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Exhibit 10.9
SECOND AMENDED AND
RESTATED SUPPLY AGREEMENT
This Second Amended and Restated Supply Agreement (this "Agreement") is
made and entered into effective as of September 1, 1998, by and among SPINCYCLE,
INC., a Delaware corporation ("Buyer"), and ALLIANCE LAUNDRY SYSTEMS LLC, a
Delaware limited liability company ("Seller").
W I T N E S S E T H
WHEREAS, Buyer is in the business of building, acquiring, owning, and
operating coin-or card-operated laundromats, and activities ancillary or related
thereto; and
WHEREAS, Buyer desires to purchase substantially all of its new
coin-operated or card-operated washing machines and dryers from Seller, and
wishes to assure itself of an ongoing business relationship with Seller
beneficial to Buyer in terms of providing it with the latest products and
technology in the business, and other complementary benefits; and
WHEREAS, Buyer's predecessor-in-interest, SpinCycle, Inc., a Minnesota
corporation and its wholly-owned subsidiary, Pinnacle Financial, Inc., a
Minnesota corporation, previously entered into a Supply Agreement with Seller's
predecessor-in-interest, Raytheon Appliances, Inc., a Delaware corporation,
dated as of November 22, 1996 (the "Original Supply Agreement"), pursuant to
which Buyer and/or its predecessors-in-interest acquired Products (as hereafter
defined) from Seller and/or its predecessors-in-interest; and
WHEREAS, the Original Supply Agreement was subsequently amended and
restated pursuant to that certain Amended and Restated Supply Agreement dated as
of February 19, 1998 (the "First Restated Agreement") between Buyer and Raytheon
Commercial Laundry LLC, a Delaware limited liability company, which had
succeeded to the rights and obligations of Raytheon Appliances, Inc., under the
Original Supply Agreement. Pursuant to the First Restated Agreement, Buyer
continued to acquire its requirements of Products from Seller and/or its
predecessors-in-interest; and
WHEREAS, the rights and obligations of Raytheon Commercial Laundry LLC
under the First Restated Agreement have subsequently been assigned to and
assumed by Seller; and
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WHEREAS, the parties now desire to amend and restate the terms of the
First Restated Agreement, and in order to do so Buyer and Seller wish to enter
into this Agreement, pursuant to which Buyer will continue to purchase its
requirements of the Products from Seller.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. REQUIREMENTS CONTRACT. For the term hereof (as defined in Section
10), so long as Seller is a manufacturer of the Products defined in Section 2
herein and so long as Buyer owns businesses located in the continental United
States at which one or more coin-operated or card operated washing machines
and/or dryers are located, Seller agrees to sell to Buyer, and Buyer agrees to
purchase from Seller, Buyer's requirements of Products on the terms and
conditions contained herein. In the event Buyer wishes to lease Products, Buyer
further agrees to specify to the lessor that such Products must be purchased
from Seller. In the event Buyer shall at any time be deriving revenue from any
other person to whom Buyer has leased or subleased any laundromat, or with whom
Buyer has entered into any license agreement, purchase agreement, franchise
agreement, or other arrangement relative to the operation of a laundromat and/or
providing such person with the benefit of Buyer's experience in connection
therewith, Buyer shall use commercially reasonable efforts, to the maximum
extent permitted by law, to require and encourage such person to purchase
Products from Seller or, at Seller's option, from one of Seller's network of
authorized distributors.
2. DEFINITION OF PRODUCTS. For purposes of this Agreement, the parties
agree that the following are the defined "Products" referenced in this
Agreement:
a. All topload and front load washing machines;
b. All stacked and tumbler dryers (collectively with a. above,
"Machines");
c. All replacement and repair parts ("Parts") for any and all
of Seller's Machines owned by, leased to or serviced by Buyer (which Buyer may
acquire either directly from Seller or from Seller's authorized distributors).
3. PRICE. The current prices to be charged Buyer for all current
formulations of the Products are those set forth in Exhibit A attached hereto
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and by this reference made a part hereof. The prices are stated on a FOB
shipping point basis, and shipping responsibilities shall be in accordance with
Seller's standard practices. Payments with respect to Products hereunder shall
be made by Buyer within thirty (30) days from date of invoice; provided,
however, that Seller retains the right to adjust payment terms in a manner
consistent with Seller's customary open-account credit terms, as the same may be
adjusted from time to time, or in the event Buyer fails to maintain the
timeliness of its payment in all material respects.
The prices set forth in Exhibit A will be subject to Seller's
Commercial Laundry Volume Rebate Program, as attached hereto as Exhibit B and by
this reference made a part hereof, with respect to Buyer's purchases of serial
numbered Speed Queen branded equipment. The Volume Rebate will be paid based
upon purchases made between September 1st and August 31st of each year
(provided, however, that for purposes of calculating Buyer's Volume Rebate for
the rebate period ending August 31, 1999, Buyer shall be given credit for all
purchases commencing August 1, 1998 and ending August 31, 1999). Rebates will be
paid or credited to Buyer's account with Seller within thirty (30) days
following the end of the rebate period.
4. RIGHTS WITH RESPECT TO FUTURE PRICES. Seller shall have the right to
change the prices charged Buyer for Products upon thirty (30) days prior written
notice. The percentage increases in prices by Seller shall not exceed the
percentage price increases which are implemented with respect to Seller's Speed
Queen Distributors, as documented by Seller's published manufacturer's list
prices. In any event, there shall be no increase in the prices charged by Seller
for Products during the first year of the term of this Agreement, and thereafter
increases in price by Seller shall not exceed two percent (2%) for the second
year of the term hereof and shall not exceed an additional two percent (2%) for
the third year of the term hereof; provided, however, that prices may be changed
as a result of modifications to the Products which are requested by Buyer.
5. COMPETITIVE PRODUCT. In consideration of Seller's agreement to
provide the significant volume-based rebates described in Exhibit B attached
hereto, Buyer agrees to limit the extent to which it acquires equipment which is
competitive with the Products manufactured by Seller. Buyer agrees to purchase
no more than 5% of its annual requirements of Machines for new store development
from competitors of Seller, and compliance with this covenant shall be tested on
a trailing 12-month basis. In addition, if (a) Seller is unable to deliver (i)
Machines which Buyer has ordered within forty-five (45)
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days or (ii) Parts within five (5) business days of Buyer's order; and (b) such
order is in an amount customarily ordered by Buyer, Buyer has the right to
instead purchase a like number of pieces of equipment of comparable grade and
quality from Seller's competitors, which purchases shall not count toward the
aforementioned 5% allowance for competitive purchases. In addition to the
foregoing, in the event that Buyer requires certain items of laundry equipment
with respect to which none of the Products manufactured by Seller materially
conform to the specifications of such equipment required by Buyer, then Buyer
shall be free to purchase such equipment from any other person; provided,
however, that in the event Seller subsequently manufactures a Product which
satisfies in all material respects the specifications required by Buyer and is
reasonably competitively priced, Buyer shall thereafter purchase such equipment
from Seller as one of the Products hereunder.
6. TECHNICAL SUPPORT. Seller will commit resources to work directly
with Buyer on projects mutually beneficial to the parties, including but not
limited to audit control, electronic display and card-actuated washers and
dryers. This is required to ensure timely response to new product development
and day-to-day product problem resolution.
7. PRODUCT RELIABILITY. Buyer will share with Seller service history
and product reliability data which is readily available to Buyer concerning the
performance of Seller's products.
8. WARRANTY. All Products are sold to Buyer with the manufacturer's
warranty as set forth on Exhibit C attached hereto, unless specifically agreed
to the contrary between Buyer and Seller as to designated Products. The
foregoing warranty coverage will also apply retroactively to all Products
purchased by Buyer from November 22, 1996, through the date of this Agreement.
9. DEFAULT AND ARBITRATION. Each of the following shall constitute an
Event of Default under this Agreement:
A. Default in the payment when due of any amount owed by Buyer
to Seller under this Agreement; and
B. Default in the obligation to obtain Products from Seller in
the manner set forth in Sections 1, 2 and 5.
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Upon the occurrence of an Event of Default hereunder, Seller shall have
the right to commence appropriate proceedings in any state or federal court
located in Fond du Lac County, Wisconsin, Buyer hereby agreeing that it
irrevocably submits to the jurisdiction of such court and waives, to the fullest
extent such party may effectively do so, the defense of an inconvenient forum to
the maintenance of any such action or proceeding. Provided, however, that if
there is a dispute arising out of any of the other terms of this Agreement, such
dispute shall be immediately submitted to arbitration in Fond du Lac, Fond du
Lac County, Wisconsin, in accordance of the commercial rules then in effect of
the American Arbitration Association, and any award of such arbitration shall be
final and binding upon the parties.
10. TERM. The initial term of this Agreement shall be three (3) years,
commencing on the date hereof and ending on August 31, 2001. This Agreement
shall be automatically renewed thereafter, for a maximum of four (4) additional
years, each such renewal being for a one (1) year term (to August 31 of the
applicable year), until one party gives a written notice of non-renewal to the
other party at least three (3) months prior to the termination date of the term
of this Agreement then in effect, or until August 31, 2005, whichever first
occurs.
11. NOTICE. Except as otherwise provided herein, any notice required
hereunder shall be in writing and shall be deemed to have been validly served,
given, or delivered upon (a) three (3) business days after deposit in the United
States certified or registered mails, with proper postage prepaid, (b) the next
business day after deposit with a reputable overnight courier with all charges
prepaid, or (c) delivery, if hand-delivered by messenger, all of which must be
properly addressed to the party to be notified as follows:
(a) If to Seller at: Alliance Laundry Systems LLC
Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxx, XX 00000-0000
Attn: Senior Vice President,
Sales and Marketing
(b) If to Buyer at: SpinCycle, Inc.
00000 X. Xxxxxxxx/Xxxxxx Xxxx
Xxxxx 000
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Xxxxxxxxxx, Xxxxxxx 00000
Attn: Mr. Xxxxx Ax
with a copy to: Xxxxxxxx & Xxxxx
000 X. Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxx Xxxxxxx, Esq.
or to such other address as each party may designate for itself by like notice.
12. CHOICE OF LAW. This Agreement shall be governed by the laws of the
State of Wisconsin.
13. SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by
either party hereto without the prior written consent of the other party, which
consent shall not be unreasonably withheld or unduly delayed. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors, legal representatives, and permitted assigns.
14. ENTIRE AGREEMENT. This Agreement is the entire agreement among the
parties hereto concerning the subject matter hereof and supersedes all prior
agreements, understandings, or negotiations between the parties.
15. COUNTER PARTS CLAUSE; TELECOPY EXECUTION. This Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument. Delivery of an executed
counterpart of this Agreement by telefacsimile shall be equally as effective as
delivery of a manually executed counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by telefacsimile shall also
deliver a manually executed counterpart of this Agreement, but the failure to
deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
BUYER: SELLER:
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SPINCYCLE, INC., a Delaware corporation ALLIANCE LAUNDRY SYSTEMS LLC,
a Delaware limited liability company
By: /s/ Xxxxx X. Ax By: /s/ Xxxx Xxxxxxxx
Title: Chief Executive Officer Title: Authorized Signatory
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