CONFIDENTIAL TREATMENT REQUESTED BY M2DIRECT, INC.
AGREEMENT REGARDING FLIGHTS IV AND V
This Agreement regarding Flights IV and V (the "Agreement"), is made and
entered into this 16th day of April, 1999, by and between M2Direct, Inc., a
Georgia corporation ("M2Direct") and Control Group, Ltd. ("Control"), a Delaware
corporation and a wholly owned subsidiary of M2Direct, on one hand; and The
Provident Bank, an Ohio corporation ("Provident"), on the other hand.
Recitals:
(1) Control and Provident entered into that certain Service Agreement
dated as of June 30, 1997 (the "Service Agreement"), under which Control has
provided certain direct marketing services to Provident, including services
generally referred to by Control and Provident as Flights IV and V.
(2) As described in this Agreement, the parties have agreed to
compromise and settle any issues between them regarding the compensation and
reimbursement by Provident to Control for Flights IV and V.
For and in consideration of the recitals stated above, the terms,
conditions, representations, warranties and undertakings of the parties
described in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which the parties hereby acknowledge, the parties
agree as follows:
ARTICLE 1
RESTRUCTURING OF FLIGHTS IV AND V
1.1 Subject to the terms and conditions of this Agreement, Provident
agrees to restructure the payment schedule for Flight IV as follows:
12/31/98 100% of September 1998 account acquisition
****** accounts @$***** $4,041,985
Date of this 100% of December 1998 account acquisition
Agreement ***** accounts @$***** $ 378,033
Billed revenues represent earned revenues as of 12/31/98 and are not
subject to refund. Provident shall pay M2Direct the sum of $378,033 upon the
execution and delivery of this Agreement.
1.2 M2Direct shall issue to Provident a stock purchase warrant in the
form of Exhibit A to this Agreement for the purchase of 100,000 shares of the
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common stock of M2Direct at an exercise price of $.01 per share.
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*** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
CONFIDENTIAL TREATMENT REQUESTED BY M2DIRECT, INC.
1.3 The parties entered into Flight V under agreements that were based
upon inaccurate performance assumptions by both parties and underwriting
criteria unacceptable to M2Direct. Those agreements included provisions for
xxxxxxxx on a per account basis. The parties agreed to restructure Flight V, and
Provident also agreed to reimburse M2Direct for any costs incurred under Flight
V. The parties subsequently agreed to terminate Flight V before its originally
contemplated termination date and accordingly agree to the following final
reconciliation of Flight V based upon costs incurred by M2Direct and accounts
booked by Provident:
2/28/99 100% of account acquisition
***** accounts @$***** $4,186,905
Provident has previously paid M2Direct $3,736,905, paying $2,238,274 on
December 10, 1998 and the remainder of such amount in 1999. Provident shall pay
the balance of $450,000 upon the execution and delivery of this Agreement.
Billed revenues represent earned revenues and are not subject to refund.
Provident accepts Flight V as performed and agrees that M2Direct has no
contingent liability regarding Flight V.
1.4 M2Direct agrees to issue a zero coupon promissory note payable in one
payment of One Million Dollars ($1,000,000) on the fifth anniversary of the date
of this Agreement, provided that the note shall be payable to Provident in full
upon the closing of M2Direct's initial public offering (the "IPO"), which for
this purpose means an underwritten offering of shares of its common stock, after
which its common stock is traded on the Nasdaq National Market or a national
stock exchange.
1.5 Subject to the terms and conditions of this Agreement, M2Direct
agrees to deposit with Provident not less than one half of the net proceeds of
the IPO. Provident shall pay interest to M2Direct at a commercially reasonable
rate for such a sum.
1.6 M2Direct shall pay the attorneys' fees and disbursements actually
incurred by Provident in negotiating this Agreement and the transactions related
hereto, not to exceed a total amount of $15,000.
1.8 The parties agree that the payment schedules contained in the project
memorandums for Flight IV and V attached to the Service Agreement are superseded
by this Agreement, which eliminates any possible contingent liability of
M2Direct regarding Flight IV.
ARTICLE 2
MISCELLANEOUS
2.1 Time of the Essence. Time is of the essence of this Agreement.
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*** Omitted pursuant to a request for confidential treatment and filed
separately with the Commission.
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CONFIDENTIAL TREATMENT REQUESTED BY M2DIRECT, INC.
2.2 Governing Law. This Agreement shall be interpreted, construed, and
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enforced in accordance with the laws of the State of Ohio.
2.3 Counterparts. This Agreement may be executed simultaneously in
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several counterparts, each of which shall be deemed an original; but all of
which together shall constitute one document.
2.4 Succession and Assignment. This Agreement shall be binding upon
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and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of M2Direct and Provident.
2.5 Entire Agreement. This Agreement contains the entire agreement of
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the parties hereto with respect to the transactions covered hereby and there are
no representations, warranties, agreements, undertakings or conditions, express
or implied, except as set forth herein. Without limiting the foregoing, the
agreement memorialized in this Agreement eliminates any possible contingent
liability of M2Direct regarding Flights IV and V.
2.6 Amendment and Waiver. This Agreement may not be amended,
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supplemented, or otherwise modified except by an instrument in writing signed by
each of the parties hereto. No waiver by any party hereto of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence.
2.7 Severability. Every provision of this Agreement is intended to be
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severable, and if any term or provision is determined to be illegal or invalid
for any reason whatsoever, such illegality or invalidity shall not affect the
validity of the remainder of this Agreement.
2.8 Construction. The parties to this Agreement have participated jointly
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in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement. Any reference to any federal, state
or local statute or law shall be deemed to also refer to the rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
[Signatures begin on following page.]
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CONFIDENTIAL TREATMENT REQUESTED BY M2DIRECT, INC.
The undersigned have signed this Agreement as of the date stated above.
Provident Bank M2Direct, Inc.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxxx Name: Xxxx X. Xxxxx
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Title: Senior Vice President Title: President and CEO
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Control Group, Ltd.
By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
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Title: Vice President
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