EXHIBIT 10.11
NETCENTIVES INC.
SUPPLY AGREEMENT
This Supply Agreement (the "Agreement") is entered into between Netcentives
---------
Inc., a California corporation ("Netcentives") and US Airways, Inc., a Delaware
-----------
corporation ("US Airways") and shall be effective for all purposes as of
----------
September 20, 1997 (the "Effective Date").
--------------
RECITALS
WHEREAS, Netcentives is in a business to provide for the grant of points
redeemable for airline frequent flier miles and other incentives to end-users of
a certain Internet-based program (the "Netcentives Program");
-------------------
WHEREAS, US Airways has established a travel awards program (the "Dividend
--------
Miles Program") pursuant to which, among other things, certain persons may
-------------
receive frequent flier miles for travel on US Airways and for such other reasons
as are permitted by US Airways; and
WHEREAS, Netcentives wishes to purchase Miles (as hereinafter defined) from
US Airways and US Airways wishes to sell Miles to Netcentives pursuant to the
terms of this Agreement;
NOW THEREFORE, in consideration of the foregoing and the mutual
consideration provided for herein, the parties hereto hereby agree as follows:
SECTION I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
1.1 "Account" shall mean the account of Netcentives Members who are also
-------
Dividend Miles Members in which Miles balances are maintained by US Airways.
1.2 "Confidential Information" means any information, technical data, or
------------------------
know-how, including, but not limited to, that which relates to research, product
plans, products, services, Netcentives Members, customers, markets, software,
developments, inventions, processes, designs, drawings, engineering, hardware
configuration information, marketing or finances of a party, which is designated
in writing to be confidential or proprietary, or if given orally, is identified
as confidential or proprietary at the time of disclosure or is obviously
confidential considering the context in which such disclosure is made.
Confidential Information does not include information, technical data or know-
how which (i) is rightfully in the possession of the receiving party at the time
of disclosure, (ii) prior to or after the time of disclosure becomes part of the
public knowledge or literature other than as a result of any improper inaction
or action of the receiving party hereunder, or (iii) is approved by the
disclosing party, in writing, for release.
1.3 "Direct Competitor of Netcentives" means any third-party that operates
--------------------------------
a program to reward Internet or online service activities, (a) where end-users
may earn Miles at multiple web sites or multiple online service areas, or (b)
where end-users may earn points which are redeemable for the incentive awards of
more than one company.
1.4 "Dividend Miles Member" means, as of any date, an individual who is a
---------------------
member in good standing of the Dividend Miles Program.
1.5 "Limited Exclusivity" means US Airways agrees not to sell Miles to any
-------------------
Direct Competitor of Netcentives as defined above. US Airways and Netcentives
shall have a relationship of "Limited Exclusivity" so long as (a) this Agreement
has not been terminated in accordance with its terms, and (b) US Airways has not
sold Miles to any Direct Competitor of Netcentives.
1.6 "Miles" means the points accrued under the Dividend Miles Program by
-----
Dividend Miles Members for travel on US Airways or such other reasons as are
permitted by US Airways.
1.7 "Netcentives Marks" means the trademarks and logos of Netcentives set
-----------------
forth on Exhibit A1 hereto, which exhibit may be changed by Netcentives from
----------
time to time upon notice to US Airways.
1.8 "Netcentives Member" means, as of any date, an individual who is a
------------------
member in good standing of the Netcentives Program.
1.9 "Netcentives Points" shall mean the points accrued under the
------------------
Netcentives Program by Netcentives Members for redemption for such products and
services as are offered by Netcentives from time to time.
1.10 "Term" has the meaning given it in Section 5.2(a) hereof.
----
1.11 "US Airways Marks" means the designated trademarks and logos of US
----------------
Airways set forth on Exhibit A2 hereto, which exhibit may be changed by US
----------
Airways from time to time upon notice to Netcentives.
SECTION II
PURCHASE AND SALE
2.1 Orders.
------
(a) General. Netcentives shall deliver orders to US Airways for Miles
-------
in such format as is detailed in Attachment A3 (to be determined by both parties
within the first 30 days of the Effective Date of this Agreement), which orders
shall designate the aggregate number of Miles to be purchased, the Account or
Accounts to which such Miles are to be credited, and the number of Miles to be
credited to each such Account. US Airways shall credit Accounts designated by
Netcentives within a reasonable time after receipt of an order from Netcentives,
but in any event within seven (7) business days thereof. As long is this
Agreement is in effect, US Airways shall not reject any order of Netcentives,
except in accordance with the terms of Section 3.2 hereof.
-2-
(b) Pre-paid Miles Account. Netcentives will order Miles to be used
----------------------
at its discretion, which Miles shall be reserved in an Account for the benefit
of Netcentives (the "Pre-paid Miles Account"). Upon receipt of an order for
----------------------
Miles pursuant to Section 2.1(a) above, US Airways shall deduct the aggregate
number of Miles required to fulfill such order from the Pre-Paid Miles Account.
If there are not enough Miles in the Pre-paid Miles Account to fulfill such
order, US Airways shall issue additional Miles to fulfill such order, and xxxx
Netcentives for the difference in accordance with Section 2.3 herein. Miles
held in the Pre-paid Miles Account shall be valid and shall not expire for a
period of two (2) years from the date of credit to the Pre-paid Miles Account.
(c) Minimum Orders. Netcentives agrees to purchase a minimum number
--------------
of Miles during the term of this Agreement from US Airways (the "Minimum
-------
Orders"), as set forth in Appendix A hereto, in accordance with the terms and
------
conditions therein. The due date of such Minimum Orders shall be as set forth
in Appendix A hereto. Any Miles purchased to meet a Minimum Order shall be
credited to the Pre-paid Miles Account. Any orders above the Minimum Orders
shall be at the discretion of Netcentives.
2.2 Purchase Terms. The terms specific to the purchase of Miles by
--------------
Netcentives under this Agreement are fixed and are contained in Appendix B
hereto.
2.3 Payment. If any orders for Miles exceed the balance in the Pre-paid
-------
Miles account, US Airways shall invoice Netcentives monthly for the additional
amount due. Netcentives will pay such invoice within thirty (30) days of
receipt of the invoice. Any payments made by Netcentives to US Airways
hereunder shall be non-refundable.
2.4 Taxes. Prices for Miles do not include taxes. Netcentives is
-----
responsible for any and all taxes on the sale of Miles to Netcentives pursuant
to this Agreement.
SECTION III
OBLIGATIONS OF NETCENTIVES
3.1 Distribution to Netcentives Members. Netcentives shall only request
-----------------------------------
that Miles be credited to the Accounts of Dividend Miles Members in exchange for
their participation in the Netcentives Program.
3.2 Distribution to Dividend Miles Members. Netcentives shall only
--------------------------------------
request that Miles be credited to the accounts of Netcentives Members whom
Netcentives believes in good faith to be Dividend Miles Members. In the event
that Netcentives requests that Miles be credited to the account of a person who
is not a Dividend Miles Member, US Airways shall deposit the Miles in the Pre-
paid Miles Account and promptly notify Netcentives.
3.3 No Resale Of Miles. At no time shall Netcentives offer Miles to any
------------------
person for resale or redistribution to a third party. If Netcentives discovers
with reasonable certainty that any Netcentives Member is inappropriately
redistributing Miles, Netcentives shall immediately cease requesting that Miles
be credited to the Account of such Netcentives Member, and shall
-3-
notify US Airways of the identity of such Netcentives Member and the nature of
the potential infraction. If US Airways discovers that any Netcentives Member
has resold or redistributed Miles in violation of this provision, US Airways
can, at its option, cease distributing any additional Miles to such Dividend
Miles Member's Account, or exercise any other legal right to which it is
entitled under this, or its Frequent Traveler Program Agreement.
3.4 Limits to Distribution of Miles. Netcentives will not allow
-------------------------------
Netcentives Points earned for Restricted Activities to be converted to Miles.
For the purposes of this Agreement, "Restricted Activities" are transactions
involving (a) gambling, (b) alcohol, (c) tobacco, (d) lotteries, (e) any
sexually explicit material, (f) any illegal or immoral activity, (g)
distribution of air travel, and (h) any travel service provider (e.g., online
air travel booking, travel agent or CRS). If Netcentives wishes to have an offer
that conflicts with these Restricted Activities, it may do so, but must restrict
the Netcentives Points earned from that transaction from being redeemed for
Miles. Such restriction shall not apply in cases where prior written approval is
received from U.S. Airways.
3.5 Maximum Number of Miles Per Year. Netcentives will notify US Airways
--------------------------------
if any Netcentives Member redeems Netcentives Points for 100,000 Miles or more
during any calendar year, and will provide US Airways with a summary of such
Netcentive Member's Mile redemption activity.
3.6 Dividend Miles Program Information. Netcentives shall post contact
----------------------------------
information regarding the Dividend Miles Program on its Internet Web site to
enable Netcentives Members to enroll in the Dividend Miles Program.
SECTION IV
PROPRIETARY INFORMATION
4.1 Confidential Information. Each party agrees not to use any
------------------------
Confidential Information disclosed to it by the other party for its own use or
for any purpose other than to carry out its obligations under this Agreement.
Neither party will disclose any Confidential Information of the other party to
third parties or to employees of the party receiving Confidential Information,
other than employees who are required to have the information in order to carry
out such party's obligations under this Agreement. Each party agrees that it
will take all reasonable measures to protect the secrecy of and avoid disclosure
or use of Confidential Information of the other party in order to prevent it
from falling into the public domain or the possession of persons other than
those persons authorized under this Agreement to have any such information,
including (without limitation) ensuring that recipients of the disclosing
party's Confidential Information adhere to confidentiality terms in content
substantially similar to the terms in this Agreement. Such measures shall
include the highest degree of care that the receiving party utilizes to protect
its own Confidential Information of a similar nature. Each party agrees to
notify the other in writing of any misuse or misappropriation of Confidential
Information of the disclosing party which may come to the receiving party's
attention.
-4-
4.2 Publicity. After the execution of this Agreement, Netcentives shall,
---------
at its discretion, and with approval from and coordination with a designated
representative of US Airways, whose approval shall not be unreasonably withheld,
issue a press release which may, among other things, confirm the existence of a
relationship between the parties and of the exclusive nature of such
relationship, and may request that US Airways issue a similar press release.
Any other information regarding the relationship between the parties including
the other terms of this Agreement and any other agreement between the parties
shall be considered Confidential Information under the definition set forth
herein.
4.3 Trademarks.
----------
(a) US Airways hereby grants to Netcentives a limited, non-exclusive,
royalty-free license, without the right to sublicense, to use, reproduce,
display, and transmit the US Airways Marks in Netcentives' promotional materials
and on its Internet Web site during the Term of this Agreement (as extended by
Section 5.2(b)(iii), as appropriate), provided however, that any use of the US
----------------
Airways Marks shall be for the purpose of promoting the Netcentives Program,
shall only be used with regard to the inclusion of Miles within the Netcentives
Program, and shall be subject to the review and prior approval of US Airways.
US Airways shall use its best efforts to provide approval of, or comments upon,
submitted materials promptly, but in no event later than five business day
following receipt of such materials.
(b) Netcentives hereby grants to US Airways a limited, non-exclusive,
royalty-free license, without the right to sublicense, to use, reproduce,
display, and transmit the Netcentives Marks in US Airways's promotional
materials and on its Internet Web site during the Term of this Agreement,
provided however, that any use of the Netcentives Marks shall be for the purpose
----------------
of promoting the Dividend Miles Program or the Netcentives Program and shall
only be used with regard to the inclusion of Miles within the Netcentives
Program.
(c) Nothing herein shall be deemed to grant either party any ownership
interest in the Marks of the other party. Netcentives shall retain all right,
title, and interest in and to the Netcentives Program. US Airways shall retain
all right, title, and interest in and to the Dividend Miles Program.
SECTION V
LIMITED EXCLUSIVITY; TERM AND TERMINATION
5.1 Limited Exclusivity.
-------------------
(a) Relationship. The parties hereto acknowledge that they shall have
------------
a relationship of Limited Exclusivity during the Term of this Agreement and that
certain rights and privileges under this Agreement and other agreements between
the parties are dependent on the maintenance of such a relationship. Either
party may terminate the obligations of the parties under the relationship of
Limited Exclusivity upon provision of ninety (90) days written notice to the
non-terminating party (the "Notice"), which termination shall have the effects
------
set forth in subsection (b), below.
-5-
(b) Effect of Termination of Limited Exclusivity. Termination of the
--------------------------------------------
relationship of Limited Exclusivity between US Airways and Netcentives shall not
affect the obligations of the parties under this Agreement except that upon the
termination of the relationship of Limited Exclusivity, in addition to the loss
of certain other rights as set forth in other Agreements between the parties,
(i) immediately upon receipt of the Notice by Netcentives, Netcentives shall no
longer be responsible for meeting the volume purchase requirements as set forth
in this Agreement, (ii) beginning ninety (90) days after receipt of the Notice
by Netcentives, US Airways shall be permitted to sell Miles to any third party,
including a Direct Competitor of Netcentives, (iii) immediately upon receipt of
the Notice by Netcentives, Netcentives shall no longer pay for Miles according
to the pricing schedule under Limited Exclusivity and will instead pay for Miles
according to the pricing schedule under dropping of Limited Exclusivity, as set
forth in Appendix B. Each party agrees that its obligations under Limited
Exclusivity as provided herein are necessary and reasonable in order to protect
Netcentives and its business, and each party expressly agrees that monetary
damages would be inadequate to compensate Netcentives for any breach by US
Airways of its Limited Exclusivity related covenants and agreements.
Accordingly, each party agrees and acknowledges that any such violation would
cause irreparable injury to Netcentives and that, in addition to any other
remedies that may be available, in law, in equity or otherwise, Netcentives
shall be entitled to obtain injunctive relief against any such breach or the
continuation of any such breach by US Airways, without the necessity of proving
actual damages.
(c) Breach; Cure. Any sales by US Airways to a Direct Competitor of
------------
Netcentives prior to the expiration of the Limited Exclusivity period shall be
considered a material breach of this Agreement. Notwithstanding the foregoing,
Netcentives recognizes that it is not always possible to determine whether a
purchaser is a Direct Competitor. US Airways agrees to use its reasonable
commercial efforts to prevent any Direct Competitor from purchasing Miles.
However, if despite using such efforts, US Airways sells Miles to a Direct
Competitor, US Airways will not be in breach of the Agreement and the Limited
Exclusivity period will not be terminated, provided however, that once
----------------
Netcentives notifies US Airways that Miles were sold to a Direct Competitor, US
Airways immediately: (i) refuses to sell any additional Miles to such Direct
Competitor; (ii) removes participation by such Direct Competitor in the Dividend
Miles Program (except that US Airways shall not be required to repurchase Miles
sold to such Direct Competitor as part of such removal); and (iii) takes all
necessary steps to ensure that no additional Miles are sold to such Direct
Competitor until the effective date of termination or expiration of this
Agreement, or until the effective date of termination of the Limited Exclusivity
period, whichever comes first.
5.2 Term and Termination.
--------------------
(a) Term and Termination.
--------------------
(i) This Agreement shall become effective as of the Effective
Date, and unless sooner terminated as provided below, shall remain effective for
an initial term of three (3) years (the "Initial Term"). The Initial Term shall
------------
automatically be extended for successive periods of one (1) year (the "Extension
---------
Terms"), unless either party provides the other party with written notice of
-----
termination at least 120 days prior to the end of such Initial Term or Extension
Term as applicable. The parties shall renegotiate the terms reflected in
Appendix A and
-6-
Appendix B at least ninety (90) days prior to the commencement of each Extension
Term. As used herein, "Term" shall mean the Initial Term plus any applicable
----
Extension Terms.
(ii) If either party defaults in the performance of any material
provision of this Agreement then the non-defaulting party may give written
notice to the defaulting party that if the default is not cured within thirty
(30) days, the Agreement will be terminated. If the non-defaulting party gives
such notice and the default is not cured during the thirty (30) day period, then
the Agreement shall automatically terminate at the end of that period.
(iii) This Agreement shall terminate with 60 days written notice
and reasonable opportunity to cure, (A) upon Netcentives' failure to make
payment by a due date indicated in this Agreement, (B) upon Netcentives'
violation of an applicable governmental regulation with respect to Miles granted
under this Agreement, or (C) upon Netcentives' inability to meet its financial
obligations as they become due.
(iv) US Airways may suspend or cancel its Miles program or
Netcentives' participation in the program at any time upon 120 days advance
written notice. Upon such notification, a winding down period of six months
will begin, during which both US Airways and Netcentives will let US Airways and
Netcentives customers know that the relationship will be ending. During such
period, Netcentives customers may continue to redeem their points for US Airways
Miles as set forth under this Agreement. US Airways will refund to Netcentives
the price paid for any Miles in the Pre-paid Miles Account that Netcentives may
no longer use.
(b) Effect of Termination or Expiration. Upon termination of this
-----------------------------------
Agreement for any reason whatsoever: (i) US Airways will credit all uncredited
orders to the Accounts originally designated by Netcentives; (ii) all Miles in
the Pre-paid Miles Account shall remain valid for their fall term and shall be
credited to Accounts in the manner provided for herein until the balance of
Miles in the Pre-paid Miles Account is zero (0); and (iii) the term of the
license granted to Netcentives under section 4.3(a) shall be extended until the
balance of Miles in the Pre-paid Miles Account is zero (0) or all such miles
have expired.
(c) Survival. US Airways' obligations to credit Accounts in a timely
--------
manner and Netcentives' obligations to pay US Airways all amounts due hereunder,
as well as Sections 1, 4.1,4.2,4.3(a) (to the extent provided in Section 5.2(b)
above), 4.3(c), 5.2(a)(iv), 5.2(b), 5.2(c), 6.2, 6.3 and 6.7 shall survive
termination of this Agreement.
SECTION VI
MISCELLANEOUS
6.1 Independent Contractors. The relationship of Netcentives and US
-----------------------
Airways established by this Agreement is that of independent contractors, and
nothing contained in this Agreement shall be construed to constitute the parties
as agents, partners, joint venturers, co-owners or otherwise as participants in
a joint or common undertaking.
-7-
6.2 Indemnification.
---------------
(a) US Airways hereby agrees to indemnify, defend and hold harmless
Netcentives and its respective directors, officers, agents and employees, from
and against any and all claims, losses, damages, suits, judgments, costs and
expenses (including litigation costs and reasonable attorneys' fees) arising out
of or relating to (i) US Airways' operation of the Dividend Miles Program
including without limitation, claims by participants in the Dividend Miles
Program of US Airways' breach, violation or failure to comply with the terms of
the Dividend Miles Program and (ii) any allegation that Netcentives use of the
US Airways Marks within the scope of this Agreement infringes a copyright or
trademark existing or issued as of the date of such use, provided in each case
that Netcentives promptly notifies US Airways in writing of any such claim,
gives US Airways sole control of the defense and all related settlement
negotiations, and cooperates with US Airways in defending or settling any such
claim.
(b) Netcentives hereby agrees to indemnify, defend and hold harmless
US Airways and its respective directors, officers, agents and employees, from
and against any and all claims, losses, damages, suits, judgments, costs and
expenses (including litigation costs and reasonable attorneys' fees) arising out
of or relating to (i) Netcentives' operation of the Netcentives Program
including without limitation, claims by participants in the Netcentives Program
of Netcentives' breach, violation or failure to comply with the terms of the
Netcentives Program and (ii) any allegation that US Airways' use of the
Netcentives Marks within the scope of this Agreement infringes a copyright or
trademark existing or issued as of the date of such use, provided in each case
that US Airways promptly notifies Netcentives in writing of any such claim,
gives Netcentives sole control of the defense and all related settlement
negotiations, and cooperates with Netcentives in defending or settling any such
claim.
6.3 Notices. All notices and demands hereunder shall be in writing and
-------
shall be delivered by personal service or by telex, facsimile, cable, telegram,
certified or registered mail, or return receipt express courier to the address
of the receiving party set forth on the signature page of this Agreement (and if
to US Airways, with a copy to the Office of the General Counsel, fax no: (703)
000-0000), or to any other address of the receiving party designated by written
notice in accordance with this paragraph.
6.4 Waiver, Amendment and Modification. No waiver, amendment or
----------------------------------
modification of any provision hereof shall be effective unless in writing and
signed by the party against whom such waiver, amendment or modification is
sought to be enforced. No failure by either party to exercise and no delay by
either party in exercising any right, power or remedy with respect to the
obligations secured hereby shall operate as a subsequent waiver of any such
right, power or remedy.
6.5 Assignment. Each of the parties agrees that its rights and
----------
obligations under this Agreement may not be transferred or assigned directly or
indirectly without the prior written consent of the other party, provided
--------
however, that such consent shall not be required for an assignment of this
-------
contract pursuant to a merger, sale of substantially all of the assets, or sale
of
-8-
all of the outstanding stock of either party. This Agreement shall be binding
upon and inure to the benefit of the parties hereto, their successors and
assigns.
6.6 Severability. In the event that any of the provisions of this
------------
Agreement shall be held by a court of competent jurisdiction to be
unenforceable, such provision will be enforced to the maximum extent permissible
and the remaining portions of this Agreement shall remain in full force and
effect. The parties agree to negotiate in good faith a substitute, valid and
enforceable provision that most nearly effects the parties' intent and to be
bound by the mutually agreed substitute provision.
6.7 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of New York, without reference to conflict
of laws provisions thereof.
6.8 Force Majeure. Neither party shall be responsible for any failure to
-------------
perform (except for payment obligations) due to unforeseen circumstances or to
causes beyond its control, including but not limited to acts of God, war, riot,
embargoes, acts of civil or military authorities, fire, floods, accidents,
strikes, or shortages of transportation facilities, fuel, energy, labor or
materials. A party whose performance is affected by a force majeure condition
shall be excused from such performance to the extent required by the force
majeure condition so long as such party takes all reasonable steps to avoid or
remove such causes of nonperformance and immediately continues performance
whenever and to the extent such causes are removed.
6.9 Entire Agreement; Amendment. This Agreement constitutes the final and
---------------------------
entire Agreement between the parties and may not be modified or amended except
in writing signed by both of the parties.
6.10 Headings. The headings and captions used in this Agreement are for
--------
convenience of reference only, and shall not in any way affect the
interpretation of the provisions of this Agreement.
6.11 Counterparts. This Agreement may be executed in counterparts, each
------------
of which shall be deemed an original and all of which together shall constitute
one instrument.
[SIGNATURE PAGE TO FOLLOW]
-9-
The parties have executed this Supply Agreement as of the date set forth
above.
NETCENTIVES INC.
ADDRESS:
0000 X. Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
/s/ Xxxx X. Xxxxxxxx Facsimile: (000) 000-0000
--------------------------------
Xxxx X. Xxxxxxxx, Chairman
US AIRWAYS, INC.
ADDRESS:
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
/s/ Xxxxxx X. Xxxxx
--------------------------------
Xxxxxx X. Xxxxx Facsimile: (000) 000-0000
Vice President
Marketing Programs and Services
[SIGNATURE PAGE TO SUPPLY AGREEMENT]
-10-
EXHIBIT A1
TRADEMARKS OF NETCENTIVES
NETCENTIVES
CLICKREWARDS
CLICKPOINTS
INTERNET INCENTIVES NETWORK
Netcentives
ClickRewards
ClickRewards(TM)
ClickRewards(TM)
Online Incentives Network
ClickRewards(TM)
Online Incentives Network
-11-
EXHIBIT A2
TRADEMARKS OF US AIRWAYS
EXHIBIT A3
SPECIFICATIONS FOR DATA
APPENDIX A
MINIMUM ORDERS
--------------
While Limited Exclusivity is in effect:
On each date specified below, Netcentives shall pay to US Airways the
amount, if any, by which the price of the cumulative minimum orders to-date
exceed the cumulative payments to-date.
------------------------------------------------------------
DATE Minimum Order Due
------------------------------------------------------------
Effective Date 5,714,286 ($100,000 worth)
January 1, 1998 2,857,143 ($50,000)
April 1, 1998 2,857,143 ($50,000)
July 1, 1998 2,857,143 ($50,000)
October 1, 1998 5,882,353 ($100,000)
January 1, 1999 5,882,353 ($100,000)
April 1, 1999 5,882,353 ($100,000)
July 1, 1999 11,764,705 ($200,000)
October 1, 1999 8,928,571 ($150,000)
January 1, 2000 8,928,571 ($150,000)
April 1, 2000 8,928,571 ($150,000)
July 1, 2000 17,857,142 ($300,000)
------------------------------------------------------------
If Limited Exclusivity is dropped:
---------------------------------
If the parties cease to have a relationship of Limited Exclusivity or this
Agreement is terminated, there will be no future minimum orders due.
___________________
/1/ For example, if on April 1, 1998 Netcentives has purchased a total of
10,000,001 Miles for a cumulative price of $175,000, Netcentives shall pay
$25,000 to US Airways for the purchase of 1,428,572 additional Miles, and US
Airways shall credit 1,428,572 Miles to the Pre-paid Miles Account (in
accordance with Section 2.1(c)).
APPENDIX B
PRICING
Purchase Terms Under Limited Exclusivity:
----------------------------------------
Contract Year Price Per Mile
------------- --------------
Year 1 $.0175
If > $500K in purchases $.0170 per incremental mile
If > $1MM in purchases $.0165 per incremental mile
Year 2 $.0170
If > $1MM in purchases $.0165 per incremental mile
Year 3 $.0168
If > $1MM in purchases $.0165 per incremental mile
If Netcentives drops Limited Exclusivity:
----------------------------------------
If Netcentives drops Limited Exclusivity, pricing remains in effect as
above.
If US Airways drops Limited Exclusivity:
---------------------------------------
If US Airways drops Limited Exclusivity, the price per Mile will
immediately drop to $.016 and remain at that level for the duration of this
Agreement, regardless of volume or contract year.
