Services Agreement - Carlson Restaurants Worldwide Inc. and Carlson Companies Inc.
SERVICES AGREEMENT
This Shared Services Agreement (this "Agreement") is entered into as of
August 19, 1999 (the "Effective Date") by and between Carlson Restaurants
Worldwide Inc., a Delaware corporation ("CRW"), and Carlson Companies, Inc. a
Minnesota corporation ("CCI").
RECITALS
WHEREAS, CRW is issuing shares of Class A Common Stock, $0.01 par value
per share ("Class A Common Stock"), to the public in an offering (the
"Initial Public Offering") registered under the Securities Act of 1933, as
amended;
WHEREAS, CCI beneficially owns all of the issued and outstanding CRW
Class B Common Stock, par value $0.01 per share ("Class B Common Stock");
WHEREAS, CCI has heretofore directly or indirectly provided certain
administrative, financial, management and other services to CRW or its
Subsidiaries (as defined below);
WHEREAS, on the terms and subject to the conditions set forth herein,
CRW desires to retain CCI as an independent contractor to provide, directly
or indirectly, certain of those services to CRW and its Subsidiaries after
the Effective Date; and
WHEREAS, on the terms and subject to the conditions set forth herein,
CCI desires to provide, directly or indirectly, such services to CRW and its
Subsidiaries.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, CCI and CRW, for themselves,
their successors and assigns, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the following
terms will have the following meanings, applicable both to the singular and
the plural forms of the terms described:
"CCI" has the meaning ascribed thereto in the preamble hereto.
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"CRW" has the meaning ascribed thereto in the preamble hereto.
"CRW Entities" means CRW and its Subsidiaries and "CRW Entity" shall
mean any of the CRW Entities.
"CRW Indemnified Person" has the meaning ascribed thereto in Section 4.05.
"Actions" has the meaning ascribed thereto in Section 4.04.
"Agreement" has the meaning ascribed thereto in the preamble hereto, as
such agreement may be amended and supplemented from time to time in
accordance with its terms.
"Benefit Billing" has the meaning ascribed thereto in Section 3.01.
"Benefits Services" has the meaning ascribed thereto in Section 3.05.
"Change Notice" has the meaning ascribed thereto in Section 3.07.
"Class A Common Stock" has the meaning ascribed thereto in the recitals
to this Agreement.
"Class B Common Stock" has the meaning ascribed thereto in the recitals
to this Agreement.
"Common Stock" means the Class B Common Stock, the Class A Common Stock
and any other class of CRW capital stock representing the right to vote
generally for the election of directors.
"Customary Billing" has the meaning ascribed thereto in Section 3.01.
"Effective Date" has the meaning ascribed thereto in the preamble to
this Agreement.
"Employee Welfare Plans" has the meaning ascribed thereto in Section
4.02.
"Initial Public Offering" has the meaning ascribed thereto in the
recitals to this Agreement.
"CCI Entities" means CCI and Subsidiaries of CCI and "CCI Entity" shall
mean any of the CCI Entities.
"CCI Indemnified Person" has the meaning ascribed thereto in Section
4.03.
"Pass-Through Billing" has the meaning ascribed thereto in Section 3.01.
"Payment Date" has the meaning ascribed thereto in Section 3.06.
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"Person" means any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization, government
(and any department or agency thereof) or other entity.
"Schedule I" means the first schedule hereto which lists the Services
(other than Services relating to employee plan and benefit matters) to be
provided by CCI to CRW and sets forth the related billing methodology.
"Schedule II" means the second schedule attached hereto which lists the
Services relating to employee plans and benefit arrangements to be provided
by CCI to CRW and sets forth the related billing methodology.
"Schedules" has the meaning ascribed thereto in Section 3.01.
"SEC" means the United States Securities and Exchange Commission.
"Service Costs" has the meaning ascribed thereto in Section 3.01.
"Services" has the meaning ascribed thereto in Section 2.01.
"Subsidiary" means, as to any Person, any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting capital stock or other voting ownership interests is owned or
controlled directly or indirectly by such Person or by one or more of the
Subsidiaries of such Person or by a combination thereof. Subsidiary, when
used with respect to CCI or CRW, shall also include any other entity
affiliated with CCI or CRW, as the case may be, that CCI and CRW may
hereafter agree in writing shall be treated as a "Subsidiary" for the
purposes of this Agreement. CRW shall not be deemed to be a Subsidiary of
CCI for purposes of this Agreement.
Section 1.02. Internal References. Unless the context indicates
otherwise, references to Articles, Sections and paragraphs shall refer to the
corresponding articles, sections and paragraphs in this Agreement and
references to the parties shall mean the parties to this Agreement.
ARTICLE II
PURCHASE AND SALE OF SERVICES
Section 2.01. Purchase and Sale of Services. (a) On the terms and
subject to the conditions of this Agreement and in consideration of the
Service Costs described below, CCI agrees to provide to CRW, or procure the
provision to CRW of, and CRW agrees to purchase from CCI, the services
described in Schedules I and II (the "Services"). Unless otherwise
specifically agreed by CCI and CRW, the Services to be provided or procured
by CCI hereunder shall be substantially similar in scope, quality, and nature
to those provided to, or procured on behalf of, the CRW Entities prior to the
Effective Date.
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(b) It is understood that (i) Services to be provided to CRW under this
Agreement will, at CRW's request, be provided to Subsidiaries of CRW and (ii)
CCI may satisfy its obligation to provide or procure Services hereunder by
causing one or more of its Subsidiaries to provide or procure such Services.
With respect to Services provided to, or procured on behalf of, any
Subsidiary of CRW, CRW agrees to pay on behalf of such Subsidiary all amounts
payable by or in respect of such Services.
Section 2.02. Additional Services. In addition to the Services to be
provided or procured by CCI pursuant to Section 2.01, if requested by CRW,
and to the extent that CCI and CRW may mutually agree, CCI shall provide
additional services (including services not provided by CCI to the CRW
Entities prior to the Effective Date) to CRW. The scope of any such services,
as well as the term, costs, and other terms and conditions applicable to such
services, shall be as mutually agreed by CCI and CRW.
ARTICLE III
SERVICE COSTS; OTHER CHARGES
Section 3.01. Service Costs Generally. Schedules I and II hereto
(collectively, the "Schedules") indicate, with respect to each Service listed
therein, whether the costs to be charged to CRW for such Service or program
are determined by (i) the customary billing method ("Customary Billing"),
(ii) the pass-through billing method ("Pass-Through Billing"), or (iii) a
calculation of certain costs relating to employee benefit plans and benefit
arrangements including CCI's reasonable and actual costs (including any
contributions and premium costs and certain third-party expenses and
allocations of certain CCI personnel expenses), generally in accordance with
past practice, subject to Section 3.05 hereof, relating to participation by
CRW employees in any of CCI's benefit plans ("Benefits Billing"); (iv) percent
of savings achieved through volume purchasing ("Percent of Savings"); and (v)
actuarially determined premiums ("Premiums"). The Customary Billing,
Pass-Through Billing, and Benefits Billing Percent of Savings and Premiums
methods applicable to Services provided to CRW, together with the unallocated
general and administrative expense billing described in Section 3.05, are
collectively referred to herein as the "Service Costs". CRW agrees to pay to
CCI in the manner set forth in Section 3.06 the Service Costs applicable to
each of the Services provided by CCI.
Section 3.02. Customary Billing. The costs of Services determined by
the Customary Billing method shall be comparable to the costs charged from
time to time to other businesses operated by CCI for comparable services,
which shall reflect CCI's cost, as determined by CCI from time to time and
including the cost of capital, associated with the delivery of such Services.
Section 3.03. Pass-Through Billing. The costs of Services determined
by the Pass-Through Billing method shall be equal to the third-party costs
and expenses incurred by CCI or any of its Subsidiaries on behalf of any CRW
Entity. If CCI incurs costs or expenses on behalf of CRW or any of its
Subsidiaries as well as other businesses operated by CCI, CCI will allocate
any such costs or expenses in good faith between the various businesses on
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behalf of which such costs or expenses were incurred as CCI shall determine
in the exercise of CCI's reasonable judgment. CCI shall apply usual and
accepted accounting conventions in making such allocations and CCI or its
agents shall keep and maintain such books and records as may be reasonably
necessary to make such allocations. CCI shall make copies of such books and
records available to any CRW Entity upon request and with reasonable notice.
Section 3.04. Benefits Billing. (a) Prior to the Effective Date, certain
employees of CRW participated in the following benefit plans sponsored by
CCI: health, dental, medical, short- and long-term disability and life
insurance, and the Carlson Legacy Plan (collectively, the "CCI Plans"). On
and after the Effective Date, CRW associates shall continue to be eligible to
participate in the CCI Plans except for the Carlson Legacy Plan, subject to
the terms of the governing plan documents as interpreted by the appropriate
plan fiduciaries. On and after the Effective Date, subject to regulatory
requirements and the provisions of Section 4.01 hereof, CCI will continue to
provide Benefits Services to and in respect of CRW employees with reference
to the CCI Plans as it administered the plans prior to the Effective Date.
(b) The costs payable by CRW for Services relating to employee plans
and benefit arrangements ("Benefits Services") may be charged on the basis of
Customary Billing, Pass-Through Billing, or Benefits Billing. It is express
intent of the parties that Services Costs relating to the administration of
CRW employee plans and the performance of related Services will not exceed
reasonable compensation for such Services. Costs associated with certain
plans and programs identified in Schedule II will be paid through CRW funding
and employee payroll deductions for such plans and programs. Benefit
Services consists of those categories of Services which are more fully
described on Schedule II attached hereto.
(c) Each party to this Agreement may request changes in the applicable
terms of or services relating to CCI Plans, approval of which shall not be
unreasonably withheld; provided, however, that approval of changes in the
terms of any of CCI Plans shall, after consultation with CRW, be in the sole
discretion of CCI.
(d) CCI and CRW agree to cooperate fully with each other in the
administration and coordination of regulatory and administrative requirements
associated with CCI Plans. Such coordination, upon request, will include
(but is not limited to) the following: sharing payroll data for
determination of highly compensated employees, providing census information
(including accrued benefits) for purposes of running discrimination tests,
providing actuarial reports for purposes of determining the funded status of
any plan, review and coordination of insurance and other independent third
party contracts, and providing for review of all summary plan descriptions,
requests for determination letters, insurance contracts, Forms 5500,
financial statement disclosures and plan documents.
Section 3.05. Unallocated General and Administrative Services. In
addition to the charges for the specific Services described in Schedules I
and II, CRW shall pay to CCI, as an additional Service Cost, the fixed amount
of $66,667 per month during the initial term and any extension of this
Agreement for unallocated general and administrative services,
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including the cost of capital associated with the delivery thereof, which are
provided by CCI to CRW and not otherwise identified to a specific Service
under this Agreement.
Section 3.06. Invoicing and Settlement of Costs. (a) CCI will invoice
or notify CRW on a monthly basis (not later than the fifth day of each
month), either directly or through CCI's intercompany billing system, in a
manner substantially consistent with the billing practices used in connection
with services provided to the CRW Entities prior to the Effective Date
(except as otherwise agreed), of the Service Costs. In connection with the
invoicing described in this Section 3.06(a), CCI will provide to CRW the same
billing data and level of detail as it customarily provided to the CRW
Entities prior to the Effective Date and as it customarily provides to other
businesses operated by CCI and such other data for CRW's review as may be
reasonably requested by CRW.
(b) CRW agrees to pay on or before 30 days after the date on which CCI
invoices or notifies CRW of the Service Costs after the Effective Date (or
the next Business Day, if such day is not a Business Day) (each, a "Payment
Date"), at CCI's option upon reasonable notice to CRW, through CCI's
intercompany billing system or, if applicable, CCI's cash management systems,
without set off, all amounts invoiced by CCI pursuant to paragraph (a) during
the preceding calendar month (or since the Effective Date, in the case of the
first Payment Date). If CRW fails to pay any monthly payment (except for
legitimately contested invoiced amounts) within 90 days of the relevant
Payment Date, CRW shall be obligated to pay, in addition to the amount due on
such Payment Date, interest on such amount at the prime, or the prime lending
rate quoted by the WALL STREET JOURNAL plus 3% per annum compounded monthly
from the relevant Payment Date through the date of payment.
Section 3.07. Amended Schedules. (a) Prior to September 30 of each year
for so long as the relevant Services continue to be provided under this
Agreement, CCI shall prepare and deliver to CRW updated versions of Schedules
I and II (to the extent applicable), setting forth with respect to the
Services described in such Schedules, any proposed changes in billing
methodology and, to the extent available, the Service Costs estimated to be
payable for such Services for the then current fiscal year. Except as CRW
and CCI may otherwise agree, and except as specifically described in this
Agreement (including the Schedules), the method of allocating and charging
the costs reflected on Schedules I and II, and any updated versions of such
schedules, shall be consistent with CCI's prior practices with respect to the
allocation of costs for services to the CRW Entities immediately prior to the
Effective Date; provided that if CCI changes the method of allocating and
charging such costs to CCI businesses generally, such revised method shall
also be applied to CRW and CRW shall be notified in writing preferably at
least 90, but not less than 60, days in advance of implementing such revised
method (a "Change Notice").
(b) If a revised method of allocating and charging costs for particular
Services would result in a significant increase in the amount of Service
Costs that CRW would be obligated to pay under this Agreement as compared to
those that would be payable were such method not revised, then,
notwithstanding Article VI, CRW shall have the right during the 90-day period
following receipt of CCI's Change Notice to terminate such Services upon
written notice to CCI, and such termination shall be effective on the
implementation date of the change in
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methodology. Such change in allocation method shall be deemed accepted by CRW
if no such notice of termination is received by CCI during such 90-day
period, and thereafter any termination shall be governed by the provisions of
Article VI. For purposes of this paragraph (b), a "significant increase"
means, with respect to any amount, an aggregate increase of more than 10%
over the prior year's cost for the affected Service (provided such increase
is at least $100,000) without a corresponding increase in the quantity of
services provided.
ARTICLE IV
THE SERVICES
Section 4.01. General Standard of Service. Except as otherwise agreed
with CRW or described in this Agreement, and provided that CCI is not
restricted by contract with third parties or by applicable law, CCI agrees
that the nature, quality, and standard of care applicable to the delivery of
the Services hereunder will be substantially the same as that of the Services
which CCI provides from time to time throughout its businesses; provided that
in no event shall such standard of care be less than the standard of care
that CCI has customarily provided to the CRW Entities with respect to the
relevant Service prior to the Effective Date. CCI shall use its reasonable
business efforts to ensure that the nature and quality of Services provided
to CRW employees either by CCI directly or through administrators under
contract shall be undifferentiated as compared with the same services
provided to or on behalf of CCI associates under CCI Plans.
Section 4.02. Delegation. Subject to Section 4.01 above, CRW hereby
delegates to CCI final, binding, and exclusive authority, responsibility, and
discretion to interpret and construe the provisions of the CCI Plans in which
CRW has elected to participate and which are administered by CCI under this
Agreement. CCI may further delegate such authority to plan administrators to:
(i) provide administrative and other services;
(ii) reach factually supported conclusions consistent with the terms
of the CCI Plans;
(iii) make a full and fair review of each claim denial and decision
related to the provision of benefits provided or arranged for under the CCI
Plans, pursuant to the requirements of ERISA, if within sixty days after
receipt of the notice of denial, a claimant requests in writing a review for
reconsideration of such decisions. The Plan Administrator shall notify the
claimant in writing of its decision on review. Such notice shall satisfy all
ERISA requirements relating thereto; and
(iv) notify the claimant in writing of its decision on review.
Section 4.03. Limitation of Liability. CRW agrees that none of CCI and
its Subsidiaries and their respective directors, officers, agents, and
employees (each, a "CCI Indemnified Person") shall have any liability,
whether direct or indirect, in contract or tort or otherwise, to CRW for or
in connection with the Services rendered or to be rendered by any
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CCI Indemnified Person pursuant to this Agreement, the transactions
contemplated hereby or any CCI Indemnified Person's actions or inactions in
connection with any such Services or transactions, except for damages which
have resulted from such CCI Indemnified Person's gross negligence or willful
misconduct in connection with any such Services, actions or inactions.
Section 4.04. Indemnification of CCI by CRW. CRW agrees to indemnify and
hold harmless each CCI Indemnified Person from and against any damages, and
to reimburse each CCI Indemnified Person for all reasonable expenses as they
are incurred in investigating, preparing, pursuing, or defending any claim,
action, proceeding, or investigation, whether or not in connection with
pending or threatened litigation and whether or not any CCI Indemnified
Person is a party (collectively, "Actions"), arising out of or in connection
with Services rendered or to be rendered by any CCI Indemnified Person
pursuant to this Agreement, the transactions contemplated hereby or any CCI
Indemnified Person's actions or inactions in connection with any such
Services or transactions; provided that CRW will not be responsible for any
damages of any CCI Indemnified Person that have resulted from (a) such CCI
Indemnified Person's gross negligence or willful misconduct in connection
with any of the advice, actions, inactions, or Services referred to above or
(b) the exercise by CCI of its authority, responsibility or discretion to
interpret and construe the provisions of the CCI Plans pursuant to Section
4.02 hereof.
Section 4.05. Indemnification of CRW by CCI. CCI agrees to indemnify and
hold harmless CRW and its Subsidiaries and their respective directors,
officers, agents, and employees (each, a "CRW Indemnified Person") from and
against any damages, and will reimburse each CRW Indemnified Person for all
reasonable expenses as they are incurred in investigating, preparing, or
defending any Action, arising out of or in connection with the gross
negligence or willful misconduct of any CCI Indemnified Person in connection
with the Services rendered or to be rendered pursuant to this Agreement or
the transactions contemplated hereby.
Section 4.06. Further Indemnification. To the extent that any other
Person has agreed to indemnify any CCI Indemnified Person or to hold a CCI
Indemnified Person harmless and such Person provides services to CCI or any
affiliate of CCI relating directly or indirectly to any employee plan or
benefit arrangement for which Benefit Services are provided under this
Agreement, CCI will exercise reasonable efforts (x) to make such agreement
applicable to any CRW Indemnified Person so that each CRW Indemnified Person
is held harmless or indemnified to the same extent as any CCI Indemnified
Person or (y) otherwise make available to each CRW Indemnified Person the
benefits of such agreement.
Section 4.07. Reports. CCI shall provide or shall cause to be provided
to CRW with data or reports requested by CRW relating to (i) benefits paid to
or on behalf of CRW employees under CCI Plans, including but not limited to
financial statements, claims history, and census information, and (ii) other
information relating to the Services that is required to satisfy any
reporting or disclosure requirement of ERISA or the Code. CCI will provide
such information within a reasonable period of time after it is requested.
The costs for reports which are substantially similar to reports prepared by
CCI or on behalf of CCI generally for
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its businesses shall be billed as part of the Benefit Costs. The cost for
additional reports shall be billed as incremental costs in accordance with
Section 3.06.
ARTICLE V
ADDITIONAL AGREEMENT
Section 5.01. Notice. Unless otherwise agreed in writing by the parties,
CRW agrees to provide CCI with at least two months prior written notice of
any material change in the eligible CRW employees and retirees covered by any
CCI Plan, and any change in the scope of Services to be provided by CCI with
respect to such plans and arrangements. Notwithstanding the preceding
sentence, if CRW provides CCI with less than two months notice of any such
change and CCI is nonetheless able, with reasonable efforts, to effectuate
such change with such shorter notice, then CCI shall implement the requested
change.
ARTICLE VI
TERM AND TERMINATION
Section 6.01. Term. Except as otherwise provided in this Article VI or
in Section 7.05 or as otherwise agreed in writing by the parties, this
Agreement shall have an initial term of ten years from the Effective Date,
and will be renewed automatically thereafter for successive one-year terms
unless either CRW or CCI elects not to renew this Agreement upon not less
than six months' written notice.
Section 6.02. Termination. (a) After the initial ten-year term, CRW may
from time to time terminate this Agreement with respect to one or more of the
Services, in whole or in part, upon giving at least six months' prior notice
to CCI.
(b) This Agreement will be subject to early termination by either CRW
or CCI upon six months' written notice if CCI owns less than fifty percent
(50%) of the outstanding shares of Common Stock of CRW.
(c) CCI may terminate any affected Service at any time if CRW shall
have failed to perform any of its material obligations under this Agreement
relating to such Service, CCI has notified CRW in writing of such failure,
and such failure shall have continued for a period of 60 days after receipt
of CRW of notice of such failure.
(d) CRW may terminate any affected Service at any time if CCI shall
have failed to perform any of its material obligations under this Agreement
relating to such Service, CRW has notified CCI in writing of such failure,
and such failure shall have continued for a period of 60 days after receipt
by CCI of notice of such failure.
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(e) Each of CRW and CCI agrees that prior to exercising its rights
under this Section 6.02 it will consult for a reasonable period with the
other party in advance of such termination as to its implementation.
(f) CRW may terminate any affected Service pursuant to Section 3.07(b)
hereof.
Section 6.03. Effect of Termination. (a) Other than as required by law,
upon termination of any Service pursuant to Section 6.01 or Section 6.02, and
upon termination of this Agreement in accordance with its terms, CCI will
have no further obligation to provide the terminated Service (or any Service,
in the case of termination of this Agreement) and CRW will have no obligation
to pay any fees relating to such Services or make any other payments
hereunder; provided that notwithstanding such termination, (i) CRW shall
remain liable to CCI for fees owed and payable in respect of Services
provided prior to the effective date of the termination; (ii) CCI shall
continue to charge CRW for administrative and program costs relating to
benefits paid after but incurred prior to the termination of any Service and
other services required to be provided and payments required to be made after
the termination of such Service and CRW shall be obligated to pay such
expenses in accordance with the terms of this Agreement; and (iii) the
provisions of Articles IV, V, VI and VII shall survive any such termination.
All program and administrative costs attributable to CRW employees for CCI
Plans that relate to any period after the effective date of any such
termination shall be for the account of CRW.
(b) Following termination of this Agreement with respect to any
Service, CCI and CRW agree to cooperate in providing for an orderly
transition of such Service to CRW or to a successor service provider.
Without limiting the foregoing, CCI agrees to (i) provide, within 90 days of
the termination, copies in a format designated by CCI, all records relating
directly or indirectly to benefit determinations of CRW employees, including
but not limited to compensation and service records, correspondence, plan
interpretive policies, plan procedures, administration guidelines, minutes,
or any data or records required to be maintained by law and (ii) work with
CRW in developing a transition schedule.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Prior Agreements. In the event there is any conflict
between the provisions of this Agreement, on the one hand, and provisions of
prior services agreements among CCI or its Subsidiaries and any of the CRW
businesses (the "Prior Agreements"), on the other hand, the provisions of
this Agreement shall govern and such provisions in the Prior Agreements are
deemed to be amended so as to conform with this Agreement.
Section 7.02. Future Litigation and Other Proceedings. In the event that
CRW (or any of its officers or directors) or CCI (or any of its officers or
directors) at any time after the date hereof initiates or becomes subject to
any litigation or other proceedings before any governmental authority or
arbitration panel with respect to which the parties have no prior agreements
(as to indemnification or otherwise), the party (and its officers and
directors) that
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has not initiated and is not subject to such litigation or other proceedings
shall comply, at the other party's expense, with any reasonable requests by
the other party for assistance in connection with such litigation or other
proceedings (including by way of provision of information and making
available of employees as witnesses). In the event that CRW (or any of its
officers or directors) and CCI (or any of its officers or directors) at any
time after the date hereof initiate or become subject to any litigation or
other proceedings before any governmental authority or arbitration panel with
respect to which the parties have no prior agreements (as to indemnification
or otherwise), each party (and its officers and directors) shall, at their
own expense, coordinate their strategies and actions with respect to such
litigation or other proceedings to the extent such coordination would not be
detrimental to their respective interests and shall comply, at the expense of
the requesting party, with any reasonable requests of the other party for
assistance in connection therewith (including by way of provision of
information and making available of employees as witnesses).
Section 7.03. No Agency. Nothing in this Agreement shall constitute or
be deemed to constitute a partnership or joint venture between the parties
hereto or, except to the extent provided in Section 4.02, constitute or be
deemed to constitute any party the agent or employee of the other party for
any purpose whatsoever and neither party shall have authority or power to
bind the other or to contract in the name of, or create a liability against,
the other in any way or for any purpose.
Section 7.04. Subcontractors. CCI may hire or engage one or more
subcontractors to perform all or any of its obligations under this Agreement,
provided that, subject to Section 4.03, CCI will in all cases remain
primarily responsible for all obligations undertaken by it in this Agreement
with respect to the scope, quality and nature of the Services provided to CRW.
Section 7.05. Force Majeure. (a) For purposes of this Section, "force
majeure" means an event beyond the control of either party, which by its
nature could not have been foreseen by such party, or, if it could have been
foreseen, was unavoidable, and includes without limitation, acts of God,
storms, floods, riots, fires, sabotage, civil commotion or civil unrest,
interference by civil or military authorities, acts of war (declared or
undeclared) and failure of energy sources.
(b) Neither party shall be under any liability for failure to fulfill
any obligation under this Agreement, so long as and to the extent to which
the fulfillment of such obligation is prevented, frustrated, hindered, or
delayed as a consequence of circumstances of force majeure, provided always
that such party shall have exercised all due diligence to minimize to the
greatest extent possible the effect of force majeure on its obligations
hereunder.
(c) Promptly on becoming aware of force majeure causing a delay in
performance or preventing performance of any obligations imposed by this
Agreement (and termination of such delay), the party affected shall give
written notice to the other party giving details of the same, including
particulars of the actual and, if applicable, estimated continuing effects of
such force majeure on the obligations of the party whose performance is
prevented or delayed. If such notice shall have been duly given, any actual
delay resulting from such force majeure shall be deemed not to be a breach of
this Agreement, and the period for performance of the
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obligation to which it relates shall be extended accordingly, provided that
if force majeure results in the performance of a party being delayed for a
period which causes a material and continuing impact on the conduct of the
business of the other party (but in no event less than 14 days), such other
party shall have the right to terminate this Agreement with respect to any
Service effected by such delay forthwith by written notice.
Section 7.06. Entire Agreement. This Agreement (including the Schedules
constituting a part of this Agreement) and any other writing signed by the
parties that specifically references this Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter hereof.
This Agreement is not intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
Section 7.07. Information. Subject to applicable law and privileges,
each party hereto covenants and agrees to provide the other party with all
information regarding itself and transactions under this Agreement that the
other party reasonably believes are required to comply with all applicable
federal, state, county and local laws, ordinances, regulations and codes,
including, but not limited to, securities laws and regulations.
Section 7.08. Confidential Information. CRW and CCI hereby covenant and
agree to hold in trust and maintain confidential all Confidential Information
relating to the other party. "Confidential Information" shall mean all
information disclosed by either party to the other in connection with this
Agreement whether orally, visually, in writing or in any other tangible form,
and includes, but is not limited to, economic and business data, business
plans, and the like, but shall not include (i) information which becomes
generally available other than by release in violation of the provisions of
this Section 7.08, (ii) information which becomes available on a
non-confidential basis to a party from a source other than the other party to
this Agreement provided the party in question reasonably believes that such
source is not or was not bound to hold such information confidential, (iii)
information acquired or developed independently by a party without violating
this Section 7.08 or any other confidentiality agreement with the other party
and (iv) information that any party hereto reasonably believes it is required
to disclose by law, provided that it first notifies the other party hereto of
such requirement and allows such party a reasonable opportunity to seek a
protective order or other appropriate remedy to prevent such disclosure.
Without prejudice to the rights and remedies of either party to this
Agreement, a party disclosing any Confidential Information to the other party
in accordance with the provisions of this Agreement shall be entitled to
equitable relief by way of an injunction if the other party hereto breaches
or threatens to breach any provision of this Section 7.08.
Section 7.09. Notices. Any notice, instruction, direction or demand
under the terms of this Agreement required to be in writing will be duly
given upon delivery, if delivered by hand, overnight receipted carrier, or
mail, to the following addresses:
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(a) If to CRW, to:
Carlson Restaurants Worldwide Inc.
7540 LBJ Freeway
Dallas, Texas 75251
Attention: General Counsel
(b) If to CCI, to:
Carlson Companies, Inc.
701 Carlson Parkway
Minneapolis, MN 55459-8249
Attention: Legal Department
with a copy to:
Carlson Hospitality Group Inc.
701 Carlson Parkway
Minneapolis, MN 55459-8214
Attention: President and CEO
or to such other addresses or telecopy numbers as may be specified by like
notice to the other parties.
Section 7.10. Governing Law and Dispute Resolution. This Agreement shall
be construed in accordance with and governed by the substantive internal laws
of the State of Minnesota. If either party is not satisfied with the other
party's performance of its obligations under this Agreement, a written
description of the problem shall be provided to the executive financial
management of the offending party by the executive financial management of
the aggrieved party, and both parties shall use good faith efforts to resolve
the problem before bringing any legal action.
Section 7.11. Severability. If any provision of this Agreement shall be
invalid or unenforceable, such invalidity or unenforceability shall not
render the entire Agreement invalid. Rather, the Agreement shall be
construed as if not containing the particular invalid or unenforceable
provision, and the rights and obligations of each party shall be construed
and enforced accordingly.
Section 7.12. Amendment. This Agreement may only be amended by a written
agreement executed by both parties hereto.
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Section 7.13. Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original and all of which,
when taken together, shall constitute one agreement.
Section 7.14. Services to CCI. (a) CRW agrees to continue to participate
in the Owners' Club Card and Friday's Gold Card programs.
(b) CRW agrees to permit CCI and its Subsidiaries to display the
trademarks and service marks owned by CRW or any of its Subsidiaries in CCI's
publicity materials and for other similar purposes at no cost to CCI or its
Subsidiaries and in a manner consistent with prior practice.
Section 7.15. Year 2000 Readiness. (a) CRW and CCI agree that each will
cooperate with the other and use its best efforts to ensure that the internal
Critical Systems in its operations will be Year 2000 Compliant beginning
December 31, 1999 and continuing from that date forward. A "Critical
System" means a system which, if it failed, would materially adversely affect
a party's performance obligations under this Agreement.
(b) Neither party represents or warrants to the other that systems
external to its systems, such as the outside power grid, suppliers,
transportation systems, and the like are Year 2000 Compliant, or that such
external systems will not adversely affect such party's obligations or
performance under this Agreement. Neither party shall be obligated to
mitigate any damages resulting from year 2000 failures of such external
systems.
(c) "Year 2000 Compliant" means a system will not produce interruptions
or errors processing date data for all dates to, through and after January 1,
2000, including leap years, when the Critical Systems are used with accurate
date data in accordance with their documentation, provided all other systems
(e.g., other software, firmware and hardware) used with a party's system
properly exchange date data with such party's system.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their duly authorized representatives.
CARLSON RESTAURANTS WORLDWIDE INC.
By: /s/ Wallace B. Doolin
------------------------------------
Name: Wallace B. Doolin
Title: President and CEO
CARLSON COMPANIES, INC.
By: /s/ Martyn R. Redgrave
-------------------------------------
Name: Martyn R. Redgrave
Title: Executive Vice President and CFO
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Services Agreement
Schedule I:
Services (Excluding Benefit Plans and Arrangements)
<CAPTION>
---------------------------------------- -------------------------------------------------- --------------------------------
SERVICE DESCRIPTION BILLING METHODOLOGY
---------------------------------------- -------------------------------------------------- --------------------------------
IT-MIS Systems Workstation technical support and IT consulting Customary
---------------------------------------- -------------------------------------------------- --------------------------------
Employee Communications Internal enterprise-wide employee communications Pass-Through Billing
---------------------------------------- -------------------------------------------------- --------------------------------
Corporate HR Services Resume scanning and database tool; compensation Customary
consulting
---------------------------------------- -------------------------------------------------- --------------------------------
Corporate Accounting External audit of shared services function; Customary
preparation of consolidated management reports;
accounting policies and procedures
---------------------------------------- -------------------------------------------------- --------------------------------
Corporate Procurement and Strategic Enterprise-wide procurement services (exclusive Percent of savings
Sourcing of Provisions-TM- services)
---------------------------------------- -------------------------------------------------- --------------------------------
Tax Tax consulting and tax examination support Customary
---------------------------------------- -------------------------------------------------- --------------------------------
Treasury and Cash Management Debt, bank relationship, and investment Customary
management; cash concentration and management
services
---------------------------------------- -------------------------------------------------- --------------------------------
Legal Corporate legal support Customary
---------------------------------------- -------------------------------------------------- --------------------------------
Corporate Executive Meetings and Corporate-wide executive management meetings and Pass-Through Billing
Briefings briefings
---------------------------------------- -------------------------------------------------- --------------------------------
Accounts Payable Processing of purchase orders, invoices, and Customary
travel and entertainment expenses
---------------------------------------- -------------------------------------------------- --------------------------------
Financial Information Technology Support of Oracle-TM- Financial Systems Customary
---------------------------------------- -------------------------------------------------- --------------------------------
Accounting to Reporting Maintenance of General Ledger and accounting Customary
support
---------------------------------------- -------------------------------------------------- --------------------------------
Fixed Assets Fixed Asset accounting support Customary
---------------------------------------- -------------------------------------------------- --------------------------------
Order to Cash Accounts receivable system support and cash Customary
receipt processing
---------------------------------------- -------------------------------------------------- --------------------------------
Corporate Security Background checks and specialized security Pass-Through Billing
services
---------------------------------------- -------------------------------------------------- --------------------------------
Corporate Travel Services Travel services; ticketing, travel expense Customary and Pass-Through
management and reporting, credit card management. Billing
---------------------------------------- -------------------------------------------------- --------------------------------
Remote Network Access Access charges for remote computer users Pass-Through Billing
---------------------------------------- -------------------------------------------------- --------------------------------
Risk Management and Insurance Services Maintenance of risk management and insurance Premiums for retained casualty
program services losses; Customary for all other
---------------------------------------- -------------------------------------------------- --------------------------------
<PAGE>
Services Agreement
Schedule II:
Benefit Plans and Arrangements
<CAPTION>
---------------------------------------- -------------------------------------------------- --------------------------------
SERVICE DESCRIPTION BILLING METHODOLOGY
---------------------------------------- -------------------------------------------------- --------------------------------
Benefit Plans and Benefit Trust Administration of health and welfare benefit Benefits Billing
Administration plans; consulting on plan design
---------------------------------------- -------------------------------------------------- --------------------------------