tit_ex10-2.htm


    EXHIBIT
10.2

    


    


    CONTRACT
NUMBER: 4205

    Cambar
Vendor Number: 4463

    


    


    PURCHASING
AGREEMENT

    


    
      	
              BUYER:

               

               

            	
              SELLER:

            
	
              General
      Nutrition Corporation

              300
      Sixth Avenue

              Pittsburgh,
      PA 15222

              Attention:  Purchasing
      Department

               

            	
              Muscle
      Pharm, LLC

              3390
      Peoria St # 307

              Auros,
      CO 80010

            
	
              Phone:   412/288/2096

            	
              Phone:
      303/564/7432

            
	
              Fax:   412/338/8865

            	
              Fax:  800/490/7165

            
	
              E-mail:  frank-pernice@gnc-hq.com

            	
              E-mail:

            
	
              Contact
      Person:  Frank Pernice

            	
              Contact
      Person:  Leonard Armenta

            


    

    


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

    


    SUMMARY OF CERTAIN KEY
TERMS

    


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

    


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


    
      
         


      

      
         

        
          

        

      

      
         


      

    


    


    3.           Product
Payment.  Buyer shall pay Seller for Products received by
Buyer:

    Pay on
Scan

    Within
ten days after on-scan or entry into the cash register at a
Buyer-owned  store and within ten days after wholesale delivery from
Buyer’s distribution center to Buyer franchisees or unaffiliated
purchasers.

    


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

    


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

    


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

    


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

    


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

    


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


    
      
         


      

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

    


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

    


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

    


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


    
      
         


      

      
        3

        
          

        

      

      
         


      

    


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

    


    


    GENERAL
TERMS

    


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

    


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

    


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

    


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


    
      
         


      

      
        4

        
          

        

      

      
         


      

    


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

    


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

    


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

    


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

    


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


    
      
         


      

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

    


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

    


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

    


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

    


    
      	
              BUYER

            	
              SELLER

            
	 
      	 
      
	
              GENERAL
      NUTRITION CORPORATION

            	
              MUSCLE
      PHARM, LLC

            
	 
      	 
      
	
              By:  /s/
      Stephen B. Cherry

            	
              By:  /s/
      Leonard K. Armenta

            
	 
      	 
      
	
              Name:
      Stephen B. Cherry

            	
              Name:
      Leonard K. Armenta

            
	 
      	 
      
	
              Title:  VP
      Purchasing

            	
              Title:  COO

            
	 
      	 
      
	
              Date:  12-18-09

            	
              Date:  12/16/09

            


    

    


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

    


    MUSCLE
PHARM, LLC

    


    By:  /s/
Leonard K. Armenta

    Name:  Leonard
K. Armenta

    Title:
COO

    Date:  12/16/09


    
      
         


      

      
        6

        
          

        

      

      
         


      

    


    EXHIBIT
1

    


    LIST
OF PRODUCTS

    


    
      	
              BUYER
      ITEM  NO.

            	
              UPC

              CODE

            	
              DESCRIPTION

            	
              UNIT
      PRICE

              FOB
      DESTINATION PREPAID

            	
              UNIT
      PRICE FOB DESTINATION FREIGHT COLLECT

            	
              OVERALL

              INVENTORY

              TURN
      RATE IN BUYER-OWNED STORES

            	
              BUYER’S

              MINIMUM

              SALES
      IN BUYER-OWNED STORES

            	
              MINIMUM
      ORDER QUANTITY

            
	
              446301

            	 
      	
              Berry
      combat powder 5lb

            	
              $21.90

            	 
      	
              NA

            	
              NA

            	
              NA

            
	
              446302

            	 
      	
              Battle
      fuel

            	
              $21.90

            	 
      	
              NA

            	
              NA

            	
              NA

            
	
              446304

            	 
      	
              Chocolate
      combat powder

            	
              $21.90

            	 
      	
              NA

            	
              NA

            	
              NA

            
	
              446305

            	 
      	
              Chocolate
      Pntbtr combat powder

            	
              $21.90

            	 
      	
              NA

            	
              NA

            	
              NA

            
	
              446306

            	 
      	
              Fruit
      punch assault

            	
              $21.00

            	 
      	
              NA

            	
              NA

            	
              NA

            
	
              446307

            	 
      	
              Fruit
      punch recon

            	
              $21.90

            	 
      	
              NA

            	
              NA

            	
              NA

            
	
              446308

            	 
      	
              Grape
      bullet proof

            	
              $20.98

            	 
      	
              NA

            	
              NA

            	
              NA

            
	
              446309

            	 
      	
              Orange
      raspberry bullet proof

            	
              $20.98

            	 
      	
              NA

            	
              NA

            	
              NA

            
	
              446310

            	 
      	
              Raspberry
      lemon assault

            	
              $21.00

            	 
      	
              NA

            	
              NA

            	
              NA

            
	
              446312

            	 
      	
              Shredded
      matrix

            	
              $19.48

            	 
      	
              NA

            	
              NA

            	
              NA

            
	
              446317

            	 
      	
              Blue
      raspberry assault

            	
              $21.00

            	 
      	
              NA

            	
              NA

            	
              NA

            
	
              446318

            	 
      	
              Banana
      combat powder

            	
              $21.90

            	 
      	
              NA

            	
              NA

            	
              NA

            


    

    


    


    



    
      
         


      

      
        7

        
          

        

      

      
         


      

    


    EXHIBIT
4

    


    GENERAL NUTRITION RETURNS
AGREEMENT

    


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

    


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

    


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

    


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

    


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

    



    
      
         


      

      
        8

        
          

        

      

      
         


      

    


    Buyer’s objectives under this
Agreement are:

    


    
      	
               
      

            	
              ·

            	
              Fairness
      to all parties

            


    

    
      	
               
      

            	
              ·

            	
              Total
      accountability

            


    

    
      	
               
      

            	
              ·

            	
              Supplier
      designated disposition of products

            


    

    
      	
               
      

            	
              ·

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

            


    

    


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

     

    
      	
            	
              ·

            	
                    
                Direct
      Product Cost (“DPC”): $0.085

              

            


      
        	
                 
      

              	
                ·

              	
                      
                  Post
      Damage Handling (“PDH”):
$0.190

                

              


      

      
        	
                 
      

              	
                ·

              	
                      
                  Operations
      Through Scan (“OTS”):
$0.101

                

              


      

      
        	
                 
      

              	
                ·

              	
                      
                  Disposition
      Cost (as selected
below)

                

              


      

       

    

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

    


    
      	
              CODE

            	
              DESCRIPTION (DISPOSITION
  COST)

            
	 
      	 
      
	
              COPT______

            	
              Scan
      and disposition left up to the discretion of Buyer ($0.020)*

            
	
              DONA_____

            	
              Scan
      and Donate ($0.030)

            
	
              DEST______

            	
              Scan
      and DESTROY ($0.040)*

            
	
              ROPT______

            	
              Scan,
      Hold, Seller Review/Center Option ($0.127)

            
	
              RDON_____

            	
              Scan,
      Hold, Seller Review, DONATE ($0.137)

            
	
              RDES______

            	
              Scan,
      Hold, Seller Review, DESTROY ($0.147)*

            
	
              RTAK______

            	
              Scan,
      Hold, Seller Review, TAKE ($0.174)

            
	
              RSHP______

            	
              Scan,
      Hold, Seller Review, Ship ($0.186)

            
	
              SHBK______

            	
              Scan
      and Ship back to Seller ($0.180)* Open RA#
      Required:_________

            


    

    


    *NON-TOXIC/NON-HAZARDOUS
MATERIAL ONLY

    


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

    


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


    
      
         


      

      
        9

        
          

        

      

      
         


      

    


    


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

    


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

    


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

    


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

    


    Explanations
of Phrases and Abbreviations

    


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

    


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

    


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

    


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

    


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

    


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

    


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

    



    
      
         


      

      
        10

        
          

        

      

      
         


      

    


    


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

    


    
      	
              ITEMS
      STANDARD COST

            	 	$	2.900	 
	
              DPC
      COST

            	 	$	0.085	 
	
              POST
      DAMAGE COST

            	 	$	0.190	 
	
              OTS

            	 	$	0.101	 
	
              DISPOSITION
      COST

            	 	$	0.020	 
	
              TOTAL

            	 	$	3.296	 


    

    


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

    


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

     
 

    
      	
              ITEMS
      STANDARD COST

            	 	$	2.900	 
	
              DPC
      COST

            	 	$	0.085	 
	
              POST
      DAMAGE COST

            	 	$	0.190	 
	
              OTS

            	 	$	0.101	 
	
              DISPOSITION
      COST

            	 	$	0.186	 
	
              TOTAL

            	 	$	3.462	 


    

    


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

    


    EXAMPLE of how recalled
Product will be
billed:

    


    
      	
              ITEMS
      STANDARD COST

            	 	$	2.900	 
	
              DPC
      COST

            	 	$	0.085	 
	
              POST
      DAMAGE COST

            	 	$	0.190	 
	
              OTS

            	 	$	0.101	 
	
              DISPOSITION
      COST

            	 	$	0.180	 
	
              TOTAL

            	 	
              $3.456
      + Pallet Charges

            	 


    

     

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

    


    



    
      
         


      

      
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    EXHIBIT
6

    ADVERTISING
AND PROMOTION

    


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

    


    
      	
              A.

            	
              Seller
      Commitments.

            


    

    


    
      	
               
      

            	
              1.

            	
              Advertising
      Commitment

            


    

    


    


    
      	
              Product:

            	
              Medium:

            	
              Outlet:

            	
              Month(s)
      Committed:

            	
              $
      Committed:

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      


    

    


    2.           Media and Promotional
Plan

    ________________________________________________________________

    


    3.           Promotional Money
(“PM”)
Support.

    


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

    


    4.           Category
Drives.

    ________________________________________________________________

    


    5.           Franchising
Specific.

     

    6.           Other.

    _________________________________________________________________

    



    
      
         


      

      
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              B.

            	
              Buyers
      Commitments.

            


    

    


    
      	
               
      

            	
              1.

            	
              Initial Plan-O-Gram or
      Shelf Space Commitment.

            


    

    __________________________________________________________________

    


    
      	
               
      

            	
              2.

            	
              Product Introduction,
      Store Commitment.

            


    

    __________________________________________________________________

    


    
      	
               
      

            	
              3.

            	
              Franchising
      Specific.

            


    

    
      	 
      


    

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    



    
      
         


      

      
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