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March 6, 1998 EXHIBIT 10.21
Xxxxx Xxxxx
President, CEO
Xxxxx'x Restaurants, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, XX 00000
Re: Coca-Cola USA Fountain Marketing Program
Dear Xxxxx:
This letter will confirm the agreement between Xxxxx'x Restaurants, Inc.
("Rubio's") and Coca-Cola USA Fountain ("CCF") with regard to the availability
and promotion of CCF's fountain beverages in restaurants owned or operated by
Rubio's. When signed by both parties, this letter, with the Term Sheets (and
Lease Agreement), will constitute a legally binding agreement (the "Marketing
Agreement") between the parties for the duration of the Term defined in the
selected Term Sheet, and will be terminable only as stated in the selected Term
Sheet. Two individual and separate Term Sheets (Term Sheet "A" and Term
Sheet "B") are attached for consideration. Rubio's will have seven days from
date of signature to render a decision in writing to CCF as to the selection of
either Term Sheet "A" or Term Sheet "B".
This letter and its attachments are confidential and Rubio's may not disclose to
any third party, without the prior consent of CCF, any information concerning
the programs described in the Term sheet, except for disclosure to employees,
attorneys, accountants, and consultants involved in assisting with the
negotiation and closing of the contemplated transaction, or unless such
disclosure is required by law. Rubio's shall obtain assurances from any party
to whom disclosure is made that such party will keep confidential the
information disclosed, except where disclosure is required by law.
If this letter and its attachments correctly state the agreement between CCF and
Rubio's, please sign and date both copies and return one copy to me. In signing
this agreement, you represent and warrant that you are authorized to enter into
this agreement on behalf of Rubio's, and that Rubio's has the power and
authority to receive the funding contemplated by the Marketing Agreement and to
cause the outlets covered by the Marketing Agreement to perform the activities
required to earn the funding.
Xxxxx 000
0 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Rubio's Restaurants, Inc.
March 6, 1998
Page 2 of 2
Sincerely,
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Vice President, Western Area
Coca-Cola USA
Agreed to this 10th day of March, 1998.
Xxxxx'x Restaurants, Inc.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
President, CFO
Attachments
TERM SHEET
(B)
RUBIOS RESTAURANTS, INC.
APRIL 1, 1998
SCOPE OF MARKETING AGREEMENT
The parties to the Marketing Agreement are Rubios Restaurants, Inc. "Rubios"
d/b/a Rubios Baja Grill and Coca-Cola USA Fountain ("CCF"). The Marketing
Agreement will apply to all outlets where Fountain Beverages are served that are
owned or operated by Rubios or any of its subsidiaries including any outlets
that are opened after the Marketing Agreement is signed. The Marketing
Agreement will also apply to outlets acquired by Rubios, unless those outlets
are already governed by an agreement with CCF and that agreement is assigned to
Rubios as part of the acquisition. The Marketing Agreement will not apply to
any outlets outside the fifty United States, and may not be assigned to a third
party without CCF's approval, which would not be unreasonably withheld. All
outlets to which the Marketing Agreement applies are referred to as "Covered
Outlets".
TERM
The Marketing Agreement will go into effect as of the first day of the month
in which it is signed and will continue for a period of five years or until
Rubio's has purchased it's volume commitment of CCF's Fountain Syrups,
whichever occurs last. When used in the Marketing Agreement the term "Year"
means each consecutive twelve month period during the Term, beginning with
the first day of the Term.
BEVERAGE AVAILABILITY
The term "Beverage" means all soft drinks and other non-alcoholic beverages,
including waters, sports drinks, frozen beverages, juices, juice-containing
drinks, punches, ades, bar mixers and iced teas, whether carbonated or
non-carbonated, with the exception of coffee or tea brewed on the premises and
dairy beverages. "Fountain Beverages" are those Beverages that are dispensed
from post-mix, or frozen beverage dispensers, bubblers, or similar equipment.
The term "Fountain Syrup" means the post-mix syrup used to prepare Fountain
Beverages, but does not include other forms of concentrate, or Breakmate syrup
or syrup for frozen beverages that is purchased from a full service supplier of
frozen beverages to which CCF provides promotional funding.
Rubios will serve in each Covered Outlet a core brand set of Fountain Beverages
that consists of Coca-Cola-Registered Trademark- classic, diet Coke-Registered
Trademark- and Sprite-Registered Trademark-, and the remaining products will be
jointly selected by Rubios and CCF. CCF's Fountain Beverages will be the only
Fountain Beverages served in the Covered Outlets.
Rubios recognizes that the sale of competitive Beverages in bottles, cans or
other packaging would diminish the product availability rights given to CCF, and
therefore also agrees not to serve competitive Beverages in bottles or cans in
the Covered Outlets.
VOLUME COMMITMENT
Rubios agrees to purchase *** of CCF's Fountain Syrup during the Term.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Projected annual volume is currently as follows:
***
***
***
MARKETING PROGRAM
The following marketing programs will be provided to assist Rubios in maximizing
the sale of Fountain Beverages in the Covered Outlets:
CONVERSION FUND CCF will provide funding of *** to offset costs
associated with the conversion to CCF brands. Funding is provided in return for
Rubios commitment to serve CCF's Fountain Beverages in the Covered Outlets
throughout the Term, and *** .
MARKETING ALLOWANCES. The amount of available funding is calculated at the rate
of *** for each gallon of CCF's Fountain Syrup Rubios purchases. To
qualify for funding Rubio's agrees to perform a minimum of *** of the
following activities annually:
Fully integrated (system wide) Co-op trademark cups, consistent in size
with current trademark cups.
Logo/brand identification on beverage portion of illuminated menuboards and
table menus.
Mutually agreeable *** .
Funding will be *** in years *** of the agreement and reconciled in
accordance actual volume purchases. Marketing allowances in the years ***
will be paid *** .
INCIDENCE IMPROVEMENT FUNDS. Funding is earned at the rate of *** for each
gallon of CCF's Fountain Syrups that Rubios Baja Grill purchases. To qualify
for this fund Rubios agrees to perform a minimum of *** of the following
activities annually:
Trademark identified meal combination program.
Trademark identified refill merchandising.
Annual crew incentive programs.
Mutually agreeable brand integration and activation initiatives.
Trademark Co-op advertising that supports mutually agreeable initiatives.
Funding will be *** in years *** of the agreement and reconciled in
accordance actual volume purchases. Incidence improvement funds in years ***
will be paid *** .
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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NESTEA-Registered Trademark- PROGRAM CCF will make available Nestea-Registered
Trademark- Raspberry Tea for Rubio's testing and evaluation in certain mutually
determined Covered Outlets. If Rubio's elects to test Nestea-Registered
Trademark- Raspberry Tea in the Covered Outlets, CCF and Rubio's will agree what
the test criteria and parameters will be. If the results of the test are
successful according to the criteria that the parties have agreed to, Rubio's
will introduce Nestea-Registered Trademark- Raspberry Tea in the Covered Outlets
within (90) days after the test is complete.
FAIR SHARE
If Rubio's Baja Grill desires to use equipment provided by CCF to dispense one
competitive fountain beverage, an additional fair share lease charge of ***
per dispenser will be added. Equipment provided by CCF may not be used to
dispense any competitive cola product, more than one competitive beverage, or
any brand of Pepsico, Inc. Further, if service is provided to an outlet that
serves a competitive fountain beverage an additional fair share service charge
of *** per outlet will be incurred.
EQUIPMENT PROGRAM
CCF will provide for Rubios use the Fountain Beverage dispensers, water
filtration equipment, and the annual water filter cartridges necessary to enable
Rubios to dispense a quality Fountain Beverage in the Covered Outlets. The cost
of installation and configuration of ice combo dispensing units are also the
financial responsibility of CCF. No dispensing equipment for frozen Beverages
or ice makers will be provided.
The equipment is provided by CCF subject to the terms and conditions of CCF's
standard lease agreement, but no lease payment will be charged. A copy of the
standard lease agreement is attached and is a part of the Marketing Agreement,
except as specifically changed by the Marketing Agreement.
SERVICE PROGRAM
CCF will provide free and reasonable service to Covered Outlets for mechanical
repair needed for Fountain Beverage dispensing equipment. Service calls will be
pro-actively managed across the Rubios system to ensure all regular mechanical
repair reasonably needed for the fountain beverage dispensing equipment is
provided at no charge. In addition to mechanical repair, parts [valued at no
more than *** ] will also be provided free of charge to restaurant managers
upon request via the CCF toll free service network.
TERMINATION
Once the Marketing Agreement is signed by both parties, it may be terminated
before the scheduled expiration date only in the following circumstances:
Either party may terminate the Marketing Agreement if the other party
fails to comply with a material term or condition of the Marketing
Agreement and does not remedy the failure within ninety (90) days
after receiving written notice (the "Cure Period"). Termination will
be effective thirty (30) days after the end of the Cure Period.
Either party may terminate the Marketing Agreement without cause after
giving twelve months' prior written notice.
CCF may terminate the Marketing Agreement if there is a transfer of a
substantial portion of the stock or assets of Rubios that is not in
the ordinary course of business. (An Initial Public Offering is
considered normal course of business)
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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If the Marketing Agreement is terminated before its expiration date, Rubios must
return any dispensing equipment owned by CCF. Additionally, unless the
Marketing Agreement is terminated by CCF without cause, Rubio's will pay the
following damages at the time of termination:
All unearned funding. For purposes of this provision Conversion Funds
will be deemed earned at the rate of *** per month.
Interest on all advanced funding on a rate of *** per month,
accrued from the date funds were paid or costs were incurred.
The unamortized portion of the cost of installation (standard cost of
installation is *** per unit), and the entire cost of refurbishing
and removal (standard cost of removal and refurbishment is *** ) of
all equipment owned by CCF that was installed less than five years
before termination.
DISPUTE RESOLUTION
Should there be a dispute between CCF and Rubios arising out of the Marketing
Agreement or the breach of the Marketing Agreement, the parties agree that they
will make a good faith effort to settle the dispute in an amicable manner. If
the parties are unable to settle the dispute through direct discussions, they
will attempt to settle the dispute by mediation administered by the American
Arbitration Association (the "AAA"), and if that procedure is unsuccessful, the
dispute will be resolved by binding arbitration administered by AAA in
accordance with its Commercial Arbitration Rules, arbitration will occur in
California. A judgment on the award of the arbitrator(s) may be entered in any
court that has jurisdiction.
PERMITTED EXCEPTIONS
If Rubio's enters into an agreement to open a restaurant or restaurants in
venues or facilities e.g. (stadiums, colleges or airports) where the pouring
rights have been pre-determined, Rubio's will make reasonable efforts to insure
that Coca-Cola Fountain products are dispensed during the term of that
agreement.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
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