SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT, made as of November 29, 1995 (the
"Effective Date"), by and between GOODING'S SUPERMARKETS, INC., a
Florida corporation, whose principal office is located at 483
Montgomery Place, Altamonte Springs, Florida, 32714 (hereinafter
referred to as "Purchaser"), and KASH N' KARRY FOOD STORES, INC.,
a Delaware corporation, whose principal office is located at 6422
Harney Road, Tampa, Florida 33610 (hereinafter referred to as
"Supplier").
WITNESSETH
WHEREAS, Purchaser is engaged in the business of operating
retail supermarkets at the locations set forth in Schedule A and
buys food and non-food products to supply its stores from third
party wholesalers; and
WHEREAS, Supplier is engaged in the business of operating
retail supermarkets and owns and operates a warehouse and
distribution center that can provide the products identified in
Schedule B to this Agreement (the "Products") to Purchaser; and
WHEREAS, Purchaser desires to assure for itself a long-term
source of supply of the Products provided by Supplier; and
WHEREAS, Supplier is only able to commit to supply such
Products on the condition that Purchaser commits to purchase such
Products on a basis acceptable to Supplier and Purchaser for a
fixed term; and
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged by each of the parties hereto, the parties hereto
intending to be legally bound, covenant and agree as follows:
1. Recitals. The foregoing recitals are hereby made a part
of this Agreement.
2. Agreement to Purchase Products.
2.1 Purchaser hereby agrees to use Supplier as its
principal supplier and to purchase from Supplier, subject to the
terms and conditions hereafter provided, Purchaser's primary
requirements of each category of product lines listed in Schedule
B.
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2.2 Beginning on the Measurement Date, as defined in
Section 2.3 below, Purchaser shall purchase from Supplier a minimum
total volume of Products from the various product lines listed in
Schedule B equal to:
(a) Twelve Million Dollars ($12,000,000.00) in each
period consisting of thirteen (13) consecutive weeks (a "Quarter,"
with the first Quarter commencing on the Measurement Date) (the
"Minimum Quarterly Purchase Requirement"); and
(b) Forty-Eight Million Dollars ($48,000,000.00) in
each period consisting of four (4) Quarters (an "Annual Period,"
with the first Annual Period commencing on the Measurement Date)
(the "Minimum Annual Purchase Requirement").
It is projected that the estimated annual volume of purchases
by Purchaser from the Supplier shall be approximately Seventy-five
Million Dollars ($75,000,000.00) per Annual Period, with a maximum
of One Hundred Million Dollars ($100,000,000.00) per Annual Period,
unless otherwise mutually agreed between Supplier and Purchaser.
If, during any Quarter, Purchaser fails to purchase Products from
Supplier sufficient to meet the Minimum Quarterly Purchase
Requirement, the Purchaser shall adjust its purchases of Products
from the Supplier for the next Quarter ("Cure Quarter") so that the
Purchaser's aggregate purchases of Products from the Supplier for
the previous Quarter and the Cure Quarter equal or exceed Twenty-
four Million Dollars ($24,000,000.00). In the event that the
Purchaser exceeds the Minimum Quarterly Purchase Requirement for
any of the previous Quarters during the Annual Period then in
effect, and so long as such excess purchases were not required to
satisfy the cure requirements because of a deficit in a previous
Quarter, then any surplus shall be applied to any subsequent
Quarter deficiency in that particular Annual Period. In the event
that the Minimum Quarterly Purchase Requirement is not satisfied in
the final Quarter of any Annual Period during the term of this
Agreement, the deficiency shall be cured by the Purchaser within
the next succeeding Quarter. In the event that the Purchaser fails
to correct any deficiency in its Minimum Quarterly Purchase
Requirement as provided above, the Supplier shall be entitled (i)
to liquidated damages as provided in Section 12.2 below, or (ii) to
terminate this Agreement, in which event Supplier shall also be
entitled to liquidated damages as provided in Section 12.3 below,
or (iii) to seek the remedies provided in clauses (i) and (ii).
2.3 For purposes of this Agreement, the term
"Measurement Date" shall mean the Sunday of the first complete week
that commences on the earlier of:
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(a) at least thirty (30) days following the first
order by Purchaser of Products from the grocery, tobacco and candy
product lines described in Schedule B, or
(b) at least one hundred eighty (180) days after
the Effective Date.
For example:
If the Purchaser
first orders
Products from the
grocery, tobacco and
candy product lines The Measurement Date
on: would be:
November 20, 1995 December 24, 1995
December 5, 1995 January 7, 1996
Provided, however, if for any reason the Supplier is unable to
commence supplying the Purchaser with its requirements from all of
the product lines listed in Schedule B, then the Measurement Date
shall be extended until such time as the Supplier is in a position
to fulfill these requirements.
3. Agreement to Supply Products.
3.1 Supplier hereby agrees to supply all of Purchaser's
reasonable demands for the Products, subject to (i) availability of
slots; (ii) the unavailability of Products for reasons beyond
Supplier's control; (iii) Supplier's right to apportion limited
supplies of Products among its retail stores and those of
Purchaser; (iv) the provisions of Section 13 hereof; (v) up to a
maximum volume of purchases in any Annual Period of One Hundred
Million Dollars ($100,000,000.00) (the "Maximum Annual Supply
Obligation"); and (vi) Purchaser's performance of its obligations
under Section 9 hereof; provided, however, clause (i) shall not
excuse Supplier from performing its obligation to supply all of
Purchaser's reasonable demands for the number of slots required by
Purchaser on the Measurement Date, if such unavailability of slots
is due to expansion by Supplier of its own retail operations. In
the event the Supplier is unable to supply all of the Purchaser's
reasonable demands for the Products, subject to clauses (i) through
(vi) above, an equitable adjustment shall be made in the Minimum
Annual and Minimum Quarterly Purchase Requirements. In addition,
any apportionment under the provisions of clause (iii) above shall
be allocated based on the movement of Products or product
categories by a percentage equal to the average volumes purchased
by the Purchaser and the Supplier over the previous two Quarters,
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or, if no historical data is available, it shall be allocated on an
equitable basis. In the event that during any period of six (6)
consecutive weeks Supplier fails to achieve a service standard (as
hereinafter defined) of at least 94%, Purchaser shall be entitled
to notify Supplier in writing of Supplier's failure to satisfy its
service standard requirement. If during the six (6) week period
commencing with the first full week that commences thirty (30) days
after such written notice is delivered to Supplier, Supplier is
unable to achieve an average weekly service standard of at least
94%, Supplier shall be deemed in material default of this
Agreement. For purposes of this section the term "service
standard" means the total number of cases of Products delivered by
Supplier to Purchaser during a given week, divided by the total
number of cases of Products ordered by Purchaser for delivery by
Supplier to Purchaser during such week, other than Products which
are unavailable to or not deliverable by Supplier for the reasons
set forth in Section 13 or represent orders in excess of the
Minimum Annual Supply Obligation.
3.2 In the event Purchaser believes, at any time during
the term of this Agreement, that Supplier's overall price and
service fee structure hereunder is not competitive with the overall
price and service fee structure (including all related factors and
conditions) available to Purchaser for at least a majority of its
requirements in the ordinary and continuing course of business,
based upon a bona-fide written proposal from a competing supplier,
Purchaser may notify Supplier of such in writing (the "Competitive
Price Notice") and shall provide Supplier with evidence of the
competitive overall price and service fee structure being so
offered by such competing supplier. If Purchaser provides such
evidence, Supplier shall have sixty (60) days after receipt thereof
to revise its overall price and service fee structure in order to
make it competitive with that offered to Purchaser by the competing
supplier. Supplier's overall price and service fee structure will
be deemed competitive if it is within two-tenths of one percent
(0.2%) of the overall price and service fee structure being offered
by the competing supplier. In the event Supplier fails to revise
its overall price and fee structure to bring it within two-tenths
of one percent (0.2%) of that being offered by the competing
supplier, as described in the Competitive Price Notice, then, in
addition to Purchaser's right to terminate this Agreement as
provided in Section 11.3 below, Purchaser shall have the right to
terminate this Agreement by providing written notice to Supplier
within ninety (90) days after its delivery of the Competitive Price
Notice, which notice shall specify the effective date of such
termination.
4. Pricing. The prices payable by Purchaser for the
Products purchased from Supplier will be determined as follows:
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4.1 The Products shall be priced at "Average Landed
Cost" (as defined on Schedule D), plus the applicable fee
(expressed as a percentage of the Average Landed Cost) as indicated
on Schedule B.
4.2 Supplier agrees to use its best efforts to notify
Purchaser as soon as possible of pending price advances and
declines of all Products. Notwithstanding the above, if Supplier
does not receive adequate notification of any price increase from
the manufacturer or if a manufacturer changes its pricing policy
for a Product to reflect "price date of shipment", Supplier shall
not be required to so notify Purchaser in advance. Adequate
notification shall consist of the same amount of time the Supplier
would give its own stores of any price increase.
4.3 Upon at least five (5) days prior notice, Purchaser
shall have the right to examine and/or audit actual invoices for
Products purchased by Supplier to determine Average Landed Cost
during the preceding one hundred eighty (180) day period. Such
examinations or audits are limited to not more than three (3) times
in any twelve (12) month period. Amounts due to or from Purchaser
determined as a result of any such audit shall be debited or
credited to Purchaser on the next weekly Summary after receipt by
Supplier of the audit report from Purchaser, or paid to Purchaser
within ten (10) days after receipt by Supplier of such audit
report, if that occurs after termination of this Agreement. If the
aggregate amount invoiced by Supplier during the period covered by
any such audit exceeds the aggregate of the Average Landed Cost of
Products reflected on such invoices by more than three percent
(3%), then Supplier shall upon demand reimburse Purchaser for its
reasonable direct audit costs. Any such demand shall be
accompanied by documentation of such audit costs.
5. Rebates
5.1 Cigarettes are billed at Supplier's Average Landed
Cost. Special or unique allowances will be retained by Supplier;
however, in lieu of passing on such special or unique allowances,
Supplier will rebate to Purchaser, at the end of each Quarter, an
amount calculated as the "Cigarette Rebate" indicated on Schedule
B. This rebate will be credited to Purchaser's Summary at the end
of each Quarter during the term of this Agreement based on the
Purchaser's purchases for the preceding thirteen (13) weeks.
5.2 Manufacturer allowances on new Products generally
used to offset expenses incurred by the Supplier (slotting fees)
are based on a number of factors including marketing plans, support
and the product category. The value of these slotting fees vary by
category and are dependent upon the number of line items offered
and the retail shelf position within the category. Each party will
continue to negotiate slotting fees for its own account directly
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with manufacturers, based on Products placed in their respective
stores. If the slotting fees paid to the Supplier for the Products
during any Quarter of the term hereof exceed the amount that would
otherwise be payable to the Supplier for Products placed in its own
stores, the Supplier will credit the excess amount to Purchaser's
Summary on the first week of the next succeeding Quarter.
5.3 Rebates earned by Purchaser in the form of
advertising dollars, volume accruals and marketing funds, will be
credited to Purchaser's Summary on a quarterly basis, based on
volume percentages and on dollar purchases by category allocable to
each chain.
6. Electronic Ordering Systems; Order Cutoff.
6.1 In order to assist Supplier in maintaining the
efficiency of its operations during the term of this Agreement,
Purchaser agrees to buy and use certain electronic ordering systems
typical of those used by Supplier's stores.
6.2 Purchaser agrees to strictly adhere to Supplier's
periodically published order cutoff schedule as may be reasonably
amended by Supplier from time to time. Purchaser's failure to
adhere to such cutoff schedule may result in a significant delay in
the delivery of Products ordered.
7. Reserves. In order to provide Purchaser with quantity
and/or price protection for certain Products, Supplier agrees to
establish buy-in reserves, and may from time to time agree to
establish a special item reserve (collectively the "Reserves") for
Purchaser at Supplier's warehouses on the following conditions and
pursuant to such additional policies as Supplier and Purchaser may
agree upon in writing from time to time.
7.1 Purchaser shall notify Supplier of its order of
Products for the Reserves by delivery or facsimile to Supplier of
a written signed document in the form used by Supplier at such
time. Such written notice shall be delivered to Supplier
sufficiently in advance of the anticipated delivery of the Products
to Purchaser so as to permit Supplier to purchase and accept
delivery of the Products so ordered. Supplier agrees to use its
best efforts to obtain the Product items for the Reserves pursuant
to Purchaser's written instructions, provided that Supplier
receives the aforesaid reasonable advance notice. Simultaneously
with the advance written notice to purchase a Product for a
Reserve, Purchaser agrees to advise the Supplier as to when
Purchaser desires to put the Product item into a Reserve and
whether the item is to be placed in the buy-in reserve or a special
item reserve.
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7.2 The quantity of any Product placed in the buy-in
reserve by Purchaser shall be limited to the average weekly order
of such Product by Purchaser during either the immediately
preceding Quarter (or the same Quarter of the prior year for
holiday items) multiplied by the Buy-In Reserve Multiple indicated
on Schedule B. Products shall be picked from the buy-in reserve as
such Products are ordered by Purchaser. Products in the buy-in
reserve must be ordered for delivery to Purchaser no later than
twelve (12) weeks (or such shorter period established by Supplier
based on the shelf life of such Product) from the date such
Products are placed in the buy-in reserve. Any Product not so
ordered for delivery from the buy-in reserve will be deemed ordered
by Purchaser and tendered to Purchaser for pick-up as of the end of
the twelve (12) week period.
7.3 The following storage fees will be charged for
Reserves, based on the ending weekly balance:
Dry Refrigerated
0-3 weeks No charge .04% per week
4-8 weeks .03% per week .04% per week
9-12 weeks .05% per week .06% per week
7.4 Products placed in the special item reserve are
Products not carried by Supplier which are specially ordered for
Purchaser. Products in the special item reserve must be ordered
for delivery to Purchaser no later than four (4) weeks from the
date such Products are placed in the special item reserve. Any
Product not so ordered for delivery from the special item reserve
will be deemed ordered by Purchaser and tendered to Purchaser for
pick-up as of the end of the four (4) week period.
7.5 Notwithstanding anything to the contrary contained
in this Section 7, in no event shall the aggregate cost of all
Products contained in the Reserves exceed in the aggregate the
Reserve Limit indicated on Schedule B.
8. Delivery.
8.1 Purchaser shall pick up at Supplier's dock and
deliver the Products to its stores on a Sunday through Saturday
delivery schedule (the "Delivery Schedule") reasonably established
by Supplier, which Delivery Schedule may provide for separate
grocery and perishable Product deliveries. The Delivery Schedule
shall be during the hours in which Supplier conducts its business,
with consideration given to the efficient use of Purchaser's
trucking fleet.
8.2 Any claims for shortages, damaged goods or out of
date products concerning a shipment must be communicated by
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Purchaser to Supplier within one (1) working day of the delivery,
during Supplier's normal business hours.
9. Security Provisions. In order to secure all indebtedness
(including interest), liabilities, and obligations of Purchaser to
Supplier under this Agreement, together with any and all costs and
expenses, including, but not limited to, reasonable attorneys' and
paralegals' fees and expenses for primary and appellate
proceedings, incurred by Supplier in connection with the
enforcement of this agreement, including any extensions,
modifications, and renewals thereof and substitutions therefor,
whether now existing or hereafter incurred, now due or hereafter to
become due (the "Obligations"), Purchaser will take the actions set
forth in Sections 9.1 through 9.4 within ten (10) days after the
Effective Date, but in any event before Supplier is obligated to
supply Products to Purchaser pursuant to this Agreement. If
Purchaser shall fail to take such actions on or before said date,
Supplier may terminate this Agreement by delivering written notice
to Purchaser at any time before Purchaser cures such failure;
provided, however, notwithstanding any contrary provision herein,
if this Agreement is terminated pursuant to this sentence, Supplier
shall not be entitled to liquidated damages for such termination
pursuant to Section 12 hereof.
9.1 Purchaser shall modify that certain Promissory Note
dated September 14, 1992 in the original principal amount of
$3,680,000 payable by Supplier to Purchaser (as modified, the
"Note") to provide that:
(a) any material default by Purchaser under this
Agreement shall suspend Supplier's obligation to pay or otherwise
perform under the Note until such default is cured (it being
understood that any amounts otherwise due under the Note, but for
the suspension of Supplier's obligation pursuant to this Section
9.1(a), shall be payable when such default by Purchaser is cured);
(b) Supplier shall, in the event of any such
material default by Purchaser which has not been cured by Purchaser
after notice as provided herein, have the following cumulative and
non-exclusive remedies under the Note, in addition to any remedies
provided under this Agreement or under applicable law:
(i) Supplier may, at its option, deduct,
recoup or offset the fixed or liquidated Obligations of
Purchaser hereunder against its own obligations to Purchaser
under the Note, whether such Note obligations are due or to
become due, in the order of maturity; or
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(ii) Supplier may, at its option, make payments
otherwise due under the Note to itself to reduce the
Obligations of Purchaser hereunder;
(c) if the amount of the Obligations of Purchaser
hereunder exceeds the Supplier's obligations under the Note, and if
Supplier elects to exercise its right of deduction, recoupment or
set-off as set forth above, then Purchaser shall deliver to
Supplier a satisfaction of the Mortgage securing the Note and the
escrow agent described in Section 9.3 below shall deliver the Note
to Supplier for cancellation; and
(d) If the payment of the outstanding principal
balance of the Note is accelerated in accordance with its terms by
reason of an event of default by Supplier under Sections 10 or 11
of that certain Purchase Money Collateral Assignment of Leasehold
and Security Agreement dated as September 14, 1992, then Supplier
shall deliver such prepayment to the escrow agent for deposit in an
interest-bearing account. Thereafter, so long no an event of
default by Purchaser shall have occurred hereunder, on the 14th day
of each month, the escrow agent shall disburse to Purchaser an
amount equal to one monthly installment under the Note, and, upon
the termination or expiration of this Agreement, so long as all
obligations of Purchaser hereunder have been satisfied in full, the
escrow agent shall disburse the remaining balance of the escrow
account, including accrued interest, to Purchaser. The undisbursed
portion of the escrow account shall be collateral security for the
obligations of the Purchaser to Supplier. Upon the occurrence of
an event of default by Purchaser hereunder, the escrow agent shall
disburse to Supplier an amount equal to the sum then due by
Purchaser to Supplier.
9.2 Purchaser shall endorse and deliver the Note to the
escrow agent described in Section 9.3 below as collateral security
for the Obligations, free and clear of all prior liens,
encumbrances and claims whatsoever.
9.3 Purchaser shall execute and deliver to Supplier a
Collateral Assignment (in substantially the form of the Collateral
Assignment dated September 14, 1992, between Purchaser and Sun
Bank, National Association, except as otherwise provided herein
except with a third party escrow agent to be mutually agreed upon
by Supplier and Purchaser) of Purchaser's interest in that certain
Purchase Money Collateral Assignment of Leasehold and Security
Agreement dated September 14, 1992 between Supplier, as mortgagor,
and Purchaser, as mortgagee, free and clear of all prior liens,
encumbrances and claims whatsoever, which Collateral Assignment
shall contain non-merger language and shall provide that, upon the
occurrence of an event of default by Purchaser under this
Agreement, Supplier shall have the rights described above in
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Sections 9.1(a), (b) and (c). Upon the termination of this
Agreement, and the satisfaction by Purchaser of all obligations to
Supplier hereunder, and assuming that the Note has not been
satisfied in accordance with its terms, as modified pursuant
hereto, Supplier shall execute and deliver a satisfaction of the
Collateral Assignment and authorize the escrow agent to disburse
the Note to Purchaser.
9.4 Purchaser shall grant to Supplier, subject to
obtaining consent from Sun Bank, N.A., the Purchaser's present
lender, a second lien position on the Purchaser's inventory. The
Purchaser shall cooperate with the Supplier to obtain such
agreements from Sun Bank as are reasonably necessary to evidence
the permitted encumbrance in favor of the Supplier. Purchaser
shall also execute all appropriate security agreements, UCC
financing statements and other documentation required to create and
perfect the Supplier's second lien position with respect to such
inventory, and shall use reasonable efforts to obtain a lien waiver
from each of its landlords with respect to the inventory; provided,
however, Purchaser shall not be deemed to be in default hereunder
if, notwithstanding the exercise of such reasonable efforts, it is
unsuccessful in obtaining such landlord lien waivers. The Supplier
further acknowledges and agrees that the Purchaser's present and
future financing requirements for the operation of its business
require a first mortgage lien position in the inventory being
purchased hereunder. Supplier acknowledges and agrees that any
purchase money security interest in the inventory which the
Supplier may have as a matter of Florida law is hereby subordinated
to the loan in favor of Sun Bank, N.A., presently existing, or to
any future lender who provides working capital for the Purchaser
secured by a first lien on its assets, including its inventory,
subject to receipt of an undertaking by such lender to provide
notice to the Supplier, concurrently with its delivery of such
notice to the Purchaser, of the occurrence of an event of default
by the Purchaser under any loan documents between such lender and
the Purchaser. Subject to receipt of the foregoing notice
undertaking, Supplier agrees to execute a subordination instrument
in a form customarily used by the lender for the financing being
obtained by the Purchaser. Failure by the Supplier to execute such
a subordination instrument within twenty (20) days of the request
therefor by the Purchaser shall constitute a default under this
Agreement by the Supplier and shall entitle the Purchaser to
exercise all remedies available hereunder or as a matter of law.
10. Terms and Fees. Supplier shall deliver to Purchaser on
Tuesday of each week a consolidated summary (the "Summary") in a
form and content reasonably satisfactory to Purchaser of all
invoices for Products delivered to, and all fees and other charges
due from Purchaser during the seven (7) day period immediately
prior to the preceding Saturday. The parties agree that amounts
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set forth on invoices rendered to Purchaser in the ordinary course
of business hereunder shall be deemed fixed or liquidated for
purposes of Section 9, without prejudice to Purchaser's right to
object to or seek adjustment of such amounts, in good faith, as
provided herein. Except as otherwise agreed by the parties in
writing, payment of the total amount specified in the weekly
Summary shall be due by wire transfer in full no later than 11:00
a.m. on the following Tuesday. After giving telephonic and
facsimile notice of past due amounts, if any, Supplier shall have
the right to impose a late fee of up to eighteen (18%) per annum
(prorated for the period from the due date thereof to the date
payment is received by Supplier) on the outstanding balance of any
past due amounts owed by Purchaser to Supplier pursuant to this
Agreement not paid within twenty-four hours of Supplier providing
telephonic and facsimile notice as provided above. Purchaser's
failure to pay to Supplier the entire amount (without deduction)
due hereunder in accordance with the terms hereof shall be deemed
a material default hereunder by Purchaser, whereupon Supplier, at
its election, may refuse further shipments and/or terminate the
Agreement and be entitled to liquidated damages as provided in
Section 12 below.
11. Term and Termination.
11.1 This Agreement shall commence as of the Effective
Date and shall continue thereafter for a period of five (5) years
after the Measurement Date (the "Initial Term"). After the Initial
Term, this Agreement shall be renewed automatically for successive
renewal terms of three (3) years each unless terminated by either
party upon the delivery of written notice to the other party at
least sixty (60) days prior to the expiration of the then current
Initial Term or renewal term, as the case may be.
11.2 Supplier shall have the right in Supplier's absolute
discretion to terminate this Agreement, without penalty to either
party, if Supplier gives the Purchaser at least twelve (12) months
advance written notice before the first day for which the
termination is to be effective. The parties agree that such notice
provides Purchaser with ample time to secure another source of
supply of the Products on terms substantially competitive to the
terms of this Agreement.
11.3 Purchaser shall have the right in Purchaser's
absolute discretion to terminate this Agreement, without penalty to
either party, if Purchaser gives Supplier at least six (6) months
advance written notice before the first day for which termination
is to be effective.
11.4 In addition to all other rights and remedies
available to the parties under applicable law, either party may
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terminate this Agreement for cause, by delivering written notice of
such termination to the other party, in the event the other party
shall: (a) default in the payment or performance when due of any
material obligation hereunder; provided, however, that any such
termination by Supplier by reason of the default by Purchaser in
its Minimum Quarterly Purchase Requirement for a given Quarter
shall be effected within the thirty (30) day period commencing on
the later of (i) the end of the Cure Quarter following such
default, as provided in Section 2.2 hereof, or (ii) the receipt by
Supplier of the amount determined in accordance with Section 12.2
by reason of such default; (b) apply for or consent to the
appointment of a receiver, trustee or liquidator of all or a
substantial part of its assets; (c) file a voluntary petition of
bankruptcy, reorganization or insolvency proceeding; or (d) if an
order, judgment or decree shall be entered by any court of
competent jurisdiction on the application of a creditor,
adjudicating said party bankrupt or insolvent or appointing a
receiver, trustee or liquidator of all or a substantial part of the
assets of said party and any such order, judgment or decree is not
dismissed within thirty (30) days from the date it is initially
granted or requested, whichever comes first.
11.5 Upon the expiration or termination of this
Agreement, the Purchaser shall purchase all Reserves and all other
Products on hand or in transit supplied by Supplier exclusively to
the Purchaser.
11.6 The obligations of the Purchaser to pay any sums due
under this Agreement, whether pursuant to Sections 10, 11.5, 12 or
otherwise, the rights and obligations of the Supplier pursuant to
Section 9, and all other rights and obligations of the parties
hereto with respect to Products purchased and sold prior to the
termination, shall survive the expiration or termination of this
Agreement until satisfied in full.
12. Liquidated Damages.
12.1 The parties acknowledge that Supplier's commitment
to perform its obligations hereunder is premised on Purchaser's
commitment to purchase Products as described in Section 2 hereof
for the term of this Agreement, requires Supplier to commit a
portion of its resources and capacity to Purchaser, and may require
Supplier to forego opportunities to supply other potential
customers. The parties agree that Purchaser's failure to perform
its obligations as described in Section 2 of this Agreement or the
termination of this Agreement, other than under the provisions of
Sections 11.1, 11.2 and 11.3 above, will cause Supplier to incur
damages which are difficult or impossible to quantify. The parties
agree that (a) if Purchaser fails to perform its obligations under
Section 2 of this Agreement, Purchaser will pay to Supplier, as
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liquidated damages and not as a penalty, the amount set forth in
Section 12.2 hereof, and (b) if this Agreement is terminated by
Purchaser, other than pursuant to Sections 3.2, 11.3 or 11.4, or is
terminated by Supplier pursuant to Sections 2.2 or 11.4, Purchaser
will pay to Supplier, as liquidated damages and not as a penalty,
the amount set forth in Section 12.3 hereof, which amounts provide
a fair and reasonable approximation of the actual damages that will
be incurred by Supplier in such events (exclusive of damages
suffered by reason of Purchaser's failure to pay sums due for
Products purchased by Purchaser, as set forth in Section 10
hereof).
12.2 In the event that Purchaser fails to satisfy the
Minimum Quarterly Purchase Requirement during any Quarter, and
fails thereafter to cure such deficiency as described in Section
2.2, Purchaser shall pay to Supplier, as liquidated damages and not
as a penalty, an amount equal to one percent (1%) of the difference
between the aggregate price of Products that should have been
purchased by Purchaser from Supplier during such Quarter, and the
aggregate price of Products actually purchased by Purchaser from
Supplier during such Quarter. Supplier's claim for or collection
of the liquidated damages specified in this Section 12.2 shall not
limit or otherwise affect Supplier's right to terminate this
Agreement pursuant to Sections 2.2 or 11.4, or to collect
liquidated damages pursuant to Section 12.3.
12.3 In the event that this Agreement is terminated by
Purchaser, other than pursuant to Sections 3.2, 11.3 or 11.4
hereof, or by Supplier pursuant to Sections 2.2 or 11.4 hereof,
Purchaser shall pay to Supplier, as liquidated damages and not as
a penalty, an amount equal to the lesser of:
(a) the product of (i) one percent (1%) of the
Purchaser's Average Weekly Purchases, times (ii) the lesser of
(A) the number of weeks remaining in the term of this Agreement at
the time of such termination, or (B) 26; or
(b) the sum of Two Hundred Fifty Thousand Dollars
($250,000.00).
For purposes of the preceding sentence, the term "Purchaser's
Average Weekly Purchases" shall mean the greater of (i) the
"Minimum Weekly Purchases" specified on Schedule B or (ii) the
Purchaser's actual average weekly purchases of Products during the
most recently completed fifty-two (52) week period (or such shorter
period, if fewer than fifty-two (52) weeks have elapsed since the
Measurement Date).
12.4 Collection of the amounts payable to the Supplier
pursuant to Sections 12.2 and 12.3 shall be Supplier's exclusive
13
monetary remedy for the Purchaser's failure to meet the Minimum
Quarterly Purchase Requirement or a termination of this Agreement
by Purchaser without cause upon less than six (6) months' prior
written notice. Nothing herein shall limit or restrict the
remedies available to the Supplier, at law or in equity, by reason
of any other default by the Purchaser hereunder, including, without
limitation, Supplier's right to payment of amounts due under
Section 10, and the Supplier's rights and remedies as set forth in
Section 9, all of which shall be in addition to the right to
liquidated damages as set forth in this Section 12.
13. Acts of God, Strikes, Etc. Neither party hereto shall be
liable for any failure to perform under this Agreement if such
failure to perform is caused by fire, strike, other labor troubles,
accidents to delivery vehicles, blackouts, floods, severe weather,
failure of sources of supply or of materials or any other act or
state of facts beyond the reasonable control of the party whose
performance is adversely affected; provided, however, that such
party must notify the other party of its inability to perform
within a reasonable time after the onset of such act or event.
While such an inability to perform under this Agreement continues,
the other party shall be relieved from its corresponding
obligations hereunder.
14. Intentionally Omitted
15. Independent Contractor.
15.1 Supplier shall be deemed to be an independent
contractor and not an agent, employee, servant or partner of
Purchaser and the employees of Supplier shall not be deemed to be
employees or agents of Purchaser. All acts authorized to be done
by Supplier hereunder shall be done as an independent contractor
and not as an agent of Purchaser. Nothing contained in this
Agreement shall be deemed or construed by the parties hereto or by
any third person to create the relationship of principal and agent
or of partnership or of joint venture or of any association between
the parties hereto.
15.2 Purchaser shall be deemed to be an independent
contractor and not an agent, employee, servant or partner of
Supplier and the employees of Purchaser shall not be deemed to be
employees or agents of Supplier. All acts authorized to be done by
Purchaser hereunder shall be done as an independent contractor and
not as an agent of Supplier.
16. Judicial Proceedings. Any judicial proceeding brought
with respect to this Agreement shall be brought in the Circuit
Court for Hillsborough County, Florida, and by execution and
delivery of this Agreement, each party (i) accepts, generally and
14
unconditionally, the exclusive jurisdiction of such court and any
related appellate court, and irrevocably agrees to be bound by any
judgment rendered thereby, subject to any rights of the parties to
appeal or review such judgment in such jurisdiction, to the extent
such rights are so exercised, in connection with this Agreement,
and (ii) irrevocably waives any objection it may now or hereafter
have as to the venue of any such suit, action or proceeding brought
in such court or that such court is an inconvenient forum. The
parties hereby waive trial by jury in any judicial proceeding to
which they are parties involving, directly or indirectly, any
matter in any way arising out of, related to, or connected with
this Agreement.
17. Notice. Except as expressly permitted herein, any
notices to be given under this Agreement shall be in writing and be
delivered by hand or sent by registered or certified mail, postage
prepaid, or to such other and address(es) as hereinafter shall be
furnished in writing by either party hereto to the other party
hereto.
If to Supplier:
Kash n' Karry Food Stores, Inc.
6422 Harney Road
Tampa, FL 33610
Attn: Senior Vice President - Administration
FAX: (813) 626-9550
If to Purchaser:
Gooding's Supermarkets, Inc.
483 Montgomery Place
Altamonte Springs, FL 32714
Attn: J. Leslie Goff
FAX: (407) 869-9092
18. Additional Stores. The parties hereto acknowledge and
agree that the Minimum Annual and Minimum Quarterly Purchase
Requirements and the Maximum Annual Supply Obligation shall not be
adjusted if Purchaser increases the number of its retail locations
for which it orders Products from the Supplier. The Supplier
further acknowledges and agrees that the Purchaser shall not be
required to purchase Products from the Supplier for new stores
developed by the Purchaser, which are developed either individually
or on a joint-venture basis with other parties. In the event the
Purchaser were to close or sell off one or more stores, such that
the number of stores in operation is reduced below (18) eighteen,
then the Minimum Annual and Minimum Quarterly Purchase
Requirements, and the Maximum Annual Supply Obligation, shall be
proportionately reduced by an amount equivalent to the average
15
percentage being purchased for such stores which were closed or
sold over the previous two Quarters, or, if no such historical data
is available, by an amount equivalent to the relative proportion of
purchases from that store as it relates to all purchases by all
stores of the Purchaser over the previous six (6) month period.
19. Restriction on Supplier's Stores. During the term of
this Agreement, neither Supplier (or its subsidiaries or
affiliates) shall own or operate retail supermarkets within a two
(2) mile radius of any existing retail locations of the Purchaser
in Orange, Seminole, Brevard, Osceola and Volusia counties;
provided, however, that Supplier shall continue to have the right
to own or operate its existing stores in Osceola County and Volusia
County.
20. Retail Support Personnel. Supplier will assign and shall
be responsible for all compensation and benefits allocable to one
of its management personnel, who shall serve as liaison between
Supplier and Purchaser and work principally on Purchaser's account.
21. Risk of Loss. Risk of loss for Products purchased by
Purchaser shall pass from Supplier to Purchaser upon delivery by
Supplier of such Products to Purchaser.
22. Minimum Dating. The Products, when picked by Purchaser,
shall have the remaining shelf lives specified on Schedule C
attached hereto.
23. Insurance. During the term of this Agreement, the
Supplier and Purchaser each agree to carry comprehensive general
public liability insurance with combined single limit coverage of
not less than FIVE MILLION DOLLARS ($5,000,000.00), respectively.
The Supplier and Purchaser shall also carry worker's compensation
insurance covering each of their respective employees during the
term of this Agreement as required by Florida law. The Supplier
and Purchaser agree that during the term of this Agreement each
will defend, indemnify and hold the other harmless against all
claims, demands and judgements for loss or damage (including,
without limitation, attorney's fees and cost of litigation,
including appeals) or injury to property or person resulting or
occurring as a result of the activities under this Agreement or as
a result of any product defect or liability which is the
responsibility of the indemnifying party. In addition, Supplier
and Purchaser also agree to carry a product liability insurance.
24. Confidentiality. Neither party shall disclose or furnish
information to any other person, firm or corporation pertaining to
any of the terms of this Agreement, any supplier of Products
hereunder, or the pricing of such Products, except (a) with the
express prior consent of the other party, (b) if required by law,
16
in which case such disclosing party shall give prompt notice of
such disclosure to the other party, and (c) to its advisors to the
extent necessary to obtain professional advice. Purchaser
acknowledges and agrees that Supplier may file a copy of this
Agreement with the Securities and Exchange Commission as an exhibit
to its periodic reports and other filings under the Securities Act
of 1933 and the Securities Exchange Act of 1934.
25. Integration, Interpretation and Miscellaneous.
25.1 This Agreement and the Exhibits and Schedules hereto
set forth the entire understanding of the parties hereto with
respect to the subject matter hereof and shall not be modified
other than by written document executed by the party against whom
enforcement of such modification is sought.
25.2 This Agreement shall be construed in accordance with
the laws of the State of Florida, without regard to principles of
conflict of laws.
25.3 This Agreement may not be assigned by Purchaser
except as follows:
(a) in the case of a proposed assignment by
Purchaser in connection with the sale of substantially all of its
assets, or a merger or consolidation between Purchaser and another
entity, or a transfer to a wholly-owned subsidiary of Gooding's
Supermarkets, Inc., and if, but only if, such proposed assignee or
successor does not compete with the Supplier in the Supplier's
principal markets, by delivering prior written notice of such
assignment to Supplier; and
(b) in any other case, without the prior written
consent of Supplier, which consent will not be unreasonably
withheld.
For purposes of the preceding sentence, an assignment shall be
deemed to have occurred upon the change in beneficial ownership of
fifty percent (50%) or more of the equity of Purchaser, other than
by reason of one or more transfers by any existing shareholder to
any person having a relationship to him or her described in section
267(b) of the Internal Revenue Code. Any unauthorized assignment
of this Agreement by Purchaser shall be deemed a material default
by Purchaser hereunder.
25.4 This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one in the
same instrument.
17
25.5 This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective permitted
successors and permitted assigns.
25.6 The parties hereto agree that the waiver by either
party of a breach by the other party of any of the provisions
contained in this Agreement shall not operate or be construed to be
a waiver of any other breach of this Agreement by either party
hereto.
25.7 Should either party hereto institute any action or
proceeding in court or otherwise to enforce any provision hereof or
for damages by reason of an alleged breach of any provision of this
Agreement, the prevailing party shall be entitled to receive from
the non-prevailing party such amount as the court may judge to be
reasonable attorneys' and paralegals' fees for the services
rendered to the prevailing party in such action or proceeding, plus
the prevailing party's costs and expenses therein, regardless of
whether such action or proceeding is prosecuted to judgment.
IN WITNESS WHEREOF, the parties hereto have set their hands
and seals as of the 29th day of November, 1995.
GOODING'S SUPERMARKETS, INC.
ATTEST:
/s/ J. Leslie Goff By: /s/ Jonathan T. Gooding
- ----------------------- ------------------------
Secretary Jonathan T. Gooding,
Chief Executive Officer
KASH N' KARRY FOOD STORES, INC.
ATTEST:
/s/ R. P. Springer By: /s/ Gary M. Shell
- ----------------------- ------------------------
Secretary Name: Gary M. Shell
Title:Senior VP - Marketing Non-Perishables
18
SCHEDULE A
1. NAME OF PURCHASER: GOODING'S SUPERMARKETS, INC.
2. PRINCIPAL OFFICE: 483 Montgomery Place
Altamonte Springs, FL 32714
3. RETAIL LOCATIONS: See Annex "A" attached hereto
19
GOODING'S SUPERMARKETS, INC.
STORE NAME AND NUMBER ADDRESS PHONE NUMBER
MAITLAND 8002 155 S. ORLANDO AVE 407-644-0852
MAITLAND, FL 32751 FAX-644-8476
ALTAMONTE 8004 1074 MONTGOMERY RD. 407-869-6925
ALTAMONTE SPGS. FL 32714 FAX-869-7562
MARKETPLACE 8006 7600 DR. PHILLIPS BLVD. 407-352-8851
ORLANDO, FL 32819 FAX-352-3378
CASSELBERRY 8007 1024 E. HIGHWAY 436 407-331-1664
CASSELBERRY, FL 32707 FAX-331-7395
PERSHING 8008 4520 S. SEMORAN BLVD. 407-658-9353
ORLANDO, FL 32822 FAX-380-9470
DELAND 8009 2701 S. WOODLAND BLVD. 904-736-6003
DELAND, FL 32720 FAX-734-3310
LAKE BUENA VISTA 8012 12521 S.R. 535 407-827-1200
LAKE BUENA VISTA, FAX-827-1219
FL 32839
UNIVERSITY 8013 7580 UNIVERSITY BLVD. 407-677-4500
WINTER PARK, FL 32792 FAX-677-8569
ROCKLEDGE 8014 224 BARTON BLVD. 407-631-8026
ROCKLEDGE, FL 32955 FAX-632-9397
MELBOURNE 8015 1270-39 WICKHAM RD. 407-254-3555
MELBOURNE, FL 32935 FAX-255-2025
INDIAN HARBOR 8016 1934 HWY A1A 407-777-5043
INDIAN HARBOR, FL 32937 FAX-773-8496
PALM BAY 8017 5270 BABCOCK ST. 407-984-4385
PALM BAY, FL 32905 FAX-951-1780
WEKIVA 8019 2231 E. SEMORAN BLVD. 407-884-8030
APOPKA, FL 32703 FAX-884-8432
LAKE MARY 8020 120 INTERNATIONAL PKWY. 407-333-9792
HEATHROW, FL 32746 FAX-333-1630
INTERNATIONAL DR.8021 8255 INTERNATIONAL DR. 407-352-4215
#120, ORLANDO, FL 32819 FAX-363-9343
HIAWASSE 8022 7149 W. COLONIAL DR. 407-578-1555
ORLANDO, FL. 32818 FAX-298-0714
DELAND 8023 911 N. WOODLAND BLVD. 904-736-4599
DELAND, FL 32720 FAX-736-6991
FORMOSA GARDENS 8024 7840 W. IRLO BRONSON HWY. 407-397-2210
KISSIMMEE, FL 34747 FAX-397-0052
WAREHOUSE 8090 2349 APOPKA BLVD. 407-884-6207
APOPKA, FL 32703 FAX-884-5494
20
SCHEDULE B
Product Line Service Fee
Grocery, Tobacco, Candy 1.65%
Cigarettes none
Dairy 3.80%
Frozen Food, Frozen Bake-Off, Ice Cream 4.00%
Meat (Beef & Pork & Veal) 3.50 cents per lb.
Package Meats 5.00 cents per lb.
Private Label Grocery 1.65% plus 1.00%
internal markup
Private Label Dairy 3.80% plus 1.00%
internal markup
Private Label Frozen Food & Ice Cream 4.00% plus 1.00%
internal markup
Drop-Shipped Products 2.00% of invoice cost
Meat - Whole Fryers 2.00 cents per lb.
- Parts Fryers 3.00 cents per lb.
- Turkeys 3.50 cents per lb.
Cattle Pack $2.00 rebate per head
Cattle pack rebate will be refunded in credit form on a monthly
basis at two dollars ($2.00) per head. Billing of this product is
your choice: cattle pack price per pound, blended primal cut
price, or extra cut price. The monthly rebate will be calculated
on the difference between extra cut pricing and cattle pack
pricing.
Holiday merchandise: For merchandise ordered in advance of the
published ship dates, the following internal markup will apply:
- Thanksgiving and Christmas Turkeys 2.00 cents per lb.
- Thanksgiving, Christmas,
and Easter Hams 3.50 cents per lb.
Merchandise not ordered in advance will be billed at the regular
markup for the commodity.
Cigarette Rebates:
Branded 100's & King's 27 cents/carton
Branded regular 25 cents/carton
All generics 25 cents/carton
Minimum Weekly Purchases: $923,077
Buy-In Reserve Multiple: 8
Reserve Limit: $4,000,000
21
SCHEDULE C
Products # Days
Fresh Beef:
Boneless Beef 24 days from pack
Bone in Beef 20 days from pack
Ground Meats 12 days from pack
Fresh Pork:
Cryovac Pork 7 days from pack
Chill Pack Poultry:
Chicken 5 selling days
Processed Meats:
Lunchmeat & Bacon 21 selling days
Hotdogs 15 selling days
Bacon 21 selling days
Smoked Sausage 21 selling days
Dairy:
Cheese 21 selling days
Yogurt 10 selling days
Margarine/Butter 14 selling days
Frozen:
Ice Cream 21 selling days
22
SCHEDULE D
Definition of Average Landed Cost
For purposes of the foregoing Supply Agreement, the term
"Average Landed Cost" shall mean, with respect to a given Product,
the Weighted Average Moving Cost (as hereinafter defined) of such
Product as computed by the Supplier based on its actual net invoice
cost, not including cash discounts, if any; and the term "Weighted
Average Moving Cost" shall be recomputed each time new purchases
are entered into the Supplier's inventory, and shall mean, with
respect to a given Product, the cost of such Product determined by
application of the following formula:
((CURRENT AVERAGE MOVING COST x NO. OF UNITS) + CURRENT PURCHASES)
------------------------------------------------------------------
TOTAL NO. OF UNITS IN INVENTORY
An example of the application of the formula is attached
hereto as Annex A.
23
EXAMPLE:
Avg.
Unit Landed Inc/(Dec) Ending Balance
Units Cost Cost In Inventory Units $
----- ---- ------ ------------ ----- -----
Beginning
Inventory -0- -0- -0- -0- -0- -0-
Purchase of
100 units
@ $1.00/unit 100 $1.00 $1.00 $100.00 100 $100.00
Ship 50 Units (50) n/a $1.00 ($50.00) 50 $50.00
Purchase of
200 units
@ $1.50/unit 200 $1.50 $1.40 $300.00 250 $350.00
Ship 100 units (100) n/a $1.40 ($140.00) 150 $210.00
Purchase of
1,000 units
@ $1.25/unit 1,000 $1.25 $1.27 $1,250.00 1,150 $1,460.00
Ship 500 units (500) n/a $1.27 ($635.00) 650 $825.00
24