EXHIBIT 10.15
ADDENDUM TO VENDOR AGREEMENT
This Addendum to Vendor Agreement (the "Addendum") is entered into by AutoZone
Parts, Inc. ("AutoZone") and Motorcar Parts of America, Inc. ("MPA") as of the
8th day of May, 2004, and is attached to and made a part of the Vendor Agreement
(the "Agreement") dated April 6, 2004, between AutoZone and MPA. All capitalized
terms not defined herein shall have the meanings ascribed to them in the
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements of
the parties set forth herein, and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
1. On May 8, 2004, AutoZone will sell approximately $24,000,000 of product to
MPA, which product will immediately thereafter become POS inventory (the "New
POS Product") under the terms of the POS Addendum dated May 8, 2004, between the
parties (the "POS Addendum"). The New POS Product is identified as such in the
POS Addendum. The title to the New POS Product will transfer to MPA on May 8,
2004. The final value of the New POS Product will be mutually agreed to by the
parties no later than May 15, 2004 ("New POS Product Credit Amount").
2. AutoZone will take monthly credits for the New POS Product Credit Amount over
a 24 month period as follows:
Date Credit Amount Date Credit Amount
---- ------------- ---- -------------
May 7, 2004 $ 100,000 June 1, 2005 $1,090,000
June 1, 2004 $ 200,000 July 1, 2005 $1,090,000
July 1, 2004 $ 300,000 August 1, 2005 $1,090,000
August 1, 2004 $ 500,000 September 1, 2005 $1,090,000
September 1, 2004 $ 700,000 October 1, 2005 $1,090,000
October 1, 2004 $ 800,000 November 1, 2005 $1,090,000
November 1, 2004 $ 900,000 December 1, 2005 $1,090,000
December 1, 2004 $ 900,000 January 1, 2006 $1,090,000
January 1, 2005 $ 900,000 February 1, 2006 $1,090,000
February 1, 2005 $ 900,000 March 1, 2006 $1,090,000
March 1, 2005 $ 900,000 April 1, 2006 $3,910,000
April 1, 2005 $ 1,000,000
May 1, 2005 $ 1,090,000 Total $24,000,000
Any adjustment necessary to reflect the actual amount of the New POS Product
Credit Amount shall be reflected in the April 1, 2006 Credit Amount. These
credits memos shall be credited against MPA invoices for purchases by AutoZone,
its subsidiaries and affiliates. These credits shall not be considered
receivables when computing the "holdback" amount for future AutoZone payments
through any Suppliers Confirmed Receivables Program. Also, there will be no
"holdbacks" for POS transactions.
3. MPA grants to AutoZone a first lien purchase money security interest in all
of the New POS Product and the proceeds therefrom (the "Security Interest"). The
Security Interest shall secure the payment of the New POS Product Credit Amount
by MPA. MPA hereby warrants and covenants: (a) MPA hereby authorizes (and will
execute upon request) any financing statement or other document or procure any
document in all public offices wherever filing is deemed by AutoZone to be
necessary to create, evidence, perfect and/or protect AutoZone's Security
Interest in the New POS Product, and (b) if AutoZone pays any taxes, liens, or
other encumbrances at any time levied or placed on the New POS Product or the
filing of any such financing statement, MPA agrees to reimburse AutoZone on
demand for any such payment made. AutoZone and MPA agree that the aggregate
value of New POS Product shall at all times equal or exceed the New POS Product
Credit Amount then outstanding. MPA represents and warrants that, during the
prior five (5) years, it has had offices and business operations only in the
states of New York, Tennessee, North Carolina and California.
4. During the term of this Addendum, AutoZone hereby appoints MPA, and MPA
hereby accepts such appointment, as the exclusive supplier for the following
starters and alternators in the indicated Distribution Centers ("DC"):
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AUTOZONE DC ITEMS MPA WILL SUPPLY EXCLUSIVELY
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AutoZone segments its offerings of its private label starters and alternators as
good, better and best. AutoZone and MPA agree that MPA shall be the exclusive
supplier of AutoZone's private label starters and alternators in each of the
segments and categories in the DCs to the extent as described above, throughout
the term of this Addendum. Further, MPA shall have the right of first refusal to
meet an offer to supply AutoZone with any additional starter or alternator
product lines introduced in the segments and categories in the DC's to the
extent described above during the term of this Addendum.
5. In addition to any other rights it may have under this Addendum, AutoZone
shall have the option to (i) terminate MPA's rights to be the exclusive supplier
of the parts set forth in Section 4 of this Addendum and/or (ii) terminate this
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Addendum in the event any of the following events occurs and MPA does not fully
cure such failure or event within thirty (30) days after receipt of written
notice thereof from AutoZone:
(a) MPA fails to maintain a running fill rate of at least [ ]% on a
rolling [ ] day basis. In calculating the running fill rate for
purposes of the preceding sentence, the parties will not take into
account (i) FOG, (ii) the addition of new part numbers added during
such [ ] day period, (iii) VDP orders, and (iv) cross-dock orders.
The fill rate shall be calculated as follows:
Actual product delivered during relevant [ ] day period * 100%
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Product ordered during relevant [ ] day period
(b) The rolling [ ] day damaged return rate for the entire product line
manufactured and supplied by MPA to AutoZone under the Agreement
exceeds the damaged return rate for the same period in the preceding
year for the entire product line by at least [ ]%. These return
rates will be generated by AutoZone's systems. This excludes damaged
return rate increases caused by (i) seasonality, (ii) decreases in
sales volume, or (iii) material changes in AutoZone's business
practices.
(c) [
]
(d) The Pay On Scan Addendum dated May 8, 2004, between the parties is
terminated by MPA.
6. In the event that MPA breaches the terms of this Addendum and fails to cure
such breach in accordance with the terms of this Addendum, then, if AutoZone
elects to terminate MPA's rights to be the exclusive supplier of the parts set
forth in Section 4 ("Termination"), AutoZone shall [
] In the event of a Termination, MPA will issue credit memos
equal to the purchases by AutoZone, its subsidiaries and affiliates, of New POS
Product and other products offered under the POS Addendum until the balance of
the New POS Product Credit Amount is equal to zero. Thereafter, all purchases of
such product will be invoiced by and paid to MPA in accordance with the terms of
the Agreement and the POS Addendum. If AutoZone ceases to purchase a product
line from MPA, core and warranty returns relating to such product line will
transition to the new vendor(s) of record for such product line on the same date
that the new vendor(s) of record first receives orders from AutoZone for such
product lines.
7. The term of this Addendum shall begin on May 8, 2004, and shall terminate on
May 7, 2008.
8. MPA agrees to support AutoZone's merchandising initiatives, including, but
not limited to, funding price shopping, product testing programs, and catalog
efforts. MPA will cooperate with AutoZone to expand or contract then-current Pay
On Scan ("POS") products into or out of AutoZone retail locations as AutoZone,
in its sole opinion, deems necessary for its business operations. AutoZone and
MPA agree to use reasonable commercial efforts to convert all products sold by
MPA to AutoZone to POS under the Agreement and POS Addendum no later than April
30, 2006. If the parties are unable to achieve the conversion of all product
sold by MPA to AutoZone to POS by April 30, 2006, AutoZone and MPA shall amend
this Addendum, in terms substantially similar to those set forth, to provided
that effective May 1, 2006, MPA will provide AutoZone with an additional
$24,000,000 to be credited against POS product sales through May 8, 2008, in 24
monthly installments of $1,000,000 each and the term of this Agreement shall be
extended through May 7, 2010.
9. Each of MPA and AutoZone agrees that it shall maintain the existence of this
Addendum and any discussions relating hereto, as well as all of the terms and
conditions hereof, strictly confidential and that each will use the same degree
of care in maintaining such confidence as it uses to hold its own confidential
information confidential, except as ordered by a court or as required by
governmental regulation, including the rules and regulations of the Securities
and Exchange Commission. This Addendum shall be considered Confidential
Information under the Confidentiality Agreement existing between MPA and
AutoZone.
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10. The undersigned confirm that the Agreement and the POS Addendum remains in
full force and effect without amendment or modification of any kind, except as
set forth in this Addendum. In the event of a conflict between the terms and
conditions of this Addendum and those appearing in the Agreement or the POS
Addendum, the terms and conditions of this Addendum shall prevail.
11. Each of MPA and AutoZone warrants that this Addendum has been duly
authorized by it and executed by a duly authorized officer thereof and that this
Addendum does not violate or conflict with any existing agreements or laws
applicable to it.
12. This Addendum is the first step in a long-term initiative whereby AutoZone
and MPA agree to use all commercially reasonable efforts to convert all products
sold by MPA to AutoZone to POS status under the terms of the Agreement and POS
Addendum. The parties mutually agree to continue to work to execute a long term
POS contract that encompasses the entire business between the parties.
IN WITNESS WHEREOF, the parties have signed this Addendum on the date
first above written.
MOTORCAR PARTS OF AMERICA, INC. AUTOZONE PARTS, INC.
By: /s/ XXXXXX XXXXX By: /s/ XXXXXXX XXXXX
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Name: Xxxxxx Xxxxx Name: Xxxxxxx Xxxxx
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Title: Chairman, President & CEO Title: Senior Vice President
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Date: May 7, 2004 Date: May 7, 2004
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By: /s/ XXXXX XXXXXX
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Name: Xxxxx Xxxxxx
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Title: Chairman, President & CEO
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Date: May 7, 2004
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