EXHIBIT 10.3
CONFIDENTIAL
FIRST AMENDMENT
TO RESELLER AGREEMENT BETWEEN
SCHOOLPOP, INC. AND
AMERICAN EXPRESS INCENTIVE SERVICES, L.L.C.
November 3, 2004
This First Amendment (the "Amendment") to the Agreement between
Schoolpop, Inc. ("Schoolpop") and American Express Incentive Services, L.L.C.
("AEIS"), for the Reseller Agreement is effective as of this 11th day of October
2004.
WHEREAS, the parties have previously entered into a Reseller Agreement,
effective the 1st day of August 2004 (the "Agreement"); and
WHEREAS, the parties wish to amend the Agreement upon the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
________________________________
The Agreement is hereby amended to change the following provisions:
Throughout the Agreement and amendments thereto, all references to "Persona" and
"Persona Select" shall mean the predenominated stored value Card "Persona(R)
Select; and all references to "Encompass" and "Encompass(R) Select" shall mean
the predenominated stored value Card "Encompass(R) Select."
o Section 2.a shall be amended to add the following at the end of the
second sentence "; provided, however, that the Guaranteed Minimum for
the first Contract Year shall be $42,000,000."
o Section 3.b.i shall replace "nine (9) months" with "twelve (12) months"
o Section 3.f shall be replaced with the following "Schoolpop shall
discontinue reselling Encompass(R) Select Cards as a standalone product
on the earlier of a) Schoolpop reaches total Encompass Select sales of
six million dollars ($6,000,000) from October 11, 2004 or b) November
11, 2004 (the "ES Stop Date"). Effective upon the ES Stop Date,
Schoolpop shall limit sales of Encompass Select Cards to Encompass
Bundles (hereinafter defined). Effective January 1, 2005, Schoolpop
shall inventory all Encompass Cards held in trust and follow the
destruction process for any and all Encompass Cards with less than
three months Card Life remaining on any such Encompass Cards, provided
that Schoolpop shall not be responsible for Card destruction fees prior
to then."
o Section 3.l is hereby amended to add the following to the end of the
subsection: "AEIS shall not charge Schoolpop any Forecast penalties
incurred during the months of October 2004 through December 2004."
o The third sentence of Section 3.m shall be replaced with the following
"Effective November 11, 2004, Encompass Select shall not be available
as a standalone product and may only be sold in Encompass Bundles; the
maximum inactive Card value shall not exceed three million dollars
($3,000,000) in any combination of products at any given time."
o Section 4.l shall be corrected to refer to "Section 4(k)".
o Section 4.n shall be corrected to refer to "this Section 4.n" in three
separate occurrences.
o Section 5.h shall be added: "Effective October 11, 2004, Schoolpop
shall place forecasted Card Orders in anticipation of actual Orders
from Clients one (1) business day in advance of receiving such Orders
from its Clients and AEIS shall process the respective ACH debit one
(1) business day following such forecasted Order.
o For example, Day 1, Schoolpop provides AEIS with a Day 2 Order
forecast; AEIS processes the Order and creates the file in GPP
and releases the Order.
o Day 2 AEIS initiates an ACH debit for the Order that was
released on Day 1.
o No earlier than Day 2 Schoolpop ships cards to Clients. Should
Schoolpop ship Orders prior to Day 2, Schoolpop shall be solely
responsible for Client/Cardholder customer service issues.
o Day 3 Cards active by 10a.m.MST. AEIS ACH is processed from
Schoolpop's bank account.
In the event any one (1) ACH is returned for insufficient funds or
other such similar reason not resulting from a bank error or banking
moratorium, or is unable to be processed upon submission by AEIS, AEIS
reserves the right to revert to the previously established Order and
payment process as documented in the Agreement prior to this Amendment.
Additionally, Schoolpop shall remit the full payment for any returned
ACH via wire transfer within twenty-four (24) hours of notice by AEIS."
o Section 8.c.i and 8.c.ii shall be replaced with the following
"c. AEIS and Schoolpop shall mutually develop, market, and
implement two (2) New Cards for Program use as follows:
i. Not later than January 31, 2005, a category Card, where
AEIS shall put forth a commercially reasonable effort to
secure contracts with a select group of merchants to
participate in the Card program as identified on Exhibit 5
attached hereto, and to make changes to such categories
and/or merchants. Further, not later than January 31, 2005,
the parties shall develop a marketing plan containing
actions, responsible parties, and target dates, to launch
such category Card into the NPO Marketplace. Schoolpop
shall commence selling the category Card during the month
of February 2005 with revenue being generated by August
2005.
ii. At a time mutually agreed by the parties, a grocery Card,
where
a. AEIS develops a non-commissionable version for
implementation within the NPO Market until such time
that a commissionable version may be developed and
ready for implementation;
b. AEIS and Schoolpop shall put forth a commercially
reasonable effort to secure commissionable contracts
with a select group of merchants leveraging Schoolpop's
existing relationships with grocery store companies, as
identified on Exhibit 5.A, attached hereto, and to add
other merchants as mutually agreed upon by both
parties. Should the parties mutually agree to the need
for an external consultant to aid the parties in
establishing meetings with desired grocery contacts,
the parties shall mutually agree on such external
consultant, and shall split the cost for such
consultant."
o Section 8 shall have a new subsection e "Subject to Section 3.f, the
parties agree that, effective October 21, 2004, Schoolpop shall
commence selling a bundled product containing one (1) or more Encompass
Select Card(s) with a total value of seventy-five (75) points, bundled
with one (1) twenty-five (25) point Persona Select Card (the "Encompass
Bundle")."
o Section 8 shall have a new subsection f "AEIS shall use commercially
reasonable efforts to negotiate and launch a commissionable Costco
card. Should AEIS be successful in its development of such a card, AEIS
reserves the right to discontinue sales of the Encompass Card upon
launch of such Costco card with thirty (30) days notice to Schoolpop."
o Section 8 shall have a new subsection g "AEIS reserves the right to
discontinue sales of 25 Point denomination Cards at its sole discretion
based upon financial results of such sales. AEIS shall provide
Schoolpop with thirty (30) days notice of such discontinuation."
o Section 8 shall have a new subsection h "AEIS will review and evaluate
merchants as presented by Schoolpop for possible inclusion into the
Persona Select Card filter. AEIS, in its sole discretion, shall
determine any additions and deletions to the merchants included in the
Persona Select Card filter, provided that Schoolpop shall receive
thirty (30) days notice of such changes. In the event of any merchant
deletions by AEIS, where such deletion eliminates a single category or
where the merchant has not been replaced with a comparable merchant,
Schoolpop shall have the right to adjust its Forecast and respective
Guaranteed Minimum, by an amount equal to the lost redemption of the
deleted merchant."
o Section 9.g shall be renumbered as subsection h. The new subsection g
shall read, "All pricing is based upon historical financial information
regarding redemption and non-redemption levels specific to Cards sold
by Schoolpop. The cost of the appeasement program will count as a cost
against non-redemption levels (reducing the amount of unredeemed
points). In the event these redemption and non-redemption levels,
including the cost of the appeasement program, vary from the historical
levels, AEIS reserves the right to change pricing. This assessment will
occur as part of the annual review referenced in Section 9.d."
o Section 10.a.ii. Persona Select website referenced shall be replaced
with the following website which represents the standard Persona
website to include a custom merchant list specific to Schoolpop Clients
"▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇". And the following shall be added after the
website reference: "AEIS agrees to show the Schoolpop logo on such
website."
o Section 10.v shall be amended to add the following to the end of the
existing section "Schoolpop shall have the sole responsibility to
provide the appropriate communications, training, customer service and
appeasement for its Clients."
o Section 13.a shall be edited as follows:
o 13.a.i remove the words "or province"
o 13.a.i "(v) replace "$3,000,000" with "$250,000"
o Exhibit 2 off-face pricing for Persona Select shall be replaced with
the following effective October 21, 2004:
"Persona Select 12%*
* AEIS reserves the right after 12/31/04 to review
financials related to Persona Select off-face pricing on a
monthly basis throughout the term of the Agreement and
revise the off-face pricing as necessary and shall document
such change in writing between the parties. Schoolpop shall
have the right to make reasonable adjustments to its
Forecasts to the extent affected by such changes and the
Guaranteed Minimum may be reduced to a mutually agreed upon
level." Exhibit 2 shall be edited to include the following
additions
"Encompass Bundle Effective 10/21/04 through 12/31/04
12% off face Persona Select and 2% off
face Encompass Select
Encompass Bundle Effective 01/01/05 through end of Term
8% off face Persona Select and 2% off
face Encompass Select"
o Exhibit 2 shall have a new subsection "Persona Select off-face pricing
of 12% is contingent upon Schoolpop's ongoing contribution of 9% of
such off-face pricing to its Clients. Should Schoolpop discontinue such
contribution to its clients, AEIS reserves the right to change pricing.
AEIS reserves the right to audit such contribution from Schoolpop to
its clients through the term of the Agreement."
o Exhibit 3, the following new account number shall be added
PRODUCT DENOMINATION ACCOUNT NUMBER
--------------------- ---------------- --------------------------
Encompass(R) Select* 75 Point 20590 (Available 11/19/04)
o Exhibit 3, last sentence shall be replaced with the following"
"*Encompass Select account numbers shall only be used for orders of
Encompass Bundle sales after November 11, 2004,"
The terms of the Agreement are hereby amended and modified by the terms
and conditions of this Amendment, which shall supersede and prevail over any
conflicting terms and conditions set forth in the Agreement. Except as
specifically set forth herein (or as set forth in any other written amendments
which may be entered into between the parties), all of the terms and conditions
of the Agreement remain unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties have signed this Amendment to the
Agreement as of the date set forth below.
SCHOOLPOP, INC. AMERICAN EXPRESS INCENTIVE SERVICES, L.L.C.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ Menedin
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▇▇▇▇ ▇▇▇▇▇▇▇▇, President ▇▇▇▇▇ Menedin, COO/CFO
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Date: 11/5/04 Date: 11/5/04
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