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Exhibit 10.8
TOM'S FOODS INC.
DISTRIBUTOR AGREEMENT
THIS AGREEMENT is made and entered into ___________________, 19____,
between Tom's and ____________________________________________________, with
its (his) principal place of business at ______________________________________
______________________________________.
WITNESSETH:
WHEREAS, Tom's, among other items, manufactures or has manufactured for it
the Products (as defined herein). All of the Products which Distributor is
authorized to sell and distribute pursuant to the terms of this Agreement are
listed and described on the Tom's Product List (as defined herein); and
WHEREAS, Tom's sells the Products to, among others, independent
distributors; and
WHEREAS, the value of Tom's distributorships and the ability to secure
Vending Machine (as defined herein) and customer locations are due in large
part to the goodwill created by Tom's through its promotion and support of the
Products (as defined herein) and the Proprietary Marks (as defined herein); and
WHEREAS, Distributor desires to enter into the business of selling and
distributing the Products and certain other items;
NOW, THEREFORE, the parties agree as follows:
I. DEFINITIONS
In addition to the other terms defined in this Agreement, the following
terms shall have the meanings set forth in this Section:
A. Adequate Service - see Section VI.D. In addition to the definition of
this term contained in Section VI.D., this term shall also be used herein to
describe the time and manner in which the customers of Distributor desire
service and/or delivery of Products by Distributor.
B. Affiliated Products shall mean certain other snack food and confection
items and cold and hot beverages which may be specified as "Affiliated
Products" from time to time by Tom's and listed on Appendix A attached to this
Agreement and made a part hereof.
C. Agreement shall mean this Tom's Foods Inc. Distributor Agreement by and
between Tom's and Distributor, and any amendment, renewal or successor thereto.
D. Area shall mean the geographical area within which Distributor operates
the Tom's Distributorship and which is more specifically described in Appendix
B attached to this Agreement and made a part hereof.
E. "base business purchases" - see Section V.B.(2)(a).
F. Combination Distributorship shall mean a type of distributorship granted
by Tom's in which a distributor is authorized to sell and distribute Products
and Affiliated Products through Vending Machines, by means of full service
direct store door or store front delivery ("DSD"), through other methods of
distribution as Tom's may specifically authorize or designate in the future,
and to serve as a Delivery Agent, as more specifically provided in Sections II.
and VI. below.
G. Consigned Inventory shall mean an inventory of Products and Affiliated
Products owned by Tom's and held on consignment by Distributor to be delivered
by Distributor as Delivery Agent to National Accounts.
H. Deferred Licensing Fee shall mean a non-refundable cash fee due Tom's
upon a Transfer, termination or expiration of this Agreement, or renewal of
this Agreement, as more specifically described in Section IX.D.(1) below.
I. Delivery Agent shall mean any person or person(s) designated by Tom's to
hold on consignment for Tom's Consigned Inventory and to deliver Consigned
Inventory to National Accounts.
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J. Delivery Fee shall mean the fee paid to Distributor as Delivery Agent
for delivering Consigned Inventory to National Accounts.
K. Distributor shall mean the individual, corporation, partnership or other
entity as described in the initial paragraph of this Agreement, and
Distributor's legal representatives, heirs, successors and assigns.
L. Distributor Price List or DPL shall mean the price of each Product as
shown on the then-current Tom's Product List.
M. Distributor's Assets shall mean those assets of Distributor described in
Sections XI.D. and XI.E.
N. force majeure - see Section V.B.(2)(b)
O. Location shall mean the location of Distributor's Warehouse specified
in Appendix B.
P. National Account Advance - see Section VI.B.
Q. National Account Assets - see Section XI.H.
R. National Accounts shall mean retail chain and convenience stores, retail
and wholesale mass merchandisers, food service companies, United States armed
forces, and local, state and federal political subdivisions and agencies who
are customers of Tom's.
S. Net Cash Flow shall mean net cash generated during the preceding twelve
(12) month or other applicable period from all operating and investment
activities of the Tom's Distributorship after payment of directly related cost
of goods sold, reasonable operating and administrative expenses, and reasonable
management compensation, but before or excluding the payment of any owner
withdrawals (other than said reasonable management compensation), debt service,
income taxes and dividends, and reduced for deferred maintenance and capital
needs (including without limitation, equipment, leasing and financing needs) of
the Tom's Distributorship and excluding the effects of the receipts and
disbursements arising as a result of Distributor serving as a Delivery Agent.
Net Cash Flow shall be determined by Tom's from, among other things, a review
of the information and documents shown on and described in paragraph C of
Appendix E, including without limitation, federal income tax returns.
T. OTC/Delivery Agent Distributorship shall mean a type of distributorship
granted by Tom's authorizing a distributor to sell and distribute the Products
and Affiliated Products by means of full service direct store door or store
front delivery ("DSD"), or through other methods of distribution as Tom's may
specifically authorize or designate in the future, and to serve as a Delivery
Agent, as more specifically provided in Sections II. and VI. below.
U. Principal Shareholder and/or Principal Partner shall mean the person or
persons who have executed the signature page(s) of this Agreement agreeing to
be individually and personally bound by all the obligations of the Distributor
under this Agreement.
V. Products shall mean those certain prepackaged snack food and confection
items manufactured by or for Tom's under the Proprietary Marks, and listed and
described on the Tom's Products List. Products shall not include (i) snack
food products and other items sold under any trademark or trade name other than
the Proprietary Marks, or (ii) snack food products and other items manufactured
by or for Tom's under the Proprietary Marks but which are not listed and
described on the Tom's Product List.
W. Proprietary Marks shall mean the trademarks "Tom's" and "Tom's Great
American."
X. "purchases" - see Section V.B.(2).
Y. Request - see Section IV.P.
Z. Tom's shall mean Tom's Foods Inc., a Delaware corporation with its
principal office and place of business in Columbus, Georgia, and its
affiliates, successors and/or assigns.
AA. Tom's Distributorship shall mean the business which is the subject
matter of this Agreement which authorizes and obligates the Distributor to
purchase, market, sell and distribute Products, Affiliated Products and such
other authorized products upon the terms and conditions contained in this
Agreement.
BB. Tom's Product List shall mean a list of Products provided to
Distributor by Tom's from time to time setting forth the Products available to
Distributors in a specific geographic area or region, the prices of each
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Product, the terms of sale and delivery, and, if any, available discounts. The
Tom's Product List, which is effective as of the date of this Agreement, is
attached hereto as Appendix C and made a part hereof.
CC. "total purchases" - see Section V.B.(2)(b).
DD. Transfer - see Section IX.B.
EE. Transfer Fee - see Section IX.D.(2).
FF. Underdeveloped Area shall mean the portion or portions of the Area that
Tom's, in its sole discretion, deems to be undeveloped or underdeveloped by
Distributor.
GG. Vending Distributorship shall mean the type of Distributorship granted
by Tom's in which a distributor is authorized to sell and distribute Products
and Affiliated Products through Vending Machines, as specifically provided in
Section II. below.
HH. Vending Machines shall mean manual, electrical and all other types of
vending machines through which the Distributor shall sell Products and
Affiliated Products.
II. Warehouse shall mean the Distributor's Warehouse, storage facility or
location specified in Appendix B.
II. GRANT
A. Tom's hereby grants to Distributor the right, and Distributor
undertakes the obligation, to conduct and operate the Tom's Distributorship to
purchase, market, sell and distribute only:
(i) the Products, and
(ii) the Affiliated Products.
Distributor shall sell and distribute the Products and Affiliated Products
through one of the following:
(1) Vending Distributorship. If Distributor is granted a Vending
Distributorship then Distributor shall sell and distribute the Products and the
Affiliated Products through Vending Machines located within the Area or through
any purchasers who resell the Products and Affiliated Products solely to
consumers through Vending Machines located in the Area. Distributor may not
sell or distribute Products and Affiliated Products through any other methods
of distribution. Distributor agrees that the Products shall occupy not less
than 75% of the facings or spindles in each snack Vending Machine. The
remaining facings or spindles may be used to dispense Affiliated Products and
other high quality products which are not similar to or competitive with any of
the Products and Affiliated Products and are approved in writing in advance by
Tom's. With regard to cold and hot beverages, Distributor agrees to use
Distributor's best efforts to sell and distribute Affiliated Products through
Vending Machines as described above; however, Distributor may sell and
distribute such other high quality beverage products through Vending Machines
as consumer/market forces dictate. Tom's may at any time inspect or audit
Distributor's Vending Machines and/or Warehouse to determine compliance with
this Section and this Agreement; or
(2) OTC/Delivery Agent Distributorship. If Distributor is granted an
OTC/Delivery Agent Distributorship then Distributor shall sell and distribute
the Products and the Affiliated Products by means of full-service direct store
door or store front delivery ("DSD") or through other methods of distribution
as Tom's may specifically authorize or designate in the future to customers
located within the Area who sell or resell the Products and the Affiliated
Products to customers or consumers located within the Area and shall serve as
Delivery Agent as described in Section VI below. Distributor may not sell or
distribute Products and Affiliated Products (i) through Vending Machines, or
(ii) through any purchasers who resell the Products and Affiliated Products to
consumers through Vending Machines; or
(3) Combination Distributorship. If Distributor is granted a
Combination Distributorship then Distributor shall sell and distribute Products
and Affiliated Products within the Area by all of the methods of distribution
provided for in a Vending Distributorship and an OTC/Delivery Agent
Distributorship, subject to the limitations and restrictions provided in this
Agreement.
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B. The Affiliated Products and the channel(s) of distribution through
which each Affiliated Product may be sold, if applicable, are specified in
Appendix A. Appendix A may be amended unilaterally by Tom's from time to time.
Distributor is not required to purchase any of the Affiliated Products.
C. Distributor has been granted a ________________________________________
Distributorship, and Distributor may sell Products and Affiliated Products by
methods of distribution applicable to such Distributorship (as set forth in
Section II.A. above).
D. During the term of this Agreement, provided that Distributor is not in
default under any term or provision of this Agreement, TOM's will not designate
another distributor for selling or distributing the Products by the same
methods of distribution as Distributor within the Area, and Tom's will not
itself or through others sell and distribute the Products through such methods
of distribution; provided, however, regardless of whether Distributor is in
default hereunder, Tom's or its designees may sell and distribute the Products
within the Area through any or all of the following: (i) through methods of
distribution other than those used by Distributor, (ii) to National Accounts,
(iii) through vending operations organized, acquired or developed by Tom's, its
subsidiary and/or its affiliate, (iv) to any customer situated within the Area
requesting service, if Distributor is unable or unwilling to provide such
service, or (v) to customers located within the Area under private labels,
generic packaging and under trademarks other than the Proprietary Marks.
Nothing herein shall be construed to prevent or inhibit Tom's in any way from
distributing and/or selling merchandise, products, goods, wares or any other
things other than the Products within the Area.
Notwithstanding any other provision of this Agreement, Distributor and
Tom's agree that Tom's may designate another distributor to sell and distribute
the Products and Affiliated Products, or Tom's, itself or through others, may
sell and distribute the Products or Affiliated Products by or through any
methods of distribution within the Area upon the occurrence or happening of an
event which causes Distributor to be in default under this Agreement. In such
event, Tom's shall not be required, prior to designating another distributor or
selling and distributing Products or Affiliated Products itself or through
others, to notify Distributor of such default or to terminate Distributor for
such default; provided, however, Tom's does not waive, but reserves any and all
rights to so notify and/or terminate Distributor. Within any given Area, Tom's
may designate an OTC/Delivery Agent Distributorship and a Vending
Distributorship or a Combination Distributorship.
III. TERM AND RENEWAL; TERMINATION BY DISTRIBUTOR
A. Except as otherwise provided herein, the initial term of this Agreement
shall expire seven (7) years from the date of this Agreement.
B. The Tom's Distributorship shall continue in full force and effect
following the initial term for additional consecutive renewal terms of five (5)
years each, subject to Distributor's payment of the Deferred Licensing Fee as
described in Section IX.D.(1) hereof and execution of the then-current form of
Tom's Distributor Agreement at least 90 days prior to the expiration of the
then-current term. The then-current form of Tom's Distributor Agreement may
establish performance standards different from and/or greater than those
contained in this Agreement. In the event Distributor fails to pay timely the
Deferred Licensing Fee or to execute the then-current form of the Tom's
Distributor Agreement at least 90 days before the end of the applicable term,
Distributor shall be in default hereunder, subject to termination as provided
in Section X.C. hereof. Tom's, in its sole discretion, may refuse to renew
this Agreement at the end of the initial term or any renewal term by providing
written notice to Distributor not less than ninety (90) days prior to the end
of the term if: (i) Distributor is in default of any provision of this
Agreement; or (ii) Distributor has failed during the initial or any renewal
terms to comply with all the terms and conditions of this Agreement, regardless
of whether Distributor has subsequently cured any defaults that may have
occurred.
C. Notwithstanding any provision to the contrary contained in this
Agreement, upon Distributor failing to execute the then current form of the
Tom's Distributor Agreement or upon the giving of notice by Tom's as described
in Section III.B. above, Tom's itself or through others may at any time during
the applicable ninety (90) day period, at its option and without notice to
Distributor, enter the Area and compete with Distributor by, among
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other things, marketing, selling and distributing Products and Affiliated
Products through any methods of distribution, including without limitation, the
same methods of distribution used by Distributor. In the event Tom's elects to
so compete with Distributor, Tom's shall have the option, exercisable at any
time within said ninety (90) day period, to purchase from Distributor and
Distributor shall sell to Tom's all or a portion of (as Tom's may choose)
Distributor's Assets and National Account Assets upon the terms set forth in
Sections XI.D., XI.E. and XI.H. hereof. In such event, Distributor shall
convey such assets to Tom's in accordance with Section XI.F. hereof. Further,
Distributor agrees that upon Tom's exercise of its option to purchase
Distributor's Assets and National Account Assets as described herein, Tom's may
begin its due diligence process which shall include, but not be limited to, a
review of the items set forth in paragraph C of Appendix E and an analysis of
the market within the Area, and during said ninety (90) day period, to operate
the Tom's Distributorship in accordance with the terms of this Agreement.
IV. DUTIES OR DISCRETIONARY SERVICES OF TOM'S
A. From time to time, Tom's shall provide Distributor with a then-current
regional Tom's Products List. The Tom's Products List may be unilaterally
amended by Tom's from time to time and at any time during the term of this
Agreement.
B. Provided Distributor is not in default under this Agreement, Tom's shall
use its reasonable best business efforts to cause Products purchased by
Distributor to be delivered to the Location.
C. For ninety (90) days following the death of Distributor or of the
Principal Partner or Principal Shareholder, Tom's will furnish, upon request of
the deceased's personal representative, consulting assistance to the personal
representative to assist in the operation of the business, at no expense to
Distributor, and management assistance charged at Tom's cost. In the event
Tom's provides such consulting or management assistance, Distributor
acknowledges and agrees that Tom's shall not, by virtue of providing such
assistance or otherwise, assume any of Distributor's liabilities, and Tom's
shall have no liability to Distributor for damages, losses, or claims arising
out of or in connection with the providing of such assistance.
D. From time to time, Tom's may assist Distributor in obtaining or
purchasing Vending Machine, vehicle, display equipment, computer equipment, or
other equipment to assist Distributor in developing and growing the Tom's
Distributorship.
E. Tom's may assist Distributor in finding Vending Machine locations and in
locating and selling customer accounts.
F. Tom's may assist Distributor with the formation of plans to help
Distributor develop and grow Distributor's market.
G. Tom's has produced and continues to produce training programs to assist
Distributor in developing and growing his market, including merchandising,
selling and marketing training, and to keep Distributors advised on employment
matters including hiring, firing, worker's compensation and employee benefits.
H. Tom's may assist Distributor in financial planning relating to the
Distributorship.
I. Tom's will develop, communicate and make available to Distributor all
applicable Tom's marketing and promotion plans and programs.
J. Tom's will continue to attempt to improve existing Products and to
develop new Products in order to meet changing consumer demands.
K. Tom's will continue to look for ways or means to assist the Distributor
in reducing the cost of the operation of the Tom's Distributorship, including
without limitation, seeking lower group health, automobile and general
liability insurance coverages.
L. Subject to Tom's ability to do so, Tom's will make available to
Distributor technical advice with respect to the repair and maintenance of the
Vending Machines and other equipment of Distributor upon mutually agreeable
terms.
M. Subject to availability, Tom's will make available to Distributor
vending parts and accessories upon mutually agreeable terms.
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N. Tom's, itself or through third party vendors, may make available to
Distributor a route distribution computer system which is or will be compatible
with Tom's computer system.
O. Tom's may belong to certain trade groups or associations and if so,
Tom's may represent Distributor's interests where consistent with Tom's
interests on various matters or issues, including without limitation, legal
issues, legislative efforts or actions, tax issues, small business issues, and
employment matters.
P. In order to provide Distributor with an exit strategy, Tom's agrees,
upon Distributor's written request or upon the written request of Distributor's
representative in the event of Distributor's death or dissolution (the
"Request"), to purchase the Tom's Distributorship from Distributor upon the
following terms and conditions, to-wit:
(1) Immediately upon Tom's receipt of the Request, Distributor
acknowledges that Tom's may begin its due diligence process which shall
include, but not be limited to, a review of the items set forth in paragraph C
of Appendix E and an analysis of the market within the Area;
(2) Upon completion of said due diligence process, Tom's shall purchase
from Distributor and Distributor shall sell to Tom's all of Distributor's
Assets and National Account Assets upon the terms set forth in Sections XI.D.,
XI.E. and XI.H. hereof. Distributor shall convey such assets to Tom's in
accordance with Section XI.F. hereof; and
(3) Tom's obligation to purchase as described in this Section IV.P.
shall be contingent and conditioned upon Distributor having been at all times
in full compliance with all of the terms and conditions of this Agreement
during the full three (3) years preceding the date of the Request. If the
contingency or condition referenced in the preceding sentence is not met, then
Tom's shall not have an obligation to purchase, but shall have an option,
exercisable within forty-five (45) days of the Request, to purchase from
Distributor and Distributor shall sell to Tom's all or a portion (as Tom's may
choose) of said assets upon the terms and conditions described in Sections
XI.D., XI.E., XI.F. and XI.H. hereof.
V. DUTIES OF DISTRIBUTOR
Distributor understands and acknowledges that the operation of the
Distributorship is important to Distributor, Tom's, and other distributors in
order to develop and maintain high service standards, to increase the demand
for the Products, and to protect Tom's reputation and goodwill. Accordingly,
Distributor agrees as follows:
A. Distributor agrees that during the term of this Agreement, Distributor
shall purchase Products from Tom's only, use Distributor's best efforts and
diligently attempt to maximize the sale of the Products within the Area,
promote and market the Products, exercise good merchandising practices, provide
high quality service to Distributor's customers, solicit accounts and locations
and develop or improve new or existing business, maintain all Vending Machines
in clean, sanitary and good operating condition, technologically upgraded from
time to time consistent with good industry standards, and properly rotate all
Products, Affiliated Products, and Consigned Inventory to insure freshness.
B. Distributor acknowledges the importance to Distributor's business and to
Tom's and other distributors of annually increasing Distributor's sales volume
within the Area. Accordingly, Distributor shall:
(1) during the remainder of the calendar year during which this
Agreement is executed, purchase at least $_________ of the Products from Tom's
and purchase at least $_________ of the Products during the first full calendar
year of the term of this Agreement;
(2) during each calendar year during the term of this Agreement
subsequent to the first full calendar year, increase Distributor's dollar
volume purchases of Products ("purchases") over purchases made during the prior
calendar year as follows:
(a) Base Business. Distributor agrees to increase Distributor's
"base business purchases" by a minimum of three percent (3%). "Base business
purchases" shall mean the dollar amount of Distributor's purchases of Products
for Distributor's own account and shall not include the replenishment of
Consigned Inventory if Distributor serves as a Delivery Agent; and
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(b) Total Purchases. Distributor agrees to increase Distributor's
"total purchases" by a minimum of three percent (3%). "Total purchases" shall
mean the aggregate dollar amount of Distributor's purchases including base
business purchases and the replenishment of Consigned Inventory if Distributor
serves as a Delivery Agent.
The purchases and the required growth thereof as described in this
Section shall not include and/or will be adjusted for increases or decreases in
purchases during the applicable period due to (i) the loss of a National
Account provided such loss is through no fault of Distributor, (ii) the
exercise by Tom's of its rights to acquire Underdeveloped Area, (iii) the
occurrences of a Transfer approved and consented to by Tom's, and (iv) Acts of
God, strikes, explosions, storms, fire, riots, war, and other events of force
majeure, but excluding actions by competitors, customers or representatives of
Distributor ("force majeure").
(3) Notwithstanding any provision herein to the contrary, if Distributor
has a decrease in total purchases of five percent (5%) or more for any
consecutive three (3) month period as compared to the same period of the
preceding year, Tom's may exercise its option to terminate this Agreement
pursuant to Section X.B.(7) hereof. In determining whether to exercise its
option to terminate under this Section, Tom's will consider and make allowances
for decreases in total purchases due to (i) force majeure, (ii) the loss of a
National Account through no fault of Distributor, (iii) Tom's exercise of its
rights to acquire Underdeveloped Area, and (iv) the occurrence of an approved
Transfer.
C. Within ninety (90) days of the receipt of notice from Tom's, Distributor
shall (i) purchase and begin using in the operation of the Tom's
Distributorship, a computer system, including without limitation, handheld
computers and computer software, which has been approved by Tom's and is
compatible with any route distribution computer system that Tom's may
implement, support or require, and (ii) begin providing to Tom's, at no cost to
Tom's, all of Distributor's sales and marketing data relating to the sale and
distribution of Products in such form, detail and at such intervals as Tom's
may require. Such data shall include, but not be limited to, Product mix,
Product sales by channel, identification of Products sold and identification of
the locations of Product sales.
D. Distributor shall maintain a Warehouse which, in the opinion of Tom's,
is of adequate size, properly located to provide easy access for delivery of
the Products, and is and shall remain in a high degree of sanitation to provide
quality assurance.
E. Distributor shall permit Tom's itself or its designees to enter the
Warehouse at any reasonable time for the purpose of conducting sanitation
inspections and shall take such reasonable steps as may be necessary to correct
immediately any deficiencies so that the Warehouse is in compliance with this
Agreement and with federal, state and local laws, rules and regulations.
F. Distributor shall have and maintain a fleet of service and distribution
vehicles which, in the opinion of Tom's, is of adequate size, capacity, and
performance level to service the Area; and Distributor shall maintain the fleet
of vehicles in good repair and working order and in a clean and sanitary
condition.
G. Distributor agrees to maintain a competent, conscientious and trained
staff. Distributor agrees that Distributor's staff will be clean, well-groomed
and dressed neatly in accordance with good industry standards.
H. Distributor shall not sell or offer to sell or donate any
out-of-code-date Products for human consumption and shall remove such Products
from Distributor's Vending Machines, trucks, Warehouse, other equipment, and
from customers' places of business and destroy the same.
I. Distributor shall purchase from Tom's an initial inventory and
thereafter shall promote and sell a representative group of Products from each
category of Products.
J. Distributor agrees that if at any time a lien is placed on any assets
(including Distributor's bank account) used by Distributor in the Tom's
Distributorship, including, without limitation, any lien by the Internal
Revenue Service or any state or local taxing authority or entity, Distributor
will, within three (3) days of the filing or obtaining knowledge of such lien,
give Tom's written notice of the same.
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K. Except as prevented by force majeure, Distributor shall place an order
for Products from Tom's at least once each seven (7) days, said order to be for
a reasonable quantity of a representative group of Products from each category
of Products.
L. Distributor shall pay all obligations and indebtedness it owes to Tom's
and to any other person or entity if Tom's is a guarantor or contingently
liable on Distributor's obligations to such other person or entity as such
obligations and indebtedness become due and payable. In the event Distributor
fails to pay any obligations and indebtedness to Tom's within thirty (30) days
of the same being due, in addition to any other remedies available to Tom's,
Tom's shall be entitled to collect from Distributor a late fee not to exceed
the maximum fee allowed by applicable law. Distributor grants to Tom's the
right of set-off to be exercised by Tom's at any time, without notice.
M. Distributor agrees to use Distributor's best efforts to cooperate with
Tom's in its marketing and promotional plans.
N. Distributor shall operate Distributor's business in compliance with all
federal, state and local laws, rules and regulations and in compliance with all
of the terms, provisions and covenants of this Agreement.
O. Distributor or the Principal Shareholder or Principal Partner, as
applicable, agrees to be directly involved in the operation of the Tom's
Distributorship. Further, during the term of this Agreement, Distributor
agrees that neither Distributor nor any shareholder, partner, member or other
person or entity having an ownership interest in Distributor or the Tom's
Distributorship shall be employed by or have any interest in any direct
competitor of Tom's, or any subsidiary, division or affiliate of such
competitor. The preceding sentence shall not apply to an ownership interest of
less than a one percent (1%) beneficial interest in the outstanding equity
securities of any such publicly held competitor.
P. Distributor shall market, promote, sell and distribute Products
throughout all regions or portions of the Area and through all authorized
channels of distribution, therefore:
(1) In the event Tom's determines that there is an Underdeveloped Area,
then, in such event, Tom's shall give Distributor written notice thereof.
Thereafter Tom's and Distributor shall have a twenty (20) day period to
formulate a mutually agreeable plan to develop the Underdeveloped Area. Should
Tom's and Distributor be unable to formulate such a plan, then, notwithstanding
any provision contained herein to the contrary, Tom's may, at its option,
exercisable within twenty-five (25) days of the end of said twenty (20) day
period, purchase and Distributor shall sell Distributor's business and all or a
portion (as Tom's may choose) of the Distributor's Assets and National Account
Assets located in the Underdeveloped Area upon the following terms, to-wit:
(a) OTC. Tom's shall pay to Distributor for the purchase of such
Distributor's Assets and National Account Assets located within the
Underdeveloped Area an amount equal to five percent (5%) of Distributor's
annual gross over-the-counter sales of Products and Affiliated Products within
the Underdeveloped Area over the preceding twelve (12) month period, as such
sales are shown upon Distributor's financial statements verified under oath by
Distributor to be true and correct, plus the fair market value of any physical
assets being purchased as mutually agreed to by Tom's and Distributor.
Over-the-counter sales shall mean sales to customers for Distributor's own
account as described in Section II.A.(2) above.
(b) Vending. Tom's shall pay to Distributor for the purchase of such
Distributor's Assets and National Account Assets located within the
Underdeveloped Area an amount equal to seven percent (7%) of Distributor's
annual gross vending sales of the Products and Affiliated Products within the
Underdeveloped Area over the preceding twelve (12) month period, as such sales
are shown upon Distributor's financial statements verified under oath by
Distributor to be true and correct, plus the fair market value of any physical
assets being purchased as mutually agreed to by Tom's and Distributor. Vending
sales shall mean sales through Vending Machines as described in Section
II.A.(1) above.
(c) National Accounts Excluded. For the purposes of this Section,
Distributor's annual gross over-the-counter and vending sales shall not include
sales or deliveries to National Accounts unless such sales or deliveries are
made pursuant to Section VI.N. hereof.
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(d) Appraiser. If Tom's and Distributor cannot agree on a fair
market value as referenced in subsections V.P.(1)(a) and (b) above within
thirty (30) days of Tom's giving notice of the exercise of its rights under
this Section V.P., then an independent appraiser shall be designated by Tom's
and his determination of the fair market value of such assets shall be final
and binding.
(e) Closing. In the event Tom's exercises its option to purchase as
described above, the closing of such purchase shall occur within forty-five
(45) days (or sooner as Tom's may choose) of such exercise. During said
forty-five (45) day period Tom's may perform its due diligence which shall
include, but not be limited to, a review of the items set forth in paragraph C
of Appendix E and an analysis of the market within the Area.
(2) In all respects under this Section V.P., including, without
limitation, the exercise of Tom's rights hereunder, Tom's agrees as follows:
(i) to act in good faith; and (ii) if Tom's elects to exercise its right to
purchase said assets, it may do so no more than once in any consecutive twelve
(12) month period.
(3) In the event Tom's purchases Distributor's business and assets in
the Underdeveloped Area as described above, Distributor shall have no further
rights or interest in and to the Underdeveloped Area and the Area shall be
redrawn and redefined by Tom's to exclude the Underdeveloped Area and Appendix
B to this Agreement shall be amended accordingly. In such event, Tom's may,
itself or through others, by or through any means, method or technique, sell
and distribute Products and Affiliated Products within the Underdeveloped Area.
Distributor agrees to convey to Tom's any assets purchased pursuant to this
Section V.P. free and clear of all liens and encumbrances and agrees to execute
all documents Tom's deems necessary to convey such title to Tom's.
(4) The rights and remedies provided Tom's under this Section V.P. are
in addition to and not in lieu of any other rights or remedies available to
Tom's hereunder, including without limitation, any such rights and remedies
provided under Section X. hereof.
(5) For the purposes of this Section V.P., the term "fair market value"
shall mean the amount at which the above physical assets would change hands
between a willing buyer and a willing seller, neither being under any
compulsion to buy or sell and both having reasonable knowledge of the relevant
facts.
VI. DELIVERY AGENT
Distributor agrees that in addition to any other duties and obligations
contained in this Agreement, Distributor will serve as the non-exclusive
Delivery Agent for Tom's within the Area. As the Delivery Agent, Distributor
agrees:
A. to hold on consignment for Tom's Consigned Inventory;
B. Tom's has advanced to Distributor the amount of $___________________
("National Account Advance"). Distributor will order, on behalf of Tom's,
Consigned Inventory of the value of said amount and will hold the same on
consignment for Tom's. Distributor agrees that if at any time during the term
of this Agreement, Tom's determines that the Consigned Inventory or National
Account Advance is insufficient or exceeds that which is necessary to provide
Adequate Service, then Distributor shall, as the case may be, accept additional
Consigned Inventory or National Account Advance or return such excess or its
National Account Advance equivalent to Tom's within fifteen (15) days of notice
from Toms;
C. to deliver Consigned Inventory to National Accounts situated within the
Area with only the special and limited powers, duties and authorities
specifically and expressly set forth in this Section VI. Tom's will notify
Distributor in writing as to the names and locations of the National Accounts;
D. to deliver Consigned Inventory at such times and in such manner as may
be requested by the National Accounts and Tom's ("Adequate Service"), and to
order from Tom's additional Consigned Inventory to replenish that which was
delivered to the National Accounts;
E. all sales to National Accounts shall be sales directly between Tom's and
the National Accounts. The proceeds of all such sales shall belong to and be
the property of Tom's and all collections and credit risks from such sales
shall likewise be the responsibility of or borne by Tom's;
F. to use such delivery tickets, credit tickets, price lists, software, and
computer interfaces as may be deemed necessary by Tom's for Distributor to
perform its duties as Delivery Agent in accordance with the terms
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of this Agreement. Distributor agrees to submit such delivery tickets, credit
tickets, other documentation or electronic or computer data to Tom's within
seven (7) days of the date of such tickets, documentation, or data or sooner if
Tom's so directs. Distributor agrees to perform its duties as Delivery Agent
in accordance with the terms, policies and procedures of Tom's relating to
Delivery Agents and National Accounts which terms, policies and procedures may
be unilaterally amended by Tom's from time to time and at any time during the
term hereof, upon thirty (30) days prior written notice by Tom's;
G. at any reasonable time, authorized representatives of Tom's shall have
the right to enter and inspect the Warehouse to enable Tom's to inspect and
verify the Consigned Inventory;
H. Tom's will pay to Distributor the Delivery Fee as provided in Appendix F
attached hereto and made a part hereof. Appendix F may be unilaterally amended
by Tom's from time to time and at any time during the term of this Agreement,
upon thirty (30) days prior written notice from Tom's;
I. Tom's will furnish, at its expense, all display equipment and other
equipment needed for or requested by National Accounts, and that such display
equipment and other equipment so furnished shall be owned by Tom's and held by
Distributor for Tom's.
J. all expenses for office, clerical, warehousing, returns and allowances
for Consigned Inventory and delivery costs incurred by the Distributor as
Delivery Agent, will be solely the responsibility of Distributor. Distributor
will prepare on behalf of Tom's all property tax returns for the Consigned
Inventory and equipment held by Distributor for Tom's. Within a reasonable
time prior to the filing date, Distributor will forward such returns to Tom's
for review. Distributor will also obtain each license required of it as a
Delivery Agent and xxxx Tom's, together with proper documentation, for the
expense of obtaining such license;
K. upon Tom's request, Distributor will prepare a listing or accounting of
the Consigned Inventory, in form and in such detail as Tom's may require.
Distributor agrees to furnish the listing or inventory to Tom's within ten (10)
days of Tom's request. Should Distributor fail to comply with any request by
Tom's to provide this listing or inventory of Consigned Inventory, in addition
to any other rights of Tom's under this Agreement, Distributor agrees that
Tom's may at any time have access to the Warehouse to specifically identify the
Consigned Inventory. Distributor agrees that Tom's identification of the
Consigned Inventory shall be final and binding upon Distributor;
L. the Consigned Inventory may from time to time change in specifics, but
the ownership, title and interest of Tom's therein shall remain in effect. The
ownership, title and interest of Tom's shall continue in the Consigned
Inventory ordered by Distributor to replenish the same as it is delivered to
National Accounts. The Consigned Inventory shall remain the property of Tom's,
and Tom's shall hold the title thereto until delivered to the National
Accounts, with all risk of loss, other than returns and allowances, to be borne
by Tom's, except that the Distributor will be fully responsible for losses due
to the willful and negligent acts of Distributor. In the event of loss, if
Consigned Inventory is commingled by Distributor with Distributor's inventory
of Products and Affiliated Products, then the loss shall be shared pro rata by
Tom's and Distributor based on total inventory owned by each at the Warehouse;
M. only Consigned Inventory shall be delivered pursuant to this Section VI.
and that Distributor will certify to this effect on every delivery ticket or
other proof of delivery submitted to Tom's by Distributor;
N. with Tom's prior consent which consent will not be unreasonably
withheld, Distributor shall have the right to solicit the National Accounts'
locations located within the Area and to sell the same for Distributor's own
account;
O. Tom's makes no representation, warranty or guarantee with regard to the
level of business Tom's may or may not have or do with any National Account.
Further, Distributor acknowledges and agrees that Tom's has no obligation
whatsoever to Distributor to increase or grow the Tom's business with any
National Accounts, to maintain any level of business with any National Account,
or to pay "greens fees", slotting allowances or other similar charges or fees
to any National Account;
P. failure by Distributor to provide Adequate Service to any National
Account constitutes a default under this Agreement, and Tom's, in addition to
any other right or remedy provided it hereunder, shall have the right
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immediately to make other arrangements for service to that National Account
without notice and without any liability to Distributor whatsoever, and
Distributor shall have no further rights or obligations relating to that
National Account;
Q. within fifteen (15) days of the termination or expiration of this
Agreement, Distributor will return to Tom's, at Distributor's expenses, all
Consigned Inventory or pay to Tom's in cash the National Account Advance,
whichever is greater. Further, within said fifteen (15) day period,
Distributor agrees to return to Tom's, at Distributor's expense, all Tom's
display equipment not located in a National Account's location.
VII. CONFIDENTIAL INFORMATION
During the term of this Agreement and during all times following
termination or expiration of this Agreement, Distributor shall not communicate,
divulge or use for the benefit of any other person, entity, partnership,
association, or corporation any confidential information, knowledge, or
know-how concerning Tom's, the operation of Tom's or the Tom's Distributorship
which may be communicated to Distributor or of which Distributor may be
apprised by virtue of Distributor's operation under the terms of this
Agreement, or any agreements or dealings between Distributor and Tom's,
including without limitation, any computer software that Tom's may develop,
marketing plans and programs, pricing policies, promotions, financing and
credit policies, and sales strategies and plans.
VIII. INSURANCE
Distributor shall procure, prior to the commencement of any operations
under this Agreement, and shall maintain in full force and effect at all times
during the term of this Agreement, at Distributor's expense, an insurance
policy or policies for the benefit of Distributor and Tom's, as may be
specified in Appendix D attached to this Agreement and made a part hereof which
may be unilaterally amended from time to time by Tom's. Upon request,
Distributor shall provide Tom's with evidence that such insurance has been
obtained.
IX. TRANSFER OF INTEREST
A. Tom's shall have the right to transfer or assign all or any part of its
rights or obligations under this Agreement to any person or legal entity.
B. Distributor understands and acknowledges that the rights and duties set
forth in this Agreement are personal to Distributor, and that Tom's has granted
the rights hereunder in reliance on the business skill, financial capacity and
personal character of Distributor or the owners of Distributor. Accordingly,
neither Distributor, nor any Principal Shareholder or Principal Partner, nor
any individual, partnership, corporation, or other legal entity which directly
or indirectly owns any interest in the Tom's Distributorship shall sell,
assign, transfer, convey, give away, pledge, mortgage, or otherwise encumber
any direct or indirect interest in the Tom's Distributorship (including,
without limitation, any direct or indirect interest in a Distributor that is a
corporation, partnership or other business entity), or any right, obligation or
interest in or under this Agreement or in a substantial portion of the assets
of the Tom's Distributorship (a "Transfer"), without the prior written consent
of Tom's which will not be unreasonably withheld. Any purported Transfer by
operation of law or otherwise, not having the written consent of Tom's required
by this Section IX.B. shall be null and void and shall constitute a material
breach of this Agreement, for which Tom's may then terminate without
opportunity to cure pursuant to Section X.B.(3) of this Agreement.
Tom's may, in its sole discretion, condition its consent to a Transfer
upon the fulfillment of certain requirements, contingencies and conditions,
including without limitation, the requirements that the prospective purchaser
be adequately capitalized as described in Appendix E and the transferor
executes a general release of Tom's in form satisfactory to Tom's. Said
requirements, contingencies and conditions shall be established by Tom's, and
may be unilaterally changed by Tom's from time to time and at any time. Said
requirements, contingencies and conditions will be uniformly applied and
consistently enforced for all Tom's distributors. Distributor may obtain a
copy of such requirements, contingencies and conditions upon written request of
Tom's.
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C. Any party holding any direct or indirect interest in Distributor or the
Tom's Distributorship and who desires to accept any bona fide, arm's length
offer from a third party to purchase all or any part of such interest shall
notify Tom's in writing of each such offer, and shall provide information and
documentation relating to the offer as Tom's may require, including without
limitation, such information as shown on and described in Appendix E to this
Agreement. Tom's shall have the right and option, exercisable within thirty
(30) days after receipt of such written notification and documentation, to
purchase the seller's interests on the same terms and conditions offered by the
third party. In the event Tom's elects to exercise such right and option,
Tom's shall notify Distributor of such election in writing within said thirty
(30) day period. If the terms and consideration offered by a third party are
such that Tom's may not reasonably be required to furnish the same terms and
consideration, then Tom's may purchase the interest proposed to be sold for the
reasonable equivalent. If the parties cannot agree, within a reasonable time,
on the reasonable equivalent, an independent appraiser shall be designated by
Tom's, and his determination of a reasonable equivalent shall be binding. In
the event that Tom's elects to purchase the seller's interest, Tom's may
immediately begin its due diligence process which shall include, but not be
limited to, a review of the items set forth in paragraph C of Appendix E and an
analysis of the market within this Area. The due diligence process and closing
on such purchase must occur within forty-five (45) days (unless sooner as Tom's
chooses) from the date of notice to the seller of the election to purchase by
Tom's. Any material change in the terms of any offer prior to closing shall
constitute a new offer subject to the same rights of first refusal by Tom's as
in the case of an initial offer. Should Tom's not exercise its option to
purchase, such failure to exercise shall not affect Tom's rights under Section
IX.B. hereof, which rights are specifically reserved nor shall such failure to
exercise be deemed or considered to constitute Tom's consent to or approval of
the Transfer. In the event Tom's does not exercise its right of first refusal,
does not consent to the Transfer and Distributor indicates a desire to
consummate the Transfer, then in such event Tom's may, itself or through
others, at any time before or after the Transfer, at its sole option and
without any liability to Distributor whatsoever, enter the Area and compete
with Distributor by, among other things, marketing, selling and distributing
Products and Affiliated Products through the same methods of distribution as
used by Distributor.
D. (1) In the event of (i) a Transfer, whether or not Tom's consented
thereto, (ii) termination or expiration of this Agreement for any reason, or
(iii) a renewal of this Agreement, Distributor agrees to pay to Tom's the
Deferred Licensing Fee. The Deferred Licensing Fee shall be equal to two and
one-half percent (2.5%) of "total purchases" (as defined in Section V.B.(2))
over the preceding twelve (12) month period. Notwithstanding the preceding
sentence, any Deferred Licensing Fee paid upon renewal of this Agreement,
subsequent to the first renewal following the initial term of this Agreement,
shall be equal to two and one-half percent (2.5%) of the increment or increase
in "total purchases" (as defined in Section V.B.(2)) for the applicable
preceding twelve (12) month period over the "total purchases" (as defined in
Section V.B.(2)) used in calculating the Deferred Licensing Fee at the end of
the previous term. With regard to a Transfer, the Deferred Licensing Fee shall
be prorated in accordance with the percentage of interest, assets or value of
the Tom's Distributorship so transferred. However, if the Transfer, whether
taken separately or in combination with any other Transfer, conveys or
transfers more than fifty percent (50%) of the ownership interest in the
Distributor, effective controlling interest of the Distributor, or a
substantial portion of the assets of the Tom's Distributorship, then the full
Deferred Licensing Fee shall be due and payable. The calculation of the
Deferred Licensing Fee and the determination of whether a full Deferred
Licensing Fee is due shall be made exclusively by Toms, and such calculation
and determination shall be binding upon Distributor. The Deferred Licensing
Fee shall be paid in cash at or before the consummation of such Transfer, the
effective date of expiration or termination or renewal.
(2) In the event of a Transfer, whether or not Tom's consented thereto,
in addition to the Deferred Licensing Fee, Distributor agrees to pay to Tom's a
non-refundable "Transfer Fee" equal to $1,500.00, which shall be payable in
cash contemporaneously with or prior to the consummation of such Transfer.
E. In the event that a Principal Shareholder or Principal Partner of
Distributor transfers any part of said Principal Shareholder's or Principal
Partner's interest in Distributor or the Tom's Distributorship pursuant to
Section IX. hereof, Tom's may require Distributor to designate a new Principal
Shareholder or Principal Partner
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of Distributor, subject to the prior approval of Tom's, who shall thereupon
execute an agreement to be personally bound by the terms and provisions of this
Agreement.
X. DEFAULT AND TERMINATION
A. TERMINATION WITHOUT NOTICE. Distributor shall be in default under the
Agreement, and all rights granted herein shall automatically terminate without
notice to Distributor:
(1) If Distributor shall become insolvent or make a general assignment for
the benefit of creditors;
(2) If a petition in bankruptcy is filed by Distributor or such a petition
is filed against and not opposed by Distributor;
(3) If Distributor is adjudicated as bankrupt or insolvent;
(4) If a xxxx in equity or other proceeding for the appointment of a
receiver of Distributor or other custodian for Distributor's business or assets
is filed and consented to by Distributor;
(5) If a receiver or other custodian (permanent or temporary) of
Distributor's Assets or other property, or any part thereof, is appointed by
any court of competent jurisdiction;
(6) If proceedings for a composition with creditors under any state or
federal law should be instituted by or against Distributor;
(7) If a final judgment remains unsatisfied or of record for ninety (90)
days or longer (unless a supersedeas bond is filed);
(8) If Distributor is dissolved;
(9) If execution is levied against Distributor's business or property;
(10) If suit to foreclose any lien or mortgage against Distributor's
Warehouse, vehicles, or other equipment is instituted against Distributor and
not dismissed within ninety (90) days;
(11) If the real or personal property of Distributor shall be sold by levy
thereupon by any sheriff, marshal or constable.
B. OPTION TO TERMINATE. Distributor shall be deemed to be in default and
Tom's, at its option, may terminate this Agreement and all rights granted
hereunder, without affording Distributor any opportunity to cure the default,
effective immediately upon mailing of notice to Distributor, upon the
occurrence of any of the following events:
(1) If Distributor at any time ceases to operate or otherwise abandons all
or a portion of the Tom's Distributorship, or otherwise abandons or forfeits
the right to do or transact business in all or any portion of the Area;
(2) If Distributor or a Principal Partner or Principal Shareholder is
convicted of a felony or any crime involving moral turpitude;
(3) If Distributor or any partner or shareholder of Distributor or
Distributor's personal representative purports to transfer any rights or
obligations under this Agreement or any interest in Distributor of the Tom's
Distributorship to any third party without Tom's prior written consent;
(4) If Distributor, after curing a default pursuant to Section X.C.
hereof, commits the same default again, whether or not cured after notice;
(5) If Distributor repeatedly is in default under Section X.C. hereof for
failure to comply with any of the requirements imposed by this Agreement
whether or not cured after notice;
(6) If Distributor is an individual, upon the death of Distributor, and if
Distributor is a partnership, corporation or other business entity, upon the
death of the Principal Partner or Principal Shareholder;
(7) If Distributor defaults under the provisions of Section V.B.(3) of
this Agreement;
(8) If Distributor makes a false statement or misrepresentation to Tom's
or if Distributor defrauds, cheats or deceives Tom's in connection with or
relating in any way to the Tom's Distributorship;
(9) If Distributor defaults under any other agreement or account between
Distributor and Tom's, whether now or hereafter existing;
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(10) If Distributor, in Tom's sole opinion, after initiating a remedy or
acceptable plan to cure a default under Section X.C. hereof, abandons or
otherwise fails to diligently pursue to completion such remedy or plan;
(11) If Distributor fails to submit, in a timely manner, delivery tickets,
credit tickets, other documentation or electronic or computer data to Tom's
which is required of Distributor as the Delivery Agent; or
(12) If Distributor, in Tom's sole discretion, is converting the Tom's
Distributorship to a non-Tom's distributorship or is removing and replacing
Products from the Tom's Distributorship with products or other merchandise not
authorized under Section II.A.
C. TERMINATION AFTER NOTICE OF DEFAULT; TIME TO CURE. Except as (i)
provided in Section X.A. and X.B. of this Agreement, (ii) provided by
applicable law, (iii) to the payment of any obligations or indebtedness to
Tom's, or to any other person or entity as hereinafter described, and (iv) to
the failure to provide Adequate Service to National Accounts or customers of
Distributor, upon any default by Distributor, Tom's may terminate this
Agreement by giving written notice of termination stating the nature of such
default to Distributor at least thirty (30) days prior to the effective date of
termination; provided, however, that Distributor may avoid termination by
curing such default to Tom's satisfaction within thirty (30) days of the date
of said written notice. If the default is of a nature that the same cannot
reasonably be cured within thirty (30) days, then Distributor may avoid
termination by immediately initiating a plan or remedy to cure such default
within thirty (30) days of said written notice and diligently pursuing and
completing such cure to Tom's satisfaction and providing proof thereof within a
reasonable period after said written notice not to exceed ninety (90) days. If
the default is not cured within thirty (30) days or any such plan or remedy to
cure is not initiated or not diligently pursued and completed within the
specified time or such longer period as may be agreed or as applicable law may
require, and this Agreement has not been terminated pursuant to Section
X.B.(10) above, then this Agreement shall terminate without further notice to
Distributor effective immediately upon the expiration of the thirty (30) day or
ninety (90) day period as applicable.
As to the payment of any obligations or indebtedness owed by Distributor
to Tom's or to any other person or entity if Tom's is a guarantor or
contingently liable on Distributor's obligations to such other person or
entity, or as to the failure of Distributor to provide Adequate Service to
National Accounts or customers of Distributor, Tom's shall give Distributor
written notice of any failure to pay promptly any such obligation or
indebtedness or provide Adequate Service and should Distributor fail to pay the
same or correct such inadequate service within ten (10) days of the date of
such notice, all sums owed by Distributor to Tom's shall, at Tom's option, be
due and payable without any further notice and/or Tom's shall have the option
to terminate this Agreement without further notice to Distributor.
XI. OBLIGATIONS UPON TERMINATION OR EXPIRATION
Upon termination or expiration of this Agreement, all rights granted
hereunder to Distributor shall immediately terminate, and Distributor and Tom's
agree as follows:
A. Distributor shall immediately cease to operate the Tom's Distributorship
and shall not thereafter, directly or indirectly, represent to the public or
hold himself or itself out as a present or former Distributor of Tom's.
B. Distributor shall immediately (i) permanently cease to use, in any
manner whatsoever, the Proprietary Marks; (ii) return and deliver to Tom's any
advertising, promotional, or merchandising materials and any other documents
containing the Proprietary Marks; and (iii) because Distributor's customer and
Vending Machine locations were/are acquired in large part by the effect of
goodwill associated with the Proprietary Marks and the Products, release and
relinquish all rights to said locations, and shall convey the same to Tom's in
accordance with Sections XI.E. and XI.F. Upon expiration or termination of
this Agreement Tom's itself or its designees shall have the right immediately
to sell and distribute Products and Affiliated Products within the Area by any
methods of distribution. Further, within thirty (30) days after the expiration
or termination of this Agreement,
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Distributor shall remove the Proprietary Marks from any truck, vehicle, Vending
Machine, or other equipment not purchased by Tom's or an approved third party
as provided herein.
C. Within ten (10) days after the effective date of termination or
expiration of this Agreement, Distributor shall pay in full all sums owing to
Tom's and to any other person or entity if Tom's is a guarantor or contingently
liable on Distributor's obligations to such other person or entity, whether or
not the same are current or due. In the event of termination for any default
of Distributor, such sums shall include all damages, costs, and expenses,
including reasonable attorneys' fees, incurred by Tom's as result of the
default, which obligation shall give rise to and remain, until paid in full, a
lien in favor of Tom's against the Warehouse, and any and all personal
property, vehicles, equipment, fixtures, and inventory owned by Distributor at
the time of default.
D. Tom's shall have the option, exercisable within fifteen (15) days after
the effective date of termination or expiration of this Agreement, to purchase
from Distributor and Distributor shall sell to Tom's all usable, current dated
Products owned by Distributor, at Distributor's net cost, and Distributor shall
destroy all out-of-code-date and broken lots of Products (including Products
without sufficient remaining shelf life to afford salability) then owned by
Distributor.
E. Tom's shall have the option, to be exercised within forty-five (45) days
after termination or expiration of this Agreement (or sooner at Tom's option),
to purchase from Distributor and Distributor shall sell to Tom's all or a
portion (as Tom's may choose) of Distributor's Vending Machines, customer and
Vending Machine locations and lists, vehicles, equipment, fixtures, supplies,
parts, cash, general intangibles, accounts, documents, instruments, furniture,
furnishings and other assets which are used in the operation of the Tom's
Distributorship (excluding real estate), (these assets together with the assets
described in Section XI.D. above are herein referred to as "Distributor's
Assets"), at fair market value as provided in Appendix E. Distributor
acknowledges that the value of the Tom's Distributorship and/or its assets and
the ability to secure customer and Vending Machine locations are due in large
part to the goodwill created by Tom's. Distributor and Tom's agree that for
the purposes of this Section XI., fair market value as determined in Appendix
E, shall not include any value for (i) goodwill, (ii) Distributor's right or
license to sell and distribute Products, if any, and (iii) any sales and
deliveries to National Accounts except for such sales and deliveries made
pursuant to Section VI.N. hereof. Further, immediately upon Tom's exercising
its option to purchase as described above, Distributor agrees that Tom's may
begin its due diligence process which shall include, but not be limited to, a
review of the items set forth in paragraph C of Appendix E and an analysis of
the market within the Area.
F. With respect to Distributor's Assets and the National Account Assets
which are subject to Tom's option or obligation to purchase as described in
Sections XI.D., XI.E., XI.H. and other sections of this Agreement, Distributor
shall convey such assets to Tom's free and clear of all liens and encumbrances,
except for such liens as Tom's may agree in writing to take subject to or
assume, and Distributor shall execute any and all documents necessary to convey
such assets to Tom's. Further, the closing of the sale of Distributor's Assets
and National Account Assets as described herein shall occur within forty-five
(45) days (or sooner as Tom's may choose) of Tom's exercise of its option to
purchase or the completion of its due diligence process, whichever is last to
occur.
G. Notwithstanding any provision in this Agreement to the contrary,
Distributor's obligation to sell to Tom's as provided herein shall be subject
to or limited by Distributor's right to sell, within the applicable time
periods, the Tom's Distributorship or applicable portion thereof or the
applicable assets to a third party at a price higher than that which is
provided for in Appendix E. Provided, however, Distributor's right to sell to
such third party shall not delay Tom's exercise of its option to purchase and
shall be subject to and limited by the provisions of Section IX.B. and Section
IX.C. hereof, regardless of whether Distributor's sale takes place during or
after the term of this Agreement.
H. In the event Tom's is obligated or exercises an option to purchase
Distributor's Assets as provided herein, and there are certain of Distributor's
Assets to be purchased which are used by Distributor exclusively in the
performance of Distributor's duties as Delivery Agent ("National Account
Assets"), then in such event, and provided Distributor can demonstrate and
prove to Tom's satisfaction the existence of the National Account Assets, Tom's
shall purchase and Distributor shall sell to Tom's the National Account Assets
at a value as
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mutually agreed to by Tom's and Distributor. If Tom's and Distributor cannot
agree on a value for the National Account Assets within thirty (30) days of
Tom's exercise of its option to purchase or of Tom's obligation to purchase, as
applicable, then an independent appraiser shall be designated by Tom's and his
determination of the value of the National Account Assets shall be final and
binding.
I. Distributor acknowledges that if this Agreement is terminated due to
Distributor's default, then such default and termination shall injure and cause
damage to Tom's and Tom's reputation and goodwill. Consequently, Distributor
shall be liable to Tom's and shall reimburse Tom's for any such injury or
damage, including without limitation, all costs and expenses incurred by Tom's
in recapturing and redeveloping the market within the Area, and lost profits of
Tom's.
J. Neither party to this Agreement nor their officers, directors,
shareholders or employees shall make or publish any derogatory, disparaging,
discrediting or harmful comment regarding the other.
XII. COVENANTS
A. Distributor specifically acknowledges that, pursuant to this Agreement,
Distributor will receive valuable confidential information, including, without
limitation, information regarding the operations, sales, promotional and
marketing methods and techniques of Tom's and Tom's distributors. Distributor
covenants that during the term of this Agreement and for a period of two (2)
years following the termination or expiration thereof for any reason,
Distributor, either directly or indirectly, for Distributor's self, or through,
on behalf of, or in conjunction with any person or legal entity, shall not
engage in or have any interest in any business engaged in the sale or
distribution of prepackaged, ready-to-eat snack-food products to customers
within the Area other than the Tom's Distributorship.
B. Distributor expressly agrees that the existence of any claims it may
have against Tom's, whether or not arising from this Agreement, shall not
constitute a defense to the enforcement by Tom's of the covenant set out in
this Section XII. Distributor agrees to pay all costs and expenses (including
without limitation reasonable attorneys' fees) incurred by Tom's in connection
with the enforcement of this Section XII.
C. Distributor understands and acknowledges that Tom's shall have the
right, in its sole discretion, to reduce the scope of any covenant set out in
this section, or any portion thereof, without Distributor's consent, effective
immediately upon mailing of notice to Distributor; and Distributor agrees that
Distributor shall comply forthwith with any covenant as so modified, which
shall be fully enforceable.
D. Distributor acknowledges that Distributor's violation of the terms of
this Section XII. would result in irreparable injury to Tom's for which no
adequate remedy at law may be available. Distributor and Tom's acknowledge and
agree that the provisions of the above covenants not to compete pertaining to
scope, term, duration and geographic area are reasonable. Should a court of
competent jurisdiction determine otherwise, Distributor agrees that the
provisions hereof relating to the scope, term, duration and geographic area
shall be enforceable against him to the maximum time and greatest geographical
area allowable under applicable law.
E. At Tom's request, Distributor shall require and obtain execution of
covenants similar to those set forth in this Section XII. from any or all
principals, managers, officers, directors, shareholders, partners (general or
limited) and members of the Distributor. Every covenant required by this
subsection shall be in a form satisfactory to Tom's. Failure by Distributor to
obtain execution of a covenant required by this subsection shall constitute a
default under Section X.C. of this Agreement.
XIII. PROPRIETARY MARKS
Tom's and Distributor acknowledge and agree:
A. Tom's is the sole owner of all right, title and interest in and to the
Proprietary Marks and all goodwill associated with and symbolized by the same.
The value of the Tom's Distributorship and the ability to secure Vending
Machine and customer locations are due in large part to the public's acceptance
of the goodwill created by the Proprietary Marks and the Products, and Tom's
efforts to support, promote and enhance the same. Distributor is granted a
non-exclusive license to use the Proprietary Marks as authorized herein, but
Distributor's
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use of the same does not give Distributor any ownership interest or other
interest in said Proprietary Marks, and all goodwill arising therefrom inures
solely to Tom's.
B. In the event that litigation involving the Proprietary Marks is
instituted or threatened against Distributor, Distributor shall provide prompt
written notice and tender the complete defense and handling of any such suit to
Tom's. Distributor shall cooperate fully with Tom's in defending or settling
such litigation and shall execute any and all documents and do such acts and
things as may be necessary, in the opinion of counsel for Tom's, to carry on or
settle such litigation.
C. (1) Distributor shall use only the Proprietary Marks and shall use the
same only for the sale and distribution of the Products or as otherwise
authorized by Tom's. Any unauthorized use of the Proprietary Marks shall
constitute an infringement of Tom's rights and a default hereunder.
(2) Distributor shall identify Distributor as the owner of the Tom's
Distributorship in conjunction with any use of the Proprietary Marks, shall not
use the Proprietary Marks as part of Distributor's corporate or other legal
name nor use the same to incur any obligation or indebtedness on behalf of
Tom's.
(3) Distributor shall exhibit the Tom's decal and use Tom's distinctive
coloring schemes on Distributor's trucks and on the Vending Machines in
accordance with Tom's then-current specifications. Tom's may unilaterally from
time to time and at any time, change such specifications and Distributor agrees
to comply with such changes.
(4) Distributor shall not carry, transport nor haul on, from or by
Distributor's trucks used in furtherance of this Agreement nor sell from such
trucks or Vending Machines any merchandise, products or personal property of
any kind (nor carry on or operate from such trucks any other business or
commercial activity) except as provided in Section II. of this Agreement.
D. The license to use the Proprietary Marks is personal to Distributor and
may not be transferred or assigned by Distributor without the prior written
consent of Tom's. Said license is non-exclusive, and Tom's retains the right,
among others, (i) to use the Proprietary Marks itself in connection with
selling and distributing Products, other merchandise and services, and (ii) to
grant other licenses for the Proprietary Marks in addition to the licenses
already granted, and to use other proprietary marks.
XIV. INDEPENDENT CONTRACTOR; INDEMNIFICATION
A. It is understood and agreed by the parties hereto that this Agreement
does not create a fiduciary relationship between them; that Distributor shall
be an independent contractor; and that nothing in this Agreement is intended to
constitute either party a legal representative, subsidiary, joint venturer,
partner, employee, or servant of the other for any purpose whatsoever.
B. During the term of this Agreement and any extensions hereof,
Distributor shall hold itself out to the public as an independent contractor
operating the business pursuant to this Agreement. Distributor agrees to take
such action as may be necessary, including, without limitation, exhibiting a
notice of that fact in a conspicuous place in the Warehouse and on
Distributor's vehicles, the content of which Tom's reserves the right to
specify. Tom's will accept such notice in substantially the following form:
"Owned and operated by ___________, an independent contractor."
C. It is understood and agreed that nothing in this Agreement authorizes
Distributor to make any contract, agreement, warranty, or representation on
Tom's behalf, or to incur any debt or other obligation in Tom's name; and that
Tom's shall in no event assume liability for, or be deemed liable hereunder as
result of, any such action; nor shall Tom's be liable by reason of any act or
omission of Distributor in Distributor's conduct of the Tom's Distributorship
or for any claim or judgment arising therefrom against Distributor or Tom's.
D. Distributor shall be responsible for the hiring, compensation,
termination and all other matters relating to any persons or entities employed
or contracted by the Distributor to perform the Distributor's duties and
functions under this Agreement and Distributor shall, with respect to all such
persons or entities, perform all obligations and discharge all liabilities
imposed upon employers under labor, wage-hour, worker's compensation,
unemployment compensation or insurance, social security and other federal,
state and local laws and regulations.
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E. Distributor shall indemnify and hold Tom's, and Tom's officers,
directors, shareholders, and employees in their corporate and individual
capacities, harmless against any and all losses, expenses, damages, injuries,
judgments, claims, liabilities, attorney's fees, and litigation expenses
arising directly or indirectly from, as a result of, or in connection with
Distributor's operation of the Tom's Distributorship, including, without
limitation, that which arises from a proposed assessment or assessment of
employment taxes against Tom's in connection with the services performed by
Distributor or arising out of or relating to the employment relationship
between Distributor and its employees, agents or subcontractors performing
services on behalf of Distributor.
XV. WARRANTIES AND WAIVERS
A. Tom's makes no warranties or guarantees upon which Distributor may
rely, and assumes no liability or obligation to Distributor, by providing any
waiver, approval, consent, or suggestion to Distributor in connection with this
Agreement, or by reason of any neglect, delay, or denial of any request
therefor.
B. No delay, waiver, omission, or forbearance on the part of Tom's to
exercise any right, option, duty or power arising out of any breach or default
by Distributor under any of the terms, provisions, covenants, or conditions
hereof, shall constitute a waiver by Tom's to enforce any such right, option,
duty, or power as against Distributor, or as to subsequent breach or default by
Distributor. Acceptance by Tom's of any payments due to it hereunder shall not
be deemed to be a waiver by Tom's of any preceding breach by Distributor of any
terms, provisions, covenants, or conditions of this Agreement.
XVI. NOTICES
Any and all notices required or permitted under this Agreement shall be in
writing and shall be personally delivered, mailed by certified or registered
mail, return receipt requested, or delivered by a nationally recognized
overnight carrier or courier service, to the respective parties at the
addresses shown below the parties' signatures unless and until a different
address has been designated by written notice to the other party. Any notice
sent by certified or registered mail or by overnight carrier or courier shall
be deemed to have been given at the date and time of mailing or delivery to the
overnight carrier or courier and, if personally delivered, upon delivery.
XVII. ENTIRE AGREEMENT
This Agreement, the documents referred to herein, and the Appendices
attached hereto constitute the entire, full, and complete Agreement between the
parties concerning the subject matter hereof, and supersede all prior
agreements between the parties concerning the subject matter hereof, and all
rights, if any, of either party hereto which may have arisen out of a prior
course of dealing. Except for those permitted to be made unilaterally by Tom's
hereunder, no amendment, change, or variance from this Agreement shall be
binding on the parties unless mutually agreed to by the parties in writing.
XVIII. SEVERABILITY AND CONSTRUCTION
A. Except as expressly provided to the contrary herein, each term, and/or
provision of this Agreement shall be considered severable; and if, for any
reason, any term, and/or provision herein is determined to be invalid and
contrary to, or in conflict with, any existing or future law or regulation by a
court or agency having valid jurisdiction, such shall not impair the operation
of, or have any other effect upon, such other terms, and/or provisions of this
Agreement; and the latter shall continue to be given full force and effect and
bind the parties hereto; and said invalid terms and/or provisions shall be
deemed not to be a part of this Agreement.
B. Except as expressly provided to the contrary herein, nothing in this
Agreement is intended, nor shall be deemed, to confer upon any person or legal
entity other than Distributor, Tom's, Tom's officers, directors, and employees
any rights or remedies under or by reason of this Agreement.
C. Distributor expressly agrees that if a court of competent jurisdiction
determines or if, from any circumstances whatsoever, it becomes evident that
the fulfillment of any provision of this Agreement involves transcending the
limit of validity prescribed by any applicable law, then, ipso facto, the
obligation to be fulfilled
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shall be reduced to the limit of such validity, and such obligation shall be
valid and binding to the limit of such validity.
D. All provisions of this Agreement which, by their terms or intent, are
designed to survive the expiration or termination of this Agreement, shall so
survive.
XIX. APPLICABLE LAW; LIMITATION ON LEGAL RIGHTS;
A. This Agreement takes effect and shall be deemed entered into upon its
acceptance and execution by Tom's in Georgia, and shall be interpreted and
construed under the procedural and substantive laws thereof, which laws shall
prevail in the event of any conflict of law.
B. The Distributor agrees that any action brought by Distributor against
Tom's in any court, whether federal, state or provincial, shall be brought
within the State of Georgia in the judicial district in which Tom's has its
principal place of business, and Distributor does hereby waive all questions of
personal jurisdiction or venue for the purposes of carrying out this provision.
Distributor agrees that Tom's shall have the option either (i) to bring an
action against Distributor in any court, whether federal, state or provincial
within the State of Georgia in the judicial district in which Tom's has its
principal place of business, in which case Distributor waives all questions of
personal jurisdiction or venue for purposes of carrying out this provision; or
(ii) to bring an action against Distributor in any other court having
jurisdiction over the parties and matters involved. It is expressly agreed
between the parties hereto that the terms of this Section XIX.B. shall survive
any termination of this Agreement and the same shall be controlling with
respect to any such action arising hereunder or in connection herewith.
C. No right or remedy conferred upon or reserved to Tom's by this
Agreement is intended to be, nor shall be deemed, exclusive of any other right
or remedy of Tom's herein or by law or equity provided or permitted, but each
shall be cumulative of every other right or remedy.
XX. ACKNOWLEDGMENTS
A. Distributor acknowledges that it has conducted an independent
investigation of the business contemplated hereunder and recognizes that the
business venture contemplated by this Agreement involves business risks and
that Distributor's success will be largely dependent upon the ability of
Distributor as an independent businessperson. Tom's expressly disclaims the
making of, and Distributor acknowledges that Distributor has not received, any
warranty, representation, covenant or guarantee, express or implied, as to the
potential volume, profits, or success of the business venture contemplated by
this Agreement.
B. Distributor acknowledges that Distributor has read and understands this
Agreement, the Appendices hereto, and agreements relating hereto, if any, and
that Tom's has encouraged Distributor to consult and accorded Distributor ample
time and opportunity to consult with advisors of Distributor's own choosing
about the potential benefits and risks of entering into this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed, sealed, and
delivered this Agreement on the day and year first above written.
TOM'S FOODS INC.
By:______________________________
Title:_______________________
Address: 000 - 0xx Xxxxxx
P. O. Xxx 00
Xxxxxxxx, Xxxxxxx 00000
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__________________________ ________________________________________(SEAL)
Witness DISTRIBUTOR
__________________________ ________________________________________(SEAL)
Witness DISTRIBUTOR
__________________________ ________________________________________(SEAL)
Witness DISTRIBUTOR
Address:_____________________________________
_____________________________________
_____________________________________
GUARANTY
The undersigned Principal Shareholder or Principal Partner, if Distributor
is a corporation, partnership or other business entity, owns a beneficial
interest in Distributor; has read this Agreement; agrees to be individually and
personally bound by all obligations of Distributor hereunder; and agrees to
irrevocably and unconditionally guarantee the full performance of this
Agreement by Distributor and the prompt and full payment when due of any and
all amounts owed by Distributor to Tom's referenced in or provided for under
this Agreement. To enforce the liability of the undersigned hereunder, Tom's
shall not be required first to give the undersigned notice of Distributor's
default or to take any action against or to obtain or attempt to obtain any
judgment against Distributor. The undersigned acknowledges and agrees that
this Guaranty shall be governed by the laws of Georgia, and the undersigned
hereby waives any rights under O.C.G.A. Section 10-7-24.
If this Guaranty is executed by more than one person, then all of the
persons so executing agree to be jointly and severally liable for all of the
obligations and liabilities of the Principal Shareholder or Principal Partner
as provided herein.
__________________________ _____________________________________________
Witness Principal Shareholder/Principal Partner
__________________________ _____________________________________________
Witness Principal Shareholder/Principal Partner
__________________________ _____________________________________________
Witness Principal Shareholder/Principal Partner
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APPENDIX A
AFFILIATED PRODUCTS
00
XXXXXXXX X
WAREHOUSE/LOCATION AND AREA
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APPENDIX C
TOM'S PRODUCT LIST
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APPENDIX D
INSURANCE
Pursuant to Section VIII. of this Agreement, Distributor shall procure and
maintain in effect the following types and amount of insurance, to-wit:
1. A vehicle liability policy with not less than the following minimum
limits:
a) Bodily injury in the amount of $500,000 each person; $1,000,000 each
accident
b) Property damage in the amount of $100,000
The bodily injury coverage may be a combination of base and umbrella
coverage, provided the combined coverage is a minimum of $500,000.
2. A comprehensive general liability policy with not less that the following
minimum limits:
a) Bodily injury in the amount of $500,000 each person; $1,000,000 each
occurrence
b) Property damage in the amount of $100,000
The bodily injury coverage may be a combination of base and umbrella
coverage, provided the combined coverage is a minimum of $500,000.
3. Xxxxxxx'x Compensation Insurance as required by state law.
The policy (or policies) of insurance described above must name TOM'S FOODS
INC. as an "additional insured" and you or your agent must send written
evidence of this to:
TOM'S FOODS INC.
Attention: Distributor Administration
P. O. Xxx 00
Xxxxxxxx, XX 00000
00
XXXXXXXX X
A. VALUATION OF THE TOM'S DISTRIBUTORSHIP AND ITS ASSETS
The fair market value of the Tom's Distributorship and its assets, shall
be equal to a multiple of 3.5 times the average annual Net Cash Flow over the
preceding three (3) years. Distributor acknowledges that the value of the
Tom's Distributorship and/or its assets and the ability to secure customer and
Vending Machine locations are due in large part to the goodwill created by
Tom's through its promotion and support of the Products and the Proprietary
Marks. Tom's will, at Tom's option, pay Distributor for the purchase of the
Tom's Distributorship or applicable assets in cash or in cash plus a promissory
note providing for deferred payments to Distributor over a period not to exceed
five (5) years. Any other specific terms with regard to the financing of Tom's
purchase shall be mutually agreeable to Tom's and Distributor.
B. ADEQUATE CAPITALIZATION OF THE TOM'S DISTRIBUTORSHIP
Absent other factors, Tom's considers 50% cash down and a current ratio
(current assets divided by current liabilities) of 2 to 1 as adequate
capitalization for the Tom's Distributorship. Any cash investment and working
capital shall be paid from the transferee's own resources and shall not be
borrowed funds.
C. INFORMATION TOM'S MAY REQUIRE IN CONNECTION WITH VALUATION OF THE TOM'S
DISTRIBUTORSHIP, ITS DUE DILIGENCE PROCESS OR THE REVIEW OF A THIRD PARTY
OFFER
1. An accurate and complete list of all of the assets of the Tom's
Distributorship to be sold (including serial numbers where applicable);
2. All of Distributor's financial statements and records for at least the
preceding three (3) years (including without limitation, federal and state
income tax returns, income statements, balance sheets and cash flow
statements); and
3. Any other information that Tom's may request (including, without
limitation, historical product mix, customer location and account lists, volume
by location or account, product mix by location, customer contracts, and
leases).
All of the above when submitted to Tom's must be verified under oath by
Distributor to be true, accurate and complete.
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APPENDIX F
DELIVERY FEE
(i) Supermarket/Mass Merchandisers. 27% of DPL less 2% discount on
Products delivered to supermarket, military and/or mass
merchandisers.
(ii) Convenience Stores. 31% of DPL less 2% discount on Products
delivered to convenience stores.
(iii) Affiliated Products. 27% of net sales price to Distributor on
Affiliated Products.
(iv) Agency Bid. 16% of DPL less 2% discount on Products delivered to
National Accounts whose business is acquired through a bidding
process (excluding military).
