ATTENTION:  PLEASE READ THIS ACH TRANSACTION DATA PRIVACY AND SECURITY POLICY CAREFULLY BEFORE PARTICIPATING IN ANY ACH TRANSACTION WITH LAKE BEVERAGE.  PARTICIPATING IN ANY ACH TRANSACTION WITH LAKE BEVERAGE INDICATES THAT YOUR COMPANY ACCEPTS THIS ACH TRANSACTION DATA PRIVACY AND SECURITY POLICY.

ACH TRANSACTION DATA PRIVACY AND SECURITY POLICY

Introduction

Lake Beverage Corporation (“LB”) has established this ACH Transaction Data Privacy and Security Policy (the “Policy”) in connection with its participation in Automated Clearing House (ACH) debit and credit transactions. This Policy describes the data privacy and security guidelines for participating in ACH transactions involving a LB bank account (the “ACH Transactions”) and is designed so that all such transactions are undertaken in compliance with applicable laws, rules, regulations and guidelines.

Data Privacy and Security Guidelines

To participate in ACH Transactions with LB, your company should employ commercially reasonable safeguards designed so that that all sensitive financial information and all personally identifiable information (defined below) that it collects or receives from LB in connection with such transactions is protected against unauthorized disclosure or use.  These safeguards should include the following:

• Transmissions of bank account numbers should be encrypted through the use of SSL.
• Access to bank account numbers should be logged.
• Computer systems used to originate or process ACH Transactions should have antivirus software installed and the virus definitions should be updated regularly.
• Computer systems used to originate or process ACH Transactions should be updated with the latest security patches within 30 days of the release.
• Access to bank account numbers or personally identifiable information should be restricted to only those persons who need-to-know such information.
• ACH Transactions should comply with all applicable data privacy and security protocols under applicable laws, rules, regulations and guidelines, including without limitation:
  • The National Automated Clearing House Association (“NACHA”) Rules and Guidelines, a copy of which is available for purchase at: https://www.nacha.org/2015-NACHA-Operating-Rules;
  • Section 208 of the New York State Technology Law, a copy of which is accessible at: http://public.leginfo.state.ny.us/lawssrch.cgi?NVLWO; and
  • Section 899-aa of the New York State General Business Law, a copy of which is accessible at: http://public.leginfo.state.ny.us/lawssrch.cgi?NVLWO.

For the purposes of this Policy, the term “personally identifiable information” means any information concerning a natural person which, because of name, number, personal mark, or other identifier, can be used to identify such natural person.  For example, “personally identifiable information” would include (i) a first and last name, (ii) a home or other physical address, including street name and name of a city or town, (iii) an e-mail address, (iv) a telephone number, or (v) a social security number.

Policy Changes

This Policy became effective as of the date set forth above.  LB reserves the right to make changes to this Policy from time to time.  We will update the effective date posted at the top of this webpage and post an updated Policy for any changes we make.  Any changes to this Policy are effective immediately after being posted by LB.

Miscellaneous

This Policy governs the relationship between LB and your company.  By continuing to do business with LB, your company agrees to be bound by this Policy, which shall govern and control in the event of any inconsistent or conflicting terms in any other agreement between the parties.

Contact LB

If you have any questions regarding this Policy, please contact LB at the following address:

Lake Beverage Corporation
900 John Street
West Henrietta, NY 14586

PURCHASE TERMS AND CONDITIONS

PART I

1.     Terms and Acceptance.  Each order for products (as defined below) now or hereafter issued by our company (each an “Order” and collectively “Orders”) shall be deemed to have been accepted by your company (“Supplier”) based upon and subject to the terms and conditions stated herein upon the occurrence of the earliest of: (i) Supplier’s written acceptance of any Order, (ii) Supplier’s confirmation of its acceptance of any Order, (iii) Supplier’s commencement of performance under any Order, (iv) Supplier’s shipment of the Products ordered under any Order, (v) Supplier’s acceptance of any payment from our company (“Distributor”) for the Products under any Order, or (vi) entering into a Distribution Agreement (as defined herein).  The offer contained in an Order is made on the terms and conditions stated herein and no others.  Any additional, inconsistent or different terms stated in any proposal, quotation, confirmation, sales order, invoice, acceptance document or other document issued by Supplier or contained in any of Supplier’s Web Terms shall be of no force and effect.  Accordingly, Supplier’s acceptance of an Order is expressly subject and limited to the terms and conditions hereof.  Notice of objection is hereby given to any proposed term or condition or any alteration whether perceived as major or minor in nature. No additions, subtractions, or other modification of the terms and conditions hereof shall be binding upon Distributor unless expressly accepted in a signed writing by Distributor in a manner other than through the use of Supplier’s Web Terms.

2.     Definitions.  (a)  The term “Person” means any natural person, corporation, division of a corporation, company, partnership, proprietorship, joint venture, association, trust, estate, foundation or any other entity, whether or not incorporated, and any governmental authority, unit or agency.

(b)  The term “Products” means (i) the beverages specified on Orders together with all enhancements and modifications to, and changes in ingredients of, any of such beverages, irrespective of whether or not the term “new” or “improved” or words of similar import are added thereto or if Supplier uses a different product code or name therefor; and (ii) any existing products and new products in any way associated with any of the Marks to the extent Distributor agrees to distribute those products.

(c)  The term “Territory” means the geographical area within which Distributor distributes the Products, or as otherwise mutually agreed in writing between Supplier and Distributor.

(d)  The term “Marks” means those trademarks, trade names, copyrighted materials, logos, slogans, designs and distinctive bottles, advertising and packaging which are used, at any time during the term hereof, in connection with the production, sale, marketing or distribution of Products or otherwise used to identify the Products (including, without limitation, those set forth herein) and any enhancements, modifications or derivatives thereof and changes thereto.

(e) The term “Web Terms” means any click-wrap, browse-wrap, or other terms and conditions contained on Supplier’s website or web portal or any third party website or web portal used in connection with ordering Products or the transactions contemplated hereby, regardless of whether Distributor has indicated its assent thereto as a condition of using such website or web portal.

3.     Delivery, Risk of Loss and Related Matters.   (a) With respect to each Order, Supplier shall deliver conforming Products on the delivery dates specified therein.  Such delivery dates will comply with Supplier’s applicable lead time requirements made available for its most preferred wholesalers on the date the Order is issued.  Products will not be delivered sooner than three (3) days prior to the stated delivery date or more than five (5) days thereafter.  Orders may be issued electronically or in writing.

(b)  Should Distributor desire to cancel an Order, Distributor will notify Supplier and Supplier will make good faith efforts to redirect the Products covered by such Order to another distributor.  If Supplier is unable to do so despite such efforts, shipment of the Products pursuant to that Order will be made to Distributor who will make payment therefor in accordance with these terms and conditions.

(c)  Products ordered pursuant to Orders shall be tendered by Supplier in a single delivery.  Deliveries will be made in accordance with the mercantile symbol or trade term, as the case may be, set forth in the applicable Order, or if not so set forth, f.o.b. Supplier’s applicable plant.

4.     Purchase Price and Payment Terms.  (a) Subject to paragraph 14(b), the price payable for Products is as set forth in each applicable Order.  Distributor shall pay each invoice within thirty (30) days after receipt, at Distributor’s warehouse, of the Products to which such invoice pertains.  Distributor may make such payment by company check.

(b)  The wholesale price for Products specified in an issued Order pursuant to paragraph 4(a) is not subject to increase and includes all transportation and shipping charges, crating, packaging, insurance premiums and all federal, state and local sales, use, excise and other taxes, duties and governmental charges imposed on or with respect to the sale or transport of such Products to Distributor.

5.     Inspection.  Within sixty (60) days after Supplier duly tenders delivery of the Products ordered pursuant to an Order, Distributor shall have the right, but not the obligation, to inspect the Products before accepting them.  Inspections performed by Distributor will not constitute acceptance nor relieve Supplier of its obligation to tender conforming Products in accordance herewith.

6.     Packaging.  All Products delivered pursuant hereto shall (i) be placed in containers conforming to Distributor’s requests, or in the absence of such requests, in recognized commercial containers designed to prevent damage to the Products and which are suitable for domestic or international shipment of the Products, as the case may be, with such containers numbered and labeled with the order number, stock number, contents, and weight and designed to prevent damage to Products in transit; and (ii) contain an itemized packing slip.  Distributor’s count or weight shall be final and conclusive on shipments of Products not accompanied by appropriate packing slip.

7.     Representations and Warranties of Supplier. Supplier hereby represents and warrants to Distributor as follows:

(a)     Supplier has obtained and holds all necessary federal, state and local licenses, authorizations and permits to operate its business and to sell Products to Distributor;

(b)     all Products sold by Supplier to Distributor shall be manufactured, bottled, packaged and labeled in conformity with all applicable federal, state and local laws, rules and regulations of the United States (including, without limitation, the Territory) and the country in which each Product is produced;

(c)     Products delivered pursuant hereto are fit for human consumption, are merchantable, of good average quality, and are free from any and all defects and when delivered to the delivery point, have a remaining shelf life for bottled and draught products specified in Supplier’s quality standards;

(d)     Products sold pursuant hereto will be free from any security interests, liens and Supplier owns or has the right to use all intellectual property rights relating to the Products, including, without limitation, all Marks, free from any claims concerning infringement or the like;

(e)     Supplier owns or has the right to use all intellectual property rights relating to the Products, including, without limitation, all Marks, free from any claims concerning infringement or the like, has the right to grant a license to Distributor to use the Marks, and the use of such intellectual property in connection with the sale of the Products by Distributor will not subject Distributor to any such infringement claims; and

(f)     Supplier has all corporate authority to perform its obligations arising pursuant hereto and compliance with the terms hereof will not conflict with or violate any other agreement or understanding to which Supplier is a party or is bound.

8.     Non-Conformities; Remedies; Waivers and Related Matters.  (a) The occurrence of any one or more of the following events shall constitute an “Event of Default”: (i) tendering delivery of any Products which fail to conform in all respects to any of the provisions hereof (“Non-conforming Products”); (ii) Supplier’s breach of or failure to perform any of its obligations hereunder of under any Orders; (iii) Supplier’s breach or misrepresentation of any representation or warranty made by Supplier hereunder or under any Orders; or (iv) Supplier’s termination of the Distribution Relationship (as defined in Part II of the provisions hereof), if applicable, other than in accordance with paragraph 15 hereof.(b) Upon the occurrence of an Event of Default, Distributor shall be entitled, but shall not be required, to exercise all, any one or any number of the following rights and remedies: (i) with respect to late deliveries, Distributor may extend the time for delivery, in which case such Products shall be shipped in an expedited manner specified by Distributor, and any additional expenses incurred for expedited shipping shall be paid by Supplier; (ii) with respect to Non-conforming Products, Distributor shall have the right to obtain replacement Products from Supplier and such Products shall be replaced with Products which are in strict compliance with the provisions hereof; (iii) reject or revoke acceptance, as the case may be, of all or any portion of the shipment of Products containing any Non-conforming Products; and (iv) exercise any other rights and remedies specified in paragraphs 10, 15, 16 and 17.  Distributor shall exercise any one or more of the foregoing rights and remedies by giving written notice to Supplier of its intention to do so.  Distributor shall not be liable to Supplier on account of exercising any such rights or remedies.  Supplier hereby acknowledges and agrees that the occurrence of an Event of Default shall constitute a substantial impairment of value to Distributor of the particular shipment in question, the entire Order in question, any then pending Other Orders (as defined in paragraph 14) and, if applicable, the Distribution Agreement, so as to entitle Distributor to exercise any one or all of the remedies specified herein and Supplier hereby waives its right to cure the default in question.

(b) Upon the occurrence of an Event of Default, Distributor shall be entitled, but shall not be required, to exercise all, any one or any number of the following rights and remedies: (i) with respect to late deliveries, Distributor may extend the time for delivery, in which case such Products shall be shipped in an expedited manner specified by Distributor, and any additional expenses incurred for expedited shipping shall be paid by Supplier; (ii) with respect to Non-conforming Products, Distributor shall have the right to obtain replacement Products from Supplier and such Products shall be replaced with Products which are in strict compliance with the provisions hereof; (iii) reject or revoke acceptance, as the case may be, of all or any portion of the shipment of Products containing any Non-conforming Products; and (iv) exercise any other rights and remedies specified in paragraphs 10, 15, 16 and 17.  Distributor shall exercise any one or more of the foregoing rights and remedies by giving written notice to Supplier of its intention to do so.  Distributor shall not be liable to Supplier on account of exercising any such rights or remedies.  Supplier hereby acknowledges and agrees that the occurrence of an Event of Default shall constitute a substantial impairment of value to Distributor of the particular shipment in question, the entire Order in question, any then pending Other Orders (as defined in paragraph 14) and, if applicable, the Distribution Agreement, so as to entitle Distributor to exercise any one or all of the remedies specified herein and Supplier hereby waives its right to cure the default in question.

9.     Indemnification.  Supplier hereby agrees to indemnify, protect and hold harmless Distributor, its directors, officers, shareholders, employees, agents and affiliates (Distributor and each such persons being collectively referred to as the “Indemnified Parties”), from and against any and all liabilities, losses, claims, obligations, damages, actions, proceedings, costs, expenses (including, without limitation, reasonable legal fees) and judgments (collectively, “Damages”) of whatsoever kind and nature, imposed upon, incurred by or asserted, threatened or awarded against any of the Indemnified Parties directly or indirectly arising out of, relating to, or resulting from: (i) Supplier’s breach of any covenants made by Supplier under the provisions hereof; (ii) the breach of any representation or warranty made by Supplier to Distributor under the provisions hereof concerning the quality or attributes of the Products; (iii) Distributor’s use of the Marks in the Territory; (iv) the quality or condition of or inherent defect in the Products at that time of delivery to Distributor; (v) any injury or damage to person or property as a result of the consumption of the Products; and (vi) Supplier’s termination of the Distribution Relationship, if applicable, other than pursuant to and in accordance with paragraph 15 hereof.  Such indemnity shall include, but shall not be limited to, reasonable expenses, attorneys’ fees, court costs, investigations, proceedings, litigation and the settlement of any such claim, provided, however, that Supplier shall not be liable pursuant to the foregoing indemnification provision in respect of Damages that a court of competent jurisdiction shall have determined by final judgment (not subject to further appeal) to be primarily and directly the result of the willful misfeasance or gross negligence of any of the Indemnified Parties.  Any and all amounts due for indemnity pursuant to these terms and conditions shall be promptly paid by the Supplier as Damages are incurred, and in any event within thirty (30) days after demand therefor.  Payments will be made in accordance with the instructions of the Indemnified Party in question at the time.

10.     Cumulative Remedies.  Subject to paragraph 16, all of Distributor’s rights and remedies pursuant to these terms and conditions shall be cumulative and not exclusive and shall be in addition to all other rights and remedies available under applicable law.  Failure by Distributor to exercise any right, remedy or option pursuant to these terms and conditions or under applicable law, or delay in exercising same, will not operate as a waiver, it being understood that no waiver by Distributor will be effective unless it is in writing and signed by Distributor, and then only to the extent specifically stated.

11.     Miscellaneous Provisions.  (a)  Notices.  All notices permitted, required or provided for hereunder shall be made in writing, and shall be deemed adequately delivered if delivered by hand or by the mailing of the notice in the U.S. mail, pre-paid certified or registered mail, return receipt requested, or by facsimile or by a recognized courier service that regularly maintains records of its pick-ups and deliveries, to the parties at their respective addresses set forth on the face of an Order or to any other address designated by a party hereto by written notice of such address change.  Notices delivered by mail shall be deemed given when deposited in a U.S. mailbox or delivered to a U.S. post office and it will be deemed received two (2) days thereafter, where the recipient’s address is located in the United States.  Notices sent by courier service will be deemed given when deposited with the courier service and it will be deemed received the next day, where the recipient’s address is located in the United States, and three (3) days thereafter, where the recipient’s address is located outside the United States.

(b)   Modification or Amendment.  The provisions hereof may not be modified or amended except by an instrument in writing signed by the party or parties against whom enforcement is sought.  For purposes hereof, the provisions hereof may not be modified by Supplier’s Web Terms even if Distributor assents to such terms through the use of a supplier portal or website.  Further, for purposes hereof, a modification includes, without limitation, a change in the competitive circumstances under which a Distribution Relationship is entered into and is performed which is caused by Supplier without fault on the part of Distributor.

(c)   Invalidity of Provision. Any term or provision hereof which is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions hereof or affecting the validity or enforceability of any of the terms or provisions hereof in any other jurisdiction.  Further, to the extent that any term or provision hereof is deemed invalid, void or otherwise unenforceable, but may be made enforceable by amendment thereto, the parties agree that such amendment may be made so that the same shall, nevertheless, be enforceable to the fullest extent permissible under the laws and public policies applied in any such jurisdiction in which enforcement is sought.

(d)   Governing Law.  Distributor and Supplier acknowledge and agree that these provisions and the Distribution Agreement are contracts made in the United States, State of New York and that same evidence a transaction involving interstate commerce.  All questions pertaining to the validity, construction, execution and performance of these provisions and Order and, if applicable, the Distribution Relationship (including the Distribution Agreement) shall be construed and governed in accordance with the laws of the United States of America, State of New York, but subject to the qualifications specified in the arbitration provisions of Part II of these provisions, and without giving effect to the principles of (i) comity of nations or (ii) conflicts or choice of law provisions thereof, and same shall not be governed by the provisions of the U.N. Convention on Contracts for the International Sale of Goods.  The Federal Arbitration Act (Title 9 of the United States Code) shall govern the interpretation, enforcement, and proceedings of the arbitration pursuant to the provisions hereof and, if applicable, the Distribution Relationship (including the Distribution Agreement).  Both Distributor and Supplier further agree that service of process for any arbitration proceeding shall be made by either a recognized courier service that regularly maintains records of its pick-ups and deliveries or by certified mail, return receipt requested, addressed to the parties at their respective addresses set forth on the face of an Order.  In addition, a party may at its option, elect to use any other method of service of process authorized by applicable law.

(e)   Waiver of Breach.  Any waiver of any of the provisions herein, or of any inaccuracy in or non-fulfillment of any of the representations, warranties or obligations pursuant to these terms and conditions, or contemplated hereby, shall not be effective unless made in writing and signed by the party against whom the enforcement of any such waiver is sought.  A waiver given in any case shall only apply with respect to that particular act, omission or breach, and shall not be effective as to any further or subsequent act, omission or breach, regardless of whether they be of the same or similar nature.

(f)   Assignment.  Supplier may not assign or otherwise delegate any of its rights or obligations hereunder or under the Distribution Agreement, if applicable, and Distributor may not assign any of its rights hereunder or under the Distribution Agreement, if applicable, without the prior written consent of the other party, which consent will not be unreasonably withheld.   In the event Distributor seeks to assign any of its rights hereunder or under the Distribution Agreement, if applicable, Supplier will not unreasonably withhold its consent and will give its consent if the proposed assignee is in reasonably sufficient financial condition to perform its obligations hereunder and has experience distributing beverage products.  Supplier shall give Distributor written notice of its decision whether to give or withhold its consent within sixty (60) days after receipt of Distributor’s request to assign its rights under the Distribution Agreement, if applicable.  If, within that time, Supplier gives written notice to Distributor of its decision to withhold its consent within such 60 day period, then Distributor shall have the right and option to require Supplier, and Supplier will be bound, to immediately purchase such rights, at the price, and on the terms and conditions set forth in the agreement between Distributor and the proposed assignee.  Distributor will exercise its right to do so by providing written notice thereof to Supplier.  If Supplier fails to give such written notice to Distributor within that time, Supplier shall be deemed to have given its consent to Distributor.  The parties acknowledge and agree that if the proposed assignee satisfies the aforementioned criteria, then the assignment of Distributor’s rights under the Distribution Agreement, if applicable, will not be deemed to materially change the duty of the Supplier, or increase materially the burden or risk imposed upon the Supplier under the Distribution Agreement, if applicable, or impair materially the Supplier’s chance of obtaining return performance.  Notwithstanding anything to the contrary contained herein, Distributor shall have the right to assign the Distribution Agreement, if applicable, without Supplier’s consent to an affiliate of Distributor upon giving Supplier at least thirty (30) days prior written notice of Distributor’s intention to do so.  For purposes hereof, an “affiliate” of Distributor is any Person directly or indirectly controlling, controlled by or under common control with Distributor.  Any attempted assignment in violation of this paragraph 11(f) shall be null and void, without legal force or effect.

(g)   Survival.  The terms of this paragraph 11(g) and paragraphs 7, 9, 10, 15, 16, 17 and 18 shall survive the acceptance of the Order and termination of the Distribution Relationship, if applicable.

(h)   Headings.  The headings in the Order are intended solely for convenience of reference and shall be given no effect in the construction or interpretation of the Order.

(i)   Entire Agreement.  The provisions hereof, the Orders, the Distribution Agreement and the Distribution Relationship, constitute and contain the entire agreement and understanding between the parties, and supersedes and replaces all prior negotiations and all agreements, proposed or otherwise, whether written or oral, concerning the subject matter hereof.  No course of dealing, usage of trade or course of performance shall be relevant to modify any express provision hereof.

(j)   Independent Contractor Status and Related Matters.   Distributor’s status pursuant to these terms and conditions shall at all times be that of an independent contractor.  Nothing in the Order is intended, nor shall it be construed, to (i) make Supplier and Distributor partners or joint venturers nor grant a right in or to any business activity or investments of or to the income or proceeds disbursed therefrom; or (ii) create a relationship between Supplier and Distributor of principal and agent or employer and employee. Supplier is only concerned with the results to be accomplished by Distributor in its marketing, distribution and sale of Products pursuant hereto; the manner and means to be employed by Distributor in achieving such results are entirely within its own authority and control.  Distributor is free to schedule its own operations and truck routing.

(k)   Governing Language.  The parties hereto agree that all written documents between them be prepared in the English language only and such language shall be the governing language. Les parties aux presentes confirment qu’elles ont agreé que tous les documents entre eux par écrit soit redigé dans la langue anglaise seulement, et telle langue sera lan langue de contrôle.

PART II

In addition to the provisions set forth in Part I hereof, the provisions of this Part II are also applicable in the event an Order is issued pursuant to a Distribution Relationship.  For purposes these provisions, the term “Distribution Relationship” means that (i) Supplier has granted Distributor the right to purchase Products from Supplier for the purpose of distributing the Products in a particular geographic territory, which grant may be verbal, in writing, pursuant to a signed agreement by and between Supplier and Distributor or through course of performance or otherwise (a “Distribution Agreement”); and (ii) Distributor has issued, or in the contemplation of the parties will issue, multiple purchase orders for Products under circumstances where Supplier knows or should know that said purchase orders are being issued for the purpose of distributing Products in such territory.  Notwithstanding anything to the contrary contained herein, the provisions hereof shall supplement the terms of any Distribution Agreement, however, in the event of a conflict or inconsistency between the express provisions hereof, on the one hand, and a Distribution Agreement or Supplier’s Web Terms, on the other hand, the express provisions hereof will govern and control.

12.     Application of Governing Statute.  Supplier and Distributor acknowledge and agree that Distributor, through its distribution, marketing and promotion of the Products in the Territory, is building the brand recognition and goodwill of the Products, as contemplated and recognized under New York Alcoholic Beverage Control Law § 55-c (“ABC Law”).  Therefore, the parties acknowledge and agree that the provisions of ABC Law will govern and control the terms hereof and the Distribution Relationship whether or not the Products sold by Supplier to Distributor are beer, except that the provisions of ABC Law § 55-c(2)(e)(i) and § 55-c(4)(c) shall not apply to any Distribution Agreement to the extent concerning any Products that are not beer.  For the purposes hereof and the Distribution Relationship, (i) Supplier will be deemed to be a “brewer” within the meaning ABC Law; (ii) Distributor will be deemed to be a “beer wholesaler” within the meaning of ABC Law; (iii) the Distribution Agreement between Distributor and Supplier will be deemed to be an “agreement” within the meaning of ABC Law; (iv) the terms “beer”, “cider”, “liquor”, “spirits” and “wine” will have the meanings ascribed thereto in New York Alcoholic Beverage Control Law § 3; (v) subject to the provisions of this paragraph 12, the term “good cause” shall have the meaning ascribed thereto in ABC Law § 55-c(2)(e); and (vi) the following terms as used in ABC Law § 55-c(2)(e)(i)(A) will have the following meanings: “essential” means indispensable and of the utmost importance to the Supplier, without which the Supplier could not operate profitably; and “contiguous states” means New Jersey, Pennsylvania, Connecticut and Vermont.

13.     Appointment; Exclusive Territory.  (a) By Supplier’s acceptance of these provisions pursuant to paragraph 1 or otherwise, and as a result of the Distribution Relationship, Supplier hereby appoints Distributor as the exclusive distributor of Products within the Territory, and hereby grants to Distributor the related distribution rights to do so.  Accordingly, Supplier will not directly or indirectly sell or otherwise distribute Products to any Person located within the Territory or authorize or permit any other Person to do so, other than Distributor.

(b)  Supplier agrees that it will not directly or indirectly sell or otherwise distribute to an authorized distributor of Supplier located outside of the Territory, Products (i) that Supplier knows or has reason to believe are destined for sale or have been sold, directly or indirectly, to Persons within the Territory; or (ii) in quantities that Supplier knows or has reason to believe are in excess of reasonable sales expectancies within that distributor’s specific assigned market or territory.  Supplier will also use commercially reasonable efforts to protect Distributor’s exclusive rights to sell Products in the Territory including, without limitation, discontinuing sales to infringing resellers.

(c)  Distributor may market, sell and otherwise distribute Products to any Person located or taking delivery within the Territory in any reasonable commercial manner not inconsistent with Distributor’s licenses and permits.  However, Distributor has the right to sell Products to another authorized distributor of Supplier located outside of the Territory for the purpose of eliminating Product shortages or inventory imbalances.

(d)  Notwithstanding anything to the contrary contained herein or under applicable law, Distributor’s obligation to market, distribute, sell or otherwise promote the sale of Products pursuant to the Distribution Relationship will be based on reasonable commercial efforts, and no greater.  It is acknowledged that in addition to Supplier’s right to market, promote and advertise the Products in the Territory, Distributor will market, advertise or promote the Products at such times, and in such manner, as is mutually agreed, in writing, between Distributor and Supplier.  In addition, Supplier hereby acknowledges that Distributor is currently, and will be in the future, engaged in the business of marketing, selling, promoting and distributing other beverage products, some of which are or may be competitive with, or constitute substitutes for, Products.  As such, it is specifically understood and agreed that such activities shall not be deemed improper or violative of any obligation of Distributor hereunder, under the Distribution Agreement or under applicable law.  Supplier will periodically provide Distributor with reasonable contributions toward the costs to be incurred by Distributor in any mutually agreed upon promotion, marketing or other support of the Products.

(e)  Supplier hereby grants to Distributor the right and license to use the Marks (i) for purposes of marketing, selling, promoting and otherwise distributing Products within the Territory; and (ii) for purposes of manufacturing and distributing promotional materials in connection with the promotion and sale of the Products.

14.     Supply.  (a) During the term of the Distribution Relationship, Supplier hereby agrees to sell to Distributor, and Distributor agrees to purchase from Supplier, Distributor’s requirements for Products to be distributed to Persons located or taking delivery within the Territory.  Distributor’s requirements for Products are as set forth in an Order, and as set forth in other purchase orders subsequently issued from time to time by Distributor pursuant to the Distribution Relationship (such other subsequent orders are collectively “Other Orders”).  Supplier will accept Orders and fulfill Distributor’s requirements for Products pursuant to the provisions hereof and thereof.

Supplier hereby acknowledges and agrees that Distributor’s requirements for Products may significantly increase relative to its prior requirements and that Supplier will supply such increased requirements of Distributor, even if same are substantially disproportionate from Distributor’s previous requirements.  Supplier further acknowledges and agrees that such increased requirements will be permissible even if the reason therefor is not currently contemplated by the parties hereto.

Supplier further acknowledges and agrees that Distributor shall have the right to reduce its requirements for Products at any time or from time to time for any bona fide business reason or none at all, even if such reduction in requirements is substantially disproportionate relative to Distributor’s previous requirements.

(b)  Prices payable by Distributor for Products pursuant to the Distribution Agreement will be Supplier’s established wholesale prices for the Products, effective at the time Distributor issues the purchase order in question.  If Supplier has more than one (1) wholesale price, the wholesale price to be paid by Distributor will be the lowest wholesale price being offered to any other wholesale customer or distributor in the State of New York at the time of Distributor’s issuance of such purchase order.

Supplier will use its reasonable efforts to advertise and promote the sale of the Products in the Territory under the Marks.  Supplier will provide Distributor with display, merchandising and point of sale materials for placement in on-premise and off-premise accounts.

It is understood and acknowledged by Supplier and Distributor that the Distribution Agreement constitutes, and will be deemed to constitute, an installment contract within the meaning of the New York Uniform Commercial Code and that all Orders shall be construed to be orders issued under an installment contract constituting the Distribution Agreement, and are not to be construed as individual unitary contracts. All amounts due from Distributor under Orders or the Distribution Agreement are subject to off-set by Distributor for any claim Distributor may have under the provisions hereof, any Other Orders or the Distribution Agreement.

15.     Term; Termination.   (a)  The term of the Distribution Relationship will continue until terminated pursuant to paragraphs 15(b) or 15(c).

(b)  Subject to paragraph 16, Supplier shall only have the right to terminate the Distribution Relationship pursuant to and in accordance with the ABC Law and the provisions hereof except that the provisions of ABC Law § 55-c(2)(e)(i) and § 55-c(4)(c) shall not apply to any Distribution Relationship to the extent it concerns Products that are not beer.

(c)  Subject to paragraph 16, Distributor shall have the right to terminate the Distribution Relationship as follows: (i) immediately upon the occurrence of an Event of Default by giving Supplier written notice of its intention to do so; or (ii) at any time, for any reason or no reason at all, by giving at least thirty (30) days prior written notice of its intention to do so.

(d)  If either party initiates a termination of the Distribution Relationship, then during any notice or cure period specified herein or in ABC Law, the parties will continue to perform their respective obligations pursuant to these terms and conditions.  Accordingly, the parties will do the following during any such notice or cure periods (the “Interim Period Obligations”):

(i)     Supplier will continue to supply Distributor’s requirements for Products and Distributor will continue to distribute same in the Territory;

(ii)     Distributor will pay for Products when due as provided herein; and

(iii)     in the event the Distribution Relationship is terminated, the parties will comply with the provisions of paragraph 16.

(e)  Notwithstanding anything to the contrary contained herein, regardless of whether termination has been initiated or any relative cure or notice periods have expired, the Distribution Relationship may not be terminated prior to the payment by Supplier of the amounts due Distributor pursuant to paragraph 16(b) and the parties shall be obligated to continue to perform the Interim Period Obligations until such payment is duly made.

16.     Post-termination Obligations.

(a)     If either party terminates the Distribution Relationship pursuant to and in accordance with paragraph 15 then:

(i)     Supplier will purchase from Distributor and Distributor will sell to Supplier all of Distributor’s then saleable inventory and p.o.s. materials at laid-in-cost, f.o.b. Distributor’s warehouse.   Such purchase and sale of inventory will be consummated within ten (10) days following the effective date of termination of the Distribution Relationship and payment of the amounts due Distributor pursuant to paragraph 16(b).  “Saleable inventory” means undamaged Products having a remaining shelf life of at least 30 days pursuant to Supplier’s then published date code or freshness policies, and that are free from any and all liens, security interests and encumbrances.  “Laid-in-cost” means the price paid by Distributor net of any discounts, credits, allowances, or rebates, for the Products or p.o.s. materials in question for delivery at the applicable f.o.b. shipping point plus freight charges incurred by Distributor in transporting same from such shipping point to its warehouse, plus all federal, state and local taxes paid by Distributor with respect to the purchase of such Product or p.o.s. materials, as the case may be.  Supplier will pay for such inventory when delivered at Distributor’s warehouses; such payment will be by Supplier check; and

(ii)     Supplier will refund deposits on kegs returned by Distributor within three (3) months following the date of the termination of the Distribution Relationship.

(b)    (i) If Supplier terminates the Distribution Relationship other than for “good cause” in accordance with ABC Law § 55-c(2)(e)(ii), Supplier will immediately pay

to Distributor a lump sum equal to the fair market value of the Distributor’s business, including the applicable distribution rights which have been lost or diminished by reason of the Supplier’s termination (the “Fair Market Value”).  If Supplier and Distributor cannot mutually agree to the Fair Market Value, then Supplier shall pay Distributor a good faith estimate of the Fair Market Value immediately on termination of the Distribution Relationship.

If Distributor believes that the payment made by Supplier was less than the Fair Market Value, then the Distributor may within forty-five (45) days of termination submit the question of Fair Market Value to binding arbitration pursuant to Section 17, and the panel shall determine whether the Supplier’s payment meets the requirements of this section 16b(i). If the arbitration panel rules that the payment made by the Supplier to the Distributor upon termination was less than the Fair Market Value, then the Supplier must pay the Distributor the difference between the payment made to the Distributor and the determined Fair Market Value plus interest and attorneys’ fees. All arbitration fees and expenses shall be equally divided among the parties to the arbitration except if the arbitration panel determines that the Supplier’s payment upon termination was less than the Fair Market Value, then the panel may award up to one hundred percent of the arbitration costs to the Supplier.

(ii)     Supplier will be deemed to have terminated a portion of the Distribution Relationship for purposes of this paragraph 16 in the event Supplier terminates Distributor’s right to purchase a particular brand or brands of Products, as opposed to all of the Products.  In such event (A) Supplier will be deemed to have terminated the Distribution Relationship only with respect to the distribution rights for the terminated Products in question (the “Affected Products”); and (B) Supplier will then immediately pay to Distributor the Fair Market Value calculated in the manner, and subject to the process, set forth above for the Affected Products only.  Thereafter, the Distribution Relationship will continue in full force and effect for the remainder of the brand or brands of Products not so terminated, all in accordance with the terms and conditions hereof.

(iii)     Notwithstanding Distributor’s right to receive compensation pursuant to this paragraph 16(b), Distributor hereby reserves the right to pursue equitable remedies such as injunctive relief and specific performance in the event Supplier breaches any of the provisions hereof or the Distribution Agreement or otherwise attempts to terminate all or a portion of the Distribution Relationship.

(iv)     Supplier shall promptly pay Distributor the amounts specified in this paragraph 16(b) when due and prior to terminating the Distribution Relationship as more particularly stated in Section 15(e) above.

17.     Arbitration.

(a)     Any controversy or claim arising out of or relating to the provisions hereof or the Distribution Relationship (including, without limitation the Distribution Agreement) or the breach hereof or thereof, including, without limitation, whether or not such dispute is subject to arbitration, shall be settled by binding arbitration before a panel of three (3) arbitrators (the “Panel”) administered by the American Arbitration Association (“AAA”) in accordance with its Commercial Arbitration Rules (as modified hereby), at the offices of AAA in New York, New York.

(b)     Notwithstanding anything to the contrary contained under applicable law, the parties hereto hereby agree that the following provisions shall apply to any arbitration proceeding covered by the provisions hereof or the Distribution Relationship.

(i)     Except in the case of a termination of the Distribution Relationship for “good cause” under ABC Law § 55-c(2)(e)(ii), (a “Supplier For Cause Termination”) and subject to paragraph 17(b)(ii) below, the Panel shall award damages in favor of Distributor in the amount of the Fair Market Value, calculated pursuant to the provisions of paragraph 16(b), in the event Supplier attempts to implement or does implement a termination of all or a portion of the Distribution Relationship.  Fair Market Value shall be determined based on (i) the investment value of the applicable distribution rights in question in a portfolio of an established market participant, (ii) an assumption that the Distribution Relationship is exclusive and perpetual, (iii) no discounts for lack of marketability or otherwise will be applied, and (iv) an assumption that the cost of capital in determining such Fair Market Value is equal to ten percent (10%).

In determining the Fair Market Value, the Panel shall not consider or determine whether or not the Fair Market Value is in the nature of a penalty or is otherwise not enforceable, and Supplier does hereby waive any and all rights to assert that any such amount is unenforceable for any reason.

(ii)     At the option of Distributor, the Panel (or any emergency arbitrator appointed as set forth below) is authorized and empowered, and is hereby directed to issue an interim or final award, upon the request of Distributor, granting injunctive or mandatory injunctive relief and the Panel or emergency arbitrator (as the case may be) shall not consider or require the posting of any bond or proof of irreparable harm with respect thereto in the event that Supplier attempts to implement or does implement a termination of the Distribution Relationship without obtaining a final award in arbitration with the following findings and determinations, as applicable:

A.     a finding (x) that a Supplier For Cause Termination has occurred, or (y) in the situation where the Products are beer, (1) that the Supplier has “good cause” under ABC Law §55-c(2)(e)(i) as clarified by the provisions hereof, or that the provisions of ABC Law § 55-c(4)(c) apply and Supplier has the right to terminate the Distribution Relationship without “good cause”, (2) determining the amount of the Fair Market Value, and (3) that payment of the Fair Market Value by Supplier to Distributor has occurred; or

B.     a finding (w) that a Supplier For Cause Termination has not occurred, (x) that Distributor has elected to receive payment of the Fair Market Value due to Supplier’s actual or attempted termination of the Distribution Relationship, (y) determining the amount of the Fair Market Value, and (z) that payment of the Fair Market Value by Supplier to Distributor has occurred.

In the event Distributor requests injunctive or other preliminary relief prior to the appointment of the Panel, the AAA is hereby directed, upon written demand of Distributor, to appoint a single emergency arbitrator to rule on such application pursuant to the provisions hereof.  The appointment by the AAA shall be made within one (1) business day of receipt of written demand therefor. In addition to requesting the appointment of the emergency arbitrator, the demand shall attest that the Supplier has terminated or threatened imminent termination of the Distribution Relationship, and the applicable conditions set forth in paragraph 17(b)(ii) have not been satisfied.  A copy of the demand shall be delivered by Distributor to Supplier by e-mail, facsimile transmission or overnight mail.  Within two (2) business days of the appointment of the emergency arbitrator, Supplier shall serve upon the emergency arbitrator and Distributor its proofs, if any, that the applicable conditions set forth in paragraph 17(b)(ii) have been satisfied.  The failure by Supplier to timely submit such proofs to the emergency arbitrator shall be deemed to be an admission by Supplier that the applicable conditions set forth in paragraph 17(b)(ii) have not been satisfied and the arbitrator shall forthwith, but in no event later than five (5) business days after the appointment of the arbitrator, issue an interim award granting the requested injunctive or mandatory injunctive relief as the case may be.  Unless the arbitrator shall, based upon the Supplier’s timely submissions, find that the applicable conditions set forth in paragraph 17(b)(ii) have been satisfied, the arbitrator shall forthwith, but in no event later than five (5) business days after the appointment of the arbitrator, issue an interim award granting the requested injunctive or mandatory injunctive relief, as the case may be.

(iii)     Any award rendered by the emergency arbitrator or the Panel shall be conclusive and binding on the parties hereto, including interim awards with respect to injunctive or other preliminary relief, and judgment thereon may be entered in any court having jurisdiction to do so.

(iv)     The AAA rules of Expedited Procedures; Optional Rules for Emergency Measures of Protection; and Procedures for Large, Complex Commercial Disputes shall not be applicable.  Further, it is the express intent of Supplier and Distributor that, notwithstanding anything to the contrary contained in any applicable laws, rules, or regulations, or rules of the AAA, (collectively “Laws”), the provisions and directives of the provisions hereof shall be specifically enforced and any conflicts between these provision and any Laws shall be resolved in favor of these provisions.

(v)     If either Supplier or Distributor fails to proceed with arbitration as provided herein or unsuccessfully seeks to stay such arbitration, or fails to comply with any arbitration award, or is unsuccessful in vacating or modifying the award pursuant to a petition or application for judicial review, the other shall be entitled to be awarded costs, including reasonable attorneys’ fees, paid or incurred by such party in successfully compelling such arbitration or defending against the attempt to stay, vacate, or modify such arbitration award and/or successfully defending or enforcing the award.

18.     Confidential Information.  During the course of Distributor’s performance under the Distribution Relationship, Distributor may disclose Confidential Information (as defined below) to Supplier.  Supplier agrees not to disclose any Confidential Information or any portion thereof to any Person and to only use such information to promote the Distribution Relationship between Supplier and Distributor, it being understood that since such information is not generally known in the trade, such information provides Distributor with a competitive advantage in its market area.   In that regard, Supplier acknowledges and agrees that the Confidential Information and all portions thereof are trade secrets and that (i) Distributor has taken and is taking reasonable steps to protect the confidentiality of, and its legitimate interests in, the Confidential Information, (ii) the Confidential Information is not readily accessible to competitors of Distributor, (iii) the Confidential Information has been assembled by Distributor through significant expenditures of time and other resources, and (iv) the Confidential Information would be very difficult for competitors of Distributor or others to duplicate.  The term “Confidential Information” means information concerning Distributor’s business, financial and marketing plans, intellectual property rights (including, without limitation, patents, trademarks, copyrights and trade secrets), forecasts, strategies and statements, and customer related and customer account level information.