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

Page 1 of 15

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

Page 2 of 15

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 Distributors [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 Distributors stock and agrees
not to order parts from Manufacturer for direct shipment to Distributors 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
Distributors actual purchase price [or the lowest price set forth in Manufacturers 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

Page 3 of 15

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 Manufacturers 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 Distributors 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 Distributors
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

Page 4 of 15

Manufacturers 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 Manufacturers
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 Distributors Territory [nor as a part of Distributors 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 Distributors accounts relating to the sale [and servicing] of Products.
[Within ninety (90) days after the close of each of Distributors fiscal years, Distributor shall
submit to Manufacturer a copy of Distributors [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, Distributors 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 Manufacturers price lists published from time to time and in effect at time of
acceptance of Distributors order, less applicable Distributors discount [Manufacturers 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 Distributors

Page 5 of 15

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 Distributors 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
Manufacturers standard minimum as established from time to time and as in effect at the time of
order acceptance.] Distributors 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

Page 6 of 15

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 Manufacturers then current price
list, Manufacturer shall grant to Distributor a credit with respect to Products then in Distributors
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 Distributors 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 attorneys fees, arising out of or
resulting from Distributors possession, use, demonstration or sale of any of the Products (unless
caused by the negligence of Manufacturer), or out of Distributors 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 Distributors attorney-in-fact wherever permitted by law.]
SECTION 5.09 Distributor shall pay all license fees, sales, use, service use, occupation,
[retailers] occupation, service occupation, personal property, and excise taxes and any other

Page 7 of 15

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 Distributors direct or indirect control.
ARTICLE VI
WARRANTIES
SECTION 6.01 Manufacturer will keep Distributor informed of Manufacturers 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 Distributors
account an amount determined in accordance with Manufacturers 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 Manufacturers 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.]

Page 8 of 15

[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. Manufacturers 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 Distributors 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
Distributors 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.

Page 9 of 15

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 Manufacturers 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

Page 10 of 15

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 Distributors unshipped orders for Products or
parts, irrespective of previous acceptance by Manufacturer, except those Products or parts which
are proved to Manufacturers satisfaction to have been sold by Distributor pursuant to a valid and

Page 11 of 15

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 Distributors 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 Distributors 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 Distributors 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 Manufacturers 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 Distributors place of business, at Distributors expense, all
reference to Manufacturers names and trademarks. [Manufacturer will reimburse Distributor at
Distributors 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.]

Page 12 of 15

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
Manufacturers option, permit Manufacturer to retain or charge Distributors account therefor, an
amount equal to 4% of the net sales price of each new Product delivered to Distributor or to
Distributors 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

Page 13 of 15

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:

Page 14 of 15

SCHEDULE I PRODUCTS
[List and Describe Products]
SCHEDULE II TERRITORY
[Identify Territory]
SCHEDULE ________
[Other Schedules as provided in Agreement]

Page 15 of 15