SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
--------
X Quarterly report pursuant to Section 13 or 15 (d) of the
-------- Securities Exchange Act of 1934,
For the quarterly period ended April 28, 1996 or
--------
Transition report pursuant to Section 13 or 15(d) of the
-------- Securities Exchange Act of 1934
Commission file number 0-15995
MICROAGE, INC.
(Exact name of registrant as specified in its charter)
Delaware 86-0321346
(State of incorporation) (I. R. S. Employer
Identification No.)
2400 South MicroAge Way
Tempe, AZ 85282
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (602) 804-2000
The registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
---- ----
The number of shares of the registrant's Common Stock (par value $.01 per
share) outstanding at June 10, 1996 was 14,456,641.
<PAGE>
INDEX
MICROAGE, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated balance sheets -- April 28, 1996 and October 29,
1995.
Consolidated statements of income -- Quarters ended April 28,
1996 and April 30, 1995; 26 weeks ended April 28, 1996 and April
30, 1995.
Consolidated statements of cash flows -- 26 weeks ended ended
April 28, 1996 and April 30, 1995.
Notes to consolidated financial statements -- April 28, 1996.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
1
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
MICROAGE, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share data)
<TABLE>
<CAPTION>
Assets
April 28, October 29,
1996 1995
------------------- -------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,050 $ 13,700
Accounts and notes receivable, net 219,891 183,286
Inventory, net 289,587 297,742
Other 13,113 13,006
----------------- -----------------
Total current assets 530,641 507,734
Property and equipment, net 46,933 45,689
Intangible assets, net 11,227 11,201
Other 8,937 7,939
----------------- -----------------
Total assets $ 597,738 $ 572,563
================= =================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 396,376 $ 379,897
Accrued liabilities 18,684 13,968
Current portion of long-term obligations 1,924 2,908
Other 3,235 3,258
----------------- -----------------
Total current liabilities 420,219 400,031
Long-term obligations 3,571 4,079
Stockholders' equity:
Preferred stock, par value $1.00 per share;
Shares authorized: 5,000,000
Issued and outstanding: none -- --
Common stock, par value $.01 per share;
Shares authorized: 40,000,000
Issued: April 28, 1996 14,540,394
October 29, 1995 14,459,847 145 145
Additional paid-in capital 122,940 122,399
Retained earnings 54,034 49,539
Loan to ESOT (447) (768)
Note receivable - stock purchase agreement (2,000) (2,000)
Treasury stock, at cost;
Shares: April 28, 1996 97,028
October 29, 1995 115,443 (724) (862)
----------------- -----------------
Total stockholders' equity 173,948 168,453
----------------- -----------------
Total liabilities and stockholders' equity $ 597,738 $ 572,563
================= =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
MICROAGE, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Quarters ended 26 weeks ended
---------------------------------- ----------------------------------
April 28, April 30, April 28, April 30,
1996 1995 1996 1995
--------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenue $ 863,648 $ 743,460 $ 1,643,966 $ 1,417,779
Cost of sales 819,079 704,204 1,559,454 1,344,256
--------------- --------------- ---------------- ----------------
Gross profit 44,569 39,256 84,512 73,523
Operating expenses 35,038 30,393 69,053 56,254
--------------- --------------- ---------------- ----------------
Operating income 9,531 8,863 15,459 17,269
Other expenses - net 4,384 4,593 7,542 8,036
--------------- --------------- ---------------- ----------------
Income before income taxes 5,147 4,270 7,917 9,233
Provision for income taxes 2,209 1,839 3,422 3,930
--------------- --------------- ---------------- ----------------
Net income $ 2,938 $ 2,431 $ 4,495 $ 5,303
=============== =============== ================ ================
Net income per common share $ 0.20 $ 0.17 $ 0.31 $ 0.37
=============== =============== ================ ================
Weighted average common and
common equivalent
shares outstanding 14,654 14,270 14,508 14,269
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
MICROAGE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Increase (Decrease) in Cash and Cash Equivalents
(in thousands)
<TABLE>
<CAPTION>
26 weeks ended
--------------------------------
April 28, April 30,
1996 1995
-------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,495 $ 5,303
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 9,205 6,919
Provision for losses on accounts and notes receivable 3,113 2,500
Changes in assets and liabilities, net of business acquisitions:
Accounts and notes receivable (39,718) 20,387
Inventory 7,705 (11,104)
Other current assets (107) (33)
Other assets (1,061) (1,902)
Accounts payable 16,478 2,969
Accrued liabilities 4,716 (1,533)
Other liabilities 115 283
-------------- -------------
Net cash provided by operating activities 4,941 23,789
Cash flows from investing activities:
Purchases of property and equipment (9,237) (12,509)
Purchases of businesses and investments
in unconsolidated companies - (2,550)
-------------- -------------
Net cash used in investing activities (9,237) (15,059)
Cash flows from financing activities:
Amounts received from ESOT 321 315
Proceeds from stock options exercised 541 783
Principal payments on long-term obligations (2,216) (1,050)
-------------- -------------
Net cash provided by (used in) financing activities (1,354) 48
-------------- -------------
Net increase (decrease) in cash and cash equivalents (5,650) 8,778
Cash and cash equivalents at beginning of period 13,700 11,074
-------------- -------------
Cash and cash equivalents at end of period $ 8,050 $ 19,852
============== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of MicroAge, Inc.
(the "Company") do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair statement of results for the periods
have been included. Operating results for the 26 weeks ended April 28, 1996 are
not necessarily indicative of the results that may be expected for the year
ending November 3, 1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended October 29, 1995.
NOTE B - OTHER EXPENSES - NET
Other expenses - net consists of the following:
Quarters ended 26 weeks ended
---------------------- ---------------------
April 28, April 30, April 28, April 30,
1996 1995 1996 1995
---------- ----------- ---------- ---------
Interest expense $ 818 $ 1,156 $ 1,061 $ 2,226
Expenses from sales of
accounts receivable 3,202 2,628 6,001 4,764
Other 364 809 480 1,046
========== ========== ========== =========
$ 4,384 $ 4,593 $ 7,542 $ 8,036
========== ========== ========== =========
NOTE C - LITIGATION
On July 14 through July 19, 1994, seven class action complaints were filed in
the United States District Court for the District of Arizona against the
Company, certain of its officers and directors, and, in three of the lawsuits,
one of the underwriters of the Company's June 16, 1994 public offering of common
stock. On December 5, 1994, the Court consolidated the seven actions into a
single action. On February 16, 1995, plaintiffs filed and served an amended,
consolidated complaint against the Company, certain officers and directors of
the Company, and three of the underwriters of the Company's June 16, 1994 public
offering of common stock ("the Complaint"). The Complaint purports to be brought
on behalf of a class of purchasers of the Company's common stock during the
period April 13, 1994 through July 14, 1994. The complaint alleges, among other
things, that the Company violated federal securities laws by making misleading
public statements and omitting material facts regarding the Company's operations
and financial results, which the plaintiffs contend to have artificially
inflated the price of the Company's common stock during the alleged class
period. The complaint seeks unspecified compensatory damages as well as fees and
costs. On April 28, 1995, the Company filed a motion to dismiss the Complaint in
its entirety. On March 25, 1996, the Court dismissed the majority of the
allegations contained in the Complaint. The Company and the individual
defendants deny the plaintiffs' remaining allegations of wrongdoing and intend
to vigorously defend themselves in these actions. The proceeding is in its early
stages, however, and its outcome cannot be predicted with certainty at this
time.
5
<PAGE>
NOTE D - STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 123 - ACCOUNTING FOR
STOCK-BASED COMPENSATION
The accounting requirements are effective for transactions entered into in
fiscal years beginning after December 15, 1995. The disclosure requirements are
effective for fiscal years beginning after December 31, 1995. Pro forma
disclosures required for entities that elect to continue to measure compensation
cost using APB Opinion No. 25 must include the effects of all awards granted in
fiscal years that begin after December 15, 1994. This Statement establishes
financial accounting and reporting standards for stock-based employee
compensation plans. This Statement defines the fair value based method of
accounting for an employee stock option or similar equity instrument and
encourages all entities to adopt that method of accounting for all of their
employee stock compensation plans. However, it also allows an entity to continue
to measure compensation cost for those plans using the intrinsic value based
method of accounting prescribed by APB Opinion No. 25, Accounting for Stock
Issued to Employees. The Company expects to implement the disclosure provisions
of SFAS 123 for its fiscal year ending November 2, 1997.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
The following table sets forth, for the indicated periods, data as percentages
of total revenue:
<TABLE>
<CAPTION>
Quarter ended 26 weeks ended
-------------------------------------------------------------------------------------
April.28, Jan. 28, Oct. 29, July 30, April 30, April 28, April 30,
1996 1996 1995 1995 1995 1996 1995
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue (in thousands) $863,648 $780,318 $764,239 $759,082 $743,460 $1,643,966 $ 1,417,779
Cost of sales 94.8 % 94.9 % 94.8 % 94.9 % 94.7 % 94.9 % 94.8 %
--------- --------- --------- -------- --------- ------------ ------------
Gross profit 5.2 5.1 5.2 5.1 5.3 5.1 5.2
Operating and other expenses
Operating expenses 4.1 4.4 4.8 4.4 4.1 4.2 4.0
Restructuring and other
one-time charges - - 1.2 - - - -
--------- --------- --------- -------- --------- ------------ ------------
Total 4.1 4.4 6.0 4.4 4.1 4.2 4.0
--------- --------- --------- -------- --------- ------------ ------------
Operating income 1.1 0.8 (0.8) 0.7 1.2 0.9 1.2
Other expenses - net 0.5 0.4 0.5 0.5 0.6 0.5 0.6
--------- --------- --------- -------- --------- ------------ ------------
Income (loss) before income 0.6 0.4 (1.2) 0.2 0.6 0.5 0.7
taxes
Provision for income taxes 0.3 0.2 (0.5) 0.1 0.3 0.2 0.3
--------- --------- --------- -------- --------- ------------ ------------
Net income (loss) 0.3 % 0.2 % (0.8) % 0.1 % 0.3 % 0.3 % 0.4 %
========= ========= ========= ======== ========= ============ ============
</TABLE>
Total Revenue. Total revenue increased $120.2 million, or 16%, to $863.7 million
for the quarter ended April 28, 1996 as compared to the quarter ended April 30,
1995. This revenue increase included a $63.1 million, or 22%, increase in
systems integration business revenue and an $80.5 million, or 19%, increase in
distribution business revenue.
Total revenue increased $226.2 million, or 16%, to $1.6 billion for the 26 weeks
ended April 28, 1996 as compared to the 26 weeks ended April 30, 1995. This
revenue increase included a $113.9 million, or 21%, increase in systems
integration business revenue and a $152.6 million, or 19%, increase in
distribution business revenue.
The revenue increase was primarily due to sales to resellers added since April
30, 1995, the Company's focus on large account sales, increased demand for the
Company's major vendors' products and the Company's addition of new product
lines.
Gross Profit Percentage. The Company's gross profit percentage was 5.2% for the
quarter ended April 28, 1996, compared to 5.1% for the quarter ended January 28,
1996 and 5.3% for the quarter ended April 30, 1995. The gross profit percentage
was 5.1% for the 26 weeks ended April 28, 1996 compared to 5.2% for the 26 weeks
ended April 30, 1995.
Future gross profit percentages may be affected by market pressures, the
introduction of new Company programs, changes in revenue mix, the Company's
utilization of early payment discount opportunities, vendor pricing actions and
other competitive and economic factors. See also "Potential Fluctuations in
Operating Results" below.
7
<PAGE>
Operating Expenses. Operating expenses increased $4.6 million to $35.0 million
for the quarter ended April 28, 1996, as compared to the quarter ended April 30,
1995. The $4.6 million increase was primarily a result of increased revenue
between the two periods, as expenses as a percentage of revenue were 4.1% for
the quarters ended April 28, 1996 and April 30, 1995.
Operating expenses increased from $56.3 million, or 4.0% of revenue, for the 26
weeks ended April 30, 1995 to $69.1 million, or 4.2% of revenue, for the 26
weeks ended April 28, 1996. The primary factor in the $12.8 million increase was
the Company's revenue increase between the two periods. If expenses as a
percentage of revenue had remained constant between the periods, expenses would
have increased by approximately $9.0 million. The remainder of the increase was
primarily due to increased depreciation and facilities expansion. The increased
depreciation resulted from expenditures for automation initiatives and facilites
expansion.
Other Expenses - Net. Other expenses - net decreased to $4.4 million for the
quarter ended April 28, 1996 from $4.6 million for the quarter ended April 30,
1995. Other expenses - net decreased to $7.5 million for the 26 weeks ended
April 28, 1996 from $8.0 million for the 26 weeks ended April 30, 1995. These
decreases were primarily due to a slight decrease in net financing costs.
If the Company is successful in achieving continued revenue growth, its working
capital requirements and related financing costs are likely to increase.
Marketing Development Funds. The Company receives funds from certain vendors
which are earned through marketing programs, meeting established purchasing
objectives or meeting other objectives determined by the vendor. There can be no
assurance that these programs will be continued by the vendors. A substantial
reduction in the vendor funds available to the Company would have an adverse
effect on the Company's results of operations.
Potential Fluctuations in Operating Results
The Company's operating results may vary significantly from quarter to quarter
depending on certain factors, including, but not limited to, demand for the
Company's information technology products and services, product availability,
competitive conditions, and general economic conditions. In particular, the
Company's operating results are sensitive to changes in the mix of product and
service revenues, product margins, inventory adjustments and interest rates.
Although the Company attempts to control its expense levels, these levels are
based, in part, on anticipated revenues. Therefore, the Company may not be able
to control spending in a timely manner to compensate for any unexpected revenue
shortfall. As a result, quarterly period-to-period comparisons of the Company's
financial results are not necessarily meaningful and should not be relied upon
as an indication of future performance.
Liquidity and Capital Resources
The Company has financed its growth and cash needs to date primarily through
working capital financing facilities, bank credit lines, common stock offerings
and cash generated from operations. The primary uses of cash have been to fund
increases in inventory and accounts receivable resulting from increased sales.
If the Company is successful in achieving continued revenue growth, its working
capital requirements are likely to increase.
8
<PAGE>
In order to establish or solidify its presence in strategic markets or in
response to competitive pressures, the Company may make acquisitions of, or
investments in, reseller locations. These acquisitions or investments may be
made utilizing cash, stock or a combination of cash and stock.
For the 26 weeks ended April 28, 1996, $4.9 million of cash was provided by
operating activities. Net cash provided by operating activities included net
income, before certain non-cash items, of $16.8 million, an increase in accounts
payable of $16.5 million, a decrease in inventory of $7.7 million and an
increase in accrued liabilities of $4.7 million, offset by an increase in
accounts receivable of $39.7 million
The number of days cost of sales in ending inventory decreased from 37 days at
October 29, 1995 to 32 days at April 28, 1996. This decrease in inventory days
was primarily due to a focus on controlling inventory levels and strong April
sales. The Company anticipates the number of days cost of sales in ending
inventory will return to historical levels. The number of days cost of sales in
ending accounts payable decreased from 47 days at October 29, 1995 to 44 days at
April 28, 1996. The number of days sales in ending accounts receivable increased
from 22 days at October 29, 1995 to 23 days at April 28, 1996. The receivables
days adjusted for receivables sold under a financing facility (see discussion
below) were 37 days at April 28, 1996 compared to 36 days at October 29, 1995.
For the 26 weeks ended April 28, 1996, $9.2 million was used in investing
activities for the purchase of property and equipment, and net cash of $1.3
million used in financing activities consisted primarily of payments on
long-term obligations.
The Company maintains a primary financing agreement (the "Agreement") with a
financing facility of $400 million. The Agreement includes two major components:
an accounts receivable facility (the "A/R Facility") and an inventory facility
(the "Inventory Facility"). The Agreement expires in August 1997.
Under the A/R Facility, the Company has the right to sell certain accounts
receivable from time to time, on a limited recourse basis, up to an aggregate
amount of $250 million sold at any given time. At April 28, 1996, the net amount
of sold accounts receivable was $135 million, and the effective funding rate was
LIBOR plus 1.85%.
The Inventory Facility provides for borrowings up to $150 million. Within the
Inventory Facility, the Company has a line of credit for the purchase of
inventory from selected product suppliers ("Inventory Line of Credit") of $50
million and a line of credit for general working capital requirements
("Supplemental Line of Credit") of $100 million. Payments for products purchased
under the Inventory Line of Credit vary depending upon the product supplier, but
generally are due between 45 and 60 days from the date of the advance. No
interest or finance charges are payable on the Inventory Line of Credit if
payments are made when due. At April 28, 1996, the Company had $2.8 million
outstanding under the Inventory Line of Credit (included in accounts payable in
the accompanying Balance Sheet), and had no amounts outstanding under the
Supplemental Line of Credit.
Of the $400 million of financing capacity represented by the Agreement, $262
million was unused as of April 28, 1996. Utilization of the unused $262 million
is dependent upon the Company's collateral availability at the time the funds
would be needed.
Borrowings under the Agreement are secured by substantially all of the Company's
assets, and the Agreement contains certain restrictive covenants, including
working capital and tangible net worth requirements, and ratios of debt to
tangible net worth and current assets to current liabilities. At April 28, 1996,
the Company was in compliance with these covenants.
9
<PAGE>
The Company also maintains trade credit arrangements with its vendors and other
creditors to finance product purchases. Several major vendors maintain security
interests in their products sold to the Company.
The unavailability of a significant portion of, or the loss of, the Agreement or
trade credit from vendors would have a material adverse effect on the Company.
Inflation
The Company believes that inflation has generally not had a material impact on
its operations.
10
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
See Note C of Notes to Consolidated Financial Statements (Unaudited)
for information regarding a consolidated class action lawsuit against the
Company, its directors, certain of its officers, and three of the underwriters
of the Company's June 16, 1994 public offering of Common Stock.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Stockholders was held on March 13, 1996.
(b)(1) The following individuals were re-elected to the
Board of Directors as Class I Directors for
three-year terms expiring at the Company's Annual
Meeting in 1999: William H. Mallender and Lynda M.
Applegate.
(b)(2) The following individual was re-elected to the Board
of Directors as a Class III Director for a two-year
term expiring at the Company's Annual Meeting in
1998: Roy A. Herberger, Jr.
(b)(3) The following individuals' terms continued after the
Annual Meeting as Class II Directors. Their terms
will expire at the Company's Annual Meeting in 1997:
Alan P. Hald and Steven G. Mihaylo.
(b)(4) The following individuals' terms continued after the
Annual Meeting as Class III Directors. Their terms
will expire at the Company's Annual Meeting in 1998:
Jeffrey D. McKeever and Fred Israel.
(c)(1) The only matter submitted for vote at the Annual
Meeting was the re-election of two Class I Directors
for three-year terms expiring at the Company's Annual
Meeting in 1999, and the re-election of one Class
III Director for a two-year term expiring at the
Company's Annual Meeting in 1998. See Items 4(b)(1)
and (2) hereof. The shares were voted as follows:
Nominee No. of Shares
William H. Mallender For 13,285,817
Against 66,751
Abstentions 0
Broker Non-votes 0
Lynda M. Applegate For 13,282,334
Against 72,384
Abstentions 0
Broker Non-votes 0
Roy A. Herberger, Jr. For 13,282,876
Against 71,842
Abstentions 0
Broker Non-votes 0
(d) None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<PAGE>
10.1 Form of Franchise Agreement by and between the
Company and its franchisees effective January 1996
10.2 Form of Agreement by and between the Company and its
resellers effective November 1995
11.1 Primary EPS Detail Calculation
11.2 Fully Diluted EPS Detail Calculation
27 Financial Data Schedule
(b) The Company did not file any Reports on Form 8-K
during the quarter ended April 28, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MICROAGE, INC.
(Registrant)
Date: June 12, 1996 By: /s/ Jeffrey D. McKeever
-------------------------
Jeffrey D. McKeever
Chairman of the Board and
Chief Executive Officer
Date: June 12, 1996 By: /s/ James R. Daniel
-------------------------
James R. Daniel
Senior Vice President, Chief
Financial Officer and Treasurer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
10.1 Form of Franchise Agreement by and between the Company and its
franchisees effective January 1996
10.2 Form of Agreement by and between the Company and its resellers
effective November 1995
11.1 Primary EPS Detail Calculation
11.2 Fully Diluted EPS Detail Calculation
27 Financial Data Schedule
Exhibit 10.1
MicroAge Computer Centers, Inc.
Franchise Agreement
January 1996
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Section Page
<S> <C> <C> <C>
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
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Section Page
<S> <C> <C> <C>
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
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Section Page
<S> <C> <C> <C>
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
</TABLE>
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
iii
<PAGE>
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.
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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.
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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 the relationship between the
parties is other than franchisor and franchisee. The Company will have no
liability for any taxes levied upon you, the Center or the Company, in
connection with the sales made, services performed or business conducted by you.
You will indemnify, defend and hold harmless the Company and its
related entities and their shareholders, directors, officers, employees, agents,
successors and assignees (the "Indemnified Parties") against any liability for
any claims directly or indirectly arising out of the operation of the Center.
For purposes of this indemnification, "claims" means and includes all claims,
obligations, actual and consequential damages, taxes, attorneys' fees and costs
reasonably incurred in the defense of any claim against the Indemnified Parties.
The Company will have the right to defend any claims. This indemnity will
continue in full force and effect after expiration or termination of this
Agreement.
9. FEES AND PAYMENTS AND SOURCE OF SUPPLY.
A. PRODUCT PURCHASES.
You are required to purchase from the MicroAge family of companies no
less than $100,000 in products (based on invoices to you) during each calendar
quarter. You will pay a mark-up or override on all products you purchase from or
through the Company, which is referred to as the "Product Fee." The Product Fee
may vary from product to product and will be listed in the Operating Manual or
electronic price guide. Payment for products will be made no later than the
shipment date or on other credit terms described in the Operating Manual and
offered by the Company in its sole discretion. The Company has the right to
receive commissions, cash or other items of benefit from any of the Company's
vendors or other third party providers of goods or services.
The Company, or its designee, shall be your primary source for purchase
of products. You shall use your best efforts to purchase from the Company your
requirements for products available from the Company and listed in the Company's
then current price guide.
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B. PRODUCT HOLD/INTEREST ON LATE PAYMENTS.
If you are delinquent in payment of amounts due to the Company, you may
not be permitted, in the Company's sole discretion, to purchase products from
the Company or to utilize the Company's support services. In addition, all
amounts you owe the Company and its related companies, will bear interest after
due date at the highest applicable legal rate for open account business credit,
not to exceed 2% per month. The Company has sole discretion to apply any
payments by you to any of your past due indebtedness. This Section 9B does not
constitute the Company's agreement to accept payments after they are due or a
commitment by the Company to extend credit to or finance your operation of the
Center.
10. OPERATING STANDARDS.
A. AUTHORIZED PRODUCTS AND SERVICES.
In order to maintain the image of MicroAge Computer Centers as
professionally operated locations offering, selling and supporting quality
computer products and related products and services, you will not offer or sell
any products or services other than computer products and related products and
services, nor will the Center or its premises be used for any purposes other
than the operation of a MicroAge Computer Center in accordance with this
Agreement.
B. PRODUCT ORDERING AND SALES.
Product ordering procedures are described in the Operating Manual. You
will comply with all applicable vendor requirements. The Company cannot sell or
ship any product to you for which you do not possess dealership authorization
from the vendor. The Company will honor all vendor dealership authorization
requirements and cannot assure or guarantee that any vendor will continue to
authorize the Company's distribution or your sale of any vendor's products. You
will sell product only to end-users, to third parties authorized by the
applicable vendor, or to another member of the MicroAge network for the limited
purpose of assisting that reseller in serving its clients, and this assistance
shall not exceed the lesser of $5,000 or 3% of your gross sales per month
without the prior written consent of the Company.
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C. COMPLIANCE WITH LAWS.
You will secure and maintain in force all required licenses, permits
and certificates relating to the operation of the Center and will operate the
Center in full compliance with all applicable laws, ordinances and regulations.
You will notify the Company in writing within 5 days of the commencement of any
action, suit or proceeding, and of the issuance of any order, injunction, award
or decree of any court or agency, which may adversely affect your or the
Center's operation or financial condition.
D. CODE OF ETHICS.
You shall abide by and cause your employees to abide by the "Code of
Ethics" adopted (and as amended) by the Company. The Code of Ethics, attached as
Exhibit A-4, is a statement of the Company's policies on good business
practices, fair dealing, cooperative activities and other matters relating to
the operation of MicroAge Computer Centers.
E. MANAGEMENT OF THE CENTER/
CONFLICTING AND COMPETING INTERESTS.
You will at all times faithfully, honestly and diligently perform your
obligations under this Agreement, will continuously exert your best efforts to
promote and enhance the business of the Center, and will not engage in any other
business or activity that requires substantial management responsibilities or
otherwise may conflict with your obligations under this Agreement, unless you
have obtained prior written approval from the Company in its sole discretion.
You will not divert elsewhere any trade or business which could be transacted by
you in or from the Center.
F. INSURANCE.
You must, at all times during the term of the Franchise, maintain in
force at your sole expense, comprehensive public, product and motor vehicle
liability insurance against claims for bodily and personal injury, death and
property damage caused by or occurring from the operation of the Center or the
conduct of business by you pursuant to the Franchise, in the policy amount
specified by the Company. All liability insurance policies must name the Company
as an additional insured, contain a waiver by the insurance carrier of all
subrogation rights against the Company and provide that the Company receive 30
days prior written notice of termination, expiration or cancellation or
modification of any policy. Upon 30 days prior notice to you, the Company may
increase the minimum protection requirement as of the renewal date of any
policy, and require different or additional kinds of insurance at any time. You
must furnish to the Company annually a copy of the certificate of or other
evidence of the renewal or extension of each insurance policy.
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11. ADVERTISING AND PROMOTION.
You will list and advertise the Center in the principal regular (White
Pages) telephone directory distributed within your primary trading area. Prior
to their use by you, samples of all advertising and promotional materials not
prepared or previously approved by the Company must be submitted to the Company
for approval, which approval will not be unreasonably withheld. If you have not
received written disapproval within 5 days from the date of receipt by the
Company of the materials, the Company will be deemed to have given the required
approval. To safeguard against misrepresentations and to protect the integrity
of the MicroAge Computer Center Network, and without limiting any other remedies
available to the Company, the Company may require that any non-approved
advertising and promotional material be changed, recalled or removed from
circulation at your expense.
12. ACCOUNTING, REPORTS AND FINANCIAL STATEMENTS.
You will establish and maintain, at your own expense, an automated
accounting and recordkeeping system conforming to the requirements and formats
prescribed by the Company. Upon written request, you will furnish reports and
financial statements to the Company in the formats and on a periodic basis
reasonably prescribed by the Company.
13. INSPECTIONS AND AUDITS.
The Company or its designated agents will have the right, at any
reasonable time upon prior notice, to inspect the Center and its equipment,
supplies and inventory and to audit your books and records, including inventory
records, to insure conformity and compliance with the Company's standards and
specifications as described in this Agreement and the Operating Manual. You
shall cooperate with the Company in all inspections and audits.
14. TRANSFER.
A. BY THE COMPANY.
This Agreement and the Franchise is fully transferable by the Company
and will be for the benefit of any transferee or other legal successor to the
interest of the Company in this Agreement.
B. YOU MAY NOT TRANSFER
WITHOUT APPROVAL OF THE COMPANY.
The rights and duties created by this Agreement are personal to you
(or, if you are conducting business as a corporation or a partnership, to the
"Owners") and the Company has granted the Franchise in reliance upon your
individual or collective character, skill, aptitude, attitude, business ability
and financial capacity. Accordingly, neither this Agreement, the Franchise, the
Center (or any interest therein), the assets of the Center, nor any part or all
of your ownership, may be transferred without the prior written approval of the
Company, which approval will not be unreasonably withheld. Any transfer without
approval will constitute a breach of this Agreement and be void and of no
effect. As used in this Agreement, the term "transfer" means and includes the
voluntary, involuntary, direct or indirect assignment, sale, gift or other
transfer by you (or any of the Owners) of any interest in: (1) this Agreement;
(2) the Franchise; (3) your ownership; (4) the Center; or (5) the assets of the
Center, including without limitation, any dealer authorizations.
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C. CONDITIONS FOR APPROVAL OF TRANSFER.
If you (and, if you are a corporation or partnership, the Owners) are
in full compliance with this Agreement, the Company will not unreasonably
withhold its approval of a transfer that meets all of the applicable
requirements of this Section 14C. If the transfer is of the Franchise or a
controlling interest, or is 1 of a series of transfers which, in the aggregate,
constitute the transfer of the Franchise or a controlling interest, all of the
following conditions must be met prior to, or concurrently with, the effective
date of the transfer:
(1) the transferee must meet the Company's standards for
MicroAge Computer Center franchisees;
(2) you must pay all amounts due and owing the Company,
its related companies and third-party creditors which
are then due and unpaid;
(3) the transferee must agree to execute the Company's
then current standard franchise agreement;
(4) you or the transferee must pay the Company 50% of the
initial franchise fee, if any, then charged by the
Company for MicroAge Computer Center franchises;
(5) you (and the Owners) and the Company must execute a
mutual general release, in form satisfactory to the
Company, of any and all claims either party may have
against the other and their respective related
companies and their officers, directors, employees
and agents;
(6) you must provide the Company with a copy of the final
purchase contract relating to the proposed transfer
with all supporting documents and schedules; and
(7) you and the Owners must execute a noncompetition
covenant in favor of the Company and the transferee
agreeing that, for a period of 6 months commencing on
the effective date of the transfer, you, the Owners
and members of your immediate family and each of the
Owner's immediate families will not hold any direct
or indirect interest as a disclosed or beneficial
owner, investor, partner, director, officer,
employee, consultant, representative or agent, or in
any other capacity, in any Competing Business located
or operating within a radius of 50 miles of the
Center or of any other MicroAge Computer Center in
operation or under construction on the effective date
of transfer, or in any entity which is granting
franchises or licenses to others to operate any
Competing Business.
If the proposed transfer is to or among the Owners, Subparagraph (4) of
the above requirements will not apply.
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D. TRANSFER TO A CORPORATION OR PARTNERSHIP.
If you are in full compliance with this Agreement, the Company will not
unreasonably withhold its approval of a proposed assignment or transfer of this
Agreement and the Franchise to a corporation or partnership which conducts no
business other than the Center and in which you maintain management control and
own and control 67% of the general partnership interest or equity and voting
power of all issued and outstanding capital stock. Transfers of shares or
partnership interests in the corporation or partnership will be subject to the
provisions of this Section 14D. You will remain personally liable under this
Agreement as if the transfer to the corporation or partnership has not occurred.
E. DEATH OR DISABILITY OF FRANCHISEE.
Upon your death or permanent disability or, if you are a corporation or
partnership, the owner of a controlling interest in you, the executor,
administrator, conservator or other personal representative of such person,
within a reasonable time, must assign his interest in the Franchise or you to a
third party approved by the Company. The disposition of this Agreement and the
Franchise must be completed within a reasonable time, not to exceed 6 months
from the date of death or permanent disability and is subject to all of the
terms and conditions of transfer set forth in this Section 14. Failure to so
dispose of your interest or the interest of the principal Owner within said
period of time will constitute a breach of this Agreement.
F. THE COMPANY'S RIGHT OF FIRST REFUSAL.
If you (or the Owners) at any time determine to sell an interest in
this Agreement, the Franchise, the Center, the assets of the Center or an
ownership interest in you, you must obtain a bona fide, executed written offer
and an earnest money deposit of at least 10% of the offering price from a
responsible and fully disclosed purchaser and must submit a true and correct
copy of the offer to the Company. The Company will have the right, exercisable
by written notice delivered to you (or the Owners) within 30 days from the date
of delivery of the offer to the Company, to purchase this interest in this
Agreement, the Franchise, the Center, the assets of the Center or an ownership
interest in you for the price and on the terms and conditions contained in the
offer (provided that the Company may substitute cash for any proposed form of
payment). If the Company does not exercise its right of first refusal, you (or
the Owners) may complete the sale on the terms of the offer, subject to the
Company's approval of the purchaser as provided in Sections 14B and 14C. If the
sale to this purchaser is not completed within 120 days after delivery of the
offer to the Company, or there is a material change in the terms of the sale,
the Company will again have a right of first refusal.
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15. RENEWAL OF FRANCHISE.
A. MUTUAL AGREEMENT TO RENEW.
If, upon expiration of the initial term of the Franchise, you have
substantially complied with all provisions of this Agreement, you may request
renewal of the Franchise for an additional term equal to the customary initial
term granted under the Company's then current form of franchise agreement. Your
request to renew must be in writing and received by the Company at least 180
days but no more than 270 days before the expiration of the initial term of this
Agreement. The Company, in its sole discretion, may choose to accept or deny
your request. If the Company chooses to accept your request for renewal, the
Company will send you written notice of the acceptance within 30 days from
receipt of your request. If the Company does not send you an acceptance notice,
then the Company will be deemed to have denied the request for renewal.
B. RENEWAL AGREEMENTS/RELEASES.
To renew the Franchise, the Company and you (and the Owners) must
execute the current form of franchise agreement and ancillary agreements as are
then used by the Company in offering franchises for MicroAge Computer Centers
(with appropriate modifications to reflect that it is a renewal franchise). The
renewal agreements may contain provisions substantially different from this
Agreement. You (and the Owners) and the Company must also execute a mutual
general release, in form satisfactory to the Company, of all claims either party
may have against the other and their respective related companies and their
officers, directors, employees and agents. Failure by you (and the Owners) to
sign the agreement(s) and release(s) within 60 days after delivery to you will
be deemed an election by you not to renew the Franchise.
16. TERMINATION OF THE FRANCHISE.
A. TERMINATION WITHOUT CAUSE.
Both you and the Company will have the right to terminate this
Agreement, without cause, on 180 days' notice to the other party; however, if
you obtained dealer status authorization from IBM, Apple, Compaq or
Hewlett-Packard during the term of this Agreement, you may terminate without
cause only after 12 months' prior notice. If any law, statute, regulation, code
or governmental authority prohibit the Company from terminating under this
Section 16A, then you will not have any right to terminate under this Section
16A. If the Agreement is terminated under this Section 16A, you (and the Owners)
and the Company will execute a mutual general release, in form satisfactory to
the Company and effective as of the date of termination, of any and all claims
either party may have against the other and their respective related companies
and their officers, directors, employees and agents.
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B. TERMINATION BY THE COMPANY.
The Company will have the right to terminate this Agreement effective
upon delivery of notice of termination to you, if you (or the Owners): (1)
abandons or fails actively to operate the Center for 3 consecutive business days
unless the Center has been closed for a purpose approved by the Company; (2)
have made any material misrepresentation or omission in your application for the
Franchise; (3) are convicted of, or plead, or have pleaded no contest to a
felony or other crime or offense; (4) violate the restrictions on competition
described in Section 7; (5) fail to meet the minimum quarterly dollar
requirement for the purchase of products from the Company; (6) make an
unauthorized transfer as described in Section 14; (7) make any unauthorized use
or disclosure of any Confidential Information; (8) fail to make payment of any
amounts due the Company or its related companies hereunder and do not correct
this failure within 10 days after written notice of failure is delivered to you;
(9) fail to purchase from the Company as your primary source of supply as
described in Section 9A; (10) fail to comply with any other provision of this
Agreement and do not: (a) correct this failure within 5 days if the failure
relates to the use of any Mark, otherwise 30 days after written notice of the
failure to comply is delivered to you or (b) provide proof acceptable to the
Company of efforts which are reasonably calculated to correct the failure if the
failure cannot reasonably be corrected within 30 days after written notice of
the failure to comply is delivered to you; or (11) fail on 2 or more separate
occasions within any period of 12 consecutive months or on 3 occasions during
the term of this Agreement to submit when due reports or other data, information
or supporting records or to pay amounts due to the Company or its related
companies or otherwise fail to comply with this Agreement, whether or not these
failures to comply are corrected after notice is delivered to you.
17. RIGHTS AND OBLIGATIONS
UPON TERMINATION OR EXPIRATION OF THE FRANCHISE.
A. PAYMENT OF AMOUNTS OWED TO THE COMPANY.
You will pay to the Company within 15 days after the effective date of
termination or expiration of the Franchise, or any later date that the amounts
due are determined, amounts due for products you have purchased from the Company
or its related companies, interest due and all other amounts owed to the Company
and its related companies which are then unpaid.
B. MARKS.
You agree that, upon the termination or expiration of the Franchise,
you will:
(1) not directly or indirectly, at any time or in any manner,
identify yourself or any business as a current or former MicroAge
Computer Center, or as a franchisee, licensee or dealer of or as
otherwise associated with the Company, or use any Mark, any colorable
imitation thereof or other indicia of a MicroAge Computer Center in any
manner or for any purpose, or utilize any trade name, trade or service
mark or other commercial symbol that suggests or indicates a connection
or association with the Company;
(2) return to the Company (or destroy at the Company's
direction) all signs, sign-faces, catalogues, forms, invoices and other
materials containing any Mark and allow the Company to remove all of
these items from the Center;
(3) take any action required to cancel all fictitious or
assumed name registrations relating to your use of any Mark;
(4) notify the telephone company and all listing agencies of
the termination or expiration of your right to use any regular,
classified or other telephone directory listings associated with any
Mark and to authorize transfer of same to or at the direction of the
Company. If you fail to so notify the telephone company and all listing
agencies, the Company has the right to notify these parties and to take
whatever action necessary to change the listings; and
(5) furnish to the Company, within 60 days after the effective
date of termination or expiration, evidence satisfactory to the Company
of your compliance with the foregoing obligations.
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C. CONFIDENTIAL INFORMATION.
Upon termination or expiration of the Franchise, you will immediately
cease to use the Confidential Information of the Company disclosed to you
pursuant to this Agreement and return to the Company all copies of the Operating
Manual (whether in written form or in other media) which have been provided to
you by the Company.
D. COVENANT NOT TO COMPETE.
Upon termination or expiration of this Agreement, you and the Owners
agree that, for a period of 6 months commencing on the effective date of
termination or the date on which you cease to conduct business, whichever is
later, neither you nor the Owners will have any direct or indirect interest
(through a member of your immediate family or the immediate family of the Owners
or otherwise) as a disclosed or beneficial owner, investor, partner, director,
officer, employee, consultant, representative or agent or in any other capacity
in: (1) any Competing Business located or operating at or from the premises of
the Center; (2) any Competing Business located or operating within a radius of
50 miles of the premises of the Center or any other MicroAge Computer Center in
operation or under construction on the effective date of termination; or (3) any
entity which is granting franchises or licenses to others to operate a Competing
Business.
You and the Owners acknowledge that you both possess skills and
abilities of a general nature and have other opportunities for exploiting these
skills and that enforcement of the covenants made in this Section 17D will not
deprive any of you of your personal goodwill or ability to earn a living. This
Section 17D will not apply to ownership of shares of a class of securities of a
Competing Business listed on a stock exchange or traded on the over-the-counter
market that represent 1% or less of the number of shares of that class of
securities issued and outstanding.
13
<PAGE>
E. CONTINUING OBLIGATIONS.
All obligations of the Company, you or the Owners, which expressly or
by their nature survive the expiration or termination of this Agreement, will
continue in full force and effect subsequent to its expiration or termination
until they are satisfied in full or expire.
18. MISCELLANEOUS PROVISIONS.
A. JUDICIAL ENFORCEMENT, INJUNCTION
AND SPECIFIC PERFORMANCE.
The Company will be entitled, without bond, to the entry of temporary,
preliminary and permanent orders of specific performance enforcing the
provisions of this Agreement or any other related agreement relating to: your
use of the Marks; the non-competition restrictions applicable to you or the
Owners; your obligations upon termination or expiration of this Agreement; and
transfer or attempted transfer of this Agreement, the Franchise, the Center, the
assets of the Center or your ownership. If the Company secures any injunction or
order of specific performance, you will pay to the Company an amount equal to
the aggregate of its costs of obtaining this relief, including, without
limitation, reasonable attorneys' fees, costs and expenses as provided in
Section 18K, and any damages incurred by the Company as a result of the breach
of any provision.
B. ARBITRATION.
ALL CONTROVERSIES, DISPUTES OR CLAIMS ARISING BETWEEN THE COMPANY, ITS
OFFICERS, DIRECTORS, AGENTS, EMPLOYEES AND ATTORNEYS (IN THEIR REPRESENTATIVE
CAPACITY) AND YOU (THE OWNERS AND GUARANTORS, IF APPLICABLE) ARISING OUT OF OR
RELATED TO: (1) THIS AGREEMENT OR ANY OF ITS PROVISIONS OR ANY RELATED
AGREEMENT; (2) THE RELATIONSHIP OF THE PARTIES; OR (3) THE VALIDITY OF THIS
AGREEMENT OR ANY RELATED AGREEMENT, WILL BE SUBMITTED FOR ARBITRATION TO BE
ADMINISTERED BY THE PHOENIX OFFICE OF THE AMERICAN ARBITRATION ASSOCIATION ON
DEMAND OF EITHER PARTY, UNLESS THE COMPANY ELECTS TO ENFORCE THIS AGREEMENT OR
ANY OTHER RELATED AGREEMENT BY JUDICIAL PROCESS. THE ARBITRATION PROCEEDINGS
WILL BE CONDUCTED IN PHOENIX, ARIZONA AND, EXCEPT AS OTHERWISE PROVIDED IN THE
AGREEMENT, WILL BE CONDUCTED IN ACCORDANCE WITH THE THEN CURRENT COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. THE ARBITRATOR WILL
HAVE THE RIGHT TO AWARD OR INCLUDE IN HIS AWARD ANY RELIEF WHICH HE DEEMS PROPER
IN THE CIRCUMSTANCES, INCLUDING WITHOUT LIMITATION, MONEY DAMAGES (WITH INTEREST
ON UNPAID AMOUNTS FROM DATE DUE), SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF, AND
ATTORNEYS' FEES AND COSTS IN ACCORDANCE WITH SECTION 18K. THE AWARD AND DECISION
OF THE ARBITRATOR WILL BE CONCLUSIVE AND BINDING UPON ALL PARTIES AND JUDGMENT
UPON THE AWARD MAY BE ENTERED IN ANY COURT OF COMPETENT JURISDICTION. THE
PARTIES FURTHER AGREE TO BE BOUND BY THE PROVISIONS OF ANY APPLICABLE LIMITATION
ON THE PERIOD OF TIME IN WHICH THE CLAIMS MUST BE BROUGHT. THE PARTIES FURTHER
AGREE THAT, IN CONNECTION WITH ANY ARBITRATION PROCEEDING, EACH WILL FILE ANY
COMPULSORY COUNTERCLAIM (AS DEFINED BY RULE 13 OF THE FEDERAL RULES OF CIVIL
PROCEDURE) WITHIN 30 DAYS OF THE DATE
14
<PAGE>
OF THE FILING OF THE CLAIM TO WHICH IT RELATES. THIS SECTION 18B WILL CONTINUE
IN FULL FORCE AND EFFECT SUBSEQUENT TO AND NOTWITHSTANDING EXPIRATION OR
TERMINATION OF THIS AGREEMENT. YOU AND THE COMPANY AGREE THAT ARBITRATION WILL
BE CONDUCTED ON AN INDIVIDUAL, NOT A CLASS WIDE BASIS.
C. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS.
All provisions of this Agreement are severable and this Agreement will
be interpreted and enforced as if all completely invalid or unenforceable
provisions were not contained in this Agreement, and partially valid and
enforceable provisions will be enforced to the extent valid and enforceable. To
the extent that Section 7, Section 14C(7) or Section 17D is deemed unenforceable
by virtue of its scope in terms of area or length of time, but may be made
enforceable by reductions of either or both you and the Company agree that same
will be enforced to the fullest extent permissible under the laws and public
policies applied in the jurisdiction in which enforcement is sought. If any
applicable law or rule of any jurisdiction requires a greater prior notice of
the termination of or refusal to renew this Agreement than is required in this
Agreement or the taking of some other action not required under this Agreement,
or if under any applicable and binding law or rule of any jurisdiction, any
provision of this Agreement is invalid or unenforceable, the prior notice and/or
other action required by this law or rule shall be substituted or the invalid or
unenforceable provision will be modified to the extent required to be valid and
enforceable. Any modifications to this Agreement will be effective only in the
applicable jurisdiction and will be enforced as originally made and entered into
in all other jurisdictions.
15
<PAGE>
D. WAIVER OF OBLIGATIONS.
The Company and you may by written instrument unilaterally waive any
obligation of or restriction upon the other under this Agreement. No acceptance
by the Company of any payment by you or any other person or entity and no
failure, refusal or neglect of the Company or you to exercise any right under
this Agreement or to insist upon full compliance by the other with its
obligations will constitute a waiver of any provision of this Agreement.
E. RESERVATION OF RIGHTS.
The Company and its related companies retain the right to: (1) sell the
products and services authorized for MicroAge Computer Centers under the Marks
and other trademarks and service marks, through similar or dissimilar channels
of distribution, and pursuant to any terms and conditions the Company deems
appropriate; (2) sell any other products or services under the Marks; (3) own,
operate or franchise MicroAge Computer Centers or other computer sales
businesses at locations as the Company, in its sole discretion, deems
appropriate; and (4) offer other franchise programs which may allow for
purchases of differing product lines.
F. YOU MAY NOT WITHHOLD
PAYMENTS DUE THE COMPANY.
You will not withhold payment of any amount owed to the Company or its
related companies on grounds of the alleged nonperformance by the Company of any
of its obligations under this Agreement.
G. RIGHTS OF PARTIES ARE CUMULATIVE.
All rights under this Agreement are cumulative and no exercise or
enforcement of any right or remedy will preclude the exercise or enforcement by
the Company or you of any other right or remedy under this Agreement or which
the Company or you are entitled by law to enforce.
H. WAIVER OF PUNITIVE DAMAGES.
The Company and you hereby waive to the fullest extent permitted by law
any right to or claim for any punitive or exemplary damages against the other
and agree that, in the event of a dispute between them, each will be limited to
the recovery of actual damages.
I. WAIVER OF JURY TRIAL.
The Company and you irrevocably waive trial by jury in any action,
proceeding or counterclaim, whether at law or in equity, brought by either of
them.
16
<PAGE>
J. LIMITATION OF CLAIMS.
Any and all claims arising out of or relating to this Agreement or the
relationship of the parties in connection with your operation of the Center will
be barred unless an action or proceeding is commenced within 1 year from the
date you or the Company knew or, by the exercise of reasonable diligence, should
have known of the facts giving rise to these claims.
K. COSTS AND ATTORNEYS' FEES.
If a claim for amounts you owe the Company or its related companies is
asserted in any legal proceeding before a court of competent jurisdiction or an
arbitrator, or if the Company or you are required to enforce this Agreement in a
judicial or arbitration proceeding, the party prevailing in the proceeding will
be entitled to recover from the other its costs and expenses, including
reasonable accounting, paralegal, legal, expert witness, attorneys' fees and
arbitrator fees, whether incurred prior to, in preparation for or in
contemplation of the filing of any proceeding. If the Company is required to
engage legal counsel in connection with any failure by you to pay when due
amounts due the Company or to submit when due any reports, information or
supporting records, or in connection with any failure to otherwise comply with
this Agreement, you will reimburse the Company for any of the above listed costs
and expenses incurred by it.
L. GOVERNING LAW.
THIS AGREEMENT, THE FRANCHISE AND THE RELATIONSHIP OF THE PARTIES WILL
BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ARIZONA, EXCEPT TO THE EXTENT
GOVERNED BY THE UNITED STATES TRADEMARK ACT OF 1946 (LANHAM ACT, 15 U.S.C.
ss.ss. 1051 ET SEQ.) AND EXCEPT THAT ALL ISSUES RELATING TO ARBITRABILITY OR THE
ENFORCEMENT OR INTERPRETATION OF THE AGREEMENT TO ARBITRATE DESCRIBED IN SECTION
18B WILL BE GOVERNED BY THE UNITED STATES ARBITRATION ACT (9 U.S.C. ss.1 ET.
SEQ.) AND THE FEDERAL COMMON LAW RELATING TO ARBITRATION.
M. CONSENT TO JURISDICTION AND VENUE.
THE COMPANY MAY INSTITUTE ANY ACTION AGAINST YOU ARISING OUT OF OR
RELATING TO THIS AGREEMENT (WHICH IS NOT REQUIRED TO BE ARBITRATED) IN ANY STATE
OR FEDERAL COURT OF GENERAL JURISDICTION IN THE COUNTY OF MARICOPA IN THE STATE
OF ARIZONA, AND YOU IRREVOCABLY SUBMIT TO THE JURISDICTION OF THESE COURTS AND
WAIVE ANY OBJECTION YOU MAY HAVE TO EITHER THE JURISDICTION OR VENUE OF ANY
COURT.
17
<PAGE>
N. FORCE MAJEURE.
Neither the Company nor you will be liable for loss or damage or deemed
to be in breach of this Agreement if its failure to perform its obligations
results from: (1) transportation shortages, inadequate supply of labor, material
or energy, or the voluntary foregoing of the right to acquire or use any of the
foregoing in order to accommodate or comply with the orders, requests,
regulations, recommendations or instructions of any federal, state or municipal
government or any department or agency; (2) compliance with any law, ruling,
order, regulation, requirement or instruction of any federal, state or municipal
government or any department or agency; (3) acts of God; (4) fires, strikes,
embargoes, war or riot; or (5) any other similar event or cause. Any delay
resulting from any of said causes will extend performance or excuse performance,
in whole or in part, as may be reasonable.
O. CONSTRUCTION.
The preambles are a part of this Agreement, which constitutes the
entire agreement of the parties, and there are no other oral or written
understandings or agreements between the Company and you relating to the subject
matter of this Agreement. This Agreement may not be modified except in a writing
signed by both parties. This Agreement is binding upon the parties and their
respective heirs, assigns and successors in interest. The headings of the
several sections and paragraphs are for convenience only and do not define,
limit or construe the contents of any section or paragraph. The term "you" is
applicable to one or more persons, a corporation or a partnership, as the case
may be, and the singular usage includes the plural and the masculine and neuter
usages include the other and the feminine. References to "you" applicable to an
individual or individuals means the principal owner or owners of the equity or
operating control of you if you are a corporation or partnership. Reference to
"immediate family" means parents, spouses, offspring and siblings, and the
parents, offspring and siblings of spouses.
19. NOTICES.
All written notices and reports permitted or required to be delivered
by this Agreement or the Operating Manual will be deemed so delivered at the
time delivered by hand, 1 business day after being placed in the hands of a
commercial courier service or United States Postal Service for overnight
delivery or 3 days after placed in the Mail by Registered or Certified Mail,
Return Receipt Requested, postage prepaid and addressed to the party to be
notified at its most current principal business address of which the notifying
party has been notified.
18
<PAGE>
The parties have executed and delivered this Agreement as of the date
listed on page 1 of this Agreement.
MicroAge Computer Centers, Inc. FRANCHISEE ("you")
(the "Company")
If a corporation:
By:
Title: By:
ATTEST: Title: President
If an individual:
[Print Name]
[Print Name]
[Print Name]
19
<PAGE>
GUARANTY
--------
FOR VALUE RECEIVED, each of the undersigned (collectively "Guarantor")
does hereby personally, unconditionally and irrevocably guaranty the payment and
performance by ______________________________, a ____________________corporation
("FRANCHISEE") of each and every undertaking, agreement and covenant set forth
in that certain MicroAge Computer Centers Franchise Agreement by and between
MicroAge Computer Centers, Inc. and FRANCHISEE of even date herewith (the
"Agreement"), including but not limited to Sections 6 and 17C concerning
confidential information, Sections 7, 14C(7) and 17D concerning restrictive
covenants and Section 18B concerning arbitration, and agrees to be personally
bound by and liable for the breach of each and every provision of the Agreement.
Guarantor agrees that this Guaranty is directly enforceable against
Guarantor without first resorting to and exhausting remedies against Franchisee,
and any indulgences, forbearances or extensions of time for performance will not
in any way release Guarantor from liability hereunder. Guarantor waives any and
all notices and legal or equitable defenses to which the Guarantor may be
entitled, except as otherwise expressly provided in the Agreement. This is an
absolute and continuing guaranty and shall remain in full force and effect
during the term of the Agreement.
IN WITNESS WHEREOF, each of the undersigned has hereunto affixed his
signature on the same day and year as the Agreement was executed.
GUARANTOR(S)
------------------------------------
and his/her spouse
------------------------------------
------------------------------------
and his/her spouse
------------------------------------
MICROAGE Exhibit 10.2
Purchasing Terms and Conditions Agreement
1. Agreement to Purchase. MICROAGE TECHNOLOGIES, a division of MicroAge
Computers Centers, Inc. (the "Company") has master vendor agreements with
various vendors ("Vendors"), and distributes and sells the Vendors' computer
hardware and related products (collectively, the "Products") to authorized
customers. Purchaser (identified on the Application and below) agrees to
purchase and resell the Products in accordance with the terms and conditions of
this Agreement and the Company's general policies and procedures as outlined in
the Price Guide and the Business Builder Resource Guide, subject to and
contingent upon receipt by the Company of Vendor authorization, if required.
2. Business Location and Name. Company shall ship all Products to the address
designated by Purchaser. Purchaser shall notify the Company of any change in
Purchaser's business location or business name. Until a Vendor that requires
authorization provides the Company with approval to do so, the Company shall not
be obligated to ship to the new location or new business name.
3. Product Ordering and Shipment Terms and Conditions. The Company's general
policies and procedures, as outlined in the Price Guide and the Business Builder
Resource Guide, shall contain the terms and conditions by which the Products
shall be ordered, and shipped to, Purchaser. The Company shall have the right to
allocate its available products among its customers in such manner as the
Company deems equitable. Purchaser agrees to maintain and operate its business
in compliance with this Agreement, the general policies and procedures as
outlined in the Price Guide and the Business Builder Resource Guide, the
standards and specifications established by its Vendors, as each may be modified
from time to time.
4. Product Cost. The purchase price for the Products and all other terms and
conditions of sale shall be as set forth in the then-current general policies
and procedures as outlined in the Price Guide and the Business Builder Resource
Guide. Purchaser shall make payment to the Company upon placement of Product
orders by means of electronic transfer of funds, certified check in advance or
other means as outlined in the general policies and procedures as outlined in
the Price Guide and the Business Builder Resource Guide. The Company may, in its
sole discretion, modify the purchase price for the products or the time or
manner of payment and/or invoicing procedures in accordance with policies and
procedures announced periodically or as contained in the general policies and
procedures as outlined in the Price Guide and the Business Builder Resource
Guide. Delinquent payments shall be subject to a service charge of the lesser of
one and one-half percent (1-1/2%) or the highest applicable legal rate allowed
on the delinquent amount due per month until paid.
5. Independent Businessperson. The parties agree that each of them is an
independent business and that their only relationship is by virtue of this
Agreement. Neither party is liable or responsible for each other's debts or
obligations. Company and Purchaser agree that neither of them will hold itself
out to be the agent, partner, joint venturer, employer or related party of the
other.
6. Indemnification. Purchaser agrees that it will indemnify and hold harmless
the Company from all fines, suits, proceedings, claims, demands or action of any
kind or nature, or from any third party whomsoever, arising or growing out of,
or otherwise connected with, the Purchaser's business.
7. Price Guide. The Company reserves the right to change the policies and
procedures outlined in the Price Guide and the Business Builder Resource Guide,
which changes shall be effective when written notice shall have been sent to
Purchaser. The master copy of the general policies and procedures as outlined in
the Price Guide and the Business Builder Resource Guide maintained by the
Company at its principal office shall be controlling in the event of a dispute
relative to the content of any provision therein.
8. Purchaser Criteria. Purchaser acknowledges and represents that: (i) its
execution of this Agreement does not violate the terms of any other
dealer/distributor agreement it is a party to; (ii) at no time during
discussions concerning this Agreement did the Company induce Purchaser to
terminate or impair any existing contract it may have; and (iii) Purchaser
represents that it possesses any authorization required by the Vendors for the
sale of the Products. Purchaser shall maintain said authorization(s) in good
standing during the terms of this Agreement.
<PAGE>
9. Proprietary Marks and Trademarks. Purchaser acknowledges that the Company's
trademarks, MICROAGE and MICROSOURCE, are the Company's sole and exclusive
property, and that Purchaser is specifically prohibited from using the Company's
trademarks in any manner or for any purpose.
10. Mutual Right to Terminate. Either party may terminate this Agreement at any
time, with or without cause, and in its sole and absolute discretion, upon
thirty (30) days' prior written notice to the other party. This Agreement shall
terminate immediately upon the expiration or termination of the master vendor
agreement between the Company and the Vendor(s). Upon any termination or
expiration of the Agreement, each party shall pay to the other all amounts or
accounts payable then owed and unpaid between the parties, if any, within
fifteen (15) calendar days of the effective date of such termination or
expiration.
11. Assignment. Purchaser may not sell, transfer or assign this Agreement, in
whole or in part, or any of the rights hereunder unless Purchaser obtains the
Company's prior written consent.
12. Confidentiality. Purchaser shall maintain the confidentiality of all
elements of the distribution system, the Agreement, the Price Guide, the
Business Builder Resource Guide and the Company's methods of doing business.
13. Miscellaneous Provisions.
13.1. All manufacturers' warranties are passed through to
Purchaser's end users. THE COMPANY HEREBY EXPRESSLY DISCLAIMS ALL EXPRESS AND/OR
IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
13.2. This Agreement may be modified only upon execution of a
written agreement executed by the parties. No waiver of any condition or
covenant contained in this Agreement, or failure to exercise a right or remedy
of the Company or Purchaser, shall be considered to imply or constitute a
further waiver by the waiving party of the same or any other condition,
covenant, right or remedy.
13.3. The validity and construction of this Agreement shall be
governed by the laws of the State of Arizona. If any of the terms of this
Agreement are inconsistent with the applicable state statutes, then state
statutes will supersede such terms. If a claim is asserted in any legal
proceeding, Purchaser and the Company agree to irrevocably submit to the
jurisdiction of the Superior Court of the State of Arizona and the Federal
District Court for the District of Arizona, and irrevocably agree that venue for
any action or proceeding shall be in the County of Maricopa, State of Arizona.
Both parties waive any objection to the jurisdiction of these courts or to venue
in Maricopa County, Arizona.
13.4. All notices required to be given under this Agreement shall
be given in writing, by certified mail, return receipt requested, at the
addresses of the parties contained in the Program Application, or to such other
addresses as the Company or Purchaser may designate from time to time, and shall
be effectively given five (5) business days after deposit in the United States
mail, postage prepaid.
13.5. These terms and conditions contain the entire agreement
between the parties and supersede any and all prior agreements, if any, between
the parties concerning the subject matter hereof. Purchaser agrees and
understands that the Company shall not be liable or obligated for any verbal
representations made. The Company does not authorize and will not be bound by
any representation of any nature other than those expressed in this Agreement.
13.6. SUBSTITUTE W-9. I certify that the Federal Taxpayer
Identification Number provided to the Payor on the Application is correct and
that the Payee is not subject to back-up withholding due to notified Payee
under-reporting.
13.7. The statements provided in this Application and in the
attached documents are true and complete to the best of Purchaser's knowledge.
Purchaser agrees that information submitted in this Application will be treated
discreetly by Company; inaccurate and/or false information may be grounds for
Company to terminate this agreement; Company may contact any person or business
outlined in this Application for the purpose of verifying the information
submitted, and Purchaser agrees to authorize any such person or business to
release any information to Company which may be required to effect such
verification. The individual signing this Agreement represents that the
corporate Purchaser (if applicable) is a valid corporation in good standing, or
that if the corporation is not valid, said individual
<PAGE>
agrees to be personally responsible for all Purchaser obligations under this
Agreement.By signing this Agreement, the Company and Purchaser agree that a
facsimile of the signed Agreement may be construed and accepted as valid,
enforceable and binding on the parties hereto.
PURCHASER
________________________________________________________________________________
(Complete name of corporation, partnership or sole proprietorship)
By______________________________________________________________________________
(Signature of Corporate Officer, Partner or Owner)
Print Name _____________________________________________________________________
Title___________________________________________________________________________
Date____________________________________________________________________________
MICROAGE TECHNOLOGIES
By______________________________________________________________________________
Title___________________________________________________________________________
Date____________________________________________________________________________
Rev. November 28, 1995
EXHIBIT 11.1
MICROAGE, INC.
PRIMARY EPS DETAIL CALCULATION
<TABLE>
<CAPTION>
26 weeks ended
-----------------------------------
April 28, April 30,
1996 1995
-----------------------------------
<S> <C> <C>
Common stock
- ---------------------------------
Weighted average common shares 14,342,041 14,072,853
Common stock equivalents
- ---------------------------------
Weighted average warrants and options 166,376 196,046
--------------- ----------------
Total weighted average common and
common equivalent shares outstanding 14,508,417 14,268,899
=============== ================
Net income available for EPS $ 4,495,000 $ 5,303,000
Primary EPS $ 0.31 $ 0.37
</TABLE>
EXHIBIT 11.2
MICROAGE, INC.
FULLY DILUTED EPS DETAIL CALCULATION
<TABLE>
<CAPTION>
26 weeks ended
-----------------------------------
April 28, April 30,
1996 1995
-----------------------------------
<S> <C> <C>
Net income available for primary EPS $ 4,495,000 $ 5,303,000
=============== ===============
Shares: per primary EPS 14,508,417 14,268,899
additional shares issuable 148,725 30
--------------- ---------------
14,657,142 14,268,929
=============== ===============
Fully diluted EPS $ 0.31 $ 0.37
=============== ===============
</TABLE>
Note: Since fully diluted EPS affects primary EPS by less than 3%, it is not
disclosed in the financial statements.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial
information extracted from the Consolidated
Balance Sheets (Unaudited) as of April 28, 1996
and October 29, 1995 and the Consolidated
Statements of Income (Unaudited) for the quarters
and 26 weeks ended April 28, 1996 and April 30,
1995 contained in the Form 10-Q for the quarterly
and 26 week periods ended April 28, 1996, and is
qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-03-1996
<PERIOD-START> JAN-29-1996
<PERIOD-END> APR-28-1996
<EXCHANGE-RATE> 1
<CASH> 8,050
<SECURITIES> 0
<RECEIVABLES> 233,450
<ALLOWANCES> (13,617)
<INVENTORY> 289,587
<CURRENT-ASSETS> 530,641
<PP&E> 96,958
<DEPRECIATION> (50,025)
<TOTAL-ASSETS> 597,738
<CURRENT-LIABILITIES> 420,219
<BONDS> 0
0
0
<COMMON> 145
<OTHER-SE> 173,803
<TOTAL-LIABILITY-AND-EQUITY> 597,738
<SALES> 863,648
<TOTAL-REVENUES> 863,648
<CGS> 819,079
<TOTAL-COSTS> 819,079
<OTHER-EXPENSES> 35,038
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 818
<INCOME-PRETAX> 5,147
<INCOME-TAX> 2,209
<INCOME-CONTINUING> 2,938
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,938
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
