Microsoft Corp. / WebTV Shopping Insertion Order [Amendment No. 2] - Microsoft Corp. and RedEnvelope Inc.
AMENDMENT 2 TO
MICROSOFT CORPORATION / WEBTV SHOPPING INSERTION ORDER
This Amendment 2 is made pursuant to that certain Microsoft Corporation / WebTV
Shopping Insertion Order (the "AGREEMENT") dated September 15, 2000 by and
between Microsoft Corporation ("MICROSOFT") and RedEnvelope, Inc. ("COMPANY"),
and sets forth the terms pursuant to which Company will participate in the
shopping placements in the MSN Shopping Channel ("eSHOP"), MSN TV Service
Shopping Center ("MSN TV SHOPPING") as well as other Microsoft sites
(collectively, the "MICROSOFT SHOPPING CHANNELS").
Microsoft and Company hereby agree to modify the Agreement as follows, effective
immediately.
1. By copy of this Amendment 2, Microsoft requests permission to assign
its rights and obligations hereunder to Microsoft Online, LP, an
affiliate of Microsoft Corporation. Hereinafter, Microsoft Corporation
and Microsoft Online, LP will be referred to either collectively or
individually as "MICROSOFT".
2. All references to "WEBTV" in the Agreement will be deemed deleted,
and the words "MSN TV SHOPPING" will respectively be deemed inserted
therein.
3. The Term, Total Fees and Order Summary outlined in the Agreement will
be deemed deleted, and such elements will be amended and deemed
inserted as set forth below:
ACCOUNT EXECUTIVE: KERRY BENJAMIN
EMAIL: Kerryb@microsoft.com
COMPANY: Red Envelope.com
CONTACT: Chas Akers CONTACT:
201 Spear St. Suite 300
San Francisco, CA 94105
--------------------------------------------------------------------------------
SITE URL: www.redenvelope.com TERM: July 1, 2002 - June 30, 2003
--------------------------------------------------------------------------------
TOTAL FEES: SEE EXHIBIT 1-B
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
AD ELEMENTS ORDER TOTAL MONTHLY GUARANTEED FEE TOTAL AD REQUESTS
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
[* See Exhibit 1-B $ [*] [*]
* (SEE EXHIBIT 1-A)
*]
---------------------------------------------------------------------------------------------------------
ADDITIONAL PLACEMENTS n/a n/a See Exhibit 1-A
[*
*
*]
---------------------------------------------------------------------------------------------------------
</TABLE>
4. MAKE GOOD POLICY. The parties agree that the following sentence shall
be deemed inserted in Section 4.A: If Microsoft fails to deliver the
agreed upon number of ad requests during the Term, Company's sole
remedy for such failure will be the extension of the Term by Microsoft
at no additional cost to Company until the agreed upon number of ad
requests as specified in Exhibit 1-A (the "TOTAL AD REQUESTS") (or
other ad requests as the parties may agree) are provided.
5. CANCELLATION. The parties agree that Section 6 of the Agreement shall
be deemed deleted, and the following shall be deemed inserted therein:
If either Microsoft or Company defaults under this Agreement, the
non-defaulting party will notify the other in writing. If the failure
is not cured within five (5) business days after written notice is
received by the notified party, the non-defaulting party may terminate
this Agreement immediately with no further obligation to the notified
party. Upon termination or expiration of this Agreement, other than by
Company due to an uncured default by Microsoft, Company will
immediately pay Microsoft any amounts of the Total Fee not yet paid. If
Company terminates due to an uncured default by Microsoft Company will
be solely obligated to render payment to Microsoft through the
effective date of termination.
MICROSOFT CONFIDENTIAL
Page 1 of 9 [MICROSOFT LOGO]
* Material has been omitted pursuant
to a request for confidential treatment.
<PAGE>
6. TESTING. In addition to the obligations set forth in Section 7, Company
will, within thirty days after execution of this Amendment, Company
will cooperate with Microsoft to conduct a 1 week test to verify that
Company's technology accurately tracks MSN Users. Test will involve
Company sending one or more tracking urls to Microsoft to test for
click discrepancies. Company will make a reasonable effort with
Microsoft to promptly resolve any discrepancies between Company's
tracking results and Microsoft's tracking results.
7. In addition to the obligations set forth in Section 11, Company will
ensure that web sites operated by or on behalf of Company comply with
the Platform for Privacy Preferences Project requirements set forth in
Exhibit 1-C.
8. FEATURED SITES:
A. PLACEMENTS: Company will receive the Featured Sites words and
closely related variants set forth in Exhibit 1-D on a
non-exclusive basis commencing on the date of first exhibition
of Company's links by Microsoft and continuing through the end
of the Term. Company's site will receive placement in relevant
MSN user searches, however, Microsoft cannot guarantee
Company's placement and/or ranking within the "Featured Sites"
section of MSN Search. Microsoft will deliver [*] ad requests
in promotion of the Featured Sites words. If Microsoft fails
to deliver such ad requests by the end of the Term or the
effective date of cancellation of the Featured Sites placement
(if the Featured Sites portion of this Agreement is terminated
by either party pursuant to Section 8.C below), Microsoft will
deliver ad requests in the placements set forth in Exhibit 1-A
until the earlier of such Featured Site ad request shortfall
is provided or until [*]% of the ad requests in Exhibit 1-A
have been delivered. Microsoft reserves the right to update
the MSN Search template at any time during the Term.
B. DELIVERY: During the Term, Microsoft will make reasonable
efforts to deliver clicks to Company's site from search
results on any Microsoft site. Microsoft is not obligated to
deliver such clicks evenly throughout the Term. Failure by
Microsoft to deliver a certain number of clicks shall not be
deemed a breach of this Agreement or entitle Company to any
legal remedy.
C. FEATURED SITES CANCELLATION: At any time during the Term,
either party may terminate the Featured Sites portion of this
Agreement upon thirty (30) days' prior written notice to the
other party. In such event, the parties will be relieved of
their respective obligations with respect to the MSN Search
Featured Site placements, however, Microsoft will remain
obligated to provide the Total Ad Requests to Company, as set
forth in Section 8.A above. The cancellation rights set forth
in this Section 8 will not pertain to Company's Microsoft
Shopping Channel placements.
D. SPECIAL TERMS: (i) The final keyword and advertisement content
will be subject to mutual agreement of the parties. (ii)
Microsoft reserves the right to immediately suspend
distribution of Company's entire Featured Site listings
("LISTINGS") if five percent (5%) or more of the total URL
links from Company are not functional and accessible, and any
such removal shall not constitute a breach of this Agreement,
(iii) Company may update or refresh the Listings once every
ninety (90) days, or an alternate schedule contingent upon
seasonal promotions or product changes and agreed upon by the
parties. Updates will be scheduled by the parties following
the date upon which the Listings are first displayed. Company
will create and deliver to Microsoft all updated Listings at
least fourteen (14) days' prior to the first run date for such
Listing, and such updates will be subject to the same review
by Microsoft as a new Listing.
This Amendment 2 will be attached to and incorporated into the Agreement, and is
subject to all the terms and conditions of the Agreement. Whereby the parties
enter into this Amendment 2 as of the later of the two dates below.
Microsoft Company
MICROSOFT ONLINE, LP RED ENVELOPE.COM
6100 Neil Road 201 Spear St. Suite 300
Reno, NV 89570 San Francisco, CA 94103
By /s/ Kerry Benjamin /s/ Charles Akers and
-------------------- Hilary Billings
(Sign) -----------------------
(Sign)
Kerry Benjamin Charles Akers and
----------------------- Hilary Billings
Name (Print) -----------------------
Name (Print)
Account Executive
----------------------- _______________________
Title Title
8/1/02 8/1/02
----------------------- -----------------------
Date Date
PROGRAM CONTACT: See Account Executive above
MICROSOFT CONFIDENTIAL
Page 2 of 9
* Material has been omitted pursuant to a request for confidential treatment.
<PAGE>
EXHIBIT 1-A
<TABLE>
<CAPTION>
FY03PROJ PRORATED AD
[*] REQUESTS (000,000)
<S> <C>
[*
[*
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
* *
</TABLE>
<TABLE>
<CAPTION>
*
<S> <C>
* *
* *]
</TABLE>
<TABLE>
<CAPTION>
* FLIGHT
*
<S> <C> <C>
*] [*]
</TABLE>
MICROSOFT CONFIDENTIAL
Page 3 of 9
* Material has been omitted pursuant
to a request for confidential treatment.
<PAGE>
<TABLE>
<S> <C> <C>
[ [* [*
* *
* *
* *
* *
* *
* *
* *
* *
*] *]
]
</TABLE>
1. Company is guaranteed a certain amount of ad requests as outlined in
Exhibit 1-A: (a) [*] total ad requests in [*] and sponsored guides; (b)
[*] total ad requests in [*]; (c) [*] total ad requests in [*]; (d) [*]
total ad requests in [*] and (e) [*] total ad requests on [*].
2. [*] ad requests are estimates for each site.
3. The parties will meet on a quarterly basis to review total ad requests
delivered by Microsoft during the prior quarter. Microsoft's reporting
will be the basis for counting ad request deliveries.
4. Microsoft will be deemed to have delivered [*] ([*]) ad requests each
time the [*] placement is exhibited and [*] ([*]) ad requests each time
the [*] is exhibited. Such ad requests will accrue toward the [*]
placement total set forth in Section 1(a) above. Microsoft will provide
Company with the total number of days Company appeared in all
placements during the quarterly meeting. Such ad requests will count
toward the overall ad request delivery obligation.
5. Failure by Microsoft to meet a particular cost per acquisition, or a
certain return on investment metric will not be deemed a breach of this
Agreement or entitle Company to any legal remedy.
MICROSOFT CONFIDENTIAL
Page 4 of 9
* Material has been omitted pursuant
to a request for confidential treatment.
<PAGE>
EXHIBIT 1-B
1. Fee. Company will pay Microsoft a flat fee of [*] dollars (US$ [*])
(the "Fee") in consideration for delivery of [*] ([*])ad requests from
the elements set forth [*] Exhibit 1-A. The Fee is a non-refundable,
guaranteed payment to Microsoft. The Fee will be rendered to Microsoft
in twelve (12) monthly installments. The first payment hereunder is
due when this Agreement is signed and returned to Microsoft. Microsoft
will invoice Company for each month's payment, and Company will pay
such invoiced amounts within thirty (30) days following the date of
such invoice. In the event that Microsoft fails to deliver the entire
[*] ad requests as outlined in Exhibit 1-A by 06/30/2003, Company will
hold final installment of the Fee until all guaranteed ad requests
have been met. Company will be obligated to render such final
installment immediately following receipt of reports and other
applicable documentation by Microsoft that such ad requests have been
delivered.
2. Commission.
2.1 If, at any time during the Term, the aggregate Net
Sales generated during the Term by MSN Customers exceeds [*]
dollars ($[*]) (the "REVENUE THRESHOLD"), Company shall pay to
Microsoft [*] percent ([*]%) of Net Sales generated during the
remainder of the Term in excess of the Revenue Threshold
("COMMISSION"). "NET SALES" means gross sales for completed
sales through the Microsoft Shopping Channel placements from
an MSN Customer less all service, shipping, handling and relay
charges, applicable taxes, credits, chargebacks, refunds,
rebates, discounts, gift certificates and credit card
processing fees. A "MSN CUSTOMER" means a user who links to
Company's site during the Term from a Microsoft tracking url
generated by Company to Company's site and completes a
transaction on Company's site: either (a) after clicking
through to such site from Company's placement; or (b)
subsequently revisiting Company's site within 30 days of the
last click through either directly or by linking to Company's
site from Company's placement or any Microsoft site. "Net
Sales" will be reported solely by Company.
2.2 Payment of Commission (if any) called for by this Section 2
will be paid on a monthly basis, in arrears within thirty (30)
days after the end of any month as to which any Commission is
payable. Company will remit to Microsoft the aggregate
Commission due, together with a statement specifying the
aggregate number of MSN Customer transactions in the
applicable month.
2.3 Company agrees to keep all usual and proper records and books
of account and all usual and proper entries relating to
Company's obligations described in this Section 2. Microsoft
shall have the right to cause, at its sole cost and expense,
an audit and/or an inspection to be made of the applicable
Company records in order to verify Company's compliance with
the terms of this Agreement. Any audit and/or inspection shall
be conducted during regular business hours upon written
notice.
3. Letter of Credit. Company will establish and maintain an
irrevocable standby letter of credit (the "STANDBY LETTER") in the
amount of [*] dollars ($[*]) following execution of this Amendment 2
and for a period of thirty (30) days thereafter. Company or Company's
designated bank will provide the Standby Letter to Microsoft
immediately upon execution of this Amendment 2. The Standby Letter
will become null and void upon November 1, 2003 or upon delivery of
the final installment of the contract fee by Company to Microsoft.
MICROSOFT CONFIDENTIAL
Page 5 of 9
* Material has been omitted pursuant
to a request for confidential treatment.
<PAGE>
EXHIBIT 1-C
PLATFORM FOR PRIVACY PREFERENCES PROJECT COMPLIANCE
To successfully use cookies, the privacy features of Internet Explorer 6 require
Web services to deploy compact privacy policies as defined by the Platform for
Privacy Preferences (P3P) Project developed by the World Wide Web Consortium
(W3C). The Internet Explorer 6 privacy features filter cookies based on these
compact policies as well as the user's privacy settings. While some cookies
might not require a compact policy, implementing policies for all cookies is
strongly recommended.
Online privacy has become increasingly important to consumers, privacy advocates
and the government. Addressing these concerns is the responsibility of the
entire internet community. To address this Microsoft has implemented new privacy
tools into Internet Explorer 6 which utilize P3P. We urge you to consider
deploying P3P on your site to ensure the proper use of cookies you may set and
as a way to build a trust relationship with your users.
We will be having regular chats at Microsoft TechNet in the IT community
Technical Chats to discuss the privacy features, cookies and how to deploy P3P.
Below are links to help you begin deployment of P3P.
INTERNET EXPLORER PRIVACY FEATURE INFORMATION LINKS:
Privacy in Internet Explorer 6, a comprehensive overview, is the best place to
start learning about the new privacy features of Internet Explorer 6 and the Web
site changes required to successfully utilize cookies. Alternatively the online
presentation Internet Explorer 6 Privacy Features is a great introduction.
How to deploy P3P privacy policies on your Web site This overview explains the
steps to take when deploying P3P beginning with a natural language privacy
policy. The examples are over-simplified and used only to illustrate the steps
to deployment.
The Microsoft Privacy Statement Wizard This wizard will help you to quickly and
easily generate privacy policies and compact privacy policies to aid in P3P
deployment.
The Platform for Privacy Preferences 1.0 Deployment Guide is the deployment
guide from the W3C.
Resources For Creating P3P Based Privacy Statements is an online presentation
which describes resources available to aid in P3P deployment.
Internet Explorer 6 Privacy User Experience is an online presentation which
explains how users will interact with IE 6 as they utilize the privacy features.
Platform for Privacy Preferences (P3P1.0) Specification is the actual W3C
candidate recommendation specifying P3P.
Internet Explorer 6 Preview - Beta test the latest in privacy features by
downloading the preview version.
MICROSOFT CONFIDENTIAL
Page 6 of 9
<PAGE>
\
EXHIBIT 1-D
MSN SEARCH FEATURED SITE LINKS KEY WORD LIST
<TABLE>
<S> <C> <C>
adult gifts christmas gift exchange friendship gifts
anniversary christmas gift exchange fruit gift baskets
anniversary gift games fruit gifts
anniversary gift ideas christmas gift guide fun gifts
anniversary gifts christmas gift idea funny gifts
anniversary ideas christmas gift ideas garden gifts
anniversary presents christmas gifts gardening gifts
baby gift christmas gifts for dad get well
baby gift baskets christmas gifts for guys get well gifts
baby gifts christmas gifts for her gift
baby shower christmas gifts for him gift and baskets
baby shower gifts christmas gifts for kids gift and ideas
baseball gifts christmas gifts for men gift basket
bat mitzvah christmas gifts for mom gift basket ideas
beer gifts christmas gifts for teens gift baskets
best christmas gifts christmas gifts for women gift baskets etc
best gifts christmas gifts ideas gift boxes
birthday christmas present gift catalog
birthday gift christmas present ideas gift catalogs
birthday gift ideas christmas presents gift finder
birthday gifts christmas gifts gift for men
birthday greeting college gifts gift giving
birthday ideas cookie gift baskets gift guide
birthday presents cookie gifts gift guides
birthday wishes cool gifts gift idea
birthdays corporate gift gift ideas
boss gifts corporate gift baskets gift ideas for christmas
boyfriend gifts corporate gifts gift ideas for him
bridesmaids gifts creative gift ideas gift ideas for men
business gifts creative gifts gift ideas for mom
channukah crystal gifts gift ideas for women
chanukah gifts discount gifts gift items
cheap christmas gifts dog gifts gift search
cheap christmas presents electronic gifts gift shop
cheap gift ideas employee gifts gift shopping
cheap gifts engraved gifts gift shops
cheese gifts erotic gifts gift stores
childrens gifts executive gifts gift suggestions
children's gifts exotic gifts giftbasket
chocolate gift baskets expensive gifts giftbaskets
chocolate gifts family gifts giftideas
chrismas gifts fathers day gifting
christening gifts father's day gifts
christmas and gifts father's day gifts gifts and collectibles
christmas crafts gifts fishing gifts gifts for boss
christmas food gifts flower gifts gifts for bosses
christmas gift flowers and gifts gifts for boyfriends
christmas gift basket food gift gifts for boys
christmas gift baskets food gift baskets gifts for christmas
food gifts
MICROSOFT CONFIDENTIAL
Page 7 of 9
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
gifts for couples home interiors and gifts teen gifts
gifts for dad hostess gifts thank you
gifts for dads house warming gifts thank you gifts
gifts for friends housewarming the perfect gift
gifts for girlfriends housewarming gifts travel gifts
gifts for girls inexpensive christmas gifts uncommon gifts
gifts for ?ILLEGIBLE? inexpensive gift ideas unique christmas gifts
gifts for grandma inexpensive gifts unique gift
gifts for grandparents international gifts unique gift ideas
gifts for guys kids gifts unique gifts
gifts for her kitchen gifts unique wedding gifts
gifts for him last minute christmas gifts unusual gifts
gifts for kids last minute gifts valentine gifts
gifts for men love gifts valentines gifts
gifts for mom luxury gifts valentine's day gifts
gifts for parents men gifts wedding
gifts for teachers mens gifts wedding anniversary
gifts for teenagers men's gifts wedding anniversary gift
gifts for teens mothers day wedding anniversary gifts
gifts for the boss mother's day wedding gift
gifts for wife mother's day gifts wedding gift ideas
gifts for women music gifts wedding gifts
gifts ideas nautical gifts wedding ideas
gifts in a jar new baby weddings
gifts online new baby gifts women gifts
gifts under $20 novelty gifts womens gifts
giftware office gifts women's gifts
golf gifts online gifts www.red envelope.com
gourmet food gifts perfect gift www.redenvelope.com
gourmet gift baskets perfect gifts xmas gifts
gourmet gifts personalized gifts x-mas gifts
graduation popcom gifts congratulations
graduation gifts present gardening gifts
grandma gifts presents going away gifts
grandparent gifts promotional gifts gourmet gift
great christmas gifts red envelope gourmet gifts
great gift ideas red envelope.com graduation gift
great gifts redenvelope.com graduation presents
groomsmen gifts retirement holiday gift
guy gifts retirement gifts holiday gifts
handmade gifts romantic christmas gifts housewarming
hannukah romantic gift ideas housewarming gift
hanukkah gifts romantic gifts retirement gift
happy birthday sailing gifts sympathy gifts
holiday food gifts sexy gifts thank you gift
holiday gift special gifts wedding present
holiday gift basket specialty gifts wedding presents
holiday gift baskets sports gifts
holiday gift ideas sympathy
holiday gifts sympathy flowers
home interiors & gifts teacher gifts
</TABLE>
MICROSOFT CONFIDENTIAL
Page 8 of 9