Exhibit 10.11
Xxxxx 00, 0000
XXX/Xxxxxxx Inc.
Spec. Dist.
00 Xxx'x Xxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Gentlemen:
PYA/Monarch, Inc. ("PYA") currently supplies produce, food stuff and other
supplies (collectively, "Products") to certain facilities of Xxxxxxxx
Restaurants Inc. ("Xxxxxxxx"), including to the Health Care Division, the Family
Dining Division and the Specialty Dining Division, pursuant to the terms of a
Supply Agreement dated July 8, 1988 between PYA and Xxxxxxxx, as amended (the
"Supply Agreement"). Xxxxxxxx has approved a Plan of Distribution pursuant to
which it has transferred all of its assets and liabilities related to the Health
Care Division to Xxxxxxxx Health Care, Inc., a newly-created, wholly owned
subsidiary of Xxxxxxxx and a Georgia corporation ("MHCI"), and transferred all
of its Family Dining Division assets and liabilities to Xxxxxxxx Fresh Cooking,
Inc, a newly-created, wholly-owned subsidiary of Xxxxxxxx and a Georgia
corporation ("MFCI"). On or about March 9, 1996, Xxxxxxxx plans to distribute
all of the issued and outstanding stock in each of MHCI and MFCI to its
stockholders. Immediately thereafter, the Specialty Dining Division, which
remained with Xxxxxxxx, will reincorporate by means of a merger in the state of
Georgia, and shall change its name to Ruby Tuesday, Inc. ("RTI")(the foregoing
transactions shall be referred to collectively as the "Reorganization").
Following the Reorganization, each of MHCI, MFCI and RTI (collectively, the
"Xxxxxxxx Companies") desires to provide for the continuation of supplier
arrangements with PYA pursuant to the terms of the Supply Agreement.
This letter will confirm that PYA has agreed to continue to supply Products
to each of the Xxxxxxxx Companies and the Xxxxxxxx Companies have agreed to
continue to purchase Products from PYA following the Reorganization under the
terms of the Supply Agreement (assuming compliance with the Supply Agreement by
each of the Xxxxxxxx Companies as if the Reorganization had not occurred). Each
of the Xxxxxxxx Companies shall have such rights and obligations as if it were
the "Buyer" under the Supply Agreement, except as modified by this letter
agreement.
Section 2(b)(i) of the Supply Agreement, regarding the percentage of
Products to be purchased by each division of Xxxxxxxx is hereby amended to
reflect the Reorganization such that RTI will be obligated to purchase 60% of
all of its Products from PYA, MFCI will be obligated to purchase 85% of all of
its Products from PYA, and MHCI will be obligated to purchase 35% of all of its
Products from PYA.
Section 2(b)(ii) of the Supply Agreement, regarding the annual aggregate
purchase requirement, which is currently $183,000,000 for Xxxxxxxx, shall be
allocated among the Xxxxxxxx Companies such that RTI shall have an annual
aggregate purchase requirement of $76,000,000, MHCI shall have an annual
aggregate purchase requirement of $31,000,000, and MFCI shall have an annual
aggregate purchase requirement of $76,000,000. Such amounts may be adjusted
from time to time as set forth in clause (ii) of Section 2(b).
PYA/Monarch Inc.
March 13, 1996
Page 2
Each of the Xxxxxxxx Companies will continue to place orders, and PYA will
continue to accept orders, deliver Products and xxxx in accordance with past
practices except as follows:
(i) PYA will assign new billing codes to each of the Xxxxxxxx Companies
for placing orders with PYA;
(ii) PYA shall xxxx each of the Xxxxxxxx Companies separately for their
respective purchases, providing each the benefit, however, of the aggregate
volume of purchases of all with respect to any volume discounts, rebates or
similar incentives offered by PYA under the Supply Agreement; and
(iii) PYA will supply Products to each of the Xxxxxxxx Companies on the
same credit terms afforded to Xxxxxxxx until such time as such company may
default in its obligations, at which time PYA may revise such company's credit
terms or otherwise exercise its rights with respect to that company consistent
with the terms of the Supply Agreement.
In the event of a default by one of the Xxxxxxxx Companies of any of its
obligations under the Supply Agreement, PYA's rights or remedies with respect to
such a default will be enforceable only against the company in default and PYA's
obligations with respect to the non-defaulting companies will remain unaffected,
except to the extent that a decline in the aggregate level of purchases under
the Supply Agreement may affect pricing and rebates in accordance with the terms
of the Supply Agreement.
The Xxxxxxxx Companies have organized a purchasing co-operative, MRT
Purchasing, LLC, ("Purchasing Co-op") for purposes of negotiating purchasing
arrangements mutually beneficial to the companies going forward. The Purchasing
Co-op has the exclusive authority to negotiate on behalf of the Xxxxxxxx
Companies, but each of the companies upon its agreement shall be individually
bound in any contractual arrangements. PYA acknowledges that the Purchasing Co-
op will be responsible for oversight of the operation of PYA under the Supply
Agreement and the negotiation of all amendments to the Supply Agreement.
The Purchasing Co-op will also manage and monitor purchasing activities on
behalf of the Xxxxxxxx Companies much in the same manner the Purchasing
Department is currently engaged on behalf of Xxxxxxxx. In this regard, PYA
agrees to send to the Purchasing Co-op the same kinds of reports which are
currently sent to the Purchasing Department of Xxxxxxxx. The Xxxxxxxx Companies
may request that all rebates for purchases under the Supply Agreement be sent to
the Purchasing Co-op on their behalf, for distribution by the Purchasing Co-op
to the appropriate companies.
This Agreement shall become effective upon the effectiveness of the
Distribution, which is scheduled to occur on or about March 9, 1996 and shall
continue for the remainder of the term of the Supply Agreement.
PYA/Monarch Inc.
March 13, 1996
Page 3
If this accurately reflects our agreement, please sign in the space
provided below.
Sincerely,
XXXXXXXX RESTAURANTS INC.
By: /s/ J. Xxxxxxx Xxxxxxxxxx
---------------------------------
Title: Senior Vice President
----------------------------
XXXXXXXX HEALTH CARE, INC.
By: /s/ J. Xxxxxxx Xxxxxxxxxx
---------------------------------
Title: Vice President
----------------------------
XXXXXXXX FRESH COOKING, INC.
By: /s/ J. Xxxxxxx Xxxxxxxxxx
---------------------------------
Title: Vice President
----------------------------
Accepted and agreed to this 7th day of March, 1996:
PYA/MONARCH, INC.
By: /s/ [Illegible]
---------------------------------
Title: President, Specialty
Distribution Division
of PYA/Monarch, Inc.
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