Accounting Services Agreement - Quality Dining Inc. and Bagel Acquisition Corp.
ACCOUNTING SERVICES AGREEMENT
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This Accounting Services Agreement ("Agreement") is made as of the 12th day
of August, 1996 by and between Quality Dining, Inc., an Indiana corporation
("Company"), and Bagel Acquisition Corporation, an Indiana corporation
("Developer").
RECITALS
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1. The Company and the Developer have entered into or propose to enter
into one or more Franchise Agreements (each a "Franchise Agreement" and,
collectively, the "Franchise Agreements"), whereby the Company or a subsidiary
of Company shall grant to the Developer the right to operate a Bruegger's Bagel
Bakery Restaurant (the "Restaurant").
2. Pursuant to the Franchise Agreements, the Developer is required to
maintain certain accounting records and provide to the Company certain periodic
financial reports and other data.
3. Developer has requested and the Company has offered that the Company
assist the Developer in maintaining certain accounting records and preparing
certain financial reports required under the Franchise Agreements.
4. Developer desires to enter into an agreement pursuant to which the
Company would perform such services for Developer upon the terms and subject to
the conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and for good and valuable consideration, the sufficiency and receipt of which is
hereby acknowledge, the parties hereby agree as follows:
1. ACCOUNTING SERVICES.
1.1 Upon the terms and subject to the conditions set forth in this
Agreement, the Company shall provide to the Developer for each
Restaurant operated by the Developer and for the Developer's Entity as
a whole the following accounting services (the "Services"):
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(a) per-unit calculation of revenue and expenses by accounting
category per the Company's standard chart of accounts and calculation
of Royalty Based Revenue and Royalty Fees (as each term is defined in
the Franchise Agreements);
(b) administration and maintenance of corporate payroll, and
administration of the processing of payroll and calculation of
applicable tax and other withholdings relating to the Developer's
Restaurants through the Company's designated payroll service bureau;
(c) administration of accounts payable (including check generation and
wire transfers);
(d) administration of recurring cash transfers between the Developer's
Restaurants and corporate bank accounts;
(e) administration and maintenance of a Developer general ledger
trial balance, balance sheet, income statement and certain other
corporate and Restaurant reports by accounting category per the
Company's standard chart of accounts and consistent with periodic
reports the Company customarily prepares in the normal course of
business to manage its financial affairs, and periodic distribution of
such reports to Developer using the company's Report Distribution
System;
(f) maintenance of all accounting records supporting Developer
financial statements (consistent with the Company's record retention
program) in reasonable fashion separate and discrete from the
accounting records of the Company's record retention program) in
reasonable fashion separate and discrete from the accounting records
of the Company; and
(g) preparation of period-end reconciliations and associated period-
end journal entries for all Developer balance sheet accounts.
1.2 The Services shall not include any of the following, each of which is
the sole responsibility of Developer:
(a) selection of accounting policies to be applied to the Developer's
books and records; however, the Company will consistently apply the
appropriate policies selected by Developer;
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(b) negotiation of terms and conditions between Developer and its
suppliers, vendors, and others, such as remittance due dates and
discounts;
(c) quarterly review and edit of the Developer's vendor masterfile for
current and accurate data; however the Company will appropriately
apply updates to the vendor masterfile as directed by the Developer;
(d) signature and final release of trade accounts payable disbursement
checks in excess of $200,000;
(e) final review and approval of annual financial statements;
(f) cash investment activities; however, the Company will initiate and
manage repetitive and/or fixed cash management activities as directed
in writing by the Developer;
(g) approval and coding of invoices for disbursement;
(h) preparation of budgets (except that the Company will develop a
budget process and calendar to facilitate the preparation of annual
budgets by the Developer); and
(i) preparation, filing, of signing of any tax returns required to be
filed by Developer, with the exception of sales and use tax returns
which will be prepared, but not, however, filed or signed by the
Company.
1.3 Developer agrees to supply the Company all information, materials,
data, and documents necessary or advisable to properly perform the
Services in such form, format, or media as the Company may reasonably
request, to make available the officers of the Developer to answer any
inquires in connection therewith.
2. FEES FOR SERVICES AND EXPENSE REIMBURSEMENT.
2.1 In consideration of the Services, the Developer agrees to pay to the
Company an administrative fee, separate and apart from any fee
otherwise payable under the Franchise Agreements, as follows:
(a) During the term of this Agreement, Developer will pay Company an
amount equal to Four Thousand Dollars ($4,000.00) per accounting
period ("Accounting Period"), in accordance of the
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Company's thirteen four-week account periods, for each corporate
entity which Developer uses to operate one or more of the Restaurants
during any portion of the applicable Accounting Period.
(b) During the term of this Agreement, Developer will pay Company an
amount equal to One Thousand Dollars ($1,000.00) per Accounting Period
for each Restaurant open and operational during any portion of the
applicable Accounting Period.
2.2 In addition to the payment of fees as specified in Section 2.1 of this
Agreement, the Developer shall reimburse the Company for all non-
ordinary, out-of-pocket expenses incurred by the Company or its
affiliates in connection with the Services rendered by them hereunder,
including, but not limited to, travel expenses, legal fees, fees of
experts, audit fees, tax fees, payroll service fees, etc. All non-
ordinary, out of pocket expenses, however, must be approved by
Developer prior to incurring such expense. Expenses payable under this
Section 2.2 shall be paid in the manner specified in Section 4.1 of
this Agreement.
3. TERM OF SERVICES. The term of this Agreement shall be for the period of
time commencing on the effective date hereof and continuing so long as any
of the Franchise Agreements remain in effect. Provided, however, that the
Company may terminate this Agreement without notice and cease rendering
the Services hereunder upon any non-payment by the Developer of the fees
and expenses provided for herein when such fees and expenses are due and
payable.
4. PAYMENT OF AMOUNTS DUE HEREUNDER: LIABILITY.
4.1 The Company will calculate and collect through electronic funds
transfer the total dollar amount of all fees and expenses due to the
Company hereunder, at the end of each Accounting Period.
4.2 The Company shall not be liable for any cost, damage, expense, or loss
of the Developer or any other person or entity arising or resulting,
directly or indirectly, from the failure of the Company to perform any
of the Services for the Developer hereunder or the misperformance of
any such Services, except to the extent such failure to perform or
such misperformance is the result of the Company's willful misconduct
or gross negligence, in which event Company's liability shall not
exceed its fee for such Services hereunder for the period in question.
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5. MISCELLANEOUS.
5.1 In performing the Services set forth in this Agreement, the Company
will have neither express or implied power to execute agreements on
behalf of the Developer or in any manner bind the Developer as to any
matter not within the scope of this Agreement.
5.2 All notices provided for in this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or
sent by overnight express or facsimile transmission or registered or
certified mail, return receipt requested and postage prepaid. Any
party may change the address to which notices hereunder are to be sent
to it by giving written notice of such change of address in the manner
herein provided for giving notice. Any notice delivered personally or
by overnight express courier or facsimile transmission shall be deemed
to have been given on the date it is so delivered, and any notice
delivered by registered or certified mail delivery service shall be
deemed to have been duly given three business days after it is sent to
the intended recipient at the address set forth above.
5.3 THIS AGREEMENT SHALL BE CONSTUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE AND TO
BE PERFOMED THEREIN WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS
THEREOF.
5.4 A failure of any party to insist in any instance upon the strict and
punctual performance of any provision of this Agreement shall not
constitute a continuing waiver of such provision. No party shall be
deemed to have waived any rights, power, or privilege under this
Agreement or any provisions hereof unless such waiver shall have been
in writing and duly executed by the party to be charged with such
waiver, and such waiver shall e a waiver only with respect to the
specific instance involved and shall in no way impair the rights of
the waiving party or the obligations of the other party or parties in
any other respect or at any other time. If any provision of this
Agreement shall be waived, or be invalid, illegal, or unenforceable,
the remaining provisions of this Agreement shall be unaffected thereby
and shall be unaffected thereby and shall remain binding and in full
force and effect.
5.5 This Agreement may be amended or modified only by a written
instrument signed by each of the parties hereto.
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5.6 This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings, either or oral or written with
respect thereto.
5.7 Nothing contained in this Agreement is intended, nor shall it be
construed, to create any rights in any person not a party to this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
COMPANY: DEVELOPER:
Quality Dining, Inc. Bagel Acquisition Corporation
By: /s/ Michael G. Sosinski By: /s/ Daniel B. Fitzpatrick
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Name: Michael G. Sosinski Name: Daniel B. Fitzpatrick
Title: Chief Financial Officer Title: President
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