Beverage Marketing Agreement [Amendment] - Coca-Cola Fountain and Rubio's Restaurants Inc.
June 21, 2002
Mr. Ralph Rubio
President, CEO
Rubio's Restaurants, Inc.
1902 Wright Place, Suite 300
Carlsbad, CA 92008
Re: Amendment to Beverage Marketing Agreement dated March 6, 1998
Dear Mr. Rubio:
This letter will constitute an amendment (the "Amendment") to the Term
Sheet between Coca-Cola Fountain ("CCF") and Rubio's Restaurants, Inc.
("Rubio's") dated March 6, 1998 (the "Agreement"). The capitalized terms
contained in this Amendment will have the same meaning set forth in the
Agreement unless otherwise defined in this Amendment.
In addition, ***
***
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Effective June 1, 2002 (the "Effective Date"), the Agreement is amended
as follows:
TERM
The first sentence of the Term section is modified by extending the Term
until the later of: (i) June 1, 2012 or (ii) when Rubio's has purchased
its Volume Commitment of CCF's Fountain Syrups.
BEVERAGE AVAILABILITY
The second sentence of the second paragraph of the Beverage Availability
section is modified as follows:
CCF's Fountain Beverages will be the only Fountain Beverages
served in the Covered Outlets, except for adult frozen "fancy
cocktails" (e.g., margarita-type drinks).
The third paragraph of the Beverage Availability section is modified as
follows:
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Confidential Treatment and filed separately with the Commission.
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Mr. Ralph Rubio
June 21, 2002
Page 2
Rubio's recognizes that the sale of competitive Beverage 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, cans in the Covered
Outlets, except for bottled water. Under no circumstances will
Rubio's serve any product of PepsiCo in the Covered Outlets.
The following paragraph is added at the end of the Beverage Availability
section:
Except as specifically provided in this Beverage Availability
section, Rubio's agrees that it shall be in compliance with the
Beverage Availability section upon the expiration of its
pre-existing agreements with unaffiliated third parties and
suppliers of competitive Beverages. In particular, Rubio's
agrees that Dr. Pepper(R) will not be served in its Covered
Outlets after April 30, 2003. In addition, Rubio's agrees that
during the first year of the Term it will conduct tests of
Dasani(R) bottled water, Nestea(R) tea, and CCF's frozen
Beverage mixers. Such tests will be conducted according to
mutually agreed upon test parameters (including duration of test
and test performance criteria) that will be established in
advance of the introduction to determine the success or failure
of the tests. In conducting such tests, Rubio's agrees that it
will provide sales data to CCF at the end of every four-weeks
during the test period that will be used to measure the results
of the test. CCF and Rubio's will mutually analyze and evaluate
the sales data to meet mutually agreed upon sales criteria and
to mutually determine the success of the tests.
VOLUME COMMITMENT
The Volume Commitment section is deleted in its entirety and substituted
with the following language:
Rubio's agrees that, beginning June 1, 2002 until the end of the Term,
the Covered Outlets will purchase an additional *** of CCF's Fountain
Syrups. Accordingly, the total Volume Commitment is *** of CCF's
Fountain Syrups.
MARKETING PROGRAM
CONVERSION FUND.
The following sentence is added at the end of the Conversion Fund
subsection:
*** conversion from Dr. Pepper(R) to CCF's brands, CCF will pay
funding in the amount of *** (the "Incremental Conversion
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Mr. Ralph Rubio
June 21, 2002
Page 3
Fund"). In the event that Rubio's elects to serve CCF's
Nestea(R) tea in all of the Covered Outlets instead of brewed
tea, CCF will provide additional funding in the amount of *** to
offset the costs of such conversion (the "Tea Conversion Fund").
Tea Conversion funding will be paid *** .
PROMOTIONAL SUPPORT FUND.
A new "Promotional Support Fund" subsection is added at the end of the
Marketing Program section as follows:
PROMOTIONAL SUPPORT FUND. Beginning in January of calendar year
2003 through and including January of calendar year 2012, CCF
shall pay Rubio's an *** Promotional Support Fund payment of ***
to offset the cost of the following activities. To qualify for
funding, each Covered Outlet will comply with a minimum of ***
of the following performance criteria:
1. Conduct *** a minimum of *** crew incentive and
training program designed to increase the sale of
CCF's Fountain Beverages in the Covered Outlets; and
2. Conduct tests of Dasani(R) bottled water,
Nestea(R)tea, and CCF's frozen Beverage mixers as
detailed in the Beverage Availability Section above;
and
3. Perform those additional marketing activities that
involve CCF's Fountain Beverages that the parties
mutually agree upon.
NESTEA(R) TEA BRAND BUILDING FUND.
A new "Nestea(R) Tea Brand Building Fund" subsection is added at the end
of the Marketing Program section as follows:
NESTEA(R) TEA BRAND BUILDING FUND. In the event that Rubio's
serves Nestea(R) Fountain Beverage in all of its Covered
Outlets, beginning in January of calendar year following such
conversion through and including January of calendar year 2012,
CCF shall pay Rubio's an *** Nestea(R) Tea Brand Building Fund
payment of *** . To qualify for funding, each Covered Outlet
will comply with *** of the following performance criteria:
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Mr. Ralph Rubio
June 21, 2002
Page 4
1. Execute a minimum of *** merchandising activity
and/or promotional activity *** that is designed to
increase the sale of CCF's Nestea(R) Fountain
Beverage in the Covered Outlets; and
2. Perform those additional marketing activities that
involve CCF's Nestea(R) Fountain Beverages that the
parties mutually agree upon.
BUSINESS BUILDING FUND.
A new "Business Building Fund" subsection is added immediately after the
end of the Nestea(R) Brand Building Fund subsection as follows:
BUSINESS DEVELOPMENT FUND. *** execution of this Agreement, CCF
shall make a *** in the amount of *** and in *** , CCF shall
make another *** of *** . These *** are to offset the costs of
conducting a minimum of *** of the following activities that
Rubio's will conduct in the Covered Outlets throughout the Term:
1. Execute mutually agreed upon strategies that are designed
to increase combo meal incidence in the Covered Outlets;
and
2. Mutually agreed upon marketing and/or promotional
activities that are designed to increase Fountain Beverage
transactions in the Covered Outlets; and
3. Those additional business development activities that the
parties mutually agree upon.
EQUIPMENT PROGRAM
The following sentence is added after the first sentence of the
Equipment Program section:
In the event Rubio's elects to serve CCF's Nestea(R) Fountain
Beverages in all of the Covered Outlets, CCF also will provide
without charge one tea urn per Covered Outlet.
TERMINATION
The Termination section is modified by adding the following sentences at
the end of the first bullet point of the third sentence:
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Mr. Ralph Rubio
June 21, 2002
Page 5
Incremental Conversion Fund will be earned at the rate of ***
per gallon; Tea Conversion Fund, Promotional Support Funds and
Nestea(R) Brand Building Fund will be earned at the rate of ***
per month; and Business Development Funds will be earned at the
rate of *** per gallon.
If this letter conforms to our agreement, please sign the enclosed copy
and return it to me for my files. By signing this Amendment, you
represent and warrant that you are authorized to enter into contracts on
behalf of Rubio's governing the subject matter of this Amendment.
Sincerely,
/s/ Dan Manning
Dan Manning
Vice President, West Group
Coca-Cola Fountain
Agreed to this _______ day of June, 2002.
RUBIO'S RESTAURANTS, INC.
By: /s/ Ralph Rubio
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Mr. Ralph Rubio
President, CEO
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Confidential Treatment and filed separately with the Commission.