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EXHIBIT 00.xx
DISTRIBUTION SERVICE AGREEMENT
THIS DISTRIBUTION SERVICE AGREEMENT ("AGREEMENT") is made as of the 30th
day of April 1997, by and between Chi-Chi's, Inc., a Delaware corporation,
(hereinafter "CC") and Sysco Corporation, a Delaware Corporation and certain of
its operating subsidiaries and/or divisions or units listed in Attachment One
attached hereto (collectively, "SYSCO"). The SYSCO operating subsidiaries,
divisions and/or units listed on Attachment One shall be referred to herein
collectively as "OPERATING COMPANIES" and individually as "OPERATING COMPANY",
and the facilities of the operating company The SYGMA Network of Ohio, Inc.
("SYGMA") are referred to herein as "DISTRIBUTION CENTERS."
RECITALS
A. CC and its subsidiaries and affiliated entities are the owners,
licensors, operators and managers of Chi-Chi's Mexican
Restaurants (the "Restaurants"). A current list of the
Restaurants is attached as Exhibit A.
B. CC desires to designate SYSCO as its primary distributor for
certain products to all of the Restaurants within the geographic
service areas (the "SERVICE AREA") designated by the shaded areas
in Exhibit B.
C. SYSCO will carry and distribute certain products, as determined
by CC, pursuant to the terms of this Agreement.
In consideration of the above recitals and the mutual covenants and agreements
set forth herein, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
I. BASIC AGREEMENT
CC will purchase from SYSCO and SYSCO will purchase, warehouse and
distribute for and to sell to CC, substantially all of the needs of the
Restaurants for all products (the "Products") in the following
categories: dairy, frozen and refrigerated items, poultry, meat,
seafood, canned and dry goods, beverages, frozen bakery, soft drink
syrup products, paper and disposables, janitorial supplies to include
cleaning chemicals and other non-food products requiring frequent
replacement, and glassware and china. An initial product listing is
attached as Exhibit C. As CC's primary distributor, SYSCO will be
entitled to substantially all of the product requirements of the
Restaurants. SYSCO will not sell or distribute any Proprietary Products
(hereinafter defined) to customers other than the Restaurants and
Chi-Chi's Franchisees (hereinafter defined) without the prior written
approval of the Vice- President, Purchasing & Distribution of Family
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Restaurants, Inc. ("FRI"), the sole stockholder of CC. "PROPRIETARY
PRODUCTS" means Products which are labeled with the trademarks or
proprietary logos of CC or are manufactured expressly for CC at CC's
direction and specifications.
II. PRODUCT DESIGNATION
A. Product Selection -- CC shall have the right to designate the
brands and/or suppliers of Products it requires to have SYSCO
supply. [*]
B. Inventory Management -- SYSCO shall use reasonable, good-faith
efforts to utilize proper inventory management for a continuous
supply of Products while minimizing the risk of inventory
obsolescence. SYSCO will provide CC with a monthly status report
of slow-moving and obsolete Products and those Products
approaching the expiration of their shelf life. A slow moving
Product is defined as having less than 10 cases movement in the
last 13 weeks. An obsolete item is defined as having zero case
movement in the last 60 days. Within two weeks of its receipt of
the monthly status report of slow-moving Products, obsolete
Products and Products approaching the expiration of their shelf
life, CC and SYSCO agree to review all products whose risk of
obsolescence is apparent. Joint resolutions to assign and reduce
obsolete inventory exposure will be initiated within forty-five
(45) days after the expiration of the two week period referred
to in the preceding sentence.
CC will communicate with SYSCO regarding anticipated menu or
Product mix changes to help avoid obsolete inventory issues and
will assist SYSCO in removal or disposition of slow-moving and
obsolete Products and those Products approaching the expiration
of its shelf life. If SYSCO has been authorized to purchase and
then purchases a Product in reasonable anticipation of sale to
CC and the volume of purchases of a Product declines
substantially to the point where the risk of obsolescence is
apparent, CC will either: 1) assume financial responsibility for
the cost to return any unsold inventory of such Product to the
supplier; unless the inventory obsolescence or a portion thereof
was caused by SYSCO in which case SYSCO will be responsible for
the cost of any unsold inventory of such Products; or 2)
designate a specific Restaurant or Restaurants to purchase and
use the subject Product inventory within a reasonable period of
time; or 3) implement other disposal alternatives, to be
mutually determined inclusive of moving such Product to SYSCO
Central Warehouse; or 4) if such Product is not sold or
otherwise disposed in accordance with this paragraph IIB, and
after the above alternatives have been exhausted, then SYSCO may
invoice CC for such
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* Confidential material in this section has been omitted pursuant to a request
for confidential treatment; the omitted material has been filed separately with
the SEC.
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product and CC shall, within 30 days after receipt of such
invoice, pay SYSCO the Cost (herein defined) of any unsold
inventory of such Product. SYSCO will make such Product
available for pick up by CC or its designee. If Product is
designated to a third party, other than the original supplier,
SYSCO may require payment at the time of pick-up.
Notwithstanding anything to the contrary in this Agreement, CC
will not be responsible for SYSCO orders of discontinued Product
made after CC has given SYSCO written notice of discontinuance
of such Product. SYSCO will use reasonable good faith efforts to
cancel or return vendor Product on order or in transit to reduce
CC liability in the event of discontinuation of such Product.
C. Approved Items by Brand Name -- Certain Products are brand name
items approved by CC and these items shall be inventoried by
SYSCO to service CC. These Products do not bear any CC name or
logo. It is understood that these Products may bear the brand
name of the manufacturer or a brand name owned by the
manufacturer or distributor. CC has no objection to these
Products being sold to other customers and, in fact, encourages
such sale in hopes of a reduction in both SYSCO's and CC's cost.
Such other sales shall not, however, jeopardize CC pricing
hereunder nor include Proprietary Products.
III. SERVICE
A. Delivery Frequency -- SYSCO shall determine order and delivery
schedules and SYSCO will make deliveries to each Restaurant
according to the required frequency noted on Exhibit A. Unless
otherwise mutually agreed between CC and SYSCO, the Restaurants
listed on Exhibit A shall receive the identified deliveries per
week. However, no changes to Exhibit A will be authorized
without the approval of the Vice President Purchasing and
Distribution of FRI. Restaurants outside the Service Area may be
added to Exhibit A upon mutual agreement by CC and SYSCO which
approval shall not be unreasonably denied or declined.
[*]
During a 45 day period after the applicable program start-up
date listed in Paragraph III.I., Restaurants being serviced by
the respective operating company
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* Confidential material in this section has been omitted pursuant to a request
for confidential treatment; the omitted material has been filed separately with
the SEC.
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or distribution center shall receive reasonable and necessary
additional deliveries at no charge.
After the opening of a new Restaurant, a 30 day grace period
will be granted where additional delivery charges will be waived
for that particular Restaurant for reasonable and necessary
additional deliveries.
B. Service Area -- Pursuant to the terms of this Agreement, SYSCO
shall deliver Products to all future Restaurants located in the
Service Area.
C. Scheduling; Access -- SYSCO may schedule such deliveries on any
day of the week and from 1:30 p.m. - 5:30 p.m. and 7:30 p.m. -
11:30 a.m. SYSCO will maintain [*] or higher on-time delivery
performance which performance shall be either earlier or within
one (1) hour later of the stated delivery time. It is understood
that either CC or SYSCO may have particular scheduling needs for
specific Restaurants where unusual circumstances may exist, and
each party agrees to address such needs in good faith.
D. Order Balancing -- It is understood that Restaurants receiving
two deliveries per week will use reasonable, good-faith efforts
to balance the orders such that each delivery consists of
approximately the same number of cases.
E. Product Unloading at Restaurants -- SYSCO delivery drivers will
bring all Products into those Restaurants where it is possible
to safely roll a two-wheel cart. Further, for those Restaurants
where it is possible to roll a two-wheel cart, SYSCO delivery
drivers will separate and deliver the order to the Restaurants'
freezer, cooler and storeroom. If it is not possible to roll a
two-wheel cart into the refrigerated, frozen or dry area of the
Restaurant, SYSCO delivery drivers will deliver the Products to
another designated area of the Restaurant as determined by CC.
CC will have personnel available to check and sign for the order
at the time the delivery is being made for all but unattended
deliveries.
F. Order Accuracy -- SYSCO will maintain a [*] or higher average
fill-rate performance of cases of Product delivered accurately
according to the Restaurant's needs, as calculated on an [*]. CC
and SYSCO agree to designate certain Products in Exhibit D which
shall be considered "essential" Products. SYSCO will give
special attention to the inventory management of essential
Products and
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* Confidential material in this section has been omitted pursuant to a request
for confidential treatment; the omitted material has been filed separately with
the SEC.
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use good faith efforts to ensure these items are in-stock at all
times. Should CC, due to a SYSCO delivery error, purchase
Product on a local basis, SYSCO will reimburse CC for the
difference between the Sell Price of that Product and the price
paid by CC for such Product; and for the reasonable cost of the
labor involved for a CC employee to leave the Restaurants to
purchase a Product on a local basis.
G. Recovery for Ordering Errors -- In situations where Product is
out-of-stock or missing as the result of an order error, SYSCO
will use its best good faith efforts to provide Product to the
Restaurants as soon as possible. Should this effort require
extra expense, it will be the responsibility of the erring party
to pay those expenses. In the event of a Restaurant ordering
error, SYSCO will advise the Restaurant of the estimated amount
of this special charge. The Restaurant manager has the authority
to accept or decline the delivery based on the special charge,
communicated at the time the special order is requested. If the
Restaurant manager places the order and that order is delivered,
the Restaurant is responsible for the special charge.
H. Route Change Notice -- SYSCO will provide Restaurant managers
not less than two weeks written notice, with copies to FRI's
Vice President of Purchasing & Distribution, of any significant
route change. The notice will include a brief statement for the
reason for the route change. SYSCO will provide FRI
Vice-President, Purchasing & Distribution not less than three
weeks written notice of any significant route change.
I. Commencement of Service -- SYSCO will begin servicing CC's
Restaurants from its distribution centers and operating
companies according to the following:
SYGMA-Chicago May 5, 1997
SYGMA-Pennsylvania May 19, 1997
Pegler-Sysco April 30, 1997
SYSCO Central Warehouse April 30, 1997
J. Special Shipments -- SYSCO will, on behalf of CC or the CC's
Franchisees and at their expense and risk, arrange C.O.D. and
freight-collect, common carrier shipments of Products from the
distribution center or operating company direct to (i)
Restaurants owned by franchisees of CC (the "CC FRANCHISEES")
that are domestic and (ii) Restaurants owned by CC that are
outside the described Service
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Area, upon CC communicating such orders to SYSCO. For this
service, SYSCO will xxxx CC or such CC Franchisees, as
applicable, for the Cost of the Product plus [*] per case
xxxx-up.
SYSCO will, on behalf or the CC's Franchisees and at their
expense and risk, arrange shipments of Products direct from the
distribution center or operating company to CC Franchisees that
are international. For this service, SYSCO will xxxx
international CC Franchisees for the Cost of the Product plus
[*] per case xxxx-up. Such CC Franchisees are responsible for
all freight costs, customs, brokerage, clearance, tariffs costs
and will be asked to pay for same at the time of shipment.
K. Expansion of Service -- SYSCO will provide distribution service
for CC's expansion in the service area of another SYSCO
distribution center, at CC's request, when CC has twenty (20)
Restaurants open in such area and once xxxx-ups have been
agreed upon by CC and SYSCO. In the event no SYGMA distribution
center is within the new service area, CC may select a SYSCO
operating company within the service area. Notwithstanding the
above, SYSCO will evaluate the feasibility of service to fewer
than twenty (20) Restaurants at any time during the term of this
Agreement.
L. Electronic Communication -- SYSCO will, in a timely manner,
electronically transmit data which will permit CC to design
specialty reports. [*] In the event of emergency, SYSCO will
provide the data via disk, within 3 days from request via
overnight service.
M. Restaurant Service -- In the event of a conflict between SYSCO
and Restaurant operators arising out of service under this
Agreement, the resolution will be negotiated by FRI's
Vice-President of Purchasing and SYSCO's Vice President/General
Manager of the delivering distribution center or operating
company.
N. CC Calendar -- Electronic transmissions, order guides and price
lists will be consistent with CC's fiscal calendar attached as
Exhibit E.
O. Unattended Deliveries -- CC agrees to provide keys and security
codes for night deliveries where necessary. SYSCO will be
responsible for expenses incurred by CC to re-key door locks
when caused by SYSCO to do so. In the event SYSCO is not
notified five (5) days in advance of changes to the Restaurants
locks and not
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* Confidential material in this section has been omitted pursuant to a request
for confidential treatment; the omitted material has been filed separately with
the SEC.
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provided the appropriate keys and alarm codes, SYSCO may elect
to charge CC for the expenses associated in route delays or
re-deliveries. CC and its employees, officers and directors are
not liable for injury, illness and/or death to SYSCO drivers
arising from criminal events during delivery (i.e. robberies,
attacks, kidnapping or hostage situations), except to the extent
same is caused by the gross negligence or willful misconduct of
CC, its employees, officers or directors.
P. Designated SYSCO Operating Companies -- It is understood that
SYSCO will perform the terms of this Agreement through the
operating companies (and their distribution centers) designated
on Attachment One, unless Attachment One is amended in writing.
IV. PRICING
A. Definition of Cost -- The price to CC for all Products sold
under this Agreement (the "SELL PRICE") will be calculated on
the basis of Cost. "COST" is defined as the cost of the Product
as shown on the invoice to the delivering SYSCO operating
company or distribution center, plus applicable freight.
Invoices used to determine Cost will be the invoice issued to
the delivering SYSCO operating company or distribution center by
the vendor or by the Merchandising Services Department of SYSCO
Corporation. Applicable freight, in those cases where the
invoice cost to the delivering SYSCO operating company or
distribution center is not a delivered cost, means that a
reasonable freight charge for delivering Products to the Sysco
operating company or distribution center has been added. Freight
charges may include common or contract carrier charges by the
Product supplier or a carrier, or charges billed by Alfmark,
SYSCO's freight management service. Applicable freight for any
Product will not exceed the rate charged by nationally
recognized carriers operating in the same market for the same
type of freight service. Cost is not reduced by cash discounts
for prompt payment available to Sysco Corporation or any SYSCO
operating company.
B. Calculation of Sell Price for Products other than Smallwares --
For all Products other than smallwares, the pricing for which is
covered under Paragraph IV.C. below, the Sell Price of each
Product sold under this Agreement will equal [*]:
DISTRIBUTION CENTER/OPERATING COMPANY PER CASE XXXX-UP
[*] [*]
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* Confidential material in this section has been omitted pursuant to a request
for confidential treatment; the omitted material has been filed separately with
the SEC.
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1. For example, a Product with a Cost of $10.00 per case
and a xxxx-up of [*] per case will have a Sell Price
calculated as follows: [*]
2. For Products with a temporary promotional allowance, the
following formula will apply:
A Product with a Cost of $10.00 and a promotional
allowance of $1.00 will have a Sell Price calculated as
follows:
[*]
3. Soft drink syrup products will be priced according to
the appropriate agency billing program.
4. SYSCO will provide additional deliveries to Restaurants
at CC's request. The charges for additional regular
scheduled deliveries will be according to the following:
Mileage from Additional Fee
Distribution Center/Operating Company Not to Exceed
[*] [*]
SYSCO will also distribute to new locations outside the
boundaries of this Agreement, provided that SYSCO and CC
have negotiated in good faith the additional charges
required for this service.
5. The additional delivery fees associated with a second
delivery for those Restaurants receiving one delivery
per week will be waived as long as the average gross
profit per delivery for all Restaurants is equal to or
greater than [*]. Notwithstanding the above, the
following locations, Colorado Springs, CO and
Fayetteville, NC will only receive one delivery per week
and any additional deliveries will be subject to the
fees set forth in Paragraph IV.B.4, regardless of the
average gross profit per delivery.
C. Calculation of Sell Price for Smallwares
1. For smallwares Product shipments from SYSCO Central
Warehouse, the Sell Price of each Product sold under
this Agreement will equal (i) the
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* Confidential material in this section has been omitted pursuant to a request
for confidential treatment; the omitted material has been filed separately with
the SEC.
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Cost of such Product plus (ii) the percentage of Cost
xxxx-up of [*]. For example, a Product with a Cost of
$10.00 per case, plus a Xxxx-up of [*]will have a Sell
Price calculated as follows: [*]
Freight for drop ship orders for all smallware items
shipped from Sysco Central Warehouse will be as follows:
Order Size Freight
[*] [*]
2. SYSCO will carry full-case china and glassware at the
distribution centers and operating companies identified
in Section IV.B. above. Other than full-case china and
glassware orders, which shall be placed with such
designated distribution centers and operating companies,
all orders of smallwares must be placed to the Sysco
Central Warehouse. For full-case china and glassware
orders placed direct with the operating companies, the
pricing set forth in Paragraph IV.B. shall apply; and
for smallwares orders placed through Sysco Central
Warehouse, the pricing set forth in Paragraph IV.C.1.
shall apply.
D. Purchase Requirements -- [*]
E. Merchandising Services -- Sysco Corporation and the SYSCO
operating companies perform value-added services for suppliers
of SYSCO(R)brand and other products over and above procurement
activities typically provided. These value-added services
include national marketing, freight management, consolidated
warehousing, quality assurance and performance-based product
marketing. Sysco Corporation and the SYSCO operating companies
may recover the costs of providing these services and may also
be compensated for these services and consider this compensation
to be earned income. Receipt of such cost recovery or earned
income does not affect Cost and does not diminish 's commitment
to provide competitive prices to its customers. Exhibit F
briefly describes some of these services provided to suppliers.
F. Freight Charges -- [*]
G. Inventory Management -- SYSCO will typically purchase product
for CC in quantities sufficient to provide to SYSCO the lowest
cost bracket available from a particular supplier for each
Product, as long as the quantity purchased does not
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* Confidential material in this section has been omitted pursuant to a request
for confidential treatment; the omitted material has been filed separately with
the SEC.
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exceed three weeks normal usage for any one item. In those cases
where SYSCO, at the request of CC, purchases any Product in such
quantities that exceeds three weeks normal usage, CC agrees, if
requested by SYSCO, to compensate SYSCO for any additional costs
incurred in carrying the additional inventory of such Product.
H. Order Guides; Ordering -- SYSCO will provide CC with order
guides, weekly price lists, and weekly price change notices or,
if preferred by CC, will provide SYSCO's standard SYGNET or
Customer Companion order-entry software to facilitate order
placement through CC personal computer equipment. Orders will be
placed directly by Restaurants ordering by item number as
specified in the order guides or through the SYGNET or Customer
Companion software. Only CC approved items will appear on order
guides and there will be no other changes to the order guides
without CC approval. Within 120 days after the date of this
Agreement, SYSCO shall provide CC with order entry software to
facilitate order placement through CC personal computer
equipment for the SYSCO Central Warehouse.
I. Cost Verification -- CC has the right, once annually, to verify
the Cost for purchases made under this Agreement. SYSCO will
furnish verification of Costs for the Products to be price
verified, subject to the following limitations:
1. Date, time and place of Cost verification must be
mutually agreed;
2. Ten (10) working days' notice must be provided to SYSCO;
and
3. The period for which pricing is to be verified shall be
limited to the preceding twelve (12) months.
4. When price verification shows, to the satisfaction of
both parties, a discrepancy between the agreed Sell
Price and the actual Sell Price, the appropriate party
will reimburse the other party. In the event of a net
undercharge, CC will deliver to SYSCO a check for the
difference within five (5) working days. If CC gives
SYSCO written notice of what CC believes to be a net
overcharge, SYSCO shall, within five (5) business days,
issue a check to CC. With regard to any disputed net
overcharge or undercharge, the parties shall continue to
negotiate in good faith, the proper amount (if any) to
be reimbursed to CC or SYSCO including interest thereon.
If net overcharges exceed .5% of purchases during any
six month
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period, SYSCO shall reimburse CC for all reasonable
costs incurred in connection with said price
verification.
Any and all information examined by CC shall be held in strict
confidence and not disclosed to any person or entity except
those employees of CC with a need to know such information and
who are notified by CC to keep such information confidential.
J. Issuance of Price List -- SYSCO's price list will be issued once
per week, effective on Sunday. On the preceding Thursday, a
notice of price changes will be faxed to the Vice-President,
Purchasing & Distribution of FRI.
V. PAYMENT TERMS
A. [* - Two pages deleted].
5. CC will complete, execute, and deliver to SYSCO a New Account
Form, in the form of Exhibit G, attached hereto, which will be
provided by CC to SYSCO before this Agreement becomes binding
upon SYSCO. CC will also deliver completed resale sales tax
exemption certificates to SYSCO, for all jurisdictions that
would require these, or where they are reasonably deemed to be
necessary by SYSCO. CC understands and agrees that it is solely
responsible for payment of any sales and use taxes that any
taxing authority deems to be due, based on purchases by CC from
SYSCO.
SYSCO will charge and collect appropriate sales taxes where
authorized to do so on CC's behalf. The responsibility of
payment of these taxes is solely that of CC.
6. For the period May 1, 1997 through September 1, 1997 for direct
shipments of smallwares from SYSCO Central Warehouse to CC
Restaurants, SYSCO Central Warehouse will invoice Restaurants
directly and CC will have fifteen (15) days to remit. After
September 1, 1997 all remittances will be included in the ACH
debits under provisions of Paragraph V.A.
B. Delinquency Charge -- If any amount due SYSCO is not paid in
accordance with this Agreement, a delinquency charge shall be
added to the sum due, which charge shall equal the amount
obtained by multiplying the delinquent balance by the lesser of
(a) one and one-half percent (1 1/2%) per month, or (b) the
maximum lawful rate permitted to be charged under applicable
law.
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* Confidential material in this section has been omitted pursuant to a request
for confidential treatment; the omitted material has been filed separately with
the SEC.
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C. Guaranty -- In consideration of the sale to the Restaurants by
SYSCO hereunder and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, FRI hereby
covenants and agrees as follows: FRI guarantees to SYSCO the
prompt payment of any obligation to SYSCO of any subsidiary or
affiliated entity of FRI, including without limitation CC, but
excluding CC's franchisees, arising out of deliveries made
pursuant to this Agreement. FRI further agrees to pay on demand
any such sum to SYSCO whenever any such subsidiary or affiliated
entity of FRI fails to pay the same when due. It is understood
that this guaranty is an absolute, continuing and irrevocable
guaranty for payments due under this Agreement. FRI expressly
waives presentment, demand, protest, notice of protest,
dishonor, diligence, notice of default or nonpayment, notice of
acceptance of this guaranty, notice of extending of any
guaranteed indebtedness already or hereafter contracted by any
such subsidiary or affiliated entity of FRI or notice of any
modification or renewal of any payments hereby guaranteed.
D. Financial Reporting and Credit -- FRI will forward to SYSCO
FRI's consolidated unaudited quarterly financial statements
within fifty (50) days after the end of each quarter. Within
ninety-five (95) days after each fiscal year end, FRI will
forward to SYSCO, FRI's audited, consolidated financial
statements for such fiscal year consisting of an income
statement, balance sheet and statement of cash flow.
E. Financial Information -- CC shall notify SYSCO in writing within
three business days after any change of controlling ownership of
CC or FRI. CC warrants to SYSCO that all financial information
provided to SYSCO for the purpose of obtaining and continuing
credit is true, correct and complete in all material respects,
and CC authorizes SYSCO to investigate all references furnished
pertaining to CC credit and financial responsibility.
VI. FRANCHISEE PARTICIPATION
SYSCO shall extend to any present or future CC Franchisees the same or
similar terms and conditions for distribution of Products to Restaurants
in the Service Area as the terms and conditions of this Agreement,
provided each CC Franchisee meets SYSCO's credit standards and enters
into and performs its obligations under an agreement with SYSCO
satisfactory to SYSCO in its sole discretion. At SYSCO's reasonable
election, each CC Franchisee will provide to SYSCO either a standby
letter of credit in an amount to be
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determined by SYSCO or personal guarantees of the individuals involved
with such CC Franchisee. Notwithstanding the above, SYSCO may alter the
payment and other terms (but not xxxx-ups or delivery schedules) with
any CC Franchisee from the terms set forth in this Agreement if SYSCO,
in its sole discretion, determines that the CC Franchisees's financial
condition or credit history does not merit the terms extended to CC
under this Agreement. Unless otherwise agreed by the parties in writing,
CC shall not be liable to SYSCO for payment obligations of its CC
Franchisees. CC and FRI will be notified of any action SYSCO has taken
against a CC Franchisee as a result of any failure by the CC Franchisee
to comply with its agreement with SYSCO. SYSCO will be notified of any
action CC and FRI have taken against a CC Franchisee as a result of any
failure by the CC Franchisee to comply with its agreement with CC or
FRI.
VII. INDEMNIFICATION AGAINST FRANCHISEES
CC and/or FRI is a franchisor and permits distribution of Products to CC
Franchisees. If for any reason CC and SYSCO cease doing business and CC
or FRI directs SYSCO to cease distribution or sales of Proprietary
Products to one or more of the CC Franchisees, CC will defend, indemnify
and hold harmless SYSCO from and against any and all losses, damages or
claims by any such CC Franchisee which may arise from SYSCO ceasing
further sales to such Franchisee.
VIII. SPECIAL PRODUCT INDEMNITY
SYSCO's policy is that all suppliers provide indemnity agreements and
insurance coverage for products purchased by SYSCO. In order to protect
SYSCO when it stocks Proprietary Products or special order items at CC's
request and the vendor of such items will not provide an indemnity
and/or insurance coverage acceptable to SYSCO, CC will defend, indemnify
and hold harmless SYSCO and its employees, officers and directors from
all actions, claims and proceedings, and any judgments, damages and
expenses resulting therefrom, brought by any person or entity for
injury, illness and/or death or for damage to property in either case
arising out of the delivery, sale, resale, use or consumption of any
Proprietary Product or special order item except to the extent such
claims are caused by the negligence or misconduct of SYSCO, its agents
or employees.
IX. INDEMNIFICATION
SYSCO agrees to indemnify, defend, and save harmless CC, its officers,
directors, agents, and employees, parent companies and subsidiaries
(collectively "INDEMNIFIED PARTIES") from and against any and all
claims, losses, damages, liability, or liens arising out of injury to or
death of persons (including, but not limited to any employee of
Indemnified
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Party), or loss of or damage to property, resulting directly from (i)
the negligence of SYSCO and its employees or (ii) from the violation by
SYSCO of copyrights or trademarks of CC arising out of the publication,
translation, reproduction, delivery, performance, use or disposition of
any data furnished under this Agreement, except to the extent that such
loss, damage, injury, liability or claim is the result of the negligence
or willful misconduct of any Indemnified Party. The right of the
Indemnified Parties to indemnification by SYSCO under the foregoing
shall be independent of the right of the Indemnified Parties to the
insurance to be provided pursuant to this Agreement. Such
indemnification shall include all costs of suit and reasonable
attorney's fees incurred in defending against, or negotiating settlement
of any claim or suit, but only if the Indemnified Party provides SYSCO
with prompt written notice of the initiation of any claim or lawsuit
seeking damages against the Indemnified Party and the opportunity to
assume the defense thereof.
X. COMPLIANCE WITH CC DISTRIBUTOR QUALITY PROGRAM
SYSCO agrees to comply with CC's Distributor Quality Program as
referenced in Exhibit H.
XI. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the parties hereto; provided, however, that
neither party may assign this Agreement without the prior written
consent of the other party which approval shall not be unreasonably
withheld or delayed.
XII. NOTICES
All notices required or permitted to be given hereunder shall be in
writing and sent by facsimile (to be followed by any of the following)
and personal delivery, overnight delivery service or United States
registered or certified mail, postage prepaid, return receipt requested,
addressed to the parties as follows:
SYSCO: SYSCO Corporation
0000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
Senior Vice President, Multi-Unit Sales
Facsimile: (000) 000-0000
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Chi-Chi's, Inc.:
Chi-Chi's, Inc.
C/o FRI Purchasing Department
00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, C.P.M.
Vice President, Purchasing and Distribution
Facsimile: (000) 000-0000
With copies to:
Family Restaurants, Inc.
00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxx
Vice President, General Counsel
Facsimile: (000) 000-0000
Notices given by personal delivery will be effective on delivery; by
overnight service on the next business day; by United States mail on the
third business day after Pre-payment in the mail, all in accordance with
the notice provisions set forth above.
XIII. FORCE MAJEURE
Each party shall be excused for failures and delays in performances,
other than for the payment of money, caused by war, governmental
proclamations, ordinances, or regulations or strikes (except by SYSCO
employees), lockouts, floods, fires, explosions, or other events beyond
the reasonable control and without the fault of such party. In the event
of a work stoppage, the SYSCO Emergency Preparedness Plan will be
implemented. In the event of any such force majeure, the terms of this
Agreement shall be extended for the period during which either party is
prevented from performing any material portion of this Agreement. This
section shall not, however, relieve any party from using reasonable
efforts to remove or avoid any such events, and any party so affected
shall continue performance hereunder as soon as reasonably practicable
whenever such causes are eliminated. Any party claiming any such excuse
for failure or delay in performance shall give notice thereof to the
other party.
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XIV. TERM OF AGREEMENT AND IMPLEMENTATION
This Agreement will be binding on both parties for a [*] term beginning
[*] through [*], and will automatically renew for successive [*].
However, either party, after the initial term of this Agreement, can
terminate this Agreement with [*] written notice.
XV. TERMINATION
A. Breach by SYSCO -- Notwithstanding the term set forth above, CC
has the right to terminate this Agreement at any time with
written notice to SYSCO [*] prior to the termination date set
forth in such notice if SYSCO has materially breached the terms
of this Agreement.
B. Breach by CC -- Notwithstanding the term set forth above, SYSCO
has the right to terminate this Agreement at any time with
written notice to CC [*] prior to termination date set forth in
such notice if CC or FRI has materially breached the terms of
this Agreement.
C. Service Interruption -- Notwithstanding any other provision of
this Agreement, SYSCO has the right to withhold all service
under this Agreement in the event CC or FRI fails to pay when
due any amount due under this Agreement; and SYSCO may continue
to withhold all service under this Agreement until SYSCO is paid
in full.
D. Change in Control -- Notwithstanding the term set forth above,
SYSCO has the right to terminate this Agreement with written
notice to CC of at least [*] if SYSCO has received a notice of
change of controlling ownership of CC or FRI pursuant to
Paragraph V.E.
E. Inventory Purchase on Termination -- Upon termination of this
Agreement for any reason, CC and FRI or its designated
distributor agrees to purchase, at SYSCO's Cost plus [*] per
case to cover transfer and warehouse handling charges, all
Products in SYSCO's inventory which SYSCO purchased specifically
for distribution to FRI and CC or any CC Franchisee. In such
event, CC and FRI shall purchase all perishables purchased in
accordance with the terms of this Agreement within seven (7)
days of the termination of this Agreement and all frozen and dry
Products purchased in accordance with the terms of this
Agreement within fifteen (15) days of the termination of this
Agreement.
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* Confidential material in this section has been omitted pursuant to a request
for confidential treatment; the omitted material has been filed separately with
the SEC.
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XVI. GOVERNING LAW
This Agreement shall be governed by the internal law, and not the law of
conflicts in accordance with the laws of the State of Kentucky.
XVII. ENTIRE AGREEMENT/AMENDMENTS
The parties expressly acknowledge that this Agreement contains the
entire agreement of the parties with respect to the relationship
specified in this Agreement and supersedes any prior arrangements or
understandings between the parties with respect to such relationship.
This Agreement may only be amended by a written document signed by each
of the CC and SYSCO.
Executed as of the date set forth at the beginning of this Agreement.
CHI-CHI'S, INC.
By: XXXXX XXXXXXXX
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Xxxxx Xxxxxxxx
President
SYSCO CORPORATION
By: XXXXXXX X. XXXXXXXX
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Xxxxxxx X. Xxxxxxxx
Senior Vice President, Multi-Unit Sales
For purposes of FRI's specific agreements under the Agreement, including,
without limitation, its agreements under Paragraphs V.C., V.D. and V.E.
FAMILY RESTAURANTS, INC.
By: XXXXXX X. XXXXXXX XX.
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Xxxxxx X. Xxxxxxx Xx.
Senior Vice President and CFO
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