CONSOLIDATED DISTRIBUTORS, INC. seeks to maintain active members participating regularly in the programs sponsored by the company, purchasing from the Preferred Sources of Supply, and assisting in the growth, development, and expansion of the business enterprise of the company. Membership shall be determined by the Board of Directors upon the basis of reasonable, fair, published, and objective criteria outlined as follows:

1. The primary business of all members shall be wholesale industrial paper, sanitary maintenance, and/or restaurant equipment and supplies distribution. An active stocking warehouse must also be provided.

2. Annual gross sales must be at least $3,000,000, and the satisfactory credit rating of the member must be maintained.

3. Only one member shall be chosen for each metropolitan statistical area if:

a) The existing member has generated total marketing allowances to Consolidated Distributors, Inc. during the immediate prior twelve (12) month period of more than $30,000 per 100,000 population in Standard Metropolitan Statistical Areas; or

b) The existing member adequately services the market segments to be serviced by an applicant for membership. Whether or not the existing member adequately services the market segments is to be made in the sole discretion of the Board of Directors.

4. No member shall participate in any other paper or chemical marketing group.

5. A member may be terminated if the requisite criteria are not satisfied, or if it fails to support the approved group suppliers.

6. All members must initially produce $20,000 in marketing allowances for the first year of membership, and all succeeding years, or they may be terminated. The Board may allow an additional probation period of three (3) months for the production of $5,000 in marketing allowances.

7. A member who fails to attend two consecutive Annual Member/Supplier Conferences of Consolidated Distributors, Inc. may be terminated upon the vote of two-thirds of the Board of Directors. If a member attends the Annual Member/Supplier Conference of Consolidated Distributors, Inc., but fails to attend at least fifty percent of said member's scheduled appointments with suppliers on the Exhibition Floor at said Conference, said member shall incur a fine of $1,000 to paid to Consolidated Distributors, Inc.

8. The Board wishes to provide all members notice and opportunity for hearing before termination, according to the following procedures:

a) The member shall be given notice, in writing, with reasons for the proposed course of action and shall have ten (10) days to request, in writing, an opportunity to appear before the Board, either in person or by written correspondence, or by a representative of his choice.

b) The Board will consider all relevant facts bearing upon the proposed course of action before terminating the member, and shall make a decision.