Document:

Exhibit 4.10

Exhibit 4.10

SECOND AMENDMENT 

  INTERNET PHOTO SERVICES AGREEMENT

  THIS AMENDMENT AGREEMENT is made as of the 16th day of July, 2013 by and between COSTCO WHOLESALE CORPORATION, a company having an office at 999 Lake Drive, Issaquah, Washington 98027 (“Costco”) and PNI DIGITAL MEDIA INC., (formerly PhotoChannel Networks Inc.) a corporation incorporated under the laws of the Province of British Columbia (“PNI”).

  WHEREAS, Costco and PNI entered into an Internet Photo Services Agreement effective April 29, 2008 (“Original Agreement”) and a First Amendment Internet Photo Services Agreement effective February 16, 2011 (“First Amendment”), (collectively “Services Agreement”); and

  WHEREAS, Costco and PNI now wish to amend certain provisions of the Services Agreement,

  NOW THEREFORE, in consideration of the premises, the mutual covenants contained in the Agreement, and other good and valuable consideration (the receipt and adequacy of which are hereby acknowledged), the parties agree as follows:

  		1.      	Definitions. Except as expressly amended herein, capitalized terms in this Agreement shall have the same meaning as in the Services Agreement.

		 	

		2.      	Amendment. The parties hereby add "Section 41 Setoff “to the Original Agreement as set forth below:

		 	

  		a.      	“Without limiting its other remedies, Costco reserves the right to setoff and withhold payments to PNI for breach of warranties or any other obligation of PNI under any SOW in an amount not to exceed 10 days revenue per SOW.

		b.      	The determination of a breach of warranty or any other obligations shall be at Costco’s sole discretion.

		c.      	The setoff will be referenced in every new SOW signed between PNI and Costco.

		d.      	The setoff amount shall be calculated on a per day basis based on Costco’s last payment made to PNI divided by the number of billing days in the last billing period.

		e.      	The setoff amount will commence upon electronic notice to PNI. The setoff will remain active until the breach has been cured by PNI.

		f.      	Costco’s acceptance of PNI’s cure shall not be unreasonably withheld.

		g.      	Costco will neither setoff nor withhold payment to PNI for software deficiencies before or after release of a new feature if any of the following applies to the deficiency:

  		i.      	Is not reproducible by PNI or Costco

		ii.      	Is reproducible but is browser specific and represents less than 3% of Costco Photo Center’s traffic

		iii.      	Is reproducible but is related to outdated and unsupported browsers and operating systems or specific configurations of third party software on a member’s system

		iv.      	Does not impair order replacement

		v.      	Does not affect more than 20 members per 24-hour period

		vi.      	Is single member specific, provided PNI provides a workable solution for that member within 5 business days from the date of the initial call, 95% of the time, and

  		1.      	Member is contacted by phone by close of business the day the issue is escalated, and

		2.      	PNI shares a Google document with Costco to show status of all escalated member issues and their current status (PNI is expected to provide conditional formatting, as applicable, in the event issues remain unresolved beyond the parameters in this 2(g)(vi).

			 

  		h.      	Subject to the above exceptions, Costco may setoff or withhold payment to PNI for development work to be performed under a mutually agreed SOW in place, regardless of revenue impact.

		 	

  		i.      	Any change by Costco to a mutually signed SOW must be made by a mutually signed Change Request. Based on the Change Request, the parties will mutually sign an amended SOW to which Costco’s setoff and withholding rights shall also apply.”

			 

  		3.      	Release of Setoff Amount. At the date of mutual execution and delivery of this Second Amendment, Costco will release payment to PNI of the setoff amount from April 2, 2013 through April 9, 2013, in the amount of $134,718.94.

		 	 

		4.      	No Other Changes. Except as expressly amended by this Agreement, the terms of the Services Agreement, as merged with this Agreement, shall remain in full force and effect.

		 	

		5.      	Counterparts. This Agreement may be executed by facsimile or other electronic transmission in two or more counterparts, all of which taken together shall constitute one legally binding agreement.

  IN WITNESS WHEREOF, the parties have executed this Agreement as of the first date written above.

  
    					
	PNI DIGITAL MEDIA, INC.		COSTCO WHOLESALE CORPORATION		

  

   

  
    								
	By:  	/s/ Kyle Hall		By:	/s/ Glen Hutchinson			 
	Name:	Kyle Hall		Name:	 Glen Hutchinson			 
	Title:	CEO 		Title:	 			 
	 							
	By:	/s/ Cam Lawrence		By:	/s/ Jeff Cole		By:	/s/ Ron Damiani
	Name:	Cam Lawrence		Name: 	Jeff Cole 		Name:	Ron Damiani
	Title:	CFO		Title:	 		Title:Exhibit 4.11

Exhibit 4.11

  [***] CERTAIN INFORMATION CONTAINED IN THIS DOCUMENT MARKED BY BRACKETS HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES AND EXCHANGE ACT OF 1934 AS AMENDED.

  THIRD AMENDMENT

    INTERNET PHOTO SERVICES AGREEMENT

  THIS AMENDMENT AGREEMENT is effective as of the 2nd day of September, 2013 by and between COSTCO WHOLESALE CORPORATION, a company having an office at 999 Lake Drive, Issaquah, Washington 98027 (“Costco”) and PNI DIGITAL MEDIA INC., (formerly PhotoChannel Networks Inc.) a corporation incorporated under the laws of the Province of British Columbia (“PNI”).

  WHEREAS, Costco and PNI entered into an Internet Photo Services Agreement effective April 29, 2008 (“Original Agreement”), a First Amendment Internet Photo Services Agreement effective February 16, 2011 (“First Amendment”), and a Second Amendment Internet Photo Services Agreement dated as of July 16, 2013 (“Second Amendment”), (collectively, “Services Agreement”);and

  WHEREAS, Costco and PNI now wish to amend certain provisions of the Services Agreement,

  NOW THEREFORE, in consideration of the premises, the mutual covenants contained in the Agreement, and other good and valuable consideration (the receipt and adequacy of which are hereby acknowledged), the parties agree as follows:

  		1.      	Amendment. The parties hereby amend the Services Agreement as set forth below, and following mutual execution by the parties of this Agreement, the Services Agreement and this Agreement shall merge and constitute the complete agreement of the parties.

		 	

		2.      	Definitions. Except as expressly amended herein, capitalized terms in this Agreement shall have the same meaning as in the Services Agreement. A new Section 1.13 is added to the Original Agreement as follows: “’Hosting Fee” means the payment set forth in Section 3 (3) of the Third Amendment Internet Photo Services Agreement’”. A new Section 1.14 is added to the Original Agreement as follows: [***]

		 	

		3.      	Payment. “Schedule F Payment to PNI Digital Media Inc.” is hereby deleted in its entirety as payment shall no longer be based on number of uploads. The new fee structure shall now be as follows: [***] to be paid on a pro rated basis each Fiscal Period. Costco shall pay PNI the calculated fees, net of shipping and freight charges, PST, GST, sales, excise and similar taxes, if any. The gross sales and per order fee will be invoiced weekly for the preceding Monday through Sunday period and paid net 30 days from receipt of invoice. The Hosting Fee will be invoiced on a pro rated basis each Fiscal Period and paid net 30 days from receipt of invoice. The total orders and gross sales will be calculated using the “Costco Revenue Analysis Report” (Attached to this Amendment as “Attachment 1 – Report Sample and Background”).

		 	

		4.      	Deadlines. PNI shall meet all deadlines.

		 	

		5.      	TOR and SOW Compliance. Both parties shall follow the terms of the TOR and SOW process.

		 	

		6.      	[***]. PNI shall complete [***] in accordance with the applicable SOW.

		 	

		7.      	Service Level Agreement. Schedule C, II, B. 3.a. “End-User Care Standard” the Original Agreement requirement that “a human operator shall be available within [***] thereafter” is amended to read “a human operator shall be available within [***] thereafter”.

		 	

		8.      	Development Hours. Development Hours are hereby reset to [***], subject to annual percentage increase and Costco’s audit rights.

  *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.

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  		9.      	No Other Changes. Except as expressly amended by this Agreement, the terms of the Services Agreement, as merged with this Agreement, shall remain in full force and effect.

		 	

		10.      	Counterparts. This Agreement may be executed by facsimile or other electronic transmission in two or more counterparts, all of which taken together shall constitute one legally binding agreement.

  IN WITNESS WHEREOF, the parties have executed this Agreement as of the first date written above.

  
    		
	PNI DIGITAL MEDIA, INC.	COSTCO WHOLESALE CORPORATION

  

   

  
    								
	By:	/s/ Kyle Hall		By:	/s/ Glen Hutchinson			 
	Name:	Kyle Hall		Name:	Glen Hutchinson			 
	Title:	CEO		Title:	 			 
		 			 			 
	By:	/s/ Cam Lawrence		By:	/s/ Jeff Cole		By:	/s/ Ron Damiani
	Name:	Cam Lawrence		Name:	Jeff Cole		Name:	Ron Damiani
	Title:	CFO		Title:	 		Title:	 

  

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  Attachment 1 – Report Sample and Background

  Source Report for Fee Calculation and Calculation Background Information:

  The “Costco Revenue Analysis Report” will be the report used for documenting the [***] and [***] totals for calculating the fees for gross sales and orders.

  The source reports for the Costco Revenue Analysis Report is the “Daily Costco US Order Summary Report” and the “Daily Costco CN Order Summary Report”.

  [***].

  [***].

  Also, note that the Daily Order Summary Report specifically excludes revenues and order totals from Greetings by Costco stationery items.

  *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.

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  *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.

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  *** Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.

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