1
DEVELOPMENT AGREEMENT ADDENDUM
REGARDING SPECIALTY SANDWICH PROGRAM
THIS DEVELOPMENT AGREEMENT ADDENDUM (THE "ADDENDUM") is entered into
effective as of the 3rd day of January, 1998 (the "Sandwich Program Effective
Date"), by and between Starbucks Corporation ("Starbucks") and Host
International, Inc. ("Licensee").
RECITALS:
WHEREAS, Starbucks and Licensee are parties to that certain development
agreement dated March 1994, as amended (the "Development Agreement"), which
includes as an exhibit a form of Starbucks System Licensing Agreement (the
"License Agreement"); and
WHEREAS, the parties now desire to amend the Development Agreement to
reflect the parties' agreement and understanding concerning a "Starbucks
Specialty Sandwich Program" as discussed herein;
NOW THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties agree as follows:
1. APPROVAL OF THE SPECIALTY SANDWICH PROGRAM. Licensee has developed a
specialty sandwich program to be offered at certain designated Licensed
Locations (the "Specialty Sandwich Program"). Starbucks hereby approves
such Specialty Sandwich Program subject to the terms of this Addendum.
Licensee shall select the Licensed Locations where Licensee desires to
implement the Starbucks Specialty Sandwich Program, but Starbucks
retains the right to approve the Licensed Locations which will offer the
Specialty Sandwich Program, and to approve the sandwich offerings of
such Specialty Sandwich Program from time to time, such approval not to
be unreasonably withheld, conditioned or delayed.
2. ROYALTY TO STARBUCKS. Starbucks and Licensee hereby agree that the
following shall apply to any Licensed Location where Starbucks has
authorized and Host has implemented the Specialty Sandwich Program:
a. PRIOR TO THE SANDWICH PROGRAM EFFECTIVE DATE (i.e., prior to
1/3/98, which is the first day of Licensee's 1998 fiscal year),
Licensee shall pay Starbucks the Royalty defined in Section 2.2
of the License Agreement.
b. AS OF THE SANDWICH PROGRAM EFFECTIVE DATE, Section 2.2 of the
License Agreement shall be deemed to have been modified to
provide for the following special categories of Royalty for
Licensed Locations which offer the Specialty Sandwich Program,
as follows:
2
i. Licensee shall pay Starbucks a Royalty of two and
one-half percent (2.5%) of all Gross Revenues derived
from the sale of the aforementioned specialty
sandwiches.
ii. Licensee shall also pay a Royalty of two and
one-half percent (2.5%) of all Gross Revenues derived
from the sale of bottled beverages from those Licensed
Locations where Licensee is offering the Specialty
Sandwich Program.
iii. The sales of "pastries" (which is deemed to refer
to all bakery items, including but not limited to
danish, bagels, scones, etc ...) shall be excluded from
the definition of Gross Revenues under Section 2.2 of
the License Agreement and therefore be exempt from
payment of the Royalty. Notwithstanding the foregoing,
however, the parties agree that Starbucks' proprietary
biscotti shall be subject to a Royalty of five percent
(5%) of such Gross Revenues derived from the
sale of such proprietary biscotti.
x. XXXXXXXXXX ATLANTA INTERNATIONAL AIRPORT AND CHICAGO X'XXXX
INTERNATIONAL AIRPORT. The parties hereby expressly agree that
the sales of specialty sandwiches and bottled beverages from
Licensee's Xxxxxxxxxx Atlanta International Airport Licensed
Location, as well as Licensee's Chicago X'Xxxx International
Airport Licensed Location, shall be subject to a Royalty,
commencing on the Specialty Sandwich Program Effective Date, of
two and one-half percent (2.5%) of Gross Revenues from such
Specialty Sandwiches and bottled beverages, as discussed above.
Prior to the Specialty Sandwich Program Effective Date, however,
Licensee shall pay the Royalty to Starbucks in the fashion paid
during the previous year (i.e. five percent Royalty on such
Xxxxx Xxxxxxxx xx Xxxxxxxxxx Xxxxxxx International Airport and
no Royalty from such sales at Chicago X'Xxxx International
Airport).
3. ENTIRE AGREEMENT. Except as modified hereby, the Development
Agreement remains in full force and effect.
HOST INTERNATIONAL, INC.
By: /s/ [Signature Illegible]
--------------------------------------
Its: Vice President
-------------------------------------
STARBUCKS CORPORATION
By: /s/ X.X. XXXXX
--------------------------------------
Its: Sr. V.P. Operations
-------------------------------------
