Distribution Service Agreement - MAPCO Express Inc. and McLane Co. Inc. d/b/a McLane Grocery Distribution
DISTRIBUTION SERVICE AGREEMENT
This Distribution Service Agreement (the "AGREEMENT") is made and entered
into as of the 1st day of January, 2005, by and between MAPCO EXPRESS, INC, a
Delaware corporation (hereinafter referred to as "MAPCO") and McLANE COMPANY,
INC. DBA McLANE GROCERY DISTRIBUTION, a Texas corporation (hereinafter referred
to as "MCLANE").
RECITALS
WHEREAS, Mapco is in the business of operating retail convenience food
stores; and
WHEREAS, McLane is in the business of wholesale distribution of food and
non-food/general merchandise products throughout the United States of America;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants contained herein, the parties hereto agree as follows:
ARTICLE I
SCOPE OF AGREEMENT
1.1 Mapco Stores. For purposes of this Agreement, the term "STORES"
means the owned, operated or managed convenience food stores located in the
United States of Mapco, or any affiliate of Mapco. Should Mapco, or any
affiliate of Mapco, build new or otherwise acquire or operate additional stores
after the date of this Agreement, such additional stores shall be included
within the definition of stores and subject to the terms and conditions of this
Agreement, except to the extent Mapco, with respect to acquired store(s),
assumes an existing distribution agreement with another distributor to which
such stores are subject at the time of Mapco's acquisition of such store(s);
provided however, that in the event such assumption occurs, such acquired
stores shall become subject to this Agreement upon the expiration or other
termination of such existing distribution agreement, and no extension or
renewal options contained therein shall be exercised; and provided further,
that at the time of such acquisition Mapco will provide McLane with the
opportunity to negotiate a buy-out of such other wholesale supply agreement(s)
for such store(s).
For purposes of this Agreement, an "AFFILIATE" of Mapco shall mean any
person or entity directly or indirectly controlling, controlled by, or under
common control with Mapco. Without limitation, an entity shall be deemed to
control another if it owns or has the power to vote, directly or indirectly,
more than 50% of the voting rights of such other entity.
1.2 Franchisees and Licensees. During the term of this Agreement, McLane
shall be the recommended supplier to any franchisees and licensees of Mapco, or
any affiliate of Mapco, if any. It is understood Mapco can only recommend
suppliers to franchisees and licensees and cannot require purchases by these
entities from the recommended suppliers.
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1.3 Purchase of Products and Services. During the term of this Agreement,
Mapco and all affiliates of Mapco will purchase from McLane, and McLane will
sell and deliver to Mapco and any affiliate of Mapco all of the stores'
requirements of wholesale food and non-food/general merchandise products
customarily supplied by convenience food wholesalers in accordance with the
prices and other terms and conditions outlined in the Exhibits A, B and C
attached hereto and incorporated herein for all purposes. Such products shall
include all standard convenience food store items, including, but not limited
to, the following (the "PRODUCTS"):
(a) Groceries, including coffee, tea, cereal, canned meats, condiments,
juice, baby food, canned and dry goods and eggs;
(b) Deli foods, including meats and salads, breakfast foods, nachos and
bulk sausage, franks, cheese and fish;
(c) Frozen foods, such as fruits, vegetables and juices;
(d) Frozen fast foods, such as burritos, pizza, pizza pieces, frozen
sandwiches, and salads;
(e) Candy, snacks and popcorn;
(f) Cigarettes and tobacco products (other than "fourth tier" products
not distributed by McLane);
(g) Cold packaged meats, lunch meats and cheeses;
(h) Shortening, breading and kitchen supplies;
(i) Prepaid phone cards and cellular phones;
(j) Post mix products including CO(2) Tanks;
(k) Store supply items, i.e., wraps, fast food supplies (including
napkins, individual condiments and cleaners);
(l) Cooler items, i.e., cheese, biscuits, dips, cultured products, butter
and margarine;
(m) Health and beauty aids, hosiery, and film and flash; and,
(n) General merchandise items, including motor oil, other automotive
products, housewares, hardware, electrical supplies, baby supplies,
sunglasses, lighters, toys and pet supplies.
[*** CONFIDENTIAL TREATMENT REQUESTED]
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McLane acknowledges that Mapco may use Liberty Wholesale Co., Inc. or a
third-party distributor to supply items other than those customarily supplied
by convenience food wholesalers, including without limitation close-outs,
one-time special buys, non major brand fourth tier cigarettes, imported novelty
times; provided, however, that Mapco shall first offer McLane the right to
include any such product this Agreement.
1.4 Cost of Products: All Products (whether purchased by McLane directly
from a manufacturer or from another source), other than cigarettes, shall be
billed at Cost (as herein defined), plus the applicable percentage markups for
each UIN department or category as set forth on the Billing Plan attached
hereto as Exhibits "A" and "C", plus any federal, state or local taxes
prescribed by law. This total shall then be reduced by promotional deals and
allowances granted by manufacturers specifically to retailers for the time
period provided by the manufacturer during their buy period. For purposes of
this Agreement, "COST" shall mean the manufacturer's current published or
publicly quoted delivered list price based on the buying bracket in which
McLane normally buys that Product for the McLane division or subsidiary
servicing the respective store(s) at date of delivery of Products to such
stores (notwithstanding the fact that a particular Product may have been
purchased from a person or entity other than the manufacturer) without regard
to any cash discounts or volume discounts or rebates allowed by the
manufacturer to McLane, plus any applicable freight charges from the
manufacturers' shipping point to the appropriate McLane division or subsidiary
(including sort and segregate charges). Backhaul income generated by McLane
using its own or another authorized carrier, at McLane's expense, shall be
retained by McLane. McLane reserves the right to impute cash discounts of up to
two percent (2%), or more if such higher discount is standard for that category
of Product, or any portion thereof which is not allowed by the manufacturer to
McLane, and to do so based upon Cost. For purposes of this Agreement, the term
"MANUFACTURER" means the person or entity that manufactures or causes others to
manufacture goods or products which are marketed under brands or labels
controlled by such person or entity, or any affiliate of such person or entity.
Cigarettes shall be billed in accordance with Exhibit B.
1.5 Core Item Mix. The stores' product mix will be developed using the
currently existing items in each McLane division inventory mix, including store
use items; provided, however, that McLane agrees to stock Mapco's proprietary
or other specialty items. Mapco agrees to review the stores' product mix each
quarter and replace slow moving items with an item reflecting greater unit
sales within the McLane division. Slow moving items are defined as those items
within each respective McLane division which do not meet the following McLane
annual inventory category days sales in inventory standards, which standards
may be changed by McLane from time to time for all customers of such McLane
division upon no less than 60 days prior notice to Mapco:
Category Days Sales In Inventory
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Cigarettes [* * *]
[* * *] CONFIDENTIAL TREATMENT REQUESTED
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Confection [***]
Snacks [***]
Perishable (meats/cheese) [***]
Frozen [***]
Grocery Standard [***]
Retail Beverages [***]
Supplies (cups/lids) [***]
Health & Beauty Care [***]
General Merchandise [***]
Other Tobacco Products [***]
If the slow-moving item is a proprietary item of Mapco or other specialty item
stocked by McLane at Mapco's request, Mapco shall purchase from McLane all such
slow-moving items within thirty (30) days after the end of the month in which
such item should be replaced at a cost equal to the [***] for such item plus all
[***]. Furthermore, upon expiration/termination of this Agreement, all such
Mapco proprietary/specialty items shall be purchased by Mapco from McLane at a
cost determined in accordance with the immediately preceding sentence.
It is understood and agreed that McLane shall make available at each McLane
division one national brand of bottled water and the best selling regional
brand of bottled water at the respective McLane division. If any store desires
a different brand of bottled water, it shall be entitled to purchase it from
another vendor.
ARTICLE II
SUPPLY SERVICES
2.1 Product Delivery. McLane, by and through its divisions and/or
subsidiaries, shall supply and deliver those Products described hereinabove
which are ordered by the stores on a weekly basis except as otherwise agreed to
in writing by the parties. In servicing the stores, McLane shall utilize a [***]
schedule. However, it is understood that some store locations, due to limited
hours of operations or local governmental restrictions may be unable to
accommodate this preference. In such instances, the parties hereto will attempt
to achieve the most flexible delivery window possible considering the
aforementioned restrictions, if any.
Each store shall order and McLane shall deliver Products to each store once
per week and the stores must accept these deliveries. Mapco may request that
McLane commence delivering Products twice per week at any time during the term
of this Agreement to any store that made average purchases of Products of at
least [***] per week during the immediately preceding two (2) month period.
McLane shall grant such requests provided (a) McLane has other deliveries
scheduled in the general area in which the store is located, (b) McLane is able
to deliver to such store during the delivery hours set forth above, and (c) the
store places balanced orders consisting of
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all categories of Products for both deliveries. McLane shall act on granted
requests during McLane's Spring and Fall re-routing processes. McLane shall
continue any twice per week deliveries granted by it until such time as the
store ceases purchasing, on average, at least [***] of Products per week during
any two (2) month period. The [***] per week amount specified above shall be
adjusted (i) with respect to non-cigarette purchases, on each anniversary date
of this Agreement in a manner to reflect the latest annual change in the U.S.
Department of Labor, Bureau of Labor Statistics Producer Price Index, Series
Id: WPUSOP3110, Not Seasonally Adjusted, ("PPI"), and (ii) with respect to
cigarette purchases, on the first day of the McLane fiscal accounting period
immediately succeeding a manufacturer's price increase on cigarettes and/or a
federal, state, local or other tax increase on cigarettes in a manner to
reflect the actual increase in taxes or the price of cigarettes to McLane. If
the PPI is no longer published, then another similar index generally recognized
as authoritative shall be substituted.
2.2 Other Customers of McLane. This Agreement shall in no way act to
foreclose McLane from supplying and delivering products or services to any
other customer or entity.
2.3 Item Maintenance and Store Traits. Mapco agrees to perform store and
item maintenance using McLane provided Quasar, StarGazer and Document Direct
software via the Internet, or any future software products McLane may make
available in the future at no additional charge, or provide this information to
McLane in a format mutually agreed between Mapco and McLane.
2.4 Account Management. McLane shall provide [***] full-time account
representatives to be located in [***], in order to facilitate the ordering and
distribution processes under this Agreement and to implement new programs
across all of McLane's divisions servicing Mapco. The account representatives
shall serve as the primary points of contact for Mapco. Additionally, McLane
will reimburse Mapco up to [***] for payroll costs incurred by Mapco for [***]
field representatives to be hired by Mapco to coordinate the services to be
performed by McLane's account representatives.
2.5 Cigarette Clean Up. McLane will reimburse Mapco up to a maximum of
[***] for damaged, overstocked or discontinued cigarettes in the Mapco stores
at the beginning of this Agreement that are removed from the stores by McLane
at the request of Mapco.
ARTICLE III
PAYMENT TERMS
3.1 Payment Terms for Products Purchases. Mapco shall cause payment to be
made by ACH Credit (or ACH Debit if approved by McLane) or wire transfer to
McLane for all Products purchased by the stores not later than 12:00 Noon,
Central Standard Time or if applicable, Central Daylight Savings Time, [***]
days from statement date. Such payments shall be in the full amount of the
statement to which they relate. Any amounts not paid when due shall bear
interest at
[***] CONFIDENTIAL TREATMENT REQUESTED
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the lesser of (i) eighteen percent (18%) per annum, or (ii) the maximum rate
allowed by applicable law. McLane shall be entitled to offset any or all rebates
or other amounts due Mapco against any amounts due and owing McLane pursuant to
this Agreement, including any accrued interest thereon.
3.2 Confirmation. MAPCO shall have the right at any time during the term
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of this Agreement (and upon termination of this Agreement) to nominate an
independent certified public accountant, reasonably acceptable to McLane, who
shall have access to McLane's records during reasonable business hours for the
purpose of verifying the payments due by MAPCO under this Agreement; provided,
however, that MAPCO may not exercise this right more than once in any calendar
year. Such independent certified public accountant shall disclose to MAPCO
information limited only to the accuracy of the payments made in accordance with
this Agreement. The expense of such independent certified public accountant
shall be paid by MAPCO unless verification indicates that MAPCO has overpaid
McLane by [***] or more, in which case such expenses shall be paid by McLane.
ARTICLE IV
TERM AND TERMINATION
4.1 Term. This Agreement shall commence on the Effective Date and,
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unless earlier terminated in accordance with terms of this Agreement, or by
mutual consent of the parties, will continue thereafter until December 31, 2007;
provided, however, that Mapco shall be entitled to extend the term of this
Agreement for an additional two (2) year period through December 31, 2009 by
delivering to McLane written notice of its exercise of such extension right on
or before October 1, 2007. In the event Mapco exercises such extension right all
terms and conditions of this Agreement would apply during the extended term
except that the Signing Bonus for the two year extension term would be [***]
which would be paid on or before [***] and would be amortized over the two year
extension term using the straight-line method of amortization in accordance
with generally accepted accounting principles. Upon termination of this
Agreement, McLane and Mapco will each fulfill their respective obligations
hereunder with respect to all orders that have been placed by the stores and/or
delivered by McLane prior to the effective date of such termination.
4.2 Effective Date. The "Effective Date" of this Agreement shall be
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as of January 1, 2005.
4.3 Termination Due to Payment Default by Mapco. In the event Mapco fails
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to make payments for any Products or services purchased by the stores from
McLane at such time as payment is required to be made by this Agreement
("PAYMENT DEFAULT"), McLane will have the immediate right to suspend
performance of its obligations under this Agreement until such time as the
Payment Default is cured. If a Payment Default is not cured within 24 hours
after Mapco receives notice of such default from McLane, then McLane may
terminate this Agreement at any
[***] CONFIDENTIAL TREATMENT REQUESTED
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time while such Payment Default continues. However, nothing in this Agreement
shall constitute a waiver of McLane's remedies under applicable law.
4.4 Termination Remedies to Both Parties.
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(a) Either party may immediately terminate this Agreement or suspend its
performance under this Agreement at such party's sole discretion
without notice upon: (i) the institution by or against the other party
to this Agreement of insolvency, bankruptcy or similar proceedings;
(ii) any assignment or attempted assignment for the benefit of
creditors by the other party; (iii) any appointment, or application
for such appointment, of a receiver for the other party; (iv) the
other party becoming insolvent or unable to pay its debts as they come
due; (v) an involuntary lien being filed or levied against, or
foreclosure or seizure of materially all or a significant portion of,
the other party's assets, including, without limitation, inventory, by
a creditor, lienholder, lessor, governmental authority or other
person, which has not been removed within ten (10) days; (vi) the
other party's material falsification of any records or reports
required hereunder; or (vii) a material adverse change in the other
party's financial condition or results of operations.
(b) Either party may terminate this Agreement in the event of other
party's breach of, or failure to comply with, any material term or
provision of this Agreement and the continuance of such breach or
failure for thirty (30) days after such party has received written
notice of such breach or failure from the other party; provided,
however that this Section 4.4(b) shall not apply to a Payment Default.
4.5 Repayment of Unamortized Amounts. Upon any termination of this
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Agreement (i) Mapco shall immediately pay to McLane the unamortized portion of
any amounts paid to Mapco pursuant to Section 4.1, Section 5.1 or Section 5.2
hereof; (ii) McLane shall immediately pay to Mapco any unpaid amounts that have
been earned by Mapco and are then payable and due pursuant to Article V or
Exhibit B of this Agreement.
ARTICLE V
COMPENSATION
5.1 Signing Bonus. Upon the execution of this Agreement, McLane agrees to
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pay Mapco a signing bonus (the "SIGNING BONUS") of [***] for the [***]. Such
amount shall be amortized over the January 1, 2005 through December 31, 2007
period using the straight-line method of amortization in accordance with the
generally accepted accounting principles.
If Mapco acquires any stores from a non-affiliated entity, Mapco shall
notify McLane of such acquisition(s) and with respect to each such acquired
store(s) McLane will pay to Mapco,
[***] CONFIDENTIAL TREATMENT REQUESTED
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within ten (10) business days after receipt of such notification, [***]
multiplied by the number of months from the date of such acquisition through
December 31, 2007. All such amounts shall be amortized over such date of
acquisition through December 31, 2007 period using the straight-line method of
amortization in accordance with the generally accepted accounting principles.
5.2 Service Allowance. Subject to the terms and conditions of Section
6.16 hereof, McLane agrees to pay Mapco the amount of [***] (the "Service
Allowance") (i) within ten (10) business days after the Effective Date of this
Agreement, and (ii) provided this Agreement has not been terminated and such
store has not been sold, closed or otherwise ceased operation, within ten (10)
business days after each anniversary date of this Agreement. The Service
Allowance shall grant to McLane the right to be the exclusive wholesaler for the
sale and delivery of the Products specified in Section 1.3 and shall be
amortized over the twelve-month period immediately suceeding its payment
applying the straight-line method of amortization in accordance with generally
accepted accounting principles.
In the event that Mapco or any affiliate of Mapco should build, purchase or
acquire any new store(s) during the term of this Agreement, Mapco shall notify
McLane of such built, purchased or acquired stores and McLane shall pay to Mapco
[***] multiplied by the number of months remaining until the next anniversary
date of this Agreement after the opening, purchase or acquisition of such store
by Mapco or any affiliate of Mapco (except in the case of a store subject to a
conflicting agreement with a third party as provided in Section 1.1 of this
Agreement, in which case such payment shall be due only with respect to months
during which such store subject to this Agreement). Such amount shall be paid
simultaneously with the payment of the Service Allowance payment due on the
anniversary date of this Agreement immediately following such opening, purchase,
or acquisition (or, if sooner, upon the expiration of this Agreement).
In the event Mapco or any affiliate of Mapco should sell, close or
otherwise cease operation of any stores subject to this Agreement, Mapco shall
promptly notify McLane of such sales, closures, or cessation of operation. For
each such store which is sold, closed or has ceased operation, Mapco shall
refund to McLane on the anniversary date of this Agreement immediately
succeeding such sale, closure or cessation of operation, [***] multiplied by the
number of months from the date of such sale, closure or cessation of operation
through such anniversary date (or, if sooner, upon the expiration of this
Agreement).
5.3 Marketing Allowance. Subject to the terms and conditions of Section
6.16 hereof, within ten (10) business days after the end of each McLane
accounting quarter during the term of this Agreement McLane agrees to pay Mapco
a marketing allowance (the "Marketing Allowance") in the amount of [***], in
operation and subject to this Agreement during such quarter, such amount to be
prorated for stores that were not in operation and subject to this Agreement for
the entire quarter.
[***] CONFIDENTIAL TREATMENT REQUESTED
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ARTICLE VI
MISCELLANEOUS
6.1 Organization, Good Standing, Etc. Mapco hereby represents and
warrants to McLane that it and any of its affiliates operating stores subject to
this Agreement are duly organized, validly existing and in good standing under
the laws of the state of their respective formation and have all requisite power
and authority, and all material licenses, permits and certificates to own and
operate their respective properties and assets and to carry on their respective
businesses. Mapco further represents and warrants that it and any affiliate is
duly qualified to do business and is in good standing as a foreign corporation
or other entity in each other jurisdiction in which the ownership or operation
of its properties or assets or the nature of its business requires such
qualification. Mapco further represents and warrants that execution of this
Agreement has been duly and validly authorized and that the persons executing
this Agreement have all power and authority to bind Mapco to all terms and
conditions of this Agreement.
6.2 Assignment. This Agreement shall be binding upon, and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, but may not be assigned by any party hereto without the prior written
consent of the other party; provided, however, that this Agreement may be
assigned by MAPCO to any entity acquiring all or substantially all of the
business or assets of MAPCO, including all or substantially all of the stores
then-currently subject to this Agreement.
6.3 Notices. Any notice, request, consent, waiver or other communication
required or permitted hereunder shall be effective only if it is in writing and
delivered personally or sent, by telecopy, facsimile transmission, a nationally
recognized overnight delivery service, or registered or certified mail, postage
prepaid, to the other party at the following address (or to such other address
as the parties shall provide to the other in writing):
If to MAPCO:
Vice President, Marketing
MAPCO Express, Inc.
830 Crescent Centre Drive, Suite 300
Franklin, TN 37067
Facsimile: (615) 224-9345
With a copy (which shall not constitute notice) to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, NY 10103
Attention: Mara Rogers, Esq.
Facsimile: (212) 318-3400
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If to McLane:
President
McLane Grocery Distribution
P.O. Box 6115
Temple, Texas 76503-6115
Facsimile: (254) 771-7509
With a Copy to:
General Counsel
McLane Company, Inc.
P.O. Box 6115
Temple, Texas 76503-6115
Facsimile: (254) 771-7515
All such notices, requests, consents, waivers or other communications
shall be deemed to have been given and received on the date of delivery or on
the third business day after mailing thereof in accordance with this Section
6.3.
6.4 Confidentiality. McLane and Mapco each agree that all information
communicated to it or any of its affiliates by the other, whether before or
after the Effective Date, will be and was received in strict confidence, will be
used only for purposes of this Agreement and that no such information, including
without limitation the provisions of this Agreement, will be disclosed by the
recipient party, its agents or employees without the prior written consent of
the other party, except as may be necessary by reason of legal, accounting or
regulatory requirements beyond the reasonable control of the recipient party;
provided, however, that McLane is authorized to submit store and item level
Product purchase data to the Product manufacturers. The provision of this
Section 6.4 will survive termination, for any reason, of this Agreement.
6.5 Reporting. Upon request, Mapco shall furnish McLane with its most
recent quarterly financial statements prepared in accordance with generally
accepted accounting principles. Additionally, within one hundred twenty (120)
days after the end of Mapco's fiscal accounting year, Mapco shall provide
McLane with its annual audited financial statements. Such financial statements
shall be furnished to Credit Department, McLane Company, Inc., P. O. Box 6115,
Temple, Texas 76503-6115.
6.6 Publicity. Neither McLane nor Mapco nor any affiliate of Mapco will
issue or make, or cause to have issued or made, any media release or
announcement concerning this Agreement or the transactions contemplated hereby
without the prior approval of the other party, except as may be necessary by
reason of legal, accounting or regulatory requirements beyond the reasonable
control of such party.
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6.7 Counterparts. This Agreement may be executed in one or more
counterparts for the convenience of the parties hereto; all of which together
shall constitute one and the same instrument.
6.8 Severability. If any provision of this Agreement is declared or found
to be illegal, unenforceable or void by a court of competent jurisdiction, then
both parties will be relieved of all obligations arising under such provision,
but only to the extent that such provision is illegal, unenforceable or void, it
being the intent and agreement of the parties that this Agreement will be
deemed amended by modifying such provision to the extent necessary to make it
legal and enforceable. If the remainder of this Agreement is not affected by
such declaration or finding, then each provision not so affected will be
enforced to the extent permitted by law.
6.9 Entire Agreement.
The parties agree that this Agreement sets forth their entire Agreement
and there are no promises or understandings other than those stated herein. All
previous agreements between the parties in effect on the Effective Date of
this Agreement including, without limitation, that one certain agreement dated
January 1, 2002, are hereby terminated as of such Effective Date.
Each party hereby releases, acquits, and forever discharges the other party and
its past and current agents, attorneys, employees, servants, officers,
directors, principals, successors, assigns, parents, subsidiaries, affiliates,
insurers, and all persons, natural or corporate, in privity with them or any of
them, from any and all claims or causes of action of any kind whatsoever, at
common law, statutory, or otherwise (a) that such party has or may have, known
or unknown, now existing or that may arise hereafter, directly or indirectly
attributable to any prior agreement or dealings between the parties, except for
any amounts having arisen in the ordinary course of the parties' transactions
pursuant to that certain Distribution Service Agreement dated as of January 1,
2002 and owing by one party to the other as of the Effective Date of this
Agreement, and (b) all other claims of any kind that such party may have
against the other party arising out of or attributable to acts or omissions
occurring prior to the Effective Date of this Agreement.
Each party shall indemnify, save, and hold harmless the other party from any
and all claims or causes of action whatsoever, at common law, statutory, or
otherwise, brought by, under, or through such party relating to the claims
released by such party in this Section 6.9.
Each party represents and warrants to the party that (i) it is the owner in
full of all the claims and causes of action released by such party in this
Section 6.9, (ii) no person, firm or business owns all or any part of the
claims and causes of action released by such party in this Section 6.9,
(iii) no representatives or statements by the other party, their attorneys, or
other agents or representatives or anyone acting on their behalf, other than
the representations and statements contained in this Agreement, have influenced
such party in making or have induced such party to make the recitals,
promises, and releases contained in this Section 6.9, (iv) if the facts with
respect to the releases contained in this Section 6.9 are found hereafter to be
different from the facts now believed by such party to be true, such party
expressly accepts and assumes
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the risk of such possible differences in facts and hereby agrees that the
releases and indemnities contained in this Section 6.9 will remain in effect
notwithstanding such differences in facts.
6.10 LIMITATION OF LIABILITY. NOTWITHSTANDING ANY PROVISION OR REFERENCE
IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT SHALL MCLANE OR MAPCO BE LIABLE
TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, SPECIAL, EXEMPLARY, INCIDENTAL OR
PUNITIVE DAMAGES, INCLUDING LOST PROFITS OR BUSINESS OPPORTUNITIES, OR, LOSSES
ATTRIBUTABLE TO OR ARISING FROM OVERHEAD ALLOCATIONS OR GENERAL AND
ADMINISTRATIVE COSTS AND EXPENSES, OR FOR THE ACT OR OMISSIONS OF MAPCO OR
MCLANE, AS THE CASE MAY BE.
6.11 CONTROLLING LAW. THE PARTIES AGREE THAT ALL DISPUTES IN ANY WAY
RELATING TO, ARISING UNDER, CONNECTED WITH, OR INCIDENT TO THIS AGREEMENT, AND
OVER WHICH THE FEDERAL COURTS HAVE SUBJECT MATTER JURISDICTION, SHALL
BE LITIGATED, IF AT ALL, EXCLUSIVELY IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF TEXAS, WACO DIVISION, AND IF NECESSARY, THE CORRESPONDING
APPELLATE COURTS. THE PARTIES FURTHER AGREE THAT ALL DISPUTES IN ANY WAY
RELATING TO, ARISING UNDER, CONNECTED WITH, OR INCIDENT TO THIS AGREEMENT, AND
OVER WHICH THE FEDERAL COURTS DO NOT HAVE SUBJECT MATTER JURISDICTION, SHALL BE
LITIGATED, IF AT ALL, EXCLUSIVELY IN THE COURTS OF THE STATES OF TEXAS, IN BELL
COUNTY, AND, IF NECESSARY, THE CORRESPONDING APPELLATE COURTS. THE PARTIES ALSO
AGREE THAT TEXAS LAW EXCLUDING ITS LAWS RELATING TO CONFLICTS IN LAW, SHALL
GOVERN ALL TERMS OF THIS AGREEMENT, INCLUDING THIS PARAGRAPH. THE PARTIES
EXPRESSLY SUBMIT THEMSELVES TO THE PERSONAL JURISDICTION OF THE STATE OF TEXAS.
6.12 Authority to Bind. Each person executing this Agreement warrants that
he or she has full and legal authority to execute this Agreement for and on
behalf of the respective party for which he/she is executing this Agreement and
to bind such party.
6.13 Force Majeure. Neither party shall be liable to the other party for
any failure or delay in performance of its obligations under this Agreement
(other that obligations to pay money when due) because of circumstances beyond
its control including, but not limited to, acts of God, flood, fire, riot,
accident, strikes, or work stoppages for any reason, embargo, inability to
obtain phone lines, government action (including enactment of any laws,
ordinances, regulations of the like which restrict or prohibit the providing of
the services contemplated by this Agreement) and other causes beyond its control
whether or not of the same class or kind as specifically named above. If either
party is unable to perform its obligations hereunder (other than obligations to
pay money when due) for any of the reasons described in this Section 6.13, the
obligations of such party shall be suspended for the duration, and only to the
extent of, such force majeure event, provided that the affected party shall
notify the other party of its inability to
[*** CONFIDENTIAL TREATMENT REQUESTED]
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so perform within five (5) business days of the occurrence of the force majeure
event, the steps it plans to take to rectify or mitigate such inability and the
anticipated length of such inability.
6.14 Material Change in Circumstances. At any time after the Effective
Date, either party shall have the right to send a notice to the other party
requesting renegotiation of this Agreement (a "CHANGE NOTICE") in the event of a
significant change in circumstances which affect product or delivery cost with
respect to the Products and services to be provided by McLane to Mapco pursuant
to this Agreement or which affect the overall economics of such party's
business; provided, however, that a party shall not be entitled to send more
than one (1) Change Notice during any January - December twelve month period of
this Agreement. The Change Notice shall describe in detail the change in
circumstances, the effects thereof on the party sending the Change Notice, and
the modifications to this Agreement being requested as a result thereof.
Examples of material change would include, without limitation, store count
change of 20% or more, purchase volume change of 20% or more, change in mix of
Products purchased as a result of changes in the legislative arena, change in
merchandising philosophy that results in volume changes of 20% or more in key
categories such as, without limitation, candy, tobacco, cigarettes or drinks or
actual purchase volume materially different than that provided by Mapco to
McLane and used by McLane in determining the product pricing set forth in this
Agreement. This Agreement shall continue unchanged until the parties agree on
any change(s) to be made. If the parties cannot reach agreement as to requested
change(s) within (60) days after a Change Notice is sent, Mapco and McLane agree
to be bound by the mutual decision reached in a meeting between Mapco's
President and McLane's President, or if no agreement can be reached, the party
sending the Change Notice shall be entitled to terminate this Agreement by
giving the other party written notice of termination within thirty (30) days
after the date of such meeting, such termination to be effective ninety (90)
days after the date of such notice.
6.15 Critical Vendor. Mapco shall use all best efforts to take all
necessary or required steps (including, without limitation, including McLane in
first day notices and motions) to have McLane designated as a "critical vendor"
entitled to payment in full for all prepetition deliveries of Products in any
bankruptcy proceedings in which Mapco or any of its affiliates is the debtor.
6.16 Entitlement to Incentives. Anything to the contrary in this Agreement
notwithstanding, it shall be an express condition precedent for Mapco to earn,
and/or be entitled to payment or provision by McLane of, any allowances,
rebates, discounts, incentives, price protections or other payments (including,
without limitation, any of the same set forth in Article V or Exhibit B hereof)
that (i) Mapco is in compliance in all material respects with the terms and
conditions of this Agreement (including, without limitation, the payment terms
set forth in Article III hereof) on the date such payment/benefit is due by
McLane, and (ii) all Product purchases to which such payments/benefits relate
have been indefeasibly paid for in full by Mapco to McLane.
6.17 Amendments. No modification, alternation, addition, or change in the
terms of this Agreement (including without limitation any agreement pursuant to
Section 2.1 of this Agreement and any amendment or waiver of this Section 6.15)
shall be binding on either party hereto unless in writing and signed by the duly
authorized representatives of each party, which in the case of
[*** CONFIDENTIAL TREATMENT REQUESTED]
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<PAGE>
MAPCO shall be two officers, at least one of whom shall be the Vice President
of Marketing, Chief Operating Officer or President.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of
the date first written above.
MAPCO EXPRESS, INC.
BY: /s/ Uzi Yemin
-------------------------------------
PRINTED NAME: Uzi Yemin
---------------------------
TITLE: President & CEO
----------------------------------
BY: /s/ Paul Pierce
-------------------------------------
PRINTED NAME: Paul Pierce
---------------------------
TITLE: VP of Marketing
----------------------------------
McLANE COMPANY, INC., DBA
McLANE GROCERY DISTRIBUTION
BY: /s/ Peter Leavitt
-------------------------------------
PRINTED NAME: Peter Leavitt
---------------------------
TITLE: V.P. Sales - Convenience
----------------------------------
[*** CONFIDENTIAL TREATMENT REQUESTED]
-14-
<PAGE>
EXHIBIT "A"
BILLING COMPONENTS AND TERMS AND CONDITIONS
Grocery Exhibit "C"
Cigarettes Exhibit "B"
Label Fee [***] Single Sell/[***] Full Case/[***] GMP
Quasar/Stargazer Maintenance by McLane [***] (waived if Mapco maintains a
minimum of 75% of its authorizations
and retails during most current 90 day
period)
Out-of-Date non-cigarette returns [***]
In-date cigarette returns [***]
Out-of-date cigarette returns [***]
* Tote box net deposit=[***]
* CO2 deposit=[***]/20 lb. Container
FUEL PRICE SURCHARGE/CREDIT
During each McLane accounting period during the term of this Agreement,
McLane will determine if a fuel price surcharge/credit is applicable. A
surcharge will be applicable if at the end of the first week of such period the
average fuel cost for the preceding four week period as posted on the EIA
Report on Highway Diesel Prices Website, or such other comparable report if the
EIA Report is no longer published (the "EIA REPORT"), is above $1.601 per
gallon. Conversely, a credit will be applicable if at the end of the first week
of such period the average fuel cost for the preceding four week period as
posted on the EIA Report is less than $1.2971 per gallon. The per gallon
amounts of $1.60 and $1.30 represents a range of $0.15 above and below the
$1.45 average fuel cost on the EIA Report for the years 2001, 2002 and 2003
("BASE RANGE"). No fuel surcharge or credits will be calculated if the average
fuel cost during the preceding four week period as posted on the EIA Report is
within the Base Range.
Any surcharge/credit will be effective from the beginning of the third
week in the McLane accounting period in which such surcharge credit
determination is made through the end of the second week of the immediately
succeeding McLane accounting period. Various fuel surcharges and credits have
been calculated and are set out in the table below based on a fuel cost range
of $0.06 per incremental change in the surcharge or credit.
ASSUMPTIONS:
Average MPG - McLane Tractor 6.0
Average Miles Between each Stop 36.0
[***] CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
Cents per Mile Cost Increment Over Base Incremental Cost per Stop
Fuel Cost Range (Fuel) Cost (Cents) (Fuel Surcharge/Credit)
-----------------------------------------------------------------------------------------------------------------------------
Credit Calculation 0.931 0.991 0.155 -0.0813 $(2.93)
Credit Calculation 0.992 1.052 0.165 -0.0712 $(2.56)
Credit Calculation 1.053 1.113 0.176 -0.0610 $(2.20)
Credit Calculation 1.114 1.174 0.186 -0.0508 $(1.83)
Credit Calculation 1.175 1.235 0.196 -0.0407 $(1.46)
Credit Calculation 1.236 1.299 0.206 -0.0305 $(1.10)
-----------------------------------------------------------------------------------------------------------------------------
BASE RANGE 1.30 1.60 BASE RANGE CENTS PER MILE 0.237
-----------------------------------------------------------------------------------------------------------------------------
Surcharge Calculation 1.601 1.662 0.267 0.0305 $ 1.10
Surcharge Calculation 1.663 1.723 0.277 0.0407 $ 1.46
Surcharge Calculation 1.724 1.784 0.287 0.0508 $ 1.83
Surcharge Calculation 1.785 1.845 0.298 0.0610 $ 2.20
Surcharge Calculation 1.846 1.906 0.308 0.0712 $ 2.56
Surcharge Calculation 1.907 1.967 0.318 0.0813 $ 2.93
-----------------------------------------------------------------------------------------------------------------------------
The Fuel Credit is the
decrease from base costs
(cents) multiplied by
the average miles
between each stop.
FORMULA FOR EACH The lower Fuel Cost
COLUMN: $.06 range Range number divided The Base Range
by 6 mpg (the average Cents per Mile
mpg per McLane minus the Cents
Tractor). per Mile Cost.
The Fuel Surcharge is the
increase over base costs
(cents) multiplied by the
average miles between
each stop.
-----------------------------------------------------------------------------------------------------------------------------
* [***] per store average minimum GMP purchase for Full Service GMP program
indexed annually for inflation. Fee of [***], indexed annually for
inflation.
* [***] per store average minimum GMP purchase for Limited Service GMP
program indexed annually for inflation. Fee of [***], indexed annually for
inflation.
[***] CONFIDENTIAL TREATMENT REQUESTED
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<PAGE>
EXHIBIT "B"
CIGARETTE PRICING
All cigarettes (i) for stores located in Tennessee, Virginia, Alabama, Georgia
and Kentucky shall be billed at the then current manufacturer list price plus
(a) [***] with respect to all cigarettes manufactured by Philip Morris or any of
its respective affiliates, or the Brown & Williamson business unit of Reynolds
American, except as provided otherwise in (c) below, (b) [***] on all cigarettes
manufactured by Reynolds American or any of its affiliates, except as provided
otherwise in (a) above or (c) or (d) below, (c) [***] on Misty, GPC, Viceroy and
any other similarly priced cigarettes previously manufactured by Brown &
Williamson, or any of its affiliates (including certain Pall Mall cigarettes),
(d) [***] on Forsythe cigarettes, (e) [***] on all cigarettes manufactured by
Lorillard Tobacco Company or any of its affiliates, or (f) [***] per carton with
respect to cigarettes not described in (a), (b), (c), (d) or (e) above, and (ii)
for stores located in Mississippi, Louisiana or Arkansas, [***] plus, in all
cases, all then applicable taxes and fair trade mark-ups. The per carton
mark-ups described in (i) or (ii) above will be proportionately
increased/decreased in the event of any post-January 1, 2005 increases/decreases
in the amounts payable to and/or discounts available to McLane from the
cigarette manufacturers related to the purchase of cigarettes from such
manufacturers by McLane. The per carton rebates described below will be paid
within ten (10) business days after the end of each McLane fiscal accounting
period.
STATE PREMIUM GENERIC SUBGENERIC
---------- ------- ------- ----------
ALABAMA [***] [***] [***]
GEORGIA [***] [***] [***]
KENTUCKY [***] [***] [***]
TENNESSEE [***] [***] [***]
VIRGINIA [***] [***] [***]
No rebates will be paid on purchases by Mapco of cigarettes manufactured by the
following manufacturers or any other manufacturers that do not offer
satisfactory rebate/promotional programs to McLane:
Imperial Tobacco
KingMaker
Kretek
Nat Sherman
Premier
Sante Fe Natural
Tobacco Exports
S&M Brands, Inc.
Subject to the terms and conditions of Section 6.16 of this Agreement, McLane
shall provide Mapco [***] by the manufacturer on future price increases on
cigarettes.
[***] CONFIDENTIAL TREATMENT REQUESTED
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<PAGE>
BILLING PLAN MARK-UPS BY UIN DEPARTMENT
EXHIBIT "C"
UIN DEPT UIN DEPARTMENT DESCRIPTION MARK-UP ON COST
CIGARETTES SEE EXHIBIT "B"
GROCERY
---------- -------------------------- ---------------
20601 GROCERY [***]
20602 SOFT/SPORTS DRINKS [***]
20603 FOUNTAIN SYRUPS FIGAL/BIB [***]
20604 JUICES [***]
20605 DRINK POWDER/LIQ. FOUNTAIN [***]
20606 COOKIES/CRACKERS [***]
20608 NUTS/SNACKS [***]
20610 AUTOMOTIVE/MOTOR OIL [***]
20611 NACHO CHIPS [***]
20612 COFFEE VENDING [***]
20614 BULK POPCORN/SUPPLIES [***]
20618 GROCERY (NORMAL GMP) [***]
20620 DISPOSABLE LIGHTERS [***]
20721 CUPS & LIDS [***]
20722 STORE SUPPLIES/RACKS [***]
20723 BAGS (PAPER, PLASTIC) [***]
20925 CANDY FULL CASE [***]
20926 CANDY/BAG [***]
21030 CANDY/COUNT GOODS [***]
21235 SMOKELESS TOBACCO/SNUFF [***]
21338 TOBACCO CHEWING/SMOKING [***]
21339 CIGARETTE PAPERS/SMOKING ACCESS [***]
21442 TOBACCO CIGARS [***]
21545 FROZEN FOOD RETAIL [***]
21546 FROZEN FOOD BULK/P.PACK [***]
21547 DELI MEAT/BULK/PPKFROZEN [***]
21548 BAKERY FROZEN [***]
21649 FROZEN FAST FOOD MISC/DESSERTS [***]
21650 FROZEN SANDWICHES [***]
[***] CONFIDENTIAL TREATMENT REQUESTED
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BILLING PLAN MARK-UPS BY UIN DEPARTMENT
EXHIBIT "C"
UIN DEPT.
GROCERY UIN DEPARTMENT DESCRIPTION MARK-UP ON COST
--------- -------------------------- ---------------
21651 FZN. FAST FOOD/PIZZA/BURRITO [***]
21652 ICE CREAM TAKE HOME [***]
21653 FROZEN NOVELTIES RETAIL [***]
21757 REFRIGERATED [***]
21758 REFRIGERATED JUICE/SHAKES [***]
21759 PACKAGED CHEESE [***]
21760 REFRIGERATED BAKERY [***]
21761 EGGS [***]
21762 FRESH PRODUCE [***]
21865 FROZEN BEEF [***]
21866 PROCESSED MEATS [***]
21867 WAFER MEATS [***]
21868 FRESH BOX BEEF [***]
21869 FRESH POULTRY [***]
21870 FRESH SEAFOOD [***]
21871 DELI MEAT/BULK/PPK/COOLER [***]
21872 DELI CHEESE/BULK/PPK [***]
21873 DELI SALADS/BULK/PPK [***]
21874 FROZEN POTATOES [***]
21875 FROZEN POULTRY [***]
21876 FROZEN PORK [***]
21877 FRESH SALADS [***]
21878 FRESH BULK VEGETABLES [***]
21879 FRESH BULK FRUITS [***]
21880 PRODUCE PREPACKAGED [***]
21881 FROZEN SEAFOOD [***]
BOTTLED WATER [***]
FIREWOOD [***]
ICE CHESTS [***]
ADDITIONAL MARK-UPS
CATCHWEIGHT [***]
SINGLE-SELL [***]
[***] CONFIDENTIAL TREATMENT REQUESTED
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<PAGE>
BILLING PLAN MARK-UPS BY UIN DEPARTMENT
EXHIBIT C
BILLING
PLAN %
MARK-UPS
--------
UIN
DEPT. UIN DEPARTMENT SELF
G.M.P. DESCRIPTION SERVICE
------ -------------- --------
32002 HEALTH CARE [***]
32003 BEAUTY CARE [***]
32104 HAIR ACCSS. [***]
32105 TOYS/GAMES/NOVELTIES [***]
32106 SCHOOLS/OFFICE PRODUCTS [***]
32018 SCHOOL PAPER (ALL TYPES) [***]
32110 CAPS/HATS [***]
32112 GLOVES [***]
32114 SOFT GOODS [***]
32115 BABY [***]
32116 HOSIERY [***]
32117 SHOE CARE [***]
32118 SUNGLASSES [***]
32120 MISC. GEN. MERCHANDISE [***]
32122 PET SUPPLIES [***]
32123 AUTO ACCESSORIES [***]
32124 HOUSEHOLD [***]
32125 SEWING ACCESSORIES [***]
32126 HARDWARE [***]
32127 ELECTRICAL [***]
32128 LIGHT BULBS [***]
32130 FILM/TAPES/CD's/COMPUTER [***]
32134 BATTERIES [***]
32138 DISPOSABLE LIGHTERS [***]
32140 LOGO LIGHTERS [***]
32142 ICE CHESTS [***]
32144 STORE SUPPLIES [***]
32146 CANDY/GMP [***]
32148 MEAT SNACKS [***]
32149 NUTS/SNACKS [***]
32150 TOBACCO SMOKELESS [***]
32151 TOBACCO CHEWING/SMOKING [***]
32152 CIGARETTE PAPERS/SMOKING [***]
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[***] CONFIDENTIAL TREATMENT REQUESTED
<PAGE>
___________________________________________________________
ACCSS.
___________________________________________________________
32153 TOBACCO CIGARS [***]
___________________________________________________________
32154 GMP/GRO.PROD.MISC. [***]
___________________________________________________________
[***] CONFIDENTIAL TREATMENT REQUESTED
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