FIRST AMENDED AND RESTATED
PROCESSING AGREEMENT
THIS FIRST AMENDED AND RESTATED PROCESSING AGREEMENT,
dated as of July 31, 1995, by and among XXXXXXX COMPANIES, INC.,
an Oklahoma corporation ("Xxxxxxx"), having a notice address at
0000 Xxxxxxxxx Xxxxxxxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000, and
certain undersigned subsidiaries of Xxxxxxx, the names and
addresses of which are listed on Schedule 2 hereto (collectively,
the "Subsidiaries"), COUPON REDEMPTION, INC., a Tennessee
corporation ("CRI"), having a notice address at 000 Xxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx 00000, and SEVEN OAKS
INTERNATIONAL, INC., a Tennessee corporation ("Seven Oaks"),
having a notice address at 000 Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxx 00000;
W I T N E S S E T H:
WHEREAS, Xxxxxxx, CRI and Seven Oaks are parties,
together with Acorn Holdings, LLC, a Tennessee limited liability
company, to that certain Stock Purchase and Debt Modification
Agreement dated as of September 7, 1994 (the "Stock Purchase
Agreement");
WHEREAS, pursuant to the Stock Purchase Agreement,
Xxxxxxx agreed to purchase the Xxxxxxx Shares (as defined in the
Stock Purchase Agreement) for consideration described therein;
WHEREAS, the Stock Purchase Agreement contains
certain other covenants and undertakings, including without
limitation the agreement that CRI shall become the exclusive
processor for coupons for Xxxxxxx and the Subsidiaries pursuant
to the Processing Agreement (as defined in the Stock Purchase
Agreement);
WHEREAS, the Processing Agreement provides for the
terms and conditions pursuant to which CRI shall process coupons
for Xxxxxxx and the Subsidiaries, which are collectively referred
to in the Processing Agreement as the "Xxxxxxx Parties" and
individually, as a "Xxxxxxx Party";
WHEREAS, subsequent to September 7, 1994, certain of
the Subsidiaries were merged into Xxxxxxx or other wholly owned
subsidiaries of Xxxxxxx;
WHEREAS, Schedule 2, as amended by this Agreement,
accurately sets forth the names of each Xxxxxxx Party and the
trade name under which such Xxxxxxx Party operates;
WHEREAS, subsequent to execution of the Processing
Agreement, CRI, and Seven Oaks executed a letter of intent with
Xxxxxxx, pursuant to which the parties have agreed to make
certain modifications and concessions with respect to the
covenants and undertakings in the Stock Purchase Agreement and
the Processing Agreement;
WHEREAS, this First Amended and Restated Processing
Agreement is intended to implement the terms of the letter of
intent with respect to coupon processing services for independent
retailers supplied by Xxxxxxx, to provide the fees to be charged
for such services, to provide for termination of the Processing
Agreement and other non-competition agreements under certain
conditions and certain additional matters;
WHEREAS, it is the intent of the parties to amend the
Processing Agreement so that it provides the terms and conditions
pursuant to which CRI shall perform coupon processing services
for the Xxxxxxx Parties and for all independently owned retailers
for whom Xxxxxxx serves as the principal supplier of food and
related products ("Xxxxxxx Supplied Retailers"); and
WHEREAS, although the Xxxxxxx Supplied Retailers will
not be parties to this Agreement, it is the purpose of this
agreement to set forth the terms and conditions, as between
Xxxxxxx and CRI, upon which CRI shall agree to provide coupon
processing services for the benefit of the Xxxxxxx Supplied
Retailers.
NOW THEREFORE, in consideration of the premises and
intending to be legally bound hereby, the parties hereby agree as
follows:
1. Services of CRI.
1.1 Xxxxxxx Parties. By its acceptance
hereof, CRI agrees to perform the following services for the
Xxxxxxx Parties:
1.1.1 To act as the Xxxxxxx Parties'
sorting agent, to receive, sort, count and submit on Xxxxxxx'x
invoice to the distributing manufacturers all valid coupons
submitted by any of the Xxxxxxx Parties to CRI within 10 days of
receipt of coupons in CRI's El Paso, Texas office, and CRI will
provide reporting as mutually agreed upon from time to time by
Xxxxxxx and CRI. The invoice will instruct the manufacturer or
its representative to make payment thereof by check payable to
Xxxxxxx submitted directly to Xxxxxxx or to a bank account
designated by Xxxxxxx as reflected on such invoice. In the event
any such invoice payment should be received by CRI, CRI shall
remit same to Xxxxxxx within twenty four (24) hours of its
receipt thereof. All coupons not processed by CRI will be
returned to Xxxxxxx within 30 days after CRI's receipt thereof in
CRI's El Paso, Texas office.
1.1.2 Be responsible for the cost of
shipping and coupon transit insurance coverage from the time
coupons are shipped from CRI in El Paso, Texas and until the
coupons are delivered to the distributing manufacturer or
returned to Xxxxxxx as provided in Section 1.1.1 above.
1.1.3 Be responsible for all supply,
computer, and all other costs required to perform the functions
listed in 1.1.1 above.
1.1.4 CRI will perform its service in
accordance with good commercial practices and industry
procedures.
1.1.5 CRI will maintain the Xxxxxxx
Parties' accounts receivable records with respect to the coupons
covered by this Agreement, with the Xxxxxxx Parties' providing
information necessary for such purpose.
1.1.6 CRI acknowledges that it will
acquire no right, title or interest in coupons submitted to it
for processing pursuant to this Agreement or, except for the
right to receive payment of the Processing Fee (as hereinafter
defined), in the proceeds of such coupons.
1.1.7 CRI agrees to provide to each of
the Xxxxxxx Parties all of the coupon processing and related
services (consistent with the pay-direct method) currently being
provided to such Xxxxxxx Parties for the Processing Fee set forth
on Schedule 2 attached hereto including but not limited to (1)
postage, freight and insurance reimbursement pertaining to the
transmittal of coupons to manufacturers, their designees or
clearing houses and (2) cash application and invoice matching
services by vendor. CRI's failure or inability to provide all of
the coupon processing and related services (consistent with the
pay-direct method) currently provided for the same Processing Fee
set forth on Schedule 2 shall constitute a material breach of
CRI's obligations under this Processing Agreement giving Xxxxxxx
the right to terminate this Processing Agreement, subject to
notice and opportunity to cure, as described in Section 5.1.2.2
hereof.
1.2 Xxxxxxx Supplied Retailers. The program
pursuant to which CRI provides coupon processing services to
Xxxxxxx Supplied Retailers shall be referred to herein as the
"Xxxxxxx Coupon Processing Program". CRI agrees to act as the
sorting agent pursuant to the Xxxxxxx Coupon Processing Program
for those Xxxxxxx Supplied Retailers who choose to utilize the
services of CRI and to provide the same services to such parties
as are set forth in Section 1.1 hereof.
1.2.1 Processing Fee. During the term
of this Agreement, CRI agrees to provide to the Xxxxxxx Supplied
Retailers all of the coupon processing and related services which
are being (consistent with the pay-direct method) currently being
provided to the Xxxxxxx Parties hereunder for the following
Processing Fee:
1.2.1.1 For a period of one
year following the Effective Date (as hereinafter defined), the
Processing Fee shall be $7.95 for each 1,000 coupons processed.
1.2.1.2 For the second year
following the Effective Date, commencing on the first anniversary
of the Effective Date, the coupon processing fee for Xxxxxxx
Supplied Retailers shall be $5.95 per 1,000 coupons.
1.2.1.3 Thereafter, the
Processing Fee for Xxxxxxx Supplied Retailers shall be mutually
agreed upon by Xxxxxxx and CRI. If no agreement regarding such
Processing Fees can be reached for the period commencing on the
second anniversary of the Effective Date, this Agreement shall be
extended for an additional period of one year at the then current
Processing Fee.
2. Terms of Payment.
2.1 By its acceptance of this Agreement, each
Xxxxxxx Party agrees to pay CRI the amount determined in
accordance with Schedule 2 hereto. Amounts payable pursuant to
this Section 2 are herein called the "Processing Fees".
2.2 Until the Remaining Account Indebtedness
(as hereinafter defined in Section 5) has been paid in full, all
Processing Fees shall be paid, disbursed and applied in
accordance with the provisions of Schedule 1 attached to and
forming part of this Agreement. Thereafter, such Processing Fees
shall be payable within 15 days after Xxxxxxx'x receipt of CRI's
detailed invoice therefor in a form prescribed by Xxxxxxx.
2.3 The fees payable under the Xxxxxxx Coupon
Processing Program shall be payable within 15 days after
Xxxxxxx'x receipt of CRI's detailed invoice therefor in a form
prescribed by Xxxxxxx.
3. Warranties and Obligations. Each Xxxxxxx Party
and each Xxxxxxx Supplied Retailer shall submit to CRI only
coupons which have been received by it in accordance with the
terms specified by the distributing manufacturer.
4. Termination.
4.1 With respect to coupon processing
services for Xxxxxxx Parties, this Agreement may be cancelled by
Xxxxxxx or CRI at any time, for any reason, by giving 90 day
written notice to the other party. This Agreement shall
terminate at the election of CRI after 15 days written notice of
a breach of any obligation herein, which has not been corrected
during the 15 day period. The provisions of this Section 4 are
subject to the provisions of Section 5.
4.2 With respect to coupon processing
services for Xxxxxxx Supplied Retailers, commencing 18 months
following the Effective Date, CRI shall have the right to
terminate the Processing Agreement by giving Xxxxxxx six months
prior written notice of such termination (the "Termination
Notice"). Following delivery by CRI of a Termination Notice,
Xxxxxxx shall be entitled to solicit coupon processing business
from any retailers who are not then Xxxxxxx customers and all
covenants and agreements pursuant to which Xxxxxxx has agreed not
to compete with CRI shall thereupon terminate.
5. Special Provisions.
5.1 Xxxxxxx and CRI are also parties to the
Stock Purchase Agreement which, among other things, makes
provision for application by Xxxxxxx of a portion of the payments
due CRI hereunder toward payment of the Remaining Account
Indebtedness (as defined in the Stock Purchase Agreement).
Notwithstanding any provision of this Agreement to the contrary,
Xxxxxxx, all other Xxxxxxx Parties and CRI mutually agree that,
until the Remaining Account Indebtedness has been paid in full:
5.1.1 The provisions set forth in
Schedule 1 attached to and forming part of this Agreement shall
be applicable.
5.1.2 Neither Xxxxxxx nor CRI will
exercise its right to terminate this Agreement pursuant to the
provisions of Section 4 of this Agreement, except that Xxxxxxx
may terminate this Agreement in the following circumstances and
manner only.
5.1.2.1 If, without the prior
written approval of Xxxxxxx, Xxxxx X. Xxxxxx shall cease to be
employed as the Chief Executive Officer of Seven Oaks otherwise
then by termination of such employment by Seven Oaks for "Cause"
(as defined in Employment Agreement of even date herewith between
Seven Oaks and Xxxxx X. Xxxxxx), then Xxxxxxx may terminate this
Agreement on not less than thirty days written notice from
Xxxxxxx to CRI and Seven Oaks; and
5.1.2.2 If CRI shall fail or
refuse in any material respect to perform its obligations under
this Agreement, and such failure or refusal shall continue for a
period of thirty (30) days after written notice to CRI from
Xxxxxxx specifying the default to be remedied, then Xxxxxxx shall
have the right to terminate this Agreement without further notice
to CRI; provided, however, if the nature of such failure or
refusal to perform on the part of CRI is such that it cannot
reasonably be remedied within said thirty (30) day period,
Xxxxxxx shall not have the right to terminate this agreement by
reason thereof if CRI commences its efforts to remedy within said
thirty (30) day period and diligently pursues such efforts to
remedy such default as soon as reasonably possible.
6. Non-Competition. On the Effective Date, the
non-competition covenants contained in that certain Agreement
dated May 12, 1986 between CRI and Xxxxxx & Hyde, Inc.,
predecessor in interest of Xxxxxxx, shall terminate. Provided,
however, during the term of this Agreement, Xxxxxxx shall not
solicit coupon processing business from retailers who are not
then Xxxxxxx customers or who do not become Xxxxxxx customers,
except for those Retailers who are currently participants in
Xxxxxxx'x Coupon Processing Program on May 10, 1995.
7. Performance Standards. All performance
standards and obligations described in that certain letter dated
May 10, 1995 from Xxxxxxx X. Xxxxxx, Director, Retail Financial
Services of Xxxxxxx, to Xxxxx Xxxxxx, Chairman of Seven Oaks (the
"Performance Standards Letter"), a copy of which is attached
hereto as Schedule 3 and incorporated herein by this reference,
shall be a part of this Agreement and all rights and obligations
of Xxxxxxx and Seven Oaks shall be and become a part of this
Agreement as if fully set forth herein. References in the
Performance Standards Letter to Seven Oaks shall be deemed to be
references to Seven Oaks or CRI, as the context of such letter
shall require.
8. Effective Date. This Agreement shall be
effective as of June 1, 1995 (the "Effective Date").
9. [CONFIDENTIAL] Payables. CRI has delivered to
Xxxxxxx a schedule of all [CONFIDENTIAL] amounts (the
"[CONFIDENTIAL] Amounts") owed by CRI or Seven Oaks to those
Xxxxxxx Supplied Retailers who were customers of [CONFIDENTIAL]
(the "[CONFIDENTIAL] Customers"). Seven Oaks represents to
Xxxxxxx that the [CONFIDENTIAL] Amounts are true, complete and
correct as of the date on which such schedule was provided to
Xxxxxxx. On the date hereof, a revised schedule of the
[CONFIDENTIAL] Amounts has been delivered to Xxxxxxx which is
also true, complete and correct. From and after the Effective
Date, to the extent [CONFIDENTIAL] Customers have deducted from
their Xxxxxxx statements any portion of the [CONFIDENTIAL]
Amounts, Xxxxxxx shall be authorized to deduct [CONFIDENTIAL] of
the sorting fee payable to CRI until Xxxxxxx has recovered all
[CONFIDENTIAL] Amounts which have been deducted from Xxxxxxx
statements; provided, however, the amount which may be deducted
by Xxxxxxx from the sorting fees shall not exceed $[CONFIDENTIAL]
per month. The [CONFIDENTIAL] Amounts shall be reduced by any
deduction made by Xxxxxxx from sorting fees otherwise due to CRI.
To the extent the [CONFIDENTIAL] Accounts are not recovered by
Xxxxxxx by deduction from sorting fees payable to CRI, CRI agrees
to pay such [CONFIDENTIAL] Amounts, plus interest at the rate of
twelve percent (12%) per annum, commencing on the Effective Date
in accordance with the terms of Schedule 4 attached hereto and
made a part hereof. The failure by CRI to pay such
[CONFIDENTIAL] Amounts in accordance with Schedule 4 shall
constitute a material default by CRI of the terms of this
Agreement, and Xxxxxxx shall be entitled to avail itself of all
remedies provided by law, for itself and for the benefit of the
unpaid [CONFIDENTIAL] Customers, including without limitation,
termination of this Agreement and all other obligations of
Xxxxxxx to CRI and Seven Oaks.
10. No Assumption by Xxxxxxx. Commencing on the
Effective Date, notwithstanding the provision of Section 6 above,
all ECS Customers shall be entitled to switch to the Xxxxxxx
Coupon Processing Program described in this Agreement.
Notwithstanding the foregoing, all amounts payable by CRI to the
ECS Customers shall remain the sole responsibility of CRI and
Seven Oaks and Xxxxxxx shall not assume any liability to ECS
Customers for repayment of any amounts due, and further, CRI
agrees to indemnify and hold harmless any Xxxxxxx Parties from
any and all liability relating to the ECS customers, including
attorney fees and costs.
11. No Legal Obligation. It is understood and
agreed that Xxxxxxx has no legal right to require the Xxxxxxx
Supplied Retailers to contract for or subscribe to the Xxxxxxx
Coupon Processing Program or utilize the processing services of
CRI or any other processor. This Agreement sets forth the terms
upon which Xxxxxxx and CRI agree that such services will be
provided to the Xxxxxxx Supplied Retailers who choose to utilize
those services.
12. Miscellaneous.
12.1 If any one or more provisions of this
Agreement shall, for whatever reason, be held unenforceable or
invalid, such enforceability or invalidity shall not affect any
other provisions of this Agreement and this Agreement shall be
enforced as if such unenforceable or invalid provisions had not
been contained herein.
12.2 This Agreement shall be binding on the
heirs, representatives, successors and assigns of the undersigned
and shall inure to the benefit of CRI and its successors and
assigns and, except as provided herein, may not be amended
without the prior written consent of CRI. This Agreement may not
be assigned by Xxxxxxx or any other Xxxxxxx Party without prior
written consent of CRI.
12.3 Each of the Xxxxxxx Parties understands
that CRI shall not be liable for special, incidental, indirect or
consequential damages or lost profits as a result of any breach
of this Agreement by CRI and that each Xxxxxxx Party's remedy for
loss, injury or damage resulting from improper or negligent
performance by CRI of its services shall be, at CRI's sole
discretion, reperformance of said services or a refund of the
face amount and processing fee of any coupon or group of coupons
improperly or negligently redeemed or failed to be redeemed by
CRI.
12.4 This Agreement shall not be binding upon
CRI until accepted in writing by a duly authorized officer of CRI
in CRI's offices in Memphis, Tennessee. THIS AGREEMENT SHALL BE
GOVERNED AND CONSTRUED UNDER THE LAWS OF THE STATE OF OKLAHOMA.
EACH XXXXXXX PARTY, CRI AND SEVEN OAKS CONSENT TO JURISDICTION
AND VENUE IN OKLAHOMA COUNTY, OKLAHOMA AND WAIVE ANY RIGHT IT OR
THEY MAY HAVE TO FILE OR OTHERWISE COMMENCE ANY ACTION OR LEGAL
PROCEEDING IN ANY OTHER PLACE OR FORUM.
12.5 This Agreement may be executed in
multiple counterparts, and may be signed by the parties on
different counterparts, each of which counterparts shall be
regarded as an original and all such counterparts shall
constitute but one and the same instrument.
XXXXXXX SUPERMARKETS, INC.
By /s/ Xxxx X. Xxxxxxxx, Xx.
Name: Xxxx X. Xxxxxxxx, Xx.
Title: Treasurer
XXXXXXXX OF KANSAS, INC.
By /s/ Xxxx X. Xxxxxxxx, Xx.
Name: Xxxx X. Xxxxxxxx, Xx.
Title: Treasurer
XXXXXXXX OF PENNSYLVANIA, INC.
By /s/ Xxxx X. Xxxxxxxx, Xx.
Name: Xxxx X. Xxxxxxxx, Xx.
Title: Treasurer
BIG W OF FLORIDA, INC.
By /s/ Xxxx X. Xxxxxxxx, Xx.
Name: Xxxx X. Xxxxxxxx, Xx.
Title: Treasurer
XXXXXXX SUPERMARKETS OF
FLORIDA, INC.
By /s/ Xxxx X. Xxxxxxxx, Xx.
Name: Xxxx X. Xxxxxxxx, Xx.
Title: Treasurer
XXXXXXXX OF NEW YORK, INC.
By /s/ Xxxx X. Xxxxxxxx, Xx.
Name: Xxxx X. Xxxxxxxx, Xx.
Title: Treasurer
XXXXXXX COMPANIES, INC.
By /s/ Xxxxxxx X. Xxxxxx, Xx.
Name: Xxxxxxx X. Xxxxxx, Xx.
Title: Senior Vice President
GATEWAY FOODS, INC.
By /s/ Xxxx X. Xxxxxxxx, Xx.
Name: Xxxx X. Xxxxxxxx, Xx.
Title: Treasurer
SEVEN OAKS INTERNATIONAL, INC.
By /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Chairman and Chief
Executive Officer
COUPON REDEMPTION, INC.
By /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Chairman and Chief
Executive Officer
SCHEDULE 1
Repayment of Remaining Account Indebtedness
A. Until the Remaining Account Indebtedness shall have been
paid or forgiven in full:
1. All invoices to manufacturers pursuant to the
Processing Agreement shall be for the face value of coupons
submitted plus manufacturer's handling fee and shall be payable
by the manufacturer or its representative, directly to Xxxxxxx
or, at Xxxxxxx'x option, into the bank account from time to time
designated by Xxxxxxx in writing to CRI (the "Xxxxxxx Account").
In addition, all invoices to manufacturers pursuant to any
processing agreement hereafter entered into between CRI and any
independent retailer serviced by Xxxxxxx shall be payable by the
manufacturer or its representative, directly to Xxxxxxx or, at
Xxxxxxx'x option, into the Xxxxxxx Account. As used in this
Schedule 1, "Processing Fee" shall mean and include not only
Processing Fees payable pursuant to the Processing Agreement but
also the similar fees payable pursuant to any such processing
agreement with any such independent retailer.
2. Upon receipt of payment of each such invoice
described in paragraph 1 above with respect to Xxxxxxx Parties,
Xxxxxxx will cause the amount of the Processing Fee for coupons
covered by such invoice to be paid, disbursed and applied as
follows: An amount equal to [CONFIDENTIAL] coupons covered by
such invoice shall be paid by check to CRI within fifteen (15)
business days after the date of such invoice; and Xxxxxxx shall
apply the balance of such Processing Fee toward payment of the
Remaining Account Indebtedness until same shall have been
satisfied in full.
3. Except for the application of certain funds to the
Remaining Account Indebtedness as and to the extent expressly
provided for in paragraph 2, above, no Xxxxxxx Party shall assert
or exercise any right of setoff of any amounts owed to any
Xxxxxxx Party against any payments due or amounts owed to CRI
pursuant to the Processing Agreement, unless and until this
Agreement shall have been terminated by Xxxxxxx by exercise of
its right of termination under Section 5 of the Processing
Agreement.
4. To the extent any retailer whose principal supplier
is Xxxxxxx ("Xxxxxxx Supplied Retailer") utilizes CRI for coupon
clearing services on a direct-pay basis to such retailer rather
than by receiving payment through Xxxxxxx or the Xxxxxxx Account,
all Processing Fees received by CRI in excess of [CONFIDENTIAL]
coupons shall be paid to Xxxxxxx and applied to reduce the
Remaining Account Indebtedness. Such payment shall be made by
CRI by wire transfer to an account designated by Xxxxxxx from
time to time within one (1) business day following receipt of
such Processing Fee by CRI. Without Xxxxxxx'x prior written
consent, CRI will not contract to provide coupon processing
services to any Xxxxxxx Supplied Retailer on a basis other than
pay-direct; provided, however, this restriction shall not apply
to any retailer with which CRI has an existing contract or
established relationship for coupon processing services.
5. Not less frequently than bi-monthly, Xxxxxxx shall
provide evidence to CRI of the amount of the unpaid balance of
the Remaining Account Balance, as shown by Xxxxxxx'x books and
records.
X. Xxxxxxx and CRI further agree with respect to the Remaining
Account Balance as follows:
1. If the Processing Agreement is terminated by reason
of Xxxxxxx'x exercise of its right to terminate pursuant to
Section 5 of the Processing Agreement, the then remaining unpaid
balance, if any, of the Remaining Account Indebtedness shall, at
the option of Xxxxxxx and without further notice or demand,
become immediately due and payable in full by CRI.
2. On September 1, 1998 the then remaining unpaid
balance, if any, of the Remaining Account Indebtedness shall in
all events become immediately due and payable in full by CRI.
3. Unless and until any remaining unpaid balance of the
Remaining Account Indebtedness shall have become immediately due
and payable pursuant to paragraph B.1 or B.2, above: (a) Xxxxxxx
will look only to the source of payment described in paragraph
A.2 of this Schedule 1 for payment of the Remaining Account
Indebtedness, and (b) Xxxxxxx shall not otherwise seek recourse
against CRI or its assets for payment of the Remaining Account
Indebtedness.
4. CRI may at its option prepay the Remaining Accounting
Indebtedness, in whole or in part, at any time without premium or
penalty.
SCHEDULE 2
Subsidiaries and Processing Fees
Current Processing Fee
Subsidiary Trade Name (per 1,000 coupons)
Xxxxxxx Supermarkets, Inc. Bakers $[CONFIDENTIAL]
Xxxxxxxx of Kansas, Inc. Boogaarts $[CONFIDENTIAL]
Xxxxxxx Supermarkets, Inc. Consumers $[CONFIDENTIAL]
Xxxxxxx Supermarkets, Inc. Festival $[CONFIDENTIAL]
Xxxxxxx Supermarkets, Inc. Festival $[CONFIDENTIAL]
Xxxxxxxx of Pennsylvania, Inc. Festival $[CONFIDENTIAL]
Big W of Florida, Inc. Hyde Park
Markets $[CONFIDENTIAL]
Xxxxxxx Supermarkets of Hyde Park
Florida, Inc. Markets $[CONFIDENTIAL]
Xxxxxxxx of New York, Inc. Market Basket $[CONFIDENTIAL]
Xxxxxxx Companies, Inc. Megamarkets $[CONFIDENTIAL]
Gateway Foods, Inc. Rainbow Foods $[CONFIDENTIAL]
Xxxxxxx Supermarkets, Inc. Sentry $[CONFIDENTIAL]
Xxxxxxx Supermarkets, Inc. Xxxxxxxx Food $[CONFIDENTIAL]
SCHEDULE 3
[Letterhead of Xxxxxxx Companies, Inc.]
May 10, 1995
Xx. Xxxxx Xxxxxx
Seven Oaks International
000 Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Dear Xxxxx:
Following are the key points that we need included in the
amendment to our existing agreements:
1. There will be no home sorting (i.e., all coupons will be
processed in Seven Oaks' commercial processing facility) of any
coupons submitted by Xxxxxxx Companies. This would include both
corporate and independent customers.
2. Xxxxxxx shall have the right to "audit" Seven Oaks'
processing operations [CONFIDENTIAL] times a year upon
[CONFIDENTIAL] notice to Seven Oaks. Such audit shall be for the
purpose of reviewing:
a. Receiving Logs
x. Xxxxxxx Coupons Inventory
c. Records Pertaining to Xxxxxxx Reporting
Any deficiencies detected in this review shall be
reported to operational management in Xxxxxx, El Paso, and
Memphis for resolution.
3. Xxxxxxx agrees to pay all [CONFIDENTIAL], Seven Oaks
will pay all [CONFIDENTIAL], and Xxxxxxx will receive
reimbursement from manufacturers for all shipments of Xxxxxxx
corporate or independent coupons.
4. Xxxxxxx agrees to assist Seven Oaks in establishing
"one-step" processing by working with manufacturers to determine
reporting requirements necessary to ensure that "one-step"
revenues are earned on Xxxxxxx coupons. Seven Oaks agrees to pay
[CONFIDENTIAL] of all "one-step" revenues received on Xxxxxxx
corporate and Xxxxxxx independent retailers' coupons toward
satisfaction of the "Account Indebtedness."
5. Seven Oaks agrees to make all computer system
enhancements to allow Xxxxxxx on-line access to reports and data
related to Xxxxxxx coupons and reporting.
6. Seven Oaks agrees to provide up to [CONFIDENTIAL] of
training for Xxxxxxx personnel on Systems, reports and computer
screens to enable complete understanding of reports prepared for
Xxxxxxx.
7. The following method will be used to calculate any
penalty charged to Seven Oaks for processing over [CONFIDENTIAL]
or any bonus paid to Seven Oaks for processing under
[CONFIDENTIAL]. Each "Work in Process" (WIP) number shall be
calculated individually using the method listed below:
- the number of coupons times
- a standard face value of [CONFIDENTIAL] for each
coupon times
- a rate of [CONFIDENTIAL] times
- the number of days late (over [CONFIDENTIAL]) or
early (under [CONFIDENTIAL]))
a. To ensure that the processing stays within the
[CONFIDENTIAL] processing period with a grace period of two days,
if processing goes beyond [CONFIDENTIAL], then Seven Oaks will
pay a penalty based on the following:
1. If processing takes between [CONFIDENTIAL], a
[CONFIDENTIAL] per month penalty will be imposed.
2. For any processing that takes between
[CONFIDENTIAL], a [CONFIDENTIAL] per month penalty will be
imposed.
3. If processing takes between [CONFIDENTIAL], then
a [CONFIDENTIAL] per month penalty will be imposed.
4. If processing goes over [CONFIDENTIAL], then
this will be deemed a default under all agreements between
Xxxxxxx and Seven Oaks.
b. Conversely, if Seven Oaks is able to process
coupons in under [CONFIDENTIAL], then Seven Oaks will be entitled
a [CONFIDENTIAL] bonus as calculated by the method stated above.
8. We require the following reports and system problems to
be corrected within [CONFIDENTIAL] from the date of signing of
the addendum. Failure to correct, to Xxxxxxx'x reasonable
satisfaction within [CONFIDENTIAL], is deemed default on the
addendum.
a. Ability to have the accounts receivable balance
include the chargeback fee as well as the invoice amount.
Conversely the ability to credit both invoice and chargeback fee
to the manufacturers. (See Exhibit A.)
b. Need to have a "management control report" in the
format similar to Exhibit B (to be developed jointly between
Seven Oaks and Xxxxxxx). This allows us to reconcile our
accounts receivable.
c. The transmission to process refunds does not work on
a consistent basis. Notwithstanding the above referenced
[CONFIDENTIAL] period, this is to be corrected within
[CONFIDENTIAL] of the date of the execution of the amendment.
Failure to timely correct is deemed default on addendum and
agreement.
d. All deductions to be processed daily by
[CONFIDENTIAL] C.S.T.
e. When we transfer the processing over to our CAPS
System from Xxxxxxxx MSA, Seven Oaks will write an interface to
match the CAPS System and will continue to provide timely
reports.
f. Seven Oaks System will assess a $[CONFIDENTIAL] fee
per line item denial to manufacturers. Also, if fees are
assessed, the system will refund these fees if physicals are
provided by the manufacturers.
g. Auto Deduct - The system will allow us not to assess
a fee to manufacturers if they ask us to take the deduction on an
invoice rather than making payments. However, these same vendors
should be assessed a fee on store payment denials.
h. Physicals - When a manufacturer returns Physicals
due to a misredemption issue, the system will allow reimbursement
to them for the fees they were previously charged.
It is agreed that if the above reports (a-e) are not provided to
Xxxxxxx within [CONFIDENTIAL] of signing the addendum, and
reports (f-h) are not provided to Xxxxxxx within [CONFIDENTIAL]
of signing the addendum, then Seven Oaks will be in default of
the amendment and Xxxxxxx shall have the right after 15 days
notice to terminate some or all agreements with Seven Oaks. With
respect to items (f-h) above, Xxxxxxx will entertain other
methods to effectively achieve Xxxxxxx'x goals if they do not
increase the cost or time constraints for Xxxxxxx.
Xxxxxxx agrees that, after the above referenced issues are
resolved to Xxxxxxx'x reasonable satisfaction, it will reimburse
Seven Oaks at the rate of $[CONFIDENTIAL] an hour for programming
and reporting changes that it deems necessary to satisfy its
reporting requirements. Such demand for time of Seven Oaks'
personnel shall not be unreasonably made.
Seven Oaks understands and agrees that some adjustments may be
necessary in order to keep on good terms with the manufacturers
(i.e., begin refunding adjustments to manufacturers on a weekly
or daily basis rather than on a period basis). Seven Oaks agrees
to make such adjustments deemed necessary by Xxxxxxx Companies in
conjunction with such manufacturers.
9. Xxxxxxx will need the ability to have [CONFIDENTIAL] per
year at no additional cost to Xxxxxxx, at times prescribed by
Xxxxxxx. Xxxxxxx will select the individuals to observe the
[CONFIDENTIAL].
10. Seven Oaks will reprocess at no charge to Xxxxxxx all
errors returned to Seven Oaks from manufacturers, manufacturers'
agents and/or clients. All returns will be reinvoiced to
appropriate manufacturers within [CONFIDENTIAL] of physical
receipt.
11. All Seven Oaks invoices on corporate or independent
retailer coupons (Xxxxxxx Coupons) shall be paid within
[CONFIDENTIAL] of date of invoice by check.
If you have any questions, please give me a call.
Sincerely,
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Director
Retail Financial Services
FJB/nc
c: Xxxxx Xxxx
Xxxx Xxxxxx
Xxx Xxxxxxxx
SCHEDULE 4
May 10, 1995
Xxxxxxx Companies, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxx, XX 00000-0000
Gentlemen:
I, Xxxxx X. Xxxxxx, Chairman and Chief Executive Officer of
Seven Oaks International, Inc. (SOI) and Coupon Redemption, Inc.
(CRI) have enclosed herewith a list of SOI and/or CRI customers,
who are also customers of Xxxxxxx Companies, Inc. To the best of
my knowledge, based on information available to me at this time,
this listing of customers and amounts due is true, complete and
accurate.
Seven Oaks International, Inc.
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, Chairman
and Chief Executive Officer
Coupon Redemption, Inc.
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, Chairman
and Chief Executive Officer
[CONFIDENTIAL]
