MODEL FORM OF INTERNATIONAL SOLE DISTRIBUTORSHIP CONTRACT

ICC Distributorship Contract(Sole Importer-Distributor)

Between

Whose registered office is at                                          

(hereinafter called “the Supplier”)

And

Whose registered office is at                                          

(hereinafter called “the Distributor”)

IT IS AGREED AS FOLLOWS

Article 1 Territory and Products

1.1  The Supplier grants and the Distributor accepts the exclusive right to market and sell the products listed in Annex I, §1(hereinafter called “the Products”) in the territory defined in Annex I, §2 (hereinafter called “the Territory”).

1.2  If the Supplier decides to market any other products in the Territory, it shall so inform the Distributor in order to discuss the possibility of including such other products within the Products defined under Article 1.1. However, the above obligation to inform the Distributor does not apply if, in consideration of the characteristics of the new products and the specialization of the Distributor, it is not to be expected that such products may be marketed by the Distributor(e.g. products of a completely different range ).

Article 2 Good faith and fair dealing

2.1 In carrying out their obligations under this contract the parties will act in accordance with good faith and fair dealing.

2.2 The provision of this contract, as well as any statements made by the parties in connection with this distributorship relationship, shall be interpreted in good faith.

Article 3 Distributor’s functions

3.1 The Distributor sells in its own name and for its own account, the Products supplied by the Supplier.

3.2 The Distributor agrees to use its best efforts to promote the sale of the Products in the Territory in accordance with the Supplier’s policy and shall protect the Supplier’s interests with the diligence of responsible businessman.

3.3 The Distributor is not entitled to act in the name or on behalf of the Supplier, unless previously and specifically authorized to do so by the latter.

3.4 The Distributor may, in cases in which it does not want to buy and resell, refer such business to the Supplier for a direct sale to the customer. For such activity as intermediary the Distributor will receive a commission as set out in Annex II, §1(if completed) or otherwise to be agreed upon case by case, to be calculated and paid according to Annex II, §3. It is expressly agreed that such activity as intermediary, to the extent it remains of an accessory character, does not modify the legal status of the Distributor as trader acting in its own name and for its own account.

Article 4 Undertaking not to compete

4.1 Without the prior written authorization of the Supplier, the Distributor shall not represent, manufacture, market or sell in the Territory any products which are in competition with the Products, for the entire term of this contract.

4.2 The Distributor is entitled to represent, manufacture, market or sell any products which are not competitive with the Products, provided he informs the Supplier in advance of such activity. However, the above obligation to inform the Supplier does not apply if, in consideration to inform the Supplier does not apply if, in consideration of: (i) the characteristics of the products which the Distributor wants to represent, and (ii) the field of activity of the supplier for whom the Distributor wishes to act, it is unreasonable to expect that the Supplier’s interests may be affected.

4.3 The Distributor declares that it represents (and/ or manufactures, markets or sells, directly or indirectly) as of the date on which this contract is signed the products listed in Annex III

Article 5 Sales organization

5.1 The Distributor shall set up and maintain an adequate organization for sales and, where appropriate, after-sales service, with all means and personnel as are reasonably necessary in order to ensure the fulfillment of its obligations under this contract for all Products and throughout the Territory.

5.2 The parties may indicate in Annex IV the names of their existing customers.

Article 6 Advertising and fairs

6.1 The parties shall discuss in advance the advertising programmer for each year. All advertising should be in accordance with the Supplier’s image and marketing policies. The costs of agreed advertising shall be shared between the parties in accordance with Annex V (if completed); otherwise each party will bear the advertising expenses it has incurred.

6.2 The parties shall agree on their participating in fairs or exhibitions within the Territory. The costs of the Distributor’s participation in such fairs and exhibitions shall be apportioned between the parties as indicated in Annex V, §2.

Article 7 Conditions of supply-prices

7.1 The Supplier shall in principle supply all Products ordered, subject to their availability, and provided payment of the Products is adequately warranted. The Supplier may not unreasonably reject orders received form the Distributor; in particular, a repeated refusal of orders contrary to good faith (e.g. if made for the purpose of hindering the Distributor’s activity) shall be considered as a breach of contract by the Supplier.

7.2 The Supplier agrees to make its best efforts to fulfill the orders it has accepted.

7.3 Sales of the Products to the Distributor shall be governed by the Supplier’s general conditions of sale. The currently applicable version of which is attached to this Contract(Annex VI, §1). In case of conflict between such general conditions and the terms of this Contract, the latter shall prevail.

7.4 The prices payable by the Distributor shall be those set forth in Supplier’s price list in force at the time the order is received by the Supplier with the discount indicated in Annex VI, §2. Unless otherwise agreed, such prices are subject to change at any time, subject to one month’s notice.

7.5 The Distributor agrees to comply, with the utmost care, with the terms of payment agreed upon between the parties.

7.6 It is agreed that the Products delivered remain the Supplier’s property until the Supplier has received payment in full.

Article 8 Sales targets- Guaranteed Minimum Target

8.1 The parties may agree annually on the sales targets for the forthcoming year.

8.2 The parties shall make their best efforts to attain the targets agreed upon, but the non-attainment shall not be considered as a breach of the contract by a party, unless that party is clearly at fault.

8.3 In Annex VII the parties may agree on a Guaranteed Minimum Target and on the consequences of its non-attainment.

Article 9 Sub-distributors or agents

9.1 The Distributor may appoint sub-distributors or agents for the sale of the Products in the Territory, provided the Distributor informs the Supplier before the engagement.

9.2 The Distributor shall be responsible for its sub-distributors or agents.

Article 10 Supplier to the kept informed

10.1 The Distributor shall exercise due diligence to keep the Supplier informed about the Distributor’s activities, market conditions and the state of competition within the Territory. The distributor shall answer any reasonable request for information made by the Supplier.

10.2 The Distributor shall exercise due diligence to keep the Supplier informed about: (i) the laws and regulations which are applicable in the Territory and relate to the Products (e.g. import regulations, labelling, technical specifications, safety requirements, etc.), and (ii) as far as they are relevant for the Supplier, the laws and regulations concerning the Distributor’s activity.

Article 11 Resale prices

A.

The Distributor is free to fix the resale prices of the Products, with the only exception of maximum sales prices that the Supplier may impose.

However, the Supplier may indicate “non binding” resale prices, provided this does in no way limit the Distributor’s right to grant lower prices.

B. CHECK ANTITRUST COMPLIANCE

The Distributor agrees to respect the resale prices fixed by the Supplier and to impose such prices on the Distributors buyers- resellers.

Article 12 Sales outside the Territory

A.

The Distributor agrees not to actively promote sales (e.g. through advertising, establishing branches or distribution depots) into the territories reserved by the Supplier exclusively for himself or allocated by the Supplier to other exclusive distributors or buyers.

B. CHECK ANTIRUST COMPLIANCE

The Distributor shall not sell the Products to customers established outside the Territory or to customers whom the Distributor should reasonably expect to resell such Products outside the Territory. The Distributor shall transmit to the Supplier all enquiries from customers established outside of the Territory.

Article 13 Supplier’s trademarks and symbols

13.1 The Distributor shall use the Supplier’s trademarks, trade names or any other symbols. However, the Distributor may do so only for the purpose of identifying and advertising the Products within the scope of this contract and in the Supplier’s sole interest.

13.2 The Distributor agrees neither to register, nor to have registered, any trademarks, trade names or symbols of the Supplier (or which are confusingly similar to the Supplier’s), in the Territory or elsewhere.

13.3 The Distributor’s right to use the Supplier’s trademarks, trade names or symbols, as provided for under the first paragraph of this Article, shall cease immediately upon the expiration or termination, for any reason, of the present contract. This does not preclude the Distributor’s right to sell the Products in stock at the date of expiration of the contract which bears the Supplier’s trademarks.

13.4 The Distributor shall notify the Supplier of any infringement in the Territory of the Supplier’s trademarks, trade names or symbols, or other industrial property rights, that comes to the Distributor’s attention.

13.5 The Distributor is free to promote the Products through Internet, but he cannot use the Supplier’s trademarks, trade names or any other symbols without previously agreeing in writing the details of such use.

Article 14 Confidential Information

14.1 Each party agrees not to disclose to third parties any Confidential Information (as defined hereunder under Article 14.2) disclosed to him by the other party in the context of this Contract.

14.2 Confidential Information means information which has been supplied to the other party with an indication that it is confidential, provided such information is not in the public domain.

Article 15 Stock of Products and spare parts – After sales service

15.1 The Distributor agrees to maintain at its own expense, for the whole term of this contract, a stock of Products and spare parts sufficient for the normal needs of the Territory, and in any case at least as indicated in Annex VIII.

15.2 The Distributor agrees to provide after sales service according to the terms and conditions set out in Annex IX, provided such Annex has been completed.

Article 16 Sole Distributorship

16.1 The Supplier shall not, during the life of this contract, grant any other person or undertaking (including a subsidiary of the Supplier) within the Territory the right to represent or market the Products. The Supplier shall furthermore refrain from selling to customers established in the Territory, except pursuant to the conditions set out under Article 16 hereafter.

A.

16.2 The Supplier is entitled to sell the Products to customers outside the Territory, even if such customers intend to export the Products into the Territory, but may not actively solicit or otherwise provoke such sales to third parties with the purpose of circumventing the exclusivity under Article 16.1.

B. CHECK ANTITRUST COMPLIANCE

16.2 The Supplier shall not sell the Products to customers outside the Territory, when the Supplier knows, or ought to know, that such customers intend to resell the Products within the Territory. The Supplier will also impose on its other distributors an obligation corresponding to that under this Article 16.2.B.

Article 17 Direct sales

17.1 The Supplier shall be entitled to deal directly with the special customers listed in Annex II,

§2; in respect of the sales to such customers the Distributor shall be entitled to the commission provided for in Annex II, §2. This article shall not apply if §2 of Annex II (Special customers commission) has not been completed by the parties.

17.2 Whenever a commission is due to the Distributor, it shall be calculated and paid according to Annex II, §3.

Article 18 Distributor to be kept informed

18.1 The Supplier shall provide the Distributor free of charge with all documentation relating to the Products (brochures, etc.) reasonably needed by the Distributor for carrying out its obligations under the contract. The Distributor shall return to the Supplier, at the end of this Contract, all Documents that have been made available to it by the Supplier and that remain in its possession.

18.2 The Supplier shall provide the Distributor with all other information reasonably needed by the Distributor for carrying out its obligations under the contract including without limitation any information regarding a material decrease in its supply capacity.

18.3 The Supplier shall keep the Distributor informed of any relevant communication with customers in the Territory.

Article 19 Terms of the Contract

A

19.1 This contract enters into force on ………………………………

    And shall remain in force until terminated according to Articles 19.2 or 20, but shall in any case expire (if not terminated earlier) after a period of five years from the date of its entry into force. The parties agree to meet at least three months before the end of the five year’s period in order to discuss the possibility of entering into a new contract after its expiration.

19.2 This contract may be terminated by either party at any time by notice given in writing by means of communication ensuring evidence and date of receipt (e.g. registered mail with return receipt, special courier), not less than 6 months in advance. The end of the period of notice must coincide with the end of a calendar month.

B.

19.1 This contract is concluded for an indefinite period and enters into force on   …………………

19.2 This contract may be terminated by either party at any time by notice given in writing by means of communication ensuring evidence and date of receipt (e.g. registered mail with return receipt, special courier), not less than six months in advance. The end of the period of notice must coincide with the end of a calendar month.

C.

19.1 This Contract enters into force on the  …………and shall remain in force until  …………

19.2 This contract shall be automatically renewed for successive periods of one year, unless terminated by either party by notice given in writing by means of communication ensuring evidence and date of receipt (e.g. registered mail with return receipt, special courier), not less than four months before the date of expiry. If the contract has been in force for more than five years, the period of notice will be six months.

Article 20 Earlier termination

20.1 Each party may terminate this contract with immediate effect, by notice given in writing by means of communication ensuring evidence and date of receipt (e.g. registered mail with return receipt, special courier), in case of a substantial breach by the other party of the obligations arising out of the contract, or in case of exceptional circumstances justifying the earlier termination.

20.2 Any failure by a party to carry out all or part of its obligations under the contract resulting in such detriment to the other party as to substantially deprive such other party of what it is entitled to expect under the contract, shall be considered a substantial breach for the purpose of Article 20.1 above. Circumstances in which it would be unreasonable to require the terminating party to continue to be bound by this contract, shall be considered as exceptional circumstances for the purpose of Article 20.1 above.

20.3 The parties hereby agree that the violation of the provisions under  …………….  of the present contract is to be considered prima facie evidence of a substantial breach of the contract. Moreover, any violation of the contractual obligations may be considered a substantial breach if such violation is repeated notwithstanding a request by the other party to fulfil the contract obligations.

20.4 The parties agree that the following situations shall be inter alia considered as exceptional circumstance which justify the earlier termination by the other party: bankruptcy, moratorium, receivership, liquidation or any kind of arrangement between debtor and creditors, or any other circumstances which are likely to affect substantially that party’s ability to carry out its obligations under this contract.

20.5 If the parties have completed Annex X, the contract may also be terminated by the Supplier with immediate effect in case of change of control, ownership and/or management of the Distributor [ company ], according to the provisions set forth in Annex X.

20.6 If a party terminates the contract invoking this Article, but the reasons (if any) put forward by that party do not justify the earlier termination, the termination will be effective, but the other party will be entitled to damages for the unjustified earlier termination. Such damages will be equal to the average profits of the sale of the Products for the period the contract would have lasted in case of normal termination, based on the turnover of the preceding year, unless the damaged party proves that the actual damage is higher (or, respectively, the party having terminated the contract proves that the actual damage is lower). The above damages are in addition to the indemnity which may be due under Article 21.

Article 21 Goodwill indemnity

A.

21.1 The Distributor shall not be entitled to an indemnity for goodwill or similar compensation (“indemnity”) in case of termination of the contract.

B.

21.1 In case of termination by the Supplier for reasons other than a substantial breach by the Distributor, the latter shall be entitled to an indemnity according to Annex XI.

21.2 The goodwill indemnity under this Article 21 (“Contractual Indemnity”) is in lieu of any goodwill indemnity or equivalent compensation the Distributor may be entitled to by virtue of rules of law applicable to the present contract (“Statutory Indemnity”) and will consequently replace such Statutory Indemnity (if any). However, in case the Distributor’s right to the Statutory Indemnity cannot be validly replaced by the Contractual Indemnity under the applicable law, Article 21.1 will not apply and the Distributor will be entitled to the Statutory Indemnity in lieu of the Contractual Indemnity set out in this Article 21.1 hereabove.

21.3 The above provision does not affect the Distributor’s right to claim damages for breach of contract as far as the termination by the Supplier amounts to such a breach, and is not already covered by Article 20.6.

Article 22 Return of documents and products in stock

22.1 Upon expiry of this contract the Distributor shall return to the Supplier all promotional material and other documents and samples which have been supplied to it by the Supplier and are in the Distributor’s possession.

22.2 At the Distributor’s option, the Supplier will buy from the Distributor all Products the latter has in stock, provided they are still currently sold by the Supplier ad are in new condition and in original packaging, at the price originally paid by the Distributor. Products not so purchased by the Supplier must be sold by the Distributor in accordance with the contract on usual terms.

Article 23 Resolution of disputes

23.1 In the event of any dispute arising out of or in connection with this distributorship contract, the parties agree to submit the matter to settlement proceedings under the ICC ADR Rules. If the dispute has not been settled within 45 days following the filing of a Request of ADR or within such other period as the parties may agree in writing, the parties will have recourse to the means of resolution of disputes set out in Article 23.2 hereunder.

23.2.A  Arbitration

All disputes arising out of or in connection with this distributorship contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules.

23.2.B.  Litigation (ordinary courts)

In case of dispute the courts of ……………… (place) ………………… (country) shall have jurisdiction.

Article 24 Applicable law

24.1.A.

Any questions relating to this contract which are not expressly or implicitly settled by the provisions contained in this contract shall be governed, in the following order:

(a)    By the principles of law generally recognised in international trade as applicable to international distributorship contracts,

(b)   By the relevant trade usages, and

(c)    By the UNIDROIT Principles of International Commercial Contracts,

With the exclusion – subject to Article 24.2 hereunder – of national laws.

24.1.B.

This contract is governed by the laws of   …………………

(name of the country the law of which is to apply).

24.2 In any event consideration shall be given to mandatory provisions of the law of the country where the distributor is established which would be applicable even if the contract is governed by a foreign law. Any such provisions will be taken into account to the extent that they embody principles which are universally recognized and provided their application appears reasonable in the context of international trade.

24.3 Unless otherwise agreed in writing, the sale contracts concluded between the Supplier and the Distributor within this distributorship agreement will be governed by the United Nations Convention on Contracts for the International Sale of Goods (Vienna Convention of 1980, hereafter referred to as CISG), and to the extent that such questions are not covered by CISG, by reference to the rules and principles of law generally recognized in international trade as applicable to international contracts of sale.

Article 25 Automatic inclusion under the present contract

25.1 If the parties have not made a choice between the alternative solutions provided in Articles 11, 12, 16.2, 19, 21, 23.2 and 24.1 under the letters A and B, by deleting one of the alternatives, and provided they have not expressly made a choice by other means, alternative A shall be considered applicable.

25.2 The Annexes attached to this model form an integral part of the contract. Annexes or parts of Annexes which have not been completed will be effective only to the extent and under the conditions indicated in this contract.

Article 26 Previous agreements – modifications – nullity – assignment

26.1 This contract replaces any other preceding agreement between the parties on the subject.

26.2 No addition or modification to this contract shall be valid unless made in writing. However a party may be precluded by its conduct from asserting the invalidity of additions or modifications not made in writing to the extent that the other party has relied on such conduct.

26.3 If any provision or clause of this contract is found to be null or unenforceable, the contract will be construed as a whole to effect as closely as practicable the original intent of the parties; however, if for good cause, either party would not have entered into the contract knowing the interpretation of the contract resulting from the foregoing, the contract itself shall be null.

26.4 The present contract cannot be assigned without the prior written agreement of the parties.

Article 27 Authentic text

The English text of this contract is the only authentic text.

Made in   …………………  on the

The Supplier                The Distributor

……………….              ………………………

ANNEX I

PRODUCTS AND TERRITORY

(Article 1.1)

§ 1. Products

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

§ 2. Territory

_____________________________________________________________________

__________________________

ANNEX II

COMMISSION ON DIRECT SALES

§ 1. Normal commission (Article 3.4)

When acting as an intermediary, according to Article 3.4., the Distributor is entitled to a commission of _______%.

§ 2. Special customers commission (Article 16)

On all direct sales to the following customers the Distributor is entitled to the following commission:

§ 3. Calculation and payment of commission

   3.1 The commission shall be calculated on the net amount of the invoices, i.e. on the effective sales price (any discount other than cash discounts being deducted) clear of any additional charges (such as packing, transportation, insurance) and clear of all duties or taxes (including value added tax) of any kind, provided that such additional charges, duties and taxes are separately stated in the invoice.

  3.2 The Distributor shall acquire the right to commission after full payment by the customers of the invoiced price. In case of partial payment made in compliance with the sales contract, the Distributor shall be entitled to a proportional advance payment.

  3.3 Should any governmental authorization (e.g. due to exchange control regulations in the Supplier’s country) be necessary for the Supplier to transfer abroad the commission (or of any other sum the Distributor may be entitled to receive), then the payment of the amount shall be made after such authorization has been given. The Supplier shall take in due time all necessary steps for obtaining the above authorizations.

  3.4 Except as otherwise agreed, the commission shall be calculated in the currency of the sales contract in respect of which the commission is due.

  3.5 Any taxes imposed on the Distributor’s commission in the Territory are for the Distributor’s account.

ANNEX III

PRODUCTS AND SUPPLIERS REPRESENTED

BY THE DISTRIBUTOR (Article 4.3)

The Distributor hereby declares that it represents (and/or manufactures, markets or sells, directly or indirectly) on the date on which this contract is signed, the following products for the following suppliers:

ANNEX IV

NAMES OF EXISTING CUSTOMERS

（Article 5.2）

§ 1. The Distributor hereby declares that, before entering into this contract, it was selling products of the same range as the Products to the following customers within the Territory:

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§ 2. The Supplier hereby declares that, before entering into this contract, it was selling (directly or through others) the Products to the following customers within the Territory:

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ANNEX V

ADVERTISING, FAIRS AND EXHIBITIONS

(Article 6)

§ 1. Advertising (Article 6.1)

Except as otherwise agreed in writing, the costs of agreed advertising shall be shared between the parties as follows:

   Supplier   ______%

   Distributor ______%

§ 2. Fairs and Exhibitions (Article 6.2)

Except as otherwise agreed in writing, the costs for Participation in fairs and exhibitions shall be shared between the parties as follows:

   Supplier   ______%

   Distributor ______%

ANNEX VI

CONDITIONS OF SALE – DISCOUNTS

(Article 7)

§ 1. Supplier’s general conditions of sale.

To be annexed to the contract.

§ 2. Discounts and/or prices granted to the Distributor.

The Distributor is granted a discount of ______% on the list prices referred to in Article 7.4.

ANNEX VII

GUARANTEED MINIMUM TARGET

(Article 8.3)

The Distributor undertakes, during each year, to place orders for not less than:

口__________________________________ (amount in money)

口__________________________________ (amount in Products)

口____________%          of the target agreed upon in accordance with Article 8.1.

if at the end of the year the above Guaranteed Minimum Target has not been attained, unless the Distributor shows that it cannot be held responsible for such non – attainment, the Supplier shall be entitled, subject to giving one month’s notice, at its choice, to terminate this contract, or to cancel the Distributor’s exclusivity, or to reduce the extent of the Territory. This right must however be exercised in writing not later than two months after the end of the year in which the Guaranteed Minimum Target has not been attained.

Unless the parties hereafter agree on different figures, the Guaranteed Minimum Target indicated above shall also be applicable for each year of the duration (including the case of renewal) of this contract.

ANNEX VIII

STOCK OF PRODUCTS

AND SPARE PARTS

(Article 15.1)

The Distributor agrees to maintain the following minimum stock of Products and spare parts:

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ANNEX IX

AFTER SALES SERVICE,

REPAIRS, WARRANTY

(Article 5.2)

1.  The Distributor agrees to provide, at its expense and with its own personnel and technical means, suitable after sales service, which shall extend to all the Products in respect of which such assistance may be required in the Territory. Such after sales service shall be provided in accordance with the standards indicated by the Supplier.

2.  The Supplier shall provide the Distributor with the training necessary to enable the latter’s personnel to provide the above services. The Distributor agrees that, at its own expense, its technical and sales personnel will participate in such relevant training and updating of courses as the Supplier may decide to organize.

3.  The Distributor shall carry out free of charge all repairs and replacements provided for in the warranty conditions of the Supplier and shall bear all the expenses of such service. The Supplier shall supply the Distributor with the items or parts needed to replace defective items or parts under the warranty conditions.

4.  After expiration for whatever reason of this Contract the Distributor shall discontinue any after sale or warranty service, unless otherwise agreed upon in writing between the parties. Any request from the customers shall be transmitted by the Distributor to the persons indicated by the Supplier.

        The Supplier                              The Distributor

_______________________________           ___________________________________

ANNEX X

CHANGE OF CONTROL, OWNERSHIP

AND/OR MANGEMENT IN THE DISTRIBUTOR [COMPANY]

(Article 20.5)

The Supplier may terminate the contract with immediate effect, if:

口 Mr______________ ceases to own more than _________% of the shares of the Distributor company.

口 Mr______________ ceases to be the ____________ of the Distributor company.

ANNEX XI

GOODWILL INDEMNITY

(Article 21.B)

§ 1. In case of contract termination by the Supplier for reasons other than a breach by the Distributor, justifying earlier termination under Article 20, the latter shall be entitled to an indemnity equal to 50% or ______% of the annual gross profit made with customers introduced by the Distributor or with customers with whom the Distributor has significantly increased the volume of business, to be calculated on the average of the preceding five years (or, if the contract has lasted less than five years on the average of such duration).

§ 2. The Distributor undertakes to make its best efforts to have the existing customers transferred to the Supplier or to the new distributor (or agent) of the Supplier. In pursuance of the above obligation the Distributor agrees to refrain, for a period of 12 months from contract termination, directly or indirectly, from selling, distributing or promoting any products which are in competition with the Products to customers to which it previously sold the Products or promoted the sale of the Products under this contract.

§ 3. The indemnity shall be paid in three instalments of equal amount respectively 4,8 and 12 months after contract termination. The payment of the indemnity id made conditional upon the performance, by the distributor, of the obligation under § 2, hereabove.

§ 4. The Distributor has the option to waive its right to indemnity at any time. In this case the non – competition clause under § 2 above as well as the obligation to encourage the transfer of existing customers to the Supplier or new distributor (or agent) will cease to apply. Exercising this option shall not require the Distributor to reimburse any instalment which has already been paid.

The Supplier                         The Distributor

_________________________             ___________________________