FIRST AMENDED AND RESTATED
PROCESSING AGREEMENT
THIS FIRST AMENDED AND RESTATED PROCESSING AGREEMENT,
dated as of July 31, 1995, by and among FLEMING COMPANIES, INC.,
an Oklahoma corporation ("Fleming"), having a notice address at
6301 Waterford Boulevard, Oklahoma City, Oklahoma 73126-0647, and
certain undersigned subsidiaries of Fleming, the names and
addresses of which are listed on Schedule 2 hereto (collectively,
the "Subsidiaries"), COUPON REDEMPTION, INC., a Tennessee
corporation ("CRI"), having a notice address at 700 Colonial
Road, Suite 100, Memphis, Tennessee 38117, and SEVEN OAKS
INTERNATIONAL, INC., a Tennessee corporation ("Seven Oaks"),
having a notice address at 700 Colonial Road, Suite 100, Memphis,
Tennessee 38117;
W I T N E S S E T H:
WHEREAS, Fleming, CRI and Seven Oaks are parties,
together with Acorn Holdings, LLC, a Tennessee limited liability
company, to that certain Stock Purchase and Debt Modification
Agreement dated as of September 7, 1994 (the "Stock Purchase
Agreement");
WHEREAS, pursuant to the Stock Purchase Agreement,
Fleming agreed to purchase the Fleming Shares (as defined in the
Stock Purchase Agreement) for consideration described therein;
WHEREAS, the Stock Purchase Agreement contains
certain other covenants and undertakings, including without
limitation the agreement that CRI shall become the exclusive
processor for coupons for Fleming and the Subsidiaries pursuant
to the Processing Agreement (as defined in the Stock Purchase
Agreement);
WHEREAS, the Processing Agreement provides for the
terms and conditions pursuant to which CRI shall process coupons
for Fleming and the Subsidiaries, which are collectively referred
to in the Processing Agreement as the "Fleming Parties" and
individually, as a "Fleming Party";
WHEREAS, subsequent to September 7, 1994, certain of
the Subsidiaries were merged into Fleming or other wholly owned
subsidiaries of Fleming;
WHEREAS, Schedule 2, as amended by this Agreement,
accurately sets forth the names of each Fleming Party and the
trade name under which such Fleming Party operates;
WHEREAS, subsequent to execution of the Processing
Agreement, CRI, and Seven Oaks executed a letter of intent with
Fleming, pursuant to which the parties have agreed to make
certain modifications and concessions with respect to the
covenants and undertakings in the Stock Purchase Agreement and
the Processing Agreement;
WHEREAS, this First Amended and Restated Processing
Agreement is intended to implement the terms of the letter of
intent with respect to coupon processing services for independent
retailers supplied by Fleming, to provide the fees to be charged
for such services, to provide for termination of the Processing
Agreement and other non-competition agreements under certain
conditions and certain additional matters;
WHEREAS, it is the intent of the parties to amend the
Processing Agreement so that it provides the terms and conditions
pursuant to which CRI shall perform coupon processing services
for the Fleming Parties and for all independently owned retailers
for whom Fleming serves as the principal supplier of food and
related products ("Fleming Supplied Retailers"); and
WHEREAS, although the Fleming Supplied Retailers will
not be parties to this Agreement, it is the purpose of this
agreement to set forth the terms and conditions, as between
Fleming and CRI, upon which CRI shall agree to provide coupon
processing services for the benefit of the Fleming Supplied
Retailers.
NOW THEREFORE, in consideration of the premises and
intending to be legally bound hereby, the parties hereby agree as
follows:
1. Services of CRI.
1.1 Fleming Parties. By its acceptance
hereof, CRI agrees to perform the following services for the
Fleming Parties:
1.1.1 To act as the Fleming Parties'
sorting agent, to receive, sort, count and submit on Fleming's
invoice to the distributing manufacturers all valid coupons
submitted by any of the Fleming Parties to CRI within 10 days of
receipt of coupons in CRI's El Paso, Texas office, and CRI will
provide reporting as mutually agreed upon from time to time by
Fleming and CRI. The invoice will instruct the manufacturer or
its representative to make payment thereof by check payable to
Fleming submitted directly to Fleming or to a bank account
designated by Fleming as reflected on such invoice. In the event
any such invoice payment should be received by CRI, CRI shall
remit same to Fleming within twenty four (24) hours of its
receipt thereof. All coupons not processed by CRI will be
returned to Fleming within 30 days after CRI's receipt thereof in
CRI's El Paso, Texas office.
1.1.2 Be responsible for the cost of
shipping and coupon transit insurance coverage from the time
coupons are shipped from CRI in El Paso, Texas and until the
coupons are delivered to the distributing manufacturer or
returned to Fleming as provided in Section 1.1.1 above.
1.1.3 Be responsible for all supply,
computer, and all other costs required to perform the functions
listed in 1.1.1 above.
1.1.4 CRI will perform its service in
accordance with good commercial practices and industry
procedures.
1.1.5 CRI will maintain the Fleming
Parties' accounts receivable records with respect to the coupons
covered by this Agreement, with the Fleming Parties' providing
information necessary for such purpose.
1.1.6 CRI acknowledges that it will
acquire no right, title or interest in coupons submitted to it
for processing pursuant to this Agreement or, except for the
right to receive payment of the Processing Fee (as hereinafter
defined), in the proceeds of such coupons.
1.1.7 CRI agrees to provide to each of
the Fleming Parties all of the coupon processing and related
services (consistent with the pay-direct method) currently being
provided to such Fleming Parties for the Processing Fee set forth
on Schedule 2 attached hereto including but not limited to (1)
postage, freight and insurance reimbursement pertaining to the
transmittal of coupons to manufacturers, their designees or
clearing houses and (2) cash application and invoice matching
services by vendor. CRI's failure or inability to provide all of
the coupon processing and related services (consistent with the
pay-direct method) currently provided for the same Processing Fee
set forth on Schedule 2 shall constitute a material breach of
CRI's obligations under this Processing Agreement giving Fleming
the right to terminate this Processing Agreement, subject to
notice and opportunity to cure, as described in Section 5.1.2.2
hereof.
1.2 Fleming Supplied Retailers. The program
pursuant to which CRI provides coupon processing services to
Fleming Supplied Retailers shall be referred to herein as the
"Fleming Coupon Processing Program". CRI agrees to act as the
sorting agent pursuant to the Fleming Coupon Processing Program
for those Fleming Supplied Retailers who choose to utilize the
services of CRI and to provide the same services to such parties
as are set forth in Section 1.1 hereof.
1.2.1 Processing Fee. During the term
of this Agreement, CRI agrees to provide to the Fleming Supplied
Retailers all of the coupon processing and related services which
are being (consistent with the pay-direct method) currently being
provided to the Fleming Parties hereunder for the following
Processing Fee:
1.2.1.1 For a period of one
year following the Effective Date (as hereinafter defined), the
Processing Fee shall be [CONFIDENTIAL] for each 1,000 coupons
processed.
1.2.1.2 For the second year
following the Effective Date, commencing on the first anniversary
of the Effective Date, the coupon processing fee for Fleming
Supplied Retailers shall be [CONFIDENTIAL] per 1,000 coupons.
1.2.1.3 Thereafter, the
Processing Fee for Fleming Supplied Retailers shall be mutually
agreed upon by Fleming and CRI. If no agreement regarding such
Processing Fees can be reached for the period commencing on the
second anniversary of the Effective Date, this Agreement shall be
extended for an additional period of one year at the then current
Processing Fee.
2. Terms of Payment.
2.1 By its acceptance of this Agreement, each
Fleming Party agrees to pay CRI the amount determined in
accordance with Schedule 2 hereto. Amounts payable pursuant to
this Section 2 are herein called the "Processing Fees".
2.2 Until the Remaining Account Indebtedness
(as hereinafter defined in Section 5) has been paid in full, all
Processing Fees shall be paid, disbursed and applied in
accordance with the provisions of Schedule 1 attached to and
forming part of this Agreement. Thereafter, such Processing Fees
shall be payable within 15 days after Fleming's receipt of CRI's
detailed invoice therefor in a form prescribed by Fleming.
2.3 The fees payable under the Fleming Coupon
Processing Program shall be payable within 15 days after
Fleming's receipt of CRI's detailed invoice therefor in a form
prescribed by Fleming.
3. Warranties and Obligations. Each Fleming Party
and each Fleming Supplied Retailer shall submit to CRI only
coupons which have been received by it in accordance with the
terms specified by the distributing manufacturer.
4. Termination.
4.1 With respect to coupon processing
services for Fleming Parties, this Agreement may be cancelled by
Fleming or CRI at any time, for any reason, by giving 90 day
written notice to the other party. This Agreement shall
terminate at the election of CRI after 15 days written notice of
a breach of any obligation herein, which has not been corrected
during the 15 day period. The provisions of this Section 4 are
subject to the provisions of Section 5.
4.2 With respect to coupon processing
services for Fleming Supplied Retailers, commencing 18 months
following the Effective Date, CRI shall have the right to
terminate the Processing Agreement by giving Fleming six months
prior written notice of such termination (the "Termination
Notice"). Following delivery by CRI of a Termination Notice,
Fleming shall be entitled to solicit coupon processing business
from any retailers who are not then Fleming customers and all
covenants and agreements pursuant to which Fleming has agreed not
to compete with CRI shall thereupon terminate.
5. Special Provisions.
5.1 Fleming and CRI are also parties to the
Stock Purchase Agreement which, among other things, makes
provision for application by Fleming of a portion of the payments
due CRI hereunder toward payment of the Remaining Account
Indebtedness (as defined in the Stock Purchase Agreement).
Notwithstanding any provision of this Agreement to the contrary,
Fleming, all other Fleming Parties and CRI mutually agree that,
until the Remaining Account Indebtedness has been paid in full:
5.1.1 The provisions set forth in
Schedule 1 attached to and forming part of this Agreement shall
be applicable.
5.1.2 Neither Fleming nor CRI will
exercise its right to terminate this Agreement pursuant to the
provisions of Section 4 of this Agreement, except that Fleming
may terminate this Agreement in the following circumstances and
manner only.
5.1.2.1 If, without the prior
written approval of Fleming, Peter R. Pettit shall cease to be
employed as the Chief Executive Officer of Seven Oaks otherwise
then by termination of such employment by Seven Oaks for "Cause"
(as defined in Employment Agreement of even date herewith between
Seven Oaks and Peter R. Pettit), then Fleming may terminate this
Agreement on not less than thirty days written notice from
Fleming to CRI and Seven Oaks; and
5.1.2.2 If CRI shall fail or
refuse in any material respect to perform its obligations under
this Agreement, and such failure or refusal shall continue for a
period of thirty (30) days after written notice to CRI from
Fleming specifying the default to be remedied, then Fleming shall
have the right to terminate this Agreement without further notice
to CRI; provided, however, if the nature of such failure or
refusal to perform on the part of CRI is such that it cannot
reasonably be remedied within said thirty (30) day period,
Fleming shall not have the right to terminate this agreement by
reason thereof if CRI commences its efforts to remedy within said
thirty (30) day period and diligently pursues such efforts to
remedy such default as soon as reasonably possible.
6. Non-Competition. On the Effective Date, the
non-competition covenants contained in that certain Agreement
dated May 12, 1986 between CRI and Malone & Hyde, Inc.,
predecessor in interest of Fleming, shall terminate. Provided,
however, during the term of this Agreement, Fleming shall not
solicit coupon processing business from retailers who are not
then Fleming customers or who do not become Fleming customers,
except for those Retailers who are currently participants in
Fleming's Coupon Processing Program on May 10, 1995.
7. Performance Standards. All performance
standards and obligations described in that certain letter dated
May 10, 1995 from Francis J. Brewer, Director, Retail Financial
Services of Fleming, to Peter Pettit, Chairman of Seven Oaks (the
"Performance Standards Letter"), a copy of which is attached
hereto as Schedule 3 and incorporated herein by this reference,
shall be a part of this Agreement and all rights and obligations
of Fleming and Seven Oaks shall be and become a part of this
Agreement as if fully set forth herein. References in the
Performance Standards Letter to Seven Oaks shall be deemed to be
references to Seven Oaks or CRI, as the context of such letter
shall require.
8. Effective Date. This Agreement shall be
effective as of June 1, 1995 (the "Effective Date").
9. [CONFIDENTIAL]
10. No Assumption by Fleming. Commencing on the
Effective Date, notwithstanding the provision of Section 6 above,
all ECS Customers shall be entitled to switch to the Fleming
Coupon Processing Program described in this Agreement.
Notwithstanding the foregoing, all amounts payable by CRI to the
ECS Customers shall remain the sole responsibility of CRI and
Seven Oaks and Fleming shall not assume any liability to ECS
Customers for repayment of any amounts due, and further, CRI
agrees to indemnify and hold harmless any Fleming Parties from
any and all liability relating to the ECS customers, including
attorney fees and costs.
11. No Legal Obligation. It is understood and
agreed that Fleming has no legal right to require the Fleming
Supplied Retailers to contract for or subscribe to the Fleming
Coupon Processing Program or utilize the processing services of
CRI or any other processor. This Agreement sets forth the terms
upon which Fleming and CRI agree that such services will be
provided to the Fleming Supplied Retailers who choose to utilize
those services.
12. Miscellaneous.
12.1 If any one or more provisions of this
Agreement shall, for whatever reason, be held unenforceable or
invalid, such enforceability or invalidity shall not affect any
other provisions of this Agreement and this Agreement shall be
enforced as if such unenforceable or invalid provisions had not
been contained herein.
12.2 This Agreement shall be binding on the
heirs, representatives, successors and assigns of the undersigned
and shall inure to the benefit of CRI and its successors and
assigns and, except as provided herein, may not be amended
without the prior written consent of CRI. This Agreement may not
be assigned by Fleming or any other Fleming Party without prior
written consent of CRI.
12.3 Each of the Fleming Parties understands
that CRI shall not be liable for special, incidental, indirect or
consequential damages or lost profits as a result of any breach
of this Agreement by CRI and that each Fleming Party's remedy for
loss, injury or damage resulting from improper or negligent
performance by CRI of its services shall be, at CRI's sole
discretion, reperformance of said services or a refund of the
face amount and processing fee of any coupon or group of coupons
improperly or negligently redeemed or failed to be redeemed by
CRI.
12.4 This Agreement shall not be binding upon
CRI until accepted in writing by a duly authorized officer of CRI
in CRI's offices in Memphis, Tennessee. THIS AGREEMENT SHALL BE
GOVERNED AND CONSTRUED UNDER THE LAWS OF THE STATE OF OKLAHOMA.
EACH FLEMING PARTY, CRI AND SEVEN OAKS CONSENT TO JURISDICTION
AND VENUE IN OKLAHOMA COUNTY, OKLAHOMA AND WAIVE ANY RIGHT IT OR
THEY MAY HAVE TO FILE OR OTHERWISE COMMENCE ANY ACTION OR LEGAL
PROCEEDING IN ANY OTHER PLACE OR FORUM.
12.5 This Agreement may be executed in
multiple counterparts, and may be signed by the parties on
different counterparts, each of which counterparts shall be
regarded as an original and all such counterparts shall
constitute but one and the same instrument.
FLEMING SUPERMARKETS, INC.
By /s/ John M. Thompson, Jr.
Name: John M. Thompson, Jr.
Title: Treasurer
SCRIVNER OF KANSAS, INC.
By /s/ John M. Thompson, Jr.
Name: John M. Thompson, Jr.
Title: Treasurer
SCRIVNER OF PENNSYLVANIA, INC.
By /s/ John M. Thompson, Jr.
Name: John M. Thompson, Jr.
Title: Treasurer
BIG W OF FLORIDA, INC.
By /s/ John M. Thompson, Jr.
Name: John M. Thompson, Jr.
Title: Treasurer
FLEMING SUPERMARKETS OF
FLORIDA, INC.
By /s/ John M. Thompson, Jr.
Name: John M. Thompson, Jr.
Title: Treasurer
SCRIVNER OF NEW YORK, INC.
By /s/ John M. Thompson, Jr.
Name: John M. Thompson, Jr.
Title: Treasurer
FLEMING COMPANIES, INC.
By /s/ William M. Lawson, Jr.
Name: William M. Lawson, Jr.
Title: Senior Vice President
GATEWAY FOODS, INC.
By /s/ John M. Thompson, Jr.
Name: John M. Thompson, Jr.
Title: Treasurer
SEVEN OAKS INTERNATIONAL, INC.
By /s/ Peter R. Pettit
Name: Peter R. Pettit
Title: Chairman and Chief
Executive Officer
COUPON REDEMPTION, INC.
By /s/ Peter R. Pettit
Name: Peter R. Pettit
Title: Chairman and Chief
Executive Officer
SCHEDULE 1
Repayment of Remaining Account Indebtedness
A. Until the Remaining Account Indebtedness shall have been
paid or forgiven in full:
1. All invoices to manufacturers pursuant to the
Processing Agreement shall be for the face value of coupons
submitted plus manufacturer's handling fee and shall be payable
by the manufacturer or its representative, directly to Fleming
or, at Fleming's option, into the bank account from time to time
designated by Fleming in writing to CRI (the "Fleming Account").
In addition, all invoices to manufacturers pursuant to any
processing agreement hereafter entered into between CRI and any
independent retailer serviced by Fleming shall be payable by the
manufacturer or its representative, directly to Fleming or, at
Fleming's option, into the Fleming Account. As used in this
Schedule 1, "Processing Fee" shall mean and include not only
Processing Fees payable pursuant to the Processing Agreement but
also the similar fees payable pursuant to any such processing
agreement with any such independent retailer.
2. Upon receipt of payment of each such invoice
described in paragraph 1 above with respect to Fleming Parties,
Fleming will cause the amount of the Processing Fee for coupons
covered by such invoice to be paid, disbursed and applied as
follows: An amount equal to [CONFIDENTIAL] coupons covered by
such invoice shall be paid by check to CRI within fifteen (15)
business days after the date of such invoice; and Fleming shall
apply the balance of such Processing Fee toward payment of the
Remaining Account Indebtedness until same shall have been
satisfied in full.
3. Except for the application of certain funds to the
Remaining Account Indebtedness as and to the extent expressly
provided for in paragraph 2, above, no Fleming Party shall assert
or exercise any right of setoff of any amounts owed to any
Fleming Party against any payments due or amounts owed to CRI
pursuant to the Processing Agreement, unless and until this
Agreement shall have been terminated by Fleming by exercise of
its right of termination under Section 5 of the Processing
Agreement.
4. To the extent any retailer whose principal supplier
is Fleming ("Fleming Supplied Retailer") utilizes CRI for coupon
clearing services on a direct-pay basis to such retailer rather
than by receiving payment through Fleming or the Fleming Account,
all Processing Fees received by CRI in excess of [CONFIDENTIAL]
coupons shall be paid to Fleming and applied to reduce the
Remaining Account Indebtedness. Such payment shall be made by
CRI by wire transfer to an account designated by Fleming from
time to time within one (1) business day following receipt of
such Processing Fee by CRI. Without Fleming's prior written
consent, CRI will not contract to provide coupon processing
services to any Fleming Supplied Retailer on a basis other than
pay-direct; provided, however, this restriction shall not apply
to any retailer with which CRI has an existing contract or
established relationship for coupon processing services.
5. Not less frequently than bi-monthly, Fleming shall
provide evidence to CRI of the amount of the unpaid balance of
the Remaining Account Balance, as shown by Fleming's books and
records.
B. Fleming and CRI further agree with respect to the Remaining
Account Balance as follows:
1. If the Processing Agreement is terminated by reason
of Fleming's exercise of its right to terminate pursuant to
Section 5 of the Processing Agreement, the then remaining unpaid
balance, if any, of the Remaining Account Indebtedness shall, at
the option of Fleming and without further notice or demand,
become immediately due and payable in full by CRI.
2. On September 1, 1998 the then remaining unpaid
balance, if any, of the Remaining Account Indebtedness shall in
all events become immediately due and payable in full by CRI.
3. Unless and until any remaining unpaid balance of the
Remaining Account Indebtedness shall have become immediately due
and payable pursuant to paragraph B.1 or B.2, above: (a) Fleming
will look only to the source of payment described in paragraph
A.2 of this Schedule 1 for payment of the Remaining Account
Indebtedness, and (b) Fleming shall not otherwise seek recourse
against CRI or its assets for payment of the Remaining Account
Indebtedness.
4. CRI may at its option prepay the Remaining Accounting
Indebtedness, in whole or in part, at any time without premium or
penalty.
SCHEDULE 2
Subsidiaries and Processing Fees
[CONFIDENTIAL]
SCHEDULE 3
[CONFIDENTIAL]
SCHEDULE 4
May 10, 1995
Fleming Companies, Inc.
6301 Waterford Boulevard
Oklahoma City, OK 73126-0647
Gentlemen:
I, Peter R. Pettit, Chairman and Chief Executive Officer of
Seven Oaks International, Inc. (SOI) and Coupon Redemption, Inc.
(CRI) have enclosed herewith a list of SOI and/or CRI customers,
who are also customers of Fleming Companies, Inc. To the best of
my knowledge, based on information available to me at this time,
this listing of customers and amounts due is true, complete and
accurate.
Seven Oaks International, Inc.
By: /s/ Peter R. Pettit
Peter R. Pettit, Chairman
and Chief Executive Officer
Coupon Redemption, Inc.
By: /s/ Peter R. Pettit
Peter R. Pettit, Chairman
and Chief Executive Officer
[CONFIDENTIAL]