Sample Business Contracts

Primary Distribution Agreement - Maines Paper & Food Service INc. and NE Restaurant Co. Inc.

Sponsored Links


Primary Distribution Agreement dated May 13, 1999, between MAINES PAPER & FOOD


A.       Maines performs purchasing, warehousing, product research &
         development, transportation and distribution services for foodservice
B.       NERCO currently operates the establishments listed in Exhibit "A" (all
         such establishments operated by NERCO, and open for business are
         collectively referred to herein as the "Customer Locations").
C.       NERCO desires to contract with Maines as its primary distributor for
         foodservice products to all of its Customer Locations and Maines
         desires to perform these services.

In consideration of the mutual obligations set forth below, the parties agree
as follows:


         NERCO appoints Maines to serve as its primary distributor to NERCO's
locations for foodservice products within the product categories described in
Article 2 ("Products"). The service benefits for this program are
automatically extended to any other NERCO System Restaurant Concept(s) that
are developed in the future, provided all parameters and requirements of the
agreement are met. Mark-up schedules however, will need to be discussed and
mutually agreed upon in advance for these new concepts.


         Bertucci's Brick Oven Pizzeria              Chili's Grill & Bar/On the Border
         ------------------------------              ---------------------------------
         Cheese, including frozen mozzarella         Cheese
         Dairy                                       Dairy
         Dry Groceries                               Dry Groceries
         Refrigerated                                Refrigerated
         Meat, Poultry, Seafood                      Meat, Poultry, Seafood
         Paper, Plastic & Disposables                Paper, Plastic & Disposables
         Beverages, including Coke Syrups            Beverages, including Coke Syrups
         Prepared Foods                              Prepared Foods
         Desserts                                    Desserts
         Chemical & Cleaning Supplies                Chemical & Cleaning Supplies
         Store Operating Supplies                    Store Operating Supplies
         Economics Laboratories                      Economics Laboratories
         Equipment & Smallwares                      Equipment & Smallwares
         Produce                                     Produce

         Products will include Maines Brand, National Brand, and other products
as specified by NERCO and stocked by Maines.

         All products in any of the product categories specified in Section 2
will be priced using the mark-up schedule set forth in Exhibits "B" & "C" for
that product category.


           Maines will begin the distribution of produce provided Maines
           meets quality and distribution standards for all Bertucci's
           locations within Maines primary distribution territory
           (excludes Atlanta/Chicago locations), within thirty days of
           the execution of this agreement.


3.1        ACCOUNT EXECUTIVE - Maines will assign a dedicated Account
           Executive and Customer Service Representatives to service
           NERCO accounts. The Account Executive and the Customer Service
           Representatives will maintain contact with NERCO Corporate
           offices on a monthly basis to review service requirements.

3.2        POLICIES AND PROCEDURES - A policies and procedures guide will
           be provided by Maines to all Customer Locations, as mutually
           agreed upon. Reasonable notice will be given to Customer
           Locations when policies and procedures are changed by Maines.
           Credits, pick-ups, re-stocking charges, and other requests for
           service will be initiated by location personnel according to
           the guide. The mutually agreed upon guide will become part of
           this agreement when executed by both parties.

           shortage, or error shall be noted on the invoice and signed by
           Customer Location receiving personnel. Credit for damages,
           shorts, or errors will be noted by Maines delivery personnel
           and will be final. All reasonable efforts will be expended in
           determining the root cause of the damage, shortage, or error.
           If the error is determined to be that of Maines, Maines will
           be responsible for the cost of replenishing that product to
           the respective location as soon as the next delivery is
           scheduled. If the situation is determined to be the error of
           NERCO personnel, NERCO will be responsible for replenishing
           that product at their cost, with authorization at NERCO
           Corporate if delivery cost exceeds $150.00. For purchases that
           are returned for credit that are determined to be the result
           of a Customer Location's excessive ordering or other ordering
           errors, a 15% re-stocking fee will be assessed with advanced
           notice to NERCO Corporate.

           approved at NERCO Corporate Offices cannot be sold to the
           individual Customer Locations by Maines.

3.5        PROPRIETARY PRODUCTS - Maines will not sell or deliver any
           NERCO proprietary products to any location not approved by
           NERCO Corporate.

3.6        MAINES CURRENT VENDOR BASE - NERCO agrees to review Maines
           current vendor base for future product needs or product
           changes where possible.

3.7        INVENTORY - Maines will inventory and deliver NERCO items as
           requested. Inventory of these items shall not exceed five
           weeks on-hand inventory, which will be regulated by Maines
           based on supplied or actual usage figures. In the event the
           level exceeds this period, NERCO will be notified. If any
           product requested by NERCO results in greater than four weeks
           on-hand inventory a definitive action plan will be provided to
           Maines from NERCO's Corporate Purchasing Management. The
           written plan will detail the actions that will be taken to
           lower the level to a maximum of four weeks supply within
           twenty-one days of notification. For inventory that remains
           on-hand thirty days after notification, Maines will charge
           NERCO the current fair market storage fee then in effect.



4.1        NO SKIP DAY DELIVERIES - There will be no skip day deliveries
           for any Chili's or On the Border locations, with the exception
           of: West Lebanon, NH, and S. Portland, ME. All skip day
           deliveries for the Bertucci's locations in New England will be
           eliminated by December 15, 1999.

4.2        Maines will establish a delivery schedule acceptable to NERCO
           for each Customer Location and will use reasonable good faith
           efforts to make on time deliveries. Mutually agreed windows
           for non-key drop locations will be 6:30 am until 11:00 am and
           2:00 pm until 5:00 pm. Deliveries must be completed, and
           delivery equipment off premises by close of window.

4.3        TWO DELIVERIES PER WEEK - Each Customer Location will be
           serviced by Maines with two deliveries per week utilizing one
           Maines driver. The exception to this delivery schedule are the
           Bertucci's locations in the Chicago and Atlanta Markets. These
           units will receive one delivery per week. The Chicago and
           Atlanta trucks will also have a delivery surcharge of three
           thousand six hundred seventy eight dollars ($3,678) per
           trailer per week.

4.4        DELIVERY SCHEDULE CHANGES - Maines reserves the right to make
           changes to existing or proposed delivery schedules by
           providing fourteen days notice to the appropriate NERCO
           Corporate Personnel, the affected NERCO Regional Managers and
           the affected Customer Location Managers. All such changes must
           keep to the provisions outlined in Section 4.1 of this
           Agreement and must be acceptable to NERCO.


          a.    Upon Maines review and approval of NERCO's lease agreement with
                Alliant of 40 computers and associated peripherals, Maines
                shall buy-out the remaining lease. As of March 1, 1999 Maines
                is told that amount is $71,548. At the time of start-up (May
                17, 1999), this amount is expected to be reduced. Maines will
                then accrue one-half (1/2) of this final amount from NERCO by
                offsetting the expense against the 0.5% discount for off-day
                deliveries, as outlined in Section 6.4. The cost of this lease
                buy-out will be amortized over a five-year period based on a
                straight line method. In the event this agreement is terminated
                before this period, the remaining balance will be due from each
                restaurant will be paid Maines within 30 days of termination of
                this agreement.

          b.    Maines agrees to have the REMACS interface testing in place for
                Chili's and On the Border by August 1, 1999.

          c.    Maines agrees to have the REMACS interface system complete and
                usable for all Chili's and On the Border locations by September
                1, 1999.

          d.    Maines agrees to provide the funding for PC hardware for any
                new Chili's and On the Border locations. Each window-based
                pentium PC will include the following configuration:
                -    Pentium 300 MHZ or above processor
                -    32 Meg of Ram Memory


                -    2.5 Gig of Hard Drive or larger
                -    56 BPS Modem

                        The cost of this hardware will be amortized over a
                five year period based on a straight line method. In the event
                this agreement is terminated before this period, the remaining
                balance due from each restaurant will be paid to Maines within
                thirty (30) days of termination of this agreement.

          e.    Any Y2K upgrades for existing Chili's or On the Border units
                will be the responsibility of NERCO.

          f.    Maines will pay for the actual per unit cost for items 5.1,
                a-d, which is not to exceed $1,500.00.

          g.    Maines agrees to provide periodic reporting of Chili's data to
                NERCO in the same format and frequency as the current
                Bertucci's reporting.

          h.    All PC maintenance and repair costs will be the responsibility
                of NERCO. i. All REMACs (help desk) support and maintenance
                costs will be the responsibility of NERCO.

          a.    Maines will provide funding for the purchase of DOS REMACS
                software for all existing Bertucci's units. Because Maines can
                not own the REMACS software, NERCO must be the licensee of
                record. Maines will therefore prepare a five (5) year
                amortization schedule based on a straight-line method. In the
                event this agreement is terminated before this period, any
                remaining balance will be paid to Maines by NERCO within thirty
                (30) days of termination.

          b.    Maines agrees to purchase minimum configuration upgrades for
                existing PC's at the Bertucci's locations. The cost of these
                upgrades will be amortized over a five (5) year period using a
                straight line method. In the event this agreement is terminated
                before this period, the remaining balance due from each
                restaurant will be paid to Maines within thirty (30) days of
                termination of this agreement.

          c.    Maines agrees to provide electronic order entry integrated with

          d.    Maines agrees to provide electronic price changes to NERCO
                Corporate in usable file format for REMACS.

          e.    Maines and NERCO Corporate IS Management will jointly provide
                systems training for Bertucci's unit location managers.

          f.    Maines will pay for the actual per unit cost for items 5.2 a-e,
                which is not to exceed $1,500.

          g.    Systems testing to be completed by August 1, 1999.

          h.    Ten units in production by October 1, 1999.

          i.    All units in production by December 31, 1999.

          j.    Maines agrees to provide funding for REMACS software for any
                new Bertucci's locations with the same provisions as are stated
                in item 5.2a.

          k.    All REMACs (help desk) support and maintenance costs will be
                the responsibility of NERCO.


6.1      DEFINITION OF COST - The price to NERCO for all products sold under
         this agreement (the


         "Sell Price") will be calculated on the basis of Cost. "Cost" is
         defined as the invoice cost to Maines plus applicable freight. The
         invoice used to determine cost will be the invoice issued to Maines by
         the vendor. Cost is not reduced by cash discounts for prompt payment
         or earned performance allowances available to Maines.

             APPLICABLE FREIGHT - In those cases where the invoice cost to
         Maines is not a delivered cost, applicable freight charges will be
         added to invoice cost. Freight charges may include common or contract
         carrier charges by the product vendor or by Maines fleet back-haul,
         or by charges billed by third party carriers. Applicable freight for
         any product will not exceed the rate charged by nationally recognized
         carriers operating in the same market for the same type of freight
         service. Earned back-haul efficiencies are retained by Maines and do
         not reduce product cost.

6.2.     L.I.F.O ACCOUNTING PRINCIPLES - Pricing to NERCO will be based upon
         L.I.F.O. Accounting Principles. Pricing for mutually agreed upon market
         sensitive items (primarily commodities) will be effective Friday of
         each week. Pricing for all other products to NERCO will be set the
         first calendar day of each month.

6.3.     CALCULATION OF SELL PRICE - The Sell Price for each product sold under
         this agreement as provided in Section 2 will equal the Cost of such
         product plus applicable freight plus the percentage mark-up as
         specified in Exhibits "B" & "C" (pricing schedules).

6.4.     DISCOUNT FOR "OFF-DAY DELIVERY - For Chili's and On the Border
         locations only, Maines will offer NERCO a 0.5% discount for one
         "off-day delivery" per week, per location. An "off-day delivery" is
         defined by Maines as a delivery day when there is excess delivery
         equipment and/or delivery personnel available for routing deliveries to
         NERCO's Chili's and On the Border locations. Maines will establish this
         "off-day delivery" information per location and provide it to NERCO
         before start up. This 0.5% discount on the one "off-day delivery" per
         week will be calculated and accrued by Maines and used as defined in
         Section 5.1a to off-set costs incurred by Maines. After the expense is
         recovered in Section 5.1a, then this credit will be issued quarterly to
         NERCO Corporate Offices. The second "non" off-day delivery is not
         eligible for this discount. Maines reserves the right to make changes
         to this schedule periodically by providing fourteen days notice to
         NERCO Corporate Personnel.

6.5.     SUBSTITUTIONS - Should a substitution be necessary and approved by
         NERCO, Maines will ship a comparable product at a sell price calculated
         using the same percentage of mark-up as on the original product.

6.6.     TERMINATION OF AGREEMENT - If Maines and NERCO cease doing business for
         any reason, NERCO will purchase, or cause a third party to purchase all
         remaining proprietary, special order, and dedicated inventory items in
         Maines inventory at Maines cost plus a reasonable transfer and ware
         house handling charge. In such an event NERCO will purchase or cause to
         be purchased and transferred all perishables within five (5) days of
         termination of this agreement and all frozen and dry items within
         fifteen days of the termination of this agreement. NERCO further agrees
         to pay interest and storage fees in effect at the time of termination
         on any or all product(s) not purchased and transferred by the time line
         set forth herein. In the event the successor distributor fails to make
         payments to Maines within thirty days of transfer of products, NERCO
         shall, upon demand, immediately make such payment.

6.7.     HOLD HARMLESS AGREEMENT - Maines policy is that all suppliers provide
         indemnity agreements and insurance coverage for products purchased by
         Maines. In order to protect


         Maines when it stocks propriety/special order items at NERCO's request
         and the vendor of such items will not provide an indemnity, NERCO will
         defend, indemnify, and hold harmless Maines and its employees, and
         officers from all actions, claims and proceedings, and any judgments,
         damages and expenses resulting in the delivery, sale, re-sale, use or
         consumption of any NERCO proprietary/special order item.

         costs of Maines are increased as a direct result of a significant
         regional or national economic problem, including but not limited to:
         fuel cost increases, and power shortages, Maines may, with the prior
         consent and agreement of NERCO, increase the mark-up schedule specified
         in Exhibits "B" & "C" to compensate for such increased costs during the
         period such increases are experienced. Both parties must agree to any
         and all changes.

6.9.     VENDOR/NERCO AGREEMENTS - NERCO will provide Maines with written
         evidence of existence of agreements with products manufacturers in
         which the manufacturers have agreed on prices they will charge Maines
         for products to be resold to NERCO. NERCO must notify Maines in writing
         of the existence of any additional agreements of this sort. Maines will
         not be responsible for the failure to purchase under such additional
         agreements in the absence of written notice from NERCO of the existence
         of such agreements.

6.10.    PAYMENT TERMS - Payment terms will be net fourteen days for all NERCO
         locations. Payment will be remitted each Wednesday via ACH Transfer for
         invoices according to a fourteen day term schedule. Attached as Exhibit
         "D" is a twelve month calendar of invoice weeks and due dates (Example:
         Sunday 1st to Saturday 7th, Sunday 8th to Saturday 15th. Payment for
         1st - 7th will be remitted by ACH transfer on Wednesday the 18th).


         NERCO throughout the term of this agreement, will be allowed audit
privileges which will include up to 25 items maximum and can be reviewed
thirteen weeks back with fifteen days written notice to Maines.


         The term of this agreement will begin on the first day of deliveries
(May 17, 1999) and continue for five years (sixty months).  Unless terminated
earlier as follows:

a.  Either party may cancel pursuant to breech of this agreement after sixty day
    advance written notice to correct issues, if said issues remain unresolved.

b.  Maines may terminate at any time, following thirty day prior written notice,
    for non-payment by NERCO of its payment obligations.

c.  Due to capital Investments made by Maines in the equipment necessary to
    deliver to the Bertucci's locations in the Atlanta/Chicago markets, NERCO
    will honor a one-year term from the date of first delivery to the
    Atlanta/Chicago Bertucci's units. If NERCO decides to terminate the
    deliveries by Maines to the Bertucci's units in Atlanta and Chicago after
    the initial twelve months of deliveries, sixty days notice of termination
    will be provided by NERCO. If the distribution agreement is terminated in
    accordance with the terms stated in Section 8 prior to the completion of the
    first twelve months of deliveries to the Atlanta/Chicago locations, NERCO
    will remit to Maines a flat rate of $25,000 per month for the period between
    the date of termination and the twelve month period from the first delivery
    date. NERCO may periodically review delivery charges.


d.  Upon such termination as described in 8, a-c, NERCO agrees to pay its
    obligations under this agreement and to pay all outstanding invoices within
    fourteen days from the date of the last shipment to each location.

         In witness whereof: the parties have hereto caused this agreement to be
executed, delivered, and signed as if under this 13th day of May, 1999 by
themselves or their duty authorized agent or representatives.

         As evidence of this agreement:

         Signed:  /s/ David J. Maines                      Date: 5/14/1999
                  ------------------------------                 -----------
                  David J. Maines
         Title:   Executive Vice President
         Company: Maines Paper & Food Services, Inc.
         Witness: /s/ Amy B. Legg                          Date: 5/14/1999
                  ------------------------------                 -----------
         Title:   Administrative Assistant

         Signed:  /s/ Paul Joseph Seidman                  Date: 5/13/1999
                  ------------------------------                 -----------
                  Paul Joseph Seidman
         Title:   Vice President
         Company: NE Restaurant Company, Inc.
         Witness: /s/ Kathleen M. Gee                      Date: 5/13/1999
                  ------------------------------                 -----------
         Title:   Executive Assistant
                  to the President