EXHIBIT 10.56
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SUPPLY AGREEMENT
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This Supply Agreement (hereinafter the "Agreement") is made and entered into by
and among Coinmach Corporation (hereinafter "Coinmach"), Super Laundry Equipment
Corporation (hereinafter "Super Laundry"), (Coinmach and Super Laundry
collectively being referred to herein as "Buyer"), and Alliance Laundry Systems
LLC, a Delaware limited liability company (hereinafter "Seller").
WITNESSETH
WHEREAS, Buyer is in the business of providing vended and non-vended
laundry equipment services for multi-family housing units, owning and operating
their own coin laundries, and is also a distributor of coin laundry and
on-premise laundry equipment and turnkey laundromat stores; and
WHEREAS, Buyer wishes to assure itself of an ongoing business
relationship with Seller, which is beneficial to Buyer in terms of assuring that
Buyer has access in sufficient quantities to the Seller's latest products and
technology in the Buyer's business, and other complementary benefits; and
WHEREAS, Buyer previously entered into a Supply Agreement with Seller,
dated as of May 1, 1998 (the "Existing Supply Agreement"); and
WHEREAS, Buyer and Seller now desire to enter into this Agreement,
pursuant to which Buyer will purchase certain of its requirements of the
Products (as defined in Exhibit B) from Seller, in replacement of the Existing
Supply Agreement, in order to extend the term of the relationship between Buyer
and Seller, to put into effect, as of the date of this Agreement, the current
pricing structure as reflected on Exhibit A attached hereto, and to include
certain existing affiliates of Coinmach Corporation directly as Buyer under this
Agreement.
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:
** Multiple asterisks throughout this Agreement indicate that the portion of
this document so marked has been omitted as a confidential portion of this
document and has been filed separately with the Securities and Exchange
Commission.
1. Requirements Contract. For the term hereof (as defined in Section 11), 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;
and/or is an authorized distributor for Seller's Products in one or more
territories, 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.
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 coin-operated or card-operated washing machines and front load
washers;
(b) All coin-operated or card-operated dryers, stacked dryers, and tumbler
dryers; and
(c) All new replacement and new repair parts for any and all of Seller's
coin-operated or card-operated washing machines, dryers, frontload washers,
stacked dryers and tumbler dryers owned by, leased to or serviced by Buyer.
3. Price. The prices to be charged Buyer will be ** OMITTED PURSUANT TO
CONFIDENTIAL TREATMENT REQUEST**
All prices are stated on an FOB shipping point basis, except Seller will prepay
freight on orders of 42 or more units of Seller's washers and dryers (21 or more
for stacked dryers) for shipments within the continental United States and, for
shipments into Mexico, will prepay freight to a destination point selected by
Buyer on the U.S. - Mexican border. For shipments of home style products to
Appliance Warehouse, Seller will prepay freight on shipments of 12 units or
more.
The current prices to be charged Buyer for replacement and repair parts are
those set forth in Seller's published parts price lists, stated as either a net
price or a suggested list price; however, if such price is listed as a suggested
list price, Buyer shall be charged suggested list price less a **OMITTED
PURSUANT TO CONFIDENTIAL TREATMENT REQUEST** discount.
Seller reserves the right to select the carrier and shipping point for Products.
Payment terms shall be ninety (90) days from date of invoice; provided, however,
that Seller retains the right to adjust payment terms in the event that Buyer
fails to maintain its timeliness of payment in all material respects.
** Multiple asterisks throughout this Agreement indicate that the portion of
this document so marked has been omitted as a confidential portion of this
document and has been filed separately with the Securities and Exchange
Commission.
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4. Rights with Respect to Future Prices. Seller shall have the right to change
the prices charged Buyer for Products, except for home style washer and
"Special" models, upon sixty (60) 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 other customers as documented by
Seller's published manufacturer's list prices. ** OMITTED PURSUANT TO
CONFIDENTIAL TREATMENT REQUEST**
5. Competitive Product. In consideration of Seller's agreement to provide
significant discount pricing, Buyer agrees to purchase at least **OMITTED
PURSUANT TO CONFIDENTIAL TREATMENT REQUEST** of its needed Products from Seller
during the term of the Agreement. In addition, if Seller is unable to deliver
Products which Buyer has ordered within ten (10) days of the date such Products
would be shipped in the ordinary course of Seller's business, Buyer has the
right to instead purchase a like number of pieces of equipment of comparable
grade and quality from any other person; provided that any such failures to
deliver Products within 45 days from the date such Products were ordered shall
be deemed to be a Default hereunder. In the event Buyer requires certain items
of laundry equipment with respect to which none of the Products manufactured by
Seller substantially conform to the specifications of such equipment as required
by Buyer, then, notwithstanding the provisions contained in the first sentence
of this Section 5, Buyer shall be free to purchase such equipment from any other
person.
In the event, Buyer receives a proposal from a customer specifying certain
equipment other than Seller's and after a good faith effort to convince the
customer to purchase Buyers equipment customer demands other equipment, such
equipment will be excluded from the **OMITTED PURSUANT TO CONFIDENTIAL TREATMENT
REQUEST** requirement.
6. Technical Support. Seller will commit resources to work directly with Buyer
on projects mutually beneficial to both parties, including but not limited to
audit control, electronic display, card-actuated washers and dryers and stacked
frontload washer/dryer combinations. This is required by Buyer to ensure timely
response to competitive new product developments and to allow Buyer to be more
competitive by offering more efficient customer friendly laundry equipment
services.
7. Forecasting and Logistics. Three business days prior to the beginning of each
month, the Buyer shall provide Seller a rolling 90 day forecast of monthly
requirements for each of the product categories, as defined in Section 2 (a) of
the Seller's route business except that the first 30 days of the forecast shall
be by model. Quantities provided in the forecast will not be binding on Buyer
but only serve to evidence the good faith estimate of future requirements.
Buyer and Seller will work cooperatively and use their good faith efforts to
optimize order processing and distribution logistics using the following
guidelines:
(a) The locations listed below will order in full truckload quantities:
** Multiple asterisks throughout this Agreement indicate that the portion of
this document so marked has been omitted as a confidential portion of this
document and has been filed separately with the Securities and Exchange
Commission.
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Cranbury, NJ Glendale, CA
Dallas, TX
Houston, TX
Roslyn, NY
West Nassau, NY
(b) Intermodel shipments (truckloads on trains) will be made to these
locations with the associated estimated transit time:
Location Transit Time
Dallas, TX 3-4 days
Glendale, CA 5-6 days
Houston, TX 3-4 days
West Nassau, NY 3-4 days
(c) Buyer must order in increments of 6 for topload washers, electric dryers,
and gas dryers and in increments of 3 for stacked dryers -gas and stacked dryers
- - electric.
8. 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.
9. Warranty. All Products sold to Buyer shall be sold to Buyer with Seller's
standard commercial limited parts warranties, unless otherwise specified by
Seller and mutually agreed to in writing by Buyer in advance of any sales;
except, however, the Speed Queen branded Washers, Dryers and Stack Dryers
shipped by Seller to Buyer on or after January 27, 1997 shall be sold to Buyer
without warranty, provided, however, that Seller shall reimburse Buyer for any
cost of material incurred by Buyer which is attributable to Seller's verified
"Epidemic Failure" of component parts. As well as any labor allowances offered
by Seller to any other customers for the same "Epidemic Failure". An "Epidemic
Failure" of a component part occurs when there is in excess of a 10% failure
rate for the preceding twelve (12) months for that component. Buyer reserves the
right to purchase the Speed Queen branded Washers, Dryers and Stack Dryers with
Seller's standard commercial limited parts warranties by paying the extra amount
specified in Exhibit B upon sixty (60) days written notice. If the Buyer chooses
to buy with warranty during the term of this Agreement, then the Buyer may not
make another election to buy without warranty during the remainder of the
Agreement.
** Multiple asterisks throughout this Agreement indicate that the portion of
this document so marked has been omitted as a confidential portion of this
document and has been filed separately with the Securities and Exchange
Commission.
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10. 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 to either Party by
the other under this Agreement, if such failure continues for a period of thirty
(30) days after payment was due;
(b) Default in the obligation to obtain all Products from Seller in the
manner set forth in Sections 1, 2 and 5, if such failure continues for a period
of thirty (30) days after notice by Seller of such default; and
(c) Default in any of Seller's obligations to Buyer hereunder.
Upon the occurrence and continuation of an Event of Default hereunder, Seller,
in the case of an Event of Default under clause A or 13 of this Section 9, and
Buyer, in the case of an Event of Default under clause A or C of this Section 9,
shall have the non-exclusive right to commence appropriate proceedings in any
state court located in New York, New York, or in the federal courts for the
Southern District of New York, Buyer hereby agreeing that it irrevocably submits
to the jurisdiction of such courts 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. The foregoing notwithstanding, 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 New York, New York, by a
retired judge provided by the Judicial Arbitration and Mediation Service 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.
11. Term
(a) The initial term of this Agreement shall be **OMITTED PURSUANT TO
CONFIDENTIAL TREATMENT REQUEST**, commencing on the date hereof and ending on
**OMITTED PURSUANT TO CONFIDENTIAL TREATMENT REQUEST**.
(b) Buyer shall have the right to terminate this Agreement upon the
occurrence of a "Change of Control" (as hereafter defined) affecting Buyer and
the giving of written notice to Seller specifying a termination date of not less
than 120 days following the later of the date upon which such "Change of
Control" occurred or the date of such notice. For purposes of this Agreement, a
"Change of Control" shall be deemed to have occurred upon the earliest of the
following events: (i) upon the sale, transfer or other disposition, on a
cumulative basis subsequent to the date of this Agreement, of equity securities
in a party representing interests sufficient to elect a majority of the board of
directors or other persons responsible for the management or governance of Buyer
or of Coinmach Laundry Corporation, a Delaware corporation ("CLC"), the sole
shareholder of Buyer; (ii) upon any other occurrence after the date of this
Agreement resulting in the ability of any person or group of persons not
presently in control of Buyer or CLC to, directly or indirectly, exercise actual
control over the direction and
** Multiple asterisks throughout this Agreement indicate that the portion of
this document so marked has been omitted as a confidential portion of this
document and has been filed separately with the Securities and Exchange
Commission.
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management of Buyer or CLC; or (iii) the sale or other disposition of all
or substantially all of the assets of Buyer; provided, however, that no Change
of Control hereunder shall be deemed to have occurred following the sale or
issuance by Buyer or CLC of any class of equity securities if such securities
are sold in a transaction pursuant to a registration statement which has been
declared effective by the U.S. Securities and Exchange Commission,
12. 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) deposit in the United States certified or registered mails,
with proper postage prepaid, (b) 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:
If to Seller at: Attn.: Chief Executive Officer
Alliance Laundry Systems LLC
Shepard Street
P. 0. Box 990
Ripon, WI 54971-0990
with a copy to: Attn.: Senior Vice President Sales and Marketing
Alliance Laundry Systems LLC
Shepard Street
P. 0. Box 990
Ripon, WI 54971-0990
If to Buyer at: Coinmach Corporation
521 East Morehead St., Suite 590
Charlotte, N.C. 28202
Attn.: Stephen R. Kerrigan
with a copy to: Mayer, Brown & Platt
1675 Broadway
New York, New York 10019-5820
Attn.: Ronald S. Brody, Esq.
or to such other address as each party may designate for itself by like notice.
13. Choice of Law. This Agreement shall be governed by the laws of the State of
New York,
14. 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. This Agreement may not be assigned, transferred or
otherwise conveyed by Seller without Buyer's prior written consent, which
consent shall not be unreasonably withheld or conditioned, or unduly delayed.
** Multiple asterisks throughout this Agreement indicate that the portion of
this document so marked has been omitted as a confidential portion of this
document and has been filed separately with the Securities and Exchange
Commission.
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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.
16. Future Acquisitions. Buyer may, in the future, acquire other route
businesses from independent operators and operate such either under a new
wholly-owned subsidiary (if, for example, such acquisition is structured as a
stock purchase with the acquired corporation not thereafter being merged into
one of the entities comprising Buyer) or under one of Buyer's existing operating
entities (if, for example, such acquisition is structured as an asset
purchase). In the event that Buyer consummates any such future acquisitions,
Buyer or its applicable subsidiary shall remain entitled to the same benefits
hereunder as if such person were a party, as an additional "Buyer," to this
Agreement, and in the event any such acquisition results in a new wholly-owned
or controlled subsidiary of Buyer, Buyer shall cause such new subsidiary to
execute an agreement, in form and substance satisfactory to Seller, adopting the
terms of this Agreement as a "Buyer" hereunder and agreeing to be bound by all
the terms and provisions hereof, provided, however, that the foregoing shall not
require Buyer or any such new subsidiary to take any action that is prohibited
by, or would otherwise result in a default under or breach of, any agreement or
instrument to which Buyer or such new subsidiary is a party and, provided
further that, until such time as any such new subsidiary has adopted this
Agreement, Buyer shall cause such new subsidiary to abide and be bound by the
terms hereof in the same manner as if such new subsidiary were a party hereto.
However, in the event Buyer's new subsidiary is already a party to a
non-cancelable supply agreement (exclusive of a supply agreement which was
entered into by such new subsidiary in contemplation of Buyer's acquisition or
formation of such new subsidiary), Buyer is not bound to cause such new
subsidiary to execute an agreement adopting the terms of this Agreement or to
abide and be bound by the terms hereof in any manner. Notwithstanding the
foregoing provisions, Buyer shall use reasonable efforts to obtain the
cancellation or termination of any provision preventing a new subsidiary from
becoming a party to this Agreement, provided that Buyer shall not be obligated
to expend funds or take any other action adverse to Buyer's interests in order
to obtain such cancellation or termination, and further provided that upon the
expiration of any such restrictive provision, Buyer shall cause such new
subsidiary to join in and become a party to this Agreement.
17. Incorporation of Schedules. All Exhibits and Schedules attached hereto are
by this reference incorporated herein and made a part hereof for all purposes as
fully set forth herein.
18. Section Headings. Section headings contained in this Agreement are for
convenience and reference only and shall not be deemed a part of this Agreement.
** Multiple asterisks throughout this Agreement indicate that the portion of
this document so marked has been omitted as a confidential portion of this
document and has been filed separately with the Securities and Exchange
Commission.
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19. Severability. If for any reason whatsoever, any one or more of the
provisions of this Agreement shall be held or deemed to be inoperative,
unenforceable or invalid as applied to any particular case or in all cases,
such circumstances shall not have the effect of rendering such provision invalid
in any other case or of rendering any of the other provisions of this Agreement
inoperative, unenforceable or invalid.
20. Confidentiality. Each of Buyer and Seller shall maintain, and shall cause
each of their respective employees and officers to maintain, the confidentiality
of this Agreement and of all other confidential proprietary information
concerning the parties hereto and their respective businesses which is obtained
by either party in connection with the negotiation and performance of the
transactions contemplated herein; provided, however, that each of Buyer and
Seller, and their respective officers and employees, may disclose information
concerning this Agreement or any other such non-public information to their
respective external accountants and attorneys, or as may be required by any
applicable law (including, without limitation, the reporting obligations of
either Buyer or Seller under the Securities Act of 1933, the Securities Exchange
Act of 1934, or the rules and regulations promulgated by the Securities and
Exchange Commission), or by any order of any judicial or administrative
proceeding. In addition, each of Buyer and Seller may disclose any such
non-public information (i) pursuant to any law, rule, regulation, direction,
request or order of any judicial, administrative or regulatory authority or
proceeding (whether or not having the force or effect of law), or (ii) to (a)
any person providing financing to either such party hereto, (b) any rating
agency or comparable body in connection with any financing provided to either
party hereto, or (c) any prospective or actual successor or assignee of either
party hereto, provided that each such person to whom disclosure is made pursuant
to this clause (ii) is informed of the confidential nature of such information
in a manner consistent with the practice of the party making such disclosure
when such party is making disclosure of its own confidential or proprietary
information to persons of a similar nature. The foregoing notwithstanding, each
of Buyer and Seller agree that they shall use the information contained in this
Agreement, and any other confidential proprietary information which they obtain
concerning the other party, only for the purpose of performing their duties and
obligations under this Agreement, and that they shall not use or exploit such
information for their own benefit, or for the benefit of any other person,
without the other party's prior written consent.
Notwithstanding the foregoing, Buyer and Seller shall be responsible for any
breach of this confidentiality provision by any of their respective
representatives, agents, advisors or providers of financing. With respect to any
information to be disclosed pursuant to applicable law, legal process or by any
order of any judicial, regulatory or administrative proceeding, the disclosing
party will promptly notify the non-disclosing party thereof and cooperate with
the non-disclosing party to the extent legally permissible if such
non-disclosing party should seek to obtain an order or other reliable assurance
that confidential treatment will be accorded designated portions of the
confidential information.
** Multiple asterisks throughout this Agreement indicate that the portion of
this document so marked has been omitted as a confidential portion of this
document and has been filed separately with the Securities and Exchange
Commission.
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21. Complete Agreement. This Agreement, those documents expressly referred to
herein and other documents of even date herewith (i) embody the complete
agreement and understanding among the parties, and (ii) supersede and preempt
any prior agreements (including the Existing Supply Agreement), summaries of
terms and conditions, understandings, or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way. No waiver of any provision hereof shall be effective unless set forth
by written instrument and executed by the parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
** Multiple asterisks throughout this Agreement indicate that the portion of
this document so marked has been omitted as a confidential portion of this
document and has been filed separately with the Securities and Exchange
Commission.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
BUYER: SELLER:
COINMACH CORPORATION, ALLIANCE LAUNDRY SYSTEMS LLC,
a Delaware corporation a Delaware limited liability company
By: /s/ STEPHEN R. KERRIGAN By: /s/ JEFFREY J. BROTHERS
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Title: CEO Title: Senior VP Sales and
Marketing
SUPER LAUNDRY EQUIPMENT CORPORATION,
a New York corporation
By: /s/ STEPHEN R. KERRIGAN
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Title: CEO
EXHIBIT A
**OMITTED PURSUANT TO CONFIDENTIAL TREATMENT REQUEST**
** Multiple asterisks throughout this Agreement indicate that the portion of
this document so marked has been omitted as a confidential portion of this
document and has been filed separately with the Securities and Exchange
Commission.
Exhibit B
**OMITTED PURSUANT TO CONFIDENTIAL TREATMENT REQUEST**
** Multiple asterisks throughout this Agreement indicate that the portion of
this document so marked has been omitted as a confidential portion of this
document and has been filed separately with the Securities and Exchange
Commission.
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EXHIBIT C
**OMITTED PURSUANT TO CONFIDENTIAL TREATMENT REQUEST**
** Multiple asterisks throughout this Agreement indicate that the portion of
this document so marked has been omitted as a confidential portion of this
document and has been filed separately with the Securities and Exchange
Commission.
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