13
PROPOSAL
For
[GRAPHIC OMITTED]
RUBY TUESDAY, INC.
July 25, 2001
by
PFG CUSTOMIZED DISTRIBUTION
PFG CUSTOMIZED DISTRIBUTION
PROPOSAL FOR
RUBY TUESDAY, INC.
PRICING
1. This proposal includes servicing Ruby Tuesday, Inc (RTI), participating RTI
Franchisees, and Specialty Restaurant Group, LLC (SRG) collectively described
herein as "Customer". SRG will be required to execute a copy of this agreement.
After RTI's contractual obligations to service SRG is concluded, PFG agrees to
seriously consider continuing it's relationship with XXX.
2. PFG agrees to supply Customer's requirements of food and non-food items
including produce, disposables, smallwares, and chemicals ordered by Customer in
the operation of the restaurants listed on Exhibit "B" and "C". Customer agrees
to purchase such ordered items pursuant to the terms hereof. This
proposal/agreement does not create an exclusive relationship between or among
the parties.
3. PFG will invoice customer at prices supplied to PFG by RTI from time to time.
RTI will specify the order or delivery day the price is to take effect.
4. Customer guarantees PFG a raw gross margin of $142.15 per ideal delivery plus
$1.01 per piece delivered plus or minus the performance measure adjustments
outlined on Exhibit "D". PFG will submit a report detailing the actual sales and
gross margin and any amount due PFG under the gross margin guarantee within four
(4) weeks after the end of each PFG accounting period. Ideal delivery is defined
as the regularly scheduled deliveries per week per restaurant. PFG and RTI agree
to review our business relationship, the delivery fee, and the per piece fee in
March of each year with the agreed upon changes to take effect July 1st of each
year.
5. Costs will be based on the actual landed product cost at each PFG Customized
Distribution center. The definition of "cost" is our actual FOB invoice cost
plus any applicable freight, not to exceed the standard rate applicable for that
route, less manufacturer's volume discounts, off-invoice promotions, and
billback promotions. Cash discounts, buy-in incentives, rebates, and growth
programs offered by manufacturers to distributors will accrue to the benefit of
PFG Customized Distribution.
6. Our actual costs will reflect the lowest possible buy bracket within shelf
life limitations and a maximum 28 day inventory on hand. To achieve the lowest
possible buy bracket for customer, inbound shipments for customer will be
combined with inbound shipments for all other customers served by each
distribution center. Once the lowest possible buy bracket is achieved, PFG will
carry less than a 28 day inventory while maintaining sufficient safety stock.
7. PFG will work with RTI to drive down cost through inbound freight and
purchasing synergies. The dollar savings suggested by PFG and accepted by RTI
will be shared by RTI , SRG, Ruby Tuesday Franchisees, and PFG. The savings will
be calculated using customer's current actual or projected future cost in effect
at the time PFG initiates a savings suggestion. The dollar savings will be
agreed to and signed off on by both parties. The shared savings will be
calculated on a program to date basis and disbursed to each party within 30 days
after the end of each RTI fiscal quarter.
RTI - PFG
SHARED SAVINGS PROGRAM
RTI PFG
1ST $100,000 90% 10%
$100,001 - $200,000 85% 15%
$200,001 - $300,000 80% 20%
$300,001 & Above 75% 25%
Our purchasing department will continually make suggestions to lower your
product costs. A formal once a year review of your program will be performed by
our category managers and our recommendations will be presented to you.
8. PFG will assist RTI to continue, enhance, and track existing and new rebates
offered by manufacturers to restaurant operators.
9. Upon the signature of this agreement, a quick review of customer's product
requirements will be performed with the mutual goal of reducing the number of
items stocked in PFG's warehouses but in all cases maintaining RTI's high
quality standards. RTI will authorize all product changes and substitutions.
10. Backhaul charges built into our product costs will be the lowest competitive
freight rate offered by the manufacturer for the agreed upon shipping bracket.
If customer's supplier contract is on a delivered price basis, customer
authorizes PFG to negotiate appropriate backhaul allowances with the supplier.
11. A fee of .05 cents per gross weight pound, will be added to the cost of
items transferred via inter-company shuttle.
12. Customer acknowledges PFG requires inbound carriers to offload and palletize
each item on the shipment according to PFG's warehouse tie and high.
Alternatively PFG offers the carrier a lumping service. The current lumping fees
charged carriers are detailed on Exhibit "A" and may be changed from time to
time by PFG.
13. To recover our rail siding capital investment and unloading labor costs, the
cost of products received by rail will include a charge of $.15 per case for
items where gross weight is less than 35 pounds and $.20 per case if the gross
weight is 35 pounds or more.
14. PFG Customized Distribution agrees to inventory all items on the RTI
approved product list, and Customer agrees to purchase each lot of product
within no more than 30 days from the date the product is received at PFG's
distribution center. In the event SRG, a RTI franchisee partner, or an RTI
region wants to use an item which is not on the RTI approved product list a
minimum movement of 50 cases per month per PFG distribution center will be
required to carry the item in our inventory
15. PFG will supply RTI with a Dead & Slow Moving Inventory Report on a monthly
basis totaled by item, by distribution center.
16. Customer will be responsible for the disposition of dead and slow moving
inventory in excess of a 28 day supply and for short shelf life items with one
third or less of it's total shelf life remaining (Dead Inventory). PFG shall
notify RTI in writing when one third or more of a lot's shelf life is remaining
and RTI shall instruct PFG of the final disposition of the short shelf life lot
before it's shelf life has expired.
If dead inventory is not distributed to Customer before it's shelf life expires
or within twenty-eight (28) days after being reported on the Dead and Slow
Moving Inventory Report. The dead inventory will be either; (a) returned to
vendor with the vendor's written consent; (b) sold through channels other than
to Customer; (c) donated in the name of the Customer with PFG providing Customer
with original documents confirming the donation, or (d) dumped.
Upon disposition of dead inventory, Customer will be responsible for reimbursing
PFG for PFG's actual landed product cost; plus the guaranteed piece fee; plus
freight incurred delivering the dead inventory to the vendor, third party,
donee, or dump; plus restocking fees if any; plus disposal fees if any; and less
any proceeds or credits obtained by PFG in returning product to vendors or
selling product through channels other than to Customer. All reasonable efforts
will be made to require vendors, third parties, and donation recipients to pick
the dead inventory up at PFG's warehouse.
17. Market conditions will, from time to time, necessitate PFG Customized
Distribution taking an extended inventory position on certain products to assure
continuity of supply to customer. This could be precipitated by drought,
excessive rain or other natural causes. Should this situation occur, and with
customer `s prior written agreement, we will add a 2.5% per month carrying
charge to the price of those items affected by such natural causes after they
have been in stock for a period of 30 days. If product must be put into outside
storage, then customer will in addition pay the actual storage costs and freight
from the outside storage to our distribution centers.
18. The delivery fee is based on a base diesel fuel cost of $1.50 per gallon.
The "Fuel Collar" will be from $1.40 to $1.60 per gallon. For each PFG
accounting period, PFG will calculate it's actual fuel cost per gallon and
submit same to RTI by the 30th of the following month. PFG will debit or credit
(as applicable) customer for any difference over or under the fuel cost collar
of $1.40 to $1.60 per gallon, based on the pieces shipped to customer pursuant
to this agreement from each PFG distribution center as a percent of the total
pieces shipped from the distribution center.
19. Our pricing includes a 3 cents per piece WOW University accrual fund.
Dispersement from this fund will be as directed by RTI. An accounting of this
fund will be provided to RTI within 30 days after the close of each PFG
financial month end. Disbursement from this account to RTI will occur annually
within 30 days after the close of each RTI fiscal year, or within thirty (30)
days after termination of this agreement.
20. PFG agrees to submit to periodic on site price verification by RTI of
invoices, bills of lading and other documents that substantiate the costs
charged to customer. RTI will provide PFG thirty (30) days advance notice of
price verification in writing. Price verification will be limited to: (a) one
hundred (100) items per verification, (b) a time period of the previous ninety
(90) days, and (c) four (4) verifications per year, unless a specific item is in
question. PFG agrees to refund customer the amount of any net overcharges
verified by price verification which were sustained by customer through the
twelve (12) months preceding the price verification, and customer agrees to
reimburse PFG the net amounts of any undercharges verified by price verification
which were sustained by PFG through the twelve (12) months preceding the price
verification.
Only PFG and RTI will participate in the price verification. RTI guarantees the
confidentiality of information provided by PFG. Disclosure of information will
be restricted to senior management of RTI, participating RTI franchisees, and
SRG.
21. In the event PFG disputes any specific amount due customer as a result of
price verification, PFG shall notify RTI within ten (10) days of the specific
amount disputed and the reason for such dispute. Any amounts that are not
disputed shall be paid to customer within thirty (30) days of the settlement of
such dispute between RTI and PFG.
22. In the event of any such dispute, PFG shall verify RTI's findings at PFG's
sole expense by a verification of a Certified Public Accountant mutually
agreeable to RTI and PFG. PFG and RTI will accept the findings of that
verification.
SERVICE
1. Customer will initially be serviced by PFG's Gainesville, Florida customized
distribution center in the areas shown and defined on Exhibit "B". In November
2001 or January 2002 PFG's Tennessee distribution center will commence service
to the areas shown and defined on Exhibit "C". Other distribution centers will
be added as determined by PFG and RTI.
2. Customer will be the personal responsibility of each distribution center's
general manager, assisted by a branch multi-unit account manager. An overall PFG
multi-unit account executive will also be assigned to the RTI account.
3. Order inventory guides containing current pricing will be provided to RTI's
corporate office and each unit via PFG connection.
4. Orders may be placed and confirmed electronically on an agreed upon skip
working day call schedule. PFG Customized Distribution will provide our order
entry and inventory management software at no charge to customer. The cost of
personal computers and modems at each restaurant will be customer's
responsibility.
5. PFG's customer service department will call restaurants unable to order
electronically for their order according to an agreed upon skip working day call
schedule. It is imperative that the unit has it's order ready at the agreed upon
time, and in any event no later than 3 p.m. local branch time.
6. A minimum of one primary and one back-up customer service representative at
each distribution center will be assigned to customer to review edits of the
orders and to resolve any problems in advance of the delivery. Limited add-on
orders can be called in up to 9 a.m. local branch time on the day the truck is
being loaded.
7. When orders are received on a skip working day basis PFG Customized
Distribution agrees to maintain a 99.5% order fill rate. Out of stock and short
items will be delivered on the next available truck going to the store's area
and no later than the next regularly scheduled delivery day.
When measuring order fill, service failures to be excluded from the calculation
are: a) An act or omission on the part of customer or the restaurants, b) An act
or omission on the part of customer's supplier, c) Recovery shipments received
by customer the same day as the scheduled delivery, or d) Force majeure.
8. Customer orders will be delivered on temperature controlled trucks with
separate temperature controlled freezer, cooler, and dry grocery compartments.
9. Deliveries will be made twice per week Monday through Saturday between 7 a.m.
to off the lot by 11:00 a.m. and from 2:00 p.m. to off the lot by 5:30 p.m. on a
mutually agreeable delivery schedule. By mutual agreement locations may take a
delivery as early as 6 a.m. and we may request a few remote locations to take
deliveries between 7 p.m. and 10 p.m. Deliveries will be made within, plus or
minus one hour of the scheduled delivery time. Regular and holiday week delivery
schedules will be agreed upon at least 2 weeks before the changes are put into
effect. By mutual agreement, key drop deliveries may become necessary.
10. Our driver will place the merchandise in the proper temperature area of the
store. The unit manager on duty will check the merchandise off at the entrance
to the restaurant and sign each page of the invoice before the driver leaves the
store. Each piece's individual catch weight will be listed on the delivery
invoice.
11. Restaurants may from time to time request that PFG make special deliveries
outside of the normal ordering and delivery schedule to compensate for
restaurant business surges or ordering mistakes. The restaurant shall be
responsible to pay PFG the regular per piece fee plus: a) The regular delivery
fee plus $1.50 per out of route mile if sent to the restaurant by a PFG delivery
vehicle, b) PFG's actual shipping cost if shipped via a third party.
12. Restaurants shall be responsible for a restocking fee of $3.50 per case for
products returned to the distribution center due to an error by the restaurant
and a late fee of $10.00 per order for any orders accepted by a distribution
center after the established add-on order cut off time. Restaurants where the
managers are unable to place their orders via PFG Connection will be charged a
telephone order service fee of $10.00. These fees are set forth as a tool to
keep customer's and PFG's distribution cost down. The above fees will only be
charged with the approval of RTI's Director of Purchasing or Director of
Distribution.
13. Monthly reports on product usage will be provided to RTI's corporate office,
in RTI's required data file format. Our capable in-house programming staff using
our modern IBM AS400 computers can provide you with almost any report you might
request.
QUALITY
1. It is understood that PFG is not the manufacturer of any of the products. PFG
will assign to customer all assignable rights against manufacturers and
suppliers of goods supplied to customer by PFG under warranties and
indemnification's PFG receives from such manufacturers and suppliers. PFG agrees
to cooperate with customer in the enforcement of any such warranties or
indemnification's against manufacturers or suppliers.
2. To the best of PFG's knowledge each product supplied hereunder shall, at the
time title passes to customer: (a) not be adulterated or misbranded within the
definition of the Food, Drug and Cosmetic Act, as amended, or other applicable
federal or state law, or otherwise spoiled, adulterated or out-of-code and (b)
comply in all respects with any and all other laws, rules and regulations
similar thereto or applicable to the supply of products and services by PFG to
the restaurants.
MERCHANDISE CREDITS AND RETURNS
1. Credits due because of shortages, damaged goods or incorrect merchandise if
any at the time of delivery, must be noted on all copies of the PFG Customized
Distribution invoice and the invoice total changed and initialed by the
restaurant manager and our driver. Credit memos will be issued internally at PFG
Customized Distribution's distribution centers.
2. In the event of concealed damage or defective product, the PFG Customer
Service Representative should be notified and the following information
provided: a) Item code number and description b) Quantity c) Invoice price d)
Invoice number and date e) Nature of problem
An on the spot credit memo will be sent with the next delivery and posted to
your account when the product is returned to our warehouse.
3. PFG will notify customer's quality assurance department of singularly serious
or recurring issues.
CREDIT APPROVAL AND PAYMENT TERMS
1. PFG Customized Distribution will require a separate credit application for
each legal entity to be sold under this agreement, and reserves the right to
approve or disapprove open payment terms for each individual legal entity.
2. Payment for each delivery is to be received in PFG's bank no later than 1:00
p.m. eastern standard time, 14 days after the date of delivery. Payments are to
be made by ACH wire transfer to the account of Performance Food Group Company,
ABA# 000000000, Account # 205000424870, Reference: PFG Customized/RTI, First
Union Bank, Richmond, VA.
3. Within 15 days following receipt of a request from PFG, RTI and each legal
entity to be sold hereunder shall furnish PFG with its quarterly financial
statement for its most recently completed fiscal quarter, certified as accurate
by an appropriate officer of RTI or such legal entity.
4. PFG will supply RTI's purchasing department every thirty (30) days with
copies of all skipped or short paid invoices due PFG from Customer. If copies
are not furnished within ninety (90) days from date of delivery Customer will
not be responsible for paying for the merchandise.
PROGRAM IMPLEMENTATION
PFG Customized Distribution represents and warrants it has had considerable
experience implementing programs of this nature. We are fully aware of the
importance of proper planning, inventory build up, scheduling and coordination
of all facets necessary for a smooth and successful transition. In view of the
above, we ask that the roll-out schedule begin no sooner than 75 days after
notification of your decision to accept this proposal.
PFG Customized Distribution will buy your present distributor's inventory at
PFG's delivered cost. We will be responsible for picking up the product and
delivering it to our warehouse at our expense. We prefer to pick up initial
stocking quantities the present distributor is long on 3 weeks before our
delivery starts, and to clean out the distributor's remaining inventory within 3
weeks after our delivery starts. PFG Customized Distribution will pick up from
your former distributor only those items and quantities which your purchasing
department approves including specifying the cost to be paid.
COMMITMENTS FROM CUSTOMER
This type of program is commonly referred to as a "Prime Vendor Contract". The
term, in itself, indicates a mutual agreement between the customer and the
distributor to make certain commitments to each other. We look to customer to
agree to the following commitments:
1. Average Order Size Customer agrees to maintain a system wide average order
size of at least 150 pieces two times per week per restaurant, an average piece
weight of 24.5 pounds, and an average piece cube of 1.0 cubic feet, and an
average sell price not to exceed $29.00. Under-performing restaurants will be
reviewed by the management of each company on a monthly basis.
2. Equal Deliveries Customer agrees to split its deliveries into, generally, 2
equal deliveries per restaurant per week. PFG will provide customer with a
monthly pieces by delivery report. A 48% - 52% split is acceptable. Restaurants
falling outside this range will be reviewed on a monthly basis by PFG and
customer.
3. Cost Containment The profit margin of a "Prime Vendor" contract dictates that
the distributor operate under a sound cost containment policy in relation to
inventory turns, orders placed at the agreed upon times, cooperation in quickly
receiving the merchandise, and payment according to the agreed upon payment
terms.
This proposal has been customized to meet customer's requirements while
minimizing each of these distributor cost areas.
MISCELLANEOUS TERMS
1. BREACH. Upon the occurrence of a Breach (as defined below), the non-breaching
party may terminate at its option upon written notice of termination to the
breaching party, and in addition, may seek any and all remedies available at law
or in equity in connection with the Breach. A breach is defined as:
(a) RTI's (or SRG or an RTI Franchisee with respect to a breach by SRG or such
RTI Franchisee) or PFG's, as the case may be, failure to perform any material
term, covenant or agreement contained herein or in any document or instrument
delivered pursuant to or in connection with this Agreement, and such failure
continues for thirty (30) days after written notice of such failure has been
delivered by the non-breaching party;
(b) RTI's (SRG's or an RTI Franchisee's) or PFG's application for or consent
towards the appointment of a receiver, custodian, trustee, or liquidator;
inability to pay its debts as such debts become due; general assignment for the
benefit of its creditors; commencement of a voluntary case under the United
States Bankruptcy Code; filing a petition seeking to take advantage of any other
law of any jurisdiction relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or readjustment of debts; or commencement by any
person against such party of a proceeding commenced for any similar relief under
any law of any jurisdiction relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or readjustment of debts, and such proceeding shall
continue un-dismissed for a period of thirty (30) days;
(c) RTI's (SRG's or an RTI Franchisee's) or PFG's assignment of its rights and
obligations under this Agreement, in whole or in part, to another entity (other
than an affiliate of RTI or PFG) without prior written consent of the other,
which consent shall not be unreasonably withheld or delayed; or
(d) RTI's (SRG's or an RTI Franchisee's) or PFG's failure to comply with the
payment terms hereof if not cured within fifteen (15) days following written
notice.
(e) Notwithstanding the foregoing, PFG acknowledges that RTI Franchisees and SRG
are each independent contractors and, as such, RTI is not liable to PFG for or
with respect to any of SRG's or such Franchisee's purchases or performance
hereunder. In the event of a Breach by SRG or such Franchisee of any of its
obligations hereunder, including payment, after notice as required pursuant
hereto, PFG may bar SRG or such Franchisee from continued participation
hereunder; provided, however, that same shall not constitute a Breach by RTI, or
any other Franchisee or SRG (if SRG is not the primary breaching party).
2. ASSIGNMENT. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. This agreement may not be assigned by either
party without the prior written consent of the other, which consent shall not be
unreasonably withheld or delayed.
3. RISK OF LOSS. Title to all goods shall pass upon delivery to the receiving
unit and acceptance by authorized signature, subject to rejection of certain
items as provided herein. PFG shall bear all risk of loss, damage or destruction
until title passes.
4. CONFIDENTIALITY. Neither this proposal nor any discussion, negotiation, or
agreement entered into pursuant to it shall be used by PFG, RTI, participating
RTI franchise partner, or SRG, in publicity or promotional material, nor shall
any party hereto disclose any information regarding this proposal nor any
discussion, negotiation, or agreement entered into pursuant to it without the
express written consent of the other parties. This provision shall not preclude
PFG or RTI from making public statements that RTI is a customer of PFG.
5. CONSTRUCTION/APPLICABLE LAW. This Agreement shall be deemed to have been made
at the Ruby Tuesday, Inc. Restaurant Support Center located at 000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, and shall be construed in accordance with
the laws of the State of Tennessee.
6. NOTICES. All notices and other communications provided for hereunder shall be
in writing and shall be deemed to have been duly given if delivered personally,
sent by telegram or facsimile transmission, or mailed, postage prepaid,
registered or certified mail, to the parties at their principal executive
offices or at such other addresses as the parties hereto may designate from time
to time in writing. Notices to RTI shall be directed to the attention of Xxx
Xxxxxxx. Notices to PFG shall be directed to the attention of Xxxx Xxxxxx, Vice
President of Business Development.
7. SRG and each RTI Franchisee purchasing hereunder shall receive all of the
benefits and rights of RTI hereunder, including pricing, incentives, freight
charges, and service level. All of SRG's and RTI Franchisees' purchases
hereunder shall be aggregated with RTI purchases for pricing, incentive and
other similar purposes.
8. The terms of this proposal will remain firm for thirty (30) days.
9. This agreement may be amended or modified only by a written agreement
executed by each of the parties hereto.
10. Upon acceptance, this agreement will be effective until terminated as
provided for in paragraph 1 of the "MISCELLANEOUS TERMS" or until terminated by
either Ruby Tuesday, Inc. or PFG Customized Distribution upon one hundred eighty
(180) days written notice to the other party. In the event of termination, Ruby
Tuesday, Inc. will be responsible for the purchase and removal of all products
from each distribution center within thirty (30) days.
[GRAPHIC OMITTED] This agreement has been accepted and executed by:
RUBY TUESDAY, INC. XXXXXXX X. XXXXXX COMPANY, INC.
DBA PFG CUSTOMIZED DISTRIBUTION
BY: /s/Xxxxxx X. Xxxxx XXX BY: /s/ Xxxx X. Xxxxxx
NAME: Xxxxxx X. Xxxxx XXX NAME: XXXX X. XXXXXX
TITLE: Chairman and TITLE: Vice President Business Development
Chief Executive Officer
DATE: July 31, 2001 DATE: August 8, 2001
[GRAPHIC OMITTED]
SPECIALTY RESTAURANT GROUP, LLC
BY: /s/_Xxxxx X. Xxxxxxxxxx
NAME: Xxxxx X. Xxxxxxxxxx
TITLE: President/CEO
DATE: August 8, 2001
