January 21, 2000
Xx. Xxx Xxxxx
Chief Financial Officer
Xxxxx'x Restaurants, Inc.
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Dear Xxx:
Based upon the terms of this letter agreement, Alliant Foodservice, Inc.
(sometimes "we" or "Alliant") offer to sell to your Rubios's Restaurants, Inc.
(sometimes "customer") products carried by the Alliant Foodservice, Inc.
distribution centers serving your account, subject to the availability of
product, for the time period stated in this agreement.
The average order size per unit per delivery will be *** per drop. We recognize
that there will be exceptions; however, this program is based on the condition
that the average order size over a reasonable period of time (quarterly) will be
maintained at *** per drop. Upon thirty (30) days advance notice to you and your
failure to correct the deficiency drop size (system average of *** per drop)
within such time period (quarterly), Alliant reserves the right thereafter to
renegotiate the terms of this agreement, including per case markup, upon prior
notice if there is a significant change in product mix or a failure to regularly
meet the average order size measured in dollar value per drop. The above
parameters are based on information which you have provided to us.
MARK UP
Fresh Produce *** flat fee per case
Tortillas *** flat fee per case
All Other Products *** flat fee per case
Landed Cost is defined as I, II, III:
X. XXXXX-BRANDED PRODUCTS AND ALLIANT EXCLUSIVE PRODUCTS--Cost for such
products may be based on various national or regional published prices
lists, plus inbound freight (where applicable). In the alternative, at
Alliant's option, the cost for Kraft and Alliant Exclusive products may
be calculated as set forth in paragraph II below "All Other Products".
*** Certain confidential portions of this Exhibit were omitted by means of
blackout of the text (the "Mark"). This Exhibit has been filed separately with
the Secretary of the Commission without the Mark pursuant to the Company's
Application Requesting Confidential Treatment under Rule 24b-2 under the 1934
Act.
II. PRODUCE - Total market cost plus freight (where applicable). Total
market cost is set by the respective Alliant Foodservice distribution
center on a district-wide basis and is intended to reflect the local
market replacement cost or current market average cost of procured
products.
III. ALL OTHER PRODUCTS--Cost for such products shall be invoice cost plus
freight (where applicable) or local market replacement cost at
Alliant's option plus freight (where applicable). Cost may include a
fee for Alliant procurement activities which provide procurement
leverage, order consolidation, and administration, and quality
assurance. Alliant may, at its option, select the invoice cost to be
used for determining Cost from among all invoices for product currently
available for sale, or from confirmed purchase orders for product to be
received by the third day of the pricing cycle. National forward
purchases (including forward warehouse purchases and consigned
products) may include applicable storage and finance charges or shall
be based on local market replacement cost at Alliant's option. Local
market replacement cost means the cost the individual Alliant
distribution center would have been required to pay for the purchase of
its normal quantity requirements of such products. The invoice used to
establish Cost will be the invoice issued by the vendor or Alliant's
national processing center.
IV. SUBSIDIARIES - This agreement expressly excludes City Meat and
Provisions Company, Inc., a subsidiary of Alliant Foodservice, Inc. and
any other subsidiaries or affiliates of Alliant which are
manufacturers, fabricators or processors (collectively, "manufacturing
subsidiaries"). In the event you wish to purchase products from
manufacturing subsidiaries, those products' cost shall be determined by
the manufacturing subsidiaries' price lists. A distribution fee, if
applicable, may be added to the manufacturing subsidiaries' price list
amount.
V. FREIGHT - Unless in-bound freight is included in vendor's delivered
pricing, freight charges will be based on market conditions and will
not exceed the freight rate normally payable by the Alliant
Distribution Center for inbound shipments of regular quantity
requirements of such products. Freight charges may include common or
contract carrier charges by the product vendor or a carrier, or charges
billed by Alliant for its freight management service.
Prices are subject to change monthly except for certain categories that
are subject to volatile cost fluctuations (i.e. produce), which will be
priced weekly or as market conditions dictate.
Only promotional allowances exclusively negotiated on your behalf or by
you will be passed through to you. There will be no promotional
allowances given on Kraft-Branded products under this agreement.
Alliant shall be entitled to cash discounts and other supplier
incentives. Because of the competitive nature of our pricing and other
terms of sale, Alliant has no additional marketing monies to fund
special customer requests (for example, customer-sponsored events,
donations to customer-directed causes, etc.).
VI. ROUNDING - To simplify pricing, receiving and inventory valuation,
Alliant rounds all prices with calculated xxxxx fractions to the next
highest xxxxx per unit of sale.
VII. SUBSTITUTIONS - will be priced in accordance within the applicable
category and of acceptable quality as determined by Rubio's R&D
department.
VIII. RESTOCKING FEE - In the case of seasonal or special products or other
instances where you request that Alliant pick up product for reasons
other than an Alliant delivery error (i.e. incorrect or damaged product
delivered), agree to pick up unopened, full cases of non-perishable
products which are in good and saleable condition with adequate
remaining shelf life to allow for resale. This will be mutually agreed
to by Rubio's and Xxxxxxx. To defray our additional handling
expenses for the return of your excess inventory, Alliant reserves
the right and with Rubio's approval, to charge a restocking fee of
*** in addition to any restocking fees that may be charged by the
manufacturer or additional freight expenses incurred. This
restocking fee will be deducted from the full credit value of
returned product.
IX. JOINT BUYING DECISIONS - Forward purchases made with your concurrence
will be priced to you as follows: During the first full calendar month
the product is in Alliant's warehouse, the price will be Landed Cost
plus the applicable flat fee per case. During each additional calendar
month that the product remains in Alliant's warehouse, the price will
be increased see Schedule C to cover the cost of financing and storage,
plus outside storage charges if applicable.
X. SERVICE CHARGE - If invoices are not paid within the terms specified in
this agreement, a service charge will be assessed of *** per month, or
such lesser charge if required by law. Unpaid invoice balances and
finance charges due to Alliant will be deducted from any credits due to
you.
XI. CUSTOMER OWNED INVENTORY - Alliant, at its discretion, may from time to
time provide incidental storage and handling services with respect to
certain products owned by you or a third party ("Customer Products").
The costs for such services shall be ***, and Customer shall pay such
amounts within *** of receipt of an invoice from Alliant. Product will
be invoiced as delivered to stores. Additional freight, storage, cost
of money, etc. Associated with customer owned inventory will be agreed
(per schedule c) and added to products. Alliant reserves the right to
accept or reject any tendered Customer Product based on then-current
business circumstances. You acknowledge that (i) Alliant will not have
title to such Customer Products, and (ii) that Alliant shall not be
deemed to be a bailee (paid or gratuitous) of the customer products,
and (iii) that Alliant has no private warehouse or other insurance that
would cover any losses relating to such Customer Products. Accordingly,
Alliant makes no warranties or representations regarding the services
provided hereunder and shall assume no liability with regard to such
services or such Customer Products. You agree to release, indemnify and
hold harmless Alliant, and its officers, employees and affiliates, from
any and all liabilities, claims, suits, expenses, causes of action or
damages (including but not limited to personal injury, death, property
damage or damage to the Customer Products, and whether such damages be
direct, actual, indirect, consequential, incidental or otherwise), that
may arise out of Alliant's handling of the Customer Products or that in
any way arise out of the services being performed by Alliant, except
for such liabilities that may arise out of the gross negligence or
willful misconduct of Alliant.
XII. PAYMENT - Terms are net *** with service charge applicable after ***,
measured from invoice delivery date to date of our receipt of payment.
Rubios will pay ***, per above terms, on a set prompt payment
timetable, Alliant reserves the right at any time to adjust the payment
terms or take any other appropriate action regarding payment or terms
as it deems appropriate in its reasonable judgment if there is a change
in Rubio's financial health, including the execution and delivery of a
security agreement for extension of credit. We reserve the right to
require the annual or quarterly, submission of audited financial
statements, including a statement of cash flow, in order to ensure
confirmation of the approved payment terms. You agree to reimburse
Alliant for all costs and expenses (including reasonable attorneys'
fees) incurred in enforcing its right to payment hereunder.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Established terms pertain to franchiser only. Franchisee terms will be
established based on Alliant's analysis of available credit
information. A personal guaranty is typically required from franchisees
in order to obtain terms exceeding c.o.d.
XXII. PROMPT PAY INCENTIVE - Your prompt payment terms are net ***. If you
elect to pay prior to the net due date, then Alliant will pay you an
incentive amount based upon the following schedule:
NET PAYMENT DAYS INCENTIVE
*** ***
The incentive, which will be paid within *** following the close of the
respective monthly period, will be calculated by *** amount during the
period. *** will be permitted. Any deviation from your payment terms
will voice and nullify this prompt payment incentive. The incentive
will be paid by check.
XIV. TERM - This agreement shall commence as of the date first written above
and shall continue for the period of 3 years and will be renewable each
year. Either party may elect to terminate this agreement, with or
without cause, upon sixty (60) days prior written notice to the other
party.
XV. CUSTOMER INVENTORY - To effectively service our customers, Alliant is
obligated to maximize warehouse capacity and limit inventory
proliferation. Accordingly, we reserve the right not to stock any
special or proprietary inventory which does not meet our minimum
velocity requirement of ***. We also request that our customers afford
us the opportunity to present alternatives to customer-requested
special and/or proprietary products. Upon termination of this agreement
for any reason, you agree to purchase at Cost plus reasonable delivery
fee, all products that Alliant has in inventory, in transit, or for
which unconditional orders have been placed, that have been purchased,
transferred or consigned at your request, or otherwise for your
account, including but not limited to customer-labeled or other
proprietary products.
In addition to the foregoing, you agree that at any time, with respect
to any obsolete products purchased specially for you (which includes
specially ordered and proprietary products), you will either purchase
such products directly or advise us how to dispose of such products. In
either event, we will be entitled to the full price, which we would
otherwise be entitled to under this agreement. For purposes of this
agreement, for each Alliant distribution center, obsolete products
shall mean those which have a sales velocity of less than the above
stated minimum velocity requirement. We will meet monthly to review and
resolve all slow moving and obsolete inventory issues.
XVI. CUSTOMER-SPECIFIED VENDORS - If you specify a particular vendor for
your account which is not currently authorized by Alliant, then such
vendor will be required to complete our standard vendor documentation
before purchases can be made by Alliant for resale to your unit(s).
XVII. DEVIATED COST PROGRAMS - Alliant agrees to maintain deviated costing
programs in its contract pricing system when deviated cost(s) has been
negotiated directly between you and vendors. Alliant will only maintain
those deviated cost programs documented by the vendor and
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
communicated to Alliant via notice on vendor letterhead or by
completion of an Alliant "Deviated Cost Program" form. The
communication shall, at a minimum, contain:
- Adequate lead time of ten (10) working days
- Program start/end dates
- Information pertaining to deviated cost type (delivered to
distributor, allowance, f.o.b. origin)
- Information on specific products covered, including manufacturer
product code
- Signature of vendor representative authorized to offer program
- Vendor contact.
Alliant will not be responsible for collection, payment or any
reimbursement of monies due to you as a result of vendors supplying
inadequate information, communication received after program start
date, predated or retroactive programs. Further, as Alliant acts as an
administrator regarding negotiated deviated cost programs negotiated by
you, Alliant will not be held liable for any vendor omissions or errors
in maintaining the programs and all such related recoveries shall be
from the involved vendor.
Alliant is responsible for maintaining accurate tracking records and
timely reporting of programs and volumes. In addition, Alliant will
monitor deviated price programs negotiated for Rubio's.
Alliant reserves the right to calculate flat fee mark up per case based
upon *** prior to any customer-specific rebates or discounts. The flat
fee per case will then be applied to the *** Alliant may impose a
charge upon vendors providing ***. If Alliant chooses to request these
charges, they will be known by and agreeded to by Rubio's, prior to
implementation.
XVIII. REPORTS/ORDER GUIDES - Alliant will provide the following reports upon
your request:
1. Customized Order/Inventory Guides. One copy will be furnished to
each purchasing location.
2. Monthly or Quarterly Standardized Usage Report. One copy will be
furnished to the location of your choice.
3. On line access to all usage reports of all products purchased by
Rubio's Restaurants through Alliant Link system electronically.
4. Quarterly Business Review - See Schedule B.
XIX. FORCE MAJEURE - Either party hereto shall be relieved of its
obligations under this agreement for so long as such party is prevented
from fulfilling its obligations by causes outside its reasonable
control, including but not limited to casualty, labor strikes and
serious adverse weather conditions. This provision shall not be
interpreted to relieve either party of its obligations to make any
payments due hereunder.
XX MISCELLANEOUS - Neither party will assign this agreement, in whole or
in part, or otherwise extend the benefits of this agreement to any
unaffiliated third party, without the prior written
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
consent of either party. At Alliant's option, the provisions of this
agreement shall not apply to any unit(s) following the transfer or sale
of such unit(s). This agreement, including the Schedules attached
herein, constitutes and contains the entire agreement of the parties
and cancels and supersedes any and all prior negotiations,
correspondence and agreements, whether oral or written, between you and
Alliant respecting the subject matter hereof
If this offer is acceptable to you, please sign both copies of this
agreement and return one to us. By your signature you represent that
these margins/prices quoted herein are competitive with margins/prices
quoted your account by others for similar products.
XXI. NOTICES - Any written notice called for in this agreement may be given
by personal delivery, first class mail, overnight delivery service or
facsimile transmission. Notices given by personal delivery will be
effective on delivery; by overnight services on the next business day,
by first class mail three business days after mailing; and by facsimile
when transmission is complete. The address of each party is set forth
below.
XXII. PRICE SUBSTANTIATION - RIGHT TO AUDIT - Upon reasonable notice and
during regular business hours, but no more frequently than once every
six months, you may examine, at the local Alliant Foodservice District
servicing your operations, documentation to support pricing of products
sold to you pursuant to this agreement; provided, however, that any
such audit shall be limited to no more than 25 items. If such
documentation is not available at the District office, Alliant's
computer generated reports will be made available to you at the
District office or the audit may be conducted at our processing center,
at Alliant's option. The audited period shall be limited to the twelve
(12) months immediately preceding such audit.
XXIII GOVERNING LAW - This agreement shall be governed by, and interpreted in
accordance with the laws of the State of Illinois, U.S., except any
such law mandating the application of the law(s) of a different
jurisdiction.
Sincerely,
ALLIANT FOODSERVICE, INC.
--------------------------
-------------------------- By: /s/ Xxx Xxxxxx
-------------------------- ---------------------------------------------
Attention: Xxx Xxxxxx, President - Southern California
----------------
Telephone: By: /s/ Xxxx Xxxxxxx
---------------- ---------------------------------------------
Facsimile: Xxxx Xxxxxxx, President - Northern California
----------------
By: /s/ Xxx Xxxxxxx
---------------------------------------------
Xxx Xxxxxxx, President - Arizona/Nevada
By: /s/ Xxxx Xxxxxx
---------------------------------------------
Xxxx Xxxxxx, President - Utah
By: /s/ Xxxx Xxxxxxxxx
---------------------------------------------
Xxxx Xxxxxxxxx, President - Colorado
By: /s/ Xxxx Xxxxxx
---------------------------------------------
Xxxx Xxxxxx, President - Minnesota
ACCEPTED:
-------------------------- ------------------------------------------------
-------------------------- Rubio's Baja Grill
--------------------------
Attention: /s/ Xxx Xxxxx
---------------- ------------------------------------------------
Telephone: Xxx Xxxxx
----------------
Facsimile: ------------------------------------------------
---------------- Chief Financial Officer
1-21-00
------------------------------------------------
(Date)
SCHEDULE A
MARKETING INCENTIVE: You will be entitled to receive a prepayment marketing
incentive of ***. Payment will be made within *** of the contract month
following the close of the respective incentive period. Any significant breach
from your payment terms will void and nullify this marketing incentive. This
incentive will be paid by check. If this agreement is terminated at any time for
any reason during this calendar year, you will return to us the prorated portion
of the incentive within *** of termination.
Additionally all new stores will receive the same *** for their first *** of
operations. This will be paid by check to Rubio's corporate office within ***.
SCHEDULE B
QUARTERLY BUSINESS REVIEW - The Quarterly Business Review will be utilized to
analyze clearly defined objectives. For example, service level, procurement
activities, technology, and general service issues. This will be an ongoing
process. We will meet every 3 months to review objectives and set new goals.
Listed below is an example of delivery measurement tracking and sku level
tracking:
HISTORICAL ON-TIME DELIVERIES - On-time delivery performance is greatly impacted
by the windows offered by a customer. A simple block out window of no deliveries
from a customer's peak day parts(s), i.e. no deliveries between 11 a.m. to 1
p.m. will bring scores approaching 100%. A two hour "open window" will generally
score in the 90's percentile. A one hour window as proposed by the RFP may
create a rating in the 90's percentile.
Measurement is provided by cross referencing Roadnet and Cadec software, which
develops a report comparing the time window allocated and the actual time and
duration of the delivery.
SALES COMPLIANCE - Using the traditional industry method of cases shipped versus
cases ordered our program customers average 98.4 "fill" rates. This can, and has
been, advanced to over 99.5 when the customer's designated vendors provide
Alliant with "perfect invoice" service. Vendor support on proprietary products
is a key element in maintaining a consistent 99+ score.
Measurement is by traditional cases shipped versus cases ordered reporting.
SCHEDULE C
OUTSIDE STORAGE AND FINANCING
Storage for Langostino and fish will be billed out as follows:
***.
Under this agreement and mutually agreed to by Rubio's and Alliant any other
products will be covered as indicated above.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
