufficient to cover the costs and expenses associated with such test programs,
including, without limitation, all costs and expenses associated with the
purchase and activation of the stored value debit test cards, customer service,
and other directly related costs and expenses for the issuance of the stored
value debit test cards (hereinafter sometimes the "DCS Expenses"). It is agreed
that the test programs shall consist of a total of 5,000 stored value debit
cards for each program. DCS hereby represents and warrants that DCS has already
paid the MasterCard licensing fee for the subject stored value card test
programs, has paid for an initial inventory of 5,000 cards for each of the test
programs (i.e., DCS Media Card for Phoenix and the DCS Media Card for Los
Angeles), has paid the start-up costs and guaranteed fees to Optimum Pay USA,
Inc. (and BankFirst, the issuing bank), has paid the start-up fees to Lexicon
Marketing which will act as the call center for the Los Angeles program and has
paid the Internet set-up fees for Global Money Online. DCS further represents
and warrants that the only DCS Expenses that DCS has yet to pay in full for each
test program are: (1) set up fees and costs for the Phoenix call center; (2) the
initial MasterCard requirement for loading for each card once ordered and issued
by the bank to the consumer which amount is Ten Dollars ($10.00) per card; and,
(3) an initial insurance premium of $10,000 to obtain insurance coverage for
bank reserves as and when required by the issuing bank (hereinafter sometimes
collectively "DCS Remaining Test Expenses"). DCS agrees to pay these funds
directly to the third-party vendor (i.e., Optimum Pay USA, Inc., X' Xxxxxxxx
Telemarketing Services and XL Insurance Company) no less than five (5) days
prior to any requirement to do so by the issuing bank or MasterCard. DCS
represents and warrants that it has immediately available a sufficient amount of
funds to cover all DCS Remaining Test Expenses contemplated by the MOU and this
Amendment. All such funds shall be reimbursable pursuant to the terms and
conditions of the MOU. Schedule "C" appended hereto contains a list of all
anticipated expenses of DCS relating to the test programs that have not been
incurred or paid as of the date hereof.
Should DCS fail to pay in their entirety any DCS Remaining Test
Expenses and should such failure prevent compliance with any contract or
obligation with the issuing bank, MasterCard, Optimum Pay USA, Inc. and any
radio or media partner and further should the same delay the issuance of the
initial inventory of test cards for the Phoenix and Los Angeles programs, as
identified herein and in the MOU, and provided further that such failure
continues for fifteen (15) consecutive days, at the end of such period ROI, at
its option (to be given in writing to DCS) shall have the right to acquire the
interest of DCS under the MOU and the MOU shall terminate in its entirety under
the following terms and conditions. Upon such event, DCS would no longer have a
claim to any further ownership or profits associated with the media card
programs in Phoenix and Los Angeles, provided, ROI shall pay to DCS an amount
equal to (i) any advanced costs and fees incurred by DCS as identified in
Schedule "A" and Schedule "C" appended hereto minus (ii) any advanced costs and
fees incurred by ROI as identified in Schedule "B" appended hereto. The unpaid
balance of such amount shall accrue interest of Five Percent (5%) simple per
annum beginning on the date of exercise. Such amount shall be paid by ROI to DCS
within forty-five (45) days after written notice of ROI's exercise of its option
described herein. Should ROI fail to fully pay DCS the amounts identified in
Schedule "A" and Schedule "C" in accordance herewith then in such event ROI's
option and rights to acquire the interest of DCS under the MOU shall expire.
Such obligation to pay expenses is conditioned upon ROI's ability to obtain all
necessary third party consents and assignments necessary to transfer to ROI all
contracts with the issuing bank, MasterCard, Optimum Pay USA, Inc., the radio
and media partners and others related to the programs. The terms of this
paragraph are subject to the conditions related to termination of the MOU as set
forth below. Should ROI fail to pay DCS such fees and costs after making any
such election, then, in such event, the rights of DCS under the MOU as amended
by this Amendment shall be reinstated and shall be deemed to be in full force
and effect retroactively.
It is further agreed that should DCS deliver the stored value test card
programs in accordance herewith and further should an "Acceptable Network" (as
defined on Schedule "D") be in place contractually, financially and physically
(appropriate equipment, software, communications and other necessary items) and
should ROI fail to obtain a radio media launch of the stored value card test
programs within thirty (30) days thereafter, then in such case ROI shall pay
Optimum Pay USA, Inc. a fee of Ten Thousand Dollars ($10,000) per month
(beginning the first day of the month after such date) until either the stored
value card test programs launch or until the MOU is terminated, whichever shall
first occur. Any fee paid by ROI to Optimum Pay USA, Inc. in accordance herewith
shall be a recoupable item for ROI in accordance with the MOU.
If DCS (i) delivers the stored value card test programs in accordance
with its obligations under the MOU as amended herein and (ii) DCS has paid or
has financing immediately available to cover all of the DCS Remaining Test
Expenses and (iii) an Acceptable Network exists, should ROI fail to obtain a
radio media launch of the stored value card test programs as stated herein by
January 31, 2005, then in such event ROI shall be obligated to pay DCS one-half
of all of its incurred costs and fees for the stored value card test programs as
identified in Schedule "A" and Schedule "C" appended hereto less any advanced
costs and fees incurred by ROI as identified in Schedule "B" appended hereto.
Such fees and costs payable by ROI to DCS shall be paid within forty-five (45)
days following any such failure by ROI, but in any event not later than March 1,
2005, if the provisions hereof apply. Notwithstanding anything to the contrary
contained herein, in any event, should the stored value card test programs not
commence by January 31, 2005 (the "Expiration Date"), and absent a joint written
extension between the parties of the MOU as amended, the MOU shall expire and be
of no further force and effect and all terms and conditions of this Amendment
shall terminate excepting as to the terms of this paragraph which shall survive.
In the event the MOU expires by its own terms ("Expiration"), DCS shall be the
sole and exclusive owner of the Personal Advantage Media Card Program and La
Raza Bank Card program ("stored value card programs") free of any claim or
interest of ROI except as noted below. The parties expressly agree that the
terms of the MOU set forth in paragraph 10 therein are not modified except in
the event of termination or Expiration of the MOU as set forth herein. In the
event of the termination or Expiration of the MOU as set forth herein, the
parties agree to cooperate in good faith to help enable the timely transfer of
ownership of the stored value card programs in accordance with the terms hereof.
In the event of Expiration, DCS shall have the option to move forward
with the Personal Advantage Media Card Program in Phoenix, provided that DCS
must notify ROI in writing within seven (7) days of Expiration of its intent to
move forward with such program, provided, further, DCS shall, within sixty (60)
days of Expiration, reimburse ROI for all expenses identified is Schedule "B"
that are directly related to the Personal Advantage Media Card Program in
Phoenix. DCS would then take full ownership of the Phoenix program and assuming
full and timely reimbursement of expenses, ROI would no longer have claim to any
further ownership or profits associated with the DCS Media Card program in
Phoenix. If DCS does not elect to exercise the option in accordance with the
terms of this paragraph, ROI has the option to purchase all rights to the
Personal Advantage Media Card Program by reimbursing DCS, within sixty (60) days
of exercising its option, for all expenses identified in Schedules "A" and "C"
directly related to the Personal Advantage Media Card Program. The terms and
conditions of this paragraph are conditioned upon obtaining all necessary third
party consents and assignments.
In the event of Expiration, ROI shall have the option to move forward
with the La Raza Bank Card program in Los Angeles, provided that ROI must notify
DCS in writing within seven (7) days of Expiration of its intent to move forward
with such program, provided, further, ROI shall, within sixty (60) days of
Expiration, reimburse DCS for all expenses identified in Schedules "A" and "C"
that are directly related to the La Raza Bank Card Program. ROI would then take
full ownership of the programs and assuming full and timely reimbursement of
expenses, DCS would no longer have claim to any further ownership or profits
associated with the La Raza Media Card program in Los Angeles. If ROI does not
elect to exercise the option in accordance with the terms of this paragraph, DCS
has the option to purchase all rights to the La Raza Bank Card Program by
reimbursing ROI for all expenses identified in Schedule "B" directly related to
La Raza Bank Card Program. The terms and conditions of this paragraph are
conditioned upon obtaining all necessary third party consents and assignments.
Every claim, dispute or controversy of whatever nature, arising out of,
in connection with, or in relation to this MOU (an "Arbitrable Claim"), shall be
settled by final and binding arbitration conducted in Los Angeles, California.
Judgment upon any award may be entered by any state or federal court having
jurisdiction thereof. Except as provided in this Agreement, the Federal
Arbitration Act shall govern the interpretation, enforcement and all proceedings
pursuant to this Section. Adherence to this dispute resolution process shall not
limit the right of the parties hereto to obtain any provisional remedy,
including injunctive or similar relief, from any court of competent jurisdiction
as may be necessary to protect their respective rights and interests pending
arbitration. Notwithstanding the foregoing sentence, this dispute resolution
procedure is intended to be the exclusive method of resolving any Arbitrable
Claims arising out of or relating to this Agreement. The arbitration procedures
shall follow the substantive law of the State of California, including the
provisions of statutory law dealing with arbitration, as it may exist at the
time of the demand for arbitration, insofar as said provisions are not in
conflict with this Agreement and specifically excepting therefrom sections of
any such statute dealing with discovery and sections requiring notice of the
hearing date by registered or certified mail. The arbitrators shall determine
the prevailing party and shall include in their award that party's reasonable
attorneys' fees and costs.
The parties agree that their sole and exclusive remedies in the event
of any material breach of the MOU, as amended, shall be those stated in the MOU,
as amended. The parties expressly waive any claim for general, special,
incidental or consequential damages (including any claim for punitive damages)
in the event of a material breach of the MOU, as amended, it being agreed that
the remedies for such breach are expressly identified in the MOU, as amended.
The remedies expressed herein are deemed to address such damages which are
difficult or uncertain to ascertain. The remedies are not intended to be a
penalty. Further, the parties agree that the terms of this provision shall inure
to the benefit of any officer, director, employee, attorney, or agent of either
party. Each party agrees that it has had the benefit of legal counsel prior to
entering into this letter agreement.
This Amendment may be signed in several counterparts, each of which
will constitute an original.
In case any provision of this Amendment shall be held to be invalid,
illegal or unenforceable, it shall, to the extent possible, be modified in such
manner as to be valid, legal and enforceable but so as to most nearly retain the
intent of the parties as evidenced hereby, and if such modification is not
possible, such provision shall be severed from this Amendment, and in either
case the validity, legality and enforceability of the remaining provisions of
this Amendment and the future application of such provision shall not in any way
be affected or impaired thereby.
Except as provided herein, the terms and conditions of the MOU shall
remain in full force and effect.
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below, whereupon this
letter agreement and our acceptance shall constitute a binding agreement between
us.
Very truly yours,
ROI MEDIA SOLUTIONS, LLC
By: /s/ Xxxxx Xxxx
--------------------------
Xxxxx Xxxx, its Manager
Accepted and agreed to as of
The date first above written:
DIRECT CARD SERVICES, LLC
By: /s/ X. Xxxxxxxx Xxxxxxxx
--------------------------
Name: X. Xxxxxxxx Xxxxxxxx
Title: Managing Me
