Document:

Exhibit 10.6

 

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

BELGIAN DISTRIBUTION AGREEMENT

 

This BELGIAN
DISTRIBUTION AGREEMENT (“Agreement”) is entered into as of October 3, 2008
(the “Effective Date”) between TAURANGA LTD, a company organized and existing
under the laws of the Republic of Ireland, trading as MONSTER ENERGY (“MEL”)
with offices at South Bank House, Barrow Street, Dublin 4, Ireland, and
COCA-COLA ENTERPRISES INC., a Delaware corporation with offices at 2500 Windy
Ridge Parkway, Atlanta, Georgia 30339 (“Distributor”).

 

1.                                       Recitals
and Definitions.

 

a.                                       MEL
is a wholly owned subsidiary of Hansen Beverage Company, a Delaware corporation
(“HBC”).  HBC owns the exclusive right,
title and interest in and to the Trademarks (as defined below).  MEL has been authorized by HBC to use the
Trademarks (as defined below) and manufacture, promote, market, distribute and
sell, including without limitation through distributors appointed by MEL, the
Products (as defined below) throughout the Territory (as defined below).

 

b.                                      Distributor
is a leading producer and distributor of beverages throughout Belgium 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”).  KO has designated
Distributor, and MEL 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 November 1, 2008, or such
other date as may be mutually agreed by the parties in writing, but which in no
event shall be later than November 30, 2008 (the “Commencement Date”).

 

c.                                       When
used herein the word “Products” means (i) 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
network of full-service distributors in the United States such as, without
limitation, the Anheuser-Busch Distributors, Miller/Coors distributors, and
Coke/Pepsi/Dr. Pepper-7UP Bottlers; and (ii) such additional Energy
Drinks, whether marketed under the Trademarks (as defined below) or otherwise,
as MEL, 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 MEL 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 ***.

 

***
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.                                       are
excluded from the definition of Distributor’s Accounts are expressly reserved
for MEL, or such other distributors as MEL may from time to time appoint.  Distributor shall be entitled to appoint
sub-distributors within the Territory provided that the terms of such
appointment shall provide that the sub-distributors shall not actively seek or
solicit customers for the Products outside the Territory or any customers
located within the Territory other than the Distributor’s Accounts set forth on
Exhibit C, and the terms of such appointments shall not be
inconsistent with the terms and conditions of this Agreement and shall be
subject to MEL’s rights hereunder.  MEL
acknowledges that Distributor intends to appoint a sub-distributor with respect
to the Territory, as identified on Exhibit B-1 hereto.  Except for the initial sub-distributor identified
on Exhibit B-1 hereto, Distributor’s appointment of
sub-distributors shall be to supplement and augment but not to replace or
substitute, wholly or partially, 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
shall not directly or indirectly, alone or in conjunction with any other person
or entity (i) actively seek or solicit customers or accounts for the
Products outside the Territory or any customers or accounts located within the
Territory other than Distributor’s Accounts set forth on Exhibit C
(in particular, but without limiting the above, Distributor shall not actively
approach customers outside the Territory or accounts other than Distributor’s
Accounts in the Territory, whether by direct mail, visits, promotions or media
advertising targeted at such customers, or otherwise), and/or (ii) actively
sell, market, distribute or otherwise dispose of any Products to any persons or
entities located outside the Territory or to any persons or entities located within
the Territory who Distributor knows or reasonably believes will distribute or
resell the Products outside the Territory. 
During the Term, Distributor shall purchase exclusively and directly
from MEL or its nominees (and from no other person or entity) all of its
requirements for Products.

 

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 MEL 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 MEL 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 MEL and Distributor, (ii) shall
not confer upon Distributor or its sub-distributor(s) any rights of any
nature whatsoever, including without limitation to purchase, sell, market or
distribute or continue to purchase, sell, market or distribute any products,
including Products, or use the Trademarks other than with respect to products
sold and delivered by MEL to Distributor, and (iii) shall constitute a
separate transaction for each shipment of products actually delivered by MEL to
Distributor and/or sub-distributor(s), in MEL’s sole and absolute discretion,
which MEL shall be entitled to exercise, vary, withdraw and/or cease, on a case
by case basis, at any time in MEL’s sole and absolute discretion.  Distributor irrevocably waives, releases and
discharges any claims, liabilities, actions and rights, in law or in equity,
against MEL 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 MEL with regard to such matters.

 

d.                                      Distributor
shall, at its sole expense, obtain all import licenses and governmental permits
and approvals which may be necessary to permit the sale of Products in the
Territory.  Distributor shall also comply
with any and all governmental laws, regulations, and orders which are
applicable to Distributor by reason of its execution of this Agreement,
including any and all laws, regulations or orders in the Territory which govern
or affect the ordering, export, shipment, import, sale, delivery or redelivery
of Products in the Territory. Distributor shall also

 

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notify MEL of the existence and
content of any provision of law which to Distributor’s knowledge conflicts with
any provisions of this Agreement at the time of its execution or thereafter. In
the export of Products from the United States, Distributor shall further comply
with the applicable law of the Territory, as well as U.S. laws and regulations
governing exports, including the Export Administration Act and regulations
thereunder, and the U.S. Boycott Regulations.

 

e.                                       MEL
and its affiliates (if applicable) will include a provision comparable to
subsections 2.b.(i) and 2.b.(ii) above in its distribution agreements
with distributors in territories within the European Economic Area.  If any other distributor appointed by MEL or
its affiliates in the European Economic Area (1) actively seeks and
solicits customers in Distributor’s exclusive accounts as identified on Exhibit C
for Products in the “Territory,” or (2) actively sells, markets,
distributes or otherwise disposes of any Products, either directly or
indirectly to any persons or entities located within its territory who such
distributor knows or reasonably believes will distribute or resell the Products
inside the Territory, MEL or its affiliates will take commercially reasonable
steps to enforce MEL’s or its affiliates (as the case may be) rights under any
distribution agreement, to the extent enforceable under applicable law, to
address the importation of Products into the Territory in violation of any
applicable distribution agreement relating to the Products.  MEL or its affiliates will take necessary
commercially reasonable steps to enforce MEL’s or its affiliates (as the case
may be) rights (A) against any other distributors to address the
importation of Products into the Territory in violation of applicable
distribution agreements with such other distributors relating to the Products
to which MEL or its affiliates are a party, and (B) to prevent such other
distributors from breaching provisions comparable to subsections 2.b.(i) and
2.b.(ii), above, to the extent that MEL or its affiliates shall be entitled to
do so pursuant to the terms of its distribution agreements with such
distributors and to the extent enforceable under applicable law. Distributor
shall cooperate and, if necessary and required by MEL, join with MEL in all
such proceedings in accordance with the foregoing.  Distributor shall have no claim, and MEL or
its affiliates shall have no liability, arising from the sale of Products by
such other distributors in the Territory, except to require MEL or its
affiliates to enforce the above-mentioned provisions in the applicable
distribution agreements.

 

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.

 

3.                                       Distributor’s
Duties.  Distributor shall:

 

a.                                       Use
commercially reasonable good faith efforts to actively and diligently promote,
solicit and push vigorously the wide distribution and sale of the Products to
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 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 Energy Drinks (including energy colas) of KO, Distributor
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 actively and diligently develop
new business opportunities for Products in Distributor’s Accounts in the
Territory, and shall allocate and devote thereto at least

 

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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 KO, Distributor and their
respective affiliates at early sales presentations and during the new business
development phase;

 

c.                                       Use
commercially reasonable efforts to actively and diligently manage all of
Distributor’s 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;

 

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

 

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.                                      In
relation to the sales of the Products only, permit MEL representatives to
accompany Distributor’s salesmen on sales routes in the Territory, upon
reasonable advance notice to Distributor;

 

i.                                          Achieve
optimum ambient and cold space, position, prominence, and visibility of the
Products in all Distributor’s Accounts in the Territory;

 

j.                                          Promote
and maintain an efficient, viable and financially sound system of distribution
for the Products in Distributor’s Accounts throughout the Territory;

 

k.                                       Provide
the resources necessary for the sale, delivery, marketing, promotion and servicing
of the Products in Distributor’s Accounts within the Territory;

 

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;

 

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

 

n.                                      Provide
such sales and marketing information in relation to the Products as may be
reasonably requested by MEL;

 

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;

 

4

 

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; and

 

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 MEL’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.

 

4.                                       Prices.

 

a.                                       The
prices (“Selling Price”) to be paid by Distributor to MEL for the Products
shall be reviewed and determined annually by MEL for the forthcoming year after
discussion with Distributor but shall be subject to adjustment in accordance
with Section 4.c. below.  The annual
increases to the Selling Price will be communicated to the Distributor no later
than three (3) calendar months prior to implementation of price increases
in a country within the Territory.

 

b.                                      It
is acknowledged that from time to time Distributor may be required by its
customer/s to fix, for a period of up to twelve (12) months, the prices that
Distributor may charge to its customer/s for certain Products.  In this event, Distributor may request that
MEL fixes the prices to be paid by Distributor for the applicable Product/s to
be resold to such customer/s.  MEL shall
promptly discuss such a request with Distributor in good faith and the parties
will prepare and record any agreement in writing.  Provided that MEL agrees to the foregoing in
writing, MEL shall not adjust, for the same period that Distributor’s prices
are fixed, the prices to be paid by Distributor for the applicable
Product/s  ***. Nothing contained in this
Section 4.b. shall be construed as imposing any agreement or restriction
on the right of either MEL to unilaterally determine the Selling Price or the
right of the Distributor to unilaterally determine Distributor’s own resale
prices and  terms of business.

 

c.                                       Notwithstanding
anything to the contrary contained in this Agreement, in the event of any
material change in the costs associated with production of the Products
(including, but not limited to, a material change in the costs of ingredients,
packaging materials, energy or freight costs related to the production and
shipping of Products) at any time, then MEL may adjust the Selling Price of
Products to Distributor to reflect such cost 
***. MEL shall provide reasonable supporting documentation evidencing
the material change in its costs of production and delivery, if requested by
Distributor.

 

d.                                      All
Selling Prices are exclusive of (1) any costs of carriage and insurance of
the Products, and (2) any applicable value added or any other sales tax,
which shall be payable by Distributor.

 

e.                                       MEL
shall reimburse or credit Distributor for all of Distributor’s actual
out-of-pocket expenses paid or incurred by Distributor in relation to the
promotion and trade marketing of Products including without limitation
discounts, allowances, rebates, demonstration costs, promotional programs,
racks, sampling, point-of-sale and merchandizing aids such as promotional
stickers, price tags, etc., free products and slotting fees, shelf programs,
local or customer-based promotions, and similar out-of-pocket expenses incurred
and paid by Distributor but only if, and to the extent, previously approved by
MEL in writing.

 

***  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

 

5.                                       Orders.  All purchase orders for Products shall be
transmitted in writing or electronically, shall specify a reasonable date and
time for delivery to locations in the Territory agreed upon in writing between
the parties from time to time with a lead time of at least ten (10) days
and shall be subject to acceptance by MEL in MEL’s reasonable discretion.  If MEL is unable to accept an order for any
reason, then MEL 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 MEL’s offers to sell Products and shall limit acceptance by
Distributor to the terms and conditions thereof.

 

6.                                       Payment.  MEL shall invoice Distributor on a monthly
basis and Distributor shall promptly pay MEL for the Products, in Euros for
Products sold in the Territory, in full (without set off, deduction or counter
claim) by electronic transfer within  ***
of the date of the relevant invoice or such other period as may be agreed by
MEL from time to time in writing. 
Distributor and MEL 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 MEL
for any costs and expenses incurred by MEL in collecting such delinquent
amounts, including, without limitation, legal fees and costs including fees of
collection agencies, and interest computed at the lesser of  *** percent 
*** per month or part thereof from the due date(s) or the maximum
legally permissible.

 

7.                                       Title
and Risk of Loss.  Title and risk of loss to the Products shall
pass to Distributor upon delivery of the Products to Distributor.

 

8.                                       Forecast
and Delivery.

 

a.                                       Distributor
shall provide MEL with  *** forecasts
describing the volume of each SKU of Products that Distributor projects will be
ordered during each  *** week period
during the Term (as defined below) of this Agreement.  Distributor shall submit each updated
forecast monthly in a format reasonably acceptable to MEL 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 MEL for delivery to Distributor 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 MEL forecasts in accordance with Section 8.a.
above, MEL agrees to use commercially reasonable good faith efforts to deliver
Products to Distributor within  *** of
receipt by MEL of the applicable purchase orders for Products in compliance
with Sections 5 and 8.a. above to (i) Distributor, in the case of Products
delivered from the point of manufacture to Distributor by ground
transportation, and (ii) the shipper, in the case of delivery of the
Products to Distributor which involves shipment by sea.  MEL shall deliver to Distributor Products
with at least six (6) months shelf life remaining at the time of delivery
or such other period as may be agreed to between MEL and Distributor with
respect to any specific Products. 
Notwithstanding the foregoing, Distributor acknowledges that delivery
dates set forth in purchase orders for Products accepted by MEL are merely
approximate and that MEL 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
MEL’s failure to comply with its obligations under this Section 8.

 

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 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

 

*** 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

 

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.  Any approval by MEL for Distributor to use
any Trademarks, trade names, Patents, Copyrights, trade secrets and Know-How in
connection with the distribution and sale of the Products shall be a mere
temporary permission, uncoupled with any right or interest, and without payment
of any fee or royalty charge for such use.

 

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,
subject to the terms of this Section 9. 
It will not be a breach of this Section for the Products to be
delivered by the Distributor in vehicles, or using employees, agents, assigns
or sub-distributors wearing clothing, displaying any other trademark, name,
brand name, logo or other products designation or symbol.  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 MEL’s policies and instructions, and MEL
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 MEL in writing or differs materially from a use
previously approved by MEL in writing) shall be subject to the prior written
consent of MEL, which MEL may withhold in its sole and absolute
discretion.  Distributor shall submit to
MEL 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, MEL 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 MEL provides to it in writing.

 

f.                                         Upon
the termination of this Agreement, the temporary permission granted under sub-Section 9.a.
above will terminate and the 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 MEL 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 MEL’s expense and upon MEL’s request, assist in
such legal proceedings as MEL 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 MEL’s request such
documents and instruments as may be necessary or appropriate in the conduct of
such proceedings, and (iii) at MEL’s expense, assist HBC and MEL 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 or MEL 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.

 

h.                                      If
during the term of this Agreement a third party institutes against HBC, MEL or
Distributor any claim or proceeding that alleges that the use of any Trademark
or any Know-How, Patent, trade secret or Copyright in connection with the
distribution, marketing, promotion, merchandising and/or sales of the Products
under this

 

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Agreement infringes the
intellectual property rights held by such third party, then MEL shall, in its
sole discretion, and at its sole expense, contest, settle, and/or assume
direction and control of the defense or settlement of, such action, including
all necessary appeals thereunder. 
Distributor shall use all reasonable efforts to assist and cooperate
with MEL in such action, subject to MEL reimbursing Distributor for any
reasonable out-of-pocket expenses incurred by Distributor in connection with
such assistance and cooperation.  If, as
a result of any such action, a judgment is entered by a court of competent
jurisdiction, or settlement is entered by MEL, such that any Know-How, Patent,
trade secret, Copyright or Trademark cannot be used in connection with the distribution,
marketing, promotion, merchandising and/or sales of the Products under this
Agreement without infringing upon the intellectual property rights of such
third party, then HBC, MEL and Distributor promptly shall cease using such
affected Know-How, Patent, trade secret Copyright or Trademark in connection
with the distribution, marketing, promotion, merchandising and/or sale of the
Products under this Agreement.  Except as
otherwise specified in this Agreement, neither party shall incur any liability
or obligation to the other party arising from any such cessation of the use of
the affected Trademark.

 

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
use commercially reasonable efforts to actively and diligently 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
MEL and Distributor from time to time. 
Distributor acknowledges that (a) MEL has no obligation to market
and promote the Products, and (b) MEL makes no, and hereby disclaims any,
express or implied warranty, representation, or covenant relating to or in
connection with MEL’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 MEL
and its affiliates and hereby releases MEL 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 MEL or MEL’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 fifth (5th) anniversary of the
Commencement Date (the “Initial Term”). 
After the Initial Term, this Agreement may be renewed for one (1) additional
five (5)-year term (“Additional Term”) if (a) either party gives written
notice to the other at least one hundred twenty (120) days prior to the end of
the Initial Term of its intention to renew the Agreement for an Additional
Term, and (b) MEL determines that the provisions of Sections 2.a., 2.b.
and 21 of this Agreement are valid and enforceable in accordance with their
respective terms during the Additional Term. 
If MEL determines that it is necessary or desirable that the parties
execute an additional agreement or instrument in order for the provisions of
Sections 2.a., 2.b. and 21 to be valid and enforceable, then the parties agree
to execute such documents as may reasonably be required to give effect to the
foregoing.  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.  The Initial
Term and the Additional Term are collectively referred to as the “Term.”

 

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:

 

8

 

(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
cannot 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 MEL 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 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.

 

(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 (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 MEL.  MEL 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, (x) if Distributor sells, assigns, delegates or transfers any of
its rights and obligations under this Agreement without having obtained MEL’s
prior written consent thereto (which consent may be withheld in MEL’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) if 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 MEL, which MEL 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
calendar year, provided MEL 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 or Coca-Cola
Bottling Company, a Nova Scotia corporation (“CCBC”), without cause or
terminated by HBC or MEL, as the case may be, as a result of a breach by
Distributor or CCBC, as the case may be, then MEL 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
MEL to Distributor.  Any such termination
shall be effective upon Distributor’s receipt of MEL’s written notice of
termination, and MEL 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.

 

9

 

MEL’s right to terminate
this Agreement under this Section 12.a.(ii)(C) shall be independent
of any other rights or remedies of MEL under this Agreement.  The “Concurrent Agreements” mean (i) the
Monster Energy Distribution Agreement dated concurrently herewith between HBC
and Distributor, (ii) the Monster Energy Canadian Distribution Agreement
dated concurrently herewith between HBC and CCBC, and (iii) the Monster
Energy International Distribution Agreement dated concurrently herewith between
MEL and Distributor.

 

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

 

(A)  If MEL fails to deliver to
Distributor at  *** 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 MEL written notice of such failure and MEL has failed to remedy such
deficiency within thirty (30) days of MEL’s receipt of such notice; and

 

(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 or CCBC, as the case may be, 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 MEL.  Any such termination
shall be effective upon MEL’s receipt of Distributor’s written notice of
termination, and Distributor shall not be liable to MEL or otherwise obligated
to pay to MEL 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 MEL 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 MEL Without Cause and Severance Payment.

 

(i).                                  MEL
or any successor to MEL, shall have the right at any time, upon sixty (60) days
written notice (or such longer period as MEL 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, MEL or its
successor, as the case may be, shall pay to Distributor a severance payment
measured as a genuine pre-estimate of the Distributor’s losses and not as a
penalty and 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 MEL to Distributor within thirty (30) days of the later of (A) the date
of the applicable termination, and (B) MEL’s receipt of all information
reasonably necessary to support computation of the Product Severance Payment,
in a form and substance satisfactory to MEL.

 

c.                                       Distributor
Right to Terminate 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 at least one (1) year’s
written notice to MEL or such shorter period as MEL shall agree in writing.

 

*** 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

 

(ii).                               If
Distributor exercises its right to terminate this Agreement in accordance with Section 12.c.(i) above,
Distributor shall pay to MEL 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.  If, such notice is given by
Distributor and thereafter 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 MEL’s benefits under this
Agreement by Distributor or Distributor’s repudiation or abandonment of this
Agreement within such one (1) year notice period then, without prejudice
to any of MEL’s other rights and/or remedies, the Distributor Severance Payment
shall be multiplied by  ***.

 

(iii).                            At
any time, and from time to time, after Distributor gives MEL written notice of
termination, and without prejudice to, or in any way detracting from,
Distributor’s obligation to pay the Distributor Severance Payment, MEL 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 MEL shall not be liable
to Distributor by reason of such termination for compensation, reimbursement,
or damages of whatsoever nature including, 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 Distributor or in reliance on the existence of this Agreement.

 

d.                                      Sole
Remedy.

 

(i).                                  The
Breach Severance Payment and/or the Product Severance Payment payable by MEL to
Distributor pursuant to the provisions of Section 12.a.(i)(A) and/or Section 12.b.(ii) above
respectively, if any, and MEL’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 MEL, 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 MEL 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 MEL 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 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 MEL pursuant to the provisions of Section 12.a.(i)(A) and
Section 12.c.(ii) above respectively, if any, and MEL’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 MEL,
shall constitute MEL’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 MEL 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
MEL 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 MEL 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):

 

*** 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

 

(i).                                  MEL
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 MEL or by MEL 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).                           MEL
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 MEL 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 MEL or Distributor in the
event of termination of this Agreement shall constitute reasonable liquidated
damages and is not intended as a forfeiture or penalty.  MEL 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 MEL or Distributor will incur as a result of such applicable
termination.  Therefore, MEL and
Distributor agree that a reasonable estimate of the total detriment that either
party would suffer in the event 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 MEL 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 MEL’s rights under this Agreement or a reinstatement, renewal or
continuation of the term of this Agreement. 
MEL and Distributor agree that if MEL continues to supply Products to
Distributor following the termination of this Agreement, (i) Distributor
shall not actively seek or solicit customers for the Products outside the
Territory or any customers located within the Territory other than the
Distributor’s Accounts, (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 MEL’s invoice, and (iii) MEL
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

 

12

 

(D) generally
cooperate with MEL in relation to the transition to any new distributor
appointed by MEL 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, MEL  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 MEL in its sole
and absolute discretion from time to time (“Global Branding and Marketing”).  Distributor acknowledges and agrees that MEL
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 MEL and its affiliates and
hereby releases MEL 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 MEL or MEL’s failure to procure, provide or perform
such activities.

 

b.                                      Not
less than sixty (60) days before the end of each Contract Year, MEL 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 (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 in accordance with Section 3.f. above.

 

c.                                       Not
less than sixty (60) days before the end of the then-current Contract Year, MEL
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
Effective Date of this Agreement.

 

d.                                      MEL
and Distributor shall also agree in writing 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 2009 calendar
year will be to integrate Products into the Distributor’s 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 and to meet the other Performance Targets that will be mutually
agreed by the parties.  In years
subsequent to 2009 Performance Targets shall consist of executional measures
such as distribution levels, quality of

 

13

 

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 2010
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 measured at
the commencement of each applicable quarter, and primarily determined with
reference to the Nielsen reports (Scantrack) or IRI (Infoscan) or equivalent
reports (the “Reports”) shall be no less than the Distribution Levels of the
leading energy brand within the Distributor’s portfolio in the Territory.  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 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) MEL’s
failure to deliver Products in accordance with this Agreement or (B) MEL’s
failure to reimburse all costs pursuant to Section 4.e above.

 

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 MEL
will not unreasonably withhold its approval to the deletion of any applicable
SKU/s. MEL may withhold its approval to deletion of any SKU/s if any applicable
SKU/s has/have sufficient sales velocity or is or are capable of delivering
sufficient sales velocity in any one or more of Distributor’s Accounts or any
one or more regions or countries, 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 or countries, 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, rounded
down to the nearest whole number (*** percent *** of the total number of SKU’s
is less than  *** but more than  ***, in which case the number will be rounded
up to  ***), be deleted from distribution
in any  *** period.

 

g.                                      Promotional
activities shall be regulated as follows:

 

(i). 
MEL and Distributor shall periodically meet and may mutually agree to
additional promotional activities including further programs and campaigns not
included in the promotional activities contemplated in Section 4.e. above.
The promotional activities costs that are so agreed to between the parties
shall be shared between, and paid by, Distributor and MEL as may be agreed in
writing 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.

 

14

 

(ii). 
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 MEL for its final written approval.  Distributor shall not use marketing materials
unless approved by MEL in writing; provided that if MEL does not notify
Distributor that it objects to any suggested marketing materials within fifteen
(15) days after receipt of such materials from Distributor, MEL shall be deemed
to have approved such suggested marketing materials.

 

14.                                 Distribution
Accounts and MOLOP Accounts.

 

a.                                       Distributor
and its sub-distributors shall have the primary relationship with retail and
other customers throughout the Territory as defined in Exhibit C and shall
be responsible for negotiating the terms of sale of the Products within the
Territory; provided that without detracting therefrom MEL shall retain the
right to provide input to Distributor and its sub-distributors regarding sales
strategy and other matters as well as to provide sales, marketing, promotional
and merchandising support and programs to retail and other customers as well as
the right to meet directly with and make presentations to retail and other
customers within the Territory as may be appropriate from time to time; and
provided further that MEL will advise Distributor of such meetings beforehand
to the extent practicable and Distributor shall be entitled to accompany MEL to
the meetings.  Additionally, MEL may accompany, assist and support
Distributor and/or its sub-distributors from time to time on sales calls to
Distributor Accounts in the Territory.  For the sake of clarity, MEL shall
not offer or agree terms of supply and/or terms of sale of the Products within
the Territory to any of Distributor’s Accounts without the prior agreement of
Distributor, which agreement will not be unreasonably withheld.

 

b.                                      “MOLOP
Accounts” shall mean (i) any account/s having at least ten (10) outlets
and that is/are licensed by applicable governmental authorities to sell
alcoholic beverages for on-premise consumption, and/or (ii) any trophy or
prestige account/s that is/are licensed to sell alcoholic beverages for
on-premise consumption.  The parties recognize that it is in their
respective interests to work together to formulate the approach to be followed
by them jointly or separately with various customers and/or channels of trade,
including MOLOP Accounts, from time to time, both to take advantage of a
coordinated approach and to avoid the negative impact of a lack of
coordination. MEL and Distributor therefore agree that an aligned
customer/channel approach is a key part of each Annual Business Plan and that
they will engage in regular communication to adopt such plans as well as to deal
with further opportunities that may arise from time to time during each
calendar year, so as to avoid either party acting in an uncoordinated way
towards customers.  Subject to Section 14.a.
above, if MEL deems it desirable for Products to be sold to any MOLOP Account,
MEL shall be entitled, in its discretion, to make arrangements directly with
such MOLOP Account including the terms of sale of Products to the MOLOP Account
and the prices therefore, which shall take into account the prices and funding
then offered by Distributor and its sub-distributors to MOLOP Accounts and
similar categories of customers, in the Territory.  MEL shall use
commercially reasonable efforts to arrange for all outlets of any such MOLOP
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 MOLOP Account
concerned not agree to its outlets within the Territory being serviced by
Distributor or should Distributor elect not to service such outlets, MEL shall
be entitled to service the outlets directly.  In the event MEL services
the outlets directly, MEL shall bear sole liability and responsibility related
to such Account and MEL shall pay to Distributor during the remaining term of
this Agreement an amount equal to  *** percent  *** of Distributor’s average gross profit per
case per Product line sold to and calculated with respect to MOLOP Accounts in
the channel in question but otherwise in accordance with the provisions of Section 12.a.(i)(A) above
for each one of the Product lines sold by MEL to the outlets concerned, within
a reasonable time after receipt by MEL 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 MEL to the outlets during any period
shall be determined by multiplying the total number of cases of Products sold
by MEL directly to such MOLOP Account or regional division of such MOLOP
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

 

*** 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

 

Territory and the denominator
of which shall be the total number of outlets that the MOLOP Account has
anywhere in the world participating in the applicable program.

 

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 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 MEL
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.                                 MEL’s
Representation.

 

a.                                       MEL
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 MEL to
breach any obligation to, or agreement or confidence with, any other person or
entity.

 

b.                                      MEL
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 MEL to, or on the order of, Distributor are
hereby guaranteed as of the date of delivery to be, on such date, (1) for
Products imported by the Distributor from the United States, not adulterated or
misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as
amended, including the Food Additives Amendment of 1958 (the “Act”) and are not
articles which may not under the provisions of Sections 404, 505, or 512 of the
Act, be introduced into interstate commerce, and (2) for all Products
supplied by MEL to the Distributor (whether or not imported from the United
States) to be in compliance with all health, safety, and labeling standards and
specifications imposed by law, regulation or order in the Territory in which
the Products will be sold by the Distributor and which are applicable to the
Products.

 

c.                                       MEL
warrants that all Products shall be merchantable.

 

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

 

18.                                 Limitation
of Warranty.  MEL MAKES NO REPRESENTATIONS OR WARRANTIES,
EXPRESSED OR IMPLIED (INCLUDING THE IMPLIED WARRANTIES OF NON-INFRINGEMENT,

 

16

 

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 MEL 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 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 (1) MEL gives Distributor
written notice of any indemnifiable claim and MEL does not settle any claim
without Distributor’s prior written consent, and (2) MEL does all things
reasonably required by applicable law to mitigate the claim, loss, damage,
liability, cost, suit, action, judgment or expense (including without
limitation attorney’s fees) to the fullest possible extent.

 

b.                                    MEL
shall indemnify, defend, and hold harmless Distributor and its officers, directors,
agents, employees, shareholders, legal representatives, successors, assigns,
and customers, 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 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 MEL’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 MEL, (iii) any prior distributor of Products in the
Territory, (iv) any MEL 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; or (B) do not comply with any applicable
health, safety, or environmental laws, regulations, orders or standards imposed
in the Territory; provided that (1) Distributor gives MEL written notice
of any indemnifiable claim and Distributor does not settle any claim without
MEL’s prior written consent, and (2) Distributor does all things
reasonably required by applicable law to mitigate the claim, loss, damage,
liability, cost, suit, action, judgment or expense (including without
limitation attorney’s fees) to the fullest possible extent.

 

c.                                       If
any action or proceeding is brought against Distributor, MEL 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, MEL 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

 

17

 

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 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.  The parties will
ensure that the insurance policies obtained pursuant to this Section are
effective and enforceable for any liability, claims or other insurable event
arising in the Territory.

 

21.                                 Competing
Products.  The provisions of Section 21 are set
forth in attached Exhibit E 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 both parties.

 

23.                                 Assignment.  Neither party may assign its rights or
delegate its obligations hereunder without the prior written consent of the
other.  Any purported assignment or
delegation, in the absence of written consent, shall be void.

 

24.                                 No
Agency.  The relationship between MEL and Distributor
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

 

18

 

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.

 

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
MEL determines that an event, incident or circumstance has occurred which may
require a recall or market withdrawal, MEL shall advise Distributor of the
circumstances by telephone or facsimile. 
MEL 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. MEL shall pay all reasonable expenses incurred
by Distributor of such a recall, including the costs of destroying Products.
Distributor, shall promptly refer to MEL 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

 

19

 

reputation of MEL or the
Products, and shall notify MEL of any governmental, customer or consumer
inquiries regarding the Products about which Distributor becomes aware.

 

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.                                 Partial
Invalidity.  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 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.  MEL 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 MEL 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.

 

20

 

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

 

34.           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.

 

35.           Sales
Information and Books and Records; Examination.
Not later than thirty (30) days after the end of each calendar month
Distributor shall deliver to MEL full, complete and accurate written details,
of the following with respect to Distributor’s sale of Products in the
Territory: (a) total sales, (b) taxes and/or duties, (c) discounts and sales
allowances paid, accrued or credited, (d) Products returned during such period,
(e) other permitted allowances, rebates, and allowance programs granted, paid,
payable, reimbursed, credited or incurred by Distributor, and (f) other records
containing data in sufficient detail reasonably necessary to determine all
amounts payable to or reimbursable by MEL under this Agreement (collectively,
the “Records”). Distributor shall keep and maintain complete and true books and
other records containing data in sufficient detail reasonably necessary to
determine all amounts payable to or reimbursable by MEL under this Agreement. MEL
shall have the right, at its own expense, on sixty (60) days prior written
notice to have such books and records and the Records (and all reasonably
related work papers and other reasonable information and documents necessary
for any determination under this Agreement or other related agreements) kept by
Distributor examined once per Calendar Quarter by a public accounting firm
appointed by MEL to verify the completeness and accuracy of the Records.

 

36.           TUPE:

 

a.             This
Section 36 applies to the extent that the provisions of the Transfer of
Undertakings (Protection of Employment) Regulations 2006 (or any equivalent
legislation in the Territory which is derived from the Acquired Rights
Directive (Directive 77/187 as amended by Directive 98/50/EC and consolidated
in 2001/23/EC (the “Regulations”) apply in respect of those MEL employees (or
those of its distributors/sub-contractors other than Distributor) working
exclusively on the sales and marketing of the Products immediately prior to the
Effective Date or in respect of those employees of the Distributor or any
sub-distributor working exclusively on the sales and marketing of the Products
immediately prior to the date of termination or expiry of this Agreement (the “Employees”).

 

b.             Subject
to the provisions of clause 36(c), (d) and (e) below, MEL shall indemnify
Distributor from and against all losses, costs, liabilities, expenses
(including reasonable legal fees and disbursements), actions, proceedings,
claims and demands (“Losses”) arising out of or in connection with:

 

(i).           any
claim by any Employee (or representative on the Employee’s behalf) for any
remedy including but not limited to any breach of contract, unfair dismissal,
redundancy, statutory redundancy, equal pay, unlawful discrimination, unlawful
deduction from wages, a protective award, an award under the National Minimum
Wage Act 1998 or the Working Time Regulations 1998 (or any legislation in the
Territory that is substantially identical and functionally equivalent) or for
breach of statutory duty or of any other nature as a result of anything done or
omitted to be done by MEL (or its distributors/sub-contractors other than
Distributor) in relation to their employment or termination of such employment
prior to the Effective Date;

 

(ii).          any
claim by any person (other than an Employee) who asserts that his rights and
liabilities as a result of his employment with MEL or its
distributors/sub-contractors (other than Distributor)  (or the termination of such employment)
whether before or after the Effective Date transfer to Distributor arising
solely under the Regulations;

 

21

 

(iii).         any
failure by MEL (or its distributors/sub-contractors other than Distributor) to
comply with its obligations under the Regulations, including but not limited to
its obligations to inform and consult with the Employees in relation to the
transfer of the sales and marketing services for the Products;

 

c.             In
the event that the Regulations are deemed or alleged to apply to transfer the
employment of any person (other than an Employee) from MEL (or its
distributors/sub-contractors other than Distributor) to Distributor at any
time, Distributor shall have the right to terminate such employment with
immediate effect and MEL shall indemnify Distributor and keep Distributor indemnified
against all Losses arising out of such employment or termination of such
employment subject to such termination of employment being carried out in
accordance with the lawful and reasonable directions of MEL.

 

d.             In
the event that either (i) Distributor informs MEL before the Effective Date
that it does not require the services of any or all of the Employees or (ii)
MEL informs Distributor before the Effective Date that it wishes to retain all
or any of the Employees, then MEL shall be fully responsible for those
Employees  (even if the Regulations are
alleged to apply) and Distributor shall have the right to terminate such
Employees’ employment with immediate effect (should the Regulations be alleged
to apply) and MEL shall indemnify Distributor and keep Distributor indemnified
against all Losses arising out of such employment or termination of such
employment (including any protective award) subject to such termination of
employment being carried out in accordance with the lawful and reasonable directions
of MEL.

 

e.             In
the event that Distributor informs MEL within three (3) months of the Effective
Date that it does not require the services of any or all of the Employees, then
Distributor shall have the right to terminate such Employees’ employment with
immediate effect and MEL shall indemnify Distributor and keep Distributor
indemnified against all Losses arising out of such employment from the
Effective Date and/or arising out of the termination of such employment
(including any protective award) subject to such termination of employment
being carried out in accordance with the lawful and reasonable directions of
MEL.

 

f.              Subject
to the provisions of clause 36(b), (c), (d) and (e) above, Distributor shall
indemnify MEL from and against all losses, costs, liabilities, expenses
(including reasonable legal fees and disbursements), actions, proceedings,
claims and demands (“Losses”) arising out of or in connection with:

 

(i).           any
claim by any Employee (or representative on the Employee’s behalf) for any remedy
including but not limited to any breach of contract, unfair dismissal,
redundancy, statutory redundancy, equal pay, unlawful discrimination, unlawful
deduction from wages, a protective award, an award under the National Minimum
Wage Act 1998 or the Working Time Regulations 1998 or for breach of statutory
duty or of any other nature as a result of anything done or omitted to be done
by Distributor or any sub-distributor in relation to their employment or
termination of such employment after the Effective Date but prior to the date
of termination or expiry of this Agreement;

 

(ii).          any
claim by any person (other than an Employee) who asserts that his rights and
liabilities as a result of his employment with Distributor or its
sub-distributor (or the termination of such employment) whether before or after
the date of termination or expiry of this Agreement transfer to MEL or its
distributors arising solely under the Regulations;

 

(iii).         any
failure by Distributor or its sub-distributors to comply with its or their
obligations under the Regulations, including but not limited to its obligations
to inform and consult with the Employees in relation to the transfer of the
sales and marketing services for the Products;

 

g.             In
the event that the Regulations are deemed or alleged to apply to transfer the
employment of any person (other than an Employee) from Distributor or its
sub-distributor to MEL or another of its distributors at any time, MEL or its
distributors shall have the right to terminate such employment with immediate
effect and Distributor shall indemnify MEL and keep MEL indemnified against all
Losses arising out of such employment or

 

22

 

termination of such employment
subject to such termination of employment being carried out in accordance with
the lawful and reasonable directions of Distributor.

 

h.             In
the event that either (i) MEL informs Distributor before the date of
termination or expiry of this Agreement that it or its distributors do not
require the services of any or all of the Employees or (ii) Distributor informs
MEL before the date of termination or expiry of this Agreement that it wishes
to retain all or any of the Employees, then Distributor shall be fully
responsible for those Employees (even if the Regulations are alleged to apply)
and MEL or its distributors shall have the right to terminate such Employees’
employment with immediate effect (should the Regulations be alleged to apply)
and Distributor shall indemnify MEL and keep MEL indemnified against all Losses
arising out of such employment or termination of such employment (including any
protective award) subject to such termination of employment being carried out
in accordance with the lawful and reasonable directions of Distributor.

 

i.              In
the event that MEL informs Distributor within three (3) months of the date of
termination or expiry of this Agreement that it or its distributors do not
require the services of any or all of the Employees, then MEL or its
distributors shall have the right to terminate such Employees’ employment with
immediate effect and Distributor shall indemnify MEL and keep MEL indemnified
against all Losses arising out of such employment from the Effective Date
and/or arising out of the termination of such employment (including any
protective award) subject to such termination of employment being carried out
in accordance with the lawful and reasonable directions of Distributor.

 

37.           Publicity.
MEL 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 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 37 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
37 shall not entitle a party to damages or to terminate this Agreement.

 

38.           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 MEL 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. MEL 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.

 

23

 

39.           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 of effect in the interpretation of this Agreement or in a
determination of the intent of either party hereto.

 

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 and
MEL:

 

Tauranga Ltd.

c/o Mason Hayes & Curran

South Bank
House, Barrow Street, Dublin 4, Ireland

Attention:
Tony Burke

Telecopy:  +353-1-614-5001

 

And:

 

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

 

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

 

24

 

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.           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.

 

42.           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.

 

43.           Confidentiality.
During the Term, each party shall maintain in strict confidence all commercial
information disclosed by the other party (which obligations 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.)

 

25

 

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

 

	
  TAURANGA LTD

  	
   

  	
  COCA-COLA ENTERPRISES INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Rodney Sacks

  	
   

  	
  By:

  	
  /s/ William W. Douglass III

  
	
  Name:

  	
  Rodney Sacks

  	
   

  	
  Name:

  	
  William W. Douglass III

  
	
  Its:

  	
  Director

  	
   

  	
  Its:

  	
  EVP & Chief Financial Officer

  

 

26

 

EXHIBIT A

Monster Energy Belgian Distribution Agreement

 

INITIAL
PRODUCT LIST

 

	
  Category  (500 milliliter cans, 500 milliliter bottles and 250 milliliter cans)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  MONSTER

  	
   

  	
  X

  
	
   

  	
   

  	
   

  
	
  MONSTER LO CARB

  	
   

  	
  X

  
	
   

  	
   

  	
   

  
	
  MONSTER RIPPER

  	
   

  	
  X

  
	
   

  	
   

  	
   

  
	
  MONSTER EXPORT

  	
   

  	
  X

  

 

27

 

EXHIBIT B

Monster Energy Belgian Distribution Agreement

 

THE
TERRITORY

 

Belgium

 

28

 

EXHIBIT B-1

Monster Energy International Distribution Agreement

 

INITIAL
SUB-DISTRIBUTOR

 

Coca-Cola Enterprises
Belgium b.v.b.a

 

29

 

EXHIBIT C

Monster Energy Belgian Distribution Agreement

 

THE
ACCOUNTS

 

	
  Account Type

  	
   

  	
  The Distributor’s 

  Accounts

  Exclusive ***, ****

  	
   

  	
  The Distributor’s

  Accounts

  Non-Exclusive ***, ****

  	
   

  	
  Accounts

  Reserved for MEL ***,

  ****

  	
   

  
	
  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

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  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.

 

30

 

	
  Account Type

  	
   

  	
  The Distributor’s 

  Accounts

  Exclusive ***, ****

  	
   

  	
  The Distributor’s

  Accounts

  Non-Exclusive ***, ****

  	
   

  	
  Accounts

  Reserved for MEL ***,

  ****

  	
   

  
	
  Alcoholic Lic.
  On-Premise*

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  General Sports
  Retailers non beverage outlets (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.

 

	
  MEL 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.

 

31

 

EXHIBIT D

Monster Energy Belgian Distribution Agreement

 

THE
TRADEMARKS

 

HANSEN’S

 

HANSEN’S NATURAL

 

MONSTER ENERGY

 

MONSTER

 

 MONSTER

 MONSTER ENERGY

 

UNLEASH THE BEAST

 

MONSTER LO CARB

 

MONSTER RIPPER

 

MONSTER EXPORT

 

32

 

EXHIBIT E

Monster Energy Belgian Distribution Agreement

 

COMPETING PRODUCTS

 

During
the term of this Agreement, 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.

 

33EXHIBIT 10.40

 

CONDITIONAL WAIVER AGREEMENT
REGARDING EVENT OF DEFAULT

 

THIS CONDITIONAL WAIVER AGREEMENT REGARDING EVENT OF DEFAULT (this “Conditional
Waiver”) is entered into as of September 30, 2008, by and between AMERICAN
BUSINESS LENDING, INC., a Texas corporation (“Borrower”), and WELLS
FARGO FOOTHILL, LLC, a Delaware limited liability company (“Lender”),
with reference to the following facts, which shall be construed as part of this
Conditional Waiver:

 

RECITALS

 

A.            Borrower and Lender have entered into that
certain Loan Agreement dated as of December 15, 2006, as amended by that
certain First Amendment to Loan Agreement dated as of February 27, 2007,
and that certain Second Amendment to Loan Agreement entered into as of July 30,
2007 to be effective as of June 30, 2007 (as amended or modified from time
to time, the “Loan Agreement”), pursuant to which Lender is providing
financial accommodations to or for the benefit of Borrower upon the terms and
conditions contained therein. Unless otherwise defined herein, capitalized
terms or matters of construction defined or established in the Loan Agreement
shall be applied herein as defined or established therein.

 

B.            Borrower has requested that Lender waive an existing
Event of Default under the Loan Agreement, and Lender is willing to do so to
the extent provided in, and subject to the terms and conditions of, this Conditional
Waiver.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the continued performance by
Borrower of its promises and obligations under the Loan Agreement and the other
Loan Documents, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender hereby agree
as follows:

 

1.             Ratification and Incorporation of Loan
Agreement and Other Loan Documents. Except to the extent waived under this Conditional Waiver, (a) Borrower
hereby acknowledges, confirms, and ratifies all of the terms and conditions set
forth in, and all of its obligations under, the Loan Agreement and the other
Loan Documents, and (b) all of terms and conditions set forth in the Loan
Agreement and the other Loan Documents are incorporated herein by this
reference as if set forth in full herein.

 

2.             Borrower’s Acknowledgement and Lender’s Conditional
Waiver of an Event of Default.
Borrower acknowledges that, immediately prior to the effectiveness of this Conditional
Waiver, an Event of Default has occurred and is continuing due to Borrower’s
failure to meet the minimum Tangible Net Worth test under Section 5.11(a) of
the Loan Agreement as of the end of its fiscal quarter ended September 30,
2008 (the “Applicable Default”). Lender hereby waives the Applicable
Default; provided, however, that an express condition precedent
to the effectiveness of such waiver is Borrower’s maintaining, on a
consolidated basis with Borrower’s Subsidiaries, Tangible Net Worth of not less
than $6,000,000 as of the end of such fiscal quarter after taking into account
any dividends paid or accrued.

 

1

 

3.             Conditions Precedent. Notwithstanding any other provision of this
Conditional Waiver, this Conditional Waiver shall be of no force or effect, and
Lender shall not have any obligations hereunder, until the following conditions
have been satisfied:

 

3.1            Execution of Conditional Waiver. Lender shall have received this Conditional
Waiver, duly executed by Borrower and Lender.

 

3.2            No Default or Event of Default. No Default or Event of Default shall have
occurred and be continuing, except for the Applicable Default.

 

4.             Representations and Warranties re Loan
Agreement. Borrower hereby
represents and warrants that the representations and warranties contained in
the Loan Agreement were true and correct in all material respects when made
and, except to the extent that (a) a particular representation or warranty
by its terms expressly applies only to an earlier date, or (b) Borrower
has previously advised Lender in writing as contemplated under the Loan
Agreement, are true and correct in all material respects as of the date hereof.
Borrower hereby further represents and warrants that no event has occurred and
is continuing, or would result from the transactions contemplated under this Conditional
Waiver, that constitutes or would constitute a Default or an Event of Default,
except for the Applicable Default.

 

5.             Miscellaneous.

 

5.1            Headings. The various headings of this Conditional Waiver are inserted for
convenience of reference only and shall not affect the meaning or
interpretation of this Conditional Waiver or any provisions hereof.

 

5.2            Counterparts. This Conditional Waiver may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which together shall be deemed to be one and the same
instrument. Delivery of an executed counterpart of a signature page to
this Conditional Waiver by facsimile transmission shall be effective as
delivery of a manually executed counterpart thereof.

 

5.3            Interpretation. No provision of this Conditional Waiver shall
be construed against or interpreted to the disadvantage of any party hereto by
any court or other governmental or judicial authority by reason of such party’s
having or being deemed to have structured, drafted or dictated such provision.

 

5.4            Complete Agreement. This Conditional Waiver constitutes the
complete agreement between the parties with respect to the subject matter
hereof, and supersedes any prior written or oral agreements, writings,
communications or understandings of the parties with respect thereto.

 

5.5            Governing Law. This Conditional Waiver shall be governed
by, and construed and enforced in accordance with, the laws of the State of New
York applicable to contracts made and performed in such state, without regard
to the principles thereof regarding conflict of laws.

 

5.6            Effect. Upon the effectiveness of this Conditional Waiver, each reference in
the Loan Agreement to “this Agreement,” “hereunder,” “hereof” or words of like
import shall mean and be a reference to the Loan Agreement as amended hereby
and each 

 

2

 

reference
in the other Loan Documents to the Loan Agreement, “thereunder,” “thereof,” or
words of like import shall mean and be a reference to the Loan Agreement as affected
by the conditional waiver contained herein.

 

5.7            Conflict of Terms. In the event of any inconsistency between
the provisions of this Conditional Waiver and any provision of the Loan
Agreement, the terms and provisions of this Conditional Waiver shall govern and
control.

 

5.8            No Novation or Waiver. Except as specifically set forth in this Conditional
Waiver, the execution, delivery and effectiveness of this Conditional Waiver shall
not (a) limit, impair, constitute a waiver by, or otherwise affect any
right, power or remedy of, Lender under the Loan Agreement or any other Loan
Document, (b) constitute a waiver of any provision in the Loan Agreement
or in any of the other Loan Documents or of any Default or Event of Default
that may have occurred and be continuing, or (c) alter, modify, amend or
in any way affect any of the terms, conditions, obligations, covenants or
agreements contained in the Loan Agreement or in any of the other Loan
Documents, all of which are ratified and affirmed in all respects and shall
continue in full force and effect.

 

[THE REMAINDER OF
THIS PAGE IS INTENTIONALLY BLANK]

 

3

 

IN WITNESS WHEREOF, the parties hereto have executed
this Conditional Waiver Agreement Regarding Event Of Default as of the day and
year first above written.

 

	
   

  	
  AMERICAN BUSINESS LENDING, INC.,

  
	
   

  	
  a Texas corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Charles P. Bell, Jr.

  
	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO FOOTHILL, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Laurel L. Varney

  
	
   

  	
  Vice President

  
	
   

  	
   

  

 

[Signature Page to
Conditional Waiver Agreement Regarding Event Of Default]

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