Document:

Exhibit
10.2

 

 

DETROIT DIESEL

 

DISTRIBUTOR AGREEMENT

 

 

 

Additional Provisions

Applicable To

Distributor Agreement

 

 

Table of Contents

 

	
  ARTICLE 1.

  	
  Glossary of Terms

  	
   

  
	
  ARTICLE
  2.

  	
  Company Rights and
  Responsibilities

  	
   

  
	
  2.1

  	
  General

  	
   

  
	
  2.2

  	
  Products
  and Parts

  	
   

  
	
  2.3

  	
  Distributors,
  branches and Authorized Dealers

  	
   

  
	
   

  	
  2.3.1

  	
  Number and Location

  	
   

  
	
   

  	
  2.3.2

  	
  Character of Changes

  	
   

  
	
  2.4

  	
  Sales
  to Distributor

  	
   

  
	
   

  	
  2.4.1

  	
  Orders

  	
   

  
	
   

  	
  2.4.2

  	
  Prices and Terms of Sale

  	
   

  
	
   

  	
  2.4.3

  	
  Shipments

  	
   

  
	
   

  	
  2.4.4

  	
  Warranties on Products
  or Parts

  	
   

  
	
   

  	
  2.4.5

  	
  Change
  in or Discontinuance of Products or Parts

  	
   

  
	
  2.5

  	
  Assistance to Distributors

  	
   

  
	
   

  	
  2.5.1

  	
  Counseling

  	
   

  
	
   

  	
  2.5.2

  	
  Manuals, Bulletins and
  Materials

  	
   

  
	
   

  	
  2.5.3

  	
  Advertising and Sales
  Promotion

  	
   

  
	
   

  	
  2.5.4

  	
  Training

  	
   

  
	
   

  	
  2.5.5

  	
  Engineering

  	
   

  
	
  2.6

  	
  Payment
  and Compensation for Performance of Specified Responsibilities

  	
   

  
	
   

  	
  2.6.1

  	
  Payment
  for Performance of Service Responsibilities

  	
   

  
	
   

  	
  2.6.2

  	
  Compensation
  of Performance of Specified Responsibilities

  	
   

  
	
  ARTICLE
  3.

  	
  Distributor Sales
  Responsibilities

  	
   

  
	
  3.1

  	
  Retail
  Sales, Wholesale Sales and Sales Promotion Activities

  	
   

  
	
  3.2

  	
  Sales Efforts

  	
   

  
	
  3.3

  	
  Application and
  Installation

  	
   

  
	
  3.4

  	
  Sales Performance Evaluation

  	
   

  
	
  3.5

  	
  Distribution
  and Sale of Products and Parts

  	
   

  
	
  3.6

  	
  Sales Outside Area
  of Responsibility

  	
   

  
	
   

  	
  3.6.1

  	
  Service
  commission for Sales Outside Area of Responsibility

  	
   

  
	
   

  	
  3.6.2

  	
  Excluded Sales

  	
   

  
	
   

  	
  3.6.3

  	
  Resolution of Disputes

  	
   

  
	
  ARTICLE
  4.

  	
  Distributor
  Service Responsibilities

  	
   

  
	
  4.1

  	
  General
  Responsibility

  	
   

  
	
  4.2

  	
  Warranties

  	
   

  
	
  4.3

  	
  Warranty,
  Special Policy and Campaign Repairs

  	
   

  
	
  4.4

  	
  Representations as to Parts

  	
   

  
	
  4.5

  	
  Start-Up Inspections

  	
   

  
	
  4.6

  	
  Service Performance
  Evaluation

  	
   

  
	
  ARTICLE 5.

  	
  Authorized Dealers

  	
   

  
	
  5.1

  	
  Appointments

  	
   

  
	
  5.2

  	
  Failure
  to Appoint

  	
   

  
	
  5.3

  	
  Administration of
  Authorized Dealers

  	
   

  
	
  ARTICLE
  6.

  	
  Distributor Requirements

  	
   

  
	
  6.1

  	
  Distributorship
  Locations and Premises

  	
   

  
	
   

  	
  6.1.1

  	
  Establishment
  of Distributorship Locations and Premises

  	
   

  
	
   

  	
  6.1.2

  	
  Establishment of
  Distributor Branches

  	
   

  
	
   

  	
  6.1.3

  	
  Execution
  of Distributorship Locations and Premises Addendum

  	
   

  
	
   

  	
  6.1.4

  	
  Changes Proposed

  	
   

  
	
   

  	
  6.1.5

  	
  Business Hours

  	
   

  
	
   

  	
  6.1.6

  	
  Signs

  	
   

  
	
   

  	
  6.1.7

  	
  Distributor Name

  	
   

  
	
  6.2

  	
  Capital

  	
   

  
	
  6.3

  	
  Personnel

  	
   

  
	
  6.4

  	
  Inventory

  	
   

  
	
  6.6

  	
  Training

  	
   

  
	
  6.5

  	
  Government
  Regulations

  	
   

  
	
  6.7

  	
  Accounting
  System, Records, Reports and Audits

  	
   

  
	
  6.8

  	
  Distributor Marketing Plans

  	
   

  
	
  6.9

  	
  Trademarks and Service
  Marks

  	
   

  
	
   

  	
  6.9.1

  	
  Ownership

  	
   

  
	
   

  	
  6.9.2

  	
  Display and Use of Marks

  	
   

  
	
   

  	
  6.9.3

  	
  Discontinuance
  of Use Upon Termination

  	
   

  
	
   

  	
  6.9.4

  	
  Not to be
  Registered by Distributor

  	
   

  
	
   

  	
  6.9.5

  	
  Liability for
  Failure to Discontinue Use

  	
   

  
	
  ARTICLE 7.

  	
  Termination

  	
   

  
	
  7.1

  	
  Termination of Agreement

  	
   

  
	
   

  	
  7.1.1

  	
  Termination by Distributor

  	
   

  
	
   

  	
  7.1.2

  	
  Termination
  Due to Certain Acts or Events

  	
   

  
	
   

  	
  7.1.3

  	
  Termination for
  Failure of Performance

  	
   

  
	
   

  	
  7.1.4

  	
  Termination Due
  to Death or Incapacity

  	
   

  
	
   

  	
  7.1.5

  	
  Termination for
  Failure to be Licensed

  	
   

  
	
   

  	
  7.1.6

  	
  Termination by Agreement

  	
   

  
	
   

  	
  7.1.7

  	
  Reliance
  on Any Applicable Termination Provision

  	
   

  
	
  7.2

  	
  Transactions After
  Termination

  	
   

  
	
   

  	
  7.2.1

  	
  Effect of Termination
  on Orders

  	
   

  
	
   

  	
  7.2.2

  	
  Termination Deliveries

  	
   

  
	
   

  	
  7.2.3

  	
  Effect of
  Transactions After Termination

  	
   

  
	
  ARTICLE 8.

  	
  Termination Assistance

  	
   

  
	
  8.1

  	
  Deferral of
  Effective Date of Termination

  	
   

  
	
  8.2

  	
  Purchase of Personal
  Property

  	
   

  
	
   

  	
  8.2.1

  	
  Company’s Obligations

  	
   

  
	
   

  	
  8.2.2

  	
  Responsibilities of
  Distributor

  	
   

  
	
   

  	
  8.2.3

  	
  Payment by Company

  	
   

  
	
   

  	
  8.2.4

  	
  Assignment of Rights

  	
   

  
	
  8.3

  	
  Assistance on
  Distributorship Premises

  	
   

  
	
   

  	
  8.3.1

  	
  Company’s Obligations

  	
   

  
	
   

  	
  8.3.2

  	
  Owned Distributorship
  Premises

  	
   

  
	
   

  	
  8.3.3

  	
  Leased Distributorship
  Premises

  	
   

  
	
   

  	
  8.3.4

  	
  Reasonable Rent
  and Reasonable Price

  	
   

  
	
   

  	
  8.3.5

  	
  Limitations
  on Obligation to Provide Assistance

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  9.

  	
  Successor and
  Replacement Distributor

  	
   

  
	
  9.1

  	
  Rights of
  Company

  	
   

  
	
   

  	
  9.1.1

  	
  Selection of Distributors

  	
   

  
	
   

  	
  9.1.2

  	
  Review of Applications

  	
   

  
	
  9.2

  	
  Succession
  Rights Upon Death or Incapacity

  	
   

  
	
   

  	
  9.2.1

  	
  Rights Under Successor
  Addendum

  	
   

  
	
   

  	
  9.2.2

  	
  Rights
  of Remaining Distributor Principal Managers and Owners

  	
   

  
	
   

  	
  9.2.3

  	
  Successor
  Distributor Requirements

  	
   

  
	
   

  	
  9.2.4

  	
  New Successor Addendum

  	
   

  
	
  9.3

  	
  Other
  Changes in Management and Ownership or Sale of Assets

  	
   

  
	
  ARTICLE 10.

  	
  General Provisions

  	
   

  
	
  10.1

  	
  No Agent or Legal
  Representative

  	
   

  
	
  10.2

  	
  Distributor’s
  Responsibility for Its Operations

  	
   

  
	
  10.3

  	
  Taxes

  	
   

  
	
  10.4

  	
  Indemnification by Company

  	
   

  
	
  10.5

  	
  Notices

  	
   

  
	
  10.6

  	
  No
  Implied Waivers

  	
   

  
	
  10.7

  	
  Assignment
  of Rights

  	
   

  
	
  10.8

  	
  Accounts
  Payable

  	
   

  
	
  10.9

  	
  Applicable Law

  	
   

  
	
  10.10

  	
  Sole Agreement of Parties

  	
   

  
	
  10.11

  	
  New and Superseding
  Agreements

  	
   

  
	
  10.12

  	
  Captions

  	
   

  
	
  10.13

  	
  Severability

  	
   

  
	
  10.14

  	
  Language

  	
   

  
					

 

 

Article 1.  Glossary of Terms

 

Affiliated Company

 

Any company in which
Detroit Diesel Corporation has a direct or indirect ownership interest, as well
as Freightliner LLC and its subsidiaries, or
such other DaimlerChrysler company responsible for manufacturing or selling the
2007 engines referred to in Article 2.2

 

Agreement

 

The Distributor Agreement
that is executed by Distributor and Company, the Additional Provisions, and all
related Addenda.

 

Area of Responsibility

 

The area described in the
Area of Responsibility Addendum to this Agreement as established by Company
from time to time.

 

Authorized Dealer

 

A business entity with
whom Distributor has executed a form of dealer agreement provided or approved
by Company, pursuant to Article 5 of this Agreement.

 

Detroit
Diesel Distributor

 

A business entity which
is a party to a Distributor Agreement with Company or an Affiliated Company for
any or all of the Products described in the Products Addendum.

 

Detroit Diesel Remanufacturing Corporation (“DDR”)

 

A company or facility
which has been authorized by Company to remanufacture and market reliabilt
Parts.

 

Direct Dealer

 

A
business entity with whom Company or Affiliated Company has directly executed a
dealer agreement for any or all of the Products and/or Parts.

 

Distributorship Location(s)

 

The location(s) approved
by Company for the conduct of Distributorship Operations as identified on the
Distributorship Locations and Premises Addendum.

 

Distributorship Operations

 

The functions,
responsibilities, operations, and activities that are contemplated by this
Agreement, including any optional activities undertaken by Distributor in
connection with Products and Parts.

 

Distributorship Premises

 

The facilities approved
by Company at the Distributorship Location(s) for the conduct of the
Distributorship Operations as identified on the Distributorship Locations and
Premises Addendum.

 

Marks

 

The various trademarks,
service marks, names and designs owned by or licensed to Company, or an
Affiliated Company, and used in connection with Products and Parts.

 

Parts

 

New parts or reliabilt
remanufactured parts which are marketed by or for Company for use in connection
with Products and which are listed in current parts catalogs, price schedules
and supplements thereto furnished by Company and DDR.

 

Products

 

The new engines that are
described in the Products Addendum, plus reliabilt Products and all past
products marketed under the same trade name.

 

Principal Manager(s)

 

The individual manager(s)
of Distributor identified in the Management and Ownership Addendum approved by
Company upon whose personal service Company relies in entering into this
Agreement.

 

Principal Owner(s)

 

Owner(s) of Distributor
upon whose stated record and beneficial ownership interests in Distributor, as
set forth in the Management and Ownership Addendum, Company relies in entering
into this Agreement.

 

reliabilt Products and reliabilt
Parts

 

Used Products and Parts
which have been remanufactured under license agreements executed by Company and
which are marketed by Company, DDR or Detroit Diesel Distributors under the “reliabilt”
trademark.

 

Service
Policy Manual

 

The manual of that name
furnished by Company to Distributor, as modified by change notices, letters or
revision sheets.

 

Terms of Sale Bulletins

 

Bulletins furnished by
Company to Distributor setting forth the terms of sale and other provisions
that apply to sales of Products and Parts by Company to Distributors as issued
from time to time or as modified by any change notices, letters or revision
sheets.

 

1

 

Article 2. Company
Rights and Responsibilities

 

2.1          General

 

Company is responsible
for determining which products it will market and the methods it will use to
sell those products to Detroit Diesel Distributors or other customers.

 

2.2          Products and Parts

 

Company
will furnish Distributor with a Products Addendum identifying Products and
Parts available for purchase by Distributor. 
During the term of this Agreement, the applicable Products Addendum,
whether original or a superceding version, will include all current medium and
heavy-duty Detroit Diesel or MBE engines for on-highway applications which are
manufactured by or for Company and offered for sale in North America by Company
or Affiliated Company and will include Parts for such engines, as well as
engines previously manufactured by or for Company for which Parts are currently
offered for sale.  In addition, the
Products Addendum shall be amended to add the engines currently in development
to meet the 2007 on-highway USEPA emissions standards in models of 9-litre,
12-litre and 14.8-litre displacements (or production derivatives of similar
displacement) when such engines are offered for sale by Company or Affiliated
Company either as loose engines or installed in on-highway vehicles sold in
North America.

 

Company
may determine additional Products and/or Parts it will sell to Distributor and
will identify those additional Products and/or Parts in the Products
Addendum.  Any such additional Products
and/or Parts may be added to or deleted from the Products Addendum by Company
by furnishing Distributor with a new Products Addendum.

 

2.3          Distributors, Branches and Authorized Dealers

 

2.3.1       Number and Location

 

Company is responsible
for determining the number and location of Detroit Diesel Distributors,
branches and Authorized Dealers. Distributor will not establish a branch or
other location for the conduct of Distributorship Operations or appoint an
Authorized Dealer without the prior written approval of Company.

 

2.3.2       Character of Changes

 

Company reserves the
right to (a) reassign a portion of the Area of Responsibility to another
Detroit Diesel Distributor; and/or (b) establish an additional Detroit Diesel
Distributor in the Area of Responsibility.

 

If Company believes any
such changes are appropriate, Company and Distributor shall endeavor to reach
agreement reflecting the changes to be effected, the manner in which they will
be accomplished, and the time period for completing such changes.

 

If Company determines in
its sole discretion that agreement satisfactory to Company cannot be reached
with Distributor, Company shall notify Distributor in writing of the changes
that it will put into effect and the timing of such changes.

 

As a result of any such
changes effected by Company, Company shall furnish to Distributor a new Area of
Responsibility Addendum, as required.

 

If the portion of the
Area of Responsibility deleted from Distributors previous Area of
Responsibility contains any approved Distributor Location(s) then Company will
repurchase Products and Parts and signs in accordance with Article 8.2 and will
provide premises assistance in accordance with Article 8.3 of this Agreement.

 

2.4          Sales to Distributor

 

2.4.1       Orders

 

Distributor shall submit orders for Products and Parts in accordance
with ordering procedures furnished Distributor by Company. Distributor’s orders
are not binding until accepted by Company and may be canceled by Distributor
until that time. After Company’s acceptance of an order, Distributor may not
modify or cancel such order without the written consent of Company, except in
the case of a price increase as provided in this Article 2.4.  Company may establish a reasonable
cancellation charge to be paid by Distributor.

 

If the productive
capacity of Company’s manufacturing sources are insufficient at any time to
meet the demand for Products or Parts, Company will endeavor to distribute
Products and Parts in a fair and equitable manner.

 

Company will not be
liable for any delay or failure to deliver Products and Parts where caused, in
whole or in part, by:

 

(a)          any strike or labor
trouble affecting operations of Company, Affiliated Companies or their
suppliers;

 

(b)         any shortage or
curtailment of utilities, materials, transportation or labor or any shortage or
damage to the facilities of Company, Affiliated Companies or their suppliers;

 

(c)          any act of government,
including the enactment of laws or regulations or issuance of judicial or
administrative injunctions or orders;

 

(d)         any curtailment or
discontinuance of production by Company, Affiliated Companies or their
suppliers;

 

(e)          any cause beyond the
control of Company, Affiliated Companies or their suppliers.

 

2.4.2       Prices and Terms of Sale

 

Prices, charges, discounts, allowances and other terms of sale
applicable to purchases of Products and Parts will be those established by
Company in pricing publications and the Terms of Sale Bulletins in effect at
the time of shipment to Distributor. Company has the right to change

 

2

 

the
prices, charges, discounts, allowances and other terms of sale for Products and
Parts at any time.

 

Company will give written
notice to Distributor of any price increase before shipping any Products to
which such increase applies. 
Distributor may cancel or modify the affected orders for Products by
delivering a written notice of cancellation to Company within 20 days of
receipt of Company’s announcement of such price increase.

 

Company agrees that it
will sell Products and/or Parts to Distributor at prices or terms of sale no
less favorable than those offered to any Authorized Dealer or Direct Dealer
within Distributor’s Area of Responsibility without the express prior approval
of Distributor.

 

2.4.3       Shipments

 

Unless otherwise agreed, Company shall arrange for shipment services on
Distributor’s behalf and account. 
Products and Parts will be shipped to Distributorship Locations or other
locations authorized by Company. Company shall not be liable for any delays,
losses or damages in shipment.

 

If any Products or Parts ordered by Distributor are diverted or
returned because of Distributor’s delay or failure to accept delivery,
Distributor will pay any additional costs incurred by Company as a result of
such diversion or return.

 

2.4.4       Warranties on Products or
Parts

 

Company warrants new
Products and Parts as set forth in documents containing those warranties that
Company provides with such Products and as set forth in the Service Policy
Manual.

 

EXCEPT AS OTHERWISE PROVIDED BY LAW, THE WRITTEN SELLER’S
WARRANTIES ARE THE ONLY WARRANTIES APPLICABLE TO NEW PRODUCTS AND PARTS.  WITH RESPECT TO DISTRIBUTOR, SUCH WARRANTIES
ARE IN LIEU OF ALL OTHER WARRANTIES OR LIABILITIES, EXPRESS OR IMPLIED,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR ANY LIABILITY FOR COMMERCIAL LOSSES BASED UPON NEGLIGENCE OR
MANUFACTURER’S STRICT LIABILITY.  EXCEPT
AS MAY BE PROVIDED UNDER AN ESTABLISHED SELLER’S PROGRAM OR PROCEDURE, COMPANY
NEITHER ASSUMES NOR AUTHORIZES ANYONE TO ASSUME FOR IT ANY OTHER OBLIGATION OR
LIABILITY IN CONNECTION WITH PRODUCTS AND PARTS, AND COMPANY’S MAXIMUM
LIABILITY IS TO REPAIR OR REPLACE THE PRODUCT OR PART.

 

2.4.5       Change in or Discontinuance
of Products or Parts

 

Company may discontinue
any Products or Parts or lines of Products or Parts or change the design or
specifications of any Products or Parts at any time without notice and without
incurring any obligation to Distributor.

 

Company may install any
equipment or accessories or incorporate any design features required by law on
any Products or Parts ordered by Distributor, whether or not such items or
features are included in Distributor’s order.

 

2.5          Assistance to Distributors

 

2.5.1       Counseling

 

Company shall counsel
Distributor on sales, service and other related matters.

 

2.5.2       Manuals, Bulletins and
Materials

 

Company shall provide
Distributor with manuals, bulletins and other materials considered appropriate
by Company and will inform Distributor of any applicable charges.

 

2.5.3       Advertising and Sales
Promotion

 

Company shall make
advertising and sales promotion programs and materials available to Distributor
as considered appropriate by Company and will inform Distributor of any
applicable charges.

 

2.5.4       Training

 

Company shall provide
training programs and materials considered appropriate by Company to assist
Distributor in fulfilling its responsibilities to train personnel of
Distributor, Authorized Dealer(s) and Product users.  Company shall inform Distributor of any applicable charges.
Company shall not be responsible for any compensation payable to personnel of
Distributor, Authorized Dealer(s) or Product users while attending such courses
or for related travel and living expenses.

 

2.5.5       Engineering

 

Company may provide
Product application guidelines and/or consulting engineering service to
Distributor.  Distributor’s
responsibility for proper installation and application shall remain the same as
provided in Article 3.3.

 

Company acknowledges that
some third parties who acquire Products or Parts from Distributor may install
or apply such Products or Parts independent of Distributor and that, in such
instances, Distributor shall have no application or installation responsibility
to such third parties or the owner/user of such Products and Parts.

 

2.6                               Payment and Compensation for
Performance of Specified Responsibilities

 

2.6.1       Payment for Performance of
Service Responsibilities

 

Company will pay Distributor for the replacement of Parts or will
provide Distributor with the Parts required and pay for labor in accordance
with the applicable provisions of

 

3

 

the Service Policy Manual for all warranty repairs, special policy
adjustments and campaign inspections or corrections performed directly by
Distributor in its conduct of service operations.

 

Company will pay Distributor in accordance with the Service Policy
Manual for approved claims submitted by Distributor on behalf of Authorized
Dealers in connection with their performance of warranty repairs, special
policy adjustments and campaign inspections and corrections for Products and
Parts for which such Authorized Dealers have service responsibilities.

 

2.6.2       Compensation for
Performance of Specified Responsibilities

 

Company will compensate
Distributor, as provided in appropriate manuals, bulletins and letters
furnished Distributor by Company, for the performance of specified services
that may include indirect sales activities, sales promotion, dealer
development, dealer technical support, 
dealer parts support and distribution functions.

 

Company and Distributor
acknowledge that Company has used such payments as a mechanism for compensating
Distributor for specified services performed to support Authorized Dealers and
direct Dealers.  Distributor
acknowledges that Company reserves the right to change the method and amount of
compensation.  Company agrees to advise
Distributor of the details of any such change at least ninety (90) days in
advance of implementation of any such change.

 

Article 3.  Distributor Sales Responsibilities

 

3.1          Retail Sales, Wholesale Sales and
Sales Promotion Activities

 

Distributor shall
aggressively and effectively perform the following sales activities in the Area
of Responsibility:

 

(a)          retail sales of Products
and Parts to users and prospective users.

 

(b)         wholesale sales of
Products and Parts to original equipment manufacturers (OEM), and Authorized
Dealers.

 

(c)          promote purchases by
dealers, users and potential users of OEM products equipped with Products.

 

Distributor acknowledges
that Company has reserved the right to sell Products and Parts directly to any
customers, including but not limited to, OEM’s.  However, nothing in this Agreement shall be construed to restrict
the right of Distributor to sell any Product or Parts to any customers within
the Area of Responsibility, including OEM’s.

 

3.2          Sales
Efforts

 

In furtherance of its
responsibilities, Distributor shall:

 

(a)          employ a force of
trained management and sales personnel considered adequate by Company;

 

(b)         build and maintain
customer confidence and satisfaction;

 

(c)          establish and maintain
regular contacts with prospective purchasers of Products and Parts and equipment
using Products and with others who influence purchases;

 

(d)         employ effective ethical
sales, advertising and promotion programs and activities; and

 

(e)          actively participate in
industry and trade associations and support programs for exhibiting and
demonstrating Products.

 

3.3          Application and Installation

 

Distributor shall be responsible for proper application and
installation, and for supervision of proper application and installation by a
third party where appropriate, of all Products sold by Distributor.

 

Company acknowledges that
some third parties who acquire Products or Parts from Distributor may install
or apply such Products or Parts independent of Distributor and that, in such
instances, Distributor shall have no application or installation responsibility
to such third parties or the owner/user of such Products and Parts.

 

However, Company assumes
no responsibility for the proper application or installation of any Products or
Parts sold by Distributor.

 

Distributor shall provide
Company all information including End Product Questionnaires (EPQ) requested
concerning applications, modifications and installations of Products.  Failures resulting from improper
application, modification or installation are not the responsibility of
Company. Distributor will reimburse Company for any expenses or other
liabilities incurred by Company as a result of Distributor’s improper
application, modification or installation of Products.

 

3.4          Sales Performance Evaluation

 

Distributor’s sales
performance will be evaluated by Company based upon Distributor’s sales
achievement as compared to sales objectives established by Company for
Distributor and to the sales achievement of other Detroit Diesel Distributors.

 

In addition, Company will
consider other relevant factors including, but not limited to:

 

(a)          the trend of
Distributor’s sales performance;

 

4

 

(b)         the manner in which
Distributor has conducted sales operations, including advertising, sales
promotion and treatment of customers;

 

(c)          sales resulting from
Distributor’s efforts to support Company sales to OEM’s;

 

(d)         the manner in which
Distributor has submitted orders for Products;

 

(e)          availability of Products
to Distributor; and

 

(f)            significant local
conditions that may have affected Distributor’s performance.

 

3.5          Distribution and Sale of Products and
Parts

 

In the distribution or
sale of new, rebuilt or remanufactured engines, or new, rebuilt or
remanufactured components or new service parts for engines or in the servicing
of engines, Distributor shall exclusively promote, sell, use and service
Products and Parts in Distributorship Premises, unless otherwise agreed by
Company.

 

Distributor may sell or
promote at Distributor Locations products and parts which do not compete with
Products and/or Parts marketed by Company if Distributor provides notice to
Company of its intention to do so reasonably in advance of the commencement of
such activity and if Distributor is otherwise in compliance with its
responsibilities under this Agreement.  This provision does
not restrict Distributor from conducting any business at any facility other
than Distributor Locations.

 

After
January 1, 2006, Distributor may request that Company waive the limitations of
Article 3.5 and sell or promote competitive products and parts. Company will
decide in its sole discretion whether to consent to the waiver.  If Company does consent and Article 3.5 is
waived, Distributor will no longer be entitled to the assistance on
distributorship premises set forth in Article 8.3, which provisions will be
ineffective.

 

In
the event Distributor is authorized by any Affiliated Company to supply parts
and service support for products sold by Affiliated Company, Company will not
unreasonably withhold its approval of Distributor activities relating to the
products and components of Affiliated Company.

 

3.6          Sales Outside Area of
Responsibility

 

3.6.1       Service Commission for
Sales Outside Area of Responsibility

 

Distributor agrees that on sales of any Products by Distributor,
directly to customers outside the Area of Responsibility, or directly or
indirectly to customers whose initial substantial use of the Products will be
outside the Area of Responsibility including, but not limited to, sales outside
the United States of America, it will pay or cause to be paid to the Detroit
Diesel Distributor in whose area of responsibility the Products are sold, or
where their initial substantial use occurs, a service com-mission as defined by
and in accordance with applicable provisions of the Service Policy Manual.

 

Distributor agrees to
accept charges against its accounts with Company and other Detroit Diesel
Distributors in implementing this Article 3.6. 
Distributor acknowledges that in actions taken by Company in implementing
this Article 3.6 and remitting a service commission to the Detroit Diesel
Distributor in whose area of responsibility a sale of a Product by a Detroit
Diesel Distributor has taken place, or where the initial substantial use of the
Product sold by Detroit Diesel Distributor occurs, Company shall act in sole
capacity of an accommodation transferor, but without liability to either party,
except for its gross negligence, or assurance that such service commission,
disputed or undisputed, shall be paid.

 

Company shall
effect such payment on behalf of Distributor by charging Distributor’s account
with Company with the amount of the service commission and crediting the other
Detroit Diesel Distributor’s account with Company with the amount so charged.

 

3.6.2       Excluded Sales

 

In view of the
active and effective efforts required of a Detroit Diesel Distributor to
continuously promote and sell Products, and such sale, or the initial
substantial use, of a Product may occur outside the selling Detroit Diesel
Distributor’s area of responsibility, a service commission on the sale of the
Product shall not be paid if (i) the purchaser has a bona fide purchasing
office, as solely determined by Company, in the selling Detroit Diesel
Distributor’s area of responsibility or (ii) if the Product is installed in a
vehicle or end-product owned or operated by the customer and located in the
selling Detroit Diesel Distributor’s area of responsibility at time of
installation, or (iii) the Product is a qualified product as listed on the
selling Detroit Diesel Distributor’s Qualified Products and OEM’s Addendum, or
(iv) the customer is a qualified OEM as listed on the selling Detroit Diesel
Distributor’s Qualified Products and OEM’s Addendum or Company has specifically
exempted a sales transaction from this provision prior to the execution of the
sale.

 

In addition, a
service commission shall not be paid (i) on sales of Products to the
governments or certain agencies of the United States of America or the Dominion
of Canada or to certain governmental units thereof, as Company, from time to
time, will delineate, for use by such government or agencies, or (ii) if the
sale is to a customer who is an authorized Detroit Diesel Distributor and the
selling Detroit Diesel Distributor is not in default under the distributor
agreement.

 

3.6.3       Resolution of Disputes

 

Distributor agrees to
accept and abide by Company’s decision in disputes arising with respect to
service commissions payable pursuant to the section.

 

5

 

Article 4.  Distributor Service Responsibilities

 

4.1          General Responsibility

 

Distributor agrees to
perform directly and through Authorized Dealers, the service obligations of
Company, Distributor and Authorized Dealers on all Products in the Area of
Responsibility, regardless of origin of purchase.  This work will be performed promptly, in a good and workmanlike
manner and in accordance with the Service Policy Manual and other publications
provided by Company.

 

Except as authorized by
Company, neither Distributor nor any Authorized Dealer shall charge a customer
for parts or service for which Distributor or Authorized Dealer will be paid by
Company or another Detroit Diesel Distributor.

 

In furtherance of its
service responsibilities, Distributor shall, at each Distributorship Location:

 

(a)          employ a force of
trained management and service technicians who are accredited and trained on
all current Products for which Distributor is authorized by this Agreement to
service;

 

(b)         establish and maintain
service facilities satisfactory in appearance and size for the conduct of
service operations;

 

(c)          maintain current
applicable service information;

 

(d)         provide and maintain
tools and equipment considered necessary by Company, including at least those
listed in the Special Service Tool and Equipment Lists, Distributor Training
Standards Manual and other applicable bulletins for all Products for which
Distributor is authorized by this Agreement to service; and

 

(e)          provide and maintain
properly equipped service vehicles or other means of providing satisfactory
customer service.

 

4.2          Warranties

 

Distributor shall
deliver, and shall require Authorized Dealers to deliver, a copy of the
warranty applicable to Products or Parts to each customer purchasing a Product
or Part and shall explain the provisions to any customer requesting such
explanation.  Such warranty shall be
delivered at the time of sale, but not later than the time of delivery, of the
Product or Part to the customer.

 

Distributor shall explain
and cause its Authorized Dealers to explain to customers the proper operation
instructions and requirements for Products.

 

4.3          Warranty, Special Policy and
Campaign Repairs

 

Distributor shall perform
and shall cause its Authorized Dealers to perform, in accordance with the
Service Policy Manual, (a) warranty repairs on all Products and Parts
qualifying for such repairs; (b) special policy adjustments approved by
Company; and (c) campaign inspections and corrections that are directed by
Company on Products and Parts.

 

In performing the above
work, Distributor will, unless otherwise authorized in writing by Company, use
only Parts. Distributor shall provide and shall cause its Authorized Dealers to
provide to each customer a copy of the repair order for the above work.

 

4.4          Representations as to Parts

 

Distributor shall not,
and shall assure that Authorized Dealers shall not, represent parts not
marketed by Company as Parts marketed by Company.

 

4.5          Service Performance
Evaluation

 

Distributor’s service
performance will be evaluated by Company based upon, but not limited to, the
following factors:

 

(a)          customer confidence and
satisfaction;

 

(b)         the manner and efficiency
in which Distributor conducts service operations;

 

(c)          the adequacy of
facilities, tools and equipment, and personnel;

 

(d)         the effectiveness of its
Authorized Dealers;

 

(e)          accuracy of claims and
processing of Applications for Adjustment (“AFA”) or other payments to dealers
and customers; and

 

(f)            availability of Parts
for service operations.

 

Article 5.  Authorized Dealers

 

5.1          Appointments

 

Distributor and Company
recognize that for Distributor to properly fulfill its service, sales and
promotional responsibilities relating to Products and Parts, it may be
necessary for Distributor to appoint qualified dealers at locations selected by
Company or proposed by Distributor in the Area of Responsibility. Each such
dealer may be required to be owned and operated independently of Distributor
and its employees and owners and each appointment is subject to approval by
Company.

 

6

 

When each such dealer has executed with Distributor a form of dealer
agreement provided or approved by Company, Company will confirm its approval in
writing to Distributor.

 

5.2          Failure to Appoint

 

If Distributor fails to
appoint a qualified dealer approved by Company or at a location requested by
Company within ninety (90) days after receipt of such written request, Company
or Affiliated Company may appoint a dealer directly as a Direct Dealer.  Unless otherwise agreed to by Distributor,
Distributor will not be responsible for the training, support and development
of any Direct Dealer appointed in Distributor’s Area of Responsibility.

 

5.3          Administration of Authorized Dealers

 

Distributor shall provide
an adequate number of capable employees to administer and advise Authorized
Dealers in all phases of their operations.

 

Distributor shall assure
that the qualifications of each Authorized Dealer are maintained to adequately
support customer needs for Products designated in the dealer agreement and for
Parts.

 

Distributor is
responsible for training Authorized Dealer personnel in procedures and
techniques applicable to the sales and service of such designated Products and
Parts.

 

Company personnel have
the right to contact Authorized Dealers directly to determine the manner in
which they perform their responsibilities and to provide assistance as
appropriate.

 

Article 6.  Distributor

 

Requirements

 

6.1          Distributorship Locations and
Premises

 

6.1.1       Establishment of
Distributorship Locations and Premises

 

Distributor will establish and maintain Distributorship Premises at the
Distributorship Location(s) approved by Company.  Such Distributor Premises shall be acceptable to Company in
appearance, functionality, trademarks, cleanliness, and neatness, and adequate
in size and properly equipped for the conduct of Distributorship Operations.

 

Further, Distributor
shall not, without prior written approval of Company, conduct, or allow any
other person or entity to conduct, any activities in conflict with Distributor
Operations at any Distributorship Location or within any building located on
the property leased or owned by Distributor.

 

6.1.2       Establishment of
Distributor Branches

 

Distributor will, upon
written request by Company, establish Distributorship Premises at a branch
location(s) selected by Company for the conduct of Distributorship Operations.
Each such branch shall be operated by Distributor. The appointment by
Distributor of an Authorized Dealer will not fulfill Distributor’s
responsibility to establish a branch location requested by Company.

 

If Distributor fails to
establish a branch within six (6) months after receipt of a written request
from Company, Company may change the Area of Responsibility, establish an
additional Detroit Diesel Distributor or directly appoint a dealer at such
location.

 

6.1.3       Execution of
Distributorship Locations and Premises Addendum

 

The Distributorship
Locations and Distributorship Premises, including branch locations established
by Distributor at the request of Company, and the purposes for which such
Premises will be used, will be reflected in a Distributorship Locations and
Premises Addendum executed by Distributor and Company. Distributor, or any of
its owners, will not conduct any of the Distributorship Operations at any
location that is not reflected in such Addendum.

 

6.1.4       Changes Proposed

 

If Distributor desires to
establish, change or eliminate any Distributorship Premises or change the use
of any Distributorship Premises, it shall advise Company in writing and obtain
prior written approval of any such change. Any such change approved by Company
shall be reflected, when implemented, in a new and superseding Distributorship
Locations and Premises Addendum.

 

Company and Distributor
acknowledge that Company and Affiliated Companies are contemplating making
changes in the manner in which Parts are distributed an in the appointment and
support of dealers.  Changes which may
occur that could affect Distributor operations include pricing changes,
functional compensation and specified service or support functions. If a
Distributor in the exercise of reasonable business judgment determines that
such a change causes a financial deterioration of a Distributor Location and
Distributor requests permission of Company to close or downsize the affected
Distributor Location, Company will not unreasonably withhold such approval.

 

If Distributor does not obtain such prior written approval, Company may
terminate this Agreement. In any event, Company may exercise its right under
Article 2.3.2 to modify the Area of Responsibility or appoint an additional
Distributor.

 

7

 

6.1.5       Business Hours

 

Distributor shall
maintain its Distributorship Premises open to serve customers during all days
and hours which are customary in the trade and lawful and necessary to properly
serve customers in the Area of Responsibility. Distributor shall provide
emergency service in the Area of Responsibility on a seven (7) day per week,
twenty four (24) hour per day basis.

 

6.1.6       Signs

 

Distributor shall install
and maintain, at its own expense, only signs approved by Company at the
Distributorship Premises and assure that the Authorized Dealers utilize signs
approved by Company.

 

6.1.7       Distributor Name

 

Distributor’s business
name must be approved in writing by Company.

 

6.2          Capital

 

Distributor shall provide
working and equity capital as mutually agreed upon by Company and Distributor
to adequately fulfill Distributor’s responsibilities under this Agreement.

 

6.3          Personnel

 

Distributor shall provide
competent management and a sufficient staff of personnel who are adequately
trained to perform the Distributor’s responsibilities under this Agreement.

 

6.4          Inventory

 

Distributor shall
maintain an inventory of Products and Parts adequate to meet the needs of
Authorized Dealers and other customers located in the Area of Responsibility.

 

Distributor will assure
that Authorized Dealers maintain an inventory of Parts considered adequate by
Distributor to meet the needs of Dealers’ customers.

 

6.5          Government Regulations

 

Distributor and Company
will provide each other with such information and assistance as reasonably
requested to facilitate compliance with government laws, regulations and orders
relating to Products and Parts. 
Distributor shall be responsible for complying with applicable laws,
regulations and orders.

 

Company and its suppliers
shall not be required to change their materials, designs, or production
processes in any way to meet such regulations, but shall endeavor to achieve
Product and Part conformance where, in their sole judgment, such conformance is
practical and is economically justified.

 

6.6          Training

 

In order to maintain and develop qualified personnel, Distributor shall
send appropriate personnel, at its own expense, to conferences and training
programs provided by Company.

 

Distributor shall establish and maintain training programs recommended
by Company devoted to training personnel of Distributor, Authorized Dealer(s)
and Product users.

 

6.7          Accounting System, Records, Reports
and Audits

 

Distributor agrees to
maintain accounting systems in a manner approved by Company. Distributor
further agrees to furnish to Company complete and accurate financial statements
on a periodic basis as required by Company in a form satisfactory to Company,
including upon request, an annual audited financial statement for
Distributorship, and if applicable, subsidiary or parent companies.

 

Distributor shall maintain
complete and accurate sales, service, parts, training and other appropriate
records designated by Company in a form satisfactory to Company and shall cause
its Authorized Dealers to maintain similar records. Distributor agrees to
maintain such records and to cause its Authorized Dealers to maintain similar
records for a minimum period of two (2) years in a form satisfactory to
Company.

 

Distributor authorizes,
and will cause each Authorized Dealer to permit, any designated representative
of Company to examine, audit, reproduce and take copies of any Distributor or
Authorized Dealer accounts and records required under this Agreement or under
the authorized dealer agreement provided or approved by Company.

 

Company will not furnish
any data submitted by Distributor to any third party unless authorized by
Distributor or required by law, or pertinent to judicial or government
administrative proceedings.  Further,
Company will not furnish to any Affiliated Company, without the express prior
approval of Distributor, data submitted by Distributor other than data related
specifically to Products and Parts.

 

Distributor agrees to
furnish, upon reasonable notice during regular business hours, when requested
by Company, accurate information covering Distributor’s sales of Products and
Parts and reliable forecasts of Distributor’s requirements for Products and
Parts.

 

6.8          Distributor Business Plans

 

Using the outline
furnished by Company, Distributor shall submit to Company a distributor
business plan covering the items specified in such outline. A distributor
business plan shall be prepared and submitted for each calendar year or for
such other period as may be specified by

 

8

 

Company. Company will
advise Distributor in writing of any recommended changes in such plan.

 

Distributor’s performance
will be evaluated by Company on the basis of how effectively it has met the
goals and objectives set forth in the distributor business plan, including any
recommendations made thereon in writing by Company. Additionally, consideration
will be given to the manner in which Distributor has fulfilled its sales,
service and premises responsibilities. Such evaluation will also consider
performance of Authorized Dealers.

 

6.9          Trademarks and Service Marks

 

6.9.1       Ownership

 

Distributor acknowledges
and will cause each Authorized Dealer to acknowledge that Company, or an
Affiliated Company is the exclusive owner or the authorized licensee of the
various trademarks, service marks, names and designs used in connection with
Products and Parts (herein called Marks).

 

6.9.2       Display and Use of Marks

 

Distributor is granted
and Distributor will grant each Authorized Dealer the non-exclusive right to
display such Marks in the conduct of Distributorship Operations by Distributor
and sales and service operations relating to Products and Parts by Authorized
Dealers. Distributor will discontinue and will cause an Authorized Dealer to
discontinue the display or use of any such mark or change the manner in which
any such Mark is displayed or used when requested to do so by Company.
Distributor will not use or permit Authorized Dealers to use any Mark as part
of the name under which the business of Distributor or an Authorized Dealer, or
any company affiliated with Distributor or an Authorized Dealer, is conducted
without the prior written approval of Company. Any such approval by Company
shall be automatically rescinded upon the expiration or termination of this
Agreement.

 

During the term of this
Agreement, Distributor will not use and will not permit an Authorized Dealer to
use any mark or name so resembling such Marks as to be likely to confuse or
deceive.

 

Distributor shall not
remove or alter Marks or other identifications used on or in connection with any
Product or add any Marks or other identification without Company’s prior
approval.

 

6.9.3       Discontinuance of Use Upon
Termination

 

Upon the expiration or
termination of this Agreement, Distributor will immediately discontinue and
cause each Authorized Dealer to discontinue, at Distributor’s and each
Authorized Dealer’s expense, all use and display of Marks. Thereafter,
Distributor will not use, either directly or indirectly, any Marks or any other
marks so resembling such Marks as to be likely to confuse or deceive. Failure
of Company and Distributor to complete the purchase and sale of signs under the
provisions of Article 8.2.1 of this Agreement shall not relieve Distributor of
its obligation to discontinue the use of such Marks on such signs.

 

6.9.4       Not to be Registered by
Distributor

 

Distributor will not take
any action, directly or indirectly, to register or cause to be registered any
Marks in its favor or in the favor of any third party.

 

6.9.5       Liability for Failure to
Discontinue Use

 

Distributor shall
reimburse Company, or Affiliated Companies, for all costs, legal fees and other
expenses incurred by any of them in connection with legal action to require
Distributor to comply with this Article 6.9.

 

Article 7.  Termination

 

7.1          Termination of Agreement

 

7.1.1       Termination by Distributor

 

Distributor may terminate
this Agreement by written notice to Company. Termination will be effective
ninety (90) days after Company’s receipt of such notice unless another date is
agreed upon in writing.

 

7.1.2       Termination Due to Certain
Acts or Events

 

Each of the following
represents an act or event that is within the control of Distributor or its
management or owners and which is so contrary to the spirit and objectives of
this Agreement as to warrant its termination:

 

(a)          the removal,
resignation, withdrawal or elimination from Distributor, for any reason, of any
Principal Manager or Principal Owner without the prior written approval of
Company;

 

(b)         any misrepresentation to
Company by Distributor or by any Principal Manager or Principal Owner in
applying for this Agreement or as to the record or beneficial ownership or
management of Distributor or other related business interest;

 

(c)          any attempted or actual
sale, transfer or assignment by Distributor of this Agreement or any of the
rights granted Distributor hereunder, or any attempted or actual transfer,
assignment or delegation by Distributor of any of the responsibilities assumed
by it under this Agreement, without the prior written approval of Company;

 

(d)         any change, whether
voluntary or involuntary, in the record or beneficial ownership of Distributor
held by the Principal Owners as set forth in the current Management and
Ownership Addendum, or any acquisition, of record or beneficially, of ten
percent

 

9

 

(10%) or more of the
ownership interest in Distributor by any person or persons, without the prior
written approval of Company;

 

(e)          any undertaking by
Distributor or any of its Principal Owners or Principal Managers to conduct,
either directly or indirectly, any of the Distributorship Operations at any
unapproved location;

 

(f)            any sale or other
transfer, by operation of law or otherwise, or any relinquishment or
discontinuance of use by Distributor, of any of the Distributorship Premises or
other principal assets required or used in the conduct of the Distributorship
Operations, without the prior written approval of Company;

 

(g)         any dispute or
disagreement between or among the owners or management personnel of Distributor
which, in the opinion of Company, may adversely affect the Distributorship
Operations or the interests of Distributor, Company or an Affiliated Company;

 

(h)         failure to pay accounts
due to Company in accordance with provisions of the Terms of Sale Bulletin, if
such failure occurs repetitively or if an undisputed balance is not paid within
90 days of the due date and/or failure to maintain lines of credit adequate to
fulfill Distributor’s responsibilities under this Agreement;

 

(i)             insolvency of Distributor;
filing of a voluntary petition in bankruptcy by Distributor; filing of an
involuntary petition to have Distributor declared bankrupt provided that it is
not vacated within thirty (30) days from date of filing; or the appointment of
a receiver or trustee for Distributor provided that it is not vacated within
thirty (30) days from date of filing; or execution by Distributor of an
assignment for the benefit of creditors of any foreclosure or other due process
of law whereby a third party acquires rights to the operation, ownership or
assets of Distributor; or execution by Distributor of an assignment for the
benefit of creditors;

 

(j)             failure of
Distributor to conduct its customary Distributorship Operations during its
customary business hours for seven (7) consecutive business days;

 

(k)          conviction in a court of
original jurisdiction of Distributor or any Principal Manger, Principal Owner
or principal officer of Distributor of any crime which is punishable by
imprisonment; or any finding by a government agency or court of original
jurisdiction that Distributor had committed any unfair business practices
which, in the opinion of Company, may adversely affect the reputation or
interest of Distributor or Company;

 

(l)             any submission by
Distributor to Company of false applications or claims for any payment, credit,
discount or allowance whether or not Distributor offers or makes restitution;

 

(m)       the distribution or sale at
Distributor Premises of new engines, new engine components or new service parts
for engines or the servicing of engines, other than products and Parts, except
as permitted by Article 3.5 of this Agreement;

 

(n)         refusal by Distributor to
furnish timely sales or financial information and related supporting data, or
to permit Company to make an examination or audit of Distributor’s accounts and
records, provided such failure or refusal continues after receipt by
Distributor from Company of a written request for such information or
permission;

 

(o)         willful failure of
Distributor to comply with the provisions of any laws or regulations relating
to the sale or service of Products and Parts.

 

When Company learns that
any of the foregoing acts or events has occurred, Company will endeavor to
discuss it with Distributor. Thereafter, Company may terminate this Agreement
by giving Distributor written notice of termination, such termination to be
effective upon receipt by Distributor of such notice or at such later date as
may be specified in the notice.

 

7.1.3       Termination for Failure of
Performance

 

If Company determines
that Distributor has failed to perform any of its responsibilities under the
Agreement, Company will review such failure with Distributor. As soon as
practicable thereafter, Company will notify Distributor in writing of the
nature of Distributor’s failure of performance and of the period of time during
which Distributor will be expected to remedy such failure, which shall be a
minimum of three (3) months, or longer at the sole determination of Company,
based on the facts. Distributor shall submit a plan to remedy the failure
within 30 days of notice.  If such plan
has not been received in 30 days or the plan is found to be unacceptable to
Company, Company may prepare a plan for Distributor setting forth the minimum
remedial actions which must be implemented within a reasonable period
established by Company, which shall be at least thirty days duration.

 

In the event Distributor
fails to remedy the failure of performance or to comply with the above, Company
may terminate this Agreement by giving Distributor thirty (30) days advance
written notice.

 

7.1.4       Termination Due to Death or
Incapacity

 

Because this is a
personal service agreement, Company may terminate this Agreement by written
notice to Distributor in the event of the death of a Principal Manager or
Principal Owner or in the event Company determines that any Principal Owner is
physically or mentally incapacitated so as to be unable to actively exercise
full managerial authority for Distributor. 
The

 

10

 

effective date of
termination will be stated in such written notice and will not be less than
ninety (90) days after receipt of such notice. Company shall waive its right to
terminate under this provision if a plan for continuation of the
Distributorship Operations has been submitted to, and approved by, Company
pursuant to Article 9 of this Agreement and no substantial changes in
circumstances have occurred subsequent to the approval of such plan.

 

7.1.5       Termination for Failure to
be Licensed

 

If Company or Distributor
fails to secure or maintain any license required for the performance of its
obligations under this Agreement, or such license is suspended or revoked,
irrespective of the cause, either party may immediately terminate this
Agreement by giving the other party written notice.

 

7.1.6       Termination by Agreement

 

This Agreement may be
terminated at any time by written agreement between Company and Distributor.

 

The provisions of Article
8, relating to termination assistance, will be applicable only to the extent
set forth in the written termination agreement.

 

7.1.7       Reliance on Any Applicable
Termination Provision

 

The terminating party may
select the termination provision under which it elects to terminate without
reference in its notice of termination to any other provision that may also be
applicable. The terminating party may also subsequently assert other grounds
for termination.

 

7.2          Transactions After Termination

 

7.2.1       Effect of Termination on
Orders

 

If Company and Distributor
do not enter into a new Distributor Agreement when this Agreement expires or is
terminated, all orders of Distributor shall be automatically canceled, except
as provided in this Article 7.2. 
Termination or expiration of this Agreement will not release Distributor
or Company from the obligation to pay any amounts owing the other, or which may
become due.

 

7.2.2       Termination Deliveries

 

If this Agreement is terminated by Distributor, or is terminated
because of the death of a Principal Manager or Principal Owner or incapacity of
a Principal Manager without a termination deferral date, or if this Agreement
expires and Company or an Affiliated Company or a successor company does not
offer a new agreement to Distributor or to any replacement distributor that has
substantially the same ownership (including total family ownership), Company
will exert its best efforts to furnish Distributor with current Products to
fill Distributor’s bona fide customer orders on hand on the effective date of
termination or expiration, not to exceed the total number of Products delivered
to Distributor by Company during the ninety (90) days immediately preceding the
effective date of termination or expiration, subject to the following
conditions and limitations:

 

(a)          Within ten (10) days
following the effective date of termination or expiration, Distributor shall
deliver to Company a written schedule of Distributor’s bona fide customer
orders on hand on the effective date of termination or expiration. Such
schedule shall show the name and address of each customer and the details with
respect to each Product ordered and shall specify each bona fide order against
which Distributor desires Company to make delivery up to the total number of
Products required to be delivered by Company as above described. Those orders
for which delivery is thus specified by Distributor, and which are approved by
Company, shall constitute Distributor’s schedule of termination deliveries. No
change or substitution may be made by Distributor in such schedule of
termination deliveries, and Company will not be obligated to effect delivery of
any Product to Distributor except as specified therein. In the event of
Distributor’s failure to deliver to Company the detailed schedule above
required, Distributor shall have no further right to receive termination
deliveries.

 

(b)         Company may impose terms
of payment different from those published in Terms of Sale Bulletins for such
deliveries, based upon the business conditions at the time, and to require
partial or complete prepayment or other financial coverage by Distributor,
prior to acceptance of the orders.

 

(c)          Distributor shall accept
any Product required to be delivered by Company under this subsection. In the
event of its failure to do so, Distributor shall have no further right to
receive such Product or any other Product in lieu of it.

 

(d)         Products shall be
delivered by Company hereunder in substantial accordance with the schedules and
basis of delivery in effect with respect to other Detroit Diesel Distributors
as of the effective date of termination.

 

(e)          Distributor shall give
Company notice immediately of cancellation, for any reason, of any order set
forth in Distributor’s schedule of termination deliveries.

 

(f)            In the event of the
cancellation, for any reason, of any order set forth in Distributor’s schedule
of termination deliveries before delivery by Company of Product to apply
against such order, Company shall be released from any obligation to effect
delivery of such Product.

 

11

 

7.2.3       Effect of Transactions
After Termination

 

Neither Company’s sale of
Products or Parts to Distributor nor any other act by Company or Distributor,
after termination of this Agreement will be construed as a waiver of the termination.

 

Article 8.   Termination Assistance

 

8.1          Deferral of Effective Date of
Termination

 

If this Agreement is
scheduled to terminate because of the death of a Principal Manager or Principal
Owner or incapacity of a Principal Manager and Distributor requests an
extension of the effective date of termination thirty (30) days prior to such
date, Company may defer the effective date for up to 18 months after such death
or incapacity occurs in order to assist Distributor in concluding its
Distributorship Operations.

 

8.2          Purchase of Personal Property

 

8.2.1       Company’s Obligation

 

If this Agreement expires
or is terminated by either party, and Company or an Affiliated Company or a
successor company does not offer a new agreement to Distributor or any replacement
distributor that has substantially the same ownership (including total family
ownership), Company will purchase the following items of personal property
(herein called “Eligible items”) from Distributor at the prices indicated:

 

(a)          New model Products which
are unused, undamaged, unmodified and not deteriorated and that are owned by
Distributor on the effective date of termination or expiration and purchased
from Company or from another source approved by Company during the twelve (12)
month period immediately preceding the effective date of termination and were
not purchased from Company under any special non-returnable sales conditions,
at Company’s net price to Detroit Diesel Distributors in effect when
Distributor purchased such Products, including transportation charges which
Distributor paid for shipment of such Products to its place of business, plus
reimbursement for transportation charges to the destination specified by
Company, less charges for any component originally furnished on or with any such
product but not included when received by Company. If requested by Company,
prior to the expiration or termination date of this Agreement, Distributor
shall supply Company with a complete listing of and supporting documents for
Products covered in this subparagraph (a), including purchase price plus the
cost of inbound transportation, the nature of purchase and purchase source.

 

(b)         Unused and undamaged
Parts that:

 

(i)             are still in the
original, resalable merchandising packages and in unbroken lots;

 

(ii)          are listed for sale in
Company’s current parts price schedules (except Parts listed as obsolete or
superseded);

 

(iii)       were purchased by
Distributor either directly from Company or from a predecessor distributor as
part of a stock or asset purchase approved by Company; and

 

(iv)      are within reasonable
stocking quantities, based on Company’s ability to sell. The total amount of
any specific Part number subject to such repurchase will not exceed the amount
of such Part number purchased by Distributor from Company during the 18-month
period immediately prior to the date of termination or expiration of the
Agreement. Parts eligible for purchase must be applicable to Products covered
by this Agreement and part numbers which may be applicable to both on-highway
and off-highway applications are eligible only to the extent that the parts reasonably reflect expected use in
on-highway applications or certain off-highway application covered by
the Agreement. Distributor may be required to support such purchase quantities
and/or ratios from business records.

 

(v)         If Products and/or Parts
are requested for repurchase under the provisions of Article 2.3.2, the amount
of such Products and/or Parts eligible for repurchase shall not exceed the
average inventory of Products and Parts respectively for such Distributor
Location during the previous 12-month period, and subject to the other
provisions of this Article 8.

 

The prices for such Parts will be Company’s distributor
prices as listed in the current parts price schedules in effect on the date of
termination or expiration, less any applicable allowances, whether or not any
such allowances were made to Distributor, when the Parts were purchased by
Distributor, plus reimbursement for transportation charges to the destination
specified by Company.

 

(c)          Distributor’s core
account with all DDR facilities shall be settled prior to any purchases of reliabilt Products or reliabilt
Parts, unless otherwise approved by Company. After such settlement, following
policies for purchase will apply:

 

Unused, undamaged,
non-obsolete and nonsuperseded reliabilt Products and reliabilt
Parts, which are owned by Distributor on the effective date of termination or
expiration at a price equal to current net price to Distributor as published by
Company or DDR exclusive of refundable core charge plus a core value equal to
the fair market value of such a core as determined by DDR. If Distributor has
paid a refundable core charge of a reliabilt Part or Product and had the
right to return an acceptable core at the time of

 

12

 

termination to Company for refund of the core deposit, then the core
value portion of the price will be replaced with the core deposit and
Distributor’s right to secure such core will cease.

 

In no event shall the
price (excluding core charges)   set for
such reliabilt
Product or reliabilt Part exceed fifty (50) percent of the
distributor price as listed in Company’s current price schedules for a
comparable new Product or Part on the effective date of termination.

 

(d)         Any signs owned by
Distributor of a type currently recommended in writing by Company and bearing
Marks, at a price based on fair market value agreed upon by Company and
Distributor. If Company and Distributor cannot agree on a price, they will
select a third party, who will set the price.

 

8.2.2       Responsibilities of
Distributor

 

Company’s obligation to
purchase Eligible Items is subject to Distributor fulfilling its responsibility
under this Article 8.2.2.

 

Within fifteen (15) days
following the effective date of termination or expiration of this Agreement,
Distributor will furnish Company with a list of unit or identification numbers
of Products and such other information as Company may request pertaining to
eligible Products to be purchased by Company. Distributor will deliver all such
eligible Products to a destination determined by Company.

 

Within thirty (30) days
following the effective date of termination or expiration of this Agreement,
Distributor will mail or deliver to Company, a complete and separate list of
each of the Eligible Items, other than Products. Company will provide written
shipping instructions thirty (30) days after receipt of such lists.

 

Within thirty (30) days
after receipt of instructions, Distributor will ship such Eligible Items,
transportation charges prepaid, to the destination specified in the
instructions.

 

Distributor will take
such action and execute and deliver such instruments as may be necessary to (1)
convey to Company good and marketable title to all Eligible Items to be
purchased; (2) comply with the requirements of any applicable law relating to
bulk sales or transfer; and (3) satisfy and discharge any liens or encumbrances
on Eligible Items prior to their delivery to Company.

 

If Company provides termination assistance under Articles 8.2 and 8.3,
within thirty (30) days following the effective date of termination or
expiration of this Agreement, Distributor or Distributor representatives will
be responsible for the removal of all parts, products or other material not
purchased by Company from the affected Distributor Premises, subject to
reasonable conditions as Company or assignee shall impose regarding access to
the facilities.

 

8.2.3       Payment by Company

 

Company will pay
Distributor for the Eligible Items purchased by it as soon as practicable
following delivery to the destination specified by Company. Company may make
any payment for such Eligible Items directly to any-one claiming a security or
ownership interest in such Eligible Item.

 

If Company has not paid
Distributor the purchase price of the Eligible Items within sixty (60) days
after delivery Company will, at Distributor’s written request, estimate the
purchase price of the unpaid Eligible Items and all other amounts owed Distributor
by Company.  After deducting the amounts
estimated to be owing Company by Distributor, Company will advance Distributor
seventy-five percent (75%) of the net amount owed Distributor and will pay the
balance, if any, as soon as practicable thereafter. Company may withhold
payment or final payment until Distributor fulfills its obligations relating to
discontinuance of use of Company Marks upon termination as set forth in Article
6.9.3.

 

Company shall be relieved
of any obligation to purchase Eligible Items pursuant to this Article 8.2 if
Company is prohibited for any reason from exercising its rights under Article
10.8.

 

8.2.4       Assignment of Rights

 

If Company decides to
appoint a replacement distributor at Distributor’s location, Distributor may
sell its Eligible Items and, if approved in writing by Company, assign its
rights under this Article 8.2 to Company’s designated replacement distributor,
provided the replacement distributor assumes Distributor’s obligations under
this Article 8.2.

 

8.3          Assistance on Distributorship
Premises

 

8.3.1       Company’s Obligation

 

Company agrees to give Distributor the assistance provided by the
Article 8.3 with regard to Distributorship Premises if (a) this Agreement is
terminated by Company for failure of performance of Distributor or because of
the death of a Principal Manager or Principal Owner or incapacity of a
Principal Manager without a termination deferral date, or if this Agreement
expires; and (b) Company or an Affiliated Company or a successor company does
not offer a new distributor agreement to Distributor or to any replacement
distributor that has substantially the same ownership (including total family
ownership).  Such assistance shall be
given only on Distributorship Premises that are described in the Distributorship
Locations and Premises Addendum and to the extent that such Premises or
portions of Premises are used solely for Distributorship Operations.  For locations used partially for Distributor

 

13

 

Operations, only the portion used for Distributorship Operations, as
identified in the Locations and Premises Allocation Addendum, will be eligible
for assistance.

 

Company shall be relieved of any obligation to provide the assistance
pursuant to this Article 8.3 if Company is prohibited for any reason from
exercising its rights under Article 10.8.

 

Any request by Distributor for such assistance must be in writing and
received by Company within thirty (30) days of expiration or termination of
this Agreement

 

Distributorship Premises that consist of more than one parcel of
property or more than one building, each of which is separately usable,
distinct and apart from the whole or any other part with appropriate ingress or
egress, shall be considered separately under this Article 8.3.

 

8.3.2       Owned Distributorship
Premises

 

Company will provide assistance on owned Distributorship Premises by
either: (a) locating a purchaser who will offer to purchase at a reasonable
price that portion of the Distributorship Premises used in the promotion or
sale and servicing of Products and Parts; or (b) locating a lessee who will
offer to lease the premises for a reasonable term at a reasonable rent.

 

If Company does not locate a purchaser or lessee within a reasonable
time, Company will itself either purchase for a reasonable price or, at its
option, lease, at a reasonable rent, for a reasonable term not to exceed twelve
(12) months, that portion of the Distributorship Premises used solely in the
promotion, sale or servicing of Products and Parts as shown in the Locations
and Premises Allocation Addendum.

 

Rather than purchase or lease, at its election, Company may pay a
Distributor a sum equal to the amount which would be due under this Article
8.3.2 (as determined by the above paragraph) immediately following the
effective date of termination of this Agreement on that portion of the
Distributorship Premises used solely for distributorship Operations as shown in
the Locations and Premises Allocation Addendum.

 

8.3.3       Leased Distributorship
Premises

 

Company
will provide assistance on leased Distributorship Premises by either:

 

(a)          locating a tenant(s)
satisfactory to the lessor, who will sublet for the balance of the lease or
assume the lease; or

(b)         arranging with the
lessor for the cancellation of the lease without penalty to Distributor; or

(c)          reimbursing Distributor
for the lesser of the rent specified in the lease or settlement agreement or a
reasonable rent for a period equal to the lesser of twelve (12) months from the
effective date of termination or expiration or the balance of the lease term.

 

Upon request, Distributor
will use its best efforts to effect a settlement of the lease with the lessor,
subject to Company’s prior approval of the terms of such settlement.  Company is not obligated to reimburse
Distributor for rent for any month during which the distributorship Premises
are occupied by Distributor or anyone else after the first (1st)
month following the effective date of termination or explanation.

 

8.3.4       Reasonable Rent and
Reasonable Price

 

Company and Distributor
will fix the amount of a reasonable rent and a reasonable price for the
Distributorship Premises by agreement at the time Distributor requests
assistance.

 

The factors to be
considered in fixing those amount are:

 

(a)                      the adequacy
and desirability of the Distributorship Premises for an authorized power
products distributorship operation; and

 

(b)                     the fair
market value of the Distributorship Premises.

 

If Company and
Distributor cannot agree, the fair market value shall be that determined by the
median appraisal of three qualified real estate appraisers, of whom Distributor
and company shall each select one, and the two selected shall select a
third.  The cost of required appraisals
shall be shared equally by Distributor and Company.

 

8.3.5       Limitations on Obligation
to Provide Assistance

 

Prior to any assistance
under Articles 8.3.2 and/or 8.3.3 related to the real property of a specific
Distributorship Location, Distributorship will provide a recent phase I environmental
report, or other customary report, acceptable to Company, which indicated
compliance with all applicable environmental laws and regulations.  Company shall not provide assistance under
either Article 8.3.2 or 8.3.3 unless Distributor shall, prior to Company or its
assignees taking possession of the facility, have remedied to Company’s
satisfaction any violations of such laws and regulation, whether determined
under such prior assessments or assessments conducted by Company prior to
execution of termination assistance under this Article.

 

In addition, Company
shall not be obligated to provide assistance on Distributorship Premises if
Distributor:

 

(a)                      fails to accept a bona fide offer from a prospective
purchaser, sublessee or assignee;

 

14

 

(b)                     refuses
to execute a settlement agreement with the lessor if such agreement would be
without cost to Distributor;

 

(c)                      refuses to use its best efforts to effect a settlement when
requested by Company;

 

(d)                     refuses to permit Company to examine Distributor’s books and
records, if necessary, to verify claims of Distributor under the Article 8.3.

 

Any amount payable by
Company as rental reimbursement or reasonable rent shall be proportionately
reduced if the Distributorship Premises are leased or sold to another party
during the period for which such amount is payable.  Payment of any such rental reimbursement or reasonable rent shall
be waived by Distributor if it does not file its claim therefore within sixty
(60) days after the expiration of the period covered by the payment. Upon
request, Distributor will support its claim with satisfactory evidence of its
accuracy and reasonableness.

 

Article 9.  Successor and Replacement
Distributor

 

9.1          Rights of Company

 

9.1.1       Selection of Distributors

 

Company has the right to
select each successor and replacement distributor and to approve its principal
manager(s) and principal owner(s) and the location of its distributorship
facilities. Company shall endeavor to select the most suitable candidate in
each circumstance.

 

9.1.2       Review of Applications

 

In selecting replacement
distributors, Company may process applications for a replacement distributor
agreement, and may consult with applicants on any aspect of the proposal or Company
requirements, at any time after a notice of termination or expiration has been
served or Distributor has proposed a sale of assets or change of ownership or
management. Any such replacement distributor agreement shall not become
effective prior to the effective date of termination or expiration of this
Agreement.

 

9.2          Succession Rights Upon Death or
Incapacity

 

9.2.1       Rights Under Successor
Addendum

 

Upon request, Company
will execute with Distributor a Successor Addendum designating proposed
principal manager(s) and/or principal owner(s) of a successor distributorship
to be established if this Agreement expires or is terminated because of death
or incapacity. The Successor Addendum must be executed by all owners and
Principal Managers.

 

To be named in the
Successor Addendum, a proposed principal manager must be, and must continue to
be, employed on a full-time basis by Distributor or a comparable
distributorship and be already qualified or be in training to qualify as
Principal Manager. All proposed owners must be acceptable to Company. Company
will, upon request, execute a new Successor Addendum upon the expiration of
this Agreement provided a new and superseding distributor agreement is executed
with Distributor, and the proposed principal manager complies with the current
requirements to be considered as a successor.

 

9.2.2       Rights of Remaining
Distributor Principal Managers and Owners

 

If this Agreement expires
or is terminated because of death or incapacity and Distributor and Company
have not executed a Successor Addendum, the remaining Principal Manager(s) or
if there is no remaining Principal Manager, the remaining owners may propose a
successor distributor entity to continue the Distributorship Operations at the
Distributorship Location. The proposal must be made at least sixty (60) days
prior to the expiration or termination of this Agreement by submitting a
written proposal to Company.

 

The proposal shall be
accepted by Company if it complies with the requirements of Article 9.2.3 and
Distributor has not been previously notified by Company that it may discontinue
Distributorship Operations at the Distributorship Location.

 

9.2.3       Successor Distributor
Requirements

 

Company will give first
consideration to, and will not arbitrarily refuse to accept, a proposal to
establish a successor distributor submitted under this Article 9.2, provided:

 

(a)          the proposed successor
owner and the proposed principal manager are ready, willing and able to comply
with the requirements of a new distributor agreement at any approved location;

 

(b)         Company approves the
proposed principal manager and all proposed owners not previously approved in
connection with the existing Distributorship Operations; and

 

(c)          the proposed principal
manager will own an unencumbered ownership interest of at least ten percent
(10%) (or less if approved by Company) in the proposed distributor.

 

9.2.4       New Successor Addendum

 

Distributor may cancel an
executed Successor Addendum at any time prior to the death of any party named
as Principal Manager. Company may cancel an executed Successor Addendum only if
the proposed principal manager no longer complies with the requirements

 

15

 

of Article 9.2.1. The
parties may execute a new and superseding Successor Addendum by mutual
agreement.

 

9.3          Other Changes in Management and
Ownership or Sale of Assets

 

Distributor shall give
Company prior written notice of any proposed change in its Principal Manager(s)
or Principal Owners(s) or any proposed disposition of its principal assets. In
turn, Company agrees to consider Distributor’s proposal under the standards
identified in this Agreement and not to arbitrarily refuse to agree to such
proposal. In determining whether the proposal is acceptable to it, Company will
take into account factors such as the personal, business and financial
qualifications of the proposed principal manager and principal owner, as well
as Company’s interest in promoting and preserving competition. Distributor
shall be notified in writing of Company’s agreement or disagreement to
Distributor’s proposal within sixty (60) days after Distributor has furnished
all applications and information reasonably requested by Company to evaluate
such proposal. Any proposed change in management and/or ownership that is
acceptable to Company will be reflected by the execution of a new and
superseding Management and Ownership Addendum or a new Distributor Agreement.
Distributor acknowledges that the occurrence of any such change or disposition
without prior written agreement by Company is cause for termination of this
Agreement.

 

Any material change in
Distributor’s proposal shall be treated as a new proposal for purposes of this
Article 9.

 

Prior written approval is
not required where the transfer of ownership to an individual is not more than
ten (10) percent in a calendar year and (a) pursuant to a Company approved
agreement; or (b) between existing owners of Distributor previously approved by
Company where there is no resulting change in majority ownership or voting
control, and provided the Principal Manager’s ownership interest will not be
reduced below ten (10) percent (unless approved otherwise by Company).
Distributor agrees to notify Company within thirty (30) days of the date of the
change and to execute a new Management and Ownership Addendum.

 

Article 10.    General Provisions

 

10.1        No Agent or Legal Representative

 

This Agreement does not
make either party the agent or legal representative of the other for any
purpose whatsoever, nor does it grant either party any authority to assume or
to create any obligation on behalf of or in the name of the other. Neither
party owes the other any fiduciary obligation.

 

10.2                                 Distributor’s
Responsibility for Its Operations

 

Except as provided
otherwise in this Agreement, Company has no liability in connection with the
establishment or conduct of the Distributorship operations, and Distributor
will be solely responsible for all expenditures, liabilities and obligations
incurred or assumed by Distributor in connection with Distributor’s
responsibilities under this Agreement.

 

10.3        Taxes

 

Distributor will pay all
local, state, federal or other applicable taxes and file required tax returns
related to its Distributorship operations and will hold Company harmless from any
claims or demands made by any taxing authority with respect thereto.

 

10.4        Indemnification by Company

 

Upon prior written
request, Company will assume the defense of Distributor and indemnify
Distributor against any judgment for monetary damages, less any offset
recovered by Distributor, in any lawsuit naming Distributor as a defendant and
relating to any Product or Part that has not been altered when the lawsuit
concerns:

 

a)              breach of the
Company warranty related to the Product or Part, bodily injury or property
damage claimed to have been caused solely by a defect in the design,
manufacture or assembly of a Product or Part by Company (other than a defect
which should have been detected by Distributor in a reasonable inspection of
the Product or Part);

 

b)             failure of the
Product or Part to conform to the description set forth in advertisements or
product brochures distributed by Company because of changes in standard
equipment or material component parts unless Distributor received notice of the
changes prior to retail delivery of the affected Product or Part by
Distributor; or

 

c)              any substantial
damage to a Product or Part purchased by Distributor from Company which has
been repaired by Company unless Distributor has been notified of the repair in
writing prior to retail delivery of the affected Product.

 

If Company reasonably
concludes that allegations other than those set forth in Article 10.4(a)
through 10.4(c) above are being pursued in the lawsuit, Company shall have the
right to decline to accept the defense or indemnify Distributor or, after
accepting the defense, to transfer the defense back to Distributor and withdraw
its agreement to indemnify Distributor.

 

Procedures for requesting
indemnification, administrative details, and limitations are contained in the
Service Policy Manual.  The obligations
assumed by Company

 

16

 

are limited to those
specifically described in this Article 10.4 and in the Service Policy Manual
and are conditioned upon compliance by Distributor with the procedures
described in the Service Policy Manual.

 

This Article 10.4 shall
not affect any right either party may have to seek indemnification or
contribution under any other contract or by law and such rights are hereby expressly
preserved.

 

10.5        Notices

 

Any notice required to be
given by either party to the other in connection with this Agreement will be in
writing and delivered personally or by mail. Except as otherwise specifically
set forth in Article 10.4, notices to Distributor will be directed to
Distributor or its representatives at Distributor’s principal place of business
and notices by Distributor will be directed to the Company at its headquarters
address.

 

10.6        No Implied Waivers

 

The failure of either
party to require performance by the other party of any provision hereof will in
no way affect the right to require such performance at any time thereafter. The
waiver by either party of a breach of any provision hereof shall not constitute
a waiver of any succeeding breach of the same or any other provision nor
constitute a waiver of the provision itself.

 

10.7        Assignment of Rights

 

Except as provided in
this Agreement, neither this Agreement nor the rights or obligations of the
Distributor hereunder may be sold, assigned, delegated or otherwise transferred
without the written approval of Company. Company may assign this Agreement,
assign any rights or obligations under this Agreement, or delegate any
performance obligations under this Agreement to any Affiliated Company or
successor company and will provide written notice of any such assignment or
delegation to Distributor.

 

10.8        Accounts Payable

 

In addition to any right
of set off provided by law, all monies or accounts due Distributor shall be
considered net of indebtedness of Distributor to Company (including
indebtedness arising from the chargeback to Distributor of any claims
previously credited to Distributor and subsequently found to have been not
properly payable) and Company may deduct any amounts due or to become due from
Distributor to Company or any amounts held by Company from any sums or accounts
due or to become due from Company to Distributor.

 

10.9        Applicable
Law

 

This Agreement is
governed by the laws of the State of Michigan. However, if performance under
this Agreement is illegal under a valid law of any jurisdiction where such
performance is to take place, the performance will be modified to the minimum
extent necessary to comply with such law if it was effective on the date of
execution of this Agreement.

 

10.10      Sole Agreement of Parties

 

Except as otherwise
provided or referred to herein, Company has made no promises to Distributor or
any Principal Manager or Principal Owner and there are no other agreements or
understandings, either oral or in writing, between the parties affecting this
Agreement or relating to any of the subject matters covered by this Agreement.

 

Except as otherwise
provided herein, this Agreement cancels and supersedes all previous agreements
between the parties that relate to any matters covered herein.

 

No agreement between
Company and Distributor which relates to matters covered herein, and no change
in, addition to (except the filling in of blank lines) or erasure of any
printed portion of this Agreement, will be binding unless it is approved in
writing in accordance with Paragraph SIXTH of this Agreement.

 

The written terms of this
Agreement may not be explained, supplemented or contradicted by evidence of any
prior agreement, course of dealing, course of performance or usage of trade.

 

10.11      New and Superseding Agreements

 

In the event a new and
superseding form of distributor agreement is offered by Company to Detroit
Diesel Distributors generally at any time prior to the expiration of the term
of this Agreement, Company may terminate this Agreement by prior written notice
to Distributor, provided Company offers Distributor a new agreement in the new
and superseding form for a term of not less than the then unexpired term of
this Agreement.

 

Unless otherwise agreed
in writing, the rights and obligations of Distributor that may become
applicable upon any termination or expiration of the term of this Agreement
shall not be applicable in the event of the execution by Company and
Distributor of any new and superseding agreement. The matured rights and
obligations of the parties hereunder shall continue under the new agreement.

 

Distributor’s performance
under any prior agreements may be considered in an evaluation of Distributor’s
performance under this, or any succeeding, agreement.

 

10.12      Captions

 

The captions in this
Agreement are for convenience of reference only and will not otherwise affect
the meaning hereof.

 

17

 

10.13                                    Severability

 

The provisions of this
Agreement shall be severable, and the invalidity or the unenforceability of any
provisions hereof shall not affect the validity or enforceability of the
remaining provisions.

 

10.14      Language

 

The parties hereto
acknowledge that they have requested that this Agreement and any and all
documents in any way related thereto or in any way evidencing contractual
relationships between the parties hereto be drawn up in the English language
only. Les
parties aux presentes reconnaissent avoir demande que cette entente ainsi que
tour les documents de quelque nature que ce soit s’y rapportant ou constatant
les relations contractuelles entre les parties aux presentes, ne soient rediges
qu’en anglais seulement

 

18

 

DETROIT DIESEL CORPORATION

 

Distributor Agreement

 

AGREEMENT, effective 1st day of January 2004
by and between Detroit Diesel Corporation, hereinafter called Company, and 

 

	
  Stewart &
  Stevenson Services, Inc.

  	
  of

  	
  Houston

  
	
   

  	
   

  	
  City

  
	
  Harris

  	
  Texas

  	
   , hereinafter
  called Distributor.

  
	
  County

  	
  State

  	
   

  
					

 

GENERAL PURPOSE

 

Company is in the
business of manufacturing and marketing power products, including diesel
engines, and parts for these products. 
Company sells its products principally to original equipment
manufacturers and to Detroit Diesel Distributors.  Company has established a system of independently owned and
managed Detroit Diesel Distributors operating at approved locations to (a) sell
directly the engines identified in the Products Addendum, herein called
Products, and related Parts, (b) actively and effectively promote the purchase
and use of Products and related Parts, (c) render prompt, efficient, and
courteous service to owners and users of such Products and (d) complement
Company’s own direct sales activities.

 

The purpose of this Distributor
Agreement, herein called Agreement, is to appoint Distributor as an authorized
Detroit Diesel Distributor to sell and service Products and Parts, to establish
the location(s) from which Distributor will conduct Distributorship Operations,
and to identify the principal management and principal owners of Distributor
upon whom Company relies in entering into this Agreement. This Agreement sets
forth the rights and responsibilities of Company and Distributor relating to
the sale and servicing of Products and Parts and the circumstances in which the
Agreement may be terminated.

 

Accordingly, Distributor
and Company hereby agree as follows:

 

FIRST: 
Rights Granted by Company and Acceptance and Acknowledgments by
Distributor

 

A.    Rights Granted by Company

In reliance on
Distributor’s agreement to fulfill the responsibilities and perform the
functions described in Paragraph SECOND of this Agreement, Company hereby
grants Distributor the non-exclusive rights to:

(1)   buy from Company the Products
identified in the Products Addendum to this Agreement and related Parts for
resale or use by Distributor in its Distributorship Operations;

(2)   identify itself as an
authorized Detroit Diesel Distributor and to conduct, at the location(s)
approved by Company, herein called Distributorship Locations, all of the
Distributorship Operations contemplated by this Agreement; and

(3)   execute dealer agreements with
Authorized Dealers approved by Company.

 

B.    Acceptance and Acknowledgments
by Distributor

Distributor hereby accepts
from Company the rights specified in this Paragraph FIRST. In doing so,
Distributor acknowledges that:

(1)   Company has reserved to itself
the rights to select and authorize other businesses to conduct distributorship
and dealership operations in connection with Products and Parts and to sell
Products and Parts directly to any customer;

(2)   as an independently owned and
managed business, Distributor’s success and enjoyment of profitable operations
will be determined substantially by how effectively its Distributorship
Operations are conducted and managed;

(3)   Distributor has not paid any
fee or other consideration for this Agreement. Neither this Agreement nor any
right granted by this Agreement is a property right; and

(4)   neither this Agreement nor any
right or responsibility under this Agreement may be transferred, assigned,
delegated or sold by Distributor without the prior written approval of Company.

 

SECOND: 
Assumption of Responsibilities by Distributor

 

Distributor will
establish, maintain and effectively conduct the complete Distributorship
Operations contemplated by this Agreement in connection with each of the
Products described in the Products Addendum. Distributor hereby assumes and
will fulfill the functions and responsibilities reflected in this Agreement,
including:

(1)   sales and sales promotion
responsibilities;

(2)   service responsibilities on all
Products that may at any time be located in the Area of Responsibility; and

(3)   performance of all of
Distributor’s other obligations under this Agreement.

 

 

THIRD: 
Management and Ownership

 

Company has selected
Distributor and has entered into this Agreement in substantial reliance upon:

(1)   Distributor’s representation to
Company relating to its business organization and financial structure and to
its ability to fulfill the functions and responsibilities assumed by
Distributor under Paragraph SECOND of this Agreement;

(2)   the personal qualifications and
business abilities of Distributor’s Principal Manager(s) and Principal Owner(s)
who are so designated by Distributor in the Management and Ownership Addendum
furnished by Distributor to Company and accepted by Company by its endorsement
thereon and whom Distributor represents will have and actively exercise full
managerial authority for the operating management of Distributor; and

(3)   the agreement of Distributor
and Company that the person(s) named in the Management and Ownership Addendum
as Principal Owner(s) will continue to own both of record and beneficially the
percentage of ownership interests in Distributor shown therein.

 

Distributor shall
provide, at the request of Company, a plan for the continuation of Distributor
in the event of death, incapacity or withdrawal from the business of any person
named as a Principal Manager(s) or Principal Owner(s).

 

Distributor acknowledges
that this Agreement is to be construed as a personal service agreement.
Accordingly, Distributor agrees that continuation of the business relationship
between Distributor and Company established by this Agreement is conditioned
upon Distributor continuing to have principal management and principal owners
acceptable to Company. If Distributor desires to make a change in its Principal
Manager(s) or sell its principal assets or change its ownership, Distributor
will give Company prior written notice of the proposed change or sale. Company
will base its approval decision on whether the proposed change is likely to
result in a successful distributorship operation with acceptable management and
ownership which will provide satisfactory sales, service and facilities for
users of Products at the approved location.

 

FOURTH: 
Additional Provisions

 

The additional provisions
set forth in the “Additional Provisions Applicable to Distributor Agreement,”
bearing Form No. DA230-A, are hereby incorporated as a part of this Agreement.

 

FIFTH: 
Term

 

This Agreement will
expire without any action by either Distributor or Company on December 31, 2010.

 

SIXTH: 
Execution on Behalf of Company and Distributor

 

Neither this Agreement
nor any related agreement shall be valid unless it bears the signature of a
Vice-President or other duly authorized representative of Company, and it is
signed on behalf of Distributor by the duly authorized officer(s) of
Distributor.

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement in duplicate as of the day and year
first above written.

 

 

	
  STEWART & STEVENSON SERVICES,
  INC.

  	
   

  	
  DETROIT DIESEL CORPORATION

  
	
  Distributor
  Firm Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/ Max L. Lukens, CEO

  	
   

  	
  By

  	
  /s/ John Morrow,
  President

  
	
   

  	
  Signature
  and Title

  	
   

  	
   

  	
  Signature &
  Title

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS:

  	
  /s/ Samantha M. Boyd

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Signature &
  Title

  
						

 

 

Subject:                           Addendum to Distributor
Agreement by and between Detroit Diesel Corporation and Authorized Distributor

 

This
Addendum is to document an agreement between Detroit Diesel Corporation
(“DDC”), a DaimlerChrysler Company, and Distributor regarding issues related
to, but not specifically part of, that certain Detroit Diesel On-Highway
Distributor Agreement dated January 1, 2004 (“Agreement”). The parties agree
that the items in this letter will remain in effect during the life of the
Agreement or until superseded by mutual agreement of both parties.

 

1.               Warranty Labor Rates

 

Effective
January 1, 2004, Distributor may apply for adjustment to its Warranty Labor
Rates. DDC will promptly process those requests in line with the guidelines
established in the Detroit Diesel Service Policy Manual in effect on December
1, 2003.

 

2.               Extended Service Coverage (“P3”)
Compensation

 

Effective
March 1, 2004 DDC will compensate Distributor for Parts and Labor on all P-3
extended service coverage claims performed on or after March 1, 2004 at the
same as Regular Warranty Claims.

 

3.               Parity with Freightliner LLC (“FLLC”)
Dealers

 

Effective
March 1, 2004 Distributor will be afforded complete commercial parity, at least
as favorable treatment as FLLC dealers are afforded, either directly or
indirectly, by DDC and Affiliated Companies. 
This shall include, but not be limited to:

 

•                  Parts pricing (distributor net)

•                  Core deposit and core return policies;

•                  Warranty processing and parts reimbursement
rates;

•                  Special tools purchase prices and policies;

•                  Warranty labor time guide and rate
increases;

•                  Policy compensation;

•                  Parts accessibility.

 

The
only exceptions to complete commercial parity shall be:

 

•                  DDC agrees to continue to offer Distributor
a 2% Excess and Obsolete Allowance in lieu of an annual physical Parts
return.  DDC and the Distributor will
engage in additional conversation in one year to evaluate the program.

 

1

 

•                  FLLC Dealer warranty parts reimbursement
rate will be higher until August 31, 2004.

 

•                  FLLC Dealers are able to place 5 stock
orders weekly, whereas DDC Distributors are able to place 2 stock orders
weekly.

 

•                  Both parties may mutually agree to
additional exceptions.

 

4.               Special Parts
Return:

 

In
consideration of the significant change that DDC intends to make on Parts
distribution policies by allowing FLLC to sell and ship DDC and MBE On Highway
Parts directly to FLLC dealers, DDC agrees to allow Distributor a Special Parts
Return on On Highway Engine Parts during the fourth quarter of 2004 to permit
Distributor to reduce its inventory. 
The details of the return will be jointly developed by DDC and the North
American Distributor Council (“NADC”) in the first quarter of 2004.  The return plan will equitably address the
core value of the return.

 

5.               Functional Compensation

 

It
is agreed that for calendar years 2004 and 2005, DDC will pay Functional Compensation
on all Parts sold by Distributor to Authorized Dealers and Direct Dealers at
twelve (12) percent of Distributor Net.

 

It
is furthermore agreed that DDC will pay to Distributor Functional Compensation
on all Parts sold by DDC or FLLC directly to Authorized Dealers and Direct
Dealers during 2004 at the rate of eight (8) percent of Distributor Net.

 

For
calendar year 2005 DDC agrees that, if it pays to Distributor Functional
Compensation on Parts sold by DDC or FLLC directly to Authorized Dealers and
Direct Dealers at a rate less than eight (8) percent of Distributor Net, then
DDC and NADC will agree to those specific distributor functions traditionally
compensated by Functional Compensation that Distributor is no longer required
to perform.

 

After
2005, DDC may eliminate Functional Compensation payments to Distributor
provided that it also eliminates the requirement for Distributor to perform
those functions traditionally compensated by Functional Compensation.

 

2

 

6.               It is recognized that beginning 2004, DDC
will commence appointing FLLC Dealers as Direct Dealers.

 

Distributor
will have the right to return to DDC parts that may be returned to Distributor
as required under the Dealer Agreement and/or as required by law.

 

With respect to Article 5.2 of the
Distributor Agreement, Distributor shall agree with Company to support any
Freightliner LLC Full-Service Dealer who is appointed by Company as a Direct
Dealer.  For any other Direct Dealer,
Distributor will, in good faith, negotiate with Company on support of said
dealer.

 

7.               It is understood the Company will assume
responsibility for service policy for On-Highway truck customers and will
administer uniformly between Dealers and Distributor.

 

8.               DDC and Distributor agree that DDC and the
NADC will meet no later than 60 days before December 31, 2004 to review this
Addendum.

 

9.               In the event of any conflict between the
terms of this Addendum and the Distributor Agreement between DDC and
Distributor, the terms of the Distributor Agreement will prevail.

 

 

This
Addendum to the Distributor Agreement are hereby accepted and agreed to as
witnessed by the signatures below.

 

 

	
   

  	
  Distributor:  Stewart &
  Stevenson Services, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Principal Management Participant

  
	
   

  	
   

  
	
  Agreed and accepted for

  Detroit Diesel Corporation

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
						

 

3

 

DA 232 (6-95)

 

MANAGEMENT
AND OWNERSHIP ADDENDUM TO

DISTRIBUTOR
AGREEMENT

 

This Management and
Ownership Addendum is executed pursuant to Paragraph THIRD of the Distributor
Agreement between Company and the undersigned Distributor.

 

Stewart & Stevenson
Services, Inc.     
a proprietorship o, partnership o,
corporation ý incorporated on  Jan 31, 1947

        Distributor
Firm Name                                                                                                                                                                                                                                                                                                                                                                            Date

in the State/Province of
Texas hereby represents to Company that the following information pertaining to
the management and the record and beneficial ownership status of the
undersigned Distributor is true, accurate and complete as January 1, 2004,
and of understands that any misrepresentation in connection therewith
constitutes cause for termination under Article 7.1.2 (b) of the
Distributor Agreement.

 

	
  Names of persons having
  Management

  positions and/or Record or Beneficial

  Ownership interests in Distributor (Must

  show names of Officers, and Principal

  Manager(s) regardless of any financial

  interest)

  	
   

  	
  Title

  If Any

  	
   

  	
  Active

  In

  Distributor

  -ship

  (Yes or

  No)

  	
   

  	
  Principal

  Manager

  (Yes or

  No)

  	
   

  	
  Principal

  Owner

  (Yes or

  No)

  	
   

  	
  Signature
  of

  Principal Owners

  and Principal

  Managers

  	
   

  	
  If a
  partnership,

  show % of

  Ownership Interest

  of each person

  listed

  	
   

  	
  If a
  Corporation, show number of shares, class and

  percentage of ownership

  	
   

  
	
  Number

  of voting

  shares

  	
   

  	
  % of

  Total

  	
   

  	
  Number

  of non-

  voting

  shares

  	
   

  	
  % of

  Total

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Max Lukens

  	
   

  	
  CEO

  	
   

  	
  Yes

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Richard M. Wiater

  	
   

  	
  COO

  	
   

  	
  Yes

  	
   

  	
  Yes

  	
   

  	
  No

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PUBLICLY TRADED

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  4587336

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  4587336

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Ownership of record is
  the ownership reflected on Distributor’s books of record (e.g., in the case
  of a corporation, the name of the trust or person entitled to receive
  dividends from Distributor). Beneficial owners are those persons that benefit
  from such an ownership situation (e.g., the beneficiary of a trust). Any
  beneficial ownership arrangement at Distributor must be explained on a
  separate sheet and attached to this Distributor Management and Ownership
  Addendum.

  	
   

  	
  APPROVED AS REPRESENTED BY
  DISTRIBUTOR

  
	
   

  	
   

  	
   

  
	
   

  	
  Stewart & Stevenson Services, Inc.

  	
   

  	
   

  	
  DETROIT
  DIESEL CORPORATION

  
	
   

  	
  Distributor Firm
  Name

  	
   

  	
   

  	
  Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Signature
  and Title

  	
   

  	
   

  	
  Vice President

  

 

 

ADDITIONAL INFORMATION CONCERNING
OWNER(S)

 

List below any person
named on the reverse side whose ownership interest in Distributor is
encumbered.

 

	
  Name

  	
   

  	
  Lender
  Name and Address

  	
   

  	
  Nature and
  Amount

  of Encumbrance

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

List below any person
named on the reverse side that is now employed by Company, or Affiliated
Companies.

 

	
  Name

  	
   

  	
  Name of
  Employer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

List below any person
named on the reverse side that is related to a present employee of Company, or
Affiliated Companies.

 

	
  Name

  	
   

  	
  Name of
  Employee

  and Relationship

  	
   

  	
  Name of
  Employer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

List below any person
named on the reverse side that has any ownership in, or is active in the
management of, any other entity that merchandises Products.

 

	
  Name

  	
   

  	
  Firm Name,
  Address and

  Position

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

List below any person
named on the reverse side that has any ownership in, or is active in the
management of, any other entity that merchandises diesel engines or parts
therefor other than those marketed by Company.

 

	
  Name

  	
   

  	
  Firm Name,
  Address

  Position and Product Line

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

REMARKS:

 

 

 

 

 

DA 235 (6-95)

 

DISTRIBUTOR LOCATIONS

AND PREMISES ADDENDUM

TO

DISTRIBUTOR AGREEMENT

 

This Distributorship Locations and Premises
Addendum is executed pursuant to Article 6.1 of the Distributor Agreement
between Company and the undersigned Distributor. Distributor and Company hereby
agree that as of the date specified, Page 2 hereof, entitled “Description of
Distributorship Premises”, identifies the Distributorship Locations and
describes the Distributorship Premises at which Distributor is authorized to
conduct Distributorship Operations under the Distributor Agreement. Distributor
also represents that Page 2 accurately reflects the terms under which it
occupies the premises and the portion used for Distributorship Operations and
other uses, if any.

 

Changes in the Distributorship Premises may
be effected during the term of the Distributor Agreement in acccordance with
the provisions of Article 2.3 or Article 6.1.4 and shall be reflected in a new
Distributorship Locations and Premises Addendum executed by Distributor and
Company.

 

 

	
   

  	
  STEWART & STEVENSON SERVICES, INC.

  	
   

  	
   

  	
  DETROIT DIESEL CORPORATION

  	
   

  
	
   

  	
  DISTRIBUTOR FIRM NAME

  	
   

  	
   

  	
  COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  SIGNATURE AND TITLE

  	
   

  	
   

  	
  VICE PRESIDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DATE

  	
   

  	
   

  	
  DATE

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  information set forth herein has been verified for Company by:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  NAME

  	
  TITLE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  as
  of

  	
   

  	
  ,
  19

  	
   

  	
   

  
												

 

(Distributor
should file this Addendum with current Distributor Agreement)

 

 

DESCRIPTION OF DISTRIBUTORSHIP PREMISES

 

 

	
  Stewart & Stevenson Services, Inc.

  	
   

  	
  Houston, Texas

  	
   

  	
  January 1, 2004

  
	
  Distributor Firm Name

  	
   

  	
  City, State/Province

  	
   

  	
  As of Date

  

 

A.              LOCATION
AND OWNERSHIP OF PREMISES

 

	
  Location

  	
   

  	
  Address

  	
   

  	
  Indicate
  by ý

  	
   

  	
  If Leased,
  Name and Address of Lessor

  
	
  Distributorship

  
	
  Asset

  	
   

  	
  Leased

  
	
  Main

  	
   

  	
  2707 North Loop West

  	
   

  	
   

  	
   

  	
  ý

  	
   

  	
  Mischer Development

  
	
   

  	
   

  	
  Houston, TX

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Houston, Texas

  
	
  2

  	
   

  	
  8631 East Freeway

  	
   

  	
  ý

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Houston, TX

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  1631 Chalk Hill

  	
   

  	
  ý

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dallas, TX

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  6530 Agnes

  	
   

  	
  ý

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Corpus Christi, TX

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  69 Highway South

  	
   

  	
   

  	
   

  	
  ý

  	
   

  	
  Miles McInnis & Group

  
	
   

  	
   

  	
  Beaumont, TX

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Dallas, TX

  
	
  6

  	
   

  	
  5717 I-10 East

  	
   

  	
  ý

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  San Antonio, TX

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  2301 Central Freeway East

  	
   

  	
   

  	
   

  	
  ý

  	
   

  	
  Bowels Children Trust

  
	
   

  	
   

  	
  Wichita Falls, TX

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Wichita Falls, TX

  
	
  8

  	
   

  	
  581 Garden Oaks Blvd.

  	
   

  	
   

  	
   

  	
  ý

  	
   

  	
  Billingsly, Houston, TX

  
	
   

  	
   

  	
  Houston, TX 77018

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  1400 Destrehan Ave.

  	
   

  	
   

  	
   

  	
  ý

  	
   

  	
  Detroit Diesel Realty,
  Detroit, MI

  
	
   

  	
   

  	
  Harvey, LA

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  15735 Club Deluxe Rd.

  	
   

  	
  ý

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Hammond, LA 70403

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  5407 SE Evangeline

  	
   

  	
  ý

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Broussard, LA 70503

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  2701 N. Cage

  	
   

  	
  ý

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Pharr, TX 78577

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  1247 Sun Valley Rd., St B

  	
   

  	
   

  	
   

  	
  ý

  	
   

  	
  Gummelt Properties, Ltd.

  
	
   

  	
   

  	
  Waco, TX 76706

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Quick Service Sublease, Waco, TX

  
	
  14

  	
   

  	
  4935 Whitehurst

  	
   

  	
   

  	
   

  	
  ý

  	
   

  	
  Manning Family, Ltd.

  
	
   

  	
   

  	
  Longview, TX 75601

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Houston, TX

  
	
  15

  	
   

  	
  611 West 38th
  Street

  Houston, TX 77018

  	
   

  	
   

  	
   

  	
  ý

  	
   

  	
  Billingsly

  Houston, TX

  

 

 

 

DESCRIPTION OF DISTRIBUTORSHIP PREMISES

 

 

	
  Stewart & Stevenson Services, Inc.

  	
   

  	
  Houston, Texas

  	
   

  	
  January 1, 2004

  
	
  Distributor Firm Name

  	
   

  	
  City, State/Province

  	
   

  	
  As of Date

  

 

B.    DESCRIPTION
OF PREMISES LISTED IN “A” ABOVE AND PURPOSE

FOR WHICH EACH IS TO BE USED BY DISTRIBUTOR

 

	
  Location

  	
   

  	
  Describe
  Use of Premises for

  Distributorship Operations

  Specify: New Products Sales, Service, etc.

  	
   

  	
  No.

  of

  Floors

  	
   

  	
   

  	
   

  	
  Distance

  From

  Main

  Location

  	
   

  
	
  Area in
  Square Feet

  
	
  Building

  	
   

  	
  Lot

  
	
  *D.O. Use

  	
   

  	
  **Other
  Use

  	
   

  	
  *D.O. Use

  	
   

  	
  *Other Use

  
	
  Main

  	
   

  	
  Corporate Offices

  	
   

  	
  4

  	
   

  	
  25,000

  	
   

  	
  53,000

  	
   

  	
  25,000

  	
   

  	
  25,000

  	
   

  	
  XXXX

  	
   

  
	
  2

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
  2

  	
   

  	
  140,000

  	
   

  	
  0

  	
   

  	
  435,600

  	
   

  	
  0

  	
   

  	
  20

  	
   

  
	
  3

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
  1

  	
   

  	
  100,000

  	
   

  	
  0

  	
   

  	
  235,000

  	
   

  	
  0

  	
   

  	
  250

  	
   

  
	
  4

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
  1

  	
   

  	
  33,000

  	
   

  	
  0

  	
   

  	
  261,000

  	
   

  	
  0

  	
   

  	
  210

  	
   

  
	
  5

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
  2

  	
   

  	
  46,000

  	
   

  	
  0

  	
   

  	
  75,000

  	
   

  	
  0

  	
   

  	
  90

  	
   

  
	
  6

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
  1

  	
   

  	
  37,000

  	
   

  	
  0

  	
   

  	
  190,575

  	
   

  	
  0

  	
   

  	
  200

  	
   

  
	
  7

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
  1

  	
   

  	
  11,500

  	
   

  	
  0

  	
   

  	
  42,500

  	
   

  	
  0

  	
   

  	
  380

  	
   

  
	
  8

  	
   

  	
  Training Center & Warehouse

  	
   

  	
  1

  	
   

  	
  20,500

  	
   

  	
  0

  	
   

  	
  32,124

  	
   

  	
  0

  	
   

  	
  5

  	
   

  
	
  9

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
  2

  	
   

  	
  77,000

  	
   

  	
  0

  	
   

  	
  25,000

  	
   

  	
  0

  	
   

  	
  375

  	
   

  
	
  10

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
  1

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
   

  	
   

  	
  32,283

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  Product Sales, Service & Parts

  	
   

  	
  1

  	
   

  	
  22,400

  	
   

  	
   

  	
   

  	
  2 ac

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  Product Sales, Service & Parts

  	
   

  	
  1

  	
   

  	
  50,000

  	
   

  	
   

  	
   

  	
  15 ac

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15

  	
   

  	
  Power Products Division Headquarters

  	
   

  	
  1

  	
   

  	
  13,848

  	
   

  	
  32,304

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
																												

 

 

 

 

DESCRIPTION OF DISTRIBUTORSHIP PREMISES

 

 

	
  Stewart & Stevenson Services, Inc.

  	
   

  	
  Houston, Texas

  	
   

  	
  January 1, 2004

  
	
  Distributor Firm Name

  	
   

  	
  City, State/Province

  	
   

  	
  As of Date

  

 

C.    LEASED
PREMISES — PROVIDE INFORMATION ON EACH LOCATION

DESIGNATED AS LEASED IN “A” ABOVE

 

	
   

  	
   

  	
  Term of
  Lease

  	
   

  	
  Annual

  	
   

  	
  Renewal
  Options

  	
   

  
	
  Location

  	
   

  	
  From

  	
   

  	
  To

  	
   

  	
  Rental

  	
   

  	
  Term and
  Date Lessor to be Notified

  	
   

  	
  Annual
  Rent

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Main

  	
   

  	
  01/01/89

  	
   

  	
  02/28/05

  	
   

  	
  $

  	
  1,000,000

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  09/25/03

  	
   

  	
  09/30/08

  	
   

  	
  $

  	
  96,688

  	
   

  	
  Currently in 5 Year Option

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  01/01/02

  	
   

  	
  03/31/07

  	
   

  	
  $

  	
  67,200

  	
   

  	
  None

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  03/01/03

  	
   

  	
  05/31/10

  	
   

  	
  $

  	
  123,360

  	
   

  	
  None

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  12/31/98

  	
   

  	
  12/31/04

  	
   

  	
  $

  	
  259,992

  	
   

  	
  2 – 3 Year Options

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  04/30/02

  	
   

  	
  04/30/07

  	
   

  	
  $

  	
  145,500

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  09/25/03

  	
   

  	
  09/25/08

  	
   

  	
  $

  	
  184,487

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15

  	
   

  	
  06/01/03

  	
   

  	
  05/31/10

  	
   

  	
  $

  	
  256,068

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
																								

 

*D.O. Use means the portion of premises listed in
“A” above used for Distributorship Operations.

**Show
the portion of the distributorship premises used for any purpose other than
performance of Distributor’s obligation under the Distributor

Agreement, and briefly describe such other use or
uses.Exhibit 10.3

 

DaimlerChrysler Off-Highway Holding GmbH

Distributor Agreement

 

AGREEMENT,
effective 1st day of January, 2004
by and between DaimlerChrysler Off-Highway Holding GmbH, a DaimlerChrysler
Company, Maybachplatz 1, 88045 Friedrichshafen, Germany hereinafter called
COMPANY, and

 

	
  Stewart &
  Stevenson Services, Inc.

  	
   

  	
  Houston, TX

  	
   

  	
  USA

  	
   

  
	
  (Name)

  	
   

  	
  (City)

  	
   

  	
  (Country)

  

 

hereinafter called Distributor.

 

GENERAL
PURPOSE

 

COMPANY is appointed by MTU Friedrichshafen
GmbH, Detroit Diesel Corporation, MTU DDC International GmbH, and DDC MTU
Americas Company L.L.C. to renew, modify, extend, terminate in part or in
whole, on behalf and on account of these parties, each as applicable in
COMPANY’s name, the existing Distributor, Direct Dealer, and Sales
Representative Agreements of the parties. This appointment covers also the
authorization to conclude new Distributor, Direct Dealer and Sales
Representative Agreements. The renewals include the rights and obligations of
the Distributors as existing at the date of renewal provided that there is no
specific deletion/amendment/modification in the new Agreement.

 

Furthermore COMPANY is appointed by
DaimlerChrysler AG to conclude Distributor, Direct Dealer and Sales
Representative Agreements on behalf and on account of DaimlerChrysler AG each
as applicable in COMPANY’s name.

 

COMPANY is in the business of marketing power
products, including diesel and gas engines, and parts for these products
through its Affiliated Companies. Affiliated Companies sell its products
principally to original equipment manufacturers and to Distributors. COMPANY
has established a system of independently owned and managed Distributors
operating at approved locations to (a) sell directly the engines identified in
the Product Addendum, DaimlerChrysler Off-Highway Form No. DA 4, herein called
Products, and related Parts, (b) actively and effectively promote the purchase
and use of Products and related Parts, (c) render prompt, efficient, and
courteous service to owners and users of such Products and (d) complement
Sellers’ own direct sales activities.

 

The purpose of this Distributor Agreement,
herein called Agreement, is to appoint Distributor as an authorized Distributor
to sell and service Products and Parts, to establish the location(s) from which
Distributor will conduct Distributorship Operations, and to identify the
principal management and principal owners of Distributor upon whom COMPANY
relies in entering into this Agreement. This Agreement sets forth the rights
and responsibilities of COMPANY and Distributor relating to the sale and
servicing of Products and Parts and the circumstances in which the Agreement
may be terminated.

 

1

 

Accordingly, Distributor and COMPANY hereby
agree as follows:

 

FIRST: Rights Granted by COMPANY and Acceptance and
Acknowledgments by Distributor

 

A               Rights Granted by
COMPANY

 

In reliance on Distributor’s agreement to
fulfill the responsibilities and perform the functions described in Paragraph
SECOND of this Agreement, COMPANY hereby grants Distributor the non-exclusive
rights to:

 

1                  buy from COMPANY
and Affiliated Companies the Products identified in the Product Addendum to
this Agreement and related Parts for resale or use by Distributor in its
Distributorship Operations;

2                  identify itself
as an authorized Distributor and to conduct, at the location(s) approved by
COMPANY, herein called Distributorship Locations, all of the Distributorship
Operations contemplated by this Agreement; and

3                  execute service
dealer agreements with authorized Service Dealers approved by COMPANY.

 

B               Acceptance and
Acknowledgments by Distributor

 

Distributor
hereby accepts from COMPANY the rights specified in this Paragraph FIRST. In
doing so, Distributor acknowledges that:

 

1                  COMPANY and
Affiliated Companies have reserved to themselves the rights to select and
authorize other businesses to conduct distributorship operations in connection
with Products and Parts and to sell Products and Parts directly to any
customer;

2                  as an
independently owned and managed business, Distributor’s success and enjoyment
of profitable operations will be determined substantially by how effectively
its Distributorship Operations are conducted and managed;

3                  Distributor has
not paid any fee or other consideration for this Agreement. Neither this
Agreement nor any right granted by this Agreement is a property right; and

4                  neither this
Agreement nor any right or responsibility under this Agreement may be
transferred, assigned, delegated or sold by Distributor without the prior
written approval of COMPANY.

 

SECOND: Assumption of Responsibilities by
Distributor

 

Distributor will establish, maintain and
effectively conduct the complete Distributorship Operations contemplated by
this Agreement in connection with each of the Products described in the Product
Addendum. Distributor hereby assumes and will fulfill the functions and
responsibilities reflected in this Agreement, including:

 

1                  sales and sales
promotion responsibilities;

2                  service
responsibilities on all Products that may at any time be located in the Area of
Responsibility; and

3                  performance of
all of Distributor’s other obligations under this Agreement.

 

THIRD: Management and Ownership

 

COMPANY has selected Distributor and has
entered into this Agreement in substantial reliance upon:

 

4                  Distributor’s
representation to COMPANY relating to its business organization and financial
structure and to its ability to fulfill the functions and responsibilities
assumed by Distributor under Paragraph SECOND of this Agreement;

5                  the personal
qualifications and business abilities of Distributor’s Principal Manager(s) and
Principal Owner(s) who are so designated by Distributor in the Management and
Ownership Addendum, DaimlerChrysler Off-Highway Form No. DA 7, furnished by
Distributor to COMPANY and accepted by COMPANY by its endorsement thereon and
whom Distributor represents will have and actively exercise full managerial
authority for the operating management of Distributor; and

 

2

 

6                  the agreement of
Distributor and COMPANY that the person(s) named in the Management and
Ownership Addendum as Principal Owner(s) will continue to own both of record
and beneficially the percentage of ownership interests in Distributor shown
therein.

 

Distributor shall provide, at the request of
COMPANY, a plan for the continuation of Distributor in the event of death,
incapacity or withdrawal from the business of any person named as a Principal
Manager(s) or Principal Owner(s).

 

Distributor acknowledges that this Agreement
is to be construed as a personal service agreement. Accordingly, Distributor
agrees that continuation of the business relationship between Distributor and
COMPANY established by this Agreement is conditioned upon Distributor
continuing to have principal management and principal owners acceptable to
COMPANY. If Distributor desires to make a change in its Principal Manager(s) or
sell its principal assets or change its ownership, Distributor will give
COMPANY prior written notice of the proposed change or sale. COMPANY will base
its approval decision on whether the proposed change is likely to result in a
successful distributorship operation with acceptable management and ownership
which will provide satisfactory sales, service and facilities for users of
Products at the approved location.

 

FOURTH: Additional Terms

 

The additional terms set forth in the
following appendices and addenda to this Agreement are an integral part of this
Agreement:

 

•                  “Additional
Provisions Applicable to Distributor Agreement”, DaimlerChrysler Off-Highway
Form No. DA 2

•                  “Area
of Responsibility Addendum”, DaimlerChrysler Off-Highway Form No. DA 3

•                  “Product
Addendum”, DaimlerChrysler Off-Highway Form No. DA 4

•                  “Sales
Representative Addendum”, DaimlerChrysler Off-Highway Form No. DA 5, if
applicable

•                  “Locations
and Premises Addendum”, DaimlerChrysler Off-Highway Form No. DA 6

•                  “Management
and Ownership Addendum”, DaimlerChrysler Off-Highway Form No. DA 7

 

FIFTH: Term

 

This Agreement will expire without any action
by either Distributor or COMPANY on December 31, 2004.

 

IN WITNESS WHEREOF, the parties hereto have
executed this Agreement in duplicate as of the day and year first above
written.

 

	
  Stewart & Stevenson Services, Inc.

  	
   

  	
  DaimlerChrysler Off-Highway Holding GmbH

  
	
  (Distributor)

  	
   

  	
  (COMPANY)

  
	
   

  	
   

  	
   

  
	
  Houston, TX 02/17/2004

  	
   

  	
  Friedrichshafen, 11.12.03

  
	
  (Location and Date)

  	
   

  	
  (Location and Date)

  
	
   

  	
   

  	
   

  
	
  By

  	
  /s/ Max L.
  Lukens

  	
   

  	
  By

  	
  /s/ I.V. Foldu

  
	
  (Signature)

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Max
  L. Lukens, President and CEO

  	
   

  	
   

  
	
  (Name and Title)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Samantha M. Boyd

  	
   

  	
   

  
	
  (WITNESS)

  	
   

  	
   

  
					

 

3

 

AREA
OF RESPONSIBILITY ADDENDUM TO

DISTRIBUTOR
AGREEMENT

WITH

 

Stewart & Stevenson Services, Inc.

(Distributor)

 

USA

(Country)

 

Effective January 1,
2004, the area described below shall be the Distributor Area of
Responsibility.

 

The counties east of
and including the counties of Hardeman, Foard, Knox, Haskell, Throckmorton,
Stephenson, Eastland, Comanche, Jills, San Saba, McCullouch, Concho, Menard,
Kimble, Edwards and Val Verde in the State of Texas; the parishes south of and
including the parishes of Beauregard, Allen, Evangelina, Saint Landry, Pointe
Couppe, West Feliciana, East Feliciana, Saint Helena, Tangipahoa and Washington
in the State of Lousiana; the counties of Hancock, Harrison and Jackson in the
State of Mississippi; the counties of Mobile and Baldwin in the State of
Alabama; and all of the United States of America.

 

Distributor will sell Products for the
following off-highway applications:

 

Marine

Genset

Construction &
Industrial

Rail

 

 

Such Distributor Area of Responsibility will
be used by COMPANY in making evaluations of the effectiveness of Distributor’s
performance of its responsibilities under the Distributor Agreement.

 

The Distributor Area of Responsibility will
also be used in the development of sales guides and other matters relating to
Distributorship Operations.

 

The Distributor Area of Responsibility
described herein will continue to be used for the foregoing purposes until it
is changed in accordance with the Distributor Agreement.

 

	
  Stewart & Stevenson Services, Inc.

  	
   

  	
  DaimlerChrysler Off-Highway Holding GmbH

  
	
  (Distributor)

  	
   

  	
  (COMPANY)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Friedrichshafen,

  
	
  (Location and Date)

  	
   

  	
  (Location and Date)

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  
	
  (Signature)

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name and Title)

  	
   

  	
   

  
					

 

1

 

PRODUCT
ADDENDUM TO

DISTRIBUTOR
AGREEMENT

WITH

 

Stewart & Stevenson Services, Inc.

(Distributor)

 

USA

(Country)

 

Effective January 1,
2004.

 

I                    Distributor has the right to buy the following Products, Parts and
remanufactured Products and Parts for use in connection with such Products.

 

a)              Diesel and gas engines of the series listed below and accessories, except for engine models designated as
engines for on-highway vehicle applications only

 

	
  Series

  	
   

  	
   

  
	
  HR

  	
   

  	
  for construction & industrial

  
	
  700

  	
   

  	
  for mairne, genset and construction &
  industrial

  
	
  SUN

  	
   

  	
  for genset and construction &
  industrial

  
	
  40

  	
   

  	
  for genset and construstion & industial

  
	
  50

  	
   

  	
  for genset and construstion & industial

  
	
  60

  	
   

  	
  for mairne, genset and construction &
  industrial

  
	
  900

  	
   

  	
  for construction & industrial

  
	
  457

  	
   

  	
  for construction & industrial

  
	
  500

  	
   

  	
  for construction & industrial

  
	
  444

  	
   

  	
  for construction & industrial

  
	
  183

  	
   

  	
  for marine, genset and railway

  
	
  1800

  	
   

  	
  for railway

  
	
  2000

  	
   

  	
  for mairne, genset and construction &
  industrial

  
	
  G2000

  	
   

  	
  for genset

  
	
  396

  	
   

  	
  for marine, genset and railway

  
	
  4000

  	
   

  	
  for marine, genset, construction &
  industrial and railway

  
	
  G4000

  	
   

  	
  for genset

  

 

b)             Generator sets and pumps with above engines and branded “MTU” or
“Detroit Diesel” or any other brand used by Sellers.

 

II                Distributor has a non-exclusive right to buy Parts and remanufactured
Products and Parts for the following out of production engines:

 

	
  Series

  	
   

  	
   

  
	
  53 /71/ 92

  	
   

  	
   

  
	
  149

  	
   

  	
   

  
	
  099

  	
   

  	
   

  
	
  331

  	
   

  	
   

  

 

1

 

III            All Products and Parts will be purchased exclusively from Sellers.

 

IV            In complex projects (including combined marine propulsion systems and
power plants) the Distributor may, as decided by COMPANY in its sole
discretion, only act as a Sales Representative in accordance with the Sales
Representative Addendum,
DaimlerChrysler Off-Highway Form No. DA 5.

 

Distributor has the right
to market the following Products and Parts as well as Parts for engines out of
previous Sellers’ sales program (as specified under II) and accessories for use
in connection with such Products on commission basis in accordance with the
Sales Representative Addendum.

 

	
  Series:

  	
   

  	
   

  
	
  40

  	
   

  	
   

  
	
  50

  	
   

  	
   

  
	
  60

  	
   

  	
   

  
	
  900

  	
   

  	
   

  
	
  457

  	
   

  	
   

  
	
  500

  	
   

  	
   

  
	
  444

  	
   

  	
   

  
	
  183

  	
   

  	
   

  
	
  1800

  	
   

  	
   

  
	
  2000

  	
   

  	
   

  
	
  G2000

  	
   

  	
   

  
	
  331

  	
   

  	
   

  
	
  396

  	
   

  	
   

  
	
  4000

  	
   

  	
   

  
	
  G4000

  	
   

  	
   

  
	
  538

  	
   

  	
   

  
	
  595

  	
   

  	
   

  
	
  956

  	
   

  	
   

  
	
  1163

  	
   

  	
   

  
	
  8000

  	
   

  	
   

  

 

Generator sets and
pumps with above engines and branded “MTU” or “Detroit Diesel” or any other
brand used by Sellers.

 

	
  Stewart & Stevenson Services, Inc.

  	
   

  	
  DaimlerChrysler Off-Highway Holding GmbH

  
	
  (Distributor)

  	
   

  	
  (COMPANY)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Friedrichshafen,

  
	
  (Location and Date)

  	
   

  	
  (Location and Date)

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  
	
  (Signature)

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name and Title)

  	
   

  	
   

  
					

 

2

 

SALES REPRESENTATIVE ADDENDUM TO

DISTRIBUTOR AGREEMENT

WITH

 

Stewart & Stevenson Services, Inc.

(Distributor)

 

USA

(Country)

 

Effective January 1,
2004.

 

1.                             Distributor may act as a Sales Representative
for Sellers on a non-exclusive basis within the 

Distributor Area of Responsibility and will especially pursue the interest of
Sellers by developing business between Sellers and third parties.

 

2.                             The pursuit of Sellers’ interests will always
be conducted in close cooperation between Distributor and Sellers.

 

3.                             The Products which are listed in the Product
Addendum, DaimlerChrysler Off-Highway Form No. DA 4, may be marketed on a
commission basis.

 

4.                             Distributor shall not act for competing firms
as a commercial representative or commission sales representative, nor shall he
associate directly or indirectly with competitive firms. Neither inside nor
outside the authorized territory shall the Distributor act as a Sales
Representative for any firm that produces or distributes identical or similar
products, even if only used products are involved, subject to prior written
approval of COMPANY.

 

5.                             The Distributor is not authorized to commit
COMPANY and Sellers. He will conduct his business in such a way that any doubt
about the extent of his capacity will be avoided.

 

6.                             The Distributor will inform Sellers regularly
of his activities, the market demands in his territory. Special business
opportunities and events including those of competitors will be reported
without delay.

 

7.                             Commission will be due and payable only for
Products manufactured by Sellers and will, therefore, exclude other products
e.g. gas turbines, gears, shafts and propellers. Commissions will be paid for
standard packages offered by Sellers.

 

1

 

8.                             The following business will be excluded and no
commission will be due and payable for:

 

o                          off-set with suppliers

 

o                          Products for exhibition or other advertisement purposes

 

o                          business with affiliated companies

 

o                          business with residents in the Territory acting on behalf of customers
outside the Authorized Territory unless Products will be imported into the
Authorized Territory.

 

o                          business with MTU, DaimlerChrysler AG or DDC licensees

 

9.                             The Distributor will not receive a sales
commission or other compensation if

 

a)                            the sales contract will be made after the
termination of this Agreement.

 

b)                           there will be no performance under a contract
or the contract will be terminated.

 

c)                            the customer is unable to make payments.

 

d)                           the Distributor acts negligently in the
performance of its obligations.

 

e)                            Sellers performs free of charge.

 

10.                       The Distributor will receive the full sales
commission under Paragraph 12. if the sale was procured exclusively through his
efforts and when the Products will be operated within the Distributor Area of Responsibility.

 

Said commission will be shared between
distributors whenever several distributors or third parties participated in the
procurement of the business. Sellers will determine in a reasonable manner
whether there was any such case and how the commission will be shared taking
into consideration the contribution of each party.

 

Whenever the Products will be purchased
outside the Distributor Area of Responsibility and thereafter imported into the
Distributor Area of Responsibility for permanent use the Distributor will, as a
rule, receive half of the commission under Paragraph 12. whenever, upon request
of Sellers, he was active in the procurement of the sale.

 

11.                       A commission may be agreed on a case by case
basis whenever Sellers will supply products to those Original Equipment
Manufacturers (OEMs) within the Distributor Area of Responsibility, who will on
a regular basis integrate those Products in their own equipment for resale. The
sale of such OEM equipment will not constitute any claim for commission in the
Distributor Organization.

 

Such commission will reflect the assistance
of the Distributor.

 

12.                       The Distributor may receive the following
commissions for his activity in achieving sales of Products calculated on the
ex-factory net sales price of each order i.e. list price less discounts, cost
for special warranty and acceptance, freight, packing, special services,
insurance premiums, taxes and duties as well as any price escalation:

 

	
  up to EURO
  200.000

  	
   

  	
  6

  	
  %

  
	
  for the
  following EURO 200.000 up to EURO 350.000

  	
   

  	
  5

  	
  %

  
	
  for the
  following EURO 350.000 up to EURO 500.000

  	
   

  	
  4

  	
  %

  
	
  for amounts
  over and above EURO 500.000

  	
   

  	
  3

  	
  %

  
	
  Parts

  	
   

  	
  10

  	
  %

  

 

2

 

All expenses resulting from Distributors
activities, regardless of whether they originate generally or in connection
with a particular business transaction, shall be covered by the commission.

 

The Distributor, thereupon, shall be
responsible to supervise application and installation of Products sold by
Sellers.

 

13.                       The sales commissions will be due after the
customer has paid the full invoice amount. Sellers will then credit the
Distributor without further delay.

 

14.                       Quotations may be altered only with written
permission from Sellers. Sellers reserve the right to alter quotations unless
otherwise specifically agreed.

 

15.                       If, under certain circumstances, Sellers will
be required to make exceptional price concessions the commission of the
Distributor may be reasonably reduced.

 

16.                       If payments for Sellers are received by the
Distributor, they will be passed on immediately to Sellers. If an immediate
money transfer will not be possible or will not be in the best interest of
Sellers, the Distributor will pay money received into a special account with a
reputable commercial bank and assign the amount to Sellers.

 

17.                       Sellers reserve the right, upon termination, to
develop directly all sales contracts. Upon request and after the end of this
Agreement, the Sales Representative will refrain from developing sales contracts.
Until the end of this Agreement, commissions will be subject to Paragraph 12.

 

18.                       Termination of this Agreement does not give
either party the right to damages or other compensations. The Sales
Representative may not claim damages from COMPANY and/or Sellers for reason of
late or non-delivery or other non-performance by COMPANY and/or Sellers with
regard to customers. Any liability of COMPANY and/or Sellers, on any claim,
whether contractual or otherwise (including negligence of any degree) shall not
exceed the amount of the sales commission of the respective sale or part
thereof. In no event will COMPANY and/or Sellers be liable for consequential
damage.

 

	
  Stewart & Stevenson Services, Inc.

  	
   

  	
  DaimlerChrysler Off-Highway Holding GmbH

  
	
  (Distributor)

  	
   

  	
  (COMPANY)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Friedrichshafen,

  
	
  (Location and Date)

  	
   

  	
  (Location and Date)

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  
	
  (Signature)

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name and Title)

  	
   

  	
   

  
					

 

3

 

LOCATIONS AND PREMISES ADDENDUM

TO

DISTRIBUTOR AGREEMENT

 

This Locations and Premises Addendum is
executed pursuant to Article 6.1 of the Additional Provisions to the
Distributor Agreement between COMPANY and the undersigned Distributor.
Distributor and COMPANY hereby agree that as of the date specified, Page 2
hereof, entitled “Description of Distributorship Premises”, identifies the
Distributorship Locations and describes the Distributorship Premises at which
Distributor is authorized to conduct Distributorship Operations under the
Distributor Agreement. Distributor also represents that Page 2 accurately
reflects the terms under which it occupies the premises and the portion used
for Distributorship Operations and other uses, if any.

 

Changes in the Distributorship Premises may
be effected during the term of the Distributor Agreement in accordance with the
provisions of Article 2.3 or Article 6.1.4 and shall be reflected in
a new Locations and Premises Addendum executed by Distributor and COMPANY.

 

 

	
  Stewart & Stevenson Services, Inc.

  	
   

  	
  DaimlerChrysler Off-Highway Holding GmbH

  
	
  (Distributor)

  	
   

  	
  (COMPANY)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Location
  and Date)

  	
   

  	
  (Location
  and Date)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
  (Signature)

  	
   

  	
   

  	
  (Signatures)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Name and
  Title)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (WITNESS)

  	
   

  	
   

  

 

1

 

DESCRIPTION OF DISTRIBUTORSHIP PREMISES

 

	
  Stewart
  & Stevenson Services, Inc.

  	
   

  	
  January 1,
  2004

  
	
  (Distributor)

  	
   

  	
  (as of
  Date)

  

 

A.            LOCATION AND OWNERSHIP OF PREMISES (incl. Branches)

(please attach a separate page if space is
not sufficient)

 

	
   

  	
   

  	
   

  	
   

  	
  Indicate by (X)

  Distributorship

  	
   

  
	
  Location

  	
   

  	
  Address/Tel./Fax/e-mail/internet

  	
   

  	
  Asset

  	
   

  	
  Leased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Main

  	
   

  	
  2707 North Loop West, Houston, TX 77008

  	
   

  	
  o

  	
   

  	
  ý

  	
   

  
	
  2

  	
   

  	
  611 W. 38th St., Houston, TX
  77018

  	
   

  	
  o

  	
   

  	
  ý

  	
   

  
	
  3

  	
   

  	
  8631 East Freeway, Houston, TX 77029

  	
   

  	
  ý

  	
   

  	
  o

  	
   

  
	
  4

  	
   

  	
  1631 Chalk Hill Road, Dallas, TX 75212

  	
   

  	
  ý

  	
   

  	
  o

  	
   

  
	
  5

  	
   

  	
  6530 Agnes, Corpus Christi, TX 78406

  	
   

  	
  ý

  	
   

  	
  o

  	
   

  

 

B.            DESCRIPTION OF PREMISES LISTED IN “A” ABOVE AND PURPOSE FOR
WHICH EACH IS TO BE USED BY DISTRIBUTOR

 

	
  Location

  	
   

  	
  Describe Use of Premises for

  Distributorship Operations

  Specify: New Products Sales, Service, etc.

  	
   

  	
  No. of Floors

  	
   

  	
  

  Building

  	
   

  
	
  *D.O. Use

  	
   

  	
  ** Other Use

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Main

  	
   

  	
  Corporate Offices

  	
   

  	
  2

  	
   

  	
  12,500

  	
   

  	
  26,000

  	
   

  
	
  2

  	
   

  	
  Power Products Division Offices

  	
   

  	
  1

  	
   

  	
  60,551

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  New Products Sales, Retail Parts, Service

  	
   

  	
  2

  	
   

  	
  140,000

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  New Products Sales, Retail Parts, Service

  	
   

  	
  2

  	
   

  	
  150,000

  	
   

  	
  20,000

  	
   

  
	
  5

  	
   

  	
  New Products Sales, Retail Parts, Service

  	
   

  	
  1

  	
   

  	
  33,000

  	
   

  	
   

  	
   

  

 

C.            LEASED PREMISES — PROVIDE INFORMATION ON EACH LOCATION
DESIGNATED AS LEASED IN “A” ABOVE

 

	
  Location

  	
   

  	
  Name and Address of Lessor

  	
   

  	
  Term of Lease

  	
   

  	
  Annual

  Rental

  	
   

  
	
  From

  	
   

  	
  To

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Main

  	
   

  	
  2707 N. Loop Mgt, 2727 N Loop West, Ste
  200, Houston, TX 77248

  	
   

  	
  01-89

  	
   

  	
  02-05

  	
   

  	
  $

  	
  780,000

  	
   

  
	
  2

  	
   

  	
  Houston Pine Forest,4100 Int’l Pkwy,
  Carrollton, TX 75007

  	
   

  	
  06-03

  	
   

  	
  05-10

  	
   

  	
  $

  	
  320,472

  	
   

  

 

*                 D.O. Use means the portion of premises listed
in “A” above used for Distributorship Operations. (percentage of area)

**          Show the portion of the distributorship
premises used for any purpose other than performance of Distributor’s
obligation under the Distributor Agreement, and briefly describe such other use
or uses.

 

2

 

A.            LOCATION AND OWNERSHIP OF PREMISES (incl. Branches)

(please attach a separate page if space is
not sufficient)

 

	
   

  	
   

  	
   

  	
   

  	
  Indicate by (X)

  Distributorship

  	
   

  
	
  Location

  	
   

  	
  Address/Tel./Fax/e-mail/internet

  	
   

  	
  Asset

  	
   

  	
  Leased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  5717 I-10 East, San Antonio, TX 78219

  	
   

  	
  ý

  	
   

  	
  o

  	
   

  
	
  7

  	
   

  	
  2301 Central Freeway East, Wichita Falls,
  TX 76302

  	
   

  	
  o

  	
   

  	
  ý

  	
   

  
	
  8

  	
   

  	
  581 Garden Oaks, Houston, TX 77018

  	
   

  	
  o

  	
   

  	
  ý

  	
   

  
	
  9

  	
   

  	
  1400 Destrehan Ave., Harvey, LA 70058

  	
   

  	
  o

  	
   

  	
  ý

  	
   

  

 

B.            DESCRIPTION OF PREMISES LISTED IN “A” ABOVE AND PURPOSE FOR
WHICH EACH IS TO BE USED BY DISTRIBUTOR

 

	
  Location

  	
   

  	
  Describe Use of Premises for

  Distributorship Operations

  Specify: New Products Sales, Service, etc.

  	
   

  	
  No. of Floors

  	
   

  	
  

  Building

  	
   

  
	
  *D.O. Use

  	
   

  	
  ** Other Use

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
  2

  	
   

  	
  37,000

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
  1

  	
   

  	
  11,500

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  Training Center

  	
   

  	
  1

  	
   

  	
  32,124

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
  2

  	
   

  	
  47,700

  	
   

  	
   

  	
   

  

 

C.            LEASED PREMISES — PROVIDE INFORMATION ON EACH LOCATION
DESIGNATED AS LEASED IN “A” ABOVE

 

	
  Location

  	
   

  	
  Name and Address of Lessor

  	
   

  	
  Term of Lease

  	
   

  	
  Annual

  Rental

  	
   

  
	
  From

  	
   

  	
  To

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  Lantex, LLC, P.O. 1764, Wichita Falls, TX 76307

  	
   

  	
  04-02

  	
   

  	
  03-07

  	
   

  	
  $

  	
  67,200

  	
   

  
	
  8

  	
   

  	
  Houston Pine Forest, 4100 Int’ll Pkwy,
  Carrollton, TX 75007

  	
   

  	
  03-03

  	
   

  	
  05-10

  	
   

  	
  $

  	
  158,880

  	
   

  
	
  9

  	
   

  	
  Detroit Diesel Realty, Detroit, MI

  	
   

  	
  12-98

  	
   

  	
  12-04

  	
   

  	
  $

  	
  259,992

  	
   

  

 

*                 D.O. Use means the portion of premises listed
in “A” above used for Distributorship Operations. (percentage of area)

**          Show the portion of the distributorship
premises used for any purpose other than performance of Distributor’s
obligation under the Distributor Agreement, and briefly describe such other use
or uses.

 

3

 

A.            LOCATION AND OWNERSHIP OF PREMISES (incl. Branches)

(please attach a separate page if space is
not sufficient)

 

	
   

  	
   

  	
   

  	
   

  	
  Indicate by (X)

  Distributorship

  	
   

  
	
  Location

  	
   

  	
  Address/Tel./Fax/e-mail/internet

  	
   

  	
  Asset

  	
   

  	
  Leased

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  5407 SE Evangaline Thruway, Broussard, LA
  70518

  	
   

  	
  ý

  	
   

  	
  o

  	
   

  
	
  11

  	
   

  	
  2701 Cage, Pharr, TX 78577

  	
   

  	
  ý

  	
   

  	
  o

  	
   

  
	
  12

  	
   

  	
  4935 Whitehurst Dr., Longview, TX 75602

  	
   

  	
  o

  	
   

  	
  ý

  	
   

  
	
  13

  	
   

  	
  1400 Destrehan, Harvey, LA 70058

  	
   

  	
  o

  	
   

  	
  ý

  	
   

  
	
  14

  	
   

  	
  1400 Destrahan, Harvey, LA

  	
   

  	
  o

  	
   

  	
  ý

  	
   

  
	
  15

  	
   

  	
  1247 Sun Valley Rd. St. B, Waco, TX76706

  	
   

  	
  o

  	
   

  	
  ý

  	
   

  

 

B.            DESCRIPTION OF PREMISES LISTED IN “A” ABOVE AND PURPOSE FOR
WHICH EACH IS TO BE USED BY DISTRIBUTOR

 

	
  Location

  	
   

  	
  Describe Use of Premises for

  Distributorship Operations

  Specify: New Products Sales, Service, etc.

  	
   

  	
  No. of Floors

  	
   

  	
  

  Building

  	
   

  
	
  *D.O. Use

  	
   

  	
  ** Other Use

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
  1

  	
   

  	
  10,700

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
  1

  	
   

  	
  32,800

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
  1

  	
   

  	
  50,000

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  Parts Warehouse

  	
   

  	
  1

  	
   

  	
  8,200

  	
   

  	
   

  	
   

  
	
  14

  	
   

  	
  Warehouse/ Fabrication

  	
   

  	
  1

  	
   

  	
  77,000

  	
   

  	
   

  	
   

  
	
  15

  	
   

  	
  New Product Sales, Retail Parts, Service

  	
   

  	
  1

  	
   

  	
  22,40

  	
   

  	
   

  	
   

  

 

C.            LEASED PREMISES — PROVIDE INFORMATION ON EACH LOCATION
DESIGNATED AS LEASED IN “A” ABOVE

 

	
  Location

  	
   

  	
  Name and Address of Lessor

  	
   

  	
  Term of Lease

  	
   

  	
  Annual

  Rental

  	
   

  
	
  From

  	
   

  	
  To

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12

  	
   

  	
  Manning Family, Ltd, 5608 Candlewood,
  Houston, TX 77056

  	
   

  	
  09-03

  	
   

  	
  09-08

  	
   

  	
  $

  	
  120,000

  	
   

  
	
  13

  	
   

  	
  Richard Watler

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  39,000

  	
   

  
	
  14

  	
   

  	
  Detroit Diesel Corporation/Destrehan Industrial
  Properties LLC

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  259,992

  	
   

  
	
  15

  	
   

  	
  Gummelt Properties, LTD., Quick Service
  Sublease, Waco, TX

  	
   

  	
  04-02

  	
   

  	
  04-07

  	
   

  	
  $

  	
  145,500

  	
   

  

 

*                 D.O. Use means the portion of premises listed
in “A” above used for Distributorship Operations. (percentage of area)

**          Show the portion of the distributorship
premises used for any purpose other than performance of Distributor’s
obligation under the Distributor Agreement, and briefly describe such other use
or uses.

 

4

 

MANAGEMENT
AND OWNERSHIP ADDENDUM TO

DISTRIBUTOR
AGREEMENT

 

This Management and Ownership Addendum is
executed pursuant to Paragraph THIRD of the Distributor Agreement between
COMPANY and the undersigned Distributor.

 

Stewart & Stevenson Services, Inc.     , a proprietorship o, partnership o, corporation ý incorporated on  January 31, 1947

Distributor                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          Date

in the United
States of America, hereby
represents to COMPANY that the following information pertaining to the
management

Country

and the record and beneficial ownership
status of the undersigned Distributor is true, accurate and complete as of  January 1,
2004

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Date

and understands that any misrepresentation in
connection therewith constitutes cause for termination under Article 7.1.2
(b) of the Distributor Agreement.

 

	
  Names of
  persons having Management

  positions and/or Record or Beneficial

  Ownership interests in Distributor (Must

  show names of Officers and Principal

  Manager(s) regardless of any financial

  interest)

  	
   

  	
  Title

  If Any

  	
   

  	
  Active

  In

  Distributor-

  ship

  (check if

  YES)

  	
   

  	
  Principal

  Manager

  (check if

  YES)

  	
   

  	
  Principal

  Owner

  (check if

  YES)

  	
   

  	
  Signature of Principal

  Owners and Principal

  Managers

  	
   

  	
  If a partnership, show

  % of Ownership

  Interest of each

  person listed

  	
   

  	
  If a Corporation, show number of shares, class and

  percentage of ownership

  	
   

  
	
  Number

  of voting

  shares

  	
   

  	
  % of

  Total

  	
   

  	
  Number

  of non-

  voting

  shares

  	
   

  	
  % of

  Total

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Max L. Lukens

  	
   

  	
  CEO

  	
   

  	
  ý

  	
   

  	
  ý

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Don Kyle

  	
   

  	
  VP

  	
   

  	
  ý

  	
   

  	
  ý

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PUBLICLY TRADED

  	
   

  	
   

  	
   

  	
  o

  	
   

  	
  o

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  28,644,510

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  o

  	
   

  	
  o

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  o

  	
   

  	
  o

  	
   

  	
  o

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  28,644,510

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Ownership of record is the ownership
  reflected on Distributor’s books of record (e.g., in the case of a
  corporation, the name of the trust or person entitled to receive dividends
  from Distributor). Beneficial owners are those persons that benefit from such
  an ownership situation (e.g. the beneficiary of a trust). Any beneficial
  ownership arrangement at Distributor must be explained on a separate sheet
  and attached to this Distributor Management and Ownership Addendum.

  	
   

  	
  APPROVED AS REPRESENTED BY DISTRIBUTOR

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Stewart & Stevenson Services, Inc.

  	
   

  	
   

  	
  Daimler Chrysler Off-Highway Holding GmbH

  
	
   

  	
   

  	
  Distributor

  	
   

  	
   

  	
  COMPANY

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  	
  By

  	
   

  

 

1

 

ADDITIONAL INFORMATION CONCERNING OWNER(S)

 

List below any person named on the reverse
side whose ownership interest in Distributor is encumbered.

 

	
  Name

  	
   

  	
  Lender Name and Address

  	
   

  	
  Nature and Amount

  of Encumbrance

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

List below any person named on the reverse
side that is now employed by COMPANY, or Affiliated Companies.

 

	
  Name

  	
   

  	
  Name of Employer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

List below any person named on the reverse
side that is related to a present employee of COMPANY, or Affiliated Companies.

 

	
  Name

  	
   

  	
  Name of Employee

  and Relationship

  	
   

  	
  Name of Employer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

List below any person named on the reverse
side that has any ownership in, or is active in the management of, any other
entity that merchandises Products.

 

	
  Name

  	
   

  	
  Firm Name, Address and

  Position

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

List below any person named on the reverse
side that has any ownership in, or is active in the management of, any other
entity that merchandises engines or parts therefore other than those marketed
by COMPANY.

 

	
  Name

  	
   

  	
  Firm Name, Address

  Position and Product Line

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

REMARKS:

*Stewart & Stevenson Services, Inc.
common stock is publicly traded on the NYSE. 
No individual is currently considered as Principal Owner, However,
Diamler Chrysler Off-Highway GmbH will view any acquisition of 10% or more of
the voting stock of Stewart & Stevenson Services, Inc., by and individual,
or group of individuals as acting in unison, as a change in Principal Ownership
and as such subject to Diamler

Chrysler Off-Highway Holding GmbH approval as
set forth in Article 7.1.2(d) of the Distributor Agreement.

 

2

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