EXHIBIT 10.11
SUPPLEMENTAL MUTUAL SUPPORT AGREEMENT
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This Supplemental Agreement made as of this 11th day of January, 1996, by
and between Florists' Transworld Delivery, Inc., a Michigan corporation and the
survivor by merger with Florists' Transworld Delivery Association, a Michigan
non-profit corporation ("FTDI"), and FTD Association, an Ohio non-profit
corporation organized on a membership basis ("FTDA").
This Supplemental Agreement is made for the purpose of modifying the
original Mutual Support Agreement executed between the parties hereto as of
December 18, 1994. The original Mutual Support Agreement is modified as
follows:
1. Section 2.3(a) is amended to read in its entirety as follows:
"(a) FTDA Directors. FTDI may designate up to twenty
percent (20%), but not fewer than two (2), of the members of
the Board of Directors of FTDA. The balance of the members
of the Board of Directors of FTDA shall be elected by the
Active Members voting on the basis of one vote for each such
membership interest, provided that regional representation
by, and election of, such directors may be established in
accordance with applicable law."
2. Section 2.4 is amended to read in its entirety as follows:
"2.4 Representation on FTDI Board of Directors. FTDA
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may designate up to twenty percent (20%), but no fewer than
two (2), of the members of FTDI's Board of Directors and the
boards of directors of any controlled Affiliates (other than
RGC) of FTDI which may operate any portion of the
Businesses.
3. A new Section 2.4.1 (inserted between Sections 2.4 and 2.5) is added
to the Mutual Support Agreement which provides the following:
"2.4.1 No Overlap of Officers
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(a) No officer of FTDA shall be an officer of FTDI.
(b) No officer of FTDI shall be an officer of FTDA."
4. Section 3.1(d)(1) is amended to read in its entirety a follows:
"(1) Under FTDA Standards. FTDA agrees that it shall
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enforce the FTDA Standards and the other rules and
regulations contained in the FTDA Handbook, to the full
extent necessary to maintain and protect the goodwill
associated with the Member Used Intellectual Property, and
FTDI hereby acknowledges that the extent to which FTD
enforced its standards prior to the Merger was sufficient
for this purpose. Notwithstanding the foregoing, in the
event a Member's violation pertains to the FTDA Standards
(other than with respect to a FTDA Standard which pertains
specifically to a Member's participation in another wire
association), and FTDA fails in the reasonable opinion of
FTDI to discipline said Member as required, FTDI shall have
the right to take whatever action FTDI deems necessary to
enforce the FTDA Standards against said Member, up to and
including the imposition of limitations upon or termination
of a Member's access to FTDI's clearinghouse, communications
system and other business operations and/or suspension or
termination of such Member's Trademark Membership License
Agreement, it being understood that such discipline would
not extend to that Member's status in FTDA or access to or
other benefits or attributes of FTDA membership (other than
with respect to such Member's access to FTDI's business
operations as referred to above or the use of the Member
Used Intellectual Property and the Trademark Membership
License Agreement), provided that in the event a Member's
access to FTDI's clearinghouse, communications system, and
other business operations has been terminated by FTDI and/or
the Trademark Membership License Agreement has been
terminated by FTDI, FTDA, at the request of the Member (if
FTDA agrees and reasonably determines that such termination
was unreasonable), may submit such matter to a neutral
arbitrator selected by FTDI and FTDA who shall apply the
procedures in Section 7.8 of this Agreement. In the event
the arbitrator determines upon such appeal that a Member's
right to use the clearinghouse, communications system, other
business operations, the Member Used Intellectual Property
and the Trademark Membership License Agreement should be
reinstated, and in the event that the Member has met its
financial obligations to FTDI, FTDI shall reinstate the
Member. The decision of the arbitrator shall be deemed to
constitute action by FTDI to maintain the goodwill
associated with the Member Used Intellectual Property."
5. Section 3.1 (d)(2) is amended to read in its entirety as follows:
"(2) Under FTDI Standards. FTDA agrees that FTDI shall
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have the right to discipline Members for violating the FTDI
Standards that shall be adopted by FTDI for the use of its
clearinghouse,
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communications system, and other business operations to the
extent necessary to ensure proper usage thereof and payment
therefor by Members associated with the Member Used
Intellectual Property, and such discipline may include the
imposition of limitations upon or termination of a Member's
access to FTDI's clearinghouse, communications system, and
other business operations and/or suspension or termination
of such Member's Trademark Membership License Agreement, it
being understood that such discipline would not extend to
that Member's status in FTDA or access to or other benefits
or attributes of FTDA membership (other than with respect to
such Member's access to FTDI's business operations as
referred to above or the use of the Member Used Intellectual
Property and the Trademark Membership License Agreement),
provided that a Member disciplined by FTDI for violating the
FTDI Standards, which discipline results in termination of a
Member's access to FTDI's clearinghouse, communications
system, and other business operations and/or termination of
such Member's Trademark Membership License Agreement, shall
have a right of appeal to a neutral arbitrator selected by
FTDI and the Member who shall apply the arbitration
procedures referred to in Section 7.8; provided further,
however, that a Member's right of appeal to an arbitrator
under this Section 3.1 (d)(2) shall exist only if (i) FTDA
shall determine, in its good faith judgment, that such
termination was unreasonable, and (ii) such termination was
not based, in whole or in part, upon (x) the failure of such
Member to meet its financial obligations to FTDI for a
period of 60 consecutive days, (y) the occurrence of three
or more bonafide customer complaints and/or test order
failures within any consecutive 12 month period or (z) the
use of FTDI's clearinghouse, communications system or other
business operations or the Member Used Intellectual Property
in a manner determined by FTDI in its good faith judgment to
be inconsistent with FTDI's Standards or the Trademark
Membership License Agreement after delivery of notice
thereof to such Member not less than thirty (30) days prior
to such termination and the failure by such Member to cure
such use in such thirty (30) day period. In the event the
arbitrator determines upon such appeal that a Member's right
to use the clearinghouse, communications system, other
business operations, the Member Used Intellectual Property
and the Trademark Membership License Agreement should be
reinstated, and in the event that the Member has met its
financial obligations to FTDI, FTDI shall reinstate the
Member. The decision of the arbitrator shall be deemed to
constitute action by FTDI to maintain the goodwill
associated with the Member Used Intellectual Property. FTDA
agrees that it shall not invoke the procedures referred to
in Section 7.8 hereof to commence an arbitration proceeding
against FTDI with respect to any dispute, controversy or
claim arising out of or relating to this Section 3.1(d)(2)
except to the extent that FTDA determines that the FTDI
Standards adopted by
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FTDI for the use of FTDI's clearinghouse, communications
system, and other business operations are not necessary to
ensure proper usage thereof and payment therefor by Members
associated with the Member Used Intellectual Property."
6. Section 3.1 (m) is amended to read in its entirety as
follows:
"(m) FTDA Standards. FTDI shall at all times control
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the nature and quality of the Licensees' products and
services identified by the Member Used Intellectual
Property. For this purpose FTD hereby appoints FTDA as
FTDI's exclusive agent after the Merger for purposes of
establishing and enforcing the FTDA Standards which shall
govern the activities of the Members and their use of the
Member Used Intellectual Property under their respective
Trademark Membership License Agreements with FTDI. FTDA
agrees to establish and enforce quality control standards
for Licensees consistent with the quality control standards
enforced by FTD prior to the Merger and FTD finds on behalf
of FTDI that such standards and the quality to be enforced
by FTDA are sufficient to adequately protect the goodwill
associated with the Member Used Intellectual Property and
the Members' products and services. FTDA agrees that the
FTDA Standards shall at all times be sufficient to protect
the goodwill associated with the Member Used Intellectual
Property. FTDA will notify FTDI of any proposed modification
(whether written or oral, through amendment, addition,
deletion or otherwise) of the FTDA Standards or any of the
FTDA Standards not less than sixty (60) days in advance of
the earlier of the proposed notice, announcement or
implementation of such modification, provided that in the
event such modification involves a proposed amendment to
FTDA's Code of Regulations pursuant to Section 2(c) or
Section 2(d) of Regulation XI thereof, such notice shall be
given within three (3) days after such amendment has been
proposed. In the event that FTDI determines in its good
faith judgment that any such proposed modification of the
FTDA Standards could violate FTDA's obligations as set forth
in this Section 3.1(m), FTDI shall be entitled to submit
such matter to arbitration as contemplated by Section 7.8
hereof, and implementation of any such modification shall be
delayed pending the resolution of such controversy pursuant
to such Section 7.8."
7. Section 3.1 (o)(i) is amended to read in its entirety as
follows:
"(o) Non-Competition. (i)(A) During the term of the
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Trademark License Agreement, FTDA agrees it will not carry
on, directly or indirectly, whether alone or in conjunction
with any Person, as a holder of an equity interest exceeding
five percent (5%) of the combined equity interest of any
corporation or partnership, or
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as a principal, agent, or otherwise, or have a material
interest in, advise, lend money (other than in connection
with the purchase of public debt securities or commercial
paper) to, guarantee debts or obligations of or otherwise
provide material support or material assistant to any Person
that, directly or indirectly, carries on, any business
activity which is in competition with the Businesses in the
United States of America, in Canada and Mexico, in the
countries of the European Union or any other place in the
world where the Businesses are currently conducted, in the
event that such business activity utilizes or proposes to
utilize in any way any portion of the Licensed Intellectual
Property.
(B) For a period of fifteen (15) years from the date of
this Agreement, FTDA agrees it will not carry on, directly
or indirectly, whether alone or in conjunction with any
Person, as a holder of any equity interest exceeding five
percent (5%) of the combined equity interest of any
corporation or partnership, or as a principal, an agent, or
otherwise, or have a material interest in, advise, lend
money (other than in connection with the purchase of public
debt securities or commercial paper) to, guarantee debts or
obligations of or otherwise provide material support or
material assistance to any Person that, directly or
indirectly, carries on, any business activity which is in
competition with the Businesses in the United States of
America, in Canada and Mexico, in the countries of the
European Union or any other place in the world where the
Businesses are currently conducted.
(C) In the event that FTDA engages in any of the
activities contemplated by clause (B) of this Section 3.1
(o)(i) subsequent to the 15-year period, (I) (x) FTDI shall
be entitled in its sole discretion to renegotiate with FTDA
the bases upon which FTDI continues to provide
administrative and similar services to FTDA pursuant to the
terms of this Agreement and (y) the obligations of FTDI
under Section 3.1 (i) of this Agreement will terminate
immediately and (II) in the event such activities are
carried on within the floral industry, the obligations of
FTDI under Section 3.1(c)(ii) and (iii) will terminate
immediately."
8. Section 3.1 (g) is amended to read in its entirety as
follows:
"(g) Direct Orders. After the Merger, FTDI and its
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Affiliates will fill all Direct Orders only through FTDI
Licensees and will distribute all Direct Orders through
procedures reasonably established by FTDI from time to time,
such procedures in existence on the date hereof being set
forth in Schedule 3.1 (g) hereto. Any changes to the
procedures set forth in such schedule shall be made on a
reasonable basis and shall provide for an allocation to FTDI
Licensees of Direct
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Orders generated by FTDI and its Affiliates on a reasonable and
equitable basis so as to provide an opportunity for all FTDI Licensees
which are qualified under FTDI's Direct Order eligibility
qualifications to participate in filling such Direct Orders. FTDI
shall notify FTDA of changes in the schedule. In the event FTDA
believes that such changes are not reasonable and equitable, it may
submit such dispute to arbitration in accordance with the procedures
provided in Section 7.8. In the event the arbitrator determines that
the changes are not reasonable and equitable, the changes shall be
discontinued by FTDI. In the event that FTDI reasonably should
conclude that the procedures in effect are in violation of any third-
party patent rights, then: (i) FTDI shall have no obligation under
this or any other agreement to employ or implement such procedures,
and (ii) FTDI shall establish and implement replacement procedures in
accordance with this Section and with the provisions of Section (p)
below to the extent applicable."
IN WITNESS WHEREOF, FTDI and FTDA have caused this Agreement to be duly
executed as of the day and year first above written.
FLORISTS' TRANSWORLD DELIVERY, INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
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Its: President/CEO
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FTD ASSOCIATION
By: /s/
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Its: President Elect
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