BANDAG SYSTEM FRANCHISE AGREEMENT
THIS AGREEMENT is made by and between Bandag, Incorporated, an Iowa corporation
("BANDAG") and _____________________________________________________
("FRANCHISEE"), a ____ corporation organized under the laws of the state of
_____________, ____ sole proprietorship owned by
____________________________________________________, ____ partnership organized
under the laws of the state of _________________________________, doing business
under the name: ________________________________________________________, whose
mailing address is:
_____________________________________________________________, with employer
federal identification number
_____________________________.
Introduction
Over many years and at substantial expense, BANDAG has developed, promoted and
improved for its franchises, and continues to improve, a unique method of
retreading tires with pre-cured rubber. This method utilizes manufacturing
technology, engineering and know-how, other proprietary processes, and
specialized equipment made by or for BANDAG or one of its corporate affiliates
for use in the process of inspecting and preparing casings for retreading,
affixing and bonding the tread rubber to the casing, and repairing casings
(herein, such equipment, as modified, improved and supplemented by BANDAG from
time to time, to be called "BANDAG Equipment"). BANDAG has also developed for
use in this unique retreading method BANDAG(R) tread rubber, BANDAG(R) cushion
gum, other tread materials and other materials used between the tread materials
and the casing (including without limitation cushion rubber, cushion gum and
other adhesives, repair gums, filling materials, special extrusions, re-belting
materials, cements and other rubber items) (herein, such items, as modified,
improved and supplemented by BANDAG from time to time, to be called "BANDAG
Rubber Products"). In addition, BANDAG has developed at substantial expense
valuable market research, proprietary rights (including patents, trademarks,
confidential know-how and copyrights), expertise in managing retread facilities,
and programs for the marketing and sale of retreaded tires, for the technical
and sales training of personnel, and for customer service. In this Agreement,
all the foregoing described in this Introduction, as they may be modified from
time to time by BANDAG, shall be referred to as the "BANDAG Method".
FRANCHISEE desires to acquire the right to practice the BANDAG Method, and
BANDAG is pleased to grant this valuable right to FRANCHISEE on the terms stated
in this Agreement.
In consideration of the mutual agreements herein and other good and valuable
consideration, BANDAG and FRANCHISEE agree as follows:
I. BANDAG Method and Grant of Franchise
(a) BANDAG hereby grants to FRANCHISEE the non-exclusive right to make and
sell light truck, truck and bus tires (but excluding any aircraft,
agricultural or passenger tires) retreaded by the BANDAG Method (as
improved by BANDAG during the term of this Agreement) with a minimum bead
diameter of 13 inches and a maximum finished outside diameter of 53.5
inches.
(b) FRANCHISEE may make retreaded tires by the BANDAG Method only at the
facility located at:
"Authorized Location:" ____________________________________
____________________________________
____________________________________
(c) FRANCHISEE's non-exclusive Territory shall be:
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
________________________________.
FRANCHISEE may sell tires retreaded by the BANDAG Method wherever and to
whomever and at any price FRANCHISEE may choose, in or outside the
Territory (as is the case with other BANDAG franchisees).
(d) FRANCHISEE may not resell BANDAG Rubber Products purchased from BANDAG or
from any other franchisee of BANDAG other than to (i) end users (and in
that instance, only if such items are incorporated into tires retreaded
by the BANDAG Method) and (ii) other BANDAG franchisees authorized to
retread tires by the BANDAG Method in the United States.
(e) While this Agreement is in effect, FRANCHISEE will not in any manner
(directly or indirectly) own, manage, operate, join, participate in,
associate with or be connected with or interested in, as a franchisee,
investor, lender, manager, agent, employee, officer, director, partner,
shareholder or proprietor of or consultant to, or provide service, advice
or other assistance to, any occupation, entity, interest, business or
enterprise that is engaged in any form of tire retreading business, other
than as described in Annex A, that competes with Bandag, or the Bandag
Method, or retread tires by any method other than the Bandag Method,
without the express prior written approval of Bandag. In order to obtain
Bandag's consent, Franchisee must demonstrate to Bandag's satisfaction
that the transaction contemplated will not in any way damage Bandag, the
Bandag Method, and/or the Bandag franchise network. In the event that any
part of the covenants or agreements set forth in this Section I(e) shall
be determined by any court of competent jurisdiction to be invalid or
unenforceable by reason of extending for too great a period of time or
over too great a geographical area, or by reason of being too extensive
in any other respect, and if such determination is upheld on appeal or no
appeal from such determination is taken, then Bandag and Franchisee agree
that this Agreement shall be amended so that the affected part of said
covenant shall be interpreted to extend only over the maximum period of
time for which it may be enforceable, and/or over the maximum
geographical area as to which it may be enforceable and/or to the maximum
extent in all other respects as to which it may be enforceable, all as
determined by such court in such action. Notwithstanding the foregoing,
the unaffected parts of said covenants shall remain in full force and
effect.
(f) For the purposes of this Agreement,
(1) "Affiliate" shall mean any natural person or legal entity that,
directly or indirectly, controls, is controlled by or is under common
control with either FRANCHISEE or any Controlling Person; and
(2) "Controlling Person" shall be any natural person or other legal
entity with a 5% or greater interest in FRANCHISEE or in another entity
that has, directly or indirectly, a 5% or greater interest in FRANCHISEE,
or otherwise having the power to control, directly or indirectly, the
management, direction or day-to-day operations of FRANCHISEE. Without
limiting the
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generality of the foregoing, a natural person or legal entity shall be a
"Controlling Person" of FRANCHISEE if it owns a 5% or greater interest in
another entity that either is itself a Controlling Person of FRANCHISEE
or has an indirect ownership interest in FRANCHISEE through one or more
intervening levels of direct or indirect subsidiaries. For example, if
FRANCHISEE is a wholly-owned subsidiary of another corporation that is,
in turn, owned equally by three other corporations, each of these three
corporations shall be considered a Controlling Person for purposes of
this Agreement.
II. Materials Provided by BANDAG; Obligations of FRANCHISEE
(a) To assist its franchisees, BANDAG has developed materials relating to the
BANDAG Method and to production engineering (including technical
bulletins), public relations, and advertising, merchandising and
promotion of the BANDAG Method and of tires retreaded by the BANDAG
Method. BANDAG will provide to FRANCHISEE from time to time such
materials as are provided by BANDAG to its franchisees generally. BANDAG
may amend and revise such materials and charge for materials in excess of
those normally provided.
(b) All proprietary and other information obtained directly or indirectly by
FRANCHISEE with respect to BANDAG's business plans, policies, and
modified or new methods, processes or products, and all written matter
furnished to FRANCHISEE by BANDAG or its affiliates (whether or not
FRANCHISEE shall be charged for same), shall remain BANDAG's property and
shall be deemed confidential information. Such information and materials
(including any translation) shall not be reproduced or disclosed to
others or used for any purpose other than performance of FRANCHISEE's
obligations under this Agreement. FRANCHISEE shall cause its employees to
comply with this provision.
If there is any claim or litigation involving the confidential
information, and if BANDAG in its sole discretion undertakes the
negotiation, settlement, defense or prosecution, FRANCHISEE shall execute
any documents and render assistance (exclusive of out-of-pocket
expenditures) as may be reasonably requested to carry out the same. If
any confidential information is sought by discovery procedures,
FRANCHISEE shall (i) notify BANDAG within three (3) days after receipt of
such discovery request, (ii) seek appropriate protective orders for such
information and (iii) join in any motion BANDAG may file to protect
against disclosure of such materials.
III. Maintenance of Quality and Reputation
(a) FRANCHISEE acknowledges the superior quality, performance and reputation
of BANDAG Equipment, BANDAG Rubber Products, and the other items and
services that constitute part of the BANDAG Method. FRANCHISEE further
acknowledges that it is essential to the reputation of the BANDAG Method
and to the maintenance of the BANDAG trademarks and logos, and to avoid
misleading the public with respect to the quality of the tires retreaded
by FRANCHISEE, that the retreaded tires sold by FRANCHISEE be retreaded
strictly in accordance with the BANDAG Method and with BANDAG Equipment
and BANDAG Rubber Products, including BANDAG(R)tread rubber and
BANDAG(R)cushion gum. Accordingly, FRANCHISEE shall utilize in the
retreading of tires with pre-cured rubber at the Authorized Location only
BANDAG Rubber Products and BANDAG Equipment. FRANCHISEE shall also follow
such procedures for retreading tires with pre-cured rubber as are
established by BANDAG from time to time and shall maintain standards and
procedures required to comply with the BANDAG Quality Certification
Program, as revised by BANDAG from time to time. BANDAG may from time to
time require additional certifications for production and marketing of
particular products or utilization of particular technology, and require
FRANCHISEE's continued adherence to the same, if FRANCHISEE desires to
produce such particular products or utilize such technology associated
with the Bandag Method. In addition, FRANCHISEE shall not engage in any
business conduct
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reasonably likely to affect adversely the reputation or goodwill of
BANDAG or the BANDAG Method
(b) Representative samples of any and all materials used in retreading tires
by the BANDAG Method and not falling under Section III(a) of this
Agreement must be submitted for testing and inspection to BANDAG (at
FRANCHISEE's expense) and must be approved by BANDAG in writing prior to
such use by FRANCHISEE; BANDAG will not unreasonably withhold its
approval of such materials if they meet BANDAG's standards for quality
and performance.
(c) All purchases from BANDAG or one of its corporate affiliates shall be at
the prices established by BANDAG from time to time, and shall be subject
to the seller's Standard Terms and Conditions of Sale, as revised from
time to time. These terms and conditions (as supplemented by this
Agreement) shall constitute the entire and only agreement between the
parties with respect to the sale of such products to FRANCHISEE. No
additional or different terms set forth in FRANCHISEE'S purchase order,
acknowledgment or other forms or correspondence shall govern any sales of
such products to FRANCHISEE, and BANDAG hereby objects to any such
additional or different terms contained in any communication from
FRANCHISEE. A copy of the Standard Terms and Conditions of Sale at the
effective date of this Agreement is attached hereto as Annex B. A breach
of such Terms shall be a breach of this Agreement.
(d) FRANCHISEE shall maintain its Authorized Location in accordance with
standards and procedures prescribed by BANDAG from time to time.
FRANCHISEE shall maintain BANDAG Equipment in satisfactory operating
condition and incorporate all modifications prescribed by BANDAG.
(e) FRANCHISEE warrants that all required inspections of equipment used in
retreading tires by the BANDAG Method will be undertaken and that, to the
extent required by local law, FRANCHISEE shall post on such equipment
appropriate certificates of inspection or other evidence of approval.
FRANCHISEE further agrees: (1) to maintain and/or install such safety
features on BANDAG Equipment as are originally installed or are
thereafter recommended by BANDAG and in conformity with all applicable
safety codes and regulations; (2) not to alter any safety features on
BANDAG Equipment, whether such equipment was purchased from BANDAG or a
third party; and (3) to rework or authorize BANDAG to rework any BANDAG
Equipment to reestablish or retrofit any safety feature for the BANDAG
Equipment.
BANDAG determines that any of FRANCHISEE's equipment used in retreading
tires by the BANDAG Method is unsafe or does not comply with current
safety standards used by BANDAG or applicable safety codes and
regulations, BANDAG may give FRANCHISEE written notification thereof, and
FRANCHISEE shall, within one month thereafter at its expense, either (y)
rework, or authorize BANDAG to rework, such equipment, or (z) remove such
equipment from service and sell it back to BANDAG, or trade it in for new
BANDAG Equipment, in either case, at its then-current fair market value,
all without prejudice to the right of BANDAG to remove certificates of
inspection or nameplates from equipment not found in compliance with
applicable safety codes or standards and to notify appropriate
governmental officials that the equipment in question no longer meets
applicable safety requirements.
(f) FRANCHISEE acknowledges that it will, in the operation of its business of
retreading tires with pre-cured rubber, comply with all applicable
federal, state and local laws, ordinances, regulations and orders.
FRANCHISEE shall also refrain from taking any action that prevents BANDAG
from realizing the benefits of this Agreement.
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(g) FRANCHISEE shall not sell, lease or in any other way transfer title or
possession of any BANDAG Equipment to third parties other than BANDAG
franchisees, without first offering such Equipment in writing free and
clear of all claims and encumbrances for purchase by BANDAG at fair
market value. "Fair market value", as used in this Agreement, means the
cash purchase price that would apply in an arm's-length transaction
between an informed and willing BANDAG franchisee under no compulsion to
purchase and an informed and willing BANDAG franchisee under no
compulsion to sell.
IV. Records and Inspection
FRANCHISEE shall maintain and provide to BANDAG financial statements, books of
account, and supply, purchasing, inventory, production and sales records
(including the date of purchase, weight and source of BANDAG Rubber Products
used by FRANCHISEE and records showing the identity and address of all
purchasers of BANDAG Rubber Products and of tires retreaded by the BANDAG
Method), together with any other business records or information records that
BANDAG may request in order to determine whether FRANCHISEE is performing its
obligations under this Agreement. FRANCHISEE shall permit BANDAG to examine
FRANCHISEE's records, premises and samples of tires made by the BANDAG Method
during regular business hours.
V. Relationship of Parties
The relationship of the parties is that of franchisor and franchisee, and seller
and buyer only, and FRANCHISEE acknowledges that this Agreement does not create
a fiduciary relationship between FRANCHISEE and BANDAG. The parties are
independent contractors, and exercise sole control over their businesses at
their own risk.
VI. Use of the Marks, Display, Advertising and Promotion of BANDAG Name
FRANCHISEE shall have the non-exclusive right to use the "BANDAG" name and xxxx,
including BANDAG's trademarks, service marks and logos (collectively, the
"Marks") in the Territory in connection with the manufacture and sale of tires
retreaded by the BANDAG Method, subject to BANDAG's Logo and Trademark Usage
Requirements and Policy, as revised from time to time by BANDAG. FRANCHISEE
shall at all times comply with such Requirements and Policy, which is attached
in its current form as Annex C.
VII. Best Efforts
FRANCHISEE shall at all times while this Agreement remains in effect exert its
best efforts to produce and sell tires retreaded by the BANDAG Method.
VIII. Duration
This Agreement shall continue in effect for five years unless terminated as
provided elsewhere in this Agreement.
IX. Termination of the Agreement by BANDAG
BANDAG shall have the right to terminate this Agreement:
(a) Effective upon notice to FRANCHISEE, in the event of any breach of
Section I(d) or (e), II(b), III(a), XI, XII or XVI of this Agreement, or
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(b) Effective upon notice to FRANCHISEE, in the event FRANCHISEE shall
fail to pay all amounts due to BANDAG within ten (10) days after BANDAG
notifies FRANCHISEE that payment is due, or
(c) Effective upon notice to FRANCHISEE, in the event FRANCHISEE shall
fail to operate the business of retreading tires by the BANDAG Method at
the location authorized in Section I for more than sixty (60) consecutive
days or otherwise abandons the franchise granted herein, or
(d) Effective upon notice to FRANCHISEE, in the event FRANCHISEE
introduces and/or supports any proceedings challenging the validity of
any trademarks or other unpatented proprietary rights, whether registered
or not, under which BANDAG derives its licensing power hereunder, or
(e) Effective upon notice to FRANCHISEE, in the event of (1) any breach
or non-compliance with any term or provision of this Agreement other than
those described in subsections (a) through (d) above, or any breach or
non-compliance with any other agreement between BANDAG and FRANCHISEE,
and in either such case the breach or non-compliance is not remedied
within thirty (30) days of notice thereof from BANDAG, or (2) the
repeated breach or non-compliance with one or more term or provision of
this Agreement, whether or not such breach or non-compliance is corrected
after notice, or
(f) Immediately, in the event FRANCHISEE becomes insolvent or is subject
to any bankruptcy, insolvency, or similar proceeding, makes an assignment
for the benefit of creditors, becomes unable to pay its debts as they
become due, goes into liquidation or winding up, or in the event a
receiver is appointed for substantial part of FRANCHISEE's assets, or
(g) Effective upon thirty (30) days' notice, in the event of (1) a
decision by a court or government agency that invalidates any significant
provision of this Agreement, or (2) the failure of the heirs or
successors of FRANCHISEE or a Controlling Person to apply for approval of
a transfer of the pre-cured retreading business or the assets of such
business in accordance with Section XI(c), or BANDAG's disapproval of
such transfer.
X. Effect of Termination
(a) In the event of termination of this Agreement for any reason:
(1) FRANCHISEE shall surrender and cease to exercise all rights granted
under this Agreement, shall cease all use of the BANDAG Method, shall
cease all use of BANDAG Equipment, and shall cease selling tires
retreaded after date of termination with pre-cured rubber on BANDAG
Equipment. In addition, no officer, director, relative, manager,
shareholder, partner or other owner of FRANCHISEE or any Affiliate or
Controlling Person, or any business enterprise in which any of them is
engaged or to which any of them is related, may directly or indirectly
operate such BANDAG Equipment or sell tires retreaded after date of
termination with pre-cured rubber on BANDAG Equipment. FRANCHISEE shall
also, at its own expense, cease all use of BANDAG's name and Marks in any
and all connections, and refrain from representing any of its products
produced after termination as "BANDAG products" or as being the "same as
BANDAG" or "similar to BANDAG" or represent itself as a BANDAG franchisee
or otherwise identify itself with BANDAG. Without limiting the foregoing,
FRANCHISEE shall change the corporate name to eliminate use of any BANDAG
Marks and change all stationary, envelopes, business cards, other
advertisements and other items and file such documents in all federal,
state and local offices as may be considered appropriate by BANDAG to
change the corporate name of record in such offices.
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(2) Termination of this Agreement shall not relieve FRANCHISEE from its
obligation to pay to BANDAG all moneys that may be due, and all amounts
yet unpaid and not yet due for equipment, materials and supplies shall
become due and payable within ten (10) days of the date of termination.
(3) FRANCHISEE shall immediately cease using, and return within a period
of ten (10) days following termination, all property of BANDAG, including
but not limited to all confidential and proprietary written materials
(and all copies thereof) received from BANDAG and all translations
thereof. Such materials will be delivered in person to a BANDAG designee
or returned via courier service, to be signed for by the recipient.
(4) BANDAG shall have the option, exercisable by notice within sixty (60)
days following the effective date of termination of this Agreement, to
purchase (i) any or all BANDAG Rubber Products at the price paid by
FRANCHISEE and/or (ii) any or all BANDAG Equipment at its 10-year
straight line depreciated value, with a minimum of 15 percent of the
purchase price paid by FRANCHISEE for such Equipment. This option extends
to all BANDAG Equipment and BANDAG Rubber Products used in the business
of FRANCHISEE prior to the effective date of termination. From the
purchase price shall be deducted the amount of any set off or
counterclaim that BANDAG may have against FRANCHISEE. Within two (2) days
of receipt of notice from BANDAG, FRANCHISEE shall prepare for immediate
return all such items.
(b) After receipt of BANDAG's notice of termination, FRANCHISEE shall not
commit itself to further advertising contracts or other agreements by
which it represents itself as a franchisee of BANDAG.
XI. Transfer of Control
(a) FRANCHISEE acknowledges that, to assure BANDAG that FRANCHISEE's
obligations herein will be performed fully and that customers of tires
retreaded by the BANDAG Method will receive adequate service, BANDAG must
know and approve who in fact controls FRANCHISEE. Accordingly, neither
FRANCHISEE nor any Controlling Person, nor any holder or owner of any
equity interest in FRANCHISEE, may enter into any agreement pertaining
to, causing or resulting in a Transfer of Control, or consummate or
permit the consummation thereof, without in each case obtaining BANDAG's
prior written approval. To provide BANDAG an opportunity to consider
whether or not to approve a proposed Transfer of Control, a written
request for such approval shall be submitted to BANDAG at least one
hundred twenty (120) days prior to the proposed or intended date for the
Transfer of Control, which request shall describe the proposed Transfer
of Control and give the identity of the proposed transferee. FRANCHISEE
shall also submit such other information regarding the proposed Transfer
of Control as may be requested by BANDAG. Franchisee agrees that under no
circumstances will Franchisee transfer or assign, directly or indirectly,
any interest in the Franchise to any Person (as defined in this Section
XI(a)) who has any form of retreading business that in any way competes
with the business of Bandag, or the Bandag Method without the express
prior written approval of Bandag in each instance. Furthermore,
Franchisee shall not offer any interest in Franchisee through any form of
public offering or exchange without the express prior written approval of
Bandag in each instance. The foregoing prohibits the engagement of any
Person who intends to offer any interest of Franchisee to the public in
any form of public offering without the express prior written approval of
Bandag in each instance. In order to obtain Bandag's consent to a
transfer, assignment or public offering or exchange, Franchisee and/or
Shareholders must demonstrate to Bandag's satisfaction that the transfer,
assignment, offering or exchange contemplated will not in any way damage
Bandag, the Bandag Method, and/or the Bandag franchise network. For
purposes of this Section XI(a), "Person" means any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, trust, or unincorporated organization.
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(b) For the purposes of this Agreement, "Transfer of Control" shall mean (i)
if FRANCHISEE or any direct or indirect Controlling Person is a
partnership, any change in the identity or respective ownership of the
partners of any of them, (ii) if FRANCHISEE or any direct or indirect
Controlling Person is a corporation, any sale, gift or other transfer of
ownership or possession of shares comprising 5% or more of the total
number of issued and outstanding shares of FRANCHISEE or such Controlling
Person or (iii) the transfer of or change in the direct or indirect
control of, or the transfer or change in the power to control, directly
or indirectly, the management, direction or day-to-day operations of
FRANCHISEE or of any direct or indirect Controlling Person; provided,
however, that the death or determination of incompetency of a partner or
any natural person constituting a Controlling Person of FRANCHISEE shall
not be a "Transfer of Control".
(c) If a partner or Controlling Person of FRANCHISEE dies or is determined to
be incompetent, the transfer of the business or assets of FRANCHISEE's
business of retreading tires with pre-cured rubber operated at the
Authorized Location to any heirs or successors of the deceased or the
incompetent, whether by bequest or otherwise, shall be subject to
BANDAG's prior written approval. Such heirs or successors shall apply to
BANDAG for such approval within 60 days after such death or
determination, providing BANDAG with such information as is then
customarily requested by BANDAG with respect to new franchisees.
XII. General and Product Liability; Warranties; Insurance and Indemnification
(a) FRANCHISEE shall purchase and maintain in full force and effect
comprehensive general liability insurance (including but not limited to
product liability, completed operations and contractual liability,
including FRANCHISEE's obligations under the indemnity provisions of this
Agreement) adequate to insure its undertakings herein and shall furnish a
certificate of such insurance upon request by BANDAG.
(b) FRANCHISEE shall defend indemnify and hold BANDAG harmless from and
against all liabilities, recoveries of judgment, claims and demands on
account of personal injury, including death or property loss or damage to
others (including FRANCHISEE's employees or customers) arising out of or
in any manner connected with (i) FRANCHISEE's business operations, (ii)
FRANCHISEE's operations as a BANDAG franchisee, (iii) the retreading of
any tires, (iv) the sale of any retreaded tires, (v) the performance by
FRANCHISEE of this Agreement, (vi) the breach of any of FRANCHISEE's
obligations herein, or (vii) the use by any person who is not a BANDAG
franchisee of BANDAG Equipment sold, transferred or otherwise provided to
such person or his employer by FRANCHISEE. FRANCHISEE shall at its own
expense defend any and all such claims and demands and hold BANDAG
harmless from and against all charges of attorneys incurred thereby and
all costs and other expenses arising therefrom. FRANCHISEE, on its behalf
and on behalf of anyone claiming through or by it, including its
employees, agents, subcontractors and insurers, hereby waives its rights
of recovery against BANDAG for loss covered by insurance maintained by
FRANCHISEE or for FRANCHISEE's benefit. It is the intent of the parties
that BANDAG shall not be subject to subrogation by anyone, including any
insurer, as a result of any such loss.
(c) BANDAG MAKES NO WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, WITH
RESPECT TO THE MERCHANTABILITY OR SUITABILITY OF TIRES RETREADED BY
FRANCHISEE. FRANCHISEE has no authority to make any kind of warranty or
representation to others on behalf of BANDAG.
(d) (i) Except as BANDAG may otherwise expressly agree in writing,
FRANCHISEE, acting on its own behalf only, shall execute and deliver to
each purchaser from FRANCHISEE of a tire retreaded by the BANDAG Method a
BANDAG Dealer National Warranty on a form then currently furnished by
BANDAG. BANDAG may also require FRANCHISEE to execute and deliver to each
purchaser from FRANCHISEE of a tire retreaded by particular technology
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associated with the BANDAG Method a special warranty on a form then
currently furnished by BANDAG. FRANCHISEE shall perform and fulfill
promptly all of the terms and conditions of all such warranties.
FRANCHISEE shall have the sole and complete responsibility for all such
warranties (even though wording may have been provided by BANDAG) and for
performance of any other warranties provided by FRANCHISEE to buyers of
tires retreaded by the BANDAG Method and/or sold or distributed as
contemplated by this Agreement. FRANCHISEE will perform all warranty and
other services hereunder as an independent contractor and not as the
agent of BANDAG and will assume responsibility for and hold BANDAG
harmless from all claims (including but not limited to claims resulting
from the negligent or willful acts or omissions of FRANCHISEE, and
including attorneys' fees) against either of them arising out of or in
connection with FRANCHISEE's performance of such service.
(ii) FRANCHISEE agrees to comply with all policies and procedures
described in the BANDAG Dealer National Warranty or such other special
warranty that may be required by BANDAG, as any thereof may be revised by
BANDAG from time to time, including but not limited to performing
warranty service on tires retreaded by the BANDAG Method that FRANCHISEE
did not manufacture or sell, and policies and procedures established by
BANDAG from time to time relating to the keeping of books and records
respecting claims FRANCHISEE may make for reimbursement for costs
incurred by FRANCHISEE. BANDAG will reimburse FRANCHISEE for costs
incurred for service FRANCHISEE performs for retreaded tires that the
FRANCHISEE did not manufacture or sell in accordance with the policies
and procedures of BANDAG described in the BANDAG Dealer National Warranty
or such other special warranty. FRANCHISEE agrees that BANDAG may inspect
FRANCHISEE's books and records respecting any warranty service or other
claims FRANCHISEE may submit to BANDAG.
(iii) FRANCHISEE hereby authorizes BANDAG to charge its account with
BANDAG for each adjustment on a BANDAG retread sold by FRANCHISEE,
performed by another franchisee under a BANDAG Dealer National Warranty
or other special warranty required by BANDAG, in such amount as may be
provided therefor in the applicable warranty, and to credit FRANCHISEE's
account for each adjustment on a BANDAG retread sold by another
franchisee, performed by the FRANCHISEE under a BANDAG Dealer National
Warranty or such other special warranty, in such amount as may be
provided therefor in the warranty, all in accordance with BANDAG's
then-current practices under the BANDAG Dealer National Warranty Program
or any other special warranty program BANDAG may require in connection
with a particular technology.
XIII. Security Interest
(a) FRANCHISEE agrees to execute and deliver to BANDAG BANDAG's then-current
standard form security agreement to secure all of FRANCHISEE's
obligations to BANDAG (as more fully described in such agreement), and to
cause those persons or entities that own the BANDAG Equipment used in
FRANCHISEE's retread business from time to time to execute and deliver a
similar security agreement to secure FRANCHISEE's and their respective
obligations to BANDAG.
(b) BANDAG agrees, upon written request from the holder of a properly
perfected Bank Lien, to subordinate the security interest granted to
BANDAG by FRANCHISEE, to the extent it secures the rights and options of
BANDAG hereunder to purchase certain assets used in FRANCHISEE's business
of retreading tires with pre-cured rubber (but not any security interest
granted in connection with purchases by FRANCHISEE, or purchase money
financing by BANDAG of any items purchased by FRANCHISEE), to such Bank
Lien. FRANCHISEE hereby covenants and agrees to execute and deliver to
BANDAG any deeds, documents, instruments and other writings requested by
BANDAG to grant or create a lien for the purposes described in this
section, and to take any actions reasonably deemed advisable by BANDAG or
its counsel to create, establish, preserve, perfect, continue perfected,
record, register, protect, determine priority of and enforce
9
such lien and BANDAG's rights, and FRANCHISEE shall pay all expenses
relating to the foregoing.
(c) For the purposes of this Agreement, "Bank Lien" shall mean a security
interest, lien, charge or encumbrance granted by FRANCHISEE to a
financial institution to secure indebtedness for borrowed money.
XIV. Force Majeure
Performance of their respective obligations hereunder (other than any obligation
for the payment of money) by either BANDAG or FRANCHISEE may be interrupted
without liability to the extent the interruption is due to a force majeure. The
term "force majeure" shall include an Act of God, war, civil commotion, fire,
explosion, flood, strike, lock-out, or any other cause beyond the reasonable
control of BANDAG or FRANCHISEE.
XV. Notices; Litigation
Any notice or demand hereunder must be in writing and shall be deemed given when
personally delivered by hand, when telecopied or telexed and acknowledged by
appropriate means, or one (1) day after delivery to a courier service, prepaid,
addressed to the party's address shown in this Agreement or as modified in
writing pursuant to this Agreement, or three (3) days after deposited in the
U.S. mails, first class mail, postage prepaid, addressed as above. In this
regard, FRANCHISEE shall notify BANDAG within ten (10) days of institution of a
lawsuit by way of the service of a complaint, cross-claim, counterclaim or the
like against FRANCHISEE if such lawsuit involves issues relating to rights
granted hereunder and shall permit BANDAG to intervene and control the lawsuit
with regard to such issues.
XVI. Assignment and Subfranchising
BANDAG may assign part or all of this Agreement and may delegate any or all of
its obligations hereunder to affiliates. No assignment, sublicense or
subfranchise may be made by FRANCHISEE without the prior written consent of
BANDAG.
XVII. Improvements by FRANCHISEE
In return for the inclusion within Section I hereof of improvements to the
BANDAG Method made by BANDAG, all inventions, patents and patent applications
which are conceived, made or acquired by FRANCHISEE in performing under this
Agreement or that relate to BANDAG's proprietary rights or equipment shall
automatically be irrevocably licensed on a royalty-free and non-exclusive basis
to BANDAG, giving BANDAG the non-exclusive right to make, have made, use and
sell such improvements, along with the right to sublicense such inventions,
patents and patent applications to any and all BANDAG franchisees.
XVIII. Execution; Representations and Warranties
If FRANCHISEE has ten (10) or fewer shareholders and/or partners, FRANCHISEE
represents and warrants that the names of all its shareholders and/or partners
at the time of execution of this Agreement are listed below, and FRANCHISEE
agrees to notify BANDAG immediately of any change of its shareholders or
partners. If FRANCHISEE has more than ten (10) shareholders and/or partners,
FRANCHISEE represents and warrants that all Controlling Persons and all persons
with an interest in any BANDAG Equipment at the time of execution of this
Agreement are listed below, and FRANCHISEE agrees to notify BANDAG immediately
of any change in any of these. FRANCHISEE further represents and warrants that
the signatures below on behalf of FRANCHISEE are duly authorized, and that the
persons signing have full power and authority to bind FRANCHISEE.
10
XIX. Arbitration
(a) Any dispute arising out of or relating to this Agreement will be
submitted to and resolved by final and binding arbitration as the sole
and exclusive remedy. Any claim subject to this Section shall be made by
filing a demand for arbitration within one (1) year following the
conduct, act or other event first giving rise to the claim; otherwise,
the right to any remedy shall be deemed forever waived and lost. The
right and duty of the parties to this Agreement to resolve any disputes
by arbitration shall be governed exclusively by the Federal Arbitration
Act as amended; and arbitration shall take place according to the
Commercial Rules of the American Arbitration Association, and shall be
held in its Chicago, Illinois office, and be decided by one arbitrator
chosen according to such Rules. Each party shall bear all of its own
costs of arbitration except that the fees of the arbitrator shall be
divided equally between the parties.
(b) Unless otherwise agreed by the parties, pre-hearing discovery in the
dispute to be arbitrated shall be limited to the following: (1)
production of any documents that the producing party intends to introduce
into evidence at the hearing; (2) production of any documents generated
by the party seeking production, or generated in the course of actual
transactions between the parties; (3) production of any written,
video-taped or tape-recorded statement given by the party seeking
production; (4) production of any documents relied on by any expert whose
opinions and conclusions will be offered at the hearing; and (5) not more
than two depositions per side, with total adverse examination time in
both depositions combined not to exceed 12 clock hours.
(c) The arbitrator shall have no authority to amend or modify the terms of
this Agreement or to award punitive or exemplary damages. His or her
award may be enforced by the judgment of any court having jurisdiction
over the party against which enforcement is sought.
(d) Each party shall have the right, without awaiting the outcome of the
arbitration, to seek from an appropriate court provisional remedies
including, but not limited to, temporary restraining orders or
preliminary injunctions before, during or after arbitration. Seeking any
such remedies shall not be deemed to be a waiver of either party's right
to compel arbitration. FRANCHISEE acknowledges that BANDAG will confront
a material risk of severe and irreparable injury for which it will not
have an adequate remedy in damages if FRANCHISEE breaches any of its
obligations under Sections I(b), (d) or (e), II(b), III(g), VI, X, XI,
XIII, XVI or XVII, and that such obligations (without limitation) shall
therefore be specifically enforceable.
(e) ACKNOWLEDGMENT OF ARBITRATION.
Each of the parties to this Agreement understands that this Agreement contains
an agreement to arbitrate. After signing this document, each of the parties
understands that it will not be able to bring a lawsuit concerning any dispute
that may arise which is covered by the arbitration agreement, unless it involves
a question of constitutional or civil rights and arbitration thereof may not be
compelled pursuant to the Federal Arbitration Act. Instead, each of the parties
agrees to submit any such dispute to an impartial arbitrator.
11
XX. Miscellaneous
(a) This is the entire Agreement and supersedes all prior agreements and
communications, either oral or in writing between the parties hereto with
respect to the subject matter hereof, except that the execution hereof
does not relieve FRANCHISEE from any obligations with respect to
materials, equipment or supplies sold or delivered by BANDAG to
FRANCHISEE, or to maintain the confidentiality of confidential
information delivered or communicated by BANDAG to FRANCHISEE, prior to
the effective date of this Agreement. Except for (I) the above-described
obligations, (ii) any product warranties made by FRANCHISEE, and (iii)
FRANCHISEE's indemnification obligations hereunder and its responsibility
for product liability on products manufactured by it at any time, BANDAG
and FRANCHISEE, each on behalf of themselves and of every company
directly or indirectly controlled by, controlling or under common control
with them, and the agents, officers, employees, successors and assigns of
all of them, release each other and the above-described persons and
entities from any and all claims, purported claims, liabilities and
defaults arising from the actions of the other under any and all prior
agreements or otherwise prior to the effective date of this Agreement.
Any amendment, addition or variation to this Agreement must be in writing
and duly executed by both BANDAG and FRANCHISEE.
(b) The representations, obligations and covenants of FRANCHISEE in Sections
II(b), III(g), V, X, XII, XVII, XIX and XX(a) (with respect to the
release) shall survive termination of this Agreement.
(c) The parties intend that all provisions will be enforceable to the maximum
extent permitted under law.
(d) FRANCHISEE acknowledges that it has conducted an independent
investigation of the business franchised hereunder, and recognizes that
the business venture contemplated by this Agreement involves certain
business risks and that its success will be largely dependent on the
ability of FRANCHISEE and its Controlling Persons as independent
businessmen. BANDAG expressly disclaims the making of, and FRANCHISEE
acknowledges that it has not received, any warranty or guarantee, express
or implied, as to the potential volume, profits or success of the
business venture contemplated by this Agreement, nor has FRANCHISEE
relied on any separate written or oral communications or understanding or
on any warranty or representation by or with BANDAG. In addition, except
for any express warranties that may be contained in manuals provided by
BANDAG to FRANCHISEE from time to time describing the capabilities of the
BANDAG Method, BANDAG expressly disclaims any warranties or
representations, express or implied, with respect to the BANDAG Method,
including merchantability and fitness for purpose. FRANCHISEE
acknowledges and agrees that it has read and understood this Agreement
and the attachments hereto, if any, that BANDAG has fully and adequately
explained the provisions of each to FRANCHISEE's satisfaction, and that
BANDAG has accorded FRANCHISEE ample time and opportunity to consult with
advisors of FRANCHISEE's own choosing about the potential benefits and
risks of entering into this Agreement.
12
(e) BANDAG may permit FRANCHISEE to remedy any default hereunder without
waiving the default so remedied, and a waiver of any default shall not be
a waiver of any other subsequent or prior default. BANDAG's failure to
enforce any of its rights shall not be a waiver thereof. The exercise of
any right does not limit BANDAG's right to exercise any other right;
every right of BANDAG under this Agreement is cumulative with every other
right BANDAG may have under this Agreement, under any other agreement or
otherwise.
(f) With respect to any provisions in this Agreement where BANDAG is
permitted to make certain modifications, determinations and exceptions,
they shall be within BANDAG's sole and absolute discretion unless
otherwise expressly provided in this Agreement.
IN WITNESS WHEREOF, BANDAG and FRANCHISEE have caused this Agreement to be
executed in two originals, effective as of the date of execution by BANDAG.
FRANCHISEE BANDAG, INCORPORATED
________________________________ By: _______________________________
Print Name of Corporation,
Partnership, or Individual Title: _____________________________
Date: _____________________________
By: ____________________________
Title: __________________________ Address:
Bandag World Headquarters
Date: __________________________ 0000 Xxxxx Xxxxxxx 00
Xxxxxxxxx, XX 00000-0000
X.X.X.
List of all partners (if a partnership) or shareholders (if a corporation) of
FRANCHISEE:
-------------------------------- ----------------------------------
Print Name Print Name
-------------------------------- ----------------------------------
Print Name Print Name
-------------------------------- ----------------------------------
Print Name Print Name
-------------------------------- ----------------------------------
Print Name Print Name
13
UNDERTAKING BY THE PRINCIPALS OF BANDAG FRANCHISEE
I (we) understand that the BANDAG SYSTEM FRANCHISE AGREEMENT between Bandag,
Incorporated ("BANDAG") and _______________________________________,
("FRANCHISEE") executed by FRANCHISEE on the _______ day of ________________
19____, provides that upon termination of the Agreement FRANCHISEE must:
1. cease using and return to BANDAG all confidential and proprietary
written materials and all translations;
2. cease using all BANDAG trademarks and logos;
3. cease using the Bandag Method and equipment made by or for BANDAG,
and cease selling tires retreaded after date of termination with
pre-cured rubber on equipment made by or for BANDAG; and
4. cease using the word BANDAG in its corporate, trade or business
name, any assumed name, and in any other way.
In consideration of the grant of a franchise by BANDAG, other good and valuable
consideration, and my (our) access to confidential information and the Bandag
Method and Equipment, I (we) agree that in the event of termination of the
Franchise Agreement I (we) shall honor the above understandings personally and
in any undertaking in which I (we) might be involved.
------------------------ ----------------------- ----------------
Print Name Signature Date
------------------------ ----------------------- ----------------
Print Name Signature Date
------------------------ ----------------------- ----------------
Print Name Signature Date
14
ANNEX LISTING
ANNEX A EXCEPTION TO SECTION I(e) IN-TERM NONCOMPETITION PROVISION
ANNEX B GENERAL TERMS AND CONDITIONS OF SALE
ANNEX C BANDAG(R) LOGO AND TRADEMARK USAGE REQUIREMENTS AND POLICY
15
Exception To Section I(e) In-Term Noncompetition Provision
1. Tire retreading pursuant to the AMF Flexcure System.
ANNEX A
Page 1 of 1
BANDAG, INCORPORATED ("Seller")
TERMS AND CONDITIONS OF SALE
1. OFFER, GOVERNING PROVISIONS AND CANCELLATION. THESE TERMS AND
CONDITIONS SHALL CONSTITUTE THE ENTIRE AGREEMENT BETWEEN SELLER AND BUYER, AND
SHALL BE GOVERNED BY AND SHALL BE CONSTRUED ACCORDING TO INTERNAL LAWS OF THE
STATE OF IOWA. THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL NOT BE
GOVERNED BY THE PROVISIONS OF THE 1980 U.N. CONVENTION ON CONTRACTS FOR THE
INTERNATIONAL SALE OF GOODS. No order may be canceled or altered by the Buyer
except upon terms and conditions acceptable to Seller, as evidenced by Seller's
written consent. In the event of such an approved cancellation by Buyer, Seller
shall be entitled to payment of the full price, less the amount of any expenses
saved by Seller by reason of the cancellation.
2. PRICES AND PAYMENT. All prices listed are payable in United States
Dollars. All prices are subject to change without notice, and the price of
products on order but unshipped will be adjusted to the price in effect at the
time of shipment. With respect to goods sold hereunder other than equipment,
payment is due on the terms agreed by Seller in writing, or, if there is no such
written agreement, in accordance with the applicable price list, or, if no price
list is applicable, upon Buyer's receipt of Seller's invoice. With respect to
equipment sold hereunder, payment is due in accordance with an applicable
written purchase agreement, or, if none, on delivery. Notwithstanding the
foregoing, at its sole option at any time, Seller may require Buyer to make
payment in advance or by irrevocable letter of credit, and may defer shipment or
cancel any order if the Buyer does not promptly provide such payment or a letter
of credit. Any such letter of credit shall be issued for Seller's benefit by a
prime U.S. bank, shall be subject to and governed by the Uniform Customs and
Practice for Documentary Credits (ICC Publication No. 400, 1983 Revision), shall
provide for payment against Seller's invoice and xxxx of lading, and shall be in
form and substance satisfactory to Seller.
3. TAXES AND OTHER CHARGES. Any tax, duty, custom, inspection or testing
fee, or any other tax, fee or charge of any nature whatsoever imposed by any
governmental authority, on or measured by the transaction between Seller and the
Buyer shall be paid by the Buyer in addition to the prices invoiced. Buyer shall
provide Seller at the time the order is submitted with any applicable exemption
certificate or other document acceptable to the authority imposing such tax, fee
or charge. In the event the Seller is required to pay any such tax, fee or
charge, the Buyer shall reimburse Seller therefor.
4. DELIVERY, CLAIMS AND FORCE MAJEURE. (a) Equipment. With respect to
equipment sold by Seller hereunder, the method and route of shipment shall be at
the sole discretion of Seller. Sales of equipment shall be F.O.B. Buyer=s
facility. Sales of equipment for delivery outside of the U.S. and Canada shall
be F.O.B. U.S. port selected by Seller.
(b) Rubber Products. With respect to orders for less than 500 pounds of
Rubber Products sold by Seller hereunder: (I) shipments will be F.O.B. point of
shipment; (ii) all risk of loss or damage in transit shall be borne by the Buyer
after delivery to the carrier; and (iii) all costs of shipping shall be borne by
Buyer. With respect to orders for 500 pounds or more of Rubber Products,
shipments will be F.O.B. Buyer's plant, and all costs of shipping shall be borne
by Seller. As used herein, "Rubber Products" shall mean any and all tread
rubber, tread materials and all other materials used between the tread materials
and the casing (including without limitation all cushion rubber, cushion gum and
other adhesives, repair gums, filled materials, special extrusions, rebelting
materials, cements and other rubber items).
ANNEX B
Page 1 of 5
(c) Promotional Materials. With respect to items other than equipment and
Rubber Products, and intended primarily for promotional or publicity purposes:
(i) sales by Seller hereunder will be F.O.B. point of manufacture or point of
shipment; (ii) all risk of loss or damage in transit shall be borne by Buyer
after delivery by the manufacturer to a carrier; and (iii) all costs of shipping
shall be borne by Buyer.
(d) Other Terms.
(i) Any additional expense arising from the use of a method or route of
shipment requested by Buyer shall be borne entirely by Buyer. Seller reserves
the right to make delivery in installments, unless otherwise agreed in writing
by Seller; all such installments are to be separately invoiced and paid for when
due per invoice, without regard to subsequent deliveries, and any deliveries not
in dispute shall be paid for regardless of other controversies relating to other
delivered or undelivered merchandise. Delay in delivery of any installment shall
not relieve buyer of its obligations to accept remaining deliveries. In any case
where Buyer is to bear the cost of shipping, Buyer shall bear all costs of bags,
barrels, boxes, pallets or other containers used to ship goods hereunder. No
shipping containers may be returned to Seller unless Seller has agreed to such
return in advance and all return freight is prepaid by Buyer. Seller may, at any
time, require any or all costs of shipping for which Buyer is responsible under
the terms hereof to be prepaid by Buyer.
(ii) Claims for shortages or other errors in delivery must be made in
writing to Seller within 10 days after receipt of shipment. Failure to give such
notice shall constitute unqualified acceptance and a waiver of all such claims
by Buyer. Claims for loss or damage to goods in transit, after risk of loss has
passed to Buyer, shall be made to the carrier and not to Seller.
(iii) All delivery dates are approximate. Seller shall not be liable for
any damage as a result of any delay or failure to deliver due to any act of God,
act of the Buyer, embargo or other governmental act, regulation or request,
fire, accident, strike, slow down or other labor difficulties, war, riot, delay
in transportation, defaults of common carriers, inability to obtain necessary
labor, materials or manufacturing facilities or, without limiting the foregoing,
any other event beyond the Seller's control. In the event of any such delay the
date of delivery shall be extended for a period equal to the length of the
delay. Buyer's exclusive remedy for other delays and for Seller's inability to
deliver for any reason, including Buyer's inability to produce goods which meet
the requirements of this contract, shall be rescission of this agreement.
5. STORAGE. If the products are not shipped within fifteen (15) days
after notification to the Buyer that they are ready for shipping, for any reason
beyond Seller's reasonable control, including the Buyer's failure to give
shipping instructions, Seller may store such products at the Buyer's risk in a
warehouse or yard or upon Seller's premises, and the Buyer shall pay all
handling, transportation and storage charges at the prevailing commercial rates
upon submission of invoices therefor.
6. CHANGES. Seller may at any time make such changes in design and
construction of products as Seller deems appropriate, without notice to Buyer.
Seller may furnish suitable substitutes for materials unobtainable because of
priorities or regulations established by governmental authority or
nonavailability of materials from suppliers.
ANNEX B
Page 2 of 5
7. WARRANTIES.
(a) The NDI. With respect to any equipment that is the subject of a lease
agreement between Buyer and Seller (whether or not a true lease) (the "NDI"),
Seller warrants that each machine, model upgrade or feature of the NDI will be
in good working order on the day it is installed. If it is proven to Seller's
satisfaction not to have been in good working order at the time of installation,
the machine, model upgrade or feature will be repaired or replaced at Seller's
option.
(b) Other Products. Seller warrants that the original purchaser of
equipment manufactured by Seller other than the NDI will have the right to enjoy
the equipment free and clear of claims of third persons against Seller. Seller
warrants products manufactured by it and supplied hereunder other than the NDI
to be free from defects in materials and workmanship under normal use and
service for a period of six months from date of shipment (nine months for
equipment manufactured by Seller if such equipment is exported from country of
manufacture when shipped to Buyer), except that the following components of the
repair gum extruder are so warranted only for 90 days from date of shipment: the
circuit boards, barrels, barrel adapters and air motors, four months on cushion
gum. This warranty is only applicable to products properly maintained and used
according to Seller's instructions. If, within the applicable period, any such
product shall be proved to Seller's satisfaction to be defective, such product
shall be repaired or replaced at Seller's option, or, also at Seller's option,
the purchase price shall be refunded.
(c) Other Terms. (i) In the case of the NDI, such repair or replacement,
and, in the case of products other than the NDI, such repair, replacement or
refund, shall be Seller's sole obligation and Buyer's exclusive remedy
hereunder. With respect to the NDI, such remedy is conditioned upon Seller's
receiving written notice of any alleged malfunctioning within ten (10) days of
installation, and, at Seller's option, return of the NDI to Seller, F.O.B. its
factory. With respect to products other than the NDI, such remedy shall be
conditioned upon Seller's receiving written notice of any alleged defect within
ten (10) days after its discovery and, at Seller's option, return of such
products to Seller, F.O.B. its factory. This warranty does not apply to products
that Seller determines have been damaged by misuse, neglect, improper operation,
accident or alteration, or that Seller determines have been tampered with or
repaired in a manner not authorized by Seller. Products supplied by Seller
hereunder that are manufactured by someone else are not warranted by Seller in
any way, but Seller agrees to assign to Buyer any warranty rights in such
products that Seller may have from the original manufacturer.
(ii) THE WARRANTY CONTAINED IN THIS SECTION 7 IS EXCLUSIVE AND IN LIEU OF
ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, AND SELLER
EXPRESSLY DISCLAIMS AND EXCLUDES ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. The exclusive remedy
stated in this Section 7 shall not be deemed to have failed of its essential
purpose so long as, (1) with respect to the NDI, Seller is willing and able to
repair or replace the malfunctioning item within ninety (90) days of the date on
which Seller determines a malfunction to exist, or (2) with respect to products
other than the NDI, Seller is willing and able to repair or replace defective
products, or refund the purchase price, within ninety (90) days of the date on
which Seller determines a defect to exist.
ANNEX B
Page 3 of 5
(iii) Any description of the products, whether in writing or made orally
by Seller or Seller's agents, specifications, samples, models, bulletins,
drawings, diagrams, engineering sheets or similar materials used in connection
with Buyer's order are for the sole purpose of identifying the products and
shall not be construed as an express warranty. Any suggestions by Seller or
Seller's agents regarding use, application or suitability of the products shall
not be construed as an express warranty unless confirmed to be such in writing
by Seller.
8. COMPLIANCE WITH LAWS. Seller certifies that these goods were produced
in compliance with all applicable requirements of sections 6, 7 and 12 of the
Fair Labor Standards Act, as amended, and all regulations and orders of the
United States Department of Labor issued under section 14 thereof. Seller does
not warrant, however, that any materials, equipment and features meet the
requirements of any local, state or federal laws or regulations (other than
those specifically enumerated above) applicable to Buyer, including those issued
under OSHA. The equipment describes herein is provided only with the safety
devices and features shown in the applicable specifications. Should the customer
require any additional devices or features, they should be specifically
identified, and Seller will adjust the price accordingly.
9. RETURNS. Products may be returned to Seller only when Seller's written
permission, signed by duly authorized personnel of Seller, shall be obtained by
Buyer in advance. Goods may not be returned unless they are in marketable
condition. Returned products must be securely packaged and reach Seller without
damage. Any cost incurred by Seller to put products in marketable condition will
be charged to Buyer.
10. PATENTS, TRADEMARKS AND COPYRIGHTS. Seller will, at its own expense,
defend any suits that may be instituted by anyone against Buyer for alleged
infringement of any United States patent, trademark, or copyright relating to
any products manufactured and furnished by Seller hereunder, if such alleged
infringement consists of the use of such products, or parts thereof, in Buyer's
business, and if Buyer shall have made all payments then due hereunder,
provided, however, that Buyer shall give Seller immediate notice in writing of
any such suit, shall transmit to Seller immediately upon receipt all processes
and papers served upon Buyer, shall permit Seller through its counsel, either in
the name of Buyer or in the name of Seller, to defend the same and shall give
all needed information, assistance and authority to enable Seller to do so. If
such products are in such suit held in and of themselves to infringe any valid
United States patent, trademark or copyright, then: (a) Seller will pay any
final award of damages in such suit attributable to such infringement, and (b)
if in such suit use of such products by Buyer is permanently enjoined by reason
of such infringement, Seller shall, at its own expense and at its sole option,
either (i) procure for Buyer the right to continue using the products, (ii)
modify the products to render them noninfringing, (iii) replace the products
with noninfringing goods, or (iv) refund the purchase price and the
transportation costs paid by Buyer for the products.
Notwithstanding the foregoing, Seller shall not be responsible for any
compromise or settlement made without its written consent, or for infringements
of combination or process patents covering the use of the products in
combination with other goods or materials not furnished by Seller. The foregoing
states the entire liability of Seller for infringement, and in no event shall
Seller be liable for consequential damages attributable to an infringement.
ANNEX B
Page 4 of 5
As to any products furnished by Seller to Buyer manufactured in
accordance with drawings, designs or specifications proposed or furnished by
Buyer, or any claim of contributory infringement resulting from the use or
resale by Buyer of products sold hereunder, Seller shall not be liable, and
Buyer shall indemnify Seller and hold Seller harmless from and against any and
all loss, liability, damage, claim or expense (including but not limited to
Seller's reasonable attorneys' fees and other costs of defense) incurred by
Seller as a result of any claim of patent, trademark, copyright or trade secret
infringements, or infringements of any other proprietary rights of third
parties.
The purchase of any products hereunder does not entitle Buyer to employ
the same in any patented process.
11. EXCLUSION OF CONSEQUENTIAL DAMAGES AND DISCLAIMER OF LIABILITY;
BUYER'S INDEMNITY. Seller's liability with respect to breaches of warranty shall
be limited as provided in Section 7 hereof. With respect to other breaches of
this contract, Seller's liability shall in no event exceed the contract price.
SELLER SHALL NOT BE SUBJECT TO AND DISCLAIMS: (1) ANY OTHER OBLIGATIONS OR
LIABILITIES ARISING OUT OF BREACH OF CONTRACT OR OF WARRANTY, (2) ANY
OBLIGATIONS WHATSOEVER ARISING FROM TORT CLAIMS (INCLUDING NEGLIGENCE AND STRICT
LIABILITY) OR ARISING UNDER OTHER THEORIES OF LAW WITH RESPECT TO PRODUCTS SOLD
OR SERVICES RENDERED BY SELLER, OR ANY UNDERTAKINGS, ACTS OR OMISSIONS RELATING
THERETO, AND (3) ALL CONSEQUENTIAL, INCIDENTAL AND CONTINGENT DAMAGES
WHATSOEVER.
Without limiting the generality of the foregoing, Seller specifically disclaims
any liability for penalties (including administrative penalties), special or
punitive damages, damages for lost profits or revenues, loss of use of products
or any associated equipment, cost of capital, facilities or services, downtime,
shut-down or slowdown costs, spoilage of material, or for any other types of
economic loss. All the limitations and disclaimers contained in this paragraph
and in the rest of this contract shall apply to claims of Buyer's customers or
any third party asserted by Buyer against Seller for indemnity or contribution,
as well as direct claims of Buyer against Seller.
Buyer shall indemnify Seller against any and all losses, liabilities,
damages and expenses (including, without limitation, attorneys' fees and other
costs of defending any action) that Seller may incur as a result of any claim by
Buyer or others arising out of or in connection with the products and/or
services sold hereunder and based on product or service defects not proven to
have been caused solely by Seller's negligence.
12. MANUALS, BROCHURES, INSTRUCTIONS. Any and all operating manuals,
instructions, brochures, warnings or the like concerning the goods supplied
hereunder shall be written in the English language, and are supplied as an aid
to Buyer and are not represented to be accurate, complete or sufficient. Buyer
warrants that it will accurately transcribe such manuals, instructions,
brochures or warnings to appropriate languages and dialects to comply with all
applicable laws and so that its employees and all third party users of the goods
will be properly informed of all the contents thereof. Buyer will indemnify and
hold harmless Seller against all liabilities and expenses (including attorneys'
fees) arising out of the use of the goods by the Buyer or a third party in any
case where the Buyer fails to make available adequate warnings, labels, manuals
and instructions concerning the proper and normal use of the goods.
13. SEVERABILITY. If any provisions of these terms and conditions of sale
shall be deemed illegal or unenforceable, such illegality or unenforceability
shall not affect the validity and enforceability of any legal and enforceable
provision hereof, which shall be construed as if such illegal and unenforceable
provision(s) had not been inserted herein.
ANNEX B
Page 5 of 5
BANDAG7 LOGO AND TRADEMARK USAGE REQUIREMENTS AND POLICY
(a) BANDAG shall have the exclusive right to register BANDAG's trademarks,
service marks and logos (collectively, the "Marks") with governmental
authorities. All use of the Marks by Franchisee and goodwill arising therefrom
shall inure exclusively to BANDAG's benefit. Franchisee shall assign to BANDAG
any rights acquired in the Marks or any registration thereof.
(b) Franchisee shall: (i) not impair the value of BANDAG's Marks, whether
registered or not; (ii) use only the Marks designated by BANDAG; (iii) not use
trademarks, service marks, symbols, slogans, logos or the like that are
confusingly similar to the Marks; (iv) not use the Marks, or any word, name or
other symbol tending to be confusingly similar to the Marks, in the name of any
bank account of Franchisee or in any other way tending to create liability of
BANDAG or other than in connection with the BANDAG Method and the sale of tires
retreaded by the BANDAG Method; and (v) immediately cease any pre-existing use
of the Marks that conflicts with the terms of this Agreement. Franchisee shall
promptly report any unauthorized use of the Marks to BANDAG. Unless BANDAG
objects in writing to Franchisee at any time, Franchisee may, but is not
required to, include the Xxxx "BANDAG" in its corporate or trade name and use
such name in the business of making and selling tires retreaded by the BANDAG
Method. If Franchisee elects to use the name BANDAG in its corporate or trade
name, Franchisee shall not: (1) use the word BANDAG as the first word in its
corporate name (e.g., "Bandag Retreads, Inc." is prohibited), (2) use the name
BANDAG in a corporate name with the name of any state, province, county, city,
governmental or political unit or subdivision, (e.g., "San Francisco Bandag,
Inc.", "Texas Bandag", etc. would be prohibited), or (3) use the name BANDAG in
a corporate name being used by any other BANDAG franchisee (wherever located).
In addition, Franchisee must comply with all policies and procedures adopted by
BANDAG from time to time regarding use of the Xxxx BANDAG in the names of its
franchisees. Franchisee shall, immediately upon request by BANDAG, consent in
writing, in such form as may be requested by BANDAG, to the use of the "BANDAG"
Xxxx by third parties in their corporate or trade name.
(c) Franchisee shall display the name "BANDAG" in its Territory on its
buildings, signs and trucks used in the business of retreading tires by the
BANDAG Method, and shall reasonably advertise and promote the name "BANDAG" in
connection with such business subject, however, at all times, to the
restrictions set forth below. Every use of the name "BANDAG" in any display,
advertisement, promotion or otherwise by Franchisee shall be in a form and
character approved by BANDAG.
BANDAG encourages franchisees to use the BANDAG logo for all kinds of approved
advertising and identification within its Territory. However, to protect the
integrity of BANDAG's Marks, BANDAG restricts the usage of the BANDAG Marks by
areas.
The following is a list of authorized uses of the BANDAG Marks within
Franchisee's Territory:
1. Building and standing signs on property used by Franchisee.
2. Vehicles used in Franchisee's business.
3. Yellow-page advertising.
4. Newspaper advertising.
5. Electronic media advertising (radio and/or television).
6. Envelope and letterhead.
7. Business cards.
8. Collateral materials (leaflets, handouts, price lists, calendars etc.)
9. Billboards.
10. Community service program sponsorship.
ANNEX C
Page 1 of 2
The following is a listing of unauthorized uses of the BANDAG Marks:
1. Building and/or standing signs located outside Franchisee's Territory.
2. Vehicles used exclusively outside Franchisee's Territory.
3. Yellow-page advertising which does not cover part of Franchisee's
Territory.
4. Newspapers not generally distributed within Franchisee's Territory.
5. Electronic media not servicing Franchisee's Territory.
6. Envelope and letterheads having addresses outside Franchisee's
Territory.
7. Business cards having an address outside Franchisee's Territory.
8. Sales and informational materials using an address outside
Franchisee's Territory.
9. Billboards located outside Franchisee's Territory.
10. Community service program sponsorship of groups not utilized by the
citizens within Franchisee's Territory
ANNEX C
Page 2 of 2
