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EXHIBIT 10.18
PEAPOD MARKETING PARTNERS
AGREEMENT
This Peapod Marketing Partners Agreement (this "Agreement") is
entered into as of October 5, 1998, between Peapod Inc., a Delaware
corporation ("Peapod"), and Online Specialty Retailing, Inc. d.b.a. Great
Food Online, a Washington corporation ("Great Food").
WHEREAS, Peapod provides a Peapod-branded Internet grocery shopping
and delivery service in several local metropolitan markets (the "Peapod Local
Service"), and has announced its intention to provide a Peapod-branded
Internet food information and shopping service for shipping on a national
basis (the "Peapod National Service," collectively the "Peapod Service");
WHEREAS, Great Food provides an Internet service which sells
certain specialty food products (the "Products"); and
WHEREAS, pursuant to the terms of this Agreement, Great Food will
make the Products available to Peapod customers in connection with the Peapod
Service.
NOW, THEREFORE, the parties agree as follows:
1. HOLIDAY PROMOTION. As soon as practical after October 1,
1998, and lasting through December 31, 1998, Peapod and Great
Food will conduct a promotional program pursuant to which
Peapod will market the XxxxxXxxx.xxx Web site to Peapod
Service customers ("Holiday Promotion"). The Holiday
promotion will consist of promotion on order confirmation
email, hyperlinks on order exit pages of the Internet versions
of the Peapod Service, direct mail, and other activities to be
mutually agreed between Peapod and Great Food. Great Food
will supply all marketing materials, including, direct mail
inserts and HTML content, at its cost, for inclusion in the
Holiday Promotion, and all such materials shall be subject to
the mutual approval of Great Food and Peapod.
(a) Peapod and Great Food will cooperate to design methods to
reasonably track the orders on XxxxxXxxx.xxx that result
directly from the Holiday Promotion, such as promotional
coding on direct mail and temporary cookies on Web
promotions. Great Food will pay Peapod a commission on
all Product purchases resulting directly from the Holiday
Promotion equal to [***] of the retail price of such
Products. Great Food will pay such commissions not later
than the 10th day of each of November, December and
January with respect to Product sales in the prior month,
less any reductions for
returns or other credits consistent with Great Food's
customer service policies. Great Food shall remit such
payments together with a report substantiating the amount
of payment.
(b) All orders generated from the Holiday Promotion will be
placed with XxxxxXxxx.xxx, and Great Food will ensure
fulfillment, provide customer service, collect funds and
perform such other functions consistent with its current
standard operating procedures.
2. ONLINE SERVICES. Peapod will provide the Peapod Service to
consumers in accordance with the standards and practices
determined by Peapod from time to time. Peapod will feature
and offer for sale Great Food's Products in the Peapod Service.
(a) Great Food will develop and maintain a customized website
for Peapod ("Customized Site") containing content and
Product offerings consistent with the XxxxxXxxx.xxx Web
site. Great Food will, so long as requested by Peapod,
host the Customized Site in its data center, and link the
Customized Site to the Peapod Service in a manner which
is as "seamless" as possible from the perspective of the
end user. Peapod may, upon its request and at its
expense, host the Customized Site at an alternative data
center or integrate specific data fields from the
XxxxxXxxx.xxx site into its Customized Site rather than
simply link to a duplicate of the Great Food site. Great
Food will cooperate with Peapod to facilitate these
requests. So long as Great Food hosts the Customized
Site, it will do so in a commercially reasonable
manner to ensure that the site performs comparably to the
XxxxxXxxx.xxx site and other Internet retailing services.
So long as Peapod hosts the Customized Site, it will
likewise do so in a commercially reasonable manner to
ensure that the site performs comparably to the
XxxxxXxxx.xxx site.
(b) Great Food will cooperate with Peapod to customize the
Customized Site to a form consistent with the look and
feel and other branding strategies of the Peapod Service.
The Great Food brand (which may include Great Food's
business name, trademarks, logos and domain name) will be
included and credited in the Customized Site, but the
extent of co-branding will be determined by Peapod based
on the design and content integration strategies of such
site. Great Food shall have the right from time to time
to review and approve the use of the Great Food brand in
connection with the Customized Site, and
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may, in its discretion, direct that some or all of the
Great Food brand identifiers be removed from the
Customized Site.
(c) Great Food will perform the necessary programming to
implement and maintain the Customized Site. This will
include initial product template development and content
re-purposing as well as ongoing product data and site
updates. Peapod will pay Great Food a non-recurring
engineering charge up to [***] to cover initial
development costs for development of the Customized Site.
Significant changes to the programming or layout of the
Customized Site will be made only at Peapod's expense,
including the payment of any additional non-recurring
engineering fees to Great Food. Great Food must approve
of the use its brand in connection with any such
significant change.
(d) Great Food and Peapod will cooperate to provide Peapod
Service customers with accurate and timely online product
information reflective of merchandising and pricing
strategies appropriate to the Peapod Service. The
Customized Site must offer the complete Product selection
available from time-to-time on XxxxxXxxx.xxx and at
retail prices no greater than those appearing on
XxxxxXxxx.xxx, except that Great Food may create
short-term specials and promotions unique to the
XxxxxXxxx.xxx marketing efforts. Great Food shall notify
Peapod of any Product, price or shipping charge change no
later than one week in advance of such change, and Peapod
and Great Food shall attempt to ensure that the
Customized Site and the XxxxxXxxx.xxx site pricing
schedules are synchronized on a frequent basis (e.g.,
daily, if appropriate).
(e) Upon mutual consent, and subject to available resources,
Great Food shall consult with Peapod regarding seasonal
and other promotional merchandising opportunities and
shall cooperate with Peapod in developing any new
Products which may be appropriate to the Peapod Service.
3. CUSTOMER SUPPORT SERVICES. Upon initial commercial launch of
the Customized Site, Great Food will provide first-line
telephonic customer support with respect to Products ordered
via the Peapod Service. Peapod and Great Food will cooperate
to develop a process for forwarding service calls from Peapod
to Great Food, and to make such service appear seamless to
Peapod Service customers. As soon as a transition can
reasonably be implemented, Peapod will assume such first-line
customer support, and
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Great Food will then provide second-level support to Peapod,
and will directly assist customers of the Customized Site only
when Peapod is reasonably unable to do so.
4. MARKETING SERVICES.
(a) Upon launch of the Peapod National Service, Great Food
will promote Peapod on its site, in mutually agreeable
locations and time periods. Peapod will pay the
following bounty fees to Great Food for transactions
conducted by new Peapod customers upon being referred
directly to the Peapod Service from the Great Food site:
(i) [***] for the initial grocery order by a new Peapod
customer pursuant to the Peapod Local Service, and
[***]for the third grocery order pursuant to the
Peapod Local Service by the same customer
(ii) [***] for the initial order by a new Peapod
customer pursuant to the Peapod National Service,
and [***] for the third order pursuant to the Peapod
National Service by the same customer
(iii) No bounty will be paid with respect to orders
containing exclusively Products or free promotional
products
(iv) Peapod shall implement accurate and reliable
procedures to identify such customers and track such
orders, and shall track such orders and remit
payment to Great Food on a quarterly basis together
with a report substantiating the amount of payment.
(v) Upon Peapod's request, and subject to mutual
agreement, Great Food will enter into Peapod's
standard Affiliate Program Agreement containing
terms not inconsistent with this Agreement
(b) Beginning upon the launch of the Peapod National Service,
Peapod shall have a right to approve all literature that
is included in Product packages shipped to Peapod Service
customers. Such literature shall specifically promote
the Products available from the Customized Site. Great
Food will use commercially reasonable efforts to develop
agreements and procedures by which its Product vendors
will include Peapod promotional literature in Products
purchased by
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Peapod Service customers. Peapod will supply such
literature to Great Food vendors at Peapod's expense.
(c) Peapod will cooperate with Great Food in the event that
Great Food wishes to promote the Customized Site to
Peapod customers who have previously purchased from such
Site. Any such promotion shall be executed by Peapod at
Great Food's expense, and the timing, promotional content
and other tactics of any promotion shall be subject to
the prior review and approval of Peapod, which approval
will not be unreasonably withheld.
5. PRODUCTS AND FULFILLMENT SERVICES.
(a) Great Food will use commercially reasonable efforts to
obtain a broad selection of quality Products and related
product information from appropriate vendors, and to make
such Products available via the Customized Site.
(b) Great Food shall use commercially reasonable efforts to
(i) cause vendors of Products to maintain appropriate
stocking levels of such Products necessary to satisfy
orders from the Customized Site in a timely manner, and
(ii) secure satisfactory arrangements with one or more
shipping companies such that Products ordered via the
Customized Site are shipped in a high quality and timely
manner.
(c) Peapod will collect orders from Peapod Service customers
in its order processing system, and forward such orders
to Great Food for fulfillment. Great Food shall be
responsible for fulfilling such orders through its
vendors and shipping agents. Peapod will be deemed to
have purchased Products from Great Food in connection
with any order from the Customized Site, and resold such
Products to the ordering customer. Great Food shall, as
between Great Food and Peapod, maintain the risk of loss
of all Products until such Products are accepted by the
ordering customer.
6. PRODUCT PRICING AND PAYMENT. Upon launch of the Customized
Site, Peapod will collect funds from the ordering customer
through its standard ordering procedures, and bear
responsibility for credit card authorization and collection
and fraud. Upon shipment, Great Food will invoice Peapod an
amount equal to [***] of the then current Great Food standard
retail price plus [***] of shipping charges per Great Food's
then current shipping charge schedule. Peapod will pay such
invoices on a monthly basis, not
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later than the 10th day of the month following receipt of
invoice, less any reductions for returns or other credits
consistent with Great Food's customer service policies.
7. RECORD KEEPING AND AUDIT.
(a) Each party shall keep complete and accurate records of
its performance under this Agreement and of the amounts
payable hereunder. Peapod shall collect payment from
Peapod Service customers and provide accounting services
according to mutually determined policies and procedures.
(b) During the term of this Agreement and for six (6) months
after the expiration or any termination of this
Agreement, an independent third-party representative of
Great Food, reasonably acceptable to Peapod, upon
reasonable notice and during Peapod's normal business
hours, shall have the right to conduct an audit of the
relevant portions of Peapod's books of account to verify
compliance with this Agreement. Peapod shall immediately
pay any overdue payments revealed by such audit(s),
together with interest thereon at the rate of 1.5% per
month (or the maximum permitted by applicable law, if
less) from the due date until paid. Great Food shall
bear the costs of the audit; provided, however, if the
audit reveals overdue payments in excess of five percent
(5%) of the total amount payable for the period subject
to the audit, then Peapod shall pay the costs of such
audit
8. EXCLUSIVITY. For the term of this agreement, and for a period
of six months following expiration or termination by either
party, Great Food agrees not to enter into any business
relationship with Xxxxxxxxx.xxx. For the term of this
agreement, and for a period of six months following expiration
or termination by either party, Peapod agrees not to enter
into any business relationship with any Great Food supplier.
9. TERM OF AGREEMENT. This Agreement shall commence as of the
date hereof and continue until December 31, 2000 unless
terminated in accordance with the terms herein.
(a) Either party may terminate this Agreement upon 60 days
prior written notice in the event of a breach by the
other party of a material term of this Agreement,
provided that the breaching party fails to cure such
breach within 60 days after receiving such notice.
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(b) The agreement may be terminated by either party upon 60
days prior written notice in the event that revenues for
Great Food generated by Peapod from aggregate Product
sales under paragraphs 1 and 6 (not including shipping
charges) through December 31, 1999 are less than [***].
(c) Upon expiration of the original term of this Agreement,
this Agreement may be extended by mutual agreement for
additional one year periods. In the absence of such
extension, this Agreement shall automatically renew on a
month-to-month basis until terminated by either party
upon 60 days prior written notice to the other party.
(d) Upon termination or expiration of this Agreement, the
operation of the Customized Site shall be discontinued,
and each party shall discontinue the use of the other
party's trademarks, trade names, domain names and
marketing materials. Each party shall return or destroy
any Confidential Information of the other party. Within
thirty (30) days of such termination or expiration,
Peapod shall pay to Great Food all sums due under this
Agreement.
10. INDEMNIFICATION AND INSURANCE.
(a) BY PEAPOD. Peapod agrees to indemnify and hold Great
Food, and any assignee or successor thereto, harmless
from and against any and all claims, costs, expenses,
damages and liabilities, including reasonable attorney's
fees, (i) arising out of the performance or lack of
performance by Peapod of its obligations contemplated by
this Agreement, or (ii) for infringement of patent,
copyright, trademark, trade secret or other intellectual
property rights of a third party arising out of (A) the
operation by Peapod of the Peapod Service, (B) any Peapod
contributions to the Customized Site, or (C) any Peapod
contributions to marketing or promotional materials.
(b) BY GREAT FOOD. Great Food agrees to indemnify and hold
Peapod, and any assignee or successor thereto, harmless
from and against any and all claims, costs, expenses,
damages and liabilities, including reasonable attorney's
fees, (i) arising out of the quality or fitness of any
Product delivered to a customer, or the failure by Great
Food, its vendors or shipping agents to honor a customer
order, (ii) arising out of the performance or lack of
performance by Great Food of its other obligations
contemplated by this Agreement, or (iii) for infringement
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of patent, copyright, trademark, trade secret or other
intellectual property rights of a third party arising out
of (A) the operation by Great Food of the XxxxxXxxx.xxx
online service, (B) any Great Food contributions to the
Customized Site, or (C) any Great Food contributions to
marketing or promotional materials. Great Food shall, at
its own expense, carry product liability insurance during
the term of this Agreement in amounts and against risks
customarily insured against by direct mail food vendors.
11. RESERVATION OF PROPERTY RIGHTS. Neither Peapod nor Great Food
will use the name or xxxx of the other in advertising or
marketing materials or on web sites without the other's prior
approval, which approval shall not be unreasonably withheld.
Each party expressly reserves all right, title and interest in
its respective name, domain name, logo and other trademarks
and service marks, and all night, title and interest in the
content, software and information comprising their respective
services. Nothing herein shall be deemed a conveyance of any
such right, title or interest, or any part thereof. Great Food
shall own the programming code implementing the Customized
Site to the extent that such code constitutes original or
derivative works of Great Food intellectual property. Prior
to any modification to the programming, code implementing the
Customized Site, the parties shall agree on the intellectual
property rights thereto.
12. TITLE TO GOODS; RISK OF LOSS. Upon launch of the Customized
Site, Great Food will sell Products to Peapod, and Peapod will
in turn sell such Products to customers of the Peapod Service.
The Products shall be held at Great Food risk and expense
with respect to loss and damage from any cause, including,
Acts of God and force majeure, spoilage and shrinkage, and
taxes and charges of any kind until such time as the Products
are delivered to Peapod customers, excluding sales and other
taxes arising out of the retail sale of Products.
13. RESOLUTION OF DISPUTES. Any controversy or claim arising out
of or relating to this contract, or the breach thereof, shall
be settled by arbitration administered by the American
Arbitration Association in accordance with its Commercial
Rules, and judgment on the award rendered by the arbitrator
may be entered in any court having jurisdiction thereof. The
arbitration proceedings shall be conducted at an agreed-upon
neutral site or sites designated by the arbitrator. The
arbitrator shall have the authority to award any remedy or
relief that a court of competent jurisdiction could order or
grant including, without limitation, the issuance of an
injunction. However, either party may, without inconsistency
with this arbitration
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provision, apply to any court having jurisdiction hereof and
seek interim injunctive relief, to the extent that the
arbitrator is not lawfully empowered to award such relief,
until the arbitration award is rendered or the controversy is
otherwise resolved. Except as necessary in court proceedings
to enforce this arbitration provision or an award rendered
hereunder, or to obtain interim injunctive relief, neither a
party nor an arbitrator may disclose the existence, content,
or results of any arbitration hereunder without the prior
written consent of both parties. The parties acknowledge that
this Agreement evidences a transaction involving interstate
commerce. Notwithstanding any choice of law provision included
in this Agreement, the United States Federal Arbitration Act
shall govern the interpretation and enforcement of this
arbitration provision.
14. ISSUANCE OF WARRANTS. In connection with the execution of
this Agreement, the parties have entered into a warrant
agreement in the form attached hereto as Schedule A. The terms
of such warrant agreement shall survive any termination of
this Agreement.
15. GENERAL PROVISIONS.
(a) CONFIDENTIALITY. The obligations of the parties with
respect to Confidential Information are set forth in the
Confidentiality Agreement attached hereto as Schedule B.
(b) ENTIRE AGREEMENT; MODIFICATIONS. Peapod and Great Food
acknowledge that there are no oral or written agreements
or understandings between Peapod and Great Food with
respect to the subject matter of this Agreement other
than as set forth herein and that this Agreement reflects
the entire agreement between the parties with respect
thereto. Any modification or amendment to this Agreement
shall be binding only if in writing, and signed by the
respective parties hereto.
(c) RELATIONSHIP OF THE PARTIES. The relationship of Peapod
and Great Food shall be that of independent contractors,
and nothing contained herein shall create an agency,
partnership, joint venture, franchise, fiduciary or other
relationship.
(d) ASSIGNMENT. This Agreement shall be binding upon, and
shall inure to the benefit of, Peapod, Great Food and
their respective successors and permitted assigns;
provided, however, that neither Peapod nor Great Food may
assign this Agreement without the other party's
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prior written consent, which consent shall not be
unreasonably withheld, except that consent shall not be
required in connection with a merger, reorganization or
acquisition of substantially all of the assets of a party.
(e) NOTICES. Any written notice provided for herein shall be
sent via certified or registered mail as follows:
If to Peapod, to:
Peapod Inc.
Xxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: President
Tel: 000-000-0000
Fax: 000-000-0000
with a copy to:
Peapod Inc.
0000 Xxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Tel: 000-000-0000
Fax: 000-000-0000
If to Great Food, to
Online Specialty Retailing, Inc. dba Great Food Online
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: President
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Online Specialty Retailing, Inc. dba Great Food Online
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Chairman
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Tel: (000) 000-0000
Fax: (000) 000-0000
(f) FORCE MAJEURE. Any delay or failure of either party to
perform hereunder solely as a result of a labor
organization or dispute, governmental action or other
event or condition outside of such party's control shall
not constitute a breach of this Agreement.
Notwithstanding the foregoing, if Great Food is delayed
or is unable to perform hereunder for more than 60 days,
Peapod may seek another preferred supplier for products
that will replace the Products and may terminate this
Agreement in whole or in part.
(g) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of
Illinois, without regard to principles of conflict of
laws.
(h) AUTHORITY. Each of the parties hereto represents and
warrants that (i) it has the power and authority to enter
into this Agreement and to perform its obligations
hereunder, (ii) the execution and delivery by such party
of this Agreement and its performance hereunder have been
duly authorized by all necessary action on its part, and
(iii) this Agreement constitutes the legal, valid and
binding agreement of such party, enforceable in
accordance with its terms.
(i) PARTIAL INVALIDITY. If any one or more provisions
contained herein is held to be invalid, illegal or
unenforceable in any respect, such provision shall be
ineffective to the extent of such invalidity,
illegality or unenforceability without invalidating the
remainder of such invalid, illegal or unenforceable
provision or provisions or any other provision hereof.
(j) WAIVERS. Any term or provision of this Agreement may be
waived by the party entitled to the benefit thereof. Any
such waiver shall be validly and sufficiently authorized
for the purposes of this Agreement, as to any party, if
it is in writing and signed by an authorized
representative of such party. The failure of any party
hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of any party
thereafter to enforce each and every such provision. No
waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.
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IN WITNESS WHEREOF, the parties hereto have caused their respective
names to be subscribed by their duly authorized representatives.
PEAPOD, INC. ONLINE SPECIALTY RETAILING, INC.
dba Great Food Online
By: /s/ Xxxx X. Xxxxxx By: /s/ Xxxxxxxx X. Xxxxxx
----------------------------------- ----------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxxxx X. Xxxxxx
--------------------------------- --------------------------------
Title: Chief Operating Officer Title: Chairman
-------------------------------- -------------------------------
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SCHEDULE A
TO THE PEAPOD MARKETING PARTNERS
AGREEMENT
DATED AS OF OCTOBER 5, 1998
WARRANT AGREEMENT
(ATTACHED)
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SCHEDULE B
TO THE PEAPOD MARKETING PARTNERS
AGREEMENT
DATED AS OF OCTOBER 5, 1998
CONFIDENTIALITY AGREEMENT
(ATTACHED)
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