Franchise Agreement

Exhibit 10.1


MicroAge Computer Centers, Inc.


Franchise Agreement


January 1996
TABLE OF CONTENTS Section Page
1. INTRODUCTION.................................................................................. 1


2. GRANT OF FRANCHISE............................................................................ 1


3. DEVELOPMENT OF CENTER......................................................................... 2
A. CONVERSION OF CENTER........................................................ 2
B. CENTER OPENING.............................................................. 2


4. COMPANY SUPPORT............................................................................... 2
A. OPERATING MANUAL............................................................ 2
B. SUPPORT SERVICES............................................................ 3
C. TRAINING.................................................................... 3


5. MARKS......................................................................................... 3
A. OWNERSHIP AND GOODWILL OF MARKS............................................. 3
B. LIMITATIONS ON FRANCHISEE'S USE OF MARKS.................................... 3
C. PROHIBITED USES............................................................. 4
D. DISCONTINUANCE OF USE OF MARKS.............................................. 4


6. CONFIDENTIAL INFORMATION...................................................................... 4


7. EXCLUSIVE RELATIONSHIP........................................................................ 4


8. RELATIONSHIP OF THE PARTIES/INDEMNIFICATION................................................... 5


9. FEES AND PAYMENTS AND SOURCE OF SUPPLY........................................................ 5
A. PRODUCT PURCHASES........................................................... 5
B. PRODUCT HOLD/INTEREST ON LATE PAYMENTS...................................... 6


10. OPERATING STANDARDS........................................................................... 6
A. AUTHORIZED PRODUCTS AND SERVICES............................................ 6
B. PRODUCT ORDERING AND SALES.................................................. 6
C. COMPLIANCE WITH LAWS........................................................ 7
D. CODE OF ETHICS.............................................................. 7
E. MANAGEMENT OF THE CENTER/CONFLICTING AND COMPETING INTERESTS................ 7
F. INSURANCE................................................................... 7
11. ADVERTISING AND PROMOTION..................................................................... 8
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TABLE OF CONTENTS Section Page
12. ACCOUNTING, REPORTS AND FINANCIAL STATEMENTS.................................................. 8


13. INSPECTIONS AND AUDITS........................................................................ 8


14. TRANSFER...................................................................................... 8
A. BY THE COMPANY.............................................................. 8
B. YOU MAY NOT TRANSFER WITHOUT APPROVAL OF THE COMPANY........................ 8
C. CONDITIONS FOR APPROVAL OF TRANSFER......................................... 9
D. TRANSFER TO A CORPORATION OR PARTNERSHIP.................................... 10
E. DEATH OR DISABILITY OF FRANCHISEE........................................... 10
F. THE COMPANY'S RIGHT OF FIRST REFUSAL........................................ 10


15. RENEWAL OF FRANCHISE.......................................................................... 11
A. MUTUAL AGREEMENT TO RENEW................................................... 11
B. RENEWAL AGREEMENTS/RELEASES................................................. 11


16. TERMINATION OF THE FRANCHISE.................................................................. 11
A. TERMINATION WITHOUT CAUSE................................................... 11
B. TERMINATION BY THE COMPANY.................................................. 12


17. RIGHTS AND OBLIGATIONS UPON TERMINATION OR EXPIRATION OF THE FRANCHISE.........................12
A. PAYMENT OF AMOUNTS OWED TO THE COMPANY...................................... 12
B. MARKS....................................................................... 12
C. CONFIDENTIAL INFORMATION.................................................... 13
D. COVENANT NOT TO COMPETE..................................................... 13
E. CONTINUING OBLIGATIONS...................................................... 14


18. MISCELLANEOUS PROVISIONS...................................................................... 14
A. JUDICIAL ENFORCEMENT, INJUNCTION AND SPECIFIC PERFORMANCE................... 14
B. ARBITRATION................................................................. 14
C. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS........................... 15
D. WAIVER OF OBLIGATIONS....................................................... 16
E. RESERVATION OF RIGHTS....................................................... 16
F. YOU MAY NOT WITHHOLD PAYMENTS DUE THE COMPANY............................... 16
G. RIGHTS OF PARTIES ARE CUMULATIVE............................................ 16
H. WAIVER OF PUNITIVE DAMAGES.................................................. 16
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TABLE OF CONTENTS


Section Page


I. WAIVER OF JURY TRIAL........................................................ 16
J. LIMITATION OF CLAIMS........................................................ 17
K. COSTS AND ATTORNEYS' FEES................................................... 17
L. GOVERNING LAW............................................................... 17
M. CONSENT TO JURISDICTION AND VENUE........................................... 17
N. FORCE MAJEURE............................................................... 18
O. CONSTRUCTION................................................................ 18


19. NOTICES....................................................................................... 18 Exhibits and Attachments


Personal Guaranty
State-Specific Riders
Exhibit A-2 Statement of Franchisee
Exhibit A-3 Franchisee Disclosure Questionnaire
(for use in Illinois only)
Exhibit A-4 Code of Ethics


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MICROAGE COMPUTER CENTERS
FRANCHISE AGREEMENT


THIS AGREEMENT (the "Agreement") is made and entered into on _____________________, 19___, by and between MICROAGE COMPUTER CENTERS, INC., a Delaware corporation, with its principal office at 2400 South MicroAge Way, Tempe, Arizona 85282-1896 (the "Company") and _________________________________ ("you" "your" or "Owner"), a _______________ corporation, whose principal business address is.


1. INTRODUCTION.


The MicroAge family of companies franchises and operates sales and support locations that specialize in the marketing of computer hardware and software and other high technology products, maintenance and repair services for these products, related consultation services and additional products and services introduced from time to time. These sales locations are known as "MicroAge Computer Centers." The Company owns, uses and licenses certain trademarks, service marks and commercial symbols in the operation and franchising of MicroAge Computer Centers, including the trade and service marks MicroAge(R) and The Solution Center(R), all of which are collectively referred to as the "Marks." MicroAge Computer Centers use the Marks and are operated with certain business formats, systems, methods and standards, all of which may be improved, developed or modified in the future.


You own and operate an independent computer sales location and desire to convert this location to a MicroAge Computer Center. You have applied for a franchise to own and operate a MicroAge Computer Center at the location identified above as your principal business address and the application has been approved by the Company based on the representations made in the application and in the Statement of Franchisee attached as Exhibit A-2 or the Franchisee Disclosure Questionnaire attached as Exhibit A-3.


2. GRANT OF FRANCHISE.


The Company grants you a nonexclusive franchise (the "Franchise") to operate a MicroAge Computer Center at the location specified above (the "Center"), and to use the Marks in its operation for a term of 10 years starting on the date of this Agreement. You will be responsible for converting your existing computer sales location to a MicroAge Computer Center. You may not relocate the Center without the Company's prior written consent, which consent will not be unreasonably withheld, and you will pay all expenses in connection with the relocation, including any expenses incurred by the Company. Termination or expiration of this Agreement constitutes a termination or expiration of the Franchise.
1 3. DEVELOPMENT OF CENTER.


A. CONVERSION OF CENTER.


The Center must meet the Company's requirements for professional appearance and must comply with all applicable Vendor requirements. You will use, in the development and operation of the Center, only those types of fixtures, equipment and signs that create and enhance the professional appearance of the Center.


You will place or display at the premises of the Center (interior and exterior) only those signs, emblems, lettering and logos that are approved by the Company and meet applicable Vendor requirements. Subject to approval by the Company, you may continue to use your prior independent trade name (unless you were licensed to use this name by another franchisor or licensor) provided that the "MicroAge" Mark is always displayed in conjunction with the prior trade name.


B. CENTER OPENING.


You may open the Center for business as a MicroAge Computer Center only after the Center meets the Company's appearance requirements and all amounts due to the Company have been paid.


4. COMPANY SUPPORT.


A. OPERATING MANUAL.


The Company will provide you, during the term of the Franchise, at least 1 copy of the Company's operating manual (the "Operating Manual," which may be in multiple volumes or provided by electronic means), which may include the following subjects: product ordering and payment policies and procedures; product pricing and fee levels; Marks usage criteria; directory of services; and other information to assist you in the operation, promotion and management of the Center. The Operating Manual is presently published under the name the BUSINESS BUILDER RESOURCE GUIDE. The provisions of the Operating Manual, which may be modified by the Company, constitute provisions of this Agreement. If there is a dispute regarding the contents of the Operating Manual, the master copy maintained by the Company at its principal office will be controlling. The Operating Manual is the Company's property and you must return it to the Company upon termination or expiration of this Agreement.
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B. SUPPORT SERVICES.


The Company will provide certain services, information and assistance to you in connection with the operation of the Center: (1) a product ordering system; (2) a product information system; (3) plan and make available regional and national meetings; and (4) other services, information and assistance described in the Operating Manual. In addition, the Company may offer certain services, information and assistance on a fee basis as described in the Operating Manual.


C. TRAINING.


The Company may, at its option, furnish initial training to you in the operation of a MicroAge Computer Center during times designated by the Company. At the Company's option, training may be furnished at the Company's or your principal offices. You are responsible for any salary, travel and living expenses which you or your employee(s) incur in connection with training.


5. MARKS.


A. OWNERSHIP AND GOODWILL OF MARKS.


Your right to use the Marks arises solely from this Agreement. This right is limited to the operation of the Center in compliance with this Agreement and the Operating Manual. Any unauthorized use of the Marks by you will constitute an infringement of the rights of the Company. Your use of the Marks and the goodwill created from this usage will be for the exclusive benefit of the Company. You agree to immediately notify the Company of any apparent infringement of any Mark or claim by any person of any rights in any Mark. All provisions of this Agreement applicable to the Marks will apply to any additional trademarks, service marks and commercial symbols authorized by the Company for your use.


B. LIMITATIONS ON FRANCHISEE'S USE OF MARKS.


You will use the Marks as the predominant identification of the Center, but you must identify yourself as the independent owner of the Center in the manner prescribed by the Company. You cannot use any Mark as part of any corporate or trade name or with any prefix, suffix or other modifying words, terms, designs or symbols (other than logos licensed to you under this Agreement), or in any modified form. You will display the Marks in the manner prescribed by the Company and will obtain fictitious or assumed name registrations as may be required under applicable law.
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C. PROHIBITED USES.


You cannot use any Mark on any product or promotional items offered, sold or distributed by you or in any other manner not expressly authorized in writing by the Company.


D. DISCONTINUANCE OF USE OF MARKS.


If the Company decides it is advisable for the Company and/or you to modify or discontinue use of any Mark, and/or use additional or substitute trade or service marks, you must comply within a reasonable time after notice by the Company.


6. CONFIDENTIAL INFORMATION.


The Company and its related companies possess certain confidential information relating to the operation of MicroAge Computer Centers (the "Confidential Information") and will disclose the Confidential Information to you in the Operating Manual and in providing information, training, services and assistance during the term of the Franchise. You will not acquire any interest in the Confidential Information other than the right to use it during the term of the Franchise and that your use in any other business constitutes an unfair method of competition. The Confidential Information is proprietary, may involve trade secrets of the Company and is disclosed to you solely on the condition that you: (a) do not use the Confidential Information in any other business or capacity; (b) maintain the confidentiality of the Confidential Information during and after the term of the Franchise; (c) do not make unauthorized copies (in written or electronic form) of the Confidential Information; and (d) adopt and implement all procedures prescribed from time to time by the Company to prevent unauthorized use or disclosure of the Confidential Information, including restrictions on disclosure to employees of the Center and the use of nondisclosure and noncompetition agreements with employees who have access to the Confidential Information.


7. EXCLUSIVE RELATIONSHIP.


You acknowledge that you could not engage in a Competing Business (defined below) during the term of this Agreement and also faithfully perform your obligations to use your best efforts to promote and enhance the business of the Center and to protect the Confidential Information and the Marks. During the term of this Agreement neither you, nor any of your shareholders or partners (in the event you are doing business as a corporation or partnership), nor any member of your immediate family will: (a) have any direct or indirect controlling ownership interest in any business operating under a name, trademark, logo, symbol or similar identification licensed by or otherwise identifying a competitor of the Company ("Competing Business"), wherever the Competing Business is located; (b) have any other ownership interest whatsoever in any Competing Business, where the Competing Business is located or operating within 50 miles of the Center or any other MicroAge Computer Center; (c) perform services as a director, officer, manager, employee, consultant, representative, agent or otherwise for any Competing Business wherever located; or (d) have any direct or indirect interest in any entity which has granted or is granting franchises or licenses to others to operate a Competing Business. These restrictions will not apply to your ownership of other MicroAge Computer Centers nor to your ownership of securities in a Competing Business if these securities are listed on a stock exchange or traded on the over-the-counter market and represent 1% or less of that class of securities. Further, "Competing Business" shall not include lines of business which you were engaged in prior to the date of this Agreement, as confirmed in writing by you and accepted in writing by the Company.
4 8. RELATIONSHIP OF THE PARTIES/INDEMNIFICATION.


You and the Company are independent contractors, and nothing in this Agreement is intended to make either party an agent, partner or employee of the other party. You will conspicuously identify yourself at the premises of the Center and in all dealings with third parties as the independent owner of the Center under a franchise agreement with the Company and will place other notices of independent ownership on forms, stationery, advertising and other materials as the Company may require. Neither the Company nor you will make any express or implied agreements, warranties or representations, or incur any debt, in the name of or on behalf of the other or represent that th ...