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EXHIBIT 10-A
RETAIL MEMBER AGREEMENT WITH XXXXXX & COMPANY
THIS AGREEMENT between_________________________________________________________
d/b/a__________________________________________________________________________
of_____________________________________________________________________________
(Full Address)
the retail member hereinafter referred to as the "Member," and XXXXXX & COMPANY
a Delaware Corporation, hereinafter referred to as the "Company,"
WHEREBY it is agreed as follows:
THE COMPANY AGREES:
To sell merchandise of the type typically sold in retail hardware stores or
home centers, to provide for shipment or delivery of such merchandise to the
Member's address indicated on this Agreement, to permit use of the TRUE
VALUE(R) Trademark and other Company owned trademarks under the conditions of
this Agreement, and to offer services to the Member.
To invoice at the Company's current prices in respect of the category of
merchandise and services involved, and to apply all preliminary payments by
Member toward final settlement of the Member's financial obligations. The
excess, if any, of the preliminary payments made, less any additional expenses
due to repeated non-conformance with established payment policies or prescribed
procedures, shall be paid or credited to the Member.
To pay annually to the Member a Patronage Dividend on the basis of the volume
of and margins applicable to merchandise and services purchased by the Member
from the Company during each such year. Patronage Dividends shall be
determined as of the end of each fiscal year of the Company and shall be
payable out of the excess, if any, of gross margins from business done with or
for Members, after deducting therefrom the following:
(a) Expenses directly or indirectly related to such business;
(b) Such reasonable reserves for necessary corporate purposes as may from
time to time be provided by the Board of Directors for depreciation and
obsolescence, state and federal taxes, bad debts, casualty losses, insurance
and other corporate and operating charges and expenses, all established and
computed in accordance with generally accepted accounting principles;
(c) Such reasonable reserves for working capital necessary for the
operation of the Corporation and for deficits arising from such operation,
including deficits from business other than business done with or for Members;
That within a reasonable time following but in no event later than the
fifteenth day of the ninth month after the close of each fiscal year, the
Patronage Dividends shall be computed in respect of such year and a proper
allocation and payment thereof made to the Member based on the volume and
applicable margins of merchandise and services purchased by the Member.
Patronage Dividends are paid in accordance with the Company's By-Laws
(principally Article VIII thereof) which provide, in substance, as follows:
Re: Form of Patronage Distribution Generally
"The Board of Directors may, in its discretion, determine to pay Patronage
Dividends either all in a form that will be treated as a deductible qualified
written notice of allocation within the meaning of section 1388(c) of the
Internal Revenue Code of 1986, as amended (hereinafter referred to as the
"IRC"), all in a form that will be treated as a nonqualified written notice of
allocation within the meaning of section 1388(d) of the IRC, or part in
qualified form and part in nonqualified form. At least twenty percent (20%) of
any qualified payment of Patronage Dividends shall be paid in cash. Subject to
this limitation with respect to qualified distributions, the Board of Directors
may decide that the balance of any Patronage Dividend be paid, in whole or in
part, in cash, property, Class B Common Stock, promissory notes or other
evidences of indebtedness, or in any other form of written notice of allocation
(within the meaning of section 1388(b) of the IRC)." [VIII Section 2(a), in
part].
Re: Class B Common Stock
"With respect to the Patronage Dividend payable for each fiscal year, the
Company may pay each Member a portion of such Patronage Dividend, not to exceed
two percent (2%) of Member's net purchases (computed to the nearest multiple of
$100) from the Company during such fiscal year, in shares of Class B Common
Stock of the Company at
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the book value thereof; provided, however, that at least twenty percent (20%)
of such Member's Patronage Dividend shall be paid in money or by qualified
check." [VIII Section 3(a)].
Re: Promissory (Subordinated) Notes
"Subject only to the payment of at least twenty percent (20%) of each Member's
annual Patronage Dividend in cash and distribution of Class B Common Stock as
provided in section 3 of this ARTICLE VIII, the Company may pay each Member all
or any portion of the annual Patronage Dividend in Promissory (Subordinated)
Notes which shall bear interest at the rate from time to time fixed by the
Board of Directors and shall mature at the time fixed by the Board of Directors
not later than seven (7) years from the date of issuance. The Promissory
(Subordinated) Notes so issued may be subordinated to any liabilities or
obligations of the Company, existing, contingent or created after date of
issuance." [VIII Section 4, in part].
THE MEMBER AGREES:
Upon execution of this Agreement, to purchase qualifying shares of the
Company's Class A Common Stock as defined in the Subscription to Shares
agreement, attached hereto and made a part of this Agreement.
To establish, operate and maintain a retail hardware store or home center
retailing merchandise and services to consumers, and to sell merchandise
carrying the Company's exclusive brands only at the retail location indicated
on this Agreement.
To buy in accordance with the Company procedures and practices which include
entering warehouse orders using electronic order entry equipment functionally
compatible with the Company's equipment, and entering all other orders using
electronic equipment whenever possible.
To comply with the Company's By-Laws, Policies and Procedures Manual and other
programs and requirements promulgated by the Company from time to time. To
notify the Company, in writing, immediately upon any change in business name,
form, ownership or control.
To pay on the date due all invoices on accounts receivable statements and any
other financial obligations to the Company, and subsidiaries, and to pay a one
and one-half percent (1-1/2%) per month service charge, but not to exceed the
maximum amount permitted by law, on past due balance of accounts. Upon either
termination of this Agreement or Member's failure to pay on the date due all
invoices on accounts receivable statements and any other financial obligations
to the Company, to pay immediately all amounts due, including future dated
invoices, from the Member to the Company and its subsidiaries.
To attend Red Carpet Markets and other meetings which the Company may hold at
intervals as determined by its President for the purpose of keeping Members
better informed on trends in the industry, presenting merchandise or services
and enabling Members to exchange ideas with fellow Members.
That all information and material furnished the Member, including without
limitation, bulletins, price lists, brands, services, illustrated catalogs,
merchandising and pricing strategies, computer hardware and software, and the
Policies and Procedures Manual is confidential property of the Company,
developed and promoted for the benefit of Members, and the Member agrees not to
divulge or display any of the information contained in this material to anyone
who is not a Member, or not affiliated with the Company, and not to use such
information in a way which is detrimental to the Company or its Members. The
Member agrees to use such information and material only in connection with the
Member's purchases from the Company and for the purpose of promoting the
Member's retail business with the Member's retail customers. The Member
acknowledges and confirms that any dissemination or other disclosure of such
information and material for any other purpose, or to anyone not affiliated
with the Company, shall cause immediate and irreparable harm to fellow Members
and the Company. All such information and material shall be immediately
returned to the Company upon termination of this Agreement.
To review the By-Laws and prospectus of the Company, receipt of which is hereby
acknowledged, and which provide, in Article VIII section 2(b) of the By-Laws,
that Membership in the Company constitutes consent to take written notices of
allocation into account at their stated dollar amount as provided in section
1385(a) of the IRC, unless such written notices clearly indicate on their face
that they are nonqualified, in the taxable year in which received, and that
Member consents to this taxation method. Such consent may be revoked upon 60
days written notice to the Company and such revocation shall act to terminate
this Agreement.
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That the Board of Directors has the authority to set the composition of the
Patronage Dividend each year, provided that at least twenty percent (20%) of
each Member's share is paid in money or by qualified check.
That the Member may receive different services or charges based on the amount
of merchandise purchased by Member.
To the right and necessity of the Company to control the use of its trademarks,
and to maintain the reputation for quality products, services and goodwill
associated with such trademarks. That the display and use of the TRUE VALUE or
any other Company owned trademarks are permitted only on the following
conditions:
(a) The TRUE VALUE or any other Company owned trademarks cannot be used
with the trademark or service xxxx of any hardware store, home center building
center, or merchandising organization other than the Company's, and may only be
used at the retail location indicated on this Agreement;
(b) The Member's store and premises will be maintained in a clean and
orderly condition;
(c) The Member will offer sufficient breadth and depth of merchandise in
the core retail departments to serve the needs of retail consumers. These
departments include: Builders Hardware and Supplies, Cleaning Supplies,
Electrical Supplies, Lawn and Garden, Paint Sundries, Plumbing, Tools, Home
Decor, and Consumer Lumber.
(d) The Member will maintain a retail inventory of representative
quantities of the Company's exclusive brand merchandise (including, for
example, paint and outdoor power equipment for hardware stores), as offered,
advertised and promoted by the Company.
(e) The Member's business operations will be conducted in such a fashion
as to enhance the reputation of fellow Members and the Company.
That during the term of the Agreement, Member shall not obtain any proprietary
rights in Company trademarks, trade names or brand names, including, without
limitations, "TRUE VALUE," or any other Company owned collective membership or
other trademarks, by use thereof. Within thirty days of termination of this
Agreement, Member shall cease the use of all Company owned trademarks, trade
names and brand names and remove, at Member's expense, all store identification
signs and decals which contain any trademarks owned by the Company, shall cease
any display or advertising, directly or indirectly, as a TRUE VALUE Store, and
shall delete TRUE VALUE, and any other Company owned trademarks from its
business name including, if applicable, Member's corporate name. That if
Member fails to comply with this paragraph within the time stated, Member
authorizes and fully empowers the Company, or its agent, at Member's expense,
to enter upon its store property and buildings, and remove all exterior and
interior signs, decals and other identification items specified in this
paragraph, and also to withhold any monies due Member until the terms of this
paragraph are complied with.
That the Company has not made any representation as to the profitability of
Member's store.
THE COMPANY AND MEMBER AGREE:
That the amount of any distributions with respect to Member's patronage made in
written notices of allocation (as defined in section 1388 of the IRC) and which
are received by Member from the Company, will be taken into account by Member
at their stated dollar amounts in the manner provided in section 1385(a) of the
IRC in the taxable year in which such written notices of allocation are
received by Member; provided, however, that this Agreement shall not extend to
written notices of allocation received by Member as part of a Patronage
Dividend which clearly indicate on their face that they are nonqualified. The
Member understands and agrees that the Promissory (Subordinated) Notes and the
shares of Class B Common Stock distributed by the Company in payment, or part
payment, of the Patronage Dividends are "written notices of allocation" within
the meaning of the statute and must be taken into account by Member. The
stated dollar amount of the Promissory (Subordinated) Notes is the principal
amount thereof and the stated dollar amount of the shares of Class B Common
Stock is the book value thereof.
That the Promissory (Subordinated) Notes and Class B Common Stock need not be
physically distributed to the Member but may be held in safekeeping for the
Member (either in separate securities or as part of a bulk security) and that
notices of the Member's allocation of Promissory (Subordinated) Notes and Class
B Common Stock to be deposited in safekeeping are "written notices of
allocation" and shall be taken into account as provided for in this Agreement.
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That this Agreement is not assignable or transferable by the Member without the
written consent of the Company. Change in control or management of a corporate
or partnership Member must also be approved in writing by the Company.
That this Agreement shall continue in force from year to year unless it is
terminated by either party giving sixty (60) or more days written notice at any
time to the other party of its intention to terminate this Agreement.
Termination by the Company upon sixty (60) days notice requires the approval of
two-thirds vote of the Board of Directors then in office. This may occur when
in the best interests of the Company and may, for example, be for such reasons
as low or non-participation, death or incapacity of a Member, or change in the
nature, management, or control of a Member's business organization. In some
circumstances the Company shall have the right to terminate immediately this
Agreement by written notice to the Member. These circumstances are: At any
time after the Member becomes insolvent, commits any act of bankruptcy, files a
voluntary petition in bankruptcy, is adjudicated a bankrupt, or breaches any
term, condition or obligation agreed to in this Agreement which breach is not
cured within ten (10) days after the Member's receipt of written notice of such
breach from the Company.
That this Agreement shall be automatically modified upon notice from the
Company to the Member of any relevant change in the Certificate of
Incorporation and/or By-Laws of the Company, or by approval of the Board of
Directors.
That this Agreement is the entire and complete Agreement between the Member and
the Company and that there are no prior Agreements, representations, promises,
or commitments, oral or written, which are not specifically contained in this
Agreement. That the current form of the Company Member Agreement shall govern
all past and present relations, actions or claims arising between the Company
and the Member.
That should any provision of this Agreement be declared invalid under or in
conflict with any existing or future law or regulation such provision shall be
modified to conform with that law and such modification shall not affect any
other provision of this Agreement which shall continue in full force and
effect.
That the Company shall have a lien on and a right of setoff against any stock
or notes, including those issued as Patronage Dividends, and against any cash
portion of such Patronage Dividend which is in excess of twenty percent (20%)
of the overall Patronage Dividend payable in any year for such indebtedness of
the Member to the Company or its subsidiaries as may, for whatever cause,
exist. In the event that the Company initiates proceedings to recover amounts
due it by Member or for any breach of this Agreement or to seek equitable or
injunctive relief against the Member, the Company shall be entitled to the
recovery of all associated costs, interest and reasonable attorney's fees.
This Agreement shall be enforced against either Member or Company, only in
courts in Xxxx County or any Illinois county contiguous to Xxxx County,
Illinois, and only be interpreted in accordance with the laws of Illinois.
Member's signature on this Agreement constitutes an offer only and this
Agreement shall have no force or effect until duly accepted and signed by the
Company at its principal office and National Headquarters which is located at
0000 Xxxx Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000-0000.
WITNESS the Member's hand and seal this ___ day of ________ , 19______.
__________________________________________________________
Member Entity
d/b/a___________________________________________________________________
check: / / proprietorship / / partnership / / corporation
Retail Location Address_________________________________________________
City ______________ State__________ Zip_________________
By: ______________________________________________
Title: ___________________________________________
WITNESS_________________________________________________________
Address_________________________________________________________
City _______________ State ___________________ Zip _____________
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ACCEPTED this _________day of________________, 19_____, at Chicago, Illinois
By XXXXXX & COMPANY, by its duly authorized agent.
___________________________________________(SEAL)
________________President
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