EXHIBIT 10.16(2)
AGREEMENT
THE XXXXXX XXXXXXX
COMPANY, INC.
____________________
ISLANDS RESTAURANTS, INC.
June 1, 1995
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THIS AGREEMENT is entered into as of the first day of June, 1995 by and between
THE XXXXXX XXXXXXX COMPANY, INC., a California corporation (EFC) and ISLANDS
RESTAURANTS, INC., a Delaware corporation (ISLANDS).
RECITALS
WHEREAS, EFC is in the business of providing food and food related
products to various types of business establishments; and
WHEREAS, ISLANDS has, over the years, purchased from EFC a variety of
meat, seafood and other food related products for all or substantially all of
its restaurants; and
WHEREAS, ISLANDS desires to have EFC continue to provide purchasing,
manufacturing, warehousing and delivery services of such products pursuant to
the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
AGREEMENT
1. TERM. This agreement shall be in effect commencing June 1, 1995 with an
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initial term of three (3) years, expiring on May 31, 1998 (the "Initial Term").
This Agreement shall terminate at the end of the Initial Term if written notice
to terminate is given by either party to the other party as provided in
paragraph 26 at least thirty (30) days prior to the last day of the Initial
Term. Otherwise, this Agreement shall continue from year to year from and after
the last day of the Initial Term until terminated by either party by written
notice given to the other party as provided in paragraph 26 at least thirty (30)
days prior to the last day of the contract year in which such notice is given.
This Agreement may also be terminated earlier in the manner and under the
circumstances provided in paragraph 17.
2. REPRESENTATIONS OF EFC. EFC represents and warrants that:
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(a) EFC has the legal right and authority to enter into this Agreement
and perform the services expected of EFC under the Agreement;
(b) Based upon due inquiry, EFC has no knowledge of any facts or
circumstances leading it to believe (i) that EFC lacks the legal right and
authority to perform the services it has undertaken to perform pursuant to the
Agreement; (ii) that the Agreement violates EFC's existing contractual
obligations to any person or entity; (iii) that performance of the Agreement
violates existing federal, state or local law, rules or regulations applicable
to the conduct of EFC's business; or (iv) that EFC does not have all licenses
and other authorizations presently required by law or regulation to permit EFC
to perform its services under the Agreement with regard to ISLANDS's restaurants
which EFC is presently serving;
(c) EFC will comply with all reasonable requests of ISLANDS relating to the
conduct of EFC's business with respect to the Agreement, or the performance of
EFC under the Agreement, in order (i) not to interfere in any way with the
business of ISLANDS and (ii) to maximize the benefits expected by ISLANDS from
the Agreement; and
(d) EFC will use its best efforts to conform products to applicable
specifications and instructions.
3. REPRESENTATIONS OF ISLANDS. ISLANDS represents and warrants that:
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(a) ISLANDS has the legal right and authority to enter into this Agreement;
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(b) Based upon due inquiry, ISLANDS has no knowledge of any facts or
circumstances leading it to believe (i) that ISLANDS lacks the legal right and
authority to perform its obligations pursuant to the Agreement; (ii) that the
Agreement violates ISLANDS's existing contractual obligations to any person or
entity; (iii) that performance of the Agreement violates existing federal, state
or local law, rules or regulations applicable to the conduct of ISLANDS's
business; or (iv) that ISLANDS does not have all licenses and other
authorizations presently required by law or regulation to permit EFC to perform
its obligations under the Agreement with regard to ISLANDS's restaurants which
EFC is presently serving;
(c) Those ISLANDS restaurants listed in Table II of the Operations Manual
will purchase, from EFC, substantially all of its requirements of "core"
products as set forth in Table I of the Manual. ISLANDS is entitled to purchase
certain "non-core" products, as needed, from other suppliers. A non-exclusive
list of non-core products is identified in Table I of the Operations Manual.
4. FORCE MAJEURE. Neither party shall be liable for delays in the performance
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of any act required under this Agreement to be performed by such party, if such
delay is due to strikes, lockouts, failure of power or other utilities,
injunction or other court or administrative order, governmental law or
regulations which prevent or substantially interfere with the required
performance, condemnations, riots, insurrections, martial law, civil commotion,
war, fire, flood, earthquake, or other casualty, acts of God, or other causes
not within the control of such party. The performance of any covenant,
agreement, work, service or other act shall be excused for the period of delay
and the period for the performance of the same shall be extended by such period.
5. OPERATIONS MANUAL. Attached to this Agreement is an Operations Manual (the
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"Manual") that defines the financial arrangements, specifications and
operational guidelines of the program conducted by EFC for ISLANDS. All of the
provisions of the Manual are incorporated herein by this reference and shall
have full force and effect as if set forth herein in their entirety.
6. PRODUCT OWNERSHIP & INVENTORIES. At the direction of ISLANDS, EFC shall
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purchase, own and control inventory levels of ISLANDS's desired products to be
either manufactured or warehoused by EFC. ISLANDS also agrees to deplete,
within a reasonable time, any and all inventories which have been discontinued
on a national or regional level that were purchased by EFC exclusively for
ISLANDS. It is agreed and understood that both parties shall endeavor to
maintain inventory levels at less than 30 days supply based on anticipated usage
by the restaurants. Selected inventories that exceed 30 days supply are subject
to interest and storage charges as described in the Manual.
7. PRODUCTION AND SPECIFICATIONS. EFC shall be responsible for the
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performance of all production activities, including cutting and packaging as
required and specified by ISLANDS and the attached Manual for ISLANDS's
business. EFC is entitled to assign approved outside agents to facilitate such
production functions as necessary to perform the Agreement. ISLANDS agrees not
to unreasonably withhold approval of such agents. All products covered by this
Agreement and the Manual shall conform to ISLANDS's written specifications,
including but not limited to grade, type, size, weight and aging. ISLANDS may,
from time to time, by written notice to EFC, make commercially reasonable
modifications or additions to any specification as it deems necessary. EFC shall
monitor and respond to all issues and problems of the performance of EFC and its
agents and upon receipt of written notice of non-compliance with the Agreement,
EFC shall, within ten (10) days, place itself into compliance under the
Agreement.
8. WAREHOUSING. EFC agrees to provide administrative (order-processing),
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receiving, shipping, and loading services of products for the sale to ISLANDS
restaurants, listed in Table II of the Manual, under guidelines specified under
the Manual. EFC may assign outside agents to facilitate such warehousing
functions as necessary to perform the distribution services. EFC shall monitor
and respond to all issues and problems of the performance of EFC and its agents
and upon receipt of written notice of non-compliance with the Agreement, EFC
shall, within ten (10) days, place itself into compliance under the Agreement.
9. TRANSPORTATION. EFC shall provide delivery service to each ISLANDS
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restaurant, listed in Table II of the Manual, and as specified in the Manual.
EFC may assign outside agents to facilitate such delivery services as necessary.
EFC shall monitor and respond to all issues and problems of the performance of
EFC and its agents and upon receipt of written notice of non-compliance with
the Agreement, EFC shall, within ten (10) days, place itself into compliance
under the Agreement.
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10. COST-PLUS PROGRAM. EFC shall charge ISLANDS for the above described
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services on a Cost-Plus formula. The Cost-Plus formula is defined in the Manual
and all rates pertaining to the Cost-Plus section in the Manual shall remain in
effect unless changes are mutually agreed upon by both parties.
11. REVIEWS AND AUDITS. EFC shall provide proper documentation related to
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matters covered in this Agreement and the Manual as required by ISLANDS. Such
Documents shall include, but not limited to complete and accurate records to
substantiate the landed cost of goods ("LCG") for each product supplied to
ISLANDS, along with all other charges, including storage fees, interest charges
and upcharges. EFC shall be required to maintain such records on file for two
(2) years. ISLANDS may audit such records at any time upon reasonable notice.
Both parties agree to reimburse the other party for any adjustments revealed by
any audits or series of audits. EFC agrees to abide by all reasonable
recommendations of ISLANDS relating to modifications of EFC's record-keeping
system to the extent that EFC's existing system fails properly to reflect costs
being charged to ISLANDS.
12. BILLING OF GOODS. EFC shall generate an invoice for each order placed by
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ISLANDS restaurants, itemizing the number of cases per item, item description,
net weight, sale price, and extended sales dollars. ISLANDS shall pay all
invoices in full as signed for by the ISLANDS designated receiver of goods. All
xxxxxxxx shall be due and payable to EFC within 7 days from date of receipt of
goods by the restaurant ordering the goods.
13. INDEMNITY. EFC will indemnify, defend and hold harmless ISLANDS, its
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parent and affiliates, officers and directors, agents, employees,
subcontractors, independent contractors and customers from any and all claims,
demands, losses, liabilities, suits at law or in equity, costs and expenses,
including reasonable attorney's fees, arising out of, or relating to:
(a) EFC's activities;
(b) EFC's products and/or completed operations;
(c) EFC fixtures, equipment, or supplies used in connection with services
provided to ISLANDS; or
(d) any injury, illness and/or death caused, in whole or in part, by
contact with, use and/or consumption of, EFC's products.
Notwithstanding the foregoing, EFC shall have no obligation to indemnify,
defend or hold ISLANDS harmless from ISLANDS's own gross negligence or
intentional acts. Upon tendering of any suit to EFC, EFC shall defend the same
at its sole cost and expense. ISLANDS agrees to advise EFC in the event it
receives notification that a claim has been or may be filed with respect to a
matter covered by this indemnity and EFC shall be given the opportunity to
assume the defense of that claim. If EFC fails to assume such defense, ISLANDS
may defend the action in the manner it deems appropriate, and EFC shall pay to
ISLANDS all costs, including reasonable attorney's fees, incurred by ISLANDS in
effecting such defense, in addition to any sum which ISLANDS may pay by reason
of any settlement or judgment against ISLANDS. Notwithstanding anything to the
contrary, the burden of proof shall be on EFC to defend the lawsuit and
establish ISLANDS's negligence and/or misconduct contributed to such injury,
loss, illness or death. In the event it is either established by a court of
competent jurisdiction or admitted by EFC that the product, in the condition it
existed when delivered to ISLANDS, caused the subject injury, illness and/or
death, EFC shall only be liable to the extent it is determined or admitted that
the product, in the condition it existed when delivered to ISLANDS, caused such
injury, illness and/or death.
14. INSURANCE. EFC shall maintain in full force and effect, at EFC's expense,
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and shall provide to ISLANDS, certificates of insurance evidencing insurance
coverage in accordance with ISLANDS's requirements as follows:
(a) The certificates of insurance shall name ISLANDS as an "Additional
Insured".
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(b) EFC insurers must be approved by ISLANDS and have a financial rating of
at least A-VII in the most current edition of A.M. Best's insurance reports.
EFC's policies of insurance shall include:
(i) Commercial general liability insurance, including contractual
liability, product/completed operations, broad form property damage, and
manufacturer's liability with broad form endorsement, with minimum primary
limits of $1,000,000 per occurrence and $2,000,000 aggregate covering claims
for bodily injury and/or death to persons and/or injury to property and property
damages arising out of the services or products covered under this Agreement,
and shall contain a waiver of subrogation by EFC's insurance carriers against
ISLANDS and ISLANDS's insurance carriers with respect to all obligations assumed
by EFC pursuant to this Agreement,
(ii) Workers' compensation insurance and employer's liability insurance
with minimum limits of $100,000 per employee and $1,000,000 per accident,
(iii) Automobile liability insurance with minimum limits of $1,000,000
combined single limits, such insurance to include coverage for owned, non-owned,
and hired vehicles.
(c) In addition to commercial general liability and automobile insurance
policies, EFC must maintain an umbrella policy with a limit of no less than
$10,000,000 per occurrence and aggregate. Each insurance policy required by this
Agreement shall contain provisions to the effect that the policy limits may not
be reduced, terms changed, or policy canceled with less than thirty (30) days
prior written notice provided to ISLANDS. The insurance required by this
Agreement shall be primary and non-contributing with respect to any other
insurance available to ISLANDS. EFC will provide a copy of any contract of
insurance required under this Agreement, upon request from ISLANDS.
15. CONFIDENTIALITY. In the course of the relationship between ISLANDS and
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EFC, under this Agreement, both parties may be given, or have access to, non-
public confidential information concerning the other party's marketing or
operational policies, practices and future plans. Both Parties agree to protect
and maintain the confidentiality of each other's information and shall not
disclose or transmit such information to any third person for so long as the
information is not publicly disclosed.
16. ASSIGNMENT. The Agreement shall be binding upon and shall inure to the
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benefit of, the parties of this Agreement, provided, however, it shall not be
assigned by either ISLANDS or EFC without the prior written consent of the other
party, provided, consent shall not be unreasonably withheld.
17. DEFAULT AND TERMINATION.
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(a) Event of Default by EFC:
(i) If EFC fails or refuses to comply with any of its obligations under
this Agreement, or,
(ii) If EFC seeks protection under the bankruptcy laws (other than as a
creditor) or any assignment is made for the benefit of creditors or a trustee is
appointed for all or any portion of such party's assets;
(b) Event of Default by ISLANDS:
(i) If ISLANDS fails or refuses to comply with any of its obligations
under this Agreement, or
(ii) If ISLANDS seeks protection under the bankruptcy laws (other than
as a creditor) or any assignment is made for the benefit of creditors or a
trustee is appointed for all or any portion of such party's assets.
In the Event of Default, the non-defaulting party may terminate this
Agreement upon ten (10) days prior written notice to the defaulting party and
this Agreement shall terminate in the event that the defaulting party has failed
to cure within the ten (10) day period after receipt of such notice. The failure
of the non-defaulting party to terminate the Agreement upon the
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occurrence of one or more of these events of default shall not constitute a
waiver or otherwise affect the right to terminate the Agreement as a result of a
continuing or subsequent failure or refusal to comply with any of such
obligations. Furthermore, failure by the non-defaulting party to exercise any of
its rights or remedies hereunder or insist on strict compliance by the
defaulting party with any of the terms of this Agreement shall not constitute a
waiver of any of the terms or conditions of this Agreement with respect to any
other or subsequent breach nor shall it constitute a waiver of its right at any
time thereafter to require strict compliance with the terms of this Agreement.
18. INSPECTIONS.
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(a) EFC's product must comply with the inspection and test procedures
established and carried out by the United States Department of Agriculture
("USDA") and all applicable federal, state and local laws. In addition, at no
time will EFC's procedures and standards be less stringent than those set forth
in the document entitled Hazard Analysis Critical Control Points, Second
Edition, dated January 1995 and prepared by Midwest Portion Meats, Inc.,
otherwise known as a "HACCP program". Should the USDA, State or Local agencies
mandate pathogen testing procedures (i.e. - E. Coli, Salmonella, Listeria,
etc.), any expenses directly related to products sold to ISLANDS to implement
such procedures and/or requirements shall be paid by EFC up to $20,000 per
year. For any expenses directly related to products sold to ISLANDS, exceeding
$20,000 per year, ISLANDS agrees to pay a surcharge against the landed cost of
goods (LCG) of up to an additional $20,000 per year. Should any expenses exceed
the sum total of $40,000 per year, both parties agree to negotiate a resolution.
The surcharge shall be calculated by determining the annual expense exceeding
$20,000, up to $40,000, divided by the estimated annual volume sold (in pounds)
to determine a cents-per-pound rate to be added to LCG.
(b) Upon request, EFC will provide ISLANDS with copies of all inspection
reports and provide additional documentation to indicate compliance with this
paragraph.
(c) All products ordered hereunder, as well as the facility in which such
are manufactured, will be subject to inspection and testing by ISLANDS to the
extent practicable at all times and places, including the period of manufacture
and in any event prior to acceptance. EFC agrees to permit ISLANDS access to
EFC's facilities at all reasonable times and upon reasonable notice for such
inspection. EFC's product will be subject to final inspection and acceptance by
ISLANDS after delivery. It is expressly agreed that inspections and/or payments
prior to delivery will not constitute final acceptance. If the product does not
meet the specifications or otherwise conform with the requirements of any order
by ISLANDS or this Agreement, ISLANDS shall have the right to reject such
product.
19. RECALL. In the event it is deemed necessary by EFC to recall any quantity
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of the product, from any restaurant of ISLANDS or from any consumer, either as a
result of failure of the product to satisfy the specifications, comply with any
warranties, or for any other reason bearing on quality and/or safety of the
product, EFC agrees to comply diligently with all product recall procedures
established by the U.S. Consumer Product Safety Commission. Furthermore, EFC
agrees to bear all costs and expenses incurred by it and/or ISLANDS in complying
with such recall procedures.
20. COMPLIANCE. EFC agrees that all food products including food articles,
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food ingredients and food packaging comprising the product or any part thereof
delivered, sold or transferred to ISLANDS hereunder (a) shall be in full
compliance with either the Federal Food, Drug and Cosmetic Act ("FDCA"), as
amended, or the rules and regulations promulgated from time to time by the USDA,
or any other applicable rule or regulation, as the case may be; (b) shall be
manufactured, stored and delivered in accordance with appropriate "Good
Manufacturing Practices" under the FDCA or comparable regulations of the USDA,
as applicable; (c) shall not be adulterated or misbranded within the meaning of
the FDCA or USDA, as applicable; (d) shall not be a food product which may not,
under the FDCA (or comparable regulations of the USDA), be introduced into
interstate commerce except as provided, therein; (e) shall comply with all
regulations, statutes, state or federal, U.S. or Canadian with respect to
nutritional labeling requirements, and (f) shall not be food product adulterated
or misbranded under any applicable provision of any state law or municipal
ordinance.
21. HARMFUL INGREDIENTS/DEFECTIVE DESIGN. Whenever EFC becomes aware that any
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ingredient or component of the product covered by this Agreement is or may
become harmful to persons or property, or that the design or construction of
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the product is defective in any manner which is or may become harmful to persons
or property, EFC shall immediately give notice thereof, including all relevant
information with respect thereto, to ISLANDS.
22. INDEPENDENT CONTRACTOR RELATIONSHIP. EFC acknowledges that it is an
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independent contractor and is not an agent, partner, joint venturer nor employee
of ISLANDS. EFC shall have no authority to bind or otherwise obligate ISLANDS
in any manner nor shall EFC represent to anyone that it has a right to do so.
ISLANDS is not an agent, partner, joint venture, or employee of EFC, and ISLANDS
shall have no authority to bind or otherwise obligate EFC to any third party, or
make any contrary representation to anyone. ISLANDS further makes no
representations regarding the duration of this Agreement beyond the Term
contemplated herein, and EFC and ISLANDS acknowledge that such Term may be
abbreviated for Events of Default.
23. NO THIRD-PARTY BENEFICIARY. No persons other than the signatories to this
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Agreement and their successors have enforceable rights under this Agreement.
24. APPLICABLE LAW. This Agreement and all of its provisions shall be
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construed in accordance with, and governed by, the internal laws of the State of
California without regard to the conflicts of laws provisions or principles of
California law. Any legal action brought by EFC against ISLANDS based on,
arising out of or to enforce the Agreement shall be brought in a state court in
San Diego County or in the United States District Court for the Southern
District of California, and any legal action brought by ISLANDS against EFC
based on, arising out of or to enforce the Agreement shall be brought in a state
court in Los Angeles County or in the United States District Court for the
Central District of California (collectively, the "Designated Jurisdiction");
provided, however, that nothing herein shall bar either EFC or ISLANDS (a) from
asserting any cross-claim or third party claim against the other in any
proceeding in another jurisdiction in which EFC or ISLANDS are sued or joined by
a third party, or (b) from suing ISLANDS or EFC, as the case maybe, in another
jurisdiction having personal jurisdiction over ISLANDS or EFC if ISLANDS or EFC
also have a claim or cause of action arising out of the same transaction against
a third party who is not amenable to the personal jurisdiction of the court in
the Designated Jurisdiction. EFC and ISLANDS both agree to waive trial by jury
with respect to any claims, causes of actions, set-offs or defenses asserted by
either against the other; provided, however, that nothing herein shall bar
either EFC or ISLANDS from seeking trial by jury with regards to any claims,
causes of action, set-offs or defenses by or against any other person joined in
the lawsuit with EFC or ISLANDS, as the case may be.
25. TIME OF ESSENCE. Time is of the essence in each provision of the
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Agreement in which a date or period of time is established for the performance
of any act.
26. NOTICE. All notices, requests, demands, and other communications given in
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connection with this Agreement, shall be in writing and deemed to have been duly
given if delivered personally or mailed, by registered or certified mail
(return receipt requested), or by faxsimile if mailed 1st class on the same day
or sent via overnight mail delivery service with receipt and with postage
prepaid to the business address of either party as set forth below or to such
other persons or addresses as may be provided in writing given by either party
to this Agreement to the other party in the manner specified herein.
To EFC at: The Xxxxxx Xxxxxxx Company, Inc.
00000 Xxxxxxxxx Xxxxxx.
P. X. Xxx 0000
Xxxxx Xx Xxxxxxx, XX 00000
Attention: President
Fax: (000) 000-0000
To ISLANDS at: Islands Restaurants
000 Xxxxx Xxxxxx Xxxxxx
P. O. Xxx 0000
Xxxxxx Xxxxx, XX 00000-0000
Attention: President
Fax: (000) 000-0000
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27. ENTIRE AGREEMENT. All documents and exhibits attached hereto or referred
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to herein, including the Manual and all exhibits attached thereto, constitute a
part of this Agreement. This Agreement contains all representations, warranties
and agreements made by the parties hereto relating to the subject matter hereof.
It is the intention of the parties to incorporate in this Agreement, their full
and complete understanding, and no amendment, modification or addition hereto
shall have effect or be binding unless it is in writing and signed by the
parties hereto.
28. TITLES AND REFERENCES. The titles to the paragraphs of this Agreement are
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for convenience only and are not a part of this Agreement and shall have no
effect upon the construction or interpretation of any part of this Agreement.
29. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
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each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
30. FURTHER ASSURANCES. The parties hereto, and each of them, agree to take
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such further actions, and execute such additional documents, instruments and
other writings, as may reasonably be requested by the other party hereto in
order more fully to give effect to the intentions of the parties with respect to
the subject matter of this Agreement.
31. SEVERABILITY. The provisions of the Agreement are severable and the
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Agreement shall be interpreted and enforced as if all completely invalid or
unenforceable provisions were not contained in the Agreement, and partially
valid and enforceable provisions shall be enforced to the extent that they are
valid and enforceable.
32. SURVIVAL. Paragraphs 2 & 3 (Representations), 4 (Force Majeure), 11
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(Audits), 13 (Indemnity), 15 (Confidentiality), 19 (Recall), 24 (Applicable Law)
and 26 (Notice) shall survive termination or expiration of this Agreement and
be binding upon such party, its successors and assigns. Either party shall
notify the other party upon occurrence of a change of control of the company,
the sale of all or substantially all of the assets of the company, or a
corporate merger or consolidation.
IN WITNESS WHEREOF, the parties hereto, or their duly authorized agents, have
caused this Agreement to be executed as of the date first above written.
THE XXXXXX XXXXXXX COMPANY, INC. ISLANDS RESTAURANTS, INC.
by______________________________ by_____________________________________
Xxxxxx Xxxxxxx Xxxx X. Xxxxx
President Chairman and Chief Executive Officer
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