<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 27, 1999
REGISTRATION NO. 333-78985
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
1-800-FLOWERS.COM, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 5992 11-3117311
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
1600 STEWART AVENUE
WESTBURY, NEW YORK 11590
(516) 237-6000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
------------------------------
JAMES F. MCCANN
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
1-800-FLOWERS.COM, INC.
1600 STEWART AVENUE
WESTBURY, NEW YORK 11590
(516) 237-6000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
ALEXANDER D. LYNCH, ESQ. PAUL P. BROUNTAS, ESQ.
KENNETH R. MCVAY, ESQ. BRENT B. SILER, ESQ.
BROBECK, PHLEGER & HARRISON LLP HALE AND DORR LLP
1633 BROADWAY, 47TH FLOOR 60 STATE STREET
NEW YORK, NEW YORK 10019 BOSTON, MASSACHUSETTS 02109
(212) 581-1600 (617) 526-6000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
PART II: INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth an estimate of the costs and expenses, other
than the underwriting discounts and commissions, payable by the Registrant in
connection with the issuance and distribution of the class A common stock being
registered.
<TABLE>
<S> <C>
SEC registration fee........................................... $ 34,528
NASD filing fee................................................ 15,500
NASDAQ listing fee............................................. 95,000
Legal fees and expenses........................................ 500,000
Accountants' fees and expenses................................. 300,000
Printing expenses.............................................. 350,000
Blue sky fees and expenses..................................... 5,000
Transfer agent and registrar fees and expenses................. 15,000
Miscellaneous.................................................. 184,972
----------
Total.................................................... $1,500,000
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----------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, or DGCL, makes
provision for the indemnification of officers and directors in terms
sufficiently broad to indemnify officers and directors under certain
circumstances from liabilities (including reimbursement for expenses incurred)
arising under the Securities Act. Section 145 of the DGCL empowers a corporation
to indemnify its directors and officers and to purchase insurance with respect
to liability arising out of their capacity or status as directors and officers,
provided that this provision shall not eliminate or limit the liability of a
director: (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
arising under Section 174 of the DGCL, or (iv) for any transaction from which
the director derived an improper personal benefit. The DGCL provides further
that the indemnification permitted thereunder shall not be deemed exclusive of
any other rights to which the directors and officers may be entitled under the
corporation's bylaws, any agreement, a vote of stockholders or otherwise.
The certificate of incorporation of 1-800-FLOWERS.COM provides for
indemnification of our directors against, and absolution of, liability to
1-800-FLOWERS.COM and its stockholders to the fullest extent permitted by the
DGCL. 1-800-FLOWERS.COM maintains directors' and officers' liability insurance
covering certain liabilities that may be incurred by our directors and officers
in connection with the performance of their duties.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
The following information regarding the issuance of the Registrant's
securities does not give effect to the recapitalization or subsequent split of
its common stock. Pursuant to the Registrant's recapitalization, each share of
class A common stock outstanding will be automatically converted into one share
of new class B common stock and each share of class B common stock will be
automatically converted into one share of new class B common stock. In May 1999,
each share of class C common stock was converted into one share of class B
common stock and cash. Pursuant
II-1
<PAGE>
to the stock split, each share of common stock will be split into 10 shares of
the same class. The Registrant has issued the following securities since May
1996:
1. On June 28, 1996, the Registrant issued 8,476.77 shares of class C
common stock to James F. McCann as partial repayment for a debt owed by the
Registrant to Mr. McCann.
2. From February 3, 1997 to January 18, 1999, the Registrant granted
123,750 options to purchase Class B common stock to 29 employees at exercise
prices ranging from $13.00 to $20.00.
3. On June 28, 1998, the Registrant issued 76,293 shares of class B
common stock to James F. McCann as partial repayment for a debt owed by the
Registrant to Mr. McCann.
4. On May 20, 1999, the Registrant issued 1,127,546 shares of preferred
stock for an aggregate amount of $117.4 million. The preferred stock
automatically converts into class A common stock upon the closing of the
initial public offering.
The issuances of the above securities were deemed to be exempt from
registration under the Securities Act in reliance on Section 4(2) of the
Securities Act, or Regulation D promulgated thereunder, or Rule 701 promulgated
under Section 3(b) of the Securities Act, as transactions by an issuer not
involving a public offering or transactions pursuant to compensatory benefit
plans and contracts relating to compensation as provided under Rule 701. The
recipients of securities in each of these transactions represented their
intention to acquire the securities for investment only and not with view to or
for sale in connection with any distribution thereof and appropriate legends
were affixed to the share certificates and instruments issued in such
transactions. All recipients had adequate access, through their relationship
with the Registrant, to information about the Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
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<C> <S>
1.1(*) Form of Underwriting Agreement.
3.1(++) Third Amended and Restated Certificate of Incorporation.
3.2(++) Form of Amendment No. 1 to Third Amended and Restated Certificate of
Incorporation to be effective upon the initial public offering.
3.3(++) Amended and Restated By-laws.
4.1(++) Specimen class A common stock certificate.
4.2(++) See Exhibits 3.1, 3.2 and 3.3 for provisions of the Certificate of
Incorporation and By-laws of the Registrant defining the rights of holders of
Common Stock of the Registrant.
4.3(++) Form of Warrant.
5.1(++) Opinion of Brobeck, Phleger & Harrison LLP.
10.1(++) Lease, commencing on May 15, 1998, between 1600 Stewart Avenue, L.L.C and
800-FLOWERS, Inc.
10.2(++) Investment Agreement, dated as of January 16, 1995, among Chemical Venture
Capital Associates, Teleway, Inc. and James F. McCann.
10.3(++) Consent and Amendment No. 1 to Investment Agreement, dated as of May 20,
1999, among Chase Capital Partners, 1-800-FLOWERS.COM, Inc. and James F.
McCann.
10.4(++) Credit Agreement, dated as of March 19,1999, between 1-800-FLOWERS, Inc. and
The Chase Manhattan Bank.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
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<C> <S>
10.5(+) Interactive Marketing Agreement, dated as of May 1, 1997, between America
Online, Inc. and 800-FLOWERS, Inc.
10.6(+) Interactive Marketing Agreement, dated as of January 1, 1998, between America
Online, Inc. and 800-FLOWERS, Inc.
10.7(+) E-Commerce Merchant Agreement for The Plaza on MSN, with a term start date of
October 21, 1997, between The Microsoft Network, L.L.C. and 800-FLOWERS,
Inc., as amended.
10.8(+) Sponsorship Agreement, dated as of May 1, 1998, between Excite, Inc. and
800-FLOWERS, Inc.
10.9(+) Development and Hosting Agreement, dated as of June 18, 1999, between Fry
Multimedia, Inc. and 800-Gifthouse, Inc.
10.10(++) 1997 Stock Option Plan, as amended.
10.11(++) Stockholders' Agreement, dated as of April 3, 1998, among The Plow & Hearth,
Inc., 1-800-FLOWERS, Inc. and the Persons Set Forth on Schedule A thereto.
10.12(++) Amendments to Stockholders' Agreement, dated as of May 17, 1999, among The
Plow & Hearth, Inc., 1-800-FLOWERS.COM, Inc. and the Persons Set Forth on
Schedule A thereto.
10.13(++) Employment Agreement, effective as of January 4, 1999, between John W. Smolak
and 1-800-FLOWERS, Inc.
10.14(++) Employment Agreement, effective as of April 3, 1998, between Peter G. Rice
and 1-800-FLOWERS, Inc.
10.15(++) Employment Agreement, effective as of January 18, 1999, between Kerry W. Coin
and 1-800-FLOWERS, Inc.
10.16(++) Investors' Rights Agreement, dated as of May 20, 1999, among
1-800-FLOWERS.COM, Inc. James F. McCann, Christopher G. McCann and the
persons designated as Investors on the signature pages thereto.
10.17(++) Stock Purchase Agreement, dated as of May 20, 1999, among 1-800-FLOWERS.COM,
Inc., James F. McCann, Christopher G. McCann and the Investors listed on
Schedule A thereto.
10.18 1999 Stock Incentive Plan.
10.19(++) Employment Agreement, effective as of July 1, 1999, between James F. McCann
and 1-800-FLOWERS.COM, Inc.
10.20(++) Employment Agreement, effective as of July 1, 1999, between Christopher G.
McCann and 1-800-FLOWERS.COM, Inc.
10.21(++) First Amendment to Credit Agreement Waiver and Consent, entered into as of
May 20, 1999, between 1-800-FLOWERS.COM, Inc. and The Chase Manhattan Bank.
10.22(++) Letter Agreements between 1-800-FLOWERS.COM, Inc. (formerly known as Teleway,
Inc.) and Bayberry Advisors, Inc., dated September 30, 1993, March 8, 1995,
May 8, 1996, May 8, 1997, May 8, 1998 and May 8, 1999.
21.1(++) Subsidiaries of the Registrant.
23.1(++) Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1).
23.2* Consent of Ernst & Young LLP.
23.3* Consent of KPMG LLP.
24.1(++) Powers of Attorney (included in the Signature Page).
27.1(++) Financial Data Schedule for the year ended June 28, 1998.
27.2(++) Financial Data Schedule for the nine months ended March 28, 1999.
</TABLE>
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(*) To be filed by amendment.
(+) Confidential treatment requested for certain portions of this Exhibit
pursuant to Rule 406 promulgated under the Securities Act.
(++) Previously filed.
II-3
<PAGE>
(b) Financial Statement Schedules
Schedule II--Valuation and Qualifying Accounts
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 4 to the registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on this 26th day of July, 1999.
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Dated: July 26, 1999 *
--------------------------------------------
James F. McCann
Chief Executive Officer
Chairman of the Board of Directors
(Principal Executive Officer)
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 4 to the registration statement has been signed by the following persons in
the capacities indicated below:
<TABLE>
<S> <C>
Dated: July 26, 1999 *
--------------------------------------------
James F. McCann
Chief Executive Officer
Chairman of the Board of Directors
(Principal Executive Officer)
Dated: July 26, 1999 /s/ JOHN W. SMOLAK
--------------------------------------------
John W. Smolak
Senior Vice President--Finance and
Administration (Principal Financial and
Accounting Officer)
Dated: July 26, 1999 *
--------------------------------------------
Christopher G. McCann
Director, Senior Vice President
Dated: July 26, 1999 *
--------------------------------------------
T. Guy Minetti
Director
Dated: July 26, 1999 *
--------------------------------------------
Jeffrey C. Walker
Director
Dated: July 26, 1999 *
--------------------------------------------
David Beirne
Director
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Dated: July 26, 1999 *
--------------------------------------------
Charles R. Lax
Director
Dated: July 26, 1999 *
--------------------------------------------
Kevin J. O'Connor
Director
</TABLE>
<TABLE>
<S> <C> <C>
*By: /s/ JOHN W. SMOLAK
--------------------------------
John W. Smolak
Attorney-in-fact
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION PAGE
- ----------- ---------------------------------------------------------------------- -----------
<C> <S> <C>
1.1(*) Form of Underwriting Agreement.
3.1(++) Third Amended and Restated Certificate of Incorporation.
3.2(++) Form of Amendment No. 1 to Third Amended and Restated Certificate of
Incorporation to be effective upon the initial public offering.
3.3(++) Amended and Restated By-laws.
4.1(++) Specimen class A common stock certificate.
4.2(++) See Exhibits 3.1, 3.2 and 3.3 for provisions of the Certificate of
Incorporation and By-laws of the Registrant defining the rights of
holders of Common Stock of the Registrant.
4.3(++) Form of Warrant.
5.1(++) Opinion of Brobeck, Phleger & Harrison LLP.
10.1(++) Lease, commencing on May 15, 1998, between 1600 Stewart Avenue, L.L.C
and 800-FLOWERS, Inc.
10.2(++) Investment Agreement, dated as of January 16, 1995, among Chemical
Venture Capital Associates, Teleway, Inc. and James F. McCann.
10.3(++) Consent and Amendment No. 1 to Investment Agreement, dated as of May
20, 1999, among Chase Capital Partners, 1-800-FLOWERS.COM, Inc. and
James F. McCann.
10.4(++) Credit Agreement, dated as of March 19,1999, between 1-800-FLOWERS,
Inc. and The Chase Manhattan Bank.
10.5(+) Interactive Marketing Agreement, dated as of May 1, 1997, between
America Online, Inc. and 800-FLOWERS, Inc.
10.6(+) Interactive Marketing Agreement, dated as of January 1, 1998, between
America Online, Inc. and 800-FLOWERS, Inc.
10.7(+) E-Commerce Merchant Agreement for The Plaza on MSN, with a term start
date of October 21, 1997, between The Microsoft Network, L.L.C. and
800-FLOWERS, Inc., as amended.
10.8(+) Sponsorship Agreement, dated as of May 1, 1998, between Excite, Inc.
and 800-FLOWERS, Inc.
10.9(+) Development and Hosting Agreement, dated as of June 18, 1999, between
Fry Multimedia, Inc. and 800-Gifthouse, Inc.
10.10(++) 1997 Stock Option Plan, as amended.
10.11(++) Stockholders' Agreement, dated as of April 3, 1998, among The Plow &
Hearth, Inc., 1-800-FLOWERS, Inc. and the Persons Set Forth on
Schedule A thereto.
10.12(++) Amendments to Stockholders' Agreement, dated as of May 17, 1999, among
The Plow & Hearth, Inc., 1-800-FLOWERS.COM, Inc. and the Persons Set
Forth on Schedule A thereto.
10.13(++) Employment Agreement, effective as of January 4, 1999, between John W.
Smolak and 1-800-FLOWERS, Inc.
10.14(++) Employment Agreement, effective as of April 3, 1998, between Peter G.
Rice and 1-800-FLOWERS, Inc.
10.15(++) Employment Agreement, effective as of January 18, 1999, between Kerry
W. Coin and 1-800-FLOWERS, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NUMBER DESCRIPTION PAGE
- ----------- ---------------------------------------------------------------------- -----------
<C> <S> <C>
10.16(++) Investors' Rights Agreement, dated as of May 20, 1999, among
1-800-FLOWERS.COM, Inc. James F. McCann, Christopher G. McCann and the
persons designated as Investors on the signature pages thereto.
10.17(++) Stock Purchase Agreement, dated as of May 20, 1999, among
1-800-FLOWERS.COM, Inc., James F. McCann, Christopher G. McCann and
the Investors listed on Schedule A thereto.
10.18 1999 Stock Incentive Plan.
10.19(++) Employment Agreement, effective as of July 1, 1999, between James F.
McCann and 1-800-FLOWERS.COM, Inc.
10.20(++) Employment Agreement, effective as of July 1, 1999, between
Christopher G. McCann and 1-800-FLOWERS.COM, Inc.
10.21(++) First Amendment to Credit Agreement Waiver and Consent, entered into
as of May 20, 1999, between 1-800-FLOWERS.COM, Inc. and The Chase
Manhattan Bank.
10.22(++) Letter Agreements between 1-800-FLOWERS.COM, Inc. (formerly known as
Teleway, Inc.) and Bayberry Advisors, Inc., dated September 30, 1993,
March 8, 1995, May 8, 1996, May 8, 1997, May 8, 1998 and May 8, 1999.
21.1(++) Subsidiaries of the Registrant.
23.1(++) Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1).
23.2* Consent of Ernst & Young LLP.
23.3* Consent of KPMG LLP.
24.1(++) Powers of Attorney (included in the Signature Page).
27.1(++) Financial Data Schedule for the year ended June 28, 1998.
27.2(++) Financial Data Schedule for the nine months ended March 28, 1999.
</TABLE>
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(*) To be filed by amendment.
(+) Confidential treatment requested for certain portions of this Exhibit
pursuant to Rule 406 promulgated under the Securities Act.
(++) Previously filed.
<PAGE>
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 22000 AOL Way, Dulles,
Virginia 20166 and 800 Flowers, Inc. ("FLOWERS"), a New York corporation, with
its principal offices at 1600 Stewart Avenue, Westbury, New York 11590 (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).
<PAGE>
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.
2
**** 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.
<PAGE>
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.
<PAGE>
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
4
<PAGE>
("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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
8
**** 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.
<PAGE>
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.
<PAGE>
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 mark involving a Mark 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
10
<PAGE>
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 Mark.
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 "AOL.COM" 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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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: Wendy L. Brown Attn: Christopher G. McCann
Copy to: Donna Iucolano
With copies to: With copy to:
Senior Vice President, Business Affairs and Gerard M. Gallagher
Vice President and General Counsel Gallagher, Walker & Bianco
America Online, Inc. 98 Willis Avenue
22000 AOL Way Mineola, NY 11501
Dulles, VA 20166
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
<PAGE>
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
<PAGE>
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/ David M. Colburn By: /s/ Christopher McCann
------------------------------- -------------------------------
Print Name: David M. Colburn Print Name: Christopher McCann
------------------------ ------------------------
Title: Senior Vice President Title: Vice President
----------------------------- -----------------------------
Date: 7/1/97 Date: 7/1/97
------------------------------ ------------------------------
23
<PAGE>
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, AOL.com, 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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
Exhibit 10.6
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.
EXECUTION COPY
CONFIDENTIAL
INTERACTIVE MARKETING AGREEMENT
This Interactive Marketing Agreement (the "Agreement"), dated as of
January 1, 1998 (the "Effective Date"), is between America Online, Inc. ("AOL"),
a Delaware corporation, with offices at 22000 AOL Way, Dulles, Virginia 20166,
and 800-Flowers, Inc. ("1-800-Flowers"), a New York corporation, with its
principal offices at 1600 Stewart Avenue, Westbury, New York 11590. AOL and
1-800-Flowers may be referred to individually as a "Party" and collectively as
"Parties."
INTRODUCTION
AOL and 1-800-Flowers are parties to the Interactive Marketing
Agreement, dated May 1, 1997 (the "Existing Agreement"), whereby AOL promotes
and distributes an interactive site referred to in the Existing Agreement as the
Online Area. AOL and 1-800-Flowers each desires to enter into a separate
interactive marketing relationship whereby AOL will promote and distribute an
interactive site referred to (and further defined) herein as the Affiliated
1-800-Flowers Site. This relationship is further described below and is subject
to the terms and conditions set forth in this Agreement. Defined terms used but
not defined in the body of the Agreement will be as defined on Exhibit B
attached hereto.
TERMS
1. PROMOTION, DISTRIBUTION AND MARKETING.
1.1. AOL PROMOTION OF AFFILIATED 1-800-FLOWERS SITE. AOL will
provide 1-800-Flowers with the promotions on AOL.com for the
Affiliated 1-800-Flowers Site which are described on Exhibit A
(the "Promotions"). AOL reserves the right to redesign or
modify the organization, structure, "look and feel,"
navigation and other elements of the AOL Network at any time.
In the event such modifications materially and adversely
affect any specific Promotion, AOL will work with
1-800-Flowers to provide 1-800-Flowers, as its sole remedy, a
comparable promotional placement (i.e., placement which is no
less valuable than the Promotion being replaced).
1.2. IMPRESSIONS. With respect to any Impressions targets specified
on Exhibit A, AOL will not be obligated to provide in excess
of any of such target amounts in any year. Any shortfall in
Impressions at the end of a year will not be deemed a breach
of the Agreement by AOL; such shortfall will be added to the
Impressions target for the subsequent year. In the event there
is a shortfall in Impressions as of the end of the Term (a
"Final Shortfall"), AOL will provide 1-800-Flowers, as its
sole remedy, with advertising placements through "run of
service" advertising on the AOL Network which have a total
value, based on an advertising rate of [****] per thousand
Impressions, equal to the value of the Final Shortfall
(determined by multiplying the percentage of Impressions that
were not delivered by the total, guaranteed payment provided
for below).
1.3. CONTENT OF PROMOTIONS. The Promotions will link only to the
Affiliated 1-800-Flowers Site and will promote only those
Products 1-800-Flowers is allowed to sell pursuant to Section
2.1. The specific 1-800-Flowers Content to be contained within
the Promotions (including, without limitation, advertising
banners and contextual promotions) (the "Promo Content") will
be determined by 1-800-Flowers, subject to AOL's technical
limitations, the terms of this Agreement and AOL's
then-applicable policies relating to advertising and
promotions. 1-800-Flowers will consistently update the Promo
Content on no less than twice per week, and the Parties will
jointly consult regarding the Promo Content to ensure that it
is designed to maximize performance. Except to the extent
expressly described herein (e.g., the placements described in
Exhibit A), the specific form, placement,
**** 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.
<PAGE>
duration and nature of the Promotions will be as determined by
AOL in its reasonable editorial discretion (consistent with
the editorial composition of the applicable screens).
2. AFFILIATED FLOWERS SITE.
2.1. CONTENT. In the event that 1-800-Flowers wishes to offer any
categories or types of Content or Products in addition to
those categories or types specifically allowed pursuant to the
Existing Agreement (the "Additional Content"), 1-800-Flowers
will notify AOL in writing. 1-800-Flowers' right to offer any
such Additional Content will be subject to AOL's prior written
approval, which shall not be unreasonably withheld.. In
addition, 1-800-Flowers acknowledges and agrees that (a) its
ability to sell or promote [****] products [****] may be
limited by AOL's arrangements with third-party [****]
product retailers and (b) in the event 1-800-Flowers
desires to create an area or sub-area related to [****]
within the Affiliated 1-800-Flowers Site that is promoted
hereunder by AOL, 1-800-Flowers will not be entitled to do
so until the Parties have mutually agreed in writing upon
the terms and conditions relating to such area. All sales
of Products through the Affiliated 1-800-Flowers Site will
be conducted through a direct sales format; 1-800-Flowers
will not promote, sell, offer or otherwise distribute any
products through any format other than a direct sales format
[****] without the prior written consent of AOL. 1-800-Flowers
will review, delete, edit, create, update and otherwise manage
all Content available on or through the Affiliated
1-800-Flowers Site in accordance with the terms of this
Agreement. 1-800-Flowers will ensure that the Affiliated
1-800-Flowers Site does not in any respect promote, advertise,
market or distribute the products, services or content of any
other Interactive Service.
2.2. PRODUCTION WORK. Except as agreed to in writing by the Parties
pursuant to the "Production Work" section of the Standard
Legal Terms & Conditions attached hereto as Exhibit F,
1-800-Flowers will be responsible for all production work
associated with the Affiliated 1-800-Flowers Site, including
all related costs and expenses.
2.3. HOSTING; COMMUNICATIONS. 1-800-Flowers will be responsible for
all communications, hosting and connectivity costs and
expenses associated with the Affiliated 1-800-Flowers Site. In
addition, 1-800-Flowers will provide all computer, telephone
and other equipment or resources necessary for 1-800-Flowers
to access the AOL Network. In the event that 1-800-Flowers
elects to create a mirrored version of the Affiliated
1-800-Flowers Site in order to comply with the terms of this
Agreement, 1-800-Flowers will bear responsibility for the
implementation, management and cost of such mirrored site.
1-800-Flowers will utilize a dedicated high speed connection
to maintain quick and reliable transport of information to and
from the 1-800-Flowers data center and AOL's designated data
center.
2.4. TECHNOLOGY. 1-800-Flowers will take all reasonable steps
necessary to conform its promotion and sale of Products
through the Affiliated 1-800-Flowers Site to the then-existing
technologies identified by AOL which are optimized for the AOL
Service. AOL will be entitled to require reasonable changes to
the Content (including, without limitation, the features or
functionality) within any linked pages of the Affiliated
1-800-Flowers Site to the extent such Content will, in AOL's
good faith judgment, adversely affect any operational aspect
of the AOL Network. AOL reserves the right to review and test
the Affiliated 1-800-Flowers Site from time to time to
determine whether the site is compatible with AOL's
then-available client and host software and the AOL Network.
2.5. PRODUCT OFFERING. Subject to Section 2.1, 1-800-Flowers will
use all commercially reasonable efforts to ensure that the
Affiliated 1-800-Flowers Site includes substantially
**** 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.
<PAGE>
all of the Products including any features, offers or contests
that are then made available by or on behalf of 1-800-Flowers
through any Additional 1-800-Flowers Channel; provided,
however, that (a) such inclusion will not be required where it
is commercially or technically impractical to either Party
(i.e., inclusion would cause either Party to incur substantial
incremental costs) or where it is prohibited as of the
Effective Date by a then-existing written agreement; (b) the
specific changes in scope, nature and/or offerings required by
such inclusion will be subject to AOL's review and approval
and the terms of this Agreement; and (c) in the event a third
party promotes, markets or distributes its products or Content
through a 1-800-Flowers Additional Channel, 1-800-Flowers will
offer AOL a substantially similar opportunity.
2.6. [****] AND TERMS; [****] 1-800-Flowers will ensure that the
[****] for Products in the Affiliated 1-800-Flowers Site do
[****] the [****] for the Products or substantially similar
Products offered by or on behalf of 1-800-Flowers through
any Additional 1-800-Flowers Channel. For purposes of
judging 1-800-Flowers' compliance with the foregoing, to
the extent 1-800-Flowers charges any shipping, handling or
similar charges or any processing, service or similar
charges (collectively, the "Service Charges"), the Service
Charges will not be considered as part of the prices for
the Products in the Affiliated 1-800-Flowers Site; provided,
however, that 1-800-Flowers must comply with Section 1.7
of the Existing Agreement.
2.7. SPECIAL OFFERS. 1-800-Flowers will, on a reasonably periodic
basis, promote through the Affiliated 1-800-Flowers Site
special offers exclusively available to AOL Members and/or AOL
Users (the "Special Offers"). 1-800-Flowers will 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, subject to
the terms and conditions hereof. 1-800-Flowers will ensure
that the Special Offers are [****] made available by or on
behalf of 1-800-Flowers through any Additional
1-800-Flowers Channel during the same time the Special
Offers are made available; provided that the foregoing
shall not apply to a Special Offer to the extent that
1-800-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.
2.8. OPERATING STANDARDS. 1-800-Flowers will ensure that the
Affiliated 1-800-Flowers Site complies at all times with the
standards set forth in Sections 2.5, 2.6 and 2.7 of the
Existing Agreement and with Exhibit D hereto.
2.9. ADVERTISING SALES. Neither Party will sell promotions,
advertisements, links, pointers or similar services or rights
through the Affiliated 1-800-Flowers Site unless and until the
Parties have mutually agreed upon a written advertising
program whereby the Parties coordinate to establish
advertising inventory space and share mutually agreed revenues
generated from such advertising sales.
2.10. TRAFFIC FLOW. 1-800-Flowers will take reasonable efforts to
ensure that AOL traffic is either kept within the Affiliated
1-800-Flowers Site or channeled back into the AOL Network
(with the exception of advertising links sold and implemented
pursuant to the Agreement). The Parties will work together on
implementing mutually acceptable links from the Affiliated
1-800-Flowers Site back to the AOL Service.
3. AOL EXCLUSIVITY OBLIGATIONS. 1-800-Flowers will be the
exclusive provider of fresh-cut flowers and Gift Plants on
AOL.com (the "AOL.com Exclusive Products"), as follows:
AOL will not (i) promote, market or advertise within
AOL.com any entity (other than 1-800-Flowers) that provides
"AOL.com Exclusive Products," including but not limited to
any entity listed on Exhibit C (each entity so listed, a
"1-800-Flowers Competitor") and (ii) will not allow any
provider of the AOL.com Exclusive Products, including but
not limited to any 1-800-Flowers Competitor, to sell, or
offer to sell the AOL.com Exclusive Products within AOL.com;
[****].
**** 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.
<PAGE>
4. PAYMENTS.
4.1. GUARANTEED PAYMENTS. During the Term of this Agreement,
1-800-Flowers will pay AOL a total guaranteed amount of
US$1,500,000, as follows: during the first eighteen (18)
months of the Term and during each of the two (2) twelve-month
periods thereafter (each of the foregoing three periods, a
"Payment Period"), 1-800-Flowers will pay AOL $500,000 as
follows: (i) 1-800-Flowers will pay AOL an amount equal to
[****] of all Transaction Revenues in each quarter of each
Payment Period (such amount, an "AOL.com Revenue Share"),
payable within thirty (30) days of the end of such quarter;
and (ii) as of the end of such Payment Period, if the
cumulative AOL.com Revenue Share during such Payment Period
pursuant to clause (i) does not equal or exceed $500,000,
1-800-Flowers will pay AOL the shortfall within thirty (30)
days of the end of such Payment Period.
4.2. ALTERNATIVE REVENUE STREAMS. In the event 1-800-Flowers or any
of its affiliates (a) receives or desires to receive, directly
or indirectly, any compensation in connection with the
Affiliated 1-800-Flowers Site other than Transaction Revenues
[****] (an "Alternative Revenue Stream"), 1-800-Flowers
will promptly inform AOL in writing, and the Parties will
negotiate in good faith regarding whether 1-800-Flowers
will be allowed to market Products producing such
Alternative Revenue Stream through the Affiliated
1-800-Flowers Site, and if so, the equitable portion of
revenues from such Alternative Revenue Stream (if
applicable) that will be shared with AOL. In the event the
Parties cannot in good faith reach agreement regarding such
Alternative Revenue Stream within ten (10) days of AOL's
request to negotiate, either Party will have the right to
have such matter submitted to dispute resolution pursuant
to Section 6.
4.3. LATE PAYMENTS. All amounts owed hereunder not paid when due
and payable will bear interest from the date such amounts are
due and payable at [****] in effect at such time.
4.4. AUDITING RIGHTS. 1-800-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
1-800-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; provided that no such audit shall occur during the
months of July or August. Any audit shall be at AOL's sole
cost and expense unless a discrepancy of the greater of
[****] is found, in which case 1-800-Flowers will pay all
reasonable costs and expenses related to the audit, not to
exceed [****]. In the event 1-800-Flowers has good faith
grounds to question AOL's tracking and reporting of
Impressions, 1-800-Flowers will be
**** 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.
<PAGE>
entitled to a report issued by a qualified independent auditor
describing AOL's methodologies regarding tracking and
reporting of Impressions and certifying AOL's compliance with
those methodologies and AOL's compliance with its obligations
hereunder. (These reports are currently being provided to AOL
for distribution to its partners by the Audit Bureau of
Circulations).
4.5. TAXES. 1-800-Flowers will 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 attorneys' fees.
4.6. REPORTS. Each Party will each provide the other Party with
reports evidencing the reporting Party's compliance with its
obligations under the Agreement. All reports will be provided
in the form and manner that each Party is obligated to provide
pursuant to Section 4.8 of the Existing Agreement.
5. TERM; RENEWAL; TERMINATION.
5.1. TERM. Unless earlier terminated as set forth herein, the term
of this Agreement will commence on the Effective Date and
expire on June 30, 2001 (the "Term").
5.2. TERMINATION FOR BREACH. Except as expressly provided elsewhere
in this Agreement, either Party may terminate this Agreement
at any time in the event of a material breach of the Agreement
by the other Party which remains uncured after thirty (30)
days written notice thereof to the other Party (or such
shorter period as may be specified elsewhere in this
Agreement); provided that the cure period with respect to
either Party's failure to make any payment to the other Party
required hereunder shall be ten (10) days from the date
receipt of written notice regarding such payment provided for
herein. Notwithstanding the foregoing, in the event of a
material breach of a provision that expressly requires action
to be completed within an express period shorter than 30 days,
either Party may terminate this Agreement if the breach
remains uncured for the applicable time period after written
notice thereof to the other Party.
5.3. TERMINATION FOR BANKRUPTCY/INSOLVENCY. Either Party may
terminate this Agreement immediately following written notice
to the other Party if the other Party (i) ceases to do
business in the normal course, (ii) becomes or is declared
insolvent or bankrupt, (iii) is the subject of any proceeding
related to its liquidation or insolvency (whether voluntary or
involuntary) which is not dismissed within ninety (90)
calendar days or (iv) makes an assignment for the benefit of
creditors.
5.4. TERMINATION ON CHANGE OF CONTROL. In the event of a Change of
Control of 1-800-Flowers resulting in control of 1-800-Flowers
by an Interactive Service, AOL may terminate this Agreement by
providing thirty (30) days prior written notice of such intent
to terminate.
6. MANAGEMENT COMMITTEE/ARBITRATION. If the Parties are unable to resolve
any dispute, controversy or claim arising under this Agreement
(excluding any disputes relating to intellectual property rights or
confidentiality) (each a "Dispute"), such Dispute shall be submitted to
the Management Committee for resolution. If the Management Committee is
unable to resolve the Dispute within ten (10) business days after
submission to them, the Dispute shall be solely and finally settled by
expedited arbitration in New York, New York, under the auspices of the
American Arbitration Association; provided that the Federal Rules of
Evidence shall apply IN TOTO to any such Dispute and, subject to the
arbitrators' discretion to limit the time for and scope of discovery,
the Federal Rules of Civil Procedure shall apply with respect to
discovery; and
<PAGE>
provided further that, consistent with the parties' desire to avoid
waste of time and unnecessary expense, any Dispute arising from any
provision of the Agreement which expressly provides for the parties to
reach mutual agreement as to certain terms therein shall not be
submitted to arbitration but shall be resolved in good faith by the
Management Committee. The arbitrator may enter a default decision
against any Party who fails to participate in the arbitration
proceedings. For purposes herein, the "Management Committee" shall mean
a committee made up of a senior executive from each of the Parties for
the purpose of resolving Disputes under this Section and generally
overseeing the relationship between the Parties contemplated by this
Agreement.
7. STANDARD TERMS. The Standard Online Commerce Terms & Conditions set
forth on Exhibit E attached hereto and Standard Legal Terms &
Conditions set forth on Exhibit F attached hereto are each hereby made
a part of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
Effective Date.
AMERICA ONLINE, INC. 800-FLOWERS, INC.
By: /s/ David M. Colburn By: /s/ Christopher McCann
------------------------------- -------------------------------
Print Name: David M. Colburn Print Name: Christopher McCann
------------------------ ------------------------
Title: Senior Vice President Title: Senior Vice President
----------------------------- -----------------------------
<PAGE>
EXHIBIT A
PLACEMENT/PROMOTION
<TABLE>
<CAPTION>
- ------------------------------------------------------ ----------------------------- -----------------------
PLACEMENT FLIGHT IMPRESSIONS(1)
DATES
- ------------------------------------------------------ ----------------------------- -----------------------
<S> <C> <C>
HOLIDAY BLITZ PROGRAM - allocated to run-of-site [****] [****] PER FLIGHT
banner advertising(2)
- ------------------------------------------------------ ----------------------------- -----------------------
SHOPPING CHANNEL ANCHOR TENANT POSITION (STANDARD [****]
ANCHOR TENANT PACKAGE, INCLUDES PROMOTIONS AND
PLACEMENT FOR 1-800-FLOWERS IN SHOPPING CHANNEL
DEPARTMENT)
- ------------------------------------------------------ ----------------------------- -----------------------
SEARCH RESULTS
- ------------------------------------------------------ ----------------------------- -----------------------
Search Results Pages - [****] of banner ads for
following search terms (the "1-800-Flowers Search [****]
Terms"):
[****]
- ------------------------------------------------------ ----------------------------- -----------------------
</TABLE>
- ----------
(1) The holiday blitz promotional commitments will be deemed
fulfilled once the Impression estimates have been reached. Prior to November
of each year, in order to avoid imbalanced allocation of 1-800-Flowers' [****]
annual Impressions, the Parties will work together to mutually agree upon a
media plan that allocates such Impressions among specific holiday periods.
(2) The holiday blitz will include promotion on an AOL.com homepage button
during the [****] preceding Valentine's Day and the [****] period preceding
Mother's Day and the combined Impressions from such [****] will not exceed
[****] without 1-800-Flowers' prior written approval.
**** 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.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------ ----------------------------- -----------------------
<S> <C> <C>
Search Results Pages - [****] rotation on banner ads [****]
for following additional search terms during
specified flight dates:
[****]
- ------------------------------------------------------ ----------------------------- -----------------------
</TABLE>
**** 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.
<PAGE>
EXHIBIT B
DEFINITIONS
The following definitions will apply to this Agreement:
ADDITIONAL 1-800-FLOWERS CHANNEL. Any other online or Internet-based
distribution channel (e.g., an Interactive Service other than AOL) through which
1-800-Flowers makes available an offering comparable in nature to the Affiliated
1-800-Flowers Site.
AFFILIATED 1-800-FLOWERS SITE. The specific area to be promoted and distributed
by AOL hereunder through which 1-800-Flowers can market and complete
transactions regarding its Products.
AOL INTERACTIVE SITE. Any Interactive Site which is managed, maintained, owned
or controlled by AOL or its agents.
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 Interactive
Sites within the AOL Service or AOL.com.
AOL MEMBER. Any authorized user of the AOL Network, including any sub-accounts
using the AOL Network under an authorized master account.
AOL NETWORK. (i) The AOL Service, (ii) AOL.com and (iii) any other product or
service owned, operated, distributed or authorized to be distributed by or
through AOL or its affiliates worldwide through which AOL elects to offer the
Affiliated 1-800-Flowers Site (and including those properties excluded from the
definitions of the AOL Service or AOL.com).
AOL PURCHASER. Any person or entity who enters the Affiliated 1-800-Flowers Site
from the AOL Network including, without limitation, from any third party area
therein (to the extent entry from such third party area is traceable through
both Parties' commercially reasonable efforts), and generates Transaction
Revenues (regardless of whether such person or entity provides an e-mail address
during registration which includes a domain other than an "AOL.com" domain).
AOL SERVICE. The narrow-band U.S. version of the America Online(R) brand
service, specifically excluding (a) AOL.com or any other AOL Interactive Site,
(b) the international versions of the AOL Service (e.g., AOL Japan), (c)
"Driveway," "AOL NetFind(TM)," "AOL Instant Messenger(TM)" or any similar
product or service offered by or through the U.S. version of the America
Online(R) brand service, (d) any programming or content area offered by or
through the U.S. version of the America Online(R) brand service over which AOL
does not exercise complete or substantially complete operational control (e.g.,
third-party Content areas, any Interactive Site containing "members.aol.com" as
part of its URL and "Digital City(TM)," "WorldPlay(TM)," "Entertainment
Asylum(TM)," the "Hub(TM)," or any similar "sub-service"), (e) any yellow pages,
white pages, classifieds or other search, directory or review services or
Content offered by or through the U.S. version of the America Online(R) brand
service and (f) any co-branded or private label branded version of the U.S.
version of the America Online(R) brand service, (g) any version of the U.S.
version of the America Online(R) brand service distributed through any broadband
distribution platform or through any platform or device other than a desktop
personal computer and (h) any property, feature, product or service which AOL
may acquire subsequent to the Effective Date.
AOL USER. Any user of the AOL Service, AOL.com or the AOL Network.
AOL.COM. AOL's primary Internet-based Interactive Site marketed under the
"AOL.COM" brand (or any successor or substitute brand for the "AOL.COM" brand),
specifically excluding (a) the AOL Service, (b)
<PAGE>
any international versions of AOL.com, (c) "Driveway," "AOL Instant
Messenger(TM)" or any similar product or service offered by or through such site
or any other AOL Interactive Site, (d) any programming or content area offered
by or through such site or any other AOL Interactive Site over which AOL does
not exercise complete or substantially complete operational control (e.g.,
third-party Content areas, any Interactive Site containing "members.aol.com" as
part of its URL and "Digital City(TM)," "WorldPlay(TM)," "Entertainment
Asylum(TM)," the "Hub(TM)," or any similar "sub-service"), (e) any yellow pages,
white pages, classifieds or other search, directory or review services or
Content offered by or through such site or any other AOL Interactive Site, (f)
any co-branded or private label branded version of such site (other than a
version otherwise prohibited by Section 3 hereof, e.g., a version distributed by
FTD), (g) any version of such site distributed through any broadband
distribution platform or through any platform or device other than a desktop
personal computer (other than a platform or device otherwise prohibited by
Section 3 hereof, e.g., a platform owned by FTD), (h) any property, feature,
product or service which AOL may acquire subsequent to the Effective Date and
(i) any version of "AOL NetFind(TM)" distributed through any Interactive Site
other than AOL.com.
CHANGE OF CONTROL. (a) The consummation of a reorganization, merger or
consolidation or sale or other disposition of substantially all of the assets of
a party; or (b) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1933,
as amended) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under such Act) of more than 50% of either (i) the then outstanding
shares of common stock of such party; or (ii) the combined voting power of the
then outstanding voting securities of such party entitled to vote generally in
the election of directors.
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, AOL Users, AOL
Purchasers and 1-800-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" will 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.
CONTENT. Information, materials, features, Products, advertisements, promotions,
links, pointers and software, including any modifications, upgrades, updates,
enhancements and related documentation.
[****]
IMPRESSION. User exposure to the page containing the applicable promotion or
advertisement, as such exposure may be reasonably determined and measured by AOL
in accordance with its standard methodologies and protocols.
[****]
**** 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.
<PAGE>
INTERACTIVE SITE. Any interactive site or area, including, by way of example and
without limitation, (i) a 1-800-Flowers site on the World Wide Web portion of
the Internet or (ii) a channel or area delivered through a "push" product such
as the Pointcast Network or interactive environment such as Microsoft's Active
Desktop.
LICENSED CONTENT. All Content offered through the Affiliated 1-800-Flowers Site
pursuant to this Agreement or otherwise provided to AOL by 1-800-Flowers for
related purposes (e.g., Promotions, AOL "slideshows" , etc.), including in each
case, any modifications, upgrades, updates, enhancements, and related
documentation.
1-800-FLOWERS INTERACTIVE SITE. Any Interactive Site (other than the Affiliated
1-800-Flowers Site) which is managed, maintained, owned or controlled by
1-800-Flowers or its affiliates.
1-800-FLOWERS 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 Interactive Sites owned, maintained or operated by 1-800-Flowers.
PRODUCT. Any product, good or service which 1-800-Flowers (or others acting on
its behalf or as distributors) offers, sells, provides, distributes or licenses
to AOL Users directly or indirectly through (i) the Affiliated 1-800-Flowers
Site (including through any Interactive Site linked thereto), (ii) any other
electronic means directed at AOL Users (e.g., e-mail offers), or (iii) an
"offline" means (e.g., toll-free number) for receiving orders related to
specific offers within the Affiliated 1-800-Flowers Site requiring purchasers to
reference a specific promotional identifier or tracking code, including, without
limitation, products sold through surcharged downloads (to the extent expressly
permitted hereunder).
TRANSACTION REVENUES. Aggregate amounts paid by AOL Purchasers in connection
with the sale, licensing, distribution or provision of any product, good or
service which 1-800-Flowers or its agent offers, sells or licenses to AOL Users
through the Affiliated 1-800-Flowers Site, 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.
SITE REVENUES. The combination of Transaction Revenues, Advertising Revenues and
Additional Revenues.
<PAGE>
EXHIBIT C
LIST OF 1-800-FLOWERS COMPETITORS
[****]
These entities also include any of their affiliates whose primary business is
the sale of the AOL.com 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 AOL.com Exclusive
Products.
**** 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.
<PAGE>
EXHIBIT D
OPERATING STANDARDS
1. [intentionally omitted].
2. HOSTING; CAPACITY. 1-800-Flowers will provide all computer servers, routers,
switches and associated hardware in an amount reasonably necessary to meet
anticipated traffic demands, adequate power supply (including generator back-up)
and HVAC, adequate insurance, adequate service contracts and all necessary
equipment racks, floor space, network cabling and power distribution to support
the Affiliated 1-800-Flowers Site.
3. SPEED; ACCESSIBILITY. 1-800-Flowers will ensure that the performance and
availability of the Affiliated 1-800-Flowers Site (a) is monitored on a
continuous, 24/7 basis and (b) remains competitive in all material respects with
the performance and availability of other similar sites based on similar form
technology. 1-800-Flowers will use commercially reasonable to ensure that: (a)
the functionality and features within the Affiliated 1-800-Flowers Site are
optimized for the client software then in use by AOL Users; and (b) the
Affiliated 1-800-Flowers Site is designed and populated in a manner that
minimizes delays when AOL Users attempt to access such site.
4. USER INTERFACE. 1-800-Flowers will maintain a graphical user interface within
the Affiliated 1-800-Flowers Site that is competitive in all material respects
with interfaces of other similar sites based on similar form technology. AOL
reserves the right to conduct focus group testing to assess compliance herewith.
5. SERVICE LEVEL RESPONSE. 1-800-Flowers agrees to use commercially reasonable
efforts to provide the following service levels in response to problems with or
improvements to the Affiliated 1-800-Flowers Site:
o For material functions of software that are or have become
substantially inoperable, 1-800-Flowers will provide a bug fix or
workaround within two (2) business days after the first report of such
error.
o For functions of the software that are impaired or otherwise fail to
operate in accordance with agreed upon specifications, 1-800-Flowers
will provide a bug fix or workaround within three (3) business days
after the first report of such error.
o For errors disabling only certain non-essential functions,
1-800-Flowers will provide a bug fix or workaround within sixty (60)
days after the first report of such error.
o For all other errors, 1-800-Flowers will address these requests on a
case-by-case basis as soon as reasonably feasible.
6. MONITORING. AOL Network Operations Center will work with a
1-800-Flowers-designated technical contact in the event of any performance
malfunction or other emergency related to the Affiliated 1-800-Flowers Site and
will either assist or work in parallel with Flowers' contact using 1-800-Flowers
tools and procedures, as applicable. The Parties will develop a process to
monitor performance and member behavior with respect to access, capacity,
security and related issues both during normal operations and during special
promotions/events.
7. TELECOMMUNICATIONS. The Parties agree to explore encryption methodology to
secure data communications between the Parties' data centers. The network
between the Parties will be configured such that no single component failure
will significantly impact AOL Users. The network will be sized such that no
single line runs at more than 70% average utilization for a 5-minute peak in a
daily period.
8. SECURITY REVIEW. 1-800-Flowers and AOL will work together to perform an
initial security review of, and to perform tests of, the 1-800-Flowers system,
network, and service security in order to evaluate the security risks and
provide recommendations to 1-800-Flowers, including periodic follow-up reviews
as reasonably required by 1-800-Flowers or AOL. 1-800-Flowers will use
commercially reasonable best efforts to fix any security risks or breaches of
security as may be identified by AOL's Operations Security. Specific services to
be performed on behalf of AOL's Operations Security team will be as determined
by AOL in its sole discretion.
9. TECHNICAL PERFORMANCE. 1-800-Flowers will perform the following technical
obligations (and any reasonable updates thereto from time to time by AOL):
o 1-800-Flowers will design the Affiliated 1-800-Flowers Site to support
the Windows version of the Microsoft Internet Explorer 4.0 browser, and
make commercially reasonable efforts to support all other AOL browsers
listed at: "http://webmaster.info.aol.com/BrowTable.html."
o 1-800-Flowers will configure the server from which it serves the site
to examine the HTTP User-Agent field in order to identify the "AOL
Member-Agents" listed at: "http://webmaster.
info.aol.com/Brow2Text.html."
o 1-800-Flowers will design its site to support HTTP 1.0 or later
protocol as defined in RFC 1945 (available at
"http://ds.internic.net/rfc/rfc1945.text") and to adhere to AOL's
parameters for refreshing cached information listed at
"http://webmaster.info.aol.com/CacheText.html."
<PAGE>
EXHIBIT E
STANDARD ONLINE COMMERCE TERMS & CONDITIONS
1. AOL NETWORK DISTRIBUTION. 1-800-Flowers will not authorize any third party to
distribute or promote the Affiliated 1-800-Flowers Site or any 1-800-Flowers
Interactive Site through the AOL Network absent AOL's prior written approval.
The Promotions and any other promotion or advertisement purchased from or
provided by AOL will link only to the Affiliate 1-800-Flowers Site (or the
1-800-Flowers Interactive Site under the Existing Agreement, as applicable).
2. PROVISION OF OTHER CONTENT. In the event that AOL notifies 1-800-Flowers that
(i) as reasonably determined by AOL, any Content within the Affiliated
1-800-Flowers Site violates AOL's then-standard Terms of Service (as set forth
on the America Online(R) brand service), the terms of this Agreement or any
other standard, written AOL policy or (ii) AOL reasonably objects to the
inclusion of any Content within the Affiliated 1-800-Flowers Site (other than
any specific items of Content which may be expressly identified in this
Agreement), then 1-800-Flowers will take commercially reasonable steps to block
access by AOL Users to such Content using Flowers' then-available technology. In
the event that 1-800-Flowers cannot, through its commercially reasonable
efforts, block access by AOL Users to the Content in question, then
1-800-Flowers will provide AOL prompt written notice of such fact. AOL may then,
at its option, restrict access from the AOL Network to the Content in question
using technology available to AOL. 1-800-Flowers will cooperate with AOL's
reasonable requests to the extent AOL elects to implement any such access
restrictions.
3. CONTESTS. 1-800-Flowers will take all steps necessary to ensure that any
contest, sweepstakes or similar promotion conducted or promoted through the
Affiliated 1-800-Flowers Site (a "Contest") complies with all applicable
federal, state and local laws and regulations.
4. NAVIGATIONAL ICONS. Subject to the prior consent of 1-800-Flowers, which
consent will not be unreasonably withheld, AOL will be entitled to establish
navigational icons, links and pointers connecting the Affiliated 1-800-Flowers
Site (or portions thereof) with other content areas on or outside of the AOL
Network.
5. DISCLAIMERS. Upon AOL's request, 1-800-Flowers agrees to include within the
Affiliated 1-800-Flowers Site a product disclaimer (the specific form and
substance to be mutually agreed upon by the Parties) indicating that
transactions are solely between 1-800-Flowers and AOL Users purchasing Products
from 1-800-Flowers.
6. LOOK AND FEEL. 1-800-Flowers acknowledges and agrees that AOL will own all
right, title and interest in and to the AOL Look and Feel, subject to Flowers'
ownership rights in any 1-800-Flowers trademarks or copyrighted material within
the Affiliated 1-800-Flowers Site and the 1-800-Flowers Look and Feel. AOL
acknowledges and agrees that 1-800-Flowers will own all right, title and
interest in and to the 1-800-Flowers Look and Feel and the 1-800-Flowers
Affiliated Site, subject to the AOL Look and Feel.
7. MANAGEMENT OF THE AFFILIATED 1-800-FLOWERS SITE. 1-800-Flowers will manage,
review, delete, edit, create, update and otherwise manage all Products available
on or through the Affiliated 1-800-Flowers Site, in a timely and professional
manner and in accordance with the terms of this Agreement. 1-800-Flowers will
ensure that each Affiliated 1-800-Flowers Site is current, accurate and
well-organized at all times. 1-800-Flowers warrants that the Products and other
Content contained therein: (i) will not infringe on or violate any copyright,
trademark, U.S. patent or any other third party right, including without
limitation, any music performance or other music-related rights; (ii) will not
violate AOL's then-applicable Terms of Service; and (iii) will not violate any
applicable law or regulation, including those relating to contests, sweepstakes
or similar promotions. Additionally, 1-800-Flowers represents and warrants that
it owns or has a valid license to all rights to any Licensed Content used in AOL
"slideshow" or other formats embodying elements such as graphics, animation and
sound, free and clear of all encumbrances and without violating the rights of
any other person or entity. 1-800-Flowers also warrants that a reasonable basis
exists for all Product performance or comparison claims appearing through the
Affiliated 1-800-Flowers Site. AOL will have no obligations with respect to the
Products available on or through the Affiliated 1-800-Flowers Site, including,
but not limited to, any duty to review or monitor any such Products.
8. DUTY TO INFORM. 1-800-Flowers will promptly inform AOL of any information
related to the 1-800-Flowers Service or Affiliated 1-800-Flowers Site which
could reasonably lead to a claim, demand, or liability of or against AOL and/or
its affiliates by any third party.
9. CUSTOMER SERVICE. It is the sole responsibility of 1-800-Flowers to provide
customer service to persons or entities purchasing Products through the AOL
Network ("Customers"). 1-800-Flowers will bear full responsibility for all
customer service, including without limitation, order
<PAGE>
processing, billing, fulfillment, shipment, collection and other customer
service associated with any Products offered, sold or licensed through the
Affiliated 1-800-Flowers Site, and AOL will have no obligations whatsoever with
respect thereto. 1-800-Flowers will receive all emails from Customers via a
computer available to Flowers' customer service staff and generally respond to
such emails within one business day of receipt. 1-800-Flowers will receive all
orders electronically and generally process all orders within one business day
of receipt, provided Products ordered are not advance order items. 1-800-Flowers
will ensure that all orders of Products are received, processed, fulfilled and
delivered on a timely and professional basis. 1-800-Flowers will offer AOL Users
who purchase Products through such Affiliated 1-800-Flowers Site a money back
satisfaction guarantee. 1-800-Flowers will bear all responsibility for
compliance with federal, state and local laws in the event that Products are out
of stock or are no longer available at the time an order is received.
1-800-Flowers will also comply with the requirements of any federal, state or
local consumer protection or disclosure law. Payment for Products will be
collected by 1-800-Flowers directly from customers. Flowers' order fulfillment
operation will be subject to AOL's reasonable review.
10. PRODUCTION WORK. In the event that 1-800-Flowers requests AOL's production
assistance in connection with (i) ongoing programming and maintenance related to
the Affiliated 1-800-Flowers Site, (ii) a redesign of or addition to the
Affiliated 1-800-Flowers Site (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, 1-800-Flowers
will 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 will notify 1-800-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 agreed-upon Production Plan, such agreement will be
reflected in a separate work order signed by the Parties. To the extent
1-800-Flowers elects to retain a third party provider to perform any such
production work, work produced by such third party provider must generally
conform to AOL's production Standards & Practices (a copy of which will be
supplied by AOL to 1-800-Flowers upon request). The specific production
resources which AOL allocates to any production work to be performed on behalf
of 1-800-Flowers will be as determined by AOL in its sole discretion.
11. OVERHEAD ACCOUNTS. To the extent AOL has granted 1-800-Flowers any overhead
accounts on the AOL Service, 1-800-Flowers will 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
1-800-Flowers, but 1-800-Flowers will 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 will bear. Upon the termination of this
Agreement, all overhead accounts, related screen names and any associated usage
credits or similar rights, will automatically terminate. AOL will have no
liability for loss of any data or content related to the proper termination of
any overhead account.
12. AOL USER COMMUNICATIONS. To the extent 1-800-Flowers sends any targeted
form of communications to AOL Users, 1-800-Flowers will promote the
Affiliated 1-800-Flowers Site as the location at which to purchase Products
(as compared to any more general or other site or location). In addition,
1-800-Flowers will not send any targeted form of communications that
encourages AOL Users to take any action inconsistent with the scope and
purpose of this Agreement, including without limitation, the following
actions: (a) using Content other than the Licensed Content; (b) bookmarking
of Interactive Sites other than the Affiliated 1-800-Flowers Site; (c) using
Interactive Sites other than those covered by the revenue-sharing provisions
herein; (d) changing the default home page on the AOL browser; or (e) using
any Interactive Service other than AOL. This section 12 will not affect
1-800-Flowers' ability to send mailings to its general customer base (e.g.,
print catalog).
13. MERCHANT CERTIFICATION PROGRAM. 1-800-Flowers will participate in any
generally applicable "Certified Merchant" program operated by AOL or its
authorized agents or contractors. Such program may require merchant participants
on an ongoing basis to meet certain reasonable, generally applicable standards
relating to provision of electronic commerce through the AOL Network (including,
as a minimum, use of 40-bit SSL encryption and if requested by AOL, 128-bit
encryption) and may also require the payment of certain reasonable certification
fees to the applicable entity operating the program. Each Certified Merchant in
good standing will be entitled to place on its affiliated Interactive Site an
AOL designed and approved button promoting the merchant's status as an AOL
Certified Merchant.
<PAGE>
EXHIBIT F
STANDARD LEGAL TERMS & CONDITIONS
1. PROMOTIONAL MATERIALS/PRESS RELEASES. Each Party will submit to the other
Party, for its prior written approval, which will not be unreasonably withheld
or delayed, any marketing, advertising, press releases, and all other
promotional materials related to the Affiliated 1-800-Flowers Site 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 Affiliated 1-800-Flowers Site for promotional purposes will not
require the approval of the other Party so long as America Online(R)is clearly
identified as the source of such screen shots. Each Party will solicit and
reasonably consider the views of the other Party in designing and implementing
such Materials. Once approved, the Materials may be used by a Party and its
affiliates for the purpose of promoting the Affiliated 1-800-Flowers Site and
the content contained therein and reused for such purpose until such approval is
withdrawn with reasonable prior notice. In the event such approval is withdrawn,
existing inventories of Materials may be depleted. Notwithstanding the
foregoing, either Party may issue press releases and other disclosures as
required by law or as reasonably advised by legal counsel without the consent of
the other Party and in such event, prompt notice thereof will be provided to the
other Party.
2. LICENSE. During the Term of this Agreement, 1-800-Flowers hereby grants
AOL a non-exclusive worldwide license to market, license, distribute, reproduce,
display, perform, transmit and promote the Licensed Content (or any portion
thereof) through such areas or features of the AOL Network solely in accordance
with the terms and conditions hereof. 1-800-Flowers acknowledges and agrees that
the foregoing license permits AOL to distribute portions of the Licensed Content
in synchronism or timed relation with visual materials prepared by 1-800-Flowers
or by AOL on behalf of 1-800-Flowers solely at Flowers' request (e.g., as part
of an AOL "slideshow"). Subject to such license, 1-800-Flowers retains all
right, title and interest in the Licensed Content. In addition, AOL Users will
have the right to access and use the Affiliated 1-800-Flowers Site.
3. TRADEMARK LICENSE. In designing and implementing the Materials and
subject to the other provisions contained herein, 1-800-Flowers will 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 will be entitled to use the following trade
names, trademarks, and service marks of 1-800-Flowers (collectively, together
with the AOL marks listed above, the "Marks"): 1-800-1-800-Flowers, Gift
Concierge Service, World's Favorite Florist, Freshness Care System and Fresh
Thoughts; provided that each Party: (i) does not create a unitary composite mark
involving a Mark of the other Party without the prior written approval of such
other Party; and (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.
4. 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 will inure to the benefit, and be on behalf, of the other
Party. Each Party acknowledges that its utilization of the other Party's
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 mark.
5. QUALITY STANDARDS. Each Party agrees that the nature and quality of its
products and services supplied in connection with the other Party's Marks will
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 will comply with all applicable laws, regulations, and customs
and obtain any required government approvals pertaining to use of the other
Party's marks.
6. 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 will 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.
7. 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
<PAGE>
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.
8. 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 will 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 two years following
expiration or termination of this Agreement, to prevent the duplication or
disclosure of Confidential Information of the other Party, other than by or
to its employees or agents or affiliates who must have access to such
Confidential Information to perform such Party's obligations hereunder, who
will each agree to comply with this section. Notwithstanding the foregoing,
either Party may issue a press release or other disclosure containing
Confidential Information without the consent of the other Party, to the
extent such disclosure is required by law, rule, regulation or government or
court order. In such event, the disclosing Party will 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 will (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 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.
9. LIMITATION OF LIABILITY; DISCLAIMER; INDEMNIFICATION.
9.1. LIABILITY. UNDER NO CIRCUMSTANCES WILL 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 BREACH OF THE AGREEMENT, THE SALE OF PRODUCTS, THE USE OR
INABILITY TO USE THE AOL NETWORK, THE AOL SERVICE, AOL.COM OR THE AFFILIATED
FLOWERS SITE, OR ARISING FROM ANY OTHER PROVISION OF THIS AGREEMENT, SUCH AS,
BUT NOT LIMITED TO, LOSS OF REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS
("COLLECTIVELY, "DISCLAIMED DAMAGES"); PROVIDED THAT EACH PARTY WILL REMAIN
LIABLE TO THE OTHER PARTY TO THE EXTENT ANY DISCLAIMED DAMAGES ARE CLAIMED BY A
THIRD PARTY AND ARE SUBJECT TO INDEMNIFICATION PURSUANT TO SECTION 9.3. EXCEPT
AS PROVIDED IN SECTION 9.3, (I) LIABILITY ARISING UNDER THIS AGREEMENT WILL BE
LIMITED TO DIRECT, OBJECTIVELY MEASURABLE DAMAGES, AND (II) NEITHER PARTY WILL
BE LIABLE TO THE OTHER PARTY FOR MORE THAN THE AGGREGATE AMOUNT OF PAYMENT
OBLIGATIONS TO BE PAID TO AOL BY FLOWERS HEREUNDER IN THE YEAR IN WHICH
LIABILITY ACCRUES; PROVIDED THAT EACH PARTY WILL REMAIN LIABLE FOR THE AGGREGATE
AMOUNT OF ANY PAYMENT OBLIGATIONS OWED TO THE OTHER PARTY PURSUANT TO SECTION 4.
9.2. NO ADDITIONAL WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY, AND EACH PARTY HEREBY SPECIFICALLY DISCLAIMS
ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE AOL
NETWORK, THE AOL SERVICE, AOL.COM OR THE AFFILIATED FLOWERS SITE, 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 AFFILIATED FLOWERS SITE.
9.3. 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 the other Party or
material breach of any duty, representation or warranty by the other Party.
9.4. 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
<PAGE>
subject to indemnification by the other Partyhereunder, and in such event, such
other Party will have no further obligation to provide indemnification for such
matter hereunder.
9.5. ACKNOWLEDGMENT. AOL and 1-800-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 9 will
be enforceable independent of and severable from any other enforceable or
unenforceable provision of this Agreement.
10. SOLICITATION OF AOL USERS. During the term of this Agreement, and for
the one-year period following the expiration or termination of this
Agreement, neither 1-800-Flowers nor its agents (acting at 1-800-Flowers
direction) will use the AOL Network to (i) solicit, or participate in the
solicitation of AOL Users when that solicitation is for the benefit of any
AOL Competitor (as defined in the Existing Agreement) or (ii) promote any
services which could reasonably be construed to be in competition with AOL in
its business or providing Internet or online services. In addition,
1-800-Flowers may not send AOL Users e-mail communications promoting Flowers'
Products through the AOL Network without a "Prior Business Relationship." For
purposes of this Agreement, a "Prior Business Relationship" will mean that
the AOL User has either (i) engaged in a transaction with 1-800-Flowers
through the AOL Network or (ii) voluntarily provided information to
1-800-Flowers through a contest, registration, or other communication, which
included notice to the AOL User that the information provided by the AOL User
could result in an e-mail being sent to that AOL User by 1-800-Flowers or its
agents. A Prior Business Relationship does not exist by virtue of an AOL
User's visit to an Affiliated 1-800-Flowers Site (absent the elements above).
More generally, 1-800-Flowers will be subject to any standard policies
regarding e-mail distribution through the AOL Network which AOL may implement.
11. COLLECTION OF USER INFORMATION. 1-800-Flowers is prohibited from
collecting AOL Member screennames or AOL User email addresses from public or
private areas of the AOL Network, except as specifically provided below.
1-800-Flowers will ensure that any survey, questionnaire or other means of
collecting AOL Member screennames or AOL User email addresses, names, addresses
or other identifying information ("User Information"), including, without
limitation, requests directed to specific AOL Member screennames or AOL User
email addresses and automated methods of collecting such information (an
"Information Request") complies with (i) all applicable laws and regulations and
(ii) any privacy policies which have been issued by AOL in writing during the
Term (the "AOL Privacy Policies"). Each Information Request will clearly and
conspicuously specify to the AOL Users at issue the purpose for which User
Information collected through the Information Request will be used (the
"Specified Purpose").
12. USE OF USER INFORMATION. 1-800-Flowers will restrict use of the User
Information collected through an Information Request to the Specified Purpose.
In no event will 1-800-Flowers (i) provide User Information (excluding any such
information (e.g., name) that was received by 1-800-Flowers from an AOL User via
another 1-800-Flowers sales channel and was not overlaid against or otherwise
derived from other information received from such user via the AOL Service or
AOL.com) 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 User Information, (iii) identify, promote or otherwise
disclose such User Information in a manner that identifies AOL Users as
end-users of the AOL Service, AOL.com or the AOL Network or (iv) otherwise use
any User Information in contravention of Section 10 above. Notwithstanding the
foregoing, in the case of AOL Members who purchase Products from 1-800-Flowers,
1-800-Flowers will be entitled to use User Information from such AOL Members as
part of 1-800-Flowers's aggregate list of Customers; provided that
1-800-Flowers's use does not in any way identify, promote or otherwise disclose
such User Information in a manner that identifies such AOL Members as end-users
of the AOL Service, AOL.com or the AOL Network.
13. EXCUSE. Neither Party will 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 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.
14. INDEPENDENT CONTRACTORS. The Parties to this Agreement are independent
contractors. Neither Party is an agent, representative or partner of the other
Party. Neither Party will 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 will not be interpreted or
construed to create an
<PAGE>
association, agency, joint venture or partnership between the Parties or to
impose any liability attributable to such a relationship upon either Party.
15. NOTICE. Any notice, approval, request, authorization, direction or other
communication under this Agreement will be given in writing and will 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 or by facsimile; (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 person(s) specified below at
the address of the Party set forth in the first paragraph of this Agreement (or
otherwise changed on written notice). In the case of AOL, such notice will be
provided to both the Senior Vice President for Business Affairs and the Deputy
General Counsel.
16. 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 will not be construed as a waiver or
relinquishment to any extent of such Party's right to assert or rely upon any
such provision or right in that or any other instance; rather, the same will be
and remain in full force and effect.
17. RETURN OF INFORMATION. Upon the expiration or termination of this
Agreement, each Party will, upon the written request of the other Party, return
or destroy (at the option of the Party receiving the request) all confidential
information, documents, manuals and other materials specified the other Party.
18. SURVIVAL. Sections 4.4 and 6 of the body of the Agreement and Sections 8
through 12 of this Exhibit F, will survive the completion, expiration,
termination or cancellation of this Agreement.
19. 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 will 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.
20. AMENDMENT. No change, amendment or modification of any provision of this
Agreement will be valid unless set forth in a written instrument signed by the
Party subject to enforcement of such amendment, and in the case of AOL, by a
senior vice president.
21. FURTHER ASSURANCES. Each Party will 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.
22. 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.
23. CONSTRUCTION; SEVERABILITY. 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, (i) such provision will be deemed to be restated to
reflect as nearly as possible the original intentions of the Parties in
accordance with applicable law, and (ii) the remaining terms, provisions,
covenants and restrictions of this Agreement will remain in full force and
effect.
24. REMEDIES. Except where otherwise 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 will be entitled to offset any amounts that it claims to be due and
payable from the other Party against amounts otherwise payable to such other
Party.
25. APPLICABLE LAW; JURISDICTION. This Agreement will 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.
26. EXPORT CONTROLS. Both Parties will adhere to all applicable laws,
regulations and rules relating to the export of technical data and will not
export or re-export any technical data, any products received from the other
Party or the direct product of such technical data to any proscribed country
listed in such applicable laws, regulations and rules unless properly
authorized.
<PAGE>
27. HEADINGS. The captions and headings used in this Agreement are inserted
for convenience only and will not affect the meaning or interpretation of this
Agreement.
28. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which will be deemed an original and all of which together will constitute one
and the same document
<PAGE>
Exhibit 10.7
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.
Microsoft Confidential
ECOMMERCE MERCHANT AGREEMENT
FOR The Plaza on MSN
- --------------------------------------------------------------------------------
PREAMBLE
- --------------------------------------------------------------------------------
The Microsoft Network, L.L.C., a Delaware limited liability company ("MSP"), by
and through its manager, Microsoft Corporation ("Microsoft"), agrees with the
undersigned ("Merchant") that the Merchant specified in the Schedule will be
offered a link mall service to "Merchant Site" as part of The Microsoft Network
pursuant to the General Terms and all Exhibits and Riders attached hereto.
- --------------------------------------------------------------------------------
SCHEDULE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Merchant Name: 800-Flowers, Inc. doing business as 1-800-FLOWERS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Entity Type (if incorporated, state place of incorporation): New York
Principal Place of Business (list state if in U.S.A.; list country if outside
U.S.A.):
1600 Stewart Avenue
Westbury, NY 11590
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address for Notices:
1600 Stewart Avenue
Westbury, NY 11590
Phone: 516.237.6000
Attention: Donna Iucolano Facsimile Number: 516.237.6009
E-mail Address (REQUIRED): DIUCOLANO @ 1800FLOWERS.COM
With copies to:
Jerry Gallagher
Gallagher, Walker & Bianco
98 Willis Avenue
Mineola, New York 11501
Phone: 516-237-6087 Facsimile Number: 516.248.2394
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MSP SERVICES:
MSP will provide a live link from the Microsoft Web Sites as designated by MSP
in its sole discretion, to The
Plaza. From The Plaza, MSP will provide a link directly to the MSN Transition
Page and/or the Mirrored Web Site which will be co-branded as specified and
approved by MSP.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Merchant SERVICES:
Merchant Site Description: __________ (We need to add correct URL for tracking
Microsoft)
Merchant shall provide e-mail address for Customer Service. __________
Merchant shall provide MSP with Weekly User information and Weekly Sales Reports
no later than the following Tuesday for the week ending on the immediately
preceding Saturday. Merchant shall be solely responsible for implementing a
weekly tracking mechanism that will determine from which Microsoft Web Site a
customer has come. This site-specific tracking can be accomplished via tracking
software at the Merchant site home page via a transition/middle page that
provides a direct link from The Plaza to the appropriate middle page(s) that
will exclusively track hits or by creating a mirror web site.
Weekly User information must include at a minimum:
o Traffic by web link
o Number of page views
o Number of unique users
Weekly Sales Reports must include at a minimum:
o number of daily orders
o total weekly revenue
o average revenue per order.
*Weekly tracking and weekly sales reports shall be sent to Deborah Levinger, c/o
Microsoft Corporation, One Microsoft Way, Redmond, WA 98052-6399.
Merchant will maintain sole responsibility for all costs for Merchant Site
(including but not limited to the MSN Transitional Page and/or the Mirrored Web
Site) development, management, tracking, support, and maintenance. Merchant will
ensure that the site content is refreshed as appropriate on a regular basis.
Merchant will make every reasonable effort to ensure that site is "live" for all
customers.
Merchant is solely responsible for product quality, product availability,
product fulfillment and customer service for all Products offered and/or sold on
the Merchant Site. MSP acts as a link operator only, and will provide marketing
support only as noted in this contract under Special Provisions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fees:
Guaranteed FEE: During the Term Merchant shall pay [****] as an advance on
commission payable for such month to MSP no later than the 5th of each month.
COMMISSION: In addition to the Guaranteed Fee, Merchant shall pay MSP [****] of
Merchant's Gross Revenue less gift certificates, service charges, shipping and
handling charges, taxes, refunds and actual bad debt incurred during the
applicable period. Each month Merchant shall be entitled to deduct the
Guaranteed Fee applicable to such month from any Commissions owing to MSP for
the applicable month. The Commission shall be payable monthly to MSP no later
than the 5th of each month for all transactions occurring during the previous
month. All payments of the Fees must be in a form acceptable to MSP, in its sole
discretion, and addressed to Deborah Levinger, c/o Microsoft Corporation, One
Microsoft Way, Redmond, WA 98052-6399.
- --------------------------------------------------------------------------------
**** 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.
<PAGE>
- --------------------------------- --------------- ------------------------------
Term Start Date: Term End Date: Renewal Options (if any):
Upon availability of the Merchant June 30, 1998 The term shall automatically
Site to customers via The Plaza extend for consecutive
October 21, 1997 six (6) months periods (the
"Renewal Period(s)") until
and unless either party
notifies the other party in
writing of its intent to
terminate this Agreement at
least 30 days prior to the
end of the initial term or
any Renewal Period.
- --------------------------------- --------------- ------------------------------
- --------------------------------------------------------------------------------
Special Provisions (if any):
Merchant will provide the following:
o Electronic mail capabilities between the customer and Merchant and customer
service standards & practices at a level at least as high as that of the
electronic commerce industry to all customers.
o Information regarding Merchant promotions, upon MSP's request for such
information, to be used by MSP, in its sole discretion, in the
pre-programmed Daily Specials area of The Plaza, as per specifications
provided by MSP.
o Promotional activities are subject to change based on business and
technology requirements as seen by MSP. MSP makes no claims or [****]
of level of [****] activities.
o Logo links on Merchant's home page to Microsoft Web Sites, as determined by
MSP and subject to all of MSP's policies and guidelines for the use of such
logo links.
o A "GO BACK TO The Plaza" button on Merchant's home page.
o Monthly listing of customer names and e-mail addresses to MSP for the
purpose of MSP's MSN promotional efforts. MSP recognizes and respects the
obligation of the Merchant to honor its privacy commitments to its
customers that may prohibit the Merchant from completely fulfilling this
request; however Merchant shall provide this information to the maximum
extent possible. Within thirty (30) days of Merchant's execution of this
Agreement, Merchant must notify MSP, in writing, of any privacy commitments
which would limit Merchant's ability to provide MSP with the above customer
information.
o Planned and executed regular promotion of The Plaza in the Merchant's
marketing materials, subject to any guidelines provided to Merchant by
MSP. [Complete as negotiated: Which shall include on-line
advertisements, online banner ads, print ads, product/company catalog,
product brochures, business cards]
MSP will provide the following:
o Microsoft Web Site logos, as determined by MSP in its sole discretion,
Internet Explorer logo, "GO BACK to The Plaza" button - to be used for
linking from the Merchant site.
o Merchandising calendar and plan based on retail holidays, for the
purpose of product promotional planning with Merchant
o Reasonable efforts to ensure that Plaza Tenants are of high quality and
stature in their respective industries.
MSP disclaims any implied warranties, promises, or guarantees of site traffic to
Merchants, number of unique users/consumers, Merchant product promotion
rotation, or industry-specific exclusivity.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
END OF SCHEDULE
- --------------------------------------------------------------------------------
THIS AGREEMENT CONSISTS OF THE PREAMBLE, THE SCHEDULE, THE GENERAL TERMS, AND
ALL ATTACHED RIDERS AND EXHIBITS THAT ARE SIGNED ON BEHALF OF BOTH MSP AND
Merchant.
THE MICROSOFT NETWORK, L.L.C. ("MSP"), 800-FLOWERS, Inc. ("Merchant")
by and through its manager, MICROSOFT -----------------------------
CORPORATION ("Microsoft")
By (signature): /s/ Deborah Levinger By (signature): /s/ Donna M. Iucolano
---------------------- ----------------------
Name: Deborah Levinger Name: Donna M. Iucolano
Title: Business Manager, The Plaza Title: Director, Interactive Services
Date: November 13, 1997 Date: November 11, 1997
**** 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.
<PAGE>
GENERAL TERMS
1. Definitions. As used herein, the following terms are defined and used in this
Agreement as follows:
1.1 Affiliate. When used in reference to either party, any company or
entity which controls, or is controlled by, or is under common control with such
party.
1.2 Gross Revenue. The aggregate of all kinds of consideration,
including, but not limited to, cash, barter and any other in-kind consideration,
received by Merchant or any other party for purchases initiated at The Plaza,
any Microsoft Web Site, the MSN Transition Page or the Mirrored Web Site.
1.3 Microsoft Web Sites. Web sites operated by or affiliated with MSP
which may include, at MSP's sole discretion for the purposes hereof, MSN Premier
Service, MSNBC, msn.com, home.microsoft.com and/or other services as they become
available.
1.4 Mirrored Web Site. A web site which is created solely for the
purposes set forth herein and is identical to Merchant's web site except that
such site is co-branded as directed by MSP at which a customer and/or internet
user is "tagged" for purposes of tracking purchases made from the Merchant which
initiated at The Plaza, any other MSN Web Site, the MSN Transition Page and/or
the Mirrored Web Site. Merchant shall not include any third party advertising in
the home page of the Mirrored Web Site or links from such home page to any site
other than Merchant's Site and MSN. Merchant will carry the MSN (a reciprocal
link), the applicable IE logo and any other links determined by MSP, on the home
page of the Mirrored Web Site, MSP and Merchant.
1.5 MSN. The Microsoft Network online service, operating on open
Microsoft and/or internet-based platforms, including, without limitation, (a)
www.msn.com and related Web Sites (which may include those managed by third
parties and those based overseas by MSP or Microsoft), and (b) MSN-branded Web
pages that are part of a third party's Web Site.
1.6 Plaza Tenant. Each Web Site operator participating in The Plaza.
1.7 The Plaza. The MSN service referred to as "The Plaza on MSN" or by
such other name as MSP may determine in its sole discretion (as solely branded
by MSP or co-branded with its sponsors) in which goods and services from Plaza
Tenants are offered for purchase.
1.8 MSN Transition Page. The Web page on Merchant's Site to which
customers and/or internet users of The Plaza are transported and at which such
customer and/or internet user is "tagged" for purposes of tracking purchases
made from the Merchant which initiated at The Plaza, any other MSN Web Site, the
MSN Transition Page and/or the Mirrored Web Site. Merchant shall not include any
third party advertising in the MSN Transition Page or links from such page to
any site other than Merchant's Site and MSN.
1.9 Product. Any product or service sold or otherwise provided by
Merchant to a customer or internet user during access by such customer or
internet user to the Merchant Site by means of The Plaza, any other Microsoft
Web Site, the MSN Transition Page and/or the Mirrored Web Site.
1.10 Web (and related terms). That part of the internet known as the
World Wide Web, containing, INTER ALIA, pages written in hypertext markup
language (HTML). A "Web page" is a document on the Web which has a distinct URL
address. A "Web Site" is a collection of inter-related Web pages.
2. Term. Subject to extension (if an option or renewal period is specified in
the Schedule), the period during which transactions on the Merchant Site will be
offered as part of The Plaza ("Term") begins on the Start Date and ends on the
End Date, as specified in the Schedule. Either party may elect to terminate this
Agreement at any time, upon not less than [****] notice to the other party.
3. Merchant Obligations.
3.1 Generally. Merchant will enable access to the Merchant Site by
means of the MSN Transition Page and/or Mirrored Web Site throughout the Term.
The Merchant will monitor all sales and other activity in the Merchant Site to
verify ongoing operation of the Merchant Site and its capacity to track
customers and/or internet users accessing the Merchant Site by means of The
Plaza. Merchant will
**** 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.
<PAGE>
ensure that customers and internet users are timely advised of their purchases.
3.2 No Exclusivity. The Merchant Site is not exclusive to MSN; that is,
at all times during the Term, the Merchant Site may offer any internet users the
right and/or ability to purchase Products at the Merchant Site by any means
other than via the MSN Transition Page and/or Mirrored Web Site.
4. MSP Obligations.
4.1 Operation of The Plaza. Throughout the Term, MSP will operate The
Plaza in accordance with the terms of this Agreement. The quantity, identity and
mix of Plaza Tenants shall be determined by MSP in its sole discretion.
5. Promotion and Marketing.
5.1 Generally. MSP and Merchant will cooperate in promotional,
advertising and marketing activities in connection with the availability of the
Merchant Site by means of the MSN Transition Page and/or the Mirrored Web Page
as the parties may mutually deem advisable. All such activities as undertaken by
either party will comply with applicable laws and regulations.
5.2 Use of Materials. (a) MSP may use the name and logo of the Merchant
Site (as provided in Section 16) in promoting, advertising and marketing The
Plaza. Provided that references to Merchant and/or the Merchant Site and use of
Merchant and/or Merchant Site logos will be less prominent than references to
The Plaza and/or use of MSN logos or screen shots. Provided that Merchant
provides MSP with not less than three current, pre-approved screen shots of the
Merchant Site, MSP's use of other screen shots from the Merchant Site in MSN
marketing for The Plaza will be subject to Merchant's prior written approval.
(b) Subject to MSP's approval, Merchant may use MSN's name and
logo, and MSN-furnished marketing materials, provided that all such use will be
in compliance with Section 16 and MSP policies. Merchant agrees to use
MSN-furnished marketing materials solely for the purpose of promoting,
advertising and marketing the availability of the Merchant Site on The Plaza.
6. Sponsorship and Advertising. MSP may include paid advertising, consisting of
Web link banners, in The Plaza. MSP may also designate sponsors of all or any
portion of The Plaza as it deems advisable.
7. Product Transactions.
7.1 MSP will be entitled to the fee(s) specified in the Schedule.
7.2 Statements. (a) Unless otherwise specified in the Schedule, for
each month during the Term Merchant will submit to MSP a statement with respect
to Gross Revenue attributable to customers and/or internet users accessing the
Merchant Site by means of The Plaza, any other Microsoft Web Site, the MSN
Transition Page and/or the Mirrored Web Site and will concurrently render
payment (if any) as shown to be due thereon no later than 5 days after the end
of the month to which such statement relates. Each such statement will state the
amount of Gross Revenue attributable to sales during the month it covers (if
any) and describe in reasonable detail the manner of Merchant's computation of
fees thereon. Alternatively, if there is no Gross Revenue for such month,
Merchant's statement will so note. All statements and payments will be sent to
MSP at the address set forth in the Schedule.
(b) MSP may, at its expense, cause an audit to be made of
the applicable records in order to verify statements issued by Merchant. Such
audit shall be conducted upon advance notice to Merchant during regular
business hours at Merchant's offices and in such a manner as not to interfere
with Merchant's normal business activities. Such audits shall be made no more
often than once every [****] months during the Term and for a period of [****]
following the end of the Term. If an audit reveals that Merchant has
under-paid MSP by [****] or more of the amounts due for any audited period of
time, Merchant agrees, in addition to recomputing and making immediate
payment to MSP of all amounts due, plus interest at the [****], based on the
actual and true amounts due and owing, to pay MSP all reasonable costs and
expenses incurred by MSP in conducting such audit, including, but not limited
to, any amounts paid to any auditor or attorney. MSP shall have the right to
audit a Merchant's site for accuracy of site traffic and customer
transactions including a review of all software as necessary.
8.3 Taxes. Merchant acknowledges and agrees that MSP has no
responsibility with
**** 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.
<PAGE>
respect to tax billing or collecting relating to sales made and/or charges
assessed to customers or other internet users accessing the Merchant Site by
means of The Plaza or any other Microsoft Web Site.
9. Hosting. Merchant is solely responsible for hosting of the Merchant Site
(including the MSN Transition Page) and MSP is solely responsible for hosting of
all programs, content, pages and materials comprising The Plaza.
10. Tracking; Use of Customer Data.
10.1 Generally. Merchant agrees to (a) use usage tracking tools
mutually approved by MSP and Merchant and resources to enable assessment and
verification of data relating to Merchant Site usage by means of The Plaza, (b)
provide access to MSP to log files relating to Merchant Site usage by means of
The Plaza, delivered and formatted in a manner mutually approved by both
parties, and (c) follow such other directions and procedures as are reasonably
determined to be necessary by MSP to enable resolution of customer and/or
internet user support issues relating to usage of the Merchant Site by means of
The Plaza.
10.2 Use of Customer Data. Provided Merchant does not violate MSP's
written policy on use of information, Merchant shall have the right to treat any
Customers who purchase from Merchant as its permanent Customers for any and all
purposes, and furthermore such Customers may be added to Merchant's Customer
Lists.
11. Confidentiality. Neither party will use or disclose to any third party, any
confidential information of the other party. As used herein, the term
"confidential information" means all non-public information that either party
designates as being confidential, or which, under the circumstances of
disclosure ought to be treated as confidential including but not limited to the
terms of this Agreement, know-how and materials provided pursuant to this
Agreement, provided that either party may disclose the terms of this Agreement
in confidence to its immediate legal and financial consultants and advisors as
required in the ordinary course of such party's business, provided that such
immediate legal and financial consultants and advisors agree in advance to be
bound by the confidentiality provisions set forth in this Section 11. All
tangible materials containing Confidential Information ("Confidential
Materials"), including documents, tapes, computer disks and other fixed storage
devices (whether or not machine or user readable), are the property of the
disclosing party. No later than 15 business days following the End Date,
Confidential Materials in either party's possession must be returned or
destroyed (with appropriate certification of destruction if not returned).
12. Warranties.
12.1 By Merchant. Merchant warrants, represents and agrees that (a)
Products offered, sold or otherwise provided as part of the Merchant Site are
made, offered, sold or otherwise provided in compliance with applicable laws and
will not infringe the copyrights, trademarks, service marks or any other
proprietary right of any third party, (b) operation of the Merchant Site is in
compliance with MSP's technical specifications and all applicable laws and (c)
Merchant has the power and authority to enter into and perform its obligations
under this Agreement, (d) Merchant will perform all of its obligations under
this Agreement.
12.2 By MSP. MSP warrants, represents and agrees that (a) MSP has the
power and authority to enter into and perform its obligations under this
Agreement, (b) MSP will operate and maintain the Microsoft Network in compliance
with all applicable laws, (c) MSP will perform all of its obligations under this
Agreement.
12.3 No Additional Warranties. THIS SECTION 12 CONTAINS THE ONLY
WARRANTIES MADE BY MERCHANT AND MSP. ANY AND ALL OTHER WARRANTIES, INCLUDING FOR
NON-INFRINGEMENT AND THE OPERATION, FUNCTIONALITY, INTERRUPTION OR LACK OF
RESOURCES OF MSN OR THE MERCHANT SITE, ARE EXPRESSLY EXCLUDED AND DECLINED. EACH
PARTY DISCLAIMS ANY IMPLIED WARRANTIES, PROMISES AND CONDITIONS OF
MERCHANTABILITY AND/OR FITNESS FOR A PARTICULAR PURPOSE, WHETHER AS TO MSN OR
THE MERCHANT SITE, THE TECHNOLOGY DEPLOYED IN CONNECTION THEREWITH, OR PRODUCTS
OR SERVICES OFFERED AND/OR SOLD IN CONNECTION THEREWITH.
12.4 Liability. TO THE MAXIMUM EXTENT PERMITTED BY LAW, NEITHER PARTY
IS LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL, EXEMPLARY, CONSEQUENTIAL,
INCIDENTAL OR PUNITIVE DAMAGES INCURRED BY THE OTHER PARTY EVEN IF THE OTHER
PARTY HAS BEEN
<PAGE>
ADVISED THAT SUCH DAMAGES ARE POSSIBLE.
12.5 Survival. Each party's representations and warranties survive the
termination of this Agreement.
13. Indemnification.
13.1 Each party will indemnify and hold harmless the other party, and
the other party's Affiliates, from and against any claims, actions, losses,
liabilities, damages, settlements, judgments, arbitration awards, costs and
expenses (including reasonable outside attorneys' fees and expenses)
(collectively "Claims") resulting from; (a) such party's breach (or, with
respect to the defense thereof, alleged breach) of its covenants, warranties and
representations as set forth in this Agreement; (b) any infringement of any
patent, trademark, copyright or other proprietary right of any third party on
The Plaza or Merchant Site, as applicable; or (c) resulting from either party's
approved use of materials obtained from the other party hereunder which
infringes the patent, trademark, copyright or other proprietary right of any
third party. For purposes hereof, Merchant's indemnity obligation hereunder
extends equally to MSP and Microsoft.
13.2 Manner of Exercise. If a party requests to be indemnified
("requesting party"), it must give prompt notice to the other party ("requested
party") specifying all relevant details of the Claim. The requested party may,
at its option, defend the Claim, in which event the requesting party will
cooperate fully and may participate in such defense with counsel of its own
choice, provided that it will be responsible for all expenses relating to such
separate counsel. If the requested party assumes the defense of a Claim, its
obligation will be limited to paying the attorneys' fees, costs and expenses
associated with such defense (except as otherwise expressly provided herein) and
holding harmless the requesting party from and against any judgment paid on
account of such Claim or monetary settlement the requested party has made (with
the requesting party's approval, not to be unreasonably withheld) or approved.
The requesting party may, if needed or desired, join the requested party as a
party in any litigation in respect of a Claim for which indemnity is requested.
No settlement may be made without the requested party's prior approval. Neither
party is responsible for loss of profits or consequential damages incurred by
the other due to a Claim. If either party fails to fulfill its material
obligations, the other party will be deemed excused from its obligations
pursuant to Section 13.1.
13.3 Survival. This Section 13 will survive any suspension, termination
or expiration of this Agreement.
14. Default and Breach.
14.1 Events of Default. After giving notice to the defaulting party and
following the completion of the applicable cure period set forth in Section
14.2, the non-defaulting party may declare the other party to be in breach of
this Agreement and may exercise the remedies specified in Section 14.3 upon the
occurrence of any of the following default events:
(a) failure to perform or comply with any material provision
of this Agreement, including without limitation either party's failure to file
or provide required statements and/or make payments due;
(b) admission in writing of an inability to pay debts as they
mature, or making an assignment for the benefit of creditors;
(c) impairment of financial condition such that the other
party has justifiable grounds to believe and can reasonably demonstrate that the
impaired party will be unable to fulfill its obligations under this Agreement;
or
(d) filing of a petition under any bankruptcy act,
receivership statute or similar law or statute, by either party, or the filing
of such a petition by any third party against either party, or the making of an
application for a receiver by either party, where such petition or application
is not dismissed or otherwise favorably resolved within 60 days.
14.2 Cure Period. (a) Subject to Section 14.2(b), upon receiving a
default notice, the defaulting party will have 15 business days to cure the
default, provided that if the default is not reasonably susceptible of cure
within such period, the non-defaulting party's right to exercise the remedies
specified in Section 14.3 will be suspended for so long as the other party
diligently pursues all reasonable steps to cure as expeditiously as possible.
Notwithstanding the foregoing, such suspension (i) will not arise for default
events that are incapable of cure, and (ii) may nonetheless result in early
termination of this Agreement upon notice given by the non-defaulting party if
cure is uncompleted after 90 days.
<PAGE>
(b) Notwithstanding Section 14.2(a), (i) the non-payment of
monies due must always be cured within the 15-business day cure period, and (ii)
unless MSP otherwise expressly agrees in writing, there shall be a 48 hour cure
period with respect to the operation of the Merchant Site in accordance with
MSP's technical specifications, and in compliance with applicable laws.
14.3 Remedies. If either party fails to timely cure an event of default
(if cure is authorized pursuant to Section 14.2), subject only to Section 17.3,
the non-defaulting party will have the right to declare the other party in
breach of this Agreement and suspend performance or, alternatively, terminate
this Agreement upon notice, whereupon the non-defaulting party's obligations
will immediately cease. The nondefaulting party's rights are cumulative and not
in lieu of any other rights and remedies under this Agreement or otherwise
provided by law or in equity. Upon suspension or termination, neither party will
hold itself out as having rights or powers pursuant to this Agreement (except in
respect of provisions of this Agreement that survive suspension or termination).
15. Notices. All notices given hereunder must be in writing and personally
delivered, or sent by registered or certified mail (return receipt requested),
facsimile, e-mail or overnight courier. A notice sent by facsimile or e-mail
must be confirmed by sending a copy of such notice by registered or certified
mail or overnight courier. Notices will be deemed given on the date received.
Notices to MSP must be sent to One Microsoft Way, Redmond, WA 98052-6399 USA
(facsimile number: (206) 936-7329), Attention: Director, Business Development.
Notices to Merchant must be sent to the address for notices specified in the
Schedule. Either party may change its address for notices at any time by giving
notice to the other party as provided herein.
16. Intellectual Property. Each party will use the appropriate trademark,
product descriptor and trademark symbol (either "(TM)" or "(R)") and copyright
symbol ((C)), and clearly indicate ownership of trademarks, trade names and/or
product names ("Marks") and copyrights, whenever first mentioned in any
advertisement, brochure or other material in connection with MSN or the Merchant
Site. Each party will, upon request, provide the other party with samples of
marketing literature that include the other party's Marks or copyrights. Each
party agrees that, as between the parties, (a) the other party's Marks and
copyrights and the good will associated therewith are and will remain the sole
property of the other party; (b) this Agreement does not confer in either party
any right of ownership in the other party's Marks or copyrights; (c) all uses by
one party of the other party's Marks and/or copyrights will inure to the benefit
of the owning party; and (d) when using the other party's materials, if any such
materials contain copyright, patent, trademark or other notices evidencing the
other party's ownership of rights in intellectual property, the using party will
not delete, modify, remove or diminish the prominence of any such notices.
17. Other Provisions.
17.1 No Ongoing Waiver. No waiver of any breach of any provision of
this Agreement constitutes a waiver of any prior, concurrent or subsequent
breach of the same or any other provisions, and will not be effective unless
made in writing and signed by an authorized representative of the waiving party.
17.2 Excuse. Neither party is liable for, and will not be considered in
default or breach of this Agreement on account of, any delay or failure to
perform as required by this Agreement as a result of causes or conditions beyond
such party's reasonable control which such party is unable to overcome by the
exercise of reasonable diligence, provided that the affected party will use
reasonable efforts to resume normal performance as promptly as possible.
17.3 Dispute Resolution. If a dispute arises hereunder, upon either
party's written request (containing a statement specifying the basis of the
dispute), the parties will each appoint a senior representative to attempt in
good faith to resolve the dispute. Except for disputes where preliminary
injunctive relief is an appropriate remedy, no formal legal proceedings may be
commenced with respect to any dispute until either party determines in good
faith (but no earlier than five business days following the initiation of
discussion) that amicable resolution through continued negotiation appears
unlikely.
17.4 Governing Law; Attorneys' Fees. This Agreement is governed by
the laws of the State of Washington, U.S.A. In any legal proceeding between the
parties relating to the enforcement of any rights arising out of or relating
to this Agreement, the primarily prevailing party will be entitled to recover
its reasonable attorneys' fees and court costs.
17.5 Riders and Exhibits. All Riders and Exhibits attached to this
Agreement that are contemporaneously signed on behalf of both parties are
incorporated herein by this reference.
<PAGE>
17.6 Assignment; Transfer of Control. (a) This Agreement may not be
assigned, by operation of law or otherwise, by either party without the
non-assigning party's prior written consent. Notwithstanding the foregoing, any
assignment of this Agreement to a person or entity acquiring all or
substantially all of the assets of the Merchant Site where such assignment
results in the transfer of management or control or significant ownership
interest in Merchant or the Merchant Site will give MSP the right to terminate
this Agreement as provided in Section 17.6(b). In any assignment proposed by
Merchant, the proposed assignee must agree in writing to be bound by the terms
of this Agreement. Any assignment by Merchant contrary to this Section 17.6(a)
will be void and of no effect.
(b) In the event of the anticipated sale or transfer of
management or control of (or a significant ownership interest in) Merchant or
the Merchant Site ("Transfer"), Merchant will give notice to MSP of such
Transfer (including the proposed transferee) not less than 30 days prior to the
effective date of such Transfer (if such Transfer is voluntary) or as soon as
possible after the Transfer (if such Transfer is involuntary). Upon the
occurrence of a Transfer, MSP may elect to terminate this Agreement. MSP must
give notice to Merchant of MSP's election to terminate this Agreement due to the
Transfer within 15 business days after the later of the following dates: (i) the
date on which MSP ascertains the occurrence of the Transfer, or (ii) the date on
which MSP receives Merchant's notice of such Transfer.
(c) Neither party will pledge or hypothecate its rights or
delegate its obligations under this Agreement except as part of a permitted
assignment of rights.
17.7 Relationship of Parties. This Agreement does not create or
constitute a partnership, joint venture or agency relationship or the grant of a
franchise as defined in the Washington Franchise Investment Protection Act, RCW
19.100, as amended, or 16 CFR Section 436.2 or otherwise.
17.8 Section Headings. Headings and captions used in this Agreement
(including attached Riders and Exhibits) are for convenience only and do not
supersede or modify any provisions.
17.9 Amendments. This Agreement may only be amended by a written
instrument duly signed by authorized representatives of both MSP and Merchant.
17.10 Third Party Enforcement. Merchant agrees that its obligations
under this Agreement may be enforced by or on behalf of any Affiliate of MSP.
17.11 Meaning of "Sale". As used herein, a "sale" includes a license
and a purchase of a Product includes a licensing arrangement; where applicable,
use of such terminology will not be deemed to waive, impair, or otherwise affect
the intellectual property rights of MSP, Microsoft or Merchant.
17.12 This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and merges all prior and
contemporaneous communications. It shall not be modified except by a written
agreement dated subsequent to the date of this Agreement and signed on behalf of
Merchant and MSP by their respective duly authorized representatives.
17.13 If any provision of this Agreement shall be held by a court of
competent jurisdiction to be illegal, invalid or unenforceable, the remaining
provisions shall remain in full force and effect.
18. Entire Agreement. This Agreement embodies the entire agreement between the
parties and supersedes all previous and contemporaneous agreements,
understandings and arrangements with respect to the subject matter hereof,
whether oral or written.
<PAGE>
MICROSOFT PLAZA LINKING AGREEMENT DATED AS OF MARCH 3, 1998
This letter shall serve as an amendment to that certain E-commerce Merchant
Agreement for The Plaza on MSN (the "Agreement") between 1-800-FLOWERS
("Merchant") and The Microsoft Network, L.L.C. ("MSP") relating to MSP's link
mall service. For good and valuable consideration, receipt of which is hereby
acknowledged, MSP and Merchant hereby agree to supplement and amend the
Agreement as follows:
Notwithstanding anything to the contrary contained in the Agreement, the
following shall apply:
1. MSP SERVICES shall be amended to include the following: "MSP may provide, at
MSP's sole discretion, a link from within any Web site owned, controlled or
operated by MSP, Microsoft or any affiliated company (the "MS Sites") directly
to the MSN Transition Page and/or the Mirrored Web Site."
2. For the avoidance of doubt, "Revenue" shall include all kinds of
consideration received by Merchant or any other party for purchases initiated at
the MS Sites.
3. All references to "The Plaza" in the General Terms, except for Sections 1.7
and 2 and the provisions relating to the "Go Back to The Plaza" links, shall he
replaced with "The Plaza and the MS Sites, as applicable".
Unless otherwise defined herein all capitalized terms used herein shall have the
same meaning as in the Agreement. Except as expressly provided herein, the
Agreement is not otherwise modified in any respect. Unless otherwise expressly
provided herein, all terms and conditions of the Agreement shall remain in full
force and effect.
If the foregoing correctly reflects your understanding please sign as indicated
below.
ACCEPTED AND AGREED TO: ACCEPTED AND AGREED TO:
1-800-FLOWERS, INC. THE MICROSOFT NETWORK, L.L.C.
Signature: /s/ Donna M. Iucolano Signature: /s/ Deborah Levinger
-------------------------- -----------------------
Date: March 25, 1998 Date: April 6, 1998
<PAGE>
ECOMMERCE MERCHANT
AGREEMENT FOR THE PLAZA ON MSN
AMENDMENT
Reference is hereby made to that certain Ecommerce Merchant Agreement for The
Plaza on MSN (the "Agreement") dated as of between 800-FLOWERS ("Merchant") and
The Microsoft Network, L.L.C. ("MSP") relating to the inclusion of the Merchant
within The Plaza on MSN Web site. For good and valuable consideration, receipt
of which is hereby acknowledged, [edged, MSP and Merchant hereby agree to
supplement and amend the Agreement as follows:
Notwithstanding anything to the contrary contained in the Agreement, the
following shall apply:
1. The Term of the Agreement shall continue through June 30, 1999.
2. The Guaranteed Fee shall be US [****] for the period from February 1, 1998
through June 30, 1998. The Guaranteed Fee shall be US [****] for the period from
July 1, 1998 through June 30, 1999.
3. The Commission shall remain the same as agreed and signed to in the Merchant
Agreement.
4. Merchant may deduct [****] of the Guaranteed Fee per month from the
Commissions owing for such month for the period from July 1, 1998 through
June 30, 1999.
Unless otherwise defined herein all capitalized terms used herein shall
have the same meaning as in the Agreement.
Except as expressly provided herein, the Agreement is not otherwise
modified in any respect. Unless otherwise expressly provided herein, all terms
and conditions of the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and
year specified below.
THE MICROSOFT NETWORK, L.L.C. ("MSP"), 800-FLOWERS, Inc. ("Merchant")
by and through its manager, MICROSOFT
CORPORATION
By (signature): /s/ Deborah Levinger By (signature): /s/ Donna M. Iucolano
---------------------- ----------------------
Name: Deborah Levinger Name: Donna M. Iucolano
Title: Business Manager, The Plaza Title: Director, Interactive Services
Date: April 6, 1998 Date: March 25, 1998
**** 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.
<PAGE>
CONTRACT NUMBER: __________
AMENDMENT NUMBER 2 TO
ECOMMERCE MERCHANT AGREEMENT
This AMENDMENT NUMBER 2 TO THE ECOMMERCE MERCHANT AGREEMENT, dated as of the
13th day of November 1997 (the "Agreement"), is made by and between Microsoft
Corporation, a Washington U.S.A. corporation ("Microsoft"), and 800-Flowers,
Inc., d.b.a. 1 800-FLOWERS, a New York U.S.A. Corporation ("Merchant"), to amend
the Agreement as set forth herein. Unless otherwise defined herein all defined
terms have the same meanings set forth in the Agreement:
The following shall be added to the Agreement:
1. Microsoft maintains a web-based portal site intended for users in the
United States and currently known as "MSN.COM" ("Portal Site").
1.1. Microsoft currently anticipates that, among other things, the
Portal Site will feature a home page as its top-most page
("Home Page") and several secondary pages grouped by content
theme ("Channels"). The Channels will be available from the
Home Page via persistent hypertext links prominently displayed
above the fold in a bar on the leftmost portion of the Home
Page. Examples of Channels that Microsoft currently expects to
feature on the Portal Site include: Autos, Business,
Computing, Games, Health, News, Personal Finance, Real Estate,
Shopping, Sports, Travel, and Women. Absent technical issues
or other such critical obstacles, Microsoft currently
anticipates that the Channels will launch on or about October
1, 1998 ("Launch Date").
1.2. The Portal Site will also feature a Microsoft developed (or
licensed) web-search capability ("Search") utilizing key words
as the search parameter.
1.3 The Home Page will also feature a text-based advertising space
above the fold ("Home Page Ad Space").
1.4. The Shopping Channel shall feature persistent sections on its
topmost page above the fold as follows:
1.4.1. a rotating set of graphic buttons consisting of
merchants' logos and providing links to those
merchants' sites in a section labeled "Plaza
Merchants";
1.4.2. a section that will feature on a rotating basis
specials from merchants in a section called "Plaza
Specials"; and
1.4.3. a section that features recommendations for gifts
based on seasonal or holiday themes (e.g.,
back-to-school, Christmas, Father's Day) that will
feature appropriate hypertext links to merchants'
sites.
The Shopping Channel will have a series of persistent secondary pages that will
group merchants by product category. Each of these secondary pages will be
entitled "Departments."
2. For the term described below, Microsoft will accord Merchant Premier
Anchor Provider Status in the Flower Category for the Portal Site.
Specifically:
2.1 Microsoft will make available to Merchant on a [****] basis
the Home Page Ad Space. Microsoft will provide to Merchant
the technical specifications for the Home Page Ad Space in a
timely manner and Merchant will comply with such technical
specifications. Notwithstanding the foregoing, Merchant
will be the only provider of floral products in this space.
**** 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.
<PAGE>
2.2 In the Shopping Channel, Microsoft also will do the following:
2.2.1 Microsoft will feature Merchant's branded logo button
above the fold in the Plaza Merchants section on a
[****] basis.
2.2.2 Microsoft will feature Merchant [****] in the Plaza
Special section;
2.2.3 Microsoft will include Merchant in Plaza Gift Guides
at least [****]; and
2.2.4 Microsoft will feature a direct hyperlink to
Merchant's Site immediately below the link labeled
"Flower Department" in the section.
2.3 In the Flower Department of the Flower Category, Microsoft
will accord Merchant the [****] position of all merchants
featured in the Department and accord the [****] product
space to Merchant on a persistent basis. There will be no
more than [****] merchants within this category including
1-800-FLOWERS as the premier merchant and a [****] partner.
2.4 Microsoft will accord Merchant the opportunity to have its
textual message included in [****] overall Plaza e-mail
campaigns targeted to Plaza registered users that have
consented to receiving such e-mailings. Such campaigns will
take place at least [****] during the Term. Merchant will
have the [****] position in any mailing that includes a
product from one sponsor flower partner. Microsoft will also
accord Merchant the opportunity to have its textual message
included in Portal Site e-mail campaigns targeted to Portal
Site registered users that have consented to receiving such
e-mailings if and when this feature is available.
2.5 For a period of [****] from the launch of Search, Microsoft
will ensure that Merchant's Search Site is served up to user
with [****] specific flower-related Key Words. Merchant
will have the opportunity to select the first [****] words.
The parties may mutually agree upon additional key words that
will serve up Merchant's Site as a result on a non-exclusive
basis.
3. For the term described below, Microsoft will also accord the following
additional tenant positions to Merchant. Specifically:
3.1. Merchant will have a [****] position in the Gifts & Gadgets
Department effective October 1, 1998 or at the launch of the
Shopping Channel on the Portal Site.
3.2 Merchant will have a [****] position in the Candy & Cards
Department.
3.3 Merchant's branded subsidiary sites, such as Plow & Hearth or
other gardening/country living, will have a [****] in the Home
& Garden Department with a planned start date no later than
January 31, 1999.
4. Microsoft's efforts as described above shall deliver at least
[****] impressions on Microsoft sites during the Term.
5. The term of the rights and obligations under this Amendment ("Term")
shall commence on October 1, 1998 and end on September 30, 1999. This
provision supersedes paragraph two of the Electronic Merchant Agreement
in its entirety.
6. In consideration for the above-described rights and obligations set
forth herein, Merchant shall pay to Microsoft the following amounts:
6.1. Guaranteed Fee: Merchant shall pay [****] to Microsoft upon
execution of this Amendment as a non-refundable advance.
**** 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.
<PAGE>
on any Commissions owed to Microsoft. This fee will be paid in
[****] equal monthly installments of [****].
Commission: Merchant shall pay Microsoft [****] of
Merchant's Gross Revenue less discounts, gift certificates,
sales and other taxes, service charges, shipping and
handling charges, credits, chargebacks, and credit card
processing fees incurred during the Term. Merchant shall be
entitled to deduct the Guaranteed Fee from any Commissions
owing to Microsoft. No commissions over the guaranteed fee is
due or owing to Microsoft until the Merchant's Gross
Revenue less actual returns and actual bad debt exceeds the
sum of [****]. The Commission shall be payable to Microsoft
no later than thirty (30) days after the anniversary of the
Launch Date. All payments of the Fees must be in a form
acceptable to Microsoft, in its sole discretion, and
addressed to Deborah Levinger, c/o Microsoft Corporation,
One Microsoft Way, Redmond, WA 98052.
6.2. Microsoft will invoice Merchant for the Guaranteed Fee.
Merchant is responsible to pay Commissions based on monthly
tracking. Merchant is responsible for ensuring that all
payment are made on a timely basis.
7. Because Merchant is a Microsoft Premier Anchor Provider, Microsoft will
use commercially reasonable efforts to integrate Merchant under terms
to be mutually agreed upon into any integrated search feature made
available on the Portal Site, such as Expedia Maps, Personalization
Section, or any Shopping Folder created in Microsoft internet Explorer,
and into the content to be provided on at least [****] other Portal
Site Channels when available.
8. Merchant will use commercially reasonable efforts to make special
offers to Portal Site users.
9. The parties agree to exercise mutual good faith efforts to promote
buying flowers via the Portal Site.
10. Merchant shall ensure that the Merchant Site complies with the [****]
program as outlined on [****] throughout the Term.
11. At least sixty (60) days prior to the expiration of the Term, the
parties hereto shall commence negotiating, in good faith, the
renewal of this Amendment and shall negotiate for a period of thirty
days (the "Negotiation Period"). If the parties do not reach an
agreement with respect thereto prior to the expiration of the
Negotiation Period, Microsoft may negotiate with a third party to be
the Premier Anchor Provider Status in the Flower Category for the
Portal Site; provided, however, Microsoft shall not enter into any
agreement with respect thereto with such third party for the two (2)
month period following expiration of the Negotiation Period without
first offering to Merchant the opportunity to enter into such
agreement on terms and conditions at least as favorable to Merchant
as those offered to or by Microsoft by or to such third party.
Merchant shall have ten (10) business days from the date of receipt
of written notice from Microsoft of any such offer (which offer
shall be irrevocable during at least such ten (10) business days and
said notice thereof shall contain full details in regard thereto) in
which to accept or reject such offer. If Merchant rejects or does
not accept such written offer within ten (10) business days after
receipt thereof, Microsoft will be free to enter into such agreement
with a third party.
Except as expressly provided herein, the Agreement is not otherwise modified in
any respect, and the same as hereby supplemented and amended is hereby ratified
and confirmed in all respects (including, specifically, Merchant's tracking and
reporting obligations, and the requirement of a "GO BACK" button on the Merchant
Site).
**** 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.
<PAGE>
WHEREBY, the parties enter into this Amendment as of the Launch Date mentioned
above.
MICROSOFT CORPORATION 800-FLOWERS, INC.
By (signature): /s/ Deborah Levinger By (signature): /s/ Donna M. Iucolano
---------------------- -----------------------
Name: Deborah Levinger Name: Donna M. Iucolano
Title: Senior Manager eCommerce Title: Vice President
Date: October 30, 1998 Date: October 29, 1998
<PAGE>
Exhibit 10.8
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.
CONFIDENTIAL EXECUTION COPY
SPONSORSHIP AGREEMENT
This agreement ("Agreement") is entered into as of the 1st day
of May, 1998 ("Effective Date"), by and between Excite, Inc., a California
corporation, located at 555 Broadway, Redwood City, California 94063 ("Excite"),
and 800-FLOWERS, Inc., a New York corporation, located at 1600 Stewart Avenue,
Westbury, New York, 11590 ("Client").
RECITALS
A. Excite maintains a site on the Internet at http://www.excite.com (the
"Excite Site"), a site at http://www.webcrawler.com (the "WebCrawler Site")
and owns and/or manages related Web sites worldwide (collectively, the
"Excite Network") which, among other things, allow its users to search for
and access content and other sites on the Internet.
B. Within the Excite Site and the WebCrawler Site, Excite currently
organizes certain content into topical channels, including "shopping"
channels (the "Shopping Channels").
C. Client is engaged in the business of selling flowers at its Web site
located at http://www.1800flowers.com (the "Client Site").
D. Client wishes to promote its sale of flowers and related gift items to
Excite's users by sponsoring various portions of the Excite Network and
purchasing banner advertising on the Excite Network.
Therefore, the parties agree as follows:
1. ADVERTISING AND PROMOTIONAL PLACEMENTS
a) The parties recognize that sponsorship, promotional
and advertising opportunities on the Excite Network
will evolve over time and will cooperate in good
faith to determine appropriate opportunities for
Client, subject to Excite's delivery of the
guaranteed impressions as described in Section 2.
b) Commencing on the Launch Date (defined below),
Client will be the exclusive provider of fresh cut
flowers and related gift items in the portions of
the Excite Network described in Exhibit A. For the
purposes of this Agreement "exclusive" means that
Excite will not display on the portions of the
Excite Network described in Exhibit A content
created by Excite promoting Client's "Competitors,"
content created by Client's Competitors [****],
promotional placements from Client's Competitors
or links to Client's Competitors' sites or otherwise
permit Client's Competitors to sell or offer to
sell any fresh cut flowers or related gift items
in said portions of the Excite Network.
**** 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.
<PAGE>
c) Notwithstanding the foregoing, Excite may display
links to [****] in Excite Search and WebCrawler
search results pages in response to user queries,
in any portion of Excite's general directory of
Web sites that appears on the Excite Site or the
WebCrawler Site and in search results displayed in
the "Shopping Service powered by Jango".
2. IMPRESSION GUARANTEES
a) Excite guarantees the display of [****]
impressions of the sponsorship links, promotional
placements and advertising banners for Client in
"Year 1" of the Agreement. For the purposes of
this Agreement, "Year 1" means the period
commencing on July 1, 1998 and ending June 30,
1999.
b) Excite guarantees the display of [****]
impressions of the sponsorship links, promotional
placements and advertising banners for Client in
"Year 2" of the Agreement. For the purposes of
this Agreement, "Year 2" means the period
commencing July 1, 1999 and ending June 30, 2000.
3. LAUNCH DATE, RESPONSIBILITY FOR EXCITE NETWORK AND
REPORTING
a) Client and Excite will use reasonable efforts to
implement the display of the first of Client's
sponsorship links, promotional placements and
advertising by July 1, 1998 (the "Launch Date"). The
parties recognize that the scheduled Launch Date can
be met only if Client provides final versions of all
graphics, text, keywords, banner advertising,
promotional placements, other promotional media and
valid URL links necessary to implement the
promotional placements and advertising described in
the Agreement (collectively, "Impression Material")
to Excite fourteen (14) days prior to scheduled
Launch Date.
b) In the event that Client fails to provide the
Impression Material to Excite fourteen (14) days in
advance of the scheduled Launch Date, Excite may, at
its reasonable discretion (i) reschedule the Launch
Date at the earliest practicable date according to
the availability of Excite's engineering resources
after delivery of the complete Impression Material or
(ii) commence delivery of Impressions based on
Impression Material in Excite's possession at the
time and/or reasonable placeholders created by
Excite.
**** 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
<PAGE>
c) Excite will have sole responsibility for providing,
hosting and maintaining, at its expense, the Excite
Network. Excite will have sole control over of the
"look and feel" of the Excite Network including, but
not limited to, the display, appearance and placement
of the parties' respective names and/or brands and
the promotional links.
d) Excite will provide Client with monthly reports
substantiating the number of impressions of Client's
sponsorship links, advertising banners and
promotional placements displayed on the Excite
Network. The parties acknowledge that Excite may rely
on ad serving and reporting services provided by its
wholly-owned subsidiary MatchLogic, Inc. to deliver
Client's sponsorship links, advertising banners,
promotional placements and reporting. However, Excite
remains liable to Client for its obligations
hereunder.
e) Excite will maintain accurate records with respect to
impressions due under this Agreement. Once per year,
the parties will-review these records to verify the
accuracy and appropriate accounting of all
impressions delivered made pursuant to the Agreement.
In addition, Client may, upon no less than thirty
(30) days prior written notice to Excite, cause an
independent Certified Public Accountant to inspect
the records of Excite reasonably related to the
calculation of such impressions during Excite's
normal business hours. The fees charged by such
Certified Public Accountant in connection with the
inspection will be paid by Client unless the
impressions delivered by Excite are determined to
have been less than [****] of the impressions
actually owed to Client or as stated by Excite to
have been delivered to Client, in which case
Excite will be responsible for the payment of the
reasonable fees for such inspection.
4. SPONSORSHIP, ADVERTISING AND TRANSACTION FEES
a) Client will pay Excite sponsorship and advertising
fees of [****] for Year 1 of the Agreement. These
fees will be paid in [****] equal monthly
installments of [****]. The first monthly payment
will be due on July 1, 1998 and paid within thirty
(30) days of the execution of this Agreement.
Subsequent installments will be due and paid on
the first of each month thereafter.
b) Provided that Excite delivers the agreed-upon
impressions due in the first year of the term of
the Agreement and the Agreement remains in effect
at the end of the first year of its term, Client
will pay Excite sponsorship and advertising fees
of [****] for Year 2 of the Agreement. These fees
will be paid in [****] equal monthly installments
of [****]. The first of these monthly payments for
Year 2 will be due and paid July 1, 1999.
**** 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
<PAGE>
Subsequent installments will be due and paid on a
monthly basis thereafter.
c) Separate and apart from the sponsorship and
advertising fees, Client will pay Excite [****] of
all gross revenue in excess of [****] in Year 1
and [****] of all gross revenue in excess of [****]
in Year 2 Client realizes on transactions
conducted by users referred to the Client Site
from the Excite Network during the term of the
Agreement. The [****] commission payment is only
due in those years in which the minimum revenue
threshold is attained. Client will pay Excite its
share of revenues within thirty (30) days after
the close of the financial quarter in which Client
recognizes the revenue derived from these
transactions. "Gross revenue" is defined as the
total transaction amount recognized by Client less
discounts, gift certificates, sales and other
taxes, actual service charges paid to Client by
customers, shipping and handling charges, credits,
refunds, chargebacks, and credit card processing
fees.
d) The sponsorship fees and transaction-related payments
are net of any agency commissions to be paid by
Client.
e) Client will maintain accurate records with respect to
the calculation of all transaction payments due under
this Agreement. Once per year, the parties will
review these records to verify the accuracy and
appropriate accounting of all payments made pursuant
to the Agreement. In addition, Excite may, no more
frequently than every six (6) months and upon no less
than thirty (30) days prior written notice to Client,
cause an independent Certified Public Accountant to
inspect the records of Client reasonably related to
the calculation of such payments during Client's
normal business hours. The fees charged by such
Certified Public Accountant in connection with the
inspection will be paid by Excite unless the
payments made to Excite during the period audited
are determined to have been less than ninety-five
percent (95%) of the payments actually owed to Excite
during the period audited and that such discrepancy
is at least ten thousand dollars ($10,000), in which
case Client will be responsible for the payment of
the reasonable fees for such inspection.
f) Client will have sole ownership and control over the
"look and feel" of the Client Site.
5. PUBLICITY
Unless required by law, neither party will make
any public statement, press release or other
announcement relating to the terms of or existence
of this Agreement without the prior written
approval of the other. Notwithstanding the
foregoing, the parties agree to issue an initial
press release regarding the relationship between
Excite and Client, the timing and wording of which
will be mutually agreed upon.
**** 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
<PAGE>
6. TERM AND TERMINATION
a) The term of this Agreement will begin on the
Launch Date and will not end until Excite displays
of a total of [****] impressions of Client's
sponsorship links, advertising banners and
promotional placements on the Excite Network.
Regardless of Excite's actual delivery of
impressions, but subject to Section 6(b), the term
of this Agreement will not be shorter than [****]
months after the display of the Launch Date,
unless earlier terminated pursuant to the terms
hereof.
b) Notwithstanding Section 6(a), in the event that
Client has not realized [****] in gross revenue
(the "Revenue Goal") on transactions conducted by
users referred to the Client Site from the Excite
Network within [****] months of the Launch Date,
Excite will continue to deliver the impressions of
Client's sponsorship links, advertising banners
and promotional placements on the Excite Network
otherwise required hereunder, but Client will not
be obligated to pay, and Excite hereby waives any
claim to, the monthly sponsorship and advertising
fees for the shorter of the following: (i) [****]
months, (ii) the end of the [****] month after the
Launch Date if by that time Client realizes [****]
in cumulative gross revenue on transactions
conducted by users referred to the Client Site
from the Excite Network or (iii) the end of
[****] month after the Launch Date if by that
time Client realizes [****] in cumulative gross
revenue on transactions conducted by users
referred to the Client Site from the Excite
Network. In the event that Client does not realize
the Revenue Goal within [****] months after the
Launch Date, Client may, at any time, terminate
this Agreement immediately upon written notice to
Excite.
c) Either party may terminate this Agreement if the
other party materially breaches its obligations
hereunder and such breach remains uncured for thirty
(30) days following the notice to the breaching party
of the breach.
d) All undisputed payments that have accrued prior to
the termination or expiration of this Agreement will
be payable in full within thirty (30) days thereof.
e) The provisions of Section 8 (Confidentiality and User
Data), Section 9 (Indemnity), Section 10 (Limitation
of Liability) and Section 11 (Dispute Resolution)
will survive any termination or expiration of this
Agreement.
**** 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.
5
<PAGE>
7. TRADEMARK OWNERSHIP AND LICENSE
a) Client will retain all right, title and interest in
and to its trademarks, service marks and trade names
worldwide, subject to the limited license granted to
Excite hereunder.
b) Excite will retain all right, title and interest in
and to its trademarks, service marks and trade names
worldwide, subject to the limited license granted to
Client hereunder.
c) Each party hereby grants to the other a
non-exclusive, limited license to use its trademarks,
service marks or trade names only as specifically
described in this Agreement. All such use shall be in
accordance with each party's reasonable policies
regarding advertising and trademark usage as
established from time to time, and, with the
exception of the links, advertising banners and
promotional placements described in this Agreement,
shall be subject to the prior written approval of the
other party, which approval shall not be unreasonably
withheld.
d) Upon the expiration or termination of this Agreement,
each party will cease using the trademarks, service
marks and/or trade names of the other except as the
parties may agree in writing.
8. CONFIDENTIALITY AND USER DATA
a) For the purposes of this Agreement, "Confidential
Information" means information about the disclosing
party's (or its suppliers') business or activities
that is proprietary and confidential, which shall
include all business, financial, technical and other
information of a party marked or designated by such
party as "confidential or "proprietary" or
information which, by the nature of the circumstances
surrounding the disclosure, ought in good faith to be
treated as confidential.
b) Confidential Information will not include information
that (i) is in or enters the public domain without
breach of this Agreement, (ii) the receiving party
lawfully receives from a third party without
restriction on disclosure and without breach of a
nondisclosure obligation, (iii) the receiving party
knew prior to receiving such information from the
disclosing party or (iv) the receiving party develops
independent of any information originating from the
disclosing party.
c) Each party agrees (i) that it will not disclose to
any third party or use any Confidential Information
disclosed to it by the other except as expressly
permitted in this Agreement and (ii) that it will
take all reasonable measures to maintain the
confidentiality of all Confidential Information of
the other party in its possession or control, which
will in no event be less than the measures it uses to
maintain the confidentiality of its own information
of similar importance.
6
<PAGE>
d) The usage reports provided by Excite to Client
hereunder will be deemed to be the Confidential
Information of Excite.
e) The terms and conditions of this Agreement will be
deemed to be Confidential Information and will not be
disclosed without the written consent of the other
party.
f) For the purposes of this Agreement, "User Data" means
all information submitted by users referred to the
Client Site from the Excite Network during the term
of the Agreement, with the exception of credit card
data. The parties acknowledge that any individual
user of the Internet could be a user of Excite and/or
Client through activities unrelated to this Agreement
and that user data gathered independent of this
Agreement, even from individuals who are users of
both parties' services, will not be deemed to be
"User Data" for the purposes of this Agreement.
g) User Data will be deemed to be the joint property of
the parties and, subject to the limitations contained
herein, both parties will retain all rights to make
use of any User Data obtained through this Agreement.
h) Client will provide to Excite all User Data collected
by Client within thirty (30) days following the end
of each calendar month during the term of the
Agreement in a mutually determined electronic format.
i) Client will not use User Data to directly or
indirectly solicit any Excite users (except as
specifically provided in this Agreement or except to
encourage the continued use of Client's services)
either individually or in the aggregate during the
term of this Agreement and for a period of twelve
(12) months following the expiration or termination
of this Agreement.
j) Neither party may sell, disclose, transfer or rent
any User Data which could reasonably be used to
identify a specific named individual ("Individual
Data") to any third party nor will either party use
Individual Data on behalf of any third party without
the express permission of the individual user. Where
user permission for the dissemination of Individual
Data to third parties has been obtained, each party
will use commercially reasonable efforts to require
the third party recipients of Individual Data to
provide an unsubscribe" feature in any email
communications generated by, or on behalf of, the
third party recipients of Individual Data.
k) Notwithstanding the foregoing, each party may
disclose Confidential Information or User Data (i) to
the extent required by a court of competent
jurisdiction or other governmental authority or
otherwise as required by law or (ii) on a
"need-to-know" basis under an obligation of
confidentiality to its legal counsel, accountants,
banks and other financing sources and their advisors.
**** 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.
7
<PAGE>
9. INDEMNITY
a) Client will indemnify, defend and hold harmless
Excite, its affiliates, officers, directors,
employees, consultants and agents from any and all
third party claims, liability, damages and/or costs
(including, but not limited to, reasonable attorneys
fees) arising from:
i) The breach of any representation or covenant in
this Agreement; or
ii) Any claim that Client's advertising banners
infringe or violate any third party's copyright, patent, trade secret,
trademark, right of publicity or right of privacy or contain any
defamatory content other than content provided by Excite, if any; or
iii) Any claim arising from content displayed on the
Client Site, other than content provided by Excite.
Excite will promptly notify Client of any and all
such claims and will reasonably cooperate with
Client with the defense and/or settlement thereof;
provided that, if any settlement requires an
affirmative obligation of, results in any ongoing
liability to or prejudices or detrimentally
impacts Excite in any way and such obligation,
liability, prejudice or impact can reasonably be
expected to be material, then such settlement
shall require Excite's written consent (not to be
unreasonably withheld or delayed) and Excite may
have its own counsel in attendance at all
proceedings and substantive negotiations relating
to such claim.
b) Excite will indemnify, defend and hold harmless
Client, its affiliates, officers, directors,
employees, consultants and agents from any and all
third party claims, liability, damages and/or costs
(including, but not limited to, reasonable attorneys
fees) arising from:
i) The breach of any representation or covenant in
this Agreement; or
ii) Any claim arising from or related to the Excite
Network other than content or services provided by Client.
iii) Any claim that Excite's advertising banners
infringe or violate any third party's copyright, patent, trade secret,
trademark, right of publicity or right of privacy or contain any
defamatory content other than content provided by Client, if any.
Client will promptly notify Excite of any and all
such claims and will reasonably cooperate with
Excite with the defense and/or settlement thereof;
provided that, if any settlement requires an
affirmative obligation of, results in any ongoing
liability to or prejudices or detrimentally
impacts Client in any way and such obligation,
liability, prejudice or impact can reasonably be
expected to be material, then such settlement
shall require Client's written consent (not to be
unreasonably withheld or delayed) and Client may
have its own counsel in attendance at all
proceedings and substantive negotiations relating
to such claim.
c) EXCEPT AS SPECIFIED IN THIS AGREEMENT, NEITHER PARTY
MAKES ANY WARRANTY IN CONNECTION WITH THE SUBJECT
8
<PAGE>
MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS ANY AND
ALL IMPLIED WARRANTIES, INCLUDING ALL IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE REGARDING SUCH SUBJECT MATTER.
10. LIMITATION OF LIABILITY
EXCEPT UNDER SECTIONS 9(a) AND 9(b), IN NO EVENT WILL EITHER
PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL
DAMAGES, WHETHER BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR
OTHERWISE, WHETHER OR NOT THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGE. THE LIABILITY OF EITHER PARTY FOR DAMAGES OR ALLEGED DAMAGES HEREUNDER,
WHETHER IN CONTRACT, TORT OR ANY OTHER LEGAL THEORY, [****].
11. DISPUTE RESOLUTION
a) The parties agree that any breach of either of the
parties' obligations regarding trademarks, service
marks or trade names and/or confidentiality would
result in irreparable injury for which there is no
adequate remedy at law. Therefore, in the event of
any breach or threatened breach of a party's
obligations regarding trademarks, service marks or
trade names or confidentiality, the aggrieved party
will be entitled to seek equitable relief in addition
to its other available legal remedies in a court of
competent jurisdiction.
b) In the event of disputes between the parties arising
from or concerning in any manner the subject matter
of this Agreement, other than disputes arising from
or concerning trademarks, service marks or trade
names and/or confidentiality, the parties will first
attempt to resolve the dispute(s) through good faith
negotiation. In the event that the dispute(s) cannot
be resolved through good faith negotiation, the
parties will refer the dispute(s) to a mutually
acceptable mediator.
c) In the event that disputes between the parties
arising from or concerning in any manner the subject
matter of this Agreement, other than disputes arising
from or concerning trademarks, service marks or trade
names and/or confidentiality, cannot be resolved
through good faith negotiation and mediation, the
parties will refer the dispute(s) to the American
Arbitration Association for resolution through
binding arbitration by a single arbitrator pursuant
to the American Arbitration Association's rules
applicable to commercial disputes. The Arbitration
will take place at an office of the American
Arbitration Association located in Nassau or New York
County if initiated by Excite and will take place at
an office of the American Arbitration Association
located in the county in which Excite maintains its
principal place of business if initiated by Client..
**** 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.
9
<PAGE>
12. GENERAL
a) ASSIGNMENT. Neither party may assign this Agreement,
in whole or in part, without the other party's
written consent (which will not be unreasonably
withheld), except that no such consent will be
required in connection with (i) a merger,
reorganization or sale of all, or substantially all,
of such party's assets or (ii) either party's
assignment and/or delegation of its rights and
responsibilities hereunder to a majority-owned
subsidiary or joint venture in which the assigning
party holds an interest. Any attempt to assign this
Agreement other than as permitted above will be null
and void.
b) GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of
California, notwithstanding the actual state or
country of residence or incorporation of Excite or
Client.
c) NOTICE. Any notice under this Agreement will be in
writing and delivered by personal delivery, express
courier, confirmed facsimile, confirmed email or
certified or registered mail, return receipt
requested, and will be deemed given upon personal
delivery, one (1) day after deposit with express
courier, upon confirmation of receipt of facsimile or
email or five (5) days after deposit in the mail.
Notices will be sent to a party at its address set
forth below or such other address as that party may
specify in writing pursuant to this Section.
d) NO AGENCY. The parties are independent contractors
and will have no power or authority to assume or
create any obligation or responsibility on behalf of
each other. This Agreement will not be construed to
create or imply any partnership, agency or joint
venture.
e) FORCE MAJEURE. Any delay in or failure of performance
by either party under this Agreement will not be
considered a breach of this Agreement and will be
excused to the extent caused by any occurrence beyond
the reasonable control of such party including, but
not limited to, acts of God, power outages and
governmental restrictions, provided the effected
party takes all reasonable steps to resume full
operation.
f) SEVERABILITY. In the event that any of the provisions
of this Agreement are held to be unenforceable by a
court or arbitrator, the remaining portions of the
Agreement will remain in full force and effect.
g) ENTIRE AGREEMENT. This Agreement is the complete and
exclusive agreement between the parties with respect
to the subject matter hereof, superseding any prior
agreements and communications (both written and oral)
regarding such subject matter. This Agreement may
only be modified, or any rights under it waived, by a
written document executed by both parties.
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h) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which will serve to evidence
the parties' binding agreement.
800-FLOWERS, Inc. Excite, Inc.
By: /s/ Christopher McCann By: /s/ Robert C. Hood
Title: Senior Vice President Title: Executive Vice President/Chief
Financial Officer
Date: 06/26/98 Date: 06/28/98
1600 Stewart Avenue 555 Broadway
Westbury, New York 11590 Redwood City, California 94063
516-237-6000 (voice) 650-568-6000 (voice)
516-237-6060 (fax) 650-568-6030 (fax)
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EXHIBIT A
ANNUAL PLACEMENT SCHEDULE
1. SPONSORSHIP OF THE SHOPPING CHANNELS
a) Client will be prominently promoted in the Excite Shopping
Channel and the WebCrawler Shopping Channel as follows:
i) A link to the Client Site (consistent with the
format used on similar links on the same page) will be displayed in the "Such
a Deal" promotional rotation on the home page of the Excite Shopping Channel
in [****] rotations during each year of the term of the Agreement, [****]
every [****].
ii) A link to the Client Site (consistent with the
format used on similar links on the same page) will be displayed in the "Shop
Here First" promotional rotation on the home page of the Excite Shopping
Channel in [****] rotations during each year of the term of the Agreement,
[****] every [****].
iii) A link to the Client Site (consistent with the
format used on similar links on the same page) will be displayed on the home
page of the Excite Shopping Channel under the Flowers & Gifts department
listing for the [****] of the Agreement.
iv) A link to the Client Site (consistent with the
format used on similar links on the same page) will be displayed on the front
page of the Flowers & Gifts department of the Excite Shopping Channel for the
[****] of the Agreement.
v) A link to the Client Site (consistent with the
format used on similar links on the same page) will be displayed in the "Shop
Here First" promotional rotation in the Flowers & Gifts department of the
Excite Shopping Channel in [****] rotations during each year of the term of
the Agreement, [****] every [****].
vi) A link to the Client Site (consistent with the
format used on similar links on the same page) will be displayed in the
"Special Web Price!" promotional rotation on the home page of the WebCrawler
Shopping Channel in [****] rotations during each year of the term of the
Agreement, [****] every [****].
vii) A link to the Client Site (consistent with the
format used on similar links on the same page) will be displayed in the
"Featured Merchants" promotional rotation on the home page of the WebCrawler
Shopping Channel in [****] rotations during each year of the term of the
Agreement, [****] every [****].
viii) A link to the Client Site (consistent with the
format used on similar links on the same page) will be displayed on the home
page of the WebCrawler Shopping Channel under the Flowers & Gifts department
listing for the [****] of the Agreement.
**** 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.
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ix) A link to the Client Site (consistent with the
format used on similar links on the same page) will be displayed on the front
page of the Flowers & Gifts department of the WebCrawler Shopping Channel for
the [****] of the Agreement.
x) A link to the Client Site (consistent with the
format used on similar links on the same page) will be displayed in the
"Featured Merchants" promotional rotation in the Flowers & Gifts department
of the WebCrawler Shopping Channel in [****] rotations during each year of
the term of the Agreement, [****] every [****].
b) During the [****] of the Agreement, Client will be
included in Excite's promotions of merchants with comparable sponsorship
commitments, such as Excite's Holiday Gift Guide promotion, a possible Gift
Reminder Service, a possible Personalized Gift Finder or other comparable
promotions.
2. "TRY THESE FIRST" AND "SHORTCUTS" LINKS
a) In the event that Client and Excite agree to include
Client in the "Try These First" and/or "Shortcuts" programs, Client will
create a co-branded version of the Client Site (the "Co-Branded Area"). Each
page in the Co-Branded Area will display the name and/or brands of Client and
Excite ("the Excite Co-Branded Area" or "the WebCrawler Co-Branded Area").
Client will create and maintain the Co-Branded Area in a manner consistent
with Excite's then-current guidelines for Co-Branded Areas including, but not
limited to, the display, appearance and placement of the parties' respective
names and/or brands and of advertising displayed on the Co-Branded Area.
b) The Co-Branded Area will be hosted by the Client. Client
will have sole responsibility for providing and maintaining, at its expense, the
Co-Branded Area and any updates thereto.
c) Each page in the Co-Branded Area will include one or more
links to the Excite Network. Excite will supply Client with the URLs for these
links.
d) Client will not sell or barter advertising on the
Co-Branded Area to Excite's competitors including, but not limited to, [****]
, or any other Web site promoting itself as a provider of Internet search and
navigation services. Within five (5) business days of receiving Excite's
written notice, Client will remove any advertising from Excite's competitors
displayed on the Co-Branded Area.
e) Other than updates to the content and to advertising
displayed on the Co-Branded Pages, Client will not change the Co-Branded Area
without Excite's prior consent, which consent will not be unreasonably withheld.
f) Excite may, upon fifteen (15) days prior notice to Client,
request reasonable revisions to the Co-Branded Area as needed to reflect changes
that will not adversely affect Client, such as changes to Excite's name and/or
brand or changes to the URLs for the links to the Excite Network. Client will
use reasonable efforts to accommodate Excite's requested changes within fifteen
(15) days from receipt of such notice.
**** 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.
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<PAGE>
g) A text link to the Excite Co-Branded Area will be
displayed in the "Try These First" section on Excite Search results pages in
response to the following keywords: [****]. The text link will be no more
than twenty-five (25) characters in length, will consist of a "call to
action" based on a special promotion relevant to the holiday (such as [****]
as opposed to a generic solicitation to [****] and will not include [****].
All text links will be prepared by Client and be subject to Excite's sole
approval. The text link will link to a page in the Excite CoBranded Area
which displays content and/or transaction opportunities responsive to the
call to action in the text link. Excite will have sole control over the "look
and feel" of the text links including, but not limited to, the display,
appearance and placement of the text links on the Excite Search results page.
h) A link to the WebCrawler Co-Branded Area will be
displayed as a "Shortcut" on WebCrawler search results pages in response to
the following keywords: [****]. The link will include text of no more than
twenty-two (22) characters in length which consists of a "call to action"
based on a special promotion relevant to the holiday (such as [****] as
opposed to a generic solicitation to [****] and may include the display of
Client's logo. All links will be prepared by Client and be subject to
Excite's sole approval. The link will link to a page in the WebCrawler
Co-Branded Area which displays content and/or transaction opportunities
responsive to the call to action in the text portion of the link. Excite will
have sole control over the "look and feel" of the links including, but not
limited to, the display, appearance and placement of the links on the
WebCrawler search resultspage.
i) At the present time, reports on the number of displayed
"Try These First" or "Shortcut" links are not available. In the event that such
reports are made available to advertisers and sponsors, Excite will provide them
to Client.
j) Excite reserves the right to modify or eliminate the "Try
These First" and/or "Shortcut" functions and to modify its guidelines for
Co-Branded Areas.
3. SPONSORSHIP OF THE EXCITE LIFESTYLE CHANNEL
A link to the Client Site (consistent with the format used on
similar links on the same page) will be displayed in the Family, Holidays, and
Relationships departments of the Excite Lifestyle Channel in a promotional area
in the left sidebar of these pages being developed by Excite (or in an
equivalent promotional area) when launched and for the duration of the term of
the Agreement.
4. SPONSORSHIP OF THE EXCITE SPORTS CHANNEL
A link to the Client Site (consistent with the format used
on similar links on the same page) will be displayed in the "Exciting Stuff'
promotional rotation on the home page of the Excite Sports Channel in [****]
rotations centered on Valentine's Day, Mother's Day and Easter during each
year of the term of the Agreement.
**** 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.
14
<PAGE>
5. SPONSORSHIP OF THE EXCITE SMALL BUSINESS AREA
a) The parties recognize that Excite is currently in the
process of developing personalization functionality for the Excite Small
Business Area which will allow a user to display a set of links to certain
merchants offering services of interest to the user. The user will be able to
select the merchants displayed from a list of participating merchants determined
by Excite. The user will also be able to delete the entire listing from his or
her personalized page. For the purposes of this Agreement, this planned
functionality (or comparable functionality in the Excite Small Business Area)
will be referred to as the "Business Services Module".
b) When Excite implements the Business Services Module, Excite
will display a link to the Client Site in the default configuration of the
Business Services Module (consistent with the format used on similar links in
the module) in periods centered on Valentine's Day, Mother's Day and Easter
during each year of the term of the Agreement. Client will also be included in
the listing of participating merchants from which users may choose to include in
the Business Services Module for the remainder of the term of the Agreement.
Client's participation in the Services Module will be subject to Excite's
guidelines generally applicable to similar participating merchants.
c) Due to the user's control over the listing displayed in the
Business Services Module and whether the Business Services Module will appear at
all in a user's personalized page, the parties acknowledge that Excite cannot
guarantee the number of times Client's link in the Business Services Module will
be displayed.
6. SPONSORSHIP OF THE WEBCRAWLER HOME & FAMILY CHANNEL
A link to the Client Site (consistent with the format used on
similar links on the same page) will be displayed in the WebCrawler Home &
Family Channel in a promotional area being developed by Excite (or in an
equivalent promotional area) when launched and for the duration of the term of
the Agreement.
7. LINK IN PERSONALIZED EXCITE FRONT PAGE "SERVICES" MODULE
a) The parties recognize that Excite is currently in the
process of developing functionality for the front page of the Excite Site which
will allow a user to display a set of links to certain merchants offering
services of interest to the user. The user will be able to select the merchants
displayed from a list of participating merchants determined by Excite. The user
will also be able to delete the entire listing from his or her personalized
front page. For the purposes of this Agreement, this planned functionality (or
comparable functionality in the personalized front page of the Excite Site) will
be referred to as the "Services Modules".
b) When Excite implements the Services Module, Client will be
included in the list of participating merchants from which users may choose to
include in the Services Module. Client's participation in the Service Module
will be subject to Excite's guidelines generally applicable to similar
participating merchants.
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<PAGE>
c) Due to the user's control over the listing displayed in the
Services Module and whether the Services Module will appear at all in a user's
personalized front page, the parties acknowledge that Excite cannot guarantee or
estimate the number of times Client's link in the Services Module will be
displayed.
8. SPONSORSHIP OF THE WEBCRAWLER HOME PAGE
A link to the Client Site (consistent with the format used on
similar links on the same page) will be displayed in the "A Word From Our
Sponsors" promotional area on the home page of the WebCrawler Site during
mutually determined periods during the term of the Agreement. Client will comply
with Excite's then-current guidelines regarding "A Word From Our Sponsors"
promotional placements.
9. ADVERTISING ON THE EXCITE SITE AND THE WEBCRAWLER SITE
a) Excite will display Client's banner advertising on Excite
Search results pages in response to the following keywords: [****].
b) Excite will display Client's banner advertising on
WebCrawler search results pages in response to the following keywords: [****].
c) Excite will display Client's banner advertising in rotation
on the Excite Site and the WebCrawler Site as follows:
i) Excite Lifestyle Channel
ii) Excite Small Business Area
iii) Excite People & Chat Channel
iv) WebCrawler People & Chat Channel
v) WebCrawler Home & Family Channel
vi) WebCrawler "Horoscopes" pages
vii) WebCrawler Relationships Channel
**** 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.
16
<PAGE>
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.
EXHIBIT 10.9
DEVELOPMENT AND HOSTING AGREEMENT
THIS AGREEMENT (this "Agreement") is made and entered into as of the
18th day of June, 1999 (the "Effective Date"), by and between Fry Multimedia,
Inc., a Michigan corporation, with offices at 3971 South Research Park Drive,
Ann Arbor, Michigan 48108 ("Fry"), and 800-Gifthouse, Inc. a New York
corporation, with offices at 1600 Stewart Avenue, Westbury, New York 115901
("Client").
Recitals
WHEREAS, Fry is in the business of offering Internet services
relating to, among other things, development, maintenance and hosting of
Internet sites, including those on the World Wide Web portion of the Internet;
WHEREAS, Fry has, and continues to, provide Internet development,
maintenance and hosting services to Client; and
WHEREAS, Client owns various web sites, including without limitation
at the domains www.1800flowers.com, www.plowhearth.com and www.bloomlink.net and
from time to time will develop, own and operate other web sites (collectively,
the "Client Sites");
WHEREAS, Client desires to engage Fry to continue to provide, and
Fry desires to continue to be engaged by Client, to provide such services with
respect to the Client Sites on the terms and subject to the conditions set forth
below.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, Fry and Client (each a "Party," collectively, the "Parties") hereby
agree as follows:
1. Fry Services. Fry agrees to provide to Client the development,
maintenance and hosting services set forth in this Agreement (the
"Services"). Each [****], by on or about [****], Client shall submit to Fry a
written plan with the proposed development, maintenance and hosting
requirements of Client for the [****] period commencing [****] of that year.
Within [****] days of receipt of such plan, Fry shall respond to Client in
writing with respect to its capacity, pricing (on a fixed-price basis unless
otherwise specified) and timetable for each of the development, maintenance
and hosting services for such upcoming year (provided that pricing as to all
hourly rates shall not increase as to any service or item at more than at the
rate of [****] during the most recent [****] month period). Client and Fry
shall then negotiate in good faith to agree upon a final plan for such period
and upon execution by each party of such plan and the Specifications,
Deliverables (each as defined below), terms and conditions thereof shall
become an exhibit to this Agreement and incorporated herein as the "Annual
Plan." In addition to the Annual Plan, Client may request additional services
from Fry and Fry shall provide such additional services as set forth in this
Agreement. With respect to the period from the date hereof until [****] or
such later date as the next Annual Plan shall be
**** 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.
A-1
<PAGE>
agreed upon by the parties, the Annual Plan attached as Exhibit A hereto shall
be deemed to be the current Annual Plan hereunder. In the event for any reason
that the Annual Plan for a year is not agreed upon by the parties by [****] of
any year, the Annual Plan then in effect (for the prior period) shall remain in
effect until the new Annual Plan is agreed upon.
2. Development Services.
2.1 Specifications; Deliverables, Pricing and Timetable. Fry
shall perform the development services set forth in the Annual Plan in
accordance with the specifications (the "Specifications"), deliverables (the
"Deliverables"), pricing and timetable therefor contained in the Annual Plan, or
if Client desires to engage Fry for the provision of any other development
services from time to time, in a project brief negotiated in good faith by the
parties containing such information (each a "Project Brief") in the form
attached hereto as Exhibit B as mutually agreed by the parties. Each fully
executed Project Brief shall be incorporated into the then applicable Annual
Plan and shall be subject to the terms and conditions of this Agreement (except
as specifically superseded by the relevant Project Brief).
2.2 Acceptance Testing. Promptly after the delivery of any
Deliverable, Client shall test the Deliverable (the "Acceptance Tests") for
up to [****] business days to determine whether the Deliverable: (i) performs
in accordance with the Specifications and without failure in all material
respects and (ii) operates with internal consistency. In the event that the
Deliverable is accepted by Client, Client shall notify Fry in writing that it
accepts the Deliverable, and the date of such written notification (the
"Acceptance Date ") shall be the date on which Fry shall be entitled to
invoice the payment for the Deliverable. In the event that any Deliverable is
not accepted, Client shall provide written notice to Fry describing the
deficiency in sufficient detail to allow Fry to attempt to correct the
deficiency. After receiving written notice of a deficiency, Fry will exert
its best efforts to correct the deficiency so that the Deliverable: (i)
performs appropriately and repetitively without failure in all material
respects and (ii) operates with internal consistency. The acceptance
procedure in this Section 2.2 will be repeated with respect to the revised
Deliverable to determine whether it is acceptable to Client, unless and until
Client issues a final rejection of the revised Deliverable after rejecting
the Deliverable on at least [****] prior occasions. If Client issues such a
final rejection of the revised Deliverable or notifies Fry in writing that it
chooses to not proceed with development due to failure of Fry to deliver a
Deliverable within [****] days of the due date therefor in the project
schedule, Fry shall promptly refund to Client any fees paid by Client for
such Deliverable. In the event that any Deliverable or revised Deliverable is
not rejected in writing and delivered to Fry within [****] business days
after delivery, the Deliverable or revised Deliverable shall be deemed
accepted by Client and Fry shall be entitled to invoice Client for payment
therefor. In the event that any Deliverable or revised Deliverable is finally
rejected, it shall be returned with all copies to Fry at the time of
rejection.
2.3 Limited Warranty. Fry warrants to Client that each
Deliverable shall perform and operate in accordance with the Specifications
therefor for a period of [****] following their acceptance by Client.
**** 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.
<PAGE>
2.4 Ongoing Consultation. Fry agrees to consult, strategize
and coordinate with Client, throughout the provision of Fry's services hereunder
to ensure Client's satisfaction with and approval of each aspect of its
development services and Deliverables.
3. Proprietary Rights and Confidentiality.
3.1 Work for Hire; Assignment. Except for Fry Material, Fry
agrees that all the results and proceeds of Fry's work on or for Client or its
affiliates, including relating to any of the Client Sites, and the content of
the Client Sites itself, shall be owned exclusively by Client (or Client's
designee), including the copyright and other intellectual property rights
thereto (including the look and feel and user interface portions of any work).
Fry agrees that all work performed under this Agreement (and the results
thereof) shall be deemed as "work for hire," of which Client shall be deemed the
author, to the extent such works qualify as such in accordance with applicable
law. In the event, for any reason, any such results or proceeds are not
qualified as work for hire, Fry hereby irrevocably assigns to Client all of its
right, title and interest in such results and proceeds and content to Client.
Fry agrees that Fry (and his affiliates or subcontractors) will sign all papers
and do all acts reasonably necessary or desirable for Client to perfect such
ownership rights, provided that Fry shall not be responsible for the payment of
any filing fees or other out-of-pocket costs associated with perfection of such
ownership rights. Fry hereby irrevocably transfers and assigns to Client any and
all Moral Rights that it may have in any of the services or work. Fry also
hereby forever waives and agrees never to assert against Client, its successors
or licensees, any and all Moral Rights Fry may have in any Services or work
hereunder (except for Fry Material), even after expiration or termination of
this Agreement. "Moral Rights" means any right to claim authorship of a work,
any right to object to any distortion or other modification of the work, and any
similar right, existing under the law of any country in the world or under any
treaty.
3.2 Fry Material. Fry hereby grants to Client and its
sublicensees, successors and assigns a nonexclusive, perpetual and irrevocable
license to use the software or materials owned by Fry which is used to maintain,
update, edit, modify, terminate, redesign and otherwise operate and service the
Client Sites and any version or derivation thereof, without further payment
("Fry Material"), but only to the extent necessary to maintain, update, edit,
modify, terminate, redesign and otherwise operate and service the Client Sites
(wherever hosted) developed as a result of work directly performed and delivered
under this Agreement, including without limitation any back-up, mirrored or
disaster recovery sites or servers.
3.3 Third Party Licensed Material. Attached as Exhibit C is a
complete inventory of the third-party software (including version numbers) used
or needed to maintain, update, edit, modify, terminate, redesign and otherwise
operate and service the Client Sites and a breakdown between software directly
licensed by Client and software licensed by Fry. This exhibit will be updated by
Fry (and to the extent of its knowledge, by Client) from time to time as soon as
practicable after such software inventory changes. In the event Client desires
to be a direct licensee of any software on Exhibit C for which it is not the
direct licensee, Fry shall arrange for Client to be a direct licensee of such
software at Client's expense. Client (or Fry as applicable) shall have perpetual
irrevocable licenses to all software listed on Exhibit C (except as otherwise
indicated on Exhibit C), as the same shall be modified and supplemented from
time to time.
<PAGE>
3.4 Proprietary Rights of Client; Domain Names. As between
Client and Fry, all data, information and other property, tangible and
intangible, provided by or created on behalf of Client or its subcontractors or
information providers, including without limitation software (including
algorithms and source code), firmware and hardware, technical processes and
formulas, source codes, product designs, sales data, store data, product data,
transaction data, customer data, usage data, advertising data, cost and pricing
data, other non-publicly disclosed financial information, product information,
product, marketing and business plans, advertising revenues and relationships,
usage rates, projections and marketing data and all other data received,
transmitted or stored on behalf of Client. or relating to Client and/or Client
Sites or those of its affiliates ("Client Content") shall remain the sole and
exclusive property of Client, including, without limitation, all copyrights,
trademarks, patents, trade secrets and any other proprietary rights therein.
Nothing in this Agreement shall be construed to grant Fry any ownership right
in, or license to, the Client Content. Fry shall assist Client at Fry's standard
charges (plus third party registration fees) in obtaining domain names (and, if
applicable, Internet Protocol addresses) but shall ensure that Client's
designated employee is named as the Administrative Contact for each such
registration on behalf of Client.
3.5 Client's Ownership. Client shall be the exclusive owner of
the Client Sites and all aspects thereof, except as set forth in Sections 3.2
and 3.3 above. Client shall have the right to modify, edit, destroy, license,
exploit or use the Client Sites in any way, without compensation or consultation
with Fry. Fry shall have no obligation to repair, modify or maintain the Client
Sites to the extent that Client's use of such component of the Client Sites is
in violation of law or regulation.
3.6 Confidentiality. Fry acknowledges that Client has provided
Fry to date with extensive confidential information concerning its business,
procedures, plans, and other confidential information and each party agrees that
during the course of this Agreement, that such confidential information and
other information that is confidential or proprietary may be disclosed to the
other party, including, but not limited to all software (including without
limitation source code (including algorithms) written on behalf of Client by
Fry, except as otherwise provided herein), technical processes and formulas,
source codes, product designs, sales data, store data, product data, transaction
data, customer data, usage data, advertising data, cost and pricing data, other
non-publicly disclosed financial information, product information and product
and business plans, , advertising revenues and relationships, usage rates,
projections and marketing data and all other data received, transmitted or
stored on behalf of Client. or relating to Client and/or Client Sites or those
of its affiliates, ("Confidential Information"). Confidential Information shall
not include information that the receiving party can demonstrate (a) is, as of
the time of its disclosure, or thereafter becomes part of the public domain
through a source other than the receiving party, (b) was known to the receiving
party as of the time of its disclosure, (c) is independently developed by the
receiving party w/o use of the Confidential Information, or (d) is subsequently
learned from a third party not under a confidentiality obligation to the
providing party. Except as provided for in this Agreement, each party shall not
make any disclosure of the Confidential Information to anyone other than its
employees who have a need to know in connection with this Agreement. Each party
shall notify its employees of their confidentiality obligations with respect to
the Confidential Information and shall require its employees to comply with
these obligations. In the event that either Party is compelled by law (whether
through court order or subpoena) to disclose Confidential Information, the
disclosing
<PAGE>
Party shall provide the other Party with notice of such compelled disclosure and
a reasonable opportunity to contest it and shall seek a protective order. In the
event that a Party divulges or seeks to divulge or otherwise improperly use any
such Confidential Information, the other Party shall have the right, in addition
to any other remedies available to it, to seek injunctive relief to enjoin such
acts, it being specifically acknowledged by the Parties that any other remedies
are inadequate. The confidentiality obligations of each party and its employees
shall survive the expiration or termination of this Agreement. The particular
terms and conditions of this Agreement are confidential and shall not be
disclosed by either party without the prior written consent of the other party
(except as deemed necessary or appropriate by counsel to Client to comply with
securities and other applicable laws or as required pursuant to judicial or
other government order provided that notice of such order is given to the other
party promptly after its receipt). Except for mutually agreeable press releases
(with each party's prior written consent, which shall not be unreasonably
withheld or delayed), no public announcements relating to this Agreement shall
be issued by either party. Notwithstanding anything stated herein, the parties
agree to allow each other to issue individual press releases announcing the
relationship initiated or continued hereunder and as appropriate to cooperate in
other joint promotional opportunities and announcements.
3.7 Grant of License -- Client. Client hereby grants to Fry a
non-exclusive, worldwide, royalty-free license for the Initial Term and any
Renewal Term (as those terms are hereinafter defined) to edit, modify, adapt,
translate, exhibit, publish, transmit, participate in the transfer of,
reproduce, create derivative works at Client's direction from, distribute,
perform, display and otherwise use Client Content as necessary to render the
Services to Client under this Agreement. In no event will Fry remove or alter
any proprietary notice of Client, or any third party, contained on any of the
Client Sites without the prior written consent of Client.
3.8 Grant of License -- Fry. Fry hereby grants to Client a
limited, non-exclusive, non-transferable perpetual license to make use of Fry
Materials which are incorporated in the Client Sites and which are required for
the operation of the Client Sites solely to operate the Client Sites on the Fry
Server as well as on any back-up, disaster recovery or mirrored servers and web
sites of Client or its affiliates whether hosted by Fry, Client or by a third
party. Fry hereby reserves for itself all rights in and to the Fry Materials not
expressly granted to Client in the immediately foregoing sentence. In no event
shall Client use any trademarks or service marks of Fry without Fry's prior
written consent.
4. Hosting, Communications and Maintenance Services
4.1 Hosting Services. Fry agrees to provide Client with
services for hosting of each of the Client Sites specified in the Annual Plan.
Fry shall provide the hosting services in a professional, workmanlike manner,
and high grade of service, so that the Client Sites are accessible to third
parties via the Internet as specified herein and in the Configuration.
4.2 Availability of the Client Sites. Unless otherwise
indicated on Schedule 1.2 hereto, the Client Sites shall be accessible to third
parties and Client via the Internet and otherwise as specified in the Annual
Plan or the Configuration twenty-four (24) hours a day, seven (7) days a week,
except for scheduled maintenance and required repairs
<PAGE>
during such non-Key Time Periods as Client and Fry mutually agreed in advance
("Scheduled Maintenance").
4.3 Updates. As part of the hosting Services, Fry shall
provide Client with a system and the necessary software to allow Client to
transmit revisions, updates, deletions, Deliverables or modifications (the
"Updates") to a staging server designated and maintained by Fry (the "Staging
Server"). Fry shall update the Fry Server with the Updates according to a
written schedule agreed upon by Client and Fry and contained in the Annual Plan.
4.4 Proprietary Rights of Client. As between Client and Fry,
Client Content shall remain the sole and exclusive property of Client,
including, but not limited to data generated by the Client Sites such as Client,
end user and usage data. Nothing in this Agreement shall be construed to grant
to Fry any ownership right in, license to, or authority to edit, modify or adapt
the Client Content provided by Client to Fry.
4.5 Access and Security. Fry shall maintain a secure room(s)
in which all of Client's equipment and data shall be located and stored (the
"Client Area"). Access to the Client Area shall be limited by Fry solely to (i)
the individuals identified and authorized by Client to have access to the Client
Area in accordance with this Agreement, as identified in the writing to Fry, as
amended from time to time, which is hereby incorporated by this reference (the
"Representatives") and Fry's engineers, senior engineers, system administrators,
equivalent systems personnel and senior management (and as necessary and with
appropriate supervision, other service personnel) authorized by Fry based on
their need to have access to perform the services hereunder. Representatives
shall have access to the Client Area and any other location in where any Client
equipment or data is located twenty-four (24) hours a day, seven (7) days a
week.
4.6 Backup; Redundancy. Fry shall provide Client at all
times with the equipment, software, communications capacity and carriers and
power backup and redundancy set forth in the Configuration attached hereto as
Exhibit D, provided that in any event Fry shall always provide Client with
sufficient local generator backup power capacity to fully operate all of
Client's equipment and each of the Client Sites for at least [****]
consecutive hours. The parties acknowledge that Fry currently has [****]
under construction in [****] and that Fry shall use its best efforts to
provide complete redundancy for each of the Client Sites (and all related
data and Client Content) in at least one such facility as soon as possible
and in accordance with the Annual Plan and Configuration, but not later than
[****].
All Client data and customer data and all transaction and other data
generated by any of the Sites (including all Client Content contained on or
generated by any of the Sites) , directly or indirectly, will be copied and
stored off-site by Fry (or through a subcontractor to be identified by Fry and
approved by Fry) on at least weekly basis with a third-party fireproof storage
facility.
4.7 Communications Services. Fry shall provide the
communications services and capacities set forth in the Annual Plan and
Configuration.
**** 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.
<PAGE>
4.8 Client Equipment. Fry acknowledges that the computer
hardware and other tangible equipment listed on Exhibit E hereto is owned by
Client and shall be returned unencumbered to Client in good working order
(ordinary wear and tear excepted) promptly upon Client's request; provided
however if any such equipment is leased by Client from a third party, Fry shall
cooperate with Client with respect to the return and safekeeping of such
equipment as required by the lessor.
4.9 Maintenance, Error Correction and Support Obligations.
(a) Definitions.
Authorized Caller. "Authorized Caller" means a person or
persons designated by Client as the technical/engineering support interface for
the Work performed hereunder or any of the Client Sites.
Designated Support Engineer. "Designated Support
Engineer" means a person or persons designated by Fry as the
technical/engineering support interface for the Work performed hereunder or any
of the Client Sites.
End User. "End User" means a customer or other user of
any of the Client Sites.
Error. "Error" means a defect in the Services performed
or provided under this Agreement or in the operation of any of the Client Sites
which causes such Services performed hereunder or the performance of any of the
Client Sites not to function substantially in conformance with the
documentation, end user documentation, or other related documentation, including
without limitation any functional documentation or other engineering
documentation for the Services performed hereunder or in any of the Client
Sites, or commonly accepted operating principles as defined by industry
standards. Errors are classified as follows:
Severity 1: System or subsystem failure which results in
a critical impact to business operations. No viable workaround is known to
Client.
Severity 2: Critical System or subsystem service
interruption or degradation creating difficulty in the execution of a material
function. Client acceptable workaround is available.
Severity 3: Significant system or subsystem problems
which prevent some material functions from meeting the Specifications. Some
business operations are impaired, but the system and subsystems continue to
function. Client acceptable workaround is available.
Severity 4: Failure to perform in substantial
accordance with the Documentation, but not a Severity 1-3 Error.
Severity 5: Deliverable requests for hardware, software,
manuals or services.
<PAGE>
Incident. "Incident" means a situation which
necessitates an End User to contact Client for assistance.
Problem. "Problem" means the perceived failure or
functional impairment that causes reduced functionality to the Work performed
hereunder or in any of the Client Sites.
Problem Priorities. "Problem Priorities" classify the
criticality of a problem at a Client site. Problem Priorities are assigned at
the time of Client's initial contact with Fry. Problem Priorities may be changed
based upon new information or Client situation. Problem Priorities refer the
classification of the Incident, not any resulting Error which may be identified
during the resolution of the Incident. Problem Priorities are classified as
follows:
Severity 1: Client is "hot"; there is risk of losing
business.
Severity 2: Client "temperature is rising"; there is
potential risk of losing actual or future business.
Severity 3: The problem is impacting the Client's day to
day business; there is no risk of losing business.
Severity 4: The problem is not currently impacting the
Client's day to day business, but may in the future; there is no risk of losing
business.
Repair. "Repair" means the repair or replacement of a
Work performed hereunder or in any of the Client Sites or part.
Technical Support Levels. "Level" means a certain class
of service provided to authorized resellers and end users. Definitions are as
follows:
Level One: First call support on all Client calls;
technical support staff answers technical inquiries regarding Work performed
hereunder or in any of the Client Sites, performs Work performed hereunder or in
any of the Client Sites installation and configuration support, provides broad
troubleshooting expertise.
Level Two: Specialist level technical support; technical
support/escalation staff performs Problem isolation and replication, lab
simulations and interoperability testing, provides remote diagnostics
capabilities and on-Client Sites troubleshooting, if required, and implements a
solution for a Problem that is not the result of a Work performed hereunder or
in any of the Client Sites Error. In the case of a Work performed hereunder or
in any of the Client Sites Error, the technical staff is able to identify the
source of the Error, create a reproducible test case, and document the details
of the Error for escalation to Fry.
Level Three: Backup engineering and technical support;
staff isolates a Work performed hereunder or in any of the Client Sites error
and implements a solution through a Work performed hereunder or in any of the
Client Sites change.
<PAGE>
Workaround. A "Workaround" is a feasible change in
operating procedures whereby an end user can avoid any deleterious effects of an
Error.
(b) Error Correction. Client and Fry shall promptly
agree in good faith to any information and/or documentation which may be
required to permit Fry to identify and resolve Errors (meaning to correct the
Error to restore compliance with specifications and Documentation) in any of the
Services performed hereunder or in any of the Client Sites. The Error correction
period begins after Fry (a) has enough information to profile the Error and (b)
can recreate the Error or has access to a facility where the Error can be
recreated. Fry agrees to respond to identified Errors based on the following
time-table:
Severity 1 Errors. Fry shall use best efforts to
resolve or reduce the severity via Workaround and/or patch within [****]
(during any Key Time Period and [****] during any non-Key Time Period) of
receipt of notice of such Error and use best efforts to resolve the Error
within [****] days of receipt of notice of such Error. Fry shall provide its
action plan within [****] days of such notice, and shall provide regular
status updates. A final engineering resolution shall be identified in the
action plan. Client and Fry problem managers shall review the incident after
such [****] day period.
Severity 2 Errors. Fry shall use best efforts to
resolve or reduce the severity via Workaround and/or patch within [****]
(during any Key Time Period and [****] during any non-Key Time Period) of
receipt of notice of such Error and use best efforts to resolve the Error
within [****] days of receipt of notice of such Error. Fry shall provide an
action plan within [****] days of such notice, and provide regular status
updates. Client and Fry problem managers shall review incident after [****]
days. A final engineering resolution shall be identified in the action plan.
A final engineering resolution shall be identified in the action plan. Client
and Fry problem managers shall review the incident after such [****]day
period.
Severity 3 Errors. Fry shall use reasonable
commercial efforts to resolve or reduce the severity via Workaround and/or
patch within [****] ([****] during any non-Key Time Period) of receipt of
notice and use best efforts to resolve within [****] days of receipt of
notice. Fry shall provide an action plan within [****] days of such notice,
and provide regular status updates. Client and Fry problem managers shall
review incident after [****] days. A final engineering resolution shall be
identified in the action plan. A final engineering resolution shall be
identified in the action plan. Client and Fry problem managers shall review
the incident after such [****]day period.
Severity 4 Errors. Fry shall use reasonable
commercial efforts to resolve or reduce the severity via Workaround and/or
patch within [****] ([****] during any non-Key Time Period) of receipt of
notice and use best efforts to resolve within [****] days of receipt of
notice. Fry shall provide an action plan within [****] days of such notice,
and provide regular status updates. Client and Fry problem managers shall
review incident after [****] days. A final engineering resolution shall be
identified in the action plan. A final engineering resolution shall be
identified in the action plan. Client and Fry problem managers shall review
the incident after such [****] day period.
**** 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.
<PAGE>
Severity 5 Errors. Fry shall use its reasonable
commercial efforts to acknowledge the Error within [****] days of receipt
of notice of such Error. A final engineering resolution will be determined
and scheduled through mutual agreement.
(c) Technical Support
(i) Support Issues. Client is responsible for
providing Level One support services to its end users. Fry shall provide
Levels One, Two and Three back-up technical support to Client, and shall make
support available to Client via telephone to Client's Authorized Caller(s).
Client agrees to use reasonable commercial efforts to ensure that no more
than [****] Client's Authorized Callers will be requesting support from Fry at
any given time. Fry will provide such support 24 hours a day seven days a
week every day of the year. .
The Authorized Callers and Designated Support Engineers will be the
primary contacts between Client's and Fry's technical support and/or escalation
centers. Client will provide a list of Authorized Callers including names,
address, phone numbers, and internet e-mail address. Fry will provide a list of
Designated Support Engineers.
(ii) Resolution of Support Issues. In the event
that Client cannot successfully resolve any Problem, Client may request
assistance from Fry. Fry will not contact or provide direct support to Client's
end users with respect to the Work performed hereunder or in any of the Client
Sites pursuant to this Agreement. Fry will provide an initial response
acknowledging receipt of the support request to all Client support inquiries
within four hours of receipt and Client and Fry will agree, in good faith, what
additional information and/or documentation will be required for resolution.
Technical support managers and engineers for each party will work in good faith
to devise and carry out an action plan that will provide a timely and
satisfactory resolution. Fry shall work with Client in attempting to reproduce
any such problem.
5. Client Content.
5.1 Accuracy and Review of Client Content. Client assumes sole
responsibility for: (a) acquiring any authorization(s) necessary for hypertext
links to third-party Web sites; and (b) the accuracy of materials provided to
Fry, including, without limitation, Client Content, descriptive claims,
warranties, guarantees, nature of business, and address where business is
conducted; and (c) ensuring that the Client Content does not infringe or violate
any right of any third party.
5.2 Limitations on Client Content. Client shall use reasonable
commercial efforts to provide Client Content that does not contain any content
or materials which are obscene, malicious, which infringe on or violate any
applicable law or regulation or any proprietary, contract, moral, privacy or
other third-party right, or which otherwise expose Fry to civil or criminal
liability.
**** 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.
<PAGE>
6. Fees and Taxes.
6.1 Maintenance Fees. To the extent that Fry is to provide
Maintenance under Exhibit A hereto, Client shall pay for all Maintenance-related
tasks as provided in Exhibit A hereto.
6.2 Out-of-Pocket Expenses. Client shall pay, or reimburse
Fry, upon receipt of appropriate receipts and documentation, for any reasonable
out-of-pocket expenses, including, without limitation, travel and travel-related
expenses, incurred by Fry in connection with the performance of the Services;
provided, however, that any single expense in excess of [****] shall require the
prior written approval of Client.
6.3 Additional Service Fees. Unless otherwise agreed to by the
Parties in a Project Brief or Annual Plan, Client shall pay to Fry all fees for
Additional Services on a time and materials basis as invoiced by Fry.
6.4 Late Payment. Client shall pay to Fry all fees not
specifically itemized on Exhibit A within [****] days of receipt of the
applicable Fry invoice. If Client fails to pay any fees within [****] days of
any written late payment notice from Fry, late charges of the lesser of [****]
per month or the maximum allowable under applicable law shall also become
payable by Client to Fry.
6.5 Taxes. Client shall pay or reimburse Fry for all sales,
use, transfer, privilege, excise and all other taxes and all duties, whether
international, national, state or local, however designated, which are levied or
imposed by reason of the performance by Fry under this Agreement; excluding,
however, income taxes which may be levied against Fry.
6.6 [****]
7. Exclusivity. Except with the prior written consent of Client,
Fry agrees that during the term of this Agreement and for two (2) years
thereafter Fry shall not provide any development, maintenance, hosting or
related services to any person or entity providing floral products or engaged
in the floral and/or gardening industries except for Client and Client's
affiliates.
8. Insurance. Fry agrees to maintain at its expense the following
insurance policies during the term of this Agreement and for two years
thereafter: commercial general liability coverage of at least [****] million
and Internet professional liability coverage of at least [****] million (and
shall name Client as an additional insured thereunder); provided, however,
that upon the signing hereof, such coverage amounts may be [****] million,
but shall be increased to the [****] million level by [****]. In addition,
Fry shall maintain appropriate workman's compensation and all other policies
required by law. Upon the signing hereof and
**** 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.
<PAGE>
any increase in coverage amount referred to above, Fry shall provide Client with
certificates of insurance evidencing the foregoing.
9. Fry Warranties.
(a) General Warranties. Fry represents and warrants
that: (i) Fry has the power and authority to enter into and perform its
obligations under this Agreement, (ii) Fry's Services under this Agreement shall
be performed in a professional workmanlike manner with the degree of skill and
care that is required by current, good and sound professional procedures and
practices and in conformance with generally accepted professional standards for
the completion of such work prevailing at the time, (iii) that it owns all
rights of any nature in the Fry Material without encumbrance and has the right
to grant to Client the rights and licenses granted herein and that neither any
design nor programming, nor any other material or facet added to the Client
Sites by Fry (provided that Fry makes no representations with respect to
material provided by Client) infringes any person or entity's copyright,
trademark, patent or other proprietary right, is libelous, an invasion of
privacy, obscene or otherwise violates any law or right of any person or entity,
or contains any recipe, formula or instruction harmful to any person or
property; (iv) that all Services and property as delivered by Fry is and shall,
during the Initial Term and any Renewal Term, and for a period of [****]
thereafter, remain free of any (a) back door, time bomb, drop dead device, or
other software routine designed to disable a computer program automatically with
the passage of time or under the positive control of the warranting party or (b)
any virus, Trojan horse, worm, or other software routine or hardware component
designed to permit unauthorized access, to disable, erase, modify or otherwise
harm any software, hardware or data or to perform any other such actions and (v)
that all software, firmware and hardware delivered to Client or used by Fry in
connection with any of the Client Sites will, except to the extent covered by a
third party manufacturer's year 2000 compliance warranty disclosed in advance to
Client in writing and accepted by Client, (1) correctly handle date information
before, during, and after January 1, 2000 including accepting date input,
providing date output and performing calculation on dates or portions of dates;
(2) function accurately and without interruption before, during, after and
including January 1, 2000 without changes in operation associated with the
advent of the new century assuming correct configuration; (3) respond to two
digit date input in a way that resolves the ambiguity as to century in a
disclosed, defined and pre-determined manner; (4) store and provide Output of
date information in ways that-are unambiguous as to century; (5) correctly
manage the leap years occurring in the year 2000 and subsequently; and (6) use
fields providing at least four decimal digits for the year portion of all stored
dates.
(b) Service Level Warranty. In the event Client
experiences any of the following which is not as a result of any actions or
inactions of Client or any third parties not under control of Fry (including
Client Equipment and third party equipment), Fry will credit Client's account as
described below:
(i) Inability to Access the Internet
(Downtime). If Client is unable to transmit or receive information from Fry's
Internet Data Center (i.e., Fry's LAN and WAN) to other portions of the
Internet because Fry failed to provide the Internet Data Center Services for
more than [****] ("Internet Access Failure"), Fry will
credit Client's account an amount equal to [****] of the [****]
**** 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.
<PAGE>
then paid by Client under this Agreement ([****] (meaning the [****] days
prior to and the day of the following days each year in the United States:
Thanksgiving, Christmas, Valentines Day, Easter, Secretary's Day, and Mothers
Day)) for each such [****] (but such credits in any given [****] shall not
exceed the [****] due for such [****]). Fry's Scheduled Maintenance of shall
not be deemed to be a failure of Fry to provide the hosting Services
hereunder. For purposes of the foregoing, "unable to transmit or receive"
shall mean sustained packet loss in excess of [****] based on Fry's
reasonable measurements.
Fry shall continue to provide Client with real-time reporting
information concerning server performance and other relevant performance,
transactional and processing data in the same manner as it currently provides to
Client plus such additional information and reporting as the parties shall agree
or as shall be contained in the Annual Plan.
(ii) Response Time and Equipment Availability. Fry
shall respond as follows within the following minimum response times:
(1) Time to Discover; Inability to Access
the Internet; Notification of Client. As soon as practicable, but within
[****](during Key Time Periods and [****] during other times) of discovering
the existence of an Internet Access Failure, Fry will determine whether the
source of the an Internet Access Failure is limited to the Client Equipment
and the Fry equipment connecting the Client Equipment to Fry's LAN ("Client
Specific Failure"). If an Internet Access Failure is not a Client Specific
Failure, Fry will determine the source of the Internet Access Failure as soon
as practicable, but within [****] (during Key Time Periods, and [****] during
other times) after determining that it is not a Client Specific Failure. In
any event, Fry will notify Client of the source of an Internet Access Failure
within [****] after identifying the source.
(2) Remedy of Inability to Access the
Internet. If an Internet Access Failure remedy is within the sole control of
Fry, Fry will remedy an Internet Access Failure as soon as practicable, but
within [****] (during Key Time Periods, and [****] during other times) of
determining the source of an Internet Access Failure . If an Internet Access
Failure is caused from outside of the Fry LAN or WAN, Fry will notify Client
and will use commercially reasonable efforts to promptly notify the
party(ies) responsible for the source and cooperate with it(them) to resolve
the problem as soon as possible.
(3) Failure to Determine Source and/or
Resolve Problem. In the event that Fry is unable to determine the source of
and remedy the Internet Access Failure within the time periods described
above, Fry will credit Client's account the pro-rata connectivity charges for
[****] of service for every failure to satisfy the above response time
commitments ([****] days during Key Time Periods) and an extra day of credit
for every [****] ([****] for non-Key Time Periods) in excess of the above time
periods that it takes Fry to resolve the problem (but such credits in any
given [****] shall not exceed the [****] due for such [****]).
(iii) Termination Option for Chronic Problems: If,
in any thirty day period , Client would be able to receive credits totaling
[****]
**** 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.
<PAGE>
resulting from [****] or more events, or if any single event entitling
Client to credits under this Section exists for a period of [****]
consecutive hours, then, Client may terminate this Agreement for cause and
without penalty by notifying Fry no later than [****] business days following
the end of such calendar month. Such termination will be effective on the
date set by Client.
10. Client Warranties. Client represents and warrants that (a)
Client has the power and authority to enter into and perform its obligations
under this Agreement, (b) commencing as of the date of this Agreement Client
Content does not and shall not contain any content, materials, advertising or
services that are materially inaccurate or that infringe on or violate any
applicable law, regulation or right of a third party, including, without
limitation, export laws, or any proprietary, contract, or any other third-party
right, (c) that Client owns the Client Content or otherwise has the right to
place the Client Content on the Client Sites on which it is placed, (d) that its
services, products, materials, data, information and Client Equipment used by
Client in connection with this Agreement as well as Client's Equipment does not
operate in any manner that would violate any applicable law or regulation in any
material respect and (e) Client has obtained any authorization(s) necessary
under law for hypertext links from the any Client Sites to other third-party Web
sites.
11. Disclaimers of Warranty. EXCEPT FOR THE LIMITED WARRANTIES SET
FORTH IN SECTIONS 9 AND 10 ABOVE, THE PARTIES MAKE NO WARRANTIES HEREUNDER, AND
THE PARTIES EXPRESSLY DISCLAIM ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
FRY DOES NOT AND CANNOT CONTROL THE FLOW OF DATA TO OR FROM FRY'S
FACILITIES AND OTHER PORTIONS OF THE INTERNET. SUCH FLOW DEPENDS IN LARGE PART
ON THE PERFORMANCE OF INTERNET SERVICES PROVIDED OR CONTROLLED BY THIRD PARTIES.
AT TIMES, ACTIONS OR INACTIONS CAUSED BY THESE THIRD PARTIES CAN PRODUCE
SITUATIONS IN WHICH CLIENTS' CONNECTIONS TO THE INTERNET (OR PORTIONS THEREOF)
MAY BE IMPAIRED OR DISRUPTED. ALTHOUGH FRY WILL USE COMMERCIALLY REASONABLE
EFFORTS TO TAKE ACTIONS IT DEEMS APPROPRIATE TO REMEDY AND AVOID SUCH EVENTS,
FRY CANNOT GUARANTEE THAT THEY WILL NOT OCCUR. ACCORDINGLY, FRY DISCLAIMS ANY
AND ALL LIABILITY TO THE EXTENT RESULTING FROM OR RELATED TO SUCH EVENTS.
EACH REPRESENTATIVE OF CLIENT AND ANY OTHER PERSONS VISITING THE
INTERNET DATA CENTERS DOES SO AT ITS OWN RISK AND FRY ASSUMES NO LIABILITY
WHATSOEVER FOR ANY HARM TO SUCH PERSONS RESULTING FROM ANY CAUSE OTHER THAN
FRY'S NEGLIGENCE OR WILLFUL MISCONDUCT RESULTING IN PERSONAL INJURY TO SUCH
PERSONS DURING SUCH A VISIT.
**** 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.
<PAGE>
12. Indemnification.
12.1 Client. Client will indemnify, defend and hold Fry, its
affiliates and Clients harmless from and against any and all Losses resulting
from or arising out of any Action brought by or against Fry, its affiliates or
Clients alleging: (a) with respect to the Client's Business: (i) infringement or
misappropriation of any intellectual property rights; (ii) defamation, libel,
slander, obscenity, pornography, or violation of the rights of privacy or
publicity; or (iii) spamming, or any other offensive, harassing or illegal
conduct; or (b) any damage or destruction to Fry's facility or the equipment of
Fry or any other client of Fry by Client or its Representatives (except for
ordinary wear and tear).
12.2 Fry. Fry will indemnify, defend and hold Client harmless
from and against any and all costs, liabilities, losses, and expenses
(including, but not limited to, reasonable attorneys' fees) (collectively,
"Losses") resulting from any claim, suit, action, or proceeding (each, an
"Action") brought against Client alleging (i) if true, a breach of any of Fry's
representations, warranties or agreements hereunder; (ii) the infringement of
any third party copyright, patent, trademark or other intellectual property
right resulting from the provision of the Services or (iii) personal injury to
Client's Representatives from Fry's negligence or willful misconduct.
12.3 Notice. In claiming any indemnification hereunder, the
indemnified party shall promptly provide the indemnifying party with written
notice of any claim which the indemnified party believes falls within the scope
of the foregoing paragraphs. The indemnified party may, at its own expense,
assist in the defense if it so chooses, provided that the indemnifying party
shall control such defense and all negotiations relative to the settlement of
any such claim and further provided that any settlement intended to bind the
indemnified party shall not be final without the indemnified party's written
consent, which shall not be unreasonably withheld.
12.4 Limitation of Liability. NEITHER PARTY SHALL HAVE
LIABILITY WITH RESPECT TO OBLIGATIONS UNDER THIS AGREEMENT OR OTHERWISE FOR
CONSEQUENTIAL, EXEMPLARY, SPECIAL, INCIDENTAL OR PUNITIVE DAMAGES, EVEN IF THE
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
EXCEPT FOR CLIENT'S INDEMNIFICATION OBLIGATIONS UNDER [****],
CLIENT'S AGGREGATE LIABILITY FOR ANY REASON AND UPON ANY CAUSE OF ACTION IN
CONNECTION WITH THIS AGREEMENT SHALL BE LIMITED TO [****]. THIS LIMITATION
APPLIES TO ALL CAUSES OF ACTION IN THE AGGREGATE, INCLUDING WITHOUT
LIMITATION, BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE, STRICT
LIABILITY, MISREPRESENTATIONS AND OTHER TORTS.
EXCEPT FOR FRY'S INDEMNIFICATION OBLIGATIONS UNDER SECTION [****]
AND BREACHES OF SECTION [****] OR ANY OTHER INTELLECTUAL
**** 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.
<PAGE>
PROPERTY PROVISIONS OF THIS AGREEMENT, FRY'S AGGREGATE LIABILITY FOR ANY
REASON AND UPON ANY CAUSE OF ACTION IN CONNECTION WITH THIS AGREEMENT SHALL
BE LIMITED TO [****]. THIS LIMITATION APPLIES TO ALL CAUSES OF ACTION IN THE
AGGREGATE, INCLUDING WITHOUT LIMITATION, BREACH OF CONTRACT, BREACH OF
WARRANTY, NEGLIGENCE, STRICT LIABILITY, MISREPRESENTATIONS AND OTHER TORTS.
The parties agree that all of the limitations and exclusions of
liability and disclaimers specified in this Agreement will survive and apply
even if found to have failed of their essential purpose.
13. Termination and Renewal.
13.1 Term. This Agreement shall be effective when signed by
the Parties and thereafter shall remain in effect for two (2) years, unless
earlier terminated as otherwise provided in this Agreement (the "Initial
Term"). This Agreement shall automatically be renewed beyond the Initial Term
for additional two (2) year terms (each, a "Renewal Term") unless Client
provides Fry with a written notice of termination at least sixty (60) days
prior to the expiration of the Initial Term or the then-current Renewal Term.
13.2 Should a Party breach this Agreement, the
non-breaching Party shall provide the breaching Party with prompt written
notice of such breach. Upon receipt of such notice, the breaching Party shall
have thirty (30) days to cure such breach, unless the breach is of the
confidentiality, license or ownership provisions of this Agreement, in which
case the non-breaching Party may terminate this Agreement immediately upon
written notice to the other party. If a breach of other than the
confidentiality, license or ownership provisions of this Agreement is not
cured within such cure period, the non-breaching Party may terminate this
Agreement upon written notice to the breaching Party. Fry shall, at the
Client's discretion, complete any work assigned or scheduled during the
notice period in accordance with the terms and conditions of this Agreement.
Subject to making the payments (except for the hold-back specified below) ,
Client shall own all the results and proceeds of Fry's Services rendered to
the date of termination as "work for hire" in accordance with the terms
hereof, and Fry shall promptly deliver all materials, information, documents,
drafts and any other property secured, produced and/or developed by Fry
pursuant to this Agreement, in full satisfaction of the Parties' obligations
to each other under this Agreement. Regardless of termination under this or
any other provision of this Agreement, Client shall be entitled, in its
discretion, to continue, discontinue, modify, or change its plans regarding
the Client Sites project.
13.3 All rights and licenses granted under or pursuant to this
Agreement by Fry to Client are, and shall be deemed to be, for purposes of
Section 365(n) of the United States Bankruptcy Code, 11 U.S.C. Section 101, et.
seq. (the "Bankruptcy Code"), licenses of rights to "intellectual property" as
defined under Section 101(56) of the Bankruptcy Code. The Parties agree that
Client, as a licensee of such rights and licenses, shall retain and may fully
exercise all of its rights and elections under the Bankruptcy Code, provided it
abides by the terms of this Agreement including without limitation, payment of
all sums due hereunder. The Parties
**** 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.
<PAGE>
further agree that, in the event that any proceedings shall be instituted by or
against Fry seeking to adjudicate it bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking an entry of an
order for relief for the appointment of a receiver, trustee or other similar
official for it or any substantial part of its property, or Fry shall take any
action to authorize any of the foregoing actions (each a "Proceeding"), Client
shall have the right to retain and enforce its rights under this Agreement
including, but not limited to, the following rights, provided it abides by the
terms of this Agreement: (i) the right to continue to use the Fry Material and
all source and object code developed under this Agreement and all versions and
derivatives thereof, and all documentation and other supporting material related
thereto, in accordance with the terms and conditions of this Agreement; and (ii)
the right to complete access to, as appropriate, all Fry Material and all source
and object code and all embodiments of such to be provided under this Agreement,
including documentation therefore to the extent provided for hereunder, and the
same, if not already in Client's possession, shall promptly be delivered to
Client: (a) upon any such commencement of a Proceeding upon written request
therefor by Client, unless Fry elects to continue to perform all of its
obligations under this Agreement; or (b) if not delivered under (a) above, upon
the rejection of this Agreement by or on behalf of Fry upon written request
therefor by Client.
13.4 Termination and Payment. Upon any termination or
expiration of this Agreement (except for an amount of up to $100,000 which
Client may hold-back until the return to Client of all of Client's Content and
other property by Fry), Client shall pay all unpaid and outstanding fees through
the effective date of termination or expiration of this Agreement and Fry shall
deliver to Client all work completed prior to the effective date of termination.
13.5 Designated Contact. Each party shall designate one person
who will act as the primary liaison for all communications regarding the
Services to be rendered by Fry hereunder.
14. Miscellaneous.
14.1 Entire Agreement. This Agreement and attached Exhibits
(including the then applicable Annual Plan) constitute the entire agreement
between Client and Fry with respect to the subject matter hereof and there are
no representations, understandings or agreements which are not fully expressed
in this Agreement.
14.2 Cooperation. The Parties acknowledge and agree that
successful completion of the Services shall require the full and mutual good
faith cooperation of each of the Parties.
14.3 Independent Contractors. Fry and its personnel, in
performance of this Agreement, are acting as independent contractors and not
employees or agents of Client.
14.4 No Joint Ventures. Nothing in this Agreement shall be
construed to establish a joint venture, agency, employment or partnership
relationship between the Parties.
<PAGE>
14.5 Amendments. No amendment, change, waiver, or discharge
hereof shall be valid unless in writing and signed by the party against which
such amendment, change, waiver or discharge is sought to be enforced.
14.6 Force Majeure. Except for the obligation to pay money,
neither party will be liable for any failure or delay in its performance under
this Agreement due to any cause beyond its reasonable control, including act of
war, acts of God, earthquake, fire, flood, embargo, riot, sabotage, labor
shortage or dispute, governmental act or failure of the Internet, provided that
the delayed party: (a) gives the other party prompt notice of such cause, and
(b) uses its reasonable commercial efforts to correct promptly such failure or
delay in performance and Client may terminate if service is down for more than
[****] consecutive hours.
If the performance of any part of this Agreement by either party is
prevented, hindered, delayed or otherwise made impracticable by reason of any
flood, riot, fire, judicial or governmental action, labor disputes, act of God
or any other causes beyond the control of either party, that party shall be
excused from such to the extent that it is prevented, hindered or delayed by
such causes provided, however, that if such delay or default by Fry exceeds
[****] consecutive business days, then Client may terminate this Agreement
effective upon written notice to the other party.
14.7 Arbitration. Any claim, dispute or controversy with
respect to, in connection with or arising out of this Agreement shall be
subject to and decided by arbitration in Nassau County, New York, by a panel
of three arbitrators. Each Party shall designate one disinterested arbitrator
and the two arbitrators so designated shall select a third arbitrator. The
persons selected as arbitrators need not be professional arbitrators, and
persons such as lawyers, accountants, brokers and bankers shall be
acceptable, but each shall have substantial experience with respect to
information technology and development. The arbitration proceeding shall be
conducted in accordance with the commercial arbitration rules of the American
Arbitration Association then and there pertaining. Any party may initiate
arbitration proceedings hereunder by providing written notice ("Demand for
Arbitration") to the other party to such claim, dispute or controversy. A
Demand for Arbitration shall be made within a reasonable time after the
claim, dispute or controversy has arisen; provided, however, that no Demand
for Arbitration may be made after the date when institution of such claim,
dispute or controversy would be barred by the applicable statutes of
limitations. Arbitration proceedings shall be commenced within thirty (30)
days of such notice or as soon thereafter as practicable, and the arbitrators
shall be required to render a written determination within thirty (30) days
after the commencement of such arbitration proceedings. The written award of
a majority of the arbitrators shall be final and binding upon the parties and
judgement may be entered upon it in accordance with applicable law in any
court having jurisdiction thereof, including the federal district courts
located in Nassau County, New York. All costs of any such arbitration shall
be borne equally by the parties.
This Section shall not be construed to prohibit either party from
seeking preliminary or permanent injunctive relief in any court of competent
jurisdiction, however, the arbitrator hearing the dispute to which the
injunction pertains will have the power to modify or dissolve any such
injunction, or to order additional injunctive relief, in connection with the
final arbitration award. The parties, their representatives, other participants,
and the mediator and
**** 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.
<PAGE>
arbitrator shall hold the existence, content, and result of any mediation and
arbitration in confidence except to the extent necessary to enforce a final
settlement agreement or to obtain and secure enforcement of or a judgment on an
arbitration decision and award.
14.8 Choice of Law and Venue. This Agreement shall be governed
in all respects by the laws of the State of New York without regard to its
conflict of laws provisions.
Subject to Section 14.7, each of the parties hereto irrevocably
and voluntarily submits to personal jurisdiction of the New York Supreme
Court located in Nassau County, New York and the Federal and state courts
located in the Eastern District of New York in any action or proceeding
arising out of or relating to this Agreement and agrees that all claims in
respect of such action or proceeding may be heard and determined in any such
court. Each of the parties hereto further consents and agrees that such party
may be served with process in the same manner as a notice may be given under
Section 14.10. Each of the parties hereto agrees that any action or
proceeding instituted by any of them against any other party with respect to
this Agreement will be instituted exclusively in the state courts located in,
and in the United States District Court for, the Eastern District of New
York. The parties hereto irrevocably and unconditionally waive and agree not
to plead, to the fullest extent permitted by law, any objection that they may
now or hereafter have to the laying of venue or the convenience of the forum
of any action or proceeding with respect to this Agreement in any such courts.
14.9 Assignment. Neither party shall assign, without the prior
written consent of the other Party, its rights, duties or obligations under this
Agreement to any person or entity, in whole or in part, whether by assignment,
merger, transfer of assets, sale of stock, operation of law or otherwise, and
any attempt to do so shall be deemed a material breach of this Agreement, except
to affiliate.
14.10 Notice. Any notice pursuant to this Agreement, if
specified to be in writing, shall be in writing and shall be deemed given (i) if
by hand delivery, upon receipt thereof, (ii) if by mail, three (3) days after
deposit in the United States mails, postage prepaid, certified mail, return
receipt requested, (iii) if by facsimile transmission, upon electronic
confirmation thereof, or (iv) if by next day delivery service, upon such
delivery. All notices shall be addressed as follows (or such other address as
either party may in the future specify in writing to the other):
In the case of Fry: Fry Multimedia, Inc.
3971 South Research Park Drive
Ann Arbor, Michigan 48108
Fax: (734) 741-0640
Attention: David Fry, President
<PAGE>
In the case of Client: 800-Gifthouse, Inc.
1600 Stewart Avenue
Westbury, New York 115901
Fax: (516) 237-6060
Attention: Donna Iucolano
With a copy to: Gallagher Walker & Bianco
98 Willis Avenue
Mineola, New York 11501
Telecopier: (516) 248-2394
Attention: Gerard M. Gallagher, Esq.
14.11 Waiver. The waiver of failure of either party to
exercise any right in any respect provided for herein shall not be deemed a
waiver of any further right hereunder.
14.12 Severability. If any provision of this Agreement is
determined to be invalid under any applicable statute or rule of law, it is to
that extent to be deemed omitted, and the balance of the Agreement shall remain
enforceable.
14.13 Counterparts. This Agreement may be executed in several
counterparts, all of which taken together shall constitute the entire agreement
between the Parties hereto.
14.14 Headings. The section headings used herein are for
reference and convenience only and shall not enter into the interpretation
hereof.
14.15 Approvals and Similar Actions. Where agreement,
approval, acceptance, consent or similar action by either party hereto is
required by any provision of this Agreement, such action shall not be
unreasonably delayed or withheld.
14.16 Survival. The provisions of Sections 3, 4.8, 7, 8, 9(a),
12, 13.2, 13.3 and 14 of this Agreement shall survive the termination or
expiration of this Agreement.
14.17 Government Regulations. Client will not export,
re-export, transfer, or make available, whether directly or indirectly, any
regulated item or information to anyone outside the U.S. in connection with this
Agreement without first complying with all applicable export control laws and
regulations of the U.S. Government and any country or organization of nations
within whose jurisdiction Client operates or does business.
14.18 Non-Solicitation. During the period beginning on the
date hereof and ending on the first anniversary of the termination or expiration
of this Agreement in accordance with its terms, Fry and Client agrees that they
will not, and will ensure that their affiliates do not, directly or indirectly,
solicit or attempt to solicit for employment or other work persons employed by
the other Party during such period.
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first written
above.
CLIENT FRY
800-GIFTHOUSE, INC. FRY MULTIMEDIA, INC.
By: /s/ Christopher G. McCann By: /s/ David Fry
-------------------------- -----------------------
(Signature) (Signature
Name: Christopher G. McCann Name: David Fry
Title: Vice President Title: President
<PAGE>
EXHIBIT A
ANNUAL PLAN
<PAGE>
====================
[LOGO] INTERACTIVE SERVICES
PROJECT BRIEF
====================
PROJECT TITLE: Annual Plan--Fiscal Year 2000 BRIEF NUMBER: 0199-1003
PROJECT SPONSOR: Donna Iucolano BRIEF DATE: Jan-13-1999
BACKGROUND:
1-800-FLOWERS(R) currently maintains a business to consumer based
transactional Web Site at www.1800flowers.com. The Site, which is developed,
managed, and maintained by Fry Multimedia in Ann Arbor, Michigan was recently
redesigned and launched on November 16, 1998. Given several new opportunities
which have presented themselves, the Company's e-commerce strategy has been
changed to support the housing of the totality of the 1-800-FLOWERS, Inc.
product and service offerings as available through its various subsidiaries
including 800-FLOWERS, 800-BASKETS, 800-GROWERS, 800-GOODIES, Plow & Hearth,
Fresh Home & Garden, and American Country Home under one "master"
Network-concept Web Site. The theme of the Network [new Web Site] is to
revolve around "living and giving" with 1-800-FLOWERS as it is bringing
customers the "best of" floral, home and gardening products. The goal is to
convey that the Network offers products and ideas for self-consumption as
well as gifting.
Due to increased competition within the floral and related gardening and gifting
categories - both online and off-line, the window of opportunity to develop and
successfully launch the Network is narrow with it being imperative to achieve a
live date of early spring.
IT IS IMPORTANT TO NOTE THAT THE STRATEGY IS BEING EVOLVED AS A RESULT OF NEW
OPPORTUNITIES AND NOT BECAUSE THE CURRENT SITE IS FLAWED IN ANY WAY. IT IS OUR
INTENT TO BUILD UPON ALL OF THE FUNCTIONALITY AVAILABLE IN THE CURRENT SITE AND
THAT IS BEING PURSUED IN PHASE II IN THE NETWORK.
While 1-800-FLOWERS has emerged as the online market leader in the fresh floral
category, it has a tremendous opportunity to expand beyond this product category
to others, which are related. Four general or umbrella categories are being
pursued including:
1. FRESH PRODUCTS - Flowers, Plants, Fruit, Vegetables, Gourmet,
Etc.
2. BASKETS & RELATED PRODUCTS - Gourmet Baskets, Novelty Gift
Baskets, Balloons, Etc.
3. GARDEN PRODUCTS - Seeds, Plants, Bulbs, Garden Tools, Garden
Ornaments, Clothing and Accessories, Etc.
4. HOME / HOME DECORATING - Indoor & Outdoor Furniture, Decorative
Containers, Accessories, Dried Floral Products, Clothing, etc.
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<PAGE>
ASSIGNMENT:
1-800-FLOWERS(R) is interested in having Fry Multimedia develop a Web Site so
that it reflects the new [Fresh] Floral, Home & Garden Network strategy. This
Network Site should leverage as much of the recent development for Version 5
[introduced on Nov-16-98] and Plow & Hearth [introduced on Dec-08-98] as
possible so as to be completed in a cost efficient manner, and one that
recognizes the time constraints under which the Network is expected to
launch. The Network strategy is being designed to position 1-800-FLOWERS as
one of the emerging online commerce hubs and is intended to aggregate all of
the products of the 1-800-FLOWERS organization under one umbrella and master
Web Site so as to gain economies of scale and not need to develop
individually branded efforts for [****] subsidiary company. Products to be
featured on the site include those of the brands 800-FLOWERS, 800-BASKETS,
800-GROWERS, 800-GOODIES, Plow & Hearth, Fresh Home & Garden, and American
Country Home as well as others if appropriate. This Network Web Site should
be robust enough to accommodate [****] of products [and attributes] as well
as provide for a [****] defined further down in this document.
OBJECTIVE[S]:
1-800-FLOWERS(R) has aggressive sales growth expectations from its Web Site in
Fiscal 2000 and views the ability to offer the totality of the 1-800-FLOWERS'
product line under one umbrella and master Web Site as critical in order to
achieve the growth. As such, 1-800-FLOWERS expects to satisfy the following
objectives with the Network concept:
1. ENABLING THE OFFERING OF GREATER VARIETY, DEPTH AND BREADTH OF
SELECTION. One of the most attractive things about online retailing for
both the retailer and the consumer is the fact that there is an endless
supply of [virtual] shelf space. Without the physical restrictions of
brick and mortar, a retailer has the ability to present millions of
products for sale to prospective shoppers. While successful in its
efforts, 1-800-FLOWERS actually offers one of the [****] inventories
of products available for sale online typically averaging approximately
[****] products. By aggregating our [****] product offerings under the
Network, 1-800-FLOWERS can make the leap from [****] to several [****]
products.
2. INCREASING SALES REVENUE. By adding products designed for [****] to
complement the [****], and adding [****] merchandise, 1-800-FLOWERS
will be able to grow sales revenue faster.
3. LEVERAGING ONLINE RETAILING & MERCHANDISING EXPERTISE. Over the years,
1-800-FLOWERS has built a reputation for its expertise in online
retailing and merchandising. This expertise should be leveraged so as to
be able to generate hundreds of orders for new product categories
introduced almost overnight. This will only work by deploying a Network
strategy.
4. MINIMIZING DEVELOPMENT & MAINTENANCE COSTS. Building and maintaining
multiple Web Sites that are on par with the 1-800-FLOWERS Web Site
will be expensive and challenging. With the initial cost of subsidiary
sites ranging from $100,000 to $250,000, plus maintenance, the return
on investment might not be realized with each individual effort. The
Plow & Hearth Web Site went live on December 9th. It now needs to be
maintained on a day-to-day basis and a marketing strategy and budget
needs to be developed to drive traffic to it. This will be both
time-consuming and expensive. And, the Web Site development for other
1-800-FLOWERS subsidiary efforts including Fresh Home & Garden,
American Country Home, and GardenWorks has also been discussed.
- --------------------------------------------------------------------------------
1-800-FLOWERS, Inc. Page 2 of 18 Confidential
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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.
<PAGE>
5. PIGGY-BACKING ON MARKETING & DISTRIBUTION DEALS. As we are finding,
driving traffic to the Web Site is getting more expensive every day.
Portal and distribution deals [****]. Negotiating each of these
relationships is time-consuming, as is the implementation once the
agreement is signed. By focusing on a Network strategy, the
relationships and marketing programs in place to support the fresh
floral product line can be leveraged to support additional product
offers. [****] This Network strategy is the exact one being
successfully deployed by [****]. 1-800-FLOWERS can do the exact same
thing, and own valuable online real estate for not only flowers, but
also gardening and home.
6. LEVERAGING OPERATIONS & CUSTOMER SERVICE EXPERIENCE. Over the past
5 years, 1-800-FLOWERS has learned many valuable lessons as a
result of its online retailing and interactive marketing efforts -
none of the mistakes made which led to lessons learned should be
repeated, if possible. While the Plow & Hearth Web Site is up and
running, its features and capabilities are [****] to where
1-800-FLOWERS is today. For example: [****]. 1-800-FLOWERS has not
processed online orders manually since April of [****]. There is
[****] and there is [****]. Given our leadership position online, we
cannot "afford" to role out related or subsidiary efforts this way
without the potential for negatively impacting our reputation.
7. PERSONALIZED CONTENT. While we have researched the integration of
personalized capabilities as offers by Net Perceptions and others, these
applications are expensive and not really designed to support gifting
sites. By aggregating all efforts under one site, we can create an
intelligent, interactive environment that targets the appropriate
audience(s) with the appropriate product(s), value-added service(s), and
information while supporting and motivating the visitor toward trial,
repeat purchase, brand adoption, and long-term loyalty by offering
products and information for self consumption as well as gifting.
8. MULTIPLE SELLING OPPORTUNITIES. With the introduction of additional
products and product categories, many more merchandising and
cross-selling opportunities become available on the Home Page and
throughout the Web Site, which can increase the conversion of browsers
to shoppers. This might include multiple featured products, buttons,
banners, and text links on the home page; the creation of a gift center
which provides for profiling of the recipient; integration of general
gifting, floral, home decorating, and light gardening information
[or editorial] which integrates products for sale.
9. CO-BRANDING. Given the new "look & feel," there will be the need to
create a "standard" presentation for co-branded content to be
implemented primarily by the expansion of the affiliate network and
general distribution relationships. The co-branding in place today
might be able to be leveraged.
10. RECOGNITION OF REFERRING URL. We recognize the tremendous marketing
potential presented by printed catalogs and general brand recognition of
1-800-FLOWERS subsidiary companies. The Network Site should be created
in a manner enabling the many domain names currently owned by
1-800-FLOWERS such as WWW.PLOWHEARTH.COM to remain live and to take
customers to the Network while acknowledging where they came from. For
example: "Plow & Hearth products found here!"
- --------------------------------------------------------------------------------
1-800-FLOWERS, Inc. Page 3 of 18 Confidential
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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.
<PAGE>
FUNCTIONAL REQUIREMENTS:
A. [****]:
1. The Network Site will become the central online point of contact
for customers interested in shopping with 1-800-FLOWERS and its
subsidiary companies. [****]
2. The "look and feel" of the Site will need to convey the
availability of fresh floral, home and garden products as
presented within a living and giving context in the most
efficient manner. A streamlined and tight masthead or primary
navigation element is desired along with high performance at a
28.8 dial-up modem speed. [****]
3. [****]
4. Web Sites to review to their efficiency and compactness include
the following: [****].
B. SHOPPING FUNCTIONALITY:
1. The Network Site should support shopping by [****] - i.e.
800-FLOWERS or Plow & Hearth as well as by [****] or [****] -
i.e. flowers, plants, outdoor furniture, etc. It should also
allow for searching by keywords.
2. The Network Site should also feature a [****] which offers
suggested products based on [****] - i.e. [****]; based on
relationship to the [****] - i.e. [****]; based on [****] -
i.e. gifts under [****]; and, based on [****] - i.e. same
day, within [****] hours, within [****] hours. A special
holiday [****] should also be available at Christmas,
Valentine's Day, Mother's Day, etc.
3. The Network Site will need to support a product database
consisting of [****] of products with attributes or features,
and be able to guide people through the searching process so
as not to be overwhelmed by the potential number of products
returned. The current of the WWW.1-800-FLOWERS.COM and
WWW.PLOWHEARTH.COM sites should be integrated.
4. The Network Site should offer [****]. All orders taken on the
Site will be processed by 1-800-FLOWERS in Westbury, New York
automatically.
- --------------------------------------------------------------------------------
1-800-FLOWERS, Inc. Page 4 of 18 Confidential
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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.
<PAGE>
5. The Network Site will integrate special features as created for
the 1-800-FLOWERS.com Site namely the [****] including [****].
These can all be enhanced through the additional of software as
provided by Net Perceptions or others.
6. The Network Site should allow [****] between companies
and departments featured on the Site.
7. The Network Site needs to support [****] including
select local florist, Federal Express, United Parcel Service,
and the US Postal Service.
8. The Network Site MUST support intelligence in the [****]
with the ability to pro-active present the [****] date and/or
[****] date to consumers.
9. Departmentalized Web shopping sites to review include:
[****].
C. CUSTOMER SERVICE FUNCTIONALITY:
1. Given the potential number of product offerings and the fact
that many more of the offerings require being inventoried and
available for purchase, the Network Site will need to
communicate in real time or close to it with company-wide
inventory management systems. This will prevent the purchasing
of products, which are out of stock and/or inform customers of
any back orders.
2. Given that a majority of the products to be purchased will be
fulfilled [****] from vendors using Federal Express,
United Parcel Service, or some other service, the ability of a
customer to [****] would offer a value added customer service
benefit to shoppers. The Site should allow customers to generate
[****] messages or [****] online.
3. Real time customer service [****] - as provided by [****] -
would need to be supported on the Network.
4. Customer service inquiries via email would also need to be
supported on the Network.
- --------------------------------------------------------------------------------
1-800-FLOWERS, Inc. Page 5 of 18 Confidential
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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.
<PAGE>
D. MERCHANDISING FUNCTIONALITY:
1. Given the potential number of product offerings, the Network
Site offers tremendous opportunity for [****] and [****]
as well as the presentation of great variety. Products will
need to be presented with [****]. The [****] should
allow for several products to be returned quickly.
2. As with the 1-800-FLOWERS.com Web Site, there will be the need
to communicate important information to customers at certain
points. This might include holiday "cut-offs," products being
out of stock, new products, etc. This information will be might
be vendor, product or Network specific.
3. The Network Site should further enable merchandising within
[****] and on the [****].
4. The Network Site should support [****] as well as [****]
to support merchandising and the presentation of special offers,
holiday reminders, etc.
5. The Network Site needs to support [****] delivery and
shipping for certain vendors and/or products.
6. The Network Site needs to support a [****] of product selection
in the case of a product [*****].
E. CONTENT FUNCTIONALITY:
1. All editorial information related to fresh flowers, gardening
and home should reside in [****] predominant place - i.e. the
[****] area. Content should however be [****] throughout the
Site - especially within the shopping section so as to
support merchandising within an editorial context. Editorial
should also support impulse buying and the integration of
merchandise.
2. Content should support selling including [****] with [****]
embedded within the content and not only available as [****]
on the [****] of pages.
3. The Network should support truly [****] content, which will
enable a customer to [****] of the service as related to
their [****]. For example: a [****] area where customers would
provide us details about [****].
4. The Network should enable integration of other content - i.e. we
might want to partner with [****] to support [****] area.
5. [****] content areas should allow for [****], as some of
the content will be written by 1-800-FLOWERS, some [****],
some [****], etc.
- --------------------------------------------------------------------------------
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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.
<PAGE>
F. ADVERTISING AND PROMOTIONAL FUNCTIONALITY:
1. Given the potential number of product offerings and multiple
brands that will be available on the Network, there should be
some [****] functionality built in which enables [****] to run
promoting products, services, brands or concepts available
within the Network.
2. [****] should be available on the Site's [****] for possible
use by the Network or for sale to [****] such as a [****]
company.
3. Integrate an [****] such as provided by [****] or [****] to
serve and track [****] within the Network Site.
4. Support for standard linking with tracking capability as it
exists today. Links to: 1-800-FLOWERS.com [****], individual
product pages, product collections, [****] content areas,
promotional pages, [****], etc.
5. Support for special partner programs such as [****] of [****]
information for [****], pre-population of order form for
[****], and 1-800-FLOWERS.com "keyword search" feature.
6. Promotional areas should enable 1-800-FLOWERS to use in-house
resources to create, update and maintain holiday or seasonal
theme areas.
G. RELATIONSHIP MARKETING FUNCTIONALITY:
1. Registration should be easy and encouraged often. Getting people
to register is high priority. There should be many real benefits
including the ability to customize the Network - i.e. the My
Flower Shop concept which will need to be renamed. Registration
should enable customers to receive information in general
about the Network or specific to an area of interest
[i.e. gardening].
2. Interaction with the Network should enable learning about the
customer in order to serve them better. This "learning" might
need to be facilitated by the software of a company such as is
offered by Net Perceptions.
3. Registration layout and information gathered will need to be
revised to accommodate customer preferences for self-consumption
as well as gifting. Personalization software should enable this
[i.e. Amazon's book recommendation service).
4. Information being captured during the registration process
should allow for profiling as well as prospecting. A much more
[****] role in [****] is being requested.
5. [****] tools should be state-of-the-art and usable at
1-800-FLOWERS as well as at Fry Multimedia.
- --------------------------------------------------------------------------------
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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.
<PAGE>
6. The following [****] for programs and general communication
need to be in place and a determination of the communication
source (1-800-FLOWERS, Fry Multimedia, Plow & Hearth) will need
to be made in each case. All communication sent to each customer
would need to be [****] as part of the [****] in the
[****].
[****]
7. The Network Site will need to incorporate [****] so to be
able to speak to customers individually and uniquely. This
can take on many forms. Keep it simple in the beginning
through [****] at [****] without buying, [****], etc.).
Eventually enhance to dynamically generate content or views
based on customer learning. (i.e. [****])
- --------------------------------------------------------------------------------
1-800-FLOWERS, Inc. Page 8 of 18 Confidential
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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.
<PAGE>
H. BRANDING FUNCTIONALITY:
1. While the Network Site should be branded in a manner that
conveys "Fresh Floral, Home & Gardening" as well as "Living &
Giving," the equity in the brand building efforts of
1-800-FLOWERS should not be abandoned. They should instead be
leveraged. While the company has not [****] on the [****], it
is receptive to suggestions from Fry Multimedia. Discussions
to date have lead to:
a. The concept that given the Company's reputation as an
online retailing leader [and pioneer] there is a big
benefit to branding the Network as being offered "by
1-800-FLOWERS" or "from 1-800-FLOWERS."
b. The fact that domain names including WWW.800FLOWERS.COM,
WWW.1800FLOWERS.COM, WWW.FLOWERS.COM as well as the
various other combinations owned should all take one to
the Network.
c. The fact that we might be able to create a brand for the
Network through another domain name such as the
[****] or [****].
d. The fact that given the catalog efforts of Plow & Hearth
and Fresh Home & Garden, they should be able to promote
branded or vanity URLs which take customers to the
Network while allowing customers to "know" want the
referring company / domain name was. For example: a
positioning that would allow for "Plow & Hearth products
featured here!" Branding and co-branding for the
subsidiary companies needs to be further investigated.
e. A well-branded site with flanking brands for review
includes that of [****]. While [****] is the primary
site, customers have access to [****], which is
branded as [****] and an educational support site
branded as the [****] at [****].
- --------------------------------------------------------------------------------
1-800-FLOWERS, Inc. Page 9 of 18 Confidential
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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.
<PAGE>
I. EDITORIAL FUNCTIONALITY:
1. The Network Site should feature [****] that is [****] to [****]
of the editorial or magazine like content, and might also be
branded as the [****]. This editorial area will need to
support a varied about of information as outlined below:
a. Floral Information - care and handling, how-to
information, meanings of flowers, floral design trends,
etc.
b. Gardening Information - what to plant, when to plant,
regional gardening tips and information, descriptions of
plants/bulbs/seeds, etc.
c. Home Decorating - trends, ideas, suggestions, etc.
d. Gifting - trends, hot products, etc.
J. REPORTING / TRACKING FUNCTIONALITY:
NOTE: THIS SECTION WILL REQUIRE FURTHER DISCUSSION AS IT PERTAINS TO
HOW WE ISSUE [****] TO PEOPLE ON THE SITE TODAY AS WELL AS [****] AND
[****] PROCEDURES SO AS TO INTERACT WITH A CUSTOMER CENTERED DATABASE
PRODUCT.
1. [****] / Customer Performance [****]
The Site will need to [****] identify and report on customers
(purchasers) / Shoppers (browsers). - All reports should be
able to be run based on the following criteria: [****]
selection By [****] range, [****] ([****] and [****]), [****]
([****]). Ability to compare over [****] period a [****] ago.
a. Number of new [****] and number of new
[****].
b. Number of [****] and [****].
c. Registered vs. Non Registered [****]
d. [****] rate of shoppers to customers (first
time)
e. [****] rates of [****] customers
f. [****] rates of [****] visitors.
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1-800-FLOWERS, Inc. Page 10 of 18 Confidential
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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.
<PAGE>
2. [****] Analysis
We need the ability to count visits to the Site by each
[****] identified visitor and then determine their purchase
[****]. What we hope to do is to identify the [****] on
average and for particular customer segments. - [****]
shopper, [****] customer, [****] customer, [****] customer
[****], [****] customer [****], [****] customer by [****] of
[****], [****] customer by [****] of [****], [****] shoppers
[****], etc. This report would include the ability to set a
[****] (i.e. [****] customers for [****] all, registered,
etc.) This should also include the ability to define the
[****] for particular segments and by the customers [****].
The information on this report should be available [****]
as well as in a [****] format that can be easily copied
into [****].
3. Establish a linkage between [****], 1-800-FLOWERS [****], and
[****]
The [****] of customers from each source should be included
in the file layouts of each of these sources. The [****] should
be passed to 1-800-FLOWERS and to [****] and retained. [****]
should correspond to 1-800-FLOWERS [****] and where multiple
customer numbers exist those records should be consolidated
or linked to obtain complete customer [****]. Based on [****]
at this level [****] or [****] can be set so that the next time
the customer comes to the web site or calls they could be [****]
for a specific [****]. Customers' will fall into specific
defined groups and be appropriately targeted.
4. Customer Purchase History
Purchase history of all customers that we can speak to via
[****]. History to include [****] dates, [****], zip code
[****] zip code [****], [****] type. We have discussed
offering this [****] to registered users and then to all
1-800-FLOWERS customers.
On the Fry side determine what [****] information can be
retained and tied to the [****] so that we can use the
[****] as a trigger for [****] that treat customers
[****]. The ultimate goal is to be able to have Fry maintain
a usable database of information that will enable us to
remember and act upon customer [****] and [****]. The [****]
portion of this equation will be incorporated into the new
registration area.
5. Metrics Numbers
Should be [****] reporting or scheduled and automated for
[****] delivery daily. Includes [****] all compared to
[****] ago numbers as defined by 1-800-FLOWERS.
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1-800-FLOWERS, Inc. Page 11 of 18 Confidential
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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.
<PAGE>
6. Basic Marketing Questions to be answered:
a. Who are my customers?
Name, Address, City, State, Zip
[****]
b. Ability to define customer [****]?
[****] visitors and buyers, [****], Buyers by
[****], [****] buyers by [****], [****], [****],
Geographically. By [****] relationship, by [****]
location (ADI, ZIP) By customer to [****] location.
c. What are my customers [****]?
Break up floral purchases to cut flowers, arrangements,
etc. and gift products. Floral vs. Fed Ex, add new items
by category
d. How much are my customers [****]?
[****]?, Last [****] Months, [****].
e. Source of Acquisition? Affiliates, search engines,
[****], etc.
f. [****]
With [****], shopping to buying seasonally issues:
[****] reports by Quarter, Month by Month, Holiday vs.
Same Holiday year ago.
7. Web Analysis
[****] Analysis - [****] the consumer through the Site to
determine [****] areas on the site [****] before leaving
site.
8. Reporting Tools
Fry to review additional Web [****] tools such as [****]
for support on the Site.
- --------------------------------------------------------------------------------
1-800-FLOWERS, Inc. Page 12 of 18 Confidential
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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.
<PAGE>
9. Site Speed
Stimulus / response data - target [****] offers to segments
with [****] to measure [****] over standard to determine best
incentives by audience. Ability to offer dynamic [****]
messages.
Ability to identify [****] Customers / Visitors [****] and for
any date range selected numerically and graphically. Need to
know how many customers are [****] on a [****] basis.
10. [Redefine] Affiliate Reporting
By [****] ([****] effort code, [****] code or combination of
[****] code and [****] code - TBD)
By [****] to determine which products were purchased as a
result (promotional products vs. other products). (By [****]
Code).
Reports would show [****] numbers, graphs of results and updated
results.
ELEMENTS TO BE INCLUDED:
[****]
K. WEB SITE ADMINISTRATION:
1. The Network Site should allow for updating and maintenance by
1-800-FLOWERS remotely. Current administration area would need
to be enhanced to support the Network.
L. WEB SITE REMOTE MONITORING:
1. 1-800-FLOWERS is interested in being able to [****] traffic,
usage, etc. [****] from Westbury, New York.
- --------------------------------------------------------------------------------
1-800-FLOWERS, Inc. Page 13 of 18 Confidential
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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.
<PAGE>
M. HOSTING / REDUNDANCY:
1. 1-800-FLOWERS is asking Fry Multimedia to re-evaluate hosting
needs and projected server capacity with respects to increased
traffic and sales volume. Determine feasibility of [****] in
[****] or other location as a [****] measure.
MESSAGE[S]:
The messages to convey to users of the Network Site include:
1. That 1-800-FLOWERS means more than just flowers.
2. That 1-800-FLOWERS is leveraging its size and online retailing
expertise to bring Web customers the "best of" flowers,
gardening, and home decorating products.
3. That 1-800-FLOWERS means "Solutions/Products for Living &
Giving!"
4. That 1-800-FLOWERS is an electronic commerce / Internet
retailing leader that is an emerging online commerce hub.
5. That 1-800-FLOWERS has the expertise in "living and giving" as
evidenced through the editorial and general content available on
the Network Site.
TARGET AUDIENCE:
The Web site should speak to the follow target audiences:
1. PRIME: Given the nature of our product, the primary audience is
pretty [****]. It includes men and women ages [****]
and living primarily in [****].
2. SECOND: We have the opportunities to attract both [****]
and [****] men and women as well. We also have
the opportunities to attract Americans living and
working [****] of the [****] as well as [****]
interested in shopping with [****] companies.
3. THIRD: A growing number of [****], which maintain [****]
are [****] to our site in support of [****]. These
companies have [****] programs for their [****]
and/or [****] for [****] gift giving needs.
- --------------------------------------------------------------------------------
1-800-FLOWERS, Inc. Page 14 of 18 Confidential
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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.
<PAGE>
NETWORK CONTENTS:
As suggested, the Network should offer a broader array of products, which are
brought to consumers by 1-800-FLOWERS. While there should be editorial
information to support the merchandising and selling process as well as to
establish credibility and expertise, the products available for sales are
critical. Here is a suggested approach to our merchandising efforts:
<TABLE>
<CAPTION>
- ---------------------------------------- -------------------------------------- --------------------------------------
FRESH [FLOWERS & RELATED] GARDENING HOME
- ---------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
FLOWERS [****]: BULBS & SEEDS [****]: DECORATING [****]:
- --------------- --------------------- ------------------
- - Floral Arrangements - Assorted bulbs - Wreaths
- - Roses - Assorted seeds - Candles
- - Plants - Starter kits / supplies - Vases
- - Wreaths / Topiaries - Pots & Containers
- - Balloons TOOLS [****]: - Dried Floral
--------------------- - Table Settings
- Tools - Garden-Inspired Art
FLOWERS [****]: - Boots, clogs & gloves - Books
- --------------- - Apparel
- - Plants - Greenhouses
- - Floral bouquets - Irrigation
- - Roses KITCHEN GARDENING [****]:
- - Plants -------------------------
- - Continuity Products - Cooking Herbs
PLANTS, TREES & SHRUBS [****] - Vegetables
----------------------------- - Fruiting Trees
- Perennials
GIFT BASKETS [****] - Herbs OUTDOOR FURNITURE [****]:
- - Gourmet Baskets - Fruit trees & plants -------------------------
- - Novelty Baskets - Roses, orchids, etc. - Wood/Iron/Wicker Furniture
- - Branded Baskets - Fencing
- - Floral/Aromatherapy Baskets WATER GARDENING [****] - Bird Feeders & Houses
---------------------- - Garden Ornaments
- Water garden plants - Storage Containers
FRUIT, CANDIES, & COOKIES [****] - Supplies & accessories
- --------------------------------
- - Fruit Baskets ORGANIC [****]:
- - Citrus Baskets/Boxes/Crates -------------- INDOOR FURNITURE [****]:
- - Candied & Dried Fruit Containers - [****] -----------------------
- - Nuts in Containers - Bedroom Furniture
- - Jellies, Jams, & Marmalades OUTDOOR FURNITURE [****]: - Other Indoor Furniture
- - Chocolate Products ------------------------- - Indoor Accessories
- - Cookie Products - Wood/Iron Furniture - Blankets
- Fencing
- Bird feeders & houses
- Garden ornaments FIREPLACE / HEARTH [****]:
--------------------------
- Fireplace Screens/Glass
PEST TRAPS [****]: - Firewood Containers/Carriers
----------------- - Wood Splitting Tools
VEGETABLES [****] - Traps - Accessories
- -----------------
- - Assorted in Crates APPAREL & ACCESSORIES [****]:
LANDSCAPE GARDENING [****]: -----------------------------
[****] --------------------------- [****]
- --------------------- - Other
- - Flowers
- - Floral Arranging [****]
- - Other - TBD --------------------- [****]
- Gardening/Gardens of the World -------------------
- [****] - Home Decorating
OTHERS - Other - TBD - Other--TBD
- ------
- - To Be Determined OTHERS OTHERS
------- ------
- To Be Determined - To Be Determined
- ---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
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1-800-FLOWERS, Inc. Page 15 of 18 Confidential
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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.
<PAGE>
COMPETITIVE SET:
While 1-800-FLOWERS has a growing number of competitors online, there is
[****] is the [****] being pursued by the Network - namely floral, home and
gardening products [****]. The following sites are however important for
their competition potential and individual efforts.
1. EMERGING COMMERCE HUBS:
[****]
2. FLORAL RELATED SITES:
[****]
3. GARDENING:
[****]
4. RETAIL AGGREGATORS:
[****]
1-800-FLOWERS FURTHER EXPECTS FRY MULTIMEDIA TO REVIEW/RESEARCH OTHER
TRANSACTIONAL AND/OR CONTENT SITES FOR [****] ELEMENTS AND SUGGESTIONS.
- --------------------------------------------------------------------------------
1-800-FLOWERS, Inc. Page 16 of 18 Confidential
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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.
<PAGE>
TONE & MANNER:
We want our customers to perceive us as online retailer first and foremost -
not a warehouse or telemarketing organization. We want to convey that we have
a passion for the products we sell and know "everything" there is to know
about them. We have the broadest selection, access to the best grower farms
around the world, the best care and handling procedures, the best vendors,
and the best customer service.
MANDATORIES:
1. FAST PERFORMANCE: The Site should be optimized for best possible
performance most notably by the fast loading of its pages and searches in
its database. Given that we are broadening the product line beyond flowers,
the Network site does not have to be [****] or [****].
2. [****] FRIENDLY: Given the strategy, 1-800-FLOWERS would be interested in
[****] its native [****] on [****]. As such, our [****] marketing and
merchandising efforts would point and link to the [****]. Given the [****],
the Site would need to be maximized for performance via the [****]
browser. [See the information at the following location for optimizing
Web Site for performance via [****].
3. REDUNDANCY: With the size and scope of the effort, the Network needs to be
developed and maintained as a "mission critical" effort requiring [****]
for all of the possible points of failure and redundancy to successfully
accommodate the high volume of traffic and sales activity.
BUDGET:
Given the investment in the 1-800-FLOWERS.com Version 5.0 site and the
Plow & Hearth Version 1.0 made over the past 6 months, and the Company's
intent to leverage as much of the development as possible, it will rely
on Fry Multimedia to submit an estimate for the Network's development.
An estimate is expected as early as possible during the month of
January 1999.
TIMING:
The new site needs to be completed and live in the spring of 1999 so as to
maximize its appeal and launch. The launch will be supported with a [****],
which includes [****] and [****].
- --------------------------------------------------------------------------------
1-800-FLOWERS, Inc. Page 17 of 18 Confidential
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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.
<PAGE>
================================================================================
PROJECT BRIEF SUBMISSION APPROVAL:
This Project Brief is being submitted on the part of 1-800-FLOWERS as approved
by:
DONNA M. IUCOLANO
-------------------------------
[Print Name]
_______________________________ Date: __________________
[Signature]
RETURN COST ESTIMATE & AGGRESSIVE TIME SCHEDULE BY FEBRUARY 01, 1999 TO:
DONNA IUCOLANO, VICE PRESIDENT
1-800-FLOWERS, INC.
1600 STEWART AVENUE
WESTBURY, NEW YORK 11590
FAX NUMBER: [516] 237-6009
E-MAIL: [email protected]
- --------------------------------------------------------------------------------
1-800-FLOWERS, Inc. Page 18 of 18 Confidential
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<PAGE>
EXHIBIT B
PROJECT BRIEF FORM
B-1
<PAGE>
========================
[GRAPHIC OMITTED] INTERACTIVE SERVICES
1-800-FLOWERS(R) PROJECT BRIEF TEMPLATE
========================
PROJECT TITLE: BRIEF NUMBER:
PROJECT SPONSOR: BRIEF DATE:
BACKGROUND:
ASSIGNMENT:
OBJECTIVE[S]:
FUNCTIONAL REQUIREMENTS:
MESSAGE[S]:
TARGET AUDIENCE:
COMPETITIVE SET:
TONE & MANNER:
MANDATORIES:
BUDGET:
TIMING:
- --------------------------------------------------------------------------------
1-800-FLOWERS, Inc. Page 1 of 2 Confidential
<PAGE>
PROJECT BRIEF SUBMISSION APPROVAL:
This Project Brief is being submitted on the part of 1-800-FLOWERS as approved
by:
-------------------------------
[Print Name]
Date:
------------------------------- ----------------
[Signature]
RETURN COST ESTIMATE & TIME SCHEDULE BY [DATE GOES HERE] TO:
Contact Information Goes Here
- --------------------------------------------------------------------------------
1-800-FLOWERS, Inc. Page 2 of 2 Confidential
<PAGE>
EXHIBIT C
THIRD PARTY LICENSES
C-1
<PAGE>
EXHIBIT C
Software licensed directly by Client
[****]
Software licensed by Fry but made available for the Client's sites
[****]
**** 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.
<PAGE>
EXHIBIT D
CONFIGURATION
1-800-FLOWERS.COM
Voice and Data Networks
[****] [one chart omitted]
1-800-FLOWERS
Final Configuration
w/o Disaster Recovery
[****] [one chart omitted]
D-1
**** 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.
<PAGE>
EXHIBIT E
CLIENT-OWNED EQUIPMENT
[****]
E-1
**** 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.
<PAGE>
Exhibit 10.18
1-800 FLOWERS.COM, INC.
1999 STOCK INCENTIVE PLAN
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1999 Stock Incentive Plan is intended to promote the
interests of 1-800 Flowers.com, Inc., a Delaware corporation, by providing
eligible persons with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation.
Capitalized terms shall have the meanings assigned to such
terms in the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into four separate equity
programs:
(i) the Discretionary Option Grant Program under which
eligible persons may, at the discretion of the Plan
Administrator, be granted options to purchase shares of Common
Stock,
(ii) the Salary Investment Option Grant Program under
which eligible employees may elect to have a portion of their
base salary invested each year in special options,
(iii) the Stock Issuance Program under which eligible
persons may, at the discretion of the Plan Administrator, be
issued shares of Common Stock directly, either through the
immediate purchase of such shares or as a bonus for services
rendered the Corporation (or any Parent or Subsidiary), and
(iv) the Automatic Option Grant Program under which
eligible non-employee Board members shall automatically receive
options at periodic intervals to purchase shares of Common
Stock.
B. The provisions of Articles One and Six shall apply to all
equity programs under the Plan and shall govern the interests of all persons
under the Plan.
<PAGE>
III. ADMINISTRATION OF THE PLAN
A. The following provisions shall govern the administration
of the Plan:
(i) The Board shall have the authority to administer the
Discretionary Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders but may delegate such authority
in whole or in part to the Primary Committee.
(ii) Administration of the Discretionary Option Grant
and Stock Issuance Programs with respect to all other persons
eligible to participate in those programs may, at the Board's
discretion, be vested in the Primary Committee or a Secondary
Committee, or the Board may retain the power to administer those
programs with respect to all such persons.
(iii) The Primary Committee shall have the sole and
exclusive authority to determine which Section 16 Insiders and
other highly compensated Employees shall be eligible for
participation in the Salary Investment Option Grant Program for
one or more calendar years. However, all option grants under the
Salary Investment Option Grant Program shall be made in
accordance with the express terms of that program, and the
Primary Committee shall not exercise any discretionary functions
with respect to the option grants made under that program.
(iv) Administration of the Automatic Option Grant
Program shall be self-executing in accordance with the terms of
those programs.
B. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full power and authority
subject to the provisions of the Plan:
(i) to establish such rules as it may deem appropriate
for proper administration of the Plan, to make all factual
determinations, to construe and interpret the provisions of the
Plan and the awards thereunder and to resolve any and all
ambiguities thereunder;
(ii) to determine, with respect to awards made under the
Discretionary Option Grant and Stock Issuance Programs, which
eligible persons are to receive such awards, the time or times
when such awards are to be made, the number of shares to be
covered by each such award, the vesting schedule (if any)
applicable to the award, the status of a granted option as
either an Incentive Option or a Non-Statutory Option and the
maximum term for which the option is to remain outstanding;
(iii) to amend, modify or cancel any outstanding award
with the consent of the holder or accelerate the vesting of such
award; and
(iv) to take such other discretionary actions as
permitted pursuant to the terms of the applicable program.
2
<PAGE>
Decisions of each Plan Administrator within the scope of its administrative
functions under the Plan shall be final and binding on all parties.
C. Members of the Primary Committee or any Secondary Committee shall
serve for such period of time as the Board may determine and may be removed by
the Board at any time. The Board may also at any time terminate the functions of
any Secondary Committee and reassume all powers and authority previously
delegated to such committee.
D. Service on the Primary Committee or the Secondary Committee shall
constitute service as a Board member, and members of each such committee shall
accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any options or stock issuances under the Plan.
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary
Option Grant and Stock Issuance Programs are as follows:
(i) Employees,
(ii) non-employee members of the Board or the board of
directors of any Parent or Subsidiary, and
(iii) consultants and other independent advisors who
provide services to the Corporation (or any Parent or
Subsidiary).
(iv) Only Employees who are Section 16 Insiders or other
highly compensated individuals shall be eligible to participate
in the Salary Investment Option Grant Program.
(v) Only non-employee Board members shall be eligible to
participate in the Automatic Option Grant Program.
V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Corporation on the open market. The maximum number of shares of Common
Stock initially reserved for issuance over the term of the Plan shall not exceed
Nine Million Nine Hundred Thousand (9,900,000) shares.
B. The number of shares of Common Stock available for issuance
under the Plan shall automatically increase on the first trading day of each
calendar, beginning with the 2000 calendar year and continuing through the 2004
calendar year, by an amount equal to three percent (3%) of the shares of Common
Stock outstanding on the last trading day of the
3
<PAGE>
immediately preceding calendar year, but in no event shall any such annual
increase exceed Two Million (2,000,000) shares.
C. No one person participating in the Plan may receive options,
separately exercisable stock appreciation rights and direct stock issuances for
more than One Million (1,000,000) shares of Common Stock in the aggregate per
calendar year, beginning with the 1999 calendar year.
D. Shares of Common Stock subject to outstanding options shall
be available for subsequent issuance under the Plan to the extent those options
expire, terminate or are cancelled for any reason prior to exercise in full.
Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the original exercise or issue price paid per share, pursuant to
the Corporation's repurchase rights under the Plan shall be added back to the
number of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent options
or direct stock issuances under the Plan. However, should the exercise price of
an option under the Plan be paid with shares of Common Stock or should shares of
Common Stock otherwise issuable under the Plan be withheld by the Corporation in
satisfaction of the withholding taxes incurred in connection with the exercise
of an option or the vesting of a stock issuance under the Plan, then the number
of shares of Common Stock available for issuance under the Plan shall be reduced
by the gross number of shares for which the option is exercised or which vest
under the stock issuance, and not by the net number of shares of Common Stock
issued to the holder of such option or stock issuance. Shares of Common Stock
underlying one or more stock appreciation rights exercised under the Plan shall
not be available for subsequent issuance.
E. If any change is made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan, (ii) the number and/or class of securities by which the share
reserve is to increase each calendar year pursuant to the automatic share
increase provisions of the Plan, (iii) the number and/or class of securities for
which any one person may be granted options, separately exercisable stock
appreciation rights and direct stock issuances under the Plan per calendar year,
(iv) the number and/or class of securities for which grants are subsequently to
be made under the Automatic Option Grant Program to new and continuing
non-employee Board members and (v) the number and/or class of securities and the
exercise price per share in effect under each outstanding option under the Plan.
Such adjustments to the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.
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ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; PROVIDED, however, that each such document
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. EXERCISE PRICE.
1. The exercise price per share shall be fixed by the
Plan Administrator at the time of the option grant.
2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section II of
Article Six and the documents evidencing the option, be payable in cash or check
made payable to the Corporation. Should the Common Stock be registered under
Section 12 of the 1934 Act at the time the option is exercised, then the
exercise price may also be paid as follows:
(i) shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on
the Exercise Date, or
(ii) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant
to which the Optionee shall concurrently provide irrevocable
instructions to (a) a Corporation-approved brokerage firm to
effect the immediate sale of the purchased shares and remit to
the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such
exercise and (b) the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm in order to
complete the sale.
Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
B. EXERCISE AND TERM OF OPTIONS. Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option. However, no option shall have a term in excess
of ten (10) years measured from the option grant date.
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C. CESSATION OF SERVICE.
1. The following provisions shall govern the exercise of
any options outstanding at the time of the Optionee's cessation of Service or
death:
(i) Any option outstanding at the time of the Optionee's
cessation of Service for any reason shall remain exercisable for
such period of time thereafter as shall be determined by the
Plan Administrator and set forth in the documents evidencing the
option, but no such option shall be exercisable after the
expiration of the option term.
(ii) Any option exercisable in whole or in part by the
Optionee at the time of death may be subsequently exercised by
his or her Beneficiary.
(iii) During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for
more than the number of vested shares for which the option is
exercisable on the date of the Optionee's cessation of Service.
Upon the expiration of the applicable exercise period or (if
earlier) upon the expiration of the option term, the option
shall terminate and cease to be outstanding for any vested
shares for which the option has not been exercised. However, the
option shall, immediately upon the Optionee's cessation of
Service, terminate and cease to be outstanding to the extent the
option is not otherwise at that time exercisable for vested
shares.
(iv) Should the Optionee's Service be terminated for
Misconduct or should the Optionee engage in Misconduct while his
or her options are outstanding, then all such options shall
terminate immediately and cease to be outstanding.
D. The Plan Administrator shall have complete discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding:
(i) to extend the period of time for which the option is
to remain exercisable following the Optionee's cessation of
Service to such period of time as the Plan Administrator shall
deem appropriate, but in no event beyond the expiration of the
option term, and/or
(ii) to permit the option to be exercised, during the
applicable post-Service exercise period, for one or more
additional installments in which the Optionee would have vested
had the Optionee continued in Service.
E. STOCKHOLDER RIGHTS. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
F. REPURCHASE RIGHTS. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee
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cease Service while holding such unvested shares, the Corporation shall have the
right to repurchase, at the exercise price paid per share, any or all of those
unvested shares. The terms upon which such repurchase right shall be exercisable
(including the period and procedure for exercise and the appropriate vesting
schedule for the purchased shares) shall be established by the Plan
Administrator and set forth in the document evidencing such repurchase right.
G. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of
the Optionee, Incentive Options shall be exercisable only by the Optionee and
shall not be assignable or transferable other than to a Beneficiary following
the Optionee's death. Non-Statutory Options shall be subject to the same
restrictions, except that a Non-Statutory Option may, to the extent permitted by
the Plan Administrator, be assigned in whole or in part during the Optionee's
lifetime (i) as a gift to one or more members of the Optionee's immediate
family, to a trust in which Optionee and/or one or more such family members hold
more than fifty percent (50%) of the beneficial interest or to an entity in
which more than fifty percent (50%) of the voting interests are owned by one or
more such family members or (ii) pursuant to a domestic relations order. The
terms applicable to the assigned portion shall be the same as those in effect
for the option immediately prior to such assignment and shall be set forth in
such documents issued to the assignee as the Plan Administrator may deem
appropriate.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Six shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options when
issued under the Plan shall not be subject to the terms of this Section II.
A. ELIGIBILITY. Incentive Options may only be granted to
Employees.
B. EXERCISE PRICE. The exercise price per share shall not be
less than one hundred percent (100%) of the Fair Market Value per share of
Common Stock on the option grant date.
C. DOLLAR LIMITATION. The aggregate Fair Market Value of the
shares of Common Stock (determined as of the respective date or dates of grant)
for which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. 10% STOCKHOLDER. If any Employee to whom an Incentive Option
is granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share of
Common Stock on the option grant date, and the option term shall not exceed five
(5) years measured from the option grant date.
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III. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. Each option outstanding at the time of a Change in Control
but not otherwise fully-vested shall automatically accelerate so that each such
option shall, immediately prior to the effective date of the Change in Control,
become exercisable for all of the shares of Common Stock at the time subject to
that option and may be exercised for any or all of those shares as fully-vested
shares of Common Stock. However, an outstanding option shall not so accelerate
if and to the extent: (i) such option is, in connection with the Change in
Control, assumed or otherwise continued in full force and effect by the
successor corporation (or parent thereof) pursuant to the terms of the Change in
Control, (ii) such option is replaced with a cash incentive program of the
successor corporation which preserves the spread existing at the time of the
Change in Control on the shares of Common Stock for which the option is not
otherwise at that time exercisable and provides for subsequent payout in
accordance with the same vesting schedule applicable to those option shares or
(iii) the acceleration of such option is subject to other limitations imposed by
the Plan Administrator at the time of the option grant. Each option outstanding
at the time of the Change in Control shall terminate as provided in Section
III.C. of this Article Two.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Change in Control, except to
the extent: (i) those repurchase rights are assigned to the successor
corporation (or parent thereof) or otherwise continue in full force and effect
pursuant to the terms of the Change in Control or (ii) such accelerated vesting
is precluded by other limitations imposed by the Plan Administrator at the time
the repurchase right is issued.
C. Immediately following the consummation of the Change in
Control, all outstanding options shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation (or parent thereof) or
otherwise expressly continued in full force and effect pursuant to the terms of
the Change in Control.
D. Each option which is assumed in connection with a Change in
Control shall be appropriately adjusted, immediately after such Change in
Control, to apply to the number and class of securities which would have been
issuable to the Optionee in consummation of such Change in Control had the
option been exercised immediately prior to such Change in Control. Appropriate
adjustments to reflect such Change in Control shall also be made to (i) the
exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the same, (ii)
the maximum number and/or class of securities available for issuance over the
remaining term of the Plan and (iii) the maximum number and/or class of
securities for which any one person may be granted options, separately
exercisable stock appreciation rights and direct stock issuances under the Plan
per calendar year.
E. The Plan Administrator may at any time provide that one or
more options will automatically accelerate in connection with a Change in
Control, whether or not those options are assumed or otherwise continued in full
force and effect pursuant to the terms of the Change in Control. Any such option
shall accordingly become exercisable, immediately prior to the effective date of
such Change in Control, for all of the shares of Common Stock at the time
subject to that option and may be exercised for any or all of those shares as
fully-vested shares of
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Common Stock. In addition, the Plan Administrator may at any time provide that
one or more of the Corporation's repurchase rights shall not be assignable in
connection with such Change in Control and shall terminate upon the consummation
of such Change in Control.
F. The Plan Administrator may at any time provide that one or
more options will automatically accelerate upon an Involuntary Termination of
the Optionee's Service within a designated period (not to exceed eighteen (18)
months) following the effective date of any Change in Control in which those
options do not otherwise accelerate. Any options so accelerated shall remain
exercisable for fully-vested shares until the earlier of (i) the expiration of
the option term or (ii) the expiration of the one (1) year period measured from
the effective date of the Involuntary Termination. In addition, the Plan
Administrator may at any time provide that one or more of the Corporation's
repurchase rights shall immediately terminate upon such Involuntary Termination.
G. The Plan Administrator may at any time provide that one or
more options will automatically accelerate in connection with a Hostile
Take-Over. Any such option shall become exercisable, immediately prior to the
effective date of such Hostile Take-Over, for all of the shares of Common Stock
at the time subject to that option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. In addition, the Plan
Administrator may at any time provide that one or more of the Corporation's
repurchase rights shall terminate automatically upon the consummation of such
Hostile Take-Over. Alternatively, the Plan Administrator may condition such
automatic acceleration and termination upon an Involuntary Termination of the
Optionee's Service within a designated period (not to exceed eighteen (18)
months) following the effective date of such Hostile Take-Over. Each option so
accelerated shall remain exercisable for fully-vested shares until the
expiration or sooner termination of the option term.
H. The portion of any Incentive Option accelerated in connection
with a Change in Control or Hostile Take Over shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
($100,000) limitation is not exceeded. To the extent such dollar limitation is
exceeded, the accelerated portion of such option shall be exercisable as a
Non-Statutory Option under the Federal tax laws.
IV. STOCK APPRECIATION RIGHTS
The Plan Administrator may, subject to such conditions as it
may determine, grant to selected Optionees stock appreciation rights which will
allow the holders of those rights to elect between the exercise of the
underlying option for shares of Common Stock and the surrender of that option in
exchange for a distribution from the Corporation in an amount equal to the
excess of (a) the Option Surrender Value of the number of shares for which the
option is surrendered over (b) the aggregate exercise price payable for such
shares. The distribution may be made in shares of Common Stock valued at Fair
Market Value on the option surrender date, in cash, or partly in shares and
partly in cash, as the Plan Administrator shall in its sole discretion deem
appropriate.
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ARTICLE THREE
SALARY INVESTMENT OPTION GRANT PROGRAM
I. OPTION GRANTS
The Primary Committee may implement the Salary Investment
Option Grant Program for one or more calendar years beginning after the
Underwriting Date and select the Section 16 Insiders and other highly
compensated Employees eligible to participate in the Salary Investment Option
Grant Program for each such calendar year. Each selected individual who elects
to participate in the Salary Investment Option Grant Program must, prior to the
start of each calendar year of participation, file with the Plan Administrator
(or its designate) an irrevocable authorization directing the Corporation to
reduce his or her base salary for that calendar year by an amount not less than
Ten Thousand Dollars ($10,000.00)) nor more than Fifty Thousand Dollars
($50,000.00). The Primary Committee shall have complete discretion to determine
whether to approve the filed authorization in whole or in part. To the extent
the Primary Committee approves the authorization, the individual who filed that
authorization shall be granted an option under the Salary Investment Grant
Program on the first trading day in January for the calendar year for which the
salary reduction is to be in effect.
II. OPTION TERMS
Each option shall be a Non-Statutory Option evidenced by one
or more documents in the form approved by the Plan Administrator; provided,
however, that each such document shall comply with the terms specified below.
A. EXERCISE PRICE.
1. The exercise price per share shall be thirty-three
and one-third percent (33-1/3%) of the Fair Market Value per share of Common
Stock on the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the alternative
forms authorized under the Discretionary Option Grant Program. Except to the
extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. NUMBER OF OPTION SHARES. The number of shares of Common
Stock subject to the option shall be determined pursuant to the following
formula (rounded down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the dollar amount of the approved reduction in the
Optionee's base salary for the calendar year, and
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B is the Fair Market Value per share of Common Stock on
the option grant date.
C. EXERCISE AND TERM OF OPTIONS. The option shall become
exercisable in a series of twelve (12) successive equal monthly installments
upon the Optionee's completion of each calendar month of Service in the calendar
year for which the salary reduction is in effect. Each option shall have a
maximum term of ten (10) years measured from the option grant date.
D. CESSATION OF SERVICE. Each option outstanding at the time
of the Optionee's cessation of Service shall remain exercisable, for any or all
of the shares for which the option is exercisable at the time of such cessation
of Service, until the earlier of (i) the expiration of the option term or (ii)
the expiration of the three (3)-year period following the Optionee's cessation
of Service. To the extent the option is held by the Optionee at the time of his
or her death, the option may be exercised by his or her Beneficiary. However,
the option shall, immediately upon the Optionee's cessation of Service,
terminate and cease to remain outstanding with respect to any and all shares of
Common Stock for which the option is not otherwise at that time exercisable.
III. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Change in Control or Hostile Take-Over
while the Optionee remains in Service, each outstanding option shall
automatically accelerate so that each such option shall, immediately prior to
the effective date of the Change in Control or Hostile Take-Over, become fully
exercisable with respect to the total number of shares of Common Stock at the
time subject to such option and may be exercised for any or all of those shares
as fully-vested shares of Common Stock. Each such option accelerated in
connection with a Change in Control shall terminate upon the Change in Control,
except to the extent assumed by the successor corporation (or parent thereof) or
otherwise continued in full force and effect pursuant to the terms of the Change
in Control. Each such option accelerated in connection with a Hostile Take-Over
shall remain exercisable until the expiration or sooner termination of the
option term.
B. Each option which is assumed in connection with a Change in
Control shall be appropriately adjusted to apply to the number and class of
securities which would have been issuable to the Optionee in consummation of
such Change in Control had the option been exercised immediately prior to such
Change in Control. Appropriate adjustments shall also be made to the exercise
price payable per share under each outstanding option, provided the aggregate
exercise price payable for such securities shall remain the same.
C. Upon the occurrence of a Hostile Take-Over, the Optionee
shall have a thirty (30)-day period in which to surrender to the Corporation
each outstanding option granted him or her under the Salary Investment Option
Grant Program. The Optionee shall in return be entitled to a cash distribution
from the Corporation in an amount equal to the excess of (i) the Take-Over Price
of the shares of Common Stock at the time subject to the surrendered option
(whether or not the Optionee is otherwise at the time vested in those shares)
over (ii) the aggregate exercise price payable for such shares. Such cash
distribution shall be paid within five (5) days following the surrender of the
option to the Corporation. The Primary Committee shall,
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at the time the option with such limited stock appreciation right is granted
under the Salary Investment Option Grant Program, pre-approve any subsequent
exercise of that right in accordance with the terms of this Paragraph C.
Accordingly, no further approval of the Primary Committee or the Board shall be
required at the time of the actual option surrender and cash distribution.
IV. REMAINING TERMS
The remaining terms of each option granted under the Salary
Investment Option Grant Program shall be the same as the terms in effect for
options made under the Discretionary Option Grant Program.
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ARTICLE FOUR
STOCK ISSUANCE PROGRAM
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance
Program through direct and immediate issuances without any intervening options.
Shares of Common Stock may also be issued under the Stock Issuance Program
pursuant to share right awards which entitle the recipients to receive those
shares upon the attainment of designated performance goals or Service
requirements. Each such award shall be evidenced by one or more documents which
comply with the terms specified below.
A. PURCHASE PRICE.
1. The purchase price per share of Common Stock subject
to direct issuance shall be fixed by the Plan Administrator.
2. Subject to the provisions of Section II of Article
Six, shares of Common Stock may be issued under the Stock Issuance Program for
any of the following items of consideration which the Plan Administrator may
deem appropriate in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any
Parent or Subsidiary).
B. VESTING/ISSUANCE PROVISIONS.
1. The Plan Administrator may issue shares of Common
Stock which are fully and immediately vested upon issuance or which are to vest
in one or more installments over the Participant's period of Service or upon
attainment of specified performance objectives. Alternatively, the Plan
Administrator may issue share right awards which shall entitle the recipient to
receive a specified number of vested shares of Common Stock upon the attainment
of one or more performance goals or Service requirements established by the Plan
Administrator.
2. Any new, substituted or additional securities or
other property (including money paid other than as a regular cash dividend)
which the Participant may have the right to receive with respect to his or her
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.
3. The Participant shall have full stockholder rights
with respect to the issued shares of Common Stock, whether or not the
Participant's interest in those shares is
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vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service
while holding one or more unvested shares of Common Stock, or should the
performance objectives not be attained with respect to one or more such unvested
shares of Common Stock, then those shares shall be immediately surrendered to
the Corporation for cancellation, and the Participant shall have no further
stockholder rights with respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for consideration paid in cash
or cash equivalent (including the Participant's purchase-money indebtedness),
the Corporation shall repay to the Participant the cash consideration paid for
the surrendered shares and shall cancel the unpaid principal balance of any
outstanding purchase-money note of the Participant attributable to the
surrendered shares.
5. The Plan Administrator may waive the surrender and
cancellation of one or more unvested shares of Common Stock (or other assets
attributable thereto) which would otherwise occur upon the cessation of the
Participant's Service or the non-attainment of the performance objectives
applicable to those shares. Such waiver shall result in the immediate vesting of
the Participant's interest in the shares of Common Stock as to which the waiver
applies. Such waiver may be effected at any time, whether before or after the
Participant's cessation of Service or the attainment or non-attainment of the
applicable performance objectives.
6. Outstanding share right awards shall automatically
terminate, and no shares of Common Stock shall actually be issued in
satisfaction of those awards, if the performance goals or Service requirements
established for such awards are not attained. The Plan Administrator, however,
shall have the authority to issue shares of Common Stock in satisfaction of one
or more outstanding share right awards as to which the designated performance
goals or Service requirements are not attained.
II. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. All of the Corporation's outstanding repurchase rights shall
terminate automatically, and all the shares of Common Stock subject to those
terminated rights shall immediately vest in full, in the event of any Change in
Control, except to the extent (i) those repurchase rights are assigned to the
successor corporation (or parent thereof) or otherwise continue in full force
and effect pursuant to the terms of the Change in Control or (ii) such
accelerated vesting is precluded by other limitations imposed by the Plan
Administrator at the time the repurchase right is issued.
B. The Plan Administrator may at any time provide for the
automatic termination of one or more of those outstanding repurchase rights and
the immediate vesting of the shares of Common Stock subject to those terminated
rights upon (i) a Change in Control or Hostile Take-Over or (ii) an Involuntary
Termination of the Participant's Service within a designated period (not to
exceed eighteen (18) months) following the effective date of any Change in
Control or Hostile Take-Over in which those repurchase rights are assigned to
the successor corporation (or parent thereof) or otherwise continue in full
force and effect.
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III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion,
be held in escrow by the Corporation until the Participant's interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing those unvested shares.
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ARTICLE FIVE
AUTOMATIC OPTION GRANT PROGRAM
I. OPTION TERMS
A. GRANT DATES. Options shall be made on the dates specified
below:
1. Each individual who is first elected or appointed as a
non-employee Board member at any time after the Underwriting Date shall
automatically be granted, on the date of such initial election or appointment, a
Non-Statutory Option to purchase Ten Thousand (10,000) shares of Common Stock,
provided that individual has not previously been in the employ of the
Corporation (or any Parent or Subsidiary).
2. On the date of each Annual Stockholders Meeting beginning
with the 2000 Annual Stockholder Meeting, each individual who has served as a
non-employee Board member since the date of the Annual Stockholders Meeting in
the immediately preceding year shall automatically be granted a Non-Statutory
Option to purchase Five Thousand (5,000) shares of Common Stock, provided such
individual has served as a non-employee Board member for at least six (6)
months.
B. EXERCISE PRICE.
1. The exercise price per share shall be equal to one
hundred percent (100%) of the Fair Market Value per share of Common Stock on the
option grant date.
2. The exercise price shall be payable in one or more of
the alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
C. OPTION TERM. Each option shall have a term of ten (10) years
measured from the option grant date.
D. EXERCISE AND VESTING OF OPTIONS. Each option shall be
immediately exercisable for any or all of the option shares. However, any shares
purchased under the initial option shall be subject to repurchase by the
Corporation, at the exercise price paid per share, upon the Optionee's cessation
of Board service prior to vesting in those shares. Each option shall vest, and
the Corporation's repurchase right shall lapse, in a series of two (2)
successive equal annual installments over the Optionee's period of continued
service as a Board member, with the first such installment to vest upon the
Optionee's completion of one (1) year of Board service measured from the option
grant date
E. CESSATION OF BOARD SERVICE. The following provisions shall
govern the exercise of any options outstanding at the time of the Optionee's
cessation of Board service:
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(i) Any option outstanding at the time of the Optionee's
cessation of Board service for any reason shall remain
exercisable for a three (3)-month period following the date of
such cessation of Board service, but in no event shall such
option be exercisable after the expiration of the option term.
(ii) Any option exercisable in whole or in part by the
Optionee at the time of death may be subsequently exercised by
his or her Beneficiary.
(iii) Following the Optionee's cessation of Board
service, the option may not be exercised in the aggregate for
more than the number of shares for which the option was
exercisable on the date of such cessation of Board service. Upon
the expiration of the applicable exercise period or (if earlier)
upon the expiration of the option term, the option shall
terminate and cease to be outstanding for any vested shares for
which the option has not been exercised. However, the option
shall, immediately upon the Optionee's cessation of Board
service, terminate and cease to be outstanding for any and all
shares for which the option is not otherwise at that time
exercisable.
(iv) However, should the Optionee cease to serve as a
Board member by reason of death or Permanent Disability, then
all shares at the time subject to the option shall immediately
vest so that such option may, during the twelve (12)-month
exercise period following such cessation of Board service, be
exercised for all or any portion of those shares as fully-vested
shares of Common Stock.
II. CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Change in Control or Hostile Take-Over,
the shares of Common Stock at the time subject to each outstanding option but
not otherwise vested shall automatically vest in full so that each such option
may, immediately prior to the effective date of such Change in Control or
Hostile Take-Over, became fully exercisable for all of the shares of Common
Stock at the time subject to such option and maybe exercised for all or any of
those shares as fully-vested shares of Common Stock. Each such option
accelerated in connection with a Change in Control shall terminate upon the
Change in Control, except to the extent assumed by the successor corporation (or
parent thereof) or otherwise continued in full force and effect pursuant to the
terms of the Change in Control. Each such option accelerated in connection with
a Hostile Take-Over shall remain exercisable until the expiration or sooner
termination of the option term.
B. All outstanding repurchase rights shall automatically
terminate and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Change in Control or Hostile
Take-Over.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each of
his or her outstanding
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automatic option grants. The Optionee shall in return be entitled to a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Option Surrender Value of the shares of Common Stock at the time subject to each
surrendered option (whether or not the option is otherwise at the time
exercisable for those shares) over (ii) the aggregate exercise price payable for
such shares. Such cash distribution shall be paid within five (5) days following
the surrender of the option to the Corporation.
D. Each option which is assumed in connection with a Change in
Control shall be appropriately adjusted to apply to the number and class of
securities which would have been issuable to the Optionee in consummation of
such Change in Control had the option been exercised immediately prior to such
Change in Control. Appropriate adjustments shall also be made to the exercise
price payable per share under each outstanding option, provided the aggregate
exercise price payable for such securities shall remain the same.
III. REMAINING TERMS
The remaining terms of each option granted under the Automatic
Option Grant Program shall be the same as the terms in effect for options made
under the Discretionary Option Grant Program.
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ARTICLE SIX
MISCELLANEOUS
I. NO IMPAIRMENT OF AUTHORITY
Outstanding awards shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
II. FINANCING
The Plan Administrator may permit any Optionee or Participant
to pay the option exercise price under the Discretionary Option Grant Program or
the purchase price of shares issued under the Stock Issuance Program by
delivering a full-recourse, interest bearing promissory note payable in one or
more installments. The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Plan Administrator
in its sole discretion. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased shares plus (ii) any Federal,
state and local income and employment tax liability incurred by the Optionee or
the Participant in connection with the option exercise or share purchase.
III. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common
Stock upon the exercise of options or the issuance or vesting of such shares
under the Plan shall be subject to the satisfaction of all applicable Federal,
state and local income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any
or all holders of Non-Statutory Options or unvested shares of Common Stock under
the Plan with the right to use shares of Common Stock in satisfaction of all or
part of the Withholding Taxes incurred by such holders in connection with the
exercise of their options or the vesting of their shares. Such right may be
provided to any such holder in either or both of the following formats:
STOCK WITHHOLDING: The election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed one hundred percent (100%)) designated by the
holder.
STOCK DELIVERY: The election to deliver to the Corporation,
at the time the Non-Statutory Option is exercised or the shares vest, one or
more shares of Common Stock previously acquired by such holder (other than in
connection with the option exercise or share vesting triggering the Withholding
Taxes) with an aggregate Fair Market Value equal to the percentage of the Taxes
(not to exceed one hundred percent (100%)) designated by the holder.
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IV. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan shall become effective immediately upon the Plan
Effective Date. However, the Salary Investment Option Grant Program shall not be
implemented until such time as the Primary Committee may deem appropriate.
Options may be granted under the Discretionary Option Grant Program at any time
on or after the Plan Effective Date. However, no options granted under the Plan
may be exercised, and no shares shall be issued under the Plan, until the Plan
is approved by the Corporation's stockholders. If such stockholder approval is
not obtained within twelve (12) months after the Plan Effective Date, then all
options previously granted under this Plan shall terminate and cease to be
outstanding, and no further options shall be granted and no shares shall be
issued under the Plan.
B. The Plan shall terminate upon the earliest of (i) July 6,
2009, (ii) the date on which all shares available for issuance under the Plan
shall have been issued as fully-vested shares or (iii) the termination of all
outstanding options in connection with a Change in Control. Upon such plan
termination, all outstanding options and unvested stock issuances shall
thereafter continue to have force and effect in accordance with the provisions
of the documents evidencing such grants or issuances.
V. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect the rights and obligations with
respect to stock options or unvested stock issuances at the time outstanding
under the Plan unless the Optionee or the Participant consents to such amendment
or modification. In addition, certain amendments may require stockholder
approval pursuant to applicable laws or regulations.
B. Options to purchase shares of Common Stock may be granted
under the Discretionary Option Grant and Salary Investment Option Grant Programs
and shares of Common Stock may be issued under the Stock Issuance Program that
are in each instance in excess of the number of shares then available for
issuance under the Plan, provided any excess shares actually issued under those
programs shall be held in escrow until there is obtained stockholder approval of
an amendment sufficiently increasing the number of shares of Common Stock
available for issuance under the Plan. If such stockholder approval is not
obtained within twelve (12) months after the date the first such excess
issuances are made, then (i) any unexercised options granted on the basis of
such excess shares shall terminate and cease to be outstanding and (ii) the
Corporation shall promptly refund to the Optionees and the Participants the
exercise or purchase price paid for any excess shares issued under the Plan and
held in escrow, together with interest (at the applicable Short Term Federal
Rate) for the period the shares were held in escrow, and such shares shall
thereupon be automatically cancelled and cease to be outstanding.
VI. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.
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VII. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any stock
option under the Plan and the issuance of any shares of Common Stock (i) upon
the exercise of any granted option or (ii) under the Stock Issuance Program
shall be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the stock
options granted under it and the shares of Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued
or delivered under the Plan unless and until there shall have been compliance
with all applicable requirements of Federal and state securities laws, including
the filing and effectiveness of the Form S-8 registration statement for the
shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which Common Stock is then listed for trading.
VIII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the
Participant any right to continue in Service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.
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APPENDIX
The following definitions shall be in effect under the Plan:
A. AUTOMATIC OPTION GRANT PROGRAM shall mean the automatic option
grant program in effect under the Plan.
B. BENEFICIARY shall mean, in the event the Plan Administrator
implements a beneficiary designation procedure, the person designated by an
Optionee or Participant, pursuant to such procedure, to succeed to such person's
rights under any outstanding awards held by him or her at the time of death. In
the absence of such designation or procedure, the Beneficiary shall be the
personal representative of the estate of the Optionee or Participant or the
person or persons to whom the award is transferred by will or the laws of
descent and distribution.
C. BOARD shall mean the Corporation's Board of Directors.
D. CHANGE IN CONTROL shall mean a change in ownership or control
of the Corporation effected through any of the following transactions:
(i) a merger, consolidation or reorganization approved
by the Corporation's stockholders, unless securities
representing more than fifty percent (50%) of the total combined
voting power of the voting securities of the successor
corporation are immediately thereafter beneficially owned,
directly or indirectly and in substantially the same proportion,
by the persons who beneficially owned the Corporation's
outstanding voting securities immediately prior to such
transaction,
(ii) any stockholder-approved transfer or other
disposition of all or substantially all of the Corporation's
assets, or
(iii) the acquisition, directly or indirectly by any
person or related group of persons (other than the Corporation
or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Corporation), of
beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%)
of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation's stockholders which the Board
recommends such stockholders accept.
E. CODE shall mean the Internal Revenue Code of 1986, as amended.
F. COMMON STOCK shall mean the Corporation's common stock.
G. CORPORATION shall mean 1-800 Flowers.com, Inc., a Delaware
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of 1-800 Flowers.com, Inc. which shall by appropriate
action adopt the Plan.
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H. DISCRETIONARY OPTION GRANT PROGRAM shall mean the
discretionary option grant program in effect under the Plan.
I. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
J. EXERCISE DATE shall mean the date on which the Corporation
shall have received written notice of the option exercise.
K. FAIR MARKET VALUE per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in
question, as such price is reported on the Nasdaq National
Market or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question
on the Stock Exchange determined by the Plan Administrator to be
the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such
exchange. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for
which such quotation exists.
(iii) For purposes of any option grants made on the
Underwriting Date, the Fair Market Value shall be deemed to be
equal to the price per share at which the Common Stock is to be
sold in the initial public offering pursuant to the Underwriting
Agreement.
(iv) For purposes of any options made prior to the
Underwriting Date, the Fair Market Value shall be determined by
the Plan Administrator, after taking into account such factors
as it deems appropriate.
L. HOSTILE TAKE-OVER shall mean:
(i) the acquisition, directly or indirectly, by any
person or related group of persons (other than the Corporation
or a person that directly or indirectly controls, is controlled
by, or is under common control with, the Corporation) of
beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%)
of the total combined voting power of the Corporation's
outstanding securities pursuant to a
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tender or exchange offer made directly to the Corporation's
stockholders which the Board does not recommend such
stockholders to accept, or
(ii) a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more
contested elections for Board membership, to be comprised of
individuals who either (A) have been Board members continuously
since the beginning of such period or (B) have been elected or
nominated for election as Board members during such period by at
least a majority of the Board members described in clause (A)
who were still in office at the time the Board approved such
election or nomination.
M. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.
N. INVOLUNTARY TERMINATION shall mean the termination of the
Service of any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge
by the Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following
(A) a change in his or her position with the Corporation or
Parent or Subsidiary employing the individual which materially
reduces his or her duties and responsibilities or the level of
management to which he or she reports, (B) a reduction in his or
her level of compensation (including base salary, fringe
benefits and target bonus under any performance based bonus or
incentive programs) by more than fifteen percent (15%) or (C) a
relocation of such individual's place of employment by more than
fifty (50) miles, provided and only if such change, reduction or
relocation is effected by the Corporation without the
individual's consent.
O. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any intentional wrongdoing by such
person, whether by omission or commission, which adversely affects the business
or affairs of the Corporation (or any Parent or Subsidiary) in a material
manner. This shall not limit the grounds for the dismissal or discharge of any
person in the Service of the Corporation (or any Parent or Subsidiary).
P. 1934 ACT shall mean the Securities Exchange Act of 1934,
as amended.
Q. NON-STATUTORY OPTION shall mean an option not intended to
satisfy the requirements of Code Section 422.
R. OPTION SURRENDER VALUE shall mean the Fair Market Value per
share of Common Stock on the date the option is surrendered to the Corporation
or, in the event of a Hostile Take-Over, effected through a tender offer, the
highest reported price per share of
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Common Stock paid by the tender offeror in effecting such Hostile Take-Over, if
greater. However, if the surrendered option is an Incentive Option, the Option
Surrender Value shall not exceed the Fair Market Value per share.
S. OPTIONEE shall mean any person to whom an option is granted
under the Discretionary Option Grant, Salary Investment Option Grant or
Automatic Option Grant Program.
T. PARENT shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations ending with the Corporation,
provided each corporation in the unbroken chain (other than the Corporation)
owns, at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
U. PARTICIPANT shall mean any person who is issued shares of
Common Stock under the Stock Issuance Program.
V. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the
inability of the Optionee or the Participant to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of twelve
(12) months or more. However, solely for purposes of the Automatic Option Grant
Program, Permanent Disability or Permanently Disabled shall mean the inability
of the non-employee Board member to perform his or her usual duties as a Board
member by reason of any medically determinable physical or mental impairment
expected to result in death or to be of continuous duration of twelve (12)
months or more.
W. PLAN shall mean the Corporation's 1999 Stock Incentive Plan,
as set forth in this document.
X. PLAN ADMINISTRATOR shall mean the particular entity, whether
the Primary Committee, the Board or the Secondary Committee, which is authorized
to administer the Discretionary Option Grant, Salary Investment Option Grant and
Stock Issuance Programs with respect to one or more classes of eligible persons,
to the extent such entity is carrying out its administrative functions under
those programs with respect to the persons under its jurisdiction. However, the
Primary Committee shall have the plenary authority to make all factual
determinations and to construe and interpret any and all ambiguities under the
Plan to the extent such authority is not otherwise expressly delegated to any
other Plan Administrator.
Y. PLAN EFFECTIVE DATE shall mean July 7, 1999, the date on
which the Plan was adopted by the Board.
Z. PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders and to administer the Salary Investment Option Grant Program with
respect to all eligible individuals.
AA. SALARY INVESTMENT OPTION GRANT PROGRAM shall mean the salary
investment grant program in effect under the Plan.
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BB. SECONDARY COMMITTEE shall mean a committee of one (1) or
more Board members appointed by the Board to administer the Discretionary Option
Grant and Stock Issuance Programs with respect to eligible persons other than
Section 16 Insiders.
CC. SECTION 12 REGISTRATION DATE shall mean the date on which
the Common Stock is first registered under Section 12(g) of the 1934 Act.
DD. SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
EE. SERVICE shall mean the performance of services for the
Corporation (or any Parent or Subsidiary) by a person in the capacity of an
Employee, a non-employee member of the board of directors or a consultant or
independent advisor, except to the extent otherwise specifically provided in the
documents evidencing the option grant or stock issuance.
FF. STOCK EXCHANGE shall mean either the American Stock Exchange
or the New York Stock Exchange.
GG. STOCK ISSUANCE PROGRAM shall mean the stock issuance program
in effect under the Plan.
HH. SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
II. 10% STOCKHOLDER shall mean the owner of stock (as determined
under Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
JJ. UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
KK. UNDERWRITING DATE shall mean the date on which the
Underwriting Agreement is executed and priced in connection with an initial
public offering of the Common Stock.
LL. WITHHOLDING TAXES shall mean the Federal, state and local
income and employment withholding tax liabilities to which the holder of
Non-Statutory Options or unvested shares of Common Stock may become subject in
connection with the exercise of those options or the vesting of those shares.
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