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Exhibit 10.4
AMENDED AND RESTATED
SUPPLY AGREEMENT
This Amended and Restated Supply Agreement (this "Agreement") is made
and entered into as of February 19, 1998, by and among SPINCYCLE, INC., a
Delaware corporation ("Buyer"), and RAYTHEON COMMERCIAL LAUNDRY 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, or selling to third persons to own and operate, 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;
WHEREAS, Buyer's predecessors-in-interest, SpinCycle, Inc., a Minnesota
corporation and 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 predecessor-in-interest; and
WHEREAS, the parties now desire to amend and restate the terms of the
Original Supply 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 leases and/or operates premises on 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
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whom Buyer has entered into any license 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, to the maximum extent permitted by law, require and encourage such person
to purchase Products from Seller.
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 washing machines and front load washers;
b. All dryers, stacked dryers, and tumbler dryers;
c. All replacement and repair parts for any and all of Seller's
washing machines and dryers 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
and by this reference made a part hereof. The prices are stated on a FOB
shipping point basis. Seller will prepay freight on orders of 42 or more units
of Seller's top-load washers for shipments within the continental United States.
Seller reserves the right to select the carrier and shipping point. Payments
with respect to Products hereunder shall be made on "Funding Dates" through the
delivery of the "Promissory Notes," all as more specifically set forth in that
certain Loan Agreement between Buyer's predecessors-in-interest and Seller's
predecessor-in-interest, as the same was subsequently amended by a First
Amendment to Loan Agreement dated as of July 15, 1997, and a Second Amendment to
Loan Agreement of even date herewith (and as all the rights, duties, and
obligations of Buyer's predecessors-in-interest and Seller's
predecessor-in-interest have been assumed by and become binding upon Buyer and
Seller, respectively). In the event that the Loan Agreement shall at any time be
terminated, or amounts to be funded thereunder shall have been fully funded,
without renewal or extension, then from and after such date, payment for
Products purchased 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 and by this
reference made a part hereof on Exhibit B, with respect to Buyer's net purchases
of serial numbered Speed Queen branded equipment. The Volume Rebate will be paid
based upon calendar year purchases (and for purposes of calculating Buyer's
Volume Rebate for 1998, Buyer shall be given credit for all purchases commencing
January 1, 1998). Rebates will be paid or credited to Buyer's account with
Seller within thirty (30) days following the end of each calendar year.
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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 three percent (3%) 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 that it may
choose to purchase only up to 5% of its needed Products from competitors of
Seller. In addition, if (a) Seller is unable to deliver Products which Buyer has
ordered within forty-five (45) days of the date such Products would be shipped
in the ordinary course of Seller's business, and (b) such order is in an amount
of equipment of comparable grade and quality from Seller's competitors. 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. Warrant. All Products are sold to Buyer with a standard
manufacturer's warranty as provided to Speed Queen distributors, unless
specifically agreed to the contrary between Buyer and Seller as to designated
Products.
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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 all Products from Seller in
the manner set forth in Sections 1, 2 and 5.
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 February 18, 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 February 18 of the
applicable year), until one party gives a written notice of non-renewal to the
other party at least six (6) months prior to the termination date of the term of
this Agreement then in effect, or until February 18, 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: Raytheon Commercial Laundry LLC
Xxxxxxx Xxxxxx
X.X. Xxx 000
Xxxxx, XX 00000-0000
Attn: Senior Vice President, Sales and
Marketing
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(b) If to Buyer at: SpinCycle, Inc.
00000 X. Xxxxxxxx/Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Mr. Xxxxx Ax
with a copy to: Xxxxxxxx & Xxxxx
000 X. Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: 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 shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
legal representatives, and 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. Counterparts 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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
BUYER:
SPINCYCLE, INC, a Delaware corporation
By: ____________________________________
Title: _________________________________
SELLER:
RAYTHEON COMMERCIAL LAUNDRY
LLC, a Delaware limited liability company
By: ____________________________________
Title: _________________________________
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