Exhibit 10.6

 
DISTRIBUTION AGREEMENT
 
THIS DISTRIBUTION AGREEMENT (“Agreement”) is effective as of the 15th day of
July, 2009, by and between Skinny Nutritional Corporation, a Nevada corporation
(“Supplier”), and Canada Dry Bottling Company of New York, a New York limited
partnership (“Distributor”).
 
WHEREAS, Supplier is the owner or exclusive U.S. licensee, with authority to
sublicense, of the trademarks listed on Exhibit A hereto, and all service marks,
designs, logos, trade names, advertising, commercial symbols and slogans used in
connection with Products (as defined below) (collectively or separately, the
“Trademarks”) for non-alcoholic beverages; and
 
WHEREAS, Supplier is engaged in the business of, among other things,
manufacturing, selling and distributing beverages bearing one or more of the
Trademarks (“Products”) in various product forms as set forth on Exhibit B
hereto  and such other forms as the parties may agree in writing from time to
time; and
 
WHEREAS, Distributor is engaged in the business of manufacturing, selling and
distributing beverages; and
 
WHEREAS, Supplier and Distributor hereby propose that Supplier license the
Trademarks to Distributor and sell the Products to Distributor for sale and
distribution in the territory specified below; and
 
NOW, THEREFORE, in consideration of these premises and the mutual covenants
contained herein, Supplier and Distributor agree as follows:
 
  1.
Appointment.

 
 
a.
Subject to the express provisions of this Agreement, Supplier hereby grants to
Distributor the exclusive right to sell and distribute Products within the
Territory, as defined below.

 
 
b.
Supplier shall offer to Distributor the exclusive right to sell and distribute
in the Territory pursuant to the terms and conditions of this Agreement, all new
or additional beverages manufactured, distributed, owned or licensed by Supplier
that Supplier wishes to introduce in the Territory. If Distributor accepts such
offer, then such new or additional products shall be added as Products under
this Agreement and shall be subject to the terms hereof. In the event
Distributor declines such offer or fails to respond to such offer within [***]
days thereof, then:

 
 
(i)
if the new or additional product is in a [***] different from the  [***] of any
Product previously distributed by Distributor and with a [***] that is distinct
from and not confusingly similar to the  [***]of any Product previously
distributed by Distributor, Supplier shall have the right to sell or distribute
such new or additional products in the Territory directly or through third
parties; and

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

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(ii)
if the new or additional product is a new or additional [***] of an existing
category of Product previously distributed by Distributor, then Supplier shall
[***] such new or additional products in the Territory directly or through third
parties.

 
For purposes of this Agreement, the term “[***]” shall mean a product or line of
products [***], such as, without limitation, the initial [***] (including within
such [***] and other [***] including but not limited to [***].
 
  2.
Supplier’s Obligations.

 
 
a.
Supplier hereby licenses the Trademarks and other Intellectual Property (as
defined in Paragraph 2.f.ii) to Distributor for use on and in connection with
the advertising, promotion, sale and distribution of the Products.  Supplier
shall have the right to use Distributor's name and logo on Supplier’s website
for the purpose of identifying Distributor as a distributor.

 

 
b.
Supplier shall fill promptly all orders from Distributor for Products and for
other items to be provided by Supplier hereunder. Supplier’s prices and terms of
sale to Distributor for the Products shall be [***]. Supplier’s prices to
Distributor (net of all discounts, allowances, rebates and promotional support
payments provided to Distributor by Supplier) shall reflect [***] to any
permitted [***] in the Territory (net of all discounts, allowances, rebates and
promotional support payments provided to such customer by Supplier), to reflect
the [***] Distributor. Supplier shall not [***] for any item on less than
[***]  days’ advance written notice.  The initial price for the Products shall
be [***] per 12 pack case.

 
 
c.
Supplier shall set aside an exclusive area described in the schedule attached
hereto as Exhibit “C” (the “Territory”) in which no person other than
Distributor will distribute, sell or promote Products. Supplier shall not suffer
or permit in the Territory any other distributor or licensee of the Trademarks
with respect to Products and shall not itself sell, nor suffer or permit any
others to sell, Products for resale or use in the Territory, nor shall Supplier
sell any Products to any person that Supplier knows or has reason to know is
likely directly or indirectly to resell the Products in the Territory. Supplier
is developing a transshipment policy in consultation with Distributor for the
purpose of discouraging transshipment into the Territory and redressing the
economic impact of transshipping on the affected distributors. The parties will
negotiate in good faith to finalize such a policy within ninety (90) days of
execution of this Agreement.

 
Notwithstanding the foregoing:

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN
ASTERISK [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
 
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(i)           Supplier may continue to sell Products directly to outlets in the
Territory of any account that will not accept a DSD System for any beverages;
provided that the Supplier shall use reasonable efforts to persuade such account
to purchase the Products on a DSD basis from Distributor;
 
(ii)           To the extent that any account with multiple outlets in the
Territory does not [***]of any beverages to its outlets and purchases beverages
only through a [***] that services only outlets of such customer (an
“Alternately Serviced Account”), and if such [***] purchases all beverages
[***]thereof and not from any [***] of such beverages, then the Supplier may
sell Products for such customer [***], provided that Supplier ensures that no
such Products sold through [***] are resold to any other customer with outlets
in the Territory; and
 
(iii)           Supplier may continue to sell Products directly to the [***] for
resale at [***] in the Territory and directly to [***], provided that after
[***], Supplier’s prices to Distributor shall reflect the [***] provided for in
Section 2.b. above.
 
If Supplier sells Products pursuant to clauses (i), (ii) and/or (iii) above,
Supplier shall pay Distributor quarterly an “Invasion Fee” for each case of
Product sold by Supplier during the previous quarterly period for resale in the
Territory equal to [***] for such Product.  Each such payment shall be
accompanied by a detailed accounting showing the calculations of the amount due,
including [***].
 
Supplier shall not make sales pursuant to clauses (i), (ii) ) and/or (iii) above
without first ensuring that the customer will provide Supplier with all
information necessary to calculate the Invasion Fee, including the number of
cases of each Product SKU purchased by such customer in each quarter for resale
in each outlet of such customer within the Territory.  For sales of Products to
[***], to the extent that Supplier is unable to obtain from [***]  the number of
cases of each Product sold to [***] for resale in the Territory, the number of
cases of Products sold by Supplier to [***] for resale in the Territory during
any period shall be determined by multiplying the total number of cases of the
Product sold by Supplier directly to [***], as the case may be, during the
period concerned, by a fraction, the numerator of which shall be the [***] in
the Territory and the denominator of which shall be the [***] within the [***]
or within the [***], as the case may be.

 
d.
Supplier shall create and make available to Distributor advertising and
promotion materials for Products of a form, in amounts and upon terms reasonably
established by Supplier.

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN
ASTERISK [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
 
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e.
Supplier shall promptly pay or credit to Distributor’s account, when due, not
less frequently than monthly, all credits, discounts, allowances, incentive
payments, bill backs or other reimbursements due Distributor pursuant to any
program to which the parties may agree.  Supplier and Distributor will meet and
agree (i) on an annual basis on a projected [***] and (ii) on a quarterly basis
on a projected [***], and will [***] accordingly.  In the event that Supplier
and Distributor cannot agree on the projected average [***] for any year, the
amount applicable to the prior year shall be used for such year. . In the event
that Supplier and Distributor cannot agree on the projected [***] for any
quarter, the amount applicable to the then current year shall be used for such
quarter. Each quarter, authorized representatives of both parties will meet to
determine final reconciliation of the agreed upon [***].

 
 
f.
Supplier represents and warrants that:

 
 
(i)
the Products (A) shall be pure and wholesome, fit for human consumption,
merchantable and free from all defects, (B) shall, in all instances, comply with
all applicable Federal, state or local laws and regulations, in all respects,
including without limitation, beverage quality, labeling, identity, quantity,
packaging, and returnable container or deposit requirements; (C) shall not be
adulterated and misbranded within the meaning of those terms under the Federal
Food, Drug and Cosmetic Act, as amended, and shall not be an article or articles
which  may not, under the provisions, of said Act, be introduced into interstate
commerce; (D) shall not be adulterated or misbranded within the meaning of the
Federal Insecticide, Fungicide, and Rodenticide Act, the Federal Hazardous
Substances Act, or any applicable state pure foods act or any other applicable
Federal, state, or local law or regulation; and (E) when delivered to
Distributor, shall have a remaining shelf life of not less than five (5) months,
the expiration of which shall be clearly marked on the outside of all cartons
and pallets.

 
 
(ii)
it is the owner or exclusive U.S. licensee of the Trademarks and all other
intellectual property used in the packaging, labels, marketing and promotional
materials designed or prepared by Supplier for the Products (collectively,
including the Trademarks, the “Intellectual Property”), that it has the right to
license the Intellectual Property to Distributor throughout the term of this
Agreement, and that Distributor’s use of the Intellectual Property will not
infringe or violate the rights of any third party; and

 
 
(iii)
it is free to enter into this Agreement and is not under any obligation, written
or otherwise, to any other party which would prevent Supplier from complying
with all the terms and conditions of this Agreement.

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN
ASTERISK [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
 
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g.
Supplier shall replace all Products that, at the time and place of delivery, do
not meet the requirements of Section 2.f.(i) above, at Supplier’s expense,
including [***] shall be allowed in the amount of Distributor’s laid-in cost, at
Distributor’s option.  Supplier shall also [***] for all of Distributor’s [***]
as a consequence of such Products [***] above (including but not limited to
Products in the hands of Distributor or of the retail trade that have [***] if
such Products did not conform to the requirements of [***]) or as a consequence
of any other fault of Supplier, and the [***], at Supplier’s option. The
foregoing shall not be construed to entitle Distributor to recover lost profits
or other consequential damages resulting from the failure of Products to conform
to the requirements of Section 2.f.(i) other than as expressly set forth above.

 
 
h.
Supplier shall materially comply with all laws, rules, regulations,
requirements, orders and ordinances now in effect or which may hereafter be
enacted or promulgated applicable to its operations or obligations under this
Agreement.

 
  3.
Distributor’s Obligations.

 
 
a.
Distributor shall pay Supplier for Product and any other items sold by Supplier
to Distributor in accordance with the prices and terms of sale set forth in this
Agreement or otherwise agreed to in writing by Supplier and Distributor.  All
payments shall be due within [***] days of delivery of such Products and items
to Distributor.

 
 
b.
Distributor shall materially comply with all laws, rules, regulations,
requirements, orders and ordinances now in effect or which may hereafter be
enacted or promulgated applicable to its operations or obligations under this
Agreement.

 
 
c.
Distributor shall use reasonable efforts to promote the sale of Product in the
Territory and to maintain a business organization and equipment necessary to
function properly in the manufacture, sale and distribution of Product.
Distributor may engage such subdistributors, agents or other third parties to
assist it in the performance of this Agreement as Distributor deems appropriate.

 
 
d.
Distributor shall not sell or distribute Product outside the Territory or sell
the Product to any person that Distributor knows or has reason to believe is
likely to resell the Products outside the Territory. Supplier shall include in
all distribution agreements entered into hereafter, and use diligent efforts to
add to all existing distribution agreements, a provision [***]. in all its
bottling and distribution agreements with all [***].

 
 
e.
Distributor and Supplier shall jointly prepare and execute a reasonable Annual
Marketing Plan for the Products for each marketing year, including participation
in such marketing programs as the parties shall agree.  For the first year of
the term hereof, the Annual Marketing Plan is as set forth on Exhibit “D.”  If
Distributor and Supplier are unable to agree on an Annual Marketing Plan for any
subsequent year, [***]shall govern until agreement is reached.

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN
ASTERISK [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
 
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f.
Supplier shall cover [***]% of any and all slotting fees, subject to Supplier’s
approval.  Supplier agrees to commit not less than $[***]in slotting fees in the
Territory during [***].  Supplier agrees to [***] to ensure payment of [***] to
[***] by Supplier to a chain customer.  Supplier and Distributor shall agree
upon Supplier’s commitment for slotting fees for each subsequent seven-year
renewal term.

 
 
g.
Distributor shall maintain and submit to Supplier at reasonable intervals sales,
marketing and similar reports relating to Product in a mutually agreed form;
provided that Distributor shall not be required to provide [***]
information.  Distributor shall maintain and submit to Supplier reports on
[***], aggregated by [***] but without [***] data, on a [***] basis.

 
 
h.
Except as otherwise provided in this Agreement, Distributor shall not sell,
transfer, convey, assign, or otherwise dispose of all or any part of its
interest in this Agreement without the prior written consent of Supplier,
provided that such consent is not unreasonably withheld; and provided further
that no consent shall be required for any transfer so long as the majority of
the outstanding voting shares or other form of voting ownership of the entity
holding Distributor’s rights and obligations under this Agreement is held
by:  [***] (“Family Members”); or any trusts for the benefit of any Family
Members of any of them; or any corporation or other business entity controlled
by [***], Family Members or such trusts. It shall be presumptively unreasonable
for Supplier to withhold its consent to any transfer of Distributor’s rights
under this Agreement to any transferee that has, or the senior management of
which has, at least [***] in the beverage industry and [***] of at least [***]
during the [***]period immediately preceding the month in which Distributor
notifies Supplier of the identity of the proposed transferee.

 
 
i.
Distributor warrants and represents to Supplier that it is free to enter into
this Agreement and is not under any obligation, written or otherwise, to any
other party which would prevent Distributor from complying with all the terms
and conditions of this Agreement.

 
  4.
Trademarks.

 
 
a.
Distributor shall notify Supplier promptly upon discovery of any use of any
mark, trade name or trademark similar to any of the Trademarks.  Supplier shall
not be required to take any action with respect to any infringement, but
Distributor shall join with Supplier, when requested by Supplier, in any
proceeding or litigation or other action for the protection of the Trademarks
and the goodwill associated therewith.  All costs and expenses of such
litigation or action shall be borne by Supplier.

 
 
b.
If Supplier does not take legal action against an infringement, Distributor may
do so in its own name and/or that of Supplier, provided that Distributor bears
all costs and expenses of such action.  In that event, Distributor shall be
entitled to any and all proceeds of such action.

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN
ASTERISK [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
 
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c.
Nothing contained in this Agreement shall be construed to vest in Distributor
any right, title or interest in or to any of the Trademarks other than the
rights and license expressly granted herein.

 
  5.
Indemnification and Insurance.

 
 
a.
Distributor shall indemnify and save harmless Supplier from and against all
losses, claims, damages or other costs of any nature or kind whatsoever arising
directly or indirectly out of or relating to any allegation of:  (i) the breach
of any warranty, representation or agreement made by Distributor in this
Agreement; (ii) the negligence or intentional misconduct, misfeasance or
nonfeasance of Distributor, its officers, employees, agents, servants or
contractors; (iii) any quality or condition of or inherent defect introduced
into the Products as a consequence of the improper storage, handling,
warehousing, distribution or sale by Distributor of Products; (iv) any wrongful,
false or misleading claim, advertising or representation by Distributor or by
any agent or representative of Distributor regarding the Products that are not
endorsed by Supplier; or (v) the conduct of Distributor’s business (including
the use of promotional materials and packaging not designed, manufactured or
approved by the Supplier). Such indemnity shall include, but not be limited to,
reasonable expenses, attorneys’ fees, court costs and other expenses of
investigation, litigation and settlement of any such claim. Supplier shall
provide Distributor prompt written notice of receipt of any such claim and shall
not settle any such claim without the prior knowledge and written consent of
Distributor, which consent shall not be unreasonably withheld.  Notwithstanding
the foregoing, upon written notice to Supplier that Distributor has assumed the
defense of any legal action or proceeding, Distributor shall not be liable to
Supplier for any legal or other expenses subsequently incurred by Supplier in
connection with the defense thereof, except in the event of a conflict of
interest or other matter that prevents counsel for Distributor from fully and
zealously representing the interests of both Supplier and Distributor.

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN
ASTERISK [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
 
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b.
Supplier shall indemnify and save harmless Distributor from and against all
losses, claims, damages or other costs of any nature or kind whatsoever arising
directly or indirectly out of or relating to any allegation of: (i) the breach
of any warranty, representation or agreement made by Supplier in this Agreement;
(ii) Distributor’s use of the Intellectual Property in the Territory in
accordance with the terms of this Agreement; (iii) the negligence or intentional
misconduct, misfeasance or nonfeasance of Supplier, its officers, employees,
agents, servants or contractors; (iv) any quality or condition of or inherent
defect in the Products supplied by Supplier, including but not limited to any
imperfection, contamination or substandard quality, production, packaging,
processing, storage, handling or transportation or other condition relating to
the Products at or before the time they were received by Distributor; (v) any
wrongful, false or misleading claim, advertising or representation by Supplier
or by any agent or representative of Supplier regarding the Products (other than
one subject to indemnification by Distributor pursuant to Section 5.a.(iv)
above); (vi) any third party that such person or entity has any right, claim or
color of right granted or allowed by Supplier to purchase, sell, market or
distribute Products in the Territory; or (vii) the conduct of Supplier’s
business (including the promotional materials and packaging designed,
manufactured or approved by the Supplier).  Such indemnity shall include, but
not be limited to, reasonable expenses, attorneys’ fees, court costs and other
expenses of investigation, litigation and settlement of any such claim.
Distributor shall provide Supplier prompt written notice of receipt of any such
claim and shall not settle any such claim without the prior knowledge and
written consent of Supplier, which consent shall not be unreasonably
withheld.  Notwithstanding the foregoing, upon written notice to Distributor
that Supplier has assumed the defense of any legal action or proceeding,
Supplier shall not be liable to Distributor for any legal or other expenses
subsequently incurred by Distributor in connection with the defense thereof,
except in the event of a conflict of interest or other matter that prevents
counsel for Supplier from fully and zealously representing the interests of both
Supplier and Distributor.

 
 
c.
Notwithstanding the foregoing, to the extent that any claim that would otherwise
be subject to indemnification pursuant to Paragraph 5.a. is traceable in whole
or in part to

 
 
i.
any ingredient supplied by Supplier;

 
 
ii.
any act or failure required or approved by Supplier; and/or

 
 
iii.
any matter subject to indemnification by Supplier under Paragraph 5.b.;

 
then Supplier shall pay the percentage of all costs, fees, damages, judgments
and decrees allocable to such ingredient, act, failure or matter, and
Distributor shall pay only for the percentage of the costs, fees, damages,
judgments and/or decrees allocable to Distributor’s own acts or failure to act.
 
 
d.
During the term of this Agreement, each party shall secure, pay for and maintain
in full force and effect comprehensive general liability insurance (including
contractual liability and with product liability coverage respecting the
Products) in an amount of not less than [***] in the aggregate and [***]per
occurrence.  Such insurance maintained by each party shall name the other party
as additional insured.  Each party shall furnish to the other annually a
certificate confirming such coverage.

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN
ASTERISK [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
 
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  6.
Termination.

 
 
a.
Supplier may terminate this Agreement if Distributor does not correct, as
provided in this Paragraph 6.b., any material failure, other than a failure
resulting from events of Force Majeure (as defined in Paragraph 9), to fulfill
any of its obligations hereunder after receiving written notice from Supplier
identifying the alleged failure with specificity and stating that Supplier
intends to terminate this Agreement if such failure is not timely
corrected.  Distributor shall have [***] days after receipt of such notice to
effect a cure of any default, provided, however, that if any such default cannot
reasonably be cured within [***]  days, Distributor shall be deemed to have
timely cured the default if it commences to cure the default within such [***]
day period and diligently proceeds thereafter to complete the cure within the
period in which such cure can reasonably be completed; and provided further that
if a default is of a nature that cannot reasonably be cured, Distributor shall
be deemed to have cured such default if it [***] of the same type of
default.  Upon a failure by Distributor to cure a material default as provided
in the preceding sentence, Supplier may terminate this Agreement by not less
than [***]  days’ written notice given within [***] days after expiration of the
period for cure.

 
 
b.
In addition to any other grounds for termination set forth herein, this
Agreement may also be terminated by Supplier in the event of:

 
 
i.
The discontinuance of service by Distributor to active customers for the
Products for a period of more than thirty days, excluding delays caused directly
or indirectly by Force Majeure (as defined in Paragraph 9 below); or

 
 
ii.
Any insolvency of Distributor or any assignment by Distributor for the benefit
of creditors; or the filing of a voluntary bankruptcy or reorganization petition
by Distributor or the failure of Distributor to vacate an involuntary bankruptcy
or reorganization petition filed against Distributor within sixty (60) days
after the date of such filing, or the failure of Distributor to vacate the
appointment of a receiver or trustee for the Distributor or any interest in the
Distributor’s business within sixty (60) days after such appointment.

 
 
c.
Distributor may terminate this Agreement at any time by giving Supplier at least
[***] days prior written notice.

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN
ASTERISK [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
 
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d.
Upon termination of this Agreement for any reason, Distributor shall discontinue
the use of the Trademarks in Distributor’s trade name, or in connection with
advertising, sales and promotion materials, or otherwise, promptly after the
disposition of its remaining inventory of Products.  On or before the
termination date, Distributor shall promptly provide Supplier with a detailed
written inventory setting forth all Products and point-of-sale materials owned
by and in the possession of Distributor which bear the Trademarks.  Distributor
shall then make available to Supplier at Distributor’s warehouse or other
facility, for the inspection by Supplier, all such Products and other
materials.  Following Supplier’s receipt of such written inventory from
Distributor and after a reasonable period of time within which Supplier may
inspect such inventory, Supplier will itself promptly purchase or cause a third
party to promptly purchase and take title to and possession of all such
inventory and materials that are in good and merchantable condition, have a
remaining shelf life that meets or exceeds industry standards, and are not
otherwise obsolete or unusable.  The price to be paid by Supplier shall be the
purchase price paid for such inventory and materials, plus other costs incurred
by Distributor reasonably related to the acquisition and receipt of such
inventory and materials, such as freight and insurance charges and any excise
taxes, so as to arrive at Distributor’s laid-in cost of all such inventory and
materials.  Notwithstanding the foregoing, visi-coolers, venders and other cold
equipment bearing Trademarks shall be retained by and remain the property of
Distributor, but Distributor shall promptly remove such Trademarks from all such
equipment.

 
In the event Supplier elects not to renew this Agreement at the end of the
initial term or any renewal term, as provided in Paragraph 10.g below, and
Distributor is not otherwise in breach of this Agreement with the time to cure
such breach having expired, the parties stipulate and agree that Supplier shall
pay Distributor, prior to the effective date of expiration, as full compensation
for any damages suffered by Distributor by reason of such non-renewal or
expiration, an amount equal to [***] the product of:
 
(i) the Gross Profit Per Case earned by Distributor on the sale of Products
during the [***] (the “Calculation Period”); multiplied by
 
(ii) the sum of :
 
(a) the [***] plus
 
(b) [***] with respect to which an [***] was payable pursuant to [***] above.
 
For purposes of this Agreement, “Gross Profit Per Case” during the Calculation
Period shall mean:
 
(i) Distributor’s [***] during the Calculation Period, [***] to Distributor from
Supplier in the Calculation Period, [***] to Distributor from Supplier for such
Products; divided by

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN
ASTERISK [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
 
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(ii) the [***] by Distributor during the Calculation Period.
 
By way of example, and not of limitation, if during the Calculation Period
Distributor sold [***] and its sales of those Products, [***] by Supplier to
Distributor during the Calculation Period totaled [***], and the [***] during
the Calculation Period was [***], then the Gross Profit per Case would be
$[***].

The amount to be paid to Distributor pursuant to this Section 6.d. shall be
[***], proportionately, with due account taken of the [***], for any period of
time that Supplier is [***] or otherwise [***] of the Products to Distributor.

  7.
Notices.

 
For purposes of this Agreement, all notices to the Supplier shall be addressed
as follows:
 
Skinny Nutritional Corporation
3 Bala Plaza East
Suite 101
Bala Cynwyd, PA 19004
Attn: President

With a copy to:
 
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103
Attn: William R. Sasso, Esquire
 
For purposes of this Agreement, all notices to Distributor shall be addressed as
follows:
 
William W. Wilson
Pepsi-Cola Bottling Company of New York, Inc.
50-35 56th Road
Maspeth, New York  11378
 
with a copy to:
 
[***]
Pepsi-Cola and National Brand Beverages, Ltd.
8275 Route 130
Pennsauken, NY 08110

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN
ASTERISK [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
 
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and with a copy to:
 
Andre R. Jaglom, Esq.
Tannenbaum Helpern Syracuse & Hirschtritt LLP
900 Third Avenue
New York, NY  10022
FAX:  (212) 371-1084
 
All notices pursuant to the terms of this Agreement shall be given by hand
delivery to the party, by overnight commercial courier service providing a
receipt for delivery, or by registered, certified or express United States mail,
postage prepaid, return receipt requested, and shall be effective upon receipt.
 
  8.
Recalls.

 
 
a.
If

 
 
(i)
any government agency recommends or requires the recall of any Products or
packaging; or

 
 
(ii)
either Supplier or Distributor reasonably determines that any Products or
packaging should be recalled or should be withdrawn from distribution and sale;

 
based upon a determination that such Products or packaging are not fit for human
consumption, are contaminated, constitute a health hazard, are of substandard
quality or are otherwise not in a saleable condition, then Supplier and
Distributor shall coordinate the immediate cessation of sale and distribution
and/or the recall or withdrawal as necessary of all such Products or packaging
from the Territory. If necessary or advisable, Distributor and Supplier shall
cooperate to recall and/or reacquire the applicable Products or packaging from
any purchaser thereof.
 
 
b.
If the problem at issue was not caused by Distributor, then Supplier shall pay
the costs and expenses associated with any such recall, and Supplier shall
indemnify Distributor for (i) its laid-in cost of all unsold recalled Products
and packaging and the cost of returning such Products and packaging to Supplier
or destroying them, as Supplier may elect; and (ii) its reasonable costs and
expenses associated with such recall, which costs may include but are not
limited to credits, refunds, or other payments by Distributor to its customers
in connection therewith.  For purposes of this Agreement, “laid-in cost” shall
include the invoice cost, insurance and freight for packaging and Products
purchased in finished form by Distributor.

 
 
c.
If the problem at issue was caused by Distributor, then Distributor shall pay
the costs and expenses associated with any such recall, and Distributor shall
indemnify Supplier for its reasonable costs and expenses associated with such
recall.

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN
ASTERISK [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
 
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  9.
Force Majeure.

 
Neither party shall have any liability to the other for any failure to perform
its obligations under this Agreement by reason of events beyond its reasonable
control, including but not limited to strikes, lockouts, labor disputes, floods,
fires, war, terrorist acts or threats, hurricane, typhoon and other like extreme
weather, earthquake, lightning, explosion, riots, disturbance, civil commotion,
epidemics, embargoes, quotas, shortage of inventory due to crop failure,
shortage of labor, delays in transportation, or government action, including but
not limited to price controls, currency controls or detention of goods by
authorities (“Force Majeure”); provided, however, that the parties shall perform
their obligations to the maximum extent and as soon as reasonably practicable.
 
  10.
Miscellaneous.

 
 
a.
The indemnification, hold harmless and defense against claims provisions in this
Agreement (including the provisions of Sections 5 and 8) shall survive the
expiration, rescission or termination of this Agreement.

 
 
b.
This Agreement does not constitute either party an agent or employee of the
other.  Their relationship shall be that of independent contractors, and neither
shall have any authority to bind the other by reason of this Agreement.

 
 
c.
If for any reason any provision of this Agreement shall be deemed by any court,
governmental agency, body or tribunal of competent jurisdiction to be legally
invalid or unenforceable in any jurisdiction to which it applies, the validity
of the remainder of the Agreement shall not be affected and such provision shall
be deemed modified to the minimum extent necessary to make such provision
consistent with applicable law, and, in its modified form, such provision shall
then be enforceable and enforced.

 
 
d.
The parties’ obligations under this Agreement shall be binding upon, and the
parties’ rights under this Agreement shall inure to the benefit of, their
respective permitted successors and assigns.

 
 
e.
This Agreement, represents the entire agreement between the parties hereto with
respect to the subject matter hereof, and supersedes all prior arrangements,
oral or written, on the same subject.  No term of this Agreement may be changed
in any way except by a writing signed by both parties.

 
 
f.
The waiver by Supplier or Distributor of any breach or default, or series of
breaches or defaults, of any term or condition herein contained shall not be
deemed a waiver of any continuing or subsequent breach or default of the same
term or any other term or condition of this Agreement.

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN
ASTERISK [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
 
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g.
This Agreement shall be for a term of seven (7) years from the date hereof and
shall automatically be renewed for successive terms of seven (7) years unless
either party provides notice of non-renewal at least 90 days prior to the end of
the then current seven (7) year term, which would result in the Agreement being
terminated effective as of the end of the then current seven (7) year term
provided that in the event of notice of nonrenewal by Supplier, Supplier pays to
Distributor prior to the expiration date the amount set forth in Section 6.e.
above.   This Agreement may also be earlier terminated only as expressly
provided in this Agreement.

 
 
h.
This Agreement shall be construed, enforced and governed by the laws of the
State of New York without regard to principles of conflict or choice of
laws.  Any action or proceeding arising out of or in connection with this
Agreement shall be heard in a federal or state court of appropriate subject
matter jurisdiction located in County and State of New York, and the parties
hereby agree to exclusive venue in, and consent to the personal jurisdiction of,
such courts.

 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as
of the day first above written.
 
DISTRIBUTOR:
 
SUPPLIER:
         
By:
/s/ J. H.
 
By:
/s/ Ronald D Wilson
Its (Title): Vice-President
 
Its (Title):  Pres. and CEO
         
Date: 7/16/2009
 
Date: 7/15/2009

[*CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS
DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN
ASTERISK [***], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.]
 
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EXHIBIT “A”
 
Trademarks
 
“SKINNY WATER”
 
Initials-Supplier:
 
Initials-Distributor:
     
/s/ RDW
 
/s/ JH

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

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EXHIBIT “B”
 
Products
 
Skinny Water Lemonade Passionfruit
Total V
   
16oz Bottle
1 82026 00027 8
 
12 Pack Single 16oz Bottles
1 82026 00056 8
     
Skinny Water Raspberry Pomegranate
Crave Control
   
16oz Bottle
1 82026 00033 9
 
12 Pack Single 16oz Bottles
1 82026 00057 5
     
Skinny Water Goji Fruit Punch
Shape
   
16oz Bottle
1 82026 00042 1
 
12 Pack Single 16oz Bottles
1 82026 00058 2
     
Skinny Water Acai Grape BlueBerry
Hi-Energy
   
16oz Bottle
1 82026 00048 3
 
12 Pack Single 16oz Bottles
1 82026 00048 3
     
Skinny Water Peach Mango Mandarin
XXX-Detox
   
16oz Bottle
1 82026 00030 8
 
12 Pack Single 16oz Bottles
1 82026 00060 5
     
Skinny Water Orange Cranberry Tangerine
Wake Up
   
16oz Bottle
1 82026 00061 2
 
12 Pack Single 16oz Bottles
1 82026 00063 6

 
Initials-Supplier:
 
Initials-Distributor:
     
/s/ RDW
 
/s/ JH

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

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EXHIBIT “C”
 
TERRITORY DESCRIPTION
 

 
State
Counties
       
New York
Nassau
         
Suffolk
         
New York
         
Bronx
         
Kings
         
Queens
         
Richmond
         
Westchester
       
New Jersey
Bergen
         
Hudson
         
Essex
         
 [***]

Initials-Supplier:
 
Initials-Distributor:
     
/s/ RDW
 
/s/ JH

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

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EXHIBIT “D”
INITIAL ANNUAL MARKETING PLAN

 
1.
Temporary [***]shall be mutually agreed upon by Supplier and Distributor.  With
respect to any “10 for $10” ads, each party will be responsible for [***].  With
respect to any “10 for $10” ads beyond the [***] Supplier will [***].  If the
price to a [***].

For example, and without limitation, assuming a “10 for $10” ad will result in a
[***] to the chain customer (from an [***]), each party will bear $[***].  For
all “10 for $10” ads after [***], Supplier will [***], bringing Supplier’s
support to $[***].  If the price to a [***], Supplier will [***].

 
2.
Free case offers (e.g., ‘Buy 5 Get 1 Free’), shall be mutually agreed upon by
Supplier and Distributor.  Each party will cover [***].

For example, assuming a 12-pack case price of [***] and Supplier and Distributor
agree to offer Buy 5 get 1 Free, Supplier and Distributor shall each cover
[***].  All funding by Supplier will be based on a [***]to the customer;
provided that such suggested retail price [***]from Supplier to Distributor.

 
3.
Point-of-Sale materials (e.g., sales sheets, rail strips, static clings, shelf
danglers, and the like) that are provided by Supplier will be paid at [***].

 
4.
Supplier shall pay [***].

 
5.
Supplier will pay [***] of the cost of free cases utilized for mutually agreed
upon sales drives during the [***] days of the term for non-chain accounts.

Initials-Supplier:
 
Initials-Distributor:
     
/s/ RDW
 
/s/ JH

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

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