Exhibit 10.8
ADDENDUM TO THE NETCENTIVES INC.
INCENTIVE MANAGEMENT PROGRAM AGREEMENT
This Addendum (the "Addendum") to the Netcentives Inc. Incentives Management
Program Agreement dated as of March 31, 2000 (the "Agreement") between
xxxxxxxxxxx.xxx inc., a Michigan corporation ("CoolSavings") and Netcentives
Inc., a Delaware corporation ("Netcentives") is effective as of June 14, 2001
(the "Addendum Effective Date"), subject to the condition set forth in Paragraph
10 of this Addendum.
WHEREAS, pursuant to the Agreement, Netcentives is licensing certain technology
and providing certain services to CoolSavings;
WHEREAS, CoolSavings has requested to alter its payment obligations under the
Agreement and Netcentives is willing to so alter pursuant to the terms of this
Addendum.
NOW, THEREFORE, the parties hereby agree, for good and valuable consideration to
this Addendum to the Agreement as provided below (all capitalized terms not
otherwise defined herein have the meanings ascribed to them in the Agreement):
1. The initial sentence of Section 3.11(C) of the Agreement is hereby
amended in its entirety and replaced as follows:
As part of its ongoing operation of the CoolSavings Program, Netcentives
will update the web pages it hosts in connection with the operation of
the CoolSavings Program, not less than once per month for content
releases and not less than once every two weeks for Rewards no longer
offered by suppliers; provided, however, that in the first Quarter
following the Launch Date, such web pages may be updated more frequently
as mutually agreed by the parties.
2. A new Section 3.14 is hereby added to the Agreement as follows:
3.14 RPV Account. The amount equal to the total RPV paid to Netcentives
pursuant to Section 4.4(A), less offsets for Rewards and any agreed upon
Breakage shall be the "RPV Account". Rewards shall be supplied from such
RPV Account. CoolSavings shall be liable for all Rewards in excess of
the RPV Account.
3. A new Section 3.15 is hereby added to the Agreement as follows:
3.15 Account Management. Each party shall name one representative to be
the Account Manager during the Term ("Account Manager"). For
Netcentives, the Account Manager is Xxxxx Xxxxxx. For CoolSavings, the
Account Manager is Xxxxx Xxxxxxx. Either party may replace its Account
Manager at any time upon reasonable advance notice to the other;
provided, however, that if a party is dissatisfied in any way with such
a replacement, the parties will work in good faith to communicate and
resolve such dissatisfaction. The Account Managers shall meet from time
to time as agreed by the Account Managers but not less than once every
three months (quarterly). Such meetings may be conducted in person or by
telephone. The Account Managers shall be responsible for understanding
the full scope of the relationship. The Account Managers shall also be
responsible for engaging the appropriate representatives of the
respective companies
to allow the parties to meet their obligations hereunder. In addition,
the Account Managers shall review and approve CoolSavings' quarterly
marketing plan for the CoolSavings Program and shall negotiate in good
faith whether joint activities should be explored in order to better
promote the CoolSavings Program. The Account Managers shall cooperate to
exchange information regarding Promotions, including but not limited to
click thru percentages, purchase rates and amounts, and margins in
aggregate as well as by segment and individual member. The Account
Managers will act as an initial point of contact to resolve
expeditiously any conflict between the parties related to this
Agreement. Notwithstanding the foregoing, in no event shall either party
be required to exchange information that violates its privacy policy, as
the same is amended from time to time.
4. Section 4.4(A) of the Agreement is hereby supplemented by adding the
following to the end of the paragraph:
Notwithstanding the foregoing, commencing on June 14, 2001 (the
"Price Adjustment Date"), the Xxxx-Up shall increase to forty-
three percent (43%) of the RPV and the Price shall be amended to
be such Xxxx-Up only. By way of example only, prior to the Price
Adjustment Date, in order to have 1,000 Points Minted,
CoolSavings would pay Netcentives $12.60 (RPV of $0.01 plus 26%
Xxxx-Up); after the Price Adjustment Date, in order to have
1,000 Points Minted, CoolSavings would pay Netcentives $4.30
(43% Xxxx-Up only).
5. The parties agree and acknowledge that as of the Price Adjustment Date,
the RPV Account balance is $996,316.73 (99,631,673 Points outstanding).
At all times, CoolSavings hereby agrees to maintain a minimum account
balance in the RPV Account equal to at least 40% of the RPV for Points
then outstanding (the "Minimum RPV Amount"). The parties agree and
acknowledge that as of the Price Adjustment Date, the Minimum RPV
Account balance is $398,526.69. In the event the RPV Account balance is
less than the Minimum RPV Amount, Netcentives may, in its sole
discretion, deliver written notice (the "Wind-Down Notice") to
CoolSavings that it is in material breach of the Agreement, and, unless
cured within 10 calendar days, Netcentives may immediately terminate the
Agreement and commence a wind-down (the "Mandatory Wind-Down") of the
CoolSavings Program pursuant to the terms of Section 5.5 of the
Agreement (except that it shall not be at CoolSavings' option).
Notwithstanding the foregoing, in the event CoolSavings did not have
notice that the RPV Account balance is less than the Minimum RPV Amount
because reports produced by the Incentives Management System were
unavailable due to a technical failure caused by Netcentives, then the
10 calendar day cure period shall be equitably tolled for the equivalent
of the period of such unavailability; provided however, CoolSavings
shall provide prompt written notice of such technical failure as soon as
it becomes aware of the same. In the event the equitable tolling
continues for 30 days, the parties shall immediately cooperate to
determine the proper amounts owed to cure the default and thereafter the
cure period shall commence. In the event of a Mandatory Wind-Down, the
RPV Account shall be netted against Netcentives' applicable fees as set
forth in Section 5.5 of the Agreement and such amount shall be deemed
paid to Netcentives and shall be retained by Netcentives. Any cure of
the obligation set forth in this paragraph 5 shall require a funding of
the RPV Account that is
sufficient to maintain the RPV Account for 2 months of forecasted
Rewards, as determined by Netcentives in its reasonable discretion. By
way of example only, in the event that 200,000,000 Points are
outstanding as of December 31, 2001, then the RPV for Points then
outstanding would be $2,000,000, 40% of which is $800,000. Therefore,
CoolSavings would be obligated to fund the RPV Account to the $800,000
level, plus an amount equal to 2 months of forecasted Rewards, as
determined by Netcentives in its reasonable discretion.
6. Section 4.5(B) of the Agreement is hereby amended in its entirety and
replaced as follows:
During the second Contract Year, CoolSavings will purchase
134,873,016 Points. The Guaranteed Purchase commitment for the
second Contract Year shall be made as follows: (i) $10,000 shall
be due on the Price Adjustment Date; (ii) $90,000 shall be due
on June 25, 2001; and (iii) the balance of $489,954 shall be due
in monthly installments thereafter ($53,328.22) commencing July
25, 2001, until paid in full. The foregoing Guaranteed Purchase
is subject to acceleration due to a higher consumption rate in
accordance with Section 4.6(B). Payments shall be made by wire
transfer to an account designated by Netcentives.
7. Section 4.7 of the Agreement is hereby amended to provide that
CoolSavings will retain 100% of Breakage. In lieu of the Breakage set
forth in Section 4.7 of the Agreement to be retained by Netcentives,
immediately, upon execution of this Addendum, $199,074.48 of the RPV
Account balance, shall be removed from the RPV Account and retained by
Netcentives as in lieu of Breakage under the Agreement. Netcentives
shall pay CoolSavings any outstanding Breakage upon expiration of the
Agreement or termination by CoolSavings pursuant to the terms of the
Agreement (the "Breakage Remittance"), provided that any amounts owing
Netcentives pursuant to the Agreement and this Addendum as of such
expiration or termination shall first be deducted from such Breakage.
The Breakage Remittance shall be made in equal quarterly installments
commencing 3 months from the effective date of the termination or
expiration. The effective date of the termination or expiration shall be
tolled during the pendancy of any Extended Service Period, Final
Promotions Period, or other wind-down of the CoolSavings Program for
purposes of determining the payments of the Breakage Remittance. For
purposes of clarity, there shall be no Breakage Remittance or other
payments to CoolSavings by Netcentives in the event of a transfer to a
new program as provided in Section 5.6(B) of the Agreement, except for:
(i) Refunds owing pursuant to Section 4.4(B) of the Agreement, and (ii)
RPV upon redemption of Flagged Points pursuant to Section 5.6(C)(iii) of
the Agreement.
8. The parties agree to cooperate to facilitate understanding of accounting
treatment of the CoolSavings Program, including Netcentives arranging
for CoolSavings to consult with its independent auditor regarding the
same. However, any expenses incurred as a result of this process will be
borne solely by CoolSavings.
9. In the event (a) CoolSavings files a petition in bankruptcy under
Article 7 of the Bankruptcy Code or (b) Netcentives terminates the
Agreement pursuant to Section 5.2(A)(i) of the Agreement, then this
Addendum shall be deemed void ab initio and the Agreement in effect
prior to this Addendum shall govern all aspects of the parties'
relationship; provided however, that for the purposes of this Paragraph
9only, the cure period set forth in Section 5.2(A)(i) of the
Agreement shall be deemed to be sixty (60) days in the first instance of
a breach by CoolSavings and thirty (30) days for any breach by
CoolSavings thereafter. Upon fulfillment of the obligations set forth in
this Addendum, this provision shall be of no further effect.
10. Notwithstanding anything in this Addendum to the contrary, the parties
agree that this Addendum shall not become effective until Netcentives
receives the payments set forth in Paragraph 6 (i) and 6 (ii) of this
Addendum, provided that both such payments are received on or prior to
June 30, 2001. Once such payments are received on or prior to June 30,
2001, this Addendum shall be deemed to be effective as of the Addendum
Effective Date.
11. The parties agree and acknowledge that, except for payments owing to
Netcentives, the conduct of the CoolSavings Program and the obligations
of each of the parties under the Agreement, are in compliance with the
Agreement and there is no current basis for termination of the
Agreement.
12. This Addendum shall not be act as a waiver that any party has at law or
equity with respects to its rights, power or remedies pursuant to the
Agreement.
13. Upon execution of this Addendum, the parties agree to immediately
commence negotiations in good faith regarding a Service Level Agreement
to be attached hereto as Exhibit O. The parties agree that the Service
Level Agreement is a material part of this Addendum, and shall be agreed
to by July 15, 2001; provided, however, failure to so agree to the
Service Level Agreement shall not be grounds for terminating the
Agreement.
Except to the extent the Agreement is supplemented and modified herein, the
Agreement remains in full force and effect.
AGREED AND ACCEPTED BY:
________________________________ _______________________________
xxxxxxxxxxx.xxx inc. Netcentives Inc.
________________________________ _______________________________
Title Title
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