Form Of Distribution Agreement

EXHIBIT 10.7(a)



DISTRIBUTION AGREEMENT

----------------------





THIS DISTRIBUTION AGREEMENT (the "Agreement") is entered into as of the ________ day of ____________, 19___, by and between BLUE RHINO CORPORATION, a Delaware corporation ("Company"), and ________________., a __________________ corporation ("Distributor").



W I T N E S E T H:

-----------------



WHEREAS, Company is in the business of offering Cylinders for exchange, upgrade and sale pursuant to a proprietary system including the use of certain marks owned by Company (the "Business"); and



WHEREAS, the parties hereto desire to effect an arrangement whereby Distributor will provide Cylinder exchange service, including sales and upgrades of Cylinders, to Company's customers using Company's Marks.



NOW, THEREFORE, the parties hereto agree as follows:



1. DEFINITIONS. Wherever the following words appear herein their

----------- meanings shall be as follows:



"Company" shall mean Blue Rhino Corporation, a Delaware corporation,

---------

or its successors and assigns.



"Company's Accounts" shall mean all customers serviced by Distributor

--------------------

other than Distributor's Accounts.



"Company's Marks" shall mean the trademarks, service marks and trade

-----------------

names set forth in Exhibit A.



"Cylinders" shall mean 20 lb. cylinders of liquid propane fuel.

-----------



"Distributor" shall mean ______________ a __________corporation.

-------------



"Distributor's Accounts" shall mean those customers listed on Exhibit

------------------------



"NFPA" shall mean the National Fire Protection Association.

------



"Sleeve" shall mean the shrink-wrap covering to be applied to all

--------

Cylinders, the form of which shall be prescribed by Company.

"Term" shall mean, subject to Section 15 hereof, the period beginning

------

on the date hereof and continuing until the _______ anniversary of the

date hereof. The Term shall thereafter be automatically renewed for

successive one-year periods until either party shall deliver to the

other written notice not less than ninety (90) days prior to the end

of any such one-year period, of such party's intent to terminate this

Agreement as of such year end.



"Territory" shall mean the area described on Exhibit C attached

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2. APPOINTMENT. Company hereby appoints Distributor during the Term of

----------- this Agreement as its exclusive distributor of Cylinders using Company's Marks in the Territory, upon the terms and conditions hereinafter set forth, and Distributor hereby accepts said appointment. Distributor acknowledges that it has paid no consideration to Company in exchange for this appointment. The Company will not appoint any additional distributors for Cylinders in the Territory during the Term without Distributor's consent.



In consideration of Distributor's agreement to sell and distribute the Cylinders using Company's Marks, Company shall pay to Distributor the consideration described on Exhibit D attached hereto. All payments due from Company to Distributor for services provided in any month shall be made within forty-five (45) days of the date of invoice, except as set forth on Exhibit E, and except for delays in the payment by the customer due to disputes relating to the servicing of such customer by Distributor. Company shall have the right to set off any amounts due from Distributor to Company against amounts due to Distributor pursuant to this Section 2.



3. DISTRIBUTOR'S DUTIES.

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(a) Exchanges, Upgrades, Sales, and Inventory. Distributor shall

----------------------------------------- provide Cylinder exchange service, including exchanges, upgrades, and sales of Cylinders, to Company's customers (as designated by Company) at such prices as Company from time to time shall designate in writing. Distributor shall maintain a sufficient supply of Cylinders to fully stock all Cylinder racks installed at a customer's place of business and shall maintain a sufficient quantity of Cylinders in inventory (float) to properly service the customers in accordance with this Agreement.



(b) Setup Process. Distributor shall be solely responsible for

------------- implementing the Cylinder exchange program at Company's customer's place of business and shall elicit such customer's input and cooperation. Distributor's duties shall include, but not be limited to, those duties which are described on Exhibit F attached hereto.



(c) Customer Delivery. Distributor shall plan and execute such

----------------- deliveries of filled Cylinders to each of Company's customers in the Territory so as to avoid stock-out situations. Distributor acknowledges that it is Company's policy that no customer be out of filled



2 of 1 Cylinders for more than forty-eight(48) hours. Distributor agrees that no more than 5% of its deliveries shall consist of deliveries to out-of-stock customers. Distributor shall be responsible for monitoring the sales history and demand information of each location and compiling sales reports for the customer and Company so as to avoid stock-outs. To assist Distributor, Company shall provide Distributor with sales data and customer history on a monthly basis.



(d) Refurbishment and Refilling. Distributor shall transport the

--------------------------- exchanged Cylinders to its plant for refurbishment and refilling. Distributor shall refurbish and refill the Cylinders in accordance with the procedures and standards as outlined in Exhibit G and other procedures and standards that are communicated from time to time by Company to Distributor.



(e) Reporting. Distributor shall use its best efforts to comply with

--------- Company's reporting requirements as described on Exhibit H attached hereto.



(f) Billing and Collection. Company will be responsible for all

---------------------- invoicing and collection matters. Notwithstanding the foregoing, if so requested by Company, Distributor shall invoice customers for Cylinders and collect the receipts or shall make deliveries on a COD basis.



(g) Insurance. Distributor shall carry, at its sole cost and expense,

--------- (i) public and products liability insurance in an amount not less than $5,000,000 for personal injury, death, or property damage, which shall include coverage "X" of "XCU" coverage; (ii) comprehensive automobile liability insurance providing third party liability insurance with $1,000,000 inclusive limits, covering all licensed vehicles owned or operated by or on behalf of Distributor; (iii) workman's compensation insurance, in such amounts as required by law; and (iv) products liability insurance as Company shall specify from time to time. All policies of insurance procured by Distributor shall (i) be issued in form acceptable to Company by insurance companies with a financial rating of not less than A-8 as rated in the most current available "Best's" insurance reports, and licensed to do business in the Territory; (ii) be written as primary policies and not contributing with, nor in excess of, coverage that Company may carry; (iii) include Company as a additional insured; and (iv) contain endorsements that such policies may not be materially changed, amended, or canceled with respect to Company except after thirty (30) days' prior notice from the insurance company to Company. Certificates of such insurance and copies of current Insurance Policies shall be furnished to Company by Distributor upon Company's request.



(h) Disposal of Cylinders. Distributor shall dispose of Cylinders

--------------------- when such Cylinders are no longer fit for use in the business. Prior to disposal, Distributor shall remove from the Cylinders all Marks and any other identifying labels or other markings associated with Company.





4. ELECTRONIC ACCOUNTING SYSTEM. Distributors will use the Blue Rhino

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3 of 1 Electronic Accounting System (BREAS) to conduct all customer transactions and report these transactions to Company. The BREAS consists of: (A) P. C. as provided by Blue Rhino Corporation, (B) Handheld Terminal(s) (HHT), HHT printer(s), (C) National Data Datacomputer Interface components, and (D) BREAS software provided by Company. HHT's will be used to print delivery tickets for all store deliveries. Delivery data entered into the handhelds will be transferred to Company via electronic communication. Distributor will obtain sufficient BREAS hardware to meet the above requirements pursuant to lease agreements with Company supplier. Company will provide, free of charge, the BREAS software required for system use and electronic communications.



5. SUPPLIES. Distributor acknowledges that Company has an interest in

-------- controlling all materials identifying Company to be used in connection with the Cylinders including, but not limited to, the Sleeve, the Company's Marks, marketing materials, and labels to be applied to the Cylinders. Therefore, Distributor agrees to purchase all such items directly from Company or a supplier approved by Company.



6. OWNERSHIP OF ACCOUNTS. Distributor agrees that all sales of

--------------------- Cylinders pursuant to this Agreement shall be for the benefit of Company and Distributor shall have no interest in such accounts or the underlying customer including, but not limited to, those customers who are initially contacted by Distributor, except as e ...