\n7462 Warsaw NC
\n7555 Warsaw NC
\n7582 Warsaw NC
\n7616 Warsaw NC
\n7622 Warsaw NC
\n7626 Warsaw NC
\n7670 Warsaw NC
\n7717 Warsaw NC
\n7754 Warsaw NC
\n7787 Warsaw NC
\n9084 Warsaw NC
\n9129 Warsaw NC
\n9150 Warsaw NC
\n9154 Warsaw NC
\n9207 Warsaw NC
\n9237 Warsaw NC
\n9320 Warsaw NC
\n9379 Warsaw NC
\n9547 Warsaw NC
\n9549 Warsaw NC
\n9563 Warsaw NC
\n9606 Warsaw NC
\n9619 Warsaw NC
\n9652 Warsaw NC
\n9656 Warsaw NC
\n9666 Warsaw NC
\n9667 Warsaw NC
\n9668 Warsaw NC
\n9688 Warsaw NC
\n9737 Warsaw NC
\n9747 Warsaw NC
\n<\/c><\/s><\/table>\n 20
\n 38<\/p>\n
SCHEDULE 1.1<\/p>\n
PRODUCTS<\/p>\n
Product List:<\/p>\n
Meat Department Category and Item Assumptions<\/p>\n
Beef (All Private Brands, National, Regional, and Local Brands) <\/p>\n
– ALL FRESH AND FROZEN BEEF PRIMALS AND SUB-PRIMALS <\/p>\n
– INCLUSIVE OF ALL RETAIL READY PRE-PACKAGED BEEF<\/p>\n
– INCLUSIVE OF ALL PRE-COOKED BEEF PRODUCTS <\/p>\n
– INCLUSIVE OF ALL HOTEL AND CASE READY CUTS AND PRIMALS <\/p>\n
– ALL FRESH AND FROZEN GROUND MEAT PRODUCTS <\/p>\n
– INCLUSIVE OF ALL BULK, PRE-PACKAGED AND RETAIL READY PRODUCTS <\/p>\n
– INCLUSIVE OF ALL FRESH AND FROZEN BY PRODUCTS<\/p>\n
Pork (All Private Brands, National, Regional, and Local Brands)<\/p>\n
– ALL FRESH AND FROZEN PORK PRIMALS AND SUB-PRIMALS<\/p>\n
– INCLUSIVE OF ALL RETAIL READY PRE-PACKAGED PRODUCTS<\/p>\n
– INCLUSIVE OF ALL BONE-IN AND BONELESS PRODUCT<\/p>\n
– INCLUSIVE OF ALL FRESH AND FROZEN BY PRODUCTS<\/p>\n
– INCLUSIVE OF ALL SMOKED AND COUNTRY CURED PRODUCTS (BONELESS AND
\n BONE-IN)<\/p>\n
Poultry (All Private Brands, National, Regional, and Local Brands)<\/p>\n
– ALL FRESH, FROZEN, AND CHILL PACK PRODUCTS<\/p>\n
– BULK, PRE-PACKAGE, IQF POULTRY AND BREADED POULTRY PRODUCTS<\/p>\n
– TRAYED, BAGGED OR BULK (C02)<\/p>\n
– INCLUSIVE OF ALL FRESH AND FROZEN TURKEYS<\/p>\n
– WHOLE AND PARTS<\/p>\n
– DUCKS, GEESE, CAPONS, AND GAME HENS<\/p>\n
Packaged Meat Products (All Private Brands, National, Regional, and Local
\nBrands)<\/p>\n
– INCLUSIVE OF ALL ITEMS PACKAGED, BULK, COOKED, RAW, FRESH OR FROZEN
\n PRODUCTS SOLD FROM THE MEAT DEPARTMENT OR DAIRY DEPARTMENT IN THE FOLLOWING
\n CATEGORIES:<\/p>\n
– BACON<\/p>\n
– FRESH SAUSAGE<\/p>\n
– SMOKED SAUSAGE<\/p>\n
– CANNED HAMS AND ALL OTHER REFRIGERATED CANNED MEAT ITEMS<\/p>\n
– ALL REFRIGERATED PICKLES AND SAUERKRAUT<\/p>\n
– HOT DOGS, WIENERS, CONIES<\/p>\n
– ALL CUP SALADS AND BULK SALAD ITEMS TRADITIONALLY SOLD IN THE MEAT
\n DEPARTMENT OR DAIRY CASE<\/p>\n
Packaged Meat Products (All Private Brands, National, Regional, and Local
\nBrands) <\/p>\n
– ALL PREPACKAGED REFRIGERATED PROCESS COLD CUTS <\/p>\n
– ALL BULK COLD CUTS THAT ARE PROCESSED AND SOLD IN THE MEAT
\n DEPARTMENT <\/p>\n
– ALL MARKET STYLE – BULK AND PRE-CUT CHEESE (SOLD IN THE MEAT
\n DEPARTMENT) <\/p>\n
– ALL MEALS TO GO – MEAL KITS – QUICK TO FIX ITEMS – HOME MEAL
\n REPLACEMENT <\/p>\n
ITEMS TO INCLUDE BUT NOT LIMITED TO: <\/p>\n
– PIZZAS (MARKET STYLE) <\/p>\n
– LUNCHABLES <\/p>\n
– TYSON\/ONCOR\/ADVANCED PRODUCTS<\/p>\n
39<\/p>\n
Seafood (All Private Brands, National, Regional, and Local Brands) <\/p>\n
– ALL FROZEN, PROCESSED, PACKAGED AND BULK SEAFOOD INCLUSIVE OF: <\/p>\n
– WHOLE H&G <\/p>\n
– FILLETS AND STEAKFISH <\/p>\n
– ALL FROZEN SHELL FISH <\/p>\n
– SHRIMP (RAW, COOKED, FRESH, FROZEN) <\/p>\n
– IMITATION SEAFOOD PRODUCTS <\/p>\n
– PRE-COOKED HEAT AND SERVE PRODUCTS <\/p>\n
– ALL GLASS AND PLASTIC CONTAINER PRODUCT RELATED TO THE CATEGORY<\/p>\n
PRODUCE<\/p>\n
In support of Kmart, Fleming will source and negotiate all Branded, Non-Branded
\nand Private Label Produce for the following products\/categories, including but
\nnot limited to:<\/p>\n
– All Fresh Categories (Including Value Added Products)<\/p>\n
– All Non-Fresh Manufactured Categories<\/p>\n
– All Floral Accessories (Including Balloons, Planters, Pots, Supplies,
\n etc.)<\/p>\n
– All Silk Flowers and Plants<\/p>\n
– Christmas Trees<\/p>\n
GFD<\/p>\n
Catsup & Mustard
\nBBQ Sauce & Misc. Sauces
\nSauces-Ital, Cooking, Paste
\nSalad Drsng, Mayo, Vinegar
\nPickles & Relishes
\nOlives & Red Cherries
\nJellies, Jams, Preserves
\nPeanut Butter & Honey
\nJuices & Drinks
\nFruits – Canned & Glass
\nVegetables – Canned & Glass
\nLow Cal & Health Foods
\nFish & Seafood
\nCanned Meat
\nPrepared & Nationality Fd
\nSoup – Canned & Dry
\nBaby Food & Formula
\nMilk – Canned & Powdered
\nCoffee & Creamers
\nTea
\nCocoa & Milk Modifiers
\nPowdered Fruit Flav Drnks
\nCereal, Pop Trts, Ins Bkfst
\nCookies & Crackers
\nChips, Snacks & Nuts
\nDried Fruit
\nDry Beans, Veg & Grains
\nPopcorn
\nSpaghetti & Macaroni
\nPrep Dinners & Box Pizza
\nBaking Accessories
\nCake Mix, Frstg, Prep Mix
\nPancake Mix
\nBreadings & Coatings <\/p>\n
2
\n 40<\/p>\n
Flour & Cake Flour
\nSalt, Seasngs, Spices, Extr, Gravies
\nDesserts, Toppng, Puddings
\nSyrup & Molasses
\nShortening & Oil
\nSugar & Sugar Substitutes
\nCandy & Gum
\nButter
\nMargarine
\nRefrig Dough Products
\nCheese – Retail Packaged
\nBulk Cheese
\nCultured Products
\nJuice Products
\nFish\/Hrsradish\/Sce\/Mustrd
\nPickles
\nRefrigerated Salads
\nDesserts & Topping
\nYeast
\nJuice
\nFruit
\nVegetables – Frozen
\nPotatoes
\nFrozen Prepared
\nFrozen Bakery & Desserts
\nNon-Dairy
\nFrozen Fish
\nFrozen Meat Packaged
\nFrozen Poultry Packaged
\nFrozen Bake-off
\nOther Frozen for Resale
\nHispanic Foods
\nOriental Foods
\nItalian Foods
\nNatural Foods
\nDiet Foods
\nNatural HABA
\nBaby Diapers & Pants
\nDog Foods
\nOther Pet Foods & Litter
\nDish Detergents
\nLaundry Detergents
\nHand & Bath Soaps
\nLaundry Supplies & Bleach
\nAll Prpose Clnr\/Disinfect
\nHousehold Clnrs, Compounds
\nHousehold Supplies
\nWaxes & Polish – Furniture
\nPesticides
\nPaper Products
\nPicnic Supplies & Drink Cup
\nWraps, Foil, Freezer Supply
\nSandwich, Storg, Trash Bags
\nCigarettes
\nCigars, Tobacco, Snuff, Misc.<\/p>\n
3
\n 41<\/p>\n
Frozen bagels and breakfast foods
\nCharcoal and lighter fluids
\nRock salt, water softener salt and pellets<\/p>\n
Deli Department<\/p>\n
– All Turkey and Poultry products including smoked, browned, flavored, dark
\n meat, pre-cooked holiday birds (fresh and frozen)<\/p>\n
– All Beef products including all roast beef, corned beef, pastrami, further
\n processed beef products etc.<\/p>\n
– All ham products including Honey, Virginia, Cooked, Water added, Chopped,
\n Capacola, Prosciutto, Flavored, canned etc.<\/p>\n
– All Cheese categories including domestic, imports, imitations, shreds,
\n balls and logs, specialty <\/p>\n
– All Smoked Meats including Canadian bacon, bacon, brats, smoked sausage,
\n metts, wieners, links etc <\/p>\n
– All Luncheon meats including bologna, braunschweiger, head cheese, liver
\n loaf, flavor loaves <\/p>\n
– All Dry Sausage including hard, genoa, pepperoni, summer sausage <\/p>\n
– All “Lite” and “Lo-Salt” deli meats and cheeses<\/p>\n
– All Salads – fresh garden salads, coleslaw, macaroni salad, potato salads,
\n desserts, dips, puddings, specialty, etc. (bilk and pre-packaged)<\/p>\n
– All pizza products both fresh, frozen and pre-made<\/p>\n
– All deli beverages including coffee, juice, tea, soft drinks etc.<\/p>\n
– All Deli snacks, tortilla chips, crackers and mustards<\/p>\n
– All Chicken products including fresh 8 pc and wogs, 8 pc. MRB and frozen
\n WOGS as well as all further processed and wing products<\/p>\n
– All vegetables and fruits used in a deli operation both dry and frozen <\/p>\n
– All condiments used in a Deli operation including dry, refrigerated and
\n frozen <\/p>\n
– All spices used in the Deli kitchen <\/p>\n
– All Hot Foods including entrees, vegetables, fish, BBQ, ribs, lamb,
\n lasagna, pork, sausage, shrimp, egg rolls, corn dogs, steaks etc. <\/p>\n
– All Deli breads and bread board items including pita breads, lavosh etc. <\/p>\n
– All salad bar ingredients <\/p>\n
– All breakfast items including sausage patties, biscuits, pre-cooked bacon
\n etc. <\/p>\n
– All frozen and fresh soups pre packaged or bulk<\/p>\n
– All thaw and sell prepackaged deli products including ready to serve
\n entrees and vegetables,<\/p>\n
– All other deli products including but not limited to herring, lox, olives,
\n pickles, cooking oils, ethnic foods,<\/p>\n
– All seasonal and promotional items for all holidays not listed including
\n gift packs, seasonal candies.<\/p>\n
BAKERY DEPARTMENT<\/p>\n
– All Breads and Rolls including bake off and thaw and sell<\/p>\n
– All Bread and roll mixes and bases<\/p>\n
– All Commodity flours, sugars, yeast<\/p>\n
– All Donuts including frozen dough, ready to finish, mixes and thaw and sell
\n \/ ready to sell<\/p>\n
– All cream products including refrigerated or frozen ice cream cakes,
\n eclairs, cream horns, pie shells, puffs, tart shells, ice cream tortes and
\n all other cream products<\/p>\n
– All Sweet Goods including all frozen bake off, ready to sell or thaw and
\n finish Danish, cinnamon rolls, coffee cakes, turnovers, puff dough, etc,<\/p>\n
– All Cakes either the mix, frozen uniced or pre-iced<\/p>\n
– All cakes ready to sell or ready to finish including angel foods, brownies,
\n cupcakes, pound cakes, creme cakes, bundt cakes or any other product made
\n from cake style batters<\/p>\n
– All pies either made in store from scratch, ready to bake or ready to thaw
\n and sell including all fruit, cremes, meringues etc.<\/p>\n
– All Hispanic and other ethnic breads, pastries and desserts<\/p>\n
– All cookies either from mix, frozen pucks or ready to thaw and sell either
\n in bulk or pre-packaged<\/p>\n
– All muffin products either from mix, or thaw and sell prepackaged or bulk<\/p>\n
– All bagel products<\/p>\n
4
\n 42<\/p>\n
– All Bakery ingredients including shortenings and oils, sugars, icings,
\n toppings, fruit fillings, eggs, spices. Decorretes, flavors, emulsions,
\n cheese for baking, sanding sugars, nuts and toppings, etc.<\/p>\n
– All cake decorating supplies<\/p>\n
– All retail cake accessories including candles, lay-ons, napkins, party
\n plates, hats etc.<\/p>\n
– All “fat free” and “sugar free” items listed above<\/p>\n
– All seasonal and holiday items including seasonal flavors of above listed
\n items and commodities<\/p>\n
– All other products sold today in the traditional Bakery department
\n including shop around pallets of bakery thaw and sell products<\/p>\n
5
\n 43<\/p>\n
SCHEDULE 1.2A<\/p>\n
HBC AND GMD<\/p>\n
The Fleming \/ Kmart GM and HBC synergies teams, headed by Jeff Manning and Cecil
\nKearse, will identify the procurement and distribution strategies and potential
\nbenefits by category for presentation on or before May 2, 2001. The categories
\nwill be broken out as follows:<\/p>\n
HEALTH & BEAUTY CARE<\/p>\n
\n
\n————————————- ———————————– ———————————–
\nDeodorants Hair Care Analgesics
\n————————————- ———————————– ———————————–
\nSkin Care First Aid Cough and Cold
\n————————————- ———————————– ———————————–
\nOral Care Foot Care Eye and Ear Care
\n————————————- ———————————– ———————————–
\nSun Care Feminine Hygiene Diet
\n————————————- ———————————– ———————————–
\nShaving Needs Family Planning Nutrition
\n————————————- ———————————– ———————————–
\nBath Baby Needs Vitamins and Supplements
\n————————————- ———————————– ———————————–
\nMen’s Grooming Cosmetics Digestive Health
\n————————————- ———————————– ———————————–
\nPrivate Label Ethnic HBC
\n————————————- ———————————– ———————————–
\n<\/c><\/c><\/s><\/table>\nGENERAL MERCHANDISE<\/p>\n
\n
\n——————————– ————————– ———————— ————————
\nHousehold Softgoods Light Bulbs \/ Electrical Baby Sun \/ Reading Glasses
\n——————————– ————————– ———————— ————————
\nCloset \/ Cleaning Supplies Batteries \/ Flashlights School Supplies Seasonal Product
\n——————————– ————————– ———————— ————————
\nBakeware \/ Kitchen Gadgets Photo \/ Audio \/ Video Home & Office Promotional Product
\n——————————– ————————– ———————— ————————
\nHousewares \/ Drinkware Hardware Sewing \/ Shoe Care
\n——————————– ————————– ———————— ————————
\nTableware Toys Party Needs
\n——————————– ————————– ———————— ————————
\nPlastic Storage Automotive Panty Hose
\n——————————– ————————– ———————— ————————
\nAppliances & Clocks Gloves Direct Imports
\n——————————– ————————– ———————— ————————
\n<\/c><\/c><\/c><\/s><\/table>\n 44
\n SCHEDULE 1.2B<\/p>\n
DUNIGAN FUEL TERMS<\/p>\n
Fuel Management Services Agreement
\n Term Sheet<\/p>\n
PURPOSE:<\/p>\n
To establish business guidelines for how Dunigan Fuels will provide fuel
\ninventory and other related services for Kmart.<\/p>\n
1. Services Provided:<\/p>\n
Dunigan Fuels will provide the following services to Kmart.<\/p>\n
A. Fuel Inventory Management – Dunigan Fuels will monitor Kmart’s Fuel
\n Center location remotely and schedule the delivery of fuel 7 days a
\n week. Fuel will be automatically dispatched on an as needed basis.<\/p>\n
B. Help Desk – Dunigan Fuels will provide a 7 day 24 hours a day help
\n desk. The help desk will support fuel operations only. Dunigan Fuels
\n will dispatch fuel maintenance companies on an as needed basis per
\n Kmart guidelines.<\/p>\n
C. Environmental Monitoring – Dunigan Fuels will provide Environmental
\n compliance monitoring during the term of the fuel management services
\n agreement. Environmental Monitoring will commence once Kmart and
\n Dunigan Fuels execute an Environmental Monitoring Plan. This plan
\n should be executed within 180 days from the commencement of this
\n agreement.<\/p>\n
D. Accounting – Dunigan Fuels will invoice using Electronic Data
\n Interchange. Kmart will pay all invoices using automated clearinghouse
\n transfers (“ACH”).<\/p>\n
2. Term:<\/p>\n
The term will be the same as this Agreement.<\/p>\n
3. Termination:<\/p>\n
Termination of this agreement will be the same as this Agreement.<\/p>\n
(CONFIDENTIAL)<\/p>\n
(CONFIDENTIAL)<\/p>\n
5. Payments\/ Payment Terms\/ Invoicing:<\/p>\n
Dunigan Fuels shall invoice Kmart for all Products sold by Dunigan Fuels to
\n Kmart via Electronic Data Interchange (EDI), or other mutually acceptable
\n methods. Payment of the Product will be due to Seller based on net ten (10)
\n days from delivery of each load of Product. Payment will be made via ACH.<\/p>\n
6. Invoice Reconciliation:<\/p>\n
Dunigan Fuels will provide all goods on a cost plus its pre-negotiated
\n fees. Services are considered to be included in fees generated by gallons
\n processed. From time to time there will be a need to correct a billing due
\n to an over or under charge for a good or services provided. These billing
\n errors will be accrued and settled on a quarterly basis. A complete
\n accounting by store and by invoice will be kept to justify all invoice
\n reconciliation.<\/p>\n
7. Access to Tank Monitors:<\/p>\n
Kmart will always allow Dunigan Fuels, during the term of the fuel
\n management services agreement, phone line access to its automatic tank
\n monitors. This access is necessary for Dunigan Fuels to perform its duties.<\/p>\n
45<\/p>\n
8. Environmental Monitoring:<\/p>\n
Dunigan Fuels will help with the Environmental Monitoring of Kmart’s
\n locations. This monitoring will be secondary to on-site monitoring of fuel
\n leaks and alarms. Environmental Monitoring will commence upon the signing
\n of a mutually agreed upon Environmental Monitoring Plan. This plan will be
\n established within 180 days of the signing of this agreement. If, in fact,
\n on-site monitoring is unavailable by Dunigan Fuels due to lack of systems
\n or other reasons, fees (margin) will be reduced by (CONFIDENTIAL) per
\n gallon.<\/p>\n
9. Federal and Local Fuel Taxes:<\/p>\n
Dunigan Fuels shall collect for Kmart all required federal, state, and
\n local taxes, including, without limitation, any additional fees or taxes
\n which may be levied or imposed in connection with the sale, transportation,
\n delivery or use of the Products at the Locations. Dunigan Fuels shall pay
\n all such taxes promptly to the appropriate authority within the time frame
\n required and indemnify, defend and hold Kmart harmless therefrom.<\/p>\n
10. Fuel Procurement<\/p>\n
It is the intent of Dunigan Fuels and Kmart to use whichever method
\n necessary to procure fuel at the lowest available cost. The current methods
\n used to procure fuel for this agreement will be having Dunigan Fuels buy
\n the fuel on its account, Kmart buying the fuel on their account, and using
\n Internet based auctions. In the future other methods may be identified and
\n used. Under all methods Dunigan Fuels will still monitor and perform its
\n services and still be entitled to the margin addressed in this agreement.
\n Any rebates earned and received by Dunigan Fuels from a specific refiner
\n will be prorated to Kmart based on Kmart’s item percentage of Dunigan
\n Fuels’ volume with that specific refiner. If Dunigan’s pricing is below
\n OPIS Low after taking into account any such rebates, Dunigan will share the
\n savings below OPIS Low with Kmart on the basis of (CONFIDENTIAL) of such
\n savings to Dunigan and (CONFIDENTIAL) of such savings to Kmart.<\/p>\n
11. Performance Reporting:<\/p>\n
Dunigan Fuels will provide to Kmart on a quarterly basis performance
\n reporting. Performance reporting will be how well fuel was procured
\n compared to the Oil Price Information System. The price fuel was procured
\n at will be compared to the OPIS Average and OPIS Low price for every
\n location. Racks to be mutually agreed upon by Kmart and Dunigan Fuels.
\n Failure to perform at or below the OPIS Low published price over any
\n quarter for any location will be grounds for termination of that location
\n from the fuel management services agreement at Kmart’s discretion. In times
\n of Natural Disaster, Government Intervention, or other events out of the
\n control of both parties that create abnormal price conditions, may affect
\n the performance reporting, these days will be excluded from any performance
\n reporting. Days excluded to be agreed upon by both parties. In addition, if
\n Dunigan is buying fuel on its own account, failure to perform at OPIS Low,
\n after taking into account all applicable rebates will result in a
\n (CONFIDENTIAL) reduction in fees to Dunigan based on gallons purchased in
\n that period for the specific location. Performance below OPIS Low will
\n result in a sharing of savings with Kmart on the basis of (CONFIDENTIAL) of
\n such savings to Dunigan and (CONFIDENTIAL) of such savings to Kmart for the
\n location.<\/p>\n
12. Freight:<\/p>\n
Dunigan Fuels will coordinate the delivery of fuel to Kmart’s fuel centers
\n using common carriers. Freight rates will be provided to Kmart on a cost
\n basis.<\/p>\n
13. Handling Credits and Float Rebates:<\/p>\n
The Handling Credits collected by Dunigan Fuels from paying taxes for the
\n fuel sold to Kmart will be rebated to Kmart on a quarterly basis. The
\n rebate will be payable 30 days following Kmart’s quarter end. A complete
\n accounting by fuel center of the handling credits will be kept and provided
\n to Kmart with each payment.<\/p>\n
Float Credit – An interest float credit of $.0008 per gallon purchased will
\n be credited on a quarterly basis. The gallons used to determine the amount
\n rebated will be the gallons sold to Kmart that Dunigan Fuels collected and<\/p>\n
2<\/p>\n
46<\/p>\n
paid the federal and state taxes. Any gallons that Kmart has not paid for
\n within the agreed upon payment term will be excluded from the rebate.<\/p>\n
14. Margin<\/p>\n
(CONFIDENTIAL)<\/p>\n
\n\n CUMULATIVE NUMBER OF GALLONS
\n PURCHASED PER GALLON FEE
\n
\n 0 – 5,000,000 gallons (CONFIDENTIAL) per gallon
\n 5,000,001 – 7,500,000 gallons (CONFIDENTIAL) per gallon
\n 7,500,001 – 10,000,000 gallons (CONFIDENTIAL) per gallon
\n 10,000,001 – 12,500,000 gallons (CONFIDENTIAL) per gallon
\n 12,500,001 – 15,000,000 gallons (CONFIDENTIAL) per gallon
\n 15,000,001 – 17,500,000 gallons (CONFIDENTIAL) per gallon
\n 17,500,001 – 20,000,000 gallons (CONFIDENTIAL) per gallon
\n 20,000,001 – 22,500,000 gallons (CONFIDENTIAL) per gallon
\n 22,500,001 – 25,000,000 gallons (CONFIDENTIAL) per gallon
\n 25,000,001 – 27,500,000 gallons (CONFIDENTIAL) per gallon
\n 27,500,001 – 30,000,000 gallons (CONFIDENTIAL) per gallon
\n 30,000,001 – 32,500,000 gallons (CONFIDENTIAL) per gallon
\n 32,500,001 – 35,000,000 gallons (CONFIDENTIAL) per gallon
\n 35,000,001 – 37,500,000 gallons (CONFIDENTIAL) per gallon
\n 37,500,001 – 40,000,000 gallons (CONFIDENTIAL) per gallon
\n 40,000,001 + gallons (CONFIDENTIAL) per gallon
\n<\/c><\/s><\/caption>\n<\/table>\n 3<\/p>\n
47<\/p>\n
SCHEDULE 1.3<\/p>\n
(CONFIDENTIAL)<\/p>\n
48<\/p>\n
SCHEDULE 1.4<\/p>\n
HIGH VELOCITY PRODUCTS<\/p>\n
(CONFIDENTIAL)<\/p>\n
49<\/p>\n
SCHEDULE 2<\/p>\n
LOGISTICS SERVICES<\/p>\n
Inbound receiving and storage of product <\/p>\n
Order selection and loading, routing and scheduling <\/p>\n
Maintaining an inventory to enable Fleming to supply products timely <\/p>\n
Inventory control and quality assurance, and stock rotation <\/p>\n
Fruit ripening <\/p>\n
Inventory management <\/p>\n
Transportation management (backhaul, consolidation, carrier selection, freight
\nbill audit and forward to Kmart for payment, pallet and tote return pursuant to
\nagreed procedures) – At Kmart’s option, Fleming shall provide transportation
\nservices and select third party transportation providers reasonably acceptable
\nto Kmart<\/p>\n
50<\/p>\n
SCHEDULE 4A<\/p>\n
SERVICE REQUIREMENTS<\/p>\n
Fleming shall exercise commercially reasonable efforts to
\nachieve service levels for Product categories described below:<\/p>\n
\n\n————————— ————- —————– —————————————— —————
\n MINIMUM
\n YEAR 2 AND SERVICE LEVELS
\n YEAR 1 THEREAFTER (BEGINNING ON THE TERMINATION
\n CATEGORY TARGET (1) TARGET EFFECTIVE DATE) PERIOD
\n————————— ————- —————– —————————————— —————
\n
\nPerishables 97 97 14 day rolling average greater than 96% 90
\n 5 day rolling average greater than 95%
\n————————— ————- —————– —————————————— —————
\nGrocery, Frozen, Dairy 96.25 97 28 day rolling average greater than 95% 90
\n 5 day rolling average greater than 94%
\n————————— ————- —————– —————————————— —————
\nHBC and GMD TBD TBD TBD TBD
\n————————— ————- —————– —————————————— —————
\n<\/c><\/c><\/c><\/c><\/s><\/caption>\n<\/table>\n(1) The “Target” service level in Year 1 shall be effective beginning on
\n the 90th day following the commencement of supply by Fleming to Kmart
\n for each Distribution Center.<\/p>\n
The failure to achieve the service level requirements set forth herein
\nas targets does not constitute a material breach of this Agreement, except as
\nprovided below. Upon failure to achieve any minimum service level for any sixty
\n(60) days during any 365 consecutive day period at any Distribution Center, a
\nmember of the Account Team appointed by Kmart shall present the matter to a
\ndesignated committee of executive officers of each party to resolve the issue.
\nIf such officers are unable to agree on a plan to resolve the matter, or if the
\nservice level deficiencies persist after implementing the actions recommended by
\nthe executive officers, Kmart shall have the right, but not the obligation, to
\nrefer the matter to an independent third party consultant approved by Fleming
\n(the “Consultant”) to review the situation and recommend an action plan to
\nincrease service levels to an acceptable level. The recommendations of the
\nConsultant shall not be binding on the parties, but the parties shall seek in
\ngood faith to implement any such recommendations. The fees and expenses of the
\nConsultant shall be borne by the parties equally.<\/p>\n
A material breach of this Agreement with respect to service level
\nrequirements shall occur only if Fleming fails to achieve any minimum service
\nlevel for any 120 days during any 365 consecutive day period.<\/p>\n
“Service level” shall be measured weekly by the number of full cases
\ndelivered as compared to the number of full cases ordered (net of discontinued
\nitems ordered inadvertently). The failure to deliver Products ordered by Kmart
\ndue to vendor outs or unavailable Products, if either of such conditions exist
\nfor a continuous period of thirty (30) days, except with respect to seasonal
\nPerishables, if such conditions exist for a continuous period of seven days, or
\ndue to discontinued items, materially inaccurate forecasting of Product needs by
\nKmart or materially inadequate order lead time by Kmart shall not be included in
\nthe calculation of the service level.<\/p>\n
Nothing contained herein shall establish service levels for Stores in
\nHawaii, which shall be evaluated separately, and the parties shall, within a
\nreasonable time, agree upon standards for service levels for Products sold to
\nStores in Hawaii.<\/p>\n
51<\/p>\n
SCHEDULE 4B<\/p>\n
QUALITY ASSURANCE AND FOOD SAFETY GUIDELINES<\/p>\n
1. Each Distribution Center will receive two unannounced ASI Inspections
\n annually. Scores of 900 or above are required. Any Distribution Center
\n receiving a score of less than 900 will require a re-inspection after
\n corrections of the deficiencies. ASI inspection documents will be
\n available for review by Kmart.<\/p>\n
2. Each Distribution Center supplying perishable Products to Super K
\n Stores will have a minimum of two Quality Control Inspectors (one for
\n Deli\/Bakery & Meat, one for Produce).<\/p>\n
3. Kmart will provide perishable product specifications by department to
\n Fleming for receiving and shipping of product to be shipped to Kmart
\n stores. No product will be shipped outside of specifications without
\n prior approval from Kmart. Dating standards as shown below will apply
\n to these specifications.<\/p>\n
4. All existing quality assurance guidelines will continue as shown below,
\n including unannounced quality audits to insure processes are in place
\n to meet specifications.<\/p>\n
5. All inbound shipments must adhere to an incoming goods inspections
\n process as identified by ASI.<\/p>\n
6. Minimum dating standards for retail delivery are as follows:<\/p>\n
\n
\n Cheese – 21 days from Expiration Date<\/p>\n Margarine – 21 days from Expiration Date<\/p>\n
Cultured Product – 7 days from Expiration Date<\/p>\n
Dough Product – 7 days from Expiration Date<\/p>\n
Refrigerated Juice – 7 days from Expiration Date<\/p>\n
Packaged Meat – 14 days from Expiration Date<\/p>\n
Box Beef – 30 days from Pack<\/p>\n
Poultry – 5 days from Expiration Date<\/p>\n
Pork – 18 days from Pack<\/p>\n
Deli Meats – 14 days from Expiration Date<\/p>\n
Deli Salads – 7 days from Expiration Date<\/p>\n
Gourmet Deli Cheeses – 14 days from Expiration Date<\/p>\n
Domestic Deli Cheese – 21 days from Expiration Date<\/p>\n
Frozen Deli – 14 days from Expiration Date<\/p>\n
Fresh Poultry (cvp) – 5 days from Expiration Date<\/p>\n
All Bakery – 14 days from Expiration Date
\n<\/c><\/c><\/s><\/table>\n
52<\/p>\n
– All dry grocery Products delivered to the Stores shall have at least 45
\n days remaining until their expiration date (except for private label
\n Products which will have the time remaining until their respective
\n expiration dates. All perishable Products shall have at least the
\n number of days remaining until the expiration date as is usual and
\n customary in the supermarket industry for products of that kind. Other
\n Products will be handled by the parties on a case by case basis by
\n rejection or with appropriate consideration for price reductions.<\/p>\n
– Upon delivery, refrigerated and frozen foods will be the proper
\n temperature and show no evidence of temperature abuse, i.e., thaw and
\n refreeze. The Stores will reject any Product shipment that has evidence
\n of temperature abuse.<\/p>\n
– Fleming’s distribution centers, both refrigerated and dry, must comply
\n with all federal, state and local health codes. Inspection reports,
\n including internal Fleming reports will be made available to Kmart upon
\n request. This includes pest control inspection reports.<\/p>\n
– All deliveries must be free of infestation or any evidence of
\n infestation by rodents and insects, including stored product pests. The
\n Stores will reject any Product shipment that has evidence of
\n infestation.<\/p>\n
– Products will be shipped in a manner so as to prevent contamination and
\n adulteration between food and chemicals.<\/p>\n
– Delivery vehicles must be clean, free of infestation, and odors, which
\n could indicate improper cleaning and sanitizing of delivery trucks.
\n Trailers used to ship food products may not be used to back haul
\n garbage, chemicals, trash or any items that may impart noxious odors
\n that could penetrate food.<\/p>\n
– Fleming must immediately notify Kmart of any product recalls from
\n manufacturers.<\/p>\n
– Fleming will accept the return of damaged or otherwise contaminated
\n cases and issue a full credit to Kmart for the return.<\/p>\n
– Kmart food safety personnel will be permitted to visit all Fleming’s
\n Distribution Centers supplying Products to Kmart with appropriate
\n coordination with Fleming.<\/p>\n
53<\/p>\n
SCHEDULE 4C<\/p>\n
SHRINK AUDIT PROCEDURE<\/p>\n
FLEMING \/ KMART SHORTAGE STANDARD<\/p>\n
Fleming will develop a Shortage Standard from actual YTD 2000 shortage credits
\nissued to Big K and Super K. The Shortage Standard will be calculated by
\nDistribution Center. Payment will be made by check within fours week after each
\nquarter end. Distribution Centers with no Kmart credit history will be
\ncalculated as a composite average of all Distribution Centers excluding from the
\ncalculation those Divisions with the highest and lowest shortage history. Rates
\nwill be adjusted quarterly. As soon as practicable after the Effective Date, and
\nin any event prior to March 31, 2001, the parties shall establish an initial
\nshortage standard rate to be applicable upon the commencement of Fleming’s
\nsupply of incremental volume of Products pursuant to this Agreement.<\/p>\n
Kmart will randomly supply associates to participate in the case count audit
\nprocess on Fleming’s dock. Quarterly, the Shortage Standard will be based on
\ncollaborative audit team findings by Kmart and Fleming associates from these
\ndock audits. Absent Kmart input, the rollup of Fleming internal 4% case count
\naudit results from the preceding quarter will apply.<\/p>\n
All case count audits will be conducted on Fleming’s dock during normal shipping
\nhours. Both parties agree to minimize disruption to shipping and on time
\ndockout.<\/p>\n
Large identifiable shortages (e.g. missing pallets) will be addressed on an
\nindividual basis. Kmart and Fleming loss control will work together at retail to
\naddress consistent claims outside the program. Fresh Meat, Frozen Shrimp,
\nCigarettes and Produce Nut Meats will be piece counted at time of delivery.<\/p>\n
Fleming and Kmart will enforce the current Seal Procedure and identify lapses.
\nSeal Procedure is set forth below.<\/p>\n
Label errors (mis-picks) will be addressed as part of Fleming’s retail credit
\npolicy.<\/p>\n
KMART SEAL PROCEDURE<\/p>\n
1. Once the trailer loading is completed, a Fleming associate will close
\n the doors and secure the load consistent with the specific division
\n security procedures.<\/p>\n
2. Billing clerk will then process the necessary paperwork, and assign the
\n security seals for the load. The seal number for each of the stops will
\n be written directly on the delivery receipt or driver run document. An
\n additional seal will be issued for use if the trailer has a side door.<\/p>\n
3. Before the trailer leaves the yard, Fleming Security or the driver will
\n attach the seal for the first stop of the load. Security will verify
\n that the seal number(s) matches the paperwork. At this point, the
\n trailer is sealed and ready to leave Fleming.<\/p>\n
4. Upon arrival to the first stop, the driver will ask the store receiving
\n personnel to break the rear door seal, verify the number and sign the
\n Delivery Receipt or the driver run document confirming that the seal
\n was intact at time of delivery. The driver will also ask the store
\n personnel to confirm, but not remove the seal number for any side
\n doors.<\/p>\n
5. If there is more than one stop on the trailer, the driver will ask the
\n store receiving personnel at the first stop to place a second seal on
\n the trailer, verify the number, and note their name directly on the
\n Delivery Receipt. This process will continue for additional stops.<\/p>\n
6. In the event a seal is broken or does not correspond with the number
\n recorded on the Delivery Receipt, the driver and store receiving
\n personnel must call Fleming Customer Service immediately. Fleming will
\n verify the seal number and confirm that Fleming Security did not make
\n any changes. At this point, the load must be counted by the driver and
\n verified by the store.<\/p>\n
54<\/p>\n
SCHEDULE 4D<\/p>\n
AUDIT PROCEDURES<\/p>\n
Kmart has the right to audit Fleming’s books and records regarding Product cost
\nfiles and selling prices and charges, allowances, and freight calculations
\nrelating to Fleming’s performance of and compliance with this Agreement upon
\nreasonable advance notice to Fleming. Fleming must maintain its books and
\nrecords in a manner that facilitates a full and complete review of Fleming’s
\nperformance of and compliance with this Agreement. All such books and records
\nwill be available for audit by Kmart for the current prior 12 accounting periods
\n(i.e. for a “rolling” thirteen periods). The books and records will be
\nmaintained on-site at each Distribution Center for the Stores serviced by that
\nDistribution Center for the current and six prior accounting periods (a
\n“rolling” seven periods), and thereafter, the books and records will be
\nmaintained off-site by Fleming and will be made available and retrieved by
\nFleming upon a specific request by Kmart to audit an identified issue. The
\naudits may be conducted by Kmart or its third party designee and will be
\nconducted at each individual Distribution Center. Kmart and Fleming will each
\nbear their own costs associated with the audits.<\/p>\n
55<\/p>\n
SCHEDULE 4E<\/p>\n
MANAGEMENT REPORTS<\/p>\n
KEY PERFORMANCE INDICATORS<\/p>\n
Service Level<\/p>\n
\n\n ———————————————————————————————————————–
\n Reporting Frequency ADJ NonFleming RAW Fleming
\n ———————————————————————————————————————–
\n REPORTING LEVELS DAY ROLLING ROLLING SERVICE SERVICE
\n WEEK PERIOD LEVEL Discon New Mfg UnAval Rstrc LEVEL Whse Mdsr Alloc
\n ———————————————————————————————————————–
\n
\n Total Company X X X
\n ———————————————————————————————————————–
\n Division X X X
\n ———————————————————————————————————————–
\n Ad Product X X X
\n ———————————————————————————————————————–
\n Department X X X
\n ———————————————————————————————————————–
\n “A” X X
\n Items
\n ———————————————————————————————————————–
\n “B” X X
\n Items
\n ———————————————————————————————————————–
\n “C” X X
\n Items
\n ———————————————————————————————————————–
\n “D” X X
\n Items
\n ———————————————————————————————————————–
\n<\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/s><\/caption>\n<\/table>\nDelivery<\/p>\n
\n\n ———————————————-
\n Reporting Frequency
\n ————————————————————————————————–
\n REPORTING LEVELS DAY WEEK PERIOD CUBE\/ % ON % Units Pallet TOTE
\n LOAD TIME Damaged BALANCE BALANCE
\n ——-
\n ————————————————————————————————–
\n
\n Total Company X X
\n ————————————————————————————————–
\n Division X X X
\n ————————————————————————————————–
\n<\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/s><\/caption>\n<\/table>\nOutstanding A\/R Balance<\/p>\n
\n\n ———————————————-
\n Reporting Frequency
\n ———————————————————————————–
\n REPORTING LEVELS DAY WEEK PERIOD % INVOICES WITH PAST DUE
\n DEDUCTIONS BALANCE
\n ———————————————————————————–
\n
\n Total Company X X
\n ———————————————————————————–
\n Division X X
\n ———————————————————————————–
\n<\/c><\/c><\/c><\/c><\/c><\/s><\/caption>\n<\/table>\nOrdering and Case Value<\/p>\n
\n\n ———————————————-
\n Reporting Frequency
\n ————————————————————————————————————————
\n REPORTING LEVELS DAY WEEK PERIOD AVG CASE AVG ORDER ORDERS
\n Total Company X
\n ————————————————————————————————————————
\n Division X
\n ————————————————————————————————————————
\n Ad Product X
\n ————————————————————————————————————————
\n Department X
\n ————————————————————————————————————————
\n<\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/c><\/caption>\n<\/table>\n 56<\/p>\n
\n\n ———————————————-
\n Reporting Frequency
\n ———————————————————————–
\n REPORTING LEVELS DAY WEEK PERIOD FORECAST % BIG LOT
\n ACCURACY PALLETS
\n ———————————————————————–
\n
\n Total Company X
\n ———————————————————————–
\n Division X
\n ———————————————————————–
\n Ad Product X
\n ———————————————————————–
\n Department X
\n ———————————————————————–
\n<\/c><\/c><\/c><\/c><\/c><\/s><\/caption>\n<\/table>\nItem Assortment & Movement<\/p>\n
\n\n ———————————————-
\n Reporting Frequency
\n ———————————————————————————-
\n REPORTING LEVELS DAY WEEK PERIOD ITEM MVMT ITEM
\n Total Company X
\n ———————————————————————————-
\n Division X
\n ———————————————————————————-
\n Ad Product X
\n ———————————————————————————-
\n Department X
\n ———————————————————————————-
\n<\/c><\/c><\/c><\/c><\/c><\/c><\/caption>\n<\/table>\nItems with low movement<\/p>\n
Super K Going In Gross Reports as current<\/p>\n
57<\/p>\n
SCHEDULE 5<\/p>\n
(CONFIDENTIAL)<\/p>\n
LOGISTICS FEES<\/p>\n
(CONFIDENTIAL)<\/p>\n
58<\/p>\n
SCHEDULE 5A
\n (CONFIDENTIAL)<\/p>\n
59<\/p>\n
SCHEDULE 5B<\/p>\n
ACCOUNTS RECEIVABLE RECONCILIATION<\/p>\n
The parties shall commit to apply required joint Kmart \/ Fleming team resources
\nto work with diligence and good faith to eliminate in next sixty (60) days
\ncurrent inter-company process bottlenecks and inefficiencies that lead to
\nincreased A\/R balances and delivery errors. These inefficiencies include, but
\nare not limited to:<\/p>\n
– Centralized control, setup and propagation of new items to all
\n Kmart supplying divisions;<\/p>\n
– Develop a process to handle invoice charges not specific to
\n one line item and miscellaneous (“hand invoice”) charges;<\/p>\n
– Address processing summary drops in lieu of “line-item” drops;<\/p>\n
– ASN failures<\/p>\n
– Lack of a fully implemented ASN system; and<\/p>\n
– Lack of uniform common items codes.<\/p>\n
60<\/p>\n
SCHEDULE 10<\/p>\n
TRANSITION MILESTONES<\/p>\n
\n\n——————————————————————————————————————————-
\nSTART UP TIME LINE
\n——————————————————————————————————————————-
\n 30 DAYS 60 DAYS 90 DAYS 120 DAYS 150 DAYS 180 DAYS
\n——————————————————————————————————————————-
\n
\n 22-Apr
\n——————————————————————————————————————————-
\nFRESNO
\n——————————————————————————————————————————-
\n 22-Apr
\n——————————————————————————————————————————-
\nSACRAMENTO
\n——————————————————————————————————————————-
\n 6-May
\n——————————————————————————————————————————-
\nMEMPHIS
\n——————————————————————————————————————————-
\n 6-May
\n——————————————————————————————————————————-
\nNASHVILLE
\n——————————————————————————————————————————-
\n 6-May
\n——————————————————————————————————————————-
\nMIAMI
\n——————————————————————————————————————————-
\n 1-Apr
\n——————————————————————————————————————————-
\nWARSAW
\n——————————————————————————————————————————-
\n 13-May
\n——————————————————————————————————————————-
\nKANSAS CITY
\n——————————————————————————————————————————-
\n 13-May
\n——————————————————————————————————————————-
\nGARLAND
\n——————————————————————————————————————————-
\n 13-May
\n——————————————————————————————————————————-
\nLAFAYETTE
\n——————————————————————————————————————————-
\n 22-Apr
\n——————————————————————————————————————————-
\nPHOENIX
\n——————————————————————————————————————————-
\n 3-Jun
\n——————————————————————————————————————————-
\nSALT LAKE CITY
\n——————————————————————————————————————————-
\n 3-Jun
\n——————————————————————————————————————————-
\nGENEVA
\n——————————————————————————————————————————-
\n 30-Jun
\n——————————————————————————————————————————-
\nLACROSSE
\n——————————————————————————————————————————-
\n 30-Jun
\n——————————————————————————————————————————-
\nNORTHEAST
\n——————————————————————————————————————————-
\n 30-Jun
\n——————————————————————————————————————————-
\nINDIANA
\n——————————————————————————————————————————-
\n 30-Jun
\n——————————————————————————————————————————-
\nNORTHWEST
\n——————————————————————————————————————————-
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