MASTER DISTRIBUTION AGREEMENT
Master Distribution Agreement (this "Agreement"), dated April 13, 1998,
between SYSCO FOOD SERVICES, INC. ("SYSCO") AND XXXXXX BAKING ("name of
customer").
BACKGROUND
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A. Sysco Corporation and its affiliates, including SYSCO, perform purchasing,
marketing, warehousing, quality control, product research and development,
transportation and distribution services for foodservice customers.
X. Xxxxxx Baking operates the establishments listed in Exhibit A (the Xxxxxx
Baking Locations).
X. Xxxxxx Baking desires to contract with SYSCO as its primary distributor for
foodservice products (i.e., supplying 80% or more of such products) to all of
its Xxxxxx Baking Locations and SYSCO desires to perform these services.
In consideration of the mutual obligations set forth below, the parties
agree as follows:
1. APPOINTMENT OF DISTRIBUTOR
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Xxxxxx Baking appoints SYSCO to serve as its primary distributor to the
Xxxxxx Baking Locations of foodservice products within the product categories
described in Article 2 ("Products"). As "primary distributor", SYSCO will be
entitled to not less than 80% of Xxxxxx Baking's purchase requirements for
Products. Xxxxxx Baking's purchase requirements will be determined on an
aggregate dollar volume basis. This aggregate dollar value excludes purchases
from Xxxxxx Baking's current direct suppliers. This list can be amended by
mutual agreement between Xxxxxx Baking and SYSCO Food Services of Portland.
2. PRODUCTS COVERED BY THIS AGREEMENT
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Products covered by this Agreement will be in the following categories:
1. Canned & Dry 7. Seafood - Fresh & Frozen
2. Frozen Fruits, Vegetables, 8. Paper, Plastics and Disposables
Bakery Items, Etc. 9. Janitorial Supplies & Cleaning
3. Dairy Chemicals
4. Meat- Fresh & Frozen 10. Beverage, Coffee and Equipment
5. Fresh Fruit and Vegetables 11. Smallwares and Equipment
6. Poultry - CVP & Frozen
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Products will include SYSCO -registered trademark- brand, national brand
and other products as specified by Xxxxxx Baking and stocked by SYSCO. Unless
otherwise specified, SYSCO -registered trademark- brand products will be
utilized to insure consistency of quality and to minimize costs. A description
of SYSCO -registered trademark- brand quality levels is attached as Exhibit B.
All Products in any of the Product categories specified in this Section 2 will
be priced using the margin on sell set forth in Section 6.2 for that product
category, whether or not such Products are set forth in the order guides
described in Section 5. All Products not in any of the Product categories
specified in this Section 2 will be sold to Xxxxxx Baking at competitive prices
established from time to time by SYSCO.
3. SERVICE OBLIGATIONS OF SYSCO
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3.1 ACCOUNT EXECUTIVE - SYSCO will assign an Account Executive and/or a
Customer Service Representative to service Xxxxxx Baking's account. The Account
Executive and/or Customer Service Representative will maintain contact with
Xxxxxx Baking Locations, on a mutually agreed basis, to review service
requirements.
3.2 PURCHASING GUIDES; ORDERS - SYSCO, with assistance from Xxxxxx Baking,
will prepare purchase order guides to be used by Xxxxxx Baking when placing
orders. Orders will be placed directly by Xxxxxx Baking Locations ordering by
line number as specified in the purchase order guide.
3.3 POLICIES AND PROCEDURES - A policies and procedures guide will be
provided by SYSCO to all Xxxxxx Baking Locations. Reasonable notice will be
given to Xxxxxx Baking Locations when policies and procedures are changed by
SYSCO. Credits, pickups and other requests for service will be initiated by
local Xxxxxx Baking Location personnel according to the guide.
3.4 RESTOCKING - SYSCO reserves the right to collect a restocking fee of
20% for returns due to Xxxxxx Baking error or the refusal to take delivery of
Products ordered by Xxxxxx Baking and/or such Xxxxxx Baking Locations.
4. DELIVERY OBLIGATIONS OF SYSCO
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SYSCO will establish a delivery schedule for each Xxxxxx Baking Location
within its market area and will use reasonable, good faith efforts to make
on-time deliveries.
5. DATA PROCESSING OBLIGATIONS OF SYSCO
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SYSCO will provide order guides on a monthly basis and, if requested in
writing by Xxxxxx Baking, product usage reports. If Xxxxxx Baking requests
customized reports in addition to order guides and usage reports, SYSCO will use
reasonable efforts to provide such reports. In order to cover the additional
expenses of providing such reports, SYSCO will establish a reasonable charge for
doing so and, if such charge is acceptable to Xxxxxx Baking, will prepare and
furnish such reports to Xxxxxx Baking.
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SYSCO will also provide, at its expense, a personal computer software
system for Xxxxxx Baking Locations to place orders directly with the delivering
operating company through the SYSCO Customer Companion system. Xxxxxx Baking
must supply whatever personal computer hardware is necessary to enable it to
utilize such order entry software systems.
6. PRICE
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6.1 CALCULATION OF SELL PRICE - [The information appearing in this Section 6.1
has been omitted pursuant to a request for confidential treatment filed with the
Securities and Exchange Commission. The full text of Section 6.1 has been filed
separately with the Commission.]
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The Sell Price for each Product on an order guide described in Section
5 will be calculated at the time the order guide is prepared. Sell Prices for
all Products on the order guide will be maintained until the next order guide is
prepared and sent to the Xxxxxx Baking except that (i) all produce will be
priced at the time of invoicing and (ii) the Sell Prices of all other Products
which are market commodity products (as determined by Sysco) will change weekly
to reflect declines and advances in the cost of those market commodities.
6.2 SUBSTITUTIONS - Should a substitution be necessary, SYSCO will ship a
comparable product at a Sell Price calculated using the same percentage of
margin as on the original Product.
6.3 MERCHANDISING SERVICES - SYSCO and Sysco Corporation perform
value-added services for suppliers of SYSCO -registered trademark- brand and
other products over and above procurement activities typically provided. These
value-added services include regional and national marketing, freight
management, consolidated warehousing, quality assurance and performance based
product marketing. SYSCO and Sysco Corporation may recover the costs of
providing these services and SYSCO and Sysco Corporation 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 SYSCO's commitment to provide competitive prices to its customers.
6.4 PROPRIETARY OR SPECIAL ORDER ITEMS - To offset the additional costs
associated with handling Products bearing Marsee Bakings' [sic] trademarks or
logos as well as other Products purchased exclusively for Xxxxxx Baking, an
additional 5% will be added to the margin on sell for all such proprietary items
that exceed 30 items per operating company. SYSCO will have no obligation to
carry a proprietary item if Xxxxxx Baking purchases less than five cases per
week of that item.
If SYSCO and Xxxxxx Baking cease doing business for any reason, Xxxxxx
Baking will purchase, or cause a third party to purchase, all remaining
proprietary/special order items in SYSCO's inventory at SYSCO's Cost plus a
reasonable transfer and xxxx house handling charge not to exceed 50% of the Cost
of such proprietary/special order items. In such an event, Xxxxxx Baking will
purchase or cause to be purchased all perishables within seven (7) days of the
termination of this Agreement and all frozen and dry proprietary/special order
items within fifteen (15) days of the termination of this Agreement.
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/special order items at Xxxxxx Baking's request and
the vendor of such items will not provide an indemnity, Xxxxxx Baking 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
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delivery, sale, resale, use or consumption of any proprietary/special order item
except to the extent such claims are caused by the negligence of SYSCO, its
agents or employees.
6.5 INCREASE IN SELL PRICE FOR SPLIT CASES - Due to the added costs
associated with handling less than full cases, a special handling charge of 10%
will be added to the Sell Price of all Product sold in split cases.
6.6 NATIONAL AGREEMENTS - Xxxxxx Baking has provided SYSCO with written
evidence of the existence of agreements with Product manufacturers in which the
manufactures and Xxxxxx Baking have agreed on prices the manufacturer will
charge distributors for Products to be resold to Xxxxxx Baking, which agreements
are identified in Exhibit X. Xxxxxx Baking must notify SYSCO in writing of the
existence of any additional agreements of this sort. SYSCO will not be
responsible for the failure to purchase under such additional agreements in the
absence of written notice from Xxxxxx Baking and the manufacturer of the
existence of such agreements.
6.7 PROGRAM REVIEW - The pricing specified in this Agreement is based on
Xxxxxx Baking's representations concerning its service needs, including but not
limited to its anticipated purchase volumes, drop sizes, Product mix, location
of Xxxxxx Baking Locations and number of deliveries, as well as Xxxxxx Baking's
compliance with its payment and other obligations specified in this Agreement.
If SYSCO determines after ninety (90) days from the date of this Agreement that
Xxxxxx Baking requires service which varies materially from the levels
contemplated in Xxxxxx Baking's representations made to SYSCO in negotiating
this Agreement, SYSCO reserves the right to request an increase in the margin on
sell specified in Section 6.2. If the parties are unable to agree on such an
increase and Xxxxxx Baking's service requirements and/or contract compliance
continue to vary from that contemplated or required by this Agreement, SYSCO may
terminate this Agreement on thirty (30) days written notice to Xxxxxx Baking.
7. CREDIT TERMS
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7.1 PAYMENT OBLIGATION - Payment for all Product is due on the 25th day of
the month for all Product delivered during the previous month (delinquent on the
26th day of the month following the month in which Product was delivered).
SYSCO may also modify its payment terms specified in this Section 7.1 if
payments are not made when due and/or the financial condition of the Xxxxxx
Baking materially deteriorates.
7.2 SERVICE CHARGE - If invoices are not paid when due, a Service Charge
will be assessed to Xxxxxx Baking, up to the maximum amount permitted by law.
Unpaid invoice balances and finance charges due to SYSCO will be deducted from
any credits due to Xxxxxx Baking.
* Confidential Treatment Requested
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7.3 GUARANTEES AND APPLICATIONS - Xxxxxx Baking will complete, execute and
deliver a new account form to SYSCO before this Agreement becomes binding upon
SYSCO. If required by SYSCO, Xxxxxx Baking will submit a guarantee of Xxxxxx
Baking's obligations under this Agreement executed by a third party specified by
SYSCO.
7.4 FINANCIAL INFORMATION - The continuing creditworthiness of Xxxxxx
Baking is of central importance to SYSCO. In order to enable SYSCO to monitor
Xxxxxx Baking's financial condition, Xxxxxx Baking will supply annual financial
statements to SYSCO consisting of an income statement, balance sheet and
statement of cash flow. SYSCO may request such further financial information
from Xxxxxx Baking from time to time as will enable SYSCO to accurately assess
Xxxxxx Baking's financial condition.
8. PRICE VERIFICATION
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Xxxxxx Baking will be allowed one annual price verification for purchases
made under this Agreement. SYSCO will furnish computer verification of Costs for
the Products to be price verified, subject to the following limitations:
1. Date, time and place of price verification must be mutually agreed;
2. Fifteen (15) working days notice to SYSCO;
3. Items to be price verified should not exceed fifteen (15) line items,
and will be taken from the price list or purchasing order guide;
4. The period for which pricing is to be verified not to begin more than
twelve (12) months prior to the date of the price verification.
It is understood that Xxxxxx Baking's price verification will consist of
reviewing SYSCO's computer verification of Costs.
9. TERM
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The term of this Agreement will begin on April 15, 1998, and will remain in
effect until terminated. This Agreement may be terminated:
(a) By SYSCO upon written notice to Xxxxxx Baking if Xxxxxx Baking's
financial position deteriorates materially, determined by SYSCO in its sole
judgment; and
(b) By either party upon sixty (60) days prior written notice to the other
party.
Upon such termination, Xxxxxx Baking agrees (i) to fully comply with its
obligations under Section 6.5 of this Agreement and (ii) to pay all invoices at
the earlier of the time they are due under Section 7.1 above or two (2) weeks
from the date of the last shipment to Xxxxxx Baking or a Xxxxxx Baking Location.
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10. MISCELLANEOUS
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10.1 ASSIGNMENT - Neither party may assign this Agreement without the prior
written consent of the other provided that SYSCO may utilize its operating
companies to perform as indicated in this Agreement. Subject to this limitation,
this Agreement shall be binding upon and inure to the benefit of the successors
and assigns of each of the parties.
10.2 ENTIRE AGREEMENT - The parties expressly acknowledges 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.
10.3 AMENDMENTS - This Agreement may only be amended by a written document
signed by each of the parties.
10.4 NOTICES - Any written notice called for in this Agreement may be given
by personal delivery, first class mail, overnight delivery service or facsimile
transmission. Notices given by personal delivery will be effective on delivery;
by overnight service on the next business day; by first class mail five business
days after mailing; and by facsimiles when an answer back is received. The
address of each party is set forth below.
* Confidential Treatment Requested
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Executed as of the date set forth at the beginning of this Agreement.
SYSCO FOOD SERVICES OF PORTLAND, INC.
Xxxx Xxxxx By: /S/Xxxx Xxxxx
Vice President Finance ----------------------------
Telephone: (000) 000-0000 Its: VP Finance
Facsimile: (000) 000-0000 ---------------------------
XXXXXX BAKING
______________________________ By: /s/ Xxx Xxxx
______________________________ ----------------------------
______________________________ Its: Chief Financial Officer
Attention:____________________ ---------------------------
Telephone:____________________
Facsimile:____________________
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MASTER DISTRIBUTION AGREEMENT
EXHIBIT INDEX
Exhibit A Participating Xxxxxx Baking Locations
Exhibit B Description of SYSCO -registered trademark- Brand
Quality LevelS
Exhibit C Direct Pricing Agreements
* Confidential Treatment Requested
EXHIBIT A
TO
MASTER DISTRIBUTION AGREEMENT
PARTICIPATING XXXXXX BAKING LOCATIONS
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WASHINGTON LOCATIONS
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COMMISSARY BURIEN
15413 NE 95th 00000 0xx Xxxxxx, X. A-107
Redmond, WA 98052 Xxxxxx, XX 00000
Phone: (000) 000-0000 Phone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
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MAIN STREET XXXXXXX
000 000xx Xxxxxx, XX 2021 NW Market
Bellevue, WA 98004 Xxxxxxx, XX 00000
Phone: (000) 000-0000 Phone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
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10TH FACTORIA
00000 00xx Xxxxxx, XX 0000 000xx Xxxxxx, XX A-1
Bellevue, WA 98004 Xxxxxxxx, XX 00000
Phone: (000) 000-0000 Phone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
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ISSAQUAH
000 XX Xxxxxx Xxxx., #X
Xxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
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CROSSROADS
00000 0xx Xxxxxx XX
Xxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
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* Confidential Treatment Requested
EXHIBIT A
TO
MASTER DISTRIBUTION AGREEMENT - CONTINUED
PARTICIPATING XXXXXX BAKING LOCATIONS (CONTINUED)
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OREGON LOCATIONS
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NW 23RD 4TH AND XXXXXX
0000 XX 00xx Xxxxxx 845 SW Fourth
Portland, OR 97210 Xxxxxxxx, XX 00000
Phone: (000) 000-0000 Phone: (000) 000-0000
(000) 000-0000 Fax: (000) 000-0000
Fax: (000) 000-0000
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BYBEE PORTLAND AIRPORT
0000 XX Xxxxx Xxxx. 0000 XX Xxxxxxx Xxx
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Phone: (000) 000-0000 Phone: (000) 000-0000
(000) 000-0000 Fax: (000) 000-0000
Fax: (000) 000-0000
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LAKE OSWEGO 6TH AND XXXXXX
406 "A" Avenue 000 XX 0xx Xxxxxx
Xxxx Xxxxxx, XX 00000 Xxxxxxxx, XX 00000
Phone: (000) 000-0000 Phone: (000) 000-0000
(000) 000-0000 Fax: (000) 000-0000
Fax: (000) 000-0000
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NE 10TH AND BROADWAY 4TH AND PINE
000 XX Xxxxxxxx 000 XX 0xx Xxxxxx
Xxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Phone: (000) 000-0000 Phone: (000) 000-0000
(000) 000-0000 Fax: (000) 000-0000
Fax: (000) 000-0000
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SALEM XXXXXXXXXX
000 Xxxxxxx XX, Xxxxx 000 2711 NW Town Center Dr.
Salem, OR 97301 Xxxxxxxxx, XX 00000
Phone: (000) 000-0000 Phone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
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EXHIBIT A
TO
MASTER DISTRIBUTION AGREEMENT - CONTINUED
PARTICIPATING XXXXXX BAKING LOCATIONS (CONTINUED)
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SHERWOOD
00000 XX Xxxxxxxx-Xxxxxxxx Xx.
Xxxxxxxx, XX 00000-0000
Phone: (000) 000-00-00
Fax: (000) 000-0000
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CITY HALL
0000 XX Xxxxx
Xxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (503) N/A
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RALEIGH HILLS
0000 XX Xxxxxxxxx-Xxxxxxxxx Xxx.
Xxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (503) N/A
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SALEM
000 Xxxxxxx XX - Xxxxx #000
Xxxxx, XX 00000
Phone: (503)
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EXHIBIT B
TO
MASTER DISTRIBUTION AGREEMENT
SYSCO QUALITY LEVELS
IMPERIAL SYSCO's highest quality level, produced and packed to
specifications which exceed the industry's top grading standards
and typically come from prime growing regions.
SUPREME Similar in quality to SYSCO's IMPERIAL products but
differentiated in that they are products unique to the
foodservice industry.
CLASSIC SYSCO's lead quality level under which fine quality products are
marketed. CLASSIC products generally meet or exceed competitive
"first" labels.
RELIANCE RELIANCE products offer consistency and value with specifications
that meet or exceed competitive labels for like economy grades
and quality. RELIANCE products offer consistency and value.
* Confidential Treatment Requested
EXHIBIT C
TO
MASTER DISTRIBUTION AGREEMENT
DIRECT PRICING AGREEMENTS
Xxxxxx Baking has agreements in place with the following vendors for
the following products, SYSCO will apply in pricing Products under this
Agreement.
VENDOR COVERED PRODUCTS
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* Confidential Treatment Requested
