Back to top

THIRD AMENDMENT TO SUPPLY AGREEMENT

Supply Agreement

THIRD AMENDMENT TO SUPPLY AGREEMENT | Document Parties: MIDAS INC | Midas International Corporation | Parts Warehouse, Inc | AutoZone Parts, Inc | AutoZone, Inc. You are currently viewing:
This Supply Agreement involves

MIDAS INC | Midas International Corporation | Parts Warehouse, Inc | AutoZone Parts, Inc | AutoZone, Inc.

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: THIRD AMENDMENT TO SUPPLY AGREEMENT
Date: 8/11/2005
Industry: Business Services     Sector: Services

THIRD AMENDMENT TO SUPPLY AGREEMENT, Parties: midas inc , midas international corporation , parts warehouse  inc , autozone parts  inc , autozone  inc.
50 of the Top 250 law firms use our Products every day

Exhibit 10.39

 

THIRD AMENDMENT TO SUPPLY AGREEMENT

 

This Third Amendment to Supply Agreement (this “Amendment”) is dated the 4th day of May, 2005, and is attached to and made a part of the Supply Agreement dated as of April 2, 2003, as amended (the “Agreement”), among Midas International Corporation, a Delaware corporation (“MIC”), Parts Warehouse, Inc., a Delaware corporation (“PWI”) (collectively “Midas”), and AutoZone Parts, Inc., a Nevada corporation, successor by assignment to AutoZone, Inc. (“AutoZone”). All capitalized terms not defined herein shall have the meanings ascribed to them in the Agreement.

 

For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

1.

The second recital of the Agreement is hereby deleted in its entirety and replaced with the following:

 

“WHEREAS, AutoZone and Midas desire to have AutoZone serve as (i) the exclusive supplier of Midas-brand Products (as hereinafter defined) to any and all current and future Midas shops, whether franchised or owned and operated by Midas or its affiliates, located in the United States (collectively, “Midas Shops”), (ii) the exclusively endorsed full-line automotive aftermarket parts supplier of non-Midas Stocking Products (as hereinafter defined) to franchised Midas Shops, (iii) a preferred supplier of Non-Stocking Products (as hereinafter defined) to Participating Midas Shops (as hereinafter defined), (iv) the exclusively endorsed supplier of Stocking Exhaust Products (as hereinafter defined) (other than Specialty Exhaust Products, as hereinafter defined) to franchised Midas Shops for purchase on a stocking basis, and (v) the exclusive full-line automotive aftermarket parts supplier of non-Midas Stocking Products and exclusive supplier of Stocking Exhaust Products (other than Specialty Exhaust Products) to Midas Shops owned and operated by Midas or its affiliates, all on the terms and subject to the conditions set forth herein; and”

 

2.

The first sentence of the first paragraph of Section 2 of the Agreement is hereby deleted in its entirety and replaced with the following:

 

“Upon the terms and subject to the conditions set forth herein, Midas hereby appoints AutoZone to serve, during the Supply Term (as defined in Section 8 of this Agreement), as (i) the exclusive supplier of Midas-brand Products to Midas Shops, (ii) the exclusively endorsed full-line automotive aftermarket parts supplier of non-Midas Stocking Products to franchised Midas Shops, (iii) a preferred supplier of Non-Stocking Products to Participating Midas Shops, (iv) the exclusively endorsed supplier of Stocking Exhaust Products (other than Specialty Exhaust Products) to franchised Midas Shops for purchase on a stocking basis, and (v) the exclusive full-line automotive aftermarket parts supplier of non-Midas Stocking Products and exclusive supplier of


Stocking Exhaust Products (other than Specialty Exhaust Products) to Midas Shops owned and operated by Midas or its affiliates. For purposes of this Agreement, “Specialty Exhaust Products” shall mean all high-performance and specialty mufflers and exhaust components, including, without limitation, Flowmaster-brand exhaust products. The foregoing appointments as the exclusively endorsed full-line automotive aftermarket parts supplier of non-Midas Stocking Products to Midas Shops (clause (ii) above) and the exclusive full-line automotive aftermarket parts supplier of non-Midas Stocking Products to Midas Shops owned and operated by Midas or its affiliates (part of clause (v) above) shall be expressly contingent upon AutoZone’s pricing and service levels for such products remaining competitive in the market, as determined by Midas in its reasonable discretion; provided , however , that AutoZone shall have a period of thirty (30) days immediately after Midas notifies AutoZone of its election to rescind the two foregoing exclusive appointments to correct such pricing and/or service level issues to the reasonable satisfaction of Midas.”

 

3.

The following sentence shall be inserted after the second sentence of Subpart (i) of Subsection (a) of Section 2 of the Agreement:

 

“Notwithstanding anything contained herein or on Schedule 3 to the contrary, “Stocking Products” shall specifically exclude any Stocking Exhaust Products. Rather, AutoZone’s role as the exclusively endorsed supplier of Stocking Exhaust Products (other than Specialty Exhaust Products) is governed by the Exhaust Program (as defined and described in Subsection 2(c) below).”

 

4.

The last two sentences of Subpart (iii) of Subsection (a) of Section 2 of the Agreement are hereby deleted in their entirety and replaced with the following:

 

“AutoZone shall ensure that all Stocking Products are delivered on such equipment as is necessary to safely and legally unload the Stocking Product order from the equipment into the Midas Shop’s bays.”

 

5.

The following shall be inserted as a new second paragraph to Subpart (iv) of Subsection (a) of Section 2 of the Agreement:

 

“Notwithstanding the foregoing, following the date that the Exhaust Program is implemented in a particular Midas Shop, the minimum order requirement (for purposes of free freight) applicable to such Midas Shop under the Stocking Program shall be [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] and the applicable delivery fee for orders failing to meet the minimum order requirement shall be [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]. In other words, from and after that date, AutoZone shall be responsible for the freight charges relating to all shipments made to such Midas Shop under the Stocking Program, but only to the extent that the Stocking Program order is greater than or equal to [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] in the aggregate and specifies delivery to a single Midas Shop location (or other mutually agreed location).

 

2


Such Midas Shop shall be charged a [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] delivery fee on each Stocking Program order that does not meet the foregoing [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] minimum requirement. Such freight charge will be added to the applicable Stocking Program order’s invoice. There will be no penalty or fee charged by AutoZone if a Midas Shop participating in the Stocking Program elects not to place a Stocking Program order on any particular order date or otherwise in accordance with its applicable order cycle.”

 

6.

Subpart (vii) of Subsection (a) of Section 2 of the Agreement is hereby deleted in its entirety and replaced with the following:

 

“(vii) Returns . (a) On a semiannual basis during the Supply Term, commencing with the second quarter of 2005, each Midas Shop shall be entitled to return to AutoZone for full credit an amount of undamaged Midas-brand Products and Stocking Exhaust Products (including Code 1 Inventory, as defined in Subsection 2(c)(x)(C) below), in original undamaged packaging, in a dollar amount up to [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] of that Midas Shop’s total net Midas-brand Product and Stocking Exhaust Product purchases under the Stocking Program and the Exhaust Program during the previous four (4) calendar quarters. All returns of Midas-brand Products and Stocking Exhaust Products (including Code 1 Inventory) shall be picked up by the nearest local AutoZone Store (as hereinafter defined) or otherwise at AutoZone’s discretion, at no charge to the Midas Shop. For any Midas Shop that is not serviced by a local AutoZone Store, AutoZone shall provide a process whereby returns of Midas-brand Products and Stocking Exhaust Products (including Code 1 Inventory) can be made by the Midas Shop to its servicing AutoZone DC without charge to Midas or the applicable Midas franchisee.

 

(b)    In addition to and exclusive of the foregoing, AutoZone agrees that, effective as of May 1, 2005, each Midas Shop shall also be entitled to return to AutoZone, for full credit at the [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] price from AutoZone and without limitation , all undamaged non-Midas Stocking Products and all non-exhaust Non-Stocking Products, in original undamaged packaging, purchased at any time during the Supply Term, but only to the extent that such products are then stocked, or normally stocked, by AutoZone in its retail outlets.

 

(c)    After the completion of the lift of the Code 2 Inventory (as defined in Subsection 2(c)(x)(B) of this Agreement) at a particular Midas Shop as described in Subsection 2(c)(x)(B) below, any and all Code 2 Inventory remaining at such Midas Shop shall no longer be eligible for return to AutoZone pursuant to this Agreement.”

 

3


7.

The following shall be inserted as a new Subpart (ix) of Subsection (a) of Section 2 of the Agreement:

 

“(ix) On or before September 1, 2005, AutoZone shall develop, implement, perform and complete a Midas Dealer Ride Control Changeover Program for the Midas System (the “Ride Control Program”). The Ride Control Program shall provide for (a) the elimination of Midas-brand and Evergard-brand shocks and struts (collectively, “Midas Shocks & Struts”) from the Midas System and (b) the replacement of the eliminated Midas Shocks & Struts with Gabriel-brand G-Force shocks and struts (collectively, “Gabriel Shocks & Struts”). The Gabriel Shocks & Struts shall initially have the same pricing as the eliminated Midas Shocks & Struts (although AutoZone shall thereafter have the right to adjust such pricing from time to time in accordance with Section 2(a)(v) of this Agreement). AutoZone shall provide each Midas Shop with two options under the Ride Control Program. Under the first option, a Midas Shop shall be entitled to have AutoZone [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION]. Under this option, a Midas Shop shall not be entitled to return to AutoZone for credit any remaining Midas Shocks & Struts in its inventory following the completion of the foregoing lift. Under the second option (i.e., for all Midas Shops not electing the first option), Midas Shops shall be entitled to a [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] discount from AutoZone on all Gabriel Shocks & Struts purchased under the Stocking Program prior to December 31, 2005. Any Midas Shop choosing this option shall not be entitled to return any Midas Shocks & Struts to AutoZone. All other terms and conditions of the Ride Control Program shall be mutually agreed to by Midas and AutoZone.”

 

8.

Subpart (iv) of Subsection (b) of Section 2 of the Agreement is hereby amended by deleting from the end of the first sentence thereof the phrase “ less a [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION] off-invoice allowance”.

 

9.

The following shall be inserted as a new Subsection (c) of Section 2 of the Agreement:

 

(c)         Exhaust Program . The parties agree that a new exhaust program will be implemented under which AutoZone shall serve as the exclusively endorsed supplier of Stocking Exhaust Products (other than Specialty Exhaust Products) to franchised Midas Shops for purchase on a stocking basis and the exclusive supplier of Stocking Exhaust Products (other than Specialty Exhaust Products) to Midas Shops owned and operated by Midas or its affiliates (the “Exhaust Program”). The Exhaust Program will be implemented on a region-by-region basis, with each region being defined, for purposes of this Section 2(c), as a respective delivery area of an AutoZone DC (an “Exhaust Region”). Midas and AutoZone shall work together to complete the conversion of the entire Midas System to the new Exhaust Program by December 31, 2005. Accordingly, the Midas exhaust program currently in effect shall remain in place in each Exhaust Region until the completion of the conversion to the Exhaust Program in such Exhaust Region. The parties agree that, subject to the terms and conditions of this Agreement, Midas shall have and exercise ultimate control and sole decision-making authority with respect to all aspects of the implementation of the Exhaust Program and the transition of the Midas Shops thereto.

 

 

(i)

Stocking Exhaust Product Inventory . Under the Exhaust Program, Midas Shops shall be entitled to place, in the manner described in Subsection 2(c)(ii) below,

 

4


and AutoZone shall receive and fill, orders for such types and quantities of Stocking Exhaust Products as the Midas Shop may require from time to time during the Supply Term to be delivered, in the manner described in Subsection 2(c)(iii) below, on a weekly basis (or otherwise as mutually agreed). For purposes of this Agreement, “Stocking Exhaust Products” shall mean the complete line of exhaust SKUs manufactured or offered for sale from time to time by ArvinMeritor, Inc. (“Arvin”) and/or such other exhaust manufacturer(s) or vendor(s) as AutoZone may hereafter select; provided , however , that such other exhaust manufacturer(s) and/or vendor(s) carry substantially the same depth and breadth of exhaust SKUs as carried by Arvin.

 

 

(ii)

Orders . Each Midas Shop shall have the right to place Exhaust Program orders with AutoZone on a weekly basis (or on a scheduled semi-weekly or bi-weekly basis if mutually agreed to by AutoZone and the applicable Midas Shop). Each Midas Shop shall be informed of its scheduled delivery time and date, and the date and time after which any Exhaust Program orders received from a Midas Shop will not be shipped with the next shipment (the “Exhaust Order Cut-Off Time”). The scheduled delivery time and date and the Exhaust Order Cut-Off Time may be adjusted by AutoZone from time to time in its sole discretion upon prior written notice to the affected Midas Shop. Exhaust Program orders shall be placed by Midas Shops, and processed by AutoZone, separately from Stocking Program orders.

 

 

(iii)

Delivery . AutoZone shall make deliveries under the Exhaust Program on a scheduled weekly basis (or on a scheduled semi-weekly or bi-weekly basis if mutually agreed to by AutoZone and the applicable Midas Shop). Exhaust Program orders shall be shipped by AutoZone separately from Stocking Program orders. Delivery shall be made to the location of the Midas Shop placing the order (or such other location(s) as may be mutually agreed to between AutoZone and Midas or the Midas franchisee). The frequency of Exhaust Program deliveries for a particular Midas Shop (or other specified location) shall be weekly, unless mutually agreed otherwise between AutoZone and Midas or the applicable Midas franchisee. Subject to Section 14(a) of this Agreement, AutoZone shall deliver (either directly through the use of AutoZone’s own fleet or through third party carriers) all orders under the Exhaust Program in accordance with Schedule 5.1 attached hereto and incorporated herein by reference. For those Midas Shops that are not listed on Schedule 5.1 hereto, AutoZone shall deliver (either directly through the use of AutoZone’s own fleet or through third party carriers) all orders under the Exhaust Program in accordance with the following timetable:

 

 

 

 

AutoZone DC servicing Midas Shop


 

  

Delivery Requirement from Exhaust

Order Cut-Off Time


 

Lavonia, GA

  

2-3*

Lexington, TN

  

2-3*

Danville, IL

  

3-4*

Zanesville, OH

  

2-3*

Lafayette, LA

  

2-4*

Dallas, TX

  

3-4*

Phoenix, AZ

  

4*

Ontario, CA (excl. Alaska and Hawaii)

  

3-5*

Ontario, CA (Alaska and Hawaii only)

  

8*

 

*

Based on business days. Delivery must be made by 5:00 p.m. local time on the scheduled delivery date.

 

5



 
SITE SEARCH

AGREEMENTS / CONTRACTS

Document Title:

Entire Document: (optional)

Governing Law:(optional)


Try our advanced search >>
 

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates
Email:
This is only a partial view of this document. We have millions of legal documents and clauses drafted by top law firms. learn more search for free browse for free learn more