Exhibit 10.1
"Pages where confidential treatment has been requested are stamped 'Confidential
Treatment Requested and the Redacted Material has been separately filed with the
Commission', and the confidential section has been marked in the margin with a
star (*)."
STRATEGIC AGREEMENT
BETWEEN
STARBUCKS CORPORATION AND
XXXXX.XXX, INC.
This Strategic Agreement ("Agreement") is made and entered into on February 12,
2000 by and between Starbucks Corporation, a Washington corporation
("Starbucks") and Xxxxx.xxx, Inc., a Delaware corporation ("Kozmo").
BACKGROUND
A. Kozmo currently provides same-day delivery of videos, DVDs, video games,
convenience foods and other items which are ordered by its customers over the
Internet and delivered by Kozmo to customers at their homes or places of
business. Kozmo intends to expand its Internet-based, same-day delivery business
to sell additional items including without limitation, books, compact discs,
magazines and electronics. Kozmo desires to provide convenient locations for its
customers to return to Kozmo videos, DVDs and video games (collectively, "Video
Products") and to possibly return to Kozmo certain other items purchased from
Kozmo.
B. Kozmo currently intends to expand its same-day delivery service business into
the Expansion Cities in the manner and in accordance with the timeline set forth
in Schedule A attached hereto, which may be revised by Kozmo at any time upon
notice to Starbucks.
C. Starbucks operates retail coffee stores throughout the United States and
Canada. In addition, Starbucks sells, both in its stores and through other means
of distribution, coffee, tea and other related products, including but not
limited to compact discs and other music items sold by Starbucks through its
Hear Music division ("Starbucks' Retail Products").
D. Starbucks has a valuable network of stores, a substantial customer base, and
certain other intangibles to which Kozmo desires access.
E. Starbucks has considerable expertise in a variety of areas, including without
limitation, branding, marketing, customer relations, real estate and employee
training ("Starbucks' Expertise").
F. Starbucks wishes to lease from Kozmo Drop-boxes to place in its stores to
permit the collection of the Video Products and certain other items purchased
from Kozmo. Kozmo further wishes to distribute to its customers certain
Starbucks' Retail Products.
G. Kozmo wishes to obtain assistance from Starbucks in the areas of Starbucks'
Expertise on terms mutually agreeable to the parties hereto; provided, however,
Starbucks will not charge Kozmo for its time.
H. Starbucks and Kozmo desire to enter into a strategic relationship to
undertake certain joint marketing efforts in-store, online and through
traditional marketing media.
AGREEMENT
The parties agree as follows:
1. DROP-BOX.
1.1 STARBUCKS' RESPONSIBILITIES.
1.1.1 Within ten (10) days following the execution of this
Agreement, Starbucks will deliver to Kozmo a list showing the location
of each of its retail coffee stores wholly-owned and operated by
Starbucks ("Starbucks Stores") located in each city in the United States
and Canada in which Kozmo operates its Internet-based, same-day delivery
business. As Kozmo expands its business into additional U.S. or Canadian
cities ("Expansion Cities"), Starbucks will provide a list showing the
location of each of its Starbucks Stores located in the Expansion Cities
within thirty (30) days following written notification from Kozmo of its
intention to commence operations in such cities. On a quarterly basis
throughout the Term of this Agreement, Starbucks will provide Kozmo with
a list for each of the cities in which Kozmo operates that sets forth
(a) new Starbucks Stores that have opened since the date of the last
quarterly report, and (b) new Starbucks Stores that Starbucks expects to
be opened during the next calendar quarter.
* 1.1.2 Starbucks will locate a Drop-box (as defined below) to
be used by customers of Kozmo for the return to Kozmo of the Video
Products and, subject to the provisions of SECTION 1.4, the Kozmo Items
(as defined below) in those Starbucks Stores [*]
---------
* Confidential Treatment Requested and the Redacted Material has been
separately filed with the Commission.
1.1.3 Starbucks will allow Kozmo's employees who comply with the
requirement of SECTION 1.2.4 below, to enter each Starbucks Store containing a
Drop-box to collect the Video Products and Kozmo Items during such store's
normal business hours, as may be modified by Starbucks from time to time in its
sole discretion, at such times as may be mutually agreed upon by Starbucks and
Kozmo.
1.1.4 Starbucks will not have any responsibility or liability for the
condition of Video Products or Kozmo Items returned to the Drop-boxes, nor will
Starbucks be responsible to accept or hold for collection by Kozmo any Video
Product or Kozmo Item which will not fit in the Drop-box for any reason. Kozmo
will bear all risk of loss relating to the Video Products and the Kozmo Items.
1.1.5 Starbucks will notify Kozmo by telephone of any problems with or
damage to a Drop-box in a Starbucks Store of which Starbucks becomes aware;
provided, however, that Starbucks will not have any duty or obligation to
inspect or monitor the Drop-boxes.
1.1.6 Starbucks reserves the right to require by written notice to
Kozmo that Kozmo remove a Drop-box from any Starbucks Store if, at any time, the
criteria set forth in SECTIONS 1.1.2 (c), (d) AND (e) are not being met. Upon
the removal of a Drop-box from a Starbucks Store, Kozmo will, at its sole cost
and expense, use commercially reasonable efforts to notify its customers that
they will no longer be able to return Video Products or Kozmo Items to the
applicable Starbucks Store.
1.2 KOZMO RESPONSIBILITIES.
1.2.1 Kozmo will collect all Video Products and Kozmo Items from the
Drop-boxes located at each Starbucks Store in such a manner so as to assure that
such Drop-boxes do not overflow, or more frequently as mutually agreed upon by
Starbucks and Kozmo. Kozmo will collect items from the Drop-boxes at such times
as is agreed to by the parties so as to not interfere with Starbucks' normal
business operations.
1.2.2 Kozmo will use commercially reasonable efforts to maintain the
Drop-boxes in good condition and appearance at all times during this Agreement.
1.2.3 Kozmo will provide each Starbucks Store with a toll free customer
service number staffed by one or more Kozmo customer service representatives
during normal business hours for Starbucks' employees to contact Kozmo, or to
provide to Kozmo's customers, for questions regarding returns, problems with or
damage to the Drop-boxes, and to request additional pick-up from the Drop-boxes.
1.2.4 Kozmo employees collecting the Video Products and Kozmo Items
from the Starbucks Stores' Drop-boxes will at all times be professional in
appearance and manner, be
appropriately identified as a Kozmo employee, not interfere with the
normal operations of any such Starbucks Store and comply with all
procedures, requirements and protocol as Starbucks may reasonably impose
from time to time.
1.3 DROP-BOX DEVELOPMENT. Kozmo will, with input and approval
from Starbucks, design, develop, manufacture and pay for drop-boxes for
the return of Video Products and Kozmo Items by Kozmo's customers
("Drop-boxes") for placement in the Starbucks Stores. Kozmo's current
Drop-box will be used until a new design is agreed upon by the parties.
The dimensions of the current Drop-boxes are 12" x 16" x 32" and the
current Drop-box includes a slanted cover with a slot the size of a VHS
video tape for the return of items and a combination lock on the front
of the box. Any modification to the size or design of the Drop-box must
be approved in advance by Starbucks, in its reasonable discretion, prior
to being placed in any Starbucks Store. Kozmo will own the design and
all proprietary rights relating to the Drop-boxes and will own each of
the Drop-boxes located in the Starbucks Stores. Kozmo will lease the
Drop-boxes to be located in Starbucks Stores to Starbucks, for the Term
of this Agreement, for the rental payment of $1.00 per Drop-box per
year, pursuant to the terms of an equipment lease to be agreed upon by
the parties (the "Equipment Lease").
1.4 KOZMO ITEMS. The Drop-boxes will be used for the purpose of
returning Kozmo Items, only if the return of such items does not
interfere with Starbucks normal business operations and does not
materially interrupt or interfere with the regular duties of Starbucks'
employees in the Starbucks Stores. Starbucks will not be responsible or
liable for paying any amounts to any Kozmo customer for the return of a
Kozmo Item. "Kozmo Items" shall mean non-perishable items sold and
delivered by Kozmo which are of a size that will easily fit into the
Drop-box and which are of the type of items listed on the attached
SCHEDULE B as may be amended from time to time upon the mutual written
consent of the parties.
1.5 EXCLUSIVITY OF KOZMO. Kozmo agrees that, during the Term,
it will not allow its Video Products or Kozmo Items to be collected in
Drop-boxes or similar receptacles located in any store of a Retail
Chain, other than Starbucks, whose primary business is the sale of
coffee or tea products; provided, however that Kozmo will not be
required to remove any drop boxes currently located in a Retail Chain
whose primary business is the sale of coffee or tea products. For the
purposes of this Agreement, a "Retail Chain" shall mean any entity which
owns or operates five (5) or more retail operations in the United States
and/or Canada under the same or substantially the same tradename or any
five (5) or more stores operating in the United States and/or Canada
under the same or substantially the same tradename pursuant to a
franchise, license, partnership or joint venture arrangement.
* 1.6 [*]
---------
* Confidential Treatment Requested and the Redacted Material has been
separately filed with the Commission.
2. SALE OF STARBUCKS' RETAIL PRODUCTS.
2.1 DISTRIBUTION OF RETAIL PRODUCTS. Kozmo will distribute to
its customers those Starbucks Retail Products identified by Starbucks
and agreed to by Kozmo from time to time, including but not limited to
compact discs and other music items sold by Starbucks through its Hear
Music division, pursuant to a supply agreement to be agreed upon by the
parties (the "Supply Agreement"). Kozmo also agrees to enter into
additional supply agreements on commercially reasonable terms reasonably
acceptable to Kozmo with suppliers of Frappuccino(R) bottled beverages
and Starbucks(R) ice cream.
2.2 PRODUCTS EXCLUSIVITY. Kozmo agrees that during the Term of
this Agreement, it will not (a) promote, sell, offer for sale or deliver
to its customers any non-Starbucks brand of coffee or tea products, or
any other products if the primary purpose of such product is to promote
non-Starbucks brands of coffee or tea products; or (b) promote a Retail
Chain whose primary business is the sale of coffee or tea products.
3. JOINT MARKETING AND WEBSITE DEVELOPMENT.
3.1 JOINT MARKETING.
3.1.1 Starbucks and Kozmo, together with the Marketing
Managers (as defined below) will develop an annual joint marketing
strategy ("Annual Strategy") which more clearly defines the
opportunities and roles of the parties, and includes a jointly-developed
business plan and budget covering cost, general and administrative
expenses and other financial arrangements. Such Annual Strategy will be
reviewed, updated and approved by each party on a quarterly basis.
Examples of possible joint marketing activities will include developing
joint messaging for in-store materials, collateral and signage and other
programs as set forth on the attached SCHEDULE C.
* 3.1.2 [*]
---------
* Confidential Treatment Requested and the Redacted Material has been
separately filed with the Commission.
3.1.3 Any and all such joint marketing materials, campaigns
and other joint promotions of Starbucks and Kozmo must be approved in writing by
representatives of both Starbucks and Kozmo, in each party's reasonable
discretion and it is recognized and agreed that such items shall not include
exterior signage at the Starbucks Stores. Interior signage at the Starbucks
Stores must conform to the requirements of the applicable lease and applicable
laws, rules and regulations, ordinances and permits. In addition, Starbucks must
consent, in its reasonable discretion consistent with Starbucks standards in its
stores, to the use and content of any Kozmo-only marketing materials to be
displayed or distributed in the Starbucks Stores.
3.1.4 Starbucks will pay for and be solely responsible for
Starbucks-only marketing expenses and costs and Kozmo will pay for and be solely
responsible for Kozmo-only marketing expenses and costs. The payment obligations
with respect to marketing expenses of each party are listed as current
understandings on SCHEDULE C.
3.2 WEB SITE DEVELOPMENT.
3.2.1 Each party will establish and maintain Internet
hypertext links ("Links") on its web site to facilitate click through to the
other party's web site by such party's customers and end-users. Each party will
cooperate with the other to identify appropriate areas within such party's web
site to place the Links and to identify the most appropriate pages within such
party's web site with which to Link; provided, however that each such party will
maintain full control over its own web site and as to the location of such
Links.
3.2.2 Each party retains the right, in its sole discretion, to
immediately cease linking to the other party's web site, if such party has
reasonable grounds to believe in good faith, that the other party' web site
infringes on the proprietary rights of any third party, violates any applicable
law or regulation or is defamatory, obscene or patently offensive.
Notwithstanding any exercise of, or failure to exercise, such right, each party
will have the sole and exclusive responsibility for its respective web sites.
3.2.3 Each party will bear its own costs for development,
hosting and maintenance of its own web sites. Either party may change the URL's
of its web site for which it is responsible hereunder upon ten (10) days'
advance written notice. Each party will retain sole editorial control of and
responsibility for information presented on its web site and will not interfere
with the other party's editorial control of such content, except as expressly
stated otherwise herein.
3.2.4 Each party will promptly inform the other of (a) any
information related to its web site that could reasonably lead to a claim,
demand or liability of or against the other party by any third party, and (b)
any changes to its web site that would substantially change the content in any
area to which the other party has linked.
3.2.5 Starbucks may collect data on end users' access and use
of its web site. All data collected by Starbucks shall be owned exclusively by
Starbucks. Kozmo may collect
data on end users' access and use of its web site. All data collected by Kozmo
shall be owned exclusively by Kozmo.
3.3 LICENSES.
3.3.1 Each party ("Licensor") grants to the other party
("Licensee") during the Term of this Agreement a non-exclusive,
non-transferable, revocable upon termination of this Agreement subject to the
terms hereof license to use the Marks (as defined below) provided by Licensee to
Licensor in compliance with this Agreement and with any reasonable guidelines
which may be provided by Licensor from time to time. The parties may only use
the Marks in connection with the joint marketing materials, for the purposes
contemplated herein. The parties each agree to cooperate with the other in
facilitating the monitoring and control of the other party's Marks. Licensor may
terminate the Agreement and the Licensee's license to use the Marks upon five
(5) days' written notice if Licensor reasonably believes that such use dilutes
or tarnishes the value of the Marks; provided, however, such notice will include
specific reasons of Licensor for its belief and provided further that if
Licensee takes such action which reasonably satisfies Licensor that the Marks
are no longer being diluted or tarnished within such five (5) day period or if
it is not commercially reasonable to fully remedy the dilution or tarnishment
within the five (5) day period then if Licensee uses commercially reasonable
efforts, and cures such dilution or tarnishment no later than fifteen (15) days
after such notice, then Licensor will not terminate this Agreement and the
Licensee's license to use the Marks at such time. Licensee agrees not to take
any action inconsistent with the Licensor's ownership of the Marks (including a
claim of any interest in the other party's Marks) and agrees that any benefits
accruing from use of such Marks will automatically vest in the Licensor.
Licensee will place a "(R)" or a "TM" (as appropriate) with the Marks as
requested by Licensor. Nothing in this Agreement will be deemed to grant to
Licensee any ownership interest in the Licensor's Marks. For the purposes of
this Agreement, "Marks" will mean the trade names, trademarks, service names and
service marks of a party (including, without limitation, the party's name,
domain name and logos) which are designated by such party for use in connection
with this Agreement.
3.3.2 Licensee acknowledges that Licensor, or a subsidiary of
Licensor, is the owner of the Marks. Licensee will not at any time do or suffer
to be done any act or thing which will in any way impair the rights of Licensor
or its subsidiary in and to the Marks or the goodwill inherent in such Marks.
Licensee agrees not to challenge the validity of the Marks or to set up any
claim adverse to Licensor or its subsidiary with respect to such challenge.
3.3.3 Licensee will comply with the conditions set forth in
this Agreement and with any reasonable guidelines provided to Licensee by
Licensor, as amended from time to time, or as reasonably directed by Licensor
with respect to the style, color, appearance and manner of use of the Marks.
Prior to producing, distributing or displaying any advertising or other material
containing the Marks, Licensee will obtain prior written approval from Licensor,
which may be held in Licensor's sole discretion. Licensee is solely responsible
for ensuring that any uses of the Marks in any advertising or promotional
materials or otherwise is approved by Licensor. Licensor will use commercially
reasonable efforts to provide either approval or rejection of Licensee's
materials within two (2) weeks of Licensee's written request for approval;
provided, however, the failure of Licensor to make such approval or rejection
within the two week period shall not be deemed, in any way, to be an approval of
such materials.
3.4 MARKETING AND OPERATIONS MANAGER.
3.4.1 Within thirty (30) days of this Agreement, or at such
other time as is agreed by the parties hereto, each party will commence
activities and will use commercially reasonable efforts to hire a management
level employee (each a "Marketing Manager") to manage the design of Drop-boxes,
the placement of Drop-boxes in the Starbucks Stores, to develop, manage and
coordinate the joint marketing efforts of the parties, to develop web site
enhancements and modifications, to manage the operations of the Drop-box
pick-up, to develop an approval process for marketing materials and proposals
for the use of the Marks and to perform such other tasks and duties related to
the relationship between Starbucks and Kozmo as may be assigned to him or her by
his or her respective employer.
3.4.2 Each party will be solely responsible for the costs and
expenses related to the hiring and payment of the Marketing Manager hired by
such party.
3.4.3 Such employee will, at all times, be under the complete
control and supervision of the party employing such employee, and such party
will have the ability to reprimand or dismiss such employee.
3.5 FUTURE OPPORTUNITIES. The parties agree to explore and evaluate, in
each party's sole discretion, the feasibility and desirability of certain future
joint business opportunities which may include but are not limited to the
opportunities described on the attached SCHEDULE D; provided, however, that
neither party shall have any obligation to proceed with or expend any funds in
relation to such future opportunities. In the event the parties agree to proceed
with one or more future business opportunities, the parties will enter into a
written agreement relating to such business endeavor, on terms reasonably
acceptable to each party. Nothing in this provision precludes either party from
exploring such future opportunities alone or with other entities provided that
each party shall comply with its all of its obligations under this Agreement.
4. CONSIDERATION. Kozmo will pay to Starbucks up to an aggregate of One Hundred
Fifty Million Dollars ($150,000,000) ("Royalty") payable over the Term of this
Agreement as follows:
------------------------- -----------------------
Year 1 $15,000,000
------------------------- -----------------------
Year 2 $25,000,000
------------------------- -----------------------
Year 3 $35,000,000
------------------------- -----------------------
Year 4 $35,000,000
------------------------- -----------------------
Year 5 $40,000,000
------------------------- -----------------------
Each annual Royalty will be payable, in advance, in four quarterly equal
installments with the first such payment to be made on March 1, 2000 ("Initial
Payment Date") and subsequent payments to be made on the first day of June,
September, December and March thereafter; provided, however, that the first
four quarterly Royalty payments will be paid by Kozmo in
advance on March 1, 2000 and thereafter, regular payments of the quarterly
Royalty will be made beginning on March 1, 2001.
5. TERM. The Term of this Agreement will commence on the date of this
Agreement and continue in full force and effect until the earlier of (a) the
fifth anniversary of Initial Payment Date (the "Term"); or (b) a termination
pursuant to SECTION 6 of this Agreement.
6. TERMINATION.
6.1 TERMINATION BY STARBUCKS.
6.1.1 In the event Kozmo fails to make any payment when due
under this Agreement, Starbucks may, but is not obligated to terminate this
Agreement upon five (5) days written notice to Kozmo, provided however that such
termination shall not be effective if Kozmo cures such breach within such five
(5) day period.
6.1.2 In the event Kozmo breaches any other material term or
covenant of this Agreement, Starbucks may terminate this Agreement upon thirty
(30) days written notice to Kozmo, provided however that such termination shall
not be effective if Kozmo cures such breach within such thirty (30) day period.
6.1.3 Starbucks may terminate this Agreement upon thirty (30)
days written notice in the event Kozmo promotes, sells, offers for sale or rent
or delivers to its customers any items or materials which violate any applicable
law or regulation, firearms or other weapons ("Prohibited Items"), or actively
promotes pornographic materials; provided however that Starbucks shall not
terminate this Agreement if within such thirty (30) day period, Kozmo ceases to
promote, sell, rent, offer for sale or rent, or deliver such Prohibited Items or
ceases to actively promote pornographic materials.
6.1.4 Starbucks may terminate this Agreement upon thirty (30)
days written notice in the event Kozmo places its Drop-boxes or otherwise allows
Video Products or Kozmo Items to be collected in pawn shops, adult book stores,
adult movie stores, gun shops or adult theme exotic entertainment facilities
("Prohibited Establishments"); provided, however that Starbucks shall not
terminate this Agreement if, within such thirty (30) day period, Kozmo removes
the Drop-boxes from such Prohibited Establishments and ceases to collect Video
Products or Kozmo Items from such Prohibited Establishments.
6.1.5 Starbucks may terminate this Agreement upon thirty (30)
days written notice to Kozmo, if any assignment for the benefit of its creditors
is made by Kozmo, or if a voluntary or involuntary petition in bankruptcy or for
reorganization, or if an arrangement is filed by or against Kozmo (which
petition is not discharged within thirty (30) days), or if Kozmo is adjudicated
bankrupt or insolvent, or if a receiver is appointed for Kozmo or for all or a
substantial part of its assets and/or operations.
6.2 TERMINATION BY KOZMO.
6.2.1 In the event Starbucks breaches any material term or
covenant of this Agreement, Kozmo may terminate this Agreement upon thirty (30)
days written notice to
Starbucks, provided however that such termination shall not be effective if
Starbucks cures such breach within such thirty (30) day period.
6.2.2 Kozmo may terminate this Agreement upon thirty (30) days
written notice to Starbucks, if any assignment for the benefit of its creditors
is be made by Starbucks, or if a voluntary or involuntary petition in bankruptcy
or for reorganization, or if an arrangement is filed by or against Starbucks
(which petition is not discharged within thirty (30) days), or if Starbucks is
adjudicated bankrupt or insolvent, or if a receiver is appointed for Starbucks
or for all or a substantial part of its assets and/or operations.
6.3 SURVIVAL UPON TERMINATION. SECTIONS 6.4, 7, AND 10 THROUGH 14
inclusive will survive the termination or expiration of this Agreement.
6.4 EFFECT OF TERMINATION. Upon the termination or expiration of this
Agreement, (a) each party will promptly return all confidential and proprietary
information and other information, documents, equipment and other materials
belonging to the other party; (b) each party will (i) upon the expiration of
this Agreement immediately cease using all Marks of the other Party, in any form
or (ii) upon the termination of this Agreement, cease using all Marks of the
other Party, in any form as soon as reasonably practicable, but in any event no
later than forty-five (45) days after the termination of this Agreement; (c)
each Party will immediately terminate all web site Links established pursuant to
this Agreement; (d) subject to SECTION 6.4(b)(ii), all licenses granted herein
and the Equipment Lease and Supply Agreement will terminate; (e) as soon as
commercially practical upon the termination of this Agreement, but in any event
no later than forty-five (45) days after termination or immediately upon the
expiration of this Agreement, Kozmo will, at its sole cost and expense, remove
all Drop-boxes from the Starbucks Stores; provided that if Kozmo fails to remove
the Drop-boxes from the Starbucks Stores within such time period, Starbucks may
remove such Drop-boxes and Kozmo will reimburse Starbucks for any costs or
expenses incurred by Starbucks for such removal; and (f) Kozmo will, at its sole
cost and expense, use commercially reasonable efforts to promptly notify its
customers that they can no longer return Video Products to Drop-boxes in
Starbucks Stores. Upon termination, each party shall have no further financial
obligation to the other; provided that nothing herein shall relieve either party
from its obligation to pay any amount which accrued prior to the effective date
of termination. Notwithstanding the foregoing, nothing herein shall restrict the
rights or remedies of either Party to pursue its rights or remedies at law or in
equity.
7. CONFIDENTIAL INFORMATION. Confidential Information (as defined in the
Confidentiality Agreement) disclosed pursuant to this Agreement and the
activities contemplated herein, shall be governed by the Mutual Confidentiality
Agreement ("Confidentiality Agreement") entered into between the parties
effective as of February 10, 2000 and incorporated herein by reference.
8. REPRESENTATIONS AND WARRANTIES.
8.1 STARBUCKS' REPRESENTATIONS AND WARRANTIES.
8.1.1 Starbucks' agreement to perform the obligations and
duties required of it under this Agreement does not violate any agreement or
obligation between Starbucks and a
third party, subject to the provisions of the lease agreements for each
Starbucks Store and Starbucks' right to require the removal of Drop-boxes
pursuant to SECTION 1.1.6;
8.1.2 Starbucks has the right to grant the license contained
in SECTION 3.3.
8.1.3 Starbucks will not make any warranty, guaranty or
representation, whether written or oral, on Kozmo's behalf.
8.2 KOZMO'S REPRESENTATIONS AND WARRANTIES.
8.2.1 Kozmo's agreement to perform the obligations and duties
required of it under this Agreement does not violate any agreement or obligation
between Kozmo and a third party;
8.2.2 Kozmo will not make any warranty, guaranty or
representation, whether written or oral, on Starbucks' behalf; and
8.2.3 Kozmo will operate its delivery service and perform its
obligations hereunder in a safe and professional manner and in accordance with
the service standards established by Kozmo and subject to Starbucks' approval
within sixty (60) days of the date of this Agreement.
9. INSURANCE. Kozmo agrees to maintain during the Term of this Agreement
(a) commercial general liability insurance, including product liability
coverage, in minimum amounts of $2,000,000 per occurrence for damage, injury
and/or death to persons and $1,000,000 per occurrence for damage and/or injury
to property and (b) product recall insurance in a minimum amount of $2,000,000
per occurrence and with a deductible of not more than $10,000. Kozmo further
agrees to require all of its delivery personnel to be licensed to drive, whether
they are employees or independent contractors. All policies of liability
insurance required to be effected by Kozmo shall cover Kozmo's employees,
agents, and independent contractors and shall include Starbucks as an additional
insured, and in addition shall contain cross liability and severability clauses
protecting Starbucks with respect to claims by Kozmo or other persons as if
Starbucks were separately insured. The insurance coverage required herein shall
be provided by an insurance company or companies acceptable to Starbucks in its
reasonable business judgment. Upon execution of this Agreement, and annually
thereafter, Kozmo shall promptly provide Starbucks with certificates of
insurance evidencing such coverage and each certificate shall indicate that the
coverage represented thereby shall not be canceled nor modified until at least
thirty (30) days prior written notice has been given to Starbucks. Upon
Starbucks request, Kozmo will provide Starbucks with copies of its insurance
policies.
10. INDEMNITY.
10.1 MUTUAL INDEMNIFICATION. Each party will indemnify the other party,
the other party's affiliates, directors, officers and employees and will hold
them harmless from any and all liability, loss damages, claims or causes of
action, including reasonable legal fees and expenses that may be incurred by the
other party, arising out of or related to the indemnifying party's breach of any
of the foregoing representations or warranties or otherwise arising out of such
party's performance under this Agreement.
10.2 KOZMO'S INDEMNIFICATION. Kozmo will indemnify Starbucks and
Starbucks' affiliates, directors, officers and employees, and will hold them
harmless, from any and all liability, loss, damages, claims or causes of action,
including reasonable legal fees and expenses that may be incurred by Starbucks
arising out of or related to Kozmo's delivery of its services or other actions
or omissions relating thereto provided that Kozmo shall have no obligation to
indemnify Starbucks for Claims that would not have occurred except for Starbucks
negligence or willful misconduct.
10.3 STARBUCKS INDEMNIFICATION. Starbucks will indemnify Kozmo and
Kozmo's affiliates, directors, officers and employees, and will hold them
harmless, from any and all liability, loss, damages, claims or causes of action
("Claims"), including reasonable legal fees and expenses that may be incurred by
Kozmo arising out of or related to (a) Starbucks operation of its retail stores
or (b) the sale or use of Starbucks products or other actions or omissions
relating thereto; provided that Starbucks shall have no obligation to indemnify
Kozmo for Claims that would not have occurred except for Kozmo's negligence or
willful misconduct.
10.4 INTELLECTUAL PROPERTY INDEMNIFICATION. Each party will indemnify
the other party, and the other party's affiliates, directors, officers and
employees and will hold them harmless from any and all liability, loss damages,
claims or causes of action, including reasonable legal fees and expenses that
may be incurred by the other party (a) arising out of any claims or causes of
action brought against the indemnified party to the extent such claim or cause
of action is based on the infringement by the indemnifying party's patents,
copyrights, or Marks, of a third party's patents, copyrights, marks or other
proprietary rights, and (b) arising out of the unaltered content or marketing
materials provided by the indemnifying party for use in the joint marketing
efforts of the parties.
11. LIMITATION OF LIABILITY.
11.1 LIABILITY. Neither party will be liable to the other party for any
indirect, incidental, consequential, special or exemplary damages (even if that
party has been advised of the possibility of such damages) arising from this
Agreement, such as, but not limited to, loss of revenue or anticipated profits
or lost business.
11.2 NO ADDITIONAL WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER PARTY MAKES, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS,
ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING ANY MATTER
SUBJECT TO THIS AGREEMENT, INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR IMPLIED WARRANTIES ARISING FROM COURSE OF
DEALING OR COURSE OF PERFORMANCE.
12. DISPUTE RESOLUTION. The parties desire to attempt to resolve disputes
arising out of this Agreement without litigation. Accordingly, except for action
seeking a temporary restraining order or injunction related to the purposes of
this Agreement, or suit to compel compliance with this dispute resolution
process, the parties agree to follow the dispute resolution procedures set forth
in this SECTION 12 with respect to any controversy or claim arising out of or
relating to this Agreement or its breach.
12.1 At the written request of either party, Starbucks and Kozmo will
appoint knowledgeable, responsible representatives to meet and negotiate in good
faith to resolve any dispute arising under this Agreement. The parties intend
that these negotiations be conducted by non-lawyer, business representatives.
The location, format, frequency, duration and conclusion of these discussions
will be left to the discretion of the representatives. Discussion and
correspondence among the representatives for the purposes of these negotiations
will be treated as confidential information developed for the purposes of
settlement, exempt from discovery and production, which will not be admissible
in any litigation described below. Documents identified in or provided with such
communications, which are not prepared for purposes of the negotiations, are not
so exempted and may, if otherwise admissible, be admitted in evidence in any
such litigation.
12.2 If the negotiations set forth in SECTION 12.1 do not resolve the
dispute within sixty (60) days of the initial written request, then either party
may pursue to litigate the claim or dispute.
12.3 If such dispute is commenced by Kozmo, then such dispute will be
resolved in a court of appropriate jurisdiction located in King County,
Washington. If such dispute is commenced by Starbucks, then such dispute will be
resolved in a court of appropriate jurisdiction located in New York City, New
York. Each of Starbucks and Kozmo hereby consents and submits to the personal
jurisdiction of the state and federal courts located in King County, Washington
and New York City, New York.
13. LATE FEES AND INTEREST. If any portion of the Royalties remains unpaid for
five (5) or more calendar days after the date on which such amount is due, Kozmo
shall pay to Starbucks interest on such delinquent amount equal to eighteen
percent (18%) per annum from the date such delinquent amount is due until paid;
provided, however, that in no event shall such interest charged be greater than
that permitted by applicable state law. This SECTION 13 shall not relieve Kozmo
of its obligation to pay the Royalty when due and in the manner herein
specified. Acceptance by Starbucks of the interest on such delinquent amount
shall not constitute a waiver of Kozmo's default with respect to said delinquent
payments, nor prevent Starbucks from exercising any other rights or remedies
available to Starbucks under this Agreement or at law or in equity.
14. MISCELLANEOUS.
14.1 ENTIRE AGREEMENT; AMENDMENT. This Agreement and other agreements
expressly referenced herein, including but not limited to the Supply Agreement,
the Equipment Lease for the Drop-boxes and the Confidentiality Agreement,
constitute the entire agreement between the parties concerning the subject
matter hereof and supersede any prior agreements,
representations, statements, negotiations, understandings, proposals or
undertakings, oral or written, with respect to the subject matter expressly set
forth herein. Any amendment or supplement to this Agreement must be in writing
and duly executed by the party against whom enforcement is sought. If any
provision of this Agreement is held to be illegal, invalid or unenforceable,
each party agrees that such provision will be enforced to the maximum extent
permissible so as to effect the intent of the parties, and the validity,
legality and enforceability of the remaining provisions of this Agreement will
not in any way be affected or impaired thereby.
14.2 EXPENSES. Each party will pay all costs and expenses that it incurs
with respect to the negotiation, execution, delivery and performance of this
Agreement and the other agreements described herein.
14.3 CHOICE OF LAW. This Agreement is to be construed in accordance with
and governed by the internal laws of the State of New York, without giving
effect to choice of law.
14.4 NOTICES. Any notice or other communication under this Agreement
will be given in writing and will be deemed to have been delivered and given (a)
on the delivery date if delivered by electronic mail with an electronically
generated return receipt or if delivered personally to the intended recipient;
(b) one (1) business day after deposit with a commercial overnight carrier with
written verification of receipt; or (c) three (3) business days after the
mailing date if sent by U.S. mail, return receipt requested, postage and charges
prepaid, or any other means of repaid mail delivery for which acknowledgement of
receipt is required. Any notices or other communications to be given under this
Agreement will be sent to the following persons:
For Starbucks: Starbucks Corporation
0000 Xxxx Xxx. X.
Xxxxxxx, XX 00000-0000
Attn: President, North American Operations
With a copy to:
Vice President and Assistant General Counsel
With a Copy to: Xxxxx Xxxxxx Xxxxxxxx, LLP
0000 XX 0xx Xxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx
For Kozmo: Xxxxx.xxx, Inc.
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: President and Chief Executive Officer
With a Copy to: Xxxxxxxxx Xxxxxxx
Met Life Building
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn.: Xxxx X. Xxxxx, Esq.
14.5 ASSIGNMENT. Except as otherwise provided in SECTION 4, neither
party may assign or transfer all or any part of its rights or obligations under
this Agreement without the prior written consent of the other party, which
consent may be given or withheld for any reason. For the purposes of this
Agreement, a change of control, merger, sale of substantially all of the assets
or any other similar corporate reorganization of Kozmo ("Change of Control
Event") will constitute an assignment that is subject to consent pursuant to
this SECTION 14.5. Starbucks will not unreasonably withhold consent upon a
Change of Control Event, provided, that it shall not be unreasonable to withhold
consent if a Change of Control Event results in a transfer to a direct
competitor of Starbucks, circumstances in which the Starbucks brand would be
adversely affected, such as transfer to a tobacco company or pornography company
or circumstances where Starbucks would then be in material breach of a material
agreement.
14.6 ATTORNEYS' FEES. If any suit or action arising out of or related to
this Agreement is brought by any party, the prevailing party or parties shall be
entitled to recover its costs and fees including without limitation reasonable
attorneys' fees, the fees and costs of experts and consultants, copying, courier
and telecommunication costs, and deposition costs and all other costs of
discovery incurred by such party or parties in such suit or action, including
without limitation any post-trial or appellate proceeding, or in the collection
or enforcement of any judgment or award entered or made in such suit or action.
14.7 PUBLICITY. Without the prior approval of the other party, none of
the parties hereto will disclose to the public or to any third party any
information concerning the transactions contemplated hereby, other than
disclosures to their financial, legal and other advisors and to governmental
authorities or the public as may, in the opinion of counsel, be required by law.
Notwithstanding the foregoing, Starbucks and Kozmo will be permitted to disclose
such details of the transaction contemplated herein as may be required by law;
provided that Starbucks and Kozmo will each have the right to review and comment
thereon prior to any such disclosure, which review and comment will be given in
a timely manner.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement on the
date first written above.
STARBUCKS CORPORATION XXXXX.XXX, INC.
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxx Xxxx
------------------------------------ --------------------------------
Xxxxxx Xxxxxxx Xxxxxx Xxxx
chairman and chief executive officer Chief Executive Officer
SCHEDULE A
* LAUNCH SCHEDULE
[*]
---------
* Confidential Treatment Requested and the Redacted Material has been separately
filed with the Commission.
SCHEDULE B
KOZMO ITEMS
- VHS video tapes
- DVD cartridges/tapes
- Video game cartridges
- CD's
- Books
- Small electronics
SCHEDULE C
* JOINT MARKETING STRATEGY
[*]
---------
* Confidential Treatment Requested and the Redacted Material has been separately
filed with the Commission.
SCHEDULE D
* FUTURE BUSINESS OPPORTUNITIES
[*]
---------
* Confidential Treatment Requested and the Redacted Material has been separately
filed with the Commission.
