Document:

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                                                                    Exhibit 10.4

"Pages where confidential treatment has been requested are stamped 'Confidential
Treatment Requested and the Redacted Material has been separately filed with the
Commission', and the confidential section has been marked in the margin with a
star (*)."

                                             As of March 10, 2000

KOZMO.COM
80 Broad Street, 18th Floor
New York, NY  10004
Attn: _____________

     This letter agreement ("AGREEMENT") sets forth the terms of the agreement
between Kozmo.com ("KOZMO") and Columbia TriStar Home Video, Inc. ("CTHV") in
connection with (i) Kozmo's ordering of certain VHS "Videocassettes" and "DVDs"
(as such terms are defined below) for, and Kozmo's and CTHV's participation in a
"Revenue Sharing Program" (as defined below) for the "Rental Pictures" (as
defined below) covered by this Agreement; and (ii) Kozmo's issuing to CTHV
certain equity in Kozmo.

A. CONDITIONS PRECEDENT: All of CTHV's obligations under this Agreement are
subject to the satisfaction of the following conditions precedent
("CONDITIONS PRECEDENT"): (i) Kozmo's willingness and operational capability
to electronically report to CTHV (utilizing an electronic reporting system
approved by CTHV [CTHV hereby preapproves SuperComm]) point-of-sale
information with respect to Rental Pictures on an ongoing basis; and (ii)
CTHV's receipt of this Agreement executed by Kozmo.

1.   TERM: The term of this Agreement shall be for a period of five years
     commencing on May 16, 2000 (or such earlier date as
     elected by Kozmo upon 21 days prior written notice to CTHV
     or up to 21 days later upon such written notice) and ending
     on the date that is the earlier of (a) 5 years thereafter or (b) May 15,
     2000 (the "Term") unless earlier terminated pursuant to the terms hereof.
     Each year of the Term shall be hereinafter referred to as a "CONTRACT
     YEAR," with the first year being referred to as the "FIRST CONTRACT YEAR,"
     etc.

2.   TERRITORY: The territory of the rights granted hereunder shall be and be
     limited to the United States and its territories and possessions (the
     "TERRITORY"). In the event that Kozmo services customers in Canada during
     the Term, the Territory will be expanded to include Canada; provided, that
     all monetary components of the Agreement will be adjusted based on CTHV's
     product prices in Canada and applicable currency conversion rates.

3.   RENTAL PICTURES:

     a. DEFINITION: For purposes of this Agreement, "Rental Picture" shall be
     defined as each and every feature motion picture for which CTHV owns or
     controls home entertainment distribution rights in the Territory
     (specifically including "Direct to Video Pictures," as defined below) which
     CTHV intends to release to consumers in the Territory during the Term on a
     "rental basis," as

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     opposed to a "sell-through basis," on (i) "Videocassette" (as defined
     below) format and which has an intended initial "Street Date" (as defined
     below) during the Term and/or (ii) "DVD" (as defined below) and which has
     an intended initial Street Date during the Term that is either (A) the
     first date that such motion picture is available for rental to the general
     public for home entertainment purposes or (B) within 6 months of the Street
     Date for Videocassettes of such motion picture. For purposes of this
     Agreement, "DIRECT TO VIDEO PICTURES" shall mean each and every feature
     motion picture that is initially made available for viewing in the
     Territory to consumers in Videocassette and/or DVD format or premium cable
     premiere format and which otherwise fits within the description of a Rental
     Picture. A "VIDEOCASSETTE" shall mean a prerecorded VHS videocassette
     format. A "DVD" shall mean a digital versatile disc (or otherwise known as
     "digital video disc") format and shall include all sub-formats thereof.
     Videocassettes and DVDs shall be hereinafter collectively referred to as
     "RENTAL PRODUCT."

4.   ORDER REQUIREMENTS. Kozmo agrees to order each and every Rental Picture
     from CTHV. In connection with each such order, the following shall apply:

     a. VIDEOCASSETTE AND DVD ORDER REQUIREMENTS: Kozmo agrees to order and CTHV
     agrees to provide (provided Kozmo is not in breach hereunder), a specified
     number of Videocassettes and DVDs for such Rental Picture determined as
     follows:

*         i. [***], shall order such quantity of Videocassettes and DVDs as
     mutually determined by CTHV and Kozmo on a Rental Picture-by-Rental Picture
     basis.

*         ii. [***] Kozmo agrees to order such quantity (which quantity will be
     sufficient to cover consumer demand for Rental Pictures in each geographic
     region where Kozmo operates its business) of Videocassettes and DVDs as
     shall be set forth in a matrix to be mutually determined by CTHV and Kozmo.
     Such matrix will be based on a regression model correlating factors such as
     domestic box office performance and "star" presence against Kozmo's
     historical purchase patterns and/or revenue performance. Such matrix will
     also take into consideration factors such as the competition in the
     marketplace, Kozmo's expansion rates and the growth (or contraction) of the
     home entertainment business.

*         iii. [***] Kozmo agrees to order such quantity of Videocassettes and
     DVDs as shall be set forth in a subsequent matrix created in the manner set
     forth in subparagraph 4.a.ii. above.

*    b. COPY DEPTH: The minimum quantity of Videocassettes or DVDs, as
     applicable, required to be ordered by Kozmo hereunder (whether determined
     pursuant to mutual agreement or pursuant to a matrix as set forth above) on
     a Rental Picture-by-Rental Picture basis shall be hereinafter referred to
     as the "BASE BUY COPIES." [***]

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* Confidential Treatment Requested and the Redacted Material has been separately
filed with the Commission.

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*5.  VIDEOCASSETTES OF CATALOG/"DIRECT-TO-SELL-THROUGH PICTURES": CTHV agrees to
     offer to Kozmo, [***] in quantities as mutually determined by CTHV and
     Kozmo on a title-by-title basis, for rental and/or sale (as new or
     previously viewed product) to Kozmo's customers, Videocassettes of all: (i)
     "Direct-To-Sell-Through Pictures" and (ii) catalog motion pictures for
     which CTHV owns or controls home video entertainment distribution rights in
     the Territory ("Catalog Pictures"). "DIRECT-TO-SELL-THROUGH PICTURES" shall
     mean each and every theatrical motion picture which has an initial intended
     Street Date during the Term and for which CTHV owns or controls home
     entertainment distribution rights in the Territory, provided such picture,
     when initially released during the Term on Videocassette is priced and
     distributed by CTHV at a "sell-through price" (as opposed to a "rental
     price"). Any such orders will be separately presented to CTHV and will not
     be included in the purchase order(s) referenced in Paragraph 4. above.

*6.  DVD NEW RELEASE AND CATALOG PICTURES: [***] in quantities as mutually
     determined by CTHV and Kozmo on a title-by-title basis, solely for sale
     to Kozmo's customers as new product (I.E., not previously viewed), DVDs
     of all: (i) "new release" motion pictures for which CTHV owns or
     controls home entertainment distribution rights in the Territory and
     (ii) catalog motion pictures for which CTHV owns or controls home
     entertainment DVD distribution rights in the Territory. Any such orders
     will be separately presented to CTHV and will not be included in the
     purchase order(s) referenced in Paragraph 4. above.

7.   STREET DATE/ORDERING OF COPIES/DISTRIBUTION OF COPIES: With respect to each
     of the Rental Pictures, CTHV shall specify the date for the first Rental
     Product rental of such Rental Picture to the general public for home
     entertainment purposes (the "STREET DATE"). Kozmo shall place its orders
     with CTHV for each Rental Picture, in accordance with the Paragraph 4.a.
     above ("INITIAL ORDER"), not later than 21 days prior to the Street Date
     for such Rental Picture. Kozmo acknowledges and agrees that if Kozmo does
     not place its order within such 21 day period, CTHV can not guarantee
     timely delivery of such Rental Product. Kozmo shall cause all of the Rental
     Product comprising the Initial Order to be made available for rental to its
     customers; provided, however, CTHV acknowledges that Kozmo may, from time
     to time, place orders for geographical locations in which Kozmo's service
     is not available to Kozmo's customers immediately upon the Street Date. In
     such event, Kozmo will make the Rental Product available to its customers
     in such geographical location as soon as possible.

8.   "REVENUE SHARING PROGRAM": Each and every Rental Picture hereunder shall be
     ordered by Kozmo and shall be provided by CTHV pursuant to a "REVENUE
     SHARING PROGRAM". The consideration payable by Kozmo for the right to
     participate in the Revenue Sharing Program with respect to any particular
     Rental Picture shall consist, in whole or in part, of a percentage of the
     "Rental Revenues" (as defined below) earned by Kozmo from the rental of the
     Rental Product of such Rental Picture.

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* Confidential Treatment Requested and the Redacted Material has been separately
filed with the Commission.

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9. "REVENUE SHARING PERIOD":

*    a. The "VIDEOCASSETTE REVENUE SHARING PERIOD" for each Rental Picture
     [***]. The Revenue Sharing Period for each applicable Rental Picture
     shall commence on the Street Date for the applicable Rental Picture.
     Subject to Paragraph 11 below, Kozmo shall ensure that all
     Videocassettes of the Rental Pictures remain available for rental during
     the entire Videocassette Revenue Sharing Period.

*    b.  The "DVD REVENUE SHARING PERIOD" for each Rental Picture [***]. The
     Revenue Sharing Period for each applicable Rental Picture shall commence
     on the Street Date for the applicable Rental Picture. Subject to
     Paragraph 11 below, Kozmo shall ensure that all DVDs of the Rental
     Pictures remain available for rental during the entire DVD Revenue
     Sharing Period.

10.  PROGRAM PRICE: In consideration for the rights granted hereunder, for each
     Videocassette and/or DVD of a Rental Picture ordered by Kozmo, Kozmo shall
     pay CTHV the applicable "Program Price" as set forth below.

     a. VIDEOCASSETTE: For each Videocassette ordered by Kozmo, Kozmo shall pay
     a "Video Program Price" as follows:

*         i. "VIDEOCASSETTE UPFRONT PRICE": [***] ordered by Kozmo
     ("VIDEOCASSETTE UPFRONT PRICE"); plus

*         ii. "VIDEOCASSETTE REVENUE PERCENTAGE PAYMENT": A share of Rental
     Revenue derived from the rental of Videocassettes ("VIDEOCASSETTE REVENUE
     PERCENTAGE PAYMENT"), determined as follows: [***]

*         iii. "VIDEOCASSETTE END-OF-PERIOD PAYMENT": A payment ("VIDEOCASSETTE
     END-OF-PERIOD PAYMENT") [***]

          The Videocassette Upfront Price, the Videocassette Revenue Percentage
     Payment and the Videocassette End-of-Period Payment shall be hereinafter
     referred to as the "Videocassette Program Price."

     b. DVD: For each DVD ordered by Kozmo, Kozmo shall pay a "DVD Program
     Price" as follows:

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* Confidential Treatment Requested and the Redacted Material has been separately
filed with the Commission.

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*         i. "DVD UPFRONT PRICE": [***] Kozmo ("DVD UPFRONT PRICE"); plus

*         ii. DVD REVENUE PERCENTAGE PAYMENT: A share of Rental Revenue derived
     from the rental of DVDs ("DVD REVENUE PERCENTAGE PAYMENT") determined as
     follows: [***]

          The DVD Upfront Price and the DVD Revenue Percentage Payment shall be
     hereinafter referred to as the "DVD Program Price," and, collectively with
     the Videocassette Program Price, the "Program Price."

     c.   DEFINITIONS.

          i. A "RENTAL TRANSACTION" shall mean each and every time a
     Videocassette or DVD, as applicable, is rented to a customer. Kozmo shall
     independently determine and charge its customers whatever Rental
     Transaction price it determines is in its own best business interests and
     without agreement with CTHV. CTHV does not suggest any particular Rental
     Transaction price.

*         ii. "RENTAL REVENUES" shall mean the aggregate of all revenues
     generated [***] in connection with Rental Transactions occurring during the
     Revenue Sharing Period, including any collected extended viewing fees and
     any amounts charged to customer credit cards [***], excluding sales taxes
     and any other government levied transaction fees.

          Kozmo shall be solely obligated to pay all taxes, fees or governmental
     charges required to be paid by Kozmo in connection with Kozmo's activities
     undertaken pursuant to this Agreement. Kozmo shall pay all such taxes
     within the applicable time periods.

11.  DESTRUCTION/RETURN/"SELL-OFF" OF RENTAL PRODUCT:

*    a. VIDEOCASSETTES. Kozmo agrees not to sell any of the Videocassettes of
     the Rental Pictures [***] without the prior consent of CTHV. During the
     remainder of the applicable Videocassette Revenue Sharing Period, Kozmo
     may make such percentage of the "Left on Shelf" Videocassettes of the
     applicable Rental Picture available for sale to consumers as may be
     mutually determined by CTHV and Kozmo. For purposes of this Agreement,
     "Left on Shelf" Videocassettes shall be defined as the least number of
     Videocassettes "left on the shelf" at a location to be mutually
     determined by CTHV and Kozmo on the close of business on a day during
     applicable Revenue Sharing Period as mutually determined by Kozmo and
     CTHV. CTHV shall not be entitled to share in the revenues collected from
     the sales of Videocassettes in accordance with the terms hereof. Kozmo
     may sell (in accordance with the terms hereof) Videocassettes to any
     individual end-user consumer via direct mail, or Kozmo's direct Internet
     site. Kozmo may not sell such Videocassettes to any third-party vendors,
     including brokers, liquidators or other wholesale distributors.

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* Confidential Treatment Requested and the Redacted Material has been separately
filed with the Commission.

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*    b. DVDS. At such time as Kozmo orders DVDs of a particular Rental Picture
     pursuant to the terms hereof, CTHV shall elect one of the following: (i) at
     the end of the applicable DVD Revenue Sharing Period for such Rental
     Picture, such DVDs shall be destroyed by Kozmo at CTHV's cost and expense
     (and in such a manner as CTHV may so direct); or (ii) at the end of the
     applicable DVD Revenue Sharing Period for such Rental Picture, such DVDs
     shall be returned to CTHV at CTHV's cost and expense (and in such a manner
     as CTHV may so direct). [***]

12.  BASE BUY ADVANCE.

     a. VIDEOCASSETTES. All Videocassette orders made by Kozmo pursuant to this
     Agreement shall be subject to the following:

*         i. [***]

*              (1) [***]

*              (2) [***]

*         ii. [***] Prior to the expiration [***] CTHV and Kozmo shall
     negotiate in good faith to mutually determine Videocassette Base Buy
     Advances for the Fourth and Fifth Contract Years. In the event that CTHV
     and Kozmo are unable to reach an agreement regarding such Videocassette
     Base Buy Advances, CTHV may elect, in its sole discretion, to obligate
     Kozmo to continue to perform under the terms and conditions of the
     Agreement (including, without limitation, the Videocassette Base Buy
     Advances set forth in subparagraphs 12.a.i.(1) and 12.a.i.(2));
     provided, however, if CTHV elects to continue to obligate Kozmo to
     continue to perform under the terms and conditions of the Agreement
     (including, without limitation, the Videocassette Base Buy Advances set
     forth in subparagraphs 12.a.i.(1) and 12.a.i.(2)), Kozmo may thereafter
     elect [***] to terminate the Agreement. Any termination of the Agreement
     shall be deemed a termination "without cause." Any and all Rental
     Pictures ordered by Kozmo as of the date of such termination shall
     continue to be governed by the terms and conditions of this Agreement.

          The Videocassette Revenue Percentage Payment and the Videocassette
     End-of-Period Payment shall be applicable against and credited to the
     Videocassette Base Buy Advance.

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* Confidential Treatment Requested and the Redacted Material has been separately
filed with the Commission.

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     b. DVDS. All DVD orders made by Kozmo pursuant to this Agreement shall be
     subject to the following:

*         i. [***]

*         ii. [***] Prior to the expiration of [***] CTHV and Kozmo shall
     negotiate in good faith to mutually determine Base Buy Advances for the
     Fourth and Fifth Contract Years. In the event that CTHV and Kozmo are
     unable to reach an agreement regarding such Base Buy Advances, CTHV may
     elect, in its sole discretion, to obligate Kozmo to continue performing
     under the terms and conditions of the Agreement; provided, however, that
     the DVD Base Buy Advance for Rental Pictures ordered by Kozmo after such
     [***] however, if CTHV elects to continue to obligate Kozmo to continue
     to perform under the terms and conditions of the Agreement (including,
     without limitation, the Base Buy Advances set forth in subparagraphs
     12.b.i.(1) and 12.b.i.(2)), Kozmo may thereafter elect [***] to
     terminate the Agreement. Any termination of the Agreement shall be
     deemed a termination "without cause." Any and all Rental Pictures
     ordered by Kozmo as of the date of such termination shall continue to be
     governed by the terms and conditions of this Agreement.

          The DVD Upfront Price and the DVD Revenue Percentage Payment shall be
     applicable against and credited to the DVD Base Buy Advance.

13.  DELIVERY/SHIPPING: CTHV will cause a third party duplicator/distributor to
     undertake direct distribution of all Videocassettes and DVDs ordered by
     Kozmo hereunder to no more than 2 distribution centers (which shall be
     designated in writing by Kozmo and which may only be changed upon 60 days
     prior written notice to CTHV). Kozmo shall be solely responsible for making
     all Videocassettes and DVDs "rental ready." CTHV will use reasonable, good
     faith efforts to deliver all Videocassettes and DVDs ordered by Kozmo
     hereunder to Kozmo's distribution centers 7 days prior to the applicable
     Street Date(s) for such Videocassettes and/or DVDs; provided, however, if
     Kozmo desires to have Videocassettes and/or DVDs delivered to its
     distribution centers 10 days prior to the applicable Street Date(s), then
     Kozmo shall place its Initial Order not later than 26 days prior to the
     applicable Street Date for Videocassettes and 33 days prior to the
     applicable Street Date for DVDs.

14.  PAYMENT: Kozmo shall pay: (i) the Videocassette Upfront Price and the DVD
     Upfront Price within 30 days following the delivery of such Videocassettes
     and/or DVDs (as applicable) to Kozmo; (ii) the Videocassette Revenue
     Percentage Payment and the DVD Revenue Percentage Payment within 30 days
     following the end of the relevant month in which Rental Revenue for the
     applicable Rental Picture is received by Kozmo; (iii) Videocassette
     End-of-Period Payment within 30 days following the expiration of the
     applicable Revenue Sharing Period; and (iv) the

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* Confidential Treatment Requested and the Redacted Material has been separately
filed with the Commission.

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     Videocassette Base Buy Advance and the DVD Base Buy Advance within 60 days
     following the applicable Rental Picture's Street Date.

*15. MISSING VIDEOCASSETTES: In the event that Videocassettes and/or DVDs of a
     Rental Picture are lost, stolen or otherwise unaccounted for (including,
     without limitation, because of a sale) [***] applicable Rental Picture
     ("Missing Videocassette" or "Missing DVD," as applicable), Kozmo shall
     so inform CTHV and shall pay CTHV the following:

*    a. VIDEOCASSETTES. [***]

*    b. DVD. [***]

          The amounts set forth in subparagraphs 15.a. and b. shall be
     hereinafter referred to as "MISSING RENTAL PRODUCT FEES." Missing Rental
     Product Fees shall be payable to CTHV within 30 days following the end of
     the relevant month during which the Revenue Sharing Period for the
     applicable Rental Picture expires.

16.  REPORTING OBLIGATIONS: Kozmo shall report electronically to CTHV, on a
     weekly basis, complete and accurate daily information regarding the rental
     of Videocassettes and DVDs of the Rental Pictures acquired under this
     Agreement on a location-by-location and Rental Picture-by-Rental Picture
     basis, in such format as may be specified by CTHV from time to time. At
     CTHV's request, Kozmo shall provide CTHV with a copy of all tracking and
     other information obtained by Kozmo, insofar as such information relates to
     the Rental Pictures. Notwithstanding the foregoing, the parties hereby
     agree to work together during the first 90 days of the Term to set up a
     mutually acceptable reporting format; provided, however, that in the event
     of any disagreement, CTHV's decision shall prevail.

17.  MARKETING SUPPORT: In lieu of specific marketing support programs and as
     consideration for services to be performed by Kozmo hereunder, CTHV agrees
     that Kozmo shall accrue, on a per-Rental Picture basis, the following
     marketing support funds (the "Marketing Support Funds"):

*    1.   VIDEOCASSETTE. [***]

*    2.   DVD. [***]

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* Confidential Treatment Requested and the Redacted Material has been separately
filed with the Commission.

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     3.   USE/PAYMENT OF MARKETING SUPPORT FUNDS. Kozmo shall use the Marketing
          Support Funds solely for the purpose of advertising and promoting the
          Rental Pictures. For clarification purposes, CTHV acknowledges and
          agrees such advertising and promotion for the Rental Pictures may
          include "tag lines" and other references to Kozmo. Upon CTHV's receipt
          of a Marketing Support Fund invoice (and, if required, adequate
          assurances that such monies were actually used to advertise and
          promote the Rental Pictures), CTHV shall reimburse Kozmo for the
          Marketing Support Funds within 60 days of CTHV's receipt of such
          invoice (or adequate assurances, as applicable).

18.  EQUITY: In partial consideration for the rights granted hereunder, Kozmo
     agrees to issue to CTHV, or its designee, $10 million of Series F
     Convertible Preferred Stock of Kozmo, which Series F Convertible Preferred
     Stock shall be governed by and subject to the terms and conditions of (i)
     the Second Amended and Restated Stockholders Agreement dated as of March
     13, 2000 among Kozmo and Stockholders of Kozmo and (ii) the Second Amended
     and Restated Registration Rights Agreement dated as of March 13, 2000 among
     Kozmo and Stockholders of Kozmo. CTHV and Kozmo hereto agree to execute and
     deliver all documentation reasonable in form and content to effect the
     issuance and sale of the Series F Convertible Preferred Stock hereunder.

19.  AUDIT:

*    a. Kozmo grants CTHV the right, from time to time during the period
     commencing on the date hereof and concluding on the date which is 12 months
     after the expiration of the Term, upon not less than 7 business days prior
     notice, but no more than twice in any calendar year, to examine and audit
     Kozmo's records, invoices, books of account, computer or data base
     information which relate to the rental and/or sale of Videocassettes of the
     Rental Pictures and/or the Revenue Sharing Program for the then immediately
     preceding 12 month period (including, without limitation, all appropriate
     information provided to Kozmo by customers, but which shall not include
     names, addresses and/or any individual identifying data of such customers).
     All such audits shall be conducted by an independent, qualified auditor of
     CTHV's choice. All such audits shall be at CTHV's sole cost and expense;
     provided however, that in the event such audit shall disclose an error or
     errors which in the aggregate [***] hereunder for the period being audited,
     Kozmo shall promptly reimburse CTHV for all outside costs and expenses
     actually incurred in connection with such audit. CTHV may make copies of
     or make excerpts from only such part of Kozmo's records, invoices, books
     of account, computer or data base information which relate to matters
     and time frames subject to examination as herein provided. Such
     examination shall be at such place where the relevant information is
     maintained and during reasonable business hours and in such manner so as
     not to interfere with Kozmo's normal business activities. Such
     examination shall continue for such time as is reasonably necessary (but
     in any event not more than 30 consecutive days, provided that CTHV has
     been provided with the requisite access and information) for CTHV to
     complete the examination. Such right to examine hereunder is limited to
     the financial matters in connection with Rental Product of Rental
     Pictures and/or the Revenue Sharing Program and/or
     Direct-to-Sell-Through Pictures ordered and/or catalog and/or DVDs
     purchased hereunder (collectively, "CTHV Product") and under no
     circumstances shall CTHV have the right to examine records relating to
     Kozmo's business generally

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* Confidential Treatment Requested and the Redacted Material has been separately
filed with the Commission.

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*    or with respect to other projects not related to CTHV Product, for purposes
     of comparison or otherwise; provided, however, that where any original
     income or expense document with third parties relates to CTHV Product and
     videocassettes of any third party's titles, CTHV shall have the right to
     examine such document; provided, further that any information contained
     therein which does not relate to CTHV Product shall be redacted therefrom.
     Any amounts determined to be due and owing to CTHV following an audit shall
     be paid to CTHV [***] (or the highest rate of interest permissible under
     applicable law, if less) from the date the applicable sums should have been
     paid to CTHV to the date of payment to CTHV.

     b. Kozmo grants CTHV the right to conduct, or to engage an auditor to
     conduct, upon 48 hours notice, on-location audits for purposes of
     "spot-checking" transaction information relating to the CTHV Product;
     provided, that CTHV shall not conduct such audits more than once per month
     at any one warehouse or geographical location.

20.  NOTICE: Any notice or communications provided for hereunder must be in
     writing and delivered either personally, by telecopy, telex or by
     registered mail, postage prepaid to the following addresses (or to such
     other address as specified by like notice):

          For Kozmo:

               Kozmo.com
               80 Broad Street, 18th Floor
               New York, NY  10004
               Attention: Yong Kang, President and Chief Administrative Officer
                          Gerry Burdo, Chief Financial Officer
                          Cindy Holland, Vice President, Business Development
               Facsimile: (212) 797-1400

          For CTHV:

               Columbia TriStar Home Video, Inc.
               10202 West Washington Boulevard, 8th Floor
               Culver City, CA  90232
               Attention: Robin Russell, Executive Vice President
               Facsimile: (310) 244-1289

21.  REPRESENTATIONS AND WARRANTIES:

     a. CTHV warrants and represents that it is a corporation duly organized and
     validly existing in good standing under the laws of the state of Delaware
     and has the full right, power, legal capacity and authority to enter into
     and carry out the terms of this Agreement.

---------
* Confidential Treatment Requested and the Redacted Material has been separately
filed with the Commission.

                                       10
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     b. Kozmo warrants and represents that it is a corporation duly organized
     and validly existing in good standing under the laws of the state of
     Delaware and has the full right, power, legal capacity and authority to
     enter into and carry out the terms of this Agreement.

22.  INDEMNIFICATION:

     a. Kozmo agrees to indemnify and hold CTHV, its parent, subsidiary and
     affiliated companies and their respective officers, agents, directors and
     employees, harmless from any and all claims, damages, liabilities, costs
     and expenses (including reasonable attorneys fees) arising out of the
     breach by Kozmo of any warranty, representation or other term or provision
     of this Agreement. CTHV shall promptly notify Kozmo in writing of any third
     party claim or litigation to which this indemnification applies, and Kozmo
     shall assume the defense of any such claim or litigation (and CTHV shall
     have the right to engage separate counsel of its choice and participate in
     the defense, negotiation and settlement of such action or proceeding, but
     shall bear the fees and expenses of such separate counsel retained by CTHV
     and CTHV shall cooperate with Kozmo in the defense of such claim at no cost
     or charge to Kozmo, other than for performing such acts as Kozmo shall
     request). If, for any reason, Kozmo shall fail to appoint counsel on a
     timely basis or otherwise fails timely to confirm its assumption of the
     defense of any applicable claim, CTHV may engage its own counsel and the
     reasonable costs and expenses made in connection therewith shall be paid by
     Kozmo. Kozmo shall have the right to approve or disapprove the settlement
     or disposition of any such claim or litigation proposed by CTHV, which
     right shall expire 20 business days following Kozmo's receipt of written
     notice with respect thereto. Kozmo shall not have the right to enter into
     any settlement or compromise unless, in connection therewith, it shall
     obtain from the claimants a full release of all related claims against
     CTHV.

     b. CTHV shall indemnify and hold Kozmo, its subsidiary and affiliated
     companies and their respective officers, agents, directors and employees,
     harmless from any and all claims, damages, liabilities, costs and expenses
     (including reasonable attorneys fees) arising out of the breach by CTHV of
     any warranty, representation or other term or provision of this Agreement.
     Kozmo shall promptly notify CTHV in writing of any third party claim or
     litigation to which this indemnification applies, and CTHV shall assume the
     defense of any such claim or litigation (and Kozmo shall have the right to
     engage separate counsel of its choice and participate in the defense,
     negotiation and settlement of such action or proceeding but shall bear the
     fees and expenses of such separate counsel retained by Kozmo and Kozmo
     shall cooperate with CTHV in the defense of such claim at no cost or charge
     to CTHV, other than for performing such acts as CTHV shall request). If,
     for any reason, CTHV shall fail to appoint counsel on a timely basis or
     otherwise fails timely to confirm its assumption of the defense of any
     applicable claim, Kozmo may engage its own counsel and the reasonable costs
     and expenses made in connection therewith shall be paid by CTHV. CTHV shall
     have the right to approve or disapprove the settlement or disposition of
     any such claim or litigation proposed by Kozmo, which right shall expire 20
     business days following CTHV's receipt of written notice with respect
     thereto. CTHV shall not have the right to enter into any settlement or
     compromise unless, in connection therewith, it shall obtain from the
     claimants a full release of all related claims against Kozmo.

                                       11
<PAGE>

23.  CONFIDENTIALITY: Other than as may be required (i) by applicable law,
     governmental order or regulation or securities laws or by order or decree
     of any court of competent jurisdiction, (ii) as part of its normal
     reporting requirements or review procedures to its parent company,
     auditors, attorneys or other advisors, (iii) in connection with a possible
     sale, merger or other consolidation transaction involving it or its parent
     company or (iv) in the case of CTHV, as may be disclosed to third party
     "profit" participants in connection with the Rental Pictures: neither party
     hereto shall divulge or disclose to any third party any of the material
     terms and conditions of this Agreement (including, without limitation, the
     existence of this Agreement or any reference to Sony Pictures
     Entertainment, CTHV, or any affiliated entity), without the prior written
     consent of the other party hereto. In the event that disclosure is required
     pursuant to clause (i) above, the party so making disclosure shall so
     notify the other party (if possible, prior to making such disclosure and in
     any event as promptly as practical) and shall seek confidential treatment
     of such information. The initial press release regarding the parties
     entering into this Agreement (if any) shall require the mutual written
     approval of both parties. Notwithstanding anything to the contrary
     contained herein, CTHV hereby acknowledges and agrees that Kozmo may be
     required to share financial and other reporting information with respect to
     the Rental Pictures with the owner/operator of Kozmo's computer program
     system and certain data information services in order to allow such
     owner/operator and/or such data information service to monitor, update and
     approve their program and/or service. In the event Kozmo is required to
     share such information, Kozmo shall so inform CTHV and shall, at CTHV's
     request, obtain a confidentiality agreement, in a form approved by CTHV,
     signed on behalf of such owner/operator and/or data information service.
     Without limiting the generality of its obligations under this Paragraph,
     Kozmo agrees that it will not share with any third party any financial or
     other reporting information with respect to the Rental Pictures which is
     kept, maintained or compiled as part of the Revenue Sharing Program, except
     as set forth in this Paragraph 23.

24.  ASSIGNMENT/CHANGE OF CONTROL:

     a. ASSIGNMENT: CTHV shall be free to assign this Agreement and its rights
     hereunder, and to delegate its duties at any time and from time to time, in
     whole or in part, to any person or entity; provided, however, that CTHV
     shall be released from its obligations under this Agreement only if such
     assignment is (i) to a person or entity into which CTHV merges or is
     consolidated or (ii) to a person or entity which acquires all or
     substantially all of CTHV's business and assets or (iii) to a person or
     entity which is controlled by, under common control with, or controls CTHV
     or (iv) with Kozmo's prior written consent. Kozmo shall not assign this
     Agreement nor its rights hereunder, nor delegate its duties under this
     Agreement in whole or in part, without CTHV's prior written consent (not to
     be unreasonably withheld); provided, however, that an assignment pursuant
     to or resulting from a sale, exchange or transfer of all or substantially
     all of Kozmo's business and assets to any person or persons or any other
     form of business combination, including, without limitation, a
     reorganization, merger, consolidation or a sale to the public, shall not
     require such consent so long as such assignment is not to a Competing Major
     Studio and such party is a financially responsible party capable of
     performing all of Kozmo's obligations under this Agreement and which such
     party assumes in writing all of Kozmo's rights and obligations hereunder.
     In the event that Kozmo or CTHV assigns its rights or interest in or to
     this Agreement pursuant to the terms hereof, in whole or in part, the
     assigning party will nevertheless continue to remain fully and primarily
     responsible and

                                       12
<PAGE>

     liable to the other party for prompt, full, complete and faithful
     performance of all terms and conditions of this Agreement. For purposes of
     this Agreement, a "Competing Major Studio" shall mean Universal Studios,
     Inc., Warner Bros., a division of Time Warner Entertainment Company, L.P.,
     MGM, Twentieth Century Fox Film Corporation, The Walt Disney Company, or
     Paramount Pictures Corporation, Inc., or any division of any of the
     foregoing, or any entity which controls, is controlled by, or is under
     common control with any of the foregoing.

     b. CHANGE OF CONTROL: For purposes of Paragraph 24.a. hereof, a
     "change-of-control" of Kozmo shall be deemed to be an assignment and shall
     be subject to the provisions of Paragraph 24.a. For purposes of this
     Agreement, a "change-of-control" of Kozmo shall be deemed to have occurred,
     if, following the applicable transaction: a Competing Major Studio acquires
     25% or more of the equity interests in Kozmo.

25.  REMEDIES:

     a. In addition to any and all other rights and remedies available to it at
     law or in equity, a non-defaulting party shall have the right to terminate
     this Agreement for any material breach by a defaulting party (a "MATERIAL
     BREACH") and/or in the event of bankruptcy, insolvency, reorganization,
     assignment for the benefit of creditors or any such similar proceeding on
     the part of either party, or the appointment of a receiver (or similar
     proceeding) for any of such party's property (each, an "INSOLVENCY EVENT").
     Notwithstanding the foregoing, in the event of a Material Breach, the
     non-defaulting party shall notify the defaulting party of such Material
     Breach in writing and the defaulting party shall have 30 days to cure such
     Material Breach; provided, that in the event of Kozmo's failure to timely
     report to CTHV pursuant to Paragraph 16 hereof or to pay CTHV sums due
     under this Agreement, Kozmo shall have 14 days to cure such Material
     Breach. The non-defaulting party shall have the right to terminate this
     Agreement for any such Material Breach that shall remain uncured for 30
     (or, if applicable, 14) days following such notice and/or for any
     Insolvency Event; provided, that in the event that such Material Breach
     (other than nonpayment) is of a nature that reasonably requires more than
     30 (or, if applicable, 14) days to cure, and the defaulting party is
     diligently in the process of such cure, the non-defaulting party will not
     terminate this Agreement unless the cure cannot be accomplished, or
     otherwise is not accomplished, in 60 days.

*    b. [***]

26.  GOVERNING LAW/ALTERNATIVE DISPUTE RESOLUTION:

     a. GOVERNING LAW. THE INTERNAL SUBSTANTIVE LAWS (AS DISTINGUISHED FROM THE
     CHOICE OF LAW RULES) OF THE STATE OF CALIFORNIA AND THE UNITED STATES OF
     AMERICA APPLICABLE TO CONTRACTS MADE AND PERFORMED ENTIRELY IN CALIFORNIA
     SHALL GOVERN (i) THE VALIDITY AND

---------
* Confidential Treatment Requested and the Redacted Material has been separately
filed with the Commission.

                                       13
<PAGE>

     INTERPRETATION OF THIS AGREEMENT, (ii) THE PERFORMANCE BY THE PARTIES OF
     THEIR RESPECTIVE OBLIGATIONS HEREUNDER, AND (iii) ALL OTHER CAUSES OF
     ACTION (WHETHER SOUNDING IN CONTRACT OR IN TORT) ARISING OUT OF OR RELATING
     TO THIS AGREEMENT OR THE TERMINATION OF THIS AGREEMENT.

     b. LEGAL PROCEEDINGS. The parties hereto agree that any dispute or
     controversy relating to any of the matters referred to in clauses (i), (ii)
     and/or (iii) of Paragraph 26.a., above, shall be decided by a Rent-A-Judge,
     mutually selected by the parties (or, if they cannot agree, by the
     Presiding Judge of the Los Angeles Superior Court) appointed in accordance
     with California Code of Civil Procedure Section 638, sitting without a
     jury, in Los Angeles County, California, and the parties hereby submit to
     the jurisdiction of such court. All such proceedings shall be closed to the
     public and confidential and all records relating thereto shall be
     permanently sealed.

27.  MISCELLANEOUS:

     a. Nothing contained herein shall be deemed to create a relationship of
     partnership, joint venture, agency, fiduciary or employment between the
     parties.

     b. This Agreement sets forth the entire understanding of the parties
     regarding the subject matter hereof and supersedes all prior oral or
     written agreements between them.

     c. No waiver of any default or breach of this Agreement by either party
     shall be deemed a continuing waiver or a waiver of any other breach or
     default, no matter how similar.

     d. This Agreement may not be changed, modified, amended or supplemented,
     except in a writing signed by both parties.

     e. Paragraph headings are inserted herein for convenience only and do not
     constitute a part of this Agreement.

     f. Kozmo and CTHV shall execute, acknowledge and deliver any and all
     further documents that are necessary, expedient or proper to implement,
     administer and effectuate the purpose and intent of this Agreement.

     g. If any term or provision of this Agreement shall be found to be void or
     contrary to law, such term or provision shall, but only to the extent
     necessary to bring this Agreement within the requirements of law, be deemed
     to be severable from the other terms and provisions of this Agreement, and
     the remainder of this Agreement shall be given effect as if the parties had
     not included the severed term herein.

     //

     //

                                       14
<PAGE>

     Please confirm your agreement with the foregoing by signing below, and
return both copies to the undersigned, after which we will return a fully
executed copy to you.

                    Very truly yours,

                    COLUMBIA TRISTAR HOME VIDEO, INC.

                    By: /s/ Illegible
                        --------------------------------------------

                    Title: President
                           -----------------------------------------

AGREED TO AND ACCEPTED THIS 10th DAY OF MARCH, 2000:

KOZMO.COM

By: /s/ Illegible
    -----------------------------------
Title: President
       --------------------------------

                                       15MINNESOTA AMERICAN, INC.

                            1993 STOCK INCENTIVE PLAN

1.       Purpose of Plan.

         The purpose of the Minnesota American, Inc. 1993 Stock Incentive plan
(the "Plan") is to advance the interests of Minnesota American, Inc. (the
"Company") and its shareholders by enabling the Company and its Subsidiaries to
attract and retain persons of ability to perform services for the Company and
its Subsidiaries by providing an incentive to such individuals through equity
participation in the Company and by rewarding such individuals who contribute to
the achievement by the Company of its economic objectives.

2.       Definitions.

         The following terms will have the meanings set forth below, unless the
context clearly otherwise requires:

         2.1 "Board" means the Board of Directors of the Company.

         2.2 "Broker Exercise Notice" means a written notice pursuant to which a
Participant, upon exercise of an Option, irrevocably instructs a broker or
dealer to sell a sufficient number of shares or loan a sufficient amount of
money to pay all or a portion of the exercise price of the Option and/or any
related withholding tax obligations and remit such sums to the Company and
directs the Company to deliver stock certificates to be issued upon such
exercise directly to such broker or dealer.

         2.3 "Change in Control" means an event described in section 12.1 of the
Plan.

         2.4 "Code" means the Internal Revenue Code of 1986, as amended.

         2.5 "Committee" means the group of individuals administering the Plan,
as provided in Section 3 of the Plan.

         2.6 "Common Stock" means the common stock of the Company, par value
$.01 per share, or the number and kind of shares of stock or other securities
into which such Common Stock may be changed in accordance with Section 4.3 of
the Plan.

         2.7 "Disability" means the disability of the Participant such as would
entitle the Participant to receive disability income benefits pursuant to the
long-term disability plan of the Company or Subsidiary then covering the
Participant or, if no such plan exists or is applicable to the Participant, the
permanent and total disability of the Participant within the meaning of Section
22(e)(3) of the Code.

<PAGE>

         2.8 "Eligible Recipients" means all employees (including, without
limitation, officers and directors who are also employees) of the Company or any
Subsidiary and any non-employee consultants and independent contractors of the
Company or any Subsidiary.

         2.9 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

         2.10 "Fair Market Value" means, with respect to the Common Stock, as of
any date (or, if no shares were traded or quoted on such date, as of the next
preceding date on which there was such a trade or quote), the following:

                  (a) If the Common Stock is listed or admitted to unlisted
         trading privileges on any national securities exchange or is not so
         listed or admitted but transactions in the Common Stock are reported on
         the Nasdaq National Market System, the mean between the reported high
         and low sale prices of the Common Stock on such exchange or by the
         NASDAQ National Market System.

                  (b) If the Common Stock is not so listed or admitted to
         unlisted trading privileges or reported on the NASDAQ National Market
         System, but bid and asked prices in the over-the-counter market are
         reported by the NASDAQ System or the National Quotation Bureau, Inc.
         (or any comparable reporting service), the mean of the closing bid and
         asked prices.

                  (c) If the Common Stock is not so listed or admitted to
         unlisted trading privileges or reported on the NASDAQ National
         Marketing System, and such bid and asked prices are not so reported by
         a reporting service, such price as the Committee determines in good
         faith in the exercise of its reasonable discretion.

         2.11 "Incentive Award" means an Option, Restricted Stock Award,
Performance Unit or Stock Bonus granted to an Eligible Recipient pursuant to the
Plan.

         2.12 "Incentive Stock Option" means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Section 6 of the Plan that
qualifies as an "incentive stock option" within the meaning of Section 422 of
the Code.

         2.13 "Non-Employee Director" means any member of the Board of Directors
of the Company who is not an employee of the Company or any Subsidiary.

         2.14 "Non-Statutory Stock Option" means a right to purchase Common
Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that
does not qualify as an Incentive Stock Option.

         2.15 "Option" means an Incentive Stock Option or a Non-Statutory Stock
Option.

         2.16 "Participant" means an Eligible Recipient who receives one or more
Incentive Awards under the Plan.

<PAGE>

         2.17 "Performance Unit" means a right granted to an Eligible Recipient
pursuant to Section 8 of the Plan to receive a payment from the Company, in the
form of stock, cash or a combination of both, upon the achievement of
established performance goals.

         2.18 "Previously Acquired Shares" means shares of Common Stock that are
already owned by the Participant or, with respect to any Incentive Award, that
are to be issued upon the grant, exercise or vesting of such Incentive Award.

         2.19 "Restricted Stock Award" means an award of Common Stock granted to
an Eligible Recipient pursuant to Section 7 of the Plan that is subject to the
restrictions on transferability and the risk of forfeiture imposed by the
provisions of such Section 7.

         2.20 "Retirement" means termination of employment or service pursuant
to and in accordance with the regular (or, if approved by the Board for purposes
of the Plan, early retirement/pension plan or practice of the Company or
Subsidiary then covering the Participant, provided that if the Participant is
not covered by any such plan or practice, the Participant will be deemed to be
covered by the Company's plan or practice for purposes of this determination.

         2.21 "Securities Act" means the Securities Act of 1933, as amended.

         2.22 "Stock Bonus" means an award of Common Stock granted to an
Eligible Recipient pursuant to Section 9 of the Plan.

         2.23 "Subsidiary" means any entity that is directly or indirectly
controlled by the Company or any entity in which the Company has a significant
equity interest, as determined by the Committee.

         2.24 "Tax Date" means the date any withholding tax obligation arises
under the Code for a Participant with respect to an Incentive Award.

3.       Plan Administration.

         3.1 The Committee. The Plan will be administered by the Board or by a
committee of the Board consisting of not less than two persons; provided,
however, that from and after the date on which the Company first registers a
class of its equity securities under Section 12 of the Exchange Act, the Plan
will be administered by the Board, all of whom will be "disinterested persons"
within the meaning of Rule 16b-3 under the Exchange Act, or by a committee
consisting solely of not fewer than two members of the Board who are such
"disinterested persons." As used in this Plan, the term "Committee" will refer
to the Board or to such a committee, if established. To the extent consistent
with corporate law, the Committee may delegate to any officers of the Company
the duties, power and authority of the Committee under the Plan pursuant to such
conditions or limitations as the Committee may establish; provided, however,
that only the Committee may exercise such duties, power and authority with
respect to Eligible Recipients who are subject to Section 16 of the Exchange
Act. Each determination, interpretation or other action made or taken by the
Committee pursuant to the provisions of the Plan will be conclusive and binding
for all purposes and on all persons, and no member of the Committee will be
liable for any action or determination made in good faith with respect to the
Plan or any Incentive Award granted under the Plan.

<PAGE>

         3.2      Authority of the Committee.

                  (a) In accordance with and subject to the provisions of the
         Plan, the Committee will have the authority to determine all provisions
         of Incentive Awards as the Committee may deem necessary or desirable
         and as consistent with the terms of the Plan, including, without
         limitation, the following: (i) the Eligible Recipients to be selected
         as Participants; (ii) the nature and extent of the Incentive Awards to
         be made to each Participant (including the number of shares of Common
         Stock to be subject to each Incentive Award, any exercise price, the
         manner in which Incentive Awards will vest or become exercisable and
         whether Incentive Awards will be granted in tandem with other Incentive
         Awards) and the form of written agreement, if any, evidencing such
         Incentive Award; (iii) the time or times when Incentive Awards will be
         granted; (iv) the duration of each Incentive Award; and (v) the
         restrictions and other conditions to which the payment or vesting of
         Incentive Awards may be subject. In addition, the Committee will have
         the authority under the Plan in its sole discretion to pay the economic
         value of any Incentive Award in the form of cash, Common Stock or any
         combination of both.

                  (b) The Committee will have the authority under the Plan to
         amend or modify the terms of any outstanding Incentive Award in any
         manner, including, without limitation, the authority to modify the
         number of shares or other terms and conditions of an Incentive Award,
         extend the term of an Incentive Award, accelerate the exercisability or
         vesting or otherwise terminate any restrictions relating to an
         Incentive Award, accept the surrender of any outstanding Incentive
         Award or, to the extent not previously exercised or vested, authorize
         the grant of new Incentive Awards in substitution for surrendered
         Incentive Awards; provided, however, that the amended or modified terms
         are permitted by the Plan as then in effect and that any participant
         adversely affected by such amended or modified terms has consented to
         such amendment or modification. No amendment or modification to an
         Incentive Award, however, whether pursuant to this Section 3.2 or any
         other provisions of the Plan, will be deemed to be a regrant of such
         Incentive Award for purposes of this Plan.

                  (c) In the event of (i) any reorganization, merger,
         consolidation, recapitalization, liquidation, reclassification, stock
         dividend, stock split, combination of shares, rights offering,
         extraordinary dividend or divestiture (including spin-off) or any other
         change in corporate structure or shares, (ii) any purchase,
         acquisitions ale or disposition of a significant amount of assets or a
         significant business, (iii) any change in accounting principles or
         practices, or (iv) any other similar change, in each case with respect
         to the Company or any other entity whose performance is relevant to the
         grant or vesting of an Incentive Award, the Committee (or, if the
         Company is not the surviving corporation in any such transaction, the
         board of directors of the surviving corporation) may, without the
         consent of any affected Participant, amend or modify the vesting
         criteria of any outstanding Incentive Award that is based in whole or
         in part on the financial performance of the Company (or any Subsidiary
         or division thereof) or such other entity so as equitably to reflect
         such event, with the desired result that the criteria for evaluating
         such financial performance of the Company or such other entity will be
         substantially the same (in the sole discretion of the Committee or the
         board of directors of the surviving corporation) following such event
         as prior to such event; provided, however, that the amended or modified
         terms are permitted by the Plan as then in effect.

<PAGE>

4.       Shares Available for Issuance.

         4.1 Maximum Number of Shares Available. Subject to adjustment as
provided in Section 4.3 of the Plan, the maximum number of shares of Common
Stock that will be available for issuance under the Plan will be Five Hundred
Thousand (500,000) shares.

         4.2 Accounting for Incentive Awards. Shares of Common Stock that are
issued under the Plan or that are subject to outstanding Incentive Awards will
be applied to reduce the maximum number of shares of Common Stock remaining
available for issuance under the Plan. Any shares of Common Stock that are
subject to an Incentive Award that lapses, expires, is forfeited or for any
reason is terminated unexercised or unvested and any shares of Common Stock that
are subject to an Incentive Award that is settled or paid in cash or any form
other than shares of Common Stock will automatically again become available for
issuance under the Plan. Any shares of Common Stock that constitute the
forfeited portion of a Restricted Stock Award, however, will not become
available for further issuance under the Plan.

         4.3 Adjustments to Shares and Incentive Awards. In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a spin-off) or any
other change in the corporate structure or shares of the Company, the Committee
(or, if the Company is not the surviving corporation in any such transaction,
the board of directors of the surviving corporation) will make appropriate
adjustment (which determination will be conclusive) as to the number and kind of
securities available for issuance under the Plan and, in order to prevent
dilution or enlargement of the rights of Participants, the number, kind and,
where applicable, exercise price of securities subject to outstanding Incentive
Awards.

5.       Participation.

         Participants in the Plan will be those Eligible Recipients who, in the
judgment of the Committee, have contributed, are contributing or are expected to
contribute to the achievement of economic objectives of the Company or its
Subsidiaries. Eligible Recipients may be granted from time to time one or more
Incentive Awards, singly or in combination or in tandem with other Incentive
Awards, as may be determined by the Committee in its sole discretion. Incentive
Awards will be deemed to be granted as of the date specified in the grant
resolution of the Committee, which date will be the date of any related
agreement with the Participant.

6.       Options.

         6.1 Grant. An Eligible Recipient may be granted one or more Options
under the Plan, and such Options will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion. The Committee may designate whether an Option
is to be considered an Incentive Stock Option or a Non-Statutory Stock Option.

<PAGE>

         6.2 Exercise Price. The per share price to be paid by a Participant
upon exercise of an Option will be determined by the Committee in its discretion
at the time of the Option grant, provided that (a) such price will not be less
than 100% of the Fair Market Value of one share of Common Stock on the date of
grant with respect to an Incentive Stock Option (110% of the Fair Market Value
if, at the time the Incentive Stock Option is granted, the Participant owns,
directly or indirectly, more than 10% of the total combined voting power of all
classes of stock of the Company or any parent or subsidiary corporation of the
Company), and (b) such price will not be less than 100% of the Fair Market Value
of one share of Common Stock on the date of grant with respect to a
Non-Statutory Stock Option.

         6.3 Exercisability and Duration. An Option will become exercisable at
such times and in such installments as may be determined by the Committee in its
sole discretion at the time of grant; provided, however, that no Option may be
exercisable after 10 years from the its date of grant.

         6.4 Payment of Exercise Price. The total purchase price of the shares
to be purchased upon exercise of an Option will be paid entirely in cash
(including check, bank draft or money order); provided, however, that the
Committee, in its sole discretion and upon terms and conditions established by
the Committee, may allow such payments to be made, in whole or in part, by
tender of a Broker Exercise Notice, Previously Acquired Shares or by a
combination of such methods.

         6.5 Manner of Exercise. An Option may be exercised by a Participant in
whole or in part from time to time, subject to the conditions contained in the
Plan and in the agreement evidencing such Option, by delivery in person, by
facsimile or electronic transmission or through the mail of written notice of
exercise to the Company (Attention: Chief Financial Officer) at its principal
executive office in Minnetonka, Minnesota and by paying in full the total
exercise price for the shares of Common Stock to be purchased in accordance with
Section 6.4 of the Plan.

         6.6 Aggregate Limitation of Stock Subject to Incentive Stock Options.
To the extent that the aggregate Fair Market Value (determined as of the date an
Incentive Stock Option is granted) of the shares of Common Stock with respect to
which incentive stock options (within the meaning of Section 422 of the Code)
are exercisable for the first time by a Participant during any calendar year
(under the Plan and any other incentive stock option plans of the Company or any
subsidiary or parent corporation of the Company (within the meaning of the
Code)) exceeds $100,000 (or such other amount as maybe prescribed by the Code
from time to time), such excess Options will be treated as Non-Statutory Stock
Options. The determination will be made by taking incentive stock options into
account in the order in which they were granted. If such excess only applies to
a portion of an incentive stock option, the Committee, in its discretion, will
designate which shares will be treated as shares to be acquired upon exercise of
an incentive stock option.

         6.7      Automatic Grants to Non-Employee Directors.

                  (a) Grant of Options. On the effective date of the Plan,
         Non-Employee Directors who were directors on December 16, 1993 will be
         granted automatically, on a one-time basis, a Non-Statutory Stock
         Option to purchase 2,000 shares of Common Stock. Following the

<PAGE>

         effective date of the Plan, Non-Employee Directors will be granted
         automatically, on May 1 of every year for the duration of the Plan, a
         Non-Statutory Stock Option to purchase 1,000 shares of Common Stock.
         All automatic grants pursuant to this Section 6.7 are subject to
         adjustment as provided in Section 4.3 of the Plan.

                  (b) Option Exercise Price. The per share price to be paid by
         the Non-Employee Director at the time an Option is exercised will be
         100% of the average bid price of one share of Common Stock during the
         month of April immediately preceding the date of grant. The total
         purchase price of the shares to be purchased upon exercise will be paid
         entirely in cash (including check, bank draft or money order).

                  (c) Duration of Options. Each Option will terminate five years
         after its date of grant and will become exercisable, with respect to
         all shares covered by such Option after six (6) months from the date of
         its grant.

                  (d) Effect of Termination of Directorship. In the event a
         Non-Employee Director's service as a director of the Company is
         terminated by reason of death or Disability, all outstanding Options
         then held by the Non-Employee Director will become immediately
         exercisable in full and will remain exercisable for a period of one
         year after such termination (but in no event after the expiration of
         any such Option). In the event that a Non-Employee Director's service
         as a director of the Company is terminated for any reason other than
         death or Disability, all outstanding Options then held by the
         Non-Employee Director will remain exercisable to the extent exercisable
         as of such termination of service for a period of three months after
         such termination of service (but in no event after the expiration of
         any such Option). Such Options will not be subject to the termination
         provisions of Section 10 of the Plan.

                  (e) Manner of Option Exercise. An Option may be exercised by a
         Non-Employee Director in whole or in part from time to time, subject to
         the conditions contained in the Plan and in the agreement evidencing
         such Option, by giving written notice of exercise to the Company at its
         principal executive office (such notice to specify the particular
         Option that is being exercised and the number of shares with respect to
         which the Option is being exercised) accompanied by payment, in cash or
         check payable to the Company, of the total purchase price of the shares
         to be purchased under the Option.

                  (f) Non-Discretionary Grants. Options granted to Non-Employee
         Directors pursuant to this Section 6.7 are intended to qualify as
         "formula awards" within the meaning of Rule 16b-3 under the Exchange
         Act. As a result, other than as provided in Section 16 of the Plan, the
         Committee will not have the authority to amend the eligibility
         requirements for, or modify the terms of, such Options (including,
         without limitation, the authority to modify the rights of Non-Employee
         Directors in connection with termination of service as a director or a
         change in control of the Company) if such amendments or modifications
         would disqualify such Options from treatment as "formula awards."

<PAGE>

7.       Restricted Stock Awards.

         7.1 Grant. An Eligible Recipient may be granted one or more Restricted
Stock Awards under the Plan, and such Restricted Stock Awards will be subject to
such terms and conditions, consistent with the other provisions of the Plan, as
may be determined by the Committee in its sole discretion. The Committee may
impose such restrictions or conditions, not inconsistent with the provisions of
the Plan, to the vesting of such Restricted Stock Awards as it deems
appropriate, including, without limitation, that the Participant remain in the
continuous employ or service of the Company or a Subsidiary for a certain period
or that the Participant or the Company (or any Subsidiary or division thereof)
satisfy certain performance goals or criteria.

         7.2 Rights as a Shareholder; Transferability. Except as provided in
Sections 7.1, 7.3 and 13.3 of the Plan, a Participant will have al voting,
dividend, liquidation and other rights with respect to shares of Common Stock
issued to the Participant as a Restricted Stock Award under this Section 7 upon
the Participant becoming the holder of record of such shares as if such
Participant were a holder of record of shares unrestricted Common Stock.

         7.3 Dividends and Distributions. Unless the Committee determines
otherwise in its sole discretion (either in the agreement evidencing the
Restricted Stock Award at the time of grant or at any time after the grant of
the Restricted Stock Award), any dividends or distributions (including regular
quarterly cash dividends) paid with respect to shares of Common Stock subject to
the unvested portion of a Restricted Stock Award will be subject to the same
restrictions as the shares to which such dividends or distributions relate. In
the event the Committee determines not to pay such dividends or distributions
currently, the Committee will determine in its sole discretion whether any
interest will be paid on such dividends or distributions. In addition, the
Committee in its sole discretion may require such dividends and distributions to
be reinvested (and in such case the Participants consent to such reinvestment)
in shares of Common Stock that will be subject to the same restrictions as the
shares to which such dividends or distributions relate.

         7.4 Enforcement of Restrictions. To enforce the restrictions referred
to in this Section 7, the Committee may place a legend on the stock certificates
referring to such restrictions and may require the Participant, until the
restrictions have lapsed, to keep the stock certificates, together with duly
endorsed stock powers, in the custody of the Company or its transfer agent or to
maintain evidence of stock ownership, together with duly endorsed stock powers,
in a certificateless book-entry stock account with the Company's transfer agent.

8.       Performance Units.

         An Eligible Recipient may be granted one or more Performance Units
under the Plan, and such Performance Units will be subject to such terms and
conditions, consistent with the other provisions of the Plan, as may be
determined by the Committee in its sole discretion. The Committee may impose
such restrictions or conditions, not inconsistent with the provisions of the
Plan, to the vesting of such Performance Units as it deems appropriate,
including, without limitation, that the Participant remain in the continuous
employ or service of the Company or any Subsidiary for a certain period or that
the Participant or the Company (or any Subsidiary or division thereof) satisfy

<PAGE>

certain performance goals or criteria. The Committee will have the sole
discretion either to determine the form in which payment of the economic value
of vested Performance Units will be made to the Participant (i.e., cash, Common
Stock or any combination thereof) or to consent to or disapprove the election by
the Participant of the form of such payment.

9.       Stock Bonuses.

         An Eligible Recipient may be granted one or more Stock Bonuses under
the Plan, and such Stock Bonuses will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion. The Participant will have all voting,
dividend, liquidation and other rights with respect to the shares of Common
Stock issued to a Participant as a Stock Bonus under this Section 9 upon the
Participant becoming the holder of record of such shares; provided, however,
that the Committee may impose such restrictions on the assignment or transfer of
a Stock Bonus as it deems appropriate.

10.      Effect of Termination of Employment or Other Service.

         10.1 Termination Due to Death, Disability or Retirement. In the event a
Participant's employment or other service with the Company and all Subsidiaries
is terminated by reason of death, Disability or Retirement:

                  (a) All outstanding Options then held by the Participant will
         become immediately exercisable in full and will remain exercisable for
         a period of twelve (12) months after such termination (but in no event
         after the expiration date of any such Option);

                  (b) All Restricted Stock Awards then held by the Participant
         will become fully vested; and

                  (c) All Performance Units and Stock Bonuses then held by the
         Participant will vest and/or continue to vest in the manner determined
         by the Committee and set forth in the agreement evidencing such
         Performance Units or Stock Bonuses.

         10.2 Termination for Reasons Other than Death, Disability or
Retirement.

                  (a) In the event a Participant's employment or other service
         is terminated with the Company and all Subsidiaries for any reason
         other than death, Disability or Retirement, or a Participant is in the
         employ or service of a Subsidiary and the Subsidiary ceases to be a
         Subsidiary of the Company (unless the Participant continues in the
         employ or service of the Company or another Subsidiary), all rights of
         the Participant under the Plan and any agreements evidencing an
         Incentive Award will immediately terminate without notice of any kind,
         and no Options then held by the Participant will thereafter be
         exercisable, all Restricted Stock Awards then held by the Participant
         that have not vested will be terminated and forfeited, and all
         Performance Units and Stock Bonuses then held by the Participant will
         vest and/or continue to vest in the manner determined by the Committee
         and set forth in the agreement evidencing such Performance Units or

<PAGE>

         Stock Bonuses; provided, however, that if such termination is due to
         any reason other than termination by the Company or any Subsidiary for
         "cause," all outstanding Options then held by such Participant will
         remain exercisable to the extent exercisable as of such termination for
         a period of ninety (90) days after such termination (but in no event
         after the expiration date of any such Option).

                  (b) For purposes of this Section 10.2, "cause" (as determined
         by the Committee) will be as defined in any employment or other
         agreement or policy applicable to the Participant or, if no such
         agreement or policy exists, will mean (i) dishonesty, fraud,
         misrepresentation, embezzlement or deliberate injury or attempted
         injury, in each case related to the Company or any Subsidiary, (ii) any
         unlawful or criminal activity of a serious nature, (iii) any
         intentional and deliberate breach of a duty or duties that,
         individually or in the aggregate, are material in relation to the
         Participant's overall duties, or (iv) any material breach of any
         employment, service, confidentiality or noncompete agreement entered
         into with the Company or any Subsidiary.

         10.3 Modification of Rights Upon Termination. Notwithstanding the other
provisions of this Section 10, upon a Participant's termination of employment or
other service with the Company and all Subsidiaries, the Committee may, in its
sole discretion (which may be exercised at any time on or after the date of
grant, including following such termination), cause Options (or any part
thereof) then held by such Participant to come or continue to become exercisable
and/or remain exercisable following such termination of employment or service
and Restricted Stock Awards and Performance Units then held by such Participant
to vest and/or continue to vest or become free of transfer restrictions, as the
case may be, following such termination of employment or service, in each case
in the manner determined by the Committee; provided, however, that no Option may
remain exercisable beyond its expiration date.

         10.4 Breach of Confidentiality or Noncompete Agreements.
Notwithstanding anything in this Plan to the contrary, in the event that a
Participant materially breaches the terms of any confidentiality or noncompete
agreement entered into with the Company or any Subsidiary, whether such breach
occurs before or after termination of such Participant's employment or other
service with the Company or any Subsidiary, the Committee in its sole discretion
may immediately terminate all rights of the Participant under the Plan and any
agreements evidencing an Incentive Award then held by the Participant without
notice of any kind.

         10.5 Date of Termination of Employment or Other Service. Unless the
Committee otherwise determines in its sole discretion, a Participant's
employment or other service will, for purposes of the Plan, be deemed to have
terminated on the date recorded on the personnel or other records of the Company
or the Subsidiary for which the participant provides employment or other
service, as determined by the Committee in its sole discretion based upon such
records.

11.      Payment of Withholding Taxes.

         11.1 General Rules. The Company is entitled to (a) withhold and deduct
from future wages of the Participant (or from other amounts that may be due and
owing to the Participant from the Company or a Subsidiary), or make other
arrangements for the collection of, all legally required amounts necessary to
satisfy any and all federal, state and local withholding and employment-related
tax requirements attributable to an Incentive Award, including, without

<PAGE>

limitation, the grant, exercise or vesting of, or payment of dividends with
respect to, an Incentive Award or a disqualifying disposition of stock received
upon exercise of an Incentive Stock Option, or (b) require the Participant
promptly to remit the amount of such withholding to the Company before taking
any action, including issuing any shares of Common Stock, with respect to an
Incentive Award.

         11.2 Special Rules. The Committee may, in its sole discretion and upon
terms and conditions established by the Committee, permit or require a
Participant to satisfy, in whole or in part, any withholding or
employment-related tax obligation described in Section 11.1 of the Plan by
electing to tender Previously Acquired Shares or a Broker Exercise Notice, or by
a combination of such methods.

12.      Change in Control.

         12.1 Change in Control. For purposes of this Section 12.1, a "Change in
Control" of the Company will mean (a) the sale, lease, exchange or other
transfer of substantially all of the assets of the Company (in one transaction
or in a series of related transaction) to a person or entity that is not
controlled, directly or indirectly, by the Company (b) a merger or consolidation
to which the Company is a party if the shareholders of the Company immediately
prior to effective date of such merger or consolidation do not have "beneficial
ownership" (as defined in Rule 13d-3 under the Exchange Act) immediately
following the effective date of such merger or consolidation of more than 80% of
the combined voting power of the surviving corporation's outstanding securities
ordinarily having the right to vote at elections of directors, or (c) a change
in control of the Company of a nature that would be required to be reported
pursuant to Section 13 or 15(d) of the Exchange Act, whether or not the Company
is then subject to such reporting requirements, including, without limitation,
such time as (i) any person becomes after the effective date of the Plan the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of 20% or more of the combined voting power of the Company's
outstanding securities ordinarily having the right to vote at elections of
directors, or (ii) individuals who constitute the Board on the effective date of
the Plan cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the effective date of
the Plan whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
comprising the Board on the effective date of the Plan will, for purposes of
this clause (ii), be considered as though such persons were a member of the
Board on the effective date of the Plan.

         12.2 Acceleration of Vesting. Without limiting the authority of the
Committee under Section 3.2 of the Plan, if a Change in Control of the Company
occurs, then, if approved by the Committee in its sole discretion either in an
agreement evidencing an Incentive Award at the time of grant or at any time
after the grant of an Incentive Award, (a) all Options will become immediately
exercisable in full and will remain exercisable for the remainder of their
terms, regardless of whether the Participants to whom such Options have been
granted remain in the employ or service of the Company or any Subsidiary; (b)
all outstanding Restricted Stock Awards will become immediately fully vested;
and (c) all Performance Units and Stock Bonuses then held by the Participant
will vest and/or continue to vest in the manner determined by the Committee and
set forth in the agreement evidencing such Performance Units or Stock Bonuses.

<PAGE>

         12.3 Cash Payment for Options. If a Change in Control of the Company
occurs, then the Committee, if approved by the Committee in its sole discretion
either in an agreement evidencing an Incentive Award at the time of grant or at
any time after the grant of an Incentive Award, and without the consent of any
Participant effected thereby, may determine that some or all Participants
holding outstanding Options will receive, with respect to some or all of the
shares of Common Stock subject to such Options, as of the effective date of any
such Change of Control of the Company, cash in an amount equal to the excess of
the Fair Market Value of such shares immediately prior to the effective date of
such Change in Control of the Company over the exercise price per share of such
Options.

         12.4 Limitation on Change in Control Payments. Notwithstanding anything
in Section 12.2 or 12.3 of the Plan to the contrary, if, with respect to a
Participant, the acceleration of the vesting of an Incentive Award as provided
in Section 12.2 or the payment of cash in exchange for all or part of an
Incentive Award as provided in Section 12.3 (which acceleration or payment could
be deemed a "payment" within the meaning of Section 280G(b)(2) of the Code),
together with any other payments which such Participant has the right to receive
from the Company or any corporation that is a member of an "affiliated group"
(as defined in Section 1504(a) of the Code without regard to Section 1504(b) of
the Code) of which the Company is a member, would constitute a "parachute
payment" (as defined in Section 280G(b)(2) of the Code), then the payments to
such Participant pursuant to Section 12.2 or 12.3 will be reduced to the largest
amount as will result in no portion of such payments being subject to the excise
tax imposed by Section 4999 of the Code; provided, however, that if such
Participant is subject to a separate agreement with the Company or a Subsidiary
which specifically provides that payments attributable to one or more forms of
employee stock incentives or to payments made in lieu of employee stock
incentives will not reduce any other payments under such agreement, even if it
would constitute an excess parachute payment, then the limitations of this
Section 12.4 will, to that extent, not apply.

13.      Rights of Eligible Recipients and Participants; Transferability.

         13.1 Employment or Service. Nothing in the Plan will interfere with or
limit in any way the right of the Company or any Subsidiary to terminate the
employment or service of any Eligible Recipient or Participant at any time, nor
confer upon any Eligible Recipient or Participant any right to continue in the
employ or service of the Company or any Subsidiary.

         13.2 Rights as a Shareholder. As a holder of Incentive Awards (other
than Restricted Stock Awards), a Participant will have no rights as a
shareholder unless and until such Incentive Awards are exercised for, or paid in
the form of, shares of Common Stock and the Participant becomes the holder of
record of such shares. Except as otherwise provided in the Plan, no adjustment
will be made for dividends or distributions with respect to such Incentive
Awards as to which there is a record date preceding the date the Participant
becomes the holder of record of such shares, except as the Committee may
determine in its discretion.

         13.3 Restriction on Transfer. Except pursuant to testamentary will or
the laws of descent and distribution or as otherwise expressly permitted by the
Plan, no right or interest of any Participant in an Incentive Award prior to the
exercise or vesting of such Incentive Award will be assignable or transferable,

<PAGE>

or subjected to any lien, during the lifetime of the Participant, either
voluntarily or involuntarily, directly or indirectly, by operation of law or
otherwise. A Participant will, however, be entitled to designate a beneficiary
to receive an Incentive Award upon such Participant's death, and in the event of
a Participant's death, payment of any amounts due under the Plan will be made
to, and exercise of any Options (to the extent permitted pursuant to Section 9
of the Plan) may be made by, the Participant's legal representatives, heirs and
legatees.

         13.4 Non-Exclusivity of the Plan. Nothing contained in the Plan is
intended to modify or rescind any previously approved compensation plans or
programs of the Company or create any limitations on the power or authority of
the Board to adopt such additional or other compensation arrangements as the
Board may deem necessary or desirable.

14.      Securities Law and Other Restrictions.

         Notwithstanding any other provision of the Plan or any agreements
entered into pursuant to the Plan, the Company will not be required to issue any
shares of Common Stock under this Plan, and a Participant may not sell, assign,
transfer or otherwise dispose of shares of Common Stock issued pursuant to
Incentive Awards granted under the Plan, unless (a) there is in effect with
respect to such shares a registration statement under the Securities Act and any
applicable state securities laws or an exemption from such registration under
the Securities Act and applicable state securities laws, and (b) there has been
obtained any other consent, approval or permit from any other regulatory body
which the Committee, in its sole discretion, deems necessary or advisable. The
Company may condition such issuance, sale or transfer upon the receipt of any
representations or agreements from the parties involved, and the placement of
any legends on certificates representing shares of Common Stock, as may be
deemed necessary or advisable by the Company in order to comply with such
securities law or other restrictions.

15.      Plan Amendment, Modification and Termination.

         The Board may suspend or terminate the Plan or any portion thereof at
any time, and may amend the Plan from time to time in such respects as the Board
may deem advisable in order that Incentive Awards under the Plan will conform to
any change in applicable laws or regulations or in any other respect the Board
may deem to be in the best interests of the Company; provided, however, that no
amendments to the Plan will be effective without approval of the stockholders of
the Company if stockholder approval of the amendment is then required pursuant
to Rule 16b-3 under the Exchange Act, Section 422 of the Code or the rules of
the National Association of Securities Dealers, Inc. No termination, suspension
or amendment of the Plan may adversely affect any outstanding Incentive Award
without the consent of the affected Participant; provided, however, that this
sentence will not impair the right of the Committee to take whatever action it
deems appropriate under Sections 4.3 and 12 of the Plan.

<PAGE>

16.      Effective Date and Duration of the Plan.

         The Plan is effective as of December 16, 1993, the date it was adopted
by the Board. The Plan will terminate at midnight on December 15, 2003, and may
be terminated prior to such time by Board action, and no Incentive Award will be
granted after such termination. Incentive Awards outstanding upon termination of
the Plan may continue to be exercised, or become free of restrictions, in
accordance with their terms.

17.      Miscellaneous.

         17.1 Governing Law. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in accordance
with the laws of the State of Minnesota.

         17.2 Successors and Assigns. The Plan will be binding upon and inure to
the benefit of the successors and permitted assigns of the Company and the
Participants.

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