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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: July 4, 1999
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________to_________________
Commission File Number: 1-11012
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Glacier Water Services, Inc.
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(Exact Name of Registrant as
Specified in Its Charter)
Delaware 33-0493559
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2261 Cosmos Court, Carlsbad, California 92009
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(Address of principal executive offices) (Zip Code)
(760) 930-2420
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(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of issuer's class of
common stock as of the latest practicable date: 2,847,074 shares of common
stock, $.01 par value, outstanding at August 1, 1999.
1
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This amendment to Form 10-Q for the quarter ended July 4, 1999 on Form 10-Q/A is
being filed solely to provide additional exhibits.
PART II - OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 10.3.1 Location Agreement and Addendum thereto dated
as of January 1, 1999 between GW Services, Inc. and Fred
Meyer Stores, Inc. (confidential treatment requested)
Exhibit 10.6 Location Agreement dated as of February 11, 1999
between GW Services, Inc. and Safeway, Inc. (confidential
treatment requested)
Exhibit 27.1 Financial Data Schedule (previously filed)
b. Reports on Form 8-K
None
EXHIBITS
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10.3.1 Location Agreement and Addendum thereto dated as of January 1, 1999
between GW Services, Inc. and Fred Meyer Stores, Inc. (confidential treatment
requested)
10.6 Location Agreement dated as of February 11, 1999 between GW Services, Inc.
and Safeway, Inc. (confidential treatment requested)
27.1 Financial Data Schedule (previously filed)
2
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
GLACIER WATER SERVICES, INC.
Date: September 14, 1999 By: /s/ David Walters
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W. David Walters
Chief Financial Officer and
Vice President, Finance
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EXHIBIT 10.3.1
[Certain information marked with two asterisks (**) in this exhibit has been
omitted and filed separately with the Securities and Exchange Commission.
Confidential treatment has been requested with respect to the omitted portions]
Location Agreement
This agreement ("Agreement") is entered into on this 1st day of January, 1999,
by and between GW Services, Inc., a California corporation, (hereinafter
referred to as "GWS" or "Vendor") and Fred Meyer Stores, Inc. ("Fred Meyer") on
behalf of itself and its affiliates (hereinafter individually referred to as
"Operating Company" and collectively as "Retailer") listed and identified in
Exhibit A, supplemental pages attached is Retailer store list (which exhibit is
attached hereto and by this reference made a part hereof, including without
limitation all Locations that are operated by the Operating Companies of
Retailer).
GWS is in the business of manufacturing and providing water vending equipment
("Equipment") and water services ("Services") and wishes to provide Equipment
and Services to Retailer at all supermarket locations now or hereafter owned or
leased by Retailer ("Location") and Retailer wishes to obtain Equipment and
Services from GWS.
Previous Agreements: upon execution of this Agreement, previous agreements
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("Previous Agreements") between GWS and Ralphs Grocery Company ("RGC") and Cala
Co. ("Cala") dated December 31, 1996; Hughes Markets, Inc. ("Hughes") dated July
18, 1998; and Smith's Food & Drug Centers, Inc. (including Smitty's
Supermarkets, Inc.) (collectively "SFD") dated August 21, 1996; shall be
considered cancelled and superceded by this Agreement except for the
representation and warranties (and corresponding indemnification's and
provisions) set forth in those agreements which shall continue to survive.
Retailer is agreeable to permitting the equipment to be placed and services to
be provided at and for the Locations under the following terms and conditions:
Groups: Each of the following shall be a separate "Group" for purposes of
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calculations made on a Group basis under this Agreement: (i) all Fred Meyer
store Locations; (ii) all Quality Food Center, Inc. ("QFC") store Locations;
(iii) all RGC and Hughes store Locations; (iv) all Cala store Locations; (v)
store Locations operated by SFD in Utah, Idaho, Wyoming and Nevada other than
Clark County and metropolitan Las Vegas ("New SFD"); and (vi) all SFD store
Locations not included in clause (v) of this paragraph ("Old SFD").
Effective Date: the effective date ("Effective Date") of this Agreement will be
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January 1, 1999.
Term: the term ("Initial Term") of this Agreement shall be for five years from
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the Effective Date. After the Initial Term, this Agreement shall automatically
renew for successive one-year terms unless it is cancelled by either party upon
at least 60-day's written notice prior to the commencement of any one-year term.
Should this Agreement automatically renew a pro-rated amount of the Marketing
Allowance will be paid for the renewal period.
Placement of Equipment: Retailer grants GWS the exclusive right to place
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Equipment at such places as GWS and Retailer shall mutually determine inside
and/or outside the supermarket buildings located at all existing Locations owned
or leased by Retailers (subject to any approvals required by the landlord(s) of
Retailer), including but not limited to those Locations listed on Schedule A to
this Agreement, and at any additional locations not previously listed on
Schedule A owned or leased by Retailer during the term of this Agreement (a "New
Location"). On or prior to the operation of any New Location by the Operating
Company, Retailer shall provide GWS with written notice of the New Location, and
the New Location shall be added to Schedule A. During the term of this
Agreement, Retailer shall not authorize or permit
Page 1 of 5
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the placement of any other water-vending device inside or outside of any
existing or New Location without obtaining the prior written consent of GWS. If
a New Location is acquired or operated by retailer after the date of this
Agreement and the Retailer determines, in its sole discretion, that because of
the format of such store it does not desire to supply the New Location with
Equipment under this Agreement, such New Location shall not be subject to this
Agreement.
Compensation Allowance: GWS will pay a compensation allowance ("Compensation
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Allowance") in the amount of ** by check upon execution of this agreement to
reimburse Retailer for expenses incurred to do market research, operational
evaluation, equipment testing, product testing, financial analysis, and other
expenses. Such Compensation Allowance shall be considered nonrefundable and
earned upon receipt by Retailer and shall have no further performance
requirements after the date of receipt. Such Compensation Allowance will be
paid to each Operating Company involved as follows: ** to RGC, Hughes and Cala
(collectively) and ** to Old SFD.
Marketing Allowance: GWS will pay to Retailer a marketing allowance ("Marketing
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Allowance") of **. Such Marketing Allowance will be paid for locations at RGC,
Hughes, Cala, and Old SFD and shall be allocated as follows: ** to RGC, Hughes,
Cala (collectively) and ** to Old SFD. The Marketing Allowance paid shall be
based on a store location count ("Store Count"), calculated initially as
follows: RGC, Cala and Hughes, collectively at ** Locations (at ** per store
Location per month over the Initial Term); Old SFD at ** Locations (at ** per
store Locations per month over the Initial Term). Amounts paid in respect of
the Marketing Allowance shall be refundable, and additional amounts shall be
payable as an additional Marketing Allowance, after the first twelve (12) months
of the Initial Term as follows:
RGC, Hughes and Cala: if the number of RGC, Hughes or Cala store Locations in
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operation at the beginning of any month during the Initial Term is in excess of
the Store Count for such stores as of the beginning of the previous month, then
Retailer shall be entitled to receive from GWS a payment equal to the difference
between such amounts multiplied by ** , multiplied by the number of months
remaining during the Initial Term. If the number of RGC, Hughes and Cala store
Locations in operation at the beginning of any month during the Initial Term is
less than the Store Count for such stores as of the beginning of the previous
month, then GWS shall be entitled to receive from Retailer a refund payment
equal to (x) the difference between such amounts, multiplied by (y) ** ,
multiplied by (z) the number of months remaining during the Initial Term.
Old SFD: if the number of Old SFD store Locations in operation at the beginning
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of any month during the Initial Term is in excess of the Store Count for such
stores, then Retailer shall be entitled to receive from GWS a payment equal to
the difference between such amount multiplied by ** , multiplied by the number
of months remaining during the Initial Term. If the number of Old SFD store
Locations in operation at the beginning of any month during the Initial Term is
less than the Store Count for such stores as of the beginning of the previous
month, then GWS shall be entitled to receive from Retailer a refund payment
equal to (x) the difference between such amounts, multiplied by (y) ** ,
multiplied by (z) the number of months remaining during the Initial Term.
Notwithstanding the foregoing, GWS shall not be entitled to a refund under this
Marketing Allowance provision for any Locations if GWS's inability to operate
its Equipment at such Location arises primarily from a material breach of GWS's
obligations under this Agreement. The foregoing provision regarding refund of
the Marketing Allowance no longer shall be in effect if GWS previously has been
refunded or will be refunded the Marketing Allowance under the provisions of the
Termination section of this Agreement.
Page 2 of 5
** Confidential treatment requested.
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Locations Allowance: GWS will pay Fred Meyer, Quality Food Centers, Inc.
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("QFC"), and New SFD a location allowance ("Locations Allowance") of ** per
store location which shall be considered nonrefundable and earned upon receipt
by Retailer with no further performance requirements after the date of receipt.
Such Location Allowance will be paid semi-annually in advance for all stores
expected to be in operation for each following semester ("Semester"). A
Semester will be any six-month period after the Effective Date, beginning from
the Effective Date and lasting through that date that is six months hence. The
Location Allowance for the first Semester will be due at the beginning of that
Semester based on ** multiplied by the number of Locations the parties hereto
agree that should be in operation through the first half of the Semester. For
any subsequent Semester, the Location Allowance due will be equal to **
multiplied by the number of Locations that the parties hereto agree should be in
operation during the Semester. Such Location Allowance will increase or
decrease with respect to each Group as the volume of gallons per day ("GPD")
increase or decrease per the schedule below:
Required
Locations Allowance Group Average
Amount GPD Per Location
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** per semester 0 to 100
** per semester 101 to 149
** per semester 150 or more
Closure of Location: for Fred Meyer and QFC, any location may be closed and
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Equipment removed with thirty (30) days written notice effective at the end of
any given Semester.
Commission: commission ("Commission") will be paid to Retailer based on the
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rates below which will be multiplied by each month's sales from the Equipment at
such Locations, less taxes, fees (including without limitation permits,
licenses, regulatory fees and inspections), and losses due to vandalism and
theft relating to the operation of the Equipment.
51% for 0 to 149 average GPD per Location within a Group
53% for 150 or more average GPD per Location within a Group
On of before the first day of each month during the term of this Agreement:
a) with respect to Locations where only coin operated Equipment is located,
GWS shall pay Retailer estimated Commission based on estimated sales for
such month.
b) with respect to Locations where only non-coin operated Equipment is
located, applicable Operating Company(ies) shall pay GWS the amount by
which estimated sales to be collected by applicable Operating Company(ies)
for such month exceed estimated Commissions for such month, and...
c) with respect to Locations where both coin operated and non-coin operated
Equipment is located, (i) if estimated commissions based upon estimated
sales for the month exceed the amount of estimated sales to be collected by
applicable Operating Company(ies) for such month, GWS shall pay applicable
Operating Company(ies) the net difference of (ii) if estimated sales to be
collected by applicable Operating Company(ies) for the such month exceed
estimated commissions for such month, applicable Operating Company(ies)
shall pay to GWS the new difference.
Page 3 of 5
** Confidential treatment requested.
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Payments for any subsequent month shall be adjusted by an amount equal to the
difference between the estimated Commission paid for any previous month and the
actual Commission for such month.
In addition, GWS will pay to Retailer each Semester a bonus payment ("Bonus
Payment") (in addition to Commissions) equal to 1/2 of 1% (.5%) of sales based
on the requirements below less taxes, fees (including without limitation
permits, licenses, regulatory fees and inspections), and losses due to vandalism
and theft relating to the operation of the Equipment.
For Fred Meyer, QFC, RGC, Hughes, Cala, Old SFD and New SFD (each as a separate
Group) will earn the 1/2 of 1% (.5%) commission bonus when any Group achieves
96 average gallons per water vending machine per day the prior Semester.
Settlement Payment: Retailer agrees to pay to GWS a settlement payment
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("Settlement Payment") in the amount of ** to terminate the Previous Agreements
and enter into this Agreement. Upon payment by Fred Meyer of the Settlement
Payment, the parties hereto shall have no further claims upon the other or
obligations to the other (financial or otherwise) in connection with the
Previous Agreements. Payment of such Settlement Payment may occur as a
deduction from the total proceeds of the Marketing Allowance that is due
Retailer under this Agreement. If payment of the Settlement Payment is handled
as such a deduction, it will be fully detailed on the check stub or accompanying
correspondence which shall include the information regarding check number and
check date as well as the details of the specific payment.
Termination: This Agreement may only be terminated by a party during the
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Initial Term in the event of a material breach hereof by the non-terminating
party that is not cured within twenty (20 days (excluding Saturday's, Sunday's
and any days on which banks located in the State of California are obligated or
authorized to close) following receipt of written notice thereof by the
terminating party.
In the event of an early termination of this Agreement and GWS is unable to
operate its Equipment at the store locations covered by this Agreement for
following shall apply:
a) if such termination should occur during the first twelve months of the
Initial Term, Retailer will pay to GWS the entirety of the Marketing
Allowance.
b) if such termination should occur after the first twelve months of the
Initial Term, Retailer will pay to GWS:
i for RGC, Hughes and Cala Locations ** multiplied times ** stores times
the number of months remaining on this Agreement.
ii For Old SFD Locations, ** multiplied times ** stores times the number
of months remaining on this Agreement.
Such payment shall be made within thirty days of termination of this Agreement.
The foregoing provision regarding refund of the Marketing Allowance no longer
shall be in effect if GWS previously has been refunded or will be refunded the
Marketing Allowance under the section titled Marketing Allowance on page 2 of
this Agreement.
Page 4 of 5
** Confidential treatment requested.
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Costs:
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1. Retailer Costs. Retailer shall incur the costs of providing electrical
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current and city tap water necessary for the operation of the Equipment.
2. GWS Costs. GWS shall incur the costs of water, electrical and drain
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connection improvements necessary for the operation of the Equipment. GWS
shall secure and pay all permits, licenses, regulatory fees and inspections
necessary for the proper maintenance of chemicals and equipment in
connection with the operation of the Equipment. GWS shall incur the costs
of the removal of its Equipment from any Location and shall repair any
damage caused by such removal.
Entry; Cooperation:
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1. Maintenance. Retailer shall allow GWS's agents, contractors and employees
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to enter each Location for the purpose of maintaining and servicing the
Equipment during regular business hours. Operating Companies and/or
Retailer shall endeavor to promptly report to GWS the theft of, damage to,
or malfunction of any Equipment.
2. Promotional Activities. Retailer will approve all promotions in advance
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and shall cooperate with GWS in promoting GWS's products and services and
shall not interfere with sales from or discourage the use of the Equipment
by any means whatsoever. Without limiting the foregoing, Retailer shall
permit GWS and its authorized agents and representatives to demonstrate
GWS's products and conduct other promotional activities or point of
purchase programs at the Locations as GWS shall deem appropriate, at no
cost to GWS.
3. Use, Control and Ownership. GWS acknowledges that this Agreement
--------------------------
constitutes only a license to use a portion of the property at each
Location and shall not be construed as a lease, easement or any other
interest in real property. Subject to the section above governing
Marketing Allowances, Retailer shall at all times retain the right to
temporarily or permanently discontinue its supermarket operations at any
Location. Retailer acknowledges that GWS shall have the right to remove
Equipment from any Location if, in GWS's sole discretion, such Equipment is
not sufficiently profitable to merit continued operation at such Location.
This Agreement, including the foregoing and Exhibits A, B and C, attached
hereto, correctly set forth the terms and conditions agreed upon between GWS and
Retailer.
Fred Meyer Stores, Inc. Glacier Water Services, Inc.
Agreed and Accepted: Agreed and Accepts:
By: Darrell D. Webb By: Jerry A. Gordon
Title: Sr. VP Food Group Title: President & Chief Operating Officer
Signature: /s/ Darrell D. Webb Signature: /s/ Jerry A. Gordon
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Page 5 of 5
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Schedule A
[Never prepared by the parties to this Location Agreement]
<PAGE>
Exhibit A
[Never prepared by the parties to this Location Agreement]
<PAGE>
Exhibit B
Significant Provisions Required for All
Promotional Allowance Agreements
The following terms and conditions shall be made a part of the agreement to
which this Exhibit is attached, and shall be binding upon the parties thereto.
Should there be a conflict between the terms of this Exhibit and the agreement
("Agreement") to which it is a part, the provisions of the Exhibit shall
prevail. For purposes of this Exhibit B, GWS will also be referred to as
Vendor.
1. Confidentiality and Non-Disclosure. GWS and Retailer shall keep the terms
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and conditions of this Agreement strictly confidential, except as otherwise
required by law, including the filing of the Agreement with any
governmental agency pursuant to public reporting requirements.
2. Compliance With All Laws, Rules, Regulations and Directives;
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Indemnification. Each party warrants and represents that it shall in every
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manner of its business related to this Agreement obey and conform in all
material respects to all federal, state and local laws, rules, regulations
and directives. Any breach of said warranty and representation or claim of
breach shall be the sole responsibility of the breaching party and the
breaching party will, for said breach or claim of breach, hold the other
party completely safe and harmless. With regard to any third party claims,
the breaching party shall fully defend and indemnify the other party and
hold the other party fully and completely safe and harmless from all
losses, claims, costs, suits, damages, fines, penalties, expenses and
counsel fees arising out of a breach of any of the foregoing.
3. Mutual Indemnification. Retailer shall indemnify and hold harmless GWS and
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its directors, officers, parent corporation, sister corporations,
subsidiaries, assigns, agents and employees from any claim, litigation,
judgment, loss, liability, damage, injury to property or person, death or
expense (including reasonable attorneys' fees and expenses) which directly
or indirectly arise from Retailer's acts or omissions, including without
limitation, any action or claim brought by Retailer's employees, agents and
representatives, pertaining to or arising out of Retailer's performance
under this Agreement or arising out of or based upon the breach of any
representation or warranty of Retailer contained in this Agreement;
provided, however, that Retailer shall not be liable to GWS for any claims,
litigation, judgment, loss, liability, damage, injury to property or
person, death or expense arising from or based upon the negligence of GWS.
GWS shall indemnify and hold harmless Retailer and its directors, officers,
parent corporation, sister corporations, subsidiaries, assigns, agents and
employees from any claim, litigation, judgment, loss, liability, damage,
injury to property or person, death or expense (including reasonable
attorneys' fees and expenses) which directly or indirectly arise from GWS's
acts or omissions, including without limitation, any action or claim
brought by GWS's employees, agents and representatives, pertaining to or
arising out of GWS's performance under this Agreement or arising out of or
based upon the breach of any representation or warranty of GWS contained in
this Agreement; provided, however, that GWS shall not be liable to Retailer
for any claims, litigation, judgment, loss, liability, damage, injury to
property or person, death or expense arising from or based upon the
negligence of Retailer.
4. Insurance. Vendor shall comply with the Insurance Requirements attached
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hereto as Exhibit C and by this reference incorporated herein and made a
part hereof.
5. Force Majeure. Neither party shall be liable for delay or failure to
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perform in whole or part any of the promises or responsibilities of this
Agreement by reason of contingencies beyond its control, including lack or
failure of raw materials, labor disturbances (including strikes and
<PAGE>
lockouts), war, acts of God, hurricanes, fires, storms, accidents,
government regulation or interference of any other cause whatever beyond
its control.
6. No Waiver. No action, failure of action or delay by either party shall
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constitute a waiver of any of its rights or remedies under this Agreement.
7. Notices. For the purpose of this Agreement, any notices and demands
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required to be given shall be given to the parties in writing and by
Certified Mail at the address set forth, or to such other address as the
parties may hereafter substitute by written notice.
Vendor: Retailer:
GW Services, Inc. Fred Meyer, Inc.
c/o Glacier Water Services, Inc. 3800 S.E. 22/nd/ Avenue
2261 Cosmos Court Portland, OR 97202
Carlsbad, CA 92009 Attn: Legal Department
Attn: President
8. Laws Governing and Venue. The Agreement shall be governed by the laws of
------------------------
the State of California, without regard to any Conflict of Laws principles.
9. Set-Off. With regard to payments due Vendor by Retailer, Retailer reserves
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the right to deduct, set-off or withhold such sums as Retailer deems due
and owing to it by Vendor if Vendor has not made payment after 30 days from
invoice date. Retailer shall not be responsible for any late charges,
penalties or assessments in connection with assertion of its right to
deduct, set-off or withhold such sums. With regard to payments due Retailer
by Vendor, Vendor reserves the right to deduct, set-off or withhold such
sums as Vendor deems due and owing to it by Retailer if Retailer has not
made payment after 30 days from invoice date. Vendor shall not be
responsible for any late charges, penalties or assessments in connection
with assertion of its right to deduct, set-off or withhold such sums.
10. No Agent. Vendor and Retailer are not, and shall not be, considered as
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joint venturers, partners, agents, servants, or employees or fiduciaries of
each other, and neither shall have the power to bind or obligate the other.
11. Assignment. The Agreement shall not be assigned by either party without the
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prior written consent of the other party, which consent will not be
unreasonably withheld. The rights and obligations of the Agreement shall
inure to the benefit of, and be binding upon the parties hereto and their
respective heir, administrators, executors, personal representative,
successors and permitted assigns.
12. Severability of Terms. If any of the terms of this Agreement are
---------------------
subsequently or are now illegal, they may be severed from the Agreement
without affecting the remaining terms.
13. Headings. The paragraph headings used in this Agreement are meant only as
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guidelines and are in no way to be considered controlling as to the content
and/or interpretation of each paragraph herein.
14. Entire Agreement Amendments. The Agreement, including the foregoing and the
---------------------------
Exhibits(s) attached thereto correctly sets forth the entire agreement
between Vendor and Retailer with respect to the subject matter addressed
therein and supersedes any and all prior understandings and/or agreements
between or among them covering the same (other than as set forth under the
heading "Previous Agreement" in the Agreement). No agreements or
understandings shall be binding on the parties hereto unless specifically
set forth in the Agreement (including the
<PAGE>
Exhibit(s)). Written amendments signed by all of the parties can be set
forth subsequent to the execution of the Agreement.
15. Counterparts. This Agreement may be executed in two or more counterparts,
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each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
<PAGE>
Exhibit C
Insurance Requirements
1. Definitions:
The term Retailer shall include, jointly, Fred Meyer Stores, Inc.; Quality
Food Centers, Inc.; Hughes Markets, Inc.; Ralphs Grocery Company (for both
its Ralphs supermarket division and its Food 4 Less warehouse store
division of Southern California); Smith's Food & Durg Centers, Inc.;
Smitty's Supermarkets, Inc., and Cala Co. (hereinafter referred to jointly
as "Retailer").
The term Supplier shall mean GW Services, Inc. (hereinafter referred to as
"Supplier"), as an independent contractor together with any and all of
Supplier's subcontractors, employees, agents, representatives, and
invitees.
2. Supplier shall provide evidence of Public Liability and Broad From Property
Damage Insurance, including Products Liability Insurance. The limits of
said coverage shall be not less than $1,000,000 Combined Single Limit for
Bodily Injury, Death and/or Property Damage.
3. Supplier shall provide evidence of Automobile Bodily Injury and Property
Damage Insurance covering all vehicles moving under their own power and
engaged in the work under contract. Coverage shall be not less than
$1,000,000 Combined Single Limit for Bodily Injury, Death and/or Property
Damage.
4. Supplier shall provide evidence of Workers Compensation Insurance, in
statutory form, on its and subcontractor's employees in accordance with
applicable law as well as obtain Employer's Liability Coverage with a limit
not less than $500,000/$500,000/$500,000 covering all persons the Supplier
may employ in carrying out any part of this Agreement requiring a personal
presence on Retailer property.
5. In addition to the insurance requirements to be maintained by the Supplier
as set forth herein, Supplier agrees to indemnify and defend Retailer
against any and all claims, losses, damages, costs and expenses arising
from injury to or death of persons or damage to or destruction of property
including, without limitation, property, employees, invitees, licensees,
customers or agents or Retailer occurring wholly or in part as the result
of the goods and/or services provided and/or work done or omitted to be
done by or contracted to be done by but not done by, Supplier or it
subcontractors or the employees or agents or invitees of either, or arising
from injury to or death of employees of agents or invitees of Supplier or
its subcontractors.
6. Supplier shall submit to Retailer, before commencement or work, a
certificate of insurance verifying the above insurance coverage, which
shall name Retailer (or, Fred Meyer, Inc., parent or grandparent of the
individual entities which comprise Retailer) as an additional insured for
General and Automobile Liability and contain certification by the insurance
company(ies) that such insurance shall not be canceled or materially
changed without at least thirty (30) days prior notification to Retailer.
7. All insurance must be placed with a company rated by "Best" and have a
"Best" rating of at least B+, VII.
<PAGE>
Addendum to Location Agreement
The Location Agreement ("Agreement"), made as of the 1st day of January,
1999, by and between GW SERVICES, INC., a California corporation (hereinafter
referred to as "GWS" or "Vendor") and FRED MEYER STORES, INC. ("Fred Meyer") on
behalf of itself and its affiliates listed and identified in Exhibit A attached
thereto (hereinafter sometimes individually referred to as "Operating Company"
and collectively as "Retailer") shall be amended as follows:
1. The first paragraph of the section headed "Previous Agreements" shall
-------------------
have the fifth and sixth lines deleted and in their place shall be:
"...superseded by this Agreement except with regard to the
indemnification provision(s) included therein, which shall continue
after termination as to any events which occurred or accrued during
the term(s) of such Previous Agreements."
2. The section headed "Settlement Payment" shall have the fourth line
------------------
deleted and in its place shall be:
"...obligations to the other (financial or otherwise, except as set
forth in paragraph headed 'Previous Agreements' above) in connection
-------------------
with the Previous Agreements. Payment of..."
3. The first paragraph of the section headed "Termination" shall have the
first line deleted and in its place shall be:
"Termination. This Agreement may only be terminated by a party
-----------
(either during the Initial Term or any extension thereof) in the event
of a..."
4. Maintenance of Equipment. Vendor shall maintain and repair the
------------------------
Equipment provided under this Agreement, and Retailer agrees to grant access to
the personnel designated by Vendor to provide such maintenance and repair
services during regular business hours of the Locations covered by this
Agreement.
5. All other terms and conditions of the Agreement by and between Vendor
and Retailer shall remain the same. In the event of any conflict in the language
of the Agreement and this Addendum relating to specific terms, conditions or
obligations dealt with herein between the parties, the language of this Addendum
shall supersede and shall prevail over those conflicting terms.
6. The Agreement (including this Addendum) may be amended only by a
written instrument signed by all parties hereto.
7. The effective date of this Addendum and the Agreement of which it is a
part shall be the same.
<PAGE>
8. The Agreement with Addendum sets forth the entire agreement between
Vendor and Retailer relating to the subject matter hereof. Neither party relies
upon any representation or warranty, express or implied, not expressly set forth
therein.
ALL OF THE TERMS AND CONDITIONS OF THE LOCATION AGREEMENT AND ADDENDUM ARE
HEREBY FULLY AGREED TO BY THE PARTIES.
GW SERVICES, INC. FRED MEYER STORES, INC.
- ----------------- -----------------------
By: /s/ Jerry A. Gordon By: /s/ Darrell D. Webb
------------------- ------------------------------------------
Title: President & COO Title: Senior Vice President, Food Group
---------------- ------------------------------------------
2
<PAGE>
Exhibit 10.6
[Certain information marked with two asterisks (**) in this exhibit has been
omitted and filed separately with the Securities and Exchange Commission.
Confidential treatment has been requested with respect to the omitted portions]
[LOGO]
LOCATION AGREEMENT
FOR COIN AND NON-COIN OPERATED MACHINES
Each party to this Agreement will hold in strict confidence from any other
person or entity, the subject matter and the terms and provisions of this
Agreement, unless compelled to disclose such information by governmental or
regulatory authorities.
This Agreement is made on February 11, 1999, between SAFEWAY, INC., herein
-------------
called ACCOUNT, and GW SERVICES, INC., herein called GLACIER, and relates to the
placement and operation of GLACIER'S Water Vending Machines, as follows:
GLACIER is the owner of water processing machine(s), herein called machine(s),
and desires to place the machine(s) at the premises owned or leased by the
ACCOUNT in order to sell processed water to the public.
The ACCOUNT agrees to permit a machine(s) to be placed at its place of business
under the below described terms and conditions:
1. PLACEMENT AND OPERATION OF MACHINES
a) ACCOUNT agrees that GLACIER shall have the right to place a
machine(s) at the specific location(s) designated by ACCOUNT within
the municipality known and numbered (see Exhibit A), and any new
locations acquired by ACCOUNT while under this Agreement, upon
approval by GLACIER. ACCOUNT represents and warrants to GLACIER that
ACCOUNT has full authority to permit GLACIER to operate its water
processing machine(s) at the property described in this paragraph and
that there are no restrictions or agreements with any person or
entity which prohibit the operation of a machine at the property.
ACCOUNT will cause to be removed immediately, any water vending
equipment that provides substantially the same function as GLACIER'S
equipment.
b) GLACIER agrees to place a machine(s) at the location(s) designated by
ACCOUNT and to incur the initial costs of permits and licenses,
water, electrical and drain connection improvements necessary for the
operation of the machine(s).
c) ACCOUNT agrees to provide GLACIER with electrical current and city
tap water at ACCOUNT'S expense during the term of this Agreement in
sufficient amounts to allow the machine(s) to properly operate.
d) GLACIER agrees to maintain the machine(s) in good condition and
repair and in full compliance with all health and safety regulations
of government authorities pertaining to water quality. GLACIER agrees
to maintain in full force and effect any permits or licenses required
by governmental authorities to sell processed water.
e) ACCOUNT agrees to promptly report any damage to, or malfunction of
the machine to GLACIER. ACCOUNT agrees to allow GLACIER, its agents,
contractors, and employees access to the property for the purpose of
maintaining and servicing the machine(s). GLACIER will maintain all
machines in accordance with federal and state standards in effect at
the machine location(s).
f) GLACIER shall have the discretion to determine whether the
machine(s), once placed on ACCOUNT'S property, is sufficiently
profitable to merit continued operation at that location. If GLACIER
determines that the machine(s) is not sufficiently profitable, the
machine(s) shall be removed from the location by GLACIER and this
Agreement will be terminated with respect to that location only.
1 of 7 Initials: /s/ GS /s/ GEC
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<PAGE>
[LOGO]
LOCATION AGREEMENT
FOR COIN AND NON-COIN OPERATED MACHINES
II. FINANCIAL TERMS AND CONDITIONS
a) This Agreement shall commence on the date of installation of initial
GLACIER machine(s) or upon signature of both parties, whichever is
later, and shall remain in effect for a period of sixty (60) months.
This Agreement will automatically renew for one year at the
conclusion of the initial term and for each anniversary thereafter
until canceled in writing with at least 60 days notice by ACCOUNT or
GLACIER.
b) For non-coin operated machine(s), ACCOUNT agrees to collect and remit
to GLACIER the proceeds from the sale of water dispensed by the
machine(s). ACCOUNT shall make the necessary additions to its in-
store accounting system to enable it to transact the sale of
processed water dispensed by GLACIER'S machine(s). ACCOUNT shall be
responsible for collecting from the customer the sales price, as
determined in accordance with this Agreement, for each gallon of
water dispensed.
c) For non-coin operated machine(s), on a weekly basis, GLACIER's
Service Representative shall record, and ACCOUNT's store
representative shall sign and receive a copy of, the meter reading
from the machine(s) indicating the number of gallons of water
dispensed. Gallons sold shall be computed by GLACIER on a four-week
period based on total gallons dispensed as indicated by the weekly
meter readings, multiplied by the sales price. Gallons sold will be
multiplied by the sales price to determine Gross Sales for the
reporting period.
d) GLACIER will determine the sales price for all locations with regard
to the area and the competitive market.
e) ACCOUNT will earn a Commission based on a percentage of Gross Sales,
which commission shall be calculated in accordance with the
commission structure attached as Exhibit B, and shall be net of taxes
and fees (including but not limited to permits, licenses, regulatory
fees and inspection costs) relating to the operation of the machines
(cumulatively, the Fees). A commission percentage shall be calculated
separately for each location, based on the joint performance of all
machines at that location. GLACIER shall provide a monthly accounting
of pertinent financial data on each machine to ACCOUNT.
f) For coin-operated machine(s), GLACIER agrees to pay to ACCOUNT on or
before the 25/th/ of each month, for the previous month's sales
performance, a percentage of the net water sales from each coin-
operated machine per the attached Exhibit B. The amount paid will be
determined by the joint performance of all water processing machines
at any given location.
g) ACCOUNT agrees to honor all promotional coupons or other giveaways
authorized by GLACIER. ACCOUNT will redeem such coupons with GLACIER
in accordance with instructions on the coupons, and GLACIER, upon
receipt of such coupons, will reimburse ACCOUNT the value of the
coupons on a monthly basis.
h) ACCOUNT agrees to and is bound by the terms set forth in the attached
CREDIT AGREEMENT.
III. ADDITIONAL TERMS
a) GLACIER shall provide evidence of Commercial General Liability
Insurance at Account's request. The limits of said coverage shall be
not less than $1,000,000 Combined Single Limit for Bodily Injury,
Death and/or Property Damage. Further, Glacier agrees to place this
insurance with a company rated by A.M. Best and have a "Best" rating
of at least A-,VII.
b) ACCOUNT understands and agrees that the machine(s) shall at all times
remain the property of GLACIER.
c) GLACIER understands and agrees that this Agreement constitutes only a
license to use a portion of the property
2 of 7 Initials: /s/ GS /s/ GEC
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<PAGE>
[LOGO]
LOCATION AGREEMENT
FOR COIN AND NON-COIN OPERATED MACHINES
described above and shall not be construed to be a lease, easement or
any other interest in real property.
d) During the term of this Agreement, ACCOUNT agrees not to authorize
the placement of another water vending device, either inside or
outside, without first obtaining the consent of GLACIER. ACCOUNT
further agrees not to interfere with sales from or discourage the use
of GLACIER's machine(s) by any means whatsoever.
e) This Agreement shall be binding upon not only the parties hereto, but
their respective heirs, legal representatives, successors and assigns
(except as provided herein).
f) ACCOUNT shall not have the right to assign this Agreement without the
prior written consent of the GLACIER.
g) Any notice which one party desires to give to the other shall be in
writing and shall be either delivered personally or sent by United
States mail, postage prepaid, certified, return receipt requested to
the current address of each party. This Agreement will be governed
under the laws of the state of California.
ACCOUNT NAME: SAFEWAY, INC.
---------------------------------------------
AUTHORIZED BY: /s/ Gary Smith
---------------------------------------------
SIGNATURE
Gary Smith
---------------------------------------------
PRINTED NAME
Signed this 8/th/ day of Feb , 1999
-------- ------ ----
GW SERVICES, INC.
BY: /s/ Gerry Compas Vice Pres of Sales
---------------------------------------------
Gerry Compas, Vice President of Sales
3 of 7 Initials: /s/ GS /s/ GEC
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<PAGE>
[LOGO]
LOCATION AGREEMENT
FOR COIN AND NON-COIN OPERATED MACHINES
CREDIT AGREEMENT
1. AGREEMENT TERMS. The word "Account" means your account with Glacier
Water Services, Inc. The words "you," "your," or "yours" means you and any
person or persons who are also contractually liable under this Agreement. The
words "we," "us," and "our" means Glacier Water Services, Inc., a Delaware
corporation.
2. PROMISE TO PAY. You agree to pay in U. S. Dollars the outstanding
balance of your Account, including applicable finance charges and other late
fees and charges, incurred by you. All checks must be drawn on funds on deposit
in the U.S. We may accept late payments or partial payments or checks and money
orders marked "payment in full" without losing any of our rights under this
Agreement.
3. BILLING. You will receive invoices for bottle purchases at the time
of bottle delivery. You will receive periodic (weekly or monthly) invoices for
water vending. Payment of all invoices is due within 20 days of the date of our
invoice to you (the "Payment Due Date"). In the event that any monthly
commission due you for outside machines exceeds the invoice amount for indoor
water vending, the water vending amount will be deducted from your commission
check and you will not receive an invoice. Bottle invoices must be paid, and
will not be deducted from outside commissions.
4. RETURNED CHECK CHARGES. To the extent not prohibited by law, you will
pay us a $15.00 returned check charge for each check that is returned unpaid.
5. FINANCE CHARGE. If you do not pay in full the outstanding balance on
your Account by the Payment Due Date, you will be obligated to pay us a Finance
Charge at a periodic rate of 1.5% per month (ANNUAL PERCENTAGE RATE: 18.0%) on
the outstanding balance of your Account assessed from the Payment Due Date until
paid in full. The Finance Charge shall be payable on the entire unpaid balance
of your Account, including unpaid Finance Charges from previous periods.
6. NON PAYMENT. If your Account balance is delinquent or in default, we
may suspend or cancel your Account in our discretion. We may remove our water
vending machine(s) from your location in our discretion without further notice
to you if your Account is in default.
7. DEFAULT - COLLECTION COSTS AND LIQUIDATED DAMAGES. You are in default
if you fail to comply with the terms of this Agreement, including failing to
make a required payment when due. If you are in default, we may charge you
reasonable attorney's fees and court or other collection costs as permitted by
law and as actually incurred by us, including post-judgment motions, contempt
proceedings, garnishment, levy, debtor and third party examinations, discovery,
bankruptcy litigation and appeals of any order or judgment. If we remove our
water vending machines from your location because your Account is in default,
you agree to pay us $1,000.00 as Liquidated Damages to offset the costs that may
be incurred by us in undertaking such removal, whether our actual costs are
greater or less than $1,000.00. You acknowledge that the actual costs of such
removal are difficult or impossible to estimate and that the amount of
Liquidated Damages provided in this paragraph is a reasonable estimate of the
costs of removal, travel, storage and administrative expenses that may be
incurred by us. Notwithstanding our right to receive Liquidated Damages from
you pertaining to removal of our water vending machine(s) pursuant to this
paragraph, we reserve all of our rights to seek damages against you for your
breach of this Credit Agreement, the Location Agreement and any other agreements
between us.
8. GOVERNING LAW. This Agreement shall be governed by, construed under
and interpreted in accordance with the laws of the state of California.
4 of 7 Initials: /s/ GS /s/ GEC
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<PAGE>
[LOGO]
LOCATION AGREEMENT
FOR COIN AND NON-COIN OPERATED MACHINES
EXHIBIT A
If multiple locations attach store listing as Addendum A
Company / Location Name: SAFEWAY, INC.
(Address where machine is located) --------------------------------------------
LOCATION NAME
--------------------------------------------
STREET ADDRESS
============================================
CITY / STATE / ZIP CODE
--------------------------------------------
AREA CODE / PHONE NUMBER
============================================
CONTACT PERSON
AGREEMENT CAN NOT BE PROCESSED WITHOUT THE FOLLOWING INFORMATION
Billing (invoice) information: SAFEWAY, INC.
--------------------------------------------
MAILING ADDRESS
============================================
CITY / STATE / ZIP CODE
--------------------------------------------
AREA CODE / PHONE NUMBER
============================================
CONTACT PERSON
Payable (check) information:
MAILING ADDRESS
============================================
CITY / STATE / ZIP CODE
--------------------------------------------
AREA CODE / PHONE NUMBER
============================================
CONTACT PERSON
5 of 7 Initials: /s/ GS /s/ GEC
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<PAGE>
[LOGO]
LOCATION AGREEMENT
FOR COIN AND NON-COIN OPERATED MACHINES
EXHIBIT B
FOR EXISTING MARKETS
=======================================================
Average Gallons Commission
Per Day Percentage
-------------------------------------------------------
0-200.00 **
-------------------------------------------------------
201+ **
=======================================================
S/50-60
. **
. **
. **
. **
NEW LOCATON/EXPANSION AREAS
=======================================================
Average Gallons Commission
Per Day Percentage
-------------------------------------------------------
0 - 99.99 **
-------------------------------------------------------
100.00 - or greater **
=======================================================
SC4050
. **
. **
. **
. **
** Confidential treatment requested.
6 of 7 Initials: /s/ GS /s/ GEC
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<PAGE>
[LOGO]
PREPAID MARKETING FUNDS
The following shall act as an Addendum to the accompanying LOCATION AGREEMENT,
(Agreement), between GW SERVICES, INC., (GLACIER), and SAFEWAY, INC. (ACCOUNT).
-------------
The start date and the term of this Addendum shall be as indicated in Section
II, Paragraph (a) of the Location Agreement. GLACIER will pay ACCOUNT a total
of ** (for ** stores
----------------------------------- -----------------------
listed below) for the full term of the Agreement. Should a store close during
the term, the remaining unamortized amount will be refunded to GLACIER or
transferred to a new location. Should a new store open during the term,
additional funds will be paid on a pro rata basis determined by the months
remaining on the initial term. (The amortized amount is rounded off to **
-----
per month per location for existing market stores and ** per month
--------------
for new location / expansion area stores as identified on page 6 of this
agreement.
Prepaid Marketing Funds are paid in consideration for developing the water
vending business, as follows:
1. Account demonstration surcharge fee waived.
2. Commission payments reduced to 10% during demonstration periods.
3. To employ new Point of Purchase signage on machines.
4. To include GLACIER a minimum of one weekly advertisement per calendar
quarter.
ACCOUNT: SAFEWAY, INC.
------------------------------------------------------
By: /s/ Gary Smith
------------------------------------------------------
Name and Title Gary Smith, Sr. Vice President
Signed this 2/8 day of , 19 99 .
----------- -------------- ----
GW SERVICES, INC.
By: /s/ Gerry Compas, Vice President of Sales
--------------------------------------------------------
Gerry Compas, Vice President, Sales
Signed this 11/th/ day of February , 19 99 .
------------ ------------------- -----
*Safeway Northern California ** **
*Safeway/Vons/Pavillions, CA, NV ** **
*Safeway Arizona ** **
*Safeway Seattle, WA ** **
*Safeway Portland, OR ** **
*Safeway Denver, CO ** **
*Safeway Eastern, MD, WA/DC ** **
** Confidential treatment requested.
7 of 7 Initials: /s/ GS /s/ GEC
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