DISTRIBUTION SERVICE AGREEMENT
This Distribution Service Agreement (the "Agreement") is made and
entered into and is effective as of the 10th day of October, 1999, by and
between The Pantry, Inc., a Delaware corporation ("Pantry") and Lil' Champ Food
Stores, Inc., a Florida corporation ("Lil' Champ) (Pantry and Lil' Champ are
hereinafter sometimes referred to collectively as the "Company") and XxXXXX
COMPANY, INC., a Texas corporation (hereinafter referred to as "McLane").
RECITALS
WHEREAS, Company is in the business of operating retail convenience
food stores; and
WHEREAS, McLane is in the business of wholesale distribution of food
and non-food/general merchandise products throughout the United States of
America;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, the parties hereto agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
1.1 Company Stores. For purposes of this Agreement, the term "stores"
means the owned or managed convenience food stores of Company. Should Company
build new or otherwise acquire additional stores after the date of this
Agreement, such additional stores shall be included within the definition of
stores.
1.2 Franchisees and Licensees. During the term of this Agreement,
Company agrees to recommend McLane as the supplier to any franchisees and
licensees of Company, if any.
1.3 Purchase of Products and Services. During the term of this
Agreement Company will purchase from XxXxxx, and XxXxxx will sell to Company,
all of Company's requirements of wholesale food and non-food/general merchandise
products customarily supplied by convenience food wholesalers; provided,
however, that the foregoing shall have no effect upon products purchased by
Company from other vendors for whom McLane is not an approved supplier for
existing and future branded fast food operations; and further, provided, that
Company may purchase (i) traditional DSD products from DSD (direct store
delivery) vendors, and (ii) all types of products currently being purchased from
other vendors other than full-line convenience food wholesalers (it being
understood that McLane may at any time propose for additional business). Such
products to be purchased from
* Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed with the Securities and
Exchange Commission and marked "CONFIDENTIAL TREATMENT."
1
McLane shall include those standard convenience food store items, including, but
not limited to, the following (the "Products"):
(a) Groceries, including coffee, tea, cereal, canned meats, condiments, juice,
baby food, canned and dry goods and eggs;
(b) Deli foods, including meats and salads, breakfast foods, nachos and bulk
sausage, xxxxxx, cheese and fish;
(c) Frozen foods, such as fruits, vegetables and juices;
(d) Frozen fast foods, such as burritos, pizza, pizza pieces, frozen sandwiches
and salads;
(e) Candy, snacks and popcorn;
(f) Cigarettes and tobacco products;
(g) Cold packaged meats, lunch meats and cheeses;
(h) Shortening, breading and kitchen supplies;
(i) Private or controlled label soft drinks and beverages;
(j) Post mix products;
(k) Store supply items, i.e., bags, wraps, fast food supplies (including
napkins, individual condiments and cleaners);
(l) Cooler items, i.e., cheese, biscuits, dips, cultured products, butter and
margarine;
(m) Health and beauty aids, hosiery, and film and flash; and,
(n) General merchandise items, including motor oil, other automotive products,
housewares, hardware, electrical supplies, baby supplies, sunglasses, lighters,
toys and pet supplies.
McLane, by and through its divisions and/or subsidiaries, shall supply and
deliver those products described hereinabove which are ordered by Company on a
weekly basis according to those prices outlined in the Billing Plans attached
hereto as Exhibit "A" and made a part hereof. The foregoing described product
categories and pricing plan may be adjusted as market conditions change, and
significant changes in fuel prices may also involve additional charges, all in
accordance with Article V hereof.
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XxXxxx'x right to propose coverage of other vendor/supplier sources would
require a competitive offer with the terms offered by vendors.
1.4 Application of Agreement to Acquired Stores. This Agreement shall
apply to any convenience store chain or group of convenience stores directly or
indirectly acquired by the Company subsequent to the date of this Agreement
which store(s) are not then covered by an existing supply agreement. Should said
acquired store(s) be covered by an existing supply agreement, this Agreement
shall apply upon the expiration of the then existing supply agreement. The
Company is permitted to renegotiate with an existing supplier as the existing
service agreement expires and McLane has the option to match the terms offered
by existing supplier for such acquired stores.
The Company will be paid a service allowance for each acquired store or new
store pursuant to Section 3.2.
1.5 Cost. All merchandise (whether purchased by McLane directly from a
manufacturer or from another source), other than cigarettes, shall be billed at
XxXxxx'x cost, plus applicable percentage markups for each UIN department as set
forth on the Billing Plan, plus any federal, state or local taxes where
prescribed by law (e.g. state tax on tobacco products). This total is then
reduced by promotional deals and allowances granted by manufacturers
specifically to retailers for the time period provided by the manufacturers
during their buy period. For purposes of this Agreement, XxXxxx'x cost shall
mean the manufacturer's current publicly quoted delivered cost based on the
buying bracket in which McLane normally buys that product for that particular
McLane division or subsidiary. Delivered cost includes freight expense from
manufacturers' shipping point to the appropriate McLane division or subsidiary
and provides sort and segregation of that product. Backhaul income generated by
McLane using its own or another authorized carrier, at XxXxxx'x expense, shall
be retained by McLane. This publicly quoted delivered cost will be without
regard to any cash discount or volume rebates allowed by the manufacturer to
McLane. McLane reserves the right to impute cash discounts of up to two percent
(2%) or any portion thereof which is not allowed by the manufacturer to McLane
and to do so based upon the delivered cost. For purposes of this Agreement the
term "manufacturer" means the person or entity that manufactures or causes
others to manufacture goods or products which are marketed under brands or
labels controlled by such person or entity.
1.6 Favored Nations. McLane warrants that the net price of Products
based on a market basket approach, inclusive of all allowances, discounts and
rebates, paid by Company for Products delivered hereunder will be at least equal
to the net price paid by any other customer of McLane based upon any other
respective customers of McLane in the same geographic location and in the same
class of trade and similar volume.
1.7 Obligations on Default/Termination. In the event this Agreement is
terminated as a result of a breach of and/or default in the terms and/or
conditions of this Agreement by
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Company or for any other reason, then Company shall pay McLane all of the
remaining unamortized portion of the Service Allowance described in Section 3.1
herein.
ARTICLE II
SUPPLY SERVICES
2.1 Product Delivery. McLane, by and through its divisions and/or
subsidiaries, shall supply and deliver those Products described hereinabove
which are ordered by Company on a weekly basis except as otherwise agreed to by
the parties. Deliveries will be scheduled seven (7) days per week, twenty-four
(24) hours a day. Stores will not be required to accept delivery during hours
when such stores are closed, where city ordinance prohibits or when a delivery
would create a major business disruption. McLane delivery vehicles will be
allowed to park on either side of a Store permitting XxXxxx'x ramp to touch down
on Store's sidewalk. At no time will entry to Store or gas pumps be blocked by
McLane delivery vehicles. Deliveries should be conducted so as not to
unreasonably hinder parking at stores but delivery vehicles shall be entitled to
park so as to be able to lower the walkboard onto the sidewalk in front of a
store provided space is available when the delivery vehicle arrives.
McLane will hold reviews every four (4) weeks with Company to analyze
XxXxxx'x order quality (i.e, over, short and damaged products) and on-time
deliveries. McLane agrees that it shall maintain a service level (i.e., the
ratio of products invoiced to products ordered) of not less than *%. In the
event McLane fails to maintain a level of order quality of *%, on-time
deliveries of *%, or a service level of at least *% over any eight (8)
consecutive week period, then Company shall notify McLane in writing setting
forth the details of any such failure. If McLane does not achieve the required
levels of order quality, during the immediately succeeding eight (8) week
period, then Company shall have the right to have all deliveries made *, as of
XxXxxx'x next reroute date.
2.2 *
2.3 Other Customers of McLane. This Agreement shall in no way act to
foreclose McLane from supplying and delivering products or services to any other
customer or entity.
2.4 Twice Per Week Delivery. McLane will provide twice weekly delivery
to * percent (*%) of Company's stores. In the event the Company requires twice
weekly delivery to more than * percent (*%), Company will be assessed an
additional $* per week per store service charge. Should Company require twice
weekly delivery in more than * percent (*%) of its Stores, McLane and Company
will negotiate an appropriate fee for those additional deliveries.
* Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
4
ARTICLE III
COMPENSATION
3.1 Service Allowance. McLane agrees to pay to Company a Service
Allowance in the total amount of $* within ten (10) business days after the date
the last party executes this Agreement (the "Service Allowance") subject to
repayment by Company to McLane and to additional Service Allowance payments by
McLane to Company in accordance with Section 3.2 below.
.. The Service Allowance is based on $* per Store per year and shall
be amortized over the term of this Agreement applying the straight-line
method of amortization in accordance with generally accepted accounting
principles. This Service Allowance shall be reduced by the amount of the
unamortized service allowance paid by McLane in accordance with that one
certain Distribution Service Agreement dated March 29, 1998 entered into by
and between the Company and McLane, as the same may have been amended
through the Effective Date (the "Prior Agreement"), which amount the
Company and McLane agree is $*, making the Service Allowance payable to
Company $*.
3.2 Service Allowance Annual Adjustment. On each anniversary date of
this Agreement, the Service Allowance will be adjusted for net Store openings or
closings during the proceeding twelve (12) month period. In order to complete
its Store evaluations, the Company may close, during the term of this Agreement,
up to * (*) Stores with no penalty under this Agreement. The amount to be paid
by McLane to Company for new stores and the amount to be paid to McLane by
Company for closed stores shall be equal to the number of full months from
opening or closing (as applicable) through the end of the term of this Agreement
multiplied by $*. The amount will be paid to Company or paid by Company to
McLane (if closings exceed openings) within thirty (30) days following each
anniversary date of this Agreement. The administration and calculation will be
performed by McLane/Carolina, Inc. and the Vice President of Merchandising of
Company.
3.3 Volume Incentive. Company shall be entitled to a volume incentive
program by which McLane will pay Company a volume rebate of *% on * purchases.
Payment will be made at the conclusion of each 4 week accounting period. The
volume incentive is expected to cause Company to increase purchases from McLane.
3.4 Payment Terms for Products Purchased. Company shall cause payment
to be made by wire transfer to McLane for all Products purchased by the stores
not later than 12:00 Noon, Central Standard Time or, if applicable, Central
Daylight Savings Time, on the * following the week of delivery (for the purpose
of this Section 3.4, each week is considered to end on Friday).
* Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
5
For Illustration Purposes Only: For deliveries made during the week of
October 16, 1998 through October 22, 1999, payment will be due and
payable to McLane no later than 12:00 Noon, Central Standard Time, or,
if applicable, Central Daylight Savings Time, on *.
McLane understands that the Company may be unable to routinely comply
with the terms as stated. Alternately the Company may require an
additional * days beyond stated terms. As compensation for the
extension of terms in addition to a difference in accounting reporting
periods, the Company, upon request of McLane, shall make a deposit of
funds with McLane in an amount of up to * days of sales which
shall be maintained at all times. The deposit will be adjusted as
necessary to reflect increases or decreases in sales volume. Company
agrees to make an initial deposit of $* on or before December
1, 1999.
McLane will review the Company's payment history with McLane and
average outstanding accounts receivable balance on or before May 31,
2000 to determine if the Company's initial deposit should be increased.
Upon any termination of this Agreement or upon any breach of this
Agreement by the Company, McLane shall be entitled to offset the amount
on deposit against any amounts due McLane by the Company.
3.5 Tote and Canister Charges. McLane will charge Company $* for each
net tote left at a Store and credit the Company $* for each net tote picked up
from a Store. This net charge or credit will also apply to CO2 canisters at the
rate of $* per canister. In order not to negatively impact the Company's cash
flow, McLane will determine, from delivery documents for the week prior to the
Effective Date of this Agreement, the number of totes and CO2 canisters in the
Stores as of the Effective Date of this Agreement. The number of totes times $*
per tote and the number of canisters times $* per canister will be set up as a
receivable by McLane and a payable by the Company. At the conclusion of this
Agreement, these accounts will be reconciled by McLane and Company.
ARTICLE IV
TERM AND TERMINATION
4.1 Term. This Agreement shall commence and become effective on the
Effective Date hereof and, unless earlier terminated in accordance with terms of
this Agreement, will continue thereafter for a period of five (5) years from the
Effective Date. Upon termination of this Agreement, McLane and Company will each
fulfill their respective obligations hereunder with respect to all orders that
have been placed by Company and/or delivered by McLane prior to the effective
date of such termination.
* Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
6
4.2 Service Commencement Date. The "Effective Date" means October 10,
1999, unless changed by mutual agreement of the parties.
4.3 Termination. In the event Company fails to make payments for any
Products or services purchased from McLane at such time as payment is required
to be made by this Agreement ("Payment Default"), McLane will have the immediate
right to suspend performance of its obligations under this Agreement until such
time as the Payment Default is cured. In the event of a Payment Default, if such
default is not cured within twenty-four (24) hours after Company receives notice
of default from McLane, then this Agreement shall terminate and all amounts
outstanding to McLane, including, but not limited to, the remaining unamortized
portion of the Service Allowance, will be immediately due and payable. However,
nothing in this Agreement shall constitute a waiver of XxXxxx'x remedies under
applicable law.
Additionally, McLane may suspend performance of its obligations and/or terminate
this Agreement in the event of Insolvency of Pantry or Lil' Champ. In the event
of a termination, the Company shall immediately repay the unamortized portion of
the Service Allowance to McLane.
The Company may terminate this Agreement (i) immediately on written notice
to McLane following a default by McLane with respect to the payment of any
amounts owed to the Company under the terms of this Agreement, which default has
remained uncured for five (5) days after XxXxxx'x receipt of written notice of
such default from Company, (ii) sixty (60) days following Company's written
notice to McLane that McLane is in a breach of its material obligations
hereunder, if such breach has not been cured within such sixty (60) day period,
(iii) immediately following the Insolvency of McLane, (iv) upon sixty (60) days
notice if McLane is found to be in violation of Section 2.1, (v) immediately,
following the violation of Section 6.4 by McLane or (vi) * If the Company
terminates this Agreement for one of the above enumerated reasons, then no fee
or other amount shall be due and payable by the Company to McLane in connection
with such termination.
For purposes of this Agreement,
(A) "Insolvency" shall mean that, with respect to an entity, such
entity shall (i) make a general assignment for the benefit of creditors or an
agent authorized to liquidate its assets, (ii) become the subject of an "order
for relief" within the meaning of the United States Bankruptcy Code, and such
order is not stayed within sixty (60) days, (iii) file a petition in bankruptcy
or for reorganization, or effect a plan or other arrangement with creditors,
(iv) file an answer to a creditor's petition, admitting the material allegations
thereof, for involuntary bankruptcy or for reorganization or to effect a plan or
other arrangement with creditor, (v) apply to a court for the appointment of a
receiver or
* Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
7
custodian for substantially all of its assets or properties, with or without
consent, and such receiver is not discharged with sixty (60) days after
appointment or (vi) adopt a plan of complete liquidation of its assets; and
(B) *
4.4 Auditing. Company's authorized representative shall have the right
during normal business hours upon minimum of fourteen (14) days notice to
examine only those records applicable to Company's specific account in order to
verify cost and the cost plus margin. If such examination discloses an
overstatement of cost or the cost plus margin price, McLane shall reimburse
Company for the overcharge. If such examination discloses an understatement of
cost or the cost plus margin price, Company shall reimburse McLane for the
undercharge. If a pattern of overcharge is established, Company has the right to
terminate this Agreement. In order for a "pattern of overcharge" to be
established, Company must conclusively establish that during any twelve (12)
consecutive month period, the overstatements must be in excess of the
understatements by more than five percent (5%) of the total amount of the
Company's purchases from McLane in such twelve (12) month period.
ARTICLE V
RENEGOTIATION
After the Effective Date, either party hereto shall have the right to
send a notice requesting renegotiation of this Agreement (a "Renegotiation
Notice") in the event of a change in the present circumstances which affect
product or delivery cost or if XxXxxx'x Products and services or prices to
Company are not competitive based on a total market basket approach with respect
to the Products and services to be provided by McLane to Company pursuant to
this Agreement. In addition, any comparison of prices and services shall only be
with a full-line distributor competitor of McLane. This Agreement shall continue
unchanged until the parties agree on any change(s) to be made, unless terminated
pursuant to the following terms and provisions of this Article. If the parties
do not agree to a change or changes within sixty (60) days after a Renegotiation
Notice is sent, the party sending the Renegotiation Notice shall have the right
to terminate this Agreement by sending a Notice of Termination to the other
party within three (3) days after the expiration of such sixty (60) day
renegotiation period, and in such event the termination shall become effective
sixty (60) days after the date of the other party's receipt of the Notice of
Termination. Neither party shall have any right to send more than one
Renegotiation Notice within any calendar year. Upon any termination of this
Agreement pursuant to this Article V, Company shall pay to McLane *% of the
unamortized portion of the Service Allowance
* Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
8
on the effective date of termination. After the fifth (5/th/) full year of this
Agreement the service allowance shall be earned and the so called straight line
amortization method terminated.
ARTICLE VI
MISCELLANEOUS
6.1 Organization, Good Standing, Etc. Company hereby represents and
warrants to McLane that it is a corporation duly organized, validly existing and
in good standing under the laws of the state of its incorporation and has all
requisite power and authority, and all material licenses, permits and
certificates to own and operate its properties and assets and to carry on its
business. Company further represents and warrants that it is duly qualified to
do business and is in good standing as a foreign corporation in each other
jurisdiction in which the ownership or operation of its properties or assets or
the nature of its business requires such qualification.
6.2 Assignment. This Agreement shall be binding upon, and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, but may not be assigned by any party hereto without the prior written
consent of the other party; provided, however, that McLane shall be entitled to
perform its duties and obligations hereunder using one or more of its
subsidiaries or divisions.
6.3 Notices. Any notice, request, consent, waiver or other
communication required or permitted hereunder shall be effective only if it is
in writing and delivered personally, by telecopy or by registered or certified
mail, postage prepaid, 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 Company:
President
Lil' Champ Food Stores, Inc.
P. X. Xxx 00000
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
The Pantry, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
ATTN: President
Telecopier: (000) 000-0000
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With a copy to:
Xxxxxxx Xxxxxx & Co. Incorporated
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
ATTN: Xx. Xxxxx X. Xxxxxx
If to McLane:
President and CEO
XxXxxx Company, Inc.
P. O. Xxx 0000
Xxxxxx, Xxxxx 00000-0000
With a Copy to:
General Counsel
XxXxxx Company, Inc.
P. O. Xxx 0000
Xxxxxx, Xxxxx 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Any such notice, request, consent, waiver or other communication will be deemed
to have been given and received as of the date personally delivered or
telecopied, or three (3) business days after being mailed as aforesaid.
6.4 Confidentiality. McLane and Company each agree that all information
communicated to it by the other, whether before or after the Effective Date,
will be and was received in strict confidence, will be used only for purposes of
this Agreement and that no such information, including without limitation the
provisions of this Agreement, will be disclosed by the recipient party, its
agents or employees without the prior written consent of the other party, except
as may be necessary by reason of legal, accounting or regulatory requirements
beyond the reasonable control of the recipient party. The provision of this
paragraph will survive termination, for any reason, of this Agreement. No party
shall disclose the terms and conditions of this Agreement to any third party.
6.5 Reporting. Company shall furnish McLane its current financial
statements prepared in accordance with generally accepted accounting principles
along with annual audited financial statements, 120 days from Company's fiscal
year end. Such financial statements shall be furnished annually and shall be
addressed to Credit Department, XxXxxx Company, Inc., P. O. Xxx 0000, Xxxxxx,
Xxxxx 00000-0000. The failure of
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Company to furnish such financial statements shall be grounds for termination of
this Agreement.
6.6 Publicity. Neither McLane nor Company will issue or make, or cause
to have issued or made, any media release or public 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.
6.7 Counterparts. 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.
6.8 Severability. If any provision of this Agreement is declared or
found to be illegal, unenforceable or void by a court of competent jurisdiction,
then both parties will be relieved of all obligations arising under such
provision, but only to the extent that such provision is illegal, unenforceable
or void, it being the intent and agreement of the parties that this Agreement
will be deemed amended by modifying such provision to the extent necessary to
make it legal and enforceable. If the remainder of this Agreement is not
affected by such declaration or finding, then each provision not so affected
will be enforced to the extent permitted by law.
6.9 Entire Agreement. Notwithstanding any provision or reference in
this Agreement to the contrary, this Agreement contains the entire understanding
of the parties relating to the subject matter contained herein and supersedes
all prior agreements and understanding, written or oral, relating to the subject
matter hereof including, without limitation, the Prior Agreement; provided,
however, that it is specifically understood and agreed that this Agreement in no
way supersedes, voids, revokes, modifies nor amends that one certain Promissory
Note dated February 1, 1999 in the original principal amount of $* executed by
Company payable to the order of McLane, which Promissory Note remains in full
force and effect and payable in accordance with its terms. This Agreement cannot
be modified, amended or terminated except in writing signed by the party against
whom enforcement is sought. No waiver of any of the provisions of this Agreement
shall be deemed, or shall constitute, the waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party against whom an
assertion of waiver is made.
6.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of North Carolina.
6.11 Authority to Bind. Each person executing this Agreement warrants
that he or she has full and legal authority to execute this Agreement for and on
behalf of the respective corporations and to bind such corporations.
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6.12 Turn of the Century. Company and McLane represent and warrant that
they will use all reasonable efforts to ensure software programs interface and
record, store, process, and present calendar dates correctly, including calendar
dates falling on or after January 1, 2000. A party shall not be liable to any
other party for any breach of this Agreement caused in whole or in part by such
other party's reasonable efforts not being successful.
6.13 Limitation of Liability. Notwithstanding any provision or
reference in this Agreement to the contrary, in no event shall McLane be liable
to Company for any consequential, special, exemplary, incidental or punitive
damages, including lost profits or
business opportunities, or, losses attributable to or arising from overhead
allocations or general and administrative costs and expenses, or for the acts or
omissions of Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as
of the date first written above.
LIL' CHAMP FOOD STORES, INC.
BY: /s/ Xxxxxxx X. Xxxx
------------------------------
Its: Executive Vice President
-----------------------------
THE PANTRY, INC.
BY: /s/ Xxxxxxx X. Xxxx
------------------------------
Its: Vice President
------------------------------
XxXXXX COMPANY, INC.
BY: /s/ Xxxxxxx Xxxxx Xxxxxx
------------------------------
XXXXXXX XXXXX XXXXXX
PRESIDENT AND CEO
XxXXXX COMPANY, INC.
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EXHIBIT "A"
Service Charge $* per store/per week
Label Fee $* Single Sell/$* Full Case/$* GMP
Repack Charge $* per tube
.. Totes at $* and CO2 canisters at $* net adjustments at time of
delivery
.. Fuel Surcharge reserved
.. Deals and allowances passed off invoice
.. Single Sell: Grocery xxxx up plus $* per unit
.. CATCHWEIGHT - *% on cost plus xxxx-up
$* per store average minimum GMP purchase for Full Service GMP program indexed
annually for inflation
$* per store average minimum GMP purchase for Limited Service GMP program
indexed annually for inflation
The stores' product mix will be developed using the currently existing
items in each McLane Division inventory mix, including store use items;
provided, however, that McLane agrees to stock Company's proprietary or other
specialty items. Company agrees to review the stores' product mix each quarter
and replace slow moving items with an item reflecting greater unit sales within
the McLane Division. Slow moving items are defined as those items within each
respective McLane Division which do not meet the following McLane annual
inventory category turn standards which standards may be changed by McLane from
time to time:
Category Annual "Turns"
Cigarettes * turns
Confection * turns
Snacks * turns
Perishable (meats/cheese) * turns
Frozen * turns
Grocery Standard * turns
Retail Beverages * turns
Supplies (cups/lids) * turns
Health & Beauty Care * turns
General Merchandise * turns
* Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
13
If a slow-moving item is a part of XxXxxx'x core item mix, McLane shall
dispose of all such items remaining in the stores after a * day xxxx down and
sell through at the store level, such xxxx down to be absorbed by the store and
not McLane. If the slow-moving item is a proprietary item of Company or other
specialty item stocked by McLane at Company's request, Company shall purchase
from McLane all such slow-moving items within * days after the end of the
quarter in which such item should be replaced at a cost equal to the cost McLane
paid for such item plus all customary and necessary handling costs and expenses.
Additionally, it is understood and agreed that McLane shall make
available at each McLane division one national brand of bottled water and the
best selling regional brand of bottled water at the respective McLane division.
If any store desires a different brand of bottled water, it shall be entitled to
purchase it from another vendor.
* Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
14
EXHIBIT "A"
--------------------------------------------------------------------------------
UIN DEPT UIN DEPARTMENT DESCRIPTION PERCENTAGE XXXX-UP
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
GROCERY
--------------------------------------------------------------------------------
20601 GROCERY *%
---------------------------------------------------------------------------
20602 SOFT/SPORTS DRINKS *%
---------------------------------------------------------------------------
20603 FOUNTAIN SYRUPS FIGAL/BIB *%
---------------------------------------------------------------------------
20604 JUICES *%
---------------------------------------------------------------------------
20605 DRINK POWDER/LIQ. FOUNTAIN *%
---------------------------------------------------------------------------
20606 COOKIES/CRACKERS *%
---------------------------------------------------------------------------
20608 NUTS/SNACKS *%
---------------------------------------------------------------------------
20610 AUTOMOTIVE/MOTOR OIL *%
---------------------------------------------------------------------------
20611 NACHO CHIPS *%
---------------------------------------------------------------------------
20612 COFFEE VENDING *%
---------------------------------------------------------------------------
20614 BULK POPCORN/SUPPLIES *%
---------------------------------------------------------------------------
20618 GROCERY (NORMAL GMP) *%
---------------------------------------------------------------------------
20620 DISPOSABLE LIGHTERS *%
---------------------------------------------------------------------------
20721 CUPS & LIDS *%
---------------------------------------------------------------------------
20722 STORE SUPPLIES/RACKS *%
---------------------------------------------------------------------------
20723 BAGS (PAPER, PLASTIC) *%
---------------------------------------------------------------------------
20925 CANDY FULL CASE *%
---------------------------------------------------------------------------
20926 CANDY/BAG *%
---------------------------------------------------------------------------
21030 CANDY/COUNT GOODS *%
---------------------------------------------------------------------------
21235 SMOKELESS TOBACCO/SNUFF *%
---------------------------------------------------------------------------
00000 XXXXXXX CHEWING/SMOKING *%
---------------------------------------------------------------------------
21339 CIGARETTE PAPERS *%
---------------------------------------------------------------------------
00000 XXXXXXX CIGARS *%
---------------------------------------------------------------------------
21545 FROZEN FOOD RETAIL *%
---------------------------------------------------------------------------
21546 FROZEN FOOD BULK/P.PACK *%
---------------------------------------------------------------------------
21547 DELI MEAT/BULK/PPKFROZEN *%
---------------------------------------------------------------------------
21548 BAKERY FROZEN *%
---------------------------------------------------------------------------
21649 FROZEN FAST FOOD MISC/DESSERTS *%
---------------------------------------------------------------------------
21650 FROZEN SANDWICHES *%
---------------------------------------------------------------------------
* Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
15
EXHIBIT A
--------------------------------------------------------------------------------
UIN DEPT. UIN DEPARTMENT DESCRIPTION PERCENTAGE XXXX-UP
--------------------------------------------------------------------------------
GROCERY
--------------------------------------------------------------------------------
21651 FZN. FAST FOOD/PIZZA/BURRITO *%
----------------------------------------------------------------------------
21652 ICE CREAM (TAKE HOME) *%
----------------------------------------------------------------------------
21653 FROZEN NOVELTIES RETAIL *%
----------------------------------------------------------------------------
21757 REFRIGERATED *%
----------------------------------------------------------------------------
21758 REFRIGERATED JUICE/SHAKES *%
----------------------------------------------------------------------------
21759 PACKAGED CHEESE *%
----------------------------------------------------------------------------
21760 REFRIGERATED BAKERY *%
----------------------------------------------------------------------------
21761 EGGS *%
----------------------------------------------------------------------------
21762 FRESH PRODUCE *%
----------------------------------------------------------------------------
21865 FROZEN BEEF *%
----------------------------------------------------------------------------
21866 PROCESSED MEATS *%
----------------------------------------------------------------------------
21867 WAFER MEATS *%
----------------------------------------------------------------------------
21868 FRESH BOX BEEF *%
----------------------------------------------------------------------------
21869 FRESH POULTRY *%
----------------------------------------------------------------------------
21870 FRESH SEAFOOD *%
----------------------------------------------------------------------------
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 VEGETABLES *%
----------------------------------------------------------------------------
21879 FRESH BULK FRUITS *%
----------------------------------------------------------------------------
21880 PRODUCE PREPACKAGED *%
----------------------------------------------------------------------------
21881 FROZEN SEAFOOD *%
----------------------------------------------------------------------------
*%
----------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
CATEGORY SELF COST PLUS FULL
LIMITED
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Grocery products serviced by the Route
Merchandiser (RMS)
---------------------------------------------------------------------------------------------
All refrigerated & Dry Grocery N/A *% *%
---------------------------------------------------------------------------------------------
Candy & Meat Snacks N/A *% *%
---------------------------------------------------------------------------------------------
Tobacco Products N/A *% *%
---------------------------------------------------------------------------------------------
* Selected portions have been deleted as confidential pursuant to Rule
24b-2. Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
16
EXHIBIT A
--------------------------------------------------------------------------------------------------------
UIN DEPT. UIN DEPARTMENT BILLING PLAN PERCENTAGE XXXX-UPS
G.M.P. DESCRIPTION
--------------------------------------------------------
FULL SERVICE LIMITED SERVICE SELF 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 *% *% *%
--------------------------------------------------------------------------------------------------------
32117 SHOE CARE *% *% *%
--------------------------------------------------------------------------------------------------------
32118 SUNGLASSES *% *% *%
--------------------------------------------------------------------------------------------------------
32120 MISC. GENERAL MERCHDISE *% *% *%
--------------------------------------------------------------------------------------------------------
32122 PET XXXXXXX *% *% *%
--------------------------------------------------------------------------------------------------------
32123 AUTO ACCESSORIES *% *% *%
--------------------------------------------------------------------------------------------------------
32124 HOUSEHOLD *% *% *%
--------------------------------------------------------------------------------------------------------
32125 SEWING ACCESSORIES *% *% *%
--------------------------------------------------------------------------------------------------------
32126 HARDWARE *% *% *%
--------------------------------------------------------------------------------------------------------
32127 ELECTRICAL *% *% *%
--------------------------------------------------------------------------------------------------------
32128O LIGHT BULBS *% *% *%
--------------------------------------------------------------------------------------------------------
32130 FILM/TAPES *% *% *%
--------------------------------------------------------------------------------------------------------
32134 BATTERIES *% *% *%
--------------------------------------------------------------------------------------------------------
32136 SMOKING ACCESSORIES *% *% *%
--------------------------------------------------------------------------------------------------------
32138 DISPOSABLE LIGHTERS *% *% *%
--------------------------------------------------------------------------------------------------------
32140 LOGO LIGHTERS *% *% *%
--------------------------------------------------------------------------------------------------------
32142 ICE CHESTS *% *% *%
--------------------------------------------------------------------------------------------------------
32144 STORE SUPPLIES *% *% *%
--------------------------------------------------------------------------------------------------------
32146 CANDY/GMP *% *% *%
--------------------------------------------------------------------------------------------------------
32148 MEAT SNACKS *% *% *%
--------------------------------------------------------------------------------------------------------
32149 NUTS/SNACKS *% *% *%
--------------------------------------------------------------------------------------------------------
32150 SMOKELESS *% *% *%
--------------------------------------------------------------------------------------------------------
32151 CHEWING/ SMOKING *% *% *%
--------------------------------------------------------------------------------------------------------
00000 XXXXXX *% *% *%
--------------------------------------------------------------------------------------------------------
32154 GMP/GRO PRODUCT MISC. *% *% *%
--------------------------------------------------------------------------------------------------------
*Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
17
EXHIBIT A
CIGARETTES
All cigarettes shall be billed at the then current manufacturer's list price
plus $* per carton plus all applicable taxes and fair trade xxxx-ups (current
invoice cost to the Company is set forth in the table below). The per carton
rebates set forth below shall be paid to the Company within * days after
the end of each McLane accounting period.
--------------------------------------------------------------------------------
STATE TYPE INVOICE REBATE NET PRICE
COST
--------------------------------------------------------------------------------
(2)FLORIDA Branded $* $* $*
--------------------------------------------------------------------------------
Generic $* $* $*
--------------------------------------------------------------------------------
(2)Private Label $* $* $*
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(2)GEORGIA Branded $* $* $*
--------------------------------------------------------------------------------
Generic $* $* $*
--------------------------------------------------------------------------------
(2)Private Label $* $* $*
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
KENTUCKY Branded $* $* $*
--------------------------------------------------------------------------------
Generic $* $* $*
--------------------------------------------------------------------------------
(2)Private Label $* $* $*
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NORTH CAROLINA Branded $* $* $*
--------------------------------------------------------------------------------
Generic $* $* $*
--------------------------------------------------------------------------------
(2)Private Label $* $* $*
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SOUTH CAROLINA Branded $* $* $*
--------------------------------------------------------------------------------
Generic $* $* $*
--------------------------------------------------------------------------------
(2)Private Label $* $* $*
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(3)INDIANA Branded $* $* $*
--------------------------------------------------------------------------------
Generic $* $* $*
--------------------------------------------------------------------------------
(2)Private Label $* $* $*
--------------------------------------------------------------------------------
*Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
18
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TENNESSEE Branded $* $* $*
--------------------------------------------------------------------------------
Generic $* $* $*
--------------------------------------------------------------------------------
(2)Private Label $* $* $*
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(6) Branded $* $* $*
VIRGINIA
--------------------------------------------------------------------------------
Generic $* $* $*
--------------------------------------------------------------------------------
(2)Private Label $* $* $*
--------------------------------------------------------------------------------
(1) Cost subject to change due to, among other things, manufacturer price
increase and increases in federal, state or local excise taxes. A
reduction in the discount percentage to XxXxxx Company would result in
lower carton rebate. Local taxes not included in invoice cost shown.
(2) All retail off-invoice allowances on your Private Label passed to The
Pantry & Lil' Champ, Inc.
(3) Designates Fair Trade State. Pricing established by state law. Rebates
subject to proof of competitive offer by competition.
(4) McLane shall offer Company one-half of the price protection provided to
McLane by the manufacturer on future increases in the price of
cigarettes.
(5) *
(6) Virginia Prices do not include municipal taxes and will be added to these
prices, where applicable.
*Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
19
FIRST AMENDMENT TO DISTRIBUTION
SERVICE AGREEMENT
THIS FIRST AMENDMENT TO DISTRIBUTION SERVICE AGREEMENT (the
"Amendment") is made and entered into effective as of the 28th day of June,
2001, by and between The Pantry, Inc., a Delaware corporation ("Pantry"), Lil'
Champ Food Stores, Inc., a Florida corporation ("Lil' Champ") (Pantry and Lil'
Champ being hereinafter sometimes referred to collectively as the "Company") and
XxXxxx Company, Inc., a Texas corporation ("McLane").
RECITALS
WHEREAS, the Company and McLane entered into a Distribution Service
Agreement effective as of October 10, 1999 (the "Service Agreement"); and
WHEREAS, the Company and McLane desire to amend the Service Agreement;
NOW, THEREFORE, for and in consideration of the promises, covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and McLane
do hereby agree as follows:
1. Amendment of Section 3.4. Section 3.4 of the Service Agreement is
hereby amended to read in its entirety as follows:
3.4 Payment Terms for Products Purchased. Company shall cause
payment to be made by wire transfer or McLane initiated ACH
to McLane for all Products purchased by the stores not later
than 12:00 Noon, Central Standard Time or, if applicable,
Central Daylight Savings Time, * days from statement date, it
being understood and agreed that statement date will be each
Friday for all Products delivered from the immediately
preceding Saturday through such Friday statement date. Such
payments shall be in the full amount of the statement to
which they relate. Any amounts not paid when due shall bear
interest at the lesser of (i) eighteen percent(18%) per
annum, or (ii) the maximum rate allowed by applicable law.
For Illustration Purposes Only. For deliveries made during the week
of Saturday, July 14, 2001 through Friday, July 20, 2001, payment
will be due McLane nor later than 12:00 Noon, Central Standard
Time, or, if applicable, Central Daylight Savings Time, on *.
2. Applicability of Amendment to Section 3.4. The amendment to Section
3.4 of the Service Agreement set forth in Section 1 of this
Amendment
*Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
shall apply to deliveries for the week of Saturday, July 14,
2001 through Friday, July 20, 2001, and all deliveries
thereafter during the term of the Service Agreement (i.e. the
first payment to McLane by the Company pursuant to the
amendment to Section 3.4 of the Service Agreement set forth in
Section 1 of this Amendment shall be due and payable no later
than 12:00 Noon, Central Standard time or, if applicable,
Central Daylight Savings Time, on *.
3. Return of Deposit. Provided the Company is not in default of
any of the terms and conditions of the Service Agreement,
including without limitation, the payment that will be due and
payable on * pursuant to the amendment to Section 3.4 of the
Service Agreement set forth in Section 1 of this Amendment,
in addition to any past due balances as a result of the
change in fiscal payment week (i.e. invoices dated July 12th
and 13th), McLane will refund to the Company, on or before
August 10, 2001, the amount of money the Company currently
has on deposit with McLane pursuant to Section 3.4 of the
Service Agreement, which the Company and McLane both
acknowledge and agree is * as of the date of this Amendment.
4. No other Modifications. Except as specifically modified by
this Amendment, all terms and conditions of the Service
Agreement shall remain fully applicable and in full force and
effect.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date first written above.
LIL' CHAMP FOOD STORES, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Printed Name: /s/ Xxxxx X. Xxxxxx
--------------------
Title: Chief Executive Officer
---------------------------
THE PANTRY, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Printed Name: /s/ Xxxxx X. Xxxxxx
--------------------
Title: Chief Executive Officer
---------------------------
XxXXXX COMPANY, INC.
By: /s/ Xxxxx XxXxxxx
------------------------------
Xxxxx XxXxxxx
President, Grocery Operations
* Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
SECOND AMENDMENT TO DISTRIBUTION SERVICE AGREEMENT
THIS SECOND AMENDMENT TO DISTRIBUTION SERVICE AGREEMENT (the
"Amendment") is made and entered into effective as of the 8th day of September,
2001, by and between The Pantry, Inc., a Delaware corporation ("Pantry"), Lil'
Champ Food Stores, Inc., a Florida corporation ("Lil Champ") (Pantry and Lil'
Champ being hereinafter sometimes referred to collectively as the "Company") and
XxXxxx Company, Inc., a Texas corporation ("McLane").
RECITALS
WHEREAS, the Company and McLane entered into a Distribution Service
Agreement effective as of October 10, 1999 (the "Service Agreement"); and
WHEREAS, the Company and McLane entered into a First Amendment to the
Service Agreement effective as of June 28, 2001 (the "First Amendment"); and
WHEREAS, the Company and McLane desire to further amend the Service
Agreement;
NOW, THEREFORE, for and in consideration of the promises, covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and McLane
do hereby agree as follows:
1. Amendment of Section 6.4. The following sentence is hereby added
to Section 6.4 of the Service Agreement:
Anything to the contrary in this Agreement notwithstanding,
McLane is hereby expressly authorized to disclose to
manufacturers of cigarette Products (or to such manufacturers'
agents or representatives), the volume of purchases of such
manufacturer's cigarette Products by the Company from McLane
pursuant to this Agreement and all other information related
thereto as McLane desires to so disclose.
2. Additional Rebate. The Company shall be entitled to an additional
rebate of $* for each carton of cigarettes purchased by the
Company from McLane after September 8th, 2001 for stores located
in non-fair trade states.
3. No Other Modifications. Except as specifically modified by this
Amendment, all terms and conditions of the Service Agreement, as
amended by the First Amendment, shall remain fully applicable and
in full force and effect.
* Selected portions have been deleted as confidential pursuant to Rule 24b-2.
Complete copies of the entire exhibit have been filed separately with the
Securities and Exchange Commission and marked "CONFIDENTIAL TREATMENT."
IN WITNESS WHEREOF, the parties have executed this Amendment effective
as of the date first written above.
LIL' CHAMP FOOD STORES, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------
Printed Name: Xxxxxxx X. Xxxx
----------------------
Title: Executive Vice President
-----------------------------
THE PANTRY, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------
Printed Name: Xxxxxxx X. Xxxx
----------------------
Title: Vice President
-----------------------------
XxXXXX COMPANY, INC.
By: /s/ Xxxxx XxXxxxx
-------------------------------
Xxxxx XxXxxxx
President Grocery Distribution
