Exhibit 10.4
FORM OF DISTRIBUTION
AGREEMENT
This Distribution Agreement
(“Agreement”) is made and entered into as of the
day of
, 20 by and between Jamba Juice
Company, a California corporation (“JJC”), and
, a
corporation (“Distributor”) with respect to the
following facts:
A. JJC is an operator and franchiser
of retail smoothie and juice stores.
B. Distributor is a warehouser and
distributor of dry, chilled and frozen food service products
(“Products”).
C. The parties desire to enter into
a business relationship on the following terms and
conditions.
NOW, THEREFORE, in consideration of
the foregoing and in consideration of the covenants, promises,
obligations, and agreements of the parties contained in this
Agreement and other good and valuable consideration, the receipt
and adequacy and sufficiency of which are hereby acknowledged by
each party hereto by its execution hereof, it is hereby agreed as
follows:
AGREEMENT
|
1.
|
DEFINITIONS AS USED IN THIS
AGREEMENT
|
“Distributor”
shall mean
.
“Company
Store” shall mean a
store owned or operated by JJC.
“Day
Deliveries” shall
mean deliveries that are made between 6:00 a.m. - 11:00 a.m. or
between 1:00 p.m. - 9:00 p.m.
“Default”
shall mean the material failure by
either party to meet any of the terms set forth in this
Agreement.
“Delivered
Cost” shall mean
the sum of Landed Cost and the applicable distributor
“mark-up”.
“Delivery Performance
Standard” shall
mean Distributor’s truck and driver’s obligation to
arrive prepared to deliver Orders within
of the scheduled delivery time.
“Distribution
Territory” shall
mean the States of
.
1
“Franchised or Licensed
Store” shall mean a
store operated by an entity other than JJC pursuant to a license
agreement or franchise agreement between JJC and that
party.
“Full
Case” shall mean
the case in which Distributor receives the Product from the
vendor.
“General
Inventory” shall
mean Product that is currently stocked by Distributor and not at
the special request of JJC.
“Hardpack
Tubs” shall mean
frozen yogurts, sherbets, sorbets, and ice cream/ice milks packed
in bulk containers.
“Incremental Product
Cost” shall mean
the cost differential between the original delivered price of an
item and the delivered price of a substituted item.
“Inventory” shall mean General Inventory, JJC Critical
Inventory, JJC Proprietary Inventory, Obsolete/Dead Inventory and
Slow Inventory.
“IQF”
shall mean individually
quick-frozen, a process used for fruit and vegetables to preserve
the Product.
“Isolated
Stores” shall mean
Stores located more than 250 miles from the closest distribution
center of Distributor.
“JJC Critical
Inventory” shall
mean all Hardpack Tubs, juice concentrates, IQF fruit, soymilk,
fresh produce, frozen bread products, and proprietary straws, cups,
lids and napkins.
“JJC Proprietary
Inventory” shall
mean Product that is labeled or printed with the Jamba Juice logo,
which is not to be sold to any customer other than the Stores, or
which is purchased at the request of JJC and not otherwise stocked
by Distributor.
“Key Drop
Deliveries” shall
mean deliveries completed via key drop between the time of the
Store closing (or 9:00 p.m., whichever is earlier; except for any
Store that normally has significant sales volumes after 9:00 p.m.,
then the time will be 10:00 p.m.) and Store opening (or 6:00 a.m.,
whichever is later).
“Landed
Cost” shall mean
the Product cost F.O.B. origin plus inbound freight costs to
Distributor’s distribution center, as may be adjusted as
provided in this Agreement, excluding early pay discounts, spoilage
and other allowances.
“Month”
shall mean a calendar
month.
2
“Obsolete/Dead
Inventory” shall
mean Products that do not move in a sixty (60)--day period from the
date of receipt by Distributor or that have been discontinued by
JJC.
“ Orders ” shall
mean orders for Product submitted to Distributor by JJC.
“Other
Distributors” shall
mean other Distribution Company’s in which JJC is currently
utilizing for service to its’ stores.
“Product(s)” shall mean all products purchased by JJC under
this Agreement.
“Service
Levels” shall mean
a fraction, expressed as a percentage, whose numerator is the total
number of items in an Order actually received and whose denominator
is the total number of items in an Order.
“Slow
Inventory” shall
mean Products that move five Full Cases or less within a 30-day
period.
“Stores”
shall mean, individually or
collectively, Company Stores and/or Franchised or Licensed Stores,
as the context so permits or requires.
“Supply” or
“Supplying” has the meaning given to those terms in
Section 2.
“Business Day
” shall be Monday –
Friday, from 8am to 5pm.
“ Extreme Remote
Location ” shall mean any store that is 300 miles or more
away from any other JJC store.
2.1 Distribution for Company
Stores . During the term of this Agreement, Distributor shall
be the exclusive purchaser, warehouser, and distributor of all
Products (with the exception of test items, equipment, marketing
items and uniforms), as needed, to JJC Stores for the Distribution
Territory. Distributor’s services shall include the purchase,
warehouse, and distribution of Products to meet the requirements of
JJC for sale in the Company Stores as described herein. (hereafter,
“ Supply ” or “ Supplying
”).
2.2 Distribution for Franchised
or Licensed Stores . During the term of this Agreement,
Distributor agrees to offer to Supply any Franchised or Licensed
Stores within the Distribution Territory on substantially the same
terms and conditions as herein contained, provided such Franchised
or Licensed Store shall have established and shall have maintained
its creditworthiness to Distributor’s reasonable
satisfaction. Distributor may discontinue Supplying any Franchised
or Licensed Store upon the material failure of such Store to comply
with the applicable terms of the agreement with the Store;
provided, that Distributor shall first have given written notice
thereof to JJC and allowed JJC a reasonable time period (not to
exceed 30 days) to contact the Franchised or Licensed
3
Store for purposes of correcting such failure.
Distributor acknowledges and agrees that JJC shall not have any
liability or responsibility for any obligations of a Franchised or
Licensed Store to Distributor, including, without limitation, for
payment for Products Supplied to Franchised or Licensed Stores. Any
failure of a Franchised Partner store to meet Credit Terms as
established in section 5 of this agreement may be placed on C.O.D.
terms. If a store fails to meet the requirements under C.O.D.
terms, then the store can be placed on a prepayment
basis.
2.3 Appointment of Liaisons .
Distributor and JJC shall each designate a managerial level person
as a designated liaison to facilitate the performance of this
Agreement.
2.4 Master Distribution
Relationship. Distributor will act as a “Master
Distributor” by consolidating shipments to remote, smaller
distribution centers, in which DISTRIBUTOR is selling inventory to
a third party distributor. For
shipments, the following fee schedule will apply:
[insert].
Product will be verified at time of
delivery to California forwarder. The load becomes the
responsibility of freight forwarder once invoice is signed by
freight forwarder.
This Agreement shall commence for
all Distribution Territories (excluding
territory) on
.
|
4.
|
PRICING
POLICIES AND PRICE LISTS .
|
This Section sets forth the basic
pricing, applicable discounts and price reporting. No changes shall
be made to any of these provisions without the prior written
approval of the JJC Chief Financial Officer or the JJC Director,
Supply Chain Management. Distributor agrees to offer the same
pricing and discounts it provides to JJC to each of the Franchised
or Licensed Stores.
The pricing structure for JJC shall
be as follows:
4.1 Directed Pricing. JJC
will provide a “Directed” pricing model to the
Distribution Center on or about the 20th of each month, in which
contracted products are listed with FOB origin, inbound freight,
landed costs and delivered pricing to the stores for said
month.
Distributor’s request for
updates to pricing must be submitted to JJC’s Contract
Compliance Coordinator no later than the 15
th
of the month prior to
the month they will take affect.
Distributor agrees to sell all
Products as calculated in the “Directed” pricing model,
using Distributor’s Landed Cost plus “standard
mark-up” percent.
4
It is the Distributors responsibility to review
the information for accuracy and to report any discrepancies within
three Business Days of receipt of directed pricing. All pricing for
that month shall remain fixed with no variability in an effort to
ensure consistent cost of goods and invoice accuracy. All
JJC’s non-contracted items may be reviewed and submitted to
JJC for pricing updates on a monthly basis.
In the event of unstable pricing due
to the enactment of “act of god clauses”, pricing will
be adjusted on an “as need basis.” JJC and Distributor
will work together to determine fair and equitable
pricing.
Distributor shall have the right of
first refusal to match the delivered cost to JJC Stores for
products that are not delivered by Distributor, which shall remain
firm for the duration of that specific contract. Any changes to the
above pricing formula must have the prior written approval of the
JJC’s Director of Supply Chain Management.
4.2 Basic Prices . The
pricing structure shall be as follows:
Standard Mark-Up
. Unless otherwise provided in this
Agreement, Distributor shall sell all Products at
Distributor’s Landed Cost plus “standard mark –
up” (landed cost multiplied by percentage mark-up). Standard
Mark-up is defined by the following declining scale and is based
upon
:
__________________________
4.3 Adjustments and Discounts
.
(a) Ordering Discounts .
Single Invoices exceeding
, taken immediately on the respective invoice.
(b) Minimum Order Surcharge .
Order’s not meeting the minimum order requirement of
will be assessed a surcharge of
, for every dollar short of the minimum. These surcharges are not
to exceed
, and will not be applied to emergency orders, or off day orders,
that are subject to the unscheduled delivery surcharges.
(c) Missed Delivery Charge.
In the event that a store has signed up for 2 or 3 times a week
delivery, and the 2 nd or 3 rd delivery is not utilized, the store
will be charges
for missing a scheduled delivery.
(d) Restocking Fee . There
will be a
restocking fee applied to any Store that returns items that were
ordered and delivered or on truck to be delivered.
5
(e) Committed Delivery
Schedules . Stores must commit to a specified delivery
schedule, in which adjustments can be made to their schedule on a
system wide basis twice per year. The available committed delivery
schedules and periods consist of one (1), two (2), or three
(3) day per week delivery schedules fixed for one or more of
the following periods: March — October; October —
March. Distributor will notify each Store in at least two
(2) weeks prior to the start of each period of its option to
submit in writing to Distributor its delivery schedule commitment
for the subsequent period. If a Store does not submit a delivery
commitment notice to Distributor prior to the start of a period,
then the delivery schedule from the preceding period will apply.
Stores may change their delivery commitment once during each period
without charge or other penalty and Distributor may request a
change to a Store’s delivery commitment, as long as the
change does not adversely affect the Store.
4.4 Pricing Information
.
(a) Directed Pricing
Worksheet . On or before the twentieth (20)
th day of each Month, JJC shall provide
the Distributor with “directed pricing” for the
up-coming months order guide. The Distributor shall complete the
template by inserting expected pricing for the up-coming month and
then send the template to JJC’s Contract Compliance
Coordinator via email. All variances to JJC’s Directed Price
must be approved prior to producing an order guide. Once prices are
agreed upon, the price for all Products designated by JJC in the
Directed Pricing model shall be in effect for the entire following
Month starting on the first day of that Month.
(b) Customized Order Guides.
Distributor agrees to provide monthly-customized order guides for
Stores as requested by JJC. Distributor will deliver to each Store
a copy of the order guide by the first day of each
Month.
(c) Pricing by Landed FOB
points. Pricing will be based upon the following FOB points and
will only be changed with written authorization from the Manager of
Supply Chain & Logistics:
[inserts]
FOB pricing in
to begin no later than January 1, 2006.
FOB pricing in
will be authorized at which time store growth allows for
sustainable Full Truck Load (FTL) purchasing brackets.
(d) Mark-up Review Trigger.
As protection against margin diluting due to average cost of goods
dropping, a review of current case cost by market area will be done
periodically and a drop greater than
will trigger a review to determine if margin needs to be enhanced
to allow Distributor to equal the GP dollars afforded at the
beginning of this contract.
6
(Example:
average landed cost is
per case. If the product value were to fall below
then Product margin would be increased to enable Distributor the
gross profit dollars equal to what would have been gained at the
value.)
(e) Product
“transfer” pricing. Products that are
“transferred” between Distributors’ own
facilities will be at the sole expense of the distributor, unless
specifically requested by JJC. If JJC requests inventory to be
“transferred”, the following fees schedule will apply:
(i) Regular transfers between
will be priced at a
mark-up (ii) Emergency transfers at the request of JJC or JJC
vendors between
will be priced at
per pallet unless otherwise mutually negotiated, at time of
emergency, at a common carrier competitive rate (iii) Regular
transfers from
will be based on a “carrier quote.” In the event
Distributor exercises the option to utilize its’ own trucks,
the transfer fee will be based on “full truck load”
pricing.
Mark-up fees will not apply to
“transfers” made to any non-recognized FOB points.
Currently,
are handled at Distributors’ expense.
4.5 Audit Rights. Distributor shall
prepare and maintain, in accordance with generally accepted
accounting principles consistently applied, complete and accurate
books of account and records (specifically including, without
limitation, the originals or copies of documents supporting entries
in the books of account) covering and limited to all transactions
arising out of or relating to this Agreement. JJC and its duly
authorized representatives have the right, during regular business
hours, for the duration of this Agreement and for two
(2) years thereafter, to examine and audit, and make extracts
from, such books of account and records and all other documents and
material in the possession or under the control of Distributor with
respect to the subject matter and the terms of this Agreement. All
such books of account, records and documents shall be kept
available by Distributor for at least two (2) years after the
end of the period to which they relate.
[insert]
6.1 Delivery Schedule .
Distributor shall provide Stores with one (1), two (2) or
three (3) deliveries per week.
6.2 Delivery Method .
Distributor shall deliver Products to the Stores with trucks
predominantly dedicated to the Products. Stores unable to accept a
Key Drop delivery will have Day Deliveries .
Distributor may from time to time utilize common or
7
other delivery services (for example, UPS or
Federal Express) to ship Product to the Stores as long as the
Delivered Cost is equal to or less than the Delivered Cost then in
effect for the Product. Any increase in Delivered Cost as a result
of utilizing an alternative delivery system must be approved in
writing by JJC Purchasing prior to invoicing.
6.3 Order Procedure . All
Orders will be faxed or called into Distributor by the mutually
agreed-upon cut-off time (Distributor’s cut-off time is
Noon). Ordering deadlines may be varied by region, and may be
adjusted as necessary with mutual agreement in order to accommodate
increased Store ordering activity. A late fee of
shall be added to Orders that are received after the applicable
deadline, unless Distributor caused the delay. Distributor shall
offer a toll-free 800 number for placing Orders and for responding
to customer service issues.
6.4 Customer Service Matters
. If requested by JJC, Distributor agrees to develop a computer
based ordering system that is compatible with each Store and
JJC’s corporate office computer network during the term of
the Agreement. Distributor agrees to provide a dedicated sales
representative at a managerial level for JJC who will have no
involvement with any other retailers that have juice and/or
smoothies as their core business. Distributor’s sales
representative will be available 12 hours a day by a toll-free 800
number pager. Response time will be within two (2) hours
Monday through Friday, between 8:00 a.m. and 6 p.m., and within
four (4) hours on weekends, after hours, and holidays.
Distributor shall provide Jamba Juice Company corporate offices
restricted remote access to Distributor computers specifically for
the purpose of accessing velocity and Inventory data regarding
Store activity.
6.5 Day Deliveries . For Day
Deliveries, there will be a two-hour delivery window from the
scheduled delivery time. No deliveries to be made between the hours
of 11:00 a.m. and 1:00 p.m., unless agreed to be store management.
Should Distributor fail to deliver within such two-hour window, or
deliver less Product than ordered to the Store, Distributor will
pay Incremental Product Costs that the Store incurs, plus
, to cover the shortage (Incremental Product Costs will be limited
to a maximum usage for a normal 24-hour period). The
Distributor’s driver will be responsible for bringing the
product into the store and placing the cases near their respective
storage areas. The driver must check in the order with store
personnel and verify invoicing accuracy. The driver must note all
discrepancies on the invoice prior to obtaining a team
member’s signature.
The parties may by mutual written
agreement, change the scheduled delivery windows from time to time.
Distributor will communicate needed changes on the delivery
schedule to the Stores in writing at least one week prior to any
change. Any major changes to delivery schedules must be
communicated to JJC Manager of Supply Chain and Logistics for
review and approval at least two weeks in advance of any proposed
change.
All “day drop”
deliveries, in which the driver has missed their delivery window,
will be subject to the requirements of a “key drop”
delivery. The driver will be
8
responsible for putting the product on the
shelves. We anticipate that stores routinely have product rotated
and prepared for day deliveries.
6.6 Key Drop Deliveries
.
(a) Delivery Procedures . For
Stores participating in Key Drop Deliveries, Distributor’s
driver will be responsible for delivering all freezer and chilled
Products into the respective walk-ins via dolly, and shall stock
Products on the shelves. All dry Products are to be placed together
in the storage areas located in the back of each Store. Store
management is responsible for preparing walk-in units for
deliveries by moving all existing merchandise to the front of the
walk-ins. When space is not available or Product has not been
properly rotated prior to the delivery, Distributor’s driver
may place Product on the floor of the walk-in. If
Distributor’s driver is not able to make a scheduled delivery
to a Store due to the fault of a JJC employee (i.e., locks or
security codes changed without informing Distributor in advance),
JJC will pay Distributor
, plus any applicable non-scheduled delivery surcharge for
returning to the Store to make the delivery.
All “key-drop”
deliveries, in which the driver has missed their delivery window,
will continue to be subject to the above requirements.
(b) Honor System . Stores
participating in Key Drop Deliveries will receive Product on an
honor system. Any invoice or delivery discrepancies shall be
brought to the attention of Distributor within four hours after the
Store opening on the following day, and any credit will be
reflected on the invoice for the following regular delivery
date.
(c) Access Security . If a
driver leaves a Store unlocked after a Key Drop Delivery, leaves
keys in the lock or leaves a security system unarmed, Distributor
will be charged
for each instance. The charge will be waived if the driver is not
able to set an alarm due to a system malfunction or other cause
beyond the reasonable control of the driver. The driver shall
immediately inform Distributor’s Customer Service and the
Store manager of such problem. The
charge will not be waived if the driver fails to timely notify such
parties. If a Store experiences theft, burglary, vandalism or other
loss as a result of a driver’s failure to secure a Store,
Distributor will be liable for any resulting losses or damages to
person or property.
6.7 Delivery Access . JJC
shall ensure that Company Stores shall provide reasonable delivery
access for Distributor’s drivers. Reasonable delivery access
shall include parking for a truck with a minimum twenty-eight
(28) foot trailer within one hundred fifty (150) feet of
the Store’s receiving door and the ability to utilize a
standard ice cream cart and/or dolly for making deliveries. Any
Store that does not provide the aforementioned access is subject to
a fair and reasonable delivery surcharge that is to be
9
negotiated with JJC prior to the Store opening.
Distributor shall inspect all new Store locations prior to
accepting the Store’s opening Order and notify JJC Manager of
Supply Chain and Logistics if a delivery surcharge is
applicable.
6.8 Off-Day Delivery/Emergency
Orders . Off-Day Delivery/Emergency Orders. Stores may request
an unscheduled off-day delivery. For Stores other than Isolated
Stores (i) all non-scheduled Sunday deliveries will be
assessed a
surcharge and all non-scheduled deliveries made Monday through
Saturday, that can be accommodated on a regularly scheduled route,
will result in a
surcharge and (ii) all emergency Orders for same day delivery
must be placed by 9:00 a.m. and will be subject to a
surcharge. For Isolated Stores (i) all non-scheduled Sunday
deliveries will be assessed a
surcharge and all non-scheduled deliveries made Monday through
Saturday, that can be accommodated on a regularly scheduled route,
will result in a
surcharge and (ii) all emergency Orders for same day delivery
must be placed by 9:00 a.m. and will be subject to a
surcharge, or applicable third party freight costs if Distributor
is unable to accommodate the delivery on its own equipment. A DM or
GM must approve any charges exceeding
, and approval must be submitted in writing (either via e-mail or
fax). If a Distributor is able to UPS or airfreights overnight the
necessary items, the
surcharge will be waived and the Store will only be charged the
related UPS or airfreight fees.
6.9 Resolution of Shortages
.
(a) JJC Critical
Inventory-Shortages Caused by Distributor . Shortages of JJC
Critical Inventory caused by Distributor will be handled in the
following manner. If a Store is not able to wait for the next
scheduled delivery, shortages will be remedied by Distributor and
resolved at Distributor’s sole cost as quickly as possible
but within a maximum of six (6) hours, except for Isolated
Stores where the maximum will be twenty four (24) hours for
such Stores. “Extreme Remote Locations” will be
remedied within a maximum of forty-eight (48) hours. Should
Distributor fail to deliver JJC Critical Inventory within a 24-hour
period, unless otherwise noted, it may be held financially
responsible for lost sales (documented via Store historical sales
records) for any lost sales that Store may incur.
(b) All Other Shortages . All
other Product shortages will be resolved within 24 hours at the
cost of the party responsible for the shortage. Should Distributor
fail to meet this commitment, Distributor shall reimburse
Incremental Product Costs, plus
, that the Store incurs to cover the shortage. The Incremental
Product Cost will be limited to a maximum usage of a normal 24-hour
period.
10
(c) Expedited Orders . If the
Distributor has run out of product at the Distribution facility due
to poor inventory management, inadequate safety stocks, etc. it is
Jamba’s expectation that product will be Expedited (air
freight, etc.) to ensure no interruption of service, at the
Distributor’s expense.
The Distributor will expedite
critical items when it is not an error on the part of the
Distributor. Jamba will support the Distributor in identifying who
the responsible party shall be for costs surrounding redelivery,
deliveries may be done by a third party carrier at which time the
responsible party will be billed by the Distributor once the third
party carrier invoices the Distributor.
6.10 New Stores . JJC agrees
to inform Distributor in writing at least thirty (30) days in
a