Orderly termination
When negotiating their agency or distribution contract, the producer (P) and the agent/distributor (A/D) might want to recognise that they will part company at some time, and the desirability of having an orderly termination when they do.
It might be along these lines:
- full period of notice to be given. P to compensate A/D if shorter notice required by P, and vice versa
- agreement as to what commissions, if any, A/D will receive in respect of orders completed after termination
- P to buy back A/D's stock, or mutual stock options (i.e. P to have option to require A/D to sell him his stock, A/D to have option to require P to purchase his stock), on agreed terms
- P to pay A/D compensation representing a fair share of any goodwill generated during the relationship
- A/D to accept restrictive covenants in return and ....
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