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