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[EXHIBIT 10.19]
ACE DEALER FRANCHISE AGREEMENT
This Franchise Agreement made and entered into by and between ACE HARDWARE
CORPORATION, a Delaware corporation, having its general offices at 0000
Xxxxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxx 00000, hereinafter referred to as the
"Company" and Utah Service, Inc., an independent merchant operating a retail
business at 00 Xxxx 000 Xxxxx, Xxxxxxxxxxx, Xxxx 00000, hereinafter referred to
as the "Dealer";
WITNESSETH:
In consideration of the premises and the mutual covenants herein contained, the
Company and the Dealer hereby agree as follows:
ARTICLE I
DUTIES AND OBLIGATIONS OF THE COMPANY
The Company agrees to:
1. permit, authorize and allow the Dealer to use the name "ACE Hardware" in
connection with the business operated by the Dealer at the above
location, and to use the ACE Hardware trademark and other trademarks and
service marks belonging to or registered by the Company and to
prominently display the ACE Hardware group identification sign and
emblem in connection with said business;
2. sell to the Dealer for resale by the Dealer at the business operated by
the Dealer at the above location such merchandise as the Company
regularly carries for sale, including all items carried under the ACE
Brand Name;
3. prepare and make available to the Dealer at the lowest possible cost for
use in connection with the business operated by the Dealer at the above
location advertising circulars, newspaper mats, ACE identification signs
and other promotional materials, provided that the Dealer, at the
Dealer's option, agrees to purchase or subscribe for said materials and
to pay a reasonable charge therefore;
4. hold ACE Hardware Corporation Conventions and Meetings from time to time
and to display at such Conventions and Meetings merchandise offered for
sale by the Company;
5. provide the Dealer with Bulletins for special purchases from time to
time and prepare and make available to the Dealer at a reasonable charge
either catalogue checklist service or microfiche film service in order
that the Dealer may have available at all time updated information to
enable the Dealer to order a wide range of merchandise for the conduct
of his business (it being understood that all such checklists and
microfiche films are the
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property of the Company and that they can be removed from the Dealer's
place of business immediately upon termination of this Agreement);
6. distribute to the Dealer as patronage dividends within 8 -1/2 months
following the close of each year, in accordance with the applicable
provisions of Article XXIV of the Company's By-laws and the then
effective patronage dividend distribution plan of the Company, the
proportionate share allocable to the Dealer's place of business
described above of the net savings and earnings effected by or resulting
from operations carried on by the Company in connection with each
category of sales of merchandise made by it to all Dealers to whom the
Company is obligated to pay patronage dividends.
ARTICLE II
DUTIES AND OBLIGATIONS OF THE DEALER
The Dealer agrees to:
1. subscribe and pay for the appropriate number of shares of capital stock
of the Company in accordance with the accompanying Subscription for
Capital Stock Agreement which shall be deemed to be a part of this
Agreement; (except that where any such capital stock has been
transferred, with the Company's consent, to the Dealer by a former
Dealer, the Dealer shall assume all obligations under the Subscription
for Capital Stock Agreement executed or assumed by such former Dealer
for which the former Dealer was liable at the time of such transfer of
said capital stock to the Dealer);
2. give first and careful consideration to all merchandise lines and items
offered for sale by the Company and to purchase an adequate volume of
merchandise (including items carried under the ACE private label) from
the Company's distribution centers, from its special Bulletin Program
and from its Supplier-Direct Shipment Program in order to maintain the
quality image of the ACE franchise and to ensure that the Dealer's
allocation under the Company's Patronage Dividend Program will not
inequitably favor the Dealer in relation to the Company's costs of
serving the Dealer;
3. make payment of all amounts shown as currently due on all billing
statements rendered by the Company to the Dealer for purchases of
merchandise, supplies and services from the Company with sufficient
promptness for the checks of the Dealer in payment of such amounts to be
received by the Company no later than the tenth day following the date
of the statement and to pay a service charge equal to 1% per bi-weekly
billing statement period on any past due balance (it being understood
that any invoices for purchases of merchandise on which extended terms
have been granted shall automatically become due when other items billed
are not paid by the due date and it being further understood that the
percentage for determining the service charge on past due balances may
be changed from time to time by the Company);
4. return no merchandise purchased by the Dealer from the Company without
the written consent of the Company first being obtained;
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5. pay to the Company a handling charge in the amount of Three Hundred
Dollars ($300.00) upon acceptance by the Company of the retail business
operated by the Dealer at the location described in this Agreement as an
authorized ACE retail outlet in order to partially defray the costs
incurred by the Company in processing this Agreement and the
accompanying Subscription for Capital Stock Agreement, or Agreement
assuming the obligations of a former Dealer under a previously executed
Subscription for Capital Stock Agreement;
6. pay such reasonable charge as the Company regularly assesses against all
ACE dealers as a percent of their volume of purchases from the Company
in order to fund the Company's national and regional advertising
programs;
7. keep in strict confidence all ACE Checklists, Microfiche Films,
Bulletins, Catalogs, Order Forms, equipment, correspondence, and other
Company documents and information furnished to the Dealer by the Company
in connection with the place of business covered by this Agreement and,
upon termination of said Agreement, to immediately return to the Company
or its agent all such Checklists, Microfiche Films, Bulletins, Catalogs,
Order Forms, and equipment which had been provided by the Company, and
to immediately remove all ACE Hardware signs and emblems from the place
of business covered by this Agreement and to refrain from thereafter
using the name "ACE" in any way in connection with such business (it
being further understood that this also requires that the name "ACE" be
eliminated if it has been used as a part of the Dealer's corporate name
or trade name at such place of business);
8. at not time adopt or use, without the Company's prior written consent,
any name, word or xxxx which is likely to be similar to or confusing
with any trade name, trademark or service xxxx belonging to or
registered by the Company (it being understood and agreed that all
variations or adaptations of any trademarks or service marks owned or
registered by the Company shall be the exclusive property of the Company
and that the Company shall have the exclusive right to register the same
and to license the use thereof);
9. assume liability for and indemnify the Company and hold it harmless from
and against any and all claims which may be asserted against the Company
and from any losses sustained by the Company (including attorneys' fees
and expenses incurred by the Company in defending such claims or in
attempting to avoid or mitigate such losses) in connection with or
resulting from xxxxxxxx by suppliers of merchandise purchased by the
Dealer, or at the request of the Dealer, from or through the Company in
cases where such merchandise is not to be supplied from the Company's
own inventories;
10. immediately inform the Company of any change in the form of ownership of
the Dealer (such as a change from individual or partnership form to
corporate form, or vice versa), or of the death of any partner having an
interest in any partnership by which the Dealer is owned or of the death
of any stockholder owning fifty percent (50%0 or more of the voting
stock of the Dealer if the Dealer is incorporated;
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11. commencing with the first bi-weekly billing period following the date
which is one year after the date of the Company's acceptance of this
Agreement, pay a special service charge of $15 for each such period
during which the Dealer's purchases of merchandise (exclusive of carload
lumber purchases) from the Company are less than $1,500, provided,
however, that when the Dealer's qualifying purchases during any calendar
year reach a total of $39,000 (or a pro-rata portion of $39,000 during
the portion of a calendar year remaining after the date as of which the
Dealer first becomes subject to the possible imposition of such charge),
no further charges of such type will be assessed against the Dealer
during the calendar year and the Dealer will be given credit on his next
bi-weekly billing statement for any such charges theretofore added to
his account during the year (it being understood that the amount of such
special charge and the required minimum amounts of bi-weekly and
calendar year purchases to avoid the charge are subject to being changed
annually by the Board of Directors of the Company);
12. comply with all provisions of the Bylaws of the Company, as amended from
time to time, which apply in any way to any of the relationships between
the Dealer and the Company.
ARTICLE III
MISCELLANEOUS
1. It is understood and agreed that the signing of this Agreement by the
Dealer constitutes an application only and that this Agreement shall
have no force or effect unless and until the same has been duly accepted
and countersigned by the Company at its principal offices in Oak Brook,
Illinois, and that all orders for merchandise, supplies and services
placed by the dealer pursuant to this Agreement are to be transmitted to
the Company at its principal office in Illinois. Accordingly, all
provisions hereof shall be interpreted and construed in accordance with
the laws of Illinois, but if any provision hereof shall be held illegal
or void it shall not affect the validity or the legality of the
remaining portion of this Agreement.
2. Neither this Agreement nor any interest of the Dealer therein shall be
assignable or subject to transfer, assignment or encumbrance by the
Dealer at any time.
3. This Agreement may be terminated at any time by either of the parties
hereto by giving of written notice of such intention to terminate to the
other party not less than thirty (30) days in advance of the termination
date set forth in the notice. The Company also reserves the right to
terminate this Agreement upon three (3) days' advance notice to the
Dealer in the event that any payment owing to the Company for
merchandise or services supplied to the Dealer is not received by the
Company within fifteen (15) days after the date on which such payment is
due. Any notice of termination hereunder shall be effective if
personally delivered by the terminating party to the other party or if
mailed to the other party by registered or certified mail at the address
of such party set forth herein or at such other address as such party
shall have specified in writing. Such notice shall be
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deemed to have been given on the date of such personal delivery or on
the date of such mailing, as the case may be.
4. It is understood and agreed that, whenever in the reasonable opinion of
the Company it shall appear that the financial condition of the Dealer
may be incapable of supporting the continued extension of normal credit
to the Dealer by the Company, the Company shall have the right to limit
the quantities of merchandise purchased by the Dealer from the Company
(including the right to prohibit the Dealer from placing any orders with
or through the Company which are not to be filled from the warehouse
inventories of the Company).
5. The patronage dividends to be distributed to the Dealer pursuant to
Paragraph 6 of Article I hereof shall be distributed each year to the
Dealer in cash or money to the extent of not less than twenty percent
(20%) thereof (30% thereof if the franchised location is in a foreign
country or is located in Puerto Rico and is owned by a Dealer other than
an individual who is a U.S. citizen) and the balance thereof shall be
distributed in "written notices of allocation", as defined in Section
1388 of the U.S. Internal Revenue Code, as amended, in accordance with
the Plan for the distribution of patronage dividends as adopted by the
Board of Directors of the Company with respect to such distributions for
the year involved. Among other things, such Plan may provide that the
portion of the patronage dividends distributed in "written notices of
allocation" may consist partly of patronage refund certificates having a
fixed maturity date and partly of shares of Class "C" non-voting stock
of the Company, or entirely of patronage refund certificates or entirely
of shares of Class "C" non-voting stock, and such Plan may provide for
greater percentages of the total annual patronage dividends
distributable to dealers whose total patronage dividends for the year
exceed certain amounts to be paid in cash than the percentages to be
paid in cash to dealers whose total annual patronage dividends do not
exceed such amounts. The Dealer hereby acknowledges that the Dealer is
familiar with the terms of the Patronage Dividend Plan of the Company
currently in effect as described in the accompanying Prospectus
descriptive of the offering of the shares of stock of the Company
subscribed for by the Dealer in the accompanying Subscription for
Capital Stock Agreement or referred to in the Agreement of the Dealer
assuming the obligations of a former Dealer under a previously executed
Subscription for Capital Stock Agreement. Notwithstanding the terms of
any provision of any such Plan, however, the portion of any patronage
dividends which would otherwise be distributable to the Dealer in cash
for the place of business described above will instead be applied
against any indebtedness owing by the Dealer to the Company to the
extent of such indebtedness upon termination of this Agreement at any
time after May 19, 1980 unless at timely request for the payment of such
amount in cash is submitted to the Company by the Dealer.
6. In the event that the Dealer desires to sell the retail business covered
by this Agreement, the Dealer shall give the Company written notice of
the proposed sale, together with the name and address of the proposed
purchaser, at least thirty (30) days prior to the closing of such sale
by registered or certified mail at the address of the Company set forth
herein,
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or at such other address as shall have been specified in writing by the
Company. However, no such purchaser shall be entitled to operate such
business as a franchised ACE dealer unless such purchaser executes an
appropriate Subscription for Capital Stock Agreement which is accepted
by the Company or purchases from the selling Dealer (with the consent of
the Company) the shares of capital stock of the Company owned by the
selling Dealer with respect to such business, and also executes an ACE
Dealer Franchise Agreement with respect to such business which is
accepted and countersigned by the Company.
7. The closing down of the business covered by this Agreement shall
automatically cause this Agreement to be terminated unless the business
operated by the Dealer at the location covered by this Agreement is
moved to another location to which the Company consents. This Agreement
shall also automatically terminate if the Dealer, or the business
operated by the Dealer at the location covered by this Agreement,
becomes insolvent, makes an assignment for the benefit of creditors, or
files a voluntary Petition in Bankruptcy, or if an involuntary Petition
in Bankruptcy is filed against the Dealer or against said business.
8. Unless the Company shall expressly consent to the continuation of this
Agreement after such time, this Agreement shall automatically be deemed
to have terminated as of the time when any of the shares of capital
stock of the Company purchased by the Dealer with respect to the
Dealer's place of business described herein, or any shares of capital
stock of the Company at any time hereafter distributed to the
undersigned as a part of any patronage dividend distribution to which
the undersigned shall be entitled with respect to such business, are
transferred (with the consent of the Company) to another eligible holder
of said shares or are purchased back from the Dealer by the Company.
9. If the business operated at the location covered by this Agreement is
owned by an individual proprietor, this Agreement shall automatically
terminate upon the death of such individual, or if the business operated
at the location covered by this Agreement is owned by a partnership,
this Agreement shall automatically terminate upon the death of a member
of such partnership, provided, however, that, with the approval of the
Company (which approval shall not be unreasonably withheld), such
business may continue to be operated under this Agreement by the estate
of such deceased individual proprietor or by the person or persons to
whom ownership of said business is to be distributed by the estate of
such deceased individual or by the person or partnership succeeding to
the interest of such deceased member of a partnership owning such
business.
IN WITNESS WHEREOF, the Dealer has caused this Agreement to be executed on this
____ day of _____________, 19____.
Signature(s) of Dealer:
Utah Service, Inc.
Fed. Emp. Ident. No. _____________________
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(If the Dealer is a Corporation, the Corporate
name should be written hereon followed by the
signature and title of an appropriate officer.
If the Dealer is a Partnership, the partnership
name should be written hereon followed by the
signature of all partners.)
ACCEPTED for ACE Hardware Corporation at Oak
Brook, Illinois this _____ day of
_______________ 19____.
By: _______________________________________
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