Form: Distribution Agreement with Commentary

Dated: ______, 20___

______, a ______ corporation (herein called “Manufacturer”), with offices at ______, ______ and ______, a ______ corporation (herein called “Distributor”), with offices at ______, ______, hereby agree as follows:

ARTICLE I

DEFINITIONS

As used in this Agreement, each of the following terms has the meaning set forth thereafter, such meaning to be equally applicable both to the singular and plural forms of the terms herein defined:

“Agreement” means this agreement, together with all schedules hereto now or hereafter signed by Distributor and Manufacturer (all of which are herein incorporated by reference), as the same may be modified, amended or supplemented from time to time.

“Products” means (i) those products manufactured by Manufacturer which are described in Schedule I hereto and (ii) unless the context indicates otherwise, all spare and replacement parts sold by Manufacturer for Products.

The terms “sale” and “resale” and any grammatical variant thereof shall include, without limitation, sales, contracts for sale, conditional sales, installment sales, rentals or leases, and any other arrangement whereby Products are placed at the disposal of the ultimate user [reseller].

“Territory” means the area [country, state, county or city, or parts thereof] referred to in Schedule II hereto.

ARTICLE II

APPOINTMENT AS DISTRIBUTOR

SECTION 2.01 Manufacturer hereby appoints Distributor as [exclusive] [non-exclusive] authorized distributor in the Territory for the sale of Products, and Distributor hereby accepts this appointment. [Manufacturer agrees not to appoint prior to the termination of this Agreement another authorized distributor in the Territory for the sale of Products. All orders or direct inquiries received by Manufacturer respecting the sale of Products in the Territory will be referred by Manufacturer to Distributor.]

SECTION 2.02 Nothing in this Agreement shall limit the geographic area in which, or the customers to whom, Distributor or any other distributor may sell or deliver Products. Manufacturer expressly reserves the right to sell and deliver Products to any other entity, and nothing in this Agreement shall obligate Manufacturer to impose any restriction upon the use or

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resale of Products by a purchaser thereof from Manufacturer; the use or resale of Products in any area by such a purchaser shall not constitute breach of any provision of this Agreement by Manufacturer, and Manufacturer shall be under no obligation to procure the termination of such use or resale.

SECTION 2.03 Distributor shall conduct its business in the purchase and resale of Products as a principal for its own account and at its own expense and risk. This Agreement does not in any way create the relationship of principal and agent, or any similar relationship, between Manufacturer and Distributor. Distributor covenants and warrants that it will not act or represent itself directly or by implication as agent for Manufacturer and will not attempt to create any obligation, or make any representation, on behalf of or in the name of Manufacturer. [Distributor has no authority to appoint an associate distributor or subdistributor of Products.]

[SECTION 2.04 Distributor may appoint subdistributors and/or agents for the Products in the Territory in such numbers and at such locations as it may deem appropriate in its sole discretion. Distributor shall be entirely responsible for the performance of its distributors and/or agents and nothing in this Section shall be deemed to create the relationship of principal and agent or distributor, or any similar relationship, between Manufacturer and such subdistributor and/or agent.]

ARTICLE III

SALES AND SERVICE

SECTION 3.01 Distributor shall use its best efforts to sell and promote the sale of Products within the Territory, which best efforts shall include but not be limited to prompt performance of all of its obligations under this Agreement. Distributor will maintain a sales volume of Products in the Territory in accordance with reasonable standards of performance established by Manufacturer from time to time. [Distributor will maintain the Minimum Purchase Requirements set forth on Schedule ______ hereto.]

SECTION 3.02 Distributor will establish, staff, equip and maintain facilities (which Manufacturer may inspect from time to time during regular business hours) for the sale [and servicing] of Products in the Territory. Such facilities shall be sufficient to enable Distributor to satisfy properly its sales [and service] responsibilities under this Agreement and shall be consistent with promoting the reputation of, and public confidence in, Products and Manufacturer. [Distributor will cause its technically and personally suitable employees to call regularly, frequently and in a systematic and businesslike manner upon customers and potential [resellers] customers located in the Territory.]

[SECTION 3.03 Distributor hereby agrees that, to the extent that Manufacturer requests Distributor in writing to perform delivery and/or warranty services on any Product, Distributor will provide such services for each such Product sold by it, and for each such Product located in the Territory, whether or not sold by Distributor. Manufacturer will compensate the Distributor as set forth in Sections 5.02 and 6.02 hereof for services which the Distributor becomes obligated to perform under the preceding sentence. Delivery and warranty services shall include, but not be

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limited to, giving operating and maintenance instructions, installing Products (other than spare and replacement parts), performing all service necessary at the time of delivery, servicing all warranty claims and making installation inspection and necessary adjustments at the time of delivery and at such subsequent times as may be necessary to ensure proper and efficient operation (according to standard practices and policies of Manufacturer as in effect from time to time). In performing delivery and warranty services Distributor agrees to comply with service policies issued by Manufacturer from time to time and to make and furnish to Manufacturer such delivery and service reports as Manufacturer may require. Distributor shall employ for the installation and service of Products expert service personnel who have received all necessary and appropriate training. Distributor shall use its best efforts to handle satisfactorily all matters relating to the servicing of Products which it shall become obligated to service. Distributor will report promptly to Manufacturer each complaint received by Distributor relating to Products which Distributor cannot remedy, giving the name and address of the complainant.]

[SECTION 3.04 If the Distributor’s [service] obligations under this Article III are not discharged properly by Distributor, Manufacturer, in its sole discretion, may discharge such obligations directly or through third parties, and Distributor agrees to reimburse Manufacturer upon demand for all [reasonable] costs and expenses incurred by Manufacturer in connection therewith.]

ARTICLE IV

INVENTORY, MARKETING AND RELATED OBLIGATIONS

SECTION 4.01 Distributor will maintain in the Territory at all times a stock of new Products and new parts therefor in such quantity and variety as shall be mutually agreed upon as reasonably necessary or desirable in order to meet the trade [sales and service] requirements in the Territory. Distributor will [annually] [semi-annually] [monthly] make a physical inventory of such Products and parts and, not later than thirty (30) days after such inventory has been taken, will furnish Manufacturer with a complete statement of such inventory showing types and quantities of Products [and parts on hand for servicing Products]. Distributor will carry on its business transactions with its customers by supplying parts from Distributor’s stock and agrees not to order parts from Manufacturer for direct shipment to Distributor’s customers except in non-repetitive emergency circumstances. The prices for any such direct shipments shall be subject to additional charges established by Manufacturer from time to time. (Distributor will not return nor instruct a customer to return Products or parts to Manufacturer without prior authorization in writing and shipping instructions from Manufacturer.]

[SECTION 4.0 Distributor may return for credit a quantity of Products the value of which does not exceed [five percent (5%)] of the net sales invoiced Distributor for Products shipped to Distributor within a [six month] [annual] period. All returned Products will be credited at Distributor’s actual purchase price [or the lowest price set forth in Manufacturer’s Price List in effect on the day of return, whichever is less]. At the end of each [six month] [annual] period Distributor shall be notified and shall have [45] days [from the day of such notification] to make such return. The return privilege shall apply only if: (a) the returned Products were shipped from Manufacturer less than [24] months prior to the date of such notification; (b) the returned

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Products have not been damaged, altered or misused; [(c) at the time of the return, Distributor must order a quantity of Products equal in dollar value to Products returned;] and (d) all returns must be within the time periods specified in this Section 4.0__. All returned Products must be shipped prepaid and accompanied by Manufacturer’s standard return authorization form.]

SECTION 4.02 Distributor will participate in the programs offered by Manufacturer by sending sales, parts and service personnel, as appropriate, to such [seminars] schools at reasonable intervals until all such personnel have received such training and will send such personnel to refresher and new model courses offered at such [seminars] schools. Manufacturer will offer periodic consultation and advice to Distributor in connection with Distributor’s sales [and service] and will provide (a) technical, engineering and sales advice, (b) assistance and advice concerning promotional and training programs, (c) suggestions for new applications for Products, and (d) liaison between Distributor and Manufacturer. Manufacturer will furnish Distributor with a reasonable supply of price lists, sales literature, catalogues, information on Products and parts, recommendations as to stocking of Products and parts, specifications, instructions and procedures necessary to enable Distributor to furnish the proper engineering advice and assistance to its customers, [advisory assistance with respect to installation and servicing of Products], and sales [and service] representatives who will call periodically on Distributor to render whatever similar assistance may be necessary to further Distributor’s business. [All demonstration equipment, manuals, instruction books, contract forms, interior and exterior advertising signs and other similar material furnished to Distributor by Manufacturer, whether furnished free of charge or not, shall remain the property of Manufacturer and upon request will be returned to Manufacturer by Distributor, subject to the provisions of Section 8.04 hereof in respect to reimbursement to Distributor for certain charges.]

SECTION 4.03 Manufacturer will offer to Distributor without cost, advice on the form of advertisements, preferred mediums and placement thereof. Manufacturer will not share in the expense of local advertising or promotion by Distributor or other sales promotion projects except by express agreement in writing. All trademark listings or display ads in telephone directories shall be mutually agreed upon by Distributor and Manufacturer, and the cost thereof shall be paid by Distributor. [Distributor will expend on a regular basis a reasonable [insert specific amount or percentage of sales, if so desired] amount on the advertising of Products.]

[SECTION 4.03 Manufacturer and Distributor shall cooperate in developing a cooperative merchandising [advertising] program. The funds for such program shall be furnished equally [split percentages] by each party up to a maximum for each of __ percent (__ %) of the net amount invoiced to Distributor for the current calendar year. Each month Manufacturer shall credit the fund with __ percent (__%) of the net amount invoiced to Distributor for the preceding month. All expenditures under this program made by either party must have the prior written approval of the other party. If Manufacturer makes an expenditure it shall bill Distributor for one-half of the amount of the expenditure. If Distributor makes an expenditure it shall bill Manufacturer for one-half of the expenditure and furnish verification therefor in the form of supporting invoices. If considered necessary by Manufacturer, Distributor will be allowed an advance against future Manufacturer contributions up to a maximum of the previous __ months’ total contributions by Manufacturer. All unexpended funds for any calendar year in the

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Manufacturer’s portion will automatically revert back to Manufacturer on [July 1] of the following year or forthwith if this Agreement is terminated.]

SECTION 4.04 All uses by Distributor in its advertising or elsewhere of Manufacturer’s name or any trademark or trade name (or any mark or name closely resembling the same) now or hereafter owned or licensed by Manufacturer [or any of its affiliates] shall be subject to the prior written approval of Manufacturer. Distributor is not authorized to use any such trademark or trade name outside Distributor’s Territory [nor as a part of Distributor’s trade style or corporate name].

SECTION 4.05 Distributor will keep records of its business relating to Products. From time to time during regular business hours, Manufacturer or its authorized representatives may examine such records and Distributor’s accounts relating to the sale [and servicing] of Products. [Within ninety (90) days after the close of each of Distributor’s fiscal years, Distributor shall submit to Manufacturer a copy of Distributor’s [audited] balance sheet and [audited] profit and loss statement for such fiscal year.] [Within ten (10) days after the end of each month, Distributor shall provide for Manufacturer the name and address of each customer to whom Distributor has sold or delivered one or more Products during such month, or if Distributor has not sold or delivered any Products during such month, a statement to that effect. Upon request by Manufacturer, Distributor shall promptly furnish reports on sales, deliveries and uses of Products.]

ARTICLE V

CONDITIONS OF SALE

SECTION 5.01 The sale by Manufacturer to Distributor of Products shall be subject to the provisions of this Agreement and subject to Distributor standard terms and conditions of sale in effect from time to time to the extent that such terms and conditions are not inconsistent with the terms of this Agreement. Any provision of any purchase order placed by Distributor which is inconsistent with any term of this Agreement or, to the extent applicable, Distributor’s standard terms and conditions of sale shall be null and void unless expressly accepted by Manufacturer in writing.

SECTION 5.02 The prices of Products sold to Distributor by Manufacturer shall be determined from Manufacturer’s price lists published from time to time and in effect at time of acceptance of Distributor’s order, less applicable Distributor’s discount [Manufacturer’s standard distributor discount set forth in Schedule ___ hereto] then offered to Distributor by Manufacturer, [plus a reasonable sum for special engineering, handling, delivery and transportation, if any,] plus such sums as are in reimbursement for any taxes paid, or equivalent to any taxes payable, by Manufacturer to any taxing authority upon the transportation, use or sale of such Products, except to the extent that Distributor may provide proper exemption certificates. Distributor agrees to pay when due all indebtedness now or hereafter owed by Distributor to Manufacturer. [For each Product for which Distributor provides delivery service which it is at the time obligated to perform pursuant to Section 3.03 hereof, Manufacturer shall, upon the completion of such service in a manner satisfactory to Manufacturer, credit to Distributor’s

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account the applicable delivery service credit offered to Distributor by Manufacturer at the time. Manufacturer may from time to time in its sole discretion credit all or any part of the applicable delivery service credit to Distributor’s account before Distributor has so completed such service; Distributor hereby promises to repay to Manufacturer from time to time on demand the aggregate amount of all such credits to which Distributor shall not have become entitled by the terms of this Agreement prior to such demand.] Manufacturer may from time to time apply all or part of any outstanding credits to Distributor against any indebtedness (whether due or to become due) owed by Distributor to Manufacturer as the same shall become due.

SECTION 5.03 No purchase order shall be binding on Manufacturer until accepted in writing by a duly authorized officer or employee of Manufacturer. Manufacturer may refuse to accept any purchase order for any reason. [The minimum order quantities shall be Manufacturer’s standard minimum as established from time to time and as in effect at the time of order acceptance.] Distributor’s order shall be subject to such reasonable allocation as, in the sole judgment of Manufacturer, may be necessary or equitable in the event of any shortages of Products or parts at any time.

[SECTION 5.04 Distributor may cancel orders, reduce quantities, revise specifications or extend schedules only by mutual agreement with Manufacturer, and in such event Distributor agrees to pay reasonable and proper cancellation charges which shall take into account expenses already incurred and commitments made by Manufacturer as well as any other loss or expense incurred by Manufacturer by reason thereof.]

SECTION 5.05 Delivery to Distributor shall be F.O.B. any plant or warehouse of Manufacturer or such other point of origin [or port of entry] as Manufacturer shall designate. Manufacturer shall not thereafter be liable for transportation or for loss or damage in transit. Claims for shortages or damages to shipments thereafter shall be made against carrier by Distributor. Claims for shortages and attributable to the carrier must be made by Distributor against Manufacturer within ten (10) days after arrival of shipment at the specified destination. [Shipping dates are estimated, and Manufacturer shall not be liable for loss or damage due to delay in manufacture or delivery resulting from any cause beyond its reasonable control including, but not limited to, compliance with regulations, orders or instructions of any federal, state or municipal government or any department or agent thereof, acts of God, acts or omissions of Distributor, acts of civil or military authority, fires, strikes, facilities shutdowns or alterations, embargoes, war, riot, delays in transportation, or inability to obtain necessary labor, manufacturing facilities or materials from usual sources, and any delays resulting from any such cause shall extend the time for delivery correspondingly. In no event shall Manufacturer be liable for consequential or special damages due to any cause. All expenses and charges caused by purchased by Distributor, including, but not limited to, its failure to accept delivery of or pay for such Products, shall be paid by Distributor to Manufacturer on demand.]

SECTION 5.06 Manufacturer expects normally to give advance notice to Distributor regarding changes in prices and design. Manufacturer shall have the right, however, to change prices and design of Products without notice to Distributor, and shall have the right at any time to discontinue the manufacture or sale of any model or type of Product, to make changes in materials, and to add improvements, all without incurring any liability whatever, including any

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obligation to install or modify the same on Products previously ordered from Manufacturer. Distributor agrees not to alter or modify and Product purchased hereunder in any way which will impair or lessen the validity of the trademarks under which these Products are made or sold. [In the event of a reduction in the price of Products as shown on Manufacturer’s then current price list, Manufacturer shall grant to Distributor a credit with respect to Products then in Distributor’s inventory equal to the difference between the lowest price paid by Distributor for such Products and the new price, multiplied by the quantity of each such Product. Distributor will furnish Manufacturer such information, including the inventory reports under Section 4.01 to enable Manufacturer to determine the amount of such prices as Manufacturer may reasonably request. No credit will be due if inventory reports are not received by Manufacturer.]

SECTION 5.07 Distributor at its own cost and expense shall keep all of the Products in which Manufacturer has an interest, and which are under Distributor’s direct or indirect control, insured under a standard policy, a physical loss, with loss payable to Manufacturer as its interest may appear, in an amount which shall be sufficient to prevent Manufacturer from sustaining any financial loss. Distributor also agrees to indemnify and hold harmless Manufacturer against any injury, loss, damage or expense including but not limited to attorney’s fees, arising out of or resulting from Distributor’s possession, use, demonstration or sale of any of the Products (unless caused by the negligence of Manufacturer), or out of Distributor’s failure to procure such insurance. [Products owned by Manufacturer (such as consignment stock) shall not be demonstrated without the express permission of Manufacturer.]

[SECTION 5.08 As collateral security for the due and punctual payment by Distributor of all amounts payable by it either under this Agreement or on account of any purchase of one or more Products from Manufacturer, Distributor hereby grants to Manufacturer a purchase money security interest in all Products now owned or hereafter acquired by Distributor from Manufacturer together with the proceeds (including, without limitation, proceeds under insurance policies) thereof, and in all right, title and interest or Distributor in and to all instruments and other documents, whenever arising, covering or relating to such Products, additions and accessions thereto and proceeds and all rights, remedies and claims of Distributor under or with respect to such Products, additions and accessions thereto and proceeds and all rights, remedies and claims of Distributor under or with respect to such documents, whether now existing or hereafter arising. Manufacturer shall have all the rights, powers, privileges and remedies with respect to such collateral as shall be permitted for a secured party under the Uniform Commercial Code of the State of ______ as in effect from time to time. Distributor agrees that it will joint with Manufacturer in executing, filing, and re-filing such documents as Manufacturer may reasonably deem necessary or appropriate to perfect and preserve and deliver such additional documents as Manufacturer may reasonably deem necessary or appropriate to carry into effect the purpose of this Section or to better assure and confirm to Manufacturer its rights, powers and remedies under this Section. Distributor hereby authorizes Manufacturer, in its discretion, to file financing statements and similar documents relative to all or any part of the collateral without the signature of Distributor wherever permitted by law and with the signature of Distributor executed by ______ as Distributor’s attorney-in-fact wherever permitted by law.]

SECTION 5.09 Distributor shall pay all license fees, sales, use, service use, occupation, [retailer’s] occupation, service occupation, personal property, and excise taxes and any other

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fees, assessments or taxes which may be assessed or levied by any national, state or local government and any departments and subdivisions thereof, against any of the Products ordered by Distributor and under Distributor’s direct or indirect control.

ARTICLE VI

WARRANTIES

SECTION 6.01 Manufacturer will keep Distributor informed of Manufacturer’s warranty or warranties applicable to Products as in effect from time to time (such warranty or warranties, as the case may be, being herein called the “Warranty”), and Manufacturer will extend the appropriate Warranty to each customer [end-user] who purchases Product from Distributor upon the purchase of that Product by such customer [end-user]. Distributor will include the Warranty, in the form and content specified by Manufacturer, in each agreement for the sale of Products by Distributor, and will furnish a copy of the Warranty to the customer [end-user] upon delivery of that Product.

[SECTION 6.02 Distributor agrees to furnish all warranty services required under the Warranty for all Products. Distributor agrees to supply free of charge to customers to whom such Products have been sold replacement parts which are required to be so supplied under the Warranty. Manufacturer agrees to replace such parts as are thereby supplied by Distributor. For each Product for which Distributor provides warranty service, Manufacturer shall, upon the completion of such service in a manner satisfactory to Manufacturer, credit to Distributor’s account an amount determined in accordance with Manufacturer’s distributor warranty reimbursement credit policy as in effect for Distributor when warranty services covered thereby are performed.]

SECTION 6.03 NO WARRANTIES, EXPRESS OR IMPLIED, OTHER THAN THOSE ABOUT WHICH DISTRIBUTOR IS INFORMED PURSUANT TO SECTION 6.01 HEREOF, ARE GIVEN IN RESPECT OF PRODUCTS, AND ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE IS HEREBY EXPRESSLY DISCLAIMED. ANY ACTION FOR AN ALLEGED BREACH OF ANY CONTRACT OF SALE OR OF THE ABOVE-STATED WARRANTY IN RESPECT OF PRODUCTS SOLD BY MANUFACTURER TO DISTRIBUTOR MUST BE COMMENCED WITHIN ONE (1) YEAR AFTER THE CAUSE OF ACTION ACCRUES.

SECTION 6.04 Distributor is familiar with Manufacturer’s Products and will become familiar with the requirements of the safety codes and laws of the states in which it sells and delivers Products under this Agreement. Whenever Distributor learns of any changes in any such code or law which would require changes in the Products, Distributor will advise and consult with Manufacturer about such changes. [Distributor hereby indemnifies Manufacturer from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on incurred by or asserted against Manufacturer arising from the sale by Distributor of any Products which to its knowledge do not comply with the safety codes and laws, as the same may be amended from time to time, of the states in which the Products are to be delivered.]

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[ALTERNATIVE ARTICLE VI]

WARRANTIES

[SECTION 6.01 Manufacturer grants to Distributor, and only to Distributor, the warranty attached hereto as Schedule ___. Subject to the provisions of Section 6.06 hereof, DISTRIBUTOR EXPRESSLY ACKNOWLEDGES THAT SUCH WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING ALL WARRANTIES OF MERCHANTABILITY OR OF FITNESS. Manufacturer’s obligation with respect to such warranty shall be limited to its obligations to Distributor as provided in Section 6.02 and such obligation shall be in lieu of any other remedy on the part of Distributor [or its dealers] [resellers].

SECTION 6.02 Distributor agrees to handle, adjust and pay all warranty claims with respect to products purchased by it hereunder and sold in the Territory. Claims which are presented to Distributor shall be presented to Manufacturer for reimbursement in accordance with its warranty to Distributor and Manufacturer agrees to review promptly such claims and to make payment with respect thereto by crediting Distributor’s account with Manufacturer within forty-five (45) days of the presentation of the claims to Manufacturer. To the extent the warranty of Manufacturer does not cover spare parts, components or accessories, Manufacturer agrees to cooperate fully with Distributor as to any warranty claims against the Manufacturer of such spare parts, components or accessories. Manufacturer shall have the right either to audit the records of Distributor relating to warranty claims presented for payment in accordance with this Section 6.02 or have one of its representatives participate in the administration of warranty claims at Distributor’s offices. Distributor agrees to utilize any compensation received pursuant to this Section 6.02 to discharge its warranty obligations [to dealers and dealers’ [resellers’] warranty obligations] to ultimate consumers pursuant to Sections 6.03 and 6.04, respectively.

SECTION 6.03 Distributor shall grant to its dealers [resellers], upon the sale by Distributor to such dealers [resellers] of Products, a warranty at least equivalent in scope and effect to the warranty granted by Manufacturer to Distributor and such warranty shall specify that the only remedy or recourse of dealers [resellers] under such warranty shall be against Distributor.

SECTION 6.04 Distributor shall cause its dealers [resellers] to grant to ultimate consumers upon the sale of Products covered by this Agreement a warranty at least equivalent in scope and effect to the warranty granted by Manufacturer to Distributor and such warranty shall specify that the only remedy or recourse of ultimate consumers under such warranty shall be against Distributor or such dealers [resellers].

SECTION 6.05 Manufacturer may require amendments to the form of warranty used by Distributor from time to time. Distributor shall promptly notify in writing its dealers [resellers] of any amendments to the form of warranty required by Manufacturer, but no such amendment shall be effective as to sales made to the ultimate consumer until so required by Manufacturer.

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SECTION 6.06 Notwithstanding anything herein contained to the contrary, the warranty granted to Distributor by manufacturer hereunder at all times shall be deemed to be modified so as to be sufficient to enable Distributor [and its dealers] [resellers] to extend warranties as required hereby in full compliance with any applicable law then in effect, including, but not limited to, the United States Magnuson-Moss Warranty-Federal Trade Commission Improvement Act. Distributor shall use its best efforts to keep Manufacturer informed of developments in federal, state and local law and regulation which would affect Manufacturer’s obligations under this Section 6.06.]

ARTICLE VII

TERMINATION

SECTION 7.01 This Agreement shall become effective as of the date hereof when executed by Distributor and Manufacturer and shall terminate automatically on ______, 19 ___ hereto unless sooner terminated as hereinafter provided. [Unless sooner terminated as hereinafter provided, this Agreement shall be in effect for a period of [two] years from the date hereof and shall be automatically renewed from year to year thereafter subject at all times to the same rights of termination as hereinafter provided.] Termination of this Agreement as hereinafter provided shall automatically terminate all schedules hereto.

[SECTION 7.02 Distributor may terminate this Agreement by written notice of termination delivered to Manufacturer, such termination to be effective not less than [thirty (30) days] [months] after receipt by Manufacturer of such notice.]

SECTION 7.03 If Distributor does not develop the sales and service of products in the Territory to the satisfaction of Manufacturer or does not conduct its business in accordance with any requirements set forth herein to be performed by Distributor, Manufacturer may terminate this Agreement by giving Distributor not less than [six (6)] months notice of termination.

SECTION 7.04 Manufacturer may terminate this Agreement immediately by delivering to Distributor or his representative written notice of such termination in the event of the happening of any of the following:

(a) Death, incapacity, or the removal, resignation, withdrawal, or elimination from the distributorship for any reason of any person named in Schedule ______ hereto unless expressly waived in writing by Manufacturer.

(b) Any attempted transfer or assignment of this Agreement or any right or obligation hereunder or any sale, transfer, relinquishment, voluntary or involuntary, by operation of law or otherwise, of any interest in the direct or indirect ownership, control or active management of Distributor without prior written approval of Manufacturer.

(c) Any dispute, disagreement, or controversy between or among principals, partners, managers, officers or stockholders of Distributor which, in the opinion of Manufacturer, may

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adversely affect the ownership, operation, management, business or interest of Distributor or Manufacturer.

(d) The execution by Distributor of an assignment for the benefit of creditors; the conviction of Distributor or any principal officer or manager of Distributor of any crimes which in the opinion of Manufacturer may adversely affect the ownership, operation, management, business or interest of Distributor or Manufacturer.

(e) Failure of Distributor to pay when due any indebtedness owing by Distributor to Manufacturer, unless expressly waived in writing by manufacturer.

SECTION 7.05 This Agreement shall terminate automatically, and without the giving of notice in the event the Distributor [or Manufacturer] shall become insolvent, or shall ask its creditors for a moratorium, or shall file a voluntary petition in bankruptcy, or shall be adjudicated as a bankrupt pursuant to an involuntary petition, or shall suffer appointment of a temporary or permanent receiver, trustee, or custodian for all or a substantial part of its assets who shall not be discharged within thirty (30) days.

SECTION 7.06 Notwithstanding any other provision of this Article VII, either party may terminate this Agreement for failure by the other party to perform or adhere to any of its obligations under this Agreement by notifying the other party of such default and allowing the other party [fifteen (15) days[ within which to cure such default. If such default is not cured within [fifteen (15) days], the party who gave such notice of default may terminate this Agreement at any time thereafter upon notice to the other party. If the default is cured within such time period but thereafter repeated, the party who gave such notice of default may cancel this Agreement forthwith by notice.

ARTICLE VIII

TRANSACTIONS AFTER TERMINATION

SECTION 8.01 Any termination of this Agreement shall not release Distributor from paying any amount which may then be owing to Manufacturer or from any obligation to pay for any Products or parts which may have been ordered by Distributor and not shipped prior to such termination. In the event of any termination of this Agreement, all obligations owed by Distributor to Manufacturer and to its affiliates shall become immediately due and payable on the effective date of termination whether otherwise then due or not (without presentation, demand, protest or notice of any kind, all of which are hereby waived by Distributor); and Manufacturer may offset and deduct from any or all amounts owed to Distributor, any or all amounts owed by Distributor to Manufacturer, rendering to Distributor the excess, if any.

SECTION 8.02 In the event of termination of this Agreement by either party or automatically as provided herein, Manufacturer is relieved from any obligation to make any further shipments hereunder, and may cancel all of Distributor’s unshipped orders for Products or parts, irrespective of previous acceptance by Manufacturer, except those Products or parts which are proved to Manufacturer’s satisfaction to have been sold by Distributor pursuant to a

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valid and binding obligation prior to the receipt by Distributor of notice of termination; provided, however, that payment therefor shall be c.o.d. Manufacturer shall have no obligation or liability to Distributor or its prospective customers in connection with any of such cancellation. If Manufacturer accepts such an order and Products or parts are shipped c.o.d., Manufacturer will arrange for the delivery and warranty service of such Products or parts [and will withhold the credits provided for delivery and warranty service]. The acceptance of orders from Distributor or the continuous sale of Products or parts to Distributor or any other act after termination of this Agreement shall not be construed as a renewal of this Agreement for any further term nor as a waiver of the termination.

SECTION 8.03 In the event of termination of this Agreement by Manufacturer pursuant to Section 7.03 or Section 7.06 hereof, Manufacturer may [shall] repurchase from Distributor, and Distributor shall sell to Manufacturer, any and all Products or parts in Distributor’s stock which are new, standard, unused, saleable and in good and usable condition, not obsolete, which are currently offered for sale by Manufacturer, and the price to Manufacturer shall be the lesser of (i) the then current net price (or 90% thereof in the case of parts) being charged by Manufacturer to Distributor or (ii) the price (or 90% thereof in the case of parts) paid by Distributor therefor; provided, however, that with respect to Products or parts, Manufacturer shall have no obligation to make such repurchase unless Manufacturer is able to exercise the rights granted to Manufacturer in respect of set-off as set forth in Section 8.01. [In the event of any other termination of this Agreement by either party or automatically as provided herein, Manufacturer shall have the option to repurchase from Distributor, and Distributor shall sell to Manufacturer, all or any part of the Products or parts and in Distributor’s stock, and the price to Manufacturer shall be as set forth in the preceding sentence.] Any such repurchase shall be made within thirty (30) days after the effective date of termination, and Distributor shall promptly ship such Products and parts to a destination specified by Manufacturer in accordance with shipping instructions used by Manufacturer to Distributor. Manufacturer [or Distributor] shall bear the cost of shipment of Products and parts. The Products and parts so delivered shall be subject to inspection by Manufacturer and payment therefor shall be made or credited within thirty (30) days of final acceptance by Manufacturer of Products and parts so inspected. If the returned Products or parts require reconditioning, in the sole judgment of Manufacturer, the cost thereof will be deducted from the price paid or credit issued.

SECTION 8.04 Upon termination of this Agreement, Distributor shall return to Manufacturer, at Distributor’s expense, promptly and without charge (except as hereinafter provided) all Products and parts books, price lists, maintenance manuals, parts and service policy manuals, service bulletins, parts cross reference manuals, sales aids, and other publications of Manufacturer relating to Products or parts which Distributor has on hand. Upon termination of this Agreement, Distributor shall return to Manufacturer[, at Manufacturer’s expense,] each sign having any Manufacturer name or trademark (whether or not any such material or signs have been paid for in full by Distributor) and Distributor will discontinue all advertising of such Products and parts and remove from Distributor’s place of business, at Distributor’s expense, all reference to Manufacturer’s names and trademarks. [Manufacturer will reimburse Distributor at Distributor’s net cost for any of the foregoing items for which Distributor paid, less reasonable depreciation or allowance for usage, obsolescence, fair wear and tear, and damage.]

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SECTION 8.05 Distributor shall be solely responsible for all commitments incurred or assumed by it during the term of this Agreement or thereafter, and Manufacturer shall not be held responsible in any manner therefor, irrespective of any suggestion or recommendation with respect thereto by Manufacturer or any of its employees or representatives unless Manufacturer has expressly agreed in writing to assume the responsibility.

[SECTION 8.06 Unless otherwise expressly agreed in writing, to assure continuity of installation and service calls and warranty service to customers following the termination of this Agreement, Distributor will relinquish and assign, and does hereby relinquish and assign, effective on the termination date, to Manufacturer, all rights to perform installation and make service calls and perform warranty service in respect of all Products. In consideration of such relinquishment and assignment of such rights, Distributor agrees to pay to Manufacturer, or at Manufacturer’s option, permit Manufacturer to retain or charge Distributor’s account therefor, an amount equal to 4% of the net sales price of each new Product delivered to Distributor or to Distributor’s customer on or after the date of termination. Distributor shall furnish to Manufacturer on the termination date a list of all customers to whom Products were delivered at any time within such six (6) month period or who have ordered such Products and are awaiting delivery, giving correct names and addresses, identification of item purchased and a statement of the installation service call work already performed by Distributor in respect of each such Product and of any warranty work which the customer has requested but which has not yet been performed. Upon complying with the foregoing provisions of this Article, Distributor shall be relieved of its outstanding obligations to Manufacturer to further install, make service calls or perform warranty service in respect of such Products.]

SECTION 8.07 Distributor agrees to comply with all legal requirements necessary to make any sale to Manufacturer hereunder valid and binding.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01 This Agreement supersedes all prior or contemporaneous agreements, representations, warranties and understandings and contains the entire agreement between the parties hereto. No amendment, modification, termination, or waiver of any provision of this Agreement nor consent to any departure therefrom, shall in any event be effective unless the same shall be in writing and signed by duly authorized representatives of each party hereto and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on Distributor in any case shall entitle it to any other or further notice or demand in similar or other circumstances. No failure or delay on the part of Manufacturer in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder.

SECTION 9.02 This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that neither party shall have the

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right to assign or otherwise transfer its rights hereunder or any interest therein without the prior written consent of the other party.

SECTION 9.03 Neither Manufacturer nor Distributor shall by reason of the termination or non-renewal of this Agreement be liable to the other for compensation, reimbursement or damages on account of the loss of prospective profits, or anticipated sales or on account of expenditures, investments, leases, property improvements or commitments in connection with the business or good will of Manufacturer, Distributor, or otherwise.

SECTION 9.04 All notices, requests, demands, directions and other communications provided for hereunder shall be in writing and shall be sufficient (and shall be deemed to have been duly given or made upon receipt) if delivered in person, by courier service, by cable, by telecopier, by telegram, by telex or by registered or certified mail (postage prepaid, return receipt requested) to the attention of the party intended as the recipient thereof at the address of such party set forth on the first page hereof, or at such other address or to the attention of such other person as such party shall have designated for such purpose in a written notice complying as to delivery with the terms of this Article.

SECTION 9.05 This Agreement shall be governed by and construed in accordance with the laws of the State of _________, excluding its conflict of laws rules. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

SECTION 9.06 This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. Headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written._____________________

[Name of Manufacturer]

By: ____________________

Title:_____________________

[Name of Distributor]

By: _____________________

Title:

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SCHEDULE I PRODUCTS

[List and Describe Products]

SCHEDULE II TERRITORY

[Identify Territory]

SCHEDULE ________

[Other Schedules as provided in Agreement]

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