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Exhibit 10.22
 
CO-MANUFACTURING, SALES, AND DISTRIBUTION AGREEMENT
 
This Co-Manufacturing, Sales, and Distribution Agreement (this “Agreement”) is
made and entered into as of July 1, 2011 (the “Effective Date”), by and between
Bellisio Foods, Inc., (“Bellisio”), a Minnesota corporation with offices located
at 1201 Harmon Place, Suite #302, Minneapolis, Minnesota 55403, and Overhill
Farms, Inc. (“Overhill”), a Nevada corporation with offices located at 2727 East
Vernon Avenue, Vernon, California 90058.  Bellisio and Overhill may be referred
to herein each as a “party” and, collectively, as the “parties”.

WHEREAS, Overhill has entered into a license agreement with Boston Market
Corporation, with an effective date of July 1, 2011 (“BMC License”), whereby
Overhill has the right to manufacture, sell and distribute Boston Market frozen
food products, and furthermore has the right to contract with a third party of
its choice for the co-manufacture, sale, and distribution of such products;

WHEREAS, the parties desire Bellisio to co-manufacture, sell and distribute
certain Boston Market branded frozen food products for Overhill, under the terms
and conditions set forth in this Agreement;

NOW, THEREFORE, in consideration of the mutual benefits, covenants, and promises
contained in this Agreement, and for other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged by both parties hereto,
Bellisio and Overhill, intending to be legally bound, agree as follows:

1.             PRODUCTS

(a)           Co-Manufacturing.  Bellisio shall have the right to
co-manufacture, at all times throughout the term of this Agreement,
approximately fifty percent (50%), within a five (5%) percentage point variance
of fifty percent (50%), of the total production volume for the eighteen (18)
different Boston Market branded food products identified on Schedule A to this
Agreement (collectively, the “Products”), with the remaining approximately fifty
percent (50%) of total production volume being manufactured by Overhill or their
designee, subject to 6. (d). Upon mutual agreement of the parties, additional
products may be added as Products from time to time by signing an amended
Schedule A identifying those products and the agreed upon pricing terms
applicable to them. Discontinued Products shall be considered removed from
Schedule A and removed as Products upon written notification from Overhill.

(b)           Sales and Distribution.  Bellisio shall have exclusive
responsibility for sales and distribution of all Boston Market brand frozen food
products that are subject to the BMC License, including but not limited to the
Products, then currently being manufactured by either party, under the terms and
conditions set forth in this Agreement.

2.             TERM AND TERMINATION

(a)           Term.  The term of this Agreement shall begin on the Effective
Date and continue for a period of:

(i) Two (2) years where the Brand P&L (as defined in section 12 herein) equals a
profit of $2,000,000 or more (excluding the cost of new item placement and
television and print advertising costs expensed to the Brand P&L for the first
twelve (12) month period from the Effective Date), and continuing thereafter on
an annual basis on each anniversary of the Effective Date unless terminated by
either party by providing at least six (6) months advance written notice to the
other party.

(ii) Eighteen (18) months where the Brand P&L shows a profit of less than
$2,000,000 excluding the cost of new item placement and television and print
advertising expensed to the Brand P&L for the first twelve (12) month period
from the Effective Date, and continuing thereafter on an annual basis on each
anniversary of the Effective Date unless terminated by either party by providing
at least one hundred twenty (120) days advance written notice to the other
party.  In the event the previous Boston Market Licensee continues to distribute
Boston Market brand products in the marketplace after the Effective Date of this
Agreement, and continuing for thirty (30) days or more beyond such date, this
section shall be null and void and have no affect whatsoever.  In such
circumstance, the term of the Agreement shall be determined by section 2(a)(i)
above.

(b)           Termination Due to Acquisition by Direct Competitor.  Either party
shall have the right to terminate this Agreement if either Overhill or Bellisio
is party to a Competitor Acquisition (as defined below), upon the terminating
party providing at least six (6) months advance written notice to such other
party. Each party has an affirmative obligation to disclose to the other party
the fact that a Competitor Acquisition will occur, such disclosure to be made
within two (2) business days after the execution of a definitive agreement
concerning a Competitor Acquisition.   A “Competitor Acquisition” means a
transaction or series of transactions whereby a Direct Competitor (as defined
below) of the terminating party acquires, directly or indirectly, (i)
substantially all of the assets of the other party, (ii) more than thirty-five
percent (35%) of the voting equity of the other party, or (iii) the right to
appoint one or more board members or board observers to the board of directors
or similar governing body of the other party.  The parties consider the
following to constitute the exclusive list of their respective Direct
Competitors for purposes of this section:

 
 

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Direct Competitors of Bellisio:
***
 
Direct Competitors of Overhill:
***
 
(c)           Termination for Breach.  Either party may terminate this Agreement
on the basis of a material breach where the breaching party was provided written
notice describing the breach in reasonable detail and failed to cure such breach
within a sixty (60) day period following notice of the breach for a non-monetary
breach and ten (10) day period for a monetary breach, specifically excluding any
payment amounts in good faith dispute between the parties.

(d)           Termination for Insolvency. Either party may terminate this
Agreement immediately upon written notice to the other party in the event such
other party makes an assignment for the benefit of its creditors, admits to
being insolvent or otherwise admits to being unable to pay its debts as they
mature/come due, voluntarily files a bankruptcy petition under the federal
bankruptcy code or any similar state laws, or has an involuntary petition for
bankruptcy filed against it that is not dismissed or vacated within ninety (90)
days after it has been filed.

(e)           Reimbursement of New Item Placement and Television and Print
Advertising Expenses Upon Termination.  Upon termination of the Agreement by
either party for any reason, Overhill shall reimburse Bellisio for all
unamortized costs, fees, and expenses related to new item placement and
television and print advertising expenses that are unamortized for termination
purposes pursuant to this section 2 based on two (2) fiscal years amortization
(or twenty-six [26] fiscal periods) for new item placement and one fiscal year
(or thirteen [13] periods) for television and print advertising expenses. New
item placement refers to the cost paid to retail customers to obtain on shelf
distribution also referred to as slotting or listing fees.   These amortization
calculations are made for termination purposes only and have no affect on the
Brand P&L pursuant section 12.

3.             MANUFACTURING COSTS AND ALLOCATIONS

(a)           Product Manufacturing Costs.  The cost to manufacture the Products
(“Product Cost”) shall be determined in the following manner:

Product Cost shall mean the cost of all raw materials based on a weighted cost
of raw material inventory and including the yield factors identified on Schedule
B, plus the cost of Product packaging based on a weighted cost of packaging
inventory and including the yield factors identified on Schedule B, plus
“Conversion Cost” as identified on Schedule C (it being noted that Conversion
Costs includes direct and indirect overhead for manufacturing and warehousing,
direct and indirect labor and profit).

The parties shall mutually agree upon an increase to the Conversion Cost, based
on actual conversion cost increases, which shall occur only once per twelve (12)
month period following the anniversary of the Effective Date, such increase not
to exceed four percent (4%) based on actual increased costs per annum, provided,
however, that the costs associated with direct labor due to Product
specification changes are not subject to such four percent (4%) cap and may be
adjusted at any time upon the mutual written agreement of the parties.

(b)           Start Up.

(i)            Cost Allocations.  All Bellisio material and labor costs related
to Product manufacturing trials and start up shall be paid by Overhill and
charged to the Brand P&L.

(ii)           Quality.  Each product developed to be manufactured by Bellisio
will have a quality sign-off by an Overhill executive chef or a Boston Market
Corporation executive chef under the terms of the BMC License.
 
______________________
***    Portions of this page have been omitted pursuant to a request for
confidential treatment and filed separately with the Securities and Exchange
Commission.

 
 

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4.             MANUFACTURE FORECASTING
 
Every week the parties shall generate a rolling eight (8) week production
forecast for the following eight weeks, which shall provide the basis of
production capacity planning in each of the parties’ respective manufacturing
facilities.  Additionally, on a rolling basis the first four (4) weeks of the
production forecast is considered binding. Week one (1) of this binding forecast
is fixed, the remaining three (3) weeks ,  may be adjusted   for plant
efficiency purposes, so long as the four (4) week binding production forecast by
product is attained. In the event agreement is not reached in a timely manner,
Bellisio shall have authority to determine and allocate their production
capacity of Bellisio-manufactured Products based on purchase orders received
from customers. However, freight and distribution costs charged to the Brand P&L
shall be based on receipt date pursuant to section 12 (c).

On a weekly basis Bellisio will issue Purchase Orders or other required
documentation to Overhill for shipment of finished goods to Bellisio’s Facility.
The document for this purpose will be the “Boston Market Master Schedule”
provided by Bellisio Foods. In the event either party chooses to produce in
excess of the eight (8) week forecast, that party will bear any responsibility
for obsolescence and associated storage and handling cost.

5.             SOURCING MATERIALS; INVENTORY RESPONSIBILITY

(a)           Procurement.  Each party shall source and procure all labor, raw
materials, ingredients and packaging materials required for the manufacture,
production, processing, packaging, and transport/shipping of the Products
consistent with production schedules described in section 4. If either party is
required to purchase quantities of such materials and/or packaging in excess of
the eight (8) week production forecast schedule due to minimum order
requirements and/or purchasing lead times, such party will first obtain the
written approval of the other party. All procurement and purchases for the
Products shall be made consistent with the party’s standard practices including,
but not limited to, standard practices relating to vendor managed inventory,
certificates of analysis, and raw material specifications. Overhill shall have
sole responsibility for designing, supplying, and obtaining any required
approvals for all Product labels, with the associated costs charged to the Brand
P&L. The purchase of all ingredients, raw materials, packaging, and other
components of the Products shall be optimized by agreement of the parties such
that purchases are made on the basis of procuring the best component at the
least cost including the cost of shipping to the manufacturing facilities of the
respective parties. However, neither party shall be required to purchase raw
material or packaging from a vendor that it objects to on the basis of quality
concerns, and shall have no liability whatsoever arising from quality issues
resulting from raw materials purchased by the other party from a supplier
approved by the parties in accordance with the immediately preceding sentence.
Any costs or losses resulting from raw materials rejected by either party on the
basis of quality concerns shall be borne by the supplier.

(b)           Inventory Due to Product Discontinuation.  In the event a Product
is discontinued, each party shall use its best efforts to maximize use of any
remaining raw materials and to sell any remaining Products through current
customers or discount channels. If the discontinued Product cannot be sold
through the former channels, it may be re-packaged and sold under a non-Boston
Market brand by the party that has possession of and title to the Product
subject to the terms and conditions of the BMC License.  Thereafter, the
cost/loss associated with any remaining Product, raw materials and/or packaging
shall be expensed to the Brand P&L so long as the remaining Product, raw
materials and packaging were purchased in quantities consistent with agreed upon
production schedules, consistent with sections 4 and 7 herein.

(c)           Inventory Due to Voluntary Termination.  In the event either party
voluntarily terminates this Agreement pursuant to section 2(a) and/or 2(b)
herein, any remaining raw materials, packaging, and Product inventory shall be
purchased at cost by Overhill and shipped by Bellisio to Overhill, the cost of
such purchase and shipment to be paid by Overhill, so long as the remaining
finished Product, raw materials and packaging were purchased in quantities
consistent with the agreed upon production schedules, consistent with sections
4  and 7 herein.

(d)           Inventory Due to Breach.  In the event Bellisio terminates this
Agreement due to Overhill’s uncured material breach, Overhill shall purchase
from Bellisio all remaining raw materials, packaging and all Products at
cost  so long as the remaining raw materials, packaging, and Products were
purchased and manufactured in quantities consistent with agreed upon production
schedules, consistent with sections 4 and 7 herein. The costs of such purchases
shall not be expensed to the Brand P&L.  In the event Overhill terminates this
Agreement due to Bellisio’s uncured material breach and Overhill continues to
manufacture the Products, Overhill shall purchase from Bellisio all remaining
raw materials, packaging and Products at cost so long as the raw materials,
packaging and Products were purchased and manufactured in quantities consistent
with agreed upon production schedules consistent with sections 4 and 7 herein,
unless the breach was due to a verifiable and uncured Product safety breach.

 
 

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6.             MANUFACTURE PROTOCOL

(a)           Pre-Existing Product Inventory.  In the event Overhill purchases
any pre-existing inventory of Boston Market brand products manufactured by the
previous Boston Market Licensee and warehoused in one of the previous licensee’s
distribution centers, such inventory shall be shipped by Overhill to the
Bellisio’s Jackson, Ohio manufacturing facility (the “Jackson Facility”) or to a
third party warehouse designated by Bellisio, such inventory cost, consistent
with Schedule C, to be expensed to the Brand P&L.  However, any and all shipping
costs related to such inventory shall be paid by Overhill.

(b)           Commencement of Manufacturing.  Bellisio’s manufacture of the
Products shall commence no earlier than when it notifies Overhill that the
Jackson Facility is ready to commence manufacture, but in no event later than
August 15, 2011, unless mutually agreed otherwise by the parties.

(c)           Distribution.  The fifty percent (50%) (subject to permitted
variance) of total production volume manufactured by Overhill pursuant to
section 1(a) of this Agreement shall be shipped by Overhill to the Jackson
Facility for distribution by Bellisio as set forth in greater detail in sections
1(b) and 11 of this Agreement.  The specific Products to be manufactured by
Bellisio and Overhill, respectively, shall be mutually agreed upon by the
parties based on Bellisio’s manufacturing capabilities and line speeds.  All
Products manufactured and shipped by Overhill shall be FOB Jackson Facility (or
another Bellisio-designated third party warehouse) and shall be shipped in a
timely manner so as to allow Bellisio reasonable time to prepare such Products
for distribution.  Such Products shall be shipped by Overhill in no less than
one half (1/2) of a full truckload, with actual, reasonable and verifiable
shipping costs paid by Overhill  expensed to the Brand P&L. Beneficial ownership
of, title to, and risk of loss or damage to, all the Products shipped by
Overhill to Bellisio shall remain with Overhill until the Products arrive FOB
Jackson Facility.

(d)           Right of First Refusal to Manufacture Products. In the event
either party determines in its commercially reasonable discretion that its
respective cost to manufacture any given Product is too high such that it
desires not to manufacture its share of such Product volume, the other party
shall have the right of first refusal to manufacture 100% of that Product volume
(as a reduction to the declining party’s overall  Manufactured Product
production volume).  In no event shall such circumstance affect Bellisio’s
continued right to have exclusive sales and distribution responsibility for all
Products throughout the term of this Agreement.  Relatedly, in the event
Overhill decides not to manufacture its approximate fifty percent (50%) of
production volume of the Products for any reason whatsoever (other than pursuant
to section 19 below), Bellisio shall have a right of first refusal (exercisable
by Bellisio giving written notice to Overhill within ten (10) days of Bellisio
receiving notice of Overhill’s decision to reduce or terminate production
volume) to undertake the manufacture, under the same terms and conditions as set
forth in this Agreement, of a portion or all of the production capacity
relinquished by Overhill before Overhill contracts with a third party for
co-manufacturing.

(e)           Standard Manufacturing Practices.  Each party shall manufacture
the Products in accordance with their documented standard manufacturing
practices, which shall at all times be fully compliant with all applicable laws
and USDA and FDA regulations and SQF/FSSC standards or the equivalent as
applicable.

(f)            On-Site Representative.  Either party may have an employee
representative present in the designated area of their respective facilities
during production runs of the Products, at each party’s sole cost and expense,
which shall not be expensed to the Brand P&L.

(g)           Timely Production and Shipment.  The parties agree to at all times
use their best efforts to produce and ship Products in a timely manner to meet
customer purchase order delivery dates.  The parties recognize and agree that a
failure to timely produce required quantities of Products will adversely impact
fill rates and may result in reduced distribution.

7.             QUALITY CONTROL

(a)           Product Specifications.  Overhill and Bellisio shall each
manufacture all Products in accordance with the agreed upon specifications,
attached hereto as Schedule B. Any requested changes in the specifications or
methods of manufacture, along with the associated Product Cost increase or
decrease, shall not be adopted unless agreed upon in writing by both
parties.  Overhill and Bellisio each agree to respond to any such requested
changes in a reasonable amount of time.

(b)           Product Quality and Safety.  Overhill and Bellisio shall each
prepare, handle, pack, hold, and transport all Products in accordance with its
standard operating procedures, consistent with all applicable laws and USDA and
FDA regulations SQF/FSSC standards or the equivalent, and shall do so in a
manner ensuring that the ingredients and the Products will not become
adulterated, contaminated, spoiled, or otherwise unsafe or unfit for human
consumption. Neither party shall be required to adopt any quality assurance
protocol that departs from its standard operating procedures unless the adoption
and associated increases or decreases in associated Product Cost are agreed to
in writing by both parties.

(c)           Product Recall.  Overhill and Bellisio shall jointly have the
right, within the parameters of applicable law and applicable USDA and FDA
regulations, to initiate and direct the content and scope of a recall, market
withdrawal, stock recovery, product correction and/or advisory safety
communication regarding the Products. Both parties shall agree upon the manner,
text and timing of any publicity to be given concerning such matters. The
parties agree to fully cooperate with one another throughout the process of such
recall and to take all such steps as are reasonably requested by the other party
or by any governmental authority having jurisdiction over such matter to
implement the recall action in a timely and complete manner.  Any and all action
to be taken in connection with a recall action shall be in accordance with
applicable FDA and USDA guidance, policies and regulations and any other
applicable laws or regulations.  In the event of a Class I recall, remedial
measures may include appropriate change of Product packaging prior to resumption
of Product manufacturing so as to distinguish the appearance of the subsequent
Product from the recalled Products.  Actual costs, losses and/or damages
suffered by either or both parties associated with any recall action shall be
charged to the Brand P&L unless such recall action is due to the gross
negligence or intentional misconduct of one of the parties, in which case such
party shall indemnify the other in accordance with section 15 herein.

 
 

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(d)           Manufacturing Facilities. Throughout the term of this Agreement,
each party agrees to have a third-party provider conduct an annual industry
standard audit of its manufacturing facility and results shall be shared with
the other party upon request.
 
(e)           Consumer Complaints. Overhill shall directly deal with routine
consumer inquiries and complaints regarding the Products.  Upon receipt of any
actual or threatened legal claim relating to the Products or their sale,
Overhill shall promptly notify Bellisio in writing and provide Bellisio copies
of all relating documentation so that Overhill and Bellisio can agree on how to
proceed.  The actual, reasonable, and verifiable costs of responding to and
addressing consumer complaints shall be paid by Overhill but charged to the
Brand P&L.

8.             INTELLECTUAL PROPERTY

Nothing in this Agreement shall be deemed to grant to one party any right,
title, interest or license to any of the other party’s trademarks, trade names,
service marks, logos, production methods or processes, product formulas or
recipes, manufacturing processes, patents, copyrights, patentable or
copyrightable designs or material or any other intellectual property, including
but not limited to all BMC license rights, Product formulations and all UPC
Codes.

9.             CONFIDENTIALITY AND NON-DISCLOSURE

Overhill and Bellisio each acknowledge that they are bound by the Non-Disclosure
Agreement between them dated February 9, 2011 and attached hereto as Schedule D,
the terms of which are incorporated herein by this reference.  For purposes of
clarity, that certain Nondisclosure Agreement between the parties dated February
9, 2011 shall remain in full force and effect; provided, however, that
notwithstanding the terms of the Nondisclosure Agreement, each party may make
disclosures and communications as may be (i) reasonably related to the
manufacturing, sales and/or distribution role of such party so long as the
receiving party is made aware of and agrees to comply with the disclosing
party’s obligations of confidentiality or (ii) reasonably required under any
law, rule or regulation (including, without limitation, any Securities and
Exchange Commission or NYSE Amex disclosure requirements) applicable to such
party.

10.           REPRESENTATIONS AND WARRANTIES

(a)           Right to Enter into this Agreement.   Each party represents and
warrants to the other party that it has the full right, power, and authority to
enter into this Agreement in its entirety and that such party’s performance of
its duties and obligations as described herein shall not constitute a breach,
default, or violation of any applicable laws or any agreement of any kind to
which such party is a party or otherwise bound.

(b)           Product Safety Compliance.  Each party represents and warrants
that the Products shall at all times be manufactured, stored, and shipped in a
manner that ensures the safety of the Products, consistent with all applicable
USDA and FDA regulations SQF/FSSC standards or the equivalent.
 
11.           SALES AND DISTRIBUTION RESPONSIBILITIES

Overhill and Bellisio agree that Bellisio shall have the exclusive right,
throughout the term of this Agreement, to sell and distribute the Products
throughout the United States with the following rights and responsibilities:

(a)           Sales Management. Bellisio shall provide all preliminary sales
management responsibilities for the Products, beginning April 22, 2011 (the
“Start Up”), to include:

 
·
Development of customer sales plans

 
·
Initiate customer appointments and create sales presentations including required
travel

 
·
Load all Product trade plans into trade management system

 
·
Undertake broker assignment and training (Overhill to utilize same broker
network)

 
 
 

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·
Conduct sales training

 
·
Protect and defend Boston Market brand distribution and shelf presence

 
·
Transfer any customer records to Bellisio’s assigned broker effective June 1,
2011

Overhill shall pay to Bellisio, on or before June 1, 2011, a Start Up management
fee of $100,000 and a Start Up brokerage fee of $75,000 in return for Bellisio
performing the above services beginning in April 2011.

(b)           Sale of Products.  Bellisio shall use its best efforts to
distribute the Products and develop the market for the Products in accordance
with the parties’ agreed upon marketing goals, including implementing sales
promotions, price management, new product introductions, and
merchandising/execution.

(c)           Customer Orders and Invoicing. Bellisio shall receive and enter
customer purchase orders, handle all customer invoicing and customer billing
reconciliation and cash collection, and schedule production based on customer
orders.

(d)           Business Management.  Bellisio shall be responsible for all
business management responsibilities including the following:
 

 
·
Provide business and financial reporting based on U.S. GAAP

 
·
Maintain all necessary records and financial information for Brand P&L

 
·
Maintain Brand P&L based on US GAAP, as applicable

 
·
Provide all accounting support

 
·
Timely make payments to all third parties for all third party expenses and
maintain proper records

 
·
All other responsibilities customarily understood in the industry to be part of
the foregoing role

 
(e)           Trade Spend Management. Overhill has final approval rights as to
all  sales, marketing, and promotion expenditures. Bellisio shall be responsible
for all trade spend management for the Products, including the following:

 
·
Execute all trade programs, and consumer spending (excluding television and
print advertising and new product placement fees), with all such expenditures to
be submitted by Bellisio and approved by Overhill.  Overhill’s approval shall
not be unreasonably withheld and shall be deemed an approval if Overhill does
not respond to Bellisio’s written request within seven (7) business days.

 
·
All expenditures for television and print advertising and new product placement
fees shall be mutually agreed upon by the parties. Such expenses to be reflected
in the Brand P&L as incurred, but in the case of Termination pursuant to Section
2, Overhill will reimburse Bellisio as described in 2(e).

 
(f)           Warehousing/Handling/Storage of Products.  Bellisio shall be
responsible for warehousing, handling, and storing the Products, including the
following:

 
·
Warehousing the Products for a maximum of sixty (60) days from receipt date
pursuant to the binding forecast in Section 4. Bellisio shall be paid by
Overhill $*** per case for each period after the sixty (60) day maximum for any
excess Product manufactured by Overhill.

 
·
Bellisio shall only be responsible for storing Products (including Boston Market
brand products purchased by Overhill from the previous Boston Market licensee)
that are in saleable condition and that are forecasted to be sold within eight
(8) months of production based on Product consumption data

 
·
All Product costs and losses due to customer returns, spoilage, obsolescence,
customer discontinuation, or warranty issues shall be charged to Brand P&L

 
·
All Products shall be stored by Bellisio in full pallet quantities on slipsheets
using Grade A pallets or equivalent

 
(g)           Inspection Of Products from Overhill.  Upon receipt of a shipment
of Products from Overhill, Bellisio shall visually examine a random sampling of
the Products, in a manner consistent with its standard operating procedures, to
determine whether there are any issues relating to shortage or defects clearly
visible to the naked eye under ordinary inspection conditions. Bellisio will
communicate to Overhill any Product shortages or defects and all resulting
losses and costs shall be borne by Overhill

(h)           Freight Distribution.  Bellisio shall ship all Products with
combined loads
of Bellisio’s frozen food products, where appropriate, and shall be subject to
the same freight distribution policies as the Bellisio products including full
pallet quantities with fourteen (14) day lead times, LTL orders, and minimum
shipments of 600 cases.  Freight cost allocation for the Products, including
fuel surcharge and fluctuations, will be determined on a pro rata basis with the
Bellisio frozen food products and will be paid or incurred by Bellisio but
charged to the Brand P&L.
 
__________________________________
***      Portions of this page have been omitted pursuant to a request for
confidential treatment and filed separately with the Securities and Exchange
Commission.
 
 
 

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(i)            Maintain Brand P&L and Provide Other Reporting.  Bellisio shall
be responsible for providing financial reporting relating to the manufacture,
sale, and distribution of the Products based on U.S. GAAP. Bellisio will
maintain a Brand P&L with the sole purpose of recording the appropriate profit
allocation to the parties based on the financial considerations described in the
following section. Bellisio will provide Brand P&L to Overhill within ten (10)
days of each Bellisio four (4) week accounting period (as discussed in section
12 (b)).

12.           BRAND PROFIT & LOSS CONSIDERATIONS

(a)           Profit Sharing.  The parties agree to share in the profits and
losses (the “Brand P&L”) realized from sales of the Products, as determined by
the Brand Profit & Loss statement (the “Brand P&L Statement”) as identified on
Schedule E.  Sharing of Brand P&L between the parties (the “Profit Share”) will
be allocated to Overhill and Bellisio on a 50/50% basis for the first $2 million
of Brand P&L profit.  Any Profit Share above the first $2 million of aggregate
Brand P&L profit will be allocated on a 60/40 basis with 60% to Overhill and 40%
to Bellisio.

(b)           Brand Profit and Loss Statement.  The Brand P&L Statement shall be
prepared and maintained by Bellisio.  Such Brand P&L Statement shall be based on
Bellisio’s thirteen (13) periods, each period being four (4) weeks, per 52/53
week fiscal year ending on the Sunday closest to December 31st.  The Brand P&L
shall be determined based upon the Brand P&L Statement, which will include gross
sales of all products less all trade expenses, Product Costs, slotting,
advertising, royalty, sales and administrative fees, warehousing fees,
distribution fees, consumer complaint fees, working capital interest, freight,
brokerage, cash discounts, losses from swell, spoilage, discontinued and/or
defective products, except for the brokerage expense, which shall not be
included in the Brand P&L until twelve (12) months after the Effective Date.

(c)           Warehouse and Distribution Pricing.  For each case of Products
warehoused by Bellisio, Bellisio shall be paid $*** per case for warehouse,
handling, and storage charges for a maximum storage period of sixty (60) days
(the “Warehouse Fee”), such payment to be charged to the Brand P&L. In the event
Bellisio is required to warehouse Products in excess of sixty (60) days due to
excess inventory by no fault of the parties, Bellisio shall be paid $*** per
case for each partial or full month of storage beyond the sixty (60) day period
and shall be charged to the Brand P&L.  In the event Bellisio is required to
warehouse Products manufactured by Overhill for more than sixty (60) days
because Overhill purchased or manufactured Products in excess of the quantities
agreed upon in production schedules, consistent with section 4 herein. Overhill
shall pay to Bellisio $*** per case for each partial or full month of storage
beyond the sixty (60) day period and shall not be charged to the Brand P&L.
Bellisio may increase the Warehouse Fee once during each twelve (12) month
period following the anniversary of the Effective Date, such increase not to
exceed four percent (4%) based on actual increased costs.

(d)           Sales and Administrative Pricing.  Bellisio has the exclusive
responsibility for sales and distribution of the Products and the related
responsibilities of providing broker management, administrative, MIS, and
customer service beginning July 1, 2011 and continuing throughout the term of
this Agreement and shall be paid a sales and administrative fee of ***% of Net
Sales for providing such services., such fee to be charged to the Brand
P&L  “Net Sales” means gross Product sales less trade promotion costs/expenses
(excluding new item placement).

(e)           Working Capital Interest. Working capital interest (“Interest”)
will be charged to the Brand P&L. Interest is calculated as working capital
related to the Brand P&L assets and liabilities multiplied by the combination of
LIBOR plus 525 basis points. Alternatively, Overhill may choose to fund working
capital to minimize Brand P&L Interest.

(f)            Right to Audit.  Each party shall have the right, exercisable up
to once per calendar year, to have an independent third party auditor inspect
and audit the other party’s books and records concerning all costs, expenses,
revenues and profits with respect to the Products and the performance by each
party of its obligations under the Agreement. The party exercising its right to
audit shall pay for all costs, fees, and expenses related thereto.

(g)           Cash Flow Distribution. Payments due to/from each Party shall be
settled within thirty (30) days of billing.  Profits or losses will be
distributed according to Bellisio’s four (4) week fiscal periods within twenty
(20) days after finalizing the Brand P&L Statement.
 
__________________________________
***           Portions of this page have been omitted pursuant to a request for
confidential treatment and filed separately with the Securities and Exchange
Commission.
 
***           Portions of this page have been omitted pursuant to a request for
confidential treatment and filed separately with the Securities and Exchange
Commission.

 
 

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13.          TRANSITION EXPENSES

(a)           Transition from Previous Boston Market Licensee.   All trade
deductions related to Boston Market promotions and/or other costs and expenses
related to Boston Market brand product sales/marketing activity incurred prior
to July 1, 2011 and deducted by customers from Bellisio generated invoices shall
be promptly reimbursed to Bellisio by Overhill within five (5) business
days.  These costs, expenses, and/or deductions shall not be charged to the
Brand P&L. In the event Overhill purchases Boston market brand product inventory
from previous Boston Market Licensee or from Boston Market Corporation, Overhill
will provide the working capital to fund such purchases., including freight
costs and expenses to Bellisio’s Facility  Overhill may elect to provide ongoing
working capital throughout the term of this Agreement, as previously stated
above, to minimize Interest.

(b)           Transition Upon Termination of Agreement.  Upon termination of the
Agreement, Bellisio shall withhold 120% of sales deductions, including but not
limited to discontinued Products, spoilage, shortages, defects, and unauthorized
trade deductions, as estimated in Bellisio’s reasonable discretion based on
prior historical experience.  Remaining funds will be released in the following
manner:
 

 
·
Fifty percent (50%) of the remaining funds shall be distributed within 60 days;

 
·
Twenty-five percent (25%) of the remaining funds shall be distributed within 120
days, and;

 
·
Twenty-five percent (25%) of the remaining funds shall be distributed within 180
days.

14.           INSURANCE

Each party shall maintain comprehensive general liability insurance that shall
include contractual liability coverage and product liability coverage for the
Products sold and distributed pursuant to this Agreement, having a combined
single claim limit of not less than $*** per occurrence and total umbrella
coverage of not less than $***.  Each party shall arrange to have the other
named as an additional insured on their respective policies, and shall ensure
that such insurance remains in effect at all times when this Agreement is in
effect and for a period of no less than two (2) years after the termination of
this Agreement.

15.           INDEMNIFICATION

Each party agrees to defend, indemnify and hold harmless the other from and
against any and all claims, liabilities, costs, damages and expenses arising out
of, based upon, or in connection with each party’s respective obligations set
forth in this Agreement or under the law. In addition, each party shall be
responsible for its own attorney’s fees and expenses. As a condition of
indemnification, the party seeking indemnification shall give the indemnifying
party prompt notice of and copies of all pleadings and correspondence related to
any such claim and agrees not to settle, compromise, or otherwise dispose of any
such claim without the prior written consent of the indemnifying party, such
consent not to be unreasonably withheld or delayed. The indemnifying party shall
have the right (but not the obligation) to assume the defense or settlement of
any such claim at its expense, by counsel of its choice. If the indemnifying
party assumes such defense, the party seeking indemnification shall cooperate
fully with the indemnifying party in defense of the action.

Furthermore, Overhill agrees to defend, indemnify and hold harmless Bellisio
from and against any and all claims, liabilities, costs, damages and expenses
arising out of, or based upon, or connected in any way to the validity or
enforceability of the BMC License, Bellisio’s use of the BMC intellectual
property as contemplated by and in strict accordance with this Agreement, and/or
any other actions taken by Bellisio in strict conformance with the terms of this
Agreement that are alleged to constitute a violation of the BMC License, the
rights of a third party, or the law.

16.           NOTICES

       Any notice pursuant to this Agreement shall be in writing and delivered
via confirmed overnight delivery to the following:
 

To Bellisio At: To Overhill At: Joel Conner, Chairman and CEO James Rudis
Bellisio Foods, Inc. Overhill Farms, Inc. 1201 Harmon Place, Suite 302 2727 E.
Vernon Ave. Minneapolis, MN  55403 Vernon, CA 90058

 
_________________________
***           Portions of this page have been omitted pursuant to a request for
confidential treatment and filed separately with the Securities and Exchange
Commission.
 
 
 

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With A Copy To: With A Copy To: Danette Bucsko, CFO Robert Olivarez, VP Finance
Bellisio Foods, Inc.  2727 E. Vernon Ave. 1201 Harmon Place, Suite 302 Vernon,
CA 90058
Minneapolis, MN  55403
 

 
17.           ASSIGNMENT

Neither party may assign or transfer this Agreement, whether by merger,
acquisition or having all or any controlling portion of its stock purchased by
another entity, or, except as expressly permitted by this agreement, subcontract
any of its performance obligations hereunder, without the prior written consent
of the other party, which consent shall not be unreasonably withheld; provided
that it shall be reasonable for either party to withhold its consent to any such
assignment or transfer of this Agreement where that assignee is a Direct
Competitor (as identified in section 2(b)) of the party that is withholding its
consent.  However, upon expiration of the six (6) month notice requirement
described in section 2(b), consent to the assignment or transfer shall be deemed
granted and the party withholding consent shall have the right, again as
described in section 2(b), to terminate the Agreement. Notwithstanding the
preceding sentences, Overhill and Bellisio may each assign this Agreement to any
of its parent, subsidiary or commonly-owned affiliate companies without the
prior written consent of the other party by providing written notice of that
assignment to the other party.   This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their permitted successors and assigns.

18.           WAIVER

No waiver by either party of any provisions hereof shall be made unless
expressed in writing and signed by a duly authorized officer of such party.

19.           FORCE MAJEURE

Neither party shall be liable for loss or damage or deemed to be in breach of
this Agreement if their failure to perform obligations results from: acts of
God; acts of terrorism; compliance with governmental authority; fires, strikes,
embargoes, war; or any other similar event or cause.  Any delay resulting from
any of said causes shall extend or excuse performance, in whole or in part, as
may be reasonable, except that said causes shall not excuse payments for amounts
owed at the time of such occurrence.

20.           SEVERABILITY

If any provision of this Agreement should be invalid or unenforceable, such
invalidity or unenforceability shall not affect the validity and enforceability
of the remaining provisions of this Agreement. The parties hereto shall in such
event use their best efforts to substitute for any invalid or unenforceable
provision a valid and enforceable arrangement that achieves results as nearly
equivalent as possible to the invalid or unenforceable provision.

21.           NO EMPLOYMENT RELATIONSHIP

The employees, agents or subcontractors of one party shall not be considered the
employees or subcontractors of the other party.
 
22.           COUNTERPARTS

This Agreement may be executed in one or more counterparts, each of which shall
be considered an original.

23.           GOVERNING LAW

The laws of the State of California, without reference to its conflicts of laws
provisions, shall govern the application and interpretation of this Agreement
and any disputes, actions, or claims arising hereunder shall be brought in the
federal district court for the central district of California.

 
 

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24.           DISPUTE RESOLUTION

Any dispute between the parties arising under or in connection with this
Agreement shall be resolved as follows:  (a) first, the senior managers of
Overhill and Bellisio shall negotiate in good faith in an attempt to resolve the
dispute if the dispute has not been resolved by the mid-level managers involved
in the matter within thirty (30) days of those mid-level managers first attempt
to resolve the dispute;  (b) second, if the senior managers of the parties are
unable to resolve the dispute after ten (10) business days of good faith
negotiations, then the parties shall participate in mandatory mediation with a
mutually agreeable mediator; (c) third, if the parties are unable to resolve the
dispute after one full day of mediation, then either party may file a lawsuit to
resolve the dispute.

25.           CONSTRUCTION

This Agreement shall be construed as having been negotiated and jointly drafted
by the parties hereto, and shall not be construed against either party based
upon either party being deemed the drafter of the Agreement.

26.           ENTIRE AGREEMENT

This Agreement expresses the entire agreement of the parties relating to the
subject matter contained herein. No modifications, amendments or supplements to
this Agreement shall be effective for any purpose unless in writing and signed
by authorized representatives of all parties hereto or their successors or
assigns.

IN WITNESS WHEREOF, The undersigned representatives of each of the parties have
executed this Agreement as of the date first written above.
 

OVERHILL FARMS, INC.   BELLISIO FOODS, INC.           /s/ James Rudis   /s/ Joel
Conner           By:  James Rudis   Joel Conner           Its:  President  
Chief Executive Officer  

 
 
 

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Schedule A
Products
 
***

 
 
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***           This page has been omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.

 
 

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Schedule B
Product Specifications
 
***

 
 
___________________________
 
***           This page has been omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.

 
 

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Schedule C
Conversion Cost

***

 
 
___________________________
 
***           This page has been omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.

 
 

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Schedule D
Non-disclosure Agreement

***

 
 
___________________________
 
***           Four pages have been omitted pursuant to a request for
confidential treatment and filed separately with the Securities and Exchange
Commission.

 
 

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Schedule E
Brand P&L Statement

***

 

___________________________
 
***           This page has been omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission.
 
 

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