EXHIBIT 10.2

CONTRACT NUMBER: 4205
Cambar Vendor Number: 4463

PURCHASING AGREEMENT

BUYER:
 
 
SELLER:
General Nutrition Corporation
300 Sixth Avenue
Pittsburgh, PA 15222
Attention:  Purchasing Department
 
Muscle Pharm, LLC
3390 Peoria St # 307
Auros, CO 80010
Phone:   412/288/2096
Phone: 303/564/7432
Fax:   412/338/8865
Fax:  800/490/7165
E-mail:  frank-pernice@gnc-hq.com
E-mail:
Contact Person:  Frank Pernice
Contact Person:  Leonard Armenta

In consideration of the mutual promises and covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are
acknowledged, and intending to be legally bound hereby, Buyer and Seller
(individually a “Party” and collectively the “Parties”) agree as follows:

SUMMARY OF CERTAIN KEY TERMS

1.           Supply of Product.  During this Agreement, (i) Buyer shall purchase
from Seller the products listed on Exhibit 1 (the “Products”) at the prices
listed on Exhibit 1 (the “Prices”)and (ii) Seller shall sell, fulfill and
deliver those Products, all pursuant to this Agreement and Buyer’s vendor book
(the “Vendor Book”), which, among other requirements, includes Buyer’s standard
purchase order (the “Purchase Order”).  Seller shall also provide the
information regarding the Products requested on Exhibit 1.

2.           Lead Time.   Unless otherwise stated in a Purchase Order from
Buyer, all delivery transportation terms of sale will be FOB Destination—FREIGHT
COLLECT, unless Buyer’s transportation department (the “Transportation
Department”) designates FOB Destination—PREPAID (the “Shipment Terms”).  The
Shipment Terms pertain to the cost and delivery point of shipment of the
Products from Seller’s facility located within the United States of America and
shall not affect allocation of the risk of loss, passage of title, acceptance,
payment, or Buyer’s right to return Products, which are addressed elsewhere in
this Agreement. Seller shall contact the Transportation Department, in
accordance with Paragraph B of the General Terms below, before making any
shipping arrangements.  All Product deliveries will be made by Seller within 3
weeks after Buyer places the order (the “Lead Time”).  If Buyer designates that
the Transportation Department will arrange pick up of the Products, then the
Lead Time for such shipment is shortened by one week.

 
 

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3.           Product Payment.  Buyer shall pay Seller for Products received by
Buyer:
Pay on Scan
Within ten days after on-scan or entry into the cash register at a
Buyer-owned  store and within ten days after wholesale delivery from Buyer’s
distribution center to Buyer franchisees or unaffiliated purchasers.

Shrink Allowance for Pay on Scan Products.  “Shrink” means lost, stolen, or
damaged Product after Acceptance.  "Shrink" does not include concealed damage
discovered after Acceptance while in Buyer's distribution center. For each unit
of Product purchased by Buyer via pay-on-scan only, Seller shall credit Buyer 1%
of the Product purchase price to account for Shrink related to the Product.  The
shrink allowance shall be deducted by Buyer against each invoice paid to Seller.

4.           Reverse Logistics.  Seller agrees to the General Nutrition Returns
Agreement (the “Returns Agreement”) attached as Exhibit 4.

5.           Term.  This Agreement shall be in effect for one year from the date
signed by Buyer (the “Effective Date”); thereafter, the Agreement will
automatically renew on an annual basis.  Either Party may terminate this
Agreement at any time without cause on 30 days advanced written notice.

6.           Advertising and Promotion.  Seller agrees to the total annual
advertising commitment for the Products as set forth on Exhibit 6 (the
"Committed Advertising").  Upon request from Buyer, Seller agrees to provide
Buyer with proof of placements for the Committed Advertising for the months
committed as set forth on Exhibit 6.  In the event that Seller fails to (a)
conduct the Committed Advertising for any committed month or (b) provide Buyer
with proof of placement showing Seller conducted the Committed Advertising for
any committed month, Buyer may discontinue any or all of the Products and such
Product(s) will be subject to the reverse logistics terms set forth in Exhibit
4.  Seller shall support Buyer's sale of the Products by Product advertising and
promotion as set forth on Exhibit 6.

7.           Customer Return Pledge.  Seller shall comply with Buyer’s customer
return program as described in the Vendor Book.  All Product returned by Buyer’s
customers will be charged back to Seller at cost plus 18% of such cost in
addition to any inbound freight cost incurred by Buyer. The chargeback amount,
structured to compensate for all expenses incurred by Buyer in carrying the
Product, will be either paid in cash to Buyer or deducted from Seller’s account
when invoice payments are issued.

8.           Insurance.  Seller shall maintain a comprehensive General/ Products
Liability occurrence policy, $2,000,000 per occurrence/$2,000,000 aggregate for
bodily injury, and property damages with the following coverage;
Premises/Operations, Products/Completed Operations, Contractual Liability and
Independent Contractors; or General/Products Liability claims made policy,
$2,000,000 per occurrence/$2,000,000 aggregate for bodily injury and property
damages with the following coverage:  Premises/Operations, Products/Completed
Operations, Contractual Liability and Independent Contractors.  The retroactive
date of the

 
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policy must be prior to the Effective Date and must be specified on the
certificate of insurance for such policy.  Further details for each policy are
contained in the Vendor Book.  Seller shall name Buyer and Buyer’s subsidiaries
and affiliates as an additional insured under such coverage as described in the
Vendor Book.  Seller shall deliver to Buyer a certificate of insurance
evidencing the required coverage to Buyer prior to any delivery of
Product.  Seller shall provide Buyer at least 60 days prior written notice of
any cancellation, change, or reduction of such coverage (a “Change in
Insurance”) and any such Change in Insurance shall constitute a material breach
of the Agreement.  In addition, Seller shall provide indemnification to Buyer
and Buyer’s affiliates as more fully described in the Vendor Book.

9.           Indemnity.  Seller shall defend, indemnify, and hold Buyer and
Buyer’s affiliates and Buyer’s and Buyer’s affiliates’ franchisees and licensees
harmless from and against all claims, expenses, liabilities, losses, and damage,
including reasonable attorney’s fees, resulting from, or arising in connection
with, (i) the failure of the Products to conform in any respect to the
representations and warranties contained in any part of this Agreement, (ii) the
failure of the Products to meet label claims or Buyer’s quality control
standards, (iii) the promotion, sale, purchase, resale, or use of the Products
or any litigation or threatened litigation based thereon, and (iv) all
intellectual property infringement and misappropriation claims based on the
Products.  Such right of indemnity shall exist in favor of the Buyer even though
the negligence, gross negligence, strict liability, common law or statutory
fault of the Buyer, or any of them, was the sole cause, a producing cause or a
concurring cause of the claim, demand, controversy or cause of action in
question.  This indemnity and defense shall be in addition to other remedies
afforded to Buyer or Buyer’s affiliates at law or in equity.  This indemnity and
defense shall survive acceptance of the Products and payment therefore by
Buyer.  Seller shall assume Buyer’s contractual obligations to defend and
indemnify Buyer’s affiliates and Buyer’s affiliates’ franchisees and licensees
from all claims, expenses, liabilities, losses, and damages, including
reasonable attorney’s fees, resulting from the promotion, sale, purchase,
resale, or use of the Products.

10.           Limitation.  IN NO EVENT SHALL BUYER BE LIABLE TO SELLER UNDER
THIS AGREEMENT (WHETHER IN TORT, IN STRICT LIABILITY, IN CONTRACT, OR OTHERWISE)
FOR ANY (i) INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, OR CONSEQUENTIAL DAMAGES,
INCLUDING DAMAGES FOR LOST PROFITS, EVEN IF BUYER HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, OR (ii) AMOUNT THAT EXCEEDS THE AGGREGATE FEES PAID
BY BUYER TO SELLER UNDER THIS AGREEMENT FOR THE IMMEDIATELY PRECEDING SIX
MONTHS.  THE EXISTENCE OF MORE THAN ONE CLAIM WILL NOT ENLARGE OR EXTEND THESE
LIMITS.

11.           Margin Neutrality.  A Product's margin percentage is calculated by
subtracting the Buyer's Product cost from the Product's retail price and
dividing that result by the Product's retail price.  A margin percentage is
established with the initial sale of the Product at Buyer's corporate
stores.  If Buyer wishes to promote the Product thereafter by lowering the
retail price of the Product, the Seller agrees to lower the cost of the Product
for each unit sold during the promotion such that the Buyer’s originally
calculated margin percentage remains neutral (i.e, the same as it was before
Buyer lowered the retail price).  The difference between the original Product
cost and

 
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the reduced Product cost during the promotion multiplied by the units sold
during the promotion period equal the markdown monies ("Markdown Monies") owed
to Buyer from Seller.  The units of Product sold during the promotion period
will be based on (a) for franchise sales, units sold by Buyer to franchisees and
(b) for corporate sales, units sold at corporate retail stores.  All promotions
will be available to franchise stores.  Solely with regard to sales of the
Product from the Buyer to franchisees, the promotional pricing for the Product
will start two weeks prior to the start date of the promotion in corporate
retail stores and end two weeks prior to the end date of the promotion in
corporate retail stores.  Markdown Monies will be paid by Seller based on units
sold at the end of each month during the promotion.  Payment will be
automatically deducted by Buyer from Seller’s account via credit memo.  If there
is not an open balance to deduct against, Seller will issue a check payment in
full within 30 days of Buyer's written notification.

GENERAL TERMS

A.           Pricing Terms. Seller guarantees that the Prices are the lowest
currently available.  Should lower prices become applicable for any of Seller’s
customers, the Prices will automatically and immediately become applicable for
Buyer.  Upon request of Buyer, Seller shall confirm in writing that the Prices
are Seller’s lowest offered price.  Seller shall work continuously on achieving
cost savings and improvements in raw materials, specifications, packaging, and
production efficiencies to the benefit of both Parties and those savings and
improvements shall be promptly passed on to Buyer in the form of lower Prices
and improved Products.

B.           Ordering and Delivery.  The Transportation Department shall
determine and arrange all transportation requirements for FOB
Destination—FREIGHT COLLECT deliveries.  If Seller is to arrange transportation,
Seller shall provide estimates to the Transportation Department for verification
of reasonableness and approval of selected carrier before shipment is made.
 Each Purchase Order received from Buyer shall be confirmed by Seller within 24
hours following receipt to Buyer’s contact person by fax or electronic
confirmation of receipt.  All Products must be shipped to the distribution
center designated by Buyer.

C.           “Sale or Return” Purchase.  Seller and Buyer agree that all
Products shall be sold on a “sale or return” basis subject to the terms of this
Agreement, including this Paragraph C and Exhibit 4 of the Returns Agreement.

D.           Confidentiality.  During the term of this Agreement and after the
expiration or termination of this Agreement, each Party shall keep confidential,
and shall require such Party’s officers, directors, employees, and agents to
keep confidential, all proprietary information of the other Party, including (i)
any information specifically identified by either Party prior to disclosure as
being confidential information, (ii) plans and data concerning products, prices,
marketing, sales, customers, and (iii) technical or business
matters.  Disclosure of such confidential information shall be made by either
Party only to those of such Party’s employees and agents who have need to know
such information in order to carry on the purposes of this Agreement and who
have agreed in writing to abide by confidentiality requirements at least as
restrictive as those set forth in this Agreement.  Seller shall not disclose the
terms of this

 
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Agreement to any person or entity that is not a Party.  A breach or threatened
breach of this Paragraph D by the receiving Party may cause irreparable harm and
injury to the disclosing Party for which money damages are inadequate.  In the
event of such breach or threatened breach, the disclosing Party shall be
entitled to seek injunctive relief, in addition to all other available remedies,
without the requirement of posting a bond or any other security.

E.           Notices.  All demands, notices, and other communications to be
given under this Agreement by a Party to the other Party shall be deemed to have
been duly given if given in writing and (i) personally delivered, (ii) sent by
nationally recognized overnight courier, or (iii) sent by mail, certified,
postage prepaid with return receipt requested, in each case, at the address set
forth in this Agreement for such other Party.  Notices delivered personally or
by courier shall be deemed communicated as of actual receipt.  Mailed notices
shall be deemed communicated as of 10:00 a.m. on the third business day after
mailing.  Any Party may change such Party’s address for notice under this
Agreement by giving prior written notice to the other Party of such change in
the manner provided in this Paragraph E.

F.           Entire Agreement and Modification.  This Agreement (including the
Vendor Book, the Purchase Order, and all exhibits) contains the entire agreement
of the Parties relating to the subject matter of this Agreement, and the Parties
agree that this Agreement supersedes all prior written or oral agreements,
representations, and warranties relating to the subject matter of this
Agreement. In the event of any conflict between the terms of this Agreement and
the Vendor Book, the terms of this Agreement shall control.  Except for changes
to the Vendor Book made by Buyer, no modification of this Agreement shall be
valid unless made in writing and signed by the Parties.  The terms contained in
Seller’s invoices, acknowledgments, or other writings are not binding on Buyer
and are of no force or effect.  The individuals signing this Agreement each
represents to the other that such individual has the full right and authority to
enter into this Agreement and to perform the obligations set forth in this
Agreement of such Party.  The terms and conditions of the Vendor Book may, from
time to time, be unilaterally amended by Buyer.  In the event of such an
amendment, Buyer shall send Seller a written notification describing the
amendment via registered mail, postage prepaid, to the address listed above at
least 30 days prior to the amendment’s effective date.  Acceptance by Seller of
a Purchase Order (or any Buyer order) after receiving notice of the amendment to
the Vendor Book shall constitute acceptance by Seller of the amended terms and
conditions of the Vendor Book.  Sections 4, 7, 8, 9, and 10 of this Agreement
and Paragraphs C through F and Paragraphs H and I of the General Terms shall
survive the termination of this Agreement.

G.           Termination.   Either Party may terminate this Agreement upon
notice to the other Party if such other Party becomes insolvent or bankrupt or
files or permits to be filed any petition in bankruptcy.

H.           Waiver, Assignment, and Severabililty.  The waiver of a breach of
any term or condition of this Agreement shall not be deemed to constitute the
waiver of any further breach of such term or condition or the waiver of any
other term or condition of this Agreement.  Neither Party shall assign this
Agreement or any right or interest in or to this Agreement, in whole or in part,
without the prior written consent of the other Party, except that Buyer may
assign this Agreement to a purchaser of all or substantially all of Buyer’s
assets.  The invalidity, in whole or

 
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in part, of any provision in this Agreement shall not affect the validity of any
other provision. The Parties exclude the application of the United Nations
Convention on Contracts for the International Sale of Goods if otherwise
applicable. This Agreement shall be interpreted, construed, and enforced in all
respects in accordance with the laws of the Commonwealth of Pennsylvania.  Venue
of any action relating to, or arising out of, this Agreement shall lie
exclusively in the courts located in Allegheny County, Pennsylvania.  All
disputes, claims, and controversies, whether statutory, contractual, or
otherwise, between the Parties arising under, or relating to, this Agreement
shall be governed by the Vendor Book.

I.           Interpretation.  In the interpretation of this Agreement, except
where the context otherwise requires, (i) “including” or “include” does not
denote or imply any limitation, (ii) “or” has the inclusive meaning “and/or,”
(iii) “and/or” means “or” and is used for emphasis only, (iv) “$” refers to
United States dollars, (v) the singular includes the plural, and vice versa, and
each gender includes each other gender, (vi) captions or headings are only for
reference and are not to be considered in interpreting this Agreement, (vii)
“Section” refers to a section of this Agreement, unless otherwise stated in this
Agreement, (viii) “Exhibit” refers to an exhibit to this Agreement (which is
incorporated by reference), unless otherwise stated in this Agreement, (ix)
“Schedule” refers to a schedule to this Agreement (which is incorporated by
reference), unless otherwise stated in this Agreement, (x) all references to
times are times in Allegheny County, Pennsylvania, (xi) “day” refers to a
calendar day unless expressly identified as a business day, and (xii) the Vendor
Book is incorporated by reference.

J.           Counterparts.  This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.  Faxed copies of manually
executed signature pages to this Agreement will be fully binding and enforceable
without the need for delivery of the original manually executed signature page.

The Parties have executed this Agreement on the date first set forth above.

BUYER
SELLER
   
GENERAL NUTRITION CORPORATION
MUSCLE PHARM, LLC
   
By:  /s/ Stephen B. Cherry
By:  /s/ Leonard K. Armenta
   
Name: Stephen B. Cherry
Name: Leonard K. Armenta
   
Title:  VP Purchasing
Title:  COO
   
Date:  12-18-09
Date:  12/16/09

Seller acknowledges that Seller has received a copy of the Vendor Book
incorporated into this Agreement.

MUSCLE PHARM, LLC

By:  /s/ Leonard K. Armenta
Name:  Leonard K. Armenta
Title: COO
Date:  12/16/09

 
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EXHIBIT 1

LIST OF PRODUCTS

BUYER ITEM  NO.
UPC
CODE
DESCRIPTION
UNIT PRICE
FOB DESTINATION PREPAID
UNIT PRICE FOB DESTINATION FREIGHT COLLECT
OVERALL
INVENTORY
TURN RATE IN BUYER-OWNED STORES
BUYER’S
MINIMUM
SALES IN BUYER-OWNED STORES
MINIMUM ORDER QUANTITY
446301
 
Berry combat powder 5lb
$21.90
 
NA
NA
NA
446302
 
Battle fuel
$21.90
 
NA
NA
NA
446304
 
Chocolate combat powder
$21.90
 
NA
NA
NA
446305
 
Chocolate Pntbtr combat powder
$21.90
 
NA
NA
NA
446306
 
Fruit punch assault
$21.00
 
NA
NA
NA
446307
 
Fruit punch recon
$21.90
 
NA
NA
NA
446308
 
Grape bullet proof
$20.98
 
NA
NA
NA
446309
 
Orange raspberry bullet proof
$20.98
 
NA
NA
NA
446310
 
Raspberry lemon assault
$21.00
 
NA
NA
NA
446312
 
Shredded matrix
$19.48
 
NA
NA
NA
446317
 
Blue raspberry assault
$21.00
 
NA
NA
NA
446318
 
Banana combat powder
$21.90
 
NA
NA
NA

 
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EXHIBIT 4

GENERAL NUTRITION RETURNS AGREEMENT

Buyer has a Reverse Logistics Program that allows Buyer to return to Seller for
credit (or for a cash payment at Buyer’s sole option) any and all of the
Products purchased by Buyer under the Purchasing Agreement to which this Returns
Agreement (this “Agreement”) is an Exhibit (the “Purchasing Agreement”), any
units of any Products that are (i) defective, (ii) outdated, (iii) discontinued
by Buyer (pursuant to the criteria set forth in this Agreement), or (iv)
recalled using a centralized returns system.  A “recalled product” is a Product
or ingredient in a Product for which a recall has been requested by Seller or
any government entity. A “defective product” is a Product that contains latent
defects relating to the quality of the Product or the Product’s packaging.

Seller agrees that Buyer’s designated reclamation center (the “Reclamation
Center”) shall process all Products and provide detailed reporting
services.  The Products will be returned to the Reclamation Center.  Buyer
reserves the right to change the Reclamation Center at any time.  All Products
returned via this Agreement to the Reclamation Center shall be held for Seller’s
review for 21 days after notice of return is provided to Seller; at that time if
not reviewed or no decision has been provided to Buyer by Seller, the Product
may be disposed of at the discretion of Buyer.

Retail and wholesale sales of the Products will be evaluated by Buyer on a
rolling eight week basis as per agreed full distribution to Buyer’s stores, and
Buyer may elect to discontinue any Products and return such Products to
Seller if, during such eight week period, either sales of such Product (i) fall
below the minimum sales threshold in Buyer-owned stores as set forth on Exhibit
1 of the Purchasing Agreement for such Product (the “Minimum Sales Threshold”)
or (ii) do not meet the minimum overall inventory Turn Rate (as defined below)
in Buyer-owned stores as set forth on Exhibit 1 of the Purchasing Agreement for
such Product (the “Minimum Overall Inventory Turn Rate”).

A “Turn Rate” means the quotient of (i) the aggregate of the last eight weeks of
Buyer’s cost of the individual Product sold resulting from retail sales of the
individual Product in Buyer-owned stores divided by (ii) the average cost of the
aggregate individual Product in inventory at Buyer-owned stores and 70% of
distribution centers inventory during the same eight week period. The calculated
value of 70% of distribution centers inventory accounts for Product inventory
allocated to Buyer-owned stores. For clarity purposes, the term “individual
Product” in the preceding sentence refers to one specific Product listed on
Exhibit 1 to the Purchasing Agreement and not all of the Products collectively
listed on Exhibit 1 to the Purchasing Agreement. Seller agrees that any of the
Products previously delivered to Buyer and that are in Buyer’s inventory prior
to execution of this Agreement are subject to the terms of this Agreement.

Seller agrees to provide Buyer with a letter of credit to satisfy any amounts
Seller owes Buyer under this Agreement.

 
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Buyer’s objectives under this Agreement are:

 
·
Fairness to all parties

 
·
Total accountability

 
·
Supplier designated disposition of products

 
·
Thorough, accurate, and timely communication with Buyer’s suppliers

Buyer shall receive a credit (or at Buyer’s option, a cash payment) for each
unit of any Product returned based on Buyer Standard Cost (as defined below) per
unit, plus the accepted factors from the Joint Industry Report (JIR) for
handling returns.  These accepted factors include:
 
·
Direct Product Cost (“DPC”): $0.085

 
·
Post Damage Handling (“PDH”): $0.190

 
·
Operations Through Scan (“OTS”): $0.101

 
·
Disposition Cost (as selected below)

 
Please indicate the method of disposition and corresponding Disposition Cost for
the Products by placing an “X” on the appropriate choice below (if no method of
disposition is chosen by Seller within seven days following the notification to
return Product, the COPT code will apply):

CODE
DESCRIPTION (DISPOSITION COST)
   
COPT______
Scan and disposition left up to the discretion of Buyer ($0.020)*
DONA_____
Scan and Donate ($0.030)
DEST______
Scan and DESTROY ($0.040)*
ROPT______
Scan, Hold, Seller Review/Center Option ($0.127)
RDON_____
Scan, Hold, Seller Review, DONATE ($0.137)
RDES______
Scan, Hold, Seller Review, DESTROY ($0.147)*
RTAK______
Scan, Hold, Seller Review, TAKE ($0.174)
RSHP______
Scan, Hold, Seller Review, Ship ($0.186)
SHBK______
Scan and Ship back to Seller ($0.180)* Open RA# Required:_________

*NON-TOXIC/NON-HAZARDOUS MATERIAL ONLY

Handling of hazardous materials (as determined by Buyer) will require Seller to
supply material safety data sheets (“MSDS”) before a Product is returned.  Fees
for hazardous materials will be in addition to the above costs.  Failure to
provide MSDS may result in additional charges and possible fines, which Seller
shall pay in full and as to which Seller shall fully indemnify Buyer.

With regard to Product located in Buyer stores in Alaska, Hawaii, and/or Puerto
Rico, in addition to the Disposition Costs set forth above, at Seller’s option,
Buyer will either destroy, at Seller’s expense, all Product at the store level
or bill Seller for all shipping charges associated with sending Product to the
Reclamation Center.  Buyer will provide an estimate of the shipping charges
associated with returning the Products to the Reclamation Center, but Buyer’s
recovery for shipping charges shall not be limited to such estimate but shall be
based on Buyer’s actual cost.

 
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Buyer may increase any costs set forth in this Agreement 30 days after written
notification of such increase is sent to Seller by Buyer.

Buyer’s unit count and dollar value determinations so made shall govern unless
proved to be in error by Seller as determined by Buyer.

With regard to Products that are recalled, all recalled Products shall be
returned to Seller via the SHBK Code (i.e., scanned and shipped back to Seller)
regardless of whether Seller has chosen a different method of disposition.  An
open RA# number must be established with Buyer’s purchasing department prior to
the initiation of a recall.  Pallets shipped with recalled Products will be
billed to Seller at the cost of $6.50 per pallet.  Itemized pallet charges will
also appear on a future invoice.

All shipments of Product (i.e., those from Buyer stores to the Reclamation
Center as well as from the Reclamation Center to Seller) shall be prepaid by
Buyer to be reimbursed by Seller as set forth in this Agreement.  Title and risk
of loss to any Products shall revert to Seller once the Products are removed
from Buyer’s stores or warehouse for delivery to the Reclamation Center.

Explanations of Phrases and Abbreviations

BUYER STANDARD COST: Buyer’s cost for the Product charged by Seller plus the
freight cost from  Seller to Buyer warehouses, if paid by Buyer.

JIR REPORT:  In 1989, a Joint Industry Committee conducted a study, measuring
the costs of handling unsaleable products all the way back through the
distribution channel.  Membership on the Committee was drawn from the following
trade organizations: FMI, GMA, NAWGA, NGA, NFBA, and NACDS.  The resulting JIR
Guidelines were issued in the form of recommended good business practices.

DPC: “Direct Product Cost” is the cost associated with transporting a Product
from Buyer’s distribution centers to the retail store shelf.

PDH:  “Post Damage Handling” is the cost of removing a Product from the stores
and shipping to the Reclamation Center.

OTS:  “Operations Through Scan” is cost of receiving, scanning, and preparing
for disposition of Product and associated costs at the Reclamation Center.

DISPOSITION COSTS:  Costs associated with the disposition of the Product, as
selected by Seller by code.

CODES: COPT, DONA, DEST, ROPT, RDON, RDES, RTAK, RSHP, SHBK.

 
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EXAMPLE of how an item under Disposition Cost code COPT will be billed:

ITEMS STANDARD COST
  $ 2.900  
DPC COST
  $ 0.085  
POST DAMAGE COST
  $ 0.190  
OTS
  $ 0.101  
DISPOSITION COST
  $ 0.020  
TOTAL
  $ 3.296  

If Buyer returns 12 pieces of this item, the credit memo deduction will be: 12 X
$3.296 = $ 39.552.

EXAMPLE of how an item under Disposition Cost code RSHP will be billed:
 
 
ITEMS STANDARD COST
  $ 2.900  
DPC COST
  $ 0.085  
POST DAMAGE COST
  $ 0.190  
OTS
  $ 0.101  
DISPOSITION COST
  $ 0.186  
TOTAL
  $ 3.462  

If Buyer returns 12 pieces of this item, the credit memo deduction will be: 12 X
$3.462 = $41.544.

EXAMPLE of how recalled Product will be billed:

ITEMS STANDARD COST
  $ 2.900  
DPC COST
  $ 0.085  
POST DAMAGE COST
  $ 0.190  
OTS
  $ 0.101  
DISPOSITION COST
  $ 0.180  
TOTAL
 
$3.456 + Pallet Charges
 

 
If Buyer returns 12 pieces of this item, the credit memo deduction will be 12 x
$3.456 = $41.472 + Pallet Charges

 
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EXHIBIT 6
ADVERTISING AND PROMOTION

The Parties agree to the following advertising and promotion commitments as set
forth below:

A.
Seller Commitments.

 
1.
Advertising Commitment

Product:
Medium:
Outlet:
Month(s) Committed:
$ Committed:
                                       

2.           Media and Promotional Plan
________________________________________________________________

3.           Promotional Money (“PM”) Support.

Buyer will charge an extra 10% over the total PM value to cover extra taxes and
charges. 

4.           Category Drives.
________________________________________________________________

5.           Franchising Specific.
 
6.           Other.
_________________________________________________________________

 
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B.
Buyers Commitments.

 
1.
Initial Plan-O-Gram or Shelf Space Commitment.

__________________________________________________________________

 
2.
Product Introduction, Store Commitment.

__________________________________________________________________

 
3.
Franchising Specific.

 

 
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