[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

 

PRODUCT MANUFACTURING AND LICENSE AGREEMENT

 

This Product Manufacturing and License Agreement (the “Agreement”) is entered
into as of this 31 day of January, 2012 (the “Effective Date”) by and between
Skinny Nutritional Corp., a Nevada corporation with principal offices at 3 Bala
Plaza East, Bala Cynwyd, Pennsylvania 19004 (“Skinny”) and Cliffstar LLC, a
Delaware limited liability company, with principal place of business located at
5519 W. Idlewild Ave., Tampa, Florida 33634 and its parent corporation and
affiliates (“Manufacturer”).

 

Whereas, Skinny has developed a product line of beverages, including
non-carbonated, shelf-stable, zero calorie, zero sugar, zero sodium and zero
preservatives drink products; and

 

Whereas, Manufacturer is in the business of developing, manufacturing and
distributing carbonated and non-carbonated drink products for sale under
Manufacturer’s own brands and/or as a private label manufacturer for third
parties; and

 

Whereas, Skinny desires to have Manufacturer produce and distribute Skinny
products which have been developed by Skinny as of the Effective Date and also
to develop, produce and distribute new products on behalf of Skinny (both such
existing products and new products being hereinafter referred to as the
“Products”), as provided in this Agreement; and

 

Whereas, Manufacturer desires to obtain the necessary rights and licenses to
otherwise manufacture and sell the Products as provided in this Agreement; and

 

Whereas, Skinny is the sole and exclusive owner of the “Skinny Water®” trademark
as well as other statutory and common law trademarks, including without
limitation the trademarks set forth in Schedule A, that, among other things,
identify and distinguish the Products and which are used in the Product’s
advertising, marketing and sale (collectively, the “Trademarks”).

 

Now therefore, in consideration of the premises and the mutual agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

1.Term and Termination.

 

(a) Term. This Agreement and the licenses granted herein shall take effect as of
the Effective Date set forth above and shall continue unless otherwise
terminated in accordance with the provisions of Sections 1(b) through 1(g), or
until such time that either party may provide thirty-six (36) months’ prior
written notice of the termination of this Agreement without cause.

 

(b) Termination by Skinny for Material Breach. Skinny shall have the right to
terminate this Agreement immediately, by providing written notice of
termination, at any time during the Term, upon a Material Breach by Manufacturer
as provided in Section 9 below. In the event of such termination by Skinny for
Manufacturer’s Material Breach, Manufacturer shall, upon receiving written
notice from Skinny, sell to Skinny and Skinny shall be obligated to purchase (i)
any Concentrate (as defined in Section 4(a) below) which has been [*****] by
[*****] but not [*****], at [*****], and (ii) all finished Products then
remaining in Manufacturer’s possession or control, at the [*****] between
[*****].

 

 

1

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

(c) Termination by Skinny for Default. Skinny shall have the right to terminate
this Agreement in the event Manufacturer fails to observe one or more of the
terms, covenants or conditions of this Agreement (a “Default”), and fails to
remedy such Default within [*****] [*****] of Manufacturer’s receipt of written
notice from Skinny which sets forth in reasonable detail the basis for the
Default, it being understood and agreed by the parties that such remedy period
shall not apply to any termination by Skinny for a Material Breach by
Manufacturer pursuant to Section 1(a) above. In the event of such termination by
Skinny for Manufacturer’s Default, Manufacturer shall, upon receiving written
notice from Skinny, sell to Skinny, and Skinny shall be obligated to purchase
(i) any Concentrate which has been [*****]but not [*****], at [*****], and (ii)
all finished Products then remaining in Manufacturer’s possession or control, at
the [*****] between [*****].

 

(d) Termination by Skinny Upon Imminent Danger. Skinny shall have the right to
terminate this Agreement immediately, by providing written notice of
termination, at any time during the Term, upon the occurrence of any event,
activity, circumstance or action caused by Manufacturer that, in Skinny’s
reasonable judgment, constitutes an imminent danger to the health and safety of
the public. In the event of any termination of this Agreement pursuant to this
Section 1(d), Manufacturer may dispose of or sell any Product that is [*****]
during a [*****] period following the effective date of termination, provided
that such Product and its sale comply with the terms of this Agreement;

 

(e) Termination by Manufacturer for Default. Manufacturer shall have the right
to terminate this Agreement in the event of a Default by Skinny and Skinny fails
to remedy such Default within [*****] of Skinny’s receipt of written notice from
Manufacturer which sets forth in reasonable detail the basis for the Default, it
being understood and agreed by the parties that such remedy period shall not
apply to any termination by Manufacturer for a Default in respect to the [*****]
to Manufacturer pursuant to this Agreement or a breach by Skinny of any of the
provisions of Section 12 hereof, which may be grounds for immediate termination
for Default without a right for Skinny to cure. In the event of such termination
by Manufacturer for Skinny’s Default, Skinny shall, upon receiving written
notice from Manufacturer, purchase from Manufacturer, and Manufacturer shall be
obligated to sell (i) any Concentrate which has been [*****] by [*****] but not
[*****], at [*****], and (ii) all finished Products then remaining in
Manufacturer’s possession or control, at the [*****]between [*****].

 

(f) Termination by Manufacturer Upon Imminent Danger. Manufacturer shall have
the right to terminate this Agreement immediately, by providing written notice
of termination, at any time during the Term, upon the occurrence of any event,
activity, circumstance or action caused by Skinny that, in Manufacturer’s
reasonable judgment, constitutes an imminent danger to the health and safety of
the public. In the event of any termination of this Agreement pursuant to this
Section 1(f) Skinny shall, upon receiving written notice from Manufacturer,
purchase from Manufacturer, and Manufacturer shall be obligated to sell (i) any
Concentrate which has been [*****] by [*****] but not [*****], at [*****], and
(ii) all finished Products then remaining in Manufacturer’s possession or
control, at the [*****] between [*****].

 

 

2

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

(g) Termination Upon Bankruptcy. Either party may terminate this Agreement
immediately in the event the other party enters composition, private arrangement
or bankruptcy proceedings, or becomes insolvent due to its inability to pay its
debts as they become due; or a receiver or liquidator, whether permanent or
temporary, for all or substantially all of its property, is appointed by any
court; or such party makes a general assignment for the benefit of its
creditors; or a voluntary or involuntary petition under applicable bankruptcy
laws are filed with respect to such party. In the event of any termination of
this Agreement pursuant to this Section 1(g), Manufacturer may dispose of or
sell any Product that is [*****] during a [*****] period following the effective
date of termination, provided that such Product and its sale comply with the
terms of this Agreement.

(h) Sale of Products Upon Expiration. Manufacturer may dispose of or sell any
Product that is then on-hand during a ninety (90) day period following the
effective date of expiration of this Agreement at the end of the Term, provided
that such Product and its sale comply with the terms of this Agreement.

 

(i) Unsafe Products. Notwithstanding any provision of this Section 1, neither
shall Manufacturer have any right to sell or distribute in any manner, nor shall
Skinny have any obligation to purchase from Manufacturer other than as set forth
in Section 1(f) above, upon a termination of this Agreement pursuant to the
provisions of Section 1(b), Section 1(c) or Section 1(d) above, any Product
which is or has been proven by a third party in any complaint or action filed
with any court or governmental regulatory agency with jurisdiction to be (i)
adulterated or misbranded within the meaning of or in violation of any
disclosure or warning required under the Federal Food, Drug, and Cosmetic Act
(the “FFD&C Act”), or any other substantially similar and applicable law or
ordinance, (ii) article which may not, under the provisions of the FFD&C Act, or
any other substantially similar and applicable law or ordinance, be introduced
into domestic or international commerce, or (iii) not in compliance with any
applicable federal, state or local law, regulation or ordinance in effect at the
time of production.

 

2.Effect of Termination.

 

(a) Discontinuation of Manufacturing. Upon termination of this Agreement (or
upon cancellation of the authorization of any Product, and in such case only
with respect to such Product), Manufacturer shall not thereafter prepare,
package, distribute or sell the Product or make use of any of the Trademarks,
cases, closures, labels or packaging materials used or intended for use by
Manufacturer solely in connection with the preparation, packaging, distribution
and sale of the Product, and Manufacturer shall not thereafter hold forth in any
manner whatsoever that Manufacturer has any connection with Skinny, the Product
or the Trademarks, except as expressly provided in this Agreement.

 

(b) No Compensation. Manufacturer shall not be entitled to any compensation upon
termination or expiration of this Agreement for any reason, including without
limitation for goodwill or the creation of a customer base in the Territory.
Manufacturer acknowledges that any goodwill generated through its sales efforts
and other activities hereunder shall belong to Skinny and that, upon
termination, Manufacturer shall be deemed to be fully compensated for any such
goodwill on or before the date of this Agreement.

 

3.License, Trademarks and Territory.

 

3

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

 

(a) Trademark License. Subject to the terms and conditions of this Agreement,
Skinny hereby grants to Manufacturer and Manufacturer hereby accepts an
exclusive, non-transferable, limited right and license to use the Trademarks
listed in Schedule A (and/or such other Trademarks as may be permitted by Skinny
in writing), including the right to sub-license, under the terms and conditions
set forth in this Agreement solely upon and in connection with the development,
production, processing, packaging, storage, distribution, and sale of the
Products. Further, Skinny expressly agrees that it shall not, during the Term,
use any of the Trademarks in connection with any products manufactured directly
by Skinny (or any successor in interest to Skinny) for sale or distribution
within the Territory. The License granted herein shall be limited to use by
Manufacturer solely in the territory set forth in Schedule B (the “Territory”),
as the same may be amended from time to time in writing duly executed by each of
the parties. Upon a change in the applicable law of any governmental
jurisdiction within the Territory that, in Skinny’s reasonable judgment as
supported by an opinion of Skinny’s legal counsel, adversely affects Skinny’s
Trademarks or other proprietary rights, Skinny shall have the right to remove
such jurisdiction from the Territory upon written notice to Manufacturer. If
Skinny desires to distribute Products outside of the Territory, Skinny agrees
that Manufacturer shall have a right of first refusal to negotiate in good faith
such amendments or other modifications to this Agreement as may be necessary or
appropriate for Manufacturer to produce and/or distribute Products in such
additional location(s). Manufacturer acknowledges and agrees that it is
prohibited from, directly or indirectly:

 

(i) using or exploiting, or allowing any third party to use or exploit, any of
the Trademarks outside of the Territory;

 

(ii) selling or distributing, or allowing any third party to sell or distribute
on its behalf, any Product outside of the Territory, provided, however, that
Manufacturer shall not be responsible for any trans-shipment of any Product by
any purchaser of Product;

 

(iii) granting the right to any third party, including but not limited to any
wholesalers or distributors, to transfer, sell, distribute and/or ship for
resale any Product outside of the Territory; and

 

(iv) granting any third party the right to further sub-license the Trademarks.

 

(b) No Other Licenses. (i) Except for the express grants of license herein,
Skinny retains all right, title and interest in and to the Trademarks and all
intellectual property and other proprietary rights associated therewith. Nothing
in this Agreement shall be construed as a sale or other conveyance of the
Trademarks or any other intellectual property rights of Skinny and no implied
license is granted hereunder. Manufacturer acknowledges and agrees that the
Trademarks and all rights incident thereto, including any goodwill created by
Manufacturer’s use of the Trademarks, are owned and shall accrue to the benefit
of and belong exclusively to Skinny. Nothing herein shall give Manufacturer any
interest in the Trademarks or the goodwill attached thereto or in any label,
design, container or visual representation thereof.

 

(ii) Manufacturer agrees that it shall not, directly or indirectly: (A) register
or attempt to register any of the Trademarks or any confusingly similar
trademark or service mark in any jurisdiction; or (B) use any of the Trademarks,
the name “Skinny Water” or other trademark confusingly similar thereto, either
in its corporate name or the corporate name of any subsidiary or affiliate, or
in any of its proprietary products.

 

4

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

 

(iii) Manufacturer disclaims any present or future right, title, or interest in
all of the Trademarks (other than the express grant of rights contained herein)
and agrees to refrain from contesting the validity of any of the Trademarks
within the Territory or elsewhere.

 

(iv) Manufacturer agrees to reasonably assist Skinny, at Skinny’s sole cost and
expense, including reimbursement of attorney’s fees incurred by Manufacturer, in
securing any and all protection which Skinny pursues for any of the Trademarks
in the Territory.

 

(v) Manufacturer shall promptly notify Skinny in writing of any suspected or
actual infringement of any of the Trademarks in the Territory by any third party
of which Manufacturer becomes aware. Skinny shall have the sole and exclusive
right to: (A) determine whether or not any action shall be taken with respect to
any suspected or actual infringement of any of the Trademarks; (B) sue for
infringement; and (C) recover and retain any and all damages. Manufacturer shall
cooperate with Skinny as Skinny may reasonably request, at Skinny’s sole cost
and expense, including reimbursement of attorney’s fees incurred by
Manufacturer, in the investigation, prosecution, negotiation, and settlement of
any claims or controversies relative to infringement of the Trademarks.

 

(c) Products Outside of Territory. In the event any Product prepared, packaged,
distributed or sold by Manufacturer is found outside the Territory, Skinny shall
provide Manufacturer with written notice of such potential nonconformance with
this Agreement. If such Products were distributed or sold by Manufacturer
outside of the Territory, Manufacturer shall have [*****] to remedy such
situation to Skinny’s reasonable satisfaction. In the event Manufacturer fails
to make commercially reasonable efforts to remedy such nonconformance to
Skinny’s reasonable satisfaction within such [*****] period, then in addition to
all other remedies available to Skinny in law or equity Skinny shall have the
right to:

 

(i) cancel forthwith Manufacturer’s authorization to sell, manufacture, market
or distribute any Product found outside the Territory; and/or

 

(ii) purchase any Product prepared, packaged, distributed or sold by
Manufacturer which is found outside the Territory, and Manufacturer shall, in
addition to any other obligation it may have under this Agreement, reimburse
Skinny for Skinny's reasonable and direct costs of purchasing, transporting,
and/or destroying such Product.

 

Notwithstanding the foregoing, Skinny acknowledges and agrees that Manufacturer
shall not be responsible for any trans-shipment of any Product by any purchaser
or distributor thereof to any location outside of the Territory and that if
Manufacturer provides reasonable documentation of the sale or delivery of any
Product to any purchaser location within the Territory, no breach of this
Agreement shall be deemed to have occurred and Manufacturer shall have no
obligation to remedy such situation.

 

(d) Development of Formulas. Skinny expressly represents and warrants to
Manufacturer that there are no agreements between Skinny and any third party
which would prohibit or restrict the development or creation by Manufacturer of
Products and/or Product flavors which match the flavors and/or formulas and
ingredients of any Product, to the extent not owned by Skinny, including without
limitation any agreement with [*****] with respect to [*****] currently used to
manufacture Products for Skinny

 

5

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

 

(e) Use of Trademarks Outside the Territory. This Agreement and the licenses
granted to Manufacturer herein shall not in any way prevent or limit Skinny from
directly using the Trademarks, or manufacturing, distributing, producing,
processing, storing or selling the Products, or any other product, outside the
Territory.

 

4.Ingredients, Containers, Packaging.

 

(a) Ingredients; Concentrates. The parties acknowledge that as of the Effective
Date of this Agreement, Skinny provides all ingredients to Manufacturer for
Manufacturer’s production of the Products which it produces for Skinny as of the
Effective Date. The parties intend for Manufacturer to become responsible for
sourcing, purchasing, maintaining inventory and otherwise providing all
ingredients required for the manufacture of the Products following a transition
period after the Effective Date of this Agreement. For purposes of this
Agreement, the term “Concentrate” shall mean the flavor concentrate for the
applicable Product [*****] by [*****] pursuant to this Agreement, regardless of
whether such [*****]is [*****] from Skinny or a third party, or is [*****] by
[*****] for use in the manufacture of Products. Until such time as [*****] can
[*****] and [*****] such [*****],[*****] will [*****] from [*****], which
supplies the [*****] for the Products existing as of the Effective Date. Until
such time as Manufacturer is prepared to source directly any or all other
ingredients of the Products, Manufacturer will continue to obtain such
ingredients from Skinny. If Manufacturer elects to [*****] for any Product, as
between Manufacturer and Skinny, Manufacturer agrees that Skinny shall own the
rights in the formulae for such [*****]. Pursuant to the provisions of Section
11 below, each party will be responsible for any defect, contamination,
adulteration or other failure of an ingredient which is purchased by the party
and which ingredient is used in the production of a Product.

 

(b) Containers. Skinny will source the Product containers for those Products
which are produced by Manufacturer, at Skinny’s sole expense, from Zuckerman
Honickman or such other bottle supplier as Manufacturer may reasonably approve,
provided that all Product containers sourced by Skinny shall be compatible with
the production facilities and capabilities of Manufacturer. Manufacturer will
provide closures for such Product containers. If desired by Manufacturer, Skinny
agrees to work cooperatively in a commercially reasonable manner with
Manufacturer to develop Product containers which can be produced directly by
Manufacturer for new Products which are developed by Manufacturer after the
Effective Date.

 

(c) Packaging. (i) The parties acknowledge that as of the Effective Date of this
Agreement, Skinny provides all packaging materials to Manufacturer for
Manufacturer’s production of the Products which it produces for Skinny as of the
Effective Date. The parties intend for Manufacturer to become responsible for
providing all packaging materials, including but not limited to labels,
necessary for the production and shipment of the Products following a transition
period following the Effective Date of this Agreement. Until such time as
Manufacturer is prepared to source directly any or all packaging materials for
the Products, Manufacturer will continue to obtain such packaging materials from
Skinny. As to all labels and/or other packaging materials provided by
Manufacturer, Manufacturer shall provide to Skinny and Skinny shall, within a
commercially reasonable time which shall not exceed [*****], approve or provide
required modifications to any and all labels and other packaging materials which
include any of the Trademarks. Subject to the terms and conditions of this
Agreement, all Product produced, sold or distributed by Manufacturer shall: (A)
bear the SKINNY WATER® trademark and/or any other Trademark(s) expressly
authorized by Skinny; and (B) comply with any and all applicable labeling
requirements required by Skinny and/or the governing laws of the Territory with
respect to content and presentation.

 

6

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

 

(ii) Manufacturer, recognizing the importance of identifying the manufacturing
source of each Product in the market, agrees to use unique identification codes
that comply with the requirements of applicable laws on all Product and
packaging materials for the Product.

 

(iii) Manufacturer shall not attach any trademark to any Product other than the
Trademark(s) authorized by Skinny under this Agreement. For avoidance of doubt,
Manufacturer’s corporate name may also be, or be an element of, a trademark, and
that corporate name may be included on the packaging and/or label for the
product as required herein, or under applicable laws.

 

(iv) Manufacturer shall maintain at all times a commercially reasonable supply
of stock of packaging, labels and other essential related materials bearing the
Trademarks licensed under this Agreement and approved by Skinny;

 

(v) Manufacturer, recognizing the important benefit to itself, Skinny and
Skinny’s other distributors of a uniform external appearance of the Product and
the materials used for the Product, agrees to accept and apply upon reasonable
advance notice by Skinny to Manufacturer the standards adopted and issued from
time to time by Skinny for the design and decoration of the Product cases,
cartons, and other materials and equipment used in the distribution and sale of
any Product. Skinny will pay for, or reimburse Manufacturer for, its costs in
implementing such changes requested by Skinny.

 

(vi) In order for Skinny to ensure that all Products sold, marketed or
distributed under the Trademarks by Manufacturer conform to Skinny’s quality
standards, Manufacturer shall only apply the labels approved by Skinny for the
Product, packaging, closures, cases, cartons and other materials and equipment
used in the distribution and sale of any Product. Manufacturer shall not modify
or alter the Skinny-approved labels in any way without first obtaining Skinny’s
prior written consent, which will not be unreasonably withheld or delayed. In no
event shall Manufacturer use any labels or packaging materials that have not
been first approved by Skinny. Upon any revision, amendment or other change in
the Trademarks, packaging or labels which may be required by Skinny pursuant to
this Section 4 or in order to comply with applicable laws, rules and/or
regulations, if Manufacturer is otherwise unable to use such materials in
connection with other products Manufacturer manufactures: (A) Skinny shall
purchase from Manufacturer, at [*****] of any kind upon Manufacturer’s
presentation to Skinny of reasonable documentation of such costs, the
commercially reasonable stock of labels and packaging materials which are
maintained by Manufacturer that need to be revised as a result of Skinny’s
requested changes, and (B) Skinny will pay for, or reimburse, Manufacturer for
its costs in implementing such changes requested by Skinny.

 

7

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

5.Quality Assurance, Quality Control.

 

(a) All Products shall be produced in those production plants set forth on
Schedule C, as amended from time to time to add additional production plants as
may be determined in the sole discretion of Manufacturer.

 

(b) Manufacturer agrees, represents and warrants that: (i) the production plants
set forth on Schedule C are owned, leased and/or controlled solely by
Manufacturer, (ii) its production plant, machinery, equipment, distribution and
vending facilities are in compliance with all applicable and material
governmental and administrative requirements, (iii) all Products shall be
merchantable, of commercially acceptable quality and fit for their intended use,
and (iv) all Products shall be produced, blended, stored, packaged, and shipped
only in accordance with this Agreement.

(c) In order for Skinny to ensure that all Products sold, marketed or
distributed under the Trademarks by Manufacturer conform to Skinny’s quality
standards, Manufacturer shall:

 

(i) furnish samples of the initial production run of such Products, as well as
all related material inputs, components, labels and packaging to Skinny for
Skinny’s prior written review and approval before Manufacturer begins selling or
distributing any Products;

 

(ii) undertake any corrective measures specified by Skinny in response thereto
(including but not limited to furnishing samples of Products and any related
inputs) if Skinny reasonably determines there is a quality control or product
safety issue;

 

(iii) perform, at Manufacturer’s sole cost and expense, Manufacturer’s standard
quality control testing for beverages such as the Products and, at Skinny’s sole
cost and expense, any other quality control testing reasonably requested by
Skinny, on all batches of finished Products manufactured, sold or distributed,
or to be sold or distributed, by Manufacturer; and

 

(iv) permit Skinny, in its sole discretion and at its sole cost and expense, to
send one or more employees or authorized representatives, at any time upon
reasonable advance notice during regular business hours, periodically to
inspect:

 

(A) the Manufacturer’s facility(ies) as listed on Schedule C;

 

(B) representative samples of the Products sold or distributed, or which
Manufacturer proposes to be sold or distributed, that bears any of the
Trademarks;

 

(C) the methods, material inputs, components, and equipment used to manufacture,
distribute or sell Products. For purposes of conducting any such inspection,
Skinny and/or its agents and representatives shall be granted reasonable and
necessary access during normal business hours to Manufacturer’s manufacturing
plants, facilities and warehouses which are used in the production of the
Products, solely for the purpose of conducting such inspection.

 

8

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

(d) In the event Skinny determines the existence of quality or technical
problems or difficulties with any Product or any container produced directly by
Manufacturer used for such Product or if in Skinny’s reasonable judgment, any
Product container produced directly by Manufacturer is of an inferior quality,
appearance and/or style, Skinny shall immediately notify Manufacturer of the
existence of the specific quality or technical problem or difficulty and Skinny
shall then have the right, immediately and at its sole option, to directly or
indirectly withdraw such Product from the market. Manufacturer, upon receipt of
notice from Skinny of such recall or withdrawal, shall immediately cease
distribution of such Product. If so directed by Skinny, the Manufacturer shall
recall and reacquire the Product involved from any purchaser and shall take such
other commercially reasonable action as may be requested by Skinny in connection
therewith. Notwithstanding any notice obligations contained in this Agreement,
Skinny shall have the right to notify Manufacturer in person, by telephone,
facsimile or email or through any other form of immediate communication in
connection with Skinny’s actions under this Section 5(d). In the event any
recall or withdrawal is caused by the Manufacturer’s failure to comply with this
Agreement or any of the instructions, quality control procedures or
specifications for the preparation, packaging, labeling, storage, transport,
distribution or sale of the Product involved to the extent not mandated by
Skinny, Manufacturer shall bear the total expense of such recall or withdrawal
and reimburse Skinny for Skinny’s reasonable out-of-pocket expenses directly
related to such recall or withdrawal, including without limitation the cost of
removal, transportation and/or disposal of such recalled or withdrawn Products.
In the event any recall or withdrawal is caused other than by Manufacturer’s
failure to comply with this Agreement or any of the instructions, quality
control procedures or specifications for the preparation, packaging, labeling,
storage, transport, distribution or sale of the Product involved to the extent
not mandated by Skinny, then the parties will seek to mutually agree, in good
faith, as to responsibility for costs of such recall or withdrawal. In the event
Manufacturer deems it reasonably necessary or is otherwise required by law,
rule, regulation or order to conduct a recall or commercial withdrawal of any
Product, and notwithstanding any notice obligations contained in this Agreement,
Manufacturer shall first (i) promptly notify Skinny of the nature and reason for
such recall or withdrawal and of any planned actions in person, by telephone,
facsimile or email or through any other form of immediate communication, and
(ii) obtain Skinny’s written consent, which shall not be unreasonable withheld,
delayed or conditioned, prior to distributing any press release or other public
or regulatory communication or announcement concerning such recall or
withdrawal.

 

6. Product Promotion and Marketing. Skinny shall be solely responsible for all
marketing, promotion, customer relations (except and to the extent specifically
provided in Section 7(a) below) and other activities related to the sale of the
Products. Manufacturer shall not be obligated to pay for or otherwise contribute
in any way to any such marketing activities unless agreed upon in advance in
writing signed by both Skinny and Manufacturer. Skinny’s [*****] for the period
ending [*****], which is based at least in part on Skinny’s actual Product sales
for its [*****], is attached to this Agreement as Schedule D. Skinny
acknowledges that Manufacturer will [*****]as the basis for [*****] of the
ingredients, packaging materials as well as production scheduling. Skinny agrees
that it will promptly notify Manufacturer, in writing, if Skinny [*****].

 

7.Product Distribution.

 

9

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

 

(a) [*****]. The parties acknowledge and agree that one of the [*****] is to
[*****] the sale of [*****] and that as of the date of this Agreement, [*****].
Therefore, the parties agree that [*****] shall sell [*****] to [*****] as the
[*****] solely for the purposes of and subject to the conditions set forth in
this Agreement. In connection with Wal-Mart sales only (unless the parties
otherwise expressly agree in writing) Manufacturer shall be responsible for the
delivery of Products (which [*****]), invoicing and collection of receivables
from Wal-Mart. Manufacturer shall, upon receipt of payment from [*****], pay to
Skinny the amounts shown on Schedule E as royalties on Product sales to
Wal-Mart. In connection with sales of Product to [*****], Manufacturer shall
also be responsible for (i) obtaining [*****] for Product sales to [*****], and
(ii) using commercially reasonable efforts to maintain sufficient supplies of
only those ingredients and packaging materials which Manufacturer is responsible
to supply in order to manufacture and deliver Products for [*****] in accordance
with [*****].

 

(b) Other Distribution Channels. The parties acknowledge that Manufacturer has
been producing Products for Skinny prior to the Effective Date of this Agreement
for purchase by Skinny and distribution through Skinny’s network of
distributors. Consistent with past practices, except for [*****], Skinny will be
responsible for all other distribution and sales of Products at its sole cost
and expense, provided, however, that upon written request by Skinny,
Manufacturer shall arrange for shipping of Product to such distributor or other
purchaser’s location as Skinny may direct, upon Manufacturer’s standard terms
and conditions for such service, including but not limited to Skinny’s
assumption of all [*****] and [*****] and all risk of loss passing to Skinny
and/or the carrier upon [*****]. Also consistent with the business practices of
the parties prior to the Effective Date, Skinny will issue purchase orders for
Product and will take delivery of such Product [*****], with the price for all
Products being due and payable [*****] to Skinny at [*****]. Manufacturer will
invoice Skinny upon completion of production, with such invoices being payable
on Manufacturer’s standard terms and conditions. Notwithstanding the provisions
of the immediately preceding two (2) sentences, Skinny and Manufacturer may
mutually agree upon alternative payment terms for Products which are the subject
of this Section 7(b). Pricing for the Products shall be as set forth on Schedule
E as such schedule may be amended from time to time by the parties in writing.

 

8.Books and Records; [*****].

 

(a) Books and Records. Manufacturer shall maintain its books, accounts and
records in accordance with generally accepted accounting principles and business
practices.

 

(b) [*****]. In the event that Skinny reasonably determines that Manufacturer
has failed to comply with the provisions of Section 7(a) of this Agreement with
regard to royalties payable to Skinny on sales of Products to Wal-Mart, Skinny
shall have the right, in addition to any other rights or remedies it may have,
to [*****] Manufacturer’s [*****] during [*****] and upon [*****] solely for
purposes of determining the extent of such non-payment.

 

9.Material Breach. Each of the below listed events shall constitute a “Material
Breach” for purposes of this Agreement:

 

(a) Manufacturer fails to use only those ingredients which are duly authorized
by Skinny in writing for preparing the Products.

 

(b) Manufacturer fails at any time to meet the insurance requirements set forth
in this Agreement or to furnish proof of the same upon Skinny’s request;

 

10

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

 

(c) Any undisputed amount owed by Manufacturer to Skinny pursuant to this
Agreement is not paid within thirty (30) days after such payment is due;

 

(d) Manufacturer violates the terms of the license grant or any of the territory
restrictions set forth in this Agreement or attempts to appropriate, duplicate
or use any of the Trademarks in violation of any term of this Agreement;

 

(e) Manufacturer fails to comply with any of the quality control procedures or
requirements set forth in this Agreement;

 

(f) Manufacturer violates any of the confidentiality or use restrictions set
forth in this Agreement;

 

(g) Manufacturer fails to comply with any applicable ordinances, laws, permits,
rules or regulations relating to the Trademarks or to the manufacture, sale,
storage, marketing or distribution of the Products or otherwise fails to comply
with any provisions set forth Sections 3 or 10 of this Agreement.

 

10.Compliance with Laws; Taxes.

 

(a) Manufacturer agrees to comply at all times with all material and applicable
laws, regulations, ordinances, decrees, rules and orders relating to the
manufacture, processing, labeling, storage, distribution and sale of Product,
including without limitation any rules or regulations promulgated by the U.S.
Food and Drug Administration or any other applicable governmental authority.

 

(b) Manufacturer shall pay all applicable fees, taxes, freight, import, duties,
imposts, demurrage, handling, fees, warehousing and taxes (including but not
limited to any value added, excise, sales, income and similar taxes) which may
arise from the purchase or the transportation, import, storage, manufacturing,
processing, production, distribution and sale of the Products by Manufacturer
unless the parties otherwise agree in writing.

 

11. Indemnification; Claims; Insurance.

 

(a) Skinny reserves the sole and exclusive right to institute, investigate,
prosecute, defend or settle any civil, administrative, regulatory or criminal
claim, proceeding, lawsuit or action and generally to take or seek any available
legal remedy it deems necessary or desirable for the protection of its good
reputation and intellectual and industrial property rights (including but not
limited to the Trademarks), as well as for the protection of any Product and
their respective formulas, provided, however, that if Manufacturer, its parent
corporation or any affiliate (i) is named as a party to any of the foregoing
claims or actions, (ii) would reasonably be expected to suffer an adverse impact
to its reputation and/or goodwill as the result thereof, or (iii) is required to
pay any amount in settlement thereof, then Manufacturer’s written consent shall
be obtained to the bringing of such claim or action or the settlement thereof.
Manufacturer shall not claim any right against Skinny as a result of any such
action or for any failure to take such actions except as specifically set forth
in Section 11(e) below. At Skinny’s request, Manufacturer shall provide Skinny
with all reasonably requested assistance, information and authority required for
the prosecution, defense or settlement of any such actions provided Skinny pays
any out-of-pocket expenses, including without limitation reasonable attorney’s
fees and expenses, incurred by Manufacturer as a result thereof. Manufacturer
shall promptly notify Skinny of any actual or threatened litigation, claim,
action or proceeding and shall not, without the prior written consent of Skinny
institute, negotiate, prosecute or defend any legal or administrative
proceedings which may affect the interests of Skinny without Skinny’s prior
written consent.

 

11

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

(b) Skinny has the sole and exclusive right to prosecute and defend all suits
arising from or relating to the Trademarks.

 

(c) Manufacturer agrees to consult with Skinny as legally appropriate on all
products liability claims or lawsuits brought against Manufacturer in connection
with any Product. Except as otherwise expressly provided herein, Manufacturer
and Skinny shall individually be responsible for their respective liability,
loss, damage, costs, attorneys fees and expenses arising out of or in connection
with any such products liability claim or lawsuit brought against them whether
individually or jointly, provided, however, that Manufacturer and Skinny
expressly reserve all rights of contribution and indemnity afforded by
applicable law and equity.

 

(d) Except to the extent caused by the negligence or willful misconduct of
Skinny, Manufacturer hereby agrees to indemnify and hold harmless Skinny, its
affiliates and their respective officers, directors, shareholders and employees
from and against any claims, losses, liabilities, damages, deficiencies,
interest and penalties, costs and expenses, including reasonable attorneys’ fees
and expenses, and expenses of investigation and defense (collectively, “Losses”)
brought by a third party (other than any affiliate of Skinny) against Skinny and
arising out of (i) any alleged or actual unauthorized use of any copyright,
trademark, process, idea, method, or device by Manufacturer in connection with
the Products other than relating to the Trademarks, (ii) Manufacturer’s failure
to comply with any applicable ordinance, law, rule, permit or regulation, (iii)
any actual or alleged defects in any Product manufactured, sold, or distributed
by the Manufacturer unless related to formula, concentrate, specifications,
containers or packaging materials provided to Manufacturer by Skinny or by any
third party at the direction of Skinny, (iv) any personal injury or damage to
property arising out of or relating to the preparing, packaging, production,
distribution or sale of the Product unless related to formula, concentrate,
specifications, containers or packaging materials provided to Manufacturer by
Skinny or by any third party at the direction of Skinny, and (v) any loss, cost
or expenses incurred by Skinny as a result of or incident to any recall and/or
reacquisition of any Product to the extent that such a recall and/or
reacquisition is determined to be required due to the actions of the
Manufacturer as more fully described in Section 5(d) of this Agreement,
including without limitation the cost of removal, transportation and/or disposal
of such recalled or withdrawn Products. Manufacturer shall promptly notify
Skinny of any litigation or proceeding instituted or threatened affecting such
matters.

 

12

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

(e) Skinny shall indemnify, defend or settle (at its option) and hold
Manufacturer, its affiliates and their respective officers, directors,
shareholders and employees harmless against any Losses brought by a third party
(other than any affiliate of Manufacturer) against Manufacturer and arising out
of (i) assertions that Manufacturer’s use of the Trademarks, labels and/or
packaging materials for the Products infringes the patent, copyright, trademark
or any other intellectual property right of any third party,, (ii) any claim by
any third party arising from and/or relating to the infringement of such third
party’s patent, trademark, copyright or other intellectual property right of any
kind in or to any Product, (iii) for damages resulting from Skinny’s failure to
comply with any applicable ordinance, law, rule, permit or regulation, (iv) for
damages resulting from any actual or alleged false advertising or other actual
or alleged misleading statement, action or omission made by Skinny, (v) any
loss, cost or expenses incurred by Manufacturer as a result of or incident to
any recall and/or reacquisition of any Product to the extent that such a recall
and/or reacquisition is determined to be required due to actual or alleged
defect is related to formula, concentrate, specifications, containers or
packaging materials provided to Manufacturer by Skinny or by any third party at
the direction of Skinny, including without limitation the cost of removal,
transportation and/or disposal of such recalled or withdrawn Products, (vi) for
damages resulting from any failure by Skinny or its agents to fully perform,
fulfill or comply with any term or provision of this Agreement, including
without limitation Skinny’s actions or inactions pursuant to Section 11(a)
above, (vii) any actual or alleged defects in any Product manufactured, sold, or
distributed by the Manufacturer and any actual or alleged personal injury or
damage to property arising out of or relating to any formula, concentrate,
ingredient, specifications, containers or packaging materials provided to
Manufacturer by Skinny or by any third party at the direction of Skinny, and
(viii) any claim by any third party that any [*****] and/or the [*****] whereby
[*****] of any third party (any of the foregoing, a “Claim”). Manufacturer shall
give prompt written notice to Skinny of any such Claim. Skinny will have the
exclusive right to defend any such Claim and make settlements thereof at its own
discretion provided that any such settlement shall not admit any wrongdoing by
Manufacturer without Manufacturer’s express prior written consent, and
Manufacturer may not settle or compromise such Claim except with the prior
written consent of Skinny. Manufacturer shall give such assistance and
information as Skinny may reasonably require to settle or defend against any
such Claim, at Skinny’s sole cost and expense, including reimbursement of
attorney’s fees incurred by Manufacturer. The foregoing obligations will not
apply to the extent the Claim arises as a result of any use by Manufacturer of
the Trademarks other than in compliance with the terms of this Agreement.

 

(f) Manufacturer agrees to carry and maintain, at its own expense, product
liability and other insurance giving Skinny reasonable and appropriate coverage
in respect to matters referred in this Section 11 (including but not limited to
the indemnity contained herein) in the amount of not less than the local
currency equivalent of $[*****]in the aggregate. In addition, upon obtaining
such insurance, Manufacturer shall submit to Skinny a certificate of insurance
demonstrating compliance with the foregoing insurance requirements. Said
insurance shall designate Skinny as an additional insured. In the event that
Manufacturer fails to maintain or pay for any such insurance required by this
Agreement, Skinny shall notify Manufacturer of such event and give Manufacturer
an opportunity to cure such deficiency. If Manufacturer fails to cure such
deficiency, then Skinny may (but shall have no obligation to) procure such
insurance and pay the premium therefor, in which event Manufacturer shall pay
Skinny all sums so paid by Skinny within twenty (20) days following Skinny’s
written demand to Manufacturer for such payments.

 

(g) Skinny agrees to carry and maintain, at its own expense, product liability
and other insurance giving Manufacturer reasonable and appropriate coverage in
respect to matters referred in this Section 11 (including but not limited to the
indemnity contained herein) in the amount of not less than the local currency
equivalent of $[*****] in the aggregate. In addition, upon obtaining such
insurance, Skinny shall submit to Manufacturer a certificate of insurance
demonstrating compliance with the foregoing insurance requirements, and which
guarantees that said insurance shall not be suspended, terminated, modified, or
cancelled without at least twenty (20) days written notice to Manufacturer. Said
insurance shall designate Manufacturer as an additional insured. In the event
that Skinny fails to maintain or pay for any such insurance required by this
Agreement, Manufacturer may (but shall have no obligation to) procure such
insurance and pay the premium therefor, in which event Skinny shall pay
Manufacturer all sums so paid by Manufacturer within ten (10) days following
Manufacturer’s written demand to Skinny for such payments.

 

13

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

 

12.Confidentiality; Non-Disclosure.

 

(a) For purposes of this Agreement, the term “Confidential Information” shall
mean (i) the proprietary information of Skinny or Manufacturer; (ii) all Product
formulations including the blending instructions and ingredient lists,
ingredient costs and their respective amounts used in formulation of the
Products; (iii) all quality control procedures and guidelines; (iv) marketing
plans, strategies and expertise used to develop, promote, and market the
Products; (v) any business or technical information of Skinny or Manufacturer
and their respective affiliates and partners, including but not limited to any
information relating to Skinny’s or Manufacturer’s product plans, costs, prices,
finances, results of operations, business opportunities, personnel, research,
development or know how, whether disclosed by or learned directly from Skinny or
Manufacturer; (vi) any other information of Skinny or Manufacturer which by its
nature would be reasonably expected to be confidential or proprietary; and (vii)
the terms and conditions, including but not limited to pricing, of this
Agreement.

 

(b) Neither Manufacturer nor Skinny shall (i) disclose Confidential Information
to any third party or (ii) use Confidential Information of the other party for
any purpose other than in connection with the manufacture, packaging, sale, or
distribution of the Products under this Agreement without the prior written
consent of the party to whom the Confidential Information belongs.

 

(c) Manufacturer and Skinny each acknowledge that any breach of its obligations
under this Agreement by itself or by any of its officers, employees, directors,
principals, and shareholders with respect to Confidential Information, even
after the termination of this Agreement for any cause whatsoever, will cause the
other party irreparable injury for which there are inadequate remedies at law,
and, therefore, the non-disclosing party shall be entitled to seek injunctive
(preliminary or otherwise) or other equitable relief in addition to all other
remedies provided by this Agreement or available at law or in equity, for any
such breach or threatened breach, without the necessity of proving actual harm
or posting a bond or other security therefor.

 

(d) These restrictions on the use or disclosure of Confidential Information
shall not apply to any Confidential Information:

 

(i) which is independently developed by Manufacturer or Skinny, as applicable,
without benefit of or access to the Confidential Information of the other party;
or

 

14

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

 

(ii) which is lawfully received by Manufacturer or Skinny, as applicable, from
another source free of restriction and without breach of this Agreement; or

 

(iii) after it has become generally available to the public without breach of
this agreement by Manufacturer or Skinny; or

 

(iv) which at the time of disclosure to the receiving party was known to the
receiving party free of restriction as evidenced by documentation in the
receiving party’s possession; or

 

(v) which the disclosing party agrees in writing is free of such restrictions.

 

13.Notices.

 

(a) All notices and reports permitted or required to be delivered hereunder
shall be in writing and shall be deemed so delivered at the time delivered by
hand, one (1) business day after transmission by facsimile transmission, or
other electronic transmission (evidenced by a machine generated receipt); two
(2) business days after being placed in the hands of a commercial courier for
express delivery, return receipt requested; or five (5) days after being sent
via registered mail, certified mail, or its equivalent, postage prepaid, return
receipt requested.

 

All notices to Skinny shall be directed to:

Skinny Nutritional Corp.

Michael Salaman

Chairman/CEO

3 Bala Plaza East, Suite 101

Bala Cynwyd, PA 19004

Fax: 610-784-7700

michael@skinnyco.com

 

All notices to Manufacturer shall be directed to:

Cliffstar LLC

Attn: General Counsel

5519 W. Idlewild Ave.

Tampa, Florida 33634

Fax: 813-881-1923

mpoe@cott.com

 

14. Assignment. Each of Skinny and Manufacturer acknowledges that its services
are unique and personal and, accordingly, agrees that this Agreement and
Skinny’s and Manufacturer’s obligations hereunder, as applicable, are not
assignable by it without the other party’s prior written consent, which may be
granted or withheld in its sole discretion. In the event of an approved
assignment, all terms and conditions of this Agreement shall be binding upon the
successors and assigns of the parties. Notwithstanding the provisions of the two
immediately preceding sentences, this Agreement is expressly binding upon and
shall be assumed or otherwise made enforceable by and against any successor to
all or substantially all of the business of each of the parties hereto, whether
by merger, sale of equity ownership, sale of assets or otherwise

 

 

15

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

15. Force Majeure. Neither party shall be held liable or responsible to the
other party nor be deemed to have defaulted under or breached this Agreement for
failure or delay in fulfilling or performing any term of this Agreement
(excluding any payment obligation) when such failure or delay is caused by or
results from causes beyond the reasonable control of the affected party,
including but not limited to fire, floods, embargoes, war, acts of war (whether
war is declared or not), insurrections, riots, civil commotions, acts of God or
acts, omissions or delays in acting by any governmental authority or the other
party (“Force Majeure Event”); provided, however, that the party claiming delay
or failure (i) provides the other party with prompt written notice of the Force
Majeure Event, (ii) provides with the other party with a detailed description of
the non-performance or delay such Force Majeure Event will cause, (iii) uses
reasonable efforts to avoid or remove such causes of non-performance and to
perform despite such Force Majeure Event, and (iv) promptly continues
performance hereunder whenever such Force Majeure Event is removed.

 

16. Waiver. The delay, default or failure of either party to enforce or to
require performance by the other party of any of the provisions of this
Agreement or any right, power or remedy hereunder, shall not be construed to be
a present or future waiver nor affect the ability of either party to enforce any
such provision thereafter. The waiver by either party of any provision,
condition or requirement of this Agreement shall not constitute a waiver of any
future obligation to comply with such provision, condition or requirement nor
shall any single or partial exercise of any such right, power, or remedy
preclude other or future exercise thereof. No waiver shall be binding unless
made in writing and signed by the duly authorized representative of the waiving
party.

 

17.Governing Law; Dispute Resolution; Indemnities of the Parties.

 

(a) Governing Law. This Agreement shall be deemed to have been made in and shall
governed by and construed in accordance with the laws of the State of Florida,
without regard to its conflict of law principles. If any controversies arise
between Manufacturer and Skinny that require judicial determination, each party
expressly consents to submitting itself to the jurisdiction of the State of
Florida.

 

(b) Arbitration. All controversies, disputes or claims between Skinny and
Manufacturer arising out of or related to this Agreement shall be submitted for
binding arbitration by a single arbitrator in accordance with the commercial
arbitration rules of the American Arbitration Association, with such arbitration
to be held in Tampa, Florida. The arbitrator shall have the right to award or
include in his or her award any relief which he or she deems proper in the
circumstances, provided that the arbitrator shall not have authority to award
exemplary or punitive damages. The award of the arbitrator shall be conclusive
and binding upon all parties hereto and judgment upon the award may be entered
in any court of competent jurisdiction. The provisions of this Section 17(b)
shall continue in full force and effect subsequent to and notwithstanding the
expiration or termination of this Agreement.

 

16

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

 

(c) Indemnity of Manufacturer. Skinny hereby agrees to indemnify, defend and
hold harmless Manufacturer and its officers, directors, parents, subsidiaries,
shareholders, members, partners, trustees, agents and employees (each, a
“Manufacturer Indemnified Party”), from and against any and all claims, demands,
losses, liabilities, actions, lawsuits and other proceedings, judgments and
awards, and costs and expenses (including without limitation reasonable
attorneys’ fees and court costs incurred in connection with the enforcement of
this indemnity or otherwise), suffered or incurred by such Manufacturer
Indemnified Party if the Manufacturer Indemnified Party prevails in any claim or
action against Skinny as the result of (i) any failure by Skinny to comply with
its obligations under this Agreement, or (ii) the fraud, negligence or willful
misconduct of Skinny in connection with this Agreement.

 

(d) Indemnity of Skinny. Manufacturer hereby agrees to indemnify, defend and
hold harmless Skinny and its officers, directors, parents, subsidiaries,
shareholders, members, partners, trustees, agents and employees (each, a “Skinny
Indemnified Party”), from and against any and all claims, demands, losses,
liabilities, actions, lawsuits and other proceedings, judgments and awards, and
costs and expenses (including without limitation reasonable attorneys’ fees and
court costs incurred in connection with the enforcement of this indemnity or
otherwise), suffered or incurred by such Skinny Indemnified Party if the Skinny
Indemnified Party prevails in any claim or action against Manufacturer as the
result of (i) any failure by Manufacturer to comply with its obligations under
this Agreement, or (ii) the fraud, negligence or willful misconduct of
Manufacturer in connection with this Agreement.

 

18. Severability. If any provision of this Agreement shall be declared invalid
or unenforceable by a court of competent jurisdiction or legally recognized
judicial authority, such provisions shall be enforced to the maximum extent
possible so as to affect the intent of the parties, and the remainder of this
Agreement shall continue in full force and effect. Further, the parties shall
negotiate in good faith an enforceable substitute provision for any
unenforceable provision that most nearly achieves the intent and economic effect
of the unenforceable provision.

 

19. Limitation of Damages. TO THE FULLEST EXTENT PERMITTED BY LAW, NEITHER
SKINNY NOR MANUFACTURER SHALL BE LIABLE TO THE OTHER, NOR TO THEIR RESPECTIVE
OFFICERS, EMPLOYEES OR REPRESENTATIVES OR TO ANY THIRD PARTY, FOR ANY INDIRECT,
INCIDENTAL, SPECIAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY DAMAGES OF THE OTHER
OR THEIR RESPECTIVE OFFICERS, EMPLOYEES, REPRESENTATIVES OR INSURERS OR OF ANY
THIRD PARTY, INCLUDING BUT NOT LIMITED TO ANTICIPATED OR LOST PROFITS, LOST
BUSINESS, LOSS OF CUSTOMERS, DAMAGE TO GOODWILL OR REPUTATION, INJURY TO
PERSONS, BUSINESS INTERRUPTION, OR ANY DEFECT IN A PRODUCT WHETHER THE CLAIM IS
BASED ON BREACH OF WARRANTY OR BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE,
FAILURE TO WARN, STRICT LIABILITY) CONTRIBUTION, INDEMNITY, SUBROGATION OR OTHER
THEORY.

 

20. Relationship of the Parties. It is expressly agreed between Skinny and
Manufacturer that nothing contained in this Agreement, nor any statement, act or
omission by either party shall be deemed to create an agency, partnership, joint
venture, franchise, employer-employee or master-servant relationship. Neither
Manufacturer nor Skinny shall represent that it is an agent of or has authority
to bind the other party for any purpose.

 

17

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

21. Counterpart Signatures. This Agreement may be signed in electronically
and/or in counterparts with the same effect as if both parties had signed one
and the same document.

 

22. Entire Agreement; Amendment. This Agreement, together with its attached
schedules constitutes the entire understanding and agreement between
Manufacturer and Skinny with respect to the subject matter of this Agreement and
supersedes all prior negotiations, commitments and understandings, verbal or
written, including the terms of any invoice issued by Manufacturer or purchase
order issued by Skinny. No amendment to this Agreement or any agreement,
commitment or understanding with respect to the subject matter of the parties’
relationship hereunder shall be effective unless executed in writing and signed
by Skinny and by Manufacturer.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers, effective as of the Effective Date first set
forth above.

SKINNY NUTRITIONAL CORP.

 

By: /s/ Michael Salaman

Name: Michael Salaman

Title: CEO

 

CLIFFSTAR LLC

 

By: /s/ Chris A. Cronje

Name: Chris A. Cronje

Title: C.O.O.

 

18

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

 

 

SCHEDULE A

 

 

[schedulea.jpg] 

 

 

19

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DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

 

SCHEDULE B

 

Territory

 

 

United States

Canada

 

 

 

 

 

 

 

 

 

 

 

 

20

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DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

SCHEDULE C

 

Production Plants

 

 

Dunkirk, NY

Joplin, MO

Fontana, CA

 

 

 

 

 

 

 

 

 

 

21

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DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

 

SCHEDULE D

 

[* * * *]

 

 

 

East Coast [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
[* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] Rasp [* * * *] [* *
* *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* *
* *] [* * * *] [* * * *] [* * * *] Acai [* * * *] [* * * *] [* * * *] [* * * *]
[* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
[* * * *] Lemon [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* *
* *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] Goji [* * * *]
[* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
[* * * *] [* * * *] [* * * *] [* * * *] Orange [* * * *] [* * * *] [* * * *] [*
* * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [*
* * *] [* * * *] Blue Rasp [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [*
* * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
Pink Citrus [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * *
*] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]                  
          [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
[* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]          
                                              [* * * *]                      

 

 

22

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

 

West Coast [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
[* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] Rasp [* * * *] [* *
* *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* *
* *] [* * * *] [* * * *] [* * * *] Acai [* * * *] [* * * *] [* * * *] [* * * *]
[* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
[* * * *] Lemon [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* *
* *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] Goji [* * * *]
[* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
[* * * *] [* * * *] [* * * *] [* * * *] Orange [* * * *] [* * * *] [* * * *] [*
* * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [*
* * *] [* * * *] Blue Rasp [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [*
* * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
Pink Citrus [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * *
*] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]                  
          [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]
[* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *] [* * * *]

 

 

 

23

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

  

SCHEDULE E

 

Pricing

 

 

 

[*****] Sales:

 

[*****] invoice price [*****]: $[*****]

Breakdown: $[*****] Less: Cliffstar fee: $[*****] Net proceeds to Skinny
$[*****]    

  

[*****] Sales:

 

Pricing base with [*****] for all products.

 

Cliffstar, LLC to provide all ingredients currently supplied by [*****], all
other ingredients, labels, closures and processing for all existing flavors as
per the following base price:

 

[*****]:$[*****]

 

[*****]:$[*****]

 

Without limitation or modification of the provisions of the Agreement,
Manufacturer and Skinny agree to work cooperatively and reasonably to manage the
various costs associated with the manufacturing of the Products, including
reasonable and appropriate efforts to contain and/or reduce such costs for the
parties’ mutual benefit.

 

Proved that Manufacturer has knowledge thereof, Manufacturer will provide Skinny
with not less than [*****] prior written notice of any anticipated increases in
the prices of any Products and, if Manufacturer is not able to provide such
notice, Manufacturer will provide such notice of any such price increase as it
is commercially practicable to provide.

 

 

Volume price rebates based on [*****] for the Products manufactured and
delivered by Manufacturer in each of Manufacturer’s fiscal years shall be as
follows:

 

Cases: range % or Cents/case

  

[*****][*****]

 

[*****][*****]

 

 

24

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT, EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH
ASTERISKS [* * * *], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]

 

 

[*****][*****]

 

[*****][*****]

 

[*****][*****]

 

Skinny shall pay for all Products delivered by Manufacturer during each of
Manufacturer’s fiscal years at the [*****]. The above rebates shall be
determined as soon as reasonably practicable following the end of each fiscal
year of Manufacturer, with Manufacturer to pay to Skinny the amount of the
rebates to which Skinny is entitled for the applicable fiscal year, or credit
such earned rebate amount against Product purchase prices in the next fiscal
year, as the parties shall mutually determine.

 

 

25