DISTRIBUTIONAGREEMENT

 

a.

Subject to the express provisions of this Agreement, Supplier hereby grants to Distributor the exclusive right to sell and distribute Products within the Territory, as defined below.

 

b.

Supplier shall offer to Distributor the exclusive right to sell and distribute in the Territory pursuant to the terms and conditions of this Agreement, all new or additional beverages manufactured, distributed, owned or licensed by Supplier that Supplier wishes to introduce in the Territory. If Distributor accepts such offer, then such new or additional products shall be added as Products under this Agreement and shall be subject to the terms hereof. In the event Distributor declines such offer or fails to respond to such offer within [***] days thereof, then:

 

(i)

if the new or additional product is in a [***] different from the  [***] of any Product previously distributed by Distributor and with a [***] that is distinct from and not confusingly similar to the  [***]of any Product previously distributed by Distributor, Supplier shall have the right to sell or distribute such new or additional products in the Territory directly or through third parties; and

 

(ii)

if the new or additional product is a new or additional [***] of an existing category of Product previously distributed by Distributor, then Supplier shall [***] such new or additional products in the Territory directly or through third parties.

 

a.

Supplier hereby licenses the Trademarks and other Intellectual Property (as defined in Paragraph 2.f.ii) to Distributor for use on and in connection with the advertising, promotion, sale and distribution of the Products.  Supplier shall have the right to use Distributor's name and logo on Supplier’s website for the purpose of identifying Distributor as a distributor.

 

b.

Supplier shall fill promptly all orders from Distributor for Products and for other items to be provided by Supplier hereunder. Supplier’s prices and terms of sale to Distributor for the Products shall be [***]. Supplier’s prices to Distributor (net of all discounts, allowances, rebates and promotional support payments provided to Distributor by Supplier) shall reflect [***] to any permitted [***] in the Territory (net of all discounts, allowances, rebates and promotional support payments provided to such customer by Supplier), to reflect the [***] Distributor. Supplier shall not [***] for any item on less than [***]  days’ advance written notice.  The initial price for the Products shall be [***] per 12 pack case.

 

c.

Supplier shall set aside an exclusive area described in the schedule attached hereto as Exhibit “C” (the “Territory”) in which no person other than Distributor will distribute, sell or promote Products. Supplier shall not suffer or permit in the Territory any other distributor or licensee of the Trademarks with respect to Products and shall not itself sell, nor suffer or permit any others to sell, Products for resale or use in the Territory, nor shall Supplier sell any Products to any person that Supplier knows or has reason to know is likely directly or indirectly to resell the Products in the Territory. Supplier is developing a transshipment policy in consultation with Distributor for the purpose of discouraging transshipment into the Territory and redressing the economic impact of transshipping on the affected distributors. The parties will negotiate in good faith to finalize such a policy within ninety (90) days of execution of this Agreement.

 

d.

Supplier shall create and make available to Distributor advertising and promotion materials for Products of a form, in amounts and upon terms reasonably established by Supplier.

 

e.

Supplier shall promptly pay or credit to Distributor’s account, when due, not less frequently than monthly, all credits, discounts, allowances, incentive payments, bill backs or other reimbursements due Distributor pursuant to any program to which the parties may agree.  Supplier and Distributor will meet and agree (i) on an annual basis on a projected [***] and (ii) on a quarterly basis on a projected [***], and will [***] accordingly.  In the event that Supplier and Distributor cannot agree on the projected average [***] for any year, the amount applicable to the prior year shall be used for such year. . In the event that Supplier and Distributor cannot agree on the projected [***] for any quarter, the amount applicable to the then current year shall be used for such quarter. Each quarter, authorized representatives of both parties will meet to determine final reconciliation of the agreed upon [***].

 

f.

Supplier represents and warrants that:

 

(i)

the Products (A) shall be pure and wholesome, fit for human consumption, merchantable and free from all defects, (B) shall, in all instances, comply with all applicable Federal, state or local laws and regulations, in all respects, including without limitation, beverage quality, labeling, identity, quantity, packaging, and returnable container or deposit requirements; (C) shall not be adulterated and misbranded within the meaning of those terms under the Federal Food, Drug and Cosmetic Act, as amended, and shall not be an article or articles which  may not, under the provisions, of said Act, be introduced into interstate commerce; (D) shall not be adulterated or misbranded within the meaning of the Federal Insecticide, Fungicide, and Rodenticide Act, the Federal Hazardous Substances Act, or any applicable state pure foods act or any other applicable Federal, state, or local law or regulation; and (E) when delivered to Distributor, shall have a remaining shelf life of not less than five (5) months, the expiration of which shall be clearly marked on the outside of all cartons and pallets.

 

(ii)

it is the owner or exclusive U.S. licensee of the Trademarks and all other intellectual property used in the packaging, labels, marketing and promotional materials designed or prepared by Supplier for the Products (collectively, including the Trademarks, the “Intellectual Property”), that it has the right to license the Intellectual Property to Distributor throughout the term of this Agreement, and that Distributor’s use of the Intellectual Property will not infringe or violate the rights of any third party; and

 

(iii)

it is free to enter into this Agreement and is not under any obligation, written or otherwise, to any other party which would prevent Supplier from complying with all the terms and conditions of this Agreement.

 

g.

Supplier shall replace all Products that, at the time and place of delivery, do not meet the requirements of Section 2.f.(i) above, at Supplier’s expense, including [***] shall be allowed in the amount of Distributor’s laid-in cost, at Distributor’s option.  Supplier shall also [***] for all of Distributor’s [***] as a consequence of such Products [***] above (including but not limited to Products in the hands of Distributor or of the retail trade that have [***] if such Products did not conform to the requirements of [***]) or as a consequence of any other fault of Supplier, and the [***], at Supplier’s option. The foregoing shall not be construed to entitle Distributor to recover lost profits or other consequential damages resulting from the failure of Products to conform to the requirements of Section 2.f.(i) other than as expressly set forth above.

 

h.

Supplier shall materially comply with all laws, rules, regulations, requirements, orders and ordinances now in effect or which may hereafter be enacted or promulgated applicable to its operations or obligations under this Agreement.

 

a.

Distributor shall pay Supplier for Product and any other items sold by Supplier to Distributor in accordance with the prices and terms of sale set forth in this Agreement or otherwise agreed to in writing by Supplier and Distributor.  All payments shall be due within [***] days of delivery of such Products and items to Distributor.

 

b.

Distributor shall materially comply with all laws, rules, regulations, requirements, orders and ordinances now in effect or which may hereafter be enacted or promulgated applicable to its operations or obligations under this Agreement.

 

c.

Distributor shall use reasonable efforts to promote the sale of Product in the Territory and to maintain a business organization and equipment necessary to function properly in the manufacture, sale and distribution of Product. Distributor may engage such subdistributors, agents or other third parties to assist it in the performance of this Agreement as Distributor deems appropriate.

 

d.

Distributor shall not sell or distribute Product outside the Territory or sell the Product to any person that Distributor knows or has reason to believe is likely to resell the Products outside the Territory. Supplier shall include in all distribution agreements entered into hereafter, and use diligent efforts to add to all existing distribution agreements, a provision [***]. in all its bottling and distribution agreements with all [***].

 

e.

Distributor and Supplier shall jointly prepare and execute a reasonable Annual Marketing Plan for the Products for each marketing year, including participation in such marketing programs as the parties shall agree.  For the first year of the term hereof, the Annual Marketing Plan is as set forth on Exhibit “D.”  If Distributor and Supplier are unable to agree on an Annual Marketing Plan for any subsequent year, [***]shall govern until agreement is reached.

 

f.

Supplier shall cover [***]% of any and all slotting fees, subject to Supplier’s approval.  Supplier agrees to commit not less than $[***]in slotting fees in the Territory during [***].  Supplier agrees to [***] to ensure payment of [***] to [***] by Supplier to a chain customer.  Supplier and Distributor shall agree upon Supplier’s commitment for slotting fees for each subsequent seven-year renewal term.

 

g.

Distributor shall maintain and submit to Supplier at reasonable intervals sales, marketing and similar reports relating to Product in a mutually agreed form; provided that Distributor shall not be required to provide [***] information.  Distributor shall maintain and submit to Supplier reports on [***], aggregated by [***] but without [***] data, on a [***] basis.

 

h.

Except as otherwise provided in this Agreement, Distributor shall not sell, transfer, convey, assign, or otherwise dispose of all or any part of its interest in this Agreement without the prior written consent of Supplier, provided that such consent is not unreasonably withheld; and provided further that no consent shall be required for any transfer so long as the majority of the outstanding voting shares or other form of voting ownership of the entity holding Distributor’s rights and obligations under this Agreement is held by:  [***] (“Family Members”); or any trusts for the benefit of any Family Members of any of them; or any corporation or other business entity controlled by [***], Family Members or such trusts. It shall be presumptively unreasonable for Supplier to withhold its consent to any transfer of Distributor’s rights under this Agreement to any transferee that has, or the senior management of which has, at least [***] in the beverage industry and [***] of at least [***] during the [***]period immediately preceding the month in which Distributor notifies Supplier of the identity of the proposed transferee.

 

i.

Distributor warrants and represents to Supplier that it is free to enter into this Agreement and is not under any obligation, written or otherwise, to any other party which would prevent Distributor from complying with all the terms and conditions of this Agreement.

 

a.

Distributor shall notify Supplier promptly upon discovery of any use of any mark, trade name or trademark similar to any of the Trademarks.  Supplier shall not be required to take any action with respect to any infringement, but Distributor shall join with Supplier, when requested by Supplier, in any proceeding or litigation or other action for the protection of the Trademarks and the goodwill associated therewith.  All costs and expenses of such litigation or action shall be borne by Supplier.

 

b.

If Supplier does not take legal action against an infringement, Distributor may do so in its own name and/or that of Supplier, provided that Distributor bears all costs and expenses of such action.  In that event, Distributor shall be entitled to any and all proceeds of such action.

 

c.

Nothing contained in this Agreement shall be construed to vest in Distributor any right, title or interest in or to any of the Trademarks other than the rights and license expressly granted herein.

 

a.

Distributor shall indemnify and save harmless Supplier from and against all losses, claims, damages or other costs of any nature or kind whatsoever arising directly or indirectly out of or relating to any allegation of:  (i) the breach of any warranty, representation or agreement made by Distributor in this Agreement; (ii) the negligence or intentional misconduct, misfeasance or nonfeasance of Distributor, its officers, employees, agents, servants or contractors; (iii) any quality or condition of or inherent defect introduced into the Products as a consequence of the improper storage, handling, warehousing, distribution or sale by Distributor of Products; (iv) any wrongful, false or misleading claim, advertising or representation by Distributor or by any agent or representative of Distributor regarding the Products that are not endorsed by Supplier; or (v) the conduct of Distributor’s business (including the use of promotional materials and packaging not designed, manufactured or approved by the Supplier). Such indemnity shall include, but not be limited to, reasonable expenses, attorneys’ fees, court costs and other expenses of investigation, litigation and settlement of any such claim. Supplier shall provide Distributor prompt written notice of receipt of any such claim and shall not settle any such claim without the prior knowledge and written consent of Distributor, which consent shall not be unreasonably withheld.  Notwithstanding the foregoing, upon written notice to Supplier that Distributor has assumed the defense of any legal action or proceeding, Distributor shall not be liable to Supplier for any legal or other expenses subsequently incurred by Supplier in connection with the defense thereof, except in the event of a conflict of interest or other matter that prevents counsel for Distributor from fully and zealously representing the interests of both Supplier and Distributor.

 

b.

Supplier shall indemnify and save harmless Distributor from and against all losses, claims, damages or other costs of any nature or kind whatsoever arising directly or indirectly out of or relating to any allegation of: (i) the breach of any warranty, representation or agreement made by Supplier in this Agreement; (ii) Distributor’s use of the Intellectual Property in the Territory in accordance with the terms of this Agreement; (iii) the negligence or intentional misconduct, misfeasance or nonfeasance of Supplier, its officers, employees, agents, servants or contractors; (iv) any quality or condition of or inherent defect in the Products supplied by Supplier, including but not limited to any imperfection, contamination or substandard quality, production, packaging, processing, storage, handling or transportation or other condition relating to the Products at or before the time they were received by Distributor; (v) any wrongful, false or misleading claim, advertising or representation by Supplier or by any agent or representative of Supplier regarding the Products (other than one subject to indemnification by Distributor pursuant to Section 5.a.(iv) above); (vi) any third party that such person or entity has any right, claim or color of right granted or allowed by Supplier to purchase, sell, market or distribute Products in the Territory; or (vii) the conduct of Supplier’s business (including the promotional materials and packaging designed, manufactured or approved by the Supplier).  Such indemnity shall include, but not be limited to, reasonable expenses, attorneys’ fees, court costs and other expenses of investigation, litigation and settlement of any such claim. Distributor shall provide Supplier prompt written notice of receipt of any such claim and shall not settle any such claim without the prior knowledge and written consent of Supplier, which consent shall not be unreasonably withheld.  Notwithstanding the foregoing, upon written notice to Distributor that Supplier has assumed the defense of any legal action or proceeding, Supplier shall not be liable to Distributor for any legal or other expenses subsequently incurred by Distributor in connection with the defense thereof, except in the event of a conflict of interest or other matter that prevents counsel for Supplier from fully and zealously representing the interests of both Supplier and Distributor.

 

c.

Notwithstanding the foregoing, to the extent that any claim that would otherwise be subject to indemnification pursuant to Paragraph 5.a. is traceable in whole or in part to

 

i.

any ingredient supplied by Supplier;

 

ii.

any act or failure required or approved by Supplier; and/or

 

iii.

any matter subject to indemnification by Supplier under Paragraph 5.b.;

 

d.

During the term of this Agreement, each party shall secure, pay for and maintain in full force and effect comprehensive general liability insurance (including contractual liability and with product liability coverage respecting the Products) in an amount of not less than [***] in the aggregate and [***]per occurrence.  Such insurance maintained by each party shall name the other party as additional insured.  Each party shall furnish to the other annually a certificate confirming such coverage.

 

a.

Supplier may terminate this Agreement if Distributor does not correct, as provided in this Paragraph 6.b., any material failure, other than a failure resulting from events of Force Majeure (as defined in Paragraph 9), to fulfill any of its obligations hereunder after receiving written notice from Supplier identifying the alleged failure with specificity and stating that Supplier intends to terminate this Agreement if such failure is not timely corrected.  Distributor shall have [***] days after receipt of such notice to effect a cure of any default, provided, however, that if any such default cannot reasonably be cured within [***]  days, Distributor shall be deemed to have timely cured the default if it commences to cure the default within such [***] day period and diligently proceeds thereafter to complete the cure within the period in which such cure can reasonably be completed; and provided further that if a default is of a nature that cannot reasonably be cured, Distributor shall be deemed to have cured such default if it [***] of the same type of default.  Upon a failure by Distributor to cure a material default as provided in the preceding sentence, Supplier may terminate this Agreement by not less than [***]  days’ written notice given within [***] days after expiration of the period for cure.

 

b.

In addition to any other grounds for termination set forth herein, this Agreement may also be terminated by Supplier in the event of:

 

i.

The discontinuance of service by Distributor to active customers for the Products for a period of more than thirty days, excluding delays caused directly or indirectly by Force Majeure (as defined in Paragraph 9 below); or

 

ii.

Any insolvency of Distributor or any assignment by Distributor for the benefit of creditors; or the filing of a voluntary bankruptcy or reorganization petition by Distributor or the failure of Distributor to vacate an involuntary bankruptcy or reorganization petition filed against Distributor within sixty (60) days after the date of such filing, or the failure of Distributor to vacate the appointment of a receiver or trustee for the Distributor or any interest in the Distributor’s business within sixty (60) days after such appointment.

 

c.

Distributor may terminate this Agreement at any time by giving Supplier at least [***] days prior written notice.

 

d.

Upon termination of this Agreement for any reason, Distributor shall discontinue the use of the Trademarks in Distributor’s trade name, or in connection with advertising, sales and promotion materials, or otherwise, promptly after the disposition of its remaining inventory of Products.  On or before the termination date, Distributor shall promptly provide Supplier with a detailed written inventory setting forth all Products and point-of-sale materials owned by and in the possession of Distributor which bear the Trademarks.  Distributor shall then make available to Supplier at Distributor’s warehouse or other facility, for the inspection by Supplier, all such Products and other materials.  Following Supplier’s receipt of such written inventory from Distributor and after a reasonable period of time within which Supplier may inspect such inventory, Supplier will itself promptly purchase or cause a third party to promptly purchase and take title to and possession of all such inventory and materials that are in good and merchantable condition, have a remaining shelf life that meets or exceeds industry standards, and are not otherwise obsolete or unusable.  The price to be paid by Supplier shall be the purchase price paid for such inventory and materials, plus other costs incurred by Distributor reasonably related to the acquisition and receipt of such inventory and materials, such as freight and insurance charges and any excise taxes, so as to arrive at Distributor’s laid-in cost of all such inventory and materials.  Notwithstanding the foregoing, visi-coolers, venders and other cold equipment bearing Trademarks shall be retained by and remain the property of Distributor, but Distributor shall promptly remove such Trademarks from all such equipment.

 

a.

If

 

(i)

any government agency recommends or requires the recall of any Products or packaging; or

 

(ii)

either Supplier or Distributor reasonably determines that any Products or packaging should be recalled or should be withdrawn from distribution and sale;

 

b.

If the problem at issue was not caused by Distributor, then Supplier shall pay the costs and expenses associated with any such recall, and Supplier shall indemnify Distributor for (i) its laid-in cost of all unsold recalled Products and packaging and the cost of returning such Products and packaging to Supplier or destroying them, as Supplier may elect; and (ii) its reasonable costs and expenses associated with such recall, which costs may include but are not limited to credits, refunds, or other payments by Distributor to its customers in connection therewith.  For purposes of this Agreement, “laid-in cost” shall include the invoice cost, insurance and freight for packaging and Products purchased in finished form by Distributor.

 

c.

If the problem at issue was caused by Distributor, then Distributor shall pay the costs and expenses associated with any such recall, and Distributor shall indemnify Supplier for its reasonable costs and expenses associated with such recall.

 

a.

The indemnification, hold harmless and defense against claims provisions in this Agreement (including the provisions of Sections 5 and 8) shall survive the expiration, rescission or termination of this Agreement.

 

b.

This Agreement does not constitute either party an agent or employee of the other.  Their relationship shall be that of independent contractors, and neither shall have any authority to bind the other by reason of this Agreement.

 

c.

If for any reason any provision of this Agreement shall be deemed by any court, governmental agency, body or tribunal of competent jurisdiction to be legally invalid or unenforceable in any jurisdiction to which it applies, the validity of the remainder of the Agreement shall not be affected and such provision shall be deemed modified to the minimum extent necessary to make such provision consistent with applicable law, and, in its modified form, such provision shall then be enforceable and enforced.

 

d.

The parties’ obligations under this Agreement shall be binding upon, and the parties’ rights under this Agreement shall inure to the benefit of, their respective permitted successors and assigns.

 

e.

This Agreement, represents the entire agreement between the parties hereto with respect to the subject matter hereof, and supersedes all prior arrangements, oral or written, on the same subject.  No term of this Agreement may be changed in any way except by a writing signed by both parties.

 

f.

The waiver by Supplier or Distributor of any breach or default, or series of breaches or defaults, of any term or condition herein contained shall not be deemed a waiver of any continuing or subsequent breach or default of the same term or any other term or condition of this Agreement.

 

g.

This Agreement shall be for a term of seven (7) years from the date hereof and shall automatically be renewed for successive terms of seven (7) years unless either party provides notice of non-renewal at least 90 days prior to the end of the then current seven (7) year term, which would result in the Agreement being terminated effective as of the end of the then current seven (7) year term provided that in the event of notice of nonrenewal by Supplier, Supplier pays to Distributor prior to the expiration date the amount set forth in Section 6.e. above.   This Agreement may also be earlier terminated only as expressly provided in this Agreement.

 

h.

This Agreement shall be construed, enforced and governed by the laws of the State of New York without regard to principles of conflict or choice of laws.  Any action or proceeding arising out of or in connection with this Agreement shall be heard in a federal or state court of appropriate subject matter jurisdiction located in County and State of New York, and the parties hereby agree to exclusive venue in, and consent to the personal jurisdiction of, such courts.

 

1.

Temporary [***]shall be mutually agreed upon by Supplier and Distributor.  With respect to any “10 for $10” ads, each party will be responsible for [***].  With respect to any “10 for $10” ads beyond the [***] Supplier will [***].  If the price to a [***].

 

2.

Free case offers (e.g., ‘Buy 5 Get 1 Free’), shall be mutually agreed upon by Supplier and Distributor.  Each party will cover [***].

 

3.

Point-of-Sale materials (e.g., sales sheets, rail strips, static clings, shelf danglers, and the like) that are provided by Supplier will be paid at [***].

 

4.

Supplier shall pay [***].

 

5.

Supplier will pay [***] of the cost of free cases utilized for mutually agreed upon sales drives during the [***] days of the term for non-chain accounts.