1
AMENDED AND RESTATED
SALES AND DISTRIBUTION AGREEMENT
This Sales and Distribution Agreement ("Agreement") dated as of the
1st day of November, 1998 (the "Effective Date"), by and among AmeriServe Food
Distribution, Inc., a Delaware corporation (the "Seller"), Tricon Global
Restaurants, Inc., a North Carolina corporation ("Tricon"), Pizza Hut, Inc., a
Delaware corporation ("Pizza Hut"), Taco Xxxx Corp., a California corporation
("Taco Xxxx"), Kentucky Fried Chicken Corporation, a Delaware corporation, and
Kentucky Fried Chicken of California, Inc., a Delaware corporation (Kentucky
Fried Chicken Corporation and Kentucky Fried Chicken of California, Inc. are
together referred to herein as "KFC"); (Tricon, Pizza Hut, Taco Xxxx and KFC
are collectively referred to herein as the "Buyer").
WHEREAS, Seller is an approved distributor of all proprietary and
non-proprietary food, supplies, equipment, smallwares, uniforms, beverages,
promotional items and point of purchase materials sold to Pizza Hut, Taco Xxxx
and KFC company owned and franchised (including licensed) restaurants; and
WHEREAS, the Buyer desires to appoint Seller, and Seller desires to
act, as the exclusive distributor of certain proprietary and non proprietary
food and packaging products as described in Section 2(b) herein sold to the
company owned Pizza Hut, Taco Xxxx and KFC restaurants of the Buyer within the
continental United States, (not including certain restaurants subject to a
sales contract or letter of intent as described below), all on the terms and
conditions set forth herein;
WHEREAS, Buyer and Seller are parties to a Sales and Distribution
Agreement dated May 6, 1997 (the "Original Agreement");
WHEREAS, Buyer and Seller desire to amend and restate the Original
Agreement with this Agreement as of the Effective Date;
NOW, THEREFORE, the parties hereto agree as follows:
1. Appointment as Approved Distributor of all Company Owned and Franchised
Restaurants.
(a) Buyer hereby appoints Seller as an approved distributor during the
term of this Agreement of the Restaurant Products (defined below) sold to all
Pizza Hut, Taco Xxxx and KFC restaurants, whether franchised or owned by Buyer
or its subsidiaries or affiliates, in the United States (including Hawaii and
Alaska), Canada and the countries where Seller currently exports Restaurant
Products from its distribution centers in the United States, which countries
are listed in Exhibit A attached hereto (the "Export Countries"). Seller
understands that the appointment contained in this Section 1 is not exclusive
and that Seller shall only have the exclusive distribution rights for the
Page 1 of 44 December 18, 1998
2
restaurants and products described in Section 2 below. In addition, Seller
understands that nothing in this Agreement shall be construed as an approval by
Buyer of Seller as a purchasing organization or purchasing agent with respect
to any of the restaurants described in the first sentence of this Section 1,
and that such approval must be separately requested by Seller and may be
granted by Buyer, in its sole discretion, from time to time.
(b) For purposes of this Agreement, the term "Restaurant Products"
shall mean all of the proprietary and non-proprietary food, equipment, office
supplies, non-office supplies (cleaning chemicals, trash can liners, etc.),
packaging products (including, without limitation, all paper products),
smallwares (pans, brooms, cutting knives, salt and pepper shakers, etc.),
uniforms, beverages, promotional items (as defined in Exhibit D hereto) and
point of purchase materials (table tents, door hangers, etc.) currently or in
the future approved by the respective Buyer for purchase by any Pizza Hut, Taco
Xxxx or KFC company owned or franchised restaurants. For purposes of clarity,
smallwares, as generally known, are reusable items with small dollar values
such as the ones described above which are used in the operation of the
business and (i) expensed under the Buyer's accounting practices in place on
the Effective Date when they are for replacements and (ii) capitalized under
the Buyer's accounting practices in place on the Effective Date when they are
purchased as part of a new restaurant opening or a major rollout of a new
Restaurant Product. The key smallwares categories are as follows: (A) Utensils
(spoodles, spatulas, tongs, cooking knives/forks/spoons, wire whips, etc.); (B)
Food prep and storage (pans, separators, containers and lids, bowls, squeeze
bottles, etc.); (C) Tabletop Items (stainless cutlery, glassware, plates, cruet
sets, tablecloths, etc.); (D) Parts (can opener blades, slicer blades, fryer
gaskets, etc.); and (E) Janitorial & cleaning reusables (mops, buckets,
brushes, garbage cans, spray bottles, urinal screens, etc.). In contrast,
equipment items are always capitalized under the Buyer's current accounting
practice (whether as a new or replacement item) and food and supplies are
always expensed.
(c) All suppliers and specifications for all Pizza Hut, Taco Xxxx and
KFC Restaurant Products purchased by Seller must be approved in advance in
writing by Pizza Hut, Taco Xxxx and KFC, respectively. Seller hereby
acknowledges that it shall have no role in the process of approving any
supplier or the specifications for the Restaurant Products. As described in
Section 7 below, the Buyer's Supply Chain Management division or other
equivalent or designated purchasing function, (referred to collectively as
"SCM") and any person designated in writing by SCM (together with SCM, an "SCM
Party") as having the right, whether as agent or independent contractor for, or
assignee, of, SCM, to exercise the rights of SCM or an SCM Party under this
Agreement, shall negotiate the price and other purchase terms of all Restaurant
Products sold by Seller to the Exclusive Restaurants (defined below). Buyer
shall provide at least thirty (30) days prior written notice to Seller of the
designation of an SCM Party and shall not permit there to be any overlap among
SCM Parties for responsibility for the purchase of any Restaurant Product.
Seller agrees that it shall not purchase Restaurant Products under agreements
negotiated by an SCM Party for any customers other than Pizza Hut, Taco Xxxx or
KFC restaurants without the prior written approval of such SCM Party. Any
breach of the preceding sentence by Seller shall constitute a material breach
of this Agreement.
Page 2 of 44 December 18, 1998
3
(d) As described in this Section 1, during the term of this Agreement
(including as extended solely for non-exclusive distributor status pursuant to
Section 9), Seller is an approved distributor of Restaurant Products for all
Pizza Hut, Taco Xxxx and KFC restaurants throughout the United States, Canada
and the Export Countries. All sections of this Agreement after this Section 1
shall, however, only describe the relationship between Buyer and Seller with
respect to certain Pizza Hut, Taco Xxxx and KFC restaurants within the 48
contiguous States of the United States of America (the "Continental United
States"). To the extent that Seller sells Restaurant Products to Pizza Hut,
Taco Xxxx or KFC restaurants outside of the Continental United States, Buyer
and Seller shall separately agree on the terms of their relationship for these
restaurants.
2. Appointment as Exclusive Distributor of Company Owned Restaurants.
(a) Buyer hereby appoints Seller as the exclusive distributor during
the term of this Agreement of the "Exclusive Restaurant Products" (defined
below) purchased by (i) the Pizza Hut, Taco Xxxx and KFC restaurants
(traditional and nontraditional units) within the Continental United States
which are owned by Buyer or any of its Subsidiaries (defined below) on the
Effective Date, except for Restaurants Under Definitive Contract or Letter of
Intent (defined below) or (ii) any additional Pizza Hut, Taco Xxxx or KFC
restaurants (traditional and nontraditional) within the Continental United
States which are acquired or built by Buyer or its Subsidiaries during the
Initial Term or any Extension Term of this Agreement (the "Exclusive
Restaurants"). The term "Restaurants Under Definitive Contract or Letter of
Intent" shall mean any Pizza Hut, Taco Xxxx or KFC restaurants owned by Buyer
which the Buyer has agreed to sell pursuant to a definitive agreement or Letter
of Intent signed by the parties thereto prior to the Effective Date, provided,
however, that until any restaurant included in the transactions the subject of
such definitive agreement or letter of intent is sold, it shall remain an
Exclusive Restaurant, and if it is not sold pursuant to such definitive
agreement or letter of intent, it shall remain an Exclusive Restaurant. A list
of "Restaurants Under Definitive Contract or Letter of Intent" is attached
hereto as Exhibit B. During the term of this Agreement, Buyer and its
Subsidiaries shall purchase, and Seller agrees to sell, 100 percent of the
Exclusive Restaurant Products required by the Exclusive Restaurants, except
incidental purchases in emergency situations and as otherwise provided herein.
The Buyer agrees that during the term of this Agreement no supplier or
distributor other than Seller shall sell the Exclusive Restaurant Products to
the Exclusive Restaurants; provided, however, that if Seller for any reason
fails to deliver any Exclusive Restaurant products on a scheduled delivery date
which was ordered within the time required for ordering as described in
subsection 5(c) hereof, the Exclusive Restaurant shall be permitted to purchase
such Exclusive Restaurant Products from another source or sources to meet its
requirements (but only for such order and not for any future orders), and no
such purchase shall be construed as a breach of Buyer's obligations or require
additional compensation to Seller. The term Exclusive Restaurants shall include
all types of nontraditional restaurants including kiosks, carts, delivery units
and restaurants in hotels,
Page 3 of 44 December 18, 1998
4
schools, airports, hospitals, or in joint consumer outlets, including
supermarkets, convenience stores, gas stations or similar arrangements, but it
shall not include any restaurants owned, acquired or built by Buyer which are
not Pizza Hut, Taco Xxxx or KFC restaurants.
For purposes of this Agreement, the term "Concept" shall mean each of
the Buyer's KFC, Pizza Hut and Taco Xxxx restaurant businesses, and the term
"Concepts" shall mean such businesses in the aggregate. To the extent the Buyer
owns, acquires or builds any restaurant concept(s) other than the Concepts,
they will only be considered Exclusive Restaurants under this Agreement if the
Buyer and Seller specifically agree in writing to include them under this
Agreement.
(b) For purposes of this Agreement, the term "Exclusive Restaurant
Products" shall mean all proprietary and non-proprietary food (including fresh
produce but excluding fresh chicken, as defined by FDA regulations), packaging
products (including, without limitation, all paper products), national soft
drinks and promotional items (as defined in Exhibit D hereto) currently or in
the future approved by the respective Buyer for purchase by any Exclusive
Restaurant. Smallwares and non-office supplies (which include, but are not
limited to, cleaning chemicals and trash can liners) will become an Exclusive
Restaurant Product, provided that Buyer and Seller, negotiating in good faith,
agree on a comprehensive operations and pricing arrangement. Until that time,
smallwares and non-office supplies will be priced and serviced under current
arrangements as set forth in Exhibit C. Fresh chicken, equipment, uniforms,
smallwares (except as set forth above), office supplies, non-office supplies
(except as set forth above) and point of purchase materials shall not be within
the definition of Exclusive Restaurant Products. National soft drinks will not
be included in the definition of Exclusive Restaurant Products to the extent
that the distribution thereof by Seller could, in the reasonable judgment of
Buyer, be expected to subject the Buyer to contractual restrictions that could
operate to limit the ability of the Buyer to offer certain brands of national
soft drinks to its customers. Buyer will use reasonable efforts to negotiate
the removal of such contractual restrictions. New Exclusive Restaurant Products
which are being tested can be distributed by a company other than Seller in one
test market for up to 90 days. As a result, Seller shall be an approved
distributor as described in Section 1 above (but not an exclusive distributor)
of all such nonexclusive Restaurant Products which are excluded from the
definition of Exclusive Restaurant Products. The above definition of Exclusive
Restaurant Products may be changed only by written agreement of Buyer and
Seller.
(c) Buyer and Seller agree to reasonably cooperate to work towards a
generic product procurement program for generic items (e.g., trash can liners,
toilet paper, cleaning materials, etc.) with Seller acting as the supplier of
these products and which would result in price reductions of at least 1 percent
below current levels. The program is subject to Buyer's final approval and the
generic products to be included within such program shall be agreed to in
writing in advance from time to time by the parties hereto. Buyer retains all
rights to grant and revoke the approval of all specifications and
qualifications of such generic products thereof and Seller agrees not to
disclose any
Page 4 of 44 December 18, 1998
5
proposed changes or modifications of such specifications or qualifications to
existing suppliers prior to the Buyer's written approval thereof. It is
understood that the intent of such product program would be to permit volume
purchases from vendors and, as such, generic product negotiations with vendors
would from time to time include negotiations in respect of Buyer's needs for
such products and the concurrent needs of other customers of Seller for such
products. Seller agrees that for any specific generic product for which Seller
is designated as the sole supplier to the Exclusive Restaurants, Buyer will be
charged no more on a per item basis for such product (meeting substantially
similar specifications) than Seller charges any other customer therefor.
(d) For purposes of this Agreement, the term "Subsidiaries" shall mean
the companies, partnerships or other entities in which the Buyer owns at least
a majority of the total equity interests. For purposes of convenience only, the
numerous Subsidiaries of the Buyer who own the Exclusive Restaurants are not
signing this Agreement. The Buyer hereby unconditionally guarantees the full
performance of the obligations of its Subsidiaries who own the Exclusive
Restaurants during the term of this Agreement and the fact that such
Subsidiaries are not signing this Agreement shall not affect in any way the
rights or obligations of the Buyer or Seller under this Agreement.
(e) A list of the Exclusive Restaurants on the Effective Date will be
provided by the Buyer to Seller on or about the Effective Date, which list will
be the initial list of the Exclusive Restaurants. If during the Initial Term or
any Extension Term of this Agreement the Buyer or any of its Subsidiaries
acquires or builds any additional Pizza Hut, Taco Xxxx or KFC restaurants, the
Buyer shall so notify Seller and such additional restaurants shall be added to
the list of Exclusive Restaurants and become subject to the terms of this
Agreement for the remaining period of the Initial Term or any Extension Term of
this Agreement. If the Buyer or any of its Subsidiaries sell, or enters into a
definitive agreement to sell, any Pizza Hut or Taco Xxxx Exclusive Restaurants
prior to December 31, 1999, and the buyer of such Exclusive Restaurants is,
immediately prior to the sale, a Pizza Hut or Taco Xxxx franchisee, and is
among the buyers that acquire the initial two hundred Pizza Hut Exclusive
Restaurants, in the case of a Pizza Hut franchisee, or the initial two hundred
Taco Xxxx Exclusive Restaurants, in the case of a Taco Xxxx franchisee, sold by
the Buyer in the period following the Effective Date (excluding Restaurants
under Definitive Contract or Letter of Intent), the buyer of such Exclusive
Restaurants shall be required prior to such sale to enter into a Sales and
Distribution Agreement with Seller with respect to such purchased Exclusive
Restaurants either, at the election of such buyer, in the form attached hereto
as Exhibit G-1(B) (having a term the same as the Original Agreement plus a six
(6) month extension) or Exhibit G-2 (having a term the same as this Agreement).
The buyer of "Restaurants Under Definitive Contract or Letter of Intent"
(excluding KFC restaurants) shall be required prior to such sale to enter into
a Sales and Distribution Agreement with Seller with respect to such restaurants
either, at the election of such buyer, in the form attached hereto as Exhibit
G-1(A) (having a term the same as the Original Agreement) or Exhibit G-2
(having a term the same as this Agreement). If the Buyer or any of its
Subsidiaries sell, or enters into a definitive agreement to sell, any Pizza Hut
or Taco Xxxx Exclusive Restaurant during the Initial Term of this Agreement, to
a buyer not covered by either of
Page 5 of 44 December 18, 1998
6
the two immediately preceding sentences, the buyer of such Exclusive Restaurant
shall be required prior to such sale, to enter into a Sale and Distribution
Agreement with the Seller in the form attached hereto as Exhibit G-2. Once such
buyer enters into such a Sales and Distribution Agreement with Seller with
respect to such purchased Exclusive Restaurants, the Buyer shall have no
further obligations under this Agreement with respect to such purchased
Exclusive Restaurants and the Buyer shall not guarantee in any way the payment
or other obligations of such buyer to Seller. If the buyer of such Exclusive
Restaurant already owns other franchised Pizza Hut or Taco Xxxx restaurants,
such other restaurants owned by such buyer shall not be required to become
Exclusive Restaurants subject to the terms of the applicable Sales and
Distribution Agreement. The requirement that refranchised Pizza Hut and Taco
Xxxx Exclusive Restaurants must continue to be Exclusive Restaurants under this
Agreement shall not apply to KFC Exclusive Restaurants sold by Buyer or its
Subsidiaries during the term of this Agreement. If a KFC Exclusive Restaurant
is sold by the Buyer or its Subsidiaries during the term of this Agreement and
becomes a franchised KFC restaurant, the terms of this Agreement shall not
apply to said KFC restaurant which will be removed from the list of Exclusive
Restaurants.
3. Prices for Exclusive Restaurant Products.
(a) The prices to be paid by the Exclusive Restaurants for the
Exclusive Restaurant Products purchased from Seller during the term of this
Agreement shall be equal to (x) the "Landed Cost" (defined below) of the
Exclusive Restaurant Products plus a xxxx-up described in Exhibit D attached
hereto plus (y) the costs of SCM allocated to the Exclusive Restaurant Products
and charged to Seller as described in Section 7 below. The xxxx-ups listed on
Exhibit D become effective on January 1, 1999. Until that date, the Landed
Cost, xxxx-ups, freight and other pricing provisions will be those provided for
under the Original Agreement. Buyer will give Seller 60 days prior written
notice of any changes in the amount of or manner of the SCM fee. As described
in Exhibit D, the xxxx-up will be different for the different restaurant
chains, Pizza Hut, Taco Xxxx and KFC. The xxxx-up applicable to Exclusive
Restaurant Products that are used in common by each Concept in a "2n1" or "3n1"
Exclusive Restaurant shall be the markup specified for the Concept under which
such "2n1" or "3n1" Exclusive Restaurant is operated and numbered by the Buyer.
The xxxx-up applicable to Exclusive Restaurant Products that are proprietary to
a Concept shall be that Concept's specified xxxx-up.
(b) As used in this Agreement, the term "Landed Cost" for Exclusive
Restaurant Products shall mean F.O.B. vendor's dock price for the Exclusive
Restaurant Products, plus standard freight from the F.O.B. point to Seller's
distribution center dock. All weight and quantity discounts, promotional
allowances, rebates and special discounts reasonably allocable to the Exclusive
Restaurants, will be deducted in computing the Landed Cost. Seller shall retain
all prompt pay discounts which will not be factored into the calculation of
Landed Cost. Buyer will not knowingly permit any SCM Party to negotiate away
any standard vendor prompt pay discounts. Seller and its subsidiaries perform
value-added services for suppliers in addition to the procurement activities
typically provided. These value-added services include regional and national
marketing,
Page 6 of 44 December 18, 1998
7
administrative services, quality assurance and performance based product
marketing. Seller and its subsidiaries may recover from such supplier the costs
of providing these services and may also be compensated by such supplier for
these services and consider this compensation to be earned income, provided
that receipt of such cost recovery or earned income will not affect Landed
Cost. Seller will disclose to Buyer on a semi-annual basis the dollar amount of
"earned income" received by Seller from vendors on a product category basis.
Neither Buyer nor any SCM Party shall have any restrictions on receiving
supplier "earned income" or other supplier incentives such as rebates and
discounts. Subject to Buyer's prior written approval, Landed Cost may also
include reasonable freight and handling costs associated with inventory
transfers between Seller's distribution centers in cases where vendor minimum
or full truck load order quantities cannot reasonably be met, said costs to be
reflected in the Landed Cost of the receiving Seller distribution center.
Seller will not charge for transfers of inventory that are required to be made
by Seller to correct inventory shortages caused by Seller's inventory
management mistakes. As indicated in Exhibit E attached hereto, Seller and
Buyer will jointly develop a process to manage such approvals.
For purposes of determining Landed Cost, Seller shall price
its inventory of Restaurant Products on a last in, first out (LIFO) basis where
all product will be sold at current market value, whether that value is higher
or lower than actual inventory value. For items priced in four-week periods,
current market value is defined as the purchase order cost if there is an
outstanding purchase order with a delivery date into Seller's distribution
center prior to the 10th day of the period for the period which pricing is
being determined, or in the absence of such a purchase order, the current
Landed Cost of that item. Buyer or the SCM Party will require vendors to give 4
weeks notice prior to a price change in a period priced Restaurant Product. For
weekly priced items (certain commodities, such as cheese, produce and other
products specified in a written notice from Buyer to Seller), current market
value is the current Landed Cost at the time pricing is determined (not to
exceed three (3) days prior to the beginning of the weekly period). Buyer or
the SCM Party will require vendors to give at least three (3) days notice prior
to a price change in a weekly priced Restaurant Product to the extent
consistent with agreements between Buyer and vendors in effect on the Effective
Date, or any renewal or extension of said agreements.
(c) Freight Management Rules. The Freight Management Rules attached
hereto as Exhibit E (the "Freight Management Rules") shall establish the
standards of performance that shall be required to be adhered to. The freight
rates and other information necessary for establishing the pricing under the
Freight Management Rules shall be redetermined annually to be effective January
1, 1999 and each anniversary thereof. Freight standards will be based on
shipment sizes that approximate current product mix.
(d) Case Size and Weight Changes and New Restaurant Products. The case
xxxx-ups provided for in this Agreement were based upon the actual calculations
of average weight per case of Exclusive Restaurant Products delivered in 1997
(the "Weight to Case Ratio"), and average case size of Exclusive Restaurant
Products delivered in 1997 (the "Cube to Case Ratio"), each as set forth in
Exhibit D hereto. The per case
Page 7 of 44 December 18, 1998
8
markup of case-priced Exclusive Restaurant Products (not the percentage markup)
will be equitably adjusted for any material change (as defined below) in the
Weight to Case Ratio or the Cube to Case Ratio, or for any new product, where
either party determines in good faith that such change or new product is
detrimental to its financial position under the terms of this Agreement,
including, without limitation, a material change in product mix (e.g., an
increase in frozen Restaurant Products). For case-priced Exclusive Restaurant
Products, a material change shall be defined as 10 percent change in either the
Weight to Case Ratio or the Cube to Case Ratio for all products on a Concept by
Concept basis. Buyer shall not, and shall cause a SCM Party not to, request a
supplier to increase the weight or case size unless there is a reasonable
business purpose other than lowering the distribution fees paid to Seller. The
parties agree to review these changes for each Buyer's Concept on a quarterly
basis. For all other products, parties will negotiate changes in good faith.
Should Buyer decide to add or modify any Restaurant Products in a manner which
fundamentally alters the storage and/or delivery requirements outside of the
current methods (e.g., ice cream, bulk oil, commissary pizza dough, high
security promotional items and game pieces), the parties shall work together in
good faith to develop, on mutually acceptable terms, alternative storage and/or
delivery methods which meet Buyer's distribution requirements. For this
purpose, mutually acceptable terms shall include prices and rates which are
market competitive with respect to the alternative storage or delivery methods
developed by the parties. If Buyer, in its reasonable judgment, determines that
mutually acceptable terms have not been agreed to within a reasonable amount of
time, Buyer may, after requesting written bid(s) for storage and delivery
methods that meet its requirements, enter into an agreement for the
distribution of the applicable Exclusive Restaurant Product with any person(s)
providing such a bid(s); provided that Seller shall have the right of first
refusal with respect to the terms of any such bid(s), for a period of 30
business days after its receipt of the terms of such bid(s).
(e) The parties will agree on the specific method of billing the
Exclusive Restaurants (e.g., electronic billing, faxed invoice or other format)
and whenever possible electronic billing will be used. From time to time during
the term of this Agreement, Buyer shall have the right to review all financial
and business records of Seller which are reasonably requested by Buyer to
determine the Landed Costs of the Exclusive Restaurant Products sold to the
Exclusive Restaurants. Within 90 days after the end of each calendar year,
Seller shall provide to the Buyer a calculation by a major independent
international public accounting firm, agreed upon by Seller and Buyer, of the
Landed Costs of all Exclusive Restaurant Products sold to each of the
respective Pizza Hut, Taco Xxxx and KFC Exclusive Restaurants during that
calendar year. Seller or Buyer, as the case may be, will then promptly make an
adjusting payment in respect of any overcharges or undercharges. Seller shall
make available to the independent accounting firm all financial records
necessary to make such calculation. The costs of the independent accounting
firm shall be shared equally by the Buyer and Seller (50 percent by each).
(f) The prices described in the paragraphs above shall apply only to
the Exclusive Restaurant Products. For all Restaurant Products which are not
included within the definition of Exclusive Restaurant Products (e.g., fresh
chicken, equipment,
Page 8 of 44 December 18, 1998
9
office supplies, uniforms, smallwares (except as provided in Section 2(b)
above), non-office supplies (except as provided in Section 2(b) above) and
point of purchase materials), the prices will be negotiated from time to time
by Seller and Buyer.
(g) Notwithstanding the foregoing, the parties agree that the prices
of the Restaurant Products which are food, paper products and similar
restaurant supplies purchased by all Pizza Hut franchised restaurants within
the Continental United States (not including the Exclusive Restaurants) will
continue until the expiration of the term of the Original Agreement (July 11,
2002) to be subject to the 2.5 percent net pre-tax profit margin limit set
forth in clause D(ii) of Section 8.3 of the standard Pizza Hut Franchise
Agreement, a copy of which is attached hereto as Exhibit F. Seller agrees to
maintain during the Initial Term of this Agreement the rebate program for this
2.5 percent net pre-tax profit margin limit for Pizza Hut restaurants in a
manner to be agreed upon by Buyer and Seller, including a basis for allocating
costs and providing to Pizza Hut franchisees the audit of all allocated costs
and rebate payments provided for under Section 8.3 of the standard Pizza Hut
Franchise Agreement. Seller will be relieved of this profit limitation if any
distributor servicing Pizza Hut franchisees is not subject to the same profit
limitations.
4. Payment Terms for the Restaurant Products.
(a) The Buyer shall pay to Seller the purchase price for the
Restaurant Products delivered to and accepted by the Buyer within 30 calendar
days after the date of invoice (which invoice will be the same day as
delivery). No interest shall be charged to the Buyer with respect to payments
made on or before the due date. Seller agrees that all credits for product on
which Seller has received telephonic or other notice that such product was
invoiced but not received on the scheduled delivery date or product picked up
for return (RMA) will be processed within 24 hours of the applicable driver's
return to the distribution center, provided that the data transmittal for all
weekend and holiday returns is processed before the evening of the following
business day.
(b) If any amounts due to Seller are not paid in accordance with the
payment terms when due as described in subsection 4(a) above, a service charge
shall be added to the sums due, which charge shall be equal to the lesser of
(i) an interest charge determined by applying to the delinquent balance an
interest rate equal to the prime rate of interest of Citibank N.A. (as
published from time to time) plus 2 percent per annum or (ii) the amount
determined by applying the maximum rate permitted to be charged under
applicable state law.
5. Deliveries and Orders of the Restaurant Products excluding Equipment
and Non Fleet Smallwares.
(a) The provisions of this Section 5 describe the mechanics and
procedures for ordering and delivering all of the Restaurant Products
distributed and sold by Seller to the Exclusive Restaurants except for the new
and replacement equipment and furnishings which Seller sells to the Exclusive
Restaurants through its equipment business and certain
Page 9 of 44 December 18, 1998
10
smallware items which are not delivered through the Seller's distribution
centers (the "Non Fleet Smallwares"). The Restaurant Products, excluding
equipment and furnishings and the Non Fleet Smallwares, is hereinafter referred
to as the "Covered Products." The specific mechanics and procedures for
ordering and delivering of equipment and furnishings is not described in this
Agreement and will be subject to the agreement of Seller and the Exclusive
Restaurants from time to time. The specific mechanics and procedures for
ordering and delivering of Non Fleet Smallwares are set forth in Exhibit C
hereto.
(b) Deliveries of the Covered Products shall be made twice a week to
the Exclusive Restaurants. If the Buyer desires to have more than two
deliveries per week for any particular Exclusive Restaurants, the Buyer will be
required to pay an additional charge to Seller in an amount to be negotiated
and agreed upon by Seller and Buyer. Seller will offer to Buyer a discount off
the purchase price of the Covered Products (in an amount determined by Seller)
if an Exclusive Restaurant agrees to reduce the number of its scheduled
deliveries per week. Seller may deliver the ordered Covered Products to the
Exclusive Restaurant at any time during which the Exclusive Restaurant is open
for business except for the black out periods described in Exhibit H attached
hereto, or such other black out periods which are previously agreed upon in
writing by Seller and the regional managers of the Exclusive Restaurants.
Before the beginning of each black out period, Seller's drivers must complete
their deliveries and be out of the Exclusive Restaurant and failure to do so
will not be considered as an on time delivery. Seller agrees to start
deliveries within one hour (before or after) of the expected delivery time that
Seller notifies an Exclusive Restaurant. As examples: (i) if the expected
delivery time is 9:00am and Seller's driver starts the delivery between 8:00am
and 10:00am, the delivery will be on time but (ii) if the expected delivery
time is 11:00am for a Taco Xxxx restaurant and Seller's driver starts the
delivery at 11:00am but does not complete the delivery by 11:30am, the delivery
will not be on time. Seller will notify the Exclusive Restaurants of the
expected delivery time no later than the day preceding the date of delivery. If
the delivery cannot be started within such two hour period (one hour before and
one hour after the scheduled delivery time), Seller will notify the Exclusive
Restaurant in advance but the delivery will still be made the same day. The
regional managers of the Exclusive Restaurants may waive in writing the black
out period delivery prohibition and accept delivery during the black out
period. Seller will be allowed to deliver the Covered Products when the
Exclusive Restaurant is closed (so called "key" deliveries) only with the prior
written approval of an authorized representative of the Buyer (or other
appropriate level employee of the Exclusive Restaurants as designated by the
Buyer). If Seller's driver sets off an alarm at a key delivery (other than
because the Exclusive Restaurant did not provide the correct alarm code) and
there are charges incurred by the Exclusive Restaurant as a result of such
alarm, Seller will reimburse the Exclusive Restaurant for such charges.
Delivery days and times will be scheduled so as to cause as little interruption
to the operation of the Exclusive Restaurants as is practical under the
circumstances.
(c) Orders by the Buyer for the Covered Products must be made to
Seller no later than 5:00pm on the day which is two days prior to the scheduled
delivery date;
Page 10 of 44 December 18, 1998
11
provided, however, that for Exclusive Restaurants which are not close to a
distribution center of Seller (not within one day normal driving time from the
nearest Seller's distribution center), Seller may require that these orders be
made no later than 5:00pm on the day which is three days prior to the scheduled
delivery date. If there are any exceptional cases where Seller wishes to
receive orders four days prior to the scheduled delivery date, they must be
approved in writing by the local manager of the affected Exclusive Restaurant.
Seller agrees to continue to maintain the "Sourcelink" electronic ordering
system (or equivalent up to date electronic ordering system) which currently
allows the Exclusive Restaurants to make electronic orders for the Covered
Products. If the Sourcelink orders are not received within two hours before the
5:00pm order deadline, Seller will call the restaurant before the order
deadline in order to try to receive the order. If the distribution center of
Seller is still unable to receive an order from an Exclusive Restaurant prior
to the 5:00pm order deadline, Seller shall automatically order for the
Exclusive Restaurant for the exact same order it received for the same day of
the previous week (excluding smallwares) and the Exclusive Restaurant will be
required to accept such delivery when made. To the extent the Exclusive
Restaurant is late in ordering or changes its order after the 5:00pm order
deadline, Seller is not required to accept such late or changed order. If
Seller decides to accept such late or changed order, Seller may charge the
Buyer a special delivery charge to be negotiated by Seller and Buyer. Seller
agrees that its Sourcelink computer software and hardware (or such other
electronic ordering software and hardware used by Seller which is at least
functionally equivalent to Sourcelink) will be free from errors or "bugs"
related to the Year 2000 issue on or before September 30, 1999. Seller shall
prepare a back-up plan for making orders should such software suffer errors or
"bugs" related to the Year 2000 issue and will make reasonable efforts to
correct any such errors or "bugs" it may suffer.
(d) Deliveries shall be to such location on the Exclusive Restaurant
premises as the Exclusive Restaurants shall reasonably direct. Covered Products
shall be deemed delivered when actually placed in the storage areas of the
Exclusive Restaurant (including the temperature controlled compartments in the
case of the frozen or refrigerated Covered Products) by Seller's drivers, as
reasonably directed by employees of the Exclusive Restaurant. Seller's drivers
will not be required to stock shelves or rotate the Covered Products. The
Exclusive Restaurants will be responsible to keep the back door and aisle free
of debris for Seller's drivers to deliver the Covered Products to the storage
areas. To the extent practicable, deliveries by Seller shall have unloading
priority over all other vendors. The Exclusive Restaurants shall assign and
make available an employee or employees to accept delivery, subject to the
terms of paragraph (f) below, of Covered Products, and to sign the invoice
documenting receipt of the ordered Covered Products (to the extent received and
not damaged).
(e) Seller will only deliver the Covered Products specified by the
Buyer and shall not substitute products for the Covered Products; provided,
however, that the delivery on an infrequent basis of the Covered Products in a
different size than ordered shall not be considered a substitute if the total
quantity of the Covered Products is the amount ordered (e.g., delivery of two
12 ounce jars instead of four 6 ounce jars). Seller agrees to comply with all
quality assurance programs and guidelines consistently required
Page 11 of 44 December 18, 1998
12
by the Buyer for other similarly situated distributors of Restaurant Products
in the United States from time to time during the term of this Agreement to
ensure that the quality of the Covered Products is maintained while the
Restaurant Product is being stored, handed and transported by Seller. If Tricon
quality assurances programs and guidelines are materially modified after the
date of the Original Agreement, Buyer agrees to discuss in good faith the
reasonableness of such change with Seller. The current quality assurance
programs and guidelines of each of Pizza Hut, Taco Xxxx and KFC have been
provided to Seller prior to the date hereof.
(f) If ordered Covered Products are not delivered by Seller on the
scheduled delivery date (including key deliveries), or are delivered damaged or
not meeting the required specification, at the request of the Exclusive
Restaurant, Seller will make a special delivery to redeliver the Covered
Products as quickly as possible. In addition, Seller shall take back all
Covered Products which are damaged or out of specification and give a credit to
the Exclusive Restaurant for the purchase price charged by Seller to the
Exclusive Restaurant for that product. If the Covered Products were out of
specification or the damages were internal and not visible to Seller upon
receiving delivery of the Covered Products from the vendor, the vendor shall be
responsible to Seller for all costs relating to making such special deliveries
and to take back damaged or out of specification Covered Products. The Buyer
and Seller each agree to use their respective best efforts to collect such
costs from the vendors.
(g) If the Buyer decides to return any nonperishable Covered Products
ordered by Buyer and delivered to it within specification, not damaged and on
the scheduled delivery date, Seller shall, within 30 days after such return,
charge the Buyer for taking back such Covered Product an amount equal to 15
percent of the invoice price of such Covered Product (as a restocking fee).
(h) Title and risk of loss for the Covered Products purchased by the
Exclusive Restaurants from Seller shall pass to the Exclusive Restaurants upon
delivery by Seller inside the Exclusive Restaurant. In the event that any
Covered Products are delivered and subsequently returned or rejected by an
Exclusive Restaurant, title and risk of loss shall revert to Seller upon the
physical transfer of possession of the Covered Products back to Seller at the
time such Covered Products are picked up by Seller from Buyer's Exclusive
Restaurant.
(i) Buyer acknowledges and agrees that Seller has full discretion to
direct all deliveries from any distribution center which Seller operates, and
to make such changes to the routing process as Seller, in its sole discretion,
determines appropriate; provided, however, that Seller shall notify the
affected Pizza Hut, Taco Xxxx and KFC restaurants of any changes in its routes.
In addition, the Buyer acknowledges and agrees that Seller's fleet may not be
solely dedicated to the distribution of Covered Products to Pizza Hut, Taco
Xxxx and KFC restaurants. As a result, Seller's fleet which distribute the
Covered Products to Pizza Hut, Taco Xxxx and KFC restaurants may also carry
other products for delivery to other customers (including competing customers)
on the same routes so long as they do not in any way damage, contaminate or
adversely affect the quality of the
Page 12 of 44 December 18, 1998
13
Covered Products during the delivery or adversely affect deliveries to the
Exclusive Restaurants.
(j) Management of the inventory levels in the distribution centers of
Seller will be the responsibility of Seller except that Seller agrees that it
will not buy any Covered Products which Seller expects to keep in inventory for
more than 60 days without the consent of the Buyer. Seller agrees to provide to
the extent practicable weekly information to the Buyer by distribution center
of its inventory levels of all Restaurant Products purchased through Seller.
Seller shall not be required to buy promotional items or new or test market
Covered Products until it first receives a firm commitment from the Buyer and,
in the case of such promotional items, or new or test market Covered Products
which are for sale to franchised Pizza Hut, Taco Xxxx and KFC restaurants,
until it first receives a firm commitment from such franchisees to purchase
such promotional items or new or test market Covered Products. If any
promotional items or any other Covered Products which are unique to the Buyer's
operations are purchased by Seller based on the Buyer's projections and such
Covered Products remain in Seller's inventory for more than 90 days after
Buyer's projected need, Seller may charge the Buyer a storage and handling
charge equal to 1 percent of the Landed Cost of such Covered Products per month
until Covered Products are delivered to the Buyer. Each month during the term
of this Agreement the Buyer and Seller shall meet to review the amount of
promotional items or other unique Covered Products which have remained in
inventory for more than 90 days after Customer's projected need and use their
respective best efforts to agree on a schedule for delivery of such excess
inventory to the Exclusive restaurants as quickly as possible and in any event
not more than an additional 90 days after such initial 90 day period. At the
end of such additional 90 day period, Seller may require the Buyer to either
order such excess inventory or direct Seller to dispose of such excess
inventory at the Buyer's cost. Unless either (i) a Covered Product is
discontinued by the Buyer or (ii) the Buyer approves an AIP (authorization for
inventory purchase) for Covered Products ordered by franchised Pizza Hut, Taco
Xxxx or KFC restaurants, the Buyer shall not be responsible to Seller for any
storage charges or purchase commitments of any franchised Pizza Hut, Taco Xxxx
or KFC restaurants. Buyer agrees that that it will cause vendors of Promotional
Items to make available to Seller payment terms at least as favorable as terms
available to any other distributor with similar credit ratings and histories of
Promotional Items to the Concepts. The payment terms on Promotional items will
not be considered in calculating the "Weighted Average Payment Term" as defined
in Section 7(a) of this Agreement.
(k) In the event the Buyer decides to recall any Restaurant Product,
Seller agrees to assist the Buyer, to the extent reasonably requested by the
Buyer, in its recall efforts, including, without limitation, promptly assisting
the Buyer in determining exactly which Pizza Hut, Taco Xxxx or KFC restaurants
may need to be notified of a product recall. Unless such recall was needed as a
result of any action or omission to act by Seller, the Buyer (or the vendor at
the Buyer's direction) shall reimburse Seller for all additional costs incurred
by Seller (e.g. labor, fuel, etc.) in such recall efforts to the extent such
recall was requested by the Buyer.
Page 13 of 44 December 18, 1998
14
(l) Seller warrants that all Covered Products to be distributed by it
to Pizza Hut, Taco Xxxx or KFC restaurants shall be inspected, handled, stored,
shipped and sold by Seller in strict compliance with all applicable (i) federal
and state laws (ii) rules and regulations of all governmental agencies having
jurisdiction and (iii) municipal ordinances. Upon its receipt of any citation
issued by any governmental or regulatory authority which might result in the
interruption in Seller's distribution service to any Pizza Hut, Taco Xxxx or
KFC restaurant customers, Seller, shall promptly notify such customers who may
be affected.
(m) Seller agrees to use its best efforts to take and respond to
emergency calls from the Exclusive Restaurants for delivery of Covered
Products. Seller and the Exclusive Restaurants will agree upon the additional
charges to be paid to Seller for special deliveries needed to respond to such
emergency calls.
6. Minimum Service Levels.
(a) Seller agrees to maintain during the term of this Agreement on a
total basis for all Exclusive Restaurants serviced by Seller, each of the
following monthly service levels:
(i) The actual number of Perfect Orders (defined below) of the
Covered Products which are delivered to the Exclusive
Restaurants during each month as a percentage of the total
number of deliveries of the Covered Products ordered shall
not be less than 85 percent; and
(ii) The number of deliveries of the Covered Products during any
month which are on time (within one hour before or after the
scheduled delivery time as described in Section 5(b) above)
shall not be less than 80 percent.
The above service levels shall be measured on a total basis for all
distribution centers of Seller together (not separately for each individual
distribution center). Key deliveries will be factored into the measurement of
on time deliveries described in (ii) above.
If Seller fails to achieve either of such service levels during any
three months of any calendar year during the term of this Agreement (commencing
in 1999), this failure shall constitute a material breach of this Agreement
entitling the Buyer to terminate this Agreement upon notice to Seller as
described in Section 10 below. Seller will provide Buyer with monthly service
level reports using data collected from each Exclusive Restaurant in a
systematic manner (including the store manager or regional manager signoff on
delivery documentation) that is a data input in an electronically produced
service level report.
Page 14 of 44 December 18, 1998
15
(b) Seller agrees to maintain during the term of this Agreement, for
the Exclusive Restaurants serviced by each distribution center of Seller, the
following monthly service level:
The actual number of Perfect Orders of the Exclusive Restaurant
Products which are delivered to the Exclusive Restaurants from that
distribution center during each month as a percentage of the total
number of deliveries of the Exclusive Restaurant Products ordered
shall not be less than 75 percent.
The above service level shall be measured separately for each
distribution center of Seller which delivers to the Exclusive Restaurants.
If Seller fails to achieve the above service level during any three
months of any calendar year during the term of this Agreement (commencing in
1999), the Buyer shall have the right upon notice to Seller given at any time
during the ninety (90) day period after the end of the third month in which it
has failed to meet such service level to remove the Exclusive Restaurants which
were serviced by such distribution center from the list of Exclusive
Restaurants. As a result, if the Buyer gives such notice, Seller will lose the
exclusive right under this Agreement to deliver the Exclusive Restaurant
Products to the Exclusive Restaurants which were customers of such
underperforming distribution center.
(c) The term "Perfect Order" shall mean a delivery where 100 percent
of the cases of the delivered Exclusive Restaurant Products are (i) exactly the
items ordered by the Exclusive Restaurant, (ii) not damaged and (iii) within
specification; provided, however, that any order which fails to be a "Perfect
Order" because (x) a vendor was not able to supply a Covered Product which is
part of the order, or (y) a Covered Product which is part of the order is not
shipped to Seller in a timely manner and the Buyer is responsible for arranging
or directing the manner of freight of such Covered Product to Seller, shall be
disregarded for purposes of this paragraph (c).
Within two (2) weeks of the end of each month Seller shall notify
Buyer of its service levels described in paragraphs (a) and (b) above for the
month and, at the request of the Buyer, Seller shall make available to the
Buyer all of its records which support its determination of the service levels
and such other records reasonably requested by the Buyer. By September 30,
1999, the service level data will be subdivided and totaled for the Exclusive
Restaurants owned by Buyer, the franchisee-owned Exclusive Restaurants and
franchisee owned non-Exclusive Restaurants which buy through SCM.
7. Supply Chain Management.
(a) Seller and SCM intend that their relationship will be based on a
spirit of cooperation where they will support each other whenever possible.
During the term of this Agreement, SCM or another SCM Party will negotiate with
the vendors all price and other purchase terms for all Restaurant Products
which are distributed and sold by Seller to any Exclusive Restaurants at such
prices described in Section 3 above. The
Page 15 of 44 December 18, 1998
16
commitment by Seller to exclusively buy under terms and agreements negotiated
by an SCM Party all Restaurant Products sold to the Exclusive Restaurants is
subject to the exception that if Seller is able to buy such Restaurant Products
for the Exclusive Restaurants on terms more favorable to the Exclusive
Restaurants than those negotiated by an SCM Party, Seller will notify the Buyer
of such better terms and offer Buyer the opportunity to buy such Restaurant
Products on such better terms negotiated by Seller. Any SCM Party shall have
the right to allocate among two or more vendors the total purchases of the
Restaurant Products purchased under terms and agreements negotiated by such SCM
Party. In addition, each SCM Party shall have the right to determine which
vendors will supply the Restaurant Products purchased under terms and
agreements negotiated by such SCM Party to each of the respective distribution
centers of Seller. Buyer agrees that the "Weighted Average Payment Term"
(defined below) for the Restaurant Products purchased during any calendar
quarter by Seller and negotiated through any SCM Party will be no less than 15
calendar days. For purposes of this Agreement, the term "Weighted Average
Payment Term" shall mean the average number of days after invoice which the
suppliers of the Restaurant Products purchased through each SCM Party (taken
together) require for payment by Seller, weighted by the dollar volumes for the
different items of the Restaurant Products and the different required terms for
payment. Notwithstanding the foregoing, SCM (and with the written consent of
SCM, any other SCM Party) may negotiate payment terms for Restaurant Products
purchased by Seller for sale to the Exclusive Restaurants owned by the Buyer
(not franchised Exclusive Restaurants) which result in a Weighted Average
Payment Term for such Restaurant Products below 15 calendar days so long as
there is an equivalent reduction in the receivable payment terms for such
Exclusive Restaurants to fully compensate Seller for paying earlier than a
Weighted Average Payment Term of 15 days. As described in Section 3(b) above,
Seller shall be entitled to receive all early pay discounts and such discounts
shall not reduce the amount of the Landed Costs. Any SCM Party shall have the
right to negotiate early pay discounts which Seller will receive so long as the
Weighted Average Payment Term, after taking into account such discounts, is not
less than 15 calendar days as described above. Buyer agrees and shall cause
such SCM Party to agree that Seller shall have the right to receive standard
vendor prompt pay discounts. In addition, any SCM Party may negotiate payment
terms which include an interest charge for late payments by Seller to the
supplier equal to the lesser of: (i) the prime rate of interest of Citibank,
N.A. (as published from time to time) plus 2 percent per annum or (ii) the
maximum rate permitted to be charged under applicable state law.
(b) Except as described below, all inbound freight of the Restaurant
Products to the distribution centers of Seller, including the selection of the
carriers and the negotiation of the freight charges, will be managed by and
incurred by Seller as part of its distribution services provided under this
Agreement (without any additional fee to Buyer). The parties agree to comply
with the Freight Management Rules attached hereto as Exhibit E.
(c) SCM fee will continue to be charged by AmeriServe in such amount
and in such manner as directed by Tricon. Tricon will give AmeriServe 60 days
prior notice of any changes in the SCM fee.
Page 16 of 44 December 18, 1998
17
(d) Seller shall promptly submit to Buyer accurate and complete
monthly reports on such forms as Buyer shall from time to time prescribe
showing (i) the identity of each Exclusive Restaurant to which Seller has sold
Products; (ii) the identity and quantity of Restaurant Products sold by Seller
to the Exclusive Restaurants; and (iii) the net price (exclusive of permissible
prompt pay discounts) paid by the Distributor (or if not conveniently available
the net price paid to Seller by each Exclusive Restaurant) as the form of such
reports and reporting requirements shall be revised in any Distributor
Participation Agreement to which Seller and any SCM Party are a party. Seller
shall be obligated, during the term of this Agreement, to deliver the invoice
information detailed by components (Landed Cost, Seller's xxxx-up and any other
invoice information provided by Seller), for each distribution center and
separately for Exclusive Restaurants owned and not owned by Buyer.
(e) Seller shall keep and preserve adequate records to support all
information provided by Seller to Buyer pursuant to this paragraph for a
commercially reasonable period of time (at least one year).
8. Continuation of Equipment Business.
Although the equipment products of Seller are not part of the Covered
Products sold to the Exclusive Restaurants, Seller currently plans to maintain
the equipment business and to make the equipment products available for
purchase by the Pizza Hut, Taco Xxxx and KFC restaurant customers of Seller.
Seller agrees to provide to the Buyer and its other Pizza Hut, Taco Xxxx and
KFC franchised restaurant customers at least six months prior notice before
either (i) any significant reduction by Seller in the distribution services it
offers for equipment products or (ii) Seller sells the equipment business.
Buyer will continue to purchase 80 percent of its equipment needs for the
Exclusive Restaurants owned by Buyer until November 1, 1999 at prices mutually
agreed to in writing by the parties from time to time.
9. Term.
This Agreement is for a term beginning on the Effective Date and
ending on January 11, 2005 (the "Initial Term"). This Agreement may be extended
until July 11, 2007 upon one year's prior written notice by either party (the
"Extension Term"). If Buyer opts to extend the Initial Term, contract rates, as
adjusted by CPI adjustments, shall continue to apply. If Seller but not Buyer
opts to extend the Initial Term, Buyer and Seller will negotiate in good faith
contract rates for the Extension Term. If parties cannot agree on rates, Buyer
may put the business out for competitive bid, but Seller will have right of
first refusal to maintain the business on same terms as those of the lowest
bona fide bid(s) obtained by Buyer. In the alternative, Seller will retain the
business for the Extension Term, at the contract rates, as adjusted by CPI
adjustments, if the Seller's actual average composite landed restaurant price
for the Exclusive Restaurant Products for the Pizza Hut, Taco Xxxx and KFC
Exclusive Restaurants owned by Buyer during the last year of the Initial Term
is within __ of the average composite landed restaurant price
Page 17 of 44 December 18, 1998
18
for the Exclusive Restaurant Products for the Pizza Hut, Taco Xxxx and KFC
Exclusive Restaurants owned by Buyer offered by third parties in connection
with bona fide market basket bid(s) obtained by Buyer for the business. In the
event Seller opts to extend but the business hereunder is placed elsewhere,
Seller shall remain an approved distributor as provided in Section 1 through
July 11, 2007.
10. Termination.
This Agreement may be terminated prior to the end of the Initial Term
or Extension Term hereof, without affecting the rights or obligations of either
party with respect to the Restaurant Products already delivered by Seller, as
follows:
(a) In the event that the other party breaches any material term of
this Agreement, and such breach shall remain unremedied for a period of thirty
calendar days after written notice of such breach from the non-breaching party,
the non-breaching party may terminate this Agreement upon written notice to the
breaching party; provided that this Agreement may not be terminated by Buyer
for breach of Section 6 above, except as provided in Section 10(b) below.
(b) If Seller is in material breach of this Agreement for failure to
maintain either of the service levels described in Section 6(a) hereof for any
three months of any calendar year during the Initial Term or Extension Term
(commencing in 1999), the Buyer may terminate this Agreement upon written
notice to Seller at any time during the 90 day period after the end of the
third month in which it failed to meet such service level.
(c) In the event that either party (i) makes an assignment for the
benefit of its creditors, (ii) has a petition initiating a proceeding under
applicable bankruptcy laws filed against it and such petition is not set aside
within 60 days after such filing, (iii) files any voluntary petition for
bankruptcy, liquidation or dissolution or has a receiver, trustee or custodian
appointed for all or part of its assets, or (iv) seeks to make an adjustment
settlement or extension of its debt with its creditors generally, the other
party may terminate this Agreement upon written notice to such party.
11. Insurance.
Each party shall obtain and maintain comprehensive general liability
insurance (including product liability) in amounts equal to at least Ten
Million Dollars ($10,000,000.00) combined single limit for death, personal
injury, and property damage, and worker's compensation insurance as required by
law. Each party shall file with the other certificates evidencing such
insurance and shall promptly pay all premiums on said policies as and when the
same become due. In addition, said policies shall contain a provision requiring
thirty days prior written notice to the other of any proposed cancellation or
termination of insurance. The insurance requirements set forth above are
Page 18 of 44 December 18, 1998
19
minimum coverage requirements and are not to be construed in any way as a
limitation of liability under this Agreement.
12. Trademarks.
(a) Neither the Buyer nor Seller shall acquire any right or interest
in the trademarks or trade names of the other party pursuant to this Agreement.
Except as specifically set forth herein, neither the Buyer nor Seller shall use
the name of the other or any part of any trademark or trade name of the other
party without the express written permission of such other party.
(b) Seller may continue to display the Pizza Hut, Taco Xxxx and KFC
trademarks on its delivery fleet in the same manner as such trademarks are
currently displayed. Any change in the way such trademarks are displayed on
Seller's delivery fleet shall require the prior written approval of the Buyer.
Buyer may, in its discretion, either (i) require Seller, at Buyer's cost
(unless Seller is refurbishing its fleet pursuant to a normal maintenance
schedule), to change the way the Pizza Hut, Taco Xxxx, and KFC trademarks are
displayed on the fleet of Seller in order to update the logos for any changes
in the way such trademarks are generally displayed by Seller or (ii) require
Seller to remove such trademarks form its fleet at any time, at Buyer's cost.
Seller further agrees that, without Buyer's prior written consent, Seller's
delivery trucks which display the Pizza Hut, Taco Xxxx and KFC trademarks will
not be used for any deliveries to any customers of Seller other than Pizza Hut,
Taco Xxxx and KFC restaurants. Seller shall not be required, however, to
continue to display the Pizza Hut, Taco Xxxx and KFC trademarks on its delivery
fleet and shall be free, in its discretion, to remove such trademarks at any
time. Seller agrees that its delivery fleet which deliver the Restaurant
Products to any Pizza Hut, Taco Xxxx or KFC restaurants (the Exclusive
Restaurants or any franchised Pizza Hut, Taco Xxxx or KFC restaurants) shall
not display the trademarks of any other restaurants of any other restaurant
customer of Seller.
13. Confidentiality by Seller.
(a) Seller acknowledges the Buyer's need to maintain the
confidentiality of certain proprietary information disclosed by the Buyer to
Seller. All information communicated by Buyer to Seller which contains vendor
pricing information negotiated by any SCM Party, marketing and restaurant data,
new product information, promotional activities or other information
specifically relating to the Buyer's business shall be kept confidential and
not used or disclosed by Seller to any third party; provided, however, that the
foregoing restriction shall not apply to the Landed Cost information which
Seller is required to provide to the independent international public
accounting firm as described in subsection 3(c) hereof (but only to the extent
so provided). Such confidential information shall not include information (i)
which becomes generally known to the public through no disclosure by Seller,
(ii) which Seller can show was known by it prior to disclosure to it by Buyer,
or (iii) which is required by law to be disclosed. Seller shall inform its
employees of the confidential nature of all information provided by Buyer which
is confidential pursuant to the terms of this Section 13 and
Page 19 of 44 December 18, 1998
20
Seller shall be fully responsible for any breach by its employees of the terms
of this Section 13.
(b) Each party hereto agrees to keep the terms of this Agreement
confidential and not disclose them to any third party without the prior written
consent of the other parties hereto, except to the extent such disclosure is
required by law.
14. Indemnity.
(a) Seller shall indemnify and hold Buyer, as well as Buyer's parents,
subsidiaries, affiliates, successors and assigns, and each of their respective
officers, directors, and employees, harmless from and against any and all loss,
liability, claims, demands or suits (including, without limitation, reasonable
attorneys' fees and expenses) which arise out of:
(i) the breach of any of the representations, warranties or
agreements made by Seller in this Agreement (including, without
limitation, damages caused by any violations by law by Seller or
recalls caused by Seller); or
(ii) the warehousing, delivery, storage, handling or
transporting of any Restaurant Products while under the care, custody,
or control of Seller.
(b) The Buyer shall indemnify Seller, as well as Seller's parents,
subsidiaries, affiliates, successors and assigns, and each of their respective
officers, directors, and employees, harmless from and against any and all loss,
liability, claims, demands or suits (including, without limitation, reasonable
attorneys' fees and expenses) which arise out of:
(i) the breach of any of the representations, warranties or
agreements made by Buyer in this Agreement; or
(ii) the operations or business of Buyer (including, without
limitation, SCM) and the Exclusive Restaurants.
15. No Franchise or Agency.
Nothing in this Agreement shall be deemed to make either party the
agent or representative of the other party for any purpose whatsoever. Nothing
provided in this Agreement shall be deemed to grant either party any right or
authority to assume, create or expand any obligation or responsibility, express
or implied, on behalf of or in the name of the other party, or to bind the
other party in any manner or matter whatsoever. Neither party to this Agreement
shall have any authority to employ any person as agent or employee for or on
behalf of the other party to this Agreement for any purpose. It is the express
intention of the parties that each party hold the other party harmless from and
against any and all claims, liability and expense arising out of any
unauthorized act of its respective employees and agents.
Page 20 of 44 December 18, 1998
21
16. General Provisions.
(a) Appointment of Executive Officers of Buyer. During the term of
this Agreement, Tricon, Pizza Hut, Taco Xxxx and KFC shall notify Seller in
writing of the names of the executive officers who shall have the authority to
bind all four companies, Tricon, Pizza Hut, Taco Xxxx and KFC and act on behalf
of Buyer, in connection with any matter relating to this Agreement, including,
without limitation, amending the terms of this Agreement as described in
Section 16(e) below.
(b) Dispute Resolution. Each of Buyer and Seller shall appoint one or
more employees who will meet with each other on a regular basis to review the
performance by each party pursuant to the terms of this Agreement. The Buyer
and Seller shall each appoint an executive officer to meet for the purpose of
resolving any claim, dispute and/or controversy arising out of or relating to
the performance of this Agreement. If the dispute is not resolved by
negotiation within thirty (30) days, the parties shall endeavor to settle the
dispute by mediation under the then current Center for Public Resources ("CPR")
Model Procedure for Mediation of Business Disputes. The neutral third party
will be selected from the CPR panel of neutrals, with the assistance of CPR,
unless the parties agree otherwise. In the event that the parties are
unsuccessful in resolving the dispute via mediation, the parties agree promptly
to resolve any such claim, dispute and/or controversy through binding
confidential arbitration conducted in Louisville, Kentucky, in accordance with
the then current rules of the American Arbitration Association ("AAA"). The
parties irrevocably consent to such jurisdiction for purposes of the
arbitration, and judgment may be entered thereon in any state or federal court
in the same manner as if the parties were residents of the state or federal
district in which said judgment is sought to be entered. The arbitrator shall
not make any award or decision that is not consistent with applicable law. In
any action between the parties, the prevailing party in such action shall
recover its costs and expenses, including reasonable attorneys' fees, from the
non-prevailing party. All applicable statutes of limitations and defenses based
upon the passage of time shall be tolled while the requirements of this Section
16(b) are being followed.
(c) Access to Distribution Centers. During the terms of this Agreement
the Buyer shall have the right to inspect at any time during the term of this
Agreement the distribution centers, all delivery trucks and any other facility
of Seller which carry the Restaurant Products.
(d) Assignment. This Agreement shall be binding upon all the parties
hereto and upon all of their respective heirs, successors and permitted
assigns. This Agreement shall not, however, be assignable or transferable, in
whole or in part, by any party except upon the express prior written consent of
all of the other parties. Any attempt to assign or otherwise transfer this
Agreement or any rights or obligations hereunder in violation of the foregoing
shall be void.
Page 21 of 44 December 18, 1998
22
(e) Amendments. This Agreement shall not be amended except in writing
signed by all parties hereto.
(f) Notices. All notices, demands, consents or other communications
required or permitted hereunder shall be in writing and personally delivered or
sent by overnight air courier, addressed as follows: if to the Buyer to each of
(i) Pizza Hut, Inc., 00000 Xxxxxx Xxxxxxx, Xxxxxx, Xxxxx, 00000, Attn:
President; (ii) Taco Xxxx Corp., 00000 Xxx Xxxxxx, Xxxxxx, Xxxxxxxxxx, 00000,
Attn: President; (iii) KFC, 0000 Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx, 00000,
Attn: President; and (iv) Tricon Global Restaurants, Inc., 0000 Xxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx, 00000, Attn: General Counsel; and if to Seller,
AmeriServe Food Distribution, Inc. 00000 Xxxxxx Xxxxxxx, Xxxxx 0000, X.X. Xxx
0000, Xxxxxxx, Xxxxx, 00000-0000, Attn: President, or to such other address as
may hereafter be furnished in writing to the other party in the manner
described above. Any notice, demand, consent or communication given hereunder
in the manner described above shall be deemed to have been effected and
received as of the date hand delivered or as of the date received if sent by
overnight air courier.
(g) Force Majeure. No party shall be responsible for delays or
defaults under this Agreement if such delay or default is occasioned by war,
strikes, fire, an act of God or other causes beyond such party's control.
(h) Waiver. No provision, requirement, or breach of this Agreement may
be waived by any party except in writing. If any party fails to enforce any
right or remedy available under this Agreement, that failure shall not be
construed as a waiver of any right or remedy with respect to any other breach
or failure by the other parties. If Seller fails to maintain the service levels
described in Section 6 hereof during any three months of any calendar year
during the term of this Agreement (commencing in 1999) and Buyer does not
exercise its right to terminate this Agreement as described in Section 10(b)
hereof or remove the Exclusive Restaurants by notice as provided in Section
6(b) within 90 days after the third such month, the Buyer shall waive any right
to terminate this Agreement or remove the Exclusive Restaurants by notice as
provided in Section 6(b) with respect to the low service levels during such
three months but shall not waive any right to terminate this Agreement as a
result of low service levels during any months after such three months.
(i) Captions. The captions used herein are inserted only as a matter
of convenience and for reference and in no way define, limit, or describe the
scope or the intent of any section or paragraph hereof.
(j) Governing Law and Forum. This Agreement shall in all respects be
construed in accordance with and governed by the substantive laws of the State
of Kentucky without giving effect to the conflicts of laws principles thereof.
(k) Severability. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision
Page 22 of 44 December 18, 1998
23
hereof, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
(l) Other Documents. The terms, conditions and provisions of any
invoice, billing statement, confirmation or other similar document relating to
the services rendered in connection with this Agreement shall be subject and
subordinate to the terms, provisions and conditions of this Agreement and, in
the event of a conflict between the terms, conditions and provisions of any
such document and of this Agreement, the terms, conditions and provisions of
this Agreement shall govern.
(m) Survival of Obligations. The obligations of any party under this
Agreement, which by their nature would continue beyond expiration or
termination of this Agreement including, without limitation, indemnification by
such party as provided in Section 14 hereof, shall survive the expiration or
termination of this Agreement.
17. The Unified Coop
The KFC National Purchasing Cooperative, Inc., organizations
representing KFC, Taco Xxxx and Pizza Hut franchisees, and Buyer are working
together to establish a purchasing program through a newly organized Unified
Purchasing Coop, LLC (the "Unified Coop") to purchase goods and equipment,
including Restaurant Products and Exclusive Restaurant Products, for
Buyer-owned and operated and franchisee-owned and operated restaurants,
including Exclusive Restaurants. If the Unified Coop purchasing program is
established, Buyer will designate the Unified Coop as an SCM Party and Buyer
will appoint and designate the Unified Coop, on an exclusive basis, to
administer purchasing programs on behalf of restaurant operators for all
restaurants located in the United States, including Exclusive Restaurants.
Seller has participated in the negotiation of a form of Distributor
Participation Agreement between Seller and the Unified Coop and, upon
designation by Buyer of the Unified Coop as an SCM Party, Seller will promptly
enter into a Distributor Participation Agreement with the Unified Coop in
substantially the same form attached as Exhibit J. Consistent with the
provisions of Paragraph 13(b) of this Agreement, Buyer and Seller each consent
to the disclosure of the terms of this Agreement and any information provided
for in this Agreement to the Unified Coop. Buyer and Seller each agree that the
designation of the Unified Coop as an SCM Party is not in violation of the
assignment provisions contained in Paragraph 16(d) of this Agreement. "The
Service Fee," as defined in Paragraph 4 of the Distributor Participation
Agreement will replace "the costs of SCM allocated to the Exclusive Restaurant
Products" referred to in clause (y) in Section 3(a) of this Agreement.
Page 23 of 44 December 18, 1998
24
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first set forth above.
TRICON GLOBAL RESTAURANTS, INC.
By:
----------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
PIZZA HUT, INC.
By:
----------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
TACO XXXX CORP.
By:
----------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
KENTUCKY FRIED CHICKEN CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
KENTUCKY FRIED CHICKEN OF CALIFORNIA, INC.
By:
----------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
AMERISERVE FOOD DISTRIBUTION, INC.
By:
----------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
Page 24 of 44 December 18, 1998
25
EXHIBIT A
EXPORT COUNTRIES
Antigua Japan
Argentina Korea
Aruba Kuwait
Australia Lebanon
Bahamas Martinique
Barbados Mexico
Belgium Netherlands
Bonaire N.A. Nicaragua S.A.
Brazil Pakistan
Canada Panama
Chile Paraguay
China Peru
Columbia Philippines
Costa Rica Poland
Curacao N.A. Puerto Rico
Cyprus Qatar
Dominican Republic Russia
Ecuador Saipan
Egypt Saudi Arabia
El Salvador Singapore
France South Africa
Germany (GDR) South Korea
Grand Cayman Spain
Grenada Sweden
Guam Taiwan
Guatemala Thailand
Honduras Trinidad
Hong Kong Turkey
Iceland Turks & Caicos
India United Arab emirates
Israel United Kingdom
Jamaica Uruguay
Page 25 of 44 December 18, 1998
26
EXHIBIT B
LIST OF "RESTAURANTS UNDER DEFINITIVE CONTRACT
OR LETTER OF INTENT"
Page 26 of 44 December 18, 1998
27
EXHIBIT C
CURRENT SMALLWARES PRICING AND SERVICING
Servicing
AmeriServe currently services the Tricon Concepts in roughly the following
proportions:
F&S DC's Equip DC FSS
Pizza Hut
Taco Xxxx
KFC
These ranges include forms and office supplies.
Pricing
Smallwares pricing falls within the following xxxx-up ranges:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Pizza Hut
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Taco Xxxx
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
KFC
-------------------------------------------------------------------------------
Page 27 of 44 December 18, 1998
28
EXHIBIT D
SELLER'S CASE CHARGE/PERCENTAGE XXXX-UP
Subject to the terms of Section 3 of this Agreement and in exchange
for the Exclusive Restaurant Products, Buyer shall pay to Seller sums in
accordance with the guidelines detailed herein:
A. The prices for the Exclusive Restaurant Products (including
fresh produce but excluding softdrinks and Promotional Items
(as defined below)) shall be the Landed Cost plus the SCM
costs or service fee, as applicable, described in Section
3(a) plus the per case charge indicated below:
Pizza Hut
Taco Xxxx
KFC
B. The new prices are effective January 1, 1999. Prior to
January 1, 1999, the Landed Cost, xxxx-ups, freight and other
pricing provisions will be the same as in the Original
Agreement.
C. The parties have agreed to negotiate a comprehensive pricing
and servicing arrangement for Smallwares. Until such
negotiations are complete, Smallwares shall be priced and
serviced under current arrangements as set forth on Exhibit C
to this Agreement.
D. National soft drinks shall be priced at levels currently
existing pursuant to existing contracts between beverage
providers and Buyer. If and when Seller assumes
responsibility for delivering national soft drinks to Buyer,
Buyer will allow Seller to receive standard distribution fees
paid by any national soft drinks provider.
E. Promotional Items -
For purposes of this Agreement, the term "Promotional Items"
includes both Stock Promotional Items and Limited Promotional
Items, where:
(1) "Stock Promotional Items" are consumable,
non-food items of various themes and design such as
kids' meals, crayons, balloons, birthday kits and
kids' table covers that are used for promotional
purposes and are held in inventory at all times, and
(2) "Limited Time Promotional Items" are consumable,
non-food items such as basketballs, cup-toppers and
Major League
Page 28 of 44 December 18, 1998
29
glassware that are offered for a limited time, are
self-liquidating and are offered for promotional
purposes.
Paper products (including paper cups and packaging materials)
that are normally Exclusive Restaurant Products that are
modified through graphics or other changes for promotional
purposes shall be considered to be Exclusive Restaurant
Products (and shall not be considered Promotional Items),
even when the introduction of such products is for a limited
time; provided, however, that any such product will be
considered to be a Promotional Item if the vendor case price
for such product is not within 20 percent of the standard
vendor case price of the item which it replaces.
Plastic cups that are normally Exclusive Restaurant Products
that are modified through graphics or other changes for
promotional purposes shall be considered to be Exclusive
Restaurant Products (and shall not be considered Promotional
Items); provided that (i) such plastic cups are self
liquidating, (ii) there are not multiple SKU's for such
plastic cups at the same time, (iii) such plastic cups are
generally available on a systemwide basis for the applicable
Concept, (iv) date-sensitive delivery of such cups to any
Exclusive Restaurant(s) is not required by Buyer, (i.e.
start/stop sell dates), (v) redeemable game pieces are not
added to the products, and (vi) normal restaurant ordering
practices apply to the ordering of these products (no auto
shipments).
All other items not described in the previous two paragraphs
which are normally Exclusive Restaurant Products that are
modified through graphics or other changes for promotional
purposes shall be considered to be Promotional Items.
F. Buyer and Seller shall negotiate xxxx-ups for Restaurant
Products that are not Exclusive Restaurant Products
(equipment, uniforms, and point of purchase items) from time
to time in good faith as provided in this Agreement.
G. By approximately September 30, 1999, as provided in this
Agreement all xxxx-ups and case charges will be applied
consistently across all distribution centers and all
Exclusive Restaurant Products (i.e. flat pricing) unless
specifically otherwise agreed to by Buyer.
H. Buyer and Seller agree that the per case xxxx-up shall depend
upon the Dropsize. The "Average Dropsize Per Delivery" means,
for any period, the number of cases of Covered Products
ordered for regularly scheduled deliveries divided by the
number of regularly scheduled deliveries for such period.
Cases that are ordered but not delivered because (i) the
vendor is out of stock, or (ii) the cases ordered are not
shipped to Seller in a timely
Page 29 of 44 December 18, 1998
30
manner and the Buyer is responsible for arranging or directing
the manner of freight of such order to Seller, will not be
considered in calculating the "Average Dropsize Per Delivery."
The pricing adjustment shall be as follows:
Average Drop Size Per Case
Per Delivery Reduction/(Surcharge)
The Drop Size will be calculated on an
Exclusive Restaurant Basis each calendar quarter on
an average basis (not a per drop basis) and shall be
applied during the following quarter. Exclusive
Restaurants that are "2nl" or "3nl" units shall be
treated as one unit for purposes of Drop Size
Adjustments.
I. The per case xxxx-up (not the percentage xxxx-up) referred to
in Section A herein shall increase on January 1 of each year
(commencing on January 1, 2001) based upon the amount by
which the.
J. As referred to in Section 3(d) of the Agreement, the actual
1997 ratios are as follows:
CUBE-TO-CASE WEIGHT-TO-CASE
CONCEPT RATIO RATIO
Pizza Hut
Taco Xxxx
KFC
Page 30 of 44 December 18, 1998
31
EXHIBIT F
TEXT OF NET PRE-TAX PROFIT
MARGIN LIMIT FROM PIZZA HUT
FRANCHISE AGREEMENT AS REFERRED TO
IN SECTION 3(G)
8.3. Product Rebate.
A. For the purpose of this Section 8.3, the term "Company" includes
any business entity controlling, controlled by, or under common control with,
PHI.
B. Franchisee may purchase from Company, upon such terms as Company
may offer, such items as Company may offer for sale to Franchisee.
C. Within 4 months after the end of each fiscal year of Company,
Company will determine its rate of gross profit and its rate of net pre-tax
profit attributable to sales by Company to all its Pizza Hut franchisees of
only food, paper products, and similar restaurant supplies (but not of any
other items, including without limitation, nonfood items manufactured by
Company and other items such as furnishings, interior and exterior decor items,
and equipment) for the fiscal year.
In making this determination the sales, gross profit, and net pre-tax profit
for all entities will be combined (without considering accounting eliminations)
into one financial statement and Company's cost will be reduced by any cash
discounts that Company received from its vendors.
D. If:
i) the rate or gross profit as determined by Company exceeds
14%, or
ii) the rate of net pre-tax profit as determined by Company
exceeds 2.5%,
then in either event Company will, within 30 days thereafter pay to any Pizza
Hut franchisees entitled thereto, in the manner provided in paragraph E below,
an amount equal to the excess as determined under either i) or ii) above,
whichever is greater; provided, however, that the aggregate payment called for
herein shall in no event exceed an amount equal to Company's net pre-tax profit
attributable to sales of food, paper products. and similar restaurant supplies
by Company to all its Pizza Hut:
franchisees for said fiscal year.
E. Company will pay to each Pizza Hut franchisee its share of the
amount determined payable by Company under paragraphs C and D above, in the
form of a cash payment or a credit, at the option of the franchisee, pursuant
to procedures established by Company. The share of each Pizza Hut franchisee
will be in an amount which bears the same relationship to the total amount
determined to be payable by Company under paragraphs C and D above as such
franchisee's gross purchases from Company of food, paper products, and similar
restaurant supplies bear to gross purchases of such items,
Page 38 of 44 December 18, 1998
32
from Company by all franchisees; the parties expressly agree that such share
shall be determined without regard to any other factors, including without
limitation, product mix variations, delivery and service charges, regional price
variations, or other price variations.
Page 39 of 44 December 18, 1998
33
EXHIBIT G-1(A)
FORM OF SALES AND DISTRIBUTION AGREEMENT
(FOR REFRANCHISED PH AND TB STORES WHERE
LETTER OF INTENT OR DEFINITIVE AGREEMENT TO PURCHASE
WAS IN PLACE ON OCTOBER 1, 1998)
Page 40 of 44 December 18, 1998
34
EXHIBIT G-1(B)
FORM OF SALES AND DISTRIBUTION AGREEMENT
(FOR GRANDFATHERED PH AND TB STORES)
Page 41 of 44 December 18, 1998
35
EXHIBIT G-2
FORM OF SALES AND DISTRIBUTION AGREEMENT
(FOR REFRANCHISED PH AND TB STORES WHERE NO
LETTER OF INTENT OR DEFINITIVE AGREEMENT TO PURCHASE
WAS IN PLACE ON OCTOBER 1, 1998)
Page 42 of 44 December 18, 1998
36
EXHIBIT H
BLACK OUT PERIODS
Exclusive Restaurants Black Out Periods
KFC Restaurants 11:30am to 1:00pm and 5:30pm to 7:00pm - All Days
Pizza Hut Restaurants 11:30am to 1:00pm - Monday to Friday
5:30pm to 7:30pm - Friday and Saturday
Taco Xxxx Restaurants 11:30am to 1:00pm and 5:30pm to 7:00pm - All Days
Page 43 of 44 December 18, 1998
37
EXHIBIT J
FORM OF DISTRIBUTOR
PARTICIPATION AGREEMENT REFERRED
TO IN SECTION 17
Page 44 of 44 December 18, 1998
