EXHIBIT 10.35
LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("Agreement") is made and entered into by and
between BOYDS WHEELS, INC., a California corporation ("Boyds") and AUTOZONE,
INC., a Nevada corporation ("Licensee").
RECITALS
A. Boyds designs, manufactures and markets premium, high quality
automotive/motorcycle aftermarket products, and is the registered owner in the
United States of America of the trademark "Boyds Ultra Violet" (the
"Trademark").
B. Licensee desires to obtain an exclusive license from Boyds and
Boyds is willing to grant to Licensee a license (the "License") with respect
to the Trademark, as more fully described herein, all upon the terms and
conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties hereinafter set forth, the parties covenant and
agree as follows:
1. GRANT OF LICENSE. Boyds hereby grants to Licensee a non-exclusive
right to use pursuant to, and in accordance with, the terms and conditions of
this Agreement, the Trademark exclusively for the purpose of marketing,
manufacturing and selling the products set forth on Exhibit A (collectively,
the "Products") in the retail stores owned or operated by Licensee or its
subsidiaries or affiliates (collectively, the "Licensed Rights").
2. TERM.
2.1 INITIAL TERM. The initial term of this Agreement shall
be for a term of three (3) years, which term shall commence on date hereof
and shall end on October 18, 1999, unless sooner terminated pursuant to the
provisions of Section 14 (the "Initial Term").
2.2 RENEWAL TERMS. This Agreement shall automatically
renew for successive periods of one (1) year each, unless either party gives
notice of termination to the other party at least sixty (60) days prior to
the commencement of any such successive one (1) year renewal period.
Notwithstanding the above, neither party shall be under any obligation to
renew the License.
3. MANUFACTURING. During the term of the Agreement, Licensee will be
responsible, either itself or through a third party, for the manufacture of
Products, and Boyds
(and any distributor designated by Boyds) will have the right to purchase its
requirements of Products from the manufacturer, be it Licensee or an
independent third party under contract with Licensee. With respect to any
Product manufactured by Licensee, Boyds (and any distributor designated by
Boyds) shall have the right to purchase such Product from Licensee at a price
equal to Licensee's cost of manufacture. With respect to Products
manufactured for Licensee by an independent third party, Boyds shall
expressly be deemed an intended third party beneficiary of any manufacturing
agreement entered into and, in connection therewith, shall expressly have the
right to purchase any such Product at a price no greater than that paid by
Licensee (but not necessarily on the same terms as Licensee). If at any time
during the term of the Agreement, the manufacturer, whether the manufacturer
is Licensee or an independent third party contracted by Licensee, is unable
to meet the reasonably forecast Product requirements of Licensee, the
manufacturer will allocate available Product in equal proportion to those
amounts ordered pursuant to accepted purchase orders by Licensee and Boyds
until allocation is no longer required to satisfy the Product requirements of
Licensee and Boyds.
4. QUALITY CONTROL. All Products manufactured by Licensee, whether
directly or through an independent third party manufacturer, shall be
manufactured to Boyds' specifications for such Products and shall be of a
quality satisfactory to Boyds. Licensee shall refrain from selling any
Products not meeting Boyds' quality specifications. Licensee agrees to
permit representatives of Boyds to have access to Licensee's or other
independent third party manufacturer's premises and place of manufacture,
during normal business hours, to inspect production facilities and to insure
that Boyds' quality standards are being met.
5. PROMOTIONAL ASSISTANCE. Boyds covenants and agrees, that during
the Initial Term, Boyds shall cooperate with and assist Licensee, without
charge, in the production of packaging and other marketing and promotional
items with respect to the Products including, without limitation, providing
photographs of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and automobiles designed and built by ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇. Boyds further consents to the use of the trademark "Hot Rods by
▇▇▇▇" on such packaging, marketing and promotional items, subject to Boyds'
prior review and approval. Boyds shall use reasonable efforts to be
responsive to requests by Licensee for promotional assistance. In the event
Boyds does not respond to Licensee's requests within a period of ten (10)
days, Boyds shall be deemed to have granted its approval with respect to the
item submitted.
6. ADVERTISING. Licensee shall spend on an annual basis an amount
equal to the Royalties (as hereinafter defined) that are paid to Boyds to
advertise the Products in a manner to be mutually agreed.
7. ROYALTIES. Boyds shall receive as consideration for the Licensed
Rights the continuing royalties ("Royalties") set forth on Exhibit B. Such
Royalties shall be calculated based on net sales of Products (i.e., gross
sales, less returns, discounts and taxes) and paid to Boyds no later than
thirty (30) days after the end of each payment period, it being understood
that a payment period is the four (4) week payment cycle used by Licensee.
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8. INFRINGEMENT AND OTHER CLAIMS; INDEMNITY.
8.1 INFRINGEMENT AND OTHER CLAIMS. Licensee shall not be
liable for claims of trademark infringement brought against Licensee arising
out of Licensee's use of such Trademark. Licensee shall promptly notify
Boyds of such claims and Boyds shall assume the defense or prosecution of
such claims. At its option, Licensee shall have the right by written notice
to assume full responsibility and authority for the conduct and direction of
any litigation regarding any such claim brought by or against Licensee,
including the right, in its sole discretion, to settle, compromise or
withdraw any such claims. After assuming such responsibility and authority,
Licensee shall bear all costs incurred in defending or prosecuting such
claims, including the amount of any settlement or judgement required to be
paid by Boyds.
8.2 INDEMNITY BY LICENSEE. Licensee hereby agrees to
indemnify and hold Boyds harmless from and against any and all Damages (as
hereinafter defined) incurred or suffered by Boyds arising out of or related
to Licensee's negligent and/or willful misconduct in connection with the
performance of this Agreement or the use or sale of the Products. "Damages"
as used herein shall include any and all claims, actions, demands, losses,
costs, expenses, liabilities, damage and recoveries to the full amount of the
actual damage incurred by Boyds, in each case including interest, penalties
or other damage (including, without limitation, actual attorneys' fees and
other costs and expenses reasonably incurred in investigating or in
attempting to avoid the same or oppose the imposition thereof or of enforcing
this indemnity).
8.3 INDEMNITY BY BOYDS. Boyds hereby agrees to indemnify and
hold Licensee harmless from and against any and all Damages (as hereinafter
defined) incurred or suffered by Licensee arising out of or related to Boyds'
negligent and/or willful misconduct in connection with the performance of
this Agreement or the use or sale of the Products. "Damages" as used herein
shall include any and all claims, actions, demands, losses, costs, expenses,
liabilities, damage and recoveries to the full amount of the actual damage
incurred by Licensee, in each case including interest, penalties or other
damage (including, without limitation, actual attorneys' fees and other costs
and expenses reasonably incurred in investigating or in attempting to avoid
the same or oppose the imposition thereof or of enforcing this indemnity).
9. MARKING OF PRODUCTS. Licensee shall ▇▇▇▇ all Products sold under
the License as instructed by Boyds.
10. DELIVERY OF PRODUCT INFORMATION. Upon the execution of this
Agreement by Licensee, Licensee shall deliver to Boyds full and complete
documentation as Licensee uses or intends to use to manufacture the Products,
together with a written description of all formulas and processes utilized in
connection therewith. Licensee further covenants to provide Boyds with
comparable information with respect to improvements and/or changes to the
foregoing which may be implemented during the term hereof.
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11. RECORDS AND BOOKS.
11.1 MAINTENANCE OF RECORDS. Licensee shall keep true and
accurate books of account and records in accordance with generally accepted
accounting principles, consistently applied, covering all transactions
relating to this Agreement. All books of account and records shall be kept
available for at least three (3) years after the date of the report to which
such books of account and records relate.
11.2 AUDIT. Boyds, and its duly authorized representatives, shall
have the right upon reasonable notice and at all reasonable hours of normal
business days to (i) examine and to copy such books of account and records
and all other documents and materials in the possession or under the control
of Licensee with respect to the subject matter and terms of this Agreement
and (ii) to conduct an audit of Licensee's operations under this Agreement.
If the results of Boyds' audit of Licensee's operations under this Agreement
reveals that royalty payments due under Section 7 have been underpaid by five
percent (5%) per annum or more, the cost of such audit shall be borne by
Licensee. In all other cases, the cost of such audit shall be borne by
Boyds. Any discovered underpayment shall be promptly paid to Boyds plus
interest at the rate of ten percent (10%).
12. COVENANTS BY LICENSEE. Licensee shall:
(a) use its best efforts to promote sales of the Products and
to meet the demand therefor on reasonable terms and at competitive prices;
(b) shall at all times act in a responsible and ethical way in
connection with the promotion and sale of the Products;
(c) submit to Boyds reasonable samples of all advertising,
labelling and other promotional materials with respect to the Products before
utilizing the same;
(d) not publish, cause to be published, encourage or permit any
advertising or practice which might deceive the public or might be detrimental
to the good name, trademarks, goodwill or reputation of Boyds;
(e) not in any manner (i) pledge the credit of Boyds or (ii)
receive any money on behalf of Boyds or (iii) commit Boyds to any obligation or
give any representation, warranty or promise on Boyds' behalf;
(f) not sell or make available for sale any of the Products in
any place outside of the retail stores owned and operated by Licensee or its
subsidiaries or affiliates;
(g) when Boyds' tradenames or trademarks for the Products are
used in any advertising, sales material or promotional material relating to the
Products, Licensee's use thereof will be in the manner instructed;
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(h) immediately and in writing bring to the attention of Boyds
any improper or wrongful use of Boyds trademarks or other intellectual or
commercial property rights (if any) known to Licensee;
(i) immediately in writing pass to Boyds details of any
complaints received from customers of Licensee or others relating to the
Products;
(j) supply to Boyds copies of any reports or tests on the
Products that come into its possession whether carried out by or for Licensee or
by or for its customers;
(k) at all times hereafter save and keep Boyds and its
successors and assigns harmless and indemnified against all actions,
proceedings, losses, costs, damages, expenses, claims and demands whatsoever
arising in any way in connection with (i) any breach by Licensee of this
Agreement or (ii) any breach by Licensee of any of Licensee's obligations to any
customer of Licensee; and
(l) except as expressly set forth herein, not at any time after
the termination of this Agreement represent itself or cause or permit itself to
be represented as being in any way a seller or distributor of the Products.
13. REPRESENTATIONS AND WARRANTIES. Boyds represents and warrants to
Licensee that:
(a) It is the sole owner of the Trademark and has the right to
grant the license contained herein.
(b) It is a corporation validly existing and in good standing
under the laws of its state of incorporation and has full power and authority to
conduct its business as is presently being conducted and to own and lease its
properties.
(c) Boyds has all requisite corporate power and authority to
execute and deliver this Agreement.
(d) Neither the execution, delivery, or performance of this
Agreement by Boyds, will (i) violate or conflict with any provision its
Articles of Incorporation or Bylaws, (ii) violate, conflict with, or result in
or constitute a default under or result in a right of termination or
acceleration under any of the terms and conditions or any contract,
indebtedness, note, bond indenture, security or pledge agreement, license,
lease, permit, agreement, or other instruments or obligations to which Boyds is
a party or by which Boyds' assets are bound, or (iii) violate any court order.
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14. TERMINATION.
(a) Either party may terminate the License by giving written
notice to the other party of such termination upon the occurrence of any of the
following events:
(i) a material breach of this Agreement by the
non-terminating party; or
(ii) dissolution of the non-terminating party for any
reason; or
(iii) if the non-terminating party shall be restrained,
prevented or hindered from transacting a substantial part of its business for a
continuous period of sixty (60) days by reason of a judgment, decree, order,
rule or regulation or any court, or of any administrative or governmental
authority or agency; or
(iv) if the non-terminating party shall become subject to
any action or proceeding in the nature of a bankruptcy proceeding under United
States law or shall make an arrangement with its creditors, or shall make an
assignment for the benefit of its creditors, or a receiver, custodian, trustee,
liquidator or comparable officer shall be appointed for the non-terminating
party or its business.
(b) Upon termination of the License:
(i) Licensee, upon expiration of the Initial Term, shall
forthwith sell any remaining Products on order or in inventory in a commercially
reasonable manner;
(ii) the non-terminating party, upon termination pursuant
to the provisions of Section 14(a), shall assume financial responsibility for
and sell any remaining Products on order by either party or in either parties'
inventory in a commercially reasonable manner; and
(iii) Licensee, except as otherwise permitted herein, shall
forthwith discontinue the use of all tradenames, trademarks and emblems used in
connection with the Licensed Rights and the use of any and all signs and printed
goods bearing Boyds' tradenames or trademarks, including, without limitation,
"Boyds Ultra Violet" and "Hot Rods by ▇▇▇▇," and any reference whatsoever
thereto, and agrees, thereupon, that the Licensee will not thereafter operate or
do business under any name or in any manner that might tend to give the public
the impression that the Licensed Rights are still in force.
15. COMPLIANCE WITH LAWS AND REGULATIONS. The Licensee shall comply with
all applicable laws, ordinances and regulations and agrees to obtain all
necessary licenses, permits and approvals necessary for the operation of
Licensee's business and sale of the Products.
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16. INSURANCE. Licensee shall at all times maintain in full force and
effect at its sole expense adequate insurance with reputable carriers including,
but not limited to, comprehensive product liability insurance against claims for
bodily and personal injury, death and property damage caused by or occurring in
connection with the Products or otherwise in conjunction with the conduct of
business by the Licensee. All policies shall name Boyds as an additional named
insured and shall provide that Boyds receive twenty (20) days prior written
notice of termination, expiration or cancellation of any such policy. Licensee
shall submit to Boyds upon demand a copy of the certificate of or other evidence
of each such insurance policy and any renewal or extension thereof. If Licensee
at any time fails or refuses to maintain any such insurance coverage or provide
satisfactory evidence thereof, Boyds, at its option and in addition to its other
rights and remedies hereunder, may, but need not, obtain such insurance
coverage. If Boyds elects to obtain such insurance on behalf of Licensee, all
costs and premiums incurred by Boyds in connection therewith shall be paid by
Licensee to Boyds on demand.
17. VENDOR DIRECT PROGRAM. Boyds and Licensee shall enter into a
Vendor Direct Program Agreement, the terms of which will allow Boyds to
participate in Licensee's Vendor Direct Program.
18. GENERAL PROVISIONS.
18.1 AMENDMENT. This Agreement may be amended only by a
writing signed by both of the parties.
18.2 GOVERNING LAW. It is the intention that the laws of the
State of Tennessee, United States of America, applicable to contracts to be
wholly performed within such State shall govern the validity of this Agreement,
the construction of its terms and the interpretation of the rights and duties of
the parties.
18.3 JURISDICTION IN CERTAIN MATTERS; SERVICE OF PROCESS. The
parties hereby concurrently grant to the United States District Court for the
Central District of California and the Western District of Tennessee, by
consent, IN PERSONAM jurisdiction over the parties in any action or proceeding
commenced by either of the parties arising under or related to this Agreement.
In any such action or proceeding, the parties agree that personal service may be
made upon either party in the same manner as notices may be given pursuant to
Section 17.4. Each of the parties hereby expressly agrees that either party, if
required, may enforce any judgment or decision by the United States District
Court in any district in the States of California, Tennessee or Nevada, and that
such party shall not contest any such judgment in such other jurisdiction in any
way whatsoever, provided notice of the proceeding was promptly given to it.
18.4 NOTICES. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by any party to any
other party shall be in writing and
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delivered personally or mailed by certified mail, postage prepaid, return
receipt requested (such mailed notice to be effective on the date its receipt is
acknowledged or refused), as follows:
If to Boyds, addressed to:
Boyds Wheels, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Chief Executive Officer
With a copy to:
Higham, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to Licensee, addressed to:
AutoZone, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice President
or to any other place and with any other copies as either party may designate as
to itself by written notice to the other.
18.5 ATTORNEYS' FEES. In any action at law or in equity to
enforce any of the provisions or rights under this Agreement, the
unsuccessful party to such litigation, as determined by the court in a final
judgment or decree, shall pay the successful party all costs, expenses and
reasonable attorneys' fees incurred by the successful party (including
without limitation, costs, expenses and fees on any appeal), and if the
successful party recovers judgment in any such action or proceeding, such
costs, expenses, and attorneys' fees shall be included as part of the
judgment.
18.6 ASSIGNMENTS AND SUBLICENSEES. The rights under this
Agreement may only be assigned or sublicensed by Licensee with the prior written
consent of Boyds in its sole discretion, and upon the condition that the
assignee or sublicensee has agreed to be bound to all of the terms and
conditions of this Agreement.
18.7 COSTS AND EXPENSES. Except as otherwise expressly provided
by this Agreement, each of the parties shall bear all costs and expenses of
performance by such party of its duties and obligations under this Agreement
without any right or contribution or reimbursement by the other party hereto
of any kind or nature whatsoever.
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18.8 COUNTERPARTS. This Areement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute a single instrument.
18.9 CAPTIONS AND SECTION HEADINGS. Captions and section
heading used herein are for convenience only and are not part of this Agreement
and shall not be used in construing it.
18.10 INDEPENDENT CONTRACTOR. It is the intention of the
parties that Boyds and Licensee are, and shall be deemed to be, independent
contractors with respect of the subject matter hereof. Nothing contained herein
shall be deemed or construed in any manner whatsoever as creating any
partnership, joint venture or other similar relationship between Boyds and
Licensee.
18.11 WAIVER. No waiver of any term, provision or condition of
this Agreement, whether by conduct, or otherwise, in any one or more
instances, shall be deemed to be or be construed as a further or continuing
waiver of any such term, provision or condition or as a waiver of any other
term, provision or condition of this Agreement.
18.12 ENTIRE AGREEMENT. This Agreement is intended by Boyds and
Licensee as the final expression of their agreement and constitutes and embodies
the entire agreement and understanding between them and is a complete and
exclusive statement of the terms and conditions hereof and thereof, and shall
supersede any and all prior correspondence, conversation, negotiations,
memoranda, agreements or other understandings relating to the same subject
matter including, without limitation, the letter agreement entered into between
the parties on or about May 23, 1996.
Entered into this 18th day of October, 1996.
"BOYDS"
BOYDS WHEELS, INC., a California
corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Its Chief
Executive Officer
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"LICENSEE"
AUTOZONE, INC., a Nevada corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Its Executive
Vice President
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EXHIBIT A
PRODUCTS
Auto Shampoo
Auto Pre-Wax
Auto Paste-Wax
Auto Liquid Wax
Auto Tire Shine
Auto Wheel Cleaner
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EXHIBIT B
ROYALTIES
During the term of the Agreement and any extension, AutoZone shall pay to
Boyds the following royalties based on Net Sales of Products, as follows:
Product Royalty
------- -------
Auto Shampoo 5%
Auto Pre-Wax 14%
Auto Paste-Wax 18%
Auto Liquid Wax 17%
Auto Tire Shine 11%
Auto Wheel Cleaner 6%
With regard to any Product other than those listed above, AutoZone
shall pay Boyds a royalty in such amount as is agreed upon by the parties.
It is understood and agreed that at all times during the term of
this Agreement or any extension, AutoZone shall have the right, at its sole
discretion, to determine all Product pricing and matters relating thereto.
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