Exhibit 10.20
September 30, 2003
NeWave Advertising, Inc
000 Xxxx Xxx.
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Dear Ladies and Gentleman:
This letter sets forth the terms and conditions under which NeWave
Advertising, Inc., a California corporation ("NWA"), will market to customers
of NWA (collectively, "Customers"), and MemberWorks Incorporated, a Delaware
corporation ("MW"), will fulfill, the membership programs set forth on Exhibit A
attached hereto (the "Programs").
NWA will, at its sole expense, (a) market the Programs to, and accept
orders for the Programs from Customers on inbound calls from Customers, in
accordance with the marketing guidelines attached hereto as Exhibit B (the
"Marketing Guidelines") and (b) provide to MW, on a daily basis, Customer
Information (as defined below) for such Customers who accept enrollment in a
Program pursuant to NWA's marketing hereunder.
MW will be responsible for billing and collecting membership fees,
including renewals, for Customers (a) accepting enrollment in, and authorizing
the membership fee to be charged for, the Programs pursuant to NWA's marketing
hereunder and (b) with respect to whom MW has received Customer Information from
NWA (an "Enrollee").
MW will pay to NWA the commissions due and payable as set forth in Exhibit
C attached hereto during the Term and for a period of one year after the Term.
Unless earlier terminated as provided below, this agreement shall be for an
initial term of one (1) year commencing on the date first set forth above (the
"Initial Term"). Thereafter, this agreement shall be automatically continued
for renewal terms of one (1) year each (each, a "Renewal Term") unless no later
than forty-five (45) days prior to the end of the then current term, either
party notifies the other in writing of its intent not to continue this
agreement. The Initial Term and Renewal Term(s), if any, shall be referred to
herein as the "Term". This agreement may be terminated by either party (a)
immediately, upon written notice to the other party, in the event of fraud,
bankruptcy, insolvency, liquidation or willful misconduct by the other party,
(b) upon thirty (30) days written notice to the other party in the event of a
material breach by the other party of any of its obligations hereunder which is
not cured within such thirty (30) day period (unless such breach is not
susceptible to cure, in which case there shall be no cure period), or (c) for
convenience upon thirty (30) days advance written notice to the other party.
This agreement may be terminated by MW, in its sole discretion, if the
Membership Retention Rate (as defined below) falls, or is reasonably forecast by
MW to fall, below 30%. Following the expiration or earlier termination of this
agreement, MW shall have the exclusive right to renew the Program memberships
generated hereunder. For purposes hereof, "Membership Retention Rate" means
with respect to any measuring period, the percentage of Enrollees enrolled in
the applicable Program during such measuring period whose respective memberships
in such Program have not been cancelled.
MW shall be responsible for servicing Program membership for each Enrollee
enrolled in the applicable Program whose membership in such Program has not been
cancelled (a "Member"). MW does not service, and NWA shall not market to,
Customers residing outside of the 48 contiguous United States or with Army Post
Office addresses. MW reserves the right to cease servicing any Program in any
state in its sole discretion. In such a case, NWA shall cease all marketing of
such Program in such state after MW notifies NWA of such cessation. MW may
terminate any membership for any reason.
Member cancellations of Program memberships shall be received by MW
directly; provided that if NWA receives communications from Members regarding
Program membership cancellations, NWA shall transmit information regarding any
such cancellation to MW within one (1) business day after NWA receives such
cancellation information.
At the end of each month during the Term, MW shall provide NWA with a
summary of sales and Enrollees for the prior month along with a sales tracking
report (the "MW Sales Tracking Report") detailing the disposition of each
Customer Information file that was sent by NWA. NWA will be required to approve
and verify the MW Sales Tracking Report within five (5) business days of
receipt.
Each party represents, warrants and covenants that (a) this agreement
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms; (b) the execution, delivery and performance of this
agreement has been authorized by all necessary corporate action and will not
violate any agreement, order, constituent document, law or regulation to which
it is bound or subject and (c) it will perform its obligations hereunder at all
times in accordance with all applicable laws, rules and regulations. Further,
all proposed usage of either party's trademarks, service marks, trade or service
names or logos shall be subject to the prior written approval of the other
party. NWA represents, warrants and covenants to MW that NWA (a) has the legal
right to solicit Customers as provided hereunder and transfer all of such
Customers' Customer Information to MW as provided hereunder; (b) shall read, and
cause its telephone sales representative to read, verbatim the scripts that have
been approved by MW in writing and (c) has obtained all necessary consents,
licenses, permits and agreements to offer the Programs or otherwise perform its
obligations hereunder. For purposes hereof, (a) "Customer Information" means a
Customer's name, address, telephone number and Valid Credit Card (as defined
below) name, number and expiration date, in each case in a computer-readable
format designated by MW and reasonably acceptable to NWA and (b) "Valid Credit
Card" means a credit card or charge card accepted by both parties which, upon
billing, is not declined by the applicable merchant processor or card issuer.
Each party shall keep true and complete records with respect to the
performance of its obligations hereunder (including, without limitation, Taped
Verifications (as defined below)), and shall make such books and records
available for inspection by the other party, upon reasonable notice and during
normal business hours, but on no more than two (2) occasions during any one (1)
year period. Such records shall be maintained for at least three (3) years
after the end of the calendar year to which they pertain.
Each party (the "Indemnifying Party") agrees to indemnify and hold the
other party, its officers, directors, employees, shareholders, agents,
successors and permitted assigns (each, an "Indemnified Person"), harmless from
and against any and all demands, claims, causes of action, losses, damages,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) asserted against, imposed upon, or incurred by any
Indemnified Person, resulting from any breach by the Indemnifying Party of any
representations and warranties made by the Indemnifying Party herein, any breach
or non-fulfillment in the performance of the Indemnifying Party's covenants and
agreements contained herein or any act or omission by an agent or independent
contractor of the Indemnifying Party in connection with the performance of the
Indemnifying Party's covenants and agreements hereunder. Except as otherwise
provided herein, each party shall be solely responsible for its own costs and
expenses incurred in performing its obligations hereunder.
Neither NWA nor any of its affiliates or subsidiaries may, directly or
indirectly, during the Term and thereafter, knowingly market any Membership
Program (other than a MW Membership Program) to any Member. "Membership
Program" means a program or service where discounts, information and/or benefits
are delivered to a consumer or business in exchange for a recurring membership
fee.
Any dispute arising out of or relating to this agreement, including any
issues related to the scope of this arbitration provision, will be finally
settled by arbitration in accordance with the rules of the American Arbitration
Association and the United States Arbitration Act, with the arbitration to be
held in Stamford, Connecticut, and judgment on any award to be entered by any
court with jurisdiction.
The parties shall operate as independent contractors in performing their
obligations hereunder and shall have exclusive control of the manner and means
of performing their obligations. Nothing in this agreement shall be construed
as making either party the agent of the other party, as granting to the other
party the right to enter into any contract on behalf of the other party or as
establishing an association, franchise, joint venture or partnership between the
parties.
This agreement constitutes the entire agreement of the parties with respect
to the subject matter hereof, superseding all prior or contemporaneous
agreements, and may only be amended by a written document signed by both
parties. Neither this agreement nor the rights and obligations hereunder may be
assigned by either party, whether by agreement or operation of law, without the
prior written consent of the other party. This agreement shall be governed by
the laws of Connecticut, without regard to its conflicts of law principles and
rules of construction requiring that it be interpreted against the party causing
it to be drafted, and shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns. The failure of
either party to insist upon strict performance of a provision or exercise any
right hereunder shall not be construed as a waiver of such party's right to rely
on such provision or assert any such right in that or any other instance. All
notices which are required to be given by either party hereunder shall be in
writing and shall be deemed to be properly given (a) when delivered personally,
(b) three (3) business days after being sent by certified mail, return receipt
requested, first-class postage paid, (c) one (1) day after being sent by a
nationally recognized overnight delivery service or (d) upon confirmation of
receipt of facsimile (to (000) 000-0000 in the case of notice to MW and to (805)
967-1222 in the case of notice to NWA), in each case to the other party's legal
department at the parties' respective addresses set forth above. All terms and
provisions hereof which should by their nature survive the expiration or earlier
termination of this agreement, including, without limitation, the
indemnification provisions hereof, shall so survive. This agreement may be
executed in counterparts, both of which shall be deemed one and the same
instrument. A facsimile transmission of this agreement bearing a party's
signature shall be legal and binding on such party.
Please confirm your agreement to the foregoing terms by signing this agreement
at the place indicated below.
Very truly yours,
MEMBERWORKS INCORPORATED
By:_/s/ Xxxxxx X.X. Xxxxxx
Name: Xxxxxx X.X. Xxxxxx
Title: Senior Vice President and General
Counsel
Agreed to and Acknowledged by:
NEWAVE ADVERTISING, INC.
By:/s/ Xxxxxxx Xxxx
Name: Xxxxxxx Xxxx
EXHIBIT A
PROGRAMS
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BusinessMaxsm
Connectionssm
Essentialssm
Galleriasm
HomeWorkssm
MyHealthySavings.comsm
PremierHealthsm
PremierHealthPlussm
Privacy Plussm
24Protect
24Protect Plussm
Simple Escapessm
Simple Escapessm (Super)
Simply Yousm
ValueMax Shopping Servicesm
Your Savings Clubsm
EXHIBIT B
MARKETING GUIDELINES
--------------------
1. NWA shall use only such scripts as have been approved by MW in advance in
writing. NWA shall read, and shall cause their respective sales representatives
to read, such scripts verbatim, and shall obtain the consumer's clear and
unambiguous affirmative consent to the offer as stated in such scripts.
2. During each telephone solicitation offering a Program, NWA shall verify
the consumer's acceptance of the offer by creating, with the consumer's
permission, a recording of that portion of the call where the consumer provides
his or her unambiguous express affirmative consent to the payment, cancellation,
and refund terms described in the offer pursuant to the applicable telemarketing
script (a "Taped Verification"). Recordings of Taped Verifications shall be
stored by NWA for a period of at least two (2) years and, if requested by MW,
shall be delivered by NWA to MW by overnight mail (or digital download in a
format acceptable to MW) within two (2) business days after MW's request for any
such recordings.
3. If, at any time during the Term, the number of written complaints or
letters received, directly or indirectly, by MW claiming or alleging an
unauthorized charge to a consumer for a Program with respect to marketing by NWA
hereunder, exceeds .25% of the aggregate number of Members enrolled in a Program
by NWA hereunder for the month in which such Member was marketed such Program (a
"Complaint Differential"), NWA shall be placed on immediate probation.
Thereupon, NWA shall implement a plan to reduce such Complaint Differential. In
the event that such plan fails to reduce such Complaint Differential within
ninety (90) days after the commencement of such probationary period, MW shall
terminate this agreement upon ten (10) days notice.
EXHIBIT C
COMMISSION
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1. The following terms not previously defined shall have the following
definitions:
a. "Effective Date" means the date first set forth above.
b. "Eligible Program Member" means with respect to any Program an Enrollee
(i) with respect to whom the initial month's Membership Fee (as defined below)
for such Program is not declined when presented for payment to the applicable
credit card issuer or merchant processor, (ii) who is not already a member of
the applicable Program and (iii) verified by both MW and NWA in writing to be an
Enrollee as set forth on the applicable MW Sales Tracking Report.
c. "Marketing Window" means each calendar month during the Term commencing
with the Effective Date.
d. "Membership Fee" means the fee charged by MW for extending membership in
a Program at the end of any applicable trial period. "Membership Fee" shall
specifically exclude any shipping and handling, processing, or trial period
fees. Except as otherwise agreed to by the parties, the initial Membership Fee
shall be no less than $9.95 per month.
e. "Projected Decline Rate" means the forecast of the percentage of
Enrollees whose credit cards will be declined when the initial month's
Membership Fee for the applicable Program is presented for payment to the
applicable credit card issuer or merchant processor. The Projected Decline Rate
shall initially be set at fifteen percent (15%) of Enrollees and may be changed
at any time as reasonably and in good faith determined by MW based on actual and
projected data.
f. "Declines" means an Enrollee with respect to whom the applicable Program
membership fee is declined by the applicable credit card issuer or merchant
processor.
g. "Upsell" means an offer of a product or service (including, but not
limited to, a Program) following NWA's own primary product or service on an
inbound call.
2. For the first 2,000 Eligible Program Members enrolled in a Program as a
result of NEW's marketing on an Upsell during each Marketing Window of the Term,
NWA shall be paid a commission of $21.00 per Eligible Program Member.
3. Commissions to which NWA is entitled with respect to Eligible Program
Members, as per Section C.2. above, shall be paid to NWA in two payments as
follows: (i) seven (7) days after the Marketing Window in which Enrollees were
enrolled in a Program MW shall make a payment equal to $10.00 per Enrollee for
those Enrollees that are projected to be Eligible Program Members based on the
then current Projected Decline Rate, and (ii) within fifteen (15) days after the
conclusion of the month in which the initial Membership Fee is scheduled to be
billed to and Eligible Program Member's Valid Credit Card MW shall pay NWA any
remaining commissions owed NWA for those Enrollees (with respect to whom NWA has
not already been paid a commission hereunder) that are Eligible Program Members
and those Enrollees that cancel their membership in a Program prior to being
billed the initial Membership Fee.
4. Within 45 days after the conclusion of each Marketing Window during the
Term, the amount of Commissions paid to NWA for Eligible Program Members
enrolled in a Program during the Marketing Window shall be reviewed, and to the
extent that such amount paid does not equal the amount earned by NWA as set
forth in Paragraph C.2 (after giving effect to Declines that have been
successfully billed by the date of such review), any such amount to which either
party was overpaid or underpaid shall be paid to the party entitled to such
amount within five (5) business days after the date of the determination of such
amount.
All programs and prices may be subject to change at MW's discretion and MW
reserves the right to add and offer additional Programs in connection with this
agreement. Each program is offered for a retail price to be determined by MW
in its sole discretion.
