Exhibit 10.2
BANDAG SYSTEM FRANCHISE AGREEMENT
TABLE OF CONTENTS
Introduction ............................................... 1
I. BANDAG Method and Grant of Franchise ................. 1
II. Materials Provided by BANDAG; Obligations of
FRANCHISEE ........................................... 2
III. Maintenance of Quality and Reputation ................ 3
IV. Records and Inspection ............................... 4
V. Relationship of Parties .............................. 4
VI. Use of the Marks, Display, Advertising and
Promotion of BANDAG Name ............................. 4
VII. Best Efforts ......................................... 4
VIII. Duration ............................................. 4
IX. Termination of the Agreement by BANDAG ............... 4
X. Effect of Termination ................................ 5
XI. Transfer of Control .................................. 5
XII. General and Product Liability; Warranties;
Insurance and Indemnification ........................ 6
XIII. Security Interest .................................... 7
XIV. Force Majeure ........................................ 7
XV. Notices; Litigation .................................. 7
XVI. Assignment and Subfranchising ........................ 7
XVII. Improvements by FRANCHISEE ........................... 7
XVIII. Execution; Representations and Warranties ............ 8
XIX. Miscellaneous ........................................ 8
UNDERTAKING BY THE PRINCIPALS OF BANDAG FRANCHISEE ..........10
ANNEX A General Terms and Conditions of Sale ................
ANNEX B BANDAG[R] Logo and Trademark Usage Requirements and
Policy ..............................................
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: _________________________________________
___________________________________________________________________
__________________________________________________________________,
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 those truck and bus tires (but excluding aircraft, agricultural
and passenger tires) retreaded by the BANDAG Method (as improved by BANDAG
during the term of this Agreement) marked below:
_____ Retreading tire sizes up to and including
14.00-25 and 17.5-25.
_____ Retreading tire sizes from LT 185/75R14 up
to and including 9R17.5 including all sizes
of Wide Base, Low Profile and High Flotation
Light Truck Tires within that size range.
_____ Retreading tire sizes from 12.00-24 up to
and including 29.5-29 including all sizes of
Wide Base, Low Profile and High Flotation
Light OTR Tires within that size range.
[Check applicable program(s)]
(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 may not, in the
Territory, sell tires of the size and use checked above retreaded by any
method using pre-cured rubber other than the BANDAG Method, or operate,
effectively control or be employed by any entity or undertaking in the
business of selling such tires in the Territory. FRANCHISEE further
agrees not to allow any of its Affiliates or Controlling Persons to engage
in these activities while this Agreement is in 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 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.
(c) FRANCHISEE agrees that, at its Authorized Location and within a 480-
mile radius thereof, during the term of this Agreement, (i) it will not,
and will not allow any Controlling Person or any Affiliate to, retread
tires by any method using pre-cured rubber other than the BANDAG Method or
directly or indirectly operate, effectively control or be employed by any
entity or undertaking in the business of retreading such tires; and (ii)
it will not refer any customers or potential customers of retreaded tires
to other entities or shops using any pre-cured method other than the
BANDAG Method.
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 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 A. 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.
If 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.
(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
mark, 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 B.
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) or (c), III(a), XI, XII or XVI of this
Agreement, or
(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.
(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.
(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
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 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.
XIX. Miscellaneous
(a) It is recognized and agreed that BANDAG will confront a material risk
of severe and irreparable injury for which it will not have an adequate
remedy at law if FRANCHISEE breaches any of its obligations under Sections
I(b), (d) or (e), II(b), or (c), III(g), VI, X, XI, XIII, XVI or XVII and
that such obligations shall therefore be specifically enforceable.
(b) 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.
(c) The representations, obligations and covenants of FRANCHISEE in
Sections II(b), III(g), V, X, XII, XVII, XIX(a) and XIX(b) (with respect
to the release) shall survive termination of this Agreement.
(d) The parties intend that all provisions will be enforceable to the
maximum extent permitted under law.
(e) 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.
(f) 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.
(g) 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: _____________________ 2905 North Highway 61
Muscatine, IA 52761-5886
U.S.A.
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
___________________________ _________________________
Print Name Print Name
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
____________________ ___________________ __________
Print Name Signature Date
____________________ ___________________ __________
Print Name Signature Date
ANNEX LISTING
ANNEX A GENERAL TERMS AND CONDITIONS OF SALE
ANNEX B BANDAG[R] LOGO AND TRADEMARK USAGE REQUIREMENTS AND POLICY
ANNEX A
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 agree-
ment, 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 bill 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. If Seller elects to
ship by carrier: (i) sales of equipment shall be F.O.B. Seller's plant in
Muscatine, Iowa; (ii) all risk of loss or damage in transit shall be
borne by Buyer after delivery to the carrier; and (iii) all costs of
shipping shall be borne by Buyer. If Seller elects to ship by trucks or
other vehicles owned, leased or operated by Seller, sales of equipment
shall be F.O.B. Buyer's facility, except that shipping will be charged to
Buyer at standard common carrier rates then in effect. Seller will notify
Buyer of the method of shipment prior to shipment.
(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).
(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 merchan-
dise. 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, in cases where the goods are delivered by a carrier, 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.
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 hereun-
der other than the NDI to be free from defects in materials and workman-
ship under normal use and service for a period of six months from date of
shipment (nine months for equipment manufactured by Seller if such equip-
ment 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 malfunc-
tioning 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 manufactur-
er.
(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 MERCHANT-
ABILITY 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.
(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 identi-
fying 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 described 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 infringe-
ment, and in no event shall Seller be liable for consequential damages
attributable to an infringement.
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
BANDAG[R] 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 Mark "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 Mark 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" Mark 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.
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.