SERVICE AGREEMENT
BETWEEN
7-ELEVEN, INC.
AND
XXXXXX COMPANY, INC.
* - Confidential portions of this Service Agreement have been omitted
and filed separately with the Securities and Exchange Commission under
a confidential treatment request pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended
Tab 1
TABLE OF CONTENTS
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ARTICLE CONTENT PAGE(S)
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ARTICLE I Scope of Agreement
ARTICLE II New and Proprietary products
ARTICLE III Allocations and Short Supply
ARTICLE IV Vendor's Cost of product
ARTICLE V Price of product
ARTICLE VI Deals and Allowances
ARTICLE VII Payment Terms
ARTICLE VIII Ordering/Delivery Services
ARTICLE IX Product Quality
ARTICLE X Insurance
ARTICLE XI Indemnity
ARTICLE XII Dispute Resolution
ARTICLE XIII Facility Standby Payment and other Payments
ARTICLE XIV Computer Systems
ARTICLE XV 7-Exchange Program
ARTICLE XVI Term and Termination
ARTICLE XVII License from 7-Eleven
ARTICLE XVIII Risk of Loss
ARTICLE XIX Force Majeure
ARTICLE XX Assignment
ARTICLE XXI Notices
ARTICLE XXII Confidentiality
ARTICLE XXIII Press Release
ARTICLE XXIV Multiple Counterparts
ARTICLE XXV Severability
ARTICLE XXVI Entire Agreement
ARTICLE XXVII Governing Law
ARTICLE XXVIII Transition
ARTICLE XXIX No Conflicts
ARTICLE XXX No Agency
SCHEDULES
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SCHEDULE SECTION
NUMBERS CONTENTS REFERENCED PAGE
-------- -------------------------------------- ------------ -----
1. Distribution Centers and Satellite Preamble
Storage Facilities
1.2 Product Categories 1.2
5.1 The Billing Plans 5.1
5.2 Cigarette Rebate Schedule 5.2
5.5 Audit Procedures 5.5
6.3 Purchase Incentive Allowance 6.3
6.4 Vendor Accounting Periods 6.4
8.1 Services 8.1
8.13 Additional In-Store Services 8.13
9.3 Driver Requirements 9.3
9.5(a) Delivery Procedures 9.5
9.5(b) Minimum Shelf Life Requirements 9.5
17(a) Marks 17.1
17(b) Products Bearing the Marks 17.1
SERVICE AGREEMENT
This
Service Agreement (the "Agreement") is made and entered into
as of the 21st day of September, 2002, by and between 7-Eleven, Inc., a
Texas corporation, (hereinafter referred to as "7-Eleven") and XxXxxx
Company, Inc., a
Texas corporation (hereinafter referred to as
"Vendor").
RECITALS:
WHEREAS, 7-Eleven is in the business of operating retail
convenience food stores throughout the United States of America under
various trade and assumed names, including, but not limited to, 7-
Eleven;
WHEREAS, Vendor operates a wholesale grocery distribution
business and acts as a grocery consolidator of various products from
suppliers;
WHEREAS, pursuant to this Agreement, 7-Eleven wishes to engage
Vendor to provide to 7-Eleven and its Stores (defined below) services
relating to the distribution and provision of food and non-food/general
merchandise products to the Stores and to designated combined
distribution centers ("CDCs") through operation by Vendor of
Distribution Centers ("Distribution Centers") in designated areas (those
currently in operation being set forth on Schedule 1); and
WHEREAS, Vendor wishes to provide such services and products
pursuant to this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, the parties hereto agree as follows.
ARTICLE I
SCOPE OF AGREEMENT
1.1(a) For purposes of this Agreement, the term "Stores" shall
mean all of 7-Eleven's corporate operated 7-Eleven convenience Stores,
or other retail grocery locations which are, or may hereafter be,
operated by 7-Eleven in the United States. Notwithstanding the foregoing
and subject to Section 1.1(b) below, for purposes of this Agreement,
Stores shall not include (i) any Stores owned and/or operated by 7-
Eleven's affiliate in Canada, (ii) any 7-Eleven convenience Stores or
other retail grocery locations which are, or hereafter may be, owned or
operated by (x) 7-Eleven's Franchisees ("Franchisee(s)") (such Stores
being hereinafter referred to as "Franchised Stores"), or (y) 7-Eleven's
domestic area licensees ("Licensees") or franchisees of the Licensees or
(iii) any convenience stores or other retail grocery locations hereafter
acquired and owned and operated by 7-Eleven which are subject at the
time of such acquisition to an existing distributor
service agreement
with a third party, but only for so long as such distributor
service
agreement remains in effect.
(b) To the extent applicable, Vendor acknowledges that 7-
Eleven's Franchisees and Licensees are independent contractors who
determine the manner and means of operating their own Stores pursuant to
the terms of the franchise or license agreements with 7-Eleven and
arrangements relating thereto. 7-Eleven will
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designate Vendor as the recommended supplier of the types of
product to be delivered by Vendor hereunder to the Franchisees and
Licensees in the areas where Vendor operates so long as Vendor (i)
complies with the terms of this Agreement, (ii) continues to supply the
Franchisees and Licensees with high quality services and products in
sufficient quantity, quality, type and variety consistent with the 7-
Eleven image prescribed by 7-Eleven and at competitive prices, and (iii)
is not in default under this Agreement. Notwithstanding the foregoing,
7-Eleven has recommended and may continue to recommend secondary
suppliers to Franchisees for Proprietary Products (defined in Section
2.3 below). Notwithstanding anything to the contrary in Section 1.1(a)
above, the term 7-Eleven and/or "Stores", except as may otherwise be
provided herein, shall include the Franchisees and Franchised Stores to
the extent any such Franchisee elects to purchase products from Vendor.
All rights, duties and obligations running from Vendor to 7-Eleven
hereunder shall also run from Vendor to each Franchisee whenever and
only to the extent such Franchisee elects to purchase products from
Vendor. 7-Eleven may, at its sole election, provide Vendor with at
least 48 hours notice that 7-Eleven will cease paying Vendor for any
products delivered by Vendor to any designated Franchised Store after 48
hours after Vendor's receipt of such notice, if, in 7-Eleven's opinion,
a franchisee violates the terms of its agreement with 7-Eleven. If
Vendor elects to continue to supply products to such Franchised Store
after such notice to Vendor, 7-Eleven will not be obligated to pay
Vendor for any products delivered by Vendor to the designated Franchised
Store after 48 hours after Vendor's receipt of such notice. Vendor
further acknowledges that (i) pursuant to the franchise agreement, 7-
Eleven shares revenue with its Franchisees and (ii) Vendor shall report
to 7-Eleven any and all rebates, discounts and other allowances that may
be provided to any Franchisees by Vendor.
(c) Vendor shall use its best efforts to negotiate its own
service arrangement(s) with Licensees and to service such Licensees.
Such service shall include Vendor providing the Licensees with the same
service and the same products as under this Agreement, including,
without limitation, Proprietary Products and other products bearing
Marks (as defined in Section 17.1), all at competitive prices to the
extent Licensees desire such service and products.
1.2 The distribution services are intended by the parties to
include the provision by Vendor and purchase by 7-Eleven, as required,
of the categories of products set forth on Schedule 1.2. Vendor
recognizes and acknowledges that certain products to be designated by 7-
Eleven may be delivered by Vendor (i) in bulk orders to the CDC or (ii)
pre-picked orders to the CDC, and Vendor agrees to work with 7-Eleven in
developing the most efficient delivery model as applicable to meet each
Store's needs. 7-Eleven also reserves the right, at its option, to
designate that certain products designated by 7-Eleven, may be purchased
by 7-Eleven from a third party for distribution through the CDCs or
other alternate channels of distribution. These products may include,
but shall not be limited to, seasonal products and Store supplies.
Notwithstanding anything in this Agreement to the contrary, 7-Eleven
shall have the right, at its sole option, to designate any and/or all
products in approximately * Stores for the purpose of testing
alternative distribution models, including distribution through the
CDC's or otherwise in 7-Eleven's discretion. This right shall include,
without limitation, the purchase of all traditional and nontraditional
grocery products and services from a third party for such stores. 7-
Eleven will grant Vendor a first right to provide 7-Eleven with such
products and distribution services for any such program involving
purchasing products from a third party and alternate distribution
services by providing Vendor with a proposal describing the terms of any
such program. If Vendor fails to respond to such an offer within
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fourteen (14) days of its receipt of such proposal, or indicates in
writing within such period that it is unable or unwilling to
participate, then 7-Eleven will reserve the right to enter into
agreements with third parties to participate in such distribution
activities and models without any obligation to Vendor, provided,
however, that such agreements shall contain terms and conditions
substantially similar to those provided to Vendor by 7-Eleven in the
proposal. For the avoidance of doubt, terms which differ from the
proposal, but which are negotiated in good faith by 7-Eleven with such
third parties to enter into a final agreement, shall not be violation of
the foregoing restriction.
1.3 The initial product assortment shall be established by 7-
Eleven and all changes to such assortment, including, without
limitation, substitutes for or replacements of any particular product
shall first require 7-Eleven's written approval in accordance with
procedures to be established and as provided herein.
1.4 7-Eleven agrees that its product purchases of the
categories of products set forth in this Agreement for all corporate
operated Stores shall equal or exceed * percent (*%) of all corporate
operated Store product purchases by 7-Eleven in those categories for
each calendar year during the term of this Agreement. For clarity, such
product purchase commitment shall be calculated based on dollar volume
of aggregate corporate Store purchases in each calendar year. The
following types of purchases shall be excluded from the calculation of
the minimum levels of purchases committed by 7-Eleven in this Section
1.4: (i) out of stock products; (ii) manufacturer product allocations
resulting in the shortages in supply; (iii) 7-Eleven's purchases from a
third party as a result of either (A) 7-Eleven's exercise of its right
to carve out approximately * Stores under Section 1.2, or (B) Vendor's
failure to comply with the competitive pricing provisions set forth
herein; (iv) items purchased for direct store delivery; or (v) reasons
of force majeure as provided in Article XIX.
ARTICLE II
NEW AND PROPRIETARY PRODUCTS
2.1 If 7-Eleven requests Vendor supply the Stores with any new
product, not previously maintained in inventory by Vendor, Vendor agrees
to have such new product available for order by the Stores at Vendor's
Distribution Centers within * weeks from Vendor's receipt from 7-Eleven
of a completed new item information packet, which shall include 7-
Eleven's initial quantity order commitment intended to cover the first *
weeks of product movement at 7-Eleven's Stores. Except as provided
otherwise in Section 2.4, in no event shall 7-Eleven's liability for any
inventory of new product exceed such initial *-week forecast as made by
7-Eleven.
2.2 Vendor will not advise any of Vendor's other customers of
any new product or product line that 7-Eleven has requested from Vendor
which is the subject of an exclusive product arrangement negotiated by
7-Eleven and Vendor or the manufacturer or supplier nor shall Vendor
make such new product or product line available to any of Vendor's other
customers ("Exclusive Product"), unless (i) the new product becomes
readily available to the retail grocery trade or (ii) such product is no
longer the subject of any such exclusive product arrangement; provided,
however, Vendor shall not divulge or share any of 7-Eleven's
merchandising practices or expertise associated with such products with
any of its other customers at anytime.
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2.3 At 7-Eleven's request, Vendor will stock and 7-Eleven will
purchase those products designated by 7-Eleven which bear 7-Eleven's or
any of its affiliates' trademarks, service marks or trade names (the
"Proprietary Products"), including those set forth on Schedule 17.1(a).
Vendor will not make the Proprietary Products available to Vendor's
other customers.
2.4 Vendor and 7-Eleven agree to the definition of Slow Moving
Inventory ("SMI") as set forth on Schedule 2.4. 7-Eleven's liability
for SMI that is either Proprietary Product or Exclusive Product shall be
limited to the greater of either (i) the average four week movement for
such product based on the prior 3 months movement or (ii) the initial
four week forecast provided by 7-Eleven for such product. 7-Eleven's
liability for SMI that is new product shall be limited to the extent
provided in Section 2.1. Upon notification to 7-Eleven by Vendor of
such SMI, 7-Eleven, within a reasonable time period mutually agreed to
by 7-Eleven and Vendor (not to exceed six weeks), will advise Vendor of
its desire to either (i) purchase all of the remaining SMI of such
products from Vendor as limited herein, (ii) have Vendor dispose of such
SMI in accordance with 7-Eleven instructions, or (iii) pay Vendor's
reasonable carrying costs for retaining such SMI. The parties agree
that reasonable carrying costs as used in this section shall mean *. On
new products that are neither Proprietary Product nor Exclusive Products
as referenced in section 2.1, following an initial period of twelve (12)
weeks from product receipt in Vendor's Distribution Center(s), 7-Eleven
will pay reasonable carrying costs for such SMI that represents any such
product remaining from 7-Eleven's initial four (4)-week forecast. In no
event shall 7-Eleven be liable for carrying costs or any similar costs
on inventory except as otherwise set forth herein.
7-Eleven shall provide Vendor with at least six (6) weeks advance
notice of 7-Eleven's intention to discontinue purchasing any Proprietary
Product or Exclusive Product.
ARTICLE III
ALLOCATIONS AND SHORT SUPPLY
3.1 In the event 7-Eleven is offered or obtains from a
manufacturer, supplier or Vendor a specified quantity allocation for any
products to be purchased by 7-Eleven from Vendor, Vendor agrees to
reserve such allocation and to sell all such allocated products solely
to 7-Eleven as 7-Eleven may request.
3.2 Subject to the other terms of this Agreement, Vendor
agrees to notify 7-Eleven of any actual or anticipated shortage in
supply of any product being sold to 7-Eleven by Vendor. Vendor agrees
to cooperate with 7-Eleven in minimizing the impact of any shortage in
supply of products available to 7-Eleven. In the event of any such
shortage in supply, Vendor will allocate all of its available supplies
of the affected products among Vendor's then existing customers based on
their respective proportionate amount of purchases of such product from
Vendor.
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ARTICLE IV
VENDOR'S COST OF PRODUCT
4.1 The term "Cost" of a product (for products other than
cigarettes) shall mean the manufacturer's or supplier's actual current
publicly quoted delivered list price based upon the buying bracket in
which Vendor normally buys that product for the Vendor division or
subsidiary servicing the respective Stores at the date of delivery of
such product to the Store(s)(or for purposes of Section 2.4, at the date
of purchase), without regard to any cash discounts or trade or
manufacturer designated wholesaler incentives given by the manufacturer
or supplier to Vendor, plus any applicable freight charges from the
manufacturer's or supplier's shipping point to the appropriate Vendor
division or subsidiary (including sort and segregate charges).
Notwithstanding the foregoing, the Cost shall at all times be the lowest
of the delivered cost to Vendor's distribution centers made available
either (i) by the manufacturer or supplier directly or (ii) through a
consolidation center (not including diverters). For purposes of
calculating Cost, Vendor's inclusion in a particular buying bracket must
be consistent with best industry practices.
4.2 *
ARTICLE V
PRICE OF PRODUCT
5.1 All products (whether purchased by Vendor directly from a
manufacturer or another source), other than cigarettes, shall be billed
to 7-Eleven at Cost, plus the applicable percentage markup for each
Universal Identification Number (UIN), department or category as set
forth in the Billing Plans set forth in Schedules 5.1 (the "Billing
Plans"). In the event Vendor wishes to shift Stores from one Vendor
distribution center to another Vendor distribution center for Billing
Plan purposes, Vendor must both (i) obtain 7-Eleven's consent prior to
such shift and (ii) ensure that such shift does not result in any higher
landed cost for such shifted Store(s). The parties recognize that the
Billing Plans have been designed to include costs of delivery to each
Store. When and if Vendor delivers products to a CDC, (a) Vendor shall
(i) reduce the applicable Billing Plan xxxx-up for such products that
are picked in bulk by * basis points; and (ii) reduce the applicable
Billing Plan xxxx-up for such products that are individually picked by *
basis points, and (b) such purchases shall be applied to all
calculations of Vendor rebates and incentives set forth herein if 7-
Eleven is able to furnish store and item level detail for such purchases
in a mutually agreed format. Such purchases shall be included in any
calculation of minimum purchases by 7-Eleven pursuant to Section 1.4.
5.2 The price charged to 7-Eleven by Vendor for cigarettes
shall be Vendor's manufacturer's invoice cost plus applicable taxes and,
if required by law, applicable fair trade xxxx-ups, minus, if applicable
and allowed by law, the rebates set forth on Schedule 5.2. For
corporate operated Stores, such rebates shall be passed daily to 7-
Eleven as an EDI credit, if allowed by applicable law. For Franchised
Stores, such rebates shall be included as a price reduction on the
applicable invoice, if allowed by applicable law. Subject to any
applicable fair trade requirements, which Vendor shall provide to 7-
Eleven and periodically update for its information and for which Vendor
and 7-Eleven (as set forth in applicable law) shall be responsible for
complying, all cigarette pricing (including rebates) shall be
5
competitive with that then being offered by Vendor to other customers of
Vendor in the applicable market area who are receiving similar levels of
service and whose per store cigarette sales volume is substantially
similar to 7-Eleven. Vendor shall immediately notify 7-Eleven of any
change in market conditions that might reasonably lead to a change in
the cigarette pricing set forth in Schedule 5.2. Upon such
notification, the parties will mutually agree to reasonable amendments
to Schedule 5.2, and Vendor shall then provide 7-Eleven with the
mutually agreed revised Schedule 5.2.
5.3 Simultaneously with any manufacturer's announced cigarette
price increases, Vendor shall give 7-Eleven (i) a *% credit based on the
amount of any price increase in cigarettes from any such manufacturer
multiplied by each Store's average purchases for the same period of
price protection given by the manufacturer to Vendor for up to one week
of price protection given by the manufacturer, and, in the event that
more than one week of protection is given by the manufacturer, (ii) a *%
credit based on the amount of any price increase in cigarettes from any
such manufacturer multiplied by each Store's average purchases for the
period of price protection beyond one week, and each calculation in (i)
and (ii) above shall be based on the average purchases per Store per
week during the four (4) week period prior to any such manufacturer's
price increase. To further illustrate the above, if the manufacturer
provides one week to the Vendor, the Vendor will provide * of protection
to the Stores. If the manufacturer should provide two weeks of
protection to the Vendor, the Vendor shall provide * percent (*%) of the
credit for the second week. The same * percent (*%) logic applies if
three or more weeks are given by the manufacturer. The foregoing
credits given to 7-Eleven shall be passed by Vendor via the EDI System
(defined below) within * days of the increase and shall be evidenced by
credit memos issued by Vendor and sent to locations designated by 7-
Eleven from time to time, and/or, at Vendor's option, reflected by not
charging the increased price on the invoice for all or a portion of the
applicable period and quantities. Such credit memos shall include a
summary of the allocation of the credits among each Store covered by the
credit memo based on the cigarette purchases made by each Store during
the applicable period.
5.4 Vendor agrees that the prices which it charges to the
Stores under this Agreement in any given market area for any products
(including without limitation, cigarettes), determined using a market-
basket approach (i.e. the standard product purchase mix), will not
exceed (i) the prices it charges for any such or similar products to any
of its other customers, or (ii) the prices offered by any third party
supplier selling any such products and providing a similar level of
service. As used in this Section 5.4, the term "similar level of
service" means similar services based on a balanced comparison of the
payment terms, in-store services, product mix, frequency of delivery and
delivery windows offered by the third party, as compared to those
offered by Vendor. In the event Vendor refuses to at least match any
such offer from any such third party supplier within ten (10) days of
being provided with such opportunity by 7-Eleven, 7-Eleven and the
Stores reserve the right, in addition to any other rights or remedies it
may have in law or equity, and without any liability or obligation to
Vendor, to purchase such products from such other supplier(s).
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5.5 Upon reasonable notice, 7-Eleven, its representatives
and/or its auditors shall have access to the relevant portions of all
pertinent systems, books, records and invoices of Vendor and its
suppliers (and, at its cost, may be permitted to copy same) to verify
(i) the cost of the products from Vendor's manufacturers and suppliers,
(ii) that Vendor is properly passing and allocating all applicable
Allowances (defined below) between 7-Eleven and Vendor, (iii) that
Vendor is complying with Section 2.4, (iv) that Vendor is correctly
pricing the products purchased and sold hereunder pursuant to the terms
of this Agreement and (v) that Vendor is complying with all of the terms
of this Agreement. To the extent reasonably available, 7-Eleven shall
have access to any of the foregoing from Vendor in an electronic format.
In addition to 7-Eleven's audit rights set forth above, Vendor shall
comply with 7-Eleven's audit procedures as set forth in Schedule 5.5.
All non-employees of 7-Eleven must be accompanied by an employee of 7-
Eleven in order to have access to the information described above.
Vendor shall not be required to furnish 7-Eleven, its representatives or
its auditors any information or documentation that is specific to any
other customer of Vendor, provided that if any such information is
combined with information of 7-Eleven, Vendor must provide the 7-Eleven
information. Vendor shall respond in writing to all 7-Eleven audit
claims within thirty (30) days of the date that Vendor receives notice
of such claim. If Vendor disputes a 7-Eleven audit claim, such response
shall substantiate in reasonable detail Vendor's reasons for disputing
the claim, consistent with the audit procedures set forth herein.
5.6 7-Eleven and Vendor also agree to cooperate with each
other in order to promptly develop and implement specific systems and
procedures to enable Vendor to collect and pay all applicable sales or
use taxes for all taxable products purchased by the Stores. Properly
completed resale exemption certificates shall be provided by 7-Eleven
covering the products which shall be resold at the Stores. 7-Eleven
shall continue to pay Vendor the charge currently being paid by 7-Eleven
for Vendor's assistance in creating resale certificates and other
related procedures, which in no event shall exceed $* per year provided
the current level of assistance and procedures does not materially
increase. 7-Eleven shall have no liability for any charges in excess of
$* unless Vendor has first provided 7-Eleven a firm written estimate of
the costs and associated services, and 7-Eleven has agreed in writing to
incur such costs.
5.7 Vendor shall not implement any price change (increase or
decrease) without first providing 7-Eleven with at least * days' notice.
Notwithstanding the foregoing, with regard to a price change (increase
or decrease) resulting from any corresponding price change from any
manufacturer or supplier or change in governmental or quasi-governmental
taxes, assessments, or similar statutorily required impositions (e.g.
fair trade xxxx-ups or excise taxes), Vendor may give 7-Eleven less than
* days' notice, but only if (and to the extent that) the manufacturer
gives less than * days notice to Vendor. In such cases, Vendor shall
provide 7-Eleven with notice of the price change immediately upon
Vendor's receipt of notice from the manufacturer. Any price increases
shall be substantiated by Vendor providing 7-Eleven with reasonably
satisfactory documentation to support such increase. Any manufacturer
or supplier product price increases or decreases or any special
manufacturer or supplier "deals" or "allowances" shall be substantiated
by Vendor providing 7-Eleven with reasonably satisfactory documentation
to support the same and shall become effective as to 7-Eleven on the
published effective date provided by such manufacturer or supplier;
provided, however, Vendor agrees to work with all such manufacturers and
suppliers in an effort to establish at least a * day notice period prior
to any applicable price changes or deals or allowances taking effect as
to 7-Eleven. Notwithstanding any price changes to the cost of the
product, the markups in the Billing Plans shall remain in effect and
unchanged during the term of this Agreement.
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5.8 Vendor shall not charge 7-Eleven any fees for any services
not specifically described herein or otherwise agreed to by 7-Eleven.
In the event any manufacturers or suppliers either cease providing,
change or fail to provide to Vendor at least * percent (*%) cash
discount payment terms, and such change or failure was not the result of
any act or omission of Vendor, then in such event Vendor may impute any
such cash discount to any product costs to 7-Eleven to compensate for
any such cessation, change or failure; provided that such imputed
discount percentage may not exceed * percent (*%). Vendor shall not be
entitled to add such imputed discount to the cost of goods in the event
a cash discount is offered to, but missed or otherwise not taken for any
reason by Vendor, or if *. Vendor shall provide 7-Eleven a current list
of manufacturers and/or suppliers from whom 7-Eleven is buying products
and who are offering cash discounts to Vendor and shall promptly notify
7-Eleven of any changes to such list throughout the term of this
Agreement.
5.9 If competitive conditions in any areas where Vendor is
serving Franchisees require that Vendor offer the Franchisees a higher
level of service than is contemplated herein, Vendor shall be permitted
to structure an alternate billing plan to address such competitive
conditions provided (i) that the applicable Billing Plans herein shall
remain in effect as an alternative to such higher levels of service and
(ii) such alternate billing plan shall be competitive with any other
supplier offering such higher level of service. Vendor agrees to
provide 7-Eleven with information relating to the cost of the components
(including services) of any such alternate billing plan and a product by
product analysis reflecting the differences in the cost of products
under any alternate billing plan from the cost of products calculated
under the applicable Billing Plans.
5.10 For all purposes hereunder, the net delivered prices
charged by Vendor for products sold to Stores or Franchised Stores shall
be determined pursuant to the Billing Plans applicable to the market
classification (corporate or franchise as determined by 7-Eleven based
on number of each type of Store in such market) in which such Stores are
located . Notwithstanding the foregoing, 7-Eleven may designate a
particular market as "transitional" from time to time in the event that
7-Eleven elects to convert a market from corporate to franchise
operation, or vice versa. 7-Eleven will give Vendor at least thirty
(30) days prior notice of the designation of a market as transitional.
During the conversion period in such transitional markets, 7-Eleven will
designate each individual Store within such market to be either a
corporate or franchise Store, as applicable.
ARTICLE VI
DEALS AND ALLOWANCES
6.1 Any deals, allowances, rebates, promotional programs or
other concessions offered by a manufacturer or supplier to retailers as
determined pursuant to items (i) through (iv) below (collectively,
"Allowances") will be passed through and made available to the Stores
for the supplier's or manufacturer's maximum allowed period (or longer
if offered by Vendor) and supplier's or manufacturer's maximum amount
(or greater if offered by Vendor). An Allowance shall be determined to
be a retailer Allowance depending on (i) the written intent of
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the supplier or manufacturer, or (ii) if the written intent as required
in (i) cannot be determined, by whether retail or wholesale performance
is required, or (iii) if (i) or (ii) above do not apply or cannot be
determined, by standard industry practice, or (iv) if (i) through (iii)
above do not apply or cannot be determined, as negotiated by 7-Eleven
and Vendor. All applicable Allowances shall be passed to the Stores as
part of the invoice to the Stores, (i.e., "off invoice"). During the
term of this Agreement, Vendor and 7-Eleven agree to cooperate with each
other and exercise commercially reasonable efforts to establish
procedures to pass "off invoice" to the Stores any Allowances not being
passed "off invoice." 7-Eleven has the right to secure trade and
advertising allowances directly from manufacturers and suppliers that
Vendor is utilizing to supply 7-Eleven with product. Vendor will pay 7-
Eleven one hundred percent (100%) percent of manufacturer/supplier trade
funds received by Vendor for the benefit of 7-Eleven in the event the
manufacturer or supplier has not set up trade fund accruals directly
with 7-Eleven. Vendor will assist 7-Eleven, at 7-Eleven's option, in
securing any such allowances. Vendor will not interfere with or
otherwise impede 7-Eleven's efforts to secure such allowances.
6.2 7-Eleven and Vendor will cooperate with each other in
seeking to maximize opportunities for 7-Eleven to benefit from any
deals, allowances, rebates, promotional programs or other concessions
offered by suppliers or manufacturers including, without limitation, by
including 7-Eleven's requirements (including its Franchisees and to the
extent applicable, 7-Eleven's Licensees) for various products in any
orders placed with suppliers or manufacturers by Vendor and its
subsidiaries for products required by Vendor for its other customers and
by allowing 7-Eleven to negotiate directly with suppliers or
manufacturers regarding such deals and allowances, if 7-Eleven so
desires. The parties agree to jointly work together to eliminate any
class of trade deals and allowances which are restrictive to 7-Eleven.
6.3 For each Vendor fiscal 4 or 5 week accounting period as
set forth in Schedule 6.4 ("Vendor accounting period"), Vendor shall pay
7-Eleven's corporate Stores and Franchised Stores a purchase incentive
allowance as set forth in Schedule 6.3 based on each Store's average
weekly purchases of all products (excluding cigarettes) during such
accounting period. The incentive allowance shall be passed in the
immediately succeeding accounting period by Vendor via the EDI System,
in the form of an EDI Credit, for all 7-Eleven corporate Stores and
applicable Franchised Stores and shall be evidenced by the EDI detail
issued by Vendor and sent to the 7-Eleven corporate office. Vendor
shall display as an invoice line item for each Franchised Store the
credits the Store receives pursuant to this Section which invoice line
item shall reflect the incentive credits earned during the immediately
preceding Vendor accounting period.
6.4 In addition to the purchase incentive allowance set forth
in Section 6.3 above, Vendor shall also provide the financial incentives
set forth below to each qualifying 7-Eleven Franchised Store (and
corporate Stores located within areas designated as franchise market
areas) to encourage the Franchisee to consolidate purchases from Vendor.
The applicable incentive(s) shall be paid only if the Franchised Store's
Store Market Share equals or exceeds the thresholds set forth in the
chart below in the preceding Vendor accounting period. The term "Store
Market Share" shall be defined as each Franchised Store's total dollar
purchases from Vendor divided by the total dollar purchases by the
Franchised Store from all suppliers. For purposes of the above,
references to total dollar purchases shall be calculated with reference
to purchases of products in the same kinds of categories as goods
expected to be purchased from Vendor under this Agreement. 7-Eleven
shall provide Vendor with monthly
9
purchase data, and Vendor shall use such data to calculate each
Franchised Store's Market Share on a Vendor accounting period basis to
determine if such Store qualifies as shown in the chart below for the
incentive payment. If such Franchised Store qualifies, 7-Eleven shall
notify Vendor of such qualification and Vendor shall pay the applicable
incentive(s) shown in the chart below. This allowance shall be passed
monthly by Vendor via the EDI System, in the form of an EDI credit, for
all qualifying Franchised Stores and shall be evidenced by the EDI
detail issued by Vendor and sent to the 7-Eleven corporate office.
Vendor shall display as an invoice line item for each Franchised Store
the credits the Store receives pursuant to this Section which invoice
line item shall reflect the incentive credits earned during the
immediately preceding Vendor accounting period.
*
ARTICLE VII
INVOICING/PAYMENT TERMS
7.1 Invoicing for products delivered by Vendor directly to
each Store shall be handled as provided in this section 7.1. Vendor
will send to 7-Eleven by-store by-item electronic invoices via the
Electronic Data Interchange ("EDI System") or other similar electronic
process. The electronic invoices, or credit memos for product returns
or product shortages, shall be transmitted by Vendor to 7-Eleven no
later than 48 hours after delivery of product to, or pick up of
product from, each Store. For each Store, Vendor shall also provide
the Store personnel with a delivery invoice or credit memo on the date
of the delivery evidencing each delivery or return. Each such invoice
shall include and / or describe, at a minimum:
i. a listing of the types and quantities of products
delivered, alphabetically by 7-Eleven PMA category
using Vendor product descriptions
ii. the Store where the products were delivered,
iii. the date of the delivery,
iv. the price for each of the delivered products by item,
v. suggested retail prices for each of the products
delivered to the Stores and / or in the case of
Franchised Stores, such retail prices as may be
selected by any Franchisee and furnished to Vendor,
vi. 7-Eleven's PMA (product movement analysis) categories
or other numerical category identification system as
may be provided to Vendor,
vii. allowances, rebates and similar credits passed to the
Store by item,
viii. a recap of all products by product category,
ix. taxable versus non-taxable product designations,
x. the applicable service fill rates, as defined in this
Agreement,
xi. gross profit percentage based on retail prices
furnished,
xii. out of stock items,
xiii. credits for overages, shortages and damages, and
xiv. any other information reasonably required by 7-Eleven.
7.2 The invoice items detailed above in (i) through (xiv)
shall also be on the electronic invoice. Sales or use tax, as
applicable, for items identified as Store supplies will be included on
the invoice to 7-Eleven, and in addition the paper invoice delivered
to the Store will include a memo entry indicating the total amount of
sales or use tax charged. Both the electronic and paper invoices
shall be adjusted by Vendor for known shortages.
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7.3 Invoicing for products delivered by Vendor to a CDC
shall be handled as provided in this Section 7.3. Vendor will deliver
product to the CDC based upon the order placed by each Store. CDC
will check in the Vendor delivery by case while the Vendor driver
waits, and then notify the Vendor driver of shorts and mis-picks. An
invoice will be created by the CDC based upon the order placed by each
Store. The CDC will deliver the product and invoice to each Store.
The Store will verify the products received against the invoice and
perform a high dollar item check in procedure. The Store will
electronically adjust the invoice for any mispicks and damaged or
unsaleable products received or any shortages in the order no later
than by 6:00 p.m. local time of the day of delivery. In the event the
Store is unable to electronically adjust the invoice, 7-Eleven will
manually enter adjustments into the ordering RIS System (defined
below). 7-Eleven shall initially be responsible for paying only the
adjusted invoice amount less the CDC distributor fees to be paid to
the operator of the CDC. Following the CDC and Store check-in
procedures set forth above, 7-Eleven and Vendor shall then mutually
provide for reconciliation and payment by 7-Eleven to Vendor for any
discrepancies between (i) payments already made by 7-Eleven based on
invoices electronically adjusted for shorts and (ii) the actual
quantity of products delivered by Vendor to the CDC related to the
applicable invoice, as substantiated by Vendor based on the CDC check-
in procedure described above. The reconciliation process will be
based on successive 4-week payment periods as described in Section 7.4
below. Reconciliation payments or credits shall be made no later than
fourteen (14) days after the last payment due date for each four-week
payment period. For example, a reconciliation payment (or credit) for
products delivered between Saturday, November 30 and Friday, December
27, 2002, shall be due no later than Monday, January 20, 2003 (which
is fourteen days after Monday, January 6, 2003, the last weekly
payment due date for products delivered in such period).
RECONCILIATION EXAMPLE: 1000 cases are ordered by the CDC, 990 cases
are delivered by the vendor to the CDC and only 980 cases are
ultimately delivered to the Stores. 7-Eleven agrees that payment
should be based upon the 990 cases. The initial payment to the
Vendor will be for the 980 cases with the remaining 10 cases falling
into the " to be reconciled amount" as described above.
The parties recognize that there are current system limitations that
may limit 7-Eleven's ability to conduct the reconciliation process
described above. 7-Eleven will, during the twelve (12) months after
the execution date of this Agreement, work toward a system solution
for the reconciliation process.
7.4 7-Eleven shall make payment to Vendor for all
invoices covering deliveries for Saturday through Friday deliveries by
* days after such respective Friday by initiating an automated
clearing house ("ACH") or other electronic transfer of funds to
Vendor's designated bank and account number. For example, 7-Eleven
will pay by * for products delivered from Saturday, November 30
through Friday, December 6, assuming Vendor properly invoices 7-
Eleven. Vendor shall provide to 7-Eleven the necessary documentation
to establish ACH or other electronic funds transfer. Payments due on
a banking holidays shall be made on the banking business day following
such holiday. 7-Eleven will provide Vendor electronically via EDI or
other similar process with a detailed listing of the invoices, as
adjusted, included in the payment. If an invoice is not sent within *
days after the date of delivery of the product, then payment due from
7-Eleven shall be deemed waived, and subsequent invoices shall be
deemed waived and null and void. Any discrepancy between (a) the
11
invoice, as electronically sent and (b) the payment received relative
to those invoices, for which a party does not notify the other within
* days of delivery of the Product that corresponds to the discrepancy,
will be deemed waived. None of the foregoing provisions shall be
deemed to be a waiver of, or limitation on, 7-Eleven's rights to audit
Vendor and to make and collect claims relating to such audit.
7.5 Vendor will promptly send by-store by-item-UPC
corrections via EDI or other similar process for either Vendor cost or
retail errors on invoices when such error was not caused by 7-Eleven.
Further, Vendor will provide a written explanation to each Store
regarding such corrections within no more than two (2) days after the
error was discovered.
7.6 In the event that 7-Eleven shall dispute in good faith
the price, quality, types and/or timing of products delivered to the
Stores, 7-Eleven shall not be obligated to pay the disputed amount of
any EDI invoice to the extent any such dispute exists until such time
as the dispute has been satisfactorily resolved; provided, however,
that 7-Eleven shall notify Vendor of such dispute prior to the end of
the payment period described in Section 7.4 above.
7.7 The existence of any such dispute as set forth in
paragraph 7.6 above, shall not be deemed a default by 7-Eleven
hereunder or otherwise effect either party's future performance under
this Agreement. Payment by 7-Eleven of any EDI System invoice shall
not be deemed to constitute a waiver of any rights to later dispute
payment of any such invoice.
7.8 If either party identifies an error in any invoice, then
such party shall promptly notify the other party of such alleged error
and shall provide such evidence to confirm the error as is available
at the time of such notice and such further evidence as may thereafter
become available.
7.9 Any notice of error issued pursuant to this Article,
which pertains to the quantities, prices, quality and types of
products ordered and delivered to the Stores or the timing of such
deliveries, shall be resolved pursuant to applicable dispute
resolution procedures in this Agreement using (i) those records in
each party's possession which have been executed or stamped by the
Vendor's delivery person that delivered the products and 7-Eleven's
representative or Franchisee's representative, as applicable, at the
Stores where such products were delivered unless such records are
clearly in error or (ii) other evidence of the transaction reasonably
capable of resolving such error.
7.10 At the direction of 7-Eleven, Vendor will deduct from
Vendor's manufacturer or supplier uncollectable 7-Eleven receivables
held by such manufacturer or supplier, on 7-Eleven's behalf, and
Vendor shall credit 7-Eleven with the amount recovered by Vendor on
the same 7-Eleven billing period such deduction is processed.
7.11 The invoiced amounts may be verified on a daily or
weekly basis taking into account the needs of 7-Eleven and Vendor (i)
to match the quantities and delivery dates of the products delivered
by Vendor, and (ii) to verify the accuracy of the calculations of the
amounts invoiced by Vendor.
7.12 Following the resolution of any such error, any
overpayment or underpayment shall be promptly remedied by the party
which benefited from such error.
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ARTICLE VIII
ORDERING/DELIVERY SERVICES
8.1 Vendor will provide 7-Eleven with the services as set
forth herein and on Schedule 8.1 attached hereto. To the extent
requested by Franchisees, Vendor shall make such services available to
the Franchised Stores.
8.2 No quantities of the products are specifically ordered
by the execution of this Agreement. Vendor will accept purchase orders
for the products only from the Stores as issued by the Stores from
time to time. Each Store will transmit its orders to the RIS System
(hereinafter defined) by the time of day established by 7-Eleven and
7-Eleven will send the orders to Vendor via the RIS System by the time
agreed upon.
8.3 Vendor shall deliver product to the Stores as scheduled
during any time of day except a locally defined high customer in Store
traffic period, which is generally between the hours of 5:00 a.m. and
9:00 a.m. local time for each Store. Vendor recognizes that the
delivery hours of 10:00 p.m. to 5:00 a.m. local time shall generally
be the preferred time for 7-Eleven in corporate Stores and certain
Franchised Stores as may be designated. Deliveries to the Store shall
be made twice weekly on a schedule to include every day of the week.
The actual delivery days and times shall be mutually agreed upon
between 7-Eleven and Vendor, with input regarding delivery windows
from Franchisees to the extent applicable. Vendor recognizes that it
shall be required to satisfy particular Franchised Store delivery
requirements that may differ from the above in frequency and timing.
By way of example, Franchised Stores may require daytime delivery,
while others may require only one weekly delivery and certain high
volume Franchised Stores may require three deliveries per week.
Vendor shall use its best efforts to accommodate all such
requirements.
8.4 All electronic orders placed by the Stores shall be
processed and delivered by Vendor to the Stores or other designated
destination within * hours from timely order placement, 7 days per
week, 365 days per year. The parties recognize that, in certain
circumstances due, for example, to geographic limitations, this may
not be feasible, and the parties agree to establish exceptions to the
*-hour order to delivery cycle. 7-Eleven will provide to Vendor
consolidated and edited ready to process order data each day by 11:00
am local Store time.
8.5 For purposes of this Section 8.5, "Appointment Time"
shall be defined as the time of day that Vendor shall deliver product
to each Store, *. Vendor shall communicate to 7-Eleven Vendor's
preferred Appointment Times and 7-Eleven shall use its best efforts to
respond to Vendor within fourteen (14) days. Vendor shall be required
to deliver product to each Store, no more than * before nor more than
* after the Appointment Time (such time period being defined as the
"Accepted Delivery Window"). Vendor acknowledges that its failure to
deliver product to each Store within such Accepted Delivery Window
will result in Store inefficiency and a potential reduction in 7-
Eleven customer service and traffic. Accordingly, if (i) product
delivery does not occur to a Store during such Accepted Delivery
Window, and (ii) Vendor's applicable distribution center does not meet
or exceed a *% on-time delivery threshold for the week in which such
delivery occurs (determined using the Acceptable Delivery Windows for
all Stores serviced by such distribution center), Vendor agrees to
reimburse the Store a charge, and not as a penalty, the amount of *
dollars ($*), through an invoice credit to the Store to be received by
the Store after a quarterly review and reconciliation between 7-Eleven
and Vendor.
13
8.6 Vendor shall provide item price-tagging services * to
the extent a Store has not yet implemented price tagging or shelf
labeling. The item price-tagging service shall require the Vendor to
affix price tags to each of the products as defined by 7-Eleven for
"each" picks only. 7-Eleven will provide electronically by item Store
specific retail pricing in conjunction with the Store ordering process
and Vendor will use these prices for price tagging and invoicing.
8.7 Vendor shall make best effort to deliver products in
totes or other agreed upon containers such that the products within
the totes or other container shall align to each Store aisle location.
7-Eleven shall provide data to the Vendor sufficient for Vendor to
organize the order by Store aisle. Multiple categories of product per
tote shall be minimized by Vendor and Vendor shall avoid tote
consolidation for a single Store except as may be consistent with such
aisle location (e.g. avoid putting batteries in six different totes
for a single Store).
8.8 INTENTIONALLY OMITTED.
8.9 Vendor agrees to maintain a delivery service rate of *%
for all products ordered by the Stores in each of the areas serviced
by each of Vendor's Distribution Centers (each a "Service Area").
Vendor recognizes that no excuses for failing to meet this rate shall
be permitted other than force majeure as provided in Article XIX. For
purposes of this Section 8.9, the delivery service rate will be
calculated and expressed in dollars and the delivery service rate
shall be defined as the product unit selling price from the Vendor to
the Store multiplied by the number of Store product units delivered to
the Store by the Vendor divided by the product unit selling price from
the Vendor to the Store multiplied by the product selling units
ordered by the Store and the resulting quotient thereof multiplied by
one hundred (100). The delivery service rate described in this
section shall be calculated to the nearest one-tenth of one percent
(0.1%) by the Vendor and reported to 7-Eleven by the Vendor within
thirty (30) days following each calendar quarter. Vendor agrees to pay
7-Eleven within ten (10) days following 7-Eleven's receipt of the
report, as an incentive payment, and not as a penalty, the sum of $*
for every *% that the Vendor delivery service rate as calculated in
the aggregate for all Stores in each Service Area is less than *%. 7-
Eleven acknowledges that such incentive payment shall reduce, and be
applied against, any damages that may be claimed by 7-Eleven against
Vendor for any failure of Vendor to meet the service levels set forth
in this Section.
8.10 Vendor shall provide 7-Eleven's Logistics Department
for its review and comment with at least eight (8) weeks prior notice
for any Store delivery route changes in an electronic file format as
directed by 7-Eleven.
8.11 Vendor will provide the products in quantities based on
the orders, at the times necessary to meet the delivery windows
stipulated herein. Vendor will maintain distribution capacity and
inventories necessary to meet the orders. Vendor, at its expense,
will provide the shipping containers, subject to the tote deposit
procedures set forth on Schedule 8.13.
8.12 If 7-Eleven instructs Vendor to cease providing any one
or more services to the Stores (excluding, to the extent applicable,
the Franchised Stores) for which Vendor was charging 7-Eleven a fee
(as specifically provided herein) or if 7-Eleven improves its system
of ordering and accepting products, then Vendor will enter into
discussions with 7-Eleven to determine appropriate reductions in such
fees or the cost of products sold to 7-Eleven.
14
8.13 Certain additional in-store services to be provided, at
7-Eleven or each Franchisee's option, as well as certain other charges
and costs, are listed and priced on Schedule 8.13.
ARTICLE IX
PRODUCT QUALITY
9.1 Vendor hereby warrants, guarantees and certifies to
7-Eleven, and to any subsidiary, division, affiliate and Franchisee of
7-Eleven that Vendor will not take or fail to take any action that
would cause any and all products sold by Vendor to 7-Eleven and the
Stores (i) to not have been produced and furnished in compliance with
the provisions of the Federal Fair Labor Standards Act; (ii) to not
have been produced in compliance with or to be, adulterated or
misbranded within the meaning of the Federal Food, Drug and Cosmetic
Act of 1938, as amended, and the regulations promulgated thereunder
(the "Act"), or the pure food or drug laws or ordinances of any state
or city to which the products are shipped by Vendor, or to be articles
which may not be introduced into interstate commerce under the Act;
(iii) if the products contain a color additive, said color additive
has been, is and will be from a batch certified by the Secretary of
Health, Education and Welfare as required by the Act; (iv) to be
misbranded hazardous substances or banned hazardous substances, or to
be in a misbranded package within the meaning of that term in the
Federal Hazardous Substance Labeling Act or the Consumer Product
Safety Act; (v) to be placed in packages with labels that do not
reflect true net weight, measure contents and size pursuant to
applicable federal and state requirements; (vi) to not be in
compliance with all applicable federal, state and local laws,
regulations and other legal requirements, including but not limited to
those related to environmental protection, health, safety, labeling,
and flammability; and (vii) to not be good and merchantable and fit
for human consumption.
Vendor shall promptly advise 7-Eleven in writing regarding any and all
warranties and indemnifications that Vendor has received from a
manufacturer or supplier regarding products sold by Vendor to the
Stores, including obligations of the manufacturer or supplier to
defend, indemnify and/or hold harmless Vendor against any damages
relating to any sale, manufacture, handling, distribution, marketing,
consumption or use of any product. Vendor hereby assigns and conveys
to 7-Eleven the full benefit of all such warranties and indemnities.
To the extent Vendor has not obtained contractual warranties and/or
indemnities from a manufacturer or supplier regarding products sold to
7-Eleven, then Vendor will work in cooperation with 7-Eleven to secure
any warranties or indemnities that 7-Eleven reasonably believes are
necessary or desirable.
9.2 Vendor further represents and warrants to 7-Eleven and
any of its subsidiaries, divisions, affiliates and Franchisees
purchasing products pursuant to this Agreement:
(a) All products produced by Vendor and sold pursuant to
this Agreement shall be of a type, quality, quantity, variety and
grade consistent with (i) good industry practices, and (ii) in
compliance with all applicable laws;
(b) Vendor shall exercise reasonable efforts to improve
freshness and quality of all perishable foods through product
development, manufacturing techniques (to the extent applicable) and
handling and delivery systems;
15
(c) During regular business hours of Vendor, 7-Eleven shall
have the right to enter and inspect Vendor's distribution (including
vehicles) and facilities used to distribute the products sold
hereunder to the Stores; provided however, that all persons
performing/attending such inspections shall execute and deliver to
Vendor (prior to such inspections) such confidentiality agreements as
Vendor may reasonably require. All inspections shall not relieve
Vendor of its other obligations or liabilities hereunder.
9.3 If any of Vendor's facilities or vehicles, including,
without limitation, Vendor's manufacturing and/or distribution
facilities used in connection with Vendor's performance under this
Agreement, do not comply with applicable law or with the terms hereof
(other than minor infractions that do not affect health, safety,
welfare or quality of the products being delivered hereunder), Vendor
shall promptly take whatever action is necessary to correct the
deficiencies so as to bring such facilities and vehicles into
compliance with applicable law and the terms hereof. Vendor will
promptly notify 7-Eleven of any request or order for recall, market
withdrawal or stock recovery of any product by any federal, state or
local authority or regulatory agency, and any voluntary recall, market
withdrawal or stock recovery initiated by Vendor of any of the
products. Any such notice by Vendor shall not relieve Vendor of its
other obligations or liabilities under this Agreement. All Vendor's
drivers shall meet the requirements as set forth on Schedule 9.3.
9.4 Either Vendor or 7-Eleven, in consultation with the
other, may initiate (or in the case of Vendor, communicate to 7-
Eleven) a product withdrawal, removal or recall. Each party will use
commercially reasonable efforts to remove all affected products from
distribution channels within its control and to otherwise cooperate
with each other in its efforts associated with any such withdrawal,
removal or recall. Vendor will, in addition to any other remedies
that may be available to 7-Eleven, promptly reimburse 7-Eleven for all
expenses reasonably incurred by the Stores or 7-Eleven in connection
with any product withdrawal, removal or recall caused by acts or
omissions of Vendor or associated with the private label or
proprietary products of Vendor, including providing the Stores with a
credit for all products paid for by the Stores. In the event of
manufacturer withdrawals, removals or recalls, Vendor's liability to
7-Eleven for costs associated with withdrawing, removing or recalling
the product(s) shall be limited to the amount provided by the
manufacturer in connection therewith. At the request of Vendor and at
its expense, provided the Stores are reasonably able to comply, the
products that are subject to such withdrawal, removal or recall, which
are in the Stores' possession, will be returned to Vendor through
Vendor's distribution system. 7-Eleven agrees to use all reasonable
efforts to obtain the cooperation of its Franchisees, as needed, in
the event of any such withdrawal, removal or recall. All products
that have been the subject of such withdrawal, removal or recall in
Vendor's possession or returned to Vendor will be disposed of by
Vendor at its sole cost and expense, and in accordance with applicable
law and consistent with good industry practices.
9.5 The delivery procedures concerning product overages,
shortages, and damages, as set forth in Schedule 9.5(a) shall apply to
products purchased and sold hereunder. 7-Eleven reserves the right to
reject and/or return products (the "Rejected Products") which (i) in
the case of coded products with a minimum shelf life, do not, at the
time of delivery,
16
have the applicable minimum shelf life specified on Schedule 9.5(b)
attached hereto, (ii) do not comply with applicable quality standards
set forth herein, or (iii) are damaged or unsaleable as a result of
acts or omissions of Vendor. All costs associated with rejecting the
Rejected Products shall be borne solely by Vendor, including, without
limitation, all costs incurred by 7-Eleven with respect to the
transportation and handling, delivery and return of Rejected Products.
As soon as is reasonably possible, Vendor shall remove the Rejected
Products from each such Store or request 7-Eleven to dispose of such
products. All Rejected Products shall be disposed of by Vendor at its
expense, and, in the case of Proprietary Products, in accordance with
7-Eleven's instructions, all in strict accordance with applicable law
and consistent with good industry practices. Vendor will give 7-
Eleven full credit for the price paid for such products.
9.6 Vendor shall not deliver any products which do not
conform to any applicable specifications, warranties and
representations in this Agreement or the order(s) placed by the
Stores. In the event Vendor breaches the foregoing obligation, in
addition to 7-Eleven's other rights and remedies, Vendor will solely
bear the cost of such unmarketable products, and such product shall be
disposed of by Vendor in accordance with applicable law and consistent
with standard industry practices. 7-Eleven may purchase any products
affected by Vendor's failure to comply with the provisions of this
Article IX, from a third party without liability of any kind
hereunder, provided such action shall not relieve Vendor from any of
its obligations or liabilities hereunder.
9.7 Vendor shall not substitute, replace, discontinue or add
any products to 7-Eleven's recommended product assortment to be
purchased by the Stores without approval from the applicable 7-Eleven
management group.
9.8 Vendor will not exceed a * percent (*%) error rate,
based on units ordered, of incorrect product unit picks, incorrect
product unit delivery, and product unit damage. Error rate will be
determined for each Vendor accounting period by dividing the number of
error occurrences by the total amount of possible occurrences.
9.9 Vendor will immediately advise 7-Eleven of material
consumer complaint or any complaint, action or inspection by the Food
and Drug Administration, including providing 7-Eleven with copies of
all Forms 483 received from the Food and Drug Administration and
Vendor's response thereto, or any agency with applicable governmental
jurisdiction with respect to the products. 7-Eleven reserves the
right to respond to such complaint, action or inspection, after
coordinating with Vendor.
ARTICLE X
INSURANCE
10.1 During the term of this Agreement, Vendor shall (a)
procure and maintain, from reputable insurance carriers with a Best
Rating of no less than B+ and a financial size category of no less
than X, the insurance set forth below, and (b) upon execution of this
Agreement (and not less than annually thereafter), furnish 7-Eleven
with certificates (i) evidencing that such insurance is in force, and
(ii) providing that such insurance shall not be cancelled or altered
without thirty (30) days prior written notice being given to 7-Eleven
(which, unless otherwise agreed to by 7-Eleven, shall not constitute
consent to such cancellation or alteration):
17
(a) Worker's Compensation and employers' liability
insurance as required by law with a limit of not less than $* million
per accident or disease covering all persons employed by Vendor who
will be performing any aspect of performance of Vendor hereunder,
including, but not limited to, those persons involved in
manufacturing, packaging, storing and delivering the products under
this Agreement;
(b) Comprehensive or Commercial General Liability
Insurance written on an occurrence basis covering all services and
products provided by Vendor, including, but not limited to, personal
injury coverage, advertising liability coverage, products/completed
operations liability coverage, including Vendors Broad Form
endorsements in favor of 7-Eleven and broad form contractual liability
coverage for liability assumed by Vendor in this Agreement, with a
combined single limit of at least $* million per occurrence and a
general aggregate limit of at least $* million in any one policy year
and a products/completed operations aggregate of at least $* million
in any one policy year to protect both 7-Eleven and Vendor for claims
of personal injury, illness, bodily injury (including death), property
damage, and exemplary and punitive damages where permitted by law and
naming 7-Eleven as an additional insured on the policy or policies;
and
(c) Vehicle Liability Insurance covering all vehicles
used in the performance by Vendor of this Agreement, including
coverage for all owned, non-owned, hired and leased vehicles or
equipment with policy limits of at least $* million combined single
limit per occurrence to protect both 7-Eleven and Vendor for claims of
bodily injury (including death) and property damage, and naming 7-
Eleven as an additional insured.
10.2 The foregoing insurance held or to be obtained by
Vendor as required hereunder shall include, if permitted by law, a
waiver of subrogation by the insurance carrier in favor of 7-Eleven or
any of its affiliates, and its and their respective directors,
stockholders, officers, employees, agents, consultants,
representatives, successors, transferees and assignees and
Franchisees. Vendor agrees to notify each of its insurance companies
of such waiver so as to prevent any invalidation of said insurance
coverage by reason of the aforesaid waiver. Vendor shall provide 7-
Eleven with written acknowledgments of such waivers of subrogation
executed by authorized representatives of such insurance carriers.
Vendor shall immediately notify 7-Eleven of the exhaustion of any
limits of coverage including aggregates and notify 7-Eleven on how it
plans to remedy such exhaustion. The insurance required hereunder
shall not limit Vendor's liability nor release Vendor from any
liability under this Agreement.
ARTICLE XI
INDEMNITY
11.1 Vendor shall absolutely and irrevocably indemnify, pay,
defend (with counsel reasonably satisfactory to 7-Eleven) and hold
harmless 7-Eleven and its affiliates and its and their respective
directors, stockholders, officers, employees, agents, consultants,
representatives, successors, transferees, assignees and franchisees
(collectively, the "7-Eleven Indemnified Parties") from and against
any and all Damages (as hereinafter defined) to the extent arising
from, relating to or associated with any one or more of the following:
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(a) Vendor's breach, violation or default of, or
failure to comply with, any one or more of the agreements,
representations, warranties and obligations made by Vendor under this
Agreement;
(b) any act or omission of any of Vendor's employees
or agents, during the course of, or in any way related to, the
delivery of products;
(c) acts or omissions of Vendor's employees or agents
in connection with the withdrawal, recall, removal, disposal and/or
rejection of the products as provided in Sections 2.4, 9.4 and 9.5
hereof;
(d) any aspect of the manufacture, production,
processing, packaging, storage, distribution, sale or handling of the
products by Vendor or its agents, including, without limitation, any
Damages relating in any way to any sale, the manufacture, handling,
distribution, marketing, consumption or use of, or exposure to, any
tobacco or tobacco product; provided that Vendor shall only be liable
to indemnify 7-Eleven for such claims to the extent (i) Vendor is
indemnified by the manufacturer or supplier or (ii) Vendor has a cause
of action against the manufacturer or supplier for such
indemnification for such Damages (provided that 7-Eleven shall refund
any incremental costs to Vendor actually incurred for such defense and
indemnification of 7-Eleven in the event of a final adjudication by a
court of competent jurisdiction that Vendor did not have a cause of
action in such case); or (iii) the Damages were caused, or contributed
to, by the actions or omissions of Vendor's employees or agents;
(e) Vendor's or its employees' or agents' negligence
or willful misconduct;
(f) claims made against 7-Eleven Indemnified Parties
by Vendor's employees, agents or representatives, except to the extent
such claim is proximately caused by such 7-Eleven Indemnified Parties;
and
(g) any claims or allegations that any patents,
trademarks, tradenames, service marks or processes or products or any
other form of Vendor or manufacturer or supplier identification
associated with the products under this Agreement violates or
infringes upon any rights of any third party; provided that Vendor
shall only be liable to indemnify 7-Eleven for such claims relating to
manufacturer or supplier identification to the extent Vendor is
indemnified for such claims by the applicable manufacturers or
suppliers of such products.
11.2 7-Eleven shall absolutely and irrevocably indemnify,
pay, defend (with counsel reasonably satisfactory to Vendor) and hold
harmless Vendor and its affiliates and its and their respective
directors, stockholders, officers, employees, agents, consultants,
representatives, successors, transferees and assignees (collectively,
the "Vendor Indemnified Parties") from and against any and all
Damages, to the extent arising from, relating to or associated with
(i) 7-Eleven's breach, violation, or default of, or failure to comply
with, any one or more of the agreements, representations, warranties
and obligations made by 7-Eleven under this Agreement, and/or (ii) 7-
Eleven's or its employees' or agents' negligence or willful
misconduct.
11.3 For purposes of this Article XI, "Damages" shall mean
any and all obligations, liabilities, damages, settlements, losses,
fines, penalties, deficiencies, judgments, costs, expenses (including,
without limitation, reasonable attorneys', accountants', engineers'
and investigators' fees and disbursements), property damage, injuries,
illnesses or deaths.
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11.4 For purposes of this Article XI, the term "Indemnifying
Party" when used in connection with a particular Claim (defined below)
shall mean the party having an obligation to indemnify the other party
with respect to such Claim pursuant to this Article XI, and the term
"Indemnified Party" when used in connection with a particular Claim
shall mean the party having the right to be indemnified with respect
to such Claim by the other party pursuant to this Article XI.
11.5 Each party agrees that promptly after it becomes aware
of facts giving rise to a claim by it for indemnification pursuant to
this Article XI (a "Claim"), it will provide notice thereof in writing
to the other party specifying the nature and specific basis for such
Claim (a "Claim Notice"). Notice provided by each party's respective
insurer to either the other party or to the other party's insurer
shall be deemed to be notice for purposes of this Article. The
failure of an Indemnified Party to send a Claim Notice shall not
relieve the Indemnifying Party from liability hereunder with respect
to such Claim except to the extent such failure results in
insufficient time being available to permit the Indemnifying Party or
its counsel to effectively defend against such Claim and to make a
timely response thereto or otherwise prejudices the Indemnifying
Party's ability to defend such Claim. For purposes of this Section
11.5, receipt by a party of written notice of any demand, assertion,
claim, action or proceeding (judicial, administrative or otherwise) by
or from any person other than a party to this Agreement which gives
rise to a Claim shall constitute notice of a Claim by such party and
shall require prompt notice to the other party of the receipt of such
matter as provided in the first sentence of this Section 11.5. Each
Claim Notice shall set forth all information with respect to the Claim
which the applicable party shall then have and shall contain a
statement to the effect that the party giving the notice is making a
claim pursuant to and formal demand for indemnification under this
Article XI.
11.6 If the Indemnified Party is one of the Vendor
Indemnified Parties and such Indemnified Party has a right against a
person or entity (other than one of the other Vendor Indemnified
Parties or one of Vendor's insurers) with respect to any damages or
other amounts paid to such Indemnified Party by 7-Eleven, then 7-
Eleven shall, to the extent of such payment, be subrogated to the
right of such Indemnified Party. If the Indemnified Party is one of
the 7-Eleven Indemnified Parties and such Indemnified Party has a
right against a person or entity (other than one of the other 7-Eleven
Indemnified Parties or one of 7-Eleven's insurers) with respect to any
damages or other amounts paid to such Indemnified Party by Vendor,
then Vendor shall, to the extent of such payment, be subrogated to the
right of such Indemnified Party.
11.7 The Indemnifying Party shall, at its sole cost and
expense, contest and defend by all appropriate legal proceedings any
Claim with respect to which it is obligated to indemnify the
Indemnified Party pursuant to this Article XI. Any such contest may
be conducted in the name and on behalf of the Indemnifying Party or
the Indemnified Party as may be appropriate. Such contest shall be
conducted by attorneys employed by the Indemnifying Party; provided,
the Indemnified Party shall have the right to participate in such
proceedings and to be represented by attorneys of its own choosing,
and the cost and expense attributable to such attorneys employed by
the Indemnified Party shall be borne solely by the Indemnified Party.
If the Indemnified Party joins in any such contest,
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the Indemnifying Party shall have full authority to determine all
action to be taken with respect thereto; provided that the foregoing
shall not include the admission of guilt (or comparable plea) or
wrongdoing or negligence or the permitting of or the imposition of
civil or criminal penalties or indictments, or the entering of consent
decrees or orders of any kind by the Indemnifying Party on behalf of
the Indemnified Party without the Indemnified Party's express written
approval. If, after notice as provided for herein, the Indemnifying
Party does not contest any Claim as provided in this Section 11.7, the
Indemnified Party may (but shall have no obligation to) contest any
such Claim and the Indemnifying Party shall be bound by the result or
settlement obtained with respect thereto by the Indemnified Party. At
any time after commencement of the defense of any Claim, the
Indemnifying Party may request the Indemnified Party to agree in
writing to the abandonment of such contest or to the payment or
compromise by the Indemnifying Party of such Claim, whereupon such
action shall be taken unless the Indemnified Party determines that the
contest should be continued, and so notifies the Indemnifying Party in
writing within 15 days after its receipt of such request from the
Indemnifying Party. If the Indemnified Party determines that the
contest should be continued, and provided that the terms of such
payment or compromise provide for the full and effective release of
the Indemnified Party (without the payment of funds by the Indemnified
Party, or the imposition of any burden or lien on, or criminal or
civil penalties or consent order or decrees or admission of guilt (or
comparable plea) or wrongdoing or negligence required to be entered by
or against, the Indemnified Party or with respect to its assets), the
Indemnifying Party shall be liable hereunder only to the extent of the
lesser of (i) the amount which the other party(ies) to the contested
Claim had agreed to accept in payment or compromise as of the time the
Indemnifying Party made its request therefor to the Indemnified Party
or (ii) such amount for which the Indemnifying Party may be liable
with respect to such Claim by reason of the provisions hereof.
11.8 If requested by the Indemnifying Party, the Indemnified
Party agrees to cooperate with the Indemnifying Party and its counsel
in contesting any Claim which the Indemnifying Party elects to contest
or, if appropriate, in making any counterclaim against the person or
entity asserting the Claim, or any cross-complaint against any person
or entity; provided, the Indemnifying Party shall reimburse the
Indemnified Party for any expenses incurred by it in so cooperating.
11.9 The Indemnified Party agrees to afford the Indemnifying
Party and its counsel the opportunity to be present at, and to
participate in, conferences with all persons or entities, including
governmental authorities, asserting any Claim against the Indemnified
Party and conferences with representatives of or counsel for such
persons or entities.
11.10 The Indemnifying Party shall pay to the Indemnified
Party, upon demand, the amount of any Damages to which the Indemnified
Party may become entitled by reason of the provisions of this Article
XI, such payment to be made in cash or other immediately available
funds at the then address of the Indemnified Party for notice purposes
pursuant to this Agreement. The indemnification provisions in this
Article XI shall survive the termination of this Agreement.
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ARTICLE XII
DISPUTE RESOLUTION
12.1 Any disputes arising hereunder shall first be referred
for resolution to Vendor's and 7-Eleven's respective local management
designee or a group of designees in the area served by the Vendor's
Distribution Center which services the Stores to which such dispute
pertains. To the extent that such dispute cannot be resolved by such
representatives of Vendor and 7-Eleven within ten (10) business days,
or if the dispute pertains to (i) a matter affecting more than one of
Vendor's Distribution Centers, or (ii) a matter which when resolved is
likely to affect the interpretation of this Agreement, then such
dispute shall be referred for resolution to Vendor's and 7-Eleven's
respective senior management designee who shall endeavor in good faith
to resolve any such disputes within the limits of each such
representative's authority and within ten (10) business days from the
date it is referred to them. In the event Vendor's and 7-Eleven's
senior management designees are unable to resolve such dispute within
such ten (10) day period, such dispute shall be referred for
resolution to the respective Presidents of Vendor and 7-Eleven, who
shall attempt to resolve the dispute within ten (10) business days
from the date that it is referred to them. If and only if any dispute
remains unresolved after the parties have followed the dispute
resolution procedure set forth above, the matter shall be resolved
pursuant to Sections 12.2 and 12.3 below.
12.2 (a) If any dispute between the parties has not been
resolved pursuant to Section 12.1 above, the parties shall endeavor to
settle the dispute by mediation through JAMS, Dallas Mediation
Services. Within ten (10) business days from the date that the
parties cease direct negotiations pursuant to Section 12.1 above, the
parties will submit to each other a written list of acceptable
qualified JAMS mediators not affiliated with any of the parties.
Within ten (10) days from the date of receipt of such list, the
parties to this Agreement shall rank the mediators in numerical order
of preference and exchange such rankings. If such mediator is not
available to serve, they shall proceed to contact the mediator who was
next highest in ranking until they are able to select a mediator.
(b) Each party shall bear its own cost of mediation;
provided, however, the cost charged by any independent third party
mediator shall be borne equally by the parties.
(c) The parties agree that any mediation proceeding
will constitute settlement negotiations for purposes of the federal
and state rules of evidence and will be treated as confidential and
privileged communication by the parties and the mediator. No
stenographic, visual or audio record shall be made of any mediation
proceedings. All conduct, statements, promises, offers and opinions
made in the course of the mediation by any party, its agents,
employees, representatives or other invitees and by the mediator shall
not be discoverable nor admissible for any purposes in any litigation
or other proceeding involving the parties and shall not be disclosed
to any third party.
(d) The parties agree that participation in this
mediation procedure shall be obligatory upon each of them. In the
event that either party refuses to adhere to the mediation procedure
set forth in this Article XII, the other party may bring an action to
seek enforcement of such obligation in any court of competent
jurisdiction.
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(e) The parties' obligation to mediate will be deemed
satisfied following completion of 8 hours of mediation, whether or not
the parties have resolved the dispute.
12.3 If any dispute has not been resolved pursuant to the
procedures set forth in Section 12.1 and 12.2, either party may
initiate litigation to seek resolution of such dispute or terminate
this Agreement as provided in Article XVI without waiving any other
rights or remedies.
ARTICLE XIII
FACILITY STANDBY PAYMENT AND OTHER PAYMENTS
13.1 In consideration of 7-Eleven entering into this
Agreement with Vendor and 7-Eleven's commitment to purchase the
designated product categories for its corporate Stores from Vendor,
Vendor agrees to pay to 7-Eleven the following payments. During the
term of this Agreement, on or about the first day of each calendar
month, 7-Eleven shall provide notice to Vendor of the total number of
corporate operated Stores currently in existence. Vendor shall pay 7-
Eleven within ten (10) business days $* per corporate Store for the
total number of corporate Stores contained in the notice.
13.2 In addition to the other incentives, markups and
rebates to be paid by Vendor to 7-Eleven pursuant to this Agreement,
Vendor shall also pay to 7-Eleven the amount of $* per year, payable
upon the Effective Date of this Agreement and on the first and second
anniversary dates of this Agreement (September 21, 2003 and September
21, 2004)
ARTICLE XIV
COMPUTER SYSTEMS
14.1 7-Eleven has developed and is continuing to develop its
proprietary retail information system (the "RIS System") which
includes software (the "Software") used, among other things, to
communicate orders and accounting information among the Vendor and the
Stores, the type and nature of which will continue to be developed
over time. Vendor will use such RIS System to coordinate the services
it is providing to 7-Eleven as well as to maintain information and
generate reports as specified by 7-Eleven. Vendor will provide online
service to 7-Eleven that provides 7-Eleven inventory in a read only
format for product on hand, product on order, product receipt, and
daily/weekly product movement. Vendor will utilize the RIS System and
processes at 7-Eleven direction, for new item or seasonal prebook
requirements as well.
14.2 Vendor's use of the RIS System will inure to the
benefit of the Stores only. Subject to the terms of this Agreement,
7-Eleven grants to Vendor a limited, nonexclusive, personal,
nontransferable license to use the Software and Documentation
(hereinafter defined), if any, in connection with the RIS System for
the purposes herein for 7-Eleven's and the Stores' sole and exclusive
benefit. ("Documentation" shall include material functional
requirements and principles of operation with respect to the Software,
such as user manuals and educational materials related to the
Software.) The term of the license shall commence on 7-Eleven's
delivery of a copy of such Software to Vendor and shall end on the
earlier of (a) Vendor's use of the Software inconsistent with the
terms of this license, for which 7-Eleven gives written notice of
termination ten (10) days in advance of the termination
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date, (b) the termination or expiration of this Agreement or (c) the
termination of 7-Eleven's license to use such Software. If or when
the license granted herein terminates, Vendor shall immediately stop
using the Software and Documentation and either return all copies to
7-Eleven or certify to 7-Eleven that the copies have been destroyed.
Unless otherwise agreed, Vendor may keep on hand at any time not more
than one (1) copy of the Software for use on a single processing unit
and a back-up copy. Vendor shall not transfer, disclose, sublicense
or distribute to third parties or make additional copies, except as
otherwise provided herein, of the Software and Documentation without
7-Eleven's written consent. All ownership, other rights and title in
the Software and Documentation are hereby reserved to 7-Eleven. The
expenses of all hardware and all expenses necessary to operate the
hardware used in the operation of the RIS System will be borne by
Vendor. Vendor will acquire such hardware designated by 7-Eleven as
necessary to integrate with and operate the RIS System.
14.3 Vendor will provide programming services to develop,
manage and maintain item bridging/linking between Vendor's inventory
and invoicing systems and the RIS System. Vendor recognizes that
synchronization between the 7-Eleven's Item Master and the Vendor
inventory/invoicing system shall require at least the following
critical capabilities:
(i) Item Master shall determine the item status such as
active, delete, add, and the effective date for orders
and changes
(ii) Item Master shall be 7-Eleven central repository for
UPC, cost and retail pricing
(iii) Vendor shall map to 7-Eleven provided price groups
and patterns
(iv) Item Master shall provide the recommended retail
price at pattern and group level, however, the
individual Store retail price shall be contained
within the order data.
(v) Vendor recognizes that Franchisees must be able to
review and pass on retail price data and Vendor must
be able to maintain "in store" retail prices on non-
recommended items. Nonrecommended items constitute
items that are not active in 7-Eleven's Item Master
for a particular Store
(vi) Item bridge integrity-Vendor shall be required to
provide to 7-Eleven a Universal Item Number (UIN) for
the purpose of bridging to the 7-Eleven SLIN.
(vii) Vendor shall provide, at 7-Eleven's direction,
electronic excise tax and fair trade regulation tables
(viii) Vendor shall provide fourteen (14) days notice to
7-Eleven on any product UPC changes.
14.4 Any programming costs incurred by Vendor to change its
systems to comply with this Article XIV or any other provisions of
this Agreement shall be charged to 7-Eleven at the rate of $* per
hour, provided however that 7-Eleven shall have no liability for any
such costs unless Vendor (i) submits a written statement of work
describing the scope of work and containing a firm estimate of the
total cost of the systems change, and (ii) 7-Eleven signs such
statement of work in advance of the costs being incurred.
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ARTICLE XV
7-EXCHANGE PROGRAM
15.1 Vendor agrees to participate in the program that
utilizes the RIS System referenced in Article XIV (the "7-Exchange
Program"), to provide certain information technology functions that
add value to Vendor's operations and reduce operating costs for
Vendor. The functions that the 7-Exchange Program currently provides
include the following: (i) centralized main order processing; (ii)
reduction in order-processing time; (iii) hand-held/ISP ordering
device, which eliminates the need for Vendor supplied Store ordering
equipment (i.e. Telxon) and related equipment and applications such as
multi-phone line order receiving, order editing, and order book
production; (iv) consolidated, clean, and edited orders to the Vendor
at a central location in a standardized or customized format; (v) a
new item introduction and seasonal change process to communicate to
Vendor product assortment changes and planograms to the Stores. It is
anticipated that the 7-Exchange Program functions will be enhanced and
that additional functions will be added, such as access to 7-Eleven
Point of Sale (POS) data to the Vendor for use by the Vendor in
analyzing sales activity and results in connection with its internal
business processes. *
ARTICLE XVI
TERM AND TERMINATION
16.1 The term of this Agreement shall commence on September
21, 2002 (the "Effective Date") and, unless earlier terminated in
accordance with terms of this Agreement, or by mutual consent of the
parties, will continue thereafter until January 31, 2006. The term of
this Agreement may also be extended beyond the original term of
September 21, 2002 through January 31, 2006, for an additional period
of up to two years subject to mutual agreement of the parties. In the
event the parties are unable to resolve any material dispute pursuant
to the mediation procedures in Article XII, either party may terminate
this Agreement following two hundred seventy (270) days' notice. Upon
termination of this Agreement, Vendor and 7-Eleven will each fulfill
their respective obligations hereunder with respect to all orders that
have been placed by 7-Eleven and/or delivered by Vendor prior to the
effective date of such termination and with respect to all other
obligations to the extent not fulfilled. On or before the expiration
date of this Agreement, and in addition to all payments due to 7-
Eleven on a monthly or Vendor Accounting Period basis as set forth in
this Agreement, Vendor shall pay 7-Eleven a pro-rata amount of the
other payments due from Vendor pursuant to Article XIII hereof to
account for the period from September 22, 2005 through January 31,
2006. For example, with respect to the $* annual payment set forth in
Section 13.2, Vendor would pay 7-Eleven a pro-rata amount equal to
approximately $* ($* / 365 days x 132 days for the period September
22, 2005 through January 31, 2006).
ARTICLE XVII
LICENSE FROM 7-ELEVEN
17.1 Vendor acknowledges and agrees (a) that 7-Eleven is the
owner of the 7-Eleven trademark and other trademarks, service marks
and/or logos associated with the operations of its 7-Eleven business,
whether or not registered (collectively, the "Marks"), including,
without limitation, those set forth on Schedule 17.1(a) attached
hereto and made a part hereof, and (b) that certain of the products
may consist of containers and packaging in which such merchandise are
packaged and sold bearing the Marks, including, without limitation,
those set forth on Schedule 17.1(b) attached hereto and made a part
hereof.
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17.2 Subject to the terms hereof, 7-Eleven hereby grants to
Vendor during the term or any subsequent renewal a non-exclusive,
revocable, royalty free license (the "License") to purchase, sell and
distribute products bearing the Marks which shall be used by and/or
sold exclusively in 7-Eleven's Stores. The License shall not be
transferred or assigned by Vendor. The License shall automatically
terminate upon termination of this Agreement, provided, however, in
the event action is necessary to protect 7-Eleven's Marks, 7-Eleven
shall have the right to revoke all such licenses upon notice at any
time. Vendor shall not purchase any Proprietary Products from nor
give, sell, convey or otherwise transfer any such products to, any
person or entity except those suppliers that are authorized by 7-
Eleven to manufacture, assemble, produce, purchase, sell and
distribute such products. 7-Eleven retains all rights not expressly
granted to Vendor hereunder.
17.3 Vendor acknowledges and agrees that (a) it shall not do
anything inconsistent with any rights 7-Eleven has in the Marks and
related goodwill (including, but not limited to, obtaining any
registrations of the Marks or any trademarks confusingly similar
thereto) and shall not challenge or assist in any challenge by any
third party to the validity of the Marks, any registrations thereof or
any rights 7-Eleven has therein; (b) all trademark use of the Marks
under this Agreement shall inure to the benefit of 7-Eleven; (c)
nothing contained herein shall be deemed to give Vendor or any
authorized sublicensee any right, title or interest to any of the
Marks (or any trade dress or any goodwill associated therewith) and
the same shall at all times remain in 7-Eleven; (d) Vendor is granted
no right to use any of such Marks or any trade dress associated
therewith, except (i) as authorized in writing by 7-Eleven, or (ii) as
may be used in any labels or documents or specimens which are approved
in advance in writing by 7-Eleven.
17.4 Vendor agrees that 7-Eleven shall be solely responsible
for taking such actions as 7-Eleven deems appropriate to obtain
trademark, service xxxx or other appropriate registration for the
Marks and trade dress used on any Proprietary Products. Vendor shall
not perform any acts or execute any documents to effectuate and/or
maintain registration of the Marks except with 7-Eleven's prior
written approval.
17.5 7-Eleven shall have the sole and exclusive right, in
its discretion, to file and prosecute suits for trademark infringement
and unfair competition arising out the unauthorized use of the Marks
or any confusingly similar xxxx, and Vendor agrees that in any such
suit, it shall render to 7-Eleven such assistance as is reasonably
necessary to establish use by 7-Eleven and Vendor of the Marks.
Vendor shall promptly advise 7-Eleven of any challenges of which it
has knowledge to the legitimacy of the use of the Marks by Vendor or
7-Eleven or of any infringements by third parties of the Marks.
17.6 Vendor shall not advertise or engage in any other form
of merchandising or promotions which refer to 7-Eleven, the Marks, the
Stores or which relate to the products bearing the Marks or depicting
any of the products bearing the Marks without 7-Eleven's consent.
17.7 Vendor shall not purchase, distribute or sell products
bearing the Marks which are not of at least the quality of a specimen
bearing the Marks to be furnished to Vendor by an authorized supplier
and which specimen has been approved by 7-Eleven in advance of any
such purchase, distribution or sale. Vendor shall not sell, use or
otherwise dispose of any of the Proprietary Products which do not
comply strictly with all applicable laws and government regulations,
standards and specifications. Vendor shall return to an authorized
supplier for credit any products bearing the Marks that are defective
in construction or appearance, including, without limitation,
incorrect color or design of the Marks, and shall require that such
Supplier destroy any such products to ensure such product is not
distributed.
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ARTICLE XVIII
RISK OF LOSS
18.1 Subject to the terms herein, Vendor shall bear the risk
of loss for all products until such time as the products are delivered
either to the Stores and signed for by the Stores' representatives or
delivered to the applicable CDCs.
ARTICLE XIX
FORCE MAJEURE
19.1 Neither party shall be liable to the other party for
any failure or delay in performance of its obligations under this
Agreement because of circumstances beyond its control including, but
not limited to, acts of God, flood, fire, riot, accident, strikes or
work stoppages for any reason, embargo, inability to obtain phone
lines, government action (including enactment of any laws, ordinances,
regulations or the like which restrict or prohibit the providing of
the services contemplated by this Agreement) and other causes beyond
its control whether or not of the same class or kind as specifically
named above. If either party is unable to perform its obligations
hereunder for any of the reasons described in this Article, the
obligations of such party shall be suspended for the duration, and
only to the extent of, such force majeure event, provided that the
affected party shall immediately notify the other party of its
inability to so perform, the steps it plans to take to rectify or
mitigate such inability and the anticipated length of such inability.
Vendor shall be entitled to claim force majeure only if it also
claims, with respect to the products similarly affected thereby, force
majeure against its other customers in any and all areas affected by
force majeure.
19.2 Vendor shall allocate all of its available supplies of
any affected products in the event of force majeure among Vendor's
then existing customers purchasing such products based on their
respective proportionate amount of purchases of such product from
Vendor. 7-Eleven may also purchase any unsupplied products from any
third party supplier. If the period of nonperformance by Vendor due
to force majeure exceeds sixty (60) days from the receipt of notice to
7-Eleven as required pursuant to Section 19.1, 7-Eleven may, by giving
notice thereof, terminate this Agreement, at its option, either in its
entirety or in part as to any and all areas of Stores that may be
affected by such force majeure event.
ARTICLE XX
ASSIGNMENT
20.1 Neither party may assign this Agreement by assignment,
stock transfer, sale, merger, operation of law, or otherwise without
the consent of the other party, which consent shall not be
unreasonably withheld.
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ARTICLE XXI
NOTICES
21.1 Any notice, request, consent, waiver or other
communication required or permitted hereunder shall be effective only
if it is in writing and delivered personally, or electronically or by
registered or certified mail, postage prepaid, or by telecopy, to the
other party at the following address (or to such other address as the
parties shall provide to the other in writing):
IF TO 7-ELEVEN: 7-Eleven, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: General Counsel
If by Telecopy: 7-Eleven, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: General Counsel
Telecopy: 000-000-0000
With a copy to: 7-Eleven, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: SVP Demand Chain Integration
IF TO VENDOR: President
McLane Grocery Distribution
0000 XxXxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
If by Telecopy: President
McLane Grocery Distribution
0000 XxXxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
With a copy to: General Counsel
XxXxxx Company, Inc.
0000 XxXxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
If by Telecopy: (000) 000-0000
A notice so given shall be deemed given on the date received.
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ARTICLE XXII
CONFIDENTIALITY
22.1 Vendor and 7-Eleven shall, and shall use
reasonable efforts to cause their respective employees, agents and
other representatives to, hold in confidence all Confidential
Information, and Vendor and 7-Eleven shall not, and shall use
reasonable efforts to ensure that any other persons having access to
the Confidential Information through them shall not use or disclose
the same to any person except in connection with this Agreement and
otherwise as may be reasonably necessary to carry out this Agreement
and the transactions contemplated hereby or to comply with
applicable law. For purposes hereof, "Confidential Information"
means this Agreement and all information of any kind (including
without limitation store and item level sales, pricing and
promotional results and other point of sale or purchase data as well
as systems documentation) obtained directly or indirectly from
Vendor or 7-Eleven, or any of their respective employees, agents,
accountants, counsel or other representatives, relating to Vendor's
or 7-Eleven's business, except information which (i) constitutes
readily ascertainable public information, including without
limitation, any information filed with the Securities and Exchange
Commission, (ii) subsequently becomes public information through no
fault of the party to whom it was revealed, (iii) either party
obtains from a third party who they have no reason to believe is
under any obligation of confidentiality, or (iv) which either party
becomes legally obligated to disclose. Notwithstanding the
foregoing, it is acknowledged and agreed that Vendor shall be
entitled to furnish item level product purchase data (but not any
other Confidential Information) to the supplier or manufacturer of
such product in the event that both (a) Vendor is required to do so
in order to participate in the manufacturer or supplier wholesale
program; provided that such program and the aforementioned
requirement is applicable to all wholesalers, and (b) Vendor
provides 7-Eleven with a reasonably detailed written description of
the requirements of the applicable program.
ARTICLE XXIII
PRESS RELEASE
23.1 Neither Vendor nor 7-Eleven will issue or make, or
cause to have issued or made, any media release or announcement
concerning this Agreement or the transactions contemplated hereby
without the prior approval of the other party, except as may be
necessary by reason of legal, accounting or regulatory requirements
beyond the reasonable control of such party or except as may be
necessary in connection with any withdrawal, recall or removal of
any products.
ARTICLE XXIV
MULTIPLE COUNTERPARTS
24.1 This Agreement may be executed in one or more
counterparts for the convenience of the parties hereto, all of which
together shall constitute one and the same instrument.
29
ARTICLE XXV
SEVERABILITY
25.1 If any term or other provision of this Agreement
is determined to be invalid, illegal or incapable of being enforced
due to any rule of law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force
and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any adverse
manner to either party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this
Agreement to effect the original intent of the parties as closely as
possible so that the transactions contemplated hereby are fulfilled
to the extent possible and the parties receive the economic
equivalent of their respective bargains in this Agreement.
ARTICLE XXVI
ENTIRE AGREEMENT
26.1 Notwithstanding any provision or reference in this
Agreement to the contrary, this Agreement and the Schedules attached
hereto contain the entire understanding of the parties relating to
the subject matter contained herein and supersede all prior
agreements and understanding, written or oral, relating to the
subject matter hereof, provided however, that this Agreement shall
not supersede or limit either (a) Section 16.1 of the
Service
Agreement entered into between Vendor and 7-Eleven and dated as of
November 29, 1992, or (b) any claims of 7-Eleven relating to
unfulfilled obligations of Vendor or 7-Eleven set forth in such
previous
Service Agreement, including without limitation claims
relating to audits of Vendor's activities during the term of such
previous
Service Agreement. This Agreement cannot be modified,
amended or terminated except in writing signed by the party against
whom enforcement is sought and this Agreement shall not be deemed to
have been waived by any course of dealing or course of performance
between the parties.
ARTICLE XXVII
GOVERNING LAW
27.1 This Agreement shall be governed by and construed
in accordance with the laws of the State of
Texas without regard to
its conflict of law rules.
ARTICLE XXVIII
TRANSITION
28.1 If applicable, as part of the commencement of this
Agreement, Vendor agrees to purchase 7-Eleven Proprietary or
Exclusive Product inventory remaining with 7-Eleven's then existing
wholesale distribution service provider at the existing wholesale
distribution service provider's cost (i.e. prior to any percentage
markup being applied) FOB the existing wholesale distribution
service provider's docks. Vendor will maintain product inventory
levels such that product delivery to Stores shall not be disrupted
during any transition from
30
Vendor to a new wholesale distribution service provider at the
termination or expiration of this Agreement and Vendor shall
cooperate with 7-Eleven and any such new provider to ensure a smooth
and orderly transition of the services. Vendor agrees to sell 7-
Eleven Proprietary or Exclusive Product inventory remaining in its
Distribution Centers at the time of any transition to a new service
provider at Vendor's Cost (as defined herein) prior to any
percentage markup being applied FOB, Vendor's existing Distribution
Centers.
ARTICLE XXIX
NO CONFLICTS
29.1 By acceptance of this Agreement, Vendor
represents, warrants, and certifies that no gift or gratuity or any
promise of gift or gratuity, has been given, offered, or made
directly or indirectly to, or for the benefit of, any employee or
agent of 7-Eleven for the purpose of influencing the selection of a
Vendor. Furthermore, Vendor certifies that no gift or gratuity or
any promise of a gift or gratuity will be offered or made to, or for
the benefit of, any employee or agent of 7-Eleven as a result of
Vendor receiving this Agreement, and, in any such event or in the
event the same is solicited by any employee or agent of 7-Eleven,
Vendor shall immediately notify 7-Eleven's Internal Audit Department
or 7-Eleven's Code of Business Conduct Compliance Coordinator, any
attorney in 7-Eleven's Legal Department or 7-Eleven's Chief Code
Compliance officer of any such event.
29.2 Vendor represents and certifies that prices for
the services have been arrived at independently without
consultation, communication, or agreement for the purpose of
restricting competition or any matter relating to such prices with
any competitor or other supplier.
29.3 Vendor represents and certifies that the prices
for the services contained in this agreement have not been knowingly
disclosed directly or indirectly to any competitor or other
supplier.
ARTICLE XXX
NO AGENCY; NO WAIVERS; REMEDIES CUMULATIVE
30.1 It is understood and agreed by the parties hereto
that this Agreement does not create a fiduciary relationship between
them; that Vendor shall be, and at all times shall remain, an
independent contractor; and that nothing in this Agreement is
intended to make either party an agent, legal representative,
subsidiary, joint venturer, partner, employee, employer, joint
employer, or servant of the other for any purpose whatsoever.
30.2 The failure of either party to enforce any right
under this Agreement shall not be construed as a waiver of its right
to enforce that or any other right hereunder in the future. All
remedies afforded in this Agreement will be taken and construed as
cumulative; that is, in addition to every other remedy available at
law or in equity, and may be exercised separately or concurrently
without the waiver of any other remedy. Any course of dealing or
performance between the parties shall not constitute a waiver of any
right hereunder.
[SIGNATURE PAGE FOLLOWS]
31
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, as of the date first written above.
ATTEST:
XXXXXX COMPANY, INC. 7-ELEVEN, INC.
D/B/A XXXXXX GROCERY
DISTRIBUTION
By: By:
----------------------- ----------------------
Title: President
-----------------
By: By:
----------------------- ----------------------
Assistant Secretary ----------------------
32
SCHEDULE 1
------------
DISTRIBUTION CENTERS
WAREHOUSE FACILITIES LOCATIONS
------------------- ---------------
MCLANE/CAROLINA BATTLEBORO, NC
MCLANE/CUMBERLAND NICHOLASVILLE, KY
MCLANE/DOTHAN COTTONWOOD, XX
XXXXXX/HIGH PLAINS LUBBOCK, TX
MCLANE/MID ATLANTIC FALMOUTH, VA
MCLANE/MIDWEST DANVILLE, IL
MCLANE/NORTHEAST BALDWINSVILLE, NY
XXXXXX/NORTHWEST TACOMA, WA
MCLANE/PACIFIC MERCED, CA
MCLANE/SOUTHEAST ATHENS, GA
MCLANE/SOUTHERN BROOKHAVEN, XX
XXXXXX/SOUTHERN CALIFORNIA SAN BERNARDINO, CA
MCLANE/SOUTHWEST TEMPLE,
TEXAS
MCLANE/SUNEAST KISSIMMEE, FL
XXXXXX/SUNWEST GOODYEAR, AZ
MCLANE/WESTERN LONGMONT, CO
MCLANE INDIANA RICHMOND, INDIANA
MCLANE/NORTHEAST-CONCORD CONTOOCOOK, NEW HAMPSHIRE
MCLANE/MINNESOTA NORTHFIELD, MINNESOTA
SCHEDULE 1.2
--------------
Product Categories
Product Category
---------------
Bundle Pack
Candy/Gum/Mints
Cigarettes
Cookies/Crackers
Cooler/Refrigerated
Cups/Lids
Eggs
Fast Food Frozen
FCB/BIB/Fountain
Frozen Food
- Ice Cream/Froz. Nov.
Grocery
- Water
- Firewood
- Drink Pwdr/Liq Fount
- Bulk Popcorn
- Disposable Lighters
- Cig Paper/Smoke Access.
HBA
- Hair Accessories
Jerky/Meat Snacks
- Meat/Market/Deli Non-Grocery Merchandise
- Toy/Games/Novelties
- Hosiery
- Shoe Care
- Pet Supply
- Household
- Hardware
- Electrical
- Light Bulbs
- Film/Tape/CD's/Compu.
- Batteries
- Ice Chest Produce Repack/Store Supplies
Snacks/Nuts
Tobacco/Cigars
Tobacco Moist
SCHEDULE 2.4
Slow Moving Inventory is defined as those items within each
respective Vendor Division which exceed the following agreed upon
average days worth of sales in inventory:
CATEGORY DAYS WORTH OF SALES IN INVENTORY
------------ --------------------------------
Cigarettes *
Confection *
Snacks *
Perishable (meats/cheese) *
Frozen *
Grocery Standard *
Retail Beverages *
Supplies (cups/lids) *
Health & Beauty Care *
General Merchandise *
Other Tobacco Products *
For example, assume the average sales of cigarettes is * cartons per
day per distribution center. Therefore, based on the above chart,
Vendor will carry up to * cartons in inventory without charging 7-
Eleven for any carrying costs (*/day x * days worth in inventory).
Further assume that Vendor has an average of * cartons in inventory
during a Vendor accounting period, resulting in * of "Slow Moving
Inventory." In such case, 7-Eleven would pay a carrying charge on the
additional * of SMI.
SCHEDULE 5.1
------------
BILLING PLAN -- SCHEDULE OF XXXX UPS BY VENDOR DISTRIBUTION CENTERS
UIN PRICE RULE 97110 97110 97114 87111 97114 97114 97114 97114 97114 97114 97111 97114 97114
-----------------------------------------------------------------------------------------------------------
UIN
DEPT DESCRIPTION SWS/S MES/S NEFRAN NWS/S MSFRAN MZCORP MZFRAN SZFRAN MPFRAN MIFRAN MWS/S NCS/S MYFRAN
------------------------------------------------------------------------------------------------------------
20000 Grocery
Default *% *% *% *% *% *% *% *% *% *% *% *% *%
20601 Grocery*1,*2 *% *% *% *% *% *% *% *% *% *% *% *% *%
20602 Soft Drinks/
Isotonics*2 *% *% *% *% *% *% *% *% *% *% *% *% *%
20603 Fountain
Syrups/Bib*3 *% *% *% *% *% *% *% *% *% *% *% *% *%
20604 Juices *% *% *% *% *% *% *% *% *% *% *% *% *%
20605 Drink Powders/
Liquid Mixes *% *% *% *% *% *% *% *% *% *% *% *% *%
20606 Cookies/
Crackers *% *% *% *% *% *% *% *% *% *% *% *% *%
20608 Nuts/Snacks *% *% *% *% *% *% *% *% *% *% *% *% *%
20610 Automotive/
Motor Oil *% *% *% *% *% *% *% *% *% *% *% *% *%
20611 Nacho Chips *% *% *% *% *% *% *% *% *% *% *% *% *%
20612 Coffee Vending
Institutional *% *% *% *% *% *% *% *% *% *% *% *% *%
20614 Bulk Popcorn
/Supplies *% *% *% *% *% *% *% *% *% *% *% *% *%
20620 Disposable
Lighters *% *% *% *% *% *% *% *% *% *% *% *% *%
20721 Cups/lids/
logo items *% *% *% *% *% *% *% *% *% *% *% *% *%
20722 Store supplies
/racks *% *% *% *% *% *% *% *% *% *% *% *% *%
20723 Bags (Paper
Plastic) *% *% *% *% *% *% *% *% *% *% *% *% *%
20925 Candy (Full
Case) *% *% *% *% *% *% *% *% *% *% *% *% *%
20926 Candy (Bag) *% *% *% *% *% *% *% *% *% *% *% *% *%
21030 Candy (Count
Goods) *% *% *% *% *% *% *% *% *% *% *% *% *%
21235 Tobacco Smokeless
/Snuff (Grocery) *% *% *% *% *% *% *% *% *% *% *% *% *%
00000 Xxxxxxx Chewing
/Smoking (Grocery)*% *% *% *% *% *% *% *% *% *% *% *% *%
21339 Cigarette Papers
/Smoking Accs
(Grocery) *% *% *% *% *% *% *% *% *% *% *% *% *%
21442 Tobacco Cigars
(Grocery) *% *% *% *% *% *% *% *% *% *% *% *% *%
21545 Frozen Food
(Retail) *% *% *% *% *% *% *% *% *% *% *% *% *%
21546 Frozen Food
(Bulk/Portion Pack) *% *% *% *% *% *% *% *% *% *% *% *% *%
21547 Deli Meat/Bulk
/PPK Frozen *% *% *% *% *% *% *% *% *% *% *% *% *%
21548 Bakery Frozen *% *% *% *% *% *% *% *% *% *% *% *% *%
21649 Frozen Fast
Food/Desserts *% *% *% *% *% *% *% *% *% *% *% *% *%
21650 Frozen
Sandwiches *% *% *% *% *% *% *% *% *% *% *% *% *%
21651 Frozen Fast Food
/Pizza/Burrittos *% *% *% *% *% *% *% *% *% *% *% *% *%
21652 Ice Cream
(Take Home) *% *% *% *% *% *% *% *% *% *% *% *% *%
21653 Frozen Ice
Cream Novelties *% *% *% *% *% *% *% *% *% *% *% *% *%
21757 Refrigerated *% *% *% *% *% *% *% *% *% *% *% *% *%
21758 Refrigerated
Juice/Shakes *% *% *% *% *% *% *% *% *% *% *% *% *%
21759 Pckg Cheese *% *% *% *% *% *% *% *% *% *% *% *% *%
21760 Refrigerated
Bakery *% *% *% *% *% *% *% *% *% *% *% *% *%
21761 Eggs *% *% *% *% *% *% *% *% *% *% *% *% *%
21762 Produce *% *% *% *% *% *% *% *% *% *% *% *% *%
21865 Frozen Beef *% *% *% *% *% *% *% *% *% *% *% *% *%
21866 Processed
Meats *% *% *% *% *% *% *% *% *% *% *% *% *%
21867 Wafer Meats *% *% *% *% *% *% *% *% *% *% *% *% *%
21868 Fresh Box Beef*% *% *% *% *% *% *% *% *% *% *% *% *%
21869 Fresh Poultry *% *% *% *% *% *% *% *% *% *% *% *% *%
21870 Fresh Fish *% *% *% *% *% *% *% *% *% *% *% *% *%
21871 Deli Meat/Bulk
/PPK/Cooler *% *% *% *% *% *% *% *% *% *% *% *% *%
21872 Deli Cheese/
Bulk/PPK *% *% *% *% *% *% *% *% *% *% *% *% *%
21873 Deli Salads/
Bulk/PPK *% *% *% *% *% *% *% *% *% *% *% *% *%
21874 Frozen Potatoes *% *% *% *% *% *% *% *% *% *% *% *% *%
21875 Frozen Poultry *% *% *% *% *% *% *% *% *% *% *% *% *%
21876 Frozen Pork *% *% *% *% *% *% *% *% *% *% *% *% *%
21877 Fresh Salads *% *% *% *% *% *% *% *% *% *% *% *% *%
21878 Fresh Bulk Veg. *% *% *% *% *% *% *% *% *% *% *% *% *%
21879 Fresh Bulk Fruits*% *% *% *% *% *% *% *% *% *% *% *% *%
21880 Produce Per Pkg *% *% *% *% *% *% *% *% *% *% *% *% *%
21881 Frozen Seafood
(Food Service) *% *% *% *% *% *% *% *% *% *% *% *% *%
32002 Health Care *% *% *% *% *% *% *% *% *% *% *% *% *%
32003 Beauty Care *% *% *% *% *% *% *% *% *% *% *% *% *%
32104 Hair Care *% *% *% *% *% *% *% *% *% *% *% *% *%
32105 Toys/Games/
Novelties *% *% *% *% *% *% *% *% *% *% *% *% *%
32106 School/Office
Products *% *% *% *% *% *% *% *% *% *% *% *% *%
32108 School Paper
(all types) *% *% *% *% *% *% *% *% *% *% *% *% *%
32110 Caps/Hats *% *% *% *% *% *% *% *% *% *% *% *% *%
32112 Gloves *% *% *% *% *% *% *% *% *% *% *% *% *%
32114 Soft Goods *% *% *% *% *% *% *% *% *% *% *% *% *%
32115 Baby *% *% *% *% *% *% *% *% *% *% *% *% *%
32116 Hosiery *% *% *% *% *% *% *% *% *% *% *% *% *%
32125 Sewing Accessories*% *% *% *% *% *% *% *% *% *% *% *% *%
1532126 Hardware *% *% *% *% *% *% *% *% *% *% *% *% *%
32127 Electrical *% *% *% *% *% *% *% *% *% *% *% *% *%
32128 Light Bulbs *% *% *% *% *% *% *% *% *% *% *% *% *%
32130 Film/Tapes/
CD's/Computer *% *% *% *% *% *% *% *% *% *% *% *% *%
32134 Batteries *% *% *% *% *% *% *% *% *% *% *% *% *%
32138 Disposable Lighters*% *% *% *% *% *% *% *% *% *% *% *% *%
32140 Logo Lighters *% *% *% *% *% *% *% *% *% *% *% *% *%
32142 Ice Chests *% *% *% *% *% *% *% *% *% *% *% *% *%
NOTES
*1 - All Firewood is at *%
*2 - All Water is at *%
*3 - UIN Department 20603 Corp Codes 711 & 050 receive National Drink Pricing.
All others receive markup as indicated.
SCHEDULE 5.2
-------------
7-ELEVEN-VENDOR CIGARETTE REBATE SCHEDULE
PREMIUM REBATE GENERIC REBATE PREMIUM BUY GPC/ VICEROY
--------------- -------------- ---------- ------------
Arizona * * *
S. California * * *
N. California * * * *
Colorado * *
Connecticut * *
Delaware * * *
Florida * * *
Idaho * *
Illinois * * * *
Indiana * * * *
Kansas * * * *
Maine * *
Maryland * * *
Massachusetts * * *
Michigan * * * *
Missouri * * * *
Nevada (Reno) * * * *
Nevada (Las Vegas) * *
New Hampshire * *
New Jersey * *
New York * *
N. Carolina * *
Ohio * * * *
Oregon * *
Pennsylvania * *
Rhode Island * * *
Texas * *
Utah * *
Vermont * *
S. Virginia * *
Virginia * * *
Washington * *
Washington, DC * *
West Virginia * * *
Wisconsin * * * *
*
SCHEDULE 5.5
------------
AUDIT PROCEDURES
5.5.1 In order to facilitate the checking of the proper markup
percentages, the Vendor will include as part of the normal billing
file, a cross reference to the product category covered under the
billing plan applicable to the individual product.
5.5.2 At the end of each Vendor accounting period, the Vendor
will provide electronic files (or hard copies where applicable) of the
following information:
Product Cost and Retail History. This file will contain a record
of all Cost and Retail price changes for each item purchased by 7-
Eleven and shall be in the format currently in use by Vendor.
Item Master file for all products purchased by 7-Eleven showing
pack size, weight, cube, UPC codes, Vendor item number, manufacturer
item number, descriptions, order quantities, case pack, add-on
quantities, cross-reference codes, taxes, etc. and shall be in the
format currently in use by Vendor.
A file disclosing the complete compilation of 7-Eleven upcharges
by product. This will include product category listings, item UPC,
item description, item code, product Cost, item/manufacturer UPC,
selling unit (e.g. piece or case), regional or warehouse
adjustments/charges.
A current price list of the supplier's cost of the various
products for all items purchased by 7-Eleven, which discloses the
supplier's list price and the bracket adjustment applicable to the
product.
A listing, by Vendor supplier, of all off-invoice promotional
deals offered during the period showing amounts and applicable dates,
in the format currently used by Vendor.
A listing showing amounts by Vendor disclosing any and all claims
and/or settlements with suppliers or manufacturers that result in
changes to the cost of products purchased by 7-Eleven.
Stock Status/Movement History. This file will provide a monthly
inventory history showing warehouse stock levels, purchases and sales
of each guaranteed item (Committed Item) purchased by 7-Eleven in the
format currently used by Vendor.
Any other files/reports or modifications to the above
files/reports that may be needed to support the activity between
Vendor and 7-Eleven; provided, however, that 7-Eleven shall pay to
Vendor $50 per hour for modifications required to Vendor's systems to
provide such files/reports/modifications.
5.5.3 In order that 7-Eleven or it's representatives can verify
the above files, Vendor will make available the following supporting
data:
Access to all original supplier invoices (or Facsimile copy
thereof) or a related EDI billing if no hard copy is available, to
verify prices, adjustments, off invoice allowances, etc. for product
purchased by 7-Eleven.
Vendor's disclosure and computation of normal purchase bracket
information and volume allowances.
Access to Vendor's supplier files relating to off-invoice
promotions, deals, and special purchase arrangements for product
purchased by 7-Eleven.
Access to files containing details of any claims or settlements
with suppliers or manufacturers resulting in changes to the price of
products purchased by 7-Eleven.
Access to any supporting documentation relating to any matter
that affects the price of a product purchased by 7-Eleven.
Access to Vendor's purchase order data relating to Vendor's
purchase orders sent to suppliers for product purchased by 7-Eleven.
Vendor will not permit 7-Eleven to review the terms of contracts
with competitors of 7-Eleven or any other confidential data or
information that is specific to another customer of Vendor.
SCHEDULE 6.3
------------
PURCHASE INCENTIVE ALLOWANCES
The purchase incentive allowance will be calculated for each Vendor
accounting period during the term of the Agreement as described below.
Total Purchase Range per Store Incentive %
------------------------------ -----------
* *
------------------------------ -----------
$* to $* *%
$* to $* *%
$* to $* *%
$* to $* *%
$* to $* *%
$* to $* *%
$* to $* *%
The calculation will be made as follows:
1. Compute the total * purchases during the applicable
Vendor accounting period.
2. Multiply the applicable incentive percentage by the total
* purchases during the period.
3. Credits will be paid except where otherwise prohibited by
applicable below cost sales laws or other similar laws;
provided that Vendor must provide reasonably
satisfactory evidence to 7-Eleven that any such credits
are actually and directly prohibited by applicable law.
SCHEDULE 6.4
-------------
VENDOR ACCOUNTING PERIODS
2002 2003 2004 2005 2006
Period Begin End Begin End Begin End Begin End Begin End
1 2/1/03 2/28/03 1/31/04 2/27/04 1/29/05 2/25/05 1/28/06 2/24/06
2 3/1/03 3/28/03 2/28/04 3/26/04 2/26/05 3/25/05 2/25/06 3/24/06
3 3/29/03 4/25/03 3/27/04 4/23/04 3/26/05 4/22/05 3/25/06 4/21/06
4 4/26/03 5/23/03 4/24/04 5/21/04 4/23/05 5/20/05 4/22/06 5/19/06
5 5/24/03 6/20/03 5/22/04 6/18/04 5/21/05 6/17/05 5/20/06 6/16/06
6 6/21/03 7/18/03 6/19/04 7/16/04 6/18/05 7/15/05 6/17/06 7/14/06
7 7/19/03 8/15/03 7/17/04 8/13/04 7/16/05 8/12/05 7/15/06 8/11/06
8 8/16/03 9/12/03 8/14/04 9/10/04 8/13/05 9/9/05 8/12/06 9/8/06
9 9/7/02 10/4/02 9/13/03 10/10/03 9/11/04 10/8/04 9/10/05 10/7/05 9/9/06 10/6/06
10 10/5/02 11/1/02 10/11/03 11/7/03 10/9/04 11/5/04 10/8/05 11/4/05 10/7/06 11/3/06
11 11/2/02 11/29/02 11/8/03 12/5/03 11/6/04 12/3/04 11/5/05 12/2/05 11/4/06 12/1/06
12 11/30/02 12/27/02 12/6/03 1/2/04 12/4/04 12/31/04 12/3/05 12/30/05 12/2/06 12/29/06
13 12/28/02 1/31/03 1/3/04 1/30/04 1/1/05 1/28/05 12/31/05 1/27/06 12/30/06 1/26/07
SCHEDULE 8.1
--------------
SERVICES SCHEDULE
-------------------
1. Vendor will provide at 7-Eleven's option any of the
reports and reporting capability provided to 7-Eleven by Vendor in
the Request for Information (RFI) process and the following
inventory and service reports in a format as reasonably requested by
7-Eleven, which shall be broken out by (i) 7-Eleven Total Company,
(ii) Division, (iii) Market, and (iv) Store, at reporting frequency
set forth below:
a. Proprietary Product Inventory - weekly
b. Service Rate Level - by invoice and warehouse out
of stock, and manufacturer out of stock - weekly
c. Invalid item number - daily
d. On-time delivery - weekly
e. Change reports (UPC, cost, description,
discontinued) - daily
f. Out of stock and out of stock performance by
Distribution Center, by item - daily
g. New Item Set Up Information - daily
h. 7-Eleven SLIN / Vendor item Number cross reference
files - daily
i. Future deletes- daily
j. Current and future deals - daily
k. Committed items - weekly
l. Authorized items - weekly
m. Error reports - daily
n. Period reports - weekly
7-Eleven reserves the right to request from time to time other reports
in a format and containing content as may be reasonably requested by
7-Eleven and provided by Vendor. 7-Eleven shall pay programming fees
to Vendor at the rate of $* per hour for changes to Vendor's system to
accommodate any such reporting, pursuant to a mutually agreed,
executed statement of work containing a description of the scope of
the work and a firm estimate. There will be no charges for any
reports or procedures already in place.
2. Vendor and 7-Eleven agree to cooperate with each other in
order to develop additional reports that 7-Eleven may require,
including, without limitation, developing the necessary computer
programs and formats for providing such reports so as to allow
flexibility for 7-Eleven to vary and designate the Store groupings to
be set forth on such reports, including groupings on a national,
division, market or Store by Store basis. Vendor will also provide to
7-Eleven at 7-Eleven's request, such data, files and other information
as it may generate and have available in order for 7-Eleven to develop
its own reports in accordance with terms to be mutually agreed upon.
7-Eleven shall pay programming fees to Vendor at the rate of $* per
hour for changes to Vendor's system to accommodate any such reporting.
3. Except as otherwise provided herein, Vendor and 7-Eleven
agree to cooperate with each other in order to develop and coordinate
a procedure for handling new products including procedures to handle
new Vendor setups, new product setups, new product order
acknowledgments, new product availability tracking, Vendor problem
resolution and replenishment of products. Vendor and 7-Eleven agree
to cooperate with each other to set up mutually compatible
communication systems to handle all of the foregoing, including all
necessary equipment.
4. Vendor shall also provide 7-Eleven with customer
service assistance at all facilities used by Vendor to service the
Stores for purposes of handling, on a day to day basis, any and all
the problems associated with product ordering and delivery,
including, without limitation, problem resolution procedures,
special delivery procedures, procedures for adding on any products
to an existing order, procedures for identifying and providing a new
item number, procedures for handling order transmittal problems (and
mechanical problems) and miscellaneous reports requested by 7-Eleven
from time to time.
5. In providing the services and products under the
Agreement, except as otherwise may be provided herein, Vendor agrees
that:
(a) all products offered to the Stores shall first be
approved by 7-Eleven's applicable category managers and
shall be presented to the Stores only through 7-
Eleven's approved communication process which 7-Eleven
shall provide to Vendor. This shall include, but not
be limited to (i) products listed in the appropriate
order guide, (ii) new product items, (iii) "core"
items, and (iv) optional items. Vendor shall not
discontinue any products without first receiving prior
approval from 7-Eleven's category managers. In
addition, Franchisees shall have access to Vendor's
entire product catalogue.
(b) all discounts and allowances and any other supplier
deals or offerings shall be communicated to 7-Eleven's
category managers and to the Stores through 7-Eleven's
communication process.
6. Vendor, with 7-Eleven's assistance and cooperation, shall
establish and maintain a wholesale Reclamation Program whereby Vendor
shall assist 7-Eleven in returning inventory to suppliers and
manufacturers for full credit to the Stores in a manner substantially
similar to the program set forth on Attachment 1 to Schedule 8.1. All
products that are non-proprietary to 7-Eleven (including Vendor's
private label products) sold by Vendor and purchased from a supplier
or manufacturer participating in the Reclamation Program shall be
eligible for the Reclamation Program. For any supplier or
manufacturer that does not participate in such program, Vendor shall
use such manufacturer's or suppliers alternate funding provided to
Vendor by the manufacturer or supplier to cover reimbursement for the
reclamation of products for the benefit of the Stores.
7. All caustic or hazardous chemical products including,
without limitation, cleaning products shall be segregated from all
food products. For example, motor oil will not be included within the
same tote as baby food.
8. With respect to all deliveries to each Store, Vendor
shall be required to deliver the products to each Store at the proper
temperature to protect product quality, in full-compliance with the
standards established by the Hazard Analysis Critical Control Point
("HACCP") and such delivery and the products shall meet all federal
and state Standards and applicable rules.
9. Vendor will provide properly qualified and skilled
merchandising/logistics support personnel, at vendor expense, to
service 7-Eleven inventory management requirements and other service
functions for the benefit of the Stores to work in the 7-Eleven
headquarters. The amount of staffing will be mutually agreed to
between 7-Eleven and Vendor and may be modified from time to time to
meet 7-Eleven's and the Store's requirements.
ATTACHMENT 1 TO SCHEDULE 8.1
----------------------------
7-ELEVEN
RETAILER RECLAMATION PROGRAM
-----------------------------
OBJECTIVE:
To provide 7-Eleven, Inc., with a program for unsaleable or damaged
merchandise through reverse logistics. The parties acknowledge that
all requirements are not fully identified at this time, and the
following process may change.
PROCESS FLOW:
1. Store manager shall collect damaged or unsaleable
merchandise and place the merchandise in a tote designated
for return to Vendor and then to the applicable Reclaim
Center.
2. When tote or totes are ready for pickup (full), the Store
will notify Vendor's driver and proper paperwork will be
signed which consists of the 7-Eleven Reclamation Return
Form, with one copy being placed in tote, one being sent to
7-Eleven's headquarters and one remaining with Store.
3. Copy of the signed reclamation pickup form shall be placed
in the tote.
4. Tote will be sealed at both ends using a tote tie.
5. Totes, once picked up by the Vendor driver, will be returned
to the Vendor's facility, unloaded and placed in the
facility's returns area awaiting transport to the Reclaim
Center.
6. Once enough totes are received, the product shall be loaded
on Vendor's trailer and transported to the Reclaim Center.
7. Reclaim Center will segregate the 7-Eleven totes and scan
the tote labels as well as its contents.
8. Processing of returned items, shall occur at the Reclaim
Center based on the current Vendor policy on file which
shall be provided to 7-Eleven. All product files will be
scanned by the Reclaims Center. This will allow Vendor to
take a deduction, on 7-Eleven's behalf and for 7-Eleven's
benefit, against invoices provided by the
suppliers/manufacturers for the returned merchandise.
9. Detailed billing file shall be prepared by the Reclaim
Center and sent to Vendor and 7-Eleven and which will
include the following:
a. Store number
b. Scanning period date
c. Wholesaler UIN
d. Pack
e. Size
f. Description
g. Cost of the item if it's an authorized item (i.e.
part of Reclaim Program); no cost if it's an
unauthorized item (such as seasonal candy)
h. Manufacturer allowance of cost
i. Scan fee paid by manufacturer
j. Extension of credit given for returned item
k. Subtotal
l. Total
10. Billing file generated by Reclaim Center will be sent to
Vendor with regular file (Vendor's warehouse credits) for
processing billbacks, and interface of deduction from vendor
invoices occurs. Vendor shall deduct the amount of the item
returned to the Reclaim Center from the suppliers/Vendor's
invoice for subsequent goods for 7-Eleven's benefit.
11. Credit is given to 7-Eleven by Vendor through a deduction
made by Vendor. The credit shall be passed in the
immediately succeeding accounting period by Vendor via the
EDI System for all applicable Stores and shall be evidenced
by credit memos issued by Vendor and sent to locations
designated by 7-Eleven from time to time.
SCHEDULE 8.13
ADDITIONAL IN-STORE SERVICES
-------------------------------
EMERGENCY COSTS
---------------
Cost for emergency deliveries $* per delivery
(not caused by Vendor error)
RESETS (WITH REASONABLE NOTICE)
-------------------------------
Labor hours to assist will be provided $* per person per hour
by Vendor as assistance to the store (includes mileage)
SHELF LABOR COST
----------------
Cost per label: * Cost of $* per 60 labels
PRICE CHANGE SHEET
-------------------
Vendor will provide the price change Cost is $* per participating
showing new retail price changes made store/per week
by 7-Eleven using Quasar and a xxxx-up
and a xxxx-down form to adjust store
inventory.
Restocking Fee or Order Errors *%
In-Date Cigarette Returns $* per carton
Out-of-Date Cigarette Returns
(Xxxxxx Xxxxxx Products) $* per carton (subject to change to
the extent that the manufacturer
return program changes, provided
that Vendor reasonably substantiates
such change to 7-Eleven in writing)
CO - 2 Deposit $*/20lb Container
FUEL PRICE SURCHARGE/CREDIT. During each Vendor accounting period during
the term of this Agreement, Vendor will determine if a fuel price
surcharge/credit is applicable. A surcharge will be applicable if at the
end of the first week of such period the average fuel cost for the
preceding four week period as posted on the EIA Report on Highway Diesel
Prices Website, or such other comparable report if the EIA Report is no
longer published (the "EIA Report"), is more than $* above the Benchmark
(as defined below). Conversely, a credit will be applicable if at the
end of the first week of such period the average fuel cost for the
preceding four week period as posted on the EIA Report is less than $*
below the Benchmark. Any surcharge/credit will be effective from the
beginning of the third week in the Vendor accounting period in which such
surcharge credit determination is made through the end of the second week
of the immediately succeeding Vendor accounting period. Surcharges and
credits shall be calculated as set forth below. No surcharge or credit
shall be applicable unless Vendor first provides 7-Eleven a written
statement with sufficient detail for 7-Eleven to verify Vendor's
calculation.
SURCHARGE/CREDIT CALCULATION
----------------------------
Four week fuel payment = 91.7 GALLONS X MONTHLY FUEL
OR charge per delivery VARIANCE
for diesel fuel ---------------------------
stops
Where:
"91.7 Gallons" = 550 average miles per dispatch for Vendor
vehicle divided by 6 miles per gallon per diesel fuel = 91.7 gallons
"Monthly Fuel Variance" means the amount, if any, of the average
diesel fuel cost each month taken from the EIA Report that is over or
under the Benchmark Range plus *cents.
"Stops" = Average of 15 stops per Vendor dispatch
"Benchmark Range" means the range of * above or * below the Benchmark.
"Benchmark" means the prior year's average diesel fuel cost taken from
the EIA Report. The Benchmark for the year 2002 is $* based on last
year's average diesel fuel cost per the EIA Report.
If the average monthly diesel fuel cost per the EIA Report is within
the Benchmark Range, no charge or payment for that month will be made.
Each year, the Benchmark shall be subject to an annual adjustment
based on the prior year's average diesel fuel cost as taken from the
EIA Report. In the event the EIA Report is not published at the
beginning of each year to make such adjustment, the Benchmark shall be
adjusted following its publication in the EIA Report and any prior
months within the calendar year will be reconciled following such
adjustment to determine whether any monthly fuel payment or charge is
due for those months.
The monthly fuel payment or charge, if any, shall be rounded to the
nearest 10 cents ($.10). For example, $.6724 will be $.70.
The following illustrates the manner in which the monthly fuel payment
or charge will be calculated based on the foregoing formula.
EXAMPLES:
---------
A. PAYMENT TO 7-ELEVEN
-------------------
Assume: Benchmark is $*
Benchmark Range is $* - $*
Monthly fuel cost per EIA Report is $1.11
Monthly Fuel Variance = $* (*cents lower than Benchmark
Range, plus *cents)
91.7 x * = $* or $* (as rounded)/delivery stop
-------- paid to 7-Eleven for the month
15
B. CHARGE TO 7-ELEVEN
------------------
Assume: Benchmark is $*
Benchmark Range is $*- $*
Monthly fuel cost per EIA Report is $1.34
Monthly Fuel Variance = $* (*cents higher than Benchmark
Range plus *cents)
91.7 x * = $* or $* (as rounded)/delivery stop
-------- charge paid to Vendor for the month
15
C. NO PAYMENT OR CHARGE
--------------------
Assume: Benchmark is $*
Benchmark Range is $* - $*
Monthly fuel cost per EIA Report is $*
Monthly Fuel Variance is = *
TOTE CREDITS/PROCEDURES:
Vendor and 7-Eleven will continue the current tote delivery and credit
procedure. In this process, totes are delivered to the stores based
on the store's order at a charge of $* per tote. Empty totes picked
up by the Vendor driver and returned are credited by the driver at $*
per tote. Upon termination of the Agreement, during the final
delivery of products, all totes will be returned to the driver and any
outstanding tote balance shall be reconciled within 14 days of
termination.
SCHEDULE 9.3
DRIVER REQUIREMENTS
---------------------
1. Drivers shall be properly licensed and trained to operate
all equipment.
2. Drivers shall act in a professional and courteous manner
with all Store personnel, which shall include but not be
limited to, waiting until Store personnel are free from
interacting with customers before transacting any needed
business, not using inappropriate or foul language, wearing
proper uniforms that are clean, maintaining good hygiene and
keeping all aisles clean and accessible.
3. Drivers shall alert Store personnel to any potentially
dangerous conditions including gas or product spills,
loitering or any other noticed conditions in or around the
Store.
4. Drivers shall coordinate with Store personnel the most
appropriate delivery load-out point to minimize customer
disruption.
5. Drivers shall also participate in all applicable product
delivery and receipt activity including counting
totes/products and the handling of all required product
delivery and reclamation paperwork.
6. 7-Eleven shall report to Vendor any driver problems or
infractions reported by the Stores and Vendor shall promptly
resolve any such problems with reasonably appropriate
disciplinary standards as needed to avoid recurring problems
or infractions.
7. Vendor shall ensure that all Drivers shall comply with
applicable laws, rules and regulations.
SCHEDULE 9.5(a)
STORE DELIVERY PROCEDURES
-------------------------
DRY GROCERY - COOLER/FREEZER (FULL CASE)
----------------------------------------
Each case is piece counted (joint count by the Vendor driver and store
manager/clerk) as an individual unit. The invoice is itemized ONLY if
the total quantity ordered does not match the quantity delivered.
CIGARETTES
----------
All deliveries of cigarettes must be made only with a joint carton
count by the Vendor driver and the store manager/clerk. The invoice
is itemized ONLY if the total quantity ordered does not match the
quantity delivered.
CANDY, TOBACCO, AND REPACK
--------------------------
All candy, tobacco, and repack items are shipped in plastic tote
boxes. The driver will perform a joint piece count with the store
manager/clerk. The invoice is itemized ONLY if the total quantity
ordered does not match the quantity delivered.
Note:
1. In order to expedite the check-in of your delivery, the
manager/clerk is asked to empty the plastic tote boxes while the
driver is bringing in the remainder of the delivery.
2. To ensure the security of your store, please do not ask the driver
to go behind your store counter or to go into your back room.
SINGLE SELL
-----------
Honor System: Tote count only, unless full tote box is missing, then
driver will itemize shortage at time of delivery and issue credit.
GENERAL MERCHANDISE
-------------------
Check-in is completed by making certain the number of master totes
delivered matches the number on the invoice.
GENERAL RULES & PROCEDURES
--------------------------
Immediately check invoice for the correct store number to insure you
are receiving the proper shipment.
The following items should always be check in before the driver
leaves:
1. number of totes, including GMP totes
2. number of repack items*
3. number of cigarette cartons*
4. number of repack candy items*
5. number of cases of frozen, deli, and grocery*
* If discrepancies in quantity are found, that category should be
checked item by item before the driver leaves the store. (These
are the only instances when item by item check-in should be
used.)
The number of totes listed on the Drivers Manifest is the amount your
store will be charged. If a discrepancy occurs between your account
and the Drivers Manifest be sure a correction is made on the Manifest
to reflect actual counts.
TYPES OF CREDITS AND HOW TO HANDLE
----------------------------------
During Delivery (Driver is present). In order to receive credit at
time of delivery from damaged merchandise, it is not necessary to
return the entire case.
TYPE HOW TO HANDLE
----------------------------------- -------------------------------------------------------------
Shortage discovered during delivery The driver will utilize the Telxon credit process using
invoice data
Broken or damaged merchandise (more The driver will utilize the Telxon credit process, using
than $1 at cost) is discovered during invoice data. The driver can issue credit for partial case
delivery, in a single shipping case damage discovered during delivery
Mis-shipment occurs, is discovered The driver will utilize the Telxon credit process, using
during delivery invoice data and return the merchandise
An error in ordering is made, and The driver will utilize the Telxon credit process using
it is discovered at time of delivery invoice data and will return the item
After Delivery (Driver has left). To receive credit after delivery
for misshipments, damaged returns and errors, the gummed label must be
affixed to case in question.
TYPE HOW TO HANDLE
----------------------------------- ------------------------------------------------------------
Shortage on honor system single sell; Note the Vendor item number, description, your Cost, and
is found inside a tote box by store your Retail. Report to the Vendor driver the following
personnel week for instant credit
After delivery, concealed damage is Set damaged merchandise aside. At next delivery, the
discovered that is valued at more driver will utilize the Telxon credit process and will call
than $1 at cost, in a single our office for cost data
shipping case
Mis-shipment occurs, is discovered Set case aside. At next delivery, the driver will utilize
after delivery the Telxon credit process and call our office for cost
data. The merchandise will be picked up. The untampered
gummed case label will be used for the other data needed.
It must be attached to the case.
An error in ordering is made, and Set case aside. At next delivery, the driver will utilize
it is discovered after delivery the Telxon credit process and call our office for cost data
Return in Excess of 3 Cases or $50.00
The Vendor driver does not have the authority to return more than 3
cases of product or merchandise that exceeds $50.00 at cost. The
driver will call our Credit Department from your store for approval.
CREDIT PROCEDURES
All credits for shortages, damages, and misshipments will be issued
by having the Vendor driver utilize the Telxon credit process.
A) The Telxon credit process will be used to credit items that
have been delivered within the last three weeks (21 days).
B) The gum shipping label must be affixed to the case you are
requesting credit, in order for us to issue credit.
C) Your account will normally be credited within 48 hours after
the driver returns to the distribution center. Holidays and
weekends are the only anticipated exceptions.
SCHEDULE 9.5(b)
PRODUCT MINIMUM SHELF LIFE REMAINING
DESCRIPTION AT TIME OF DELIVERY TO STORES
----------------- -------------------------------
Grocery No more than * days from date of
manufacturer packaging on delivery
by Vendor to Store
Frozen No more than * days from date of
manufacturer packaging on delivery
by Vendor to Store
Dairy (excl. yogurt) * days before expiration
Chilled * days before expiration
Yogurt * days before expiration
Eggs - Grade A * days before expiration
Grade AA * days before expiration
Frozen Bakery * days to expiration date
upon delivery
Deli Packaged Meats * days before expiration
Deli Packaged Cheese * days before expiration
Bag in the Box * days to expiration/best
used by date
Deli Salads * days before expiration
Chips * days before expiration
Crackers/Nuts/Natural Snacks * months before expiration
SCHEDULE 17.1(a)
TRADEMARKS
Gulp
Big Gulp
Super Big Gulp
Double Gulp
Slurpee
Super Slurpee
7-Eleven
Potato Bite
Big Swirl
Cafe Select
SCHEDULE 17.1(b)
PRODUCTS BEARING THE MARKS
----------------------------
Gulp Cup
Big Gulp Cup
Super Big Gulp Cup
Big Gulp/Super Big Gulp Lid
7-Eleven Promotional Cups
Slurpee Cup
Super Slurpee Cup
7-Eleven Proprietary Hot Dogs
7-Eleven Hot Dog Containers
7-Eleven Nacho Containers
7-Eleven Napkins
7-Eleven Sugar Packets
7-Eleven Bagel Bags
7-Eleven Roll Bags
7-Eleven Sandwich Labels
7-Eleven Salad Containers
7-Eleven Sandwich Containers
7-Eleven Sandwich Wrap
7-Eleven 5" Square Cinnamon Roll Containers
7-Eleven Proprietary Coffee (Beans and Packets)
7-Eleven Coffee Cups
7-Eleven Coffee Brake Mugs
7-Eleven Bulk Xxxxxxx Canister
7-Eleven Bulk Sugar Canister
7-Eleven Exclusive Blend Coffee
7-Eleven Decanters
Cafe Select Cups
Cafe Select Decanters
Cafe Select Coffee
Espresso Select Cups
Big Swirl Soft Serve Cups
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