DEALER SERVICES AGREEMENT
Exhibit 10.36
This DEALER SERVICES AGREEMENT, dated as of [•], 2010 (this “Agreement”), is made by and among
P1 Sub, LLC, a North Carolina limited liability company (“Primo US”), P2 Sub, LLC, a North Carolina
limited liability company (“Primo Canada”, and together with Primo US, each a “Buyer” and
collectively, the “Buyers” or the “Company”), and Culligan International Company, a Delaware
corporation (“Culligan”). Capitalized terms used in this Agreement without definition have the
meanings set forth in the Purchase Agreement (as defined below).
A. The Buyers, Primo Water Corporation, Culligan, Culligan of Canada, Ltd and Culligan Store
Solutions, LLC (together with Culligan of Canada, Ltd., the “Sellers”) have entered into an Asset
Purchase Agreement, dated as of June 1, 2010 (the “Purchase Agreement”), pursuant to which the
Buyers have agreed to purchase from the Sellers substantially all of the Sellers’ assets relating
to the Business.
B. Whereas, the Sellers have operated the Business by engaging service providers to install,
maintain, repair and remove vended water dispenser machines (“Cabinets”) and associated water
treatment equipment (“Equipment”) located at retail stores (the “Existing Service Providers”).
C. Whereas, certain of the Existing Service Providers are Culligan franchisees (the
“Franchisee Dealers”) or Culligan company owned dealers (the “Culligan Owned Dealers” and, together
with the Franchisee Dealers, the “Dealers”) and the Buyers desire to obtain Culligan’s assistance
in utilizing the Dealers in servicing the Business on the terms and conditions set forth herein.
Certain of the Franchisee Dealers and Culligan Owned Dealers service the Business in Canada (the
“Canadian Dealers”) and certain of the Franchisee Dealers and Culligan Owned Dealers service the
Business in the United States (the “US Dealers”).
D. It is a condition to the Closing under the Purchase Agreement that this Agreement be
executed by the parties and delivered to the Company on the Closing Date.
Now, therefore, the parties hereto agree as follows:
1. Culligan Owned Dealer Services. During the term of this Agreement,
Culligan shall cause the Culligan Owned Dealers to provide the services set forth on Schedule
A hereto (each, a “Service” and collectively, the “Services”) with respect to the Cabinets and
Equipment (the “Serviced Equipment”) serviced by such Culligan Owned Dealer as of the date
immediately prior to the date of this Agreement, all on the terms and conditions set forth in this
Agreement, including in Schedule A. The Company may contact the Culligan Owned Dealers directly
with respect to the provision of the Services.
2. Franchisee Dealer Services. During the term of this Agreement, Culligan
shall use commercially reasonable efforts to cause the Franchisee Dealers to provide the Services
with respect to the Serviced Equipment serviced by such Franchisee Dealer as of the date
immediately prior to the date of this Agreement, all on the terms and conditions set forth in this
Agreement, including in Schedule A. The Company may contact the Franchisee Dealers directly with
respect to the provision of the Services.
3. Payment for Services. As compensation for providing the Services, the
Dealers shall be entitled to a fee (the “Fee”), calculated and payable by the applicable Buyer in
accordance with Schedule B hereto.
4. Limitation on Obligations. The Company or its subsidiaries shall be
responsible for providing all other services which are necessary in order to enable the Dealers to
provide the Services, including the services set forth on Schedule C hereto (the
“Company-Provided Services”).
5. Term; Discontinuation of Services. The term of this Agreement will
commence on the Closing Date and will end on December 31, 2011. Each Buyer may discontinue
receiving any or all of the Services by giving Culligan at least 3 days’ prior written notice,
which notice shall specify the date as of which any such Services shall be discontinued.
6. Termination for Cause. Either party (the “Terminating Party”)
may terminate this Agreement with immediate effect by notice in writing to the other party (the
“Other Party”) on or at any time after the occurrence of any of the following events:
(a) the Other Party is in default of any of its material obligations under this
Agreement and (if the breach is capable of remedy) has failed to remedy the breach within 30 days
after receipt of notice in writing from the Terminating Party giving particulars of the breach and
demanding the Other Party to do so; provided only 3 days notice shall be required in the
event the Company fails to pay any invoice in accordance with Section 3;
(b) the Other Party commences a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial
part of its property, or consents to any such relief or to the appointment of or taking possession
by any such official in an involuntary case or other proceeding commenced against it, or makes a
general assignment for the benefit of creditors, or fails generally to pay its debts as they become
due, or takes any corporate action to authorize any of the foregoing; or
(c) an involuntary case or other proceeding is commenced against the Other Party
seeking liquidation, reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial
part of its property, and such involuntary case or other proceeding remains undismissed and
unstayed for a period of 60 days, or an order for such relief shall be entered against the Other
Party.
7. Independent Contractor. For all purposes hereof, Culligan shall at all
times act as an independent contractor and shall have no authority to represent the Company in any
way or otherwise be deemed a partner, employee, representative, joint venturer or fiduciary of the
Company. Neither the Company nor Culligan shall declare or represent to any third party that
Culligan has any power or authority to negotiate or conclude any agreement, or to make any
representation or to give any undertaking on behalf of the Company in any way whatsoever.
8. Survival. Sections 9 and 10 shall survive the termination of this
Agreement.
9. Limitation on Liability; Disclaimer of Warranties; Force Majeure.
(a) IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER OR ANY THIRD PARTY FOR ANY
SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES (INCLUDING LOST OR
ANTICIPATED REVENUES OR PROFITS AND FAILURE TO REALIZE EXPECTED SAVINGS) ARISING FROM ANY CLAIM
RELATING TO THIS AGREEMENT OR ANY OF THE SERVICES, WHETHER SUCH CLAIM IS BASED ON WARRANTY,
CONTRACT, TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY) OR OTHERWISE, EVEN IF AN AUTHORIZED
REPRESENTATIVE OF SUCH PARTY IS ADVISED OF THE POSSIBILITY OR LIKELIHOOD OF THE SAME.
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(b) Disclaimer of Warranties. EXCEPT AS SPECIFIED IN THIS AGREEMENT, NO
WARRANTIES, WHETHER EXPRESS, IMPLIED OR STATUTORY, ARE MADE OR CREATED AMONG THE PARTIES,
INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
(c) The liability of Culligan with respect to the claims of the Company arising out
of the performance or nonperformance of Culligan’s obligations under or in connection with this
Agreement including liquidated damages or for claims of indemnity, and whether based on contract,
tort (including negligence), strict liability, pollution, disease or otherwise, shall not exceed an
amount equal to the amount paid to Culligan under this Agreement. No claim may be asserted against
Culligan unless the injury, loss or damage giving rise to the claim occurs or is sustained prior to
the termination or expiration of this Agreement and no suit or action thereon may be instituted or
maintained unless it is initiated by the Company within one year after the date the cause of action
first accrues.
(d) No party will be liable to the other party for any breach hereunder occasioned by causes
beyond the control of such non-performing party (or, in the case of Culligan, any Dealer),
including but not limited to unavailability of materials, strikes, labor slowdowns and stoppages,
labor shortages, lockouts, fires, floods, earthquakes, storms, droughts, adverse weather, riots,
thefts, accidents, embargoes, war (whether or not declared) or other outbreak of hostilities, civil
strife, acts of governments, acts of God, governmental acts or regulations, orders or injunctions,
or other reasons, whether similar or dissimilar to the foregoing.
10. Miscellaneous.
(a) Amendment. This Agreement may not be amended except by an instrument in
writing signed by each of the parties.
(b) Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in writing and will be
deemed to have been given when personally delivered or received by certified mail, return receipt
requested, by facsimile transmission (subject to written confirmation of receipt) or sent by
guaranteed overnight courier service to the addresses set forth below (or such other address as may
be specified by such addressee in writing to the other party):
if to the Company, to
Primo Water Corporation
000 Xxxxxxxxx Xxxxx Xxxxx
Xxxxxxx-Xxxxx, XX 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
Attn: Xxxx Xxxxxxxxx
000 Xxxxxxxxx Xxxxx Xxxxx
Xxxxxxx-Xxxxx, XX 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
Attn: Xxxx Xxxxxxxxx
with a copy (which shall not constitute notice) to:
K&L Gates LLP
4350 Xxxxxxxx at Xxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
4350 Xxxxxxxx at Xxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
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Phone: (000) 000-0000
Attn: D. Xxxxx Xxxxxx
Attn: D. Xxxxx Xxxxxx
if to Culligan, to
Culligan International Company
0000 Xxxx Xxxxxxx Xxxx
Xxxxx 0000
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
Attn: Xxxxx X. Xxxxxxx
0000 Xxxx Xxxxxxx Xxxx
Xxxxx 0000
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
Attn: Xxxxx X. Xxxxxxx
with a copy (which shall not constitute notice) to:
Debevoise & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Phone: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx
(c) Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by either party hereto (whether by
operation of law or otherwise) without the prior written consent of the other party; provided, that
the Company may assign any or all of its rights or interests, or delegate any or all of their
obligations, in this Agreement (a) to any successor to the Company or any acquirer of a material
portion of the business or assets of the Company, (b) to one or more of the Company’s Affiliates or
(c) to any lender to the Company or its Affiliates as security for obligations to such lender; and,
provided further, that no such assignment shall relieve the Company of any of its obligations under
this Agreement.
(d) Severability. If any provision of this Agreement, including any phrase,
sentence, clause, Section or subsection is inoperative or unenforceable for any reason, such
circumstances shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other provision or provisions
herein contained invalid, inoperative, or unenforceable to any extent whatsoever.
(e) Governing Law. This Agreement will be governed by the Law of the State
of Illinois without giving effect to any choice or conflict of law principles of any jurisdiction.
(f) Headings. Headings of the Sections of this Agreement are for the
convenience of the parties only, and shall be given no substantive or interpretive effect
whatsoever.
(g) Interpretation. In this Agreement, unless the context otherwise
requires, words in the singular form shall include the plural form and vice versa, and words
denoting any gender shall include all genders and words denoting natural persons shall include
corporations and partnerships and vice versa. Whenever the words “include,” “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by the words “without
limitation.”
(h) Counterparts; Facsimile Signatures. This Agreement may be executed by
the Parties in multiple counterparts and shall be effective as of the date set forth above when
each Party shall have
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executed and delivered a counterpart hereof, whether or not the same counterpart is executed
and delivered by each Party. When so executed and delivered, each such counterpart shall be deemed
an original and all such counterparts shall be deemed one and the same document. Transmission of
images of signed signature pages by facsimile, e-mail or other electronic means shall have the same
effect as the delivery of manually signed documents in person.
(i) Entire Agreement. This Agreement together with any other documents
delivered by the parties in connection herewith or therewith constitute the entire agreement
between the parties with respect to the subject matter hereof and supersede all prior agreements
and understandings among the parties with respect thereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
P1 SUB, LLC |
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By: | ||||
Name: | ||||
Title: | ||||
P2 SUB, LLC |
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By: | ||||
Name: | ||||
Title: | ||||
CULLIGAN INTERNATIONAL COMPANY |
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By: | ||||
Name: | ||||
Title: |
SCHEDULE A
SERVICES
I. | Standard Commission Program |
Dealer is required to visit each assigned store each month (every 30 days), perform the
Services on the frequency set forth below, and fax in meter readings and service work order for
Cabinets and Processors for that month before the 25th of that month. Dealer must
also perform necessary water tests and cover any non scheduled or emergency service calls on a
timely basis. All service parts are consigned and shipped by the Company to the Dealer. Dealer
is expected to maintain the appropriate inventory to minimize service completion time and
Company’s air freight fees. Dealer is required to carry service parts on Dealer’s service
vehicles while performing services to minimize additional trips and downtime of the Cabinets
and Equipment. Dealer will be compensated according to Schedule B for these activities.
Service | Equipment | Frequency | ||
Clean all services of cabinet top/bottom doors
|
Cabinet | Monthly | ||
Clean drain grate in fill station area
|
Cabinet | Monthly | ||
Clean drain basin of fill station
|
Cabinet | Monthly | ||
Check and replace any lights that are not working or dim
|
Cabinet | Monthly | ||
Replace any graphics that are damaged or worn
|
Cabinet | Monthly | ||
Check for leaks on all fittings
|
Cabinet | Monthly | ||
Check spout for up/down proper function
|
Cabinet | Monthly | ||
Make sure POP literature is filled
|
Cabinet | Monthly | ||
Fill out service record card
|
Cabinet | Monthly | ||
Clean bottle shelves and stock bottles
|
Cabinet | Monthly | ||
Repair any broken switches
|
Cabinet | Monthly | ||
Check TDS of water
|
Cabinet | Monthly | ||
Pour 1/3 cup bleach in cabinet drain and flush twice to
remove bleach smell
|
Cabinet | Monthly | ||
Pull a coli form sample (if state requires monthly testing)
|
Cabinet | Monthly | ||
Fill out meter readings for both dispense and store use and
obtain store rep. signature
|
Cabinet | Monthly | ||
Fill out work order and fill out all parts used during
monthly service
|
Cabinet | Monthly | ||
Pull coli form sample (if state requires quarterly testing)
|
Cabinet | Quarterly |
Service | Equipment | Frequency | ||
Replace cabinet post filter
|
Cabinet | Semi-annually | ||
Replace main and spout UV bulbs
|
Cabinet | Annually | ||
Perform a nitrate/nitrite water sample test (where applicable)
|
Cabinet | Annually | ||
Check for leaks and as needed
|
Processor | Monthly | ||
Replace filters as needed
|
Processor | Monthly | ||
Check product gauge for proper membrane production and
replace any bad membranes
|
Processor | Monthly | ||
Replace any pressure gauges as needed
|
Processor | Monthly | ||
Check auto bypass for store use for proper functioning
|
Processor | Monthly | ||
Engage pressure switches and check RO operation and pressures
settings
|
Processor | Monthly | ||
Check tanks for leaks and if waterlogged
|
Processor | Monthly | ||
Repair any mechanical issues (including pumps, motors & pressure switches)
|
Processor | Monthly | ||
Check any pretreatment for proper functioning and repair as
needed (test water see if equipment doing what is required)
|
Processor | Monthly | ||
Check water booster pumps for proper operation (if applicable)
|
Processor | Monthly | ||
Sanitize the RO system
|
Processor | Quarterly | ||
Check tanks for leaks or for water log, add air if tank has
<18PSI when empty.
|
Processor | Monthly | ||
Repair any mechanical issues (pump, booster pump, motors or
pressure switches) issues as required
|
Processor | Monthly | ||
Perform water test on any pretreatment equipment to test for
proper function and repair as required. If rebed is required
contact DVM for PO.
|
Processor | Monthly | ||
Inspect all lines in store for possible leaks and for
possible need to be replaced (not applicable to stores with
PVC lines)
|
Processor | Annually | ||
If store has a CSS supplied softener for pretreatment, add
salt as needed and invoice CSS.
|
Processor | Monthly | ||
Respond to and resolve emergency service calls within 48 hours
|
Both | As needed |
II. Service Work Outside of the Standard Commission Program
From time to time, service work may be needed at a customer location that is deemed outside of
normal PM, water testing or emergency services and may be eligible for additional compensation.
These services are usually limited to installation or removal of equipment. Any additional
services would receive compensation outside of the commission program only by pre-approved P.O.
A. CSS CLASS “A” INSTALL — Installation of a CSS vended/store use system at a store with PVC lines
requires the following steps and equipment installed.
1. Pre-install trip: the site survey form must be filled out to check location/space available for
equipment and confirm if water, electrical outlets available (no GFI outlets) and drains for
processor and cabinet are available/ready.
2. Installation of the following:
• | Mounting of plywood or CDX board onto dry/wet wall if applicable. |
• | Hanging of processor on wall or stand. |
• | Mounting of manifold, store use bypass and big blue filter on wall or stand. |
• | Assembly, setup and start up of carbon bed and/or softeners and/or depth filters add test port. (Dealer to insure proper setup of carbon or softener settings on head controls) |
• | Assembly and hook up of 2 remote tanks (tanks must be within 5 feet of processor). |
• | Installation of 1 1/2 PVC drain pipe for air gap off floor drain for processor and pretreatment equipment. |
• | Setup of dispensing unit and bottle shelf and wire dump bin on sales floor. |
• | Communications with store managers about the operations of the processor and cabinet equipment, the shut off valves and power switches in case of emergency. Give the store manager the refill stickers, owners manual included in the install kit and point out the toll free number for customer service for ordering bottles or placing service calls. |
• | Service Work Order paper work for installation must be filled out with store information and equipment serial number and faxed back to assigning DVM within 3 business days of install completion in order to be paid for install. |
B. CSS CLASS “B” INSTALL — Installation of CSS store use only equipment (no dispenser).
1. Pre-install trip: Check location/space available for equipment and confirm water and
electrical outlets (no GFI outlets) are available and a drain for the processor is accessible.
2. Class B installation and start up includes the following:
• | Install pre assembled r/o assembly that is mounted on stand in requested floor location. |
• | Assemble and hook up 1 remote tank (tanks must be within 5ft of processor). |
• | Installation of 1 1/2 PVC drain pipe for air gap off floor for processor and pretreatment equipment. |
• | Mount store use bypass on wall if required |
• | Communications with store managers about the operations of the processor equipment and
the shut off valves and power switches in case of emergency. Give CSS 000-000-0000 for any service issues. |
• | Service Work Order paper work for installation must be filled out with store information and equipment serial number and faxed back to assigning DVM within 3 business days of install completion in order to be paid for install. |
C. Additional services that could be eligible for additional compensation:
Swap out or add an extra cabinet/dispenser
|
2 hours | |
Add or replace a carbon bed or softener to store
|
3 hours | |
Rebed carbon or softener
|
3 hours | |
Replace or run new lines to store use or cabinet
|
Paid the hourly rate for 1st man and half hourly rate for the 2nd man. Time must be worked out with DVM before work started. |
SCHEDULE B
FEES
I. Standard Commission Program
Monthly commission equal to 20% of invoiced water sales, subject to a minimum monthly commission of
$90 and a maximum monthly commission of $145.
In addition to the monthly commission, each Dealer that provides Services with respect to Dealer
Serviced Equipment that is more than 50 miles from such Dealer’s servicing branch shall receive a
monthly mileage compensation payment calculated at $1.50 per mile for the mileage over 50 to the
farthest located Dealer Serviced Equipment serviced by such Dealer.
Meter reading forms trigger this payment. CSS deducts commissions on readings received with
elapsed days > 45 days, to a 30 day average.
Service on Store use only customers- Some stores have our “store use only” program (no vending)
and are serviced once a quarter. We pay a trip charge for those stores, paying the dealer for each
quarterly visit and any emergency calls. This payment is also triggered by a meter read.
Pennsylvania Second visits — The state of Pennsylvania requires twice a month water tests. The
dealer will not be expected to cover this extra call within the standard commission program. The
Company will contract with a merchandiser or the dealer (whichever is more economical) to take this
extra test each month.
II. Additional Services
Additional service compensation is limited to installation or removal services deemed outside the
commission program and preapproved with a PO by the DVM. The compensation is based on the standard
services tier rate and multiplied by the agreed upon hours necessary for the activity.
CSS Equipment Installation and Start Up
Dealer will be paid for 1 hour to do a Pre-install visit and complete a site survey form for the
store. Pre-install trip must be completed 5 days from written/faxed notification and prior to
install; and either
(a) Dealer will be paid 8 hours for a complete class “A” installation and start up of CSS
equipment; or
(b) Dealer will be paid 3 hours for a complete class “B” installation and start up of CSS
equipment.
Service Work Order paperwork for installation must be filled out with store information and
equipment serial numbers and faxed back to assigning DVM within 3 business days of install
completion in order to be paid for install.
Adders:
• | Dealer will be paid 1 hour for adding booster pump during install if it was needed. |
• | If PVC lines are not provided by store, Dealer will be paid an additional amount (between a minimum of $150 and a maximum of $1,200) for the required 2 man job of running lines to cabinet and all store use. DVM must approve the quote prior to the installation |
• | If lift rental is required, due to ceiling 15 ft and above, Dealer is responsible to have lift on site on time of install and also responsible for getting lift picked up from site. Cost of lift will be covered by Company if receipt is provided. Cost should be added to the site survey and approved by the DVM before the install. Final receipt added to the Service Work Order. |
Deducts:
• | Deduct 1 hour if not adding softener or depth filter during install. |
III. CSS Installation and Training Session
A Dealer may accompany and assist a Company trainer in performing the installation of a vended
system for training purposes. The Dealer will be paid $250.00 for complete installation and start
up training of Equipment with the Company trainer.
SCHEDULE C
COMPANY-PROVIDED SERVICES
Maintains the headquarters relationship with the customer
Provides all equipment for vending and store use to the customer
Provides a toll free number for all customers and service providers
Manages regulatory compliance process for vending systems.
Manages the installation timing and process with the customer and local regulators (permits)
Tracks all store locations, call activities and issue closure
Establishes meter reading / service schedules for Dealers
Takes service requests
Sends service dispatches to Dealers
Provides inventory to Dealers for providing services on a consigned bases
Sends replacement parts to Dealers (on consignment)
Upgrades equipment or pretreatment or graphics when appropriate
Sends water test kits to Dealers, with postage prepaid
Tracks all service completion
Tracks/reports exceptions to service commitment
Provides business updates to the customer and the service providers
Provides training/training tools