Exhibit 10.5
CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION, PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.
INTERACTIVE MARKETING AGREEMENT
This Agreement, dated as of May 1, 1997 (the "Effective
Date"), is made and entered into by and between America Online, Inc. ("AOL"), a
Delaware corporation, with its principal offices at 00000 XXX Xxx, Xxxxxx,
Xxxxxxxx 00000 and 800 Flowers, Inc. ("FLOWERS"), a New York corporation, with
its principal offices at 0000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (each a
"Party" and collectively the "Parties").
INTRODUCTION
AOL and FLOWERS each desires that FLOWERS provide the Online Area on
the AOL Network, subject to the terms and conditions set forth in this
Agreement. Defined terms used but not defined in the body of the Agreement shall
be as defined on Exhibit A attached hereto.
TERMS
1. ONLINE AREA - CONTENT AND PROGRAMMING. The Parties shall have the following
duties and rights with respect to the content and programming of the Online
Area:
1.1 ONLINE AREA. FLOWERS shall work diligently to maintain the
Online Area, consisting of the categories and types of Content
and Products contained within the Online Area as of the
Effective Date, and such other Content and Products as may be
added pursuant to Section 1.2. FLOWERS shall develop any
redesign of the Online Area in consultation with AOL and in
accordance with (i) a mutually agreed upon Design Package and
(ii) any standard design and content publishing guidelines
provided to FLOWERS by AOL. FLOWERS shall not authorize or
permit any third party to distribute the Licensed Content or
any other Content of FLOWERS through the AOL Network absent
AOL's prior written approval; provided that FLOWERS shall not
be prohibited from (a) placing advertisements for Products
with third party content providers on the AOL Service (so long
as such advertisements link only to the Online Area) or (b)
licensing portions of the Licensed Content relating to such
Products to such providers in order to create "mini-store"
screens on those providers' areas (e.g., on the Romance
Channel) (so long as such screens link only to the Online
Area).
1.2 ADDITIONAL CONTENT; ADVERTISING; OTHER TRANSACTIONS. In the
event that FLOWERS wishes to offer any categories or types of
Content or Products (including, without limitation, any
third-party advertising or promotion on the Online Area) in
addition to those categories or types specifically contained
within the Online Area as of the Effective Date (the
"Additional Content"), FLOWERS shall notify AOL in writing.
FLOWERS's right to offer any such Additional Content shall be
subject to AOL's prior written approval, which shall not be
unreasonably withheld. Any third party advertising or
promotion on the Online Area (including, without limitation,
classifieds listings) shall be subject to AOL's then standard
advertising terms and conditions, including, without
limitation, applicable revenue sharing terms (as such terms
are mutually agreed upon).
1.3 INTERNET AREAS. FLOWERS shall not be permitted to establish
any links between the Online Area and any other area on or
outside of the AOL Network, including, without limitation,
sites on the World Wide Web portion of the Internet, without
the prior written approval of AOL. In the event that AOL
approves any such links or pointers, such approval shall, in
each case, be subject to FLOWERS's compliance with the
then-current terms and conditions for such links or pointers,
as such terms and conditions may be amended by AOL from time
to time; provided that there shall be no fees assessed for
such links or pointers, except as provided in Section 1.2 for
links or pointers relating to third-party advertising or
promotion.
1.4 CONTESTS. FLOWERS shall take all commercially reasonable steps
necessary to ensure that any contest, sweepstakes or similar
promotion conducted or promoted through the Online Area (a
"Contest") complies with all applicable federal, state and
local laws and regulations. FLOWERS shall provide AOL with at
least thirty (30) days prior written notice of any Contest.
1.5 NAVIGATIONAL ICONS. AOL shall be entitled to establish
navigational icons, links and pointers connecting the Online
Area (or portions thereof) with other content areas on or
outside of the AOL Network; provided that the Parties shall
meet following execution hereof and thereafter, as
appropriate, to develop guidelines for such navigational icons
(e.g., pre-approved logos, copy, content categories for
placement of icons, etc.).
1.6 [****] COMMITMENT; SPECIAL OFFERS. FLOWERS shall ensure
that the [****] for Products in the Online Area [****] for
substantially similar Products offered by or on behalf of
FLOWERS through any online or Internet-based interactive
sites. In addition, FLOWERS shall, on a reasonably periodic
basis, promote a reasonable number of special offers
through the Online Area (e.g., free gift certificates to
AOL Members upon the purchase of Product(s) and tie-ins to
AOL's reward or frequent purchaser points program (upon
development of such program by AOL, and on terms of
participation in such program by FLOWERS that are mutually
agreed by the parties), etc.) (the "Special Offers").
FLOWERS shall (a) provide AOL with reasonable prior notice
of Special Offers so that AOL can market the availability
of such Special Offers in the manner AOL deems appropriate
in its editorial discretion and (b) ensure that the Special
Offers are the best offers in all material respects when
compared with any other such offers made available by or on
behalf of FLOWERS through any interactive, online or
Internet media during the same time the Special Offers are
made available; provided that clause (b) shall not apply to
a Special Offer to the extent that FLOWERS cannot make such
offer available in the event such offer requires certain
support technology from AOL which AOL cannot, or elects not
to, provide. In addition, FLOWERS shall provide reasonably
increased support for online contest and other special
promotions, including, without limitation, greater
contribution of flowers and gifts for use as prizes and
give-aways.
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**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
1.7 SERVICE CHARGES. In connection with any Product ordered
through the AOL Network, FLOWERS may not, without the prior
written consent of AOL, require the purchaser to pay (a) any
shipping, handling or similar charges or (b) any processing,
service or similar charges (the "Service Charges") in excess
of (i) the Service Charge assessed for similar orders placed
through FLOWERS telephone order system or (ii) [****] of the
Service Charge assessed by FLOWERS inany online or Internet-
based sales channel; provided that, except as mutually agreed
by the Parties, the AOL Service Charge shall never be lower
than [****].
1.8 DISCLAIMERS. FLOWERS agrees that a product disclaimer in
substantially the following form will be displayed in a legal
notice screen to be placed in a mutually agreed upon spot in
the listbox in the Customer Service portion of the Online
Area:
"AOL AND ITS AFFILIATES WILL NOT BE A PARTY TO ANY
TRANSACTION BETWEEN ANY PURCHASER AND FLOWERS, AND,
EXCEPT AS EXPRESSLY PROVIDED IN AOL'S SHOPPING
CHANNEL SATISFACTION GUARANTEE (AVAILABLE AT KEYWORD
"GUARANTEE"), ALL ASPECTS OF SUCH TRANSACTIONS
INCLUDING BUT NOT LIMITED TO PURCHASE TERMS, PAYMENT
TERMS, WARRANTIES, GUARANTEES, MAINTENANCE, AND
DELIVERY ARE SOLELY BETWEEN PURCHASER AND FLOWERS.
AOL AND ITS AFFILIATES PROVIDE NO GUARANTEES OR
WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE
QUALITY, MAKE, OR PERFORMANCE OF THE PRODUCTS OR
SERVICES AVAILABLE THROUGH THIS AREA. ALL SUCH
GUARANTEES OR WARRANTIES, IF ANY, ARE DIRECTLY
BETWEEN FLOWERS OR CATALOGER AND THE PURCHASER."
1.9 LICENSE. FLOWERS hereby grants AOL a non-exclusive worldwide
license to market, license, distribute, display, perform,
transmit and promote the Online Area contained therein through
the AOL Network solely for the purposes described herein. AOL
Members shall have the right to access and use the Online Area
free of charge during the term of the Agreement. Subject to
such license, FLOWERS retains all right, title to and interest
in the Licensed Content.
1.10 AOL LOOK AND FEEL. FLOWERS acknowledges and agrees that AOL
shall own all right, title and interest in and to the AOL Look
and Feel, subject to FLOWERS's ownership rights in the
Licensed Content, including, without limitation, any "look and
feel" rights of FLOWERS specifically associated with the
Licensed Content and the Online Area.
3
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
2. ONLINE AREA - MANAGEMENT AND MAINTENANCE.
2.1 MANAGEMENT OF ONLINE AREA. FLOWERS shall manage, review,
delete, edit, create, update and otherwise manage all content
and services available on or through the Online Area,
including but not limited to the Licensed Content and message
boards, in a timely and professional manner and in accordance
with the terms of this Agreement and AOL's applicable Terms of
Service. As set forth in further detail in Section 2.1 of
Exhibit C, FLOWERS shall be responsible for all costs and
expenses related to production work for the Online Area.
FLOWERS shall use reasonable efforts to keep the Online Area
current, accurate and well-organized. FLOWERS warrants that
the Online Area (i) will not infringe on or violate any
copyright, U.S. patent or any other third-party right; and
(ii) will not contain any Content which violates any
applicable law or regulation. FLOWERS will use commercially
reasonable best efforts to ensure that the Online Area
conforms to AOL's applicable Terms of Service. AOL shall have
no obligations with respect to the Content available on or
through the Online Area, including, but not limited to, any
duty to review or monitor any such Content.
2.2 ACCESS EQUIPMENT. FLOWERS shall provide all computer,
telephone and other equipment or resources necessary for
FLOWERS to access the AOL Network, except for the AOL
proprietary client software necessary to access the AOL
Network and the publishing tools to be provided by AOL
pursuant to Exhibit C.
2.3 DUTY TO INFORM. FLOWERS shall use all reasonable efforts to
promptly inform AOL of any written information (or any verbal
information received by a senior executive of FLOWERS) related
to the Online Area which could reasonably lead to a claim,
demand, or liability of or against AOL and/or its Affiliates
by any third party.
2.4 OVERHEAD ACCOUNTS. FLOWERS shall be granted a reasonable
number of Overhead Accounts, as mutually determined by AOL and
FLOWERS, for the exclusive purpose of enabling it and its
agents to perform FLOWERS's duties under this Agreement.
FLOWERS shall be responsible for the actions taken under or
through its Overhead Accounts, which actions are subject to
AOL's applicable Terms of Service and for any surcharges,
including, without limitation, all premium charges,
transaction charges, and any applicable communication
surcharges incurred by any Overhead Account issued to FLOWERS,
but FLOWERS shall not be liable for charges incurred by any
Overhead Account relating to AOL's standard monthly usage fees
and standard hourly charges, which charges AOL shall bear.
Upon the termination of this Agreement, all Overhead Accounts,
related screen names and any associated usage credits or
similar rights, shall automatically terminate. AOL shall have
no liability for loss of any data or content related to the
proper termination of any Overhead Account.
2.5 CUSTOMER SERVICE. It is the sole responsibility of FLOWERS to
provide customer service to persons or entities purchasing
Products through the AOL Network
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("Customers") regarding any Products or related transactions.
In addition to complying with the Customer Service
Requirements set forth in Exhibit E, and any reasonable
changes thereto that AOL may make from time to time, FLOWERS
shall ensure same-day delivery for orders received before
12:30 p.m. in the time zone where the order is to be
delivered. If same-day service will not be feasible for a
particular order, FLOWERS agrees to use its best efforts
(e-mail, phone, etc.) to notify the customer that the order
will be delivered the next day. Next-day delivery will always
be attempted, even during busy holiday seasons. Furthermore,
the "cut-off" time of 12:30 p.m. may be expanded or contracted
by FLOWERS during holiday periods according to significant
changes in market demand. FLOWERS will use all reasonable
efforts to notify AOL before the "cutoff" time is changed.
FLOWERS agrees that the cutoff time for accepting orders from
AOL customers shall be no sooner than the cutoff time for any
other FLOWERS online or Internet-based partner, subject to
earlier cutoff times for AOL customers during specific
performance failures of the AOL Network (e.g., downtime of
e-mail, Standard Clerk Tools). FLOWERS shall bear all
responsibility for compliance with federal, state and local
laws in the event the Products are out of stock or are no
longer available at the time an order is received. Title to
Product(s) shall remain in FLOWERS and shall be transferred
directly from FLOWERS to the Customers. Payment for FLOWERS
Product(s) shall be collected by FLOWERS directly from
Customer. FLOWERS shall bear the entire economic risk of
shipment and payment for FLOWERS Product(s).
2.6 ERROR RATES. Recognizing the subjective nature of a
custom-made floral order, to the extent that an error does
occur or is alleged to occur by an AOL Member, FLOWERS will
rectify the situation as set forth in Exhibit E. FLOWERS will
use its best efforts to achieve an error rate on orders taken
through the AOL Network that does not exceed [****]
(the "Performance Standard"). For purposes of this paragraph,
an "error" is defined as an order that, due primarily to
the failure of FLOWERS or its florists, (i) is not
delivered pursuant to FLOWERS customary delivery schedules,
(ii) is delivered to an incorrect location, (iii) or does
not arrive in reasonably good condition. In the event that
FLOWERS fails to meet the Performance Standard, as
determined on a monthly basis, for a period of two
consecutive months, then AOL shall send FLOWERS a written
notice specifying the details of any such failures and
affording FLOWERS thirty (30) days to comply with the
Performance Standard. If FLOWERS does not cure said default
within thirty (30) days then AOL shall have the right to
terminate this Agreement. Flowers agrees to use best
efforts in correcting any problems reported by AOL and will
act accordingly to correct any problems. FLOWERS will
provide a monthly report to AOL no later than thirty (30)
days after the end of each calendar month that shows all
known errors and measures the rate of properly-completed
orders versus orders processed with an "error" (as defined
above). Without limiting the foregoing, in the event
(a) the error rate achieved by FLOWERS is above [****] but
below [****] and (b) AOL receives a significant number of
complaints from AOL Members
5
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
regarding errors, the parties shall discuss in good faith the
means by which the error rate may be improved.
2.7 TECHNICAL CONFORMANCE. FLOWERS shall take all commercially
reasonable steps necessary to conform its promotion and sale
of Products through the Online Area to the then-existing
commerce technologies made available to FLOWERS by AOL.
Notwithstanding the foregoing, FLOWERS and AOL shall take all
commercially reasonable efforts to develop and implement a new
order transfer mechanism (to be mutually agreed upon by the
Parties as soon as commercially practicable following
execution hereof) to replace the FTP process currently used by
FLOWERS for receipt of orders from AOL.
2.8 ADDITIONAL TRANSACTION MECHANISMS. FLOWERS shall only be
permitted to promote and/or offer Products to be sold through
the Online Area using AOL's then-available "clerk" transaction
tools ("Standard Clerk Tools"). To the extent the Parties
agree that FLOWERS shall be permitted to sell Products from
FLOWERS's site on the World Wide Web through a hybrid browser
or other similar form, the Parties shall mutually agree upon a
transaction mechanism (an "Alternative Transaction Mechanism")
for the purchase of Products, which Alternative Transaction
Mechanism shall include FLOWERS's plan for reporting
information to AOL regarding sales of Products. In the event
an Alternative Transaction Mechanism is agreed upon, the
parties shall mutually agree on (a) any new revenue-sharing
provisions relating to the sales occurring through such means
and (b) any changes in the revenue targets set forth in
Sections 4 and 10. All sales under the Alternative Transaction
Mechanism shall count towards such revenue targets.
3. MARKETING AND PROMOTION.
3.1 BY FLOWERS. FLOWERS shall use commercially reasonable efforts
to market the Online Area, and shall, at a minimum, perform
the following obligations:
3.1.1 FLOWERS shall cooperate with and reasonably assist
AOL in supplying material for AOL's marketing and
promotional activities which relate to the Online
Area.
3.1.2 FLOWERS shall perform any New Member acquisition
obligations set forth in Exhibit D and shall not
perform any member or subscriber acquisition
obligations on behalf of any interactive, online or
Internet service provider (including, without
limitation, NetCom, EarthLink, CompuServe, Microsoft
Network; and AT&T WorldNet).
3.1.3 FLOWERS shall prominently and regularly promote the
Online Area (making specific mention of its
availability through the America Online(R)service) in
(i) approximately [****] of FLOWERS-controlled
television, radio or print advertisements that are
produced after
6
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
the Effective Date and that specifically mention any
of FLOWERS's online or Internet-based shopping
functionality and (ii) approximately [****] of any
publications, programs, features or other forms of
media under FLOWERS's control (excluding the
advertisements subject to clause (i)). In this
regard, in any instances when FLOWERS makes
promotional reference in any print advertisements to
its World Wide Web site(s) (each a "FLOWERS Web
Site") (each reference, a "Web Reference"), FLOWERS
shall include a specific reference to the Online
Area's availability through the America
Online(R)service of at least equal prominence to the
Web Reference; any listings of the applicable
"URL(s)" for such web site(s) (each a "Web
Reference") shall include a listing of the AOL
"keyword" for the Online Area of at least equal
prominence to the Web Reference. AOL acknowledges
that an occasional, unintentional failure to comply
with the foregoing promotional commitments shall not
be deemed a breach of the Agreement.
3.1.4 FLOWERS shall ensure that (a) AOL is given the
exclusive first opportunity to participate in
[****] of any online or Internet-related marketing
and promotional activities, initiated and/or
controlled by (directly or through an advertising
agency) FLOWERS, which FLOWERS desires to conduct
with any entity which could reasonably be
construed to be or become in competition with AOL
[****] subsequent to execution hereof (so long as
AOL informs FLOWERS of its desire to participate
in any such activity within five (5) business days
following receipt of written notice from FLOWERS
detailing the opportunity) and (b) AOL receives
substantially more promotion and marketing (in
value, duration, prominence, etc.) from FLOWERS
than either [****] receives from FLOWERS. In
addition, FLOWERS shall not affirmatively promote,
market or distribute the products or services of
the following [****]; provided that this provision
shall not prevent FLOWERS from promoting,
marketing, advertising or distributing its own
Products through such entities, subject to Section
1.6. FLOWERS shall not enter into any significant
marketing, distribution, advertising or
promotional arrangement related to either [****]
following the execution hereof (excluding any
business-to-business arrangement).
3.1.5 FLOWERS shall include each of the following
promotions for the Online Area and AOL within each
FLOWERS Web Site during the term of the
7
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
Agreement: (i) a prominent "Try AOL" feature in the
area where FLOWERS mentions its business partners
(which is currently known as "About 1-800-FLOWERS")
where users can obtain promotional information about
AOL products and services and, at AOL's option,
download or order AOL's then-current version of
client software for the America Online(R)brand
service and (ii) a link from the FLOWERS Web Site to
AOL's primary site on the World Wide Web. In
addition, in the event FLOWERS commences the sale of
advertising on any FLOWERS Web Site, FLOWERS shall
reserve no less than fifteen percent (15%) of FLOWERS
unsold advertising inventory on such FLOWERS Web Site
for use by AOL at no cost to AOL.
3.2 BY AOL.
3.2.1 AOL shall provide prominent online promotion for the
Online Area across the AOL Service using promotional
mechanisms chosen from time to time by AOL in its
reasonable discretion from among the following, all
as set forth in Exhibit B (the "Promotional Plan"):
(a) pop-up advertisements within the Personal
Finance, Sports and Shopping channels; (b) the AOL
"Welcome Screen"; and (c) appropriate holiday/theme
areas (including Thanksgiving, Christmas/Hanukkah,
Valentine's Day, Easter, Mother's Day, New Year's and
Secretaries' Week). In addition, also as set forth in
Exhibit B, AOL shall provide FLOWERS with a
consistent and prominent promotional presence in the
following areas on the AOL Service: Shopping
newsletters, Gift Reminder, Lifestyles, Interests,
and Romance. Promptly following execution hereof, AOL
in consultation with FLOWERS shall develop a mutually
agreed detailed promotional plan regarding the above
commitments based on Exhibit B. The parties agree
that Exhibit B is not intended to exclude any
additional promotional mechanisms or plans. On a
periodic basis, no less than quarterly, the parties
shall review and modify, as applicable, the
promotional plan in a continuing effort to have a
current and effective promotional plan. If AOL is
unable to deliver any particular promotion pursuant
to Exhibit B, the Parties will cooperate in good
faith to develop a replacement program that will
include providing FLOWERS with a substitute promotion
of similar quality, nature and value. In addition,
AOL shall use commercially reasonable best efforts to
include FLOWERS when AOL makes promotional references
to online shopping which include references to online
partners in AOL's promotions, marketing or
advertising; provided that AOL shall not be required
to make such inclusion when making promotional
references to (a) a single online partner or (b)
online partners who make up a specific product
category (other than floral products). The Parties
will also explore the creation of [****] on the AOL
Service.
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**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
3.2.2 AOL shall provide FLOWERS with a prominent
promotional position (an "Anchor Tenancy") on the
relevant main screen that is pointed to from the
floral products department/category listed in the
"Shopping Channel" on the AOL Service. Anchor Tenancy
shall entitle FLOWERS to placement that is no less
prominent and favorable in size and position on the
screen than any other third party with an Anchor
Tenancy on such main screen.
3.2.3 AOL shall ensure that, in all areas on the AOL
Service which are owned, maintained or controlled
by AOL (the "AOL-Controlled Areas"), FLOWERS shall
be the exclusive provider of fresh cut flowers and
plants (the "Exclusive Products"). In accordance
with the foregoing, AOL shall not (a) promote,
market or advertise within the AOL-Controlled Areas
any entity that sells the Exclusive Products, or
(b) otherwise allow such entities to sell, or offer
to sell, the Exclusive Products within the
AOL-Controlled Areas. For purposes of this
Section 3.2.3, the terms "promote," "market" and
"advertise" shall include not only their customary
meanings, but also any and all promotional linking
and pointing. [****]
3.2.4 AOL shall be entitled, in its reasonable discretion,
to list, promote and offer for the benefit of FLOWERS
individual Products or specific subsets of Products
offered by FLOWERS through features within the AOL
Network managed and maintained by AOL, its Affiliates
or their agents, including without limitation,
special gift collections and product search services.
In the event such listings, promotions or offers
involve text or multimedia descriptions which differ
from the descriptions appearing within the Online
Area, such modified descriptions shall be subject to
the prior approval of FLOWERS, which shall not be
unreasonably withheld or delayed.
9
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
3.3 PROMOTIONAL MATERIALS/PRESS RELEASES. Each Party will submit
to the other Party, for its prior written approval, which
shall not be unreasonably withheld or delayed, any marketing,
advertising, press releases and all other promotional
materials related to the Online Area and/or referencing the
other Party and/or its trade names, trademarks, and service
marks (the "Materials"); provided, however, that either
Party's use of screen shots of the Online Area for promotional
purposes shall not require the approval of the other Party so
long as the AOL Network is clearly identified as the source of
such screen shots. Each Party shall solicit and reasonably
consider the views of the other Party in designing and
implementing such Materials. A Party whose approval is sought
shall respond within five (5) business days of its receipt of
the Materials. If such Party fails to respond within such
five-day period, then its consent shall be deemed given. Once
approved, the Materials may be used during the term of this
Agreement by a Party and its affiliates for the purpose of
promoting the Online Area and the content contained therein
and reused for such purpose until such approval is withdrawn
with reasonable prior notice. No press release, public
announcement, confirmation or other public statement regarding
this Agreement or the contents hereof shall be made without
the prior written consent of the other Party, which consent
shall not be unreasonably withheld. It is agreed and
understood that the Parties shall work together to prepare a
press release to be issued as soon as reasonably possible
following execution hereof and in no event more than ten (10)
business days thereafter. Notwithstanding the foregoing,
either Party may issue a press release or other disclosure
without the consent of the other Party, if such disclosure is
required pursuant to Section 6 (and in accordance therewith).
3.4 TRADEMARK LICENSE. In designing and implementing the Materials
and subject to the other provisions contained herein, FLOWERS
shall be entitled to use the following trade names,
trademarks, and service marks of AOL: the "America Online(R)"
(brand service, "AOL(TM)" service/software and AOL's triangle
logo; and AOL and its Affiliates shall be entitled to use the
following trade names, trademarks, and service marks of
FLOWERS solely in connection with this Agreement:
1-800-Flowers, Gift Concierge Service, World's Favorite
Florist, Freshness Care System, Fresh Thoughts (collectively,
together with the AOL marks listed above, the "Marks");
provided that each Party: (i) does not create a unitary
composite xxxx involving a Xxxx of the other Party without the
prior written approval of such other Party; (ii) displays
symbols and notices clearly and sufficiently indicating the
trademark status and ownership of the other Party's Marks in
accordance with applicable trademark law and practice; and
(iii) uses the other Party's Marks in accordance with written
guidelines provided to such Party by the other Party.
3.4.1 OWNERSHIP OF TRADEMARKS. Each Party acknowledges the
ownership of the other Party in the Marks of the
other Party and agrees that all use of the other
Party's Marks (including all goodwill associated with
the Marks) shall inure to the benefit, and be on
behalf, of the other Party. Each Party acknowledges
that its utilization of the other Party's
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Marks will not create in it, nor will it represent it
has, any right, title, or interest in or to such
Marks other than the licenses expressly granted
herein. Each Party agrees not to do anything
contesting or impairing the trademark rights of the
other Party, including, without limitation, seeking
to register the other Party's Marks as part of a
composite Xxxx.
3.4.2 QUALITY STANDARDS. Each Party agrees that the nature
and quality of its products and services supplied in
connection with the other Party's Marks shall conform
to quality standards set by the other Party. Each
Party agrees to supply the other Party, upon request,
with a reasonable number of samples of any Materials
publicly disseminated by such Party which utilize the
other Party's Marks. Each Party shall comply with all
applicable laws, regulations, and customs and obtain
any required government approvals pertaining to use
of the other Party's marks.
3.4.3 INFRINGEMENT PROCEEDINGS. Each Party agrees to
promptly notify the other Party of any unauthorized
use of the other Party's Marks of which it has actual
knowledge. Each Party shall have the sole right and
discretion to bring proceedings alleging infringement
of its Marks or unfair competition related thereto;
provided, however, that each Party agrees to provide
the other Party with its reasonable cooperation and
assistance with respect to any such infringement
proceedings.
3.5 ADDITIONAL AGREEMENTS. In order to expand FLOWERS's exposure
on the AOL Service beyond the AOL-Controlled Areas, AOL shall
use commercially reasonable efforts to assist FLOWERS in
establishing promotional, marketing, advertising and/or
distribution relationships with AOL's content providers to be
the provider of the FLOWERS Products to or through such
entities. In addition, the Parties shall work together in good
faith to approach other entities (e.g., those entities in
which AOL has an ownership interest) to promote, market and
distribute FLOWERS and its Products through such entities.
Without limiting the foregoing, AOL shall approach [****]
on behalf of FLOWERS to discuss establishment of a
promotional, marketing, advertising and/or distribution
arrangement. The Parties shall also explore distribution of
the Online Area through AOL's "XXX.XXX" brand Internet site
and international versions of the AOL Service. With respect to
all of the foregoing promotional, marketing, advertising or
distribution arrangements that result in a contractual
relationship, (a) AOL shall be entitled to receive a
negotiated percentage (as agreed upon in good faith by the
Parties) of the gross revenues (as defined in any such
contract) and upfront payments (if any) pursuant to any such
arrangements and (b) with respect to arrangements relating to
international versions of the AOL Service, FLOWERS will, for a
period of [****] following execution of the Agreement,
upon AOL's request, work solely with AOL to approach the
operators of such versions and to develop proposed
arrangements therewith. In particular, the Parties agree that
AOL shall extend the terms and conditions of this Agreement to
include distribution of the Online Area through AOL Canada;
11
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
provided that AOL Canada agrees to such terms and conditions.
FLOWERS acknowledges and agrees that AOL does not guarantee
(a) that any of the entities to be approached under this
Section 3.5 will agree to enter an arrangement with FLOWERS,
or (b) that the terms and conditions of any arrangement that
any such entity may agree to enter will resemble in any
respect the terms and conditions of this Agreement (including
without limitation the promotion and exclusivity provisions
hereof).
4. PAYMENTS: REPORTS.
4.1 INITIAL PAYMENTS.
4.1.1 Subject to Section 10, FLOWERS shall pay AOL in
immediately available funds wired to AOL's account
the total non-refundable sum of Ten Million Dollars
(US$10,000,000), as follows: (a) upon execution
hereof, Two Million Five Hundred Thousand Dollars
(US$2,500,000), (b) on June 30, 1998, Two Million
Five Hundred Thousand Dollars (US$2,500,000), (c) on
December 15,1998, Two Million Five Hundred Thousand
Dollars (US$2,500,000) and (d) on June 30, 1999,
Two Million Five Hundred Thousand Dollars
(US$2,500,000). AOL shall earn a portion of the
initial 2,500,000 payment not to exceed Six Hundred
Ninety Thousand Dollars ($690,000) in accordance
with the milestones set forth in Exhibit F.
4.1.2 In the event cumulative Sales Revenues excluding
Service Charges (the "Merchandise Revenues") for the
first year commencing on July 1, 1997 ("Year 1") and
the second year following Year 1 ("Year 2") equal or
exceed [****], FLOWERS shall pay AOL the
non-refundable sum of [****] in equal installments
on the first day of each calendar quarter during
the third year following Year 2 ("Year 3").
4.1.3 In the event (a) cumulative Merchandise Revenues for
Years 1, 2 and 3 equal or exceed [****] or (b)
Merchandise Revenues in Year 3 equal or [****],
FLOWERS shall pay AOL the non-refundable sum of
[****] in equal installments on the first day of
each calendar quarter during the fourth year
following Year 3 ("Year 4").
4.2 SHARING OF SALES REVENUES.
4.2.1 During each of Year 1 and Year 2, FLOWERS shall pay
AOL an amount equal to [****] of all Sales
Revenues in such year; provided that (a) in Year 1
FLOWERS shall pay such amount only for Sales
12
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
Revenues occurring on or after July 1, 1997 (all
revenues prior to such date being accounted for
pursuant to Section 4.5) and (b) in the event Sales
Revenues in either Year 1 or Year 2 equal or exceed
[****] in such year (such amount in each year, a
"Yearly Hurdle"), FLOWERS shall pay AOL an amount
equal to [****] of all Sales Revenues thereafter in
such year. The amount, if any, by which a Yearly
Hurdle in Years 1, 2, 3 or 4 exceeds the total Sales
Revenues in any such year is called a "Yearly
Shortfall." The Yearly Hurdle for each year shall be
increased by the amount of the Yearly Shortfall from
the prior year. The existence of a Yearly Shortfall
in any year shall not in any respect constitute a
breach of this Agreement by either Party.
4.2.2 During Year 3, in the event AOL is entitled to
receive a [****] pursuant to Section 4.1.2,
FLOWERS shall pay AOL (in addition to the [****]) an
amount equal to [****] of all Sales Revenues;
provided that in such event and in the event Sales
Revenues in Year 3 equal or exceed [****] (also,
a "Yearly Hurdle" subject to adjustment as set forth
in Section 4.2.1), FLOWERS shall pay AOL an amount
equal to [****] of all Sales Revenues thereafter in
Year 3. In the event AOL is not entitled to
receive a [****] pursuant to Section 4.1.2, FLOWERS
shall pay AOL an amount equal to [****] of all Sales
Revenues during Year 3 until the total Sales
Revenues during Year 3 equal or exceed the amount
of the Yearly Shortfall in Year 2, at which point
FLOWERS shall pay AOL an amount equal to [****] of
all Sales Revenues thereafter in Year 3.
4.2.3 During Year 4, in the event AOL is entitled to
receive a [****] pursuant to Section 4.1.3, FLOWERS
shall pay AOL (in addition to the [****]) an amount
equal to [****] of all Sales Revenues; provided that
in such event and in the event Sales Revenues in
Year 4 equal or exceed [****] (also, a "Yearly
Hurdle" subject to adjustment as set forth in
Section 4.2.l), FLOWERS shall pay AOL an amount equal
to [****] of all Sales Revenues thereafter in Year 4.
In the event AOL is not entitled to receive a
[****] pursuant to Section 4.1.3, FLOWERS shall pay
AOL an amount equal to [****] of all Sales Revenues
during Year 4 until the total Sales Revenues during
Year 4 equal or exceed the amount of the Yearly
Shortfall in Year 3, at which point FLOWERS shall
pay AOL an amount equal to [****] of all Sales
Revenues thereafter in Year 4.
13
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
4.2.4 In the event at any time during the term of the
Agreement, cumulative Merchandise Revenues equal or
exceed [****], FLOWERS shall pay AOL an amount
equal to [****] of all Sales Revenues thereafter.
4.2.5 Each month, FLOWERS shall pay all amounts owed
pursuant to this Section 4.2 within thirty (30) days
of the end of such month. Each payment to AOL shall
include any reporting required pursuant to Section
4.8 below.
4.3 EXHIBIT C FEES. FLOWERS shall pay AOL in accordance with the
payment terms and conditions agreed upon by the Parties in
connection with the AOL services that may be agreed upon
pursuant to Section 2.1 of Exhibit C.
4.4 NEW MEMBER BOUNTIES. In consideration of FLOWERS's New Member
acquisition efforts pursuant to Section 3.1.5 and Exhibit D,
AOL shall pay FLOWERS a fee of Ten Dollas (US$10.00) for each
New Member acquired as a direct result of such efforts (a
"New Member Bounty").
4.5 OLD AGREEMENT AMOUNTS. Each Party shall pay the other Party
all outstanding amounts due and payable to the other Party
pursuant to Section 1 of the Old Agreement (as defined in
Section 11.8) in the time and manner prescribed therein.
FLOWERS shall pay AOL for sales of Products occurring
hereunder subsequent to the Effective Date and prior to July
1, 1997, based on the structure set forth in Section 1 of the
Old Agreement (i.e., [****]).
4.6 LATE PAYMENTS. All amounts owed hereunder not paid when due
and payable will bear interest from the date such amounts are
due and payable the rate of 8% per year.
4.7 AUDITING RIGHTS. FLOWERS shall maintain complete, clear and
accurate records of all expenses, revenues and fees in
connection with the performance of this Agreement. For the
sole purpose of ensuring compliance with this Agreement, AOL
shall have the right, at its expense, to direct an independent
certified public accounting firm to conduct a reasonable and
necessary inspection of portions of the books and records of
FLOWERS which are relevant to amounts payable to AOL pursuant
to this Agreement. Any such audit may be conducted once per
year after twenty (20) business days, prior written notice.
Any audit shall be at AOL's sole cost and expense unless a
discrepancy of the greater of five percent (5%) or
Twenty-Five Thousand Dollars (US$25,000) is found,
in which case FLOWERS will pay all reasonable costs and
expenses related to the audit, not to exceed Ten Thousand
Dollars (US$10,000).
14
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
4.8 REPORTS. Each Party shall each provide the other Party with
certain reports evidencing the reporting Party's compliance
with its obligations under the Agreement and detailing certain
information, all as set forth below, which may be mutually
amended from time to time by the parties.
4.8.1 SALES REPORTS. Consistent with the reports currently
supplied by FLOWERS to AOL, FLOWERS shall provide AOL
with a periodic report detailing the following
activity in such period: Sales Revenue, chargebacks
and credits for returned or cancelled goods or
services (and, where possible, an explanation of the
type of reason therefor, e.g., bad credit card
information, poor customer service, etc.), and credit
card processing fees charged and/or collected by the
credit card issuer.
4.8.2 PROMOTIONAL REPORTS. Each Party shall provide the
other Party with a quarterly report documenting its
compliance with any promotional commitments it has
undertaken pursuant to the Agreement. In reporting
any promotion, the Party should describe the nature
of promotion, its duration and any other relevant
information regarding the promotion, including any
required information set forth in the description of
each promotion.
4.8.3 FRAUDULENT TRANSACTIONS. To the extent permitted by
applicable laws, FLOWERS shall provide AOL with a
prompt report of any fraudulent order, including the
date, screenname and amount associated with such
order, following FLOWERS obtaining knowledge that the
order is, in fact, fraudulent.
4.8.4 AOL REPORTS. AOL shall provide FLOWERS with monthly
reports specifying for the prior month aggregate
hourly usage within the Online Area and other
mutually agreed-upon information relating to the
Online Area.
4.9 TAXES. FLOWERS shall collect and pay and indemnify and hold
AOL harmless from, any sales, use, excise, import or export
value added or similar tax or duty not based on AOL's net
income, including any penalties and interest, as well as any
costs associated with the collection or withholding thereof,
including reasonable attorneys' fees, in the event litigation
or any regulatory proceeding, investigation or action is
commenced.
15
5. REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants to the
other Party that: (i) such Party has the full corporate right, power and
authority to enter into this Agreement and to perform the acts required of it
hereunder; (ii) the execution of this Agreement by such Party, and the
performance by such Party of its obligations and duties hereunder, do not and
will not violate any agreement to which such Party is a party or by which it is
otherwise bound; (iii) when executed and delivered by such Party, this Agreement
will constitute the legal, valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms; and (iv) such Party
acknowledges that the other Party makes no representations, warranties or
agreements related to the subject matter hereof that are not expressly provided
for in this Agreement.
6. CONFIDENTIALITY. Each Party acknowledges that Confidential Information may
be disclosed to the other Party during the course of this Agreement. Each
Party agrees that it shall take reasonable steps, at least substantially
equivalent to the steps it takes to protect its own proprietary information,
during the term of this Agreement, and for a period of [****] following
expiration or termination of this Agreement, to prevent the duplication or
disclosure of Confidential Information of the other Party, other than
duplication by or disclosure to its employees or affiliates who must have
access to such Confidential Information to perform such Party's obligations
hereunder, who shall each agree to comply with this Section 6 of this
Agreement. Notwithstanding the foregoing, either Party may issue a press
release or other disclosure containing Information without the consent of the
other Party, to the extent such disclosure is required by law, rule,
regulation or government or court order, as evidenced by a written opinion of
legal counsel. In such event, the disclosing Party shall provide at least
five (5) business days, prior written notice of such proposed disclosure to
the other Party. Further, in the event such disclosure is required of either
Party under the laws, rules or regulations of the Securities and Exchange
Commission or any other applicable governing body, such Party shall (i)
redact mutually agreed-upon portions of this Agreement to the fullest extent
permitted under applicable laws, rules and regulations and (ii) submit a
request (at the expense of the primary party seeking to limit disclosure) to
such governing body that such portions and other provisions of this Agreement
receive confidential treatment under the laws, rules and regulations of the
Securities and Exchange Commission or otherwise be held in the strictest
confidence to the fullest extent permitted under the laws, rules or
regulations of any other applicable governing body.
7. SOLICITATION/PROMOTION.
7.1 SOLICITATION OF SUBSCRIBERS. During the term of this
Agreement, and for the one-year period following the
expiration or termination of this Agreement, neither
FLOWERS nor its affiliates or agents (such agents
acting at the direction of FLOWERS) will use the AOL
Network to (i) solicit, or participate in the solicitation
of AOL Members when that solicitation is for the benefit
of any AOL Competitor or (ii) promote any services which
could reasonably be construed to be in competition with
the business of AOL in providing Internet, online or
related services. In addition, FLOWERS may not send any
AOL Member e-mail communications through the AOL Network
without a "Prior Business Relationship." For purposes of this
Agreement, a "Prior Business Relationship"
16
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
shall mean that the AOL Member has either (i) engaged in a
transaction with FLOWERS through the AOL Network or (ii)
voluntarily provided information to FLOWERS through a contest,
registration, or other communication, which, in the case of
clause (ii), included notice therein to the AOL Member that
the information provided by the AOL Member could result in an
e-mail being sent to that AOL Member by FLOWERS or its
affiliates or agents. A Prior Business Relationship does not
exist by virtue of an AOL Member's visit to the Online Area
(absent the additional elements described above).
7.2 COLLECTION OF MEMBER INFORMATION. FLOWERS is prohibited from
collecting AOL Member screennames from public or private areas
of the AOL Network, except as specifically provided below;
provided that FLOWERS is allowed to receive screennames within
the Online Area, subject to the provisions below. FLOWERS
shall ensure that any survey, questionnaire or other means of
collecting Member Information including, without limitation,
requests directed to specific AOL Member screennames and
automated methods of collecting screennames (an "Information
Request") complies with (i) all applicable laws and
regulations, (ii) AOL's applicable Terms of Service and (iii)
any privacy policies which have been issued by AOL in writing
during the term of the Agreement and made available to FLOWERS
(the "AOL Privacy Policies"). Each Information Request shall
clearly and conspicuously specify to the AOL Members at issue
the purpose for which Member Information collected through the
Information Request shall be used (the "Specified Purpose").
7.3 USE OF MEMBER INFORMATION. FLOWERS shall restrict use of the
Member Information collected through an Information Request to
the Specified Purpose. In no event shall FLOWERS (i) provide
AOL Member names, screennames, addresses or other identifying
information (excluding any such information (e.g., name) that
was received by FLOWERS from an AOL Member via another FLOWERS
sales channel and was not overlaid against or otherwise
derived from other information received from such member via
the AOL Service or the Online Area) ("Member Information") to
any third party (except to the extent specifically (a)
permitted under the AOL Privacy Policies or (b) authorized by
the members in question), (ii) rent, sell or barter Member
Information, (iii) identify, promote or otherwise disclose AOL
Member names, screennames, addresses or other identifying
information in a manner that identifies AOL Members as
end-users of the AOL Network or (iv) otherwise use any Member
Information in contravention of Section 7.1 above.
8. LIMITATION OF LIABILITY; DISCLAIMER; INDEMNIFICATION.
8.1 LIABILITY. UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE
TO THE OTHER PARTY FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL,
SPECIAL OR EXEMPLARY DAMAGES (EVEN IF THAT PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES), ARISING FROM THE
SALE OF PRODUCTS, THE USE OR
17
INABILITY TO USE THE AOL NETWORK, THE AOL SERVICE OR THE
ONLINE AREA, OR ARISING FROM ANY OTHER PROVISION OF THIS
AGREEMENT, SUCH AS, BUT NOT LIMITED TO, LOSS OF REVENUE OR
ANTICIPATED PROFITS OR LOST BUSINESS. EXCEPT AS PROVIDED IN
SECTION 8.3, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY
FOR MORE THAN THE AGGREGATE AMOUNTS TO BE PAID TO AOL BY
FLOWERS IN ANY YEAR UNDER THIS AGREEMENT.
8.2 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 THE AOL NETWORK, THE AOL SERVICE
OR THE ONLINE AREA, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND
IMPLIED WARRANTIES ARISING FROM COURSE OF DEALING OR COURSE OF
PERFORMANCE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING,
AOL SPECIFICALLY DISCLAIMS ANY WARRANTY REGARDING THE
PROFITABILITY OF THE ONLINE AREA.
8.3 INDEMNITY. Either Party will defend, indemnify, save and hold
harmless the other Party and the officers, directors, agents,
affiliates, distributors, franchisees and employees of the
other Party from any and all third-party claims, demands,
liabilities, costs or expenses, including reasonable
attorneys' fees ("Liabilities"), resulting from the
indemnifying Party's material breach of any duty,
representation, or warranty of this Agreement, except to the
extent Liabilities result from the negligence or misconduct
of, or material breach of any duty, representation, or
warranty of this Agreement by, the other Party.
8.4 CLAIMS. Each Party agrees to (i) promptly notify the other
Party in writing of any indemnifiable claim and give the other
Party the opportunity to defend or negotiate a settlement of
any such claim at such other Party's expense, and (ii)
cooperate fully with the other Party, at that other Party's
expense, in defending or settling such claim. Each Party
reserves the right, at its own expense, to assume the
exclusive defense and control of any matter otherwise subject
to indemnification by the other Party hereunder, and in such
event, such other Party shall have no further obligation to
provide indemnification for such matter hereunder.
8.5 ACKNOWLEDGEMENT. AOL and FLOWERS each acknowledges that the
provisions of this Agreement were negotiated to reflect an
informed, voluntary allocation between them of all risks (both
known and unknown) associated with the transactions
contemplated hereunder. The limitations and disclaimers
related to warranties and liability contained in this
Agreement are intended to limit the circumstances and extent
of liability. The provisions of this Section 8 shall be
18
enforceable independent of and severable from any other
enforceable or unenforceable provision of this Agreement.
9. AOL TERMS OF SERVICE; UNSPECIFIED CONTENT. AOL shall have the right to
remove, or direct FLOWERS to remove any Content which, as reasonably
determined by AOL (i) violates AOL's then-standard Terms of Service (as
set forth on the AOL Service) or the terms of this Agreement or (ii)
belongs to a type or category of Content not specifically contained
within the Online Areas as of the Effective Date subject further to the
provisions of Section 1.2 hereof.
10. TERM AND TERMINATION.
10.1 TERM. Unless earlier terminated as set forth herein, the term
of this Agreement shall commence on the Effective Date and
expire on June 30, 2001.
10.2 TERMINATION. Either Party may terminate this Agreement at any
time in the event of a material breach by the other Party
which remains uncured after thirty (30) days written notice
thereof (or, in the case of an alleged breach which cannot
with due diligence be cured within a period of thirty (30)
days, so long as the party institutes measures to cure such
breach within such thirty (30) day period and thereafter takes
all reasonable measures to cure such alleged breach, such
party shall have an additional period of sixty (60) days to
cure such alleged breach, subject to Section 11.1. In
addition, either Party may terminate this Agreement
immediately following written notice to the other Party (i) if
the other Party ceases to do business, becomes or is declared
insolvent or bankrupt, is the subject of any proceeding
related to its liquidation or insolvency which is not
dismissed within ninety (90) calendar days or makes an
assignment for the benefit of creditors or (ii) in the event
of consummation of an acquisition of the other Party, or all
or substantially all of the assets of such other Party,
through merger, asset acquisition, stock acquisition or
otherwise, by a direct competitor of the Party giving such
notice. In addition, in the event (a) cumulative Merchandise
Revenues in Years 1 and 2 equal less than [****], (b) total
Merchandise Revenues in Year 2 equal less than [****] in such
year, (c) total Merchandise Revenues in Year 3 equal less than
[****] in such year, or (d) cumulative Merchandise Revenues
for Years 1, 2 and 3 equal less than [****], AOL shall have
the right to terminate the Agreement upon thirty (30) days,
written notice to FLOWERS. In the event AOL desires to
terminate the Agreement pursuant to clauses (a) or (b), the
Agreement shall terminate on the date on which the total Sales
Revenues equal or exceed [****]; provided that (i) in the
event such date has not occurred as of the end of Year 3, the
Agreement shall continue under the same terms except that
during the period following the end of Year 3, Sections 1.6,
1.7, 3.1 and 3.2 shall not apply and (ii) in no event shall
the
19
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
Agreement continue beyond the end of Year 4. In the event
that, prior to the end of Year 2, AOL is considering
termination of the Agreement pursuant to clauses (a) or (b)
above, AOL shall provide FLOWERS with written notice at least
thirty (30) days prior to the end of Year 2 that AOL is
reserving its right to so terminate; in such event, FLOWERS
shall be entitled to withhold the [****] otherwise
due to AOL pursuant to Section 4.1.1, until AOL notifies
FLOWERS that AOL elects not to terminate the Agreement
pursuant to either such clause, at which time FLOWERS shall
pay AOL such amount. In the event AOL desires to terminate the
Agreement pursuant to clause (c) or (d) above, the Agreement
shall terminate on the date on which the total Sales Revenues
equal or exceed [****]; provided that (i) during the period
following the end of Year 3 Sections 1.6, 1.7, 3.1 and 3.2
shall not apply and (ii) in no event shall the Agreement
continue beyond the end of Year 4. In no event shall AOL be
entitled to terminate the Agreement pursuant to clauses (a),
(b), (c) or (d) to the extent that AOL's addition of "sub"
services within the AOL Service renders FLOWERS unable to meet
the revenue targets set forth in such clauses. AOL shall also
have the right of termination specified in Section 2.6. In no
event shall the failure of Merchandise Revenues or Sales
Revenues to equal or exceed certain revenue targets set forth
in Section 4 and this Section 10.2 be deemed a material breach
of the Agreement by either AOL or FLOWERS.
10.3 EFFECT OF TERMINATION. In the event of termination by FLOWERS
based on a material breach of the Agreement by AOL during any
Year (as defined in Section 4), FLOWERS shall not be required
to pay AOL the amounts otherwise due to AOL pursuant to
Section 4.1 for such Year. For example, if FLOWERS terminates
the Agreement in Year 1 on April 15, 1998, FLOWERS shall not
be obligated to pay AOL the [****] required by Section 4.1.1,
nor any fees except those earned as of the date of
termination. In the event of termination by AOL based on a
material breach of the Agreement by FLOWERS during any Year
(as defined in Section 4), FLOWERS shall pay AOL within
thirty (30) days of the date of termination all amounts
otherwise due to AOL pursuant to Section 4.1 for such Year.
For example, if AOL terminates the Agreement in Year 1 on
May 15, 1998, FLOWERS shall pay AOL by June 15, 1998, the
[****] required by Section 4.1.1 (otherwise due to AOL
on June 30, 1998). Notwithstanding the foregoing, each
Party shall be entitled upon termination due to breach of
the Agreement by the other Party to seek all additional
remedies for such breach which the Party may possess at law
or in equity.
11. GENERAL PROVISIONS.
11.1 EXCUSE. Neither Party shall be liable for, or be considered in
breach of or default under this Agreement on account of, any
delay or failure to perform as required
20
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
by this Agreement as a result of any causes or conditions
which are beyond such Party's reasonable control and which
such Party is unable to overcome by the exercise of reasonable
diligence; provided: (i) the delayed Party gives the other
Party written notice of such cause or condition promptly and
(ii) uses its reasonable best efforts to promptly correct such
failure or delay. For purposes of this provision, a delay or
non-performance shall not be deemed beyond the reasonable
control of the Party affected if such delay or non-performance
would not have occurred had the affected Party been performing
in accordance with the provisions of the Agreement.
11.2 INDEPENDENT CONTRACTORS. The Parties to this Agreement are
independent contractors. Neither Party is an agent,
representative, or partner of the other Party. Neither Party
shall have any right, power or authority to enter into any
agreement for or on behalf of, or incur any obligation or
liability of, or to otherwise bind, the other Party. This
Agreement shall not be interpreted or construed to create an
association, agency, joint venture or partnership between the
Parties or to impose any liability attributable to such a
relationship upon either Party.
11.3 NOTICE. Any notice, approval, request, authorization,
direction or other communication under this Agreement shall be
given in writing and shall be deemed to have been delivered
and given for all purposes (i) on the delivery date if
delivered by electronic mail on the AOL Network; (ii) on the
delivery date if delivered personally to the Party to whom the
same is directed; (iii) one business day after deposit with a
commercial overnight carrier, with written verification of
receipt, or (iv) five business days after the mailing date,
whether or not actually received, if sent by U.S. mail, return
receipt requested, postage and charges prepaid, or any other
means of rapid mail delivery for which a receipt is available,
to the address of the Party to whom the same is directed as
such addresses are set forth in the introduction to this
Agreement.
AMERICA ONLINE FLOWERS
Attn: Xxxxx X. Xxxxx Attn: Xxxxxxxxxxx X. XxXxxx
Copy to: Xxxxx Xxxxxxxx
With copies to: With copy to:
Senior Vice President, Business Affairs and Xxxxxx X. Xxxxxxxxx
Vice President and General Counsel Xxxxxxxxx, Xxxxxx & Xxxxxx
America Online, Inc. 00 Xxxxxx Xxxxxx
00000 XXX Xxx Xxxxxxx, XX 00000
Xxxxxx, XX 00000
11.4 NO WAIVER. The failure of either Party to insist upon or
enforce strict performance by the other Party of any provision
of this Agreement or to exercise any right under this
Agreement shall not be construed as a waiver or relinquishment
to any extent of such Party's right to assert or rely upon any
such
21
provision or right in that or any other instance; rather, the
same shall be and remain in full force and effect.
11.5 RETURN OF INFORMATION. Upon the expiration or termination of
this Agreement, each Party shall, upon the other Party's
written request, either return or destroy (at the option of
the Party receiving the request) all Confidential Information,
documents, manuals and other materials specified by the other
Party.
11.6 SURVIVAL. Sections 4, 6, 7, 8, 10.3 and 11.5 shall survive the
completion, expiration, termination or cancellation of this
Agreement.
11.7 ENTIRE AGREEMENT. This Agreement sets forth the entire
agreement, and supersedes any and all prior agreements of the
Parties with respect to the transactions set forth herein.
Neither Party shall be bound by, and each Party specifically
objects to, any term, condition or other provision which is
different from or in addition to the provisions of this
Agreement (whether or not it would materially alter this
Agreement) and which is proffered by the other Party in any
correspondence or other document, unless the Party to be bound
thereby specifically agrees to such provision in writing.
Notwithstanding the foregoing, FLOWERS shall also be bound by
the Terms of Service except as such Terms of Service are
specifically amended by this Agreement.
11.8 EXPIRATION OF OLD AGREEMENT. Upon the Effective Date, the
Information Provider Agreement dated August 16, 1994, between
the Parties (and any amendments thereto) (the "Old Agreement")
shall be deemed to be terminated and of no further force and
effect, except (a) as expressly set forth in Section 4.5 of
this Agreement or (b) to the extent the Old Agreement contains
any confidentiality provision. Except as provided for in this
Section 11.8, no outstanding obligations or liabilities of
either Party under the Old Agreement shall survive termination
of the Old Agreement.
11.9 AMENDMENT. No change, amendment or modification of any
provision of this Agreement shall be valid unless set forth in
a written instrument signed on behalf of each Party hereto,
and in the case of AOL, by a senior vice president.
11.10 FURTHER ASSURANCES. Each Party shall take such action
(including, but not limited to, the execution, acknowledgment
and delivery of documents) as may reasonably be requested by
any other Party for the implementation or continuing
performance of this Agreement.
11.11 RESERVATION OF REMEDIES. Except where otherwise expressly
specified, the rights and remedies granted to a Party under
this Agreement are cumulative and in addition to, and not in
lieu of, any other rights or remedies which the Party may
possess at law or in equity; provided that, in connection with
any dispute hereunder, neither Party shall be entitled to
offset any amounts that such Party
22
claims to be due and payable from the other Party against
amounts otherwise payable by the claiming Party to the other
Party.
11.12 HEADINGS. The headings in this Agreement are for reference
only, and shall not affect the interpretation of this
Agreement.
11.13 ASSIGNMENT. Except for assignment, transfer or delegation by
either Party to an affiliate or successor by way of merger,
consolidation or sale of all or substantially all of such
Party's outstanding voting securities or assets, neither Party
shall assign (voluntarily, by operation of law or otherwise)
this Agreement or any right, interest or benefit under this
Agreement without the prior written consent of the other
Party. Subject to the foregoing, this Agreement shall be fully
binding upon, inure to the benefit of and be enforceable by
the Parties hereto and their respective successors and
assigns.
11.14 CONSTRUCTION. In the event that any provision of this
Agreement conflicts with the law under which this Agreement is
to be construed or if any such provision is held invalid by a
court with jurisdiction over the Parties to this Agreement,
such provision shall be deemed to be restated to reflect as
nearly as possible the original intentions of the Parties in
accordance with applicable law, and the remainder of this
Agreement shall remain in full force and effect.
11.15 APPLICABLE LAW; JURISDICTION. This Agreement shall be
interpreted, construed and enforced in all respects in
accordance with the laws of the Commonwealth of Virginia
except for its conflicts of laws principles.
11.16 COUNTERPARTS. This Agreement may be executed in facsimile
counterparts, each of which shall be deemed an original and
all of which together shall constitute one and the same
document.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the Effective Date.
AMERICA ONLINE, INC. 800 FLOWERS, INC.
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxxxxxxx XxXxxx
------------------------------- -------------------------------
Print Name: Xxxxx X. Xxxxxxx Print Name: Xxxxxxxxxxx XxXxxx
------------------------ ------------------------
Title: Senior Vice President Title: Vice President
----------------------------- -----------------------------
Date: 7/1/97 Date: 7/1/97
------------------------------ ------------------------------
23
EXHIBIT A
DEFINITIONS. The following definitions shall apply to this Agreement:
1.1 AFFILIATE. Any agent, distributor, or franchisee of AOL, or an
entity in which AOL holds at least a [****] equity interest.
1.2 AOL LOOK AND FEEL. The elements of graphics, design,
organization, presentation, layout, user interface, navigation
and stylistic convention (including the digital
implementations thereof) which are generally associated with
online areas within the AOL Service.
1.3 AOL MEMBER(S). Authorized users of the AOL Network, including
any sub-accounts using the AOL Network under an authorized
master account.
1.4 AOL NETWORK. The AOL Service and any other information,
communication, transaction or other related service owned,
operated, distributed or authorized to be distributed by or
through AOL or its Affiliates throughout the world through
which AOL elects to offer the Online Area (including, without
limitation, any CD-ROM merchandising products which may be
distributed by AOL).
1.5 AOL SERVICE. The U.S. version of the America Online(R) brand
service (excluding Digital City, XXX.xxx, NetFind and any
similar "sub" service that may be distributed by or through
the America Online(R) brand service) (so long as any such
additional "sub" services do not have a material adverse
impact on FLOWERS).
1.6 CONFIDENTIAL INFORMATION. Any information relating to or
disclosed in the course of the Agreement, which is or should
be reasonably understood to be confidential or proprietary to
the disclosing Party, including, but not limited to, the
material terms of this Agreement, information about AOL
Members and FLOWERS customers, technical processes and
formulas, source codes, product designs, sales, cost and other
unpublished financial information, product and business plans,
projections, and marketing data. "Confidential Information"
shall not include information (a) already lawfully known to or
independently developed by the receiving Party, (b) disclosed
in published materials, (c) generally known to the public, or
(d) lawfully obtained from any third party.
1.7 CONTENT. Information, materials, features, Products,
advertisements, promotions, links, pointers and software,
including any modifications, upgrades, updates, enhancements
and related documentation.
1.8 LICENSED CONTENT. All content, services and Products offered
through the Online Area pursuant to this Agreement, including
any modifications, upgrades, updates, enhancements, and
related documentation.
24
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
1.9 NEW MEMBER. Any person or entity (a) who registers for the AOL
Network using FLOWERS's special promotion identifier and (b)
from whom AOL or an Affiliate of AOL collects at least three
monthly usage fees for the use of the AOL Network.
1.10 ONLINE AREA. The specific area within the AOL Network where
FLOWERS can market and complete transactions regarding
FLOWERS's Products, as more fully described in Section 2. The
Online Area shall be developed, managed and marketed by
FLOWERS pursuant to this Agreement, including, but not limited
to [****].
1.11 OVERHEAD ACCOUNTS. Accounts of AOL Members for which AOL does
not require payment of standard AOL subscription and usage
charges.
1.12 PRODUCTS. Any product, good or service which FLOWERS offers,
sells or licenses to AOL Members through the Online Area.
1.13 SALES REVENUES. Aggregate amounts paid by AOL Members in
connection with the sale, licensing, distribution or provision
of any Products, including, in each case, handling, shipping,
Service Charges, and excluding, in each case, (a) amounts
collected for sales or use taxes or duties, (b) credit card
processing fees to the extent charged and/or collected by the
credit card issuer and (c) credits and chargebacks for
returned or cancelled goods or services, but not excluding
cost of goods sold or any similar cost.
25
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
EXHIBIT B
PROMOTIONAL PLAN
AOL shall provide online promotion for the Online Area totaling at least
[****] impressions per year using a combination of the following
promotional vehicles (and any other agreed upon promotional vehicles or
methods); provided that AOL shall not be obligated to provide in excess of
[****] impressions in any year.
o Banner advertising in Holiday/Theme Areas (including Thanksgiving,
Christmas/Hanukkah, Valentine's Day, Easter, Mother's Day, New Year's
and Secretaries Day) - total of [****] annual impressions
o 1 Sports Channel Pop-up ([****] impressions each) in February
(Valentine's) and May (Mother's Day)
o 1 Personal Finance Channel Pop-up ([****] impressions each) in February
(Valentine's) and May (Mother's Day)
o [****] total days of Shopping Channel "Deal of the Day" Pop-ups during
the months of November (Thanksgiving), December (Winter Holidays),
February (Valentine's) and May (Mother's Day).
o Banner advertising in Sports Channel - [****] annual impressions
o Banner advertising in Personal Finance Channel - [****] annual
impressions
o Banner advertising in News Area - [****] annual impressions
o Banner advertising in Women's Channel - [****] annual impressions
o Banner advertising in Family Channel - [****] annual impressions
o Banner advertising in Lifestyles Channel - [****] annual impressions
o Banner advertising in Interests Channel - [****] annual impressions
o Banner advertising in Romance Channel - [****] annual impressions
o E-Mail banner advertising - [****] annual impressions u Gift
Reminder Impressions ([****]/month).
o Shopping Channel Newsletter Impressions ([****]/month)
o Welcome Screen ([****] hours/year) (approximately [****] during floral
holiday periods)
26
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
EXHIBIT C
AOL SERVICES
1. TECHNOLOGY ENHANCEMENT.
The Parties will schedule a technology meeting promptly following execution
hereof to discuss and order priorities regarding operational enhancements to be
made according to the time, manner and payment terms agreed upon by the Parties.
[****]
2. ADDITIONAL PRODUCTION: TRAINING, SUPPORT AND REPORTING.
2.1 PRODUCTION WORK. In the event that FLOWERS requests AOL's
production assistance (including the enhancements set forth in
Section 1 of this Exhibit C) in connection with (i) ongoing
programming and maintenance related to the Online Area, (ii) a
redesign of or addition to the Online Area (e.g., a change to
an existing screen format or construction of a new custom
form), (iii) production to modify work performed by a
third-party provider or (iv) any other type of production
work, FLOWERS shall work with AOL to develop a detailed
production plan for the requested production assistance (the
"Production Plan"). Following receipt of the final Production
Plan, AOL shall notify FLOWERS of (i) AOL's availability to
perform the requested production work, (ii) the proposed fee
or fee structure for the requested production and maintenance
work and (iii) the estimated development schedule for such
work. To the extent the Parties reach agreement regarding
implementation of an agreed-upon Production Plan, such
agreement shall be reflected in a separate work order signed
by the Parties. To the extent FLOWERS elects to retain a
third-party provider to perform any such production work, work
produced by such third-party provider must generally
27
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
conform to AOL's production Standards & Practices (a copy of
which will be supplied by AOL to FLOWERS upon request). The
specific production resources which AOL allocates to any
production work to be performed on behalf of FLOWERS shall be
as determined by AOL in its sole discretion.
2.2 TRAINING. AOL shall make available to FLOWERS standard AOL
training programs related to FLOWERS's management and
maintenance of the Online Area (including, without limitation,
the technical production classes for AOL publishing tools
described below). In addition, FLOWERS will pay its own travel
and lodging costs associated with its participation in any AOL
training programs (including AOL's reasonable travel and
lodging costs when training is conducted at the FLOWERS's
offices).
2.3 PUBLISHING TOOLS. AOL grants FLOWERS a non-exclusive,
royalty-free license during the term of the Agreement to use
publishing tools, which are then made generally available by
AOL to its interactive content providers, solely to be used in
connection with FLOWERS's construction and maintenance of its
Online Area. FLOWERS recognizes that (i) AOL provides all such
publishing tools on an "as is" basis, without warranties of
any kind and (ii) AOL may withdraw or modify its publishing
tools at any time. FLOWERS shall be required to complete AOL's
then-standard technical production training classes prior to
receiving access to the AOL publishing tools.
3. OTHER PROVISIONS RELATED TO THE DELIVERY OF SERVICES.
3.1 COOPERATION. FLOWERS shall cooperate with AOL by, among other
things, making available, as reasonably requested by AOL,
management decisions, responsive information and approvals to
enable AOL to provide the services described above. In return,
AOL shall cooperate with FLOWERS by, among other things,
making available, as reasonably necessary depending on the
particular services to be provided by AOL, management
decisions, responsive information and approvals in connection
with such services.
3.2 INTELLECTUAL PROPERTY. AOL will not, by virtue of the
performance of any of the services described herein, transfer,
assign, forfeit or otherwise relinquish any intellectual
property rights it may possess. FLOWERS will not, by virtue of
the performance of any of the services described herein,
transfer, assign, forfeit or otherwise relinquish its
intellectual property rights in any Licensed Content or any
other intellectual or other proprietary rights it may possess.
28
EXHIBIT D
NEW MEMBER ACQUISITION
FLOWERS's New Member acquisition responsibilities shall include the following:
o Promotion of AOL via retail displays containing AOL software in all company
and participating franchise stores. Extension of such an offer to be made
to BloomNet florists as well as 24,000 AFS shops throughout the U.S.
(compensation to be paid by FLOWERS from the bounty payment it receives
from AOL).
o Placement of AOL software in every Fresh Kit that accompanies floral orders
and insertion of reply cards (or other promotional material) in mailings as
appropriate; provided that an occasional, unintentional failure to place
such software in such kits shall not be deemed a material breach of the
Agreement.
o AOL access to customer lists (in a mutually agreeable format) of FLOWERS
(and related partners, if allowed pursuant to FLOWERS's contractual
arrangements and applicable law) in connection with member acquisition
programs.
o Inserting the AOL software in appropriate FLOWERS's direct marketing
efforts (AOL to cover all incremental costs associated with bundling (if
any) and mailing).
o AOL to pay costs associated with shipment of AOL software to distribution
points for the programs.
o AOL to consult with FLOWERS to test promotion of AOL Service subscription
offerings with FLOWERS's inbound telemarketing efforts. Nothing herein is
intended to obligate FLOWERS to agree to any testing which AOL may suggest.
o FLOWERS to consult with AOL to test inclusion of FLOWERS gift certificates
in appropriate AOL Service marketing efforts. Nothing herein is intended to
obligate AOL to agree to any testing which FLOWERS may suggest.
29
EXHIBIT E
CUSTOMER SERVICE REQUIREMENTS
1. Commercially reasonable best efforts to process orders electronically
within one hour from receipt (if between 7 A.M. and 7 P.M. EST) and to
promptly transmit orders to the receiving supplier.
2. Deliver all merchandise in professional packaging. All packages should
arrive undamaged, well packed and neat (barring any shipping
disasters).
3. Make available customer service personnel dedicated to the online
medium (i.e., people whose primary concern is the online customer's
orders) and make at least one customer service representative available
from 9:00 p.m. - midnight E.S.T. during the week before each peak
holiday period such as Thanksgiving, Christmas/Hanukkah, Valentine's
Day, Easter, Mother's Day, New Year's and Secretaries' Week, to answer
questions in an "online conference room" set up specifically for the
FLOWERS store. Online customers need to be given as much priority as
customers coming through any other sales channel.
4. Respond promptly and professionally to questions, comments, complaints
and other reasonable requests from Customers regarding the Products,
including, at a minimum, best efforts to receive and respond to e-mails
within 24 hours of receipt via a computer available to the customer
service staff.
5. Provide the customer with an order confirmation within 24 hours of
receipt. Order confirmation should include any information such as
order status (temporary back order or out-of-stock situations), and
expected delivery times.
6. Have the ability to handle volumes in excess of 25% to 50% of your
average daily order volumes.
7. Regularly monitor on-line store to minimize/eliminate the promotion of
out-of-stock merchandise.
8. Ship the displayed product at the price displayed in the Online Area
without substituting.
9. Offer all AOL Members who purchase Products through the Online Area a
100% satisfaction guarantee to all AOL Members, pursuant to which,
FLOWERS agrees to replace or refund orders upon the customer's or AOL's
request, in accordance with FLOWERS's standard customer service policy.
10. Comply with the following requirements of California disclosure law (if
applicable to FLOWERS):
30
o Before accepting payment or processing debit/credit transactions,
FLOWERS must disclose: (a) its return and refund policy; (b) FLOWERS's
legal name; and (c) the complete street address of the location where
FLOWERS's business is actually conducted.
o The legal name and address information must appear on one of the
following screens: (a) the first screen displayed when the Online Area
is accessed; (b) the screen on which the goods or services are first
offered; (c) the order screen; or (d) a screen where the purchaser
inputs payment information (credit card number, etc.).
o The font size of the notice cannot be smaller than that used in the
text offering the goods and services.
o The legal name and address must also include a statement "describing
how the buyer can receive information at the buyer's e-mail address."
FLOWERS must provide requested disclosure information at the
purchaser's e-mail address within 5 days of receiving the purchaser's
request.
o FLOWERS must maintain on-screen access to all the above information
until all orders have been filled or 30-day notices sent.
31
EXHIBIT F
PERFORMANCE MILESTONES
Milestone Amount
--------- ------
Entering exclusive negotiations with
FLOWERS following April 1, 1997 [****]
Production and development work relating to [****]
the Online Area during the period from
April 1, 1997 through June 30, 1997
Fulfillment and operational support [****]
----------
(1) This amount represents "Clerk2" development work performed, and to be
performed, by AOL as described below. These activities will require
approximately [****] labor hours, which valued at [****] equates to [****].
o Order Efficiency Phase I (installed 4/1/97) - included free extended
context (increased simultaneous shoppers supported in current
configuration), "max qty 1" then "no qty" screen (reduced number of
screens for stores geared toward selling quantity = 1 product);
o Seamless Credit Card Billing (installed 5/1/97) - security feature
which stores credit card information and does not require re-display;
and
o Fast Checkout (to be installed on approximately 6/26/97) - enables
quick sell of 1 item at a time (no shopping cart required to purchase
more than 1 item).
(2) This amount represents the establishment of a single point of contact within
AOL Operations for any FLOWERS file transfer concerns (available 24/7 via
pager), which resulted in incremental hours spent to support FLOWERS by the
single contact as well as other operations staff (managers and staff who consult
and assist the single contact). These activities required [****] labor hours,
which valued at [****] equates to [****].
32
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
EXHIBIT G
EXCLUDED ENTITIES
[****]
These entities also include any of their affiliates whose primary business is
the sale of the Exclusive Products. During the first two (2) years following
execution hereof, FLOWERS can replace any of the above bullet points with
another entity whose primary business is the sale of the Exclusive Products.
33
**** Represents material which has been redacted and filed separately with
the Commission pursuant to a request for confidential treatment under
Rule 406 of the Securities Act of 1933, as amended.
