Exhibit 10.4


 


Portions hereof have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request
for confidential treatment in accordance with Rule 24b-2 of the Securities
Exchange Act of 1934, as amended


 


MONSTER ENERGY

CANADIAN DISTRIBUTION AGREEMENT


 


This MONSTER ENERGY CANADIAN DISTRIBUTION
AGREEMENT (the “Agreement”) is entered into as of October 3, 2008 (the “Effective
Date”) between HANSEN BEVERAGE COMPANY, a Delaware corporation (“HBC”) with
offices at 550 Monica Circle, Suite 201, Corona, California 92880, and
COCA-COLA BOTTLING COMPANY, a Nova Scotia corporation (“Distributor”), with
offices at 42 Overlea Boulevard, Toronto, Canada ON MH4 1B8.


 


1.             Recitals
and Definitions.


 


a.             Distributor
is a leading producer and distributor of beverages throughout Canada and has
substantial experience in the distribution of beverages.  Distributor has developed and implemented
successful marketing plans and/or systems for such distribution and which are
substantially associated with the trademarks and trade name of The Coca-Cola
Company (“KO”).  HBC wishes to appoint
Distributor, as a distributor of Products (as defined below) as part of
Distributor’s business operations and systems, with performance to commence as
of January 1, 2009, or as soon as practicable after all necessary
approvals are obtained by HBC and Distributor (the “Commencement Date”).


 


b.             When
used herein the word “Products” means (a) those products identified in Exhibit A
hereto with an “X” as well as all other shelf-stable, non-alcoholic, Energy
Drinks (as defined below) in ready to drink form, that are packaged and/or
marketed by HBC at any time after the Effective Date under the primary brand
name “Monster” or any other primary brand name having “Monster” as a derivative
or part of such name, and which may, but are not required, to contain the “ “
mark, and/or the “M” icon, that HBC distributes from time to time through its
national network of full-service distributors such as, without limitation, the
Anheuser-Busch Distributors, Miller/Coors distributors, and Coke/Pepsi/Dr. Pepper-7UP
Bottlers and (b) such additional Energy Drinks, whether marketed under the
Trademarks (as defined below) or otherwise, as HBC, Distributor and KO shall
agree from time to time by executing an amended Exhibit A.  The Products shall include all sizes of SKUs
including, without limitation, 3 oz., 8 oz., 15 oz., 16 oz., 16.9 oz., 23.5
oz., 24 oz. and 32 oz. SKUs. When used herein (i) the word “Territory”
means the territory identified in Exhibit B hereto, (ii) the
word “Distributor’s Accounts” means those accounts or classes of accounts
identified in Exhibit C hereto other than those reserved for HBC as
identified on Exhibit C, (iii) the word “Trademarks” means
those names and marks identified on Exhibit D hereto, and (iv) 
the words “Energy Drink/s” means any ***. 
All Exhibits referred to in this Agreement shall be deemed to be
incorporated into this Agreement.


 


c.             Coca-Cola
Ltd, a corporation organized and existing under the laws of Canada, with
principal offices at 3389 Steeles Avenue East, Suite 500, Toronto,
Ontario, M2H 3S8 – Canada (“CCL”) is willing to provide the services set forth
in Section 6.b of this Agreement, and Distributor wishes to appoint CCL to
perform such services with respect to the Products as part of Distributor’s
sale of Products in the Territory, with performance to commence as of the
Commencement Date.


 






***   Portions
hereof have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 

















 


2.             Appointment.


 


a.             With
effect from the Commencement Date, HBC appoints Distributor, and Distributor
accepts appointment, as a distributor of Products only to Distributor’s
Accounts within the Territory.  Such
appointment shall only be exclusive if and to the extent so designated on Exhibit C
hereto.  Such appointment shall exclude
any SKU/s deleted from distribution pursuant to Sections 13.b. or 13.f.
below.  Unless otherwise agreed in
writing by HBC, Distributor specifically covenants not to sell, market,
distribute, assign or otherwise transfer (collectively, “Transfer”) in any
manner any Products except to the Distributor’s Accounts which are set forth on
Exhibit C, within the Territory. 
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.  HBC
acknowledges that Distributor intends to appoint certain sub-distributors with
respect to certain specified portions of the Territory.  Distributor’s appointment of sub-distributors
shall be to supplement and augment but not to replace or substitute, wholly or
partially, any of Distributor’s obligations or any of Distributor’s resources,
performance capabilities, and/or ability to fully perform all of Distributor’s
obligations under this Agreement, including without limitation, as provided in Section 3
below, in the Territory.  Distributor
will remain liable for the actions, omissions and performance of all of
Distributor’s sub-distributors.


 


b.             Distributor
hereby agrees not to Transfer 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 for Transfer, or to persons or
entities with regard to whom Distributor has knowledge or reasonable belief
will distribute and/or sell the Products outside of the Territory, except that,
subject to all of the terms and conditions of this Agreement, Distributor may
Transfer Products to other bottlers or distributors designated by KO that are
authorized in writing by HBC for Transfer into such bottler’s or distributor’s
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 that are not 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 Transfer or
continue to purchase and/or Transfer any products, including Products, or use
the Trademarks other than with respect to products sold and delivered by HBC to
Distributor, and (iii) shall constitute a separate transaction for each
shipment of products actually delivered by HBC to Distributor and/or
sub-distributor(s), in 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 (including without limitation, consequential,
special or punitive damages), compensation or severance payments or any other
claims of whatsoever nature by 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 with regard to such matters.


 


d.             Distributor
has agreed to acquire certain distribution rights held by prior HBC
distributors (“Prior Distributor Rights”) for the Territory by paying an amount
which Distributor and HBC have agreed shall be calculated in accordance with
the formula set forth in Exhibit E hereto.  As soon as practicable after the Effective
Date, HBC shall calculate the estimated amount payable by Distributor in
accordance with the formula agreed to between Distributor and HBC as set forth
in Exhibit E hereto, which shall be calculated based upon the
estimated Sale Volume (as defined below) for the Territory for the period ended
December


 


2

















 


31,
2008 (the “Estimated Buy-Out Contribution”). 
No later than fifteen (15) days prior to the Commencement Date,
Distributor shall deliver to HBC an amount equal to the Estimated Buy-Out Contribution.  As soon as practicable after December 31,
2008, HBC shall determine the actual Sale Volume for the Territory for the
period ended December 31, 2008 in order to calculate the final amount due
by Distributor in accordance with the formula set forth in Exhibit E
(the “Final Buy-Out Contribution”). Distributor shall be and remain obligated
to pay to HBC any shortfall between the Final Buy-Out Contribution and the
amount received by HBC for the Estimated Buy-Out Contribution and HBC shall pay
to Distributor the amount by which the Estimated Buy-Out Contribution actually
received by HBC exceeds the amount of the Final Buy-Out Contribution. The
parties acknowledge and agree that in determining the Final Buy-Out
Contribution it will be necessary for HBC to make allocations and estimates of
the Sales Volumes of the Products based upon such information as may be made
available to it by prior HBC distributor. 
HBC agrees that in making any such allocations or estimates it shall be
required to and shall act reasonably and in good faith. HBC shall provide to
Distributor copies of the written records relied upon by HBC to reasonably
allocate, estimate and determine the Final Buy-Out Contribution, for review by
Distributor, and Distributor hereby agrees to maintain such information and
records in strict confidence. The Final Buy-Out Contribution paid by
Distributor to HBC shall be used by HBC to acquire or terminate the Prior
Distributor Rights and any shortfall necessary to accomplish that goal shall be
borne by HBC and any excess shall be paid to and/or retained by HBC.  “Sale Volume” means the aggregate number of
cases of Products sold and to be sold by any prior distributors and to be sold
by Distributor in the Territory or referenced portion thereof during the twelve
(12) month period ended on a referenced date. 
For the avoidance of doubt, HBC shall acquire or terminate the Prior
Distributor Rights and bear the deficiency, if any, between the amount of the
Final Buy-Out Contribution and the cost of acquiring or terminating the Prior
Distributor Rights, whether or not the Final Buy-Out Contribution is
sufficient.


 


e.             HBC
may from time to time designate additional territory (“Additional Territory”),
which HBC reasonably determines to be within such proximity to the Territory as
to make incorporation of the Additional Territory desirable.  If HBC gives Distributor written notice of
such designation of Additional Territory, Distributor shall use its
commercially reasonable good faith efforts to add the Additional Territory by
execution of an amendment of Exhibit B to this Agreement if
Distributor has other distribution activities in the Additional Territory.


 


f.              The
parties acknowledge that it is their current mutual intention that they will
consider in due course entering into a written agreement on mutually acceptable
terms to provide for the manufacture of certain Products in the Territory. This
subsection 2.f shall not be enforceable against either party unless and until
an enforceable agreement has been executed by both parties.


 


g.             With
effect from the Commencement Date, Distributor appoints CCL, and CCL accepts
appointment, as a provider of the services set forth in Section 6.b of
this Agreement with respect to the Products only to Distributor’s Accounts
within the Territory.


 


3.             Distributor’s
Duties.  Distributor shall:


 


a.             Use
commercially reasonable good faith efforts to aggressively promote, solicit and
push vigorously the wide distribution and sale of the Products to Distributor’s
Accounts in the Territory (except to accounts reserved for HBC pursuant to Exhibit C
and those National Accounts (as defined below) that are serviced directly by
HBC in accordance with Section 14). 
Distributor shall allocate and devote thereto at least such resources
and efforts as are proportional to the volume that Distributor’s sales of
Products in the Territory represent to the volume of Distributor’s sales of the
principal (Flagship) brand of Energy Drinks (including energy colas) of KO,
Distributor and their respective affiliates from time to time in the
Territory.  Without detracting from the
foregoing, the resources and efforts that Distributor shall allocate and devote
to the promotion, marketing and distribution of the Products shall in no event
be less than the resources and efforts Distributor allocates and devotes to the
promotion, marketing and distribution of all


 


3

















 


Energy Drinks (including
energy colas) of Distributor, KO, and their respective affiliates, unless to do
so (with respect to Distributor’s obligations under this sentence) would not be
commercially feasible based on the then-current sales volumes of the Products;


 


b.             Use
commercially reasonable good faith efforts to develop new business
opportunities for Products in Distributor’s Accounts in the Territory, and
shall allocate and devote thereto at least such resources and efforts as are
proportional to the volume that Distributor’s sales of Products in the
Territory represent to the volume of Distributor’s sales of the principal
(Flagship) brand of Energy Drinks (including energy colas) of KO, Distributor
and their respective affiliates from time to time in the Territory.  Without detracting from the foregoing, the
resources and efforts that Distributor shall allocate and devote to develop new
business opportunities for Products at early sales presentations and during the
new business development phase shall in no event be less than the resources and
efforts Distributor allocates and devotes to develop new business opportunities
for all Energy Drinks (including energy colas) of Distributor, KO, and their
respective affiliates at early sales presentations and during the new business
development phase;


 


c.             Use
commercially reasonable good faith efforts to manage all Distributor
sub-distributors throughout the Territory to gain system alignment to promote
the sale and distribution of Products;


 


d.             Secure
extensive in-store merchandising and optimal shelf positioning in Distributor’s
Accounts in the Territory with respect to Products, except for those National
Accounts serviced directly by HBC in accordance with Section 14 below;


 


e.             Perform
complete and efficient distribution functions to and in Distributor’s Accounts
throughout the Territory to the reasonable satisfaction of HBC;


 


f.              Fully
implement the Annual Business Plan (as defined and to be agreed upon from
time-to-time in accordance with Section 13.b. below), and use commercially
reasonable good faith efforts to achieve and maintain all of the objectives set
with respect thereto as contemplated in Section 13.b. below;


 


g.             Achieve
and maintain the Performance Targets (as defined and determined each calendar
year in accordance with Section 13.d. below);


 


h.             Permit
HBC representatives to work sales routes with Distributor’s salesmen in the
Territory, upon reasonable advance notice to Distributor;


 


i.              Achieve
optimum warm and cold space, position, prominence, and visibility of the
Products in all Distributor’s Accounts in the Territory, except for those
National Accounts serviced directly by HBC in accordance with Section 14
below;


 


j.              Promote
and maintain an efficient, viable and financially sound system of distribution
for the Products in Distributor’s Accounts throughout the Territory, except for
those National Accounts serviced directly by HBC in accordance with Section 14
below;


 


k.             Provide
the resources necessary for the sale, delivery, marketing, promotion and
servicing of the Products in Distributor’s Accounts within the Territory,
except for those National Accounts serviced directly by HBC in accordance with Section 14
below;


 


l.              Achieve
and maintain Minimum Distribution Levels for the Products in Distributor’s
Accounts designated on Exhibit C as exclusive to Distributor as
agreed upon or determined in accordance with Section 13.c. below from time
to time;


 


4

















 


m.            Satisfy
its obligations specified in Sections 10 and 13 below;


 


n.             Provide
such sales and marketing information as may be reasonably requested by HBC;


 


o.             Distributor
shall comply with any laws and regulations of the Territory and be responsible
for ensuring that all Product deliveries by it within the Territory comply with
all health, safety, environmental and other standards, specifications and other
requirements imposed by law, regulation or order in the Territory, and
applicable to the Products;


 


p.             Assign
such article numbers as may be utilized by Distributor from time to time for
each Product and Product package to track sales information by its sales data
collection system and its bottlers;


 


q.             Cause
all of its promotional and marketing efforts and/or activities under this
Agreement to be devoted solely to the Products. 
Unless approved by HBC’s prior written consent, it shall be a violation
of this subsection for (1) Products to be placed by Distributor in
equipment branded with the trademark of another energy drink, but not if
branded with another non-energy beverage trademark; (2) other energy
drinks to be placed by Distributor in equipment branded for Products; (3) sales
materials created by Distributor to include trademarks of Products and other
energy drinks; (4) Distributor’s promotional pricing and/or promotional
and/or marketing activities and/or promotional and/or marketing programs to
apply to all or any Products in combination with all or any other energy
products sold by Distributor.  It is not
a violation of this subsection for Products to be ordered, sold, delivered, or
merchandised by the same person or in the same vehicles; and


 


r.              Both
parties will work together where possible in obtaining (at HBC’s expense) all
import licenses and governmental approvals which may be necessary to permit the
sale of Products in the Territory and which have not been obtained by HBC prior
to the Effective Date, and provide reasonable assistance to each other for the
renewal or amendment of any licenses or approvals which have been obtained as
of the Effective Date.  Distributor shall
also comply with all registration requirements in the Territory, and comply with
any and all governmental laws, regulations, and orders which may be applicable
to Distributor by reason of its execution of this Agreement, including any and
all laws, regulations or orders which govern or affect the ordering, export,
shipment, import, sale, delivery or redelivery of Products in the
Territory.  Distributor shall also notify
HBC of the existence and content of any provision of law which to Distributor’s
knowledge conflicts with any provision of this Agreement at the time of its
execution or thereafter.


 


4.             Prices.  The prices of Products shall be as set forth
in HBC’s then current Canadian price list as the same may be changed from time
to time by HBC upon  *** prior written
notice to Distributor.


 


5.             Orders.  All purchase orders for Products shall be
transmitted in writing or electronically, shall specify a reasonable date and
time for delivery with a lead time of at least ten (10) days and shall be
subject to acceptance by HBC in HBC’s reasonable discretion.  If HBC is unable to accept an order for any
reason, then HBC will use commercially reasonable efforts to equitably allocate
available Products to fill orders from its distributors and customers,
including Distributor.  In the event of
any conflict or inconsistency between the terms of this Agreement and any
purchase order, the terms of this Agreement shall govern.  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.


 






*** Portions
hereof have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


5

















 


6.             Payment.


 


a.             Distributor
shall promptly pay the prices of Products in full (without deduction or set off
for any reason) no later than  *** from
date of invoice unless HBC otherwise agrees in writing.  Distributor and HBC shall use a mutually
agreeable method of electronic settlement of accounts that Distributor
reasonably approves which may include ACH or Xign, Distributor’s current
electronic invoice presentment system. 
If Distributor is delinquent in payment upon presentation of invoice and
remains delinquent for seven (7) days after written notice calling upon
Distributor to pay, Distributor shall reimburse HBC for any costs and expenses
incurred by HBC in collecting such delinquent amounts, including, without
limitation, legal fees and costs including fees of collection agencies, and
interest computed at the  ***
percent  *** per month or part thereof
from the due date(s) or the maximum legally permissible.


 


b.             CCL
shall facilitate and coordinate HBC and Distributor’s entering into
distribution arrangements, and after such arrangements have been entered into,
to provide assistance with the collection and analyses of sales and marketing
information concerning the Products, and provide other assistance.  In consideration thereof, Distributor agrees
to pay to CCL a fee calculated in accordance with the formula set forth on
attached Exhibit F (the “CCL Facilitation Fee”).  The CCL Facilitation Fee will be payable by
Distributor to CCL in accordance with the terms of the applicable CCL
invoice.  HBC shall have no
responsibility or liability with respect to the collection or payment of the
CCL Facilitation Fee.


 


7.             Title.  Title to the Products shall pass to
Distributor upon delivery of the Products to Distributor.


 


8.             Forecasts
and Delivery.


 


a.             Distributor
shall provide HBC with  *** forecasts
describing the volume of each SKU of Products that Distributor projects will be
ordered during each  *** period during
the Term (as defined below) of this Agreement. 
Distributor shall submit each updated forecast monthly in a format
reasonably acceptable to HBC no later than the first day of each month during
the Term.


 


b.             Unless
otherwise agreed in writing by the parties to this Agreement, the Products will
be tendered by HBC for delivery to Distributor, including Distributor’s hubs in
Canada as may be mutually agreed upon, in full truckload quantities of
particular Product lines and extensions but without combining different Product
lines in the same truckloads.  For the
avoidance of doubt, Monster and its extensions and Java Monster and its
extensions are different particular Product lines.  Subject to Distributor providing HBC
forecasts in accordance with Section 8.a. above, HBC agrees to (i) use
commercially reasonable good faith efforts to deliver Products to Distributor
within  ***, in the case of Monster and
Monster Reduced Carb Products sold in 24-pack/16 oz. cases, and within  *** in the case of all other Products, of HBC’s
receipt of purchase orders for Products in compliance with Sections 5 and 8.a.
above, and (ii) deliver Products to Distributor with at least  *** of shelf life remaining at the time of
delivery.  Notwithstanding the foregoing,
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, except only for fines, penalties and assessments
imposed by Distributor’s customers and actually paid by Distributor which arise
solely and directly as a result of HBC’s failure to comply with its obligations
under this Section 8.


 


c.             HBC
shall use commercially reasonable means to cause packing and packaging to
comply with all applicable laws in the Territory.


 


9.             Trademarks.


 


a.             Distributor
acknowledges HBC’s exclusive right, title, and interest in and to the
Trademarks and trade names, whether or not registered, patents and patent
applications (“Patents”), copyrights (“Copyrights”) and trade secrets and
know-how (“Know-How”) which HBC may have at any time


 






***   Portions hereof have been
omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment in accordance with Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


6

















 


created, adopted, used,
registered, or been issued in the United States of America or in any other
location in connection with HBC’s business or the Products and Distributor
shall not do, or cause or permit to be done, any acts or things contesting or
in any way impairing or tending to impair any portion of HBC’s right, title,
and interest in and to the Trademarks, trade names, Patents, Copyrights, and
Know-How.


 


b.             Distributor
shall not use any trademark, name, brand name, logo or other production
designation or symbol in connection with Products other than the
Trademarks.  Distributor acknowledges
that it has no right or interest in the Trademarks (except as expressly
permitted hereunder) and that any use by Distributor of the Trademarks will
inure solely to HBC’s benefit. 
Distributor may only use the Trademarks in strict accordance with HBC’s
policies and instructions, and HBC reserves the right, from time to time and at
any time, at its discretion, to modify such policies and instructions then in
effect.


 


c.             Any
proposed use by Distributor of the Trademarks (to the extent that it either has
not been previously approved by HBC in writing or differs materially from a use
previously approved by HBC in writing) shall be subject to the prior written
consent of HBC, which HBC may withhold in its sole and absolute
discretion.  Distributor shall submit to
HBC in writing each different proposed use of the Trademarks in any medium.


 


d.             Distributor
shall not at any time alter the Trademarks or the packaging of Products, use
the 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 the Trademarks.  Distributor shall not cause or permit its
business name to include any of the Trademarks or its business to be operated
in a manner which is substantially associated with any of the Trademarks.


 


e.             In
advertising, promotions or in any other manner so as to identify Products,
Distributor shall clearly indicate HBC’s ownership of the Trademarks.  Distributor further agrees that before
distributing or publishing any sales literature, promotional or descriptive
materials, HBC shall have the right, upon request, to inspect, edit and approve
such materials which illustrate, describe or discuss the Products.  Distributor shall comply with any Trademark
usage guidelines that HBC provides to it in writing.


 


f.              Upon
the termination of this Agreement, Distributor shall cease and desist from any
use of the Trademarks and any names, marks, logos or symbols similar thereto
and the use of any Patents, Copyrights and Know-How.


 


g.             Distributor
shall (i) notify HBC of any actual or suspected misuse or infringement of
any Trademark, brand name, logo or other production designation or symbol in
the Territory, (ii) at HBC’s expense and upon HBC’s request, assist in
such legal proceedings as HBC will deem necessary for the safeguard of any
Trademark, brand name, logo or other production designation or symbol in the
Territory, and execute and deliver in accordance with HBC’s request such
documents and instruments as may be necessary or appropriate in the conduct of
such proceedings, and (iii) at HBC’s expense, assist HBC in the registration
and/or renewal of registration of any Trademark, brand name, logo or other
production designation or symbol in the Territory as HBC may determine to be
necessary or desirable, and execute such documents and instruments as may be
necessary to register or to apply for the registration (or registration
renewal) of such Trademark, brand name, logo or other production designation or
symbol.


 


10.           Promotion
and Trade Marketing of Products.  Distributor shall be responsible for
promotion and “trade” marketing of the Products to Distributor’s Accounts
within the Territory.  Distributor shall
aggressively distribute and encourage the utilization of merchandising aids and
promotional materials in all Distributor’s Accounts throughout the
Territory.  Without in any way detracting
from the foregoing, Distributor shall reasonably participate in and diligently
implement all “trade” marketing and promotional programs that are mutually
agreed upon by HBC and Distributor from time to time.  Distributor acknowledges that (a) HBC
has no obligation to market and promote the Products, and (b) HBC makes
no,


 


7

















 


and hereby disclaims
any, express or implied warranty, representation, or covenant relating to or in
connection with HBC’s marketing and promotional activities including any Global
Branding and Marketing activities (as defined in Section 13.a. below),
including without limitation, as to the value, performance, extent,
effectiveness, quantity, quality, success or results of any such activities or
the lack thereof.  Except as expressly
provided in Section 19 below, Distributor shall have no claim against HBC
and its affiliates and hereby releases HBC and its affiliates from all and any
claims by, and/or liability to, Distributor of any nature for its failure to
market and promote, or adequately market and promote, the Products or arising
from or relating to or in connection with any Global Branding and Marketing
activities procured, provided or performed by HBC or HBC’s failure to procure,
provide or perform such activities.


 


11.           Term.  Unless terminated by either party pursuant to
the terms of this Agreement, the initial term of this Agreement shall commence
on the Effective Date and shall end on the twentieth (20th) anniversary of the
Commencement Date or upon termination of the Hansen Beverage Company
Distribution Agreement between HBC and Coca-Cola Enterprises Inc., whichever
occurs first (the “Initial Term”).  After
the Initial Term, this Agreement shall, subject to being terminated by either
party pursuant to the terms of this Agreement, continue and remain in effect,
unless either party gives written notice of non-renewal to the other party at
least ninety (90) days prior to the end of the Initial Term or any subsequent
anniversary of the Commencement Date, as the case may be (collectively, the “Term”).  A “Contract Year” means any calendar year
during the Term and the period from the Commencement Date until the close of
business on December 31st of the calendar year in which the Commencement
Date falls.


 


12.           Termination.


 


a.             Termination
for Cause.


 


(i)            Termination
By Either Party.  Without prejudice to its other rights and
remedies under this Agreement and those rights and remedies otherwise available
in equity or at law, either party may terminate this Agreement on the
occurrence of one or more of the following:


 


(A)          Breach.  The other party’s material breach of a
provision of this Agreement and failure to cure such breach within thirty (30)
days after receiving written notice describing such breach in reasonable detail
from the non-breaching party; provided, however, if such breach is of a nature
that it can not reasonably be cured within thirty (30) days, then the breaching
party shall have an additional thirty (30) day period to cure such breach,
providing it immediately commences, and thereafter diligently prosecutes, in
good faith, its best efforts to cure such breach.  In the event that either HBC or Distributor
exercises its right to terminate this Agreement in accordance with this Section 12.a.(i)(A),
the breaching party shall be obligated to pay to the other party a severance
payment (the “Breach Severance Payment”) in the amount calculated as
follows:  the Distributor’s “average
gross profit per case” (as defined below) multiplied by the number of cases of
Products sold by the Distributor during the most recently completed twelve (12)
month period ended on the last day of the month preceding the month in which
this Agreement is terminated.  The
Distributor’s “average gross profit per case” shall mean the Distributor’s
actual selling price less (i) promotion allowances, discounts, free cases
and allowance programs, and (ii) Distributor’s laid in cost of the
Products. The computation of the Distributor’s “average gross profit per case”
shall exclude the CCL Facilitation Fee; provided that if this Agreement is
terminated by Distributor within three (3) years of the Effective Date as
a result of HBC’s breach, the severance payment shall be equal to the Breach
Severance Payment or the Final Buy-Out Contribution (as defined above),
whichever is greater.


 


(B)           Insolvency.  The other party (a) makes any general
arrangement or assignment for the benefit of creditors, (b) becomes
bankrupt, insolvent or a “debtor” as defined in 11 U.S.C. § 101, or any
successor statute (unless such petition is dismissed within sixty (60) days
after its original filing), (c) has appointed a trustee or receiver to
take possession of substantially all of such party’s assets or interest in this
Agreement (unless possession is restored to such party within sixty (60) days
after such taking), or


 


8

















 


(d) has substantially
all of such party’s assets or interest in this Agreement (unless such
attachment, execution or judicial seizure is discharged within sixty (60) days
after such attachment, execution or judicial seizure) attached, executed, or
judicially seized.


 


(C)           Agreement.  Mutual written agreement of the parties.


 


(ii)           Termination
by HBC.  HBC may terminate this Agreement at any time:


 


(A) Upon written
notice, and such termination will be effective immediately upon Distributor’s
receipt of such notice, if (x) Distributor sells, assigns, delegates or
transfers any of its rights and obligations under this Agreement without having
obtained HBC’s prior written consent thereto (which consent may be withheld in
HBC’s sole discretion), other than as a result of a material change in the
control of Distributor or sale by Distributor of all or substantially all of
its assets approved as provided in clause (y) below of this Section 12.a.(ii)(A),
except if such assignment, sale, delegation or transfer is to KO or (y) there
is any material change in the control of Distributor or Distributor sells all
or substantially all of its assets, without the prior written consent of HBC,
which HBC shall not be entitled to unreasonably withhold, unless such control
or assets are acquired by KO.


 


(B)           In
the event that Distributor fails to achieve the Performance Targets (defined and
determined from time to time in accordance with the provisions of Section 13.d.
below) for any Contract Year, provided HBC has delivered to Distributor written
notice of the failure to achieve a Performance Target and Distributor has
failed to remedy the deficiency within ninety (90) days of Distributor’s
receipt of such notice, as determined by the Reports (as defined in Section 13.d.(i))
for the most recent four (4) week period immediately preceding the
expiration of such ninety (90) day notice period.


 


(C)           If
all or any of the Concurrent Agreements (as defined below) are terminated by
Distributor without cause or terminated by HBC or MEL, as the case may be, as a
result of a breach by Distributor then HBC shall have the option to terminate
this Agreement, which option may be exercised within one hundred twenty (120)
days of the occurrence of such termination by written notice by HBC to
Distributor.  Any such termination shall
be effective upon Distributor’s receipt of HBC’s written notice of termination,
and HBC shall not be liable to Distributor or otherwise obligated to pay to
Distributor any severance payment or other amount by reason of such termination
for compensation, reimbursement or damages of whatsoever nature including, for (i) loss
of prospective compensation or earnings, (ii) goodwill or loss thereof, or
(iii) expenditures, investments, leases or any type of commitment made in
connection with the business of Distributor or in reliance on the existence of
this Agreement. HBC’s right to terminate this Agreement under this Section 12.a.(ii)(C) shall
be independent of any other rights or remedies of HBC under this
Agreement.  The “Concurrent Agreements”
mean (i) the Monster Energy International Distribution Agreement dated
concurrently herewith between Tauranga Ltd., an Irish company (“MEL”) and
Coca-Cola Enterprises Inc., a Delaware corporation (“CCE”), (ii) the
Monster Energy Belgian Distribution Agreement dated concurrently herewith
between MEL and CCE, and (iii) the Monster Energy Distribution Agreement
dated concurrently herewith between HBC and CCE.


 


(iii)          Termination
by Distributor. Distributor may
terminate this Agreement at any time:


 


(A)          If
HBC fails to deliver to Distributor at least 
***percent  *** of the aggregate
volume of all Products ordered by Distributor in accordance with Sections 5 and
8 above over a continuous period of ninety (90) days after the initial due
date/s for delivery in accordance with Section 8.b. above, provided
Distributor has delivered to HBC written notice of such failure and HBC has
failed to remedy such deficiency within thirty (30) days of HBC’s receipt of
such notice; and


 






***   Portions hereof have been
omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment in accordance with Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


9

















 


(B)           If
all or any of the Concurrent Agreements are terminated by HBC or MEL, as the
case may be, without cause or terminated by Distributor as a result of HBC’s or
MEL’s breach, as the case may be, then Distributor shall have the option to
terminate this Agreement, which option may be exercised within one hundred
twenty (120) days of the occurrence of such termination by written notice by
Distributor to HBC.  Any such termination
shall be effective upon HBC’s receipt of Distributor’s written notice of
termination, and Distributor shall not be liable to HBC or otherwise obligated
to pay to HBC any severance payment or other amount by reason of such
termination for compensation, reimbursement, or damages of whatsoever nature
including, for (i) loss of prospective compensation or earnings, (ii) goodwill
or loss thereof, or (iii) expenditures, investments, leases or any type of
commitment made in connection with the business of HBC or in reliance on the
existence of this Agreement.  Distributor’s
right to terminate this Agreement under this Section 12.a.(iii)(B) shall
be independent of any other rights or remedies of Distributor under this
Agreement.


 


b.             Complete
or Partial Termination By HBC Without Cause and Severance Payment.


 


(i)            HBC,
or any successor to HBC, shall have the right at any time, upon sixty (60) days
written notice (or such longer period as HBC may determine, in its sole
discretion) to terminate, without cause or for no reason (A) this
Agreement in its entirety (a “Complete Termination”), and/or (B) Distributor’s
right to sell any one or more of the brands of Products identified in Exhibit A
hereto, as amended from time to time (a “Partial Product Termination”).


 


(ii)           In
the event of a Complete Termination or Partial Product Termination, HBC or its
successor, as the case may be, shall pay to Distributor a severance payment
calculated with respect to the Products which are the subject of the
termination (the “Product Severance Payment”), calculated as follows: the
Distributor’s “average gross profit per case” (as defined above) per Product
line multiplied by the number of cases of such 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 Complete Termination, or
Partial Product Termination, as the case may be, occurs.  The Product Severance Payment shall be paid
by HBC to Distributor within thirty (30) days of the later of (A) the date
of the applicable termination, and (B) HBC’s receipt of all information
reasonably necessary to support computation of the Product Severance Payment,
in a form and substance satisfactory to HBC.  
The computation of the Distributor’s “average gross profit per case”
shall exclude the CCL Facilitation Fee.


 


(iii)          Proviso.  If this Agreement is terminated prior to the
third anniversary of the Commencement Date and if a Product Severance Payment
is payable under Section 12.b.(ii) above, then the Product Severance
Payment shall, subject to the last sentence of this Proviso, be no less than (A) 
*** percent  *** of the “Final
Buy-Out Contribution” (as defined above) if such termination occurs within six (6) months
of the Commencement Date, (B) *** percent 
*** of the Final Buy-Out Contribution if such termination occurs after
six (6) months of the Commencement Date but prior to the first anniversary
of the Commencement Date, (C) *** percent 
*** of the Final Buy-Out Contribution if such termination occurs after
the first anniversary of the Commencement Date, but prior to the second
anniversary of the Commencement Date, and (D) the Final Buy-Out
Contribution if such termination occurs after the second anniversary of the
Commencement Date, but prior to the third anniversary of the Commencement
Date.  If such termination occurs after
the third anniversary of the Commencement Date, the provisions of this Proviso
shall fall away and be of no further force and effect and any Product Severance
Payment that may be payable by HBC or its successor to Distributor shall not be
increased or adjusted in any way pursuant to the provisions of this Proviso.


 


For purposes of
computing the Product Severance Payment under this Section 12.b.(iii), in
the event of a Partial Product Termination, the Final Buy-Out Contribution
shall be multiplied by a fraction, the numerator of which shall be the number
of cases of Products terminated by such Partial Product Termination sold by
Distributor during the twelve (12) month period ending on the last day of the
month


 






***   Portions hereof have been
omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment in accordance with Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


10
















 


immediately preceding the
month in which the Partial Product Termination occurs and the denominator of
which shall be the total number of cases of Products sold by Distributor for
the same period.


 


c.            Distributor
Termination Without Cause and Severance Payment.


 


(i)          Distributor, or any successor to
Distributor, shall have the right at any time to terminate this Agreement,
without cause or for no reason, upon two (2) years written notice to HBC
if such notice is given prior to the *** of the Commencement Date, or upon one (1) year’s
written notice if such notice is given after the *** of the Commencement Date.


 


(ii)         If Distributor exercises its right to
terminate this Agreement in accordance with Section 12.c.(i) above,
Distributor shall pay to HBC a severance payment (the “Distributor Severance
Payment”) in an amount equal to Distributor’s “average gross profit per case”
(as defined above) multiplied by the number of cases of Products sold by the
Distributor during the most recently completed twelve (12) month period ended
on the last day of the month preceding the month in which this Agreement is
terminated. The computation of the Distributor’s “average gross profit per case”
shall exclude the CCL Facilitation Fee. If, such notice is given by Distributor
and thereafter, prior to the  *** of the
Commencement Date, this Agreement is otherwise terminated as a result of
Distributor’s breach of this Agreement, including without limitation, arising
from the elimination of substantially all of HBC’s benefits under this
Agreement by Distributor or Distributor’s repudiation or abandonment of this
Agreement (collectively, a “Termination Breach”), within the two (2) year
notice period, then, without prejudice to any of HBC’s other rights and/or
remedies, the Distributor Severance Payment shall be trebled.  If after the 
*** of the Commencement Date but prior to the *** of the Commencement
Date termination of this Agreement occurs due to a Termination Breach within
the two (2) year notice period then, without prejudice to any of HBC’s
other rights and/or remedies, the Distributor Severance Payment shall be
doubled.  If, after the  *** of the Commencement Date termination of
this Agreement occurs due to a Termination Breach within the one (1) year
notice period, then, without prejudice to any of HBC’s other rights and/or
remedies, the Distributor Severance Payment shall be  ***.


 


(iii)        At any time, and from time to time after
Distributor gives HBC written notice of termination, and without prejudice to,
or in any way detracting from, Distributor’s obligation to pay the Distributor
Severance Payment, HBC may elect to exercise its right to terminate this
Agreement wholly or partially with respect to any part of the Territory or one
or more of the Products prior to the expiration of any notice period, in which
event HBC shall not be liable to Distributor by reason of such termination for
compensation, reimbursement, or damages of whatsoever nature including, for (1) loss
of prospective compensation or earnings, (2) goodwill or loss thereof, or (3) expenditures,
investments, leases or any type of commitment made in connection with the
business of Distributor or in reliance on the existence of this Agreement.


 


d.             Sole
Remedy.


 


(i)            The Breach Severance Payment and/or
Product Severance Payment payable by HBC to Distributor pursuant to the
provisions of Section 12.a.(i)(A) and/or Section 12.b.(ii) above
respectively, if any, and HBC’s repurchase of Distributor’s inventory of
Products and advertising materials pursuant to this Agreement, or Distributor’s
right to sell such inventory if not so repurchased by HBC, shall constitute
Distributor’s sole and exclusive remedy for the termination or non-renewal of
this Agreement, including, without limitation, in the case of a breach and
shall be in lieu of all other claims that Distributor may have against HBC as a
result thereof.  Without in any way
detracting from or limiting the provisions of Section 12.e.(iii) below
and, in addition thereto, under no circumstances shall HBC be liable to Distributor
by reason of the termination or non-renewal of this Agreement for compensation,
reimbursement or damages of whatsoever nature including, without limitation,
for (A) loss of prospective compensation or


 






***
Portions hereof have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.


 


11

















 


earnings, (B) goodwill
or loss thereof, or (C) expenditures, investments, leases or any type of
commitment made in connection with the business of Distributor or in reliance
on the existence of this Agreement.


 


(ii)           The Breach Severance Payment and/or
the Distributor Severance Payment payable by Distributor to HBC pursuant to the
provisions of Section 12.a.(i)A. or Section 12.c.(ii) above
respectively, if any, and HBC’s repurchase of Distributor’s inventory of
Products and advertising materials pursuant to Section 12.e.(iv) below,
or Distributor’s right to sell such inventory if not so repurchased by HBC,
shall constitute HBC’s sole and exclusive remedy for the termination or
non-renewal of this Agreement, including, without limitation, in the case of
a  breach and shall be in lieu of all
other claims that HBC may have against Distributor as a result thereof.  Without in any way detracting from or
limiting the provisions of Section 12.e.(iii) below and, in addition
thereto, under no circumstances shall Distributor be liable to HBC by reason of
the termination or non-renewal of this Agreement for compensation,
reimbursement or damages of whatsoever nature including, without limitation,
for (A) loss of prospective compensation or earnings, (B) goodwill or
loss thereof, or (C) expenditures, investments, leases or any type of
commitment made in connection with the business of HBC or in reliance on the
existence of this Agreement.


 


e.             Other
Terms Pertaining to Termination.  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
affected Products accepted but remaining unfilled as of the date of
termination;


 


(ii)           all
amounts payable by Distributor to HBC or by HBC to Distributor shall be
accelerated and shall immediately become due unless such termination results
from the other’s breach of this Agreement;


 


(iii)          except
for the sole remedy provisions in Sections 12.d.(i) and (ii), 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; and


 


(iv)          HBC
and Distributor shall each have the option, exercisable upon written notice to
the other within thirty (30) days after the date of termination hereof, to
cause HBC to repurchase all affected Products in Distributor’s inventory and
current advertising materials (providing such Products and advertising
materials are in saleable condition) at the prices paid or payable for such
Products by Distributor (less any freight and insurance charges), F.O.B.,
Distributor’s premises.


 


(v)           Any
Breach Severance Payment, Product Severance Payment and/or Distributor
Severance Payment, and any applicable multiple, percentage or variation thereof
(each, for purposes of this Section 12e(v), a “Severance Payment”) payable
in accordance with this Agreement by either HBC or Distributor in the event of
termination of this Agreement shall constitute reasonable liquidated damages
and is not intended as a forfeiture or penalty. 
HBC and Distributor agree that it would be impractical and extremely
difficult to estimate the total detriment suffered by either party as a result
of termination of this Agreement pursuant to this Section 12, and that
under the circumstances existing as of the Effective Date, the applicable
Severance Payment represents a reasonable estimate of the damages which either
HBC or Distributor will incur as a result of such applicable termination.  Therefore, HBC and Distributor agree that a
reasonable estimate of the total detriment that either party would suffer in the
event


 


12

















 


of termination of this
Agreement pursuant to this Section 12 is an amount equal to the applicable
Severance Payment.  The foregoing
provision shall not waive or affect either party’s indemnity obligations or the
parties’ respective rights to enforce those indemnity obligations under this
Agreement, or waive or affect either party’s obligations with respect to any
other provision of this Agreement which by its terms survives the termination
of this Agreement.


 


f.              Continued
Supply of Products After Termination.  In the event HBC continues to supply Products
to Distributor for any reason following the termination of this Agreement,
Distributor acknowledges and agrees 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
Distributor’s 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.


 


g.             Distributor’s
Obligations After Notice of Termination.


 


(i)            During any period
after either party gives the other notice of termination of this Agreement and
until actual termination of this Agreement, Distributor shall (A) continue
to perform of all of Distributor’s obligations under this Agreement, including
without limitation, all of Distributor’s obligations under Section 3
above, (B) not cause or permit the Products or the Trademarks to be
prejudiced in any manner, (C) not eliminate, reduce or replace the
listings, shelf space, positioning and/or other benefits enjoyed by the
Products, and (D) generally cooperate with HBC in relation to the
transition to any new distributor appointed by HBC for the Territory.


 


(ii)           For a period of thirty (30) days
after termination of this Agreement for any reason, Distributor shall not
tortiously interfere with any listings, shelf space, or positioning for the
Products.


 


13.           Annual
Business Plan; Minimum Distribution Levels; Promotion.


 


a.             During
the Term, HBC shall have primary responsibility for the overall global branding
and positioning of the Products, as well as brand and image marketing for the
Products, in such form and manner and of such nature and to such extent as may
be determined by HBC in its sole and absolute discretion from time to time (“Global
Branding and Marketing”).  Distributor
acknowledges and agrees that HBC makes no express or implied warranty,
representation or covenant relating to or in connection with any Global
Branding and Marketing activities, including without limitation, as to the
value, performance, extent, effectiveness, quantity, quality, success or
results of any such activities or the lack thereof.  Except as set forth in Section 19 below,
Distributor shall not have any claim against HBC and its affiliates and hereby
releases HBC and its affiliates from all and any claims by, and liability to,
Distributor of any nature for its failure to market and promote, or adequately
market and promote, the Products or arising from or relating to or in
connection with any Global Branding and Marketing activities procured, provided
or performed by HBC or HBC’s failure to procure, provide or perform such
activities.


 


b.             Not
less than sixty (60) days before the end of each Contract Year, HBC and
Distributor shall mutually review the conditions of the marketplace,
Distributor’s efforts to achieve sales and its results, including year over
year performance, as well as a proposed annual sales, promotion, and trade
marketing plan (“Annual Business Plan”) for the next Contract Year prepared by
Distributor.  Such review shall include
discussion on marketing efforts and proposed programs to be implemented to
improve the distribution and/or sales velocity of the very lowest selling
(measured by sales velocity) SKU/s of Products, if appropriate, and/or the
possible deletion from distribution, if appropriate, of the very lowest selling


 


13

















 


(measured by sales
velocity) SKU/s of Products but in accordance with and subject to the
provisions of Section 13.f. below. 
Such Annual Business Plan shall cover such matters as may be appropriate
including specific account placement performance objectives, merchandising
goals, specific account and channel objectives for specified distribution
channels, distribution goals, a sales and marketing spending plan and a
strategy for maximizing sales and growth of market share.  Additionally, if the Territory has an ethnic
market or concentration, the Annual Business Plan shall address such specific
ethnic segments, including retail promotions, point-of-sale allocations and
special events for ethnic segments.  The
Annual Business Plan shall not detract from the provisions of Section 10
above.  Distributor shall fully implement
such Annual Business Plan in the following Year.


 


c.             Not
less than sixty (60) days before the end of the then-current Contract Year, HBC
and Distributor shall mutually agree, in writing, on the minimum distribution
levels to be achieved and maintained by Distributor for the Products throughout
the next Contract Year (the “Minimum Distribution Levels”).  Should the parties have failed, for
whatsoever reason, to mutually agree upon the Minimum Distribution Levels to be
achieved and maintained by Distributor for the Products throughout the next
Contract Year, the same shall be determined by reference to the process
described in Section 13.d below. 
The parties shall perform all of their respective obligations under this
Section except that Distributor shall not be obligated to achieve and
maintain the Minimum Distribution Levels until the expiration of the six (6) month
period immediately following the Commencement Date of this Agreement.


 


d.             HBC
and Distributor shall also agree to performance targets to be achieved and
maintained by Distributor for the forthcoming calendar year of this Agreement
(collectively, the “Performance Targets”). 
The Performance Target for the 2008 calendar year will be to integrate
Products into the Distributor distribution system and within a reasonable time
to improve the distribution levels and quality thereof and extent of SKU’s in
distribution in all Distributor’s Accounts within the Territory above existing
levels at the commencement of this Agreement. 
In years subsequent to 2008 Performance Targets shall consist of
executional measures such as distribution levels, quality of distribution,
extent of SKU’s in distribution, displays and shelf space and positioning on
shelves and in coolers, as mutually agreed. 
For the avoidance of doubt, neither Minimum Distribution Levels nor Performance
Targets will include volume requirements.


 


If the parties are unable to agree to the
Performance Targets for any calendar year commencing with the 2009 calendar
year, prior to the commencement of each such calendar year, then the
Performance Targets for such year shall be as follows:


 


(i)            the Minimum Distribution Levels that
shall be required to be achieved and maintained on average during the year for
the Monster Energy brand shall be not less than the national average
distribution levels of the leading energy brand within the Territory measured
at the commencement of each applicable year, which shall be primarily
determined with reference to the Nielsen reports (Scantrack) or IRI (Infoscan)
or equivalent reports (the “Reports”). 
If the Monster Energy brand is, during such year, the leading energy
brand within the Territory, then such Minimum Distribution Levels shall at a
minimum be not less than the national average distribution levels of the second
leading energy brand within the Territory measured at the commencement of each
applicable year;


 


(ii)  the Minimum
Distribution Levels that shall be required to be achieved and maintained for
Products other than Monster Energy brand, shall be commercially reasonable
levels from time to time in light of the distribution levels and velocities of
comparable products in the Territory and the distribution levels and velocities
achieved by Distributor and/or its sub-distributors with regard to Distributor’s
other energy brands at the time;


 


(iii)  a commercially reasonable representation of all SKU’s of
Products shall be required to be in distribution throughout the year in
reasonable positioning on shelves, which shall


 


14

















 


take into account
retailer willingness to sell all of the SKU’s of Products, shelf space
limitations and other commercially reasonable factors that may be applicable in
the market; and


 


e.             The
Minimum Distribution Levels for the Products that shall be required to be
achieved and maintained by Distributor for the Products shall be reduced to the
extent only that actual distribution levels are eroded as a direct result of (A) HBC’s
failure to deliver Products in accordance with this Agreement or (B) HBC’s
failure to obtain the listing of a Product SKU in a retail chain for which HBC
and Distributor have agreed in writing that HBC is to be solely responsible, or
(C) HBC’s failure to contribute its agreed share of the parties funding
obligation as set forth in Exhibit G.


 


f.              The
parties agree to periodically meet in order to discuss performance of the
lowest selling SKU/s of Products and to delete from distribution in the
Territory any SKU/s the parties mutually agree in writing, provided that HBC
will not unreasonably withhold its approval to the deletion of any applicable
SKU/s.  HBC may withhold its approval to
deletion of any SKU/s if any applicable SKU/s has/have sufficient sales
velocity or is/are capable of delivering sufficient sales velocity in any one
or more of Distributor’s Accounts or any one or more regions, as the case may
be, to make such SKU/s economically viable to continue in distribution in such
one or more of Distributor’s Accounts or in any one or more regions, as the
case may be.  Notwithstanding the
foregoing, unless mutually agreed in writing, in no event shall more than  *** percent 
*** of the total number of SKU’s be deleted from distribution in any
rolling  *** period.


 


g.             Promotional
activities shall be regulated as follows:


 


(i)  The estimated
costs of promotional activities shall be allocated equally between HBC and
Distributor thirty (30) days prior to the commencement of a calendar year on a
cost per-case basis of Products.


 


(ii)  The
promotional activities costs are to be shared between Distributor and HBC as
set forth in Exhibit G.  The
parties agree that the costs for the Promotional Activities shall be reconciled
each quarter and that the estimate for the costs of Promotional Activities in
the subsequent quarter may be adjusted provided there is mutual agreement.


 


(iii)  HBC and
Distributor shall periodically meet and may mutually agree to further programs
and campaigns not included in the Promotional Activities.


 


(iv)  Distributor
shall continue its business in the ordinary course including the provision,
utilization, and maintenance of coolers, other refrigeration equipment and
vending machines.  Distributor shall be
responsible for creating marketing materials for submission to HBC for its
final written approval.  Distributor
shall not use marketing materials unless approved by HBC in writing; provided
that if HBC does not notify Distributor that it objects to any suggested
marketing materials within fifteen (15) days after receipt of such materials
from Distributor, HBC shall be deemed to have approved such suggested marketing
materials.


 


14.           National
Accounts.


 


a.            Distributor and its sub-distributors
shall have the primary relationship with retail and other customers throughout
the Territory and shall be responsible for negotiating the terms of sale of the
Products within the Territory; provided that without detracting therefrom HBC
shall retain the right to provide input to Distributor and its sub-distributors
respecting sales strategy and other matters as well as to provide sales,
promotional and merchandising support and programs to retail and other
customers as well as the right to meet directly with and make sales
presentations to retail and other customers within the Territory as may be
appropriate from time to time; and provided further that HBC will advise Distributor
of such


 






***
Portions hereof have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.


 


15

















 


meetings beforehand to the extent practicable and Distributor shall be
entitled to accompany HBC to the meetings. 
Additionally, HBC may accompany, assist and support Distributor and/or
its sub-distributors from time to time on sales calls to retail and other
customers.


 


b.           “National Account” shall mean a
customer that sells at retail in more than fifty (50) stores and in multiple
states of the United States and in extensive areas of the Territory including,
but not limited to, customers such as Wal-Mart, Safeway and Costco, and has the
ability to make a central decision for the sales of a Product in the United
States and the Territory. The provisions of this Agreement shall not in any way
whatsoever detract from or interfere with or constitute any limitation on any
of HBC’s rights to deal directly with any National Account with regard to the
sale by HBC and/or any distributor and/or any other third party of Products to
any National Account in the United States or any other country in the world
outside of the Territory.  If HBC deems
it desirable for Products to be sold to any National Account pursuant to an
indivisible arrangement that encompasses all outlets of the National Account
including those within the Territory, on a uniform basis, HBC shall be entitled
in its discretion to make arrangements directly with such National Account
including the terms of sale of Products to the National Account and the prices
therefor, which shall take into account the prices and funding then being
offered by Distributor and its sub-distributors to such National Account and
similar categories of customers, in the Territory.  HBC shall use commercially reasonable efforts
to arrange for all outlets of any such National Account within the Territory to
be serviced by Distributor and/or its sub-distributors and for delivery of the
Products and other arrangements with regard thereto, to be made directly by
Distributor and its sub-distributors or their warehouse system.  Notwithstanding the foregoing, should the
National Account concerned not agree to their outlets within the Territory
being serviced by Distributor or should Distributor elect not to service such
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, an amount equal to  ***
percent  *** of the Distributor’s average
gross profit per case per Product line, calculated in accordance with the
provisions of Section 12.a.(i)(A) above, for each case of Products
sold by HBC to the outlets within a reasonable time after receipt by HBC of all
information necessary for the computation of the amount due under this Section 14,
but in no event more frequently than twice per calendar year.  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 National Account or regional division of such National
Account, as the case may be, during the period concerned, by a fraction, the
numerator of which shall be the number of outlets within the Territory and the
denominator of which shall be the total number of outlets that the National
Account has within the United States or within the regional division of such
customer (including the outlets in the Territory), as the case may be.  Distributor shall not be liable to pay the
CCL Facilitation Fee on HBC’s direct sales to National Accounts.


 


15.           Exclusion
of Damages.


 


a.             EXCEPT
FOR DAMAGES DIRECTLY RESULTING FROM INDEMNITY OBLIGATIONS PROVIDED IN SECTION 19,
WITHOUT IN ANY WAY DETRACTING FROM OR LIMITING THE PROVISIONS OF SECTIONS 12.d.
or 12.e.(iii) ABOVE AND, IN ADDITION THERETO, NEITHER PARTY SHALL BE
LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, SPECIAL, OR EXEMPLARY DAMAGES
(INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF PROFITS, LOSS OF GOODWILL,
BUSINESS INTERRUPTION, LOSS OF BUSINESS OPPORTUNITY, OR ANY OTHER PECUNIARY
LOSS) SUFFERED BY THE OTHER RELATED TO OR ARISING OUT OF THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND/OR THE USE OF OR INABILITY TO
USE OR SELL THE PRODUCTS, AND/OR FROM ANY OTHER CAUSE WHATSOEVER, EVEN IF IT
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.


 


b.             EACH
AND EVERY PROVISION OF THIS AGREEMENT WHICH PROVIDES FOR A LIMITATION OF
LIABILITY OR WARRANTIES, DISCLAIMER, OR


 






***
Portions hereof have been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment in
accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.


 


16

















 


EXCLUSION OF DAMAGES, IS
EXPRESSLY INTENDED TO BE SEVERABLE AND INDEPENDENT FROM ANY OTHER PROVISION,
SINCE THOSE PROVISIONS REPRESENT SEPARATE ELEMENTS OF RISK ALLOCATION BETWEEN
THE PARTIES, AND SHALL BE SEPARATELY ENFORCED.


 


16.           Distributor’s
Representations and Warranties.  Distributor represents and warrants to HBC
that (a) it has the right and lawful authority to enter into this
Agreement, and (b) the execution, delivery and performance of this
Agreement will not cause or require Distributor to breach any obligation to, or
agreement or confidence with, any other person or entity.


 


17.           HBC’s
Representations and Warranties.


 


a.             HBC
represents and warrants to Distributor that (i) it has the right and
lawful authority to enter into this Agreement, and (ii) the execution,
delivery and performance of this Agreement will not cause or require HBC to
breach any obligation to, or agreement or confidence with, any other person or
entity.


 


b.             HBC
warrants that all Products, all food additives in the Products, or all
substances for use in, with, or for the Products, comprising each shipment or
other delivery hereby made by HBC to, or on the order of, Distributor are
hereby guaranteed as of the date of such shipment to be, on such date, not
adulterated or mislabeled in accordance with the Canadian Food and Drugs Act
and the Natural Health Products Regulations promulgated thereunder.


 


c.             HBC
warrants that all Products shall be merchantable.


 


d.             Distributor’s
sole and exclusive remedy for HBC’s breach of HBC’s representations in Sections
17.b. and 17.c. above shall be as provided for in Section 19.b. below.


 


18.           Limitation
of Warranty. HBC MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED (INCLUDING THE IMPLIED
WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE) EXCEPT THOSE SET FORTH IN SECTION 17 ABOVE.


 


19.           Indemnification.


 


a.             Distributor
shall indemnify, defend, and hold harmless HBC and its officers, directors,
agents, employees, shareholders, legal representatives, successors and assigns,
and each of them, from loss, liability, costs, damages, or expenses from any
and all claims, actions and suits, instituted by any third party, whether
groundless or otherwise, and from and against any and all third party claims,
liabilities, judgments, losses, damages, costs, charges, attorney’s fees, and
other expenses of every nature and character arising from (i) the breach
of Distributor’s express representations and warranties under this Agreement by
Distributor or its agents, employees, subcontractors, sub-distributors or
others acting on its behalf, provided that HBC gives Distributor written notice
of any indemnifiable claim and HBC does not settle any claim without
Distributor’s prior written consent, or (ii) as set forth on attached Exhibit H
which is incorporated in this Section 19 by this reference.


 


b.
            HBC
shall indemnify, defend, and hold harmless Distributor and its officers,
directors, agents, employees, shareholders, legal representatives, successors,
assigns, and customers, and each


 


17

















 


of
them, from loss, liability, costs, damages, or expenses from any and all
claims, actions and suits instituted by any third party, whether groundless or
otherwise, and from and against any and all such third party claims,
liabilities, judgments, losses, damages, costs, charges, attorney’s fees, and
other expenses of every nature and character and all Distributor’s direct
documented costs to store, transport, test and destroy all unsellable Products
and advertising materials arising from (i) the breach of HBC’s express
representations and warranties under this Agreement or those of its agents,
employees, subcontractors or others acting on its behalf, (ii) any
impurity, adulteration, deterioration in or misbranding of any Products sold to
Distributor by HBC, (iii) any prior distributor of Products in the
Territory, (iv) any HBC marketing, advertising, promotion, labeling,
Global Branding and Marketing, and the Trademarks, Copyrights, Patents,
Know-How or other intellectual property relating to the Products, or (v) the
fact that  the Products (A) are
not safe for the purposes for which goods of that kind are normally used, (B) 
do not comply with applicable health, safety, and environmental standards
imposed in the Territory, or (C) do not comply with the Safety Orders of
the State of California Division of Industrial Safety and Proposition 65;
provided that Distributor gives HBC written notice of any indemnifiable claim
and Distributor does not settle any claim without HBC’s prior written consent.


 


c.             If
any action or proceeding is brought against Distributor, HBC or any other
indemnified party under Section 19.a. or 19.b. (the “Indemnified Party”),
the Indemnified Party shall promptly notify the party required to provide
indemnification (the “Indemnifying Party”) in writing to that effect.  If the Indemnified Party fails to promptly
notify the Indemnifying Party, the Indemnified Party shall be deemed to have
waived any right of indemnification with respect to such claim to the extent
(but only to the extent) any delay in such notice prejudice’s the Indemnifying
Party’s ability to defend such action, suit or proceeding.  The Indemnifying Party shall have the right
to defend such action or proceeding at the Indemnifying Party’s sole cost by
counsel satisfactory to Indemnifying Party. 
If the Indemnifying Party fails to promptly defend or otherwise settle
or finally resolve such action, suit or proceeding, Indemnified Party may
defend such action, suit or proceeding using counsel selected by Indemnified
Party, and the Indemnifying Party shall reimburse Indemnified Party for any
resulting loss, damages, costs, charges, attorney’s fees, and other expenses
and the related costs of defending such action, suit or proceeding.


 


d.             The
parties agree that the provisions contained in this Section shall survive
the termination or expiration of this Agreement.


 


20.           Insurance.  During the term of this Agreement and for a
period of two (2) years thereafter, HBC and Distributor agree to maintain
policies of insurance of the nature and amounts specified below, which shall
provide the other party as an additional insured (providing for a waiver of
subrogation rights and endeavoring to provide for not less than thirty (30)
days written notice of any modification or termination of coverage), and each
party shall provide to the other party with a certificate of insurance
evidencing such insurance, in a form satisfactory to such party:


 


·                                          Commercial
General Liability, including contractual liability coverage, with limits of at
least $1,000,000 per occurrence; Bodily Injury and Property Damage /
$1,000,000; Personal and Advertising Injury / $1,000,000; Products/Completed
Operations / $2,000,000 General Aggregate.


 


·                                          Excess
or Umbrella Liability with a limit of not less than $5,000,000 per occurrence
over the insurance coverage described above.


 


·                                          Other
statutory insurance required by the applicable laws of the Territory.


 


For any claims under this Agreement, the
applicable party’s insurance shall be deemed to be primary and not contributing
to or in excess of any similar coverage purchased by the other party.  All deductibles payable under an applicable
policy shall be paid by the party responsible for purchasing such policy.   All such


 


18

















 


insurance shall be written by companies
authorized to do business in the state or states where the work is to be
performed and having at least the ratings of the respective parties current
insurers, unless not obtainable at commercially reasonable rates in light of
previous premiums.


 


21.           Competing
Products.  The provisions of Section 21 are set
forth in attached Exhibit I  and are incorporated in this Section 21
by this reference.


 


22.           Amendment.  Except to the extent otherwise expressly
permitted by this Agreement, no amendment of, or addition to, this Agreement
shall be effective unless reduced to a writing executed by the duly authorized
representatives of all parties.


 


23.           Assignment.  No party may assign its rights or delegate
its obligations hereunder without the prior written consent of the others.  Any purported assignment or delegation, in
the absence of written consent, shall be void.


 


24.           No
Agency.  The relationship of each of the parties to
this Agreement to the others is that of a vendor to its vendee and nothing
herein contained shall be construed as constituting either party the employee,
agent, independent contractor, partner or co-venturer of the other party.  Neither party shall have any authority to
create or assume any obligation binding on the other party.


 


25.           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) and the provisions of the United
Nations Convention On Contracts For The International Sale Of Goods will
expressly be excluded and not apply.  The
place of the making and execution of this Agreement is California, United
States of America.  Distributor hereby
waives any rights that it may otherwise have to assert any rights or defenses
under the laws of the Territory or to require that litigation brought by or
against it in connection with this Agreement be conducted in the courts or
other forums of the Territory.


 


26.           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 seven (7) calendar days after
appointment the arbitrator shall set the hearing date, which shall be within
ninety (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 five (5) depositions by each party to
last no more than five (5) 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 and costs
to the prevailing party.  The arbitrator
shall make his or her award no later than seven (7) calendar days after
the close of evidence or the submission of final briefs, whichever occurs
later.  The decision of the arbitrator
shall be final and conclusive upon all parties. Notwithstanding anything to the
contrary, if either party desires to seek injunctive or other equitable relief
that does not involve the payment of money, then those claims shall be brought
in a state or federal court located in Orange County, California, and the
parties hereby irrevocably and unconditionally consent to personal jurisdiction
of such courts and venue in Orange County, California in any such action for
injunctive relief or equitable relief.


 


19

















 


27.           Force Majeure.


 


a.            Neither party shall
be liable for any delays in delivery or failure to perform or other loss due
directly or indirectly to unforeseen circumstances or causes beyond such party’s
reasonable control (each, individually, a “Force Majeure Event”) including,
without limitation: (a) acts of God, act (including failure to act) of any
governmental authority (de jure or de facto), wars (declared or undeclared),
governmental priorities, port congestion, riots, revolutions, strikes or other
labor disputes, fires, floods, sabotage, nuclear incidents, earthquakes,
storms, epidemics; or (b) inability to timely obtain either necessary and
proper labor, materials, ingredients, components, facilities, production
facilities, energy, fuel, transportation, governmental authorizations or instructions,
material or information. The foregoing shall apply even though any Force
Majeure Event occurs after such party’s performance of its obligations is
delayed for other causes but only during the period of the applicable Force
Majeure Event.


 


b.             The party affected by a Force
Majeure Event shall give written notice to the other party of the Force Majeure
Event within a reasonable time after the occurrence thereof, stating therein
the nature of the suspension of performance and reasons therefore.  Such party shall use its commercially
reasonable efforts to resume performance as soon as reasonably possible.  Upon restoration of the affected party’s
ability to perform its obligations hereunder, the affected party shall give
written notice to the other party within a reasonable time.


 


28.           Merger.  Except for any letter agreement/s executed by
the parties concurrently herewith, this Agreement and the attached Exhibits
contains the entire agreement between the parties to this Agreement with
respect to the subject matter of this Agreement, is intended as a final
expression of such parties’ agreement with respect to such terms as are
included in this Agreement, is intended as a complete and exclusive statement
of the terms of such agreement, and supersedes all negotiations, stipulations,
understandings, agreements, representations and warranties, if any, with
respect to such subject matter, which precede the execution of this Agreement.


 


29.           Waivers.  No waiver of any provision hereof or of any
terms or conditions will be effective unless in writing and signed by the party
against which enforcement of the waiver is sought.


 


30.           Product
Recall.  If any governmental agency or authority
issues a recall or takes similar action in connection with the Products, or if
HBC determines that an event, incident or circumstance has occurred which may
require a recall or market withdrawal, HBC shall advise Distributor of the
circumstances by telephone or facsimile. 
HBC shall have the right to control the arrangement of any Product
recall, and Distributor shall cooperate in the event of a Product recall with
respect the reshipment, storage or disposal of recalled Products, the
preparation and maintenance of relevant records and reports, and notification
to any recipients or end users.  HBC
shall pay all reasonable expenses incurred by Distributor of such a recall,
including the costs of destroying Products. 
Distributor, shall promptly refer to HBC for exclusive response to all
customer or consumer complaints involving the health, safety, quality,
composition or packaging of the Products, or which in any way could be
detrimental to the image or reputation of HBC or the Products, and shall notify
HBC of any governmental, customer or consumer inquiries regarding the Products
about which Distributor becomes aware.  
Distributor may consult with HBC regarding issues which Distributor
believes may require a product recall; provided, that the final decision as to
whether to implement a recall shall be made by HBC or a government agency or authority
and not by Distributor.


 


31.           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.


 


32.           Severability.  Each provision of this Agreement will be
valid and enforceable to the fullest extent permitted by law.  If any provision of this Agreement or the
application of the provision to any person


 


20

















 


or circumstance will, to
any extent, be invalid or unenforceable, the remainder of this Agreement, or
the application of the provision to persons or circumstances other than those
as to which it is held invalid or unenforceable, will not be affected by such
invalidity or unenforceability, unless the provision or its application is
essential to this Agreement.  The parties
shall replace any invalid and/or unenforceable provision with a valid and
enforceable provision that most closely meets the aims and objectives of the
invalid and/or unenforceable provision.


 


33.           Distributor
Suppliers Guiding Principles.


 


HBC has been informed by
Distributor that the following are Distributor Suppliers Guiding Principles
(the “Guiding Principles”). 
Notwithstanding anything set forth below, compliance with the Guiding
Principles shall not constitute an obligation of HBC under this Agreement.  The Guiding Principles shall constitute
unenforceable goals only of the parties and neither party shall be entitled to
make any claim for breach against the other or enforce any remedy under this
Agreement or terminate this Agreement as the result of non-compliance with, or
a violation of, any Guiding Principle(s). 
The preceding sentence shall not detract from the parties respective
rights and obligations under Section 19 above.


 


·              Laws and Regulations –
Each party will use commercially reasonable good faith efforts to comply with
all applicable local and national laws, rules, regulations and requirements in
the manufacturing and distribution of Products.


 


·              Child Labor - Each party
will use commercially reasonable good faith efforts to comply with all
applicable local and national child labor laws.


 


·              Forced Labor - Each
party will use commercially reasonable good faith efforts to not use forced,
bonded, prison, military or compulsory labor.


 


·              Abuse of Labor - Each
party will use commercially reasonable good faith efforts to comply with all
applicable local and national laws on abuse of employees and will not
physically abuse employees.


 


·              Freedom of Association
and Collective Bargaining - Each party will use commercially reasonable good
faith efforts to comply with all applicable local and national laws on freedom
of association and collective bargaining.


 


·              Discrimination - Each
party will use commercially reasonable good faith efforts to comply with all
applicable local and national discrimination laws.


 


·              Wages and Benefits -
Each party will use commercially reasonable good faith efforts to comply with
all applicable local and national wages and benefits laws.


 


·              Work Hours and Overtime
- Each party will use commercially reasonable good faith efforts to comply with
all applicable local and national work hours and overtime laws.


 


·              Health and Safety - Each
party will use commercially reasonable good faith efforts to comply with all
applicable local and national health and safety laws.


 


·              Environment - Each party
will use commercially reasonable good faith efforts to comply with all
applicable local and national environmental laws.


 


34.           Publicity.  HBC and Distributor each agree that the
initial public, written announcements regarding the execution of this Agreement
and the subject matter addressed herein shall be coordinated between the
parties prior to release.  Thereafter,
each party agrees to use commercially reasonable efforts to


 


21

















 


consult with the other
party regarding any public, written announcement which a party reasonably
anticipates would be materially prejudicial to the other party.  Nothing provided herein, however, will prevent
either party from (a) making and continuing to make any statements or
other disclosures it deems required, prudent or desirable under applicable
Federal or State Security Laws (including without limitation the rules,
regulations and directives of the Securities and Exchange Commission) and/or
such party’s customary business practices, or (b) engaging in oral
discussions or oral or written presentations with actual or prospective
investors or analysts regarding the subject matter of this Agreement, provided
no confidential information is disclosed. 
If a party breaches this Section 34 it shall have a seven (7) day
period in which to cure its breach after written notice from the other
party.  A breach of this Section 34
shall not entitle a party to damages or to terminate this Agreement.


 


35.           Ethical
Standards.


 


a.  Distributor and each of its sub-distributors
will comply with the United States Foreign Corrupt Practice Act and without
derogating from the generality of the foregoing, will not have its directors,
officers or employees, directly or indirectly, offer, promise or pay any bribes
or other improper payments for the purposes of promoting and/or selling
Products to any individual, corporation, government official or agency or other
entity.  No gift, benefit or contribution
in any way related to HBC or the promotion and/or sale of Products will be made
to political or public officials or candidates for public office or to
political organizations, regardless of whether such contributions are permitted
by local laws.


 


b.  HBC will comply with the United States
Foreign Corrupt Practice Act and without derogating from the generality of the
foregoing, will not have its directors, officers or employees, directly or
indirectly, offer, promise or pay any bribes or other improper payments for the
purposes of promoting and/or selling Products to any individual, corporation,
government official or agency or other entity. 
No gift, benefit or contribution in any way related to Distributor or
the promotion and/or sale of Products will be made to political or public
officials or candidates for public office or to political organizations,
regardless of whether such contributions are permitted by local laws.


 


c.  CCL will comply with the United States
Foreign Corrupt Practice Act and without derogating from the generality of the
foregoing, will not have its directors, officers or employees, directly or
indirectly, offer, promise or pay any bribes or other improper payments for the
purposes of promoting the Products to any individual, corporation, government
official or agency or other entity.  No
gift, benefit or contribution in any way related to HBC or the promotion and/or
sale of Products will be made to political or public officials or candidates
for public office or to political organizations, regardless of whether such
contributions are permitted by local laws.


 


36.           Controlling
Language.  This Agreement is in the English language
only, which will be controlling in all respects.  No translation, if any, of this Agreement
into any other language will be of any force or effect in the interpretation of
this Agreement or in a determination of the intent of either party hereto.


 


37.           Further
Assurances.  Each party to this Agreement will execute all
instruments and documents and take all actions as may be reasonably required to
effectuate this Agreement.


 


38.           Third-Party
Beneficiaries.  Nothing in this Agreement, express or
implied, is intended or shall be construed to give any person or entity, other
than the parties to this Agreement and their successors and permitted assigns,
any legal or equitable right, remedy or claim under or in respect of any
agreement or any provision contained in this Agreement.


 


39.           Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which
together shall constitute one document.


 


22
















 


40.           Notices.  All notices or other communications required
or permitted to be given to a party to this Agreement shall be in writing and
shall be personally delivered, sent by certified mail, postage prepaid, return
receipt requested, or sent by an overnight express courier service that
provides written confirmation of delivery, to such party at the following
respective address:


 


If to HBC:


 


Hansen Beverage Company


550 Monica Circle, Suite 201


Corona, California 92880


Attention: Chief
Executive Officer


Telecopy:  (951) 739-6210


 


                with
a copy to:


 


Solomon Ward Seidenwurm &
Smith LLP


401 B Street, Suite 1200


San Diego,
California  92101


Attention:  Norman L. Smith, Esq.


Telecopy:  (619) 231-4755


 


If to Distributor:


 


Coca-Cola Enterprises
Inc.


2500 Windy Ridge Parkway


Atlanta, Georgia 30339


Attention:  Chief Financial Officer


Telecopy:  (770) 989-3784


 


                with
a copy to:


 


Coca-Cola Enterprises
Inc.


2500 Windy Ridge Parkway


Atlanta, Georgia 30339


Attention: General
Counsel


Telecopy:  (770) 989-3784


 


If to CCL:


 


Coca-Cola Ltd.


42 Overlea Blvd.


Toronto, Ontario M4H 1B8


CANADA


Attention:  Vice President, Finance


Telecopy:  (416) 756-8153


 


                with
a copy to:


 


Coca-Cola Ltd.


42 Overlea Blvd.


Toronto, Ontario M4H 1B8


 


23

















 


CANADA


Attention:  Division Counsel


Telecopy:  (416) 467-2212


 


Each such notice or other communication shall be
deemed given, delivered and received upon its actual receipt, except that if it
is sent by mail in accordance with this Section, then it shall be deemed given,
delivered and received three (3) days after the date such notice or other
communication is deposited with the U.S. Postal Service in accordance with this
Section.  Any party to this Agreement may
give a notice of a change of its address to the other party to this Agreement.


 


41.           Confidentiality.  During the Term each party shall maintain in
strict confidence all commercial information disclosed by the other party
(which obligation shall expressly survive termination of this Agreement for any
reason); provided however that such commercial information shall not include
any information which (a) is in the public domain except through any
intentional or negligent act or omission of the non-disclosing party (or any
agent, employee, shareholder, director, officer, or independent contractor of
or retained by such other party or any of its affiliates, (b) can be shown
by clear and convincing tangible evidence to have been in the possession of the
non-disclosing party prior to disclosure by the disclosing party, (c) is
legally and properly provided to the non-disclosing party without restriction
by an independent third party that is under no obligation of confidentiality to
the disclosing party and that did not obtain such information in any illegal or
improper manner or otherwise in violation of any agreement with the disclosing
party, (d) is disclosed without any restrictions of any kind by the
disclosing party to third parties on a regular basis without any measures being
taken, whether explicitly or implicitly, by the disclosing party to protect the
confidentiality of such information, or (e) is independently generated by
any employee or independent contractor of or retained by the non-disclosing
party, and such employee or independent contractor has no knowledge of any of
such commercial information.


 


(Signature
page/s follows.)


 


24

















 


                IN WITNESS WHEREOF, the parties have caused their
duly authorized representatives to execute this Agreement as of the date first
above written.


 


	
  HANSEN BEVERAGE
  COMPANY

  	
   

  	
  COCA-COLA BOTTLING
  COMPANY

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Rodney Sacks

  	
   

  	
  By:

  	
  /s/ William B.
  Douglass III

  
	
  Name:

  	
  Rodney Sacks

  	
   

  	
  Name:

  	
  William B. Douglass
  III

  
	
  Its:

  	
  Chairman

  	
   

  	
  Its:

  	
  Executive Vice
  President

  
								



 


 


Acknowledged and agreed
as to the rights and obligations of and COCA-COLA LTD, a corporation organized
and existing under the laws of Canada, with principal offices at 3389 Steeles
Avenue East, Suite 500, Toronto, Ontario, M2H 3S8 – Canada set forth in
Sections 1.c, 2.g, 6.b, 22, 23, 24, 35.c, 40 and 41.


 


COCA-COLA LTD


 


	
  By:

  	
  /s/ Silvi [Illegible]

  	
   

  
	
  Name:

  	
  Silvi [Illegible]

  	
   

  
	
  Its:

  	
  V.P.
  Secretary & Division Counsel

  	
   

  
					



 


25

















 


EXHIBIT
A

Monster Energy Canadian Distribution Agreement


 


INITIAL PRODUCT LIST


 


	
  Category (All SKU’s)

  	
   

  
	
   

  	
   

  
	
  MONSTER

  	
  X

  
	
   

  	
   

  
	
  MONSTER ASSAULT

  	
  X

  
	
   

  	
   

  
	
  MONSTER KHAOS

  	
  X

  
	
   

  	
   

  
	
  MONSTER REDUCED CARB

  	
  X

  
	
   

  	
   

  
	
  MONSTER M80

  	
  X

  
	
   

  	
   

  
	
  MONSTER MIXXD (2009)

  	
  X

  
	
   

  	
   

  
	
  ALL JAVA MONSTER SKU’s
  - Mean Bean, Loca Moca, Russian, LO-BALL (2009)

  	
  X

  
	
   

  	
   

  
	
  MONSTER HITMAN ENERGY
  SHOOTER (2009)

  	
  X

  
	
   

  	
   

  
	
  LOST ENERGY 16 OZ.
  SKU’s - Regular and Five-O

  	
  X

  
	
   

  	
   

  
	
  HANSEN ENERGY PRO

  	
  X

  



 


26

















 


EXHIBIT
B 

Monster Energy Canadian Distribution Agreement


 


THE TERRITORY


 


ALL OF CANADA


 


In the event of a
dispute with respect to territorial boundaries between two adjacent
distributors, Hansen Beverage Company shall have the right to decide such
dispute in its sole discretion, and any such decision shall be final and
binding upon the parties.


 


27

















 


EXHIBIT C


Monster Energy Canadian
Distribution Agreement


 


THE ACCOUNTS


 


	
  Account Type

  	
   

  	
  The Distributor’s

  Accounts

  Exclusive ***, ****

  	
   

  	
  The Distributor’s

  Accounts

  Non-Exclusive ***, ****

  	
   

  	
  Accounts

  Reserved for HBC ***,

  ****

  
	
  Convenience Stores

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Chain Convenience
  Stores

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Deli’s

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Independent Grocery

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Chain Grocery

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Mass Merchandisers

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Drug Stores

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schools

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hospitals

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Health Food Stores

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U.S. Military –ONLY AAFES, NEXCOM, MCX, and USCG for
  Exchanges / Shopettes / Convenience Stores / Class 6 Stores / vending
  for the Continental United States (“CONUS”)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U.S. Military –ONLY AAFES, NEXCOM, MCX, and USCG for
  Exchanges / Shopettes / Convenience Stores / Class 6 Stores / vending
  for Outside the Continental United States (“OCONUS”)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U.S. Military -
  Morale, Welfare & Recreation (i.e. including but not limited to
  bowling alleys, golf courses, officers clubs, etc.) for both CONUS &
  OCONUS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  U.S. Military – all
  others including, but not limited to, DeCA, Ships-A-Float, Troop Feeding for
  both CONUS & OCONUS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canadian Military

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Marine Foods Service
  (e.g. cruise ships, service ships, and oil rigs)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 






***    Portions hereof have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request
for confidential treatment in accordance with Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.


****  Delineations of exclusivity for accounts have
been redacted.


 


28

















 


	
  Account Type

  	
   

  	
  The Distributor’s

  Accounts

  Exclusive ***, ****

  	
   

  	
  The Distributor’s

  Accounts

  Non-Exclusive ***, ****

  	
   

  	
  Accounts

  Reserved for HBC ***,

  ****

  
	
  Alcoholic Lic.
  On-Premise*

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Trader Joe’s

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  General Sports
  Retailers (i.e. including but not limited to extreme sports retailers,
  motorcycle dealers and resellers, and all similar retailers and distributors
  servicing such sports retailers)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Club Stores

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Vending

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  All other accounts not
  falling within the descriptions listed above

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 






*   Alcoholic Licensed On-Premise Accounts means
accounts licensed by applicable governmental authority to sell alcoholic
beverages for on-premise consumption.


 


	
   

  	
  HBC Initials: 

  	
   

  
	
   

  	
  Distributor Initials:

  	
   

  



 


*** Portions hereof have
been omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment in accordance with Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


**** Delineations of exclusivity for accounts have
been redacted.


 


29
















 


EXHIBIT D 

Monster Energy Canadian Distribution Agreement


 


THE TRADEMARKS


 


HANSEN’S


 


HANSEN’S
NATURAL


 


MONSTER
ENERGY


 


MONSTER


 





 MONSTER


 MONSTER ENERGY


 


MONSTER
ASSAULT


 


MONSTER
KHAOS


 


MONSTER
REDUCED CARB


 


UNLEASH
THE BEAST


 


MONSTER
M80


 


MONSTER
MIXXD


 


JAVA
MONSTER - Mean Bean, Loca Moca, Russian, and Lo-Ball


 


MONSTER
HITMAN ENERGY SHOOTER


 


LOST
ENERGY – Regular and Five-0


 


30

















 


EXHIBIT E  

Monster Energy Canadian Distribution Agreement


 


(Section 2.d)


 


ESTIMATED BUY-OUT CONTRIBUTION


 


The
pre-agreed rate shall be  ***.


 






***   Portions hereof have been omitted and filed
separately with the Securities and Exchange Commission pursuant to a request
for confidential treatment in accordance with Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.


 


31

















 


EXHIBIT F

Monster Energy Canadian Distribution Agreement


 


(Section 6.b.)


 


CCL FACILITATION FEE


 


The CCL Facilitation Fee payable by
Distributor to CCL shall be  equal
to  *** per case of 24 units and  *** per case of 12 units of Products sold by
HBC to the Distributor, but excluding any free or bonus unit or units used for
sampling.  Any other case configuration
to be mutually agreed between CCE and CCL.


 






***   Portions
hereof have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


32

















 


EXHIBIT G

Monster Energy Canadian Distribution Agreement


 


PROMOTIONAL ACTIVITIES COSTS


 


Discount and allowances, price promotions
and other customer discount activities (“D&A”):


 


Distributor shall contribute an amount
equal to HBC’s contribution for D&A up to a total of  *** per 24-unit 16 oz. case, (reduced or
increased on a pro rata basis for cases containing less than 24 units or a
larger number of units) sold at a discounted price by Distributor to
Distributor’s Accounts.  Thus,
Distributor’s contribution shall be no more than  *** per 24-unit 16 oz. case of Products
(reduced or increased on a pro rata basis for cases containing less than 24
units or a larger number of units) sold at a discounted price on the above
programs.  If additional D&A is
necessary to achieve a promotional price to be offered to a customer as agreed
by HBC and Distributor, then HBC shall contribute any amount required
above  ***.  The frequency of customer promotional
discount programs requiring D&A shall be agreed in the Annual Business
Plan.  D&A may be paid by either HBC
or Distributor to the customer and reconciled periodically.


 


Trade Marketing Programs including shelf
buys, CMA’s, free cases, coupons, corporate/retailer rebates, sales force incentives,
POS, samples, meeting competition price offers (“TMP”).


 


Distributor shall contribute an amount
equal to  *** on all TMP programs.  All TMP programs shall be agreed upon and
form part of the Annual Business Plans and shall include such additional TMP
programs as may be mutually agreed upon from time to time by the parties. In
exceptional cases, such as Trophy or Prestige accounts, either party may
voluntarily agree to contribute more than its 
*** share to cover any specific TMP programs.  TMP may be paid by either HBC or Distributor
to the customer and reconciled periodically.


 


Equipment.


 


HBC shall permit Distributor to manage
all equipment that HBC owns and of which HBC is able to obtain possession in
the Territory as of the Effective Date. 
Distributor shall not be required to repair or service such HBC
equipment owned by HBC as of the Effective Date.  Distributor shall use commercially reasonable
efforts to place Products in all Distributor’s equipment where appropriate and
desired by the Distributor’s Account. 
Distributor shall reimburse HBC for 
*** of the cost of equipment that Distributor and HBC agree that HBC
purchase for the Territory in the future and which shall be managed by
Distributor.


 


Miscellaneous.


 


If HBC calls on or assists Distributor in
calling on Distributor’s Accounts, to the extent that HBC makes a commitment
for funds or support in excess of what is provided above or was agreed to by
Distributor and HBC, any such excess shall be borne by  ***.


 


The parties’ respective rights and
obligations under this Exhibit G shall be revised and amended from
time to time to reflect then-prevailing conditions by written agreement of the
parties to be arrived at after good faith discussions and negotiation.  If the parties are unable to agree upon an
amendment requested by either party, such disagreement shall be referred to
arbitration in accordance with Section 26 of the Agreement.


 


All amounts provided above shall be
adjusted from time to time to account for changes in selling prices or other
adjustments that may occur from time to time to conform to prevailing beverage
industry practices relating to the Energy Drink category.  The amounts of such adjustments shall be
mutually agreed in writing by the parties from time to time.


 






***   Portions
hereof have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


33

















 


EXHIBIT H

Monster Energy Canadian Distribution Agreement


 


INDEMNIFICATION


 


Distributor
shall indemnify, defend, and hold harmless HBC and its officers, directors,
agents, employees, shareholders, legal representatives, successors and assigns,
and each of them, from loss, liability, costs, damages, or expenses from any
and all claims, actions and suits, instituted by any third party  ***, whether groundless or otherwise, and
from and against any and all third party claims 
***, liabilities, judgments, losses, damages, costs, charges, attorney’s
fees, and other expenses of every nature and character arising from Distributor’s  *** and/or its affiliates or any change in,
or termination of, ***, unless solely attributable to HBC’s alleged wrongful
conduct which is unrelated to this Agreement or any other agreement between the
parties entered into concurrently herewith, provided that HBC gives Distributor
written notice of any indemnifiable claim and HBC does not settle any claim
without Distributor’s prior written consent.


 






***   Portions hereof have been
omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment in accordance with Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


34

















 


EXHIBIT I

Monster Energy Canadian Distribution Agreement


 


COMPETING PRODUCTS


 


Distributor
shall not market, sell or distribute in the Territory Energy Drink/s (the “Competing
Products”), or product/s likely to be confused with, any of the Products,
except that Distributor may market, sell and distribute in the Territory
Competing Products that  ***


 






***   Portions hereof have been
omitted and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment in accordance with Rule 24b-2
of the Securities Exchange Act of 1934, as amended.


 


35