Exhibit 10.79
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT. SUCH PORTIONS ARE DESIGNATED "***".
THIS SUPPLY AGREEMENT ("Agreement"), is made and entered into as of the
3rd day of September, 2002 , between The Valvoline Company, a division of
Ashland Inc., a Kentucky corporation, with a mailing address of P. O. Xxx 00000,
Xxxxxxxxx, Xxxxxxxx 00000, Attention: Manager, National Accounts ("VALVOLINE"),
and Monro Muffler Brake, Inc, a New York corporation, with a mailing address of
000 Xxxxxxxx Xxxxxxx, Xxxxxxxxx, XX 00000 ("CUSTOMER").
W I T N E S S E T H:
IN CONSIDERATION OF THE MUTUAL PROMISES SET FORTH IN THIS AGREEMENT, and
other good, valuable and sufficient consideration, the receipt and adequacy of
which are hereby acknowledged, VALVOLINE hereby agrees to sell and deliver, and
CUSTOMER hereby agrees to purchase, receive and pay for, the Valvoline(R)
products described below at CUSTOMER'S premises identified on the attached
Schedule A, and any future locations the CUSTOMER may acquire, open or operate
on the following terms and conditions:
1. TERM. This Agreement shall be in effect for a term of ***
years from November 1, 2002. CUSTOMER expressly agrees that the consideration
for this Agreement is independent of any other agreement between CUSTOMER and
VALVOLINE. This Agreement shall remain in effect unless terminated pursuant to
the provisions hereof regardless of the termination or expiration of any other
agreement between CUSTOMER and VALVOLINE.
2. PRODUCTS. VALVOLINE shall sell and deliver, and CUSTOMER shall
purchase, pay and provide safe access for the delivery of the following
VALVOLINE(R) products ("Products"):
(i) Valvoline(R) motor oils, greases and other lubricants and/or
other automotive products the CUSTOMER may choose offered for
sale by VALVOLINE (including bulk and packaged products),
subject only to Section 5 hereof.
Customer shall exclusively use and/or sell Products at all of its
current and future locations and shall purchase, at a minimum, *** gallons of
Valvoline oils and greases each year (November 1 to October 31 the following
year) this Agreement is in effect. In the event Customer purchases at least ***
gallons but less than *** gallons in a year, the shortage shall be carried
forward and, together with the shortage from any other year, be purchased by
Customer within 180 days following the term of this Agreement.
3. PRICE/PAYMENT. For Products sold and delivered hereunder,
CUSTOMER shall pay VALVOLINE's applicable prices as established on Schedule B on
the date of delivery. Prices are subject to change upon written notice to
CUSTOMER and such notice shall be delivered to CUSTOMER at least sixty (60) days
in advance. *** Any future price adjustments shall generally allow CUSTOMER to
remain competitive with comparable products sold by CUSTOMER's competitors.
CUSTOMER is responsible for payment of all applicable taxes, fees and other
government-imposed charges, whether or not included in such prices. If
compliance with law prevents VALVOLINE from charging or CUSTOMER from paying the
price provided in this Agreement, any resulting failure to perform shall be
excused pursuant to Section 5 hereof. Each delivery hereunder shall be
considered a separate sale.
4. PRODUCT IDENTIFICATION. VALVOLINE shall have the right at any
time to change or discontinue use of any trademark, service xxxx, grade
designation, trade dress, trade name or other indication of source of origin
("Marks") under which the Products are sold. If VALVOLINE discontinues the use
of any Xxxx which the CUSTOMER, in its sole discretion, deems as being
detrimental to its on-going business, the CUSTOMER shall have the right to
terminate this agreement under the conditions outlined below. CUSTOMER shall use
its best efforts to maintain the quality, good name and reputation of VALVOLINE
and the Products. Only the Products shall be stored or sold using any equipment
or container which bears the Marks. VALVOLINE grants to CUSTOMER a license to
use the Marks only to identify the Products, and store and advertise the
Products. CUSTOMER shall not
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alter in composition, co-mingle with products from other sources, or otherwise
adulterate the Products. CUSTOMER shall not bring or cause to be brought any
proceedings, either administrative or judicial in nature, contesting VALVOLINE's
ownership of rights to, or registrations of the Marks.
5. FORCE MAJEURE. The parties to this Agreement shall not be
responsible for any delay or failure to perform under this Agreement (other than
to make payments when due hereunder) if delayed or prevented from performing by
act of God; transportation difficulty; strike or other industrial disturbance;
any law, regulation, ruling, order or action of any governmental authority; any
allocation or shortage of product, as determined by VALVOLINE in its sole
discretion; or any other cause or causes beyond such party's reasonable control
whether similar or dissimilar to those stated above.
6. COMPLIANCE WITH LAWS/TAXES. CUSTOMER shall, at its own expense,
(i) comply with all applicable laws, regulations, rulings and orders, including
without limitation those relating to taxation, workers' compensation, and
environmental protection; (ii) obtain all necessary licenses and permits for the
purchase and sale of the Products; and (iii) pay directly, or reimburse
VALVOLINE on demand if paid by VALVOLINE, all taxes, inspection fees, import
fees, and other governmental charges imposed upon this Agreement, the Products,
or on the sale, purchase, handling, storage, advertising, distribution, resale
or use of the Products.
7. VALVOLINE'S RIGHT TO INSPECT. VALVOLINE, or its authorized
agents, shall have the right, but not the obligation, to inspect CUSTOMER's
premises, sample, monitor or test any motor oil, grease or filter offered for
sale, and to inspect or test any tank, line, pump, dispenser, or other operating
equipment, including without limitation equipment owned by Customer, used at
CUSTOMER's premises bearing the Marks, or being represented to contain the
Products, at any time during business hours.
8. TERMINATION; REMEDIES. This Agreement may be terminated only by
mutual consent of the parties in writing or if any one or more of the following
events occur during the term of this Agreement:
(i) CUSTOMER defaults in the performance of or breaches any
provision of Section 4 of this Agreement and fails to cure such default within
fifteen (15) days;
(ii) CUSTOMER's calendar quarter purchases are less than
***; or
(iii) Any payment due hereunder is unpaid when due and remains
unpaid for thirty (30) days after written notice from VALVOLINE to CUSTOMER; or
(iv) Either party materially defaults in the performance of
or breaches any other provision of this Agreement and does not cure the same
within thirty (30) days after notice of such default or breach; or
(v) Any proceeding in bankruptcy is filed, or any order for
relief in bankruptcy is issued, by or against either party, or if a receiver for
either party or the Premises is appointed in any suit or proceeding brought by
or against either party, or if there is an assignment by either party for the
benefit of that party's creditor(s); or
(vi) VALVOLINE is acquired, either directly or indirectly,
through the sale of assets, merger, or otherwise; or
(vii) The CUSTOMER is acquired, either directly or indirectly,
through the sale of assets, merger, or otherwise.
Nothing contained herein shall be deemed to limit or otherwise restrict
any right, power, or remedy of either party. All rights, powers, and remedies
shall be cumulative and concurrent and the exercise of one or more rights,
powers or remedies existing under this Agreement or now or hereafter existing at
law or in equity, shall not preclude the subsequent exercise by either party of
any other right, power or remedy.
In the event that a change of control of VALVOLINE shall result in a
party, person or corporate entity controlling a majority share of VALVOLINE and
such party, person or corporate entity shall be a citizen of, or based in, a
country which is, or becomes, listed on the United States of America's
Department of State's Office of Defense Trade Control's Embargo Reference Chart,
the CUSTOMER shall have the immediate right to terminate this agreement without
penalty, assessment of liquidated damages or prior notification.
9. NOTICE. Any written notice required or permitted to be given
under this Agreement shall be sufficient for all purposes hereunder if in
writing and personally delivered or sent by any means providing for return
receipt to the address provided for
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the party in question in the heading of this Agreement. Any party may change the
mailing address or other information provided for it in the heading hereof by
written notice given in accordance with this Section 9.
10. PROMOTIONAL AND MARKETING SUPPORT. In consideration of becoming
the exclusive supplier to the CUSTOMER, VALVOLINE agrees to provide an
immediate, initial credit to CUSTOMER in the amount of *** in Business
Development Funds ("BDF") in lieu of costs associated with providing storage and
dispensing equipment, prior supplier product obsolescence, development and
production of replacement point-of-sale materials, and other costs associated
with CUSTOMER's change of supplier. Such credit may be used by CUSTOMER in its
sole discretion.
Further, in order to compensate CUSTOMER for any and all costs
associated with CUSTOMER's change of supplier (which decision was made by
CUSTOMER without involvement by VALVOLINE) including, but not limited to,
advertising costs associated with the launch of new products, Valvoline agrees
to provide the CUSTMER with *** in two separate credit memos of which one (1)
will be for *** and one (1) will be for ***. It is anticipated that the credit
memo for *** will be used for advertising placed within six (6) months after the
execution of this agreement. It is anticipated that the credit memo for *** will
be used against initial product shipments of bulk petroleum products.
Additionally, VALVOLINE will supply CUSTOMER with a total of *** cases of
MaxLife oil to support CUSTOMER's premium oil promotional efforts.
VALVOLINE shall provide a quarterly cooperative advertising rebate
credit memo to the CUSTOMER in the amount of *** for each bulk gallon of
petroleum product purchased by the CUSTOMER during the preceding quarter. Such
credits shall be issued in the form of credit memos to be delivered to the
CUSTOMER within 45 days of the end of a calendar quarter.
VALVOLINE shall provide a quarterly cooperative advertising rebate
credit memo in the amount of *** of all purchases from VALVOLINE during the
previous quarter. Such credits shall be issued in the form of credit memos to be
delivered to the CUSTOMER within 45 days of the end of a calendar quarter.
VALVOLINE shall provide the CUSTOMER an annual growth bonus credit for
achieving annualized volume levels as follows:
0 to 1,999,999 gallons ***
2,000,000 to 2,099,999 gallons ***
2,100,000 to 2,199,999 gallons ***
2,200,000 to 2,299,999 gallons ***
2,300,000 to 2,399,999 gallons ***
2,400,000 to 2,499,999 gallons ***
2,500,000 to 2,599,999 gallons ***
2,600,000 to 2,699,999 gallons ***
2,700,000 to 2,799,999 gallons ***
2,800,000 to 2,899,999 gallons ***
2,900,000 to 2,999,999 gallons ***
3,000,000 or more gallons ***
Such credits shall be issued in the form of a credit memo delivered to
the CUSTOMER within 45 days of the end of a calendar year. With respect to any
credit memo issued by VALVOLINE under this Agreement, CUSTOMER must use such
credit memo(s) within three months of their respective issuances against then
existing balances owed.
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VALVOLINE shall provide funding, redemption and other support for the
CUSTOMER to promote a consumer mail-in rebate offer of *** for *** each calendar
year at CUSTOMER's discretion, except during VALVOLINE's national promotional
periods. In conjunction with this effort, CUSTOMER shall have the right to
participate in other consumer rebate promotions offered by VALVOLINE and
VALVOLINE will provide funding, redemption and other support as necessary for
those promotions.
VALVOLINE will provide motor-sports incentives to CUSTOMER as outlined
on Schedule C.
VALVOLINE shall supply the CUSTOMER with the initial delivery of bulk
oil for any new or acquired CUSTOMER location in the amount of ***.
11. LIQUIDATED DAMAGES. In the event that this Agreement is
terminated by CUSTOMER without cause, by VALVOLINE due to default by CUSTOMER,
or other applicable reasons outline in paragraph 8 above (except 8 (vi)),
CUSTOMER shall pay to VALVOLINE as liquidated damages (and not as a penalty) an
amount as outlined below. The entire amount of such liquidated damages shall be
paid to VALVOLINE within thirty (30) days of the effective date of the
termination of this Agreement.
For the first twelve (12) months of this agreement the sum of
liquidated damages shall be calculated at the rate of *** for each full calendar
month remaining in this Agreement after expiration of termination notice. For
the period after the first twelve (12) months until the expiration of this
Agreement the sum of the liquidated damages shall be calculated at the rate of
*** for each full calendar month remaining in this Agreement after expiration of
termination notice. Except as provided for in section 20.1.a, the parties agree
that upon termination of this Agreement VALVOLINE shall not be entitled to any
amount, whether as damages or otherwise, except as set forth in this section.
12. INDEPENDENT CONTRACTOR. The business conducted by CUSTOMER at
CUSTOMER's premises shall be the independent business of CUSTOMER, and the
entire control and direction of the activities of such business shall be and
remain with CUSTOMER. CUSTOMER shall not be the employee or agent of VALVOLINE,
and CUSTOMER shall make no representation to the contrary.
13. TIME OF THE ESSENCE/WAIVER. In performing all obligations under
this Agreement, time is of the essence. The failure of any party hereto to
exercise any right such party may have with respect to breach of any provision
of this Agreement shall not impair or be deemed a waiver of such party's rights
with respect to any continuing or subsequent breach of the same or any other
provision of this Agreement.
14. EXECUTION AND ACCEPTANCE. This Agreement or any modification
hereof shall not be binding upon VALVOLINE until it has been duly accepted by
VALVOLINE, as evidenced by the signature of one of VALVOLINE's authorized
officers or representatives in VALVOLINE's Lexington, Kentucky offices, with an
executed counterpart delivered to CUSTOMER. Commencement of business between the
parties prior to such acceptance, signature and delivery of a counterpart shall
not be construed as a waiver by VALVOLINE of this condition.
15. ENTIRETY OF CONTRACT. This writing is intended by the parties as
the final, complete and exclusive statement of the terms, conditions and
specifications of their agreement and is intended to supersede all previous oral
or written agreements and understandings between the parties relating to its
specific subject matter. No employee or agent of VALVOLINE has authority to make
any statement, representation, promise or agreement not contained in this
Agreement. No prior stipulation, agreement, understanding or course of dealing
between the parties or their agents with respect to the subject matter of this
Agreement shall be valid or enforceable unless embodied in this Agreement. No
amendment, modification or waiver of any provision of this Agreement shall be
valid or enforceable unless in writing and signed by all parties to this
Agreement. This Agreement shall supersede, and shall not be modified or amended
in any way by the terms of, any purchase order which may be issued by CUSTOMER
for the purchase of product hereunder.
16. SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any person or circumstance is held invalid,
the application of such provision to any other person or circumstance and the
remainder of this Agreement will not be affected thereby and will remain in full
effect.
17. GOVERNING LAW. THIS AGREEMENT HAS BEEN DELIVERED AND ACCEPTED
AND SHALL BE DEEMED TO HAVE BEEN MADE AT LEXINGTON, KENTUCKY. Any dispute, claim
or controversy arising out of or related to this Agreement (or any of the
Agreements attached hereto as exhibits) or breach, termination or validity
thereof, may be, by mutual
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consent of the parties, settled by arbitration conducted expeditiously in
accordance with the commercial Arbitration Rules of the American Arbitration
Association ("AAA"). Within ten (10) business days of the filing of arbitration,
the parties shall select a sole independent and impartial arbitrator in
accordance with such Rules. If the parties mutually agree to arbitration, but
are unable to agree upon an arbitrator within such period, the AAA will appoint
an arbitrator on the eleventh (11th) day, which arbitrator shall be experienced
in commercial matters. The arbitrator will issue findings of fact and
conclusions of law to support his/her opinion and is not empowered to award
damages in excess of compensatory damages. The place of arbitration shall be
Lexington, Kentucky. Judgment upon the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof. Notwithstanding any of the
foregoing, either party may seek remedies through the courts, including, without
limitation, injunctive relief, prior and without prejudice to arbitration in
accordance with this provision. THE PARTIES HEREBY WAIVE ANY AND ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING DIRECTLY OR INDIRECTLY
HEREUNDER.
Notwithstanding anything contained in this Agreement, Valvoline
shall not be liable in any arbitration, litigation or other proceeding for
anything other than actual, compensatory damages.
18. RENEWABILITY. This Agreement has an established term and shall
not automatically renew upon its expiration. If mutually
desired, the Parties agree to terminate this agreement and
replace it with another Agreement prior to the expiration of the
established term of this Agreement.
19. EXISTING UNAMORTIZED EQUIPMENT. VALVOLINE agrees to reimburse
CUSTOMER for the cost to purchase the equipment it currently
uses in its 550 locations up to a total of ***.
20. NEW EQUIPMENT. VALVOLINE will, during the term of this agreement
and at its cost and expense, provide ordinary and necessary repair and
maintenance for the equipment and will maintain it in good working condition
through the approved equipment repair facility(s) for the subject equipment
repair and maintenance. When necessary, VALVOLINE will replace worn equipment
with new equipment.
VALVOLINE will, during the term of this agreement at its cost and
expense, provide supplemental equipment to CUSTOMER based on a pre-established
and agreed upon budget and guidelines (one unit per location unless otherwise
mutually approved by CUSTOMER and VALVOLINE, as follows:
a. Used Oil Disposal Tank
b. Self Evacuation Oil Drain
c. New Oil Storage Tank with dispensing equipment
1. Equipment Depreciation
a. The original cost of the lubricant dispensing equipment is
depreciated, on a straight-line basis, over five (5) years. At the
end of the five-year period, the equipment value will become and
remain $1. All new equipment and installation costs during the term
of this agreement will be depreciated on a five-year, straight line
depreciation schedule from the date of installation, and any
remaining value of said equipment will be payable to VALVOLINE
within thirty (30) days of termination as outlined in paragraph 8
above.
Notwithstanding anything to the contrary contained in this Agreement,
VALVOLINE's obligation to repair and maintain equipment and provide new or
supplemental equipment, all as specified in this Section 20, shall not exceed
*** per year based on CUSTOMER's existing 550 locations. The amount of
*** shall be increased in 1% increments for each CUSTOMER location above
550 open and operating on October 31 of each year this Agreement is in effect.
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SCHEDULE B
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***
33
IN WITNESS WHEREOF, the parties hereto have set their hands as of the
date first written above.
WITNESSES:
--------------------------------
--------------------------------
WITNESSES:
--------------------------------
--------------------------------
MONRO MUFFLER BRAKE, INC. THE VALVOLINE COMPANY, A DIVISION OF ASHLAND, INC
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
--------------------------------- --------------------------------------
Print Name: Xxxxxx X. Xxxxx Print Name: Xxxxxx X. Xxxxxxxx, Xx.
-------------------------- -------------------------------
Title: Chief Executive Officer Title: President and V.P. Ashland
------------------------------ -------------------------------------
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