Prospectus Summary

EX-10.31 38 f89225orexv10w31.txt EXHIBIT 10.31 EXHIBIT 10.31 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: ***@*** 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 - --------------------------------------------------------------------------------

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. 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. EXHIBIT 1-A

MICROSOFT CONFIDENTIAL Page 3 of 9 * Material has been omitted pursuant to a request for confidential treatment. ~~[ [* [* * * * * * * * * * * * * * * * * *] *] ]~~

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. 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. 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 \ EXHIBIT 1-D MSN SEARCH FEATURED SITE LINKS KEY WORD LIST 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

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

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