Exhibit 10.3
Execution Copy
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (this "Agreement") is made this 31st day of
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October, 2001 (the "Effective Date"), by and between Hurry, Inc. (formerly known
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as Harry's Farmers Market), a Georgia corporation ("HFM"), and Whole Foods
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Market Group, Inc., a Delaware corporation ("Supplier").
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WHEREAS, Supplier and HFM have entered into a certain Asset Purchase
Agreement dated as of August 8, 2001 (the "Purchase Agreement"; terms not
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otherwise defined herein shall have the meaning ascribed to them in the Purchase
Agreement);
WHEREAS, pursuant to the Purchase Agreement, Supplier is purchasing
from HFM certain assets including, but not limited to, assets used in the supply
of products to certain retail stores owned by HFM; and
WHEREAS, as a condition to HFM entering into the Purchase Agreement,
Supplier has agreed to supply HFM with certain food, beverage, floral and other
retail products described on Exhibit A attached hereto and incorporated herein
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by this reference (the "Products") under the terms and conditions of this
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Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, HFM and Supplier hereby agree as follows:
1. Products. During the first year of this Agreement, Supplier shall
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supply to HFM the Products in accordance with the supply and inventory systems
and schedules (the "Systems") utilized by HFM in supplying the Excluded Stores
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as of the Effective Date. During the first year of this Agreement, the Products
and the supply and distribution schedules shall not be substituted, modified or
otherwise changed, in any material respect, without first obtaining HFM's
written approval of such change, such approval not to be unreasonably withheld.
During the second and third years of this Agreement, if the respective options
of HFM are exercised as described below, Supplier shall supply Products to HFM
in accordance with such supply and inventory systems as Supplier elects to
utilize in its sole discretion, which shall continue to provide a reasonable
method of supply for HFM in accordance with the intent of this Agreement.
2. Term. This Agreement shall be in effect for a term of one (1) year
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from the Effective Date ("Term"). However, following each of the first two years
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of this Agreement, and provided HFM is not then in default hereunder, HFM may,
in its sole discretion, extend the term of this Agreement for one (1) additional
year. The extension of this Agreement by HFM shall be sent to Supplier in
writing no less than 30 days prior to the end any term. This Agreement may also
be terminated earlier pursuant to the provisions of this Agreement.
Notwithstanding anything contained herein, the volume of Products ordered and
the number of orders placed during the Term shall be determined solely by orders
placed pursuant to Section 3.
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3. Order and Delivery.
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3.1 Orders shall be placed by HFM and sent electronically or by
facsimile to Supplier at the address set forth below (the "Order"). Acceptance
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of any Order is expressly limited to the terms thereof and HFM agrees that the
return of any products will be solely due to defects of such products. HFM shall
have no right for chargebacks to the Supplier, except in the case of product
defects.
3.2 HFM shall be permitted to utilize Supplier's computerized
inventory replenishment system ("IRS") for all purposes provided by IRS,
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including but not limited to the placing of Orders pursuant to this Agreement
and the utilization of the theoretical gross margin tool produced by IRS, as
well as the computerized report manager system (the "Report Manager") and all
related programming. During the term of this Agreement, HFM shall be permitted
to utilize all upgrades, improvements or changes to IRS, the Report Manager and
all related programming. In addition, Supplier agrees to use its best efforts to
continue to support and provide, consistent with normal practice, (i) the
hardware and communications infrastructure to allow HFM access; (ii) the
recording,
accumulation, storage and archiving of data necessary to report on and provide
an audit trail of HFM's use of the applications; and (iii) HFM reasonable access
to the systems. Following the first year of this Agreement, Supplier shall have
no obligation to continue supporting or maintaining IRS, the Report Manager or
other related progamming described in this Section 3.2. However, in the event
Supplier decides not to continue such support or maintenance, it shall provide
HFM reasonable notice of such discontinuation and allow HFM, at its sole cost
and expense, to continue to utilize, support, maintain and improve such systems
and shall provide HFM reasonable access to the hardware and software necessary
for the continued operations thereof.
3.3 Products will be shipped F.O.B. Supplier's commissary. The
risk of loss or damage in transit shall be upon HFM. Supplier shall, in the
event of a delay or threat of delay due to any cause in the production or
delivery of the Products hereunder, immediately notify HFM and shall include
with such notice all relevant information with respect to such delay or
threatened delay, including, but not limited to, in the case of actual delay,
Supplier's good faith estimate of when the Products will be available.
4. Price. The prices of the Products shall be determined as is
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described on Exhibit A. However, in no event shall HFM be charged for increased
costs other than for normal price increases as may be charged by the provider of
the raw materials, goods and other items being received by Seller, prior to
manufacture or delivery to HFM.
5. Payment. Supplier shall invoice HFM for all Products delivered
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under an Order (the "Invoice"). Each Invoice is payable by HFM within fourteen
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(14) days from the date of the Invoice.
6. Quality Control.
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6.1 Packaging. During the first year of this Agreement, the
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Products and all packaging used in connection with the Products ("Packaging
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Material") shall be of a consistent and high quality which conform to the
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standards developed by HFM or developed by Supplier and approved by HFM.
Supplier will use such packaging for the Products as is furnished by HFM or is
in the inventory purchased by Supplier in connection with the Purchase
Agreement. Following the first year of this Agreement, to the extent the
Packaging Material is not furnished by HFM, the Supplier shall be entitled to
reasonably change the Packaging Material in a manner consistent with the quality
of packaging utilized by Supplier in its operations.
6.2 Inspection. During the first year of this Agreement, Supplier
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will cooperate with HFM, at its sole cost and expense, to permit inspections of
Supplier's facilities during the Term to monitor the quality of Products offered
by Supplier, provided HFM gives Supplier 24 hours prior notice of such
inspection and such inspections do not interfere with Supplier's business, as
reasonably determined by Supplier. Supplier shall also provide HFM with
reasonable access to its quality assurance data documentation. Following the
first year of this Agreement, HFM shall be entitled to no more than one such
inspection per calendar quarter.
6.3 Transition Support. During the first six months of the term of
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this Agreement, HFM will make Xxxxxx Xxxxxxxxxx available to Supplier for two
days per week during normal business hours to consult with, and to assist and
support, Supplier in connection with the performance of its duties hereunder. In
the event that Xx. Xxxxxxxxxx is no longer an employee of, or consultant to,
HFM, then HFM will arrange for other employees reasonably acceptable to Supplier
to be available to Supplier as aforesaid.
7. Representations and Warranties of Supplier. Supplier represents and
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warrants, which warranties and representations will survive the Term:
7.1 that the Products, including food articles, food ingredients,
food packaging and food labeling relating to or comprising the Products or any
part thereof that is supplied by Supplier and delivered, sold or transferred to
HFM hereunder shall be manufactured, stored and delivered in full compliance
with all applicable federal, state and local statutes, rules and regulations
including but not limited to the rules and regulations of the U.S. Food and Drug
Administration (the "Regulations");
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7.2 that the Products shall be manufactured, stored and delivered
in accordance with appropriate "Good Manufacturing Practices" or similar
practices that may be promulgated under the Regulations as applicable;
7.3 that the Products shall not be adulterated or misbranded within
the meaning of the Regulations;
7.4 that the Products shall not be a food product which may not,
under the Regulations, be introduced into interstate commerce except as provided
therein; and
7.5 that Supplier is free to enter into this Agreement, that
Supplier's execution of this Agreement has been duly approved by all applicable
corporate procedures, that this Agreement constitutes a legal, valid and binding
obligation of Supplier, and that to Supplier's knowledge this Agreement will not
violate the rights of any third party.
Except as specifically set forth above, Supplier makes no warranty regarding the
Products and any implied or statutory warranties not specifically provided
herein are expressly denied. Payment for, inspection of, or receipt of Products
by HFM shall not constitute a waiver of any breach or warranty.
8. Representations and Warranties of HFM. HFM represents and warrants,
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which warranties and representations will survive the Term, that HFM is free to
enter into this Agreement, that HFM's execution of this Agreement has been duly
approved by all applicable corporate procedures, that this Agreement constitutes
a legal, valid and binding obligation of HFM, and that to HFM's knowledge this
Agreement will not violate the rights of any third party. Acceptance of payment
for Products by Supplier shall not constitute a waiver of any breach or
warranty.
9. Widescale Defects/Recall.
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9.1 Whenever Supplier becomes aware that any ingredient or
component of a Product covered by this Agreement is or may become harmful to
persons or property or that a Product is mislabeled, Supplier shall immediately
give notice thereof to HFM and Supplier shall provide all relevant information
with respect thereto.
9.2 In the event it is deemed necessary by HFM and Supplier to
recall any quantity of the Product, from any store of HFM or from any consumer,
both parties agree to take such reasonable steps necessary to protect the
interests of the public and to comply diligently with all product recall
procedures established by the Regulations.
9.3 The parties agree to bear equally all cost and expenses
incurred by the parties in complying with the foregoing recall procedures,
unless such recall is the result of the sole negligence of one of the parties.
In the event a party fails or refuses to comply with the recall of the Product
upon the reasonable request of the other party, the requesting party shall be
authorized to take such action as it deems necessary to recall the Product, and
the non-requesting party shall reimburse the requesting party for its costs and
expenses incurred in such recall procedure. Any such action taken by the
requesting party shall not relieve the non-requesting party of its obligations
or liability hereunder.
10. Insurance. Supplier agrees to maintain during the Term, general
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liability insurance, including product liability coverage, in minimum amounts of
$1,000,000.00 per occurrence for damage, injury and/or death to persons and
$1,000,000.00 per occurrence for damage and/or injury to property. Supplier
further agrees to require all of its delivery personnel to be licensed to drive,
whether they are employees or independent contractors. All policies of liability
insurance required to be effected by Supplier shall cover Supplier's employees,
agents, and independent contractors and shall include HFM as an additional
insured. Upon execution of this Agreement, Supplier shall promptly provide HFM
with certificates of insurance evidencing such coverage, and each certificate
shall indicate that the coverage represented thereby shall not be canceled nor
modified until at least thirty (30) days prior notice has been given to HFM.
11. Default and Termination.
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11.1 In the event either party:
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(a) breaches any term or condition of this Agreement that
cannot be cured within fifteen (15) days following receipt of notice of such
breach; or
(b) abuses or misrepresents its status as a supplier and/or
seller of any Product to the detriment of the other party, or
(c) becomes the subject of any proceeding under the
Bankruptcy Act, becomes insolvent or any assignment is made for the benefit of
creditors or a trustee is appointed for all or any portion of the party's
assets, or
(d) fails to comply with any Regulation,
then the non-breaching party, in its sole discretion, may terminate this
Agreement with fifteen (15) days written notice to the breaching party.
Additionally, this Agreement may be terminated:
(e) by HFM upon 30 days' prior written notice given to
Supplier at any time (it being understood that such notice shall contain an
undertaking by HFM to purchase, on the date of termination, any excess inventory
and packaging materials produced or held exclusively for HFM);
(f) by Supplier upon 15 days prior written notice in the
event that HFM is in material breach of its obligations under the Purchase
Agreement which cannot be cured within fifteen (15) days following receipt of
notice of such breach, or, unless there shall be a change of control of HFM. if
HFM's principal stockholder is in material breach under the related Consulting
and Non-Competition Agreement and such breach cannot be cured within fifteen
(15) days following receipt of notice of such breach.
11.2 Notwithstanding anything to the contrary, in the event the
party's breach is for noncompliance with the Regulations, termination shall be
effective immediately.
11.3 The failure to terminate the Agreement upon the occurrence of
one or more of these events of default by a party shall not constitute a waiver
or otherwise affect the right of the non-breaching party to terminate the
Agreement as a result of a continuing or subsequent failure or refusal by the
breaching party to comply with any of such obligations. Failure by the
non-breaching party to exercise any of its rights or remedies hereunder or to
insist on strict compliance with any of the terms of this Agreement shall not
constitute a waiver of any of the terms or conditions of this Agreement with
respect to any other or subsequent breach nor shall it constitute a waiver by
the non-breaching party of its rights at any time thereafter to require strict
compliance with the terms of this Agreement.
11.4 Upon termination, HFM shall pay Supplier any outstanding
undisputed Invoices and shall use their commercially reasonable best efforts to
resolve such disputed invoices as promptly as practicable.
12. Confidentiality. Each party acknowledges that during the course of
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carrying out this Agreement, it may receive confidential and proprietary
information related to the other party's business, including, without
limitation, recipes and formulations created or provided by the other party
("Confidential Information"). Confidential Information includes any information,
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designs, data or know-how that a party has designated as proprietary and/or
confidential or that, by the nature of the circumstances surrounding the
disclosure, ought to be treated as proprietary and/or confidential; provided,
however, that any information which is otherwise in the public domain shall not
be deemed confidential. Each party acknowledges that such Confidential
Information is the sole and exclusive property of the other party and undertakes
to retain in confidence all Confidential Information. Each party's obligations
under this Section 12 shall survive expiration or termination of this Agreement
and any amendments thereto.
13. Indemnity.
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13.1 Supplier agrees to indemnify and hold HFM, its officers and
directors, employees or agents, customers and users of the Product, harmless
from all claims, demands, losses, liabilities, suits at law or in equity, costs
and expenses, including reasonable attorney's fees, resulting from (a) injury,
illness and/or death caused, in
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whole or in part, by contact with, use and/or consumption of the Products,
unless (and then only to the extent) such injury, illness and/or death is caused
by the negligence or misconduct of HFM and (b) breach of any of Supplier's
representations and warranties. In the event of any claim, threatened claim, or
notification that may be the subject of indemnification provided for in this
Section, HFM will give Supplier prompt written notification thereof and, to the
extent the interests of the parties hereto are not adverse to one another,
provide Supplier such reasonable assistance in the response and prosecution of
any defense as Supplier may request, at Supplier's expense. Upon HFM's tendering
any suit to Supplier, Supplier shall defend the same at its sole cost and
expense. If Supplier fails to assume such defense, HFM may defend the action in
the manner it deems appropriate, and Supplier shall pay to HFM all costs,
including reasonable attorneys' fees, incurred by HFM in effecting such defense,
in addition to any sum which HFM may pay by reason of any settlement or judgment
against HFM. The provisions of this Section 13.1, and the indemnity hereunder,
shall survive this Agreement and any performance hereunder.
13.2 HFM agrees to indemnify and hold Supplier, its officers and
directors, employees or agents, customers and users of the Product, harmless
from all claims, demands, losses, liabilities, suits at law or in equity, costs
and expenses, including reasonable attorney's fees, resulting from (a) injury,
illness and/or death caused, in whole or in part, by contact with, use and/or
consumption of the Products, but only to the extent such injury, illness and/or
death is caused by the negligence or misconduct of HFM and (b) the breach of any
of HFM's representations and warranties. In the event of any claim, threatened
claim, or notification that may be the subject of indemnification provided for
in this Section, Supplier will give HFM prompt written notification thereof and,
to the extent the interests of the parties hereto are not adverse to one
another, provide HFM such reasonable assistance in the response and prosecution
of any defense as HFM may request, at HFM's expense. Upon Supplier's tendering
any suit to HFM, HFM shall defend the same at its sole cost and expense. If HFM
fails to assume such defense, Supplier may defend the action in the manner it
deems appropriate, and HFM shall pay to Supplier all costs, including reasonable
attorneys' fees, incurred by Supplier in effecting such defense, in addition to
any sum which Supplier may pay by reason of any settlement or judgment against
Supplier. The provisions of this Section 13.2, and the indemnity hereunder,
shall survive this Agreement and any performance hereunder.
14. Miscellaneous Provisions.
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14.1 Independent Contractor Relationship. Supplier and HFM are
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independent contracting parties, and this Agreement does not create the
relationship of principal and agent, partners, joint ventures or employer and
employee between HFM and Supplier. Supplier shall have no authority to bind or
otherwise obligate HFM in any manner nor shall Supplier represent to anyone that
it has a right to do so.
14.2 Severability. If any provision of this Agreement is held to
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be illegal, invalid, or unenforceable, such provision shall be fully severable,
and this Agreement shall be construed and enforced as if such illegal, invalid
or unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance; and in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible that is
legal, valid and enforceable.
14.3 Entire Agreement. This Agreement and the exhibits hereto
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contain the complete agreement among the parties with respect to the
transactions contemplated hereby and supersede all prior agreements and
understandings, oral or written, among the parties with respect to such
transactions. Section and other headings are for reference purposes only and
shall not affect the interpretation or construction of this Agreement. The
parties hereto have not made any representation or warranty except as expressly
set forth in this Agreement or in any certificate or schedule delivered pursuant
hereto.
14.4 Amendments in Writing. Neither the Agreement nor any of its
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provisions may be waived, modified or amended except by an instrument in writing
signed by the parties to this Agreement.
14.5 Assignment. This Agreement may not be assigned by the
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Supplier without the written consent of HFM; provided, however, that the
Supplier shall be entitled to assign this Agreement to any subsidiary of
Supplier so long as the Supplier remains liable for the obligations of Supplier
hereunder. Subject to the preceding
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sentence, this Agreement and the rights, interests and obligations hereunder
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns.
14.6 Applicable Law. This Agreement shall be governed by, and
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construed in accordance with, the laws of the State of Delaware.
14.7 Force Majeure. Neither party shall be liable for defaults
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or delays or non-performance of any covenant, agreement, work, service, or other
act required under this Agreement to be performed by such party, if such delay
or hindrance is due to strikes, lockouts, failure of power or other utilities,
injunction or other court or administrative order, governmental law or
regulations which prevent or substantially interfere with the required
performance, condemnations, riots, insurrections, martial law, civil commotion,
war, fire, flood, earthquake., or other casualty, acts of God, or other causes
not within the control of such party. The performance of any covenant,
agreement, work, service, or other act shall be excused for the period of delay
and the period for the performance of the same shall be extended by such period.
14.9 Remedies. No right, remedy or election given by any term of
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this Agreement shall be deemed exclusive but each shall be cumulative with all
other rights, remedies and elections available at law or in equity. Except for
third party claims described in Section 13 hereof, the sole remedy available to
a non-breaching party arising from the breach of this Agreement shall be
termination of this Agreement and recovery of any out-of-pocket expenses of the
non-breaching party, after reasonable mitigation of damages. Other than for
damages or claims as relate to injury, illness and/or death caused, in whole or
in part, by contact with, use and/or consumption of the Products, in no event
shall any party be liable for consequential damages, lost profits, punitive
damages or other speculative damages.
14.10 Notices. All notices, demands, requests or other
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communications that may be or are required to be given, served or sent by any
party to any other party pursuant to this Agreement shall be in writing and
shall be mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or transmitted by a reputable overnight courier
service or by hand delivery or facsimile transmission, addressed as follows:
(i) If to HFM: 0000 Xxxxx Xxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attn: President
Fax: 000-000-0000
with a copy to:
Xxxxxx & Bird LLP
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Fax: 000-000-0000
Attn: Xxxx X. Xxxxxx, Esq.
(ii) If to Purchaser: 000 X. Xxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Chief Financial Officer
Fax: 000-000-0000
with a copy to:
Xxxxxxx & Xxxxxx
000 X. Xxxxxxx, 00/xx/ Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxx
Fax: 000-000-0000
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Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served, or sent.
Each notice, demand, request or communication that is mailed, delivered, or
transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt, fax confirmation
sheet or the affidavit of courier or messenger being deemed conclusive evidence
of such delivery) or at such time as delivery is refused by the addressee upon
presentation.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
HURRY, INC. WHOLE FOODS MARKET GROUP, INC.
By: /s/ Xxxxx X. Blazer By: /s/ Xxx Sud
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Name: Xxxxx X. Blazer Name: Xxx Sud
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Title: President Title: VP
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