Sample Business Contracts

Procurement Agreement - Carlson Restaurants Worldwide Inc. and Carlson Hospitality Worldwide Procurement Group Inc.

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                               PROCUREMENT AGREEMENT
                                  AUGUST 15, 1999

     This Agreement, effective August 15, 1999, is entered into between
Carlson Restaurants Worldwide Inc., a Delaware corporation ("CRW") and
Carlson Hospitality Worldwide Procurement Group, Inc., a Minnesota
corporation ("Provisions.")

     WHEREAS, CRW is in the business of developing, owning and franchising
restaurants throughout the world; and

     WHEREAS, Provisions is in the business of negotiating and contracting
for the procurement of food and beverages, supplies, uniforms, furniture,
fixtures and equipment for restaurants and other hospitality industry
establishments; and

     WHEREAS, CRW and Provisions have done business with each other in the
past and wish to continue doing business with each other;

     NOW, THEREFORE, the parties hereto agree as follows:

1.   SCOPE OF ENGAGEMENT.  CRW, for CRW owned and operated restaurants, and
     franchised restaurants that choose to be included in this Agreement,
     ("Sites"), agrees to hire Provisions to source for each Site substantially
     all food, beverages, supplies, packaging, selected pieces of the uniforms
     for staff and other operating supplies used in the day to day operation of
     the Site (sometimes hereinafter referred to as "Food Product"), as well as
     furniture, fixtures and equipment used by a Site in its operations,
     including  non-food items used in daily operations, kitchen equipment and
     utensils, and decor used at the Site (sometimes hereinafter referred to as
     "FFE").  Collectively, Food Product and FFE may hereinafter be referred to
     as "Goods".  Food Product does not currently include produce (including
     fruits and vegetables), milk, ice cream, half and half, alcoholic



     beverages, eggs and certain breads, and any other exceptions set forth in
     Exhibit A attached hereto, which may be amended throughout the term by the
     parties.  Other than as set forth below, during the term of this Agreement,
     neither CRW nor any individual Site will, outside of the scope of this
     Agreement, purchase Goods from a supplier under contract with Provisions.
     Provisions agrees to provide such sourcing of Goods for each Site.


     (a)  Provisions will negotiate contracts with suppliers of Goods to secure
          Goods and shall use commercially reasonable efforts to obtain the
          lowest available pricing for such Goods that is reasonably available
          in the market.  Suppliers may be international, national, regional or
          local and, with respect to sourcing Goods for Sites outside of the
          United States, Goods may be exported to the Site country or they may
          be sourced locally.  Provisions will take all reasonable steps to
          assure that suppliers comply with all pertinent national and local
          laws and regulations pertaining to the procurement and sale of Food
          Products. Prior to finalizing any purchasing commitment on behalf of
          CRW, Provisions shall first obtain written consent from CRW as to the
          Supplier and all material terms of the purchasing commitment, which
          consent shall not be unreasonably withheld.

     (b)  CRW agrees to cooperate with Provisions to approve secondary and
          alternative suppliers so that Provisions can use all reasonable
          efforts to negotiate the best quality product for the most competitive

     (c)  Provided Provisions is in full compliance with the terms of this
          Agreement and the relevant distribution or suppler agreement, CRW
          shall indemnify and hold Provisions harmless for any Goods in a
          distributor's possession or held pursuant to a written commitment
          signed by a supplier and CRW that have been determined by CRW to be
          obsolete or outdated for any reason. Provisions will undertake all
          reasonable efforts to seek disposition alternatives and to limit the
          amount of obsolete Goods.



     (d)  CRW may from time to time form a committee comprised of
          representatives from its franchisees and corporate owned restaurants
          (the Purchasing Committee").  The Purchasing Committee procedures
          shall be mutually established by CRW and Provisions, with input from
          the franchisee representatives. Provisions shall actively participate
          in the Purchasing Committee in accordance with the established

     (e)  From time to time, executive chefs for various CRW restaurant brands
          may develop food items or concepts, for which the chef and Provisions
          jointly agree  that a suitable Food Product may best be obtained from
          a source other than Provisions or its suppliers.  In such situations,
          at the reasonable discretion of the executive chef, those specific
          Food Products may be obtained from sources other than Provisions or
          its suppliers.

     (f)  From time to time, a CRW restaurant or an executive chef may have a
          special promotion or a special menu item that does not appear
          permanently or daily at the restaurant.  In such instances that the
          promotion is being conducted in at least 25 restaurants and is to be
          offered for at least a three month period, Food Products used in such
          special promotions shall be obtained from Provisions, provided however
          if Provisions is unable to reasonably fill such an order, the Food
          Products may be procured by CRW elsewhere.


     (a)  Provisions will either itself, or through the services of a qualified
          third party, and at no additional direct cost to a Site or CRW: (a)
          inspect Goods to reasonably assure the Site and CRW that the Goods
          comply with written quality specifications developed for such Goods.
          Quality specifications shall be developed jointly by Provisions and
          CRW.  The inspection and testing criteria shall include the following:



          (i)   All protein  and other potentially hazardous food products
                (products that carry pathogens, raw, uncooked products
                containing potentially hazardous disease-causing agents
                such as a living micro-organism including but not limited to
                Salmonella, E coli, Staphylococcus aureus, Listeria, etc.
                Uncooked meats, chicken and seafood naturally containing some
                pathogens in small numbers) shall be tested once per month.
                Potentially hazardous imported items shall be inspected lot by
                lot upon entry to the country, prior to shipment to the
                distribution centers.

          (ii)  Proprietary items shall be tested once every 6 months

          (iii) Products with complaints shall be tested as needed

     (b)  Products shall be tested for chemical, microbiological and physical
          analysis. Products shall be pulled from CRW  approved distributors at
          the direction of Q.A.  Provisions determines the sampling process to
          be used for specific distribution centers.

     (c)  Provisions shall inspect all new food suppliers and other high volume
          food suppliers and distributors to insure compliance with CRW and
          Provisions quality assurance specifications, as well as all
          governmental health, sanitation and other safety standards.  The
          following types of product vendors may, at Provisions discretion, not
          be inspected:

          (i)   Grocery items

          (ii)  National brands (Heinz, etc.)

          (iii) Beverage (Coke, liquor, etc.)

     (d)  Provisions shall physically audit or review evidence of an accredited
          audit of the manufacturing plants for compliance to government
          regulations and Provisions requirements.  Plants producing protein
          products shall be audited twice a year and other proprietary items
          shall be audited once per year.




     (a)  With respect to Food Products, CRW shall agree on the selection of a
          distribution company (the "Distributor") and shall mutually secure the
          services of the Distributor. Provisions and CRW shall enter into a
          distribution contract with the Distributor for the distribution of
          Food Products to Sites, upon reasonable terms and conditions.  A
          process shall be adopted with the Distributor, whereby a Site shall
          place its order for Food Products directly with the Distributor, which
          shall make deliveries of Food Product to the Site on an agreed upon
          timetable.  In the event that the Distributor is unable or unwilling
          to fill or deliver a reasonable order, Provisions, upon written notice
          from the Site, shall be responsible for sourcing alternative
          distribution services for delivering the Food Product in a reasonable
          time and manner to the Site.  Distributor shall invoice CRW directly
          for Food Product delivered to CRW-owned Sites.  CRW shall be
          responsible for paying to Distributor its own Food Product invoices.
          Franchisees of CRW shall have the option of purchasing Food Products
          through the Distributor. In such instances, the Franchisee shall be
          responsible for paying to the Distributor its own Food Product

     (b)  Provisions shall administer and manage the agreement between CRW and
          the Distributor to ensure proper accounting from the suppliers of all
          rebates, incentives and other consideration based on Food Product
          delivered through the Distributor.

     (c)  With respect to FFE, franchisees of CRW shall have the option of
          utilizing the purchasing services of Provisions. In such instances, a
          franchisee or, in the case of CRW-owned Sites, CRW, will complete a
          "check list" provided by CRW.  The checklist will indicate which FFE
          is being ordered for the Site.  Based on the completed checklist,
          Provisions, on behalf of CRW, will submit purchase orders to FFE
          suppliers with whom Provisions has negotiated price agreements.  The
          supplier will deliver FFE directly to the Site and will invoice CRW
          for the FFE.




     (a). FOOD PRODUCTS.

          (i)   PAYMENTS TO DISTRIBUTOR.  Each franchisee owned Site and CRW on
                behalf of CRW owned Sites shall be solely responsible for paying
                Distributor the amounts set forth in the Distributor's invoice.

          (ii)  Payments to Provisions.   Neither CRW, Franchisee, nor any site
                shall be responsible for making any payments to Provisions for
                services rendered of Food and Supply Products.  However,
                Provisions shall be entitled to certain remuneration paid
                directly by the suppliers of Food and Supply Products such as
                volume incentives, growth fees, brokerage commissions,
                purchasing fees, sales incentives, consolidation fees,
                administration fees, export and related international services,
                distribution or any other compensation paid by a supplier to
                Provisions for such related services.  These agreements will be
                made between Provisions and the supplier and maintained
                completely separate from any supply agreements made on behalf of
                CRW and its franchisees by Provisions.  Any compensation earned
                will be the sole property of Provisions.  CRW and its
                franchisees will not be entitled to any or part of fees
                Provisions earns.  The amount of any fee established with each
                supplier will be determined by Provisions and Supplier based on
                a mutually agreed upon criteria.  These fees may vary from
                supplier to supplier dependent on the function performed.


                (a) From time to time Provisions may negotiate a rebate to
                    Sites that order Food Product from that supplier.
                    Suppliers pay the rebate upon proof of sale of food product
                    from distributor to Site. Those rebates may be provided by
                    the Supplier to Provisions for further distribution or
                    Provisions may be required to invoice the Supplier for the
                    rebate based on the volume of Food



                    Product ordered by the Site according to invoice.  In all
                    cases where supplier rebates are not distributed directly to
                    a Site, Provisions will collect and redistribute such
                    rebates to the franchise Site, or to CRW for all CRW-owned
                    Sites, according to the rebate formula determined by the
                    Supplier and Provisions

                (b) From time to time Distributor may provide a rebate or a
                    "Freight Incentive" to Sites based on a formula determined
                    by Distributor.  These rebates are "distributed" directly to
                    the franchise Site or to CRW by the Distributor issuing a
                    credit that appears on the Distributor's invoice to the Site
                    for Food Products.  Such rebates are the sole property of
                    the entity to which the invoice containing the rebate is
                    addressed. In the event Distributor does not have the
                    ability to distribute the rebate directly to CRW and
                    franchisees, Provisions will redistribute any such rebates
                    actually received according to actual volume purchased by

     (b)  FFE.

          (i)   INVOICE PAYMENT AND CONSOLIDATION.  Provisions shall review all
                FFE invoices for accuracy prior to processing them through CRW
                for payment. Upon approval of an invoice, Provisions shall
                forward the invoice to CRW for payment. CRW shall be responsible
                for payment of all invoices for CRW owned sites and shall
                advance payment to Provisions the FFE Vendors on behalf of
                Franchisee Sites ("Advance Payment").

          (ii)  FEE.  CRW shall invoice the Franchisee Site for the price of FFE
                plus a fee equal to eight (8%) percent of the total FFE invoice
                (exclusive of shipping and taxes) for the Site (the "Equipment
                Purchasing Fee").



                At the time CRW issues an invoice to a Franchisee Site, CRW
                shall pay to Provisions a sum equal to the Equipment Purchasing

          (iii) OFFSET.  CRW shall have the right to offset from any monies due
                to Provisions an amount equal to or less than any Advance
                Payment or Equipment Purchasing Fee which remains uncollected by
                CRW from a Franchisee for more than 30 days following invoice
                date as a result of: (A) the FFE is claimed by the Franchisee
                Site to be defective (or as having other quality related issues)
                or being out of specification for the Franchisee Site, and/or;
                (B) the FFE was ordered for a Franchisee that CRW had previously
                put on a C.O.D. basis and Provision had been notified of that

          (iv)  At the start of each fiscal year of this Agreement, commencing
                fiscal 2000, CRW shall notify Provisions of the number of CRW
                Sites to be developed for the upcoming fiscal year. CRW shall
                commit to pay to Provisions an annual lump sum of $408,152.00
                (for 2000, equal to $12,368.00 per Site) ("CRW Purchasing Fee").
                The CRW Purchasing Fee shall be payable in 12 equal monthly
                installments of $34,012.66, commencing with January 30 of each
                year and shall be payable regardless of the number of actual
                openings. The CRW Purchasing Fee shall be adjusted each year in
                an amount not to exceed the change in the Consumer Price Index.
                No such adjustment shall reduce the per-Site CRW Purchasing Fee
                below the per-Site fee for the prior year unless there is a
                substantial reduction in services. As additional consideration,
                CRW shall perform the accounting and invoice consolidation
                procedures and make the Advance Payments for the Franchisee
                Sites as set forth above.

6.   CONFLICT RESOLUTION.  CRW, on behalf of itself and its franchisees, and
     Provisions shall each appoint two (2) individuals who shall meet as needed
     or on any basis they deem beneficial to address and suggest solutions
     pertaining to issues arising under this Agreement.  If a dispute becomes
     irreconcilable, the disputed issue shall be referred for



     resolution to the highest ranking officer of Provisions and the Chairman of
     CRW. If following a meeting between those officers the issue cannot be
     resolved, either party may compel non-binding mediation with the other, to
     be presided over by the president of Carlson Hospitality Group, Inc. at a
     time and place mutually convenient to the parties. The procedures for each
     such mediation shall be mutually established by the parties.

7.   TERM AND TERMINATION.  The term of this Agreement shall be five (5) years
     from the effective date of the Agreement.  The Agreement shall
     automatically renew for consecutive three (3) year terms, unless notice of
     election to not renew is given in writing by either party at least ninety
     (90) days prior to the end of the term.  If such notice is given, it shall
     specify a reason for the election to not renew and the other party shall
     have thirty (30) days from the receipt of such notice to rectify the reason
     for the election to not renew, as determined by the terminating party's
     reasonable opinion. Notwithstanding the foregoing, this Agreement may be
     terminated without liability to the terminating party if Carlson Companies
     Inc. directly or indirectly ceases to own, directly or indirectly, 50% or
     more of the voting control of CRW.

     Either party may terminate this Agreement upon ten (10) business days
     written notice if the other party fails to substantially and materially
     perform this Agreement.

8.   HOLD HARMLESS AND INDEMNIFICATION.  Provisions will defend, indemnify and
     hold harmless CRW, its parent and controlled affiliates and all officers,
     directors and employees thereof from and against any and all costs,
     damages, expenses, and claims arising out of or as a result of any alleged
     negligent or willful failure or malfeasance in the performance of its
     services hereunder, including, but not limited to all reasonable costs
     including attorneys' fees incurred as a result of suits against CRW arising

     CRW will defend, indemnify and hold harmless Provisions and its officers,
     directors and employees from and against any and all costs, damages,
     expenses, and claims



     arising out of or as a result of any alleged negligent or willful failure
     or malfeasance in the performance of its obligation hereunder, including
     but not limited to all reasonable costs, including attorneys' fees incurred
     as a result of suits against Provisions arising therefrom.

     The parties' obligations to defend, indemnify, and hold harmless shall
     survive the termination of this Agreement.

9.   CONFIDENTIALITY.  All information provided to one party to the other under
     this Agreement shall be deemed confidential information ("Confidential
     Information").  Each party agrees that it shall use reasonable care to
     maintain such Confidential Information in confidence and shall not discuss
     or divulge it to any persons outside of that party without the prior
     written consent of the other party.  "Reasonable care" shall mean the same
     degree of care exercised by a party with respect to its own information,
     which is of the same nature as the Confidential Information.  Upon
     termination of this Agreement, each party shall immediately return all
     Confidential Information to the other party or shall, upon request of the
     party, destroy such Confidential Information and deliver an affidavit,
     executed by an officer of that party confirming such destruction.  Each
     party agrees to keep the terms, conditions and subject matter of this
     Agreement confidential and not disclose them to, or discuss them with, any
     person other than its employees on a need-to-know basis or the other party.
     This provision shall survive termination or expiration of this Agreement.

10.  ENTIRE AGREEMENT/AMENDMENTS.  This written Agreement and any amendments
     made in accordance herewith, constitute the entire agreement of the
     parties.  All prior agreements or representations between the parties are
     superseded and replaced, are of no continuing force or effect and are not
     relied upon by either party. This Agreement may not be amended except by a
     written instrument signed by the parties hereto.

11.  ASSIGNMENT.  This Agreement may not be assigned by either party without the
     prior written consent of the other party, which consent shall not be
     unreasonably withheld.



12.  SEVERABILITY.  Any provision of this Agreement which is declared void or
     unenforceable by any competent authority or court shall to the extent of
     such invalidity or unenforceability be deemed severable and the other
     provisions of this Agreement shall continue unaffected.

13.  APPLICABLE LAW AND JURISDICTION.  This Agreement and the legal relations
     between the parties hereto shall be governed by and construed in accordance
     with the laws of the State of Texas (without regard to the laws of conflict
     of any jurisdiction) as to all matters, including, without limitation,
     matters of validity, interpretation, construction, effect, performance and
     remedies.  Jurisdiction and venue shall be exclusively vested in the State
     or Federal courts in Dallas, Texas.

14.  COUNTERPARTS.  This Agreement may be executed in two (2) counterpart copies
     and all such counterparts when taken together shall constitute one and the
     same instrument.

15.  NO THIRD PARTY BENEFICIARIES.  Nothing expressed or implied in this
     Agreement shall be construed to give any person or entity other than the
     parties hereto any legal or equitable rights hereunder.











                                     EXHIBIT A