1. DEFINITIONS
1.1 "Affiliate" means any company, corporation, or entity in which a Party owns or controls at least twenty percent (20%) of the voting stock or other
ownership; or any person, company, corporation or entity which owns or controls at least fifty-one percent (51%) of a Party. Unless otherwise specified, the
term Company or Supplier includes the Affiliates of each.
1.2 “Commencement of Production” means the date determined by mutual agreement of the Parties upon which a Product or Products are manufactured
at Supplier’s Plant(s) in conformity with this Agreement and in quantities and quality sufficient for commercial distribution and sale by Company.
1.3 “Dietary Supplement” shall mean the definition set forth in the FDCA, as amended by the Dietary Supplement Health Education Act (“DSHEA”),
1.4 “Distributors” shall mean the entities with which the Company has logistics agreements to distribute Products to customers. Distributors shall, unless
otherwise specified by the Company, be responsible for arranging transportation and shipments of Products from Supplier’s Plant(s) to Company’s Customers.
1.5 “Effective Date” means the date this Agreement is accepted as a fully executed, mutually binding contract between the Parties, and is the date set forth
in the letter above.
1.6 "FDCA" means the Federal Food, Drug and Cosmetic Act, as amended from time to time, together with all regulations issued by the U.S. Food and Drug
Administration (the “FDA”) and other governmental agencies pursuant thereto, relating to Dietary Supplements including Dietary Supplements Guidance
Documents & Regulatory Information issued by the FDA.
1.7 "Formulas" means all documentation, formulas, formulations, specifications, designs, ingredients (including quantity of each ingredient by percentage
and weight), and information necessary to manufacture each Product or Products for the Company. Formulas do not include Supplier’s proprietary
manufacturing processes or manufacturing know-how.
1.8 “Ingredients” means all raw materials and ingredients of every kind used in manufacturing each Product regardless of whether such Ingredients are
listed in the Supplement Facts panel of the label for such Product.
1.9 “Intellectual Property” means all trademarks, trademark applications, trade names, patents, patent applications, copyrights, trade secrets, and “know-
how”: (i) owned by or proprietary to Supplier prior to the Effective Date, or (ii) owned by or proprietary to Company.
1.10 “Manufacturing Requirements” means collectively (a) current Good Manufacturing Practices (“cGMP”) established by the FDA; (b) all federal statutes,
regulations and rules promulgated under the FDCA applicable to Dietary Supplements, (c) all comparable state statutes and regulations, including California's
Safe Drinking Water and Toxic Enforcement Act of 1986, as amended from time to time; (d) ordinances, regulations and rules of local governmental agencies
having jurisdiction over activities contemplated in this Agreement; (e) compliance with all Product related requirements included in any Formulas,
Specifications, Technical Data or Testing Protocols (defined in Section 9.3 below) provided by the Company.
1.11 "Plant" means Supplier's production facility identified by Supplier and approved by Company for the manufacture of Company Products.
1.12 ”Product" or “Products” whether singular or plural, shall mean the products manufactured and packaged by Supplier for the Company pursuant to
this Agreement. The term “Product” or “Products” shall also include all new products the Parties subsequently agree to add to this Agreement, if any.
1.13 “Purchase Price” means the complete price at which each unit of Product will be sold by Supplier to Company and shall include Supplier’s Toll fee.
The initial Purchase Price for each Product shall be a fixed price as of the Effective Date for each Product subject to adjustment as provided in Article 8 below.
1.14 “Specifications” means all Product and Ingredient related information, Formulas, Technical Data, and requirements (e.g., date coding, tracking
requirements, quality requirements, etc.)
1.15 “Technical Data" means the analytical testing and quality control requirements established by Company and/or Supplier for the Products; sourcing
information and identity for all raw materials and ingredients used in manufacturing the Products; substantiation for the identity and quantity of nutrients,
vitamins and minerals, and dietary ingredients listed in the Supplement Facts panel of the nutrition label for each Product; and substantiation for any claims
that may be allowed or asserted with respect to each Product or any ingredient therein.
1.16 “Term” means the duration of this Agreement, and extensions thereof, as provided in the Letter above and in Section 15.1 below.
2. OWNERSHIP OF FORMULAS AND TECHNICAL DATA. All Formulas, Specifications and Technical Data relating to the Products, excluding Supplier’s
pre-existing “Know-How,” shall be owned solely and exclusively by Company as its Intellectual Property.
3. INGREDIENTS AND PACKAGING MATERIALS; LOT TRACING AND DATING.
3.1 Ingredients. All Ingredients sourced and procured by Supplier for use in manufacturing the Products shall be of best quality and sourced and
purchased from suppliers approved by Company shall be received, inspected, tested, and stored by Supplier in compliance with this Agreement, the
Manufacturing Requirements and the Specifications and Technical Data provided by the Company.
3.2 Receiving, Inspection and Testing of Ingredients: Shipments of Ingredients received by Supplier shall be visually inspected upon receipt for damage
and potential defects (e.g., leaking, odor, discoloration, etc.); Supplier shall also sample each shipment, with a sample size sufficient for testing to confirm identity,
purity, and potency of Ingredients; and shipping documents shall be inspected to verify sourcing, identity and correct quantities of Ingredients. Supplier shall
perform analytical testing of Ingredients as required in Technical Data provided by the Company.
3.3 Packaging and Labels. Company shall purchase all Product specific packaging materials (e.g., pouches, boxes, etc.) and Product labeling (collectively
the “Packaging Materials”) from vendors selected by Company. The Parties will collaborate and cooperate to ensure that the Packaging Materials specified by
Company are appropriate for the packaging equipment and processes used by Supplier. Supplier shall collaborate and cooperate with Company in the placement
and appearance of labels and printed packaging on the Product containers and shipping containers.
3.4 Inspection of Packaging Materials. Shipments of Packaging Materials received by Supplier shall be inspected upon receipt for damage and errors (e.g.,
print errors in Product labels). Supplier shall notify the Company as soon as practicable in the event any damage or errors ae discovered.
3.5 Lot Tracing. During the Term, and for a period of three (3) years following the expiration or termination of this Agreement, Supplier shall retain and
make available to the Company records sufficient to: (a) trace an Ingredient or processing material (e.g., cleaning or sanitizing agent) upstream to its original
source, (b) trace each such Ingredient or processing material to a specific production run or lot of Products manufactured for Company, and further (c) to
identify each such production run or lot of Products by means of a mutually agreed date and tracking code printed on each pouch or other package or container
of finished Product.
4. FORECAST; PURCHASE ORDERS; INVENTORY
4.1 Rolling Forecast. On a quarterly basis, Company will provide Supplier with a current forecast of Company’s estimated Product requirements for the
next three (3) months. The first six weeks (approximately 45 days) of each forecast will be considered binding for the purpose of Supplier’s lead time to purchase
and receive Ingredients and Packaging Materials in sufficient quantities and in time to manufacture, package and deliver finished Products in accordance with
Company’s anticipated requirements for Products. The estimated requirement for the remainder of each forecast will be non-binding and will serve as an
estimate to be used by the Parties only for planning purposes. In addition to the rolling forecast provided by Company, the Parties will meet and confer at least
semi-annually to review business trends affecting Company’s requirements for Products. Supplier may use the rolling forecast to make commitments to
purchase inventory of Ingredients and Packaging Materials, but as provided in Section 4.4 below, Supplier shall exercise reasonable business judgment in making
such forward commitments. Company shall not be liable for more than Supplier’s actual cost of a ninety (90) day supply of any Ingredients and Packaging
Material forward purchased by Supplier.
4.2 Production Schedule. Upon receipt of each rolling forecast, Supplier will develop a production schedule for the three (3) months of the forecast
(“Production Schedule”). Specific dates Products will be manufactured during a Production Schedule shall be determined by Supplier in its sole discretion and
provided to Company at least seventy-two (72) hours in advance of each production run. The Parties will cooperate to estimate order frequency in conjunction
with each rolling forecast, and Supplier shall develop its Production Schedule for Products to accommodate the estimated order frequency. In the event of
changes to a Production Schedule, or a scheduled production run, that may affect delivery or fulfillment of an accepted Purchase Order, Supplier shall: (a)
immediately inform the Company and Distributors, and (b) cooperate with Company and Distributors to mitigate harm or other business impairment that may
arise from a delayed or missed delivery or from a partially fulfilled Purchase Order.
4.3 Purchase Orders. Supplier shall manufacture, package and deliver Products pursuant to the terms of a written Purchase Order issued by Company.
4.4 Ingredient and Packaging Material Inventory. Supplier shall be responsible for procuring Ingredients and Packaging Materials (other than packaging
materials that are supplied by Company) and shall exercise reasonable business judgment in maintaining inventory levels sufficient to fulfill Company’s
projected Product requirements and estimated frequency of Purchase Orders. Unless otherwise agreed by the Company in writing, Supplier shall not purchase
or make forward purchase commitments of Ingredients or Packaging Materials in excess of the quantities necessary to fulfill manufacturing requirements as
estimated in the Company’s most current ninety (90) day rolling forecast.
5. MANUFACTURING AND SHIPPING
5.1 Good Manufacturing Practices: Supplier shall maintain during the Term, and extensions thereof, good manufacturing and quality control practices,
compliant with the Manufacturing Requirements, for: (a) the manufacture, packaging, labeling and storing of dietary supplements, (b) monitoring and
controlling Supplier’s manufacturing processes, (c) record keeping, (d) maintaining clean and sanitary conditions in Supplier’s Plants, and (e) cleaning
manufacturing equipment and facilities, to include proper storage and use of cleaning agents and compounds, so as to prevent adulteration or contamination of
Products including cross-contamination by other third-party products manufactured by Supplier.
5.2 Order Volume and Fulfillment. Supplier shall fulfill and deliver all Products in accordance with the requirements of Purchase Orders issued by the
Company. The Parties acknowledge and agree that a variance of plus or minus five (5%) percent in the quantity of Product(s) shipped in response to a Purchase
Order shall be deemed acceptable, provided the Products otherwise fully comply with Manufacturing Requirements, Specifications, Technical Data and other
terms of this Agreement.
5.3 Failed Fulfillment. If Supplier fails to substantially fulfill the terms of two consecutive Purchase Orders, or a total of three Purchase Orders during
the Term for reasons other than Acts of God or force majeure, the Company shall have the right, in addition to any other remedy, to void the Supplier’s
manufacturing rights for some or all Products, allow the Agreement to continue as a non-exclusive manufacturing agreement, and to obtain some or all of its
requirements for Products from other manufacturers. If Acts of God or force majeure, or foreseeable conditions, such as labor strife or strike, interfere with or
impair Supplier’s ability or capacity to manufacture Products, and such condition of impaired production capacity is reasonably likely to continue for more than
thirty (30) consecutive days, the Parties agree to meet and confer and in good faith determine other manufacturing sources to fulfill the Company’s requirements
for Products, and without unreasonable interruption or adverse impact to the Company’s business. Under such conditions, Supplier shall cooperate in good faith
with Company, and such other manufacturers, to transfer production, including transfer of Ingredients, Packaging Materials, and finished Products in a timely
and commercially reasonable manner. For any such transfer of production the Parties acknowledge and agree that time is of the essence, and provided Supplier
fully cooperates with the Company in connection with the transfer of production.
5.4 Storage. Supplier shall provide suitable storage and warehousing space for all Ingredients, Packaging Materials, and Products for the time and to the
extent required for Supplier to perform its quality assurance and testing obligations as required by the Company. All Products, Ingredients, and Packaging
Materials shall be stored in clean space suitable for storage and protection from contamination, and in compliance with best warehousing practices,
requirements of the FDCA, and all applicable laws, rules and regulations of any regulatory authority having jurisdiction over such activities.
5.5 Delivery and Shipping. Supplier shall prepare the Products for shipment in quantities and on dates designated in Company’s Purchase Orders, unless
the Parties mutually agree to another shipment date, which shall be confirmed and accepted via email or facsimile. All shipments of finished Products shall be
prepared for shipment in cooperation with shipping and loading instructions of Customer and/or its Distributors and delivered F.O.B. Carrier designated by
Customer or Distributors. For avoidance of doubt, Supplier shall be responsible for properly and securely palletizing and preparing Products for shipment, and
for the safe and proper loading of Product onto a carrier designated by either Company or its Distributors. Prior to shipping, Supplier shall issue a formal
Certificate of Analysis for each production lot of Products to be shipped.
5.6 Production and Shipping Reports. Supplier shall provide Company with production reports and shipment of finished goods reports, in such form as
Company reasonably requests. Reports from Supplier's facilities shall be sent to Company by email or facsimile in the manner set forth in the notice section
below.
6. MEANS OF PRODUCTION. Supplier shall furnish and maintain, at its cost and expense, all equipment, manpower and financial resources necessary
to manufacture and package the Products in accordance with the terms and conditions of this Agreement. The Parties acknowledge that from time to time either
Party may suggest additional equipment, improvements to existing equipment or manufacturing processes, or changes in processes and procedures intended
to improve the overall efficiency and/or quality of manufacturing.
7. MANUFACTURING RIGHTS AND PROCESSES; PRODUCT ENHANCEMENTS.
7.1 Manufacturing Rights. The Parties acknowledge and agree that their respective best interests are served by identifying manufacturing and product
enhancements that reduce costs, improve manufacturing output, or improve product quality for any Products covered by this Agreement.
7.1.1. Supplier agrees to continually exercise commercially reasonable efforts during the Term to reduce the Company’s cost for finished
Products and to upgrade and enhance the Products by: (a) reducing the cost of Ingredients sourced by Supplier, while maintaining quality, purity and
potency, or (b) reducing manufacturing costs and/or increase manufacturing efficiency and output, or (c) identify supply chain cost reductions or
efficiencies or (d) sensory or quality improvements in any of the Products.
7.1.2. Company shall also seek out enhancements for any of the Products, and from time to time may recommend such enhancements to Supplier.
The Parties agree to cooperate in good faith to incorporate commercially reasonable and practicable enhancements into the manufacturing processes
and activities contemplated in this Agreement.
7.1.3 Supplier agrees to maintain an “open book” relationship with Company meaning that Supplier will periodically during the Term of this
Agreement, provide Company, upon request, with a fully costed bill of materials, meaning Supplier’s actual costs for Ingredients and Packaging
Materials sourced and purchased by Supplier and costs included in Supplier’s Tolling Fee.)
7.2 Manufacturing Processes. Supplier shall not make any change to its manufacturing process or change the Plant(s) at which the Products are
manufactured without prior notice to and approval from the Company.
8. Purchase PRICE, PAYMENT
8.1 Purchase Price and Terms of Sale. Company shall purchase Products from the Supplier at the Purchase Price set forth for each Product, which shall
be set forth on the cover letter to this Agreement and in any Appendices thereto. The Purchase Price for each Product, as set forth in the cover letter, shall
remain fixed until or unless adjusted as provided in Section 8.2 below. Supplier represents that Company shall receive “most favored customer” tolling, product
pricing and terms of sale, and that no other customer for which Supplier provides reasonably comparable products and manufacturing services will be offered lower tolling, prices, or receive more favorable terms of sale than the Company. This most favored customer provision shall remain in effect for the Term of the
Agreement.
8.2 Purchase Price Increases/Decreases. The Purchase Price for Products shall adjust semi-annually during the Term to reflect material increases or
decreases in Ingredient costs for the top three Ingredients in each Product. A material increase or decrease in cost shall be deemed to be an increase or decrease
of more than five per cent, and the Supplier shall provide documentation supporting such cost increases or decreases satisfactory to the Company. The Parties
shall confer and make a good faith determination regarding pass through of the Ingredient cost increase or decrease with reasonable consideration for: (a) the
resulting increase or decrease in the Purchase Price of each affected Product, (b) competition in the market for Company’s Products affected by the Purchase
Price increase or decrease (for clarity, the resulting impact on the Company’s pricing of Products to its customers), (c) the Company’s ability to pass through
cost increases or decreases in pricing the Products to its customers, and (d) the effect of such increases or decreases on the Company’s ability to compete in the
relevant product markets.
8.3 Invoices. Company shall have the right to dispute any invoice, or part thereof, in good faith; and in such event the Parties shall exercise good faith
reasonable efforts to compromise and settle any such dispute in a timely and commercially reasonable manner.
9. QUALITY CONTROL, TESTING
9.1 Specifications. Supplier shall manufacture the Products strictly in accordance with the Formulas, Specifications, Technical Data and in compliance
with the Manufacturing Requirements.
9.2 Quality of Ingredients. Supplier shall inspect, sample and quality test incoming shipments of Ingredients upon receipt of shipments, as provided in
this Section 9.2, and Article 3 above, and in accordance with any Specifications or Technical Data applicable to such inspection, sampling and testing provided
by the Company. The results of all such analytical testing of Ingredients shall be provided to the Company in accord with applicable Specifications or Technical
Data before such Ingredients are used in manufacturing Products. Quality inspections, sampling and testing may be conducted in-house by Supplier, unless
otherwise provided in Specifications or Technical Data, but random, periodic testing by an outside laboratory selected by the Company may be conducted from
time-to-time as determined by Company. All results from analytical testing, whether performed in-house by Supplier, or by an outside laboratory selected by
the Company, are to be documented and copies provided to Company and Supplier.
9.3 Production Quality. Supplier shall perform all in-process and finished manufacturing quality testing, including microbial testing, necessary to assure
Product quality and conformance with the Product Formulas, Specifications and Technical Data. Supplier shall perform full analytical testing for the first three
production runs of each Product, and any new or reformulated Products, to ensure that finished Products conform to the Product Formula, Specifications, and
Technical Data. Thereafter, the Company may request the same frequency of analytical testing for any Product that fails to conform with its Formula,
Specifications, or Technical Data. Additionally, Supplier will perform such finished goods testing as necessary to provide a Certificate of Analysis for each lot of
Product. Testing necessary to provide a Certificate of Analysis will be conducted as a routine part of the manufacturing process, the cost of which will be included
in the Purchase Price for each Product. All test results shall be documented and summarized by Supplier, and copies provided to Company at Company's request.
Product testing procedures and specific analytical tests, as contemplated in this Section 9.3, and acceptance criteria for tested Products (collectively, “Testing
Protocols”), will be determined in good faith, by mutual agreement of the Parties, but reasonably satisfactory to the Company, and may incorporate testing
beyond that which Supplier currently performs. Supplier will provide, at its expense, one full Nutrition Label Education Act (“NLEA”) label claim analysis for
each Product annually during the term of this Agreement. Supplier shall be responsible for and liable to Company for the accuracy of all label claims and
supplement facts developed by Supplier for each Product.
9.4 Product Release. Unless otherwise agreed by the Parties, Supplier shall not deliver any finished Products for shipment until a Certificate of Analysis
has been issued to Company.
9.5 Non-complying Products. All Products that do not conform to the Specifications, Manufacturing Requirements, and all Products that fail Testing
Protocols, shall be segregated and held by Supplier until Company determines the disposition for such non-complying Products. Supplier shall immediately
contact Company if Supplier at any time has reason to believe or otherwise becomes aware of a condition or occurrence affecting Products that may result in:
(a) a breach of Supplier’s warranties, (b) contamination or adulteration of Products, (c) concerns for Product safety, or (d) regulatory action that may subject
Products to recall or request to voluntarily withdraw Products from the market.
9.6 Samples. At its cost and expense, Supplier shall collect and keep retention samples for each production lot of Products for two years.
10. INSPECTION OF MANUFACTURER ACCESS, REGULATORY ACTION
10.1 Inspection. Supplier's Plants shall meet all Manufacturing Requirements and all requirements established by the FDCA, and applicable state and local
statutes, laws, ordinances, rules and regulations enforced by governmental agencies having jurisdiction over the Products or manufacturing activities
contemplated in this Agreement. Company and its agents shall have access to Supplier's Plants at times when production runs are scheduled for Products
(including set-up of equipment, staging of Ingredients and Packaging Material, lot testing, storing completed Products, and preparation and loading of Products
for delivery) for the purpose of conducting such inspections and performing quality control audits required by Company. Supplier shall be notified in advance
of the names of all visiting personnel or agents and their intended dates of arrival.
10.2 Regulatory Action. If the FDA or any other federal, state or local government agency makes an inquiry regarding the Products directly or indirectly,
or gives notice of or makes an inspection at Supplier’s Plant(s), seizes any Product or requests a recall of any Product, or directs any Party to take or cease taking
any action in connection with any Product or the manufacturing of a Product, the other Party shall be notified immediately but in no event later than the next
business day. Duplicates of any samples of Product provided to such agency shall be sent to the other Party promptly. In the event of any action described in
this Section, the Parties shall cooperate in determining the response, if any, to be made to such action. If any Products manufactured by Supplier are recalled for
reasons directly related to the manufacturing, packaging, or testing of such Products by Supplier, then Supplier shall pay for the costs of such recall and defend
and indemnify Company from any and all liability in connection with such recall.
11. WARRANTY, PRODUCT INSPECTION
11.1 Warranty. The Supplier hereby expressly warrants that the finished Products delivered to Company or its Distributors shall: (a) be of best quality
and free from adulteration or contamination; (b) be fit for their intended purpose and consumption; (c) conform to the Formulas, Specifications, Technical Data
and Manufacturing Requirements relating to such Products; (d) comply with all applicable laws, rules and regulations of the FDCA and any state or local
governmental agency having jurisdiction; (e) not be contaminated, adulterated or misbranded within the meaning of the FDCA, (f) not be an article which, under
the provisions of Section 404 and 505 of the FDCA, may not be introduced into interstate commerce, (g) not be in violation of the provisions of the Food Additives
Amendment of 1958, and (h) be in full compliance with California's Safe Drinking Water and Toxic Enforcement Act of 1986, as amended from time to time, and
all regulations promulgated thereunder, and are products which do not require any form of warning under such Act.
11.2 NO CONSEQUENTIAL DAMAGES. UNDER NO CIRCUMSTANCES SHALL COMPANY OR SUPPLIER OR ANY AFFILIATE OF EITHER OF THEM HAVE ANY
LIABILITY TO THE OTHER FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, SUCH AS, BUT NOT LIMITED TO, LOSS OF PROFIT OR REVENUE; LOSS OF USE
OF THE PRODUCTS; OR COST OF CAPITAL; PROVIDED, HOWEVER, THAT THIS LIMITATION OF LIABILITY AND DAMAGES SHALL NOT APPLY TO A PRODUCT
RECALL OR WITHDRAWAL DIRECTLY RELATED TO OR ARISING OUT OF THE MANUFACTURING, PACKAGING, OR TESTING OF SUCH PRODUCTS BY SUPPLIER.
12. INTELLECTUAL PROPERTY
12.1 Company Trademarks. Company is the owner of all proprietary rights and intellectual property rights including without limitation all trademarks,
trade dress, trade names, logos, domain names, and service marks, together with all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications, registrations, reservations, and renewals in connection therewith, whether or not registered
("Trademark Rights"), for the Products and intends to design, research, develop, formulate, manufacture and package the Products under such Trademark
Rights and/or such other brand names and trademarks as may be adopted from time to time by Company ("Trademarks").
12.2 License. Company grants to Supplier, during the Term, a nonexclusive, nontransferable license, without the right to sublicense, to use Company’s
Trademarks on Packaging Materials for the Products manufactured pursuant to this Agreement. Except as set forth in this Section, Supplier understands and
acknowledges that nothing contained in this Agreement shall be deemed to give it any right, title or interest to any Trademarks, patents or copyrights owned
by Company and the same shall at all times remain the sole and separate property of Company. Supplier will not alter, modify, dilute or misuse the Trademarks,
or otherwise bring them into disrepute or challenge Company’s rights therein.
12.3 Supplier’s “Know-How”. Supplier owns and has full title to the intellectual property comprised of its preexisting engineering, and manufacturing
know-how and conditions, and the type and arrangement of specific equipment used by Supplier to manufacture Products.
13. INDEMNIFICATION, INSURANCE.
13.1 Indemnity by Supplier. Supplier shall, at Supplier's expense, defend, indemnify and hold harmless Company, and its Affiliates, and subsidiaries, and
their directors, shareholders, officers, employees, agents and representatives from and against any and all claims, loss, cost, damages, liability or expense
(including reasonable attorneys’ fees and reasonable costs and expenses) based upon, arising out of or in connection with: (a) breach or default of Supplier's
material representations, warranties, duties or obligations hereunder; (b) any alleged negligence, misrepresentation, other tort, or statutory duty by Supplier;
(c) a third party claim or a recall of Products, wherein the claim or action alleges that: (i) Products manufactured by Supplier caused injury or damage to a
person or property; or (ii) Products, including any Ingredients, are not fit for human consumption, or otherwise fail to comply with applicable law or regulation;
or (iii) Products manufactured using Supplier's manufacturing process infringe any patent, trade secret, or other proprietary right of any third party; provided,
however, as to (iii) that Supplier will have no liability to the extent such infringement is attributable to the use of Packaging Materials, or other printed material,
specified by Company.
13.2 Indemnity by Company. Company shall, at Company’s expense, defend, indemnify and hold harmless Supplier, and its Affiliates, and subsidiaries, and
their directors, shareholders, officers, employees, agents and representatives from and against any and all claims, loss, cost, damages, liability or expense
(including reasonable attorneys’ fees and reasonable costs and expenses) based upon, arising out of or in connection with: (a) the breach or default of any of
Company’s representations, warranties, duties or obligations hereunder; (b) any alleged negligence, misrepresentation, other tort, or statutory duty by
Company; and (c) any third-party claim that any Packaging Material, or other printed material specified by Company, infringes such third-party’s trademarks,
trade dress, copyrights or similar intellectual property rights.
13.3 Insurance Carried by Supplier. Supplier shall carry insurance during the Term, with companies reasonably satisfactory to Company: (i) workers'
compensation insurance; (ii) Commercial General Liability Insurance including Contractual Liability and Products Liability/Completed Operations Coverage
with a single limit for each occurrence of not less than Three Million Dollars ($3,000,000.00), and aggregate limits of not less than Five Million Dollars
($5,000,000.00). Supplier shall provide certificates of insurance evidencing the above coverage, and naming Company and its Affiliates as additional insureds.
The Certificate(s) of Insurance shall be provided to Company at the address designated for notices. Product Liability Insurance shall be maintained in effect by
Supplier for a period of two (2) years from the date of the last delivery of any Products to Company or to an approved customer. In case of Supplier's failure to
carry said policies and/or furnish certificates of insurance or upon cancellation of any required insurance, Company may, at its option, immediately terminate
this Agreement unless Supplier has obtained substitute insurance coverage before such insurance becomes canceled and provides Company with satisfactory
evidence thereof.
14. RELATIONSHIP OF THE PARTIES.
Supplier shall be deemed an independent contractor with respect to the terms and provisions of this Agreement
and it shall not in any respect act as an agent, employee, partner or joint-venturer of Company. All persons employed in connection with the manufacture and/or
supply of the Products shall be employees or agents of Supplier and under no circumstances shall Supplier or any of its employees or agents be deemed to be
employees or agents of Company.
15. TERM OF AGREEMENT, TERMINATION, DUTIES UPON TERMINATION OR EXPIRATION
15.1 Term. This Agreement will expire automatically and shall be deemed cancelled at the expiration of the initial Term, or upon the expiration of a
mutually agreed extension of the Term.
15.2 Termination on Specific Events. Either Party may terminate this Agreement immediately if:
15.2.1 The other Party suspends or discontinues its business operations; or
15.2.2 The other Party shall commence, or have commenced against it, any case, proceeding or other action relating to bankruptcy, insolvency,
reorganization, or relief for the benefit of creditors, or seeking to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, or
other relief with respect to it, or its debts or creditors.
15.3 Termination for Cause. Either Party may terminate this Agreement prior to the end of its Term, or an extension of the Term, after notice to the other
of a material failure to comply with any material covenant in this Agreement and such failure continues for more than thirty (30) days after written notice
thereof, unless such failure cannot reasonably be cured within thirty (30) days then only if Party receiving such notice fails to commence such cure within thirty
(30) days and diligently thereafter prosecutes such cure to completion.
15.4 Termination for Quality. Company may terminate this Agreement for cause, where cause consists of Supplier’s failure to manufacture and deliver
Products in accordance with the Formulas, Specifications, Technical Data, Manufacturing Requirements, or any other reason related to the quality of the
Products, and such termination shall be effective thirty (30) days after written notice if the quality issue is not corrected to the satisfaction of Company.
15.6 Termination for Failed Fulfillment. Upon the occurrence of failed fulfillment, as provided in Section 5.3, and a determination by the Company to
terminate Supplier’s manufacturing rights with respect to one or more Products affected by the failed fulfillment, the Company shall notify Supplier that
Company intends to transfer manufacturing to another supplier, and Company and Supplier shall wind-down manufacturing of the affected Product, and
transition to such alternate supplier, as provided in Section 15.5 below.
15.5 Duties on Expiration of Termination. Upon expiration or earlier termination of this Agreement, the Parties will collaborate and cooperate in the
winding down process as follows: (a) Company shall pay to Supplier all sums owing to Supplier for outstanding Product invoices, unless any such outstanding
Purchase Order is subject to a good faith dispute or claim by Company; (b) the Parties shall make a good faith effort to resolve and settle any outstanding
accounts or claims between them; (c) each Party shall cease to use any know-how or Intellectual Property materials of the other Party; (d) work in progress on
Purchase Orders accepted by Supplier shall be completed and delivered; (e) the Supplier shall cancel orders for Ingredients and Packaging Materials to be used
in the manufacture of Products; (f) Company shall purchase, at Supplier’s cost, such inventories of good and merchantable Ingredients and Packaging Materials,
consistent with Section 4.4, procured by Supplier to manufacture Products; and (g) the Parties shall collaborate and cooperate in the winding down process and
transition and transfer of packaging materials, and ingredient inventories, and other manufacturing related materials to such other suppliers as Company may
designate. For any such transfer of production the Parties acknowledge and agree that time is of the essence, and, shall be performed in a time frame and manner
that maintains to the greatest extent practicable uninterrupted supply of affected Products to Company.
16. CONFIDENTIALITY
16.1 Duty to Protect Confidential Information. Any confidential information disclosed or conveyed by either Party to the other in connection with its
business by written communication, or by oral communication, and confirmed to be confidential by the disclosing Party, shall be treated by the receiving Party
as a trade secret of the disclosing Party and as confidential proprietary information. The information disclosed shall be held in trust by the receiving Party for
the benefit of the disclosing Party. The receiving Party shall treat such information as confidential proprietary and/or trade secret information, and shall take
such steps to assure its continued confidentiality in like manner as it would use to protect its own trade secrets or confidential information and will not, except
as required by law, disclose any such confidential information received from the other Party to any third party unless such disclosure is approved in writing by
the disclosing Party.
16.2 Means of Protecting Confidential Information. Supplier and Company agree to take reasonable steps to ensure the proprietary and confidential nature
of the other's confidential information, and to protect confidential information from unauthorized disclosure, loss or theft.
16.3 Terms of Agreement. The Parties agree that the terms contained in this Agreement are confidential, as is the existence of this Agreement. Each Party
agrees to maintain the existence of this Agreement and the terms and information contained herein strictly confidential and will not disclose any such
information to any person who is not a Party hereto without the prior written consent of the other Party.
16.4 Formulas, Specifications and Technical Data. The Parties agree that the Formulas, Specifications, and Technical Data related to the Products are
proprietary and Confidential Information of the Company and are furnished only for the purpose of manufacturing and packaging Products for the Company.
Any other use of any such information by Supplier shall be deemed to constitute a material breach of this Agreement.
16.5 Audits. The Parties agree the information arising, created, compiled or developed in connection with inspections and audits permitted pursuant to
certain Sections of this Agreement are proprietary and confidential, and the information revealed therein is furnished only for the purpose of confirming
compliance with the terms of this Agreement. Any other use of disclosure of the information revealed by such inspections or audits, without the express prior
written consent of the other, is understood and agreed by the Parties to constitute a material breach of this Agreement.
16.6 Extended Term of Confidentiality. It is recognized by the Parties that the provisions of this Article16 apply during the term of this Agreement and for
a period of ten years thereafter.
16.7 Irreparable Injury. Each Party acknowledges that damages at law will be an insufficient remedy for violation of the terms of this Article and that the
other Party would suffer irreparable injury as a result of such violation. Accordingly, it is agreed the Parties may obtain injunctive relief to enforce the provisions
of this Article of this Agreement, which injunctive relief shall be in addition to any other rights or remedies available to it or them.
17. APPLICABLE LAW
17.1 Law. This Agreement shall be construed in accordance with the laws of the State of Minnesota without regard to its rules on conflicts of law.
17.2 Venue. Subject to the obligation to first negotiate and mediate disputes set forth herein, any action or proceeding seeking to enforce any provision of
or based on any right arising out of this Agreement shall be commenced exclusively in a state or federal court located in the state of Minnesota.
17.3 Dispute Resolution. The Parties shall first attempt to resolve any dispute or controversy arising of or relating to this Agreement promptly by good
faith negotiation between an executive officer of each Party who has authority to settle the dispute. If the dispute is not resolved by such good faith negotiation
the disputed matters shall then be mediated as provided in this Section 17.3. Except as otherwise provided herein, no civil action with respect to any dispute,
claim or controversy arising out of or relating to this Agreement may be commenced until the matter has been submitted for mediation as provided herein.
Either Party may commence mediation by providing to the American Arbitration Association office located in Minneapolis, MN (the “AAA”) and the other Party
a written request for mediation, setting forth the subject of the dispute and the relief requested. The parties will cooperate with AAA and with one another in
selecting a single mediator from AAA’s panel of neutrals, the Parties will share equally the costs of mediation, except each Party will be responsible for its own
attorney fees, and the Parties agree they will participate in the mediation in good faith. All offers, promises, conduct and statements, whether oral or written,
made in the course of the mediation by the Parties, their agents, employees, experts and attorneys, and by the mediator and any AAA employees, are confidential,
privileged and inadmissible for any purpose, including impeachment, in any subsequent litigation or other proceeding involving the Parties. Either Party may
seek equitable relief prior to the mediation to preserve the status quo to preserve the status quo or enforce the Agreement, pending the completion of the
mediation process. The provisions of this Clause may be enforced by any Court of competent jurisdiction.
18. FORCE MAJEURE. No Party shall be liable to any other Party for its failure to timely perform any obligations under this agreement when such failure
is substantially the result of fire, flood, epidemic, earthquake, explosion, accident, or similar act of nature or public enemy, labor dispute or strike, riot or civil
disturbance, war (whether declared or undeclared) or armed conflict, or any other similar event or occurrence, not reasonably foreseeable and not within the
control of the defaulting Party. However, in the event Supplier’s performance of this Agreement is impaired or prevented by reasons of force majeure, Company
shall have the right to transfer the production of any Products supplied by Supplier to a third-party supplier of Company’s choosing as provided in Sections 5.3
and 15.5
19. NOTICE; DESIGNATION. All notices, consents, waivers and other communications under this Agreement must be in writing and will be deemed to
have been given and received upon (a) delivery by hand, (b) one day after confirmation of receipt if sent by email, or (c) upon delivery by overnight delivery
service with confirmation of receipt. Notices shall be sent in each case to the appropriate addresses indicated for each Party above, or to such other addresses
as a Party may later designate.
20. ASSIGNMENT. This Agreement may not be assigned or transferred by Supplier, including in connection with a change of control transaction, without
the prior written consent of Company, which shall not be unreasonably withheld, conditioned or delayed.
21. MODIFICATION, SEVERABILITY. Neither this Agreement nor any part hereof may be changed, altered or amended orally. Any modification must be
by written instrument signed by the Party against whom enforcement of the change, alteration or amendment is sought. If any provision of the Agreement is
held ineffective for any reason, the other provisions shall remain effective. Each provision of this Agreement shall be considered severable, and if for any reason
any provision which is not essential to effect the basic purposes of this Agreement is determined to be invalid and contrary to any existing or future law, then
such invalidity shall not impair the operation of or affect those provisions of this Agreement that are valid.
22. FURTHER ASSURANCES. The Parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each
other such other documents, and (c) to do such other acts and things, all as the other Party may reasonably request for the purpose of carrying out the intent of
this Agreement and the documents referred to in this Agreement.
23. WAIVER. The rights and remedies of the Parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any Party
in exercising any right, power or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power
or privilege.
24. PUBLICITY. The Parties agree that no press release, or public announcement of this Agreement or concerning the activities and transactions
contemplated herein shall be issued without the prior written consent of both Parties to the content of such release or public announcement, except as may be
required by law.
25. TIME OF ESSENCE. With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.
26. SAVING CLAUSE. If and to the extent any provision of this Agreement is found to be prohibited under, or contrary to or ineffective under any existing
law, this Agreement shall be considered amended only to the extent necessary to make this Agreement conform to such law.
27. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.
28. ENTIRE AGREEMENT.
This Agreement (comprising the cover letter incorporating these Standard Terms & Conditions and any Appendices attached or referenced in the cover letter) supersede all prior agreements between the Parties with respect to its subject matter and constitutes a complete and exclusive statement of the terms of the agreement between the Parties with respect to its subject matter. If a term in the cover letter conflicts with a term in these Standard Terms & Conditions, then the term in the cover letter shall apply.
