EXHIBIT 10.1
SUPPLIER AUTHORIZATION AGREEMENT
This Supplier Authorization Agreement ("Agreement") is made as of
12006 ("Effective Date") by and between Rudy Beverage, Inc., a Nevada
corporation, with a principal place of business at P.O. Box 25338, Scottsdale,
AZ 85255, ("Supplier"), and Baugh Supply Chain Cooperative, Inc., a Delaware
non-stock corporation with a principal place of business at 1390 Enclave
Parkway, Houston, Texas 77077 (`BSCC").
RECITALS
A. Sysco Corporation ("SYSCO"), through its operating divisions,
affiliates, and subsidiaries (each a "SYSCO Company" and collectively the "SYSCO
Companies"), is a distributor of food and related non-food products to the
foodservice industry.
B. BSCC is a cooperative comprised of member SYSCO Companies, either
directly or through regional member cooperatives, which provides sourcing,
merchandising and quality assurance services for SYSCO and the SYSCO Companies
in order to provide SYSCO Companies with SYSCO brand and other products at
competitive quality levels and prices. BSCC also has authority to license third
parties to manufacture, process and package SYSCO Brand Products (as defined in
clause (i) of Recital C).
C. Supplier desires to sell the following foodservice products to BSCC
and/or the SYSCO Companies for resale by the SYSCO Companies to the foodservice
industry (check all that apply):
[_] (i) products bearing one or more of the SYSCO trademarks, brands,
logos, symbols, slogans, or packaging motifs (the "SYSCO Trademarks")
but not bearing one or more of Supplier's trademarks, brands, logos,
symbols, slogans, or packaging motifs ("Supplier Trademarks"), which
products are manufactured, packaged, and/or labeled in accordance with
the specifications of SYSCO ("SYSCO Brand Products");
[X] (ii) products bearing one or more of the Supplier Trademarks but not
bearing any SYSCO Trademarks ("Supplier Brand Products"); and/or
[_] (iii) products bearing one or more of the SYSCO Trademarks AND one or
more of the Supplier Trademarks ("Co-Branded Products").
All SYSCO Brand Products, Supplier Brand Products and Co-Branded
Products supplied under this Agreement are referred to collectively as
"Products."
D. Supplier desires to grant BSCC, SYSCO and the SYSCO Companies the
exclusive use of certain Supplier Trademarks in connection with the packaging,
advertising, promotion, marketing, sale, and distribution of certain Supplier
Brand Products as more fully described herein.
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NOW THEREFORE, in consideration of the recitals above and the mutual
promises herein contained, the parties agree as follows:
1. AUTHORIZATION. Subject to the terms and conditions of this Agreement, BSCC
hereby appoints and designates Supplier, as applicable and as elected in Recital
C above, as a non-exclusive supplier during the Term (as defined in Section 6
hereof) of this Agreement to the SYSCO Companies of (i) the SYSCO Brand
Products, (ii) the Supplier Brand Products, and/or (iii) the Co-Branded
Products, in each case as mutually agreed by the parties from time to time.
Nothing herein shall obligate BSCC or any of the SYSCO Companies to purchase any
SYSCO Brand Products from Supplier during the Term of this Agreement. Unless
otherwise agreed in writing by the parties, Supplier hereby authorizes BSCC or
any SYSCO Company (each an "Ordering Entity") to order SYSCO Brand Products,
Supplier Brand Products, or Co-Branded Products from Supplier; provided,
however, that BSCC shall be the authorized ordering entity for corporate billed
programs. Each such order will be subject to the terms of this Agreement.
2. SYSCO BRAND PRODUCTS AND CO-BRANDED PRODUCTS. If the parties have indicated
their intent to have Supplier sell either SYSCO Brand Products or Co-Branded
Products to BSCC or the SYSCO Companies by electing such product categories in
Recital C above, the additional terms set forth in Exhibit A shall apply, as
applicable, to this Agreement, and such additional terms are incorporated herein
for all purposes.
3. PRICING AND TAXES.
3.1. PRICING TERMS. The price of the Products sold by Supplier to BSCC
or the SYSCO Companies and payment terms with respect thereto shall be mutually
agreed to by the parties from time to time. If Supplier participates in the BSCC
corporate billing program (the "BSCC Billing Program"), Supplier has executed or
will execute a Centralized Billing Conversion Agreement that describes the
responsibilities of BSCC and Supplier under the BSCC Billing Program. If
applicable, the Centralized Billing Conversion Agreement is incorporated in this
Agreement by this reference.
3.2. PROCUREMENT SERVICES. Supplier acknowledges and agrees that BSCC,
SYSCO and the SYSCO Companies perform valued-added services for Supplier for
which BSCC, SYSCO and the SYSCO Companies are compensated in connection with the
sale of the SYSCO Brand Products and Supplier Brand Products (such compensation
and cost recovery is referred to as "Earned Income"). These value-added services
include regional and national marketing, freight management, consolidated
warehousing, quality assurance and performance based product marketing. To
compensate BSCC, SYSCO and the SYSCO Companies for providing such services,
Supplier and BSCC may mutually agree on an Earned Income program from time to
time as provided in Section 3.3, below. Supplier shall make no payments directly
to employees of BSCC, SYSCO or the SYSCO Companies without the prior express
written consent of BSCC, SYSCO or the SYSCO Companies, as the case may be.
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3.3. EARNED INCOME PROMGRAMS. BSCC has agreed on a program of Earned
Income pursuant to a separate agreement substantially in the form attached
hereto as Exhibit B (the "EI Program") as it may be amended from time to time by
mutual agreement. Supplier agrees that there are no exceptions to the EI Program
on the date of this Agreement ("Exceptions"), whether based on sales to certain
customers, to certain classes of customers, or otherwise, except as specifically
set forth in writing in the EI Program. Any future Exceptions shall not become
effective unless and until specifically authorized in writing by the Vice
President, Multi-Unit Sales of BSCC, or his or her designee authorized in
writing. Without limiting the foregoing, BSCC and the SYSCO Companies will not
recognize any Exceptions purportedly agreed to by BSCC or SYSCO Company
merchandisers or by sales representatives of SYSCO or SYSCO Companies unless
approved as provided in the preceding sentence.
3.4 TAXES. Unless otherwise agreed in writing or required by law,
Supplier assumes exclusive liability for calculating and charging BSCC and/or
the applicable SYSCO Company for all applicable sales, use, duties, VAT, excise,
and other similar taxes, charges or contributions ("Sales and Use Taxes")
imposed on, with respect to, or measured by Supplier's sale of Product under
this Agreement. Supplier shall pay all such Sales and Use Taxes before
delinquency. BSCC will cooperate with Supplier at its reasonable request in
order to assist Supplier in establishing that the sale of Products to BSCC or
the SYSCO Companies is exempt from Sales and Use Taxes if such exemption is
available under applicable law.
4. SUPPLIER BRAND PRODUCT SPECIFICATIONS
Supplier warrants that all Supplier Brand Products produced for sale to
BSCC or the SYSCO Companies shall be manufactured in accordance with product
specifications provided by Supplier (the "Supplier Specifications"). Supplier
warrants that all packaging and labeling, including ingredient statements,
complies with provisions, to the extent applicable to Supplier Brand Products,
of the (i) U.S. Customs marking regulations, the Federal Food, Drug and Cosmetic
Act, the Federal Meat Inspection Act, the Federal Poultry Inspection Act, and
all other applicable state and local laws, regulations and ordinances for all
Supplier Brand Products intended for resale anywhere except Canada, and (ii) the
Food and Drug Act of Canada and related regulations, the Consumer Packaging and
Labeling Act and related regulations and applicable provincial, territorial and
local laws, regulations and ordinances for all Supplier Brand Product intended
for resale in Canada.
5. INDEMNIFICATION AND INSURANCE; COMPLIANCE MATTERS; DELIVERY.
5.1 INDEMNIFICATION AND INSURANCE. Supplier acknowledges that the sale
of any of the Products to BSCC or any of the SYSCO Companies, including but not
limited to any sales of Products through any broker or re-distributor, is
subject to that certain Hold Harmless Agreement and Guaranty/Warranty of Product
Agreement ("HHA") by and between Supplier and SYSCO, which is attached hereto as
Exhibit C and is hereby ratified and remains in full force and effect. If there
is no currently effective HHA, Supplier agrees to execute and deliver
concurrently herewith an HHA substantially in accordance with SYSCO's current
form of HHA.
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5.2 SUPPLIER INDEMNIFICATION AGAINST INFRINGEMENT. Supplier shall
defend, indemnify and hold harmless BSCC, SYSCO and the SYSCO Companies, and
each of their respective directors, officers, employees, contractors, and agents
(collectively, the "SYSCO Group"), from and against any and all actions, claims,
costs (including without limitation, costs of investigation, litigation, and
court costs), damages, demands, fines, interest, judgments, liabilities, losses,
penalties, proceedings, suits (including appeal), and expenses (including,
without limitation, reasonable attorneys' fees) (collectively, "Claims") brought
by or on behalf of any person or entity arising out of or in connection with any
allegation, in whole or in part, that the SYSCO Group's use, sale, distribution,
or marketing of the Products or their packaging or labeling, infringes,
misappropriates, dilutes, or violates the copyright, trade secret, trademark,
trade dress, service mark, patent or any other proprietary right (including
without limitation, moral, termination, privacy, or personality rights) of any
person or entity, except to the extent that such Claim is covered by the
indemnity set forth in Section 1.3 of Exhibit A, if applicable.
5.3 CERTIFICATE OF COMPLIANCE. If Supplier will manufacture, process or
produce Products from a facility located within the United States or any
territory thereof, Supplier agrees to the Incorporation of Obligations and
Responsibilities in the form attached as Exhibit D hereto.
5.4 KOSHER CERTIFICATION. In the event BSCC requires any of the
Products to be certified "Kosher" by a Kosher certification organization or if
the Supplier Brand Products are certified "Kosher" by such an organization,
Supplier agrees to (i) maintain its facilities where such Products are
manufactured or packed in accordance with the requirements of such certifying
organization, (ii) warrant that all such Products are Kosher, (iii) pay all
costs and fees of such certifying organization in obtaining the "Kosher"
certification for the Products, (iv) repurchase from BSCC and the SYSCO
Companies all Products which are at any time determined by such certifying
organization not to be in compliance with the "Kosher" certification standards
and requirements, and (v) indemnify SYSCO, BSCC and the SYSCO Companies for
damages, costs and expenses incurred by foodservice customers as the result of
the use of foods in their foodservice installations which breach the Kosher
warranty in clause (ii) of this sentence. Supplier shall execute and deliver the
Kosher certification acknowledgement in the form attached hereto as Exhibit E.
5.5 DELIVERY. Unless otherwise mutually agreed in writing by the
parties, if transportation is arranged by BSCC or a SYSCO Company, delivery
shall occur and title and risk of loss shall transfer, when such Products are
loaded into the transporter's equipment at Supplier's shipping point. In all
other cases, delivery shall occur, and title and risk of loss shall transfer,
when Product is received at the destination BSCC or SYSCO Company facility.
6. TERM AND TERMINATION. This Agreement shall have an initial term of five (5)
years from the Effective Date and shall automatically renew for successive one
(1) year periods, unless earlier terminated as described below (the initial term
and any applicable renewal terms shall collectively be referred to as "Term").
6.1. MANNER OF TERMINATION. This Agreement may be terminated as
follows:
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(a) By BSCC or Supplier at least ninety (90) days prior to the end of
the initial term or the then-applicable renewal term upon written notice of such
parties' intent not to renew;
(b) By BSCC at any time upon ninety (90) days prior written notice to
Supplier;
(c) By either party (i) upon the filing of any petition in bankruptcy
or the commencement of any proceeding relating to the relief or readjustment of
indebtedness of the other party, (ii) upon the foreclosure of any of the other
party's facilities by any financial institution, or (iii) if the first party in
good faith believes that the financial condition of the other party or the
prospect of payment by the other party of any of its indebtedness becomes
impaired;
(d) By either party in the event that the other party fails to perform
or observe any of the material covenants and agreements of this Agreement,
including, without limitation, production of the Products in accordance with
their applicable specifications (as set forth in this Agreement, or if
applicable, in Exhibit A), and such failure shall not be cured, in the
reasonable judgment of the non-breaching party, within thirty (30) days after
delivery by the non-breaching party of written notice of such failure to the
breaching party;
(e) By BSCC in the event of any sale of (i) substantially all of the
assets of Supplier or (ii) a controlling equity interest in Supplier, including,
but not limited to, a sale of, in the case of a corporation, greater than fifty
percent (50%) of the issued and outstanding stock;
(f) By BSCC in the event of any failure of Supplier to abide by the
provisions set forth in Section 4 hereof (or Section 2 of Exhibit A, if
applicable), including without limitation, any marking, labeling or food safety
rules, regulations or procedures; and
(g) By BSCC in the event of any breach of the obligations of Supplier
as set forth in Sections 7 or 8.1 hereof.
6.2. CERTAIN OBLIGATIONS ON TERMINATION. In the event of a termination
of this Agreement pursuant to Sections 6.1(a or (b) above, BSCC will use
reasonable good faith efforts to assist Supplier in selling any remaining
Supplier inventories of SYSCO Brand Products and Co-Branded Products to any
SYSCO Company prior to the effective date of such termination. Supplier agrees
to cease all manufacturing, packaging, sales, and distribution of SYSCO Brand
Products or Co-Branded Products as of the effective date of any such
termination, except where such termination arises from the failure of Supplier
to comply with any marking, labeling, or food safety laws, rules, regulations or
procedures or the impairment of Supplier's financial condition as described in
Section 6.1(c) in which event, all such manufacture, packaging, and sales shall
cease immediately. Supplier further agrees to (i) remove excess inventory of
Products from inventory at BSCC or any SYSCO Company, and (ii) if applicable,
refund the purchase price and pay for any remaining inventory of labels for such
SYSCO Brand Products or Co-Branded Products (limited to label inventory in
excess of thirty (30) days) if this Agreement is terminated by BSCC under
Sections 6.1(c through 6.1(g).
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7. CONFIDENTIALITY.
BSCC and the SYSCO Companies consider all information provided by BSCC,
SYSCO or any SYSCO Company hereunder, including specifically and without
limitation, all EI Programs, promotional activities and pricing under this
Agreement and all data concerning sales to particular customers of SYSCO ("SYSCO
Information"), as highly confidential information that is not to be shared with
any person or entity that is not a party to this Agreement. Therefore, Supplier
shall treat SYSCO Information as confidential and shall not disclose the same to
any third party, including without limitation any foodservice institutions which
purchase Products through SYSCO Companies or any other foodservice distributor,
unless (i) required by law, or (ii) SYSCO Information becomes part of the public
domain through no fault of Supplier. If Supplier is ordered by a court of
competent jurisdiction to disclose SYSCO Information to a third party, it shall
provide BSCC as much advance notice as possible so as to permit BSCC and SYSCO
to take appropriate steps, at BSCC's expense, to prohibit, control or limit the
proposed disclosure of SYSCO Information. The parties shall also comply with any
additional confidentiality agreements between SYSCO or BSCC, on the one hand,
and Supplier, on the other hand, and in the event of any conflict between this
Section 7 of this Agreement and any such confidentiality agreements, the terms
of this Agreement shall control.
8. ADDITIONAL OBLIGATIONS.
8.1. SUPPLIER CODE OF CONDUCT. SYSCO has adopted a code of business
conduct for suppliers in the form attached to this Agreement as Exhibit F (the
"Code of Conduct") that is incorporated into this Agreement. BSCC asks each
supplier to agree to the Code of Conduct as one aspect of the supplier's
relationship with BSCC. Accordingly, Supplier agrees to be bound by the Code of
Conduct.
8.2. RECALLS AND PRODUCT WITHDRAWALS. All Suppliers of SYSCO Brand or
Co-Branded Product are required to have an acceptable product recall program.
Exhibit G sets forth the minimum requirements for Supplier's product recall
program. In recognition of the significant costs incurred by BSCC and SYSCO
Companies in responding to recalls and withdrawals, BSCC has established a
schedule of fees and charges applicable in the event of a recall or withdrawal
of any Product (the "Recall Fee Schedule"), a copy of which is attached as
Exhibit H and incorporated into this Agreement. Upon receipt of a properly
documented claim under the Recall Fee Schedule by a SYSCO Company, Supplier
agrees to pay such claim within thirty (30) days of receipt of such claim.
8.3. DISTRESSED PRODUCTS. BSCC has developed and adopted a salvage
policy for distressed goods (the "Salvage Policy") that provides guidance for
SYSCO suppliers, transporters and forward warehouses, in the form attached to
this Agreement as Exhibit I and incorporated into this Agreement. Supplier
agrees to comply with the Salvage Policy.
8.4. EQUAL BROKERAGE. In the event Supplier utilizes the services of a
broker in connection with the sale of the SYSCO Brand Products or Co-Branded
Products, Supplier agrees that any payments to such broker to facilitate the
sales of SYSCO Brand Products or Co-Branded
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Products shall compare fairly and equitably to any payments by Supplier to such
broker to facilitate the sales of similar Supplier Brand Products.
9. ASSIGNMENT. Supplier acknowledges that BSCC has entered into this Agreement
because of the unique technical abilities, capabilities and credit-worthiness of
Supplier. Therefore, Supplier may not assign this Agreement or any rights
obtained hereunder or delegate or subcontract any duty of performance owed by
Supplier hereunder without the prior written approval of BSCC. Any assignment
made in contravention of this Section 9 shall be null and void for all purposes.
For purposes of this Section 9, a sale, assignment or transfer of (i)
substantially all of the assets of Supplier or (ii) a controlling equity
interest in Supplier, including, but not limited to, a sale, assignment or
transfer of, in the case of a corporation, greater than fifty percent (50%) of
the issued and outstanding stock, shall be deemed an assignment.
10. RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be deemed or
construed by the parties or by any third parties as creating a relationship of
principal and agent, partnership, or joint venture between the parties, it being
understood and agreed that no provision contained herein or act of the parties
shall be deemed to create any relationship between the parties other than the
relationship of buyer and seller. Neither party shall have, nor hold itself out
as having, any right, power or authority to assume, create, or incur any
expenses, liability, or obligation on behalf of the other party, except as
expressly provided herein.
11. GOVERNING LAW; FORUM; CONSENT TO JURISDICTION. This Agreement, and all the
rights and duties of the parties arising out of, in connection with, or relating
in any way to the subject matter of this Agreement or the transactions
contemplated by it, shall be governed by, construed, and enforced in accordance
with the laws (excluding conflict of laws rules which would refer to and apply
the substantive laws of another jurisdiction) of (i) for Suppliers selling
product to BSCC and/or SYSCO Companies located in the United States, the State
of Texas, and (ii) for Suppliers selling product only to BSCC and/or SYSCO
Companies located in Canada, the Province of Ontario. Any suit or proceeding to
be brought under clause (i) above may be brought in any state or federal court
located in Harris County, Texas and any suit or proceeding to be brought under
clause (ii) above may be brought in any court of competent jurisdiction in
Ontario, and each party consents to the personal jurisdiction of said state and
federal courts, as applicable, and waives any objection that such courts are an
inconvenient forum.
12. CERTIFICATION REGARDING DEBARMENT, SUSPENSION OR INELIGIBILITY FOR
GOVERNMENT CONTRACTS. Supplier certifies, to the best of its knowledge and
belief, that the Supplier and/or any of its principals:
(a) Are not presently debarred, suspended, proposed for debarment, or
declared ineligible for the award of contracts by any Federal agency;
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(b) Have not, within a three-year period preceding this offer, been
convicted of or had a civil judgment rendered against them for (i) commission of
fraud or a criminal offense in connection with obtaining, attempting to obtain,
or performing a Federal, state or local government contract or subcontract, (ii)
violation of Federal or state antitrust statutes relating to the submission of
offers, or (iii) commission of embezzlement, theft, forgery, bribery,
falsification or destruction of records, making false statements, tax evasion,
or receiving stolen property; and
Are not presently indicted for, or otherwise criminally or civilly
charged by a Government entity with, commission of any of these offenses.
For the purposes of this certification, "principals" means officers, directors,
owners, partners and persons having primary management or supervisory
responsibilities within a business entity (such as general manager, plant
manager, head of a subsidiary, division, or business segment, and similar
positions).
13. NOTICE. Any notice, request, instruction, waiver or other documents must be
given under this Agreement by any party to the other in writing, delivered
personally, or by certified mail, postage being paid, or by a nationally
recognized, next-day delivery service (such as Federal Express or UPS),
addressed as may be specified by proper written notice hereunder, and shall be
effective when received by the party to which it is addressed.
If to BSCC: Baugh Supply Chain Cooperative, Inc.
1390 Enclave Parkway
Houston, Texas 77077-2099
Facsimile: (281) 584-1249
Telephone: (281) 584-1390
Attention: Executive Vice President,
Merchandising Services
with copy to (which copy shall not constitute notice)
Sysco Corporation
1390 Enclave Parkway
Houston, Texas 77077-1390
Facsimile: (281) 584-2510
Telephone: (281) 584-2546
Attention: General Counsel
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If to Supplier: Rudy Beverage, Inc.
P.O. Box 25338
Scottsdale, AZ 85255
Facsimile: (480) 626-7284
Telephone: (480) 626-7283
Attention: Drew Carver
with copy to (which copy shall not constitute notice)
James A. Reskin, Esq.
520 South Fourth Avenue
Suite 400, The Marmaduke Bldg
Louisville, KY 40202-2577 Facsimile:
(502) 515-9201
Telephone: (502) 561-0500
14. SURVIVAL. The provisions of Sections 4, 5.2, 7, 8.2, 8.3, 11 and 12 of this
Agreement and Sections 1.2, 1.3 and 2.1 through 2.6 of Exhibit A to this
Agreement shall survive the termination of this Agreement.
15. ENTIRE AGREEMENT. Except for existing agreements concerning pricing of
Products which Supplier is already selling to the SYSCO Companies, earned income
and credit terms relating to such sales, any Centralized Billing Conversion
Agreement relating to such sales and confidentiality agreements (which existing
pricing, earned income programs, credit terms, Centralized Billing Conversion
Agreement and confidentiality agreements are incorporated in this Agreement by
reference), this Agreement together with the exhibits hereto constitutes the
entire understanding among the parties with respect to the subject matter hereof
and supersedes all negotiations and prior discussions and writings between the
parties. Unless otherwise provided herein, no modifications to this Agreement
shall be binding on either party unless made in writing and signed by duly
authorized representatives of both parties. In the event of any conflict between
this Agreement and any addenda, exhibits, or other attachments, the terms of
this Agreement shall govern. Orders for Products placed by BSCC or the SYSCO
Companies pursuant to this Agreement are subject to their express terms and are
deemed to incorporate the terms of this Agreement. Supplier agrees that terms or
conditions accompanying any order acceptance, delivery, invoice or other
documents submitted by Supplier to BSCC or any SYSCO Company that conflict with
or are in addition to the terms contained in this Agreement are of no force or
effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SUPPLIER: BSCC:
RUDY BEVERAGE, INC. BAUGH SUPPLY CHAIN COOPERATIVE, INC.
By: By:
Name: Name:
Title: Title:
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