ACE HARDWARE CORPORATION
LICENSE AGREEMENT FOR
_______________________
TABLE OF CONTENTS
PARAGRAPH PAGE
I. APPOINTMENT 2
II. FEES 2
III. TERM & RENEWAL 3
IV. PROPRIETARY MARKS 4
V. CONFIDENTIAL INFORMATION 6
VI. COMPANY'S OBLIGATIONS 7
VII. LICENSEE'S OBLIGATIONS 8
VIII. CONFIDENTIAL OPERATIONS MANUAL 15
IX. COVENANTS NOT TO COMPETE 15
X. DEFAULT AND TERMINATION 16
XI. EXPIRATION OR TERMINATION 18
XII. TRANSFERABILITY OF INTEREST 20
XIII. NO AGENCY 21
XIV. MISCELLANEOUS 21
EXHIBITS
A. ACE STORE LOCATIONS
ACE HARDWARE CORPORATION
LICENSE AGREEMENT
This License Agreement ("Agreement"), by and between ACE HARDWARE
CORPORATION, a Delaware corporation having its principal place of business
at 0000 Xxxxxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxx, 00000 ("Company") and
____________________________________, a corporation incorporated under the
laws of having its general offices at
____________________________________________________________ ("Licensee") .
WITNESSETH:
1. Company is in the business of selling home improvement products,
tools, hardware, paint and related merchandise and products, including
private labelled merchandise containing the name "ACE" or "ACE Hardware"
(collectively referred to as the "Merchandise") at wholesale; and
2. Company is also in the business of granting the rights to operate
businesses selling Merchandise from retail locations ("ACE Stores") under
the trade names and service marks "ACE", "ACE Hardware", and "ACE Home
Center" and associated logos and commercial symbols, and such other trade
names, trademarks and service marks ("ACE Marks") as are now designated
(and may hereinafter be designated in writing by Company) as an integral
part of the ACE Stores; and
3. Licensee desires to establish and operate ACE Stores outside the
United States of America in the country of ___________________ (the
"Territory") as a licensee of Company and to sublicense others the right
to establish and operate ACE Stores in the Territory, using procedures and
standards developed and prescribed by Company; and
4. Company expressly disclaims the making of, and Licensee
acknowledges that it has not received nor relied upon, any warranty or
guaranty, express or implied, as to the revenues, profits or success of the
business venture contemplated by this Agreement.
NOW, THEREFORE, the parties, in consideration of the undertakings and
commitments of each party to the other set forth in this Agreement, agree
as follows:
PARAGRAPH I
APPOINTMENT
1.01. Subject to the terms and conditions herein and during
the term of this Agreement, Company grants to Licensee the exclusive right
throughout the Territory to use the ACE Marks and Licensee undertakes the
obligation to establish and operate ACE Stores solely in compliance with
operational procedures and standards prescribed by Company from time to
time. Company will not, so long as this Agreement is in force and effect
and Licensee is not in default under any of the material terms hereof,
license another to operate, or itself operate, any other ACE Stores within
the Territory.
1.02 Company further grants to Licensee, upon and subject to the
terms and conditions set forth in Section 7.03 below, the right to
sublicense others to establish and operate ACE Stores in the Territory
solely in compliance with operational procedures and standards prescribed
by Company from time to time, and to supervise the operations of such
sublicensed ACE Stores.
1.03 Company further grants to Licensee, upon and subject to the
terms and conditions set forth herein, the right to purchase Merchandise
from Company for resale at the ACE Stores in the Territory.
1.04 In connection with the above rights, Company grants to
Licensee the exclusive right and license to use certain ACE Marks , as well
as exclusive access to Company's proprietary systems, operations manuals
("Operations Manuals"), standard forms and formats, and operational
knowledge within the Territory.
PARAGRAPH II
FEES
2.01. Licensee shall pay to Company a Royalty Fee (" Royalty
Fee") in an amount equal to ____ percent (__%) of the Gross Retail Revenues
generated from the sale of home improvement products, tools, hardware,
paint and related merchandise and products, from whatever source, provided
to customers of the ACE Stores operated by Licensee and its Sublicensees in
the Territory ("Gross Retail Revenues"). For the purposes of this
paragraph, the term "Gross Retail Revenues" shall exclude all sales and
value added taxes actually collected by Licensee and its Sublicensees from
customers and paid to any government authority in the Territory, which
shall be the sole responsibility of Licensee and its Sublicensees, and any
customer refund and credits. All Royalty Fees shall be due and payable to
Company, in United States Dollars, thirty (30) days after the end of each
calendar quarter for the calendar quarter just ended. In the event that
payment of the above fees in United States Dollars is not possible by
application of law, Licensee shall be entitled to make payment in
______________ currency (______) at the currency exchange rate reported in
the Wall Street Journal, on the date the payment is transmitted, provided,
however, that if the payment is transmitted after the date on which payment
is due, the currency exchange rate used shall be the rate as of the day
payment is transmitted or the date payment was due, whichever rate produces
the larger amount in United States Dollars.
2.03. Licensee shall also pay to Company a sum equal to
________________ percent (___%) of any sublicense fee or similar fee
charged by Licensee to its Sublicensees hereunder.
2.04. In connection with the purchase of Merchandise for
resale from ACE Stores in the Territory, Licensee agrees to pay Company as
follows:
a. for Merchandise purchased from Company's warehouses, the
cost of such merchandise, plus a _________ percent (__%) handling charge;
b. for Merchandise purchased directly from Company's vendors
in the United States and billed through Company, the cost of such
merchandise, plus a _____ percent (__%) handling charge;
c. for Merchandise purchased through Company's bulletin program
(pooled merchandise), the cost of such merchandise, plus a ____
percent (__%) handling charge; and
d. for Merchandise purchased directly from vendor's outside
the United Sates and billed through Company, the cost of such merchandise
plus a handling charge to be determined on a per purchase basis.
It is mutually understood that the Company's handling charge may be
changed by Company upon sixty (60) days prior written notice to Licensee.
2.05. Licensee shall pay all amounts shown as currently due
on Company's billing statements for purchases of merchandise, supplies and
services made by Licensee with such promptness as shall enable Company to
receive payment no later than the tenth (10th) day following the date of
the statement (it being understood that all invoices for merchandise
purchased on extended payment terms become currently due when other items
billed are not paid when due), and pay a service charge, currently .77% per
bi-weekly billing statement on any past due balance in such amount as
Company may from time to time impose on its dealers generally. All amounts
becoming payable by Licensee pursuant to Company's billing statements shall
be payable in United States currency.
PARAGRAPH III
TERM & RENEWAL
3.01. This Agreement shall be effective and binding from the
date of its execution for an initial term equal to __________ (__) years
from the date of this Agreement (the "Initial Term").
3.02. Licensee shall have the right to renew this license at
the expiration of the initial term of the license for additional terms of
____ (__) years each ("Renewal Terms"), provided that all of the following
conditions have been fulfilled:
a. Licensee has, during the entire term of this Agreement,
complied with all the provisions hereof;
b. Licensee has given Company written notice of its intent
to renew the license not less than six (6) months nor more than twelve (12)
months prior to expiration of the then current term;
c. Licensee has satisfied all monetary obligations owed by
it to Company and has paid these obligations in a timely manner as required
herein throughout the term of this Agreement;
d. Licensee has satisfied the performance requirements for
number of square feet of retail space and dollar volume of merchandise
purchases established in Paragraph 7.05 of this Agreement; and
e. Prior to each Renewal Term, if any, the parties shall
agree in writing upon the amount of the Royalty Fee applicable during such
Renewal Term, provided, however, that in no event will the Royalty Fee be
less than the Royalty Fee in effect during the Initial Term, nor shall the
Royalty Fee during any Renewal Term increase by more than _____ percent
(__%) from the prior term.
PARAGRAPH IV
PROPRIETARY MARKS
4.01. Company grants Licensee exclusive license to use the
ACE Marks in connection with the retail hardware services offered and
performed by Licensee at the location(s) within the Territory, and in
connection with the Merchandise purchased from Company for resale from the
said location(s). Licensee shall display an exterior store identification
sign that shall comply with the identity standards and requirements set
forth in the Operations Manual or the ACE Identity Standards Manual.
4.02. Company does not guarantee, warrant or offer any patent
or trademark protection to Licensee on any of the products purchased by
Licensee from Company, and Company shall not be obligated or liable in any
way to indemnify Licensee for any actual or alleged violations of patent or
patent rights, or trademark, service xxxx, trade name or other intellectual
property rights arising from or in connection with the sale or use of any
products, programs or services purchased from Company by Licensee or the
exercise of any rights granted hereunder.
4.03. Licensee agrees to use the ACE Marks only in the form,
manner, and logotype previously approved by Company in writing and to
comply with all guidelines and instructions from time to time issued by
Company with respect thereto. All use of the ACE Marks shall clearly and
conspicuously disclose that the ACE Marks are owned by, or used under
license from Company.
4.04. All services provided in connection with which the ACE
Marks are used shall be of high quality as determined by Company, and
otherwise in accordance with such specifications as Company may, from time
to time, prescribe.
4.05. In no event shall the license herein granted be
construed as authorizing Licensee to use any marks, trade names, slogans or
logos of Company other than as specifically licensed hereunder. Licensee
agrees that it shall not place or cause to be placed the names "ACE" or
"ACE Hardware" on any merchandise without the Company's prior written
consent.
4.06. Licensee agrees not to adapt or vary the ACE Marks or
create or use any trademark, service marks, trade names, symbols or logos
that are confusingly similar to those owned by Company, whether or not
licensed hereunder. Licensee also agrees to at no time use the ACE Marks
in association or conjunction with any trade name, trademark or service
xxxx owned or registered by a competitor of Company.
4.07. Company expressly disclaims any and all liability to
Licensee or to any third party with respect to any actual or alleged
invalidity of the Xxxx or in connection with Licensee's use of the ACE
Marks, or the use of the services furnished by Licensee in connection
therewith.
4.08. Licensee acknowledges Company's ownership of the ACE
Marks, and agrees that it will not do or permit any act to be done which
may impair such ownership. Licensee agrees that all use of the ACE Marks
by it shall inure to the benefit of, and be on behalf of, Company.
Licensee agrees that it will never in any manner represent that it has an
ownership interest in the ACE Marks, or contest the ownership of the ACE
Marks by Company, or attack the validity of the license herein granted.
Licensee agrees to execute, upon request, such documents as Company may
deem necessary or desirable to acknowledge Company's ownership of the ACE
Marks, or to register, retain, enforce or defend the ACE Marks.
4.09. Licensee agrees to notify Company of any unauthorized
use of the ACE Marks by others, as promptly as such use may come to
Licensee's attention. Not later than 60 days after receipt of notification
from Licensee, Company shall take all practicable action deemed necessary
to defend the ACE Marks in the Territory.
4.10. Licensee agrees at no time to adopt or use, or
authorize, permit or condone the use by any other person or firm, of any
name, word or xxxx which is similar to or likely to be confused with, any
trade name, trademark or service xxxx belonging to or registered by
Company, whether or not licensed hereunder, (it being understood and agreed
that all variations or adaptations of any trademarks or service marks owned
or registered by Company shall be the exclusive property of Company and
that Company shall have the exclusive right to register the same and to
license the use thereof).
4.11. In order to preserve the validity and integrity of the
ACE Marks and copyrighted materials licensed herein and to assure that
Licensee is properly employing the same in the operation of its ACE
Stores, Company or its agents shall have the right of entry and inspection
of Licensee's premises upon 10 days prior notice to Licensee and,
additionally, shall have the right to observe the manner in which Licensee
is conducting its operations and activities, to confer with Licensee's
customers and employees and to inspect merchandise, products, reports,
forms and documents and related data for test of content and evaluation
purposes to make certain that the operations and activities are
satisfactory and meet the Company's Ace 2000 and other performance
standards.
4.12. Licensee shall not use the Marks in any advertising or
any other form of promotion without appropriate registration symbols, or
other designation of ownership and rights required by law in the country in
which the ACE Stores is operated.
PARAGRAPH V
CONFIDENTIAL INFORMATION
5.01. Licensee acknowledges that its entire knowledge of the
operation of an ACE Stores including the knowledge or know-how regarding
the specifications, standards and operating procedures of the Company
services, is derived from information disclosed to Licensee by Company and
that certain of such information is proprietary, confidential and a trade
secret of Company. Licensee shall maintain the absolute confidentiality of
all such proprietary information during and after the term of this
Agreement and shall not use any such information in any other business or
in any manner not specifically authorized or approved in writing by
Company.
5.02. Licensee agrees to keep in strict confidence all
Operations Manuals, warehouse checklists, microfiche films, videograms,
bulletins, catalogs, price lists, order forms and other documents and
information furnished by Company with respect to the merchandise, programs
and services which are available from Company, and at no time to divulge or
display any of the foregoing, other than in connection with Licensee's
transactions with Company or for the purpose of promoting Licensee's
business. Licensee agrees to comply with all policy statements and
guidelines communicated from time to time by Company with respect to any
confidential information belonging to Company and at no time to authorize,
permit or condone the use of any of the foregoing by any other person or
firm.
5.03. Licensee shall divulge such confidential information
only to the extent and only to such of its employees as must have access to
it in order to operate the ACE Stores. Any and all information, knowledge
and know-how including, but not limited to, specifications and standards
concerning the operation of the ACE Stores and other data which Company
designates as confidential shall be deemed confidential for purposes of
this Agreement, except information which Licensee can demonstrate lawfully
came to its attention prior to disclosure thereof by Company; or which, at
the time of disclosure by Company to Licensee, had lawfully become a part
of the public domain, through publication or communication by others;
which, after disclosure to Licensee by Company, lawfully becomes a part of
the public domain through publication or communication by others, or which
Licensee is required to be furnished to any government or public authority
pursuant to any law or judicial order applicable to Licensee.
5.04. Licensee acknowledges and agrees that Company owns or
is the licensee of the owner of the Copyrighted Works and shall further
create, acquire or obtain licenses for certain copyrights in various works
of authorship used in connection with the operation of the ACE Stores
including, but not limited to, all categories of works eligible for
protection under the United States copyright law, all of which shall be
deemed to be Copyrighted Works under this Agreement. Such Copyrighted
Works include, but are not limited to, the Manual, advertisements,
promotional materials, posters and signs, and may include all or part of
the Marks, the ACE International Computer System (as defined in Paragraph
6.14. of this Agreement), trade dress and other portions of the System.
Company intends that all works of authorship related to the operation of
ACE Stores which are created by Company in the future shall be owned by
Company.
5.05. If Licensee develops any new program, project, work of
art or other material in the course of operating the ACE Stores which
incorporates the ACE marks or the ACE name and Company approves the use and
sale of this service in the ACE Stores, this new program, project, work of
art or other material shall automatically become the property of Company as
though Company had developed the program, project, work of art or other
material itself ("Work for Hire") .
PARAGRAPH VI
COMPANY'S OBLIGATIONS
Company agrees, as part of the Licensee Fee, to provide to Licensee
the following:
6.01. Numerous proprietary Operations Manuals covering the
functional areas within the ACE Hardware business system.
6.02. The use of Company's pre-developed formats for
promotional materials, annual surveys and other operations functions.
6.03. The use of Company's extensive promotional and
educational videotapes and new videotape titles as produced and developed.
6.04. The use of Company's consultants in connection with
the operation of distribution centers and retail stores.
6.05. Assistance in developing a business plan detailing how
to develop ACE Stores in the Territory including analysis of human
resources needs, marketing strategies, cash flow requirements, and other
operational needs.
6.06. Assistance in developing a marketing plan discussing
the actual tactics that should be used in lead generation and follow-up for
licensees.
6.07. Periodic on-going consultation and follow-up to ensure
that Company's systems are being properly implemented.
6.08. On-going research and development into new suppliers,
product lines, merchandising techniques and operational techniques, from a
worldwide perspective.
6.09. Access to Company's existing and on-going advertising
and promotional support.
6.10. Exclusive access to Company's on-going private label
product lines in the Territory.
6.11. Exclusive access to Company's proprietary systems,
standard forms and formats, and operational knowledge for use within the
Territory.
6.12. Use of Company's numerous proprietary software systems,
including customized systems for inventory control and ordering ("ACE
International Computer System"),expected to be available the fourth quarter
of 1996, at a cost to be determined by Company. All hardware and software
adaptations compatible with and necessary to operate the ACE International
Computer System shall be provided by Licensee at its expense.
6.13. An annual review of operations and a written report
outlining operational deficiencies or defaults identified by such review
together with a timetable for correcting such defaults which cure period in
no event shall exceed six (6) months from receipt of Company's notice of
such default.
PARAGRAPH VII
LICENSEE'S OBLIGATIONS
7.01. Licensee shall comply with all requirements set forth
in this Agreement, the Operations Manual, the plans and reports set forth
in sections 6.05, 6.06 and 6.13, and other written policies provided to
Licensee by Company and as developed by the parties. Mandatory
specifications, standards, operating procedures and rules prescribed from
time to time by Company in the Manual or otherwise communicated to Licensee
in writing, shall constitute provisions of this Agreement as if fully set
forth herein.
7.02. Licensee shall comply with any and all laws,
regulations and governmental orders of the United States of America, the
several states, or the country or Territory in which Licensee's ACE Stores
is located, which may be applicable to the sale and distribution of the
products purchased by Licensee from Company or to the conduct of Licensee's
business operations, as the case may be. Licensee agrees to order only
such merchandise as may lawfully be resold without alterations in labeling
or otherwise in the country or Territory in which Licensee's business is
located and agrees to indemnify Company and hold it harmless from and
against any and all claims, suits, proceedings, demands, actions,
judgments, orders, fines or penalties arising in connection with the actual
or alleged failure of such merchandise to comply with any laws, regulations
or governmental requirements applicable to the sale or resale thereof.
Licensee shall provide Company with copies of all licenses, permits and
certificates required by applicable law for the operation of a business.
7.03. Licensee shall have the right, beginning in
_____________ year following execution of this Agreement, to sublicense the
ACE Marks: "ACE", "ACE Hardware", "ACE Home Center", "ACE Paint" and "ACE
Rental Place" Stores within the Territory, provided that Licensee satisfies
the following obligations during the first _______ (__) years following
execution of this Agreement :
a. Licensee personally operates ____ (__) ACE Stores in
the Territory which shall total at least ___________________ square feet in
the aggregate.
b. Licensee satisfies the minimum annual purchase
requirements set forth in Section 7.05 below.
Licensee shall advise Company of the address, telephone number and
size of each ACE Store opened by Licensee and its sublicensees during the
term of this Agreement, a list of which shall be attached hereto as Exhibit
A. Exhibit A shall be modified as each new ACE Store is opened in the
Territory.
7.04. Licensee shall, at its expense, provide the following
services to sublicensed ACE Stores within the Territory:
a. Licensee shall develop individual license agreements
for use with individual sublicensees in the Territory. Licensee shall
submit a draft of such license agreement to Company for Company's prior
approval. Licensee shall enter into individual license agreements with
individual sublicensees for the operation of individual ACE Stores within
the Territory.
b. Licensee shall train all individual sublicensees with a
training program supplied by or approved by Company. At a minimum,
Licensee shall provide individual sublicensees and their managers or
employees with a minimum six (6) week retail training program prior to
commencement of operations.
c. Licensee shall make periodic visits to all individual
sublicensed businesses located within the Territory, for the purposes of
consultation, assistance and guidance of individual sublicensees in all
aspects of the operation and management of the individual ACE Stores.
Licensee's representatives who visit at the individual sublicensed
businesses will prepare, for the benefit of individual sublicensees,
Licensee and Company, written reports with respect to such visits outlining
any suggested changes or improvements in the operations and detailing any
defaults in such operations which become evident as a result of any such
visit. A copy of each such written report shall be provided to both the
individual sublicensees and Company. Licensee's agreements with its
sublicensees shall also provide that the Company may make periodic visits
to sublicensed ACE Stores to ensure that they are operating in accordance
with the Company's standards.
d. Licensee shall advise individual sublicensees within
the Territory of problems arising out of the operation of the individual
ACE Stores as disclosed by reports submitted to Licensee, or to Licensee's
representative, by individual sublicensees or pursuant to inspections of
the individual ACE Stores conducted by Licensee or Licensee's representative.
e. Licensee shall take all necessary steps to enforce the
terms of each individual sublicensee's Individual License Agreement and the
provisions of the Manual.
f. Licensee shall coordinate, administer, supervise and
otherwise monitor advertising and promotional activities of individual
sublicensees within the Territory.
All expenses incurred by Licensee in performing its obligations
under this Agreement shall be the sole responsibility of Licensee.
Licensee agrees to expend such sums for office administration, travel,
promotions, and advertising as may be reasonably required to develop and
supervise the Territory.
7.05. Licensee shall meet the minimum annual performance
requirements for number of square feet of retail space and total annual
dollar volume purchases in United States currency during the Initial Term,
as follows:
Total Annual Volume of
Minimum Number of Purchases In United
Year Total Square Feet States Dollars
---- ----------------- ----------------------
The minimum annual performance requirements for the Renewal Terms, if
any, shall be mutually agreed upon by the Company and Licensee prior to the
end of the then current term.
7.06 Licensee shall purchase products from Company as follows:
a. Licensee shall refrain from making any representation that a
product purchased from Company can be used for a purpose or in a manner not
intended by its manufacturer, and Licensee assumes full responsibility for,
and hereby indemnifies Company and holds it harmless from and against any
and all claims asserted against Company (a) which are based upon or arise
out of any such representation or (b) which are based upon or arise out of
any act performed by Licensee or its sublicensees to assist Licensee's
customer in using a product purchased from Company, or to alter, install,
repair or service any product purchased by Licensee from Company.
b. Licensee shall indemnify Company and hold it harmless from
and against any and all claims for (a) charges asserted against Company by
another party for services provided by such party to Licensee or its
sublicensees or for merchandise shipped by another party at Licensee's or
its sublicensee's request and (b) damages demanded from Company in
connection with any occurrence concerning which it is alleged that Licensee
functioned as an agent of the Company.
c. Licensee shall indemnify Company and hold it harmless for
the amount of all attorneys' fees and expenses reasonably incurred by it
in:
(i) enforcing compliance by Licensee with the provisions of
this Agreement or enforcing collection of any past due balances owing by
Licensee on Company's billing statements,
(ii) defending any claims asserted against Company which are
based upon or arise out of any occurrence of the types described in
Paragraphs IV, V, VII and XIII hereof or in attempting to avoid or mitigate
any losses to Company in connection therewith, and
(iii) in protecting any security interest of Company
granted in any property of Licensee in the event that Licensee becomes a
debtor in bankruptcy or insolvency proceedings.
d. Licensee shall furnish Company with annual financial
statements of their year end and financial statements, books and records
and related information including purchase and sales figures, concerning
Licensee's business on a quarterly basis or as shall reasonably be
requested from time to time by Company in order to confirm Licensees
compliance with the terms of this Agreement.
e. Licensee shall provide Company with a standby irrevocable
letter of credit, issued or confirmed by a United States bank approved by
Company or with such other instruments or collateral as Company shall deem
to be appropriate in order to secure the prompt payment of the indebtedness
to it incurred by Licensee from time to time. Company agrees to, as long
as Licensee is not in breach of this Agreement, extend credit to Licensee,
in such amount as Company and its credit insurance company shall, in their
sole discretion, deem reasonable for sales of Merchandise and services to
Licensee. Company reserves the right to change the amount of credit
extended to Licensee from time to time.
f. All orders for merchandise, supplies and services placed by
Licensee shall be subject to acceptance or nonacceptance by Company at its
corporate headquarters, now located in Oak Brook, Illinois, United States
of America. Company shall cause all items ordered by Licensee to be
shipped to Licensee's designated receiving terminal in the United States
for shipment by Licensee only to Licensee's location listed hereinabove.
Title to all such merchandise and supplies shipped to Licensee shall pass
to Licensee upon delivery to such receiving terminal. Licensee shall be
responsible for and agrees to pay to Company all costs and charges related
to the delivery of such items to said terminal, except in the case of
prepaid shipments from Company's vendors.
g. Licensee shall be solely responsible for and shall pay when
due all import or export permit fees, customs duties and taxes of any
nature imposed upon the sales made by Company to Licensee by the United
States Government or the government of the country in which Licensee's
place of business is located. Licensee shall fully indemnify Company for
the amount of any such fees, duties and taxes, together with any interest
or penalties thereon, which Company may be required to pay as a result of
Licensee's failure to do so.
h. At its sole discretion and notwithstanding any other
provisions of this Agreement to the contrary, Company may limit or restrict
the quantities or types of merchandise sold to Licensee hereunder.
i. Nothing herein shall be deemed in any way to limit the right
of Licensee to determine the prices or terms at which products purchased
through Company shall be resold by Licensee. It is expressly understood
that Licensee may resell such products at any prices determined by
Licensee, whether greater or lesser than any prices listed or suggested by
Company.
j. Company shall supply Licensee with such quantities of sales
aids as Company, in its sole discretion, deems necessary or desirable. All
such sales aids shall be in the English language. All copyrights which may
be issued or applied for with respect to such sales aids or any
translations thereof shall be issued or applied for in the name of Company,
and shall be the sole property of Company.
k. Licensee agrees to return no merchandise to Company without
the written consent of Company first being obtained.
l. Licensee agrees to use the Ace International Redistribution
Center, expected to open on the West Coast of the United States in 1996, in
connection with the export by Licensee of all merchandise purchased from
Company by Licensee for itself and for resale to its sublicensees .
7.07. If requested at any time by Company, and if reasonably
available to Licensee in the Territory, Licensee shall maintain at
Licensee's sole expense, with a reputable insurance carrier or carriers, a
policy or policies of liability insurance with commercially reasonable
coverage limits as agreed upon by Company and Licensee with respect to any
claims for damages to property, personal injuries or wrongful death which
are based upon or arise out of any occurrence concerning which it is
alleged that Licensee functioned as an agent of Company, or that Licensee,
Company, or either of them is otherwise liable therefor, except for claims
based on or arising out of the sole negligence of Company. Company shall
be named as an additional insured party in each such policy and Company
shall be furnished with a certificate of insurance evidencing such
coverages as are required herein.
7.08. Licensee and its sublicensees shall participate in the
following advertising and marketing programs:
a. Each calendar month Licensee shall spend an amount equal to
______ percent (__%) of Licensee's Gross Retail Revenues on local
marketing and advertising of Licensee's ACE Stores. Company shall provide
guidelines for conducting such marketing and advertising. Licensee shall
provide to Company an accounting as to its expenditures for local
marketing,advertising and promotion.
b. Licensee shall require each of its sublicensees to spend
an amount equal to ___ percent (__%) of such sublicensee's Gross Retail
Revenues on advertising in the Territory. ___ percent (__%) of such amount
shall be spent directly by the sublicensee on local advertising of its ACE
Store(s). The other ___ percent (__%) shall be paid by the sublicensee to
Licensee and shall be spent by Licensee on institutional advertising of the
ACE Stores in the Territory.
c. Licensee shall submit all advertising and promotional
materials promoting the ACE Stores to Company for review and approval
prior to use. Company shall notify Licensee in writing of its disapproval
of any such advertising or promotional materials within thirty (30)
business days of receipt of such materials, or fifteen (15) business days
if received via telefax, from Licensee. If Company does not notify
Licensee of its disapproval of any such advertising or promotional
materials within said thirty (30) business day period, such advertising or
promotional materials shall be deemed approved. All advertising conducted
by the ACE Stores shall be conducted in a dignified manner and shall
display the ACE Marks in the manner prescribed by Company.
7.09. Licensee shall not engage in the wholesale distribution
of ACE branded products throughout the Territory to non-ACE Stores, home
centers and other channels of distribution.
7.10. Licensee shall operate additional Ace Stores only if
(i) Licensee is in compliance with all requirements and obligations of this
Agreement and all other agreements between Company and Licensee, and (ii)
Licensee is in compliance with all of its performance obligations of
Paragraph 7.05. of this Agreement.
7.11. Licensee shall notify Company in writing within fifteen
(15) days after it becomes aware of the commencement of any action, suit or
proceeding and of the issuance of any order, writ, injunction, award or
decree of any court, agency or other governmental instrumentality which may
adversely affect the operation or financial condition of the ACE Stores.
7.12. Licensee may, with Company's prior written consent,
develop additional ACE Stores within the Territory upon the same terms and
conditions set forth in this Agreement including satisfaction of the
performance schedule set forth in Paragraph 7.05 of this Agreement and,
provided that Licensee has made application to Company and has timely
fulfilled its obligations arising hereunder and under any other agreement
between the parties and is in compliance with the terms of this Agreement
for each ACE Stores Licensee owns and operates.
PARAGRAPH VIII
CONFIDENTIAL OPERATIONS MANUAL
8.01. Company shall provide to Licensee one (1) or more
manuals containing specifications, standards, operating procedures and
rules prescribed from time to time by Company relative to the operation of
the ACE Stores. Licensee shall, at its expense, have the Manual
translated into the primary language used in the Territory. The Manual, as
used herein, shall refer to the entire series of manuals detailing the
operation of the ACE Stores. Company shall have the right to add to and
otherwise modify the Manual from time to time to reflect changes in the
specifications, standards, operating procedures and rules prescribed by
Company for the ACE Stores, provided that no such addition or modification
shall alter Licensee's fundamental status and rights under this Agreement.
8.02. The Manual shall at all times remain the sole property
of Company and shall promptly be returned upon the expiration or other
termination of this Agreement. Licensee agrees and covenants that it shall
not disclose, duplicate or otherwise use in an unauthorized manner any
portion of the Manual.
8.03. The Manual contains proprietary information of Company
and shall be kept confidential by Licensee both during the term of this
Agreement and for a period of five (5) years subsequent to the expiration
or termination of this Agreement. Licensee shall at all times ensure that
its copy of the Manual be available at the ACE Stores premises in a current
and up-to-date manner.
PARAGRAPH IX
COVENANTS NOT TO COMPETE
9.01. Licensee covenants that during the term of this
Agreement and any renewal thereof, except as otherwise approved in writing
by Company, Licensee shall not, whether alone, as a partner, officer,
director, employee, consultant or holder of any beneficial interest in any
such business or activity or any person or entity engaged in any such
activity, either directly or indirectly, for itself or through, on behalf
of or in conjunction with any person, persons, partnership, corporation or
other legal entity:
a. Divert or attempt to divert any business or customer of
the business licensed hereunder to any competitor, by direct or indirect
inducement or otherwise, or do or perform, directly or indirectly, any
other act injurious or prejudicial to the goodwill associated with
Company's ACE Marks and the ACE Stores.
b. Employ or seek to employ any person who is at that time
employed by Company or by any other licensee of Company or otherwise,
directly or indirectly, induce or seek to induce such person to leave his
or her employment with Company or its licensee, without first obtaining the
Company's or its licensee's written consent.
c. Own, maintain, engage in, or have any interest in any
retail hardware business utilizing a similar format as the ACE Stores
licensed hereunder.
9.02. Licensee shall not for a period of two (2) years
following the expiration or termination of this Agreement (or the maximum
period allowable by law, if less than two [2] years), either directly or
indirectly, on behalf of itself or through any other entity, engage in
offering or selling home improvement products, tools, hardware and
merchandise and related products pursuant to a franchise, license, or
similar agreement with any U.S. competitor of the Company.
PARAGRAPH X
DEFAULT AND TERMINATION
10.01. Either party may terminate this Agreement upon written
notice to the other for any of the following events:
a. the discovery of a material misrepresentation or
omission made by a party which, if known to the other party at the time of
execution of this Agreement, would cause such party to elect not to enter
into this Agreement;
b. the liquidation, bankruptcy or insolvency of one of the
parties;
c. the appointment of a trustee, receiver or liquidator
for all or substantially all of the assets or the business of one of the
parties;
d. the attachment, sequestration, execution or seizure of
all or substantially all of the assets of the parties, provided that such
attachment, sequestration, execution or seizure is not
discharged within thirty (30) days from the institution thereof; or
e. subject to section 10.02 below, a breach by one of the
parties of any terms or conditions of this Agreement, such breach not being
rectified (assuming it is capable of being rectified within a reasonable
period of time, not to exceed sixty (60) days, following the receipt of
written notice from the non-breaching party.
10.02. This Agreement shall, at the option of Company, terminate
automatically upon delivery of notice of termination to Licensee, if
Licensee:
a. Is convicted of or pleads no contest to a felony or
other crime or offense that is likely to adversely affect the reputation of
Company, Licensee or the ACE Stores.
b. Makes any unauthorized use, disclosure or duplication
of any portion of the Operations Manual or duplicates or discloses or makes
any unauthorized use of any trade secret or confidential information
provided to Licensee by Company.
c. Abandons, fails or refuses to actively operate any of
the ACE Stores for ten (10) business days in any twelve (12) month period
provided (excluding the closing of the ACE Stores for holidays recognized
in the Territory, or for reasons beyond the control of Licensee, such as
natural disasters), or if any of the ACE Stores are not being operated for
a purpose approved by Company or fails to relocate the premises of the ACE
Stores to approved premises within an approved period of time following
expiration or termination of the lease for the premises of the ACE Store.
d. Surrenders or transfers control of the operation of the
ACE Stores, makes or attempts to make an unauthorized direct or indirect
assignment of the license or an ownership interest in Licensee or fails or
refuses to assign the license or the interest in Licensee of a deceased or
incapacitated controlling owner thereof as herein required.
e. Submits to Company on two (2) or more separate
occasions at any time during the term of this Agreement any reports or
other data, information or supporting records which understate by more than
two percent (2%) the Royalty Fees, amounts due for merchandise purchased by
Company or any fees owed to Company for any period and Licensee is unable
to demonstrate that such understatements resulted from inadvertent error.
f. Materially misuses or makes any unauthorized use of any
of the Marks or commits any other act which can reasonably be expected to
materially impair the goodwill associated with any of the Marks. A
"material misuse" shall mean any use of the Marks not previously approved
in this Agreement or otherwise in writing by Company, or any use other than
for the promotion of the ACE Stores.
g. Materially misuses or makes any unauthorized use of the
ACE International Computer System. A "material misuse" shall mean any use
of the ACE International Computer System not previously approved in this
Agreement or otherwise in writing by Company, or any use other than for the
promotion of the ACE Stores.
h. Fails on two (2) or more separate occasions within any
period of twelve (12) consecutive months to submit when due reports or
other information or supporting records, to pay when due the Royalty Fees,
amounts due for purchases from Company or other payments due to Company, or
otherwise fails to comply with this Agreement, whether or not such failures
to comply are corrected after notice thereof is delivered to Licensee.
i. Fails to make expenditures for advertising as
prescribed in Paragraph 7.08. of this Agreement.
j. Fails to comply with the performance requirements in
accordance with the Schedule agreed upon by the parties as prescribed in
Paragraph 7.05 of this Agreement.
k. Fails or refuses to make payments of any amounts due
Company for Royalty Fees, purchases from Company or any other amounts due
to Company, and does not correct such failure or refusal within fifteen
(15) days after written notice of such failure is delivered to Licensee; or
l. Fails or refuses to comply with any other provision of
this Agreement, or any mandatory specification, standard or operating
procedure prescribed in the Manual as developed by the parties or as
otherwise agreed to by the parties in writing, and does not correct such
failure within six (6) months or provide proof acceptable to Company that
Licensee has made all efforts as agreed upon by the parties to correct such
failure and will continue to make efforts to cure until a cure is effected
as agreed upon by the parties, if such failure cannot be corrected within
ninety (90) days after written notice of such failure to comply is
delivered to Licensee.
10.03. If Licensee is a corporation, unless Licensee first
obtain's Company's prior written approval, this Agreement shall
automatically terminate upon the consummation of any sale or transfer of
all of the shares of capital stock (both voting and non-voting) of such
corporation held by the holder or holders of fifty percent (50%) or more of
its outstanding voting stock.
PARAGRAPH XI
RIGHTS AND DUTIES OF THE PARTIES UPON EXPIRATION OR TERMINATION
11.01. Upon termination or expiration, this Agreement and all
rights granted hereunder to Licensee shall forthwith terminate, and:
a. Licensee shall immediately cease to operate the ACE
Stores under this Agreement and shall not thereafter, directly or
indirectly, represent to the public or hold itself out as a present or
former licensee of Company.
b. Licensee shall immediately and permanently cease to
use, by advertising or in any other manner whatsoever, any confidential
methods, procedures and techniques associated with the Marks and any
distinctive forms, slogans, signs, symbols, logos or devices associated
with the Marks. In particular, Licensee shall cease to use, without
limitation, all signs, advertising materials, stationery, forms and any
other article which displays the ACE Marks, except that Licensee may
continue its internal use of personalized items such as coffee mugs,
drinking glasses or notebooks .
c. Licensee shall take such action as may be necessary to
cancel or assign to Company or Company's designee, at Company's option, any
assumed name or equivalent registration filed with governmental authorities
which contains the name "ACE" or any of the ACE Marks and Licensee shall
furnish Company with evidence satisfactory to Company of compliance with
this obligation within thirty (30) days after termination or expiration of
this Agreement.
d. In the event Licensee continues to operate or
subsequently begins to operate any other business, Licensee shall not use
any reproduction, counterfeit, copy or colorable imitation of the ACE Marks
either in connection with such other business or the promotion thereof,
which is likely to cause confusion, mistake or deception, or which is
likely to dilute Company's exclusive rights in and to the ACE Marks. This
Paragraph XI. is not intended as an approval of Licensee's right to operate
other businesses and in no way is it intended to contradict Paragraph IX.
of this Agreement. Licensee shall not utilize any designation of origin or
description or representation which falsely suggests or represents an
association or connection with Company so as to constitute unfair
competition. Licensee shall make such modifications or alterations to the
premises of the ACE Stores immediately upon termination or expiration of
this Agreement as may be necessary to prevent any association between
Company and any business thereon subsequently operated by Licensee or
others, and shall make such specific additional changes thereto as Company
may reasonably request for that purpose. In the event Licensee fails or
refuses to comply with the requirements of this Paragraph XI., Company
shall have the right to enter upon the premises where Licensee's ACE Stores
were located, without incurring any liability to Licensee, for the purpose
of making or causing to be made such changes as may be required at the
expense of Licensee, which expense Licensee shall pay upon demand.
e. Licensee shall promptly pay all sums owing to Company
as agreed upon by the parties. In the event of termination for any default
of Licensee, such sums shall include but not be limited to, all damages,
costs, expenses, including reasonable attorneys' fees, and lost future
royalties incurred by Company as a result of the default.
f. The losing party shall pay to the prevailing party all
damages, costs and expenses, including reasonable attorneys' fees, incurred
subsequent to the termination or expiration of the license herein granted
in obtaining injunctive or other relief for the enforcement of any
provisions of this Paragraph XI. or Paragraph IX.
g. Licensee shall immediately turn over to Company all
Manuals, customer lists, records, files, instructions, brochures,
agreements, disclosure statements and any and all other materials provided
by Company to Licensee relating to the operation of the ACE Stores (all of
which are acknowledged to be Company's property).
h. Company shall acquire all right, title and interest in
and to any sign or sign faces bearing the Marks. Licensee acknowledges
Company's right to have access to the premises of the ACE Stores should
Company elect to take possession of any said sign or sign faces bearing the
ACE Marks. Removal shall be at Licensee's expense.
i. Licensee shall comply with the covenants contained in
Paragraph IX. of this Agreement.
11.02. All obligations of Company and Licensee which expressly
or by their nature survive the expiration or termination of this Agreement
shall continue in full force and effect subsequent to and notwithstanding
its expiration or termination and until they are satisfied or by their
nature expire.
PARAGRAPH XII
TRANSFERABILITY OF INTEREST
12.01. This Agreement and all rights hereunder may be assigned
and transferred by Company and, if so, shall be binding upon and inure to
the benefit of Company's successors and assigns.
12.02. Licensee agrees to notify Company in writing:
a. prior to or concurrently with the effective date
thereof, as to any change in the legal form of ownership of Licensee (such
as, for example, a change from individual or partnership form to corporate
form, or vice versa), it being understood that no such change will operate
to release from liability to Company any party previously responsible for
Licensee's obligations hereunder without the written consent of Company,
b. as promptly as feasible, as to the death of any partner
having an interest in any partnership by which Licensee is owned or the
death of any stockholder owning 50% or more of the voting stock of Licensee
if Licensee is incorporated, or
c. not less than thirty (30) days prior to the closing of
the transaction, as to the name and address of each proposed buyer or
transferee in any proposed sale, assignment or transfer of fifty (50%) or
more of the ownership interest(s) of Licensee or of the business operated
at the location of Licensee's business indicated hereinabove or of all of
the capital stock (both voting and non-voting) owned by the holder(s) in a
corporation owning the business operated at such location if fifty percent
(50%) or more of the outstanding voting stock of such corporation is owned
by such holder(s).
12.03. Licensee shall not transfer or assign this Agreement or
any part hereof without Company's written consent. Licensee shall promptly
advise Company in writing of any relocation of its place of business or the
closing of any existing place of business.
PARAGRAPH XIII
NO AGENCY
13.01. Licensee shall not have authority to represent Company
in Licensee's country, the Territory or elsewhere as an agent, nor to bind
Company to any contract, representation, understanding, act or deed
concerning Company or any products sold by it. Neither the making of this
Agreement nor the performance of any part of the provisions hereof shall be
construed to constitute Licensee as an agent or representative of Company
for any purpose nor shall this Agreement be deemed to establish a joint
venture or partnership between the parties. All sales of merchandise by
Licensee shall be for its own account, it being understood that Licensee is
an independent business reselling products which are purchased from
Company.
13.02. Company shall not, by virtue of any approvals, advice
or services, provide to Licensee, assume responsibility or liability to
Licensee or any third parties to which Company would not otherwise be
subject.
PARAGRAPH XIV
MISCELLANEOUS
14.01. The prevailing party shall be entitled to recover
reasonable attorneys' fees, experts' fees, court costs and all other
expenses of litigation in any action instituted against the other party in
order to secure or protect its rights under this Agreement or to enforce
terms hereof.
14.02. This Agreement, any Exhibit attached hereto and the
documents referred to herein, shall be construed together and constitute
the entire, full and complete agreement between Company and Licensee
concerning the subject matter hereof, and supersede all prior agreements.
This Paragraph XIV shall not be orally modified. No other representation
has induced Licensee to execute this Agreement and there are no
representations, inducements, promises or agreements, oral or otherwise,
between the parties not embodied herein, which are of any force or effect
with reference to this Agreement or otherwise. No amendment, change or
variance from this Agreement shall be binding on either party unless
executed in writing by both parties.
14.03. The Recitals set forth in this Agreement are
specifically incorporated into the terms of this Agreement and constitute a
part of this Agreement.
14.04. The signing of this Agreement by Licensee constitutes
an application only and this Agreement shall not be effective unless and
until it has been duly accepted and countersigned by Company at its
principal office in Illinois, United States of America not later than
thirty (30) days after the date of signing by Licensee. All orders for
merchandise, supplies and services placed by Licensee pursuant to this
Agreement shall be transmitted to Company at said office and Licensee shall
be deemed to have consented and agreed that:
a. all provisions of this Agreement shall be interpreted
and construed in accordance with the substantive laws of the State of
Illinois, United States of America; and
b. all controversies, disputes or claims arising between
Company and Licensee arising out of or related to the relationship of the
parties hereto, this Agreement or any provision hereof, or any related
agreement, shall be submitted for arbitration to be administered by the
office
of the American Arbitration Association ("AAA") in Chicago, Illinois,
U.S.A. on demand of either party. Such arbitration proceedings shall be
conducted in Chicago as herein provided before a panel of three (3) neutral
arbitrators and, except as otherwise provided in this Agreement, shall be
conducted in accordance with the then current commercial arbitration rules
of the AAA for international arbitrations. The arbitrators shall have the
right to award or include in their award any relief which they deem proper
in the circumstances, including without limitation, money damages (with
interest on unpaid amounts from date due), specific performance, injunctive
relief, legal fees and costs, but shall not have the authority to award
exemplary, punitive or special damages. The award and decision of the
arbitrators shall be conclusive and binding upon all parties hereto and
judgment upon the award may be entered in any court of competent juris
diction, including courts in the United States of America and the
Territory. The parties further agree to be bound by the provisions of any
applicable limitation on the period of time in which claims must be brought
under applicable law or this Agreement, whichever is less. The parties
further agree that in connection with any such arbitration proceeding, each
shall submit or file any claim which would constitute a compulsory
counterclaim (as defined by Rule 13 of the United States Federal Rules of
Civil Procedure) within the same proceeding as the claim to which it
relates. Any such claim which is not submitted or filed as described above
shall be barred.
14.05. Except as otherwise specifically provided, all notices
required or permitted to be given hereunder by one party to the other party
shall be effective if personally delivered, airmailed or sent by telex or
facsimile to the addresses set forth hereinabove or to such other address
as either party designates to the other in writing for the receipt of
notices hereunder, with receipt deemed within fourteen (14) days after
airmailing or within two (2) days after sending by telex or facsimile.
14.06. The English version of this Agreement shall govern in
the event of any variations between the English version and any translation
hereof and shall be used exclusively in any arbitration, legal proceeding
or suit hereunder.
14.07. The failure of either party to enforce its rights under
any provision hereof shall not be deemed a waiver of such rights for
purposes of future enforcement. No modification of this Agreement or any
waiver of rights hereunder shall be of any force and effect unless in
writing and signed by the party against whom enforcement of such waiver or
modification is sought.
14.08. The terms and conditions set forth in any purchase
order or other document shall be effective only to the extent that the same
shall not be inconsistent with the terms and conditions hereof.
14.09. Any provision or provisions hereof which contravene the
law of any state or country in which this Agreement is effective shall, in
such state or country, to the extent of such contravention of law, be
deemed separable and shall not impair the validity of any other term,
condition or provision hereof.
14.10. a. Company represents and warrants that:
(i) it is a corporation duly incorporated and existing
under the laws of the State of Delaware, the United States of America;
(ii) it has all necessary licenses to carry out its
business in the United Sates of America; and
(iii) this Agreement constitutes legally valid and
binding obligations of Company, enforceable against Company in accordance
with its terms, and the person or persons signing this agreement on behalf
of Company are duly authorized to do so.
b. Licensee represents and warrants that:
(i) it is a corporation duly incorporated and existing
under the laws of ___________________;
(ii) it has all necessary licenses to carry out its
business in the Territory; and
(iii) this Agreement constitutes legally valid and
binding obligations of Licensee, enforceable against Licensee in accordance
with its terms, and the person or persons signing this agreement on behalf
of Licensee are duly authorized to do so.
IN WITNESS WHEREOF, this Agreement has been executed by the parties on this
_________ day of _________________________, 199__.
COMPANY: LICENSEE:
ACE HARDWARE CORPORATION ________________________________________
By: By:
Title: Title:
EXHIBIT A TO THE LICENSE AGREEMENT
STORE LOCATIONS
Address: Address:
Telephone No.: Telephone No.:
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Address: Address:
Telephone No.: Telephone No.:
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Address: Address:
Telephone No.: Telephone No.:
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Address: Address:
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