Exhibit 10.31
XXXXXX BEVERAGE COMPANY
DISTRIBUTION AGREEMENT
AGREEMENT, made as of this 16" day of August, 2004, between XXXXXX
BEVERAGE COMPANY ("HBC"), with offices at 0000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxx 00000, and BEVERAGE NETWORK OF MARYLAND, INC. DBA ATLANTIC BEVERAGE
CO., a Florida corporation ("Distributor"), with offices at 0000 XXXXXXX XXXXX
XXXXXX, XX 00000.
1. Definitions. When used herein, (a) the word "Products" means those
products identified in Exhibit A hereto with an "X"; (b) the word "Territory"
means the territory identified in Exhibit B hereto; (c) the word "Accounts"
means those accounts identified in Exhibits C1 and C-2 and (d) the word
"Trademarks" means those names and marks identified on Exhibit D hereto.
2. Appointment.
(a) HBC appoints Distributor, and Distributor accepts appointment,
as a distributor of Products only to Accounts within the Territory.
Such appointments may be either exclusive or nonexclusive, as the case
may be, as designated on Exhibits C-1 and C-2 hereto. Unless otherwise
agreed by HBC, Distributor specifically covenants not to sell or
otherwise transfer in any manner any Products except to Accounts within
the Territory. The Distributor shall be entitled to appoint
sub-distributors within the Territory provided that the terms of such
appointments shall not be inconsistent with the terms and conditions of
this Agreement and shall be subject to HBC's rights hereunder.
(b) Distributor hereby agrees not to sell, transfer and/or assign
any Products, either directly or indirectly, to any other persons
and/or entities located outside the Territory nor to any persons and/or
entities within the Territory with regard to whom Distributor has
knowledge or reasonable belief will distribute and/or sell the Products
outside of the Territory.
(c) Distributor acknowledges and agrees that it has no right to
distribute any products of HBC other than the Products identified in
Exhibit A hereto with an "X". Any sales by HBC to Distributor of any
products of HBC other than the Products identified in Exhibit A with an
"X" and/or that are not listed on Exhibit A, and/or any Products sold
by HBC to Distributor and/or its sub-distributor/s beyond the scope,
term or after the termination of this Agreement, with or without cause,
for any reason or no reason at all (i) shall not constitute, be
construed as, or give rise to, any express or implied Distribution
Agreement, course of conduct or other relationship between HBC and
Distributor; (ii) shall not confer upon Distributor .or its
sub-distributor/s any rights of any nature whatsoever, including
without limitation to purchase and/or sell or continue to purchase
and/or sell any products, including Products, or use the Trademarks
other than with respect to Products sold and delivered by HBC to the
Distributor and (iii) shall constitute a separate transaction for each
shipment of products actually delivered by HBC to Distributor and/or
sub-distributor/s, at HBC's sole and absolute discretion, which HBC
shall be entitled to exercise, vary, withdraw and/or cease, on. a case
by case basis, at any time in HBC's sole and absolute discretion.
Distributor irrevocably waives, releases and discharges any claims,
liabilities, actions and rights, in law or in equity, against HBC
including without limitation for damages, compensation or severance
payments or any other claims of whatsoever nature to Distributor
arising from or in connection with the matters referred to in this
section 2(c) and/or any acts, omissions or conduct of HBC.
3. Distributor's Duties. Distributor shall:
(a) vigorously and diligently promote and achieve the wide
distribution and sale of Products to Accounts within the Territory to
the reasonable satisfaction of HBC; Distributor shall permit HBC
representatives to work sales routes with the Distributor's salesmen;
(b) secure extensive in-store merchandising and optimal shelf
positioning with respect to Products in Accounts within the Territory
to the reasonable satisfaction of HBC;
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(c) perform complete and efficient distribution functions throughout
the Territory to the reasonable satisfaction of HBC;
(d) fully implement and execute the annual marketing plans to be
agreed upon from time to time in accordance with Clause 13 below and
achieve and maintain where appropriate all of the objectives set with
respect thereto; and
(e) achieve and maintain the minimum distribution levels relating to
Products as set forth on Exhibit E hereto during the initial term and
achieve and maintain the agreed minimum distribution levels relating to
Products in respect of each renewal term in accordance with Clause 13
below.
(f) provide HBC on or before the tenth (10th) day of each calendar
month with a schedule showing for the previous month (i) sales by
flavor and package, (ii) number of new accounts opened, (iii) aggregate
number of active accounts for Product; and
(g) maintain in strict confidence all commercial information
disclosed by HBC to Distributor (which obligation shall expressly
survive termination of this Agreement for any reason).
4. Prices. The prices of Products shall be as set forth in HBC's then
current price list as the same may be changed from time to time by HBC upon
written notice to Distributor.
5. Orders. All purchase orders for Products shall be in writing and
shall be subject to acceptance by HBC. All such purchase orders shall be deemed
acceptances of HBC's offers to sell Products and shall limit acceptance by
Distributor to the terms and conditions thereof.
6. Payment. Distributor shall promptly pay the prices of Products in
full (without deduction or set-off for any reason) in accordance with the
payment terms set forth in HBC's invoice. If Distributor is delinquent in
payment, upon presentation of invoice, Distributor shall reimburse HBC for any
costs and, expenses incurred by XXX.xx collecting such delinquent amounts,
including, without limitation, legal expenses, interest at 1 % per, month or
part thereof from the due date(s), and fees of collection agencies.
7. Security Interest. HBC reserves, and Distributor grants to HBC, a
security interest in Products sold to Distributor on credit (if any).
Distributor acknowledges that this Agreement constitutes a security agreement
between HBC, as secured creditor, and Distributor, as debtor, for the purposes
of the Uniform Commercial Code. Distributor agrees to execute and deliver to HBC
such financing statements and other instruments as HBC may reasonably request in
order to perfect its security interest.
8. Delivery. Unless otherwise agreed in writing by the parties,
Products will be tendered by HBC for delivery to Distributor in full truckload
quantities. Distributor acknowledges that delivery dates set forth in purchase
orders for Products accepted by HBC are merely approximate and that HBC shall
have no liability for late deliveries.
9. Trademarks.
(a) Distributor shall not use any trademark, brand name, logo or
other production designation or symbol in connection with Products
other than Trademarks. Distributor acknowledges that it has no right or
interest in Trademarks (except as expressly permitted hereunder) and
that any use by Distributor of Trademarks will inure solely to HBC's
benefit. Distributor may only use Trademarks in strict accordance with
HBC's policies and instructions, and HBC reserves the right, from time
to time and any time, at its discretion, to modify such policies and
instructions then in effect.
(b) Any proposed use by DISTRIBUTOR OF TRADEMARKS (TO THE extent
that it either has not been previously approved by HBC or differs
materially from a use previously approved by HBC) shall be subject to
the prior written consent of HBC. Distributor shall submit to HBC in
writing each proposed use of Trademarks in any medium.
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(c) Distributor shall not at any time alter Trademarks or the
packaging of Products, use Trademarks for any purpose other than the
promotion, advertising and sale of Products hereunder, or challenge the
validity, or do or refrain from doing any act which might result in
impairment of the value, of Trademarks.
(d) Upon the termination hereof, Distributor shall cease and desist
from the use of the Trademarks and any names, marks, logos or symbols
similar thereto.
10. Promotion. Distributor shall be solely responsible for marketing
and promoting Products within the Territory. Distributor shall aggressively
distribute and encourage the utilization of merchandising aids and promotional
materials in outlets throughout the Territory. Without in any way detracting
from the foregoing, Distributor shall participate in and diligently implement
all marketing and promotional programs and campaigns that may be agreed to by
both Distributor and HBC and which HBC may agree to fund jointly with
Distributor on a co-op basis, from time to time.
11. Term and Termination.
(a) The initial term of this Agreement shall commence on AUGUST 16,
2004 and shall end on December 31, 2004. Upon the expiration of the
initial term, this agreement shall be automatically renewed for
additional terms of one year at a time, up to a maximum of fifteen (15)
additional one year terms; provided always that the Distributor (i) is
not in breach of any of the provisions of this Agreement, (ii) has
fulfilled all of its obligations hereunder, and (iii) has agreed with
HBC with respect to the minimum distribution levels and/or annual
marketing plan for the forthcoming term, as the case may be, in
accordance with Clause 13 below. If all such requirements are not met,
then this Agreement shall terminate at the expiration of the then
current term.
(b) Either party may terminate this Agreement, without cause, at any
time, upon thirty (30) days' prior written notice or, if longer, the
minimum period permissible under applicable law.
(c) Either party may terminate this Agreement upon written notice if
the other party:
(i) commits a breach of any of the provisions hereof, or
(ii) sells all or substantially all of its assets or outstanding
shares of stock entitled to vote, or
(iii) files or has filed against it a petition in bankruptcy, is
adjudicated insolvent or bankrupt, makes a general assignment for the
benefit of creditors, or has a receiver or trustee appointed for it or
for the administration of its assets.
(d) In the event of the termination of this Agreement for any reason
whatsoever (and whether such termination is due to the breach of any of
the provisions of this Agreement by any party and/or itself is in
breach of the Agreement or otherwise):
(i) HBC shall have the right to cancel all of Distributor's
purchase orders for Products accepted but remaining unfilled as of the
date of termination;
(ii) all amounts payable by Distributor to HBC shall be
accelerated and shall immediately become due; and
(iii) neither party shall be liable to the other party in
contract, tort or on any other theory of liability for any damage,
loss, cost or expense (whether general, special, indirect, incidental,
consequential or punitive) suffered, incurred or claimed by the other
party as a result of or related to such breach and/or termination (even
if the termination results from a breach and the breaching party has
been advised of the possibility of such damages), including, without
limitation, loss of anticipated profits or goodwill, loss of or damage
to goodwill or business reputation or any loss of investments or
payments made by either party in anticipation of performing under this
Agreement.
(e) In the event HBC continues to supply Products to Distributor for
any reason following the termination of this Agreement, Distributor
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understands and acknowledges that any such action shall not constitute
a waiver of HBC's rights under this Agreement or a reinstatement,
renewal or continuation of the term of this Agreement. HBC and
Distributor agree that if HBC continues to supply Products to
Distributor following the termination of this Agreement, (i)
Distributor shall be prohibited from selling or otherwise transferring
Products except to Accounts within the Territory, (ii) Distributor
shall promptly pay the prices of the Products in full (without
deduction or set-off for any reason) in accordance with the payment
terms set forth in HBC's invoice, and (iii) HBC shall have the right,
in its sole discretion, to discontinue supplying Products to
Distributor at any time, without notice to Distributor,
(f) Should HBC or any successor to HBC terminate this Agreement
without cause otherwise than pursuant to the express provisions of this
Agreement including, without limitation, pursuant to the express
provisions of Clause 11(b) above, then provided that the Distributor
shall not be in breach of any of the provisions of this Agreement, HBC
or its successor, as the case may be,, shall be liable to pay to
Distributor a severance payment calculated as follows: $3.00 per
24-pack case (reduced on a pro rata basis for cases that contain less
than 24 units, i.e. 12-pack cases, but excluding any free units) of
energy Products in 8-oz., 16-oz. and 23.5-oz. cans and $1.50 per
24-pack case (reduced on a pro rata basis for cases that contain less
than 24 units, but excluding any free Products) of all other Products,
sold by Distributor during the most recently completed twelve (12)
month period ending on the last day of the month preceding the month in
which the Agreement is terminated, less the amount, if any, Distributor
may receive from any assignee of its rights under this Agreement.
12. Option. HBC shall have the option, exercisable upon written notice
to Distributor within thirty (30) days after the date of termination hereof, to
repurchase all Products in Distributor's inventory at the prices therefor paid
or payable by Distributor (less any freight and insurance charges), F.O.B.,
Distributor's premises.
13. Annual Marketing Plans. Not less than 60 days before the end of
then current term HBC and Distributor shall mutually review the conditions of
the marketplace, Distributor's efforts to achieve sales and its results as well
as the proposed annual marketing plan which is to be prepared by Distributor and
agree on the annual marketing plan, which shall include sales and other
objectives and minimum distribution levels to be achieved and maintained by
Distributor, for the forthcoming term of this Agreement.
Minimum Distribution Levels. Not less than 60 days before the end of
the then current term HBC and Distributor shall mutually agree on the minimum
distribution levels for the forthcoming term of this Agreement.
14. The provisions of this clause shall apply only to accounts that
have been assigned exclusively to Distributor in terms of Exhibits C-1 and C-2
hereto. Distributor agrees that should HBC wish to supply Products to any
National Account (which shall mean a customer that sells at retail in more than
one Territory), HBC shall be entitled to make arrangements directly with such
customer and establish the terms of sale of Products to such customer and the
prices therefor, which shall take into account the prices then being offered by
Distributor and/or other Distributors within whose Territory the customer has
Outlets, to such customer or similar categories of customer. Should such
customer have one or more outlets within the Territory ("Outlets"), and agree to
Outlets being serviced by Distributor, Distributor agrees to service the Outlets
in accordance with such arrangements and on the same terms and at the same
prices as HBC shall have agreed with the customer concerned. Notwithstanding the
foregoing, Distributor shall be entitled to elect not to service the Outlets by
giving prompt written notice of such election to HBC. Should the customer not
agree to the Outlets being serviced by Distributor or should Distributor elect
not to service the Outlets, HBC shall be entitled to service the Outlets
directly. In the event HBC services the Outlets directly, HBC shall pay to
Distributor, during the remaining term of this Agreement, $0.50 per 24-pack case
(reduced on a pro rata basis for cases that contain less than 24 units,
excluding any free units) of energy Products in 8-oz., 16-oz. and 23.5-oz. cans
and $0.25 per 24-pack case (reduced on a pro rata basis for cases that contain
less than 24 units, excluding any free units) of all other Products, sold by HBC
to the Outlets; provided that Distributor shall have achieved and maintained the
agreed distribution levels within the Territory. For the purposes of this
Agreement, the number of cases of Products sold by HBC to the Outlets during any
period shall be determined by multiplying the total number of cases of products
sold by HBC directly to such customer or regional division of such customer, as
the case may be, during the period concerned, by a fraction, the numerator of
which shall be the number of Outlets and the denominator of which shall be the
total number of Outlets that the customer has within the United States or within
the regional division of such customer, as the case may be.
15. Amendment. Except to the extent otherwise expressly permitted by
this Agreement, no amendment of this Agreement shall be effective unless reduced
to a writing executed by the duly authorized representatives of both parties.
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16. Assignment. Distributor may not assign its rights or delegate its
obligations hereunder without the prior written consent of HBC. Any purported
assignment or delegation by Distributor, in the absence of HBC's written
consent, shall be void.
17. No Agency. The relationship between HBC and Distributor is that of
a vendor to its vendee and nothing herein contained shall be construed as
constituting either party the employee, agent, partner or coventurer of the
other party. Neither party shall have any authority to create or assume any
obligation binding on the other party.
18. Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of California (without reference to its
law of conflict of laws).
19. Arbitration. Any dispute, controversy or claim arising out of or
relating to this Agreement or the breach or termination hereof shall be settled
by binding arbitration conducted by JAMS/Endispute. ("JAMS") in accordance with
JAMS Comprehensive Arbitration Rules and Procedures (the "Rules"). The
arbitration shall be heard by one arbitrator to be selected in accordance with
the Rules, in Orange County, California. Judgment upon any award rendered may be
entered in any court having jurisdiction thereof. Within 7 calendar days after
appointment the arbitrator shall set the hearing date, which shall be within 90
days after the filing date of the demand for arbitration unless a later date is
required for good cause shown and shall order a mutual exchange of what he/she
determines to be relevant documents and the dates thereafter for the taking of
up to a maximum of 5 depositions by each party to last no more than 2 days in
aggregate for each party. Both parties waive the right, if any, to obtain any
award for exemplary or punitive damages or any other amount for the purpose or
imposing a penalty from the other in any arbitration or judicial proceeding or
other adjudication arising out of or with respect to this Agreement, or any
breach hereof, including any claim that said Agreement, or any part hereof, is
invalid, illegal or otherwise voidable or void. In addition to all other relief,
the arbitrator shall have the power to award reasonable attorneys' fees to the
prevailing party. The arbitrator shall make his or her award no later than 7
calendar days after the close of evidence or the submission of final briefs,
whichever occurs later.
20. Merger. This Agreement supersedes all prior oral and written
communications between the parties concerning, and constitutes their sole and
exclusive understanding with respect to, the subject matter hereof.
21. Waivers. No waiver of any provision hereof or of any terms or
conditions established by HBC will be effective unless in writing and signed by
the party against which enforcement of the waiver is sought.
22. Competitive Products. Distributor shall not sell, market or
distribute any products likely to compete with or be confused with any of the
Products, during the term of this agreement.
23. HBC represents that no products shall, on the date of purchase or
delivery, be adulterated or misbranded or unsafe within the meaning of the
Federal Food Drug and Cosmetic Act, including all provisions and amendments
pertaining thereto from time to time. HBC indemnifies Distributor and its agents
from and against all/or any damages for personal injuries and property damage,
including reasonable attorney's fees, resulting from any impurity, adulteration,
deterioration in or misbranding of products delivered to Distributor; provided
that Distributor gives HBC written notice of any indemifiable claim and
Distributor does not settle any claim without HBC's prior written consent. HBC
represents that its maintains and will continue to maintain, at its own cost,
product liability insurance in the minimum amount of $2,000,000. HBC will supply
proof of same to Distributor within a reasonable time after written request
therefore from Distributor.
24. Interpretation. In the event of any ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement. No provision of this Agreement shall be construed against any
party on the grounds that such party or its counsel drafted that provision
25. Severability. If any provision of this Agreement is held invalid
for any reason by a court, government agency, body or tribunal, the remaining
provisions will be unaffected thereby and shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement as of the date first above written.
XXXXXX BEVERAGE COMPANY BEVERAGE NETWORK of MARYLAND, INC.
("HBC") d.b.a. ATLANTIC BEVERAGE CO.
("Distributor")
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
-------------------------- ------------------------------
Its: Chairman Its: President
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EXHIBIT A
THE PRODUCTS
X Han.-en's energy Formula 8.3 oz. Cans
X Xxxxxx'x energy Power Formula 8.3 oz. Cans
X Xxxxxx'x energy Endurance Formula 8.3 oz. Cans
X Xxxxxx'x Diet Red Ener 8.3-oz Cans
X Xxxxxx'x Xxxx Deuce 16-oz Cans
X Xxxxxx'x X00 Ener Water in 23.5-oz Clear PET Bottles
X Xxxxxx'x Xxxx ade 23.5 oz. Cans
X Xxxxxx'x Signature Soda 12-oz Bottles
X Xxxxxx'x Gold Standard Teas 20-oz Bottles
X Xxxxxx'x Smoothies 16-oz PET Bottles
X Monster Ener 16-oz. Cans
X Lo-Carb Monster Ener 16-oz. Cans
X Lost Energy 16-oz. Cans
To the extent HBC has supplied or may agree to supply any Product to
Distributor which is not listed above, it is understood that Distributor's
right to sell such Product is limited to that specific transaction only. No
course of conduct or usage of trade may be relied upon or construed to create
any obligation on HBC to sell or continue to sell such Product's to Distributor
nor shall the same create any right in favor of Distributor.
HBC reserves the right to secure an alternate Distributor or distribution
process for any Products that are not actively promoted or sold.
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EXHIBIT B
THE TERRITORY
State of Maryland, Counties of:
Xxxx Arundel and the independent city of Annapolis.
Baltimore and the independent city of Baltimore
Xxxxxxx'
Xxxxx
Xxxxxxx
Hartford
Xxxxxx
Xxxxxxxxxx
Prince
George's
The District of Columbia
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EXHIBIT X-X
Xxxxxx'x Signature Soda 12-oz Bottles
Xxxxxx'x Gold Standard Teas 20-oz Bottles
Xxxxxx'x Smoothies. 16-oz PET Bottles
THE ACCOUNTS
Distributor Distributor
Account Type Exclusive Non-exclusive Reserved for HBC
------------ ----------- ------------- ----------------
Convenience Stores X
Chain Convenience Stores X
Deli's X
Independent Grocery X
Chain Grocery X
Mass Merchandisers X
Drug Stores X
Schools X
Hospitals X
Health Food Stores X
Military X
Alcoholic Lie. On-Premise X
Trader Joe's X
Club Stores X
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EXHIBIT C-2
X Xxxxxx'x energy Original Formula 8.3 oz. Cans
X Xxxxxx'x energy Power Formula 8.3 oz. Cans
X Xxxxxx'x energy Endurance Formula 8.3 oz. Cans
X Xxxxxx'x Diet Red Energy 8.3-oz Cans
X Xxxxxx'x Energy Deuce 16-oz Cans
X Xxxxxx'x X00 Energy Water in 23.5-oz Clear PET Bottles
X Xxxxxx'x Energade 23.5 oz. Cans
X Monster Energy 16-oz. Cans
X Lo-Carb Monster Energy 16-oz. Cans
X Lost Energy 16-oz. Cans
THE ACCOUNTS
Distributor Distributor
Account Type Exclusive Non-exclusive Reserved for HBC
------------ ----------- ------------- ----------------
Convenience Stores X
Chain Convenience Stores X
Deli's X
Independent Grocery X
Chain Grocery X
Mass Merchandisers X
Drug Stores X
Schools X
Hospitals X
Health Food Stores X
Military X
Alcoholic Lic. On-Premise X
Trader Joe's X
Club Stores X
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EXHIBIT D
THE TRADEMARKS
XXXXXX'X XXXXXX'X ENERGY
XXXXXX'X NATURAL XXXXXX'X ENERGY (DESIGN)
CALIFORNIA'S NATURAL CHOICE ENERGY
XXXXXX'X NATURAL SODAS A NEW KIND 'A BUZZ
XXXXXX'X PREMIUM SIGNATURE SODAS NERGY HYDRATION SYSTEM
CALIFORNIA'S CHOICE SLIM DOWN
EQUATOR LOST
IMPORTED FROM NATURE LOST ENERGY
LIQUID FRUIT LOST ENERGY DRINK
IT'S JUST GOOD THE "PLANET" LOGO
THE REAL DEAL
STAMINA
ANTLOX
D. STRESS
POWER
HEALTHY START
IMMUNEJUICE
INTELLIJUICE
ANTIOXJUICE
VITAMAX.JUICE
DYNAJUICE
POWERPACK
BLUE SKY
MEDICINE MAN
RED ROCKER
ENERGADE
E,0 ENERGY XXXXX
XXXXXX'X, X,0 ENERGY WATER
MONSTER ENERGY
MONSTER
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EXHIBIT E
ANNUAL MARKETING PLAN
AVAILABLE TARGET % of AVAILABLE
PRODUCTS ACCOUNTS ACCOUNTS ACCOUNTS CASE SALES
-------- --------- -------- --------------- ----------
Energy - 8.3 oz Cans * * * *
Diet Red Energy - 8.3 oz Cans * * * *
Energy Deuce - 16 oz Cans * * * *
Energade - 23.5 oz Cans * * * *
E20 Energy Water - 23.5 oz Clear Bottles * * * *
Xxxxxx'x Signature Soda 12-oz Bottles * * * *
Xxxxxx'x Gold Standard Teas 20-oz Bottles * * * *
Xxxxxx'x Smoothies 16-oz PET Bottles
Monster Energy - 16 oz Cans * * * *
Lo-Carb Monster Energy - 16 oz Cans * * * *
Lost Energy - 16 oz Cans * * * *
* To be determined for the 2005 Calendar Year on or before December 31, 2004.
Percentage of Available Accounts is defined as the total number of Accounts that
purchased each of the Products listed above in any 60-day period divided by the
total number Available of Accounts that purchased any product from the
Distributor in the same 60-day period.
In the event that HBC and Distributor fail to agree on an Annual Marketing Plan
for any current- term on or before the commencement of such term, HBC shall be
entitled, but not obligated, in its sole discretion, to elect to establish a
reasonable Annual Marketing Plan for such term. DisrAgr.3 12
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