EXHIBIT 10.16
AGREEMENT
THE XXXXXX XXXXXXX
COMPANY, INC.
_____________________
CHART HOUSE, 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 CHART
HOUSE, INC., a Delaware corporation (CHART).
RECITALS
WHEREAS, EFC is in the business of providing food and food related products to
various types of business establishments; and
WHEREAS, CHART 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, CHART 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 five (5) years, expiring on May 31, 2000 (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 CHART's restaurants which EFC is
presently serving;
(c) EFC will comply with all reasonable requests of CHART 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 CHART and (ii) to maximize the benefits expected by CHART from the
Agreement; and
(d) EFC will use its best efforts to conform products to applicable
specifications and instructions.
3. REPRESENTATIONS OF CHART. CHART represents and warrants that:
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(a) CHART has the legal right and authority to enter into this Agreement;
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(b) Based upon due inquiry, CHART has no knowledge of any facts or
circumstances leading it to believe (i) that CHART lacks the legal right and
authority to perform its obligations pursuant to the Agreement; (ii) that the
Agreement violates CHART'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 CHART's
business; or (iv) that CHART 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 CHART's restaurants which EFC is presently
serving;
(c) CHART will purchase, from EFC, substantially all of its requirements of
"core" products as set forth in Table I of the Manual. CHART 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 CHART. 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 CHART, EFC shall
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purchase, own and control inventory levels of CHART's desired products to be
either manufactured or warehoused by EFC. CHART 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
CHART. 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 performance
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of all production activities, including cutting and packaging as required and
specified by CHART and the attached Manual for CHART's business. EFC is
entitled to assign approved outside agents to facilitate such production
functions as necessary to perform the Agreement. CHART agrees not to
unreasonably withhold approval of such agents. All products covered by this
Agreement and the Manual shall conform to CHART's written specifications,
including but not limited to grade, type, size, weight and aging. CHART 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 CHART
restaurants 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 CHART restaurant
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as agreed to by both parties 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 CHART for the above described services
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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 CHART. 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
CHART, 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. CHART 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 CHART 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 CHART.
12. BILLING OF GOODS. EFC shall generate an invoice for each order placed by
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CHART restaurants, itemizing the number of cases per item, item description, net
weight, sale price, and extended sales dollars. CHART shall pay all invoices in
full as signed for by the CHART 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 CHART, its parent
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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 CHART; 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 CHART harmless from CHART'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. CHART 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, CHART may defend
the action in the manner it deems appropriate, and EFC shall pay to CHART all
costs, including reasonable attorney's fees, incurred by CHART in effecting such
defense, in addition to any sum which CHART may pay by reason of any settlement
or judgment against CHART. Notwithstanding anything to the contrary, the burden
of proof shall be on EFC to defend the lawsuit and establish CHART'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 CHART,
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 CHART, 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 CHART, certificates of insurance evidencing insurance
coverage in accordance with CHART's requirements as follows:
(a) The certificates of insurance shall name CHART as an "Additional Insured".
(b) EFC insurers must be approved by CHART 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:
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(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 CHART and CHART'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 CHART. The insurance required by this
Agreement shall be primary and non-contributing with respect to any other
insurance available to CHART. EFC will provide a copy of any contract of
insurance required under this Agreement, upon request from CHART.
15. CONFIDENTIALITY. In the course of the relationship between CHART 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 CHART 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 CHART:
(i) If CHART fails or refuses to comply with any of its obligations under
this Agreement, or
(ii) If CHART 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 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
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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 CHART 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 CHART, exceeding $20,000
per year, CHART 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 CHART 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 CHART 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 CHART 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
CHART 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 CHART or this Agreement, CHART 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 CHART 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 CHART 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 CHART 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 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 CHART.
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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 CHART. EFC shall have no authority to bind or otherwise obligate CHART in
any manner nor shall EFC represent to anyone that it has a right to do so.
CHART is not an agent, partner, joint venture, or employee of EFC, and CHART
shall have no authority to bind or otherwise obligate EFC to any third party, or
make any contrary representation to anyone. CHART further makes no
representations regarding the duration of this Agreement beyond the Term
contemplated herein, and EFC and CHART 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 CHART 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 CHART 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 CHART (a) from asserting
any cross-claim or third party claim against the other in any proceeding in
another jurisdiction in which EFC or CHART are sued or joined by a third party,
or (b) from suing CHART or EFC, as the case maybe, in another jurisdiction
having personal jurisdiction over CHART or EFC if CHART 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 CHART 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 CHART
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 CHART, 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 CHART at: Chart House, Inc.
000 Xxxxx Xxxxxx Xxxxxx
P. O. Xxx 0000
Xxxxxx Xxxxx, XX 00000-0000
Attention: President
Fax: (000) 000-0000
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
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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. CHART HOUSE, INC.
by______________________________ by__________________________________
Xxxxxx Xxxxxxx Xxxx Xxxxx
President President
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