EXHIBIT 10.A
RETAIL MEMBER AGREEMENT WITH TRUSERV CORPORATION
A COOPERATIVE OF INDEPENDENT RETAILERS
THIS AGREEMENT between _________________________________________________________
d/b/a __________________________________________________________________________
[ ] True Value [ ] Home & Garden Showplace [ ] Induserve [ ] Non-Branded
[ ] Grand Rental Station [ ] Party Central [ ] Xxxxxx Rental
________________________________________________________________________________
(Full Address)
the retail member hereinafter referred to as the "Member," and TRUSERV
CORPORATION, a Delaware Corporation, hereinafter referred to as the "Company."
The Company is an organization operated on a cooperative basis by and for
independent retailers who operate hardware stores, home or garden centers,
rental stores or similar operations.
MEMBER AND COMPANY AGREE AS FOLLOWS:
1. This agreement is subject to and incorporates herein the Company's By-Laws,
Subscription to Shares agreement, and the Members' Policies and Procedures
Manuals ("Manuals") all of which may be amended from time to time (hereinafter
collectively referred to as "Agreement").
2. The Company shall sell merchandise of the type typically sold in retail
hardware stores, home and garden centers, rented at full service rental centers,
or sold to commercial/industrial customers, provide for shipment or delivery of
such merchandise to the Member's address indicated on this Agreement, permit use
of the service xxxx associated with the program checked above ("Designated
Xxxx") and other permitted Company owned servicemarks, trademarks, collective
membership marks, tradenames or brandnames ("Marks") under the conditions of
this Agreement and offer services to the Member as Company may decide to offer
from time to time.
3. The Company shall invoice Member at the Company's then current prices for
the merchandise and services involved, and apply all payments by Member toward
final settlement of the Member's financial obligations to the Company. The
excess, if any, of the payments made, less any additional expenses due to
non-conformance with established payment policies or prescribed procedures,
shall be paid or credited to the Member.
4. The Company shall pay 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 that Patronage Dividends are
available. The availability of 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 charges and reserves for necessary corporate purposes
as may from time to time be determined by the Company 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; and
(c) Such reasonable charges and reserves for working capital necessary for
the operation of the Company and for deficits arising from such operation,
including deficits from business other than business done with or for Members.
1
(d) In any fiscal year, to the extent a loss exists after deducting such
expenses, charges and reserves, the Company will determine on a reasonable basis
a plan to allocate the loss to Members.
The Company shall reasonably allocate and pay any Patronage Dividend within a
time reasonably determined by the Company following the end of each fiscal year,
but in no event later than the fifteenth day of the ninth month after the close
of each such fiscal year, in accordance with its By-Laws, policies and
procedures as they may be amended or changed from time to time.
5. The Company shall hold Markets and other meetings from time to time for the
purpose of keeping Members better informed on trends in the industry, presenting
merchandise or services available and enabling Members to exchange ideas with
fellow Members.
6. Upon execution of this Agreement, the Member shall purchase sixty (60)
qualifying shares of the Company's Class A Common Stock at a purchase price of
$100 per share for each store owned by Member, to a maximum of three hundred
(300) shares for five (5) or more stores, as defined in the Subscription to
Shares agreement.
7. The Member shall establish, operate and maintain a retail hardware store,
and/or home or garden center ("Retail Store") retailing merchandise and services
to consumers if the Designated Xxxx is True Value or Home & Garden Showplace, or
a full service rental store ("Rental Center") renting appropriate merchandise if
the Designated Xxxx is Xxxxxx Rental, Grand Rental or Party Central, or sell
commercial/industrial merchandise if the Designated Xxxx is Induserve ("MRO
location") and sell or rent merchandise carrying any of the Company's Marks only
at the authorized retail location indicated on this Agreement.
8. The Company has not granted any protected or exclusive territorial or
geographical rights to Member and the Company may, at its sole discretion,
accept any other Member at any location without limitation.
9. The Member shall utilize the Company as its primary supplier for the types
of merchandise offered by the Company under each Agreement for which a Member
signs.
10. The Member shall buy from the Company in accordance with the Company
procedures and practices set forth in the Manuals, which include entering
warehouse orders and claims using electronic order entry equipment functionally
compatible with the Company's equipment, and entering all other orders using
electronic equipment whenever possible.
11. The Member shall notify the Company, in writing, immediately upon any
change in business name, form, ownership or control.
12. The Member shall pay in full on the date due all invoices on accounts
receivable statements and any other financial obligations to the Company or its
subsidiaries, and 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 termination of this Agreement, all invoices on
accounts receivable statements and any other financial obligations to the
Company or its subsidiaries, including future dated invoices, from the Member to
the Company and its subsidiaries shall become immediately due and payable in
full.
13. All information and material furnished to the Member, including without
limitation, bulletins, price lists, illustrated catalogs, merchandising and
pricing options, computer software, electronic data and the Manuals are
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 without obtaining the prior written approval of the Company, and not
to use such information in a way which is detrimental to the Company or its
Members. The Member shall 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 business with the Member's 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
2
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.
14. Member shall provide all financial statements, guarantees, security
agreements and any other supporting materials or documents as may from time to
time be requested by Company in relation to this Agreement.
15. Member represents that it has reviewed the By-Laws and prospectus of the
Company, the receipt of which is hereby acknowledged, the By-Laws providing 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. By entering
into this Agreement Member agrees and consents to be bound by Article IX,
section 2(b) of the By-Laws. Such "membership consent" (within the meaning of
section 1388(c)(2)(B) of the IRC) may be revoked by Member only by terminating
its Membership in the Company in the manner provided in this Agreement.
16. Member acknowledges that the Company, with the approval of 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 cash or qualified check in accordance with section 1385 of the IRC.
17. Member acknowledges that any cash payments, dividends, note maturities,
interest or other payments may be applied to outstanding past due debt with
Company at the Company's option and sole discretion.
18. Member acknowledges that the Member may receive different services, charges
or freight rates based on the amount of merchandise purchased by Member.
19. Member's right to use any Designated Xxxx or other Xxxx shall be subject to
the right and necessity of the Company to control the use of its Designated Xxxx
and other Marks and to maintain the reputation for quality products and services
and goodwill associated with such Marks. The Member's right to the display and
use of the Designated Xxxx or any other Marks are permitted only on the
following conditions:
(a) The Designated Xxxx and any other Marks permitted by the Company, are
the only Company owned trademarks or servicemarks which Member is entitled to
use, and the Company may, at its sole discretion, choose to sell merchandise
carrying any of the Company's Marks only to Members who are permitted to use a
particular Designated Xxxx;
(b) The Designated Xxxx or any other Marks cannot be used with the
trademark or servicemark of any hardware store, home or garden center, building
center, rental center or merchandising organization other than the Company's,
and may only be used at the retail location indicated on this Agreement so long
as the retail location continues to be an active retail location and as
determined to be appropriate by the Board of Directors;
(c) The Member's store and premises will be maintained in a clean and
orderly condition;
(d) If a Retail Store, the Member will offer sufficient breadth and depth
of merchandise in the core retail departments to serve the needs of retail
consumers. For a hardware store, these departments include: Builders Hardware
and Supplies, Cleaning Supplies, Electrical Supplies, Lawn and Garden, Paint and
related Sundries, Plumbing, Tools and Home Decor; if a Rental Center, the Member
will offer sufficient breadth and depth of rental merchandise to serve the needs
of rental consumers; and if a MRO location, the Member will offer sufficient
breadth and depth of merchandise sufficient to serve the needs of
commercial/industrial consumers.
(e) If a Retail Store or an MRO location, the Member will maintain a
retail inventory of representative quantities of the Company's merchandise as
offered, advertised and promoted by the Company;
(f) The Member's business operations will be conducted in such a fashion
as to enhance the reputation of fellow Members and the Company; and
3
(g) That Member shall not be entitled to use the Designated Xxxx or any
other Marks as part of its corporate or partnership name, with the exception of
any Member who was a Member and used it as such prior to January, 1997.
(h) That Member shall secure and maintain in force all required licenses,
permits, and certificates relating to the conduct of its business pursuant to
this Agreement. That Member shall comply with all applicable laws, ordinances
and regulations.
(i) In order to preserve the goodwill in the Designated Xxxx or Marks,
that Member shall in all dealings with its customers, suppliers, Company, and
public officials adhere to high standards of honesty, integrity, fair dealing
and ethical conduct and Member agrees to refrain from any activity which may be
injurious to Company and the goodwill associated with the Designated Xxxx or
Marks.
20. During the term of this Agreement, Member shall not obtain any proprietary
rights in the Designated Xxxx or any other Marks by use thereof. Member
expressly acknowledges and agrees that the license granted under this Agreement
to use the Designated Xxxx or any other Xxxx is non-exclusive and
non-transferable, and that the Company has and retains the right to grant other
licenses without any limitations as to territory, product, terms or otherwise.
Within thirty days of termination of this Agreement, Member shall cease the use
of all Marks, including the Designated Xxxx, and remove, at Member's expense,
all store identification signs and decals which contain any Designated Xxxx or
other Marks and Member shall cease any display or advertising, directly or
indirectly, as a store using the Designated Xxxx or other Marks, including but
not limited to, display in internet web sites and telephone directories. Member
shall further delete the Designated Xxxx and any other Marks from its business
name including, if applicable, Member's corporate name. Member shall transfer to
the Company, at Member's expense, any internet domain names which contain the
Designated Xxxx or any other Marks. Member agrees to confirm in writing thirty
days after termination of this Agreement that Member has ceased using the
Designated Xxxx and any other Marks.
21. If Member fails to comply with Section 20 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 that
paragraph, to withhold any monies due Member until the terms of this paragraph
are complied with and Member shall pay to the Company not as a penalty but as a
hold-over royalty, the sum of $500 per day for each day beyond the thirty days
that the Member fails to comply with that Paragraph. Company may, at its option,
pursue any and all remedies available to Company for breach of this provision,
including equitable or injunctive relief as well as collect the holdover royalty
payment and any other damages. Member agrees to release, waive and forever
discharge Company from any and all claims, demands, losses and liabilities, of
any nature whatsoever, related to Company's exercise of its rights under that
Section.
22. Company has not represented to Member that a "minimum", "guaranteed", or
"certain" income can be expected or realized. Success depends, in part, on
Member devoting dedicated personal efforts to the business and exercising good
business judgment in dealings with customers, suppliers, and employees. Member
also acknowledges that neither Company nor any of its employees or agents has
represented that Member can expect to attain any specific sales, profits, or
earnings. If Company has provided estimates to Member, such estimates are for
informational purposes only and do not represent any guarantee of performance by
Company to Member. COMPANY MAKES NO REPRESENTATIONS OR WARRANTIES EITHER EXPRESS
OR IMPLIED REGARDING THE PERFORMANCE OF MEMBER'S BUSINESS.
23. Subject to Section 9, Member, as an independent retailer, is free to decide
how to operate its business, determine what merchandise it will stock, sell or
rent and how its store shall be identified utilizing the Designated Xxxx and
additional words or phrases that identify the specific location indicated on
this Agreement.
24. Member and Company understand and agree that this Agreement does not create
a fiduciary relationship between Member and Company, and that Member and Company
are and will be independent contractors, and that nothing in this Agreement is
intended to make either Member or Company a general or special agent, joint
venturer, partner, or employee of the other for any purpose. Member agrees to
identify itself conspicuously in all dealings
4
with customers, suppliers, public officials, store personnel, and others as the
independent owner of Member's store and to place notices of independent
ownership on forms, business cards, stationery, advertising and other materials.
25. Member and Company may not make any express or implied agreements,
warranties, guarantees, or representations, or incur any debt, in the name or on
behalf of the other. Company will not be obligated for any damages to any person
or property directly or indirectly arising out of Member's store's operation or
the business conducted by Member under this Agreement.
26. 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 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 Notes is the principal amount thereof and the stated dollar
amount of the shares of Class B Common Stock is the par value thereof. The first
sentence of this paragraph is intended to constitute "consent in writing" within
the meaning of section 1388(c)(2)(A) of the IRC and may be revoked as provided
in section 1388(c)(3)(B) of the IRC, provided, however, that, so long as Member
remains a member of the Company, revocation by Member of its "consent in
writing" shall not revoke Member's "membership consent."
27. The Promissory Notes and Class A 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 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.
28. This Agreement is not assignable or transferable by the Member without the
written consent of the Company, but Company shall have the right to assign this
Agreement. Change in control or management of a corporate, partnership or
limited liability company Member must be approved in writing by the Company.
29. This Agreement shall continue in force from year to year unless it is
terminated as follows:
(a) The Company shall have the right to immediately terminate this
Agreement by written notice to the Member, (i) in the event and at the time or
after the Member becomes insolvent, commits any act of bankruptcy, files a
voluntary petition in bankruptcy, is adjudicated a bankrupt; (ii) if Member
breaches any term, condition or obligation under this Agreement or any other
agreement with the Company or one of its subsidiaries, which breach is not cured
within thirty (30) days (ten (10) days in case of nonpayment of accounts
receivable statements or any other financial obligations to the Company), or
within the applicable cure period in an agreement with the Company after the
Member's receipt of written notice of such breach from the Company; or (iii) if
Member fails to obtain written consent by the Company to a change in control or
management of a corporation, partnership or limited liability company Member.
(b) This Agreement may be terminated unilaterally by the Member upon sixty
(60) days written notice mailed to the Chief Executive Officer or Treasurer of
the Company at the Company's principal office.
(c) This Agreement may be terminated unilaterally by the Company upon
sixty (60) days written notice mailed to the Member at the address shown on the
books of the Corporation; provided, however, that such termination by the
Company shall occur after the affirmative vote of two-thirds or more of the
directors then in office that such termination is in the best interests of the
Company as determined in the sole discretion of the Board of Directors.
5
30. 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 resolution of the Board of Directors.
31. This Agreement, and any other agreement which Member signs with the
Company, is the entire and complete Agreement between the Member and the Company
and there are no prior agreements, representations, promises, or commitments,
oral or written, which are not specifically contained in this Agreement or any
other agreement which Member signs with the Company. 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.
32. 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.
33. The failure on the part of the Company at any time or times to enforce its
rights under this Agreement, its Certificate of Incorporation, its By-Laws, its
Manuals, any Company policies or procedures, or any written agreements with
Member shall not constitute or be held to be a waiver of any succeeding breach
thereof.
34. The Company, but not the Member, shall have a lien on and a right, but not
an obligation, of setoff against any Company issued stock or notes, dividends,
interest payments or other funds held by or issued to Member, 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, including without
limitation borrowings, accounts payable, and the Member's share of Company
losses, as reasonably determined by the Company. Upon termination, Company shall
have no obligation to redeem Member's investment unless and until all amounts
due and owing the Company on accounts receivable statements, ancillary
agreements with the Company or any other financial obligations to the Company or
its subsidiaries are paid in full. 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 the state or federal courts located in Xxxx County or
any Illinois county contiguous to Xxxx County, Illinois or in the county in
which the Company's headquarters are then located, and only be interpreted in
accordance with the substantive laws of Illinois without giving effect to its
conflict of laws principles.
35. This Agreement may not be modified except as set forth herein or by a
writing referencing this Agreement and signed by the Company.
6
Prospective 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.
WITNESS the Member's hand and seal this _____ day of ________, 20__.
________________________________________________________________________________
Member's Legal Entity
d/b/a __________________________________________________________________________
check: [ ] sole proprietor [ ] partnership [ ] corporation [ ] limited liability
company
Retail Location Address ________________________________________________________
City _________________ State ________________ Zip ___________
By: ____________________________________________________________________________
Title: _________________________________________________________________________
WITNESS ________________________________________________________________________
Address ________________________________________________________________________
City _________________ State ________________ Zip ___________
ACCEPTED this _____ day of ______________, 20____, at Chicago, Illinois,
By TRUSERV CORPORATION, by its duly authorized agent.
__________________________________________________________________________
__________________________________________________________________________ Title
7
