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EXHIBIT 6.k
Neighborhood Box Office, Inc
Contract Services Agreement
THIS CONTRACT SERVICES AGREEMENT (this "Agreement") is entered into
effective as of April 11, 2000 (the "Effective Date") by and between
Neighborhood Box Office, Inc., a Utah corporation ("NBO"), with its principal
place of business at 0000 X. Xxxxxxxxxx Xxx, Xxxxxxxx X Xxxx Xxxx Xxxx, Xxxx
00000 and Xxxxx'x Food and Drug Centers, Inc. ("Customer"), with it's principle
place of business at 0000 X. Xxxxxxx Xxxx, Xxxx Xxxx Xxxx, Xxxx 00000. NBO and
Customer are sometimes each referred to herein as a "Party" and collectively the
"Parties."
RECITALS:
A. NBO is in the business of developing, marketing, owning and operating
remote gift certificate distribution systems.
B. Customer is in the business of owning, operating and managing
supermarket grocery stores (hereafter the "Properties").
C. The Parties desire to enter into a relationship whereby NBO will make
available to and install its remote gift certificate distribution machine (the
"Kiosk" or the "System") in the market herein defined as the Wasatch Front. The
System will be placed at each Property identified in Addendum A and to provide
services associated therewith, as further described in this Agreement.
NOW, THEREFORE, In consideration of the premises set forth above, the
mutual promises, covenants, agreements and benefits set forth herein below, and
for other good and valuable consideration, the Parties agree as follows:
1. RIGHTS AND OBLIGATIONS OF CUSTOMER.
a. Distribution. Customer hereby grants to NBO the exclusive right to
offer and issue gift certificates for participating retailers which are
redeemable at the participating retailers, and grants to NBO the authority to
install the System at the Properties, for the Term (defined below) and as
further described in this Agreement. During the Term, the Customer reserves the
right to issue Xxxxx'x gift certificates via Kiosk, telephone, or other methods
mutually agreed upon to individuals and corporate customers.
b. Utility Access and Service. Customer will provide, or cause to be
provided, at points in the Customer's "front end" the facilities necessary to
enable NBO to obtain and maintain for the System the electricity and telephone
service (the "Utility Services") required for its operation, as specified on
Addendum A part II. The installation of such services will be NBO's sole cost
and expense and will be in place and operational prior to installation of the
gift certificate system. In the event both parties agree to use communication
technology such as Virtual Private Network (VPN) installation specification will
be created in order to determine timing and feasibility. (This information will
also be described in Addendum A part II.
c. Advertising. Customer agrees to advertise the NBO system on location
and reasonably assist NBO in the advertising and promotion of the system with
spots in Customer's weekly circulars and mentions in other media efforts.
d. Maintenance and Training. Customer will provide, the personnel
necessary to (i) periodically monitor the inventory of blank gift certificate
stock in the Kiosk, (ii) restock the blank gift certificate paper stock as
needed and (iii) notify NBO or its designated agent of any malfunction with, or
damage to the System or any component thereof. In addition, Customer's personnel
will cooperate with NBO in performing its periodic maintenance and diagnostic
procedures on the Kiosk to determine if and when any periodic or preventative
maintenance is needed or if an NBO designated service organization should be
called. NBO will provide, or cause to be provided at NBO's sole cost and
expense, all necessary maintenance and repair within twenty-four (24) hours of
Customer's request therefore.
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e. Financial Responsibility. NBO proposes four sources of revenue
sharing for Xxxxx'x:
[**]% of $[**] per certificate consumer convenience fees
[**]% of NBO's participating retailer redemption fees
[**]% of on-screen advertising
[**]% of on-certificate advertising
f. Internet. (Additional feature if desired.) At customer's option,
customer and NBO will cooperate in designing and implementing a so-called
"hyperlink" or "HTML Frame" which will allow visitors to Customer's website the
opportunity to obtain Gift Certificates via the Internet. Customer will provide
NBO with names of Customer's website administrators in order to complete all
programming requirements. NBO will pay for all programming costs to establish
the "hyperlink" or "HTML Frame" in its website and NBO will pay for programming
costs required for NBO to gain access to and connect with Customer's website.
NBO agrees to provide fulfillment on each order that is transacted through the
Internet.
g. Relocation. Customer shall have the right at any time during the Term
to cause NBO to relocate the Kiosk to another location in the store front end
upon giving NBO at least thirty (30) days advance written notice of its
intention to relocate. In that event, Customer shall at its expense bring the
necessary utilities to the relocated Kiosk. NBO shall provide the technical
expertise, to assure that the Kiosk is functioning properly following the
relocation. Such technical expertise will be billed back to customer at an
hourly rate of $65.00 per hour.
2. RIGHTS AND OBLIGATIONS OF NBO.
a. The System. NBO will install the System at designated Customer
Properties at no cost to the Customer and will cause the System to be operated
only for the issuance of Gift Certificates and for no other purpose. All Gift
Certificates will be issued through the Kiosks using cash or debit card. NBO
will cause the Kiosk to be fully operational and activated on a date mutually
agreed upon by both parties.
The Kiosk is the exclusive property of NBO and will remain NBO's
property throughout the Term and thereafter. NBO is and shall be the sole owner
of the trade name "Neighborhood Box Office" and all gift certificate software,
trade names, trademarks and copyrights now used in or in the future used by NBO
in connection with the System. This does not include the names of participating
retailers on the NBO System.
b. Competing Installations. Customer understands and agrees that NBO has
the right to enter into agreements the same as or similar to this Agreement with
other retail establishments in the geographic vicinity of the Properties, and to
install its distribution components in such establishments and offer Gift
Certificates thereat. Customer understands these retailers will not be in the
same industry (grocery or drug stores) as the Customer. NBO herein agrees to
offer the Customer first right of refusal in the grocery/drug category for
implementation of the System in other markets where the Customer has presence
and is a major force in said market.
c. Advertising. NBO has the right to engage in an on-going program of
advertising and promoting the services which it offers, including any components
of the System that may be installed at other retail establishments located in
the geographic vicinity of the Properties. NBO may not, however, use Customer's
name or the name of any of its affiliates nor the name or likeness of the
Property in any advertising or promotion nor shall NBO engage in such
advertising and promotion at the Properties without the express written consent
of Customer, consent is at the Customer's sole and absolute discretion.
d. Maintenance and Training. During the Term NBO will maintain or cause
to be
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[**] ALL SECTIONS MARKED WITH TWO ASTERISKS [**] REFLECT PORTIONS WHICH HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION BY NEIGHBORHOOD BOX OFFICE, INC. AS PART OF A REQUEST FOR
CONFIDENTIAL TREATMENT.
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maintained, and make all necessary repairs or cause such repairs to be made to,
the System, including all warranty work on all hardware and software associated
with the Kiosk at no cost to Customer. NBO will provide training to personnel
designated by Customer in the operation of the System, including, but not
limited to, the method of reconciliation contemplated by Section 1(e) of this
Agreement. NBO will also conduct training sessions, as requested and approved by
Customer, for representatives of the Properties at no cost to Customer.
e. Convenience Fees. A convenience fee per certificate will be charged
for the Gift Certificates with such fees set forth in Addendum A Part I,
attached hereto. NBO shall pay to Customer its share of the fees within fifteen
(15) days following the end of each calendar month.
f. Gift Certificate Redemption. The Gift Certificates will initially be
in the form of executable bank checks that can be redeemed for merchandise or
services at any retail establishment participating in the system and deposited
into the account of such retail establishment. NBO will guarantee the redemption
funds to the retail establishment as long as said establishment follows the NBO
Gift Certificate redemption procedures. Such redemption procedures shall be
mutually agreed upon by the Parties and provided in writing to participating
retail establishments.
g. Management of Depository and Related Accounts. Certain depository and
other accounts will be established by NBO. Each such account shall clearly
indicate that NBO has no ownership interest in the amounts deposited in the
account and that such amounts are for the benefit of the holders of Gift
Certificates, subject to redemption.
h. Unredeemed Gift Certificates. NBO shall be responsible for and will
cause compliance with all applicable state abandoned property or escheat laws.
Any balance of unredeemed participating retailer Gift Certificates remaining
after compliance with all applicable laws shall be paid to NBO as fees for
services provided by NBO. NBO will also asses a management fee on all unredeemed
gift certificates, which fee will be paid for by the holder of the certificate
and will conform to all state laws as it applies to these fees.
i. Insurance; Indemnity. NBO shall indemnify Customer and save it
harmless for, from and against any and all claims, actions, damages, liabilities
and expenses suffered by Customer in connection with: (i) loss of life, personal
injury and/or damage to property or the environment suffered by third parties
arising from or out of the occupancy or use by NBO of the Property or any part
thereof, occasioned wholly or in part by any act or omission of NBO, its agents,
contractors, invitees or employees. At all times on and after the date of this
Agreement, NBO will carry and maintain, at its expense, a non-deductible (i)
commercial general liability insurance policy, including insurance against
assumed or contractual liability under this Agreement to afford protection with
respect to personal injury, death or property damage of not less than One
Million Dollars ($1,000,000.00) per occurrence combined single limit and Two
Million Dollars ($2,000,000.00) general aggregate; (ii) all-risks property and
casualty insurance policy, including theft, written at replacement cost value
and with replacement cost endorsement, covering all personal property of NBO
located at the Properties, including without limitation, all elements of the
System and (iii) if and to the extent required by law, worker's compensation
insurance policy, or similar insurance in form and amounts required by law.
Commercial general liability and all risks property and casualty insurance
policies evidencing such insurance shall, with respect to commercial general
liability policies, name Customer and/or its designee(s) as additional insured,
and shall be primary and non-contributory.
Neither Customer nor NBO shall be liable to the other Party or to any
insurance company (by way of subrogation or otherwise) insuring the other party
for any loss or damage to any building, structure or other tangible property or
any resulting loss of income or losses under worker's compensation laws even
though such loss or damage might have been occasioned by the negligence of such
Party, its agents or employees. The provisions of this paragraph shall not limit
the indemnification for liability to third parties contained in the preceding
paragraph.
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NBO shall indemnify Customer from and against any claims from
participating retailers, consumers, and any others in association with purchases
of participating retailer certificates from Customer's location.
j. Reporting and Audit. Within twenty (20) days of the end of each
month, NBO will provide Customer with a report showing the volume of Gift
Certificate issued during the preceding month. Such report shall indicate the
entire volume of Gift Certificates issued at Customers Properties, and will have
a summary of which were issued for cash, or debit card. An authorized officer or
agent of NBO will sign the report. Customer shall have the right to examine or
audit NBO's books and records relating to the Gift Certificates (for the
Property, only), at NBO's principal place of business and during normal business
hours, by informing NBO in writing of its desire to do so five (5) days in
advance. Within sixty (60) days of the end of each fiscal year, NBO will provide
Customer with a statement of showing the volume of Gift Certificates issued
during the Term, which shall be accompanied by the signed certificate of an
independent Certified Public Accountant stating specifically that (i) s/he has
examined the report of those issuances for the Term, (ii) his/her examination
included such tests of NBO's books and records as s/he considered necessary or
appropriate under the circumstances, and (iii) that such report presents fairly
such issuances.
k. Gift Certificate Stock and Processing. NBO shall be responsible for
providing to Customer, at NBO's expense, all gift certificate stock and document
processing necessary to generate the Gift Certificates.
l. Laws Compliance. NBO shall comply and shall cause the Gift
Certificate Program to comply with all federal, state, regional, county,
municipal and other governmental statutes, laws, rules, orders, regulations and
ordinances applicable to the Gift Certificate Program, including, but not
limited to, applicable escheat statutes.
3. AGREEMENT TERM:
a. Term. The term of this Agreement shall commence as of the date hereof
and shall terminate [**] years from the date executed hereof with two, one (1)
year options to renew. Either party may terminate this agreement by means of 90
day prior written notice, unless terminated in accordance with the provisions of
Section 5 below.
b. Termination. Upon the termination of this Agreement, NBO and Customer
will no longer issue Gift Certificates through the System. NBO will remove the
Kiosk from the Property within 14 days of receiving written notice, and restore
Property to original condition. If not removed within 14 days the Kiosk will be
considered abandoned property and shall become the sole property of Customer.
Unless Customer has terminated this Agreement due to an Event of Default by NBO
in accordance with Section 5, NBO will continue to process previously issued
Gift Certificates until the expiration date of the last Gift Certificate issued.
NBO and Customer will destroy all unused gift certificate stock in each of their
possession.
4. ASSIGNMENT.
a. Assignment by Customer. Customer may delegate, assign, transfer or
encumber its rights, duties, interests or obligations under this Agreement to
any subsidiary or affiliate of Customer or to any person or entity, which
acquires the Properties. No such transfer or assignment of this Agreement will
constitute a termination of this Agreement. Customer agrees (subject to any
confidentiality agreement which Customer may have with the Third Party) to
disclose to NBO the name of and a contact person associated with the Third Party
purchaser so that NBO may contact such Third Party concerning this Agreement and
NBO's services.
b. Assignment by NBO. NBO may not delegate, assign, transfer or encumber
its rights, duties, and interests of obligations under this Agreement (each an
"Assignment") except with the written consent of the Customer.
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[**] ALL SECTIONS MARKED WITH TWO ASTERISKS [**] REFLECT PORTIONS WHICH HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION BY NEIGHBORHOOD BOX OFFICE, INC. AS PART OF A REQUEST FOR
CONFIDENTIAL TREATMENT.
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5. DEFAULT AND TERMINATION.
The following events shall constitute an "Event of Default":
a. Bankruptcy. The adjudication of either Party as being bankrupt,
insolvent or unable to pay its debts and obligations as they become due or if
either Party places any of its property or assets in liquidation for the purpose
of meeting claims of its creditors or a trustee or receiver is appointed. If any
such adjudication is involuntary, it shall not be an Event of Default hereunder
if such Party is seeking to have the adjudication dismissed and in fact causes
it to be dismissed within sixty (60) days.
b. Failure to Perform. The failure of either Party to perform or fulfill
at the time and in the manner herein provided any duty, obligation or condition
required to be performed or fulfilled by that Party hereunder; provided,
however, that the non-performing Party shall have been given ten (10) days
written notice if such non-performance is the non-payment of money and thirty
(30) days' prior written notice for any other non-performance, specifying the
non-performance or non-fulfillment that it is charged with having committed and
shall have failed to cure such non-performance or non-fulfillment within such
ten (10) day or thirty (30) day period, as the case may be; provided, however,
in the event of a non-monetary non-performance or non-fulfillment, there shall
not be an Event of Default hereunder if the defaulting Party shall be diligently
pursuing the curing of such non-performance and in fact completes the cure
within sixty (60) days from the date of the notice.
Upon the occurrence of an Event of Default, the non-defaulting Party
shall have the right to terminate this Agreement upon written notice to the
other Party. If this Agreement is terminated pursuant to this Section, the
defaulting Party nevertheless shall remain liable for all damages which may be
due or sustained by the non-defaulting Party, including, but not limited to,
reasonable attorneys' fees, costs and expenses incurred by the non-defaulting
Party in pursuit of its remedies hereunder.
6. MISCELLANEOUS PROVISIONS.
a. Applicable Law. All matters pertaining to the validity, performance,
construction or effect of this Agreement, and the legal relations between the
Parties, shall be governed by and construed in accordance with the laws of the
State of Utah applicable to agreements made and wholly to be performed in said
State without regard to principles of conflicts of law. Any disputes arising
under this Agreement or the transactions contemplated hereunder shall be
resolved in the state and federal courts residing in Salt Lake City, Salt Lake
County, Utah.
b. Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the Parties with respect to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings related to the
subject matter hereof. No representation, promise, inducement or statement of
intention has been made by either of the Parties that is not embodied in this
Agreement, and neither of the Parties shall be bound by or be liable for any
alleged representation, promise, inducement or statement of intention that is
not specifically set forth in or referred to herein.
c. No Joint Venture. NBO and Customer are independent contractors. No
agency, partnership, joint venture or employee-employer relationship is intended
or created by this Agreement, and neither party shall hold itself out in a
manner that would indicate any such relationship exists in any matter, including
but not limited to, advertising.
d. Notice. Any notice or other communication required or permitted to be
given hereunder shall be effective upon receipt by the intended recipient at the
address indicated in the introductory paragraph above (or such other address as
either Party shall provide to the other Party by one of the means set forth
herein below). Receipt shall be deemed to have occurred upon the
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earlier of (a) the date of actual receipt by the intended Party by registered
mail, (b) five (5) days after such notice is deposited in the United States
mail, certified or registered, postage prepaid and properly addressed, (c) the
date such notice is sent to the other Party by telecopy (with receipt
confirmation), provided such notice is promptly provided to the other Party by
United States mail, certified or registered, postage prepaid and properly
addressed, or (d) one (1) business day after such notice is deposited with a
recognized overnight courier service with instructions for overnight delivery.
e. Force Majeure. Neither Party shall be responsible to the other Party
for non-performance or delay in performance of any of the terms, duties,
obligations or conditions contained in this Agreement due to acts of God, acts
of governments, wars, riots, strikes, accidents or other causes beyond the
control of the Parties. In no event shall financial inability excuse a Party's
performance hereunder.
f. Confidentiality. The Parties agree that the contents and existence of
this Agreement shall be considered confidential and shall not be disclosed to
any third person or entity by either Party except with the prior written
approval of the other Party or upon the order of a court of competent
jurisdiction.
g. Severability. In the event that any provision hereof shall be deemed
in violation of any applicable law, rule or regulation, or held to be invalid by
any court in which this Agreement shall be interpreted, the violation or
invalidity of any particular provision hereof shall not be deemed to affect any
other provision hereof, but this Agreement shall be thereafter interpreted as
though the particular provision so held to be in violation or invalid were not
contained herein.
h. Miscellaneous. The above Recitals and all Attachments attached hereto
are deemed to be incorporated herein by reference. Notwithstanding any rule or
maxim of construction to the contrary, any ambiguity or uncertainty in this
Agreement shall not be construed against either Party based upon authorship of
any of the provisions hereof.
IN WITNESS WHEREOF, the Parties have entered into this Agreement
effective as of the Effective Date.
CUSTOMER: NBO:
--------- ----
Xxxxx'x Food & Drug Centers, Inc. Neighborhood Box Office, Inc.
By: By:
--------------------------------- ----------------------------------
Signature Signature
--------------------------------- ----------------------------------
Name (printed) Name (printed)
--------------------------------- ----------------------------------
Title Title
--------------- ---------------
Date Date
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ADDENDUM A
ATTACHED TO AND FORMING A PART OF THE CONTRACT SERVICES AGREEMENT DATED April
11, 2000 BY AND BETWEEN NEIGHBORHOOD BOX OFFICE, INC. ("NBO") AND XXXXX'X FOOD &
DRUG CENTERS, INC. ("CUSTOMER")
I. CONVENIENCE FEE. Customer and NBO agree to the following fee structure and
revenue share:
[**] of [**] per certificate consumer convenience fees
[**] of NBO's participating retailer redemption fees
[**] of on-screen advertising
[**] of on-certificate advertising
II. POWER AND TELEPHONE SPECIFICATIONS. The requirement for installation of
power at the Kiosk location is a dedicated 110 Volt, 20-amp circuit, either wall
mount or floor mount, (NBO, with Customers assistance, will be responsible to
insure that the power requirements are installed at the designated Kiosk
location prior to installation of the hardware). The wall mount needs to be
within 3 feet of the center of the Kiosk location and the floor mount needs to
be directly under the Kiosk location, with a 4-inch variance allowed in any
direction from the center of the Kiosk location. The telephone requirement is a
56k modem line. The connector should be either wall mount or floor mount. The
wall mount should be within 2 feet of the Kiosk location and the floor mount
should be between 2 and 3 feet long and not located under the Kiosk installation
location. Proper coordination will need to occur between Store Management and
NBO's Operations department.
III. Proposed List of Customer Properties for System installation;
0000 Xxxxxxxx Xxxx., Xxxxx, XX
000 X. Xxxx Xxxxxx, Xxxxxxx Xxxx, XX
2560 X. 000 X., Xxxxx Xxxxx, XX
0000 Xxxxxxxx Xxxx., Xxxxx, XX
0000 X. Xxxxxxx 00, Xxxxxxxxxx, XX
0000 X. Xxxx Xxxxxx, Xxxxxx, XX
000 X. 0000 X., Xxxxxxxx, XX
0000 X. Xxxxxxx, Xxxxxx, XX
2399 S. Main, Bountiful, UT
0000 X. 0xx X., Xxxx Xxxx Xxxx, XX
000 X. 000 X., Xxxx Xxxx Xxxx, XX
000 X. Xxxx Xxxxxx, Xxxxx, XX
0000 X. Xxxxxxx Xx., Xxxx Xxxx Xxxx, XX
8205 W. 3500 S., Magna, UT
0000 X. 000 X., Xxxx Xxxx, XX
0000 X. Xxxxx Xxx, Xxxx Xxxx, XX
000 0xx Xxx., Xxxx Xxxx Xxxx, XX
000 X. 0xx X., Xxxx Xxxx Xxxx, XX
7th X. 0000 X., Xxxx Xxxx Xxxx, XX
00 X. 0000 X., Xxxxxxx, XX
000 X. Xxxx, Xxxxxx, XX
000 X. 0000 X., Xxxx Xxxx Xxxx, XX
4643 X. 0000 X., Xxxx Xxxxxx Xxxx, XX
7061 S. 1700 W., West Jordan, UT
0000 X. 0000 X., Xxxx Xxxx Xxxx, XX
2039 E. 9400 S., Sandy, UT
000 Xxxxx X. Xxxxx Xx., Xxxxxxxx Xxxx, XX
[**] ALL SECTIONS MARKED WITH TWO ASTERISKS [**] REFLECT PORTIONS WHICH HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION BY NEIGHBORHOOD BOX OFFICE, INC. AS PART OF A REQUEST FOR
CONFIDENTIAL TREATMENT.
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000 X. 000 X., Xxxxxxxx Xxxxx, XX
000 X. 000 X., Xxxxxx, XX
0000 Xxxxxx Xxxx., Xxxx Xxxx Xxxx, XX
000 X. Xxxx Xxxxx Xxxx., Xxxxxxx, XX
000 X. 00000 X, Xxxxxx, XX
000 X. Xxxxxxx Xxxx., Xxxxx, XX
0000 X. Xx. Xxxxxx Xxxx, Xxxxx Xxxxxx, XX
00 X. Xxxxx, Xxxx, XX
00000 S. 1300 E., Sandy, UT
4080 W. 9000 S., West Jordan, UT
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ADDENDUM B
Banking Terms
ATTACHED TO AND FORMING A PART OF THE CONTRACT SERVICES AGREEMENT DATED April
11, 2000 BY AND BETWEEN NEIGHBORHOOD BOX OFFICE, INC. ("NBO") AND XXXXX'X FOOD &
DRUG CENTERS, INC. ("CUSTOMER")
The following described procedures will be implemented with the financial
institutions after the Contract Services Agreement is signed by both Parties and
prior to the issuance of any Gift Certificates by NBO.
1. [**]
2. [**]
3. [**]
[**] ALL SECTIONS MARKED WITH TWO ASTERISKS [**] REFLECT PORTIONS WHICH HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION BY NEIGHBORHOOD BOX OFFICE, INC. AS PART OF A REQUEST FOR
CONFIDENTIAL TREATMENT.
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[**]
[**] ALL SECTIONS MARKED WITH TWO ASTERISKS [**] REFLECT PORTIONS WHICH HAVE
BEEN REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION BY NEIGHBORHOOD BOX OFFICE, INC. AS PART OF A REQUEST FOR
CONFIDENTIAL TREATMENT.
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