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    EXHIBIT
      10.1

     

    PORTIONS
      OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
      AND
      EXHANGE COMMISSION PURSUANT TO AN APPLICATION FOR CONFIDENTIAL TREATMENT FILED
      WITH THE COMMISSION PURSUANT TO RULE 24B-2
      UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
      AMENDED.

     

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

     

    SUPPLY
      AND LICENSE AGREEMENT

     

    This
      supply and license agreement (“Agreement”), effective as of January 1, 2008 (the
“Effective Date”), is by and between CTI Industries Corporation, having its
      principle office located at 22160 N. Pepper Road, Barrington, Illinois 60010
      (referred to herein as “Supplier” or “CTI”) and S. C. Johnson & Son, Inc., a
      Wisconsin corporation, having its principal office located at 1525 Howe Street,
      Racine, Wisconsin 53403.

     

    Whereas,
      Johnson and Supplier have entered into this Agreement to reflect their mutual
      understanding of the terms upon which Supplier will manufacture and supply
      certain products to Johnson;

     

    Whereas,
      Supplier owns or controls the necessary property, plant and equipment so as
      to
      be able to produce such products; 

     

    Whereas,
      Supplier has agreed to grant Johnson the right to convert the manufacture and
      supply arrangement described herein to a license arrangement described herein
      upon the occurrence of certain events. 

     

    Now,
      therefore, the parties agree as follows:

     

    
      	
              1.

            	
              DEFINITIONS

            

    

     

    
      	 	
              1.1
                

            	
              General.
                The capitalized terms defined herein shall have the meanings indicated
                for
                purposes of this Agreement. Terms defined in the singular shall have
                a
                comparable meaning when used in the plural, and vice versa.
                

            

    

    

    
      	 	
              1.2

            	
              “Affiliate”
                shall mean,
                with respect to Johnson, any entity controlling or controlled by
                Johnson,
                where control means the power to direct the management and policies
                of a
                party, and with respect to Supplier it shall mean any entity controlling,
                controlled by, or under common control with Supplier.
                

            

    

    

    
      	 	
              1.3
                

            	
              “Contract
                Year”
                means any period commencing on July 1 and ending on June 30 thereafter,
                unless otherwise noted, provided, however, that the first Contract
                Year
                shall be an eighteen month period beginning January 1, 2008 and ending
                June 30, 2009.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	 	
              1.4

            	
              “Consumer
                Fields of Use”
                means all distribution channels of trade where consumers purchase,
                direct
                or indirect, products for ultimate use in the home or otherwise including
                but not limited to food, drug, and mass distribution retailers,
                do-it-yourself home improvement stores, warehouse clubs, office supply
                stores and similar retailers and internet outlets. This term shall
                not
                include commercial sales of airtight vacuum bags to business end-users
                for
                airtight dry storage of parts.

            

    

    

    
      	 	
              1.5
                

            	
              “Effective
                Date”
                is defined in the first paragraph of this
                Agreement.

            

    

    

    
      	 	
              1.6

            	
              “Johnson License
                Agreement”
                shall mean Johnson’s license and right to use, at Johnson’s option and
                upon conversion pursuant to Sections
                11.4 or 11.7
                hereof, all Licensed Intellectual Property (defined under Section
                21),
                and shall include the right to sublicense third
                parties.

            

    

    

    
      	 	
              1.7

            	
              “Net
                Account Revenue”
                means Johnson’s (including Johnson Affiliates’) gross sales of Bags that
                utilize any Supplier Patent Rights, to third party retail customers
                less
                any deductions or payments including the
                following:

            

    

    

    
      	 	 	
              (A)
                Supply Chain Logistics Discounts, meaning discounts for ordering
                full
                pallets, trucks, proper order lead times,
                etc.

            

    

    
      	 	 	
              (B)
                Supply Chain Channel Discounts, meaning wholesaler or broker discounts
                or
                similar items.

            

    

    
      	 	 	
              (C)
                Supply Chain Discounts/Markdowns, meaning discounts applied to obsolete
                goods in Johnson warehouses to incent secondary market
                sales.

            

    

    
      	 	 	
              (D)
                Returns, meaning full case returns including any third party handling
                fees.

            

    

    
      	 	 	
              (E)
                Remnants/Spoils, meaning less than full case returns or damaged cases
                including any third party handling
                fees.

            

    

    
      	 	 	
              (F)
                Cash Discounts, meaning discounts allowed for prompt payment of
                invoices.

            

    

    
      	 	 	
              (G)
                Deals, meaning all other trade payments for account specific consumer
                promotions, markdowns, volume or growth rebates, display programs,
                slotting fees, etc.;

            

    

    

    
      	 	 	
              provided
                that, for purposes of this definition only, Bags shall be deemed
                to
                include Product starter kits that include both Bags and [*] Pumps
                supplied by Supplier but shall not include Product starter kits that
                include Bags supplied by Supplier without a [*] Pump supplied by
                Supplier.
                

            

      	 	 	 

      	 	1.8	“Product(s)”
              means the following products, individually or
              collectively:

    

     

    
      	 	
              (A)

            	
              a
                zippered airtight vacuum bag, listed on Schedule
                2.1,
                incorporating a [*] valve and covered by claim(s) of Supplier’s patents
                6,984,278, 6,033,113, 7,305,742, or other patents pending (the “Bag”),
                and

            

    

     

    
      	 	
              (B)

            	
              a
                [*] vacuum pump designed to interface with a [*] valve on the vacuum
                bag,
                as listed on Schedule
                2.1
                (the “Pump”).

            

    

     

    
      	 	
              1.9

            	
              “Supplier
                Patent Rights”
                means those U.S. and foreign patents and patent applications,
                currently pending or issued, that are owned, licensed, or otherwise
                controlled by Supplier, and that contain any issued valid claim that
                reads
                on the Product(s), including but not limited to those patents listed
                in
                Schedule
                1.9,
                attached hereto, and hereby incorporated herein by reference.
                

            

    

    

      CONFIDENTIAL
        INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
        COMMISION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
        OMISSIONS.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	 	
              1.10

            	
              “Term”
                as used herein shall have the meaning as set forth in Section
                3
                below. 

            

    

    

    
      	 	
              1.11

            	
              “Territory”
                means worldwide.

            

    

    

    
      	
              2.

            	
              TERMS
                OF SALE

            

    

     

    
      	 	
              2.1

            	
              Supply
                Commitment.
                Subject to the terms and conditions of this Agreement, the Supplier
                shall
                manufacture and sell to Johnson and Johnson shall purchase from Supplier
                the products listed in Schedule
                2.1
                ("Product(s)"). Schedule
                2.1
                contains a list of the Products (“Product List”) and the price adjustment
                mechanism(s) for the Products (“Price Adjustment Mechanism(s)”), if any.
                The Product List may be amended from time to time by written agreement
                of
                the parties.

            

    

     

    
      	 	
              2.2

            	
              Purchase
                Orders.
                Johnson may place orders in writing, by phone (confirmed in writing),
                or
                by electronic data transmission (“Purchase
                Order(s)”).

            

    

     

    
      	 	
              2.3

            	
              Shipments.
                Shipments are according to Johnson’s delivery schedules and shipping
                instructions (“Shipment Terms”) as set forth in Schedule 2.3.
                The Shipment Terms apply until changed by Johnson.
                Delivery schedules shall not materially exceed the capacity levels
                and
                forecasts as provided in Section
                6
                hereof.

            

    

     

    
      	 	
              2.4

            	
              Payment
                Terms.
                Payment terms for Bag purchases are forty (40) days from the later
                of (i)
                the date of invoice or (ii) acceptance of Product. Payment terms
                for Pump
                purchases are forty two (42) days from the shipment date, provided
                that
                the goods were received by Johnson a minimum of seven (7) days prior
                to
                the end of such time period and Johnson has not rejected the goods.
                In no
                event shall Johnson be required to make payment before receipt of
                Product
                nor shall invoices be dated prior to the date of shipment. Johnson
                does
                not waive any right it has for adjustment of the amount due to Supplier
                by
                its having paid for the Product. 

            

    

     

    
      	 	
              2.5

            	
              Designated
                Purchasers.

            

    

     

    
      	 	
              (A)

            	
              Johnson
                may request that Supplier sell Product directly to a third party
                purchaser. Under these circumstances, such designated third party
                purchaser shall purchase the Product subject to the terms and conditions
                of this Agreement. In the event that Supplier determines that a designated
                third party purchaser is not performing according to the terms of
                this
                Agreement (including events of late payment), Supplier has the right
                to
                cease selling to such third party purchaser; provided, however, that
                Supplier shall notify Johnson if a designated third party purchaser
                is not
                performing according to the terms hereof, and shall allow Johnson
                at least
                sixty (60) days to attempt to resolve the matter with the designated
                third
                party purchaser before Supplier ceases sales to such designated third
                party purchaser. 

            

    

     

    
      	 	
              (B)

            	
              References
                to Johnson are considered a reference to such third party purchaser
                if
                Johnson has exercised its option to have Product sold to such third
                party
                purchaser. Johnson may change or add third party purchasers at any
                time
                upon written notice to the Supplier.

            

    

     

    
      	 	
              2.6

            	
              Additional
                Terms.
                Acceptance of this Agreement is limited to acceptance of the terms
                and
                conditions contained in this document. Any proposal for additional
                or
                different terms or attempt by Supplier or Johnson to change any of
                the
                terms and conditions of this Agreement is rejected and not of any
                effect.
                Additionally, if any terms of a Purchase Order, invoice or other
                document
                exchanged between the parties related to the purchase of the Product(s)
                conflicts with the terms of this Agreement, the terms of this Agreement
                shall apply. 

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
              3.

            	
              TERM

            

    

     

    
      	 	
              3.1

            	
              Initial
                Term.
                This Agreement shall commence on the Effective Date and continue
                in full
                force and effect for an initial term ending June 30, 2011 (“Initial
                Term”), unless renewed per the terms of Section
                3.2
                or
                terminated earlier pursuant to this Agreement (the Initial Term and
                any
                renewal terms shall be referred to collectively as the “Term”).
                

            

    

     

    
      	 	
              3.2

            	
              Renewal
                Terms.
                After the Initial Term, this Agreement may be renewed for two additional
                terms of two (2) years each. This Agreement shall automatically renew
                for
                a first renewal term of two (2) years (“Automatic First Renewal Term”) if
                the Product prices for the fourth Contract Year as proposed by Supplier
                to
                Johnson pursuant to Section
                4.2(A)
                below are equal to or less than the target Product prices set forth
                in
                Schedule
                3.2
                attached hereto. If this Agreement does not automatically renew in
                accordance with the preceding sentence, then Johnson shall have the
                right
                to unilaterally renew this Agreement for the first renewal term of
                two (2)
                years (“First Renewal Term”) by giving written notice to Supplier at lease
                four (4) months prior to the end of the Initial Term. In addition,
                provided this Agreement has been renewed for the Automatic First
                Renewal
                Term or First Renewal Term, Johnson shall have the right to further
                extend
                this Agreement for a second renewal term of two (2) years (“Second Renewal
                Term”) by giving written notice to Supplier at least four (4) months prior
                to the end of the such first renewal
                term.

            

    

     

    
      	
              4.

            	
              PRICING

            

    

     

    
      	 	
              4.1

            	
              Price.
                The initial price for each Product is set forth in Schedule
                2.1.

            

    

     

    
      	 	
              4.2

            	
              Price
                Adjustments.

            

    

     

    
      	 	
              (A)

            	
              Periodic
                Price Adjustments. The Product prices in Schedule
                2.1
                (including the Supplier’s conversion cost component of the Product price
                as stated in Schedule 2.1)
                are firm for the entire Initial Term except
                as provided in the Price Adjustment Mechanism in Schedule
                2.1
                and Sections
                4.2
                and 4.4.
                For the Renewal Terms,
                Supplier will provide to Johnson, at least six months prior to the
                commencement of the First or Second Renewal Term (as applicable),
                the
                Product price for the first year of the applicable Renewal Term.
                The
                Product prices for Bags will be fixed for each Renewal Term and will
                be
                based on the following price components as submitted for the first
                Contract Year of the applicable Renewal Term: [*]
                The Product prices for Pumps for each Renewal Term shall be calculated
                per
                Schedule
                2.1.
                

            

    

     

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (B)

            	
              Johnson
                Requested Change. If Johnson requests a change in the Specifications
                or
                manufacturing process and the change would affect Supplier's conversion
                cost and/or materials cost, the parties shall determine the impact,
                if
                any, the change would have on the Product price. If Johnson and Supplier
                agree on a price adjustment, the Specification change or manufacturing
                process change, or both, will be implemented, and the price change
                will
                become effective on the date the change is implemented.
                

            

    

     

    
      	 	
              (C)

            	
              Complete
                Pricing. The Product prices are complete, and Supplier may not add
                charges
                of any type without Johnson's prior written consent. Examples of
                charges
                that may not be added to the price include, without limitation, shipping,
                packaging, labeling, customs duties, taxes, storage, insurance, boxing,
                overtime (unless approved by Johnson in advance), and crating costs.
                

            

    

     

    
      	 	
              (D)

            	
              Most
                Favored Pricing. The Supplier represents and warrants to Johnson
                that the
                Product prices are not less favorable than those currently extended
                by
                Supplier to any other person for the same or similar articles supplied
                in
                similar quantities. If permissible under applicable law, Supplier
                shall
                immediately reduce the price to Johnson for the affected Product
                if
                Supplier reduces its price to other persons for the same or similar
                article for the supply of similar
                quantities.

            

    

     

    
      	 	
              (E)

            	
              [*]
                price adjustments. Product prices shall be subject to [*]
                price adjustment made effective on the first day of each calendar
                quarter
                in accordance with Schedule
                2.1
                attached.

            

    

     

    
      	 	
              4.3

            	
              Shrinkage.
                Supplier is responsible for all expenses relating to manufacturing
                losses
                and inventory losses until the Product is delivered to and accepted
                by
                Johnson. 

            

    

     

    
      	 	
              4.4

            	
              Cost
                Savings.
                Supplier shall use its reasonable commercial efforts to generate
                cost
                savings in the cost of the Products. Cost
                savings shall be allocated as
                follows:

            

    

     

    
      	 	
              (A)

            	
              Cost
                savings, which (i) result from Product or Product packaging modifications
                or (ii) result from projects initiated jointly or solely by either
                party
                and require no investment by Supplier or (iii) result from a relocation
                of
                production to another Supplier manufacturing facility, will be applied
                solely to reduce Product prices upon implementation. If Supplier
                must
                invest to achieve these savings, these savings will (i) first be
                used to
                fund the cost of the investment and (ii) thereafter will be applied
                solely
                to reduce Product prices.

            

    

     

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
              5.

            	
              SPECIFICATIONS

            

    

     

    
      	 	
              5.1

            	
              Specifications.
                Johnson has given Supplier copies of the Product Instruction Handbooks.
                The Green General Specifications and Guidelines Handbook contains
                general
                specifications for goods being manufactured for Johnson. Specifications
                for new products just being launched are in Red Product Instruction
                Handbooks. Blue Product Instruction Handbooks cover the specifications
                for
                established products. Yellow Product Instruction Handbooks cover
                the
                specifications for special pack products. These Product Instruction
                Handbooks contain Product-related, finished goods, and packaging
                specifications; manufacturing instructions, formulas, processing
                instructions, quality control procedures, finished goods and component
                performance tests, Acceptable Quality Limits; and other information
                relating to the manufacture of Product (the “Specification(s)”). Supplier
                shall not use the Product Instruction Handbooks for any purpose other
                than
                to perform its obligations under this Agreement. Supplier shall
                manufacture Product in compliance with the Product Instruction Handbooks.
                The Product Instruction Handbooks (including all copies and related
                notes)
                must be returned to Johnson upon Johnson’s request or upon termination of
                this Agreement. Upon changes in the Specifications, Johnson will
                provide
                amended Product Instruction Handbooks to
                Supplier.

            

    

     

    
      	 	
              5.2

            	
              Changes.
                Supplier must not change any Specification or manufacturing location
                without Johnson’s prior written consent. Johnson shall have the right, but
                not the obligation, to change the Specifications, from time to time,
                upon
                reasonable advance written notice to Supplier and, in that case,
                Johnson
                and Supplier shall enter into good faith negotiations to adjust the
                price
                in accordance with Section 4.2(B).
                For changes to be effective, they must be set forth in a writing
                that is
                signed by the parties and incorporated as an amendment to the
                Specifications.

            

    

     

    
      	 	
              5.3

            	
              Materials.
                Unless otherwise agreed, Supplier is solely responsible for obtaining
                the
                equipment, materials, components, and services required by Supplier
                to
                manufacture and deliver Product. To the extent not covered by the
                Specifications, providers of and specifications for materials and
                components must be approved in advance by Johnson. If Johnson has
                a
                supplier of raw material and/or components that could result in a
                Product
                cost savings, Johnson shall have the right to change the Specifications
                pursuant to Section
                5.2
                above to include such material and the designated supplier, subject
                to the
                terms of Section
                5.2.
                In addition, Supplier may use an alternative supplier if approved
                in
                advance and in writing by Johnson. If Supplier fails to obtain Johnson’s
                prior written approval, Supplier shall assume any and all responsibility
                in accord with Section
                12.1
                of
                the Agreement. 

            

    

     

    
      	
              6.

            	
              MANUFACTURING
                CAPACITY

            

    

     

    
      	 	
              6.1

            	
              Capacity.
                Supplier guarantees sufficient capacity at its production facilities
                to
                manufacture and deliver the quantities of Bags and Pumps during the
                Product introduction phase as set forth in Schedule
                6.1
                hereto. Thereafter, Supplier will use reasonable commercial efforts
                to
                develop and maintain capacity at its owned or controlled production
                facilities to manufacture and deliver at least 150% of Johnson’s annual
                forecast requirements (updated quarterly) as forecasted under Section
                6.2
                for the Products, provided that, and notwithstanding anything else
                herein,
                if at any time Johnson’s actual Product purchases for a calendar quarter
                causes Supplier’s capacity to fall below the 150% threshold (as compared
                to such actual purchases), then Supplier will have one hundred fifty
                (150)
                days to meet the 150% requirement. This is not a commitment by Johnson
                to
                purchase any quantity. The minimum criteria for any Contract Year
                of this
                Agreement shall be that Supplier’s service permits Johnson to ship 99% of
                its orders using Products to Johnson customers on time and complete.
                

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	 	
              6.2

            	
              Forecasting.

            

    

     

    
      	 	
              (A)

            	
              Johnson
                may provide on-line access for Supplier to Johnson’s production
                forecasting system or its equivalent (collectively, “PFS”). This access
                will permit Supplier to have current information relating to Johnson’s
                estimates of production forecast. Johnson shall provide such other
                information as Supplier may reasonably request concerning Johnson’s
                forecasts. Supplier shall only access that portion of the PFS system
                necessary for Supplier to determine Johnson’s Product needs. All
                information in the PFS system is highly confidential and will be
                treated
                as Johnson Confidential Information pursuant to Section
                17
                below. 

            

    

     

    
      	 	
              (B)

            	
              If
                Supplier does not have access to Johnson’s PFS system, Johnson shall
                provide non-binding annual forecasts, updated quarterly, and binding
                written or electronic data input ("EDI") Purchase Orders. The initial
                non-binding annual forecast is attached hereto as Schedule
                6.2.
                

            

    

     

    
      	 	
              6.3

            	
              No
                Requirements and No Minimums.
                This is a not a requirements contract. Additionally, Johnson does
                not have
                to purchase a minimum quantity of Product. Johnson does not have
                to use
                its best efforts to promote and sell the Product, and Johnson may
                discontinue or reduce its commercialization effort with respect to
                any
                Product at any time for any reason.

            

    

     

    
      	 	
              6.4

            	
              Exclusivity.
                During the Term of this Agreement, Supplier and its Affiliates shall
                not
                directly or indirectly manufacture or sell the Product or any other
                zippered air tight vacuum bag, or license the Supplier Patent Rights,
                in
                the Consumer Fields of Use in the Territory, for or to anyone other
                than
                Johnson, except that Supplier shall have the right to sell Supplier’s
                commercialized zippered vacuum bag with a molded external valve to
                department specialty stores (e.g. Kohl’s Department stores and Bed, Bath
                and Beyond), sporting goods stores (e.g. Gander Mountain and Dick’s
                Sporting Goods), the sporting goods/outdoor section of Mass Merchandise
                stores (e.g. Wal-Mart’s sporting goods section) and direct sales through
                internet channels.
                Furthermore, Supplier shall have the right to sell large sized zippered
                vacuum bags having a layflat surface area greater than two hundred
                fifty
                square inches that are intended for use in non-food home storage
                applications through any channels of distribution. During the Term
                of this
                Agreement Johnson
                will not manufacture or purchase the Product from anyone other than
                Supplier, unless and until Johnson exercises its right and option
                to
                convert this Agreement to a Johnson License Agreement pursuant to
                Section
                11.4 or 11.7
                below. 

            

    

     

    
      	
              7.

            	
              BRAND
                NAME

            

    

     

    Supplier
      acknowledges that Johnson’s Ziploc brand (or another brand designated by
      Johnson) will be the primary brand name for the Product. Johnson shall also
      select, own and control any sub-brand for the Product. 

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
              8.

            	
              (INTENTIONALLY
                OMITTED)

            

    

     

    
      	
              9.

            	
              ROYALTY
                PAYMENTS AND REPORTS

            

    

     

    
      	 	
              9.1

            	
              Conversion
                to Johnson License Agreement. If
                this Agreement converts to a Johnson License Agreement pursuant to
                Section
                11.7
                below, the royalty fee payable on Johnson’s Bag Product Net Account
                Revenue shall be referred to herein as
                “Royalties.”

            

    

     

    
      	 	
              9.2

            	
              Payment
                Due Date.
                Any and all Royalties payable pursuant to Section
                11.7
                shall be paid to Supplier at the address set forth on the first page
                hereof, within sixty (60) days of the close of each calendar quarter
                within which the royalties accrued. All Royalties payable hereunder
                shall
                be paid in USD. The royalties which are to be paid for sales made
                in
                non-USD shall be calculated separately for each month of the calendar
                quarter by determining the aggregate Net Account Revenue of Products
                for
                that month in local currency, then converting same to USD using the
                average of the conversion rates for the first and last business day
                of
                that month as published in the Wall Street Journal (New York edition).
                The
                royalties for each month of the calendar quarter shall be calculated
                separately as described, and then added to arrive at the quarterly
                royalty
                payment.

            

    

     

    
      	 	
              9.3

            	
              Statements.
                Johnson shall prepare and issue a report for each calendar quarter,
                identifying this Agreement and showing (A) total number or amount
                of
                Products by item sold by Johnson and its Affiliate sublicensees,
                (B) Bag
                Product Net Account Revenue, and (C) the royalties accrued during
                the
                quarter and payable to Supplier.

            

    

     

    
      	 	
              9.4

            	
              Taxes
                and Other.
                Johnson shall be responsible for payment of any taxes on the sale
                of
                Products. If any taxes are required to be withheld on the royalties
                due
                under this Agreement, which taxes would be owed by Supplier, Johnson
                shall
                pay such taxes on behalf of Supplier, provide to Supplier a copy
                of the
                withholding tax certificate, and deduct any such payments from the
                amounts
                due to Supplier.

            

    

     

    
      	
              10.

            	
              SUPPLIER
                REPRESENTATIONS AND
                WARRANTIES

            

    

     

    
      	 	
              10.1

            	
              Product
                Representations and Warranties.
                The Supplier represents and warrants to Johnson with respect to each
                delivery of Product as follows:

            

    

     

    
      	 	
              (A)

            	
              Product
                has been manufactured in compliance with the Specifications, is new,
                and
                is free from defects in materials and workmanship and conforms in
                all
                respects to agreed samples. Product is adequately contained, packaged,
                marked, and labeled. Product is merchantable and is safe and appropriate
                for the purpose for which goods of that kind are normally used and
                shall
                be suitable for food contact applications as defined by the FDA and,
                for
                product destined for the Canadian market, the Canadian equivalent
                of the
                FDA Notwithstanding the foregoing, Supplier shall not be responsible
                for
                Product defects to the extent caused by Bag valves supplied by Johnson’s
                approved valve supplier, [*], or Bag zippers supplied by [*],
                provided that Supplier fully complies with all of the Quality Control
                procedures and standards contained in the Product Instruction Handbook
                with respect to the inspection and testing of such valves and zippers.
                For
                the avoidance of any doubt, Supplier shall be responsible for Product
                defects caused by Supplier’s breach of any such Quality Control
                requirements applicable to the valves and zippers.
                

            

    

    

      CONFIDENTIAL
        INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
        COMMISION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
        OMISSIONS.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (B)

            	
              Supplier
                has conveyed to Johnson good title to the Products, free from any
                lawful
                security interest, lien, or
                encumbrance.

            

    

     

    
      	 	
              (C)

            	
              Supplier
                and Supplier’s facilities comply with all applicable laws relating to the
                manufacture, storage and sale of the Product, including import and
                export
                compliance. Johnson may audit Supplier’s compliance with applicable laws,
                rules, regulations and the like, including a safety and environmental
                audit.

            

    

     

    
      	 	
              (D)

            	
              To
                Supplier’s best knowledge, neither Products nor Supplier’s methods and
                means of manufacturing Products infringe a valid patent, copyright,
                design
                right, or trade secret of a third
                party.

            

    

     

    
      	 	
              (E)

            	
              Waste
                material generated in connection with the production of the Products,
                as
                well as any other products manufactured by Supplier at its facility,
                has
                been or will be disposed of in strict compliance with applicable
                laws.
                Upon request, Supplier shall certify its compliance with such
                laws.

            

    

     

    
      	 	
              (F)

            	
              Supplier
                is authorized to enter into and perform this Agreement and will not
                breach
                any obligations owed to another person by performing this
                Agreement.

            

    

     

    
      	 	
              (G)

            	
              Product,
                Product constituents, and production methodologies comply with all
                applicable laws, regulations and government directives, including,
                but not
                limited to the Toxic Substances Control
                Act.

            

    

     

    
      	 	
              10.2.

            	
              Patent Representations
                and Warranties.
                Supplier represents and warrants to Johnson with respect to Supplier
                Patent Rights as follows:

            

    

     

    
      	 	
              (A)

            	
              Supplier
                is the owner or exclusive licensee, and otherwise in control of all
                of
                said Supplier Patent Rights, and that all of the associated patents
                and
                patent applications, owned, licensed, or controlled by Supplier within
                defined Consumer Fields of Use, are set forth in Schedule
                1.9.
                Furthermore, Supplier represents and warrants that said Schedule
                captures
                all of the patent rights owned, licensed or otherwise controlled
                by
                Supplier that fully cover the subject matter of Products as defined
                herein.

            

    

     

    
      	 	
              (B)

            	
              Supplier
                has authority to enter into this Agreement and to perform its obligations
                under this Agreement and that it has been duly authorized to execute
                and
                to deliver this Agreement.

            

    

     

    
      	 	
              (C)

            	
              As
                of the date of signature hereto, and with exception for any specific
                disclosures made to Johnson within the prior ninety days by Mr. John
                Schwan on behalf of Supplier, Supplier is without knowledge, whether
                actual or implied, of any pending or threatened infringement litigation
                with respect to Supplier Patent Rights, and furthermore that it has
                not
                received any actual notices of infringement with respect to any of
                its own
                manufactured products that may or could be covered by or related
                to
                Supplier Patent Rights. 

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (D)

            	
              As
                of the date of signature hereto, and with exception for any specific
                disclosures made to Johnson within the prior ninety days by Mr. John
                Schwan on behalf of Supplier, Supplier is without actual or implied
                knowledge of any patent, any document, or any other information,
                that
                would limit the validity of the Supplier Patent Rights under this
                Agreement. 

            

    

     

    
      	 	
              (E)

            	
              As
                of the date of signature hereto, and with exception for any specific
                disclosures made to Johnson within the prior ninety days by Mr. John
                Schwan on behalf of Supplier, Supplier is without knowledge that
                the
                practice of the Supplier Patent Rights is or may be limited by
                intellectual property rights of third parties. Moreover, Supplier
                shall
                have a continuing obligation to notify Johnson within thirty days
                of its
                receipt of any non-public information that impacts this warranty
                and
                representation. 

            

    

    
       

      
        	 	
                10.3.

              	
                Certification.
                  Upon Johnson’s request, Supplier shall provide Johnson with a warranty
                  certificate certifying compliance with any and all of the representations
                  and warranties contained in Sections 10.1
                  and 10.2.

              

      

       

    

    
      	 	
              10.4

            	
              Additional
                Agreements of Supplier.

            

    

     

    
      	 	
              (A)

            	
              If
                requested by Johnson, Supplier must participate in Johnson’s Systems
                Quality Assurance Program (“SQA Program”) through Johnson’s Systems
                Quality Assurance group. If the Supplier produces “Critical Level I”
                products, as determined by Johnson, or Products that are used in
                the
                manufacture of products regulated by Good Manufacturing Practices
                (“GMP”)
                regulations, as determined by Johnson’s Regulatory group, Supplier agrees
                to achieve a rating of 3.0 or higher in each of the “red” subsystems in
                the SQA Program, and a rating of 2.5 or higher in each of the “yellow”
                subsystems in the SQA Program. Supplier further agrees to continuously
                improve in all areas of the SQA Program, with a target of an overall
                score
                of 4.0 or higher.

            

    

     

    
      	 	
              (B)

            	
              If
                the Products are regulated or controlled by the United States Food
                and
                Drug Administration (“FDA”) or its Canadian equivalent, Supplier shall
                maintain itself in good standing with the FDA and manufacture the
                Products
                in compliance with all Good Manufacturing Practices (“GMPs”) issued by the
                FDA from time to time, and all raw materials used in such Products
                shall
                be suitable for food contact applications as defined by the FDA or
                its
                Canadian equivalent. Johnson or its agents shall have the right to
                audit
                Supplier’s GMP compliance at any
                time.

            

    

     

    
      	 	
              (C)

            	
              If
                the Products are registered with or regulated by the United States
                Environmental Protection Agency (“EPA”) or Health Canada, Supplier shall
                manufacture the Products in compliance with all applicable EPA or
                Health
                Canada rules and regulations, and shall promptly provide to Johnson
                copies
                of all reports, notices, filings and other correspondence with the
                EPA or
                Health Canada and similar state, provincial or local agencies related
                to
                the Products, including, without limitation, “6(a)2” forms. Johnson or its
                agents shall have the right to audit Supplier’s EPA or Health Canada
                compliance at any time.

            

    

     

    
      	 	
              (D)

            	
              If
                Supplier’s projected annual sales to Johnson is $1 million to $5 million
                in the United States, Supplier agrees to establish a Supplier Diversity
                procurement target and agrees to report, on a semi-annual basis,
                its
                expenditures for materials and/or services with certified minority
                and
                women-owned businesses (i.e., certified by an approved third party
                agency)
                attributable to Products made for Johnson in the United States. If
                Supplier’s projected annual sales to Johnson exceed $5 million in the
                United States, Supplier further agrees to submit a written supplier
                diversity procurement plan by March 31st
                of
                each year. Johnson does not accept
                self-certification.

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (E)

            	
              Supplier
                acknowledges that it has received, is aware of and has reviewed Johnson’s
                Manufacturing Code of Conduct (the “Code”), as amended from time to time,
                and agrees to comply with the Code. Further upon request, Supplier
                agrees
                to certify its compliance with the Code to Johnson. Johnson shall
                have the
                right to audit Supplier’s compliance with the Code at any time. The Code
                is attached hereto as Schedule
                10.4(E).

            

    

     

    
      	 	
              (F)

            	
              Supplier
                acknowledges that it has received, is aware of and has reviewed Johnson’s
                Business Conduct and Ethics Policy (the “Policy”), as amended from time to
                time, and agrees to comply with the Policy. The Policy is attached
                hereto
                as Schedule
                10.4(F).

            

    

     

    
      	 	
              (G)

            	
              Upon
                Johnson’s request, the parties will meet quarterly to review a “Supplier
                Scorecard” as developed by Johnson to track and require improvement, when
                necessary, the Supplier’s performance, including, but not limited to, key
                metrics such as price, guaranteed cost savings, quality, and service.
                Supplier will use reasonable commercial efforts to continually improve
                its
                performance on the metrics listed on the Supplier Scorecard. Supplier
                will
                track and report its performance related to these key
                metrics.

            

    

     

     

    
      	 	
              (H)

            	
              If
                Supplier is importing or transporting imported products to Johnson
                or
                Johnson’s designated third party purchaser into the U.S. or Puerto Rico,
                and Supplier is eligible to become certified under the Customs -
                Trade
                Partnership Against Terrorism (“C-TPAT”) program, Supplier will become
                C-TPAT certified and comply with the C-TPAT requirements. If Supplier
                is
                not eligible to become C-TPAT certified, Supplier will comply with
                Johnson's security measures, a copy of which is attached in Schedule
                10.4(H).
                Supplier will provide its certification number or evidence of its
                membership in C-TPAT, or proof of its compliance with Johnson’s security
                measures, whichever is applicable. Johnson may audit Supplier's compliance
                at any time upon reasonable notice. 

            

    

     

     

    
      	 	
              (I)

            	
              Union
                of Orthodox Jewish Congregations of America. At the request of Johnson,
                Supplier will support the obtaining of Orthodox Union (OU) certification
                for the production line that manufactures Products. Thereafter Supplier
                shall maintain Kosher compliance on all production lines that manufacture
                OU certified product for Johnson. The Orthodox Union’s (OU) Rabbinic field
                representatives shall have the right to perform Kosher inspections
                of
                these lines at any time. Johnson or its agents shall have the right
                to be
                present for such audits. 

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	
              11.

            	
              TERMINATION/CONVERSION
                OF AGREEMENT

            

    

     

    
      	 	
              11.1

            	
              Termination.
                Johnson may withdraw any Product(s) or all Products from this Agreement
                (the latter withdrawal of the entire Product portfolio being deemed
                to be
                tantamount to a termination of this Agreement) or terminate this
                Agreement
                in its entirety, at any time during the Initial Term, Automatic First
                Renewal Term or any other Renewal Term at its sole discretion by
                giving at
                least one hundred twenty (120) days written notice. In the event
                Johnson
                withdraws a Product during the Initial Term, the Automatic First
                Renewal
                Term or, if there is no Automatic First Renewal Term then the First
                Renewal Term, at its discretion pursuant to this Section
                11.1,
                then Johnson shall have no further right to sell or distribute the
                applicable withdrawn Product hereunder as of the Product withdrawal
                date
                and, further, Johnson shall not be entitled to exercise its conversion
                and
                option rights pursuant to Section
                11.7.
                In the event Johnson terminates this Agreement in its entirety prior
                to
                the end of the Initial Term, the Automatic First Renewal Term or,
                if there
                is no Automatic First Renewal Term, the First Renewal Term at its
                discretion pursuant to this Section
                11.1,
                or if the Initial Term shall expire without automatic renewal for
                an
                Automatic First Renewal Term or without a renewal at the election
                of
                Johnson for a First Renewal Term, then Johnson shall have no further
                right
                to sell or distribute the Products as of the date of termination
                and,
                further, Johnson shall not be entitled to exercise its conversion
                and
                option rights pursuant to Section
                11.7.
                In the event Johnson withdraws any Product or terminates this Agreement
                at
                its discretion pursuant to this Section
                11.1
                for effect (a) at the earlier of the last day of (i) the Automatic
                First
                Renewal Term (if applicable) or (ii) the First Renewal Term, or (b)
                if
                Johnson shall have renewed this Agreement for a Second Renewal Term,
                any
                time after the earlier of the dates specified in subpart (a), then
                Johnson
                shall have the right to convert this Agreement to a Johnson License
                Agreement pursuant to the conversion and option rights in Section
                11.7
                below. In the event the Automatic First Renewal Term or the First
                Renewal
                Term, if any, shall expire without renewal for a Second Renewal Term,
                then
                Johnson shall have the right to convert this Agreement to a Johnson
                License Agreement pursuant to the conversion and option rights in
                Section
                11.7
                below. Furthermore, in the event Johnson terminates this Agreement
                at any
                time pursuant to Section
                11.2,
                then Johnson shall have the right to convert this Agreement to a
                Johnson
                License Agreement pursuant to the conversion and option rights in
                Section
                11.7
                below. 

            

    

     

    
      	 	
              11.2

            	
              Termination
                for Breach.
                Johnson or Supplier may terminate this Agreement, subject to Johnson’s
                right to convert this Agreement to a Johnson License Agreement pursuant
                to
                the conversion and option rights in Section
                11.7,
                upon the other party’s breach of its obligations under this Agreement by
                giving at least sixty (60) days written notice, which describes the
                reason
                for the termination. This Agreement will terminate, subject to Johnson’s
                right to convert this Agreement to a Johnson License Agreement pursuant
                to
                the conversion and option rights in Section
                11.7,
                unless the party receiving the notice cures or remedies the situation
                supporting termination within the sixty (60) day notice period. Supplier
                shall not have the right to cure the breach if the breach relates
                to
                Supplier’s warranties and representations set forth in Section
                10.1
                hereof and such breach results in a Product recall or a government
                regulatory action or proceeding concerning the Product.
                

            

    

     

    
      	 	
              11.3

            	
              Bankruptcy.
                If Supplier makes any assignment of assets or business for the benefit
                of
                creditors, or if a trustee or receiver is appointed to administer
                or
                conduct Supplier’s affairs or business, or if it is adjudged in any legal
                action to be either a voluntary or involuntary bankrupt, the obligations
                of Johnson and the rights and privileges of Supplier under this Agreement
                shall be deemed to have become a Johnson License Agreement (as defined
                in
                Section
                11.7)
                immediately prior to such assignment, appointment of trustee or receiver,
                or bankruptcy without Johnson giving any notice or taking any legal
                action. 

            

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	 	
              11.4

            	
              Automatic
                Grant of License Rights.
                If
                any Johnson forecast issued pursuant to Section
                6.2
                hereof states a forecasted annual volume (as updated quarterly)
                [*]
                or
                Supplier’s capacity falls below that quantity of Bags for any reason, then
                Johnson shall automatically be granted a Johnson License Agreement.
                Such
                Johnson License Agreement shall supplement and be in addition to
                this
                Supply Agreement, shall be on the same terms as the Johnson License
                Agreement described in Section
                11.7
                except that the license shall be a sole non-exclusive royalty free
                license
                only during the term of this Agreement, and Johnson shall have the
                right
                to manufacture, market and sell Bags or any improved Bag(s) or any
                similar
                product to meet budgeted or actual volume requirements in excess
                of the
                lesser of the following volumes (i) [*]
                or
                (ii) Supplier’s actual Bag production capacity. Johnson’s use of a third
                party contract manufacturer shall be subject to Supplier’s approval, which
                approval shall not be unreasonably
                withheld.

            

    

     

    
      	 	
              11.5

            	
              Change
                in Control.
                If a controlling interest in Supplier is transferred to a third party,
                then Supplier must immediately notify Johnson of such transaction.
                In that
                event, Johnson shall have the right to convert this Agreement to
                a fully
                paid-up royalty free Johnson License Agreement pursuant to Section
                11.7
                below provided that (i) the third party is a competitor of Johnson
                in one
                or more product categories within one or more of Johnson’s ten largest
                markets, or (ii) Johnson reasonably believes the third party does
                not meet
                its requirements for a supplier of product.

            

    

     

    
      	 	
              11.6

            	
              Assignment.
                If
                this Agreement and the rights and obligations hereunder are assigned
                by
                Supplier to a third party pursuant to Section
                23.4
                below, then Supplier must immediately notify Johnson of such transaction.
                In that event Johnson shall have the right to convert this Agreement
                to a
                Johnson License Agreement pursuant to Section
                11.7
                below provided that (i) the third party is a competitor of Johnson
                in one
                or more product categories in one or more of Johnson’s ten largest
                markets, or (ii) Johnson reasonably believes the third party does
                not meet
                its requirements for a supplier of
                product.

            

    

     

    
      	 	
              11.7

            	
              Johnson’s
                Conversion and Option Rights. Notwithstanding anything
                else herein, (a) upon termination of this Agreement by Johnson (i)
                at the
                end of the Automatic First Renewal Term or the end of the First Renewal
                Term, if there is no Automatic Renewal Term, or at any time thereafter
                pursuant to Section
                11.1,
                or (ii) at any time during the Term hereof pursuant to Section
                11.2,
                (b) in the event the Automatic First Renewal Term or the First Renewal
                Term, if any, shall expire without renewal of this Agreement for
                a Second
                Renewal Term, or (c) upon the occurrence of an event described in
                Sections
                11.5 or 11.6
                hereof, then Johnson shall have the right to convert this Agreement
                to a
                Johnson License Agreement on written notice to Supplier. In addition,
                this
                Agreement shall automatically convert to a Johnson License Agreement
                upon
                the occurrence of an event described in Section 11.3.
                The Johnson License Agreement shall be on the same terms and conditions
                as
                set forth in this Agreement, except (A) the Johnson License Agreement
                shall include the grant to Johnson of the non-exclusive right and
                license
                to use any and all Licensed Intellectual Property to manufacture,
                or have
                manufactured the Product, any improved or modified Product, or any
                substantially similar product anywhere in the world, and to market,
                import, distribute and sell Product or any improved or modified Product
                anywhere in the Territory, (B) the royalty rate for the Johnson License
                Agreement shall be [*]
                of
                Net Account Revenue payable to Supplier provided that the royalty
                will
                cease upon the expiration of the last Supplier Patent Right, (C)
                the Term
                of the Johnson License Agreement shall be indefinite, and (D) the
                Johnson
                License Agreement shall include the right to sublicense third parties.
                Upon conversion to a Johnson License Agreement, Supplier will promptly
                disclose all Licensed Intellectual Property to Johnson. All grants
                pursuant to this Section
                11.7
                shall include the right on the part of Johnson to make or have made
                the
                Product by Johnson, a Johnson Affiliate or a third party contractor.
                

            

    

     

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	 	
              11.8

            	
              Effect
                of Termination.
                Upon termination, Supplier shall promptly stop all work and observe
                Johnson’s instructions regarding work in process.
                

            

    

     

    
      	
              12.

            	
              DEFECTIVE
                PRODUCT

            

    

     

    
      	 	
              12.1

            	
              Remedies
                for Defective Product.
                Supplier shall promptly replace or correct defects in any Product,
                which
                Johnson reasonably deems is not or may not be in compliance with
                the
                Specifications or poses a health and/or safety risk (in any such
                case, a
                “Defective Product”), without expense to Johnson. If Supplier does not
                promptly correct defects or replace Defective Products, Johnson may
                notify
                Supplier and make the corrections or replace the Product itself or
                from a
                third-party supplier and charge Supplier for all costs and expenses
                incurred by Johnson in doing so. 

            

    

     

    
      	 	
              12.2

            	
              Inspection.
                The inspection, test, acceptance, or use of Product does not affect
                any of
                Supplier's obligations to Johnson. Representations and warranties
                survive
                inspection, test, acceptance, and use of Product. Supplier's
                representations and warranties run to Johnson, its successors, and
                assigns.

            

    

     

    
      	
              13.

            	
              EQUIPMENT,
                molds and tooling

            

    

     

    
      	 	
              13.1

            	
              Equipment.

            

    

     

    
      	 	
              (A)

            	
              Supplier
                Equipment.
                From time to time, Johnson may request that Supplier purchase and
                place
                specific equipment at the Supplier’s facility for the sole purpose of
                producing the Products (the “Supplier Equipment”), and Supplier agrees to
                comply with such request(s). Supplier shall not use the Supplier
                Equipment
                for any purpose other than for production of the Products, unless
                Johnson
                has provided its prior written approval, and if such approval is
                given
                then Johnson will be credited for Supplier Equipment amortization
                at a
                rate to be agreed as part of the approval process. The Supplier Equipment
                is listed in Schedule
                13.1
                attached hereto, which will be reviewed and updated annually, if
                necessary, no later than February 15 of each year. Schedule
                13.1
                also describes, for each item of Supplier Equipment, the amortization
                schedule for purposes of determining Johnson’s Supplier Equipment purchase
                rights and obligations and Supplier’s sale obligations in the event of a
                withdrawal, termination or conversion of this Agreement, as further
                described in Section
                13.3
                below. 

            

    

    
    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (B)

            	
              Johnson
                Equipment.
                Johnson may directly or indirectly purchase certain production equipment
                for use by the Supplier at Supplier’s facility for the sole purpose of
                producing the Products (“Johnson Equipment”). Supplier shall not use the
                Johnson Equipment for any other purpose. The Johnson Equipment is
                listed
                on Schedule
                13.2
                attached hereto, which shall be reviewed and updated annually, if
                necessary, no later than February 15 of each year. Supplier shall
                mark the
                Johnson Equipment as being owned by Johnson in a highly visible location
                on or adjacent to the Johnson Equipment, in a manner acceptable to
                Johnson. Supplier shall keep the Johnson Equipment free of any liens,
                encumbrances or other rights of third
                parties.

            

    

     

    
      	 	
              (C)

            	
              Risk
                of Loss.
                Supplier shall bear the entire risk of loss, damage, theft, or destruction
                to the Supplier Equipment and Johnson Equipment (collectively the
                “Equipment”). In addition, Supplier shall carry and maintain, at all times
                and at its expense, physical damage insurance providing “all risks”
                coverage for the Equipment and public liability and property damage
                insurance in an amount levied upon the possession or use of the
                Equipment.

            

    

     

    
      	 	
              (D)

            	
              Taxes
                and Fees.
                Supplier shall pay all fees, taxes and governmental charges imposed
                or
                levied upon the possession or use of the
                Equipment.

            

    

     

    
      	 	
              (E)

            	
              Care
                of Equipment/Indemnification.
                Supplier shall, at its expense, keep the Equipment in good condition
                and
                working order and shall make all necessary adjustments, repairs,
                services
                and replacements in a manner consistent with prudent industry practice
                and
                subject to Johnson’s approval, from time to time. Supplier shall defend,
                hold harmless and indemnify Johnson from and against any damage (including
                incidental and consequential damages), expense (including reasonable
                attorney’s fees), loss, claim, demand, or liability resulting from or
                arising out of the use of the Johnson Equipment by Supplier, including
                but
                not limited to any personal injury, wrongful death or other claims.
                

            

    

     

    
      	 	
              (F)

            	
              Personal
                Property. Supplier
                shall ensure that the Equipment remains personal property even though
                it
                may be installed on real property. Supplier shall, at its expense,
                comply
                with all laws, rules, regulations, requirements, orders and guidelines
                applying to the Equipment and its use (including, but not limited
                to, all
                requirements for safe operation of the Equipment), maintenance, repair,
                condition, storage and operation. Supplier shall not use the Equipment
                for
                any function not intended by its manufacturer, or operate the Equipment
                with any materials that do not meet the specifications of its
                manufacturer. Supplier shall keep all Equipment free of liens, claims
                and
                encumbrances.

            

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    
      	 	
              13.2

            	
              Molds
                and Tooling.
                The following governs all molds and tooling, if any, used by the
                Supplier
                to make Products:

            

    

     

    
      	 	
              (A)

            	
              Supplier
                shall manufacture or have manufactured all molds and tooling required
                to
                manufacture the Products. The method by which the
                cost
                of the molds or tooling is funded is provided in Schedule
                13.1.

            

    

     

    
      	 	
              (B)

            	
              In
                the event new molds or tooling are required due to normal wear, or
                the
                molds or tooling become obsolete, Supplier shall replace such molds
                or
                tooling. The method by which the cost of the molds or tooling is
                funded is
                provided in Schedule
                13.1.

            

      	 	 	 

      	 	(C)	The provisions of Section
              13.1
              also apply to all molds and
              tooling.

    

     

    
      	 	
              13.3

            	
              Johnson’s
                Right to Purchase.
                Johnson shall have the right (and in some instances shall have the
                obligation) to purchase, and Supplier shall have the obligation to
                sell,
                all or any of the Supplier Equipment, molds, or tooling pursuant
                to the
                terms and conditions set forth in Schedule
                13.1
                attached hereto. Johnson’s purchase price for such Supplier Equipment,
                molds, or tooling is set forth in Schedule
                13.1.
                In
                that case, Supplier will promptly cooperate with Johnson to transfer
                and
                deliver such equipment to Johnson. 

            

    

     

    
      	
              14.

            	
              INVENTORY

            

    

     

    
      	 	
              14.1

            	
              Seasonal
                Carry-Over or Slow-Moving Inventory.
                Johnson shall reimburse Supplier for raw material or component inventory
                carrying costs for seasonal carry-over or slow-moving inventory.
                Seasonal
                carry-over or slow-moving inventory is defined as inventory purchased
                by
                Supplier under a Purchase Order for the exclusive use in the Products
                which is not anticipated to be needed in the next one hundred twenty
                (120)
                days of production and is not obsolete. Seasonal carry-over or slow-moving
                inventory does not include materials or components otherwise usable
                by
                Supplier or purchased without Johnson’s approval or under a Purchase
                Order. Carrying costs shall mean the cost of warehousing, using a
                third-party warehouse, and interest expense at Supplier’s Borrowing Rates.
                Payment of such costs will commence thirty (30) days after the number
                of
                turns specified in the Price Template for the affected Product, or
                as
                otherwise agreed, and will discontinue when production begins again
                for
                the Product.  

            

    

     

    
      	 	
              14.2

            	
              Closing
                Inventories.
                Supplier may rely upon Purchase Orders to purchase the materials
                and
                components necessary to assure the supply of Products. If Johnson
                terminates the Agreement,
                Johnson shall purchase Supplier's inventory of materials and components
                at
                Supplier’s cost, but only to the extent the inventory is dedicated solely
                to the manufacture of Product and was purchased to supply Product
                under a
                Purchase Order. Johnson shall purchase finished Product that was
                produced
                in good faith against a Purchase Order at the price in effect as
                of the
                termination date. If Johnson decides not to purchase finished Product
                on
                the termination date, Johnson will purchase the finished Product
                within
                six (6) months after the termination date if Johnson pays Supplier
                a
                reasonable, mutually agreed upon monthly carrying cost. Upon termination,
                Supplier shall cancel (if possible) open purchase orders for materials
                and
                components. Supplier shall assign non-cancelable orders to
                Johnson.

               

              All
                requests that Johnson purchase finished
                Products, materials or components pursuant to this Section
                14.2
                must be made by Supplier in writing within ninety (90) days after
                the
                later to occur of (a) notification by Johnson that such finished
                Products, materials or components are obsolete, or (b) (i) in
                the case of obsolete finished Products, the last manufacture by Supplier
                of such finished Products or (ii) in the case of obsolete materials
                or components, the last use of such materials or components by Supplier
                in
                the manufacture of Products.

            

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    

    
      	 	
              14.3

            	
              Obsolescence.
                Johnson shall purchase from Supplier at Supplier’s cost any materials or
                components purchased in good faith against a Purchase Order that
                are made
                obsolete by a Johnson-approved change in the Specifications if Supplier
                cannot use the materials or components to manufacture other products
                or,
                if compatible with the other products, the materials or components
                are in
                excess of Supplier's 120-day requirement when aggregated with other
                stocks
                on hand or on order. Johnson shall purchase finished Product that
                becomes
                obsolete as a result of reformulation, relabeling, or repackaging
                if the
                Product was originally produced in good faith against a Purchase
                Order.
                Johnson shall purchase Product at the price in effect on the date
                of the
                Purchase Order against which such Product was
                manufactured.

            

    

     

    
      	 	
              14.4

            	
              Purchase
                Condition.
                Johnson’s obligation to purchase materials, components, or finished
                Product under this Section
                14
                does not apply to materials, components, or Product not in compliance
                with
                applicable Specifications.

            

    

     

    
      	
              15.

            	
              INDEMNIFICATION
                

            

    

     

    
      	 	
              15.1

            	
              Supplier Indemnification.

            

    

     

    
      	 	
              (A)

            	
              Supplier
                shall defend, hold harmless, and indemnify Johnson from and against
                any
                damage (including incidental and consequential damages), expense
                (including reasonable attorney’s fees), loss, lawsuit, claim, demand, or
                liability to the extent such results from or arises out of (i) any
                omission, misrepresentation, negligence, or breach of this Agreement
                by
                Supplier; (ii) any allegation against Supplier that Supplier’s
                manufacturing methods or equipment infringe upon, or constitute the
                misappropriation of, the patent or other intellectual property rights
                of
                any third party; (iii) any allegation against Johnson that Johnson’s use
                or sale of any Product, because manufactured using Supplier Patent
                Rights
                or Licensed Intellectual Property, infringes upon, or constitutes
                the
                misappropriation of, the intellectual property rights of any third
                party;
                (iv) any allegation that the materials or components used without
                the
                authorization of Johnson to manufacture and deliver Products infringe
                upon, or constitute the misappropriation of, the patent or other
                intellectual property rights of any third party; or (v) any allegation
                that the materials or components used without the authorization of
                Johnson
                to manufacture and deliver Products caused any injuries or damages.
                

            

    

     

    
      	 	
              (B)

            	
              Supplier
                shall defend, indemnify and hold Johnson harmless from and against
                any
                damage (including incidental and consequential damages), expense
                (including reasonable attorney’s fees), loss, lawsuit, claim, demand, or
                liability arising out of bodily injury (including death), property
                damage,
                and personal injury, to the extent such results from or arises out
                of
                Supplier’s use or possession of the Equipment.

            

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (C)

            	
              Supplier
                also hereby agrees to defend, hold harmless, and indemnify Johnson
                against
                any and all third party liability, claims, actions, suits, and expenses,
                and any other damages incurred by a third party or Johnson arising
                out of
                Johnson’s use of Supplier’s Patent
                Rights.

            

    

     

    
      	 	
              15.2

            	
              Johnson
                Indemnification.
                Johnson shall defend, indemnify and hold Supplier harmless from and
                against any damage (including incidental and consequential damages),
                expense (including reasonable attorney's fees), loss, lawsuit, claim,
                demand, or liability arising out of bodily injury (including death),
                property damage, or personal injury to the extent such arises out
                of (i)
                Johnson’s breach of this Agreement or (ii) Johnson’s production and sale
                of Products pursuant to a Johnson License
                Agreement.

            

    

     

    
      	 	
              15.3

            	
              Notice.
                The parties shall promptly notify each other in writing of the institution
                of any suit, claim, demand, or proceeding with respect to which a
                party
                may be entitled to indemnification.

            

    

     

    
      	 	
              15.4

            	
              Insurance.
                Supplier shall carry insurance during the term of this Agreement
                and for
                at least two years thereafter as
                follows:

            

    

     

    
      	 	
              (A)

            	
              Workers
                Compensation and Employers Liability as required by law,
                and

            

    

     

    
      	 	
              (B)

            	
              Comprehensive
                General Liability Insurance, which includes, without limitation,
                bodily
                injury liability, personal injury liability, property damage liability,
                products liability, and completed operations liability
                coverage.

            

    

     

    
      	 	
              15.5

            	
              Insurance
                Amounts.
                Supplier’s insurance must have total limits of at least US$10 million for
                each occurrence, combined single limit for bodily injury and property
                damage, including personal injury liability, products liability,
                contractual liability, and completed operations liability. Supplier
                shall
                name Johnson as an “additional named insured” on the insurance
                policies.

            

    

     

    
      	 	
              15.6

            	
              Certificate
                of Insurance.
                Within thirty (30) days after execution of this Agreement, Supplier
                shall
                provide to Johnson a Certificate of Insurance showing Supplier, the
                issuing insurance company, the type of insurance, the policy number,
                the
                effective date, the expiration date, and the limits of liability.
                The
                insurance must provide for at least thirty (30) days written notice
                to the
                parties regarding cancellation or material change in the
                insurance.

            

    

     

    
      	
              16.

            	
              INSPECTIONS
                AND RECORDS

            

    

     

    
      	 	
              16.1

            	
              Right
                to Inspect.
                Johnson may, during regular business hours access any of Supplier’s
                premises to examine (i) Supplier’s records relating to its performance
                under this Agreement, and (ii) materials, components, manufacturing
                facilities, procedures, and Product in any state of production or
                delivery. Johnson’s inspection of Product (or its election not to inspect)
                does not operate as a waiver of Johnson’s right to reject and return
                Product under Section
                12.
                

            

    

     

    
      	 	
              16.2

            	
              Retention
                of Records.
                Supplier shall maintain books and records relating to this Agreement
                for
                at least three (3) years.

            

    

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    
      	 	
              16.3

            	
              Retain
                Samples.
                Supplier shall maintain retain samples and manufacturing records
                related
                to any Product for at least three (3) years after such Product has
                been
                de-listed by Johnson.

            

    

     

    
      	 	
              16.4

            	
              Financial
                Statements.
                Supplier shall give Johnson a copy of its (i) annual report if it
                is a
                public company or (ii) audited financial statements if it is a
                privately-owned company.

            

    

     

    
      	 	
              16.5

            	
              Audits.
                Supplier shall carry out regular (at least once every six (6) months)
                and
                diligent audits of its manufacturing and supply chain processes and
                procedures and record keeping to ensure it is complying with the
                terms of
                this Agreement. Johnson shall have the right, but not the obligation,
                to
                require Supplier to carry out further audits in addition to the regular
                audits referred to above.

            

    

     

    
      	
              17.

            	
              CONFIDENTIALITY

            

    

     

    
      	 	
              17.1

            	
              Definition.
                "Confidential Information" means any information disclosed by Johnson
                relating to its products or business. Confidential Information may
                be
                disclosed in oral, written, visual, or physical form by Johnson employees
                or by other persons disclosing under Johnson authorization. Information
                will not be considered Confidential Information if it can be shown
                to have
                been:

            

    

     

    
      	 	
              (A)

            	
              Rightfully
                in Supplier’s possession prior to the date of Johnson's disclosure to
                Supplier,

            

    

     

    
      	 	
              (B)

            	
              Available
                to the public prior to the date of Johnson's disclosure to Supplier
                or to
                have become available to the public after Johnson's disclosure without
                any
                unauthorized act or omission by
                Supplier,

            

    

     

    
      	 	
              (C)

            	
              Disclosed
                to Supplier without restriction by a third party who had a right
                to
                disclose and was not under an obligation of confidence to Johnson,
                or

            

    

     

    
      	 	
              (D)

            	
              Independently
                developed by Supplier by a person having no access to the Confidential
                Information.

            

    

     

    Confidential
      Information will not be deemed to be generally available to the public or in
      Supplier’s possession merely because it may be embraced by a more general
      disclosure or merely because it may be derived from combinations of disclosures
      generally available to the public or in Supplier’s possession.

    

    
      	 	
              17.2

            	
              Confidentiality
                Obligation.
                Supplier shall not disclose any Confidential Information to any third
                party or use or reproduce any Confidential Information for any purpose
                other than to carry out its obligations under the Agreement. Supplier
                will
                disclose Confidential Information only to its employees who have
                a need to
                know. However, Supplier may disclose Confidential Information in
                compliance with applicable law or an order of a court of competent
                jurisdiction if Supplier gives Johnson prompt, advance notice of
                its need
                to disclose and cooperates with Johnson in an effort to narrow or
                avoid
                such disclosure, obtain any available protective order, or the like.
                Supplier agrees not to use any reference to Johnson or its products
                or
                trademarks, including, but not limited to, its logos, in Supplier’s
                advertising, web page, or other materials given or exposed to third
                parties without Johnson's express prior written permission granted
                by a
                Johnson officer. Notwithstanding anything else herein, Johnson
                acknowledges and agrees that Supplier must comply with certain SEC
                disclosure requirements, and may include reference to Johnson and
                this
                Agreement in documents filed with the SEC and related disclosure
                materials. Supplier shall redact from such disclosures any confidential
                business information to be extent permitted by the SEC. Supplier
                shall
                provide Johnson with an advance copy of any such SEC filings that
                include
                a reference to Johnson or this Agreement.

            

    

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    
      	 	
              17.3

            	
              Return
                of Confidential Information.
                Johnson may request the return of the Confidential Information at
                any
                time. If Johnson makes that request, Supplier will promptly comply,
                returning to Johnson any and all written or physical embodiments
                of the
                Confidential Information that are then in Supplier’s possession or
                control, including all physical or electronic
                copies.

            

    

     

    
      	 	
              17.4

            	
              Time
                Limitation.
                The confidentiality obligations in this Section
                17 remain
                in effect for a period of three (3) years following termination of
                this
                Agreement, except that information identified by Johnson as strictly
                confidential will be maintained in confidence as long as it is
                confidential as defined under Section
                17.1.

            

    

     

    
      	 	
              17.5

            	
              Additional
                Obligation.
                The obligations in this Section
                17
                do
                not abrogate, and are in addition to, any prior confidentiality agreements
                entered into between Supplier and
                Johnson.

            

    

     

    
      	
              18.

            	
              FORCE
                MAJEURE

            

    

     

    
      	 	
              18.1

            	
              Force
                Majeure.

            

    

     

    
      	 	
              (A)

            	
              Johnson
                Excuse.
                Johnson may delay delivery of Products occasioned by causes beyond
                its
                control. Supplier shall hold delayed Products at Johnson’s direction and
                shall deliver the Products when the cause for the delay ends. Johnson
                is
                responsible only for Supplier's direct additional costs in holding
                the
                Products or delaying performance of this Agreement at Johnson's
                request.

            

    

     

    
      	 	
              (B)

            	
              Supplier
                Excuse.
                Supplier will be excused if delivery is delayed by the occurrence
                of
                unforeseen or unforeseeable events or by causes beyond its control,
                provided Supplier promptly notifies Johnson of the events and gives
                Johnson a revised delivery schedule. If a delay exceeds thirty (30)
                days
                from the original delivery date, Johnson may cancel the affected
                Purchase
                Order and convert this Agreement to the Johnson License Agreement
                pursuant
                to Section
                11.4
                above in order to manufacture or have manufactured that quantity
                of
                Product contained in Johnson’s cancelled Purchase Orders. Johnson shall be
                entitled to pre-qualify its own production line or that of a third
                party
                in order to prepare for such an event. If Supplier's production is
                only
                partially restricted or delayed, Supplier shall use its best efforts
                to
                accommodate Johnson's requirements and shall give unfilled Johnson
                Purchase Orders preference and priority over those of other customers
                that
                were placed after Johnson's Purchase
                Orders.

            

    

     

    
      	
              19.

            	
              DISPUTE
                RESOLUTION

            

    

     

    
      	 	
              19.1

            	
              Dispute.
                Any dispute arising out of or relating to this Agreement, except
                for
                disputes involving or arising out of third-party claims described
                in
                Section
                15,
                (“Dispute”) shall be resolved in accordance with the procedures specified
                in this Section
                19,
                which shall be the sole and exclusive procedures for the resolution
                of any
                such disputes.

            

    

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    
      	 	
              19.2

            	
              Non-binding
                Negotiation.
                The parties shall attempt in good faith to resolve any Dispute promptly
                by
                negotiation between executives who have authority to settle the
                controversy and who are at a higher level of management than the
                persons
                with direct responsibility for administration of this Agreement.
                Any party
                may give the other party written notice of any Dispute not resolved
                in the
                normal course of business. Within twenty (20) business days after
                delivery
                of the notice, the receiving party shall submit to the other a written
                response. The notice and the response shall include (a) a statement
                of
                such party’s position and a summary of arguments supporting that position,
                and (b) the name and title of the executive who will represent that
                party
                and of any other person who will accompany the executive. Within
                ten (10)
                business days after delivery of the responding party’s response, the
                executives of both parties shall meet at a mutually acceptable time
                and
                place, and thereafter as often as they reasonably deem necessary,
                to
                attempt to resolve the Dispute. All reasonable requests for information
                made by one party to the other will be honored. All negotiations
                pursuant
                to this clause are confidential and shall be treated as compromise
                and
                settlement negotiations for purposes of applicable rules of
                evidence.

            

    

     

    
      	 	
              19.3

            	
              Non-binding
                Mediation.
                If a Dispute has not been resolved by negotiation within thirty (30)
                days
                of the disputing party’s notice, or if the parties fail to meet within
                twenty (20) days, one or both parties may request in writing to settle
                the
                dispute by mediation under the then current CPR Model Mediation Procedure
                for Business Disputes. Unless otherwise agreed, the parties will
                select a
                mediator from the CPR Panel of Neutrals and shall notify CPR to initiate
                the selection process. Unless otherwise agreed, mediation shall take
                place
                in Milwaukee, Wisconsin.

            

      	 	 	 

      	 	19.4	Arbitration.

    

     

    
      	 	
              (A)

            	
              If
                a Dispute is not resolved by a non-binding procedure as provided
                herein
                within sixty (60) days of the delivery of the original notice, one
                or both
                of the parties may request in writing that it be settled by arbitration
                in
                accordance with the then current CPR Non-Administered Arbitration
                Rules by
                a sole arbitrator mutually acceptable to the parties provided, however,
                that if either party will not participate in a non-binding procedure,
                the
                other may initiate arbitration before expiration of the above period.
                The
                arbitration shall be governed by the United States Arbitration Act,
                9
                U.S.C. §1-26, and any court having jurisdiction thereof may enter judgment
                upon the award rendered by the arbitrator. The place of arbitration
                shall
                be Milwaukee, Wisconsin. The arbitrator is empowered to award damages
                as
                provided in this Agreement.

            

    

     

    
      	 	
              (B)

            	
              The
                parties recognize that a party may need a preliminary remedy or other
                assistance of a court in aid of arbitration hereunder. The parties
                hereby
                consent to the jurisdiction of the courts in Wisconsin with respect
                to any
                application for preliminary injunctive relief or other assistance
                in
                connection with any arbitration hereunder and for entry of judgment
                with
                respect to the award of the
                arbitrator.

            

    

     

    
      	 	
              (C)

            	
              The
                statute of limitations of Wisconsin applicable to the commencement
                of a
                lawsuit shall apply to the commencement of an arbitration hereunder,
                except that no defenses shall be available based upon the passage
                of time
                during any negotiation called for by the preceding paragraphs of
                this
                Section
                19.

            

    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (D)

            	
              Each
                party shall be responsible for its own arbitration costs, including
                attorney fees.

            

    

     

    
      	 	
              19.5

            	
              Performance
                Pending Dispute.
                During the pendency of any Dispute under this Section 19,
                the parties shall continue to perform all of their respective obligations
                under this Agreement unless one party has terminated this Agreement
                under
                Section
                11.
                The obligations under this Section
                19 may
                survive termination at the sole discretion of the party terminating
                the
                Agreement under Section
                11.

            

    

     

    
      	
              20.

            	
              INDEPENDENT
                CONTRACTOR

            

    

     

    
      	 	
              20.1

            	
              Independent
                Contractor.
                The parties are independent contractors. This Agreement does not
                create a
                partnership, joint venture, employer-employee, principle-agent, or
                any
                similar relationship between the parties. Neither party has the right
                or
                authority to assume or create obligations or responsibilities, express
                or
                implied, on behalf of the other and neither may bind the other in
                any
                manner or thing whatsoever.

            

    

     

    
      	
              21.

            	
              INTELLECTUAL
                PROPERTY

            

    

     

    
      
        	 	
                21.1

              	
                Definitions.

              

      

       

    

    
      	 	
              (A)

            	
              "Intellectual
                Property (IP)" shall mean any invention (whether patentable or not
                and
                including, but not limited to, apparatuses, procedures, and designs),
                together with any data, writings subject to copyright, any patent,
                patent
                application, trademark, trade name, trade secret, service mark, drawing,
                formula, method of treatment, processing technique, or other intellectual
                property, and any secret know-how.

            

    

     

    
      	 	
              (B)

            	
              “Project
                Intellectual Property” shall mean Intellectual Property relating to the
                Product, which includes any Improvements as defined herein below,
                whether
                invented solely by Supplier (also sometimes referred to in this
                Section
                21
                as
                “CTI”), solely by Johnson, or jointly by Supplier and Johnson under this
                Agreement, but shall not include any of Johnson’s or Supplier’s
                pre-Agreement Intellectual Property, the latter constituting Background
                Intellectual Property, as defined herein below (except for that portion
                of
                Supplier’s Background Intellectual Property which comprises Supplier
                Patent Rights or Johnson's Patent Rights, each as defined above,
                and as
                specifically identified in current Schedule
                1.9).

            

    

     

    
      	 	
              (C)

            	
              “Improvements”
                shall mean any and all contributions to Project Intellectual Property
                under this Agreement, [*],
                including but not limited to added features, enhancements or modifications
                of the Product, including the use of, or means or methods of
                manufacturing, the Product.

            

    

     

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (D)

            	
              “Background
                Intellectual Property” shall mean all Intellectual Property owned
                respectively by Supplier or Johnson prior to this Agreement, but
                not
                including Intellectual Property created under said separate Term
                Sheet.
                

            

    

     

    
      	 	
              (E)

            	
              “Licensed
                Intellectual Property” shall mean the subset of Supplier's Background
                Intellectual Property (including all of Supplier’s Patent Rights
                identified in Schedule
                1.9)
                which is necessary for Johnson's manufacture and sale of the Product,
                any
                improved or modified Product or any substantially similar product
                in the
                event that Johnson converts this Agreement to a Johnson License Agreement
                pursuant to Sections
                11.4 or 11.7
                hereof.

            

      	 	 	 

      	 	(F)	[*]

    

    
       

      
        
          	 	
                  21.2

                	
                  Rights
                    to Intellectual
                    Property.

                

        

         

      

      
        	 	
                (A)

              	
                No
                  disclosure of Confidential Information will be deemed by implication
                  or
                  otherwise to vest in Supplier any ownership rights in any of Johnson's
                  Intellectual Property, Project Intellectual Property, or Background
                  Intellectual Property. In addition, no disclosure of Confidential
                  Information, or any grant of rights to Johnson by Supplier hereunder
                  will
                  be deemed by implication or otherwise to vest in Johnson any ownership
                  rights in any of Supplier’s Background Intellectual Property.
                  Notwithstanding any of the foregoing, Supplier is hereby granted
                  a limited
                  license to use Johnson's Project Intellectual Property to the limited
                  extent required to perform its obligations under this Agreement.
                  

              

      

       

    

    
      	 	
              (B)

            	
              Except
                as may be otherwise provided under this Agreement, each party shall
                continue to solely own its respective Background Intellectual Property,
                and nothing in this Agreement, apart from any actual grant a license,
                shall be construed as a grant by one party of a license to the other
                party
                of any Background Intellectual Property owned by the one party as
                of the
                date of this Agreement.

            

    

     

    
      	 	
              (C)

            	
              Supplier
                shall be entitled to a royalty-free, fully paid-up, non-transferable,
                non-sublicensable, non-exclusive license back from Johnson under
                all or
                any part of Project Intellectual Property to allow Supplier to use
                the
                Project Intellectual Property for a term running to the last to expire
                patent included within such Project Intellectual Property in the
                following
                Supplier Field of Use: (i) Supplier’s commercialized zippered vacuum bags
                with a molded external valve sold either alone or with a [*] or [*]
                vacuum
                pump through department specialty stores (e.g. Kohls Department stores
                and
                Bed, Bath and Beyond), sporting goods stores (e.g. Gander Mountain
                and
                Dick’s Sporting Goods) and the sporting goods/outdoor section of Mass
                Merchandisers (e.g. Wal-Mart sporting goods department) or direct
                sales
                through internet channels, and (ii) airtight vacuum bags sold for
                commercial uses but excluding sales to the Consumer Field of Use.
                

            

    

     

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (D)

            	
              The
                spirit of this Agreement shall be one of open collaboration. Upon
                completion of any development work hereunder, both Supplier and Johnson
                shall provide the other with details of fruits of all results, including
                documentation (electronic and hard copies) and any tangible materials
                associated therewith so that compliance with terms of this Agreement
                may
                be fully met. Each party shall promptly disclose, in writing to the
                other,
                all Project Intellectual Property made, developed, or conceived which
                arises out of work conducted pursuant to this Agreement, said separate
                Term Sheet, or out of any Confidential Information provided to one
                party
                by the other. 

            

    

     

    
      	 	
              (E)

            	
              Supplier
                shall continue to be responsible for its own Background Intellectual
                Property, and shall pay all maintenance fees due and payable on said
                subset of Supplier's Background Intellectual Property under which
                Johnson
                is licensed hereunder. Supplier agrees to cooperate with Johnson
                in the
                perfection of Johnson’s rights to Project Intellectual Property, including
                any required assistance in the preparation and execution of all documents
                (including patent applications, assignments, and updates or additions
                to
                Schedule
                1.9,
                of any and all patent rights), in a timely
                manner.

            

    

     

    
      	 	
              (F)

            	
              Johnson
                will have the sole right to determine when and if it is appropriate
                to
                prosecute patent infringement by others within Johnson’s Consumer Fields
                of Use concerning Project Intellectual Property. In the event of
                any such
                prosecution of patent infringement, Johnson shall have the absolute
                right
                to control all aspects of such prosecution and Supplier hereby agrees
                to
                become an indispensable party to any lawsuit brought by Johnson.
                Johnson
                will pay the costs of such prosecution. However, with respect to
                any
                patent infringement that occurs within CTI’s Fields of Use, Supplier shall
                be free to pursue any patent infringement actions against third parties.
                

            

    

     

    
      	 	
              (G)

            	
              The
                parties' obligations and rights under said Term Sheet will survive
                any
                early termination of this Agreement. Moreover, in the event of discrepancy
                between said Term Sheet and this Agreement, said Term Sheet shall
                be
                controlling and shall govern.

            

    

     

    
      	 	
              (H)

            	
              In
                the event of termination and conversion of this Agreement to a Johnson
                License Agreement pursuant to Section
                11.7 hereof,
                then Johnson shall have a non-exclusive license to Supplier’s Background
                Intellectual Property to manufacture, have manufactured, distribute
                and
                sell the Product, any improved or modified product, and any substantially
                similar product. 

            

    

     

    
      
        	 	
                21.3

              	
                Assistance
                  by CTI.
                  CTI shall provide all reasonable assistance to Johnson to effectuate
                  the
                  requirements of this Section
                  21,
                  including, but not limited to, providing all necessary information
                  and
                  executing all necessary documents requested by
                  Johnson.

              

      

    

     

    
      	
              22.

            	
              REGULATORY
                COMPLIANCE

            

    

     

    As
      and
      when requested by Johnson in writing, Supplier shall promptly provide Johnson
      with all information necessary for Johnson to comply with all legal and
      regulatory requirements relating to the Products or any products in which the
      Products are to be incorporated, including, without limitation, the
      registration, packaging, labeling and provision of safety information (e.g.,
      material safety data sheet) in all countries where products incorporating the
      Products are sold from time to time. Johnson may disclose such information
      as
      required by applicable law.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    
      	
              23.

            	
              MISCELLANEOUS

            

    

     

    
      	 	
              23.1

            	
              Governing
                Law.
                This Agreement and the relationship of the parties hereunder is governed
                by and interpreted in accordance with the internal laws of the State
                of
                Wisconsin without regard to its principles of conflict of
                laws.

            

    

     

    
      	 	
              23.2

            	
              Survivability.
                The claims of either party for indemnification or breach of warranty
                under
                this Agreement, as well as Sections
                10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20 and 21
                shall survive termination of this
                Agreement.

            

    

     

    
      	 	
              23.3

            	
              Modification.
                This Agreement is not modified or supplemented by any agreement or
                representation that is not contained in this document. Modifications
                or
                supplements to the Agreement must be agreed to in writing and signed
                by
                the parties.

            

    

     

    
      	 	
              23.4

            	
              Assignment.
                The rights and duties under this Agreement are not assignable or
                delegable
                by either party without the other party's prior written consent,
                except
                that Johnson may assign or delegate this Agreement, or any portion
                thereof, to a Johnson Affiliate without Supplier’s consent and Supplier
                may assign this Agreement to a third party purchaser of all or
                substantially all of its business (including all assets related to
                the
                performance of this Agreement).

            

    

     

    
      	 	
              23.5

            	
              Time
                of the Essence.
                Time and punctual performance are of the
                essence.

            

    

     

    
      	 	
              23.6

            	
              Waiver.
                Waiver by either party of nonperformance or any breach of this Agreement
                does not constitute a waiver of any subsequent nonperformance or
                other
                breach of the same or any other
                provision.

            

    

     

    
      	 	
              23.7

            	
              Notices.
                Notices must be in writing and must be sent to the recipient at the
                address set forth at the beginning of this Agreement. Either party
                may
                change the address to which notice must be given by written notice
                to the
                other party. Notices are effective upon receipt or 10 days after
                sending,
                whichever comes first, if the notice is sent by an overnight delivery
                service or if mailed postage prepaid, certified or registered mail,
                return
                receipt requested.

            

    

     

    
      	 	
              23.8

            	
              Severability.
                If any provision of this Agreement is held to be invalid, the validity
                of
                the remainder of the Agreement will not be affected, and the rights
                and
                obligations of the parties will be construed and enforced as if the
                Agreement did not contain the invalid provision. The provisions of
                this
                Agreement are severable.

            

    

     

    
      	 	
              23.9

            	
              Entire
                Agreement.
                This Agreement and the documents referred to herein constitute the
                entire
                agreement between the parties relating to the subject matter of this
                Agreement. It supersedes any other agreement between the parties
                relating
                to this subject matter. It does not in any way alter, affect, or
                set forth
                the terms of a contractual relationship between the parties relating
                to a
                subject matter other than that set forth in this
                Agreement.

            

    

     

    
      	 	
              23.10

            	
              UN
                Convention.
                The United Nations Convention on Contracts for the International
                Sale of
                Goods shall not apply to this
                Agreement.

            

    

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    
      	 	
              23.11

            	
              No
                Rule of Strict Construction.
                The parties chose the language used in this Agreement to express
                their
                mutual intent. No rule of strict construction is to be applied against
                either party. 

            

    

     

    
      	 	
              23.12

            	
              Section
                Headings.
                The section headings in this Agreement are inserted for convenience
                only
                and are in no way to be construed as part of this Agreement or as
                a
                limitation or enlargement of the scope or meaning of the particular
                section to which it refers and shall not affect the interpretation
                of any
                provisions of this Agreement. 

            

    

     

    
      	 	
              23.13

            	
              Schedules
                and Exhibits.
                All schedules and exhibits referred to herein are intended to be
                and
                hereby are specifically made a part of this
                Agreement.

            

    

     

    
      	Signed:	 	 	 
	 	 	 	 
	CTI Industries
              Corporation	 	S. C. Johnson & Son,
              Inc.
	 	 	 	 	 
	By:	
              /s/
                John Schwan

            	 	By:	
              /s/
                Victor J.
                Puente              
                

            
	Name:	
              John
                Schwan

            	 	Name:	
              Victor
                J. Puente       

            
	Date:	
              February
                1, 2008        
                

            	 	
              Date:
                

            	
              February
                1, 2008       
                

            

    

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      1.9

     

    
      	Assignee	Patent Number and
              Title
	 	 
	CTI Industries Corporation	US Patent Number 6,033,113
              for
              "Seal for Zipper-Type Plastic Bags and the Like"
	 	 
	CTI Industries Corporation	US Patent Number 6,984,278
              for
              "Method for Texturing a Film"
	 	 
	CTI Industries Corporation	US Patent Number 7,305,742 for "Seal
              for
              Zippered Bag"

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

     

    
      	 	
              SCHEDULE
                2.1

            	 
	 	 	 
	 	
              Product
                List

            	 

    

     

    
      	Item
              Code	Description	
              Initial
                Price

            
	
              
                200263

                
                  200264

                  
                    200261

                  

                

              

            	
              Quart
                vacuum bag

              
                
                  Gallon
                    vacuum bag

                  
                    [*] vacuum
                      pump

                  

                

              

            	
              
                [*]

                
                  [*]

                  
                    [*]

                  

                

              

            

    

     

    
      	
              Product
                Prices

            	 
	
              The
                Prices for the Products are subject only to the Price Adjustment
                Mechanism
                in this Schedule
                2.1
                and Sections
                4.2 and 4.4
                of
                the Agreement. All prices are in USD.

            
	
              The
                Price is based on a print and extrusion run equivalent to [*]
                quart bags or [*]
                gallon bags.

            
	
            

    

     

    
      	
              Bag
                - Price Defined

            	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
              Item
                Code

            	
              200263

            	
              200264

            	 	 	 
	 	
              Bag
                Description

            	
              quart
                vacuum

            	
              gallon
                vacuum

            	 	 	 
	 	 	
              $/bag

            	
              $/bag

            	 	 	 
	 	 	 	 	 	 	 
	 	 	
              [*]

            	
              [*]

            	
              (1)

            	
              Bag

            	 
	 	 	 	 	 	 	 
	 	 	
              [*]

            	
              [*]

            	
              (2)

            	
              Depreciation

            
	 	 	 	 	 	 	 
	 	 	
              [*]

            	
              [*]

            	
              (3)

            	
              Zipper

            	 
	 	 	 	 	 	 	 
	 	 	 	 	
              (4)

            	
              Valve
                cost based

            
	 	 	 	 	 	
              on
                number of bags

            
	 	 	 	 	 	
              purchased

            	 
	 	 	
              [*]

            	
              [*]

            	 	
              0
                to [*]

            
	 	 	
              [*]

            	
              [*]

            	 	
              [*]
                to
                [*]

            
	 	 	
              [*]

            	
              [*]

            	 	
              [*]
                and
                over

            
	 	 	 	 	 	 
	 	 	
              (5)

            	
              Total
                bag price based

            
	 	 	
               

            	
              on
                number of bags

            
	 	 	 	
              purchased

            	 
	 	
              [*]

            	
              [*]

            	 	
              0
                to [*]

            
	 	
              [*]

            	
              [*]

            	 	
              [*]
                to
                [*]

            
	 	
              [*]

            	
              [*]

            	 	
              [*]
                and over

            

    

    

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    
      	 	 	
              [*]

            	
              [*]

            	
              (6)

            	
              Conversion
                Cost

            
	 	 	 	 	 	
              (Included
                in (1) Bag cost)

            
	
              (1)

            	
              Bag

            	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
              Includes:

            	
              -
                bag material cost, scrap, finance fee, pallets, shipment packaging
                materials, labor and margin to produce the bag 
                -
                  cost to ship the valve to Supplier, scrap cost of the valve and
                  cost to
                  apply the valve and zipper 

              

            
	 	 
	 	 	
              -
                folding each quart and gallon bag one time in half and
                packing

            
	 	
              Excludes:

            	
              -
                cost of zipper and zipper scrap

            	 	 	 
	 	 	
              -
                cost of the valve

            	 	 	 
	 	 	
              -
                margin on the zipper and valve

            	 	 	 
	 	 	 	 	 	 	 
	
              (2)

            	
              Depreciation

            	 	 	 	 	 
	 	
              Depreciation,
                see Schedule
                13.1

            	 	 	 	 
	 	
              Depreciation
                is based on [*]
                lines and [*]
                bags
                (total of quart and gallon).

            
	 	
              Depreciation
                shall be removed from the price after [*]
                bags have been purchased. 

            
	 	 	 	 	 	 	 
	
              (3)

            	
              Zipper

            	 	 	 	 	 
	 	
              There
                shall be no margin cost for the zipper.

            	 	 	 
	 	
              Shipping
                cost from [*], to Barrington, IL is included in the zipper
                cost.

            
	 	
              If
                the cost of the zipper changes, the cost of the zipper shall be passed
                through to Johnson in the price of the finished bag.

            
	 
	 	
              The
                zipper cost is the following:

            	 	 	 	 
	 	 	
              quart

            	
              gallon

            	 	 	 
	 	
              $/ft

            	
              [*]

            	
              [*]

            	 	 	 
	 	
              in/bag

            	
              [*]

            	
              [*]

            	 	 	 
	 	
              $/bag

            	
              [*]

            	
              [*]

            	 	 	 
	 	
              $/bag+5%scrap

            	
              [*]

            	
              [*]

            	 	 	 
	 	 	 	 	 	 	 
	
              (4)

            	
              Valve

            	 	 	 	 	 
	 	
              There
                shall be no margin cost for the valve.

            	 	 	 
	 	
              If
                the cost of the valve changes, the cost of the valve shall be passed
                through to Johnson in the cost of the finished bag.

            
	 
	 	
              Based
                on the total number of quart and gallon bags purchased by Johnson,
                the
                cost of the valve is as follows:

            
	 
	 	 	 	 	 	 	 
	 	
              Valve
                - clear

            	 	 	 	 	 
	 	
              $/valve

            	
              valves
                (bags) purchased

            	 	 	 
	 	
              [*]

            	
              0
                to [*]

            	 	
               

            	 	 
	 	
              [*]

            	
              [*]
                to
                [*]

            	 	 	 
	 	
              [*]

            	
              [*]
                and over

            	 	 	 
	 	
              If
                the valve is changed from a clear valve to a colored valve, the bag
                purchases are cumulative.

            
	 

    

    

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    
      	
              (5)

            	
              Total
                bag price

            	 	 	 	 	 
	 	 	 	 	 	 	 
	
              (6)

            	
              Conversion
                Cost

            	 	 	 	 	 
	 	 	 	 	 	 	 
	 	
              Included
                in (1) Bag cost.

            	 	 	 	 
	 	
              Conversion
                Cost includes the:

            	 	 	 	 
	 	 	 	 	 	 	 
	 	
              -
                production labor

            	 	 	 	 	 
	 	
              -
                overheads associated with production (factory, supplies, depreciation
                (excluding the bag production equipment), utilities)

            
	 
	 	
              -
                expenses associated with ordering, handling, and storing of
                inventory

            	 
	 	
              -
                profit

            	 	 	 	 	 

    

    

    
      	
              Pump
                - Price Defined

            	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	
              Pump

            	 	 	 	 	 	 
	 	
              $/pump

            	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	
              [*]

            	
              (1)

            	
              Pump

            	 	 	 	 
	 	
              [*]

            	
              (2)

            	
              Depreciation

            	 	 	 
	
              Pump
                Price

            	
              [*]

            	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	
              (1)

            	
              Pump

            	 	 	 	 	 	 
	 	
              Based
                on PIH

            	 	 	 	 	 
	 	 	 	 	 	 	 	 
	
              (2)

            	
              Depreciation

            	 	 	 	 	 
	 	
              Depreciation,
                see Schedule
                13.1

            	 	 	 	 
	 	
              Depreciation
                is based on [*]
                pumps. 
                Depreciation
                  shall be removed from the price after [*] pumps have been
                  purchased. 

              

            

    

    

    Price
      Adjustment Mechanism

    

    Bag
      - [*]
      Adjustment

    

    The
      bag
[*]
      are
[*]
      and
[*]
      a
[*]
      a [*].

    Supplier
      purchases the [*],[*],[*] and
      the [*].
      

    

    The
      [*]
      Adjustments of the [*]
      sheet
      and the [*]
      film are
      based on the [*]
      costs of
      the manufacturers that produce the [*]
      and
[*]
      that
      Supplier purchases. The [*]
      cost is
      based upon [*]
      quarterly average pricing and is calculated on a formula that is subject to
      Johnson’s approval. All Bag [*]
      cost
      adjustments will be subject to review and approval by Johnson. 

    

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

    

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

       

    

    Product
      prices will be updated quarterly, effective the first day of each calendar
      quarter, beginning April 1, 2008, based on the cost of [*]
      film,
[*],[*]
      and
[*]
      used
      in
      the Price.

    

    Each
      March 15, June 15, September 15, and December 15 the new cost will be calculated
      and entered into the Price and submitted to Johnson by the Supplier. The updated
      Product prices will be effective on the following April 1, July 1, October
      1,
      and January 1, respectively.

    

    The
      [*]
      Adjustment for the [*]
      and
      [*]
      used
      in
      the Price will be the difference of the previous cost of the [*]
      and the
      previous cost of the [*]
      multiplied times the ratio of the new Third-Party Average [*]
      Price
      over the previous quarter Third-Party Average [*]
      Price.

    

    The
      Third-Party Average [*]
      Price
      is
      defined as the simple average of the monthly [*]
      prices
      as published by the Chemical Markets Associates, Inc. (CMAI) Global Plastics
      & Polymers Market Report, using the first 3 months of the 4 months
      immediately preceding the effective date.

    

    
      	Quarter	 	
              Months
                used to Calculate Quarterly

              Third-Party Average [*]
                Price

            	 	Effective Date
	 	 	 	 	 	 
	 	
              Q1

            	 	September, October,
              November	 	January, 1
	 	
              Q2

            	 	December, January,
              February	 	April, 1
	 	
              Q3

            	 	March, April, May	 	July, 1
	 	
              Q4

            	 	June, July, August	 	October,
              1

    

     

    Monthly
      prices will be taken from:

    Chemical
      Markets Associates, Inc. (CMAI) Global Plastics & Polymers Market Report,
      Market Statistics

    
      

      
        	 	
                Product: [*] 

              	 	 	 	 
	 	
                Market:

              	 	North America	 	 
	 	
                Type:

              	 	Domestic Market (Contract)
                Extrusion Coating 	 	 
	 	
                Unit
                  Price:

              	 	Cents/Pound	 	 
	 	Inco Term:	 	Delivered	 	 
	 	 	 	 	 	 
	 	Product: [*]	 	 	 	 
	 	Market:	 	North America	 	 
	 	Type:	 	Domestic Market (Contract)
                Octene
                Film	 	 
	 	Unit Price:	 	Cents/Pound	 	 
	 	Inco Term:	 	Delivered	 	 

    

    

    These
      monthly prices will be used without regard to any notations, footnotes,
      adjustments or otherwise explaining rational for the published price. In other
      words, the price as published will be the price used (i.e. “non-market”
adjustments will apply). If any of the three months are not “closed”, the
      average will be calculated using those months of the three that are
      closed.

    

    The
      [*]
      and
      [*]
      initial
      cost per bag and initial CMAI Third-Party Average [*]
      Prices
      are:

    

    
      	
              Bag

            	
              [*]

            	
              [*]
                

            	
              weight,

            	
              [*]

            	
              CMAI

            
	
              size

            	
              type

            	
              $/lb

            	
              pound

            	
              cost

            	
              initial

            
	
               

            	
               

            	
               

            	
               

            	
              $/bag

            	
              Cent/lb

            
	
               

            	 	 	 	 	
               

            
	
              quart

            	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            
	
              quart

            	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            
	
               

            	 	 	 	 	
               

            
	
              gallon

            	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            
	
              gallon

            	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            

    

     

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

    

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    

    The
      Bag - [*] Adjustment example calculation for the [*] and [*] is
      given:

    Bag
      Size:
      quart

    Fourth
      Quarter Price: [*]
      $each

     

    
      	
              [*]

            	
              Third-Party
                Average [*]
                Price

            	
               

            	
              [*]
                Cost Adjustment

            
	
              Type

            	 	 	
               

            	
               

            
	
              [*]

            	 	 	
               

            	
              ●
                Previous quarter [*]
                cost subtracted from the previous quarter [*]
                cost times the ratio of the new quarter Third-Party Average [*]
                Price over the previous quarter Third-Party Average [*]
                Price.

            
	
               

            	
              CMAI
                Contract-Market

            	 	
               

            	
               

            
	
               

            	 	 	
               

            	
               

            
	
               

            	
              PRODUCT

            	
              [*]

            	
               

            	
               

            
	
               

            	
              MARKET

            	
              North
                America

            	
               

            	
               

            
	
               

            	
              TYPE

            	
              Domestic
                Market (Contract)

            	
               

            	
               

            
	
               

            	 	
              [*]

            	
               

            	
               

            
	
               

            	
              UNIT
                PRICE

            	
              Cents/Pound

            	
               

            	
              Example:

            
	
               

            	
              INCO
                TERM

            	
              Delivered
                United States

            	
               

            	
               

            
	
               

            	 	 	
               

            	
              ●
                Third-Party
                Average [*]
                Price for Q1= [*]
                Cents/Pound

            
	
               

            	 	 	
               

            	
              ●
                Previous quarter (Q4) Third-Party Average [*]
                Price = [*]
                Cents/Pound

            
	
               

            	
              Example:

            	 	
               

            	
              ●
                Previous quarter (Q4) [*]
                cost = [*]
                $/bag

            
	
               

            	 	 	
               

            	
               

            
	
               

            	
              Quarter:
                Q1

            	
              Cents/Pound

            	
               

            	
              ●
                [*]
                Adjustment for Q1 = [*]
                x
                [*]/[*]-[*]=[*]$/bag

            
	
               

            	
              September
                2007

            	
              [*]

            	
               

            	
               

            
	
               

            	
              October
                2007

            	
              [*]

            	
               

            	
               

            
	
               

            	
              November
                2007

            	
              [*]

            	
               

            	
               

            
	
               

            	 	 	
               

            	
               

            
	
               

            	
              ●
                Third-Party Average [*]
                for Q1 = ([*]+[*]+[*])/3
                = [*]
                Cents/Pound

            	
               

            	
               

            	
               

            
	 	 	 	 	 

    

     

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

    

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    

    
      	 	 	 	 	 
	
              [*]

            	
              Third-Party
                Average [*]
                Price

            	
               

            	
              [*]
                Cost Adjustment

            
	
              Type

            	 	 	
               

            	
               

            
	
              [*]

            	 	 	
               

            	
              ●
                Previous quarter [*]
                cost subtracted from the previous quarter [*]
                cost times the ratio of the new quarter Third-Party Average [*]
                Price over the previous quarter Third-Party Average [*]
                Price.

            
	
               

            	
              CMAI
                Contract-Market

            	 	
               

            	
               

            
	
               

            	 	 	
               

            	
               

            
	
               

            	
              PRODUCT

            	
              [*]

            	
               

            	
               

            
	
               

            	
              MARKET

            	
              North
                America

            	
               

            	
               

            
	
               

            	
              TYPE

            	
              Domestic
                Market (Contract) 

            	
               

            	
               

            
	
               

            	 	
              [*]

            	
               

            	
               

            
	
               

            	
              UNIT
                PRICE

            	
              Cents/Pound

            	
               

            	
              Example:

            
	
               

            	
              INCO
                TERM

            	
              Delivered
                United States

            	
               

            	
               

            
	
               

            	 	 	
               

            	
              ●
                Third-Party
                Average [*]
                Price for Q1= [*]
                Cents/Pound

            
	
               

            	 	 	
               

            	
              ●
                Previous quarter (Q4) Third-Party Average [*]
                Price = [*]
                Cents/Pound

            
	
               

            	
              Example:

            	 	
               

            	
              ●
                Previous quarter (Q4) [*]
                cost = [*]
                $/bag

            
	
               

            	 	 	
               

            	
               

            
	
               

            	
              Quarter:
                Q1

            	
              Cents/Pound

            	
               

            	
              ●
                [*]
                Adjustment for Q1 = [*]
                x
                [*]/[*]-[*]
                =
                [*]
                $/bag

            
	
               

            	
              September
                2007

            	
              [*]

            	
               

            	
               

            
	
               

            	
              October
                2007

            	
              [*]

            	
               

            	
               

            
	
               

            	
              November
                2007

            	
              [*]

            	
               

            	
               

            
	
               

            	 	 	
               

            	
               

            
	
               

            	
              ●
                Third-Party Average [*]
                for Q1 = ([*]+[*]+[*])/3
                = [*]
                Cents/Pound

            	
               

            	
               

            	
               

            

    

     

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    

    
      	
              Bag

            	
              [*]

            	
              [*]

            	
              CMAI

            	
              CMAI

            	
              [*]
                Adjustment

            
	
              size

            	
              type

            	
              cost
                Q4

            	
              Q4

            	
              Q1

            	 
	
               

            	
               

            	
              $/bag

            	
              Cent/lb

            	
              Cent/lb

            	
               

            
	
               

            	
               

            	 	 	 	 
	
              quart

            	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            
	
              quart

            	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            
	
               

            	
               

            	 	 	 	 
	
               

            	
               

            	 	
              adjustment
                total

            	
              [*]

            
	
               

            	
               

            	 	
              Bag
                price Q4

            	
              [*]

            
	
               

            	
               

            	 	 	 
	
               

            	
               

            	
               

            	
              Bag
                price Q1

            	
              [*]

            

    

    

    Pump
      - [*]
      and Currency Adjustment

     

    The
      pump
      price shall be adjusted yearly for [*]
      and
      currency. The adjustment is determined during November for the effective date
      of
      January 1. The
      currency is the [*]
      dollar and the [*]
      is [*]
      and
      [*].

    

    The
      [*]
      Adjustment of the pump is based on the [*]
      costs of
      the manufacturer that produces the pump that Supplier purchases. The
[*]
      and
      currency adjustments to Pump prices are calculated per formulas to be agreed
      by
      Supplier and Johnson. Further, all pump price changes will be subject to review
      and approval by Johnson.

     

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      2.3

    

    SHIPMENT
      AND SHIPPING PAYMENT TERMS

     

    
      	
              Item

            	
              Shipping
                Terms

            	
              Shipping
                Payment Terms

            
	
              200263
                quart vacuum bag

            	
              FCA
                - 

              CTI
                Industries Corporation

              22160
                N. Pepper Road

              Barrington,
                Illinois, USA

            	
              Undelivered
                Price

              Johnson’s
                3rd
                party Billing

            
	
              200264
                gallon vacuum bag

            	
              FCA
                - 

              CTI
                Industries Corporation

              22160
                N. Pepper Road

              Barrington,
                Illinois, USA

            	
              Undelivered
                Price

              Johnson’s
                3rd
                party Billing

            
	
              200261
                manual vacuum pump

            	
              DDP
                - Racine, Wisconsin, USA

            	
              DDP
                - Supplier

            

    

    

    Johnson’s
      Third Party Billing address:

    

    S.
      C.
      Johnson & Son, Inc.

    TransInternationnal
      Co. Inc.

    N93
      W16288 Megal Drive

    Menomonee
      Falls, WI 53051

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

       

    

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

    

    SCHEDULE
      3.2

     

    
      	 	Size	Price, $/bag (1)
	 	 	 
	 	Quart	[*]
	 	 	 
	 	Gallon	[*]

    

     

    (1)
      Total
      bag price based on Product Instruction Handbook.

     

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

    

    SCHEDULE
      6.1

    

    
      	Product	Product introduction
              phase	Volume
	
            	 	 
	Bags (total of 200263 and
              200264)	January 1, 2008 to May 15, 2008	[*]
	 	 	 
	Pumps (200261)	December 24, 2007 to March 15, 2008	[*]

    

     

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

    SCHEDULE
      6.2

    
      

      
        	 	Year 	 	Bags   
                Total
                  of 200263 and 200264 

              
	 	 	 	 
	 	1	May 15, 2008 to June
                30,
                2009	[*]
	 	 	 	 
	 	2	July 1, 2009 to June
                30,
                2010	[*]
	 	 	 	 
	 	3	July 1, 2010 to June
                30,
                2011	[*]

      

      
        

        
          	 	Year 	 	Pumps   
                  200261

                
	 	 	 	 
	 	1	March 16, 2008 to March
                  15, 2009
                  (1)	[*]
	 	 	 	 
	 	2	March 16, 2009 to March
                  15, 2010
                  (1)	[*]
	 	 	 	 
	 	3	March 16, 2010 to March
                  15, 2011
                  (1)	[*]

        

         

      

    

    (1)
      date
      offset due to delivery times from Taiwan

     

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

    

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

    SCHEDULE
      10.4(E)

    

    MANUFACTURING
      CODE OF CONDUCT

     

    PURPOSE:

     

    Inherent
      in “This We Believe” is a corporate ethic and belief that’ S. C. Johnson &
Son, Inc. is a company comprised of many different kinds of diverse people
      dedicated to fair treatment and equal opportunity for all. We expect our
      business partners to share this ethic and to share our commitment to the
      promotion of best practices and continuous improvement in employee safety and
      health; compensation and benefits; conditions of employment; recognition of
      the
      rights of individuals; and non-discrimination in all aspects of
      employment.

    

    The
      Company’s manufacturing operations worldwide will be guided by this statement of
      principles and will expect and require its business associates and partners
      (collectively the “Manufacturer”) to do so, as well.

    

    THE
      STANDARDS:

    

    
      	 	1.	Forced Labor: The manufacturer does not use forced
              labor
              in any form - prison, indentured, bonded or
              otherwise.

      	 	 	 

      	 	2.	Child Labor: The manufacturer does not employ any
              person
              below the age of 16 to produce products. Where local standards are
              higher,
              no person under the legal minimum age will be
              employed.

      	 	 	 

      	 	3.	Compensation: The manufacturer provides each employee
              at
              least the minimum wage, or the prevailing industry wage, whichever
              is
              higher; provides each employee a clear, written accounting for every
              pay
              period; and does not deduct from worker pay for disciplinary
              infractions.

      	 	 	 

      	 	4.	Benefits: The manufacturer provides each employee
              at
              least all legally mandated benefits. Benefits vary by country, but
              may
              include meals or meal subsidies; transportation or transportation
              subsidies; other cash allowances; health care; child care; emergency,
              pregnancy or sick leave; vacation, religious, bereavement or holiday
              leave; and contributions for social security and other insurance,
              including life, health and worker’s
              compensation.

      	 	 	 

      	 	5.	Hours of Work/Overtime: The manufacturer complies
              with
              legally mandated work hours; uses overtime only when each employee
              is
              fully compensated according to local law; informs each employee at
              the
              time of hiring if mandatory overtime is a condition of employment;
              and, on
              a regularly scheduled basis, provides one day off in seven, and requires
              no more than 60 hours of work per week, or complies with local limits
              if
              they are lower.

      	 	 	 

      	 	6.	Management of Environment, Safety and Health (IESH):
              The
              manufacturer has written health and safety guidelines, including those
              applying to employee residential facilities, where applicable; has
              a
              factory safety committee; complies with local legally mandated
              environmental, safety and health standards and Johnson’s environmental
              safety and health standards where applicable; provides Personal Protective
              Equipment (PPE) free of charge, and mandates its use; and complies
              with
              all applicable local environmental, safety and health
              regulations.

      	 	 	 

      	 	
              7.

            	
              Immigration/Legally
                Qualified to Work: The manufacturer ensures that all of its employees
                are
                properly documented and legally qualified to work for the manufacturer
                in
                the country where such employees are providing services as required
                under
                local immigration and related laws. The manufacturer also ensures
                that any
                subcontractor it uses to provide goods or services directly or indirectly
                to Johnson meets these same
                requirements.

            

    

    

    
      	 	
              8.

            	
              Documentation
                and Inspection: The manufacturer maintains on file all documentation
                needed to demonstrate compliance with these standards; agrees to
                make
                these documents available for Johnson or its designated auditor to
                inspect
                upon request; and agrees to submit to labor practices audits or
                inspections with or without prior
                notice.

            

    

    

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      10.4(F)

    

    BUSINESS
      CONDUCT AND ETHICS POLICY

    

    

    
      	
              I.

            	
              Background/Objectives

            
	
              S.
                C. Johnson & Son, Inc. has been guided by certain basic principles
                since its founding in 1886. Our commitment to these principles -
                embodied
                in This
                We Believe
                -
                encourages us to act with integrity at all times with all stakeholder
                groups. The intent of this policy is to provide guidance for company
                employees in the area of business gifts.

            
	
              II.

            	
              Policy

            
	 	
              A.

            	
              (omitted)

            
	 	
              B.

            	
              (omitted)

            
	 	
              C.

            	
              Gifts
                and Entertainment - Cannot Be Accepted

            
	 	 	
              1.

            	
              Employees
                may not accept gifts from outside business associates, regardless
                of
                value.
                If
                you receive a gift, you must inform your manager. Unless it would
                be
                against the company's best interests, it must be returned with an
                explanation of the company policy against accepting gifts. (See the
                FAQs
                for a sample note returning a gift.)

            
	 	 	
              2.

            	
              In
                unusual circumstances, you may believe it is in the best interest
                of the
                company to accept a gift
                from an outside business associate, for example when for cultural
                reasons
                it could offend the giver if you decline it. In this case, you should
                discuss with your manager the appropriate disbursement of the gift,
                for
                example donating it to charity or distributing it among employees.
                If the
                gift is worth more than nominal value, your manager must involve
                the
                officer responsible for your division to confirm the
                decision.

            
	 	 	
              3.

            	
              You
                may not accept entertainment, including meals, from an outside business
                associate, regardless of value.
                If
                you are invited to participate in a meal or entertainment and it
                is of
                nominal value, you may participate but must pay your own way and
                expense
                the cost. If that is not possible at the time, you must ask to be
                provided
                with an invoice after the event that can be paid by SCJ. If you are
                invited to participate in a meal or entertainment that is above nominal
                value (for example a golf outing), you must get written approval
                before
                attending from two levels of your management, at least one of which
                is an
                officer of the company. If the event is unanticipated and you cannot
                get
                prior approval, if you choose to attend you must pay your own way
                and it
                will be up to your two levels of management to decide if it should
                be
                expensed.

            
	
              III.

            	
              Interpretation
                of the Policy

            
	 	
              The
                Summary and the Frequently Asked Questions (FAQs) below are integral
                parts
                of the policy. Employees must comply with all requirements stated
                in both
                the sections above, the Summary and the FAQs.

            
	 	 	 	 

    

    

    A. Policy
      Summary

    

    (omitted)

    

    
      
        B.
          Frequently
          Asked Questions

      

    

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

     

    
      	
              FAQs
                about Terms

            
	 
	
              Q:
                What is the definition of a “gift?”

              A:
                Any item of monetary value. 

            
	
              Q:
                What is the definition of “entertainment?”

              A:
                Any meals or events of monetary value, including, golf, tennis or
                other
                sports outings; hunting, fishing or similar trips; musical, theatrical
                or
                other performances. Charity events for which a fee is charged for
                attendance are also considered entertainment.

            
	
              Q:
                What is the definition of “business associates?”

              A:
                Business associates are people outside the company with whom the
                company
                is doing business or is considering doing business. It includes actual
                and
                potential Suppliers, customers and others, such as advertising agencies,
                banks, contractors, law firms, accounting firms, consultants of all
                kinds
                and government agencies. 

            
	
              Q:
                What is the definition of “nominal value?”

              A:
                “Nominal value” is defined as US$100 or one percent of your base salary -
                whichever is less. If, however, a General Manager wishes to establish
                a
                lower definition of “nominal value” that is more appropriate for the local
                economic situation, he or she must work with SCJ’s Regional Lead Lawyer in
                that area.

            
	 
	
              FAQs
                about Accepting Gifts

            
	
              Q:
                May I accept a business meal or outing/entertainment
                event?

              A:
                You may participate in a meal or outing/entertainment event with
                a
                business associate if it is of nominal value. However, you must pay
                your
                own way and expense the cost. If you are unable to pay your share,
                ask to
                be provided with an invoice for your portion after the event, so
                it can be
                paid by SCJ. If the event is above nominal value, you can still
                participate following the process above, but must also get approval
                before
                attending from two levels of management, at least one of which is
                an
                officer of the company.

            
	
              Q:
                What if I am attending a conference or seminar at which dinners or
                entertainment (for example, a golf outing) are a part, or “gifts” such as
                notebooks, pens, etc. are given?

              A:
                As long as your payment for the conference or seminar included the
                meals,
                entertainment or gifts, and you expense this on your expense report,
                you
                may take part in the dinners and outings or keep items given out
                at the
                event. If the entertainment or gifts are not part of that payment,
                they
                must be handled like any other entertainment or gifts under this
                policy.

            
	
              Q:
                What if I don’t know if the gift or entertainment is of nominal
                value?

              A:
                If you are unsure, assume it is above nominal value and discuss with
                your
                manager. 

            
	
              Q:
                May a member of my family receive a gift or entertainment from a
                business
                associate?

              A:
                No. This policy applies to employees as well as any member of your
                family.
                If you feel there is some reason for an exception, discuss it with
                your
                manager. 

            

    

    

    

    
      
        
           

          
          

        

        
          41

          
            

          

        

        
          
          

        

      

    

    

    SCHEDULE
      10.4(H) - Part 1

     

    SECURITY
      MEASURES

     

    PHYSICAL
      AND PROCEDURAL FOR SUPPLIERS & SERVICE PROVIDERS

     

    S.
      C.
      Johnson & Son, Inc. (SCJ) participates in the Customs-Trade Partnership
      Against Terrorism (C-TPAT) program. The purpose of this document is to establish
      security measures for SCJ non-U.S. based Suppliers, manufacturers, and
      transportation providers. SCJ will work with its business partners to ensure
      that pertinent security measures are in place and adhered to throughout its
      supply chain.

     

    Physical
      Security:

     

    All
      buildings should be constructed of materials which resist unlawful entry and
      protect against outside intrusion. Physical security should include:

     

    
      	 	
              ·

            	
              Adequate
                locking devices for external and internal doors, windows, gates and
                fences. 

            

    

     

    
      	 	
              ·

            	
              Adequate
                lighting provided inside and outside the facility to include parking
                areas. 

            

    

     

    
      	 	
              ·

            	
              Segregation
                and marking of international, domestic, high-value, and dangerous
                goods
                cargo, while in the shipping or receiving
                stage.

            

    

     

    
      	 	
              ·

            	
              Use
                of physical barriers to limit access to storage containers and
                buildings.

            

    

     

    
      	 	
              ·

            	
              As
                appropriate, the use of closed-circuit TV (CCTV)
                monitoring.

            

    

     

    
      	 	
              ·

            	
              As
                appropriate, the use of intrusion detection systems.
                

            

    

     

    
      	 	
              ·

            	
              Separate
                parking area for private vehicles separate from the shipping, loading
                dock, and cargo areas. 

            

    

     

    
      	 	
              ·

            	
              Having
                internal/external communications systems in place to contact internal
                security personnel or local law enforcement police.
                

            

    

     

    Access
      Controls: 

    

    Unauthorized
      access to facilities should be prohibited. Access control must be maintained
      at
      all entrances and exits to the site and/or buildings. Controls should include:
      

     

    
      	 	
              ·

            	
              The
                positive identification of all employees, visitors, and vendors.
                

            

    

     

    
      	 	
              ·

            	
              Procedures
                for challenging unauthorized/unidentified persons.
                

            

    

     

    
      	 	
              ·

            	
              Signage
                stating that all visitors are required to register with the security
                staff.

            

    

     

    It
      is encouraged that facilities with a work force larger than 25, use a photo
      identification card system. All facilities shall require employees to wear
      a
      company-issued identification card in a visible location. Visitors and contract
      workers must be registered and issued a temporary identification card.
      Registration logs should consist of the following minimum information: printed
      name; date of visit; time of visit; person to be seen; purpose of visit; who
      party is representing; and, time of departure. Registration logs should be
      maintained a minimum of three years

     

    Communications:

    Security
      operations will have at least one two-way radio per guard post. The radio should
      have sufficient power to provide strong transmission signals throughout the
      site. The Security Supervisor will have a cellular telephone or pager for
      contact by on-duty guard force personnel or the site manager after his or her
      normal shift hours. 

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    Procedural
      Security:

     

    Procedures
      should be in place to protect against unmanifested material being introduced
      onto the facility. Security controls should include: 

     

    
      	 	
              ·

            	
              Having
                designated, trained personnel to supervise the introduction/removal
                of
                cargo. 

            

    

     

    
      	 	
              ·

            	
              Seven-point
                inspection of each container will be performed before loading the
                container. The carrier will inspect the container when picking up
                to
                deliver to the SCJ facility or co-packer. Container seals will be
                handled
                per the seal handling procedures (as published separately). Containers
                will be inspected by the carrier when dropping the trailers. The
                warehouse
                personnel unloading the containers will inspect the container when
                unloading and notify of any problems or
                issues.

            

    

     

    
      	 	
              ·

            	
              Properly
                marked, weighed, counted, and documented cargo/cargo equipment verified
                against manifest documents. 

            

    

     

    
      	 	
              ·

            	
              Procedures
                for verifying seals on containers, trailers, and railcars.
                

            

    

     

    
      	 	
              ·

            	
              Procedures
                for detecting and reporting shortages and overages.
                

            

    

     

    
      	 	
              ·

            	
              Procedures
                to notify Customs and other law enforcement agencies in cases where
                anomalies or illegal activities are detected or suspected by the
                company.
                

            

    

     

    
      	 	
              ·

            	
              Deliveries
                (including mail) -- periodic screening of packages shall be conducted.
                Suspected breaches of the delivery or suspicious packages should
                be
                reported immediately to security for resolution. Once notified, Security
                shall notify U.S. Customs and Border Protection (CBP) or the appropriate
                agency.

            

    

    

    At
      each
      location, the Security Staff will have the following records, logs, or
      information readily available to all shift personnel:

    

    
      	
              ·

            	
              Corporate
                emergency contact list

            

    

    
      	
              ·

            	
              Security
                Supervisor after-hours contact information

            

    

    
      	
              ·

            	
              Facility
                emergency contact list 

            

    

    
      	
              ·

            	
              Key
                list (keys and proximity cards issued to the guard
                force)

            

    

    
      	
              ·

            	
              Property
                Pass Authorization and Exemption List

            

    

    
      	
              ·

            	
              Property
                Pass file system (file to maintain copies of Property
                Passes)

            

    

    
      	
              ·

            	
              Pass
                Down log (log to pass important information from one shift to
                another)

            

    

    
      	
              ·

            	
              Visitor
                Registration Log 

            

    

    
      	
              ·

            	
              Employee
                Temporary and Contractor Employee Badge Log

            

    

     

    Transport
      Unit Controls:

     

    Transport
      Unit Security 

    Transport
      unit integrity must be maintained to protect against the introduction of
      unauthorized materials and/or persons. At point of stuffing, procedures must
      be
      in place to properly seal and maintain the integrity of the shipping containers
      (see attached cargo-sealing document). A high-security seal must be affixed
      to
      all loaded containers bound for the U.S. All seals must meet or exceed the
      current PAS ISO 17712 standards for high-security seals.

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

    Transport
      Unit Inspection 

    Procedures
      must be in place to verify the physical integrity of the transport unit prior
      to
      stuffing, to include the reliability of the locking mechanisms of the doors.
      A
      seven-point inspection process is recommended for all containers as
      follows:

    
      	 	
              ·

            	
              Front
                wall 

            

    

    
      	 	
              ·

            	
              Left
                side 

            

    

    
      	 	
              ·

            	
              Right
                side 

            

    

    
      	 	
              ·

            	
              Floor
                

            

    

    
      	 	
              ·

            	
              Ceiling/Roof
                

            

    

    
      	 	
              ·

            	
              Inside/outside
                doors 

            

    

    
      	 	
              ·

            	
              Outside/undercarriage

            

    

    

    Transport
      Unit Seals 

    Written
      procedures must stipulate how seals are to be controlled and affixed to loaded
      transport units. This includes procedures for recognizing and reporting
      compromised seals and transport units to CBP or to the appropriate foreign
      authority. Only designated employees should distribute transport unit seals
      for
      integrity purposes.

    

    Transport
      Unit Storage

    Unattended
      &/or unloaded transport units used for international shipments must be
      stored in a secure area to prevent unauthorized access and/or manipulation.
      One
      recommended manner can include the creation of “bull pens” with six-foot high
      chain link fencing, with locked gates for the parking of those transport
      units.

    

    Confidential
      Information:

    

    The
      Company shall take steps to ensure that information which it deems confidential
      will be protected from unauthorized use or disclosure. 

     

    Parking
      Lots:

     

    Parking
      of employee and visitors shall be permitted only in authorized spaces and away
      from the shipping and receiving docks. The parking of transport units, either
      loaded or empty, will be within a designated area, which is under surveillance
      of the security staff. Loaded, parked transport units will display a complete
      seal. 

     

    Exterior
      Lighting:

    

    Facilities
      are encouraged to use lighting as a deterrent to criminal activity. It is
      recommended that areas such as the transport unit storage, shipping and
      receiving docks, parking lots and access control points, should have lighting
      of
      a minimum of one foot candle. 

    

    Personnel
      Security:

    

    Each
      company shall conduct employment screening and interviewing of prospective
      employees to include background checks and application verifications. These
      background checks shall include, where allowed by local laws, verification
      of
      claimed education, verification of claimed employment history, criminal
      conviction history check, credit verification, verification of Social Security
      number or similar local national identifier. 

    

    
      
        
        

      

      
        44

        
          

        

      

      
        
        

      

    

    Personnel
      Termination Procedures:

     

    Working
      with Human Resources, written procedures shall be issued which provide
      guidelines for the termination of employees and the recovery of company property
      including ID cards, keys and computer peripherals.

     

    Education
      and Training Awareness:

     

    A
      security awareness program will be provided to employees and contractors engaged
      in the receiving and shipping of any transport unit. This training shall
      include: recognizing internal conspiracies; maintaining cargo integrity;
      determining and addressing unauthorized access; the verification and retention
      of shipping documents; and procedures for seal locking. These programs are
      designed to encourage active employee participation in security controls.
      

    

      
        
           

          
          

        

        
          45

          
            

          

        

        
          
          

        

      

    SCHEDULE
      10.4(H) - Part 2

    

    Recommended
      C-TPAT Cargo Sealing Policy & Procedure 

    for
      Transport Units

    

    

    Scope

    This
      document establishes the recommended procedures for affixing mechanical seals
      to
      cargo-loaded transport units (i.e. containers, trucks, etc.) by foreign
      Suppliers of S. C. Johnson & Son, Inc., as well as the control, inventory
      and accountability of those seals. To receive full consideration and benefits
      of
      the Customs-Trade Partnership Against Terrorism (C-TPAT) joint
      government-industry initiative, SCJ is requesting its foreign shippers to ensure
      the security and integrity of their cargo by adhering to more stringent
      guidelines as outlined in this document for the use and control of seals used
      to
      secure cargo containers and trucks. 

    

    Background

    U.S.
      Customs’ organizations and trade entities worldwide use seals to ensure the
      integrity of containerized or truckload cargo while moving from point to point
      within the supply chain. U.S. Customs and Border Protection (CBP) verify the
      integrity of these seals upon arrival in the United States. With the concerns
      and need for increased security, the quality and integrity of the seal is
      critical to the process of preventing the use of cargo trailers or trucks as
      vehicles to import illicit materials and contraband, including Weapons of Mass
      Destruction and other terrorist devices into the U.S.

    

    Terms
      and Definitions of High-Security Seals

    For
      the
      purpose of this document, high-security seals are considered those seals that
      are constructed and manufactured of material such as metal or metal cable,
      with
      the intent to delay intrusion. They generally must be removed with quality
      bolt
      cutters or cable cutters. They require inspection to indicate whether tampering
      has occurred or entry has been attempted. 

    

    All
      seals
      must meet the standards, specifications and identification requirements of
      19CFR24, 13a(a), (b), and (c). These specifications are elaborated on in ISO/PAS
      17712. Seals shall be identified by unique marks and numbers that are readily
      legible; markings intended for unique identification of the seal shall be
      considered permanent. Any modification of markings shall require irreversible
      physical, chemical, heat or other destruction of the security seal.

    

    Container/Truck
      Physical Integrity Inspection

    Prior
      to
      loading a container or truck, the physical integrity of the unit must be
      inspected prior to stuffing. A seven-point inspection process is recommended
      for
      all containers as follows:

    
      	 	
              ·

            	
              Front
                wall

            

    

    
      	 	
              ·

            	
              Left
                side

            

    

    
      	 	
              ·

            	
              Right
                side

            

    

    
      	 	
              ·

            	
              Floor

            

    

    
      	 	
              ·

            	
              Ceiling/Roof

            

    

    
      	 	
              ·

            	
              Inside/outside
                doors

            

    

    
      	 	
              ·

            	
              Outside/undercarriage

            

    

    

    
      
        
        

      

      
        46

        
          

        

      

      
        
        

      

    

    Seal
      Acquisition and Control Responsibility

    Suppliers
      are responsible for acquiring seals from legitimate manufacturers. CBP and
      SCJ
      do not endorse any particular seal manufacturer or product. There are
      organizations, however, such as the International Seal Manufacturers Association
      that can provide guidance for Suppliers looking for seal manufacturers offering
      ISO/PAS 17712 high-security seals. Accountability procedures should be in place
      to minimize the risk of compromising seal integrity and use of the seals by
      unauthorized entities.

    

    For
      all SC Johnson shipments:

    

    
      	 	
              1.

            	
              All
                seals must meet or exceed the standards of ISO/PAS 17712 for high-security
                seals.

            

    

    
      	 	
              2.

            	
              Seals
                should be kept in a locked and secure location, and only a limited
                number
                of designated individuals should have access to the seals and the
                responsibility for their
                distribution.

            

    

    
      	 	
              3.

            	
              The
                seal number and related information for each shipment must be recorded
                in
                the Outbound Container/Truckload Seal Log (see attached example).
                This
                includes shipment date, BOL number, carrier, container/trailer number,
                name of the individual who affixed the seal and signature, etc. The
                seal
                number affixed to the container/trailer should be verified to match
                the
                seal number indicated on the BOL/manifest. This will provide CBP
                personnel
                with a method of verifying legitimate
                seals.

            

    

    
      	 	
              4.

            	
              Seal
                information and related shipping documentation should be retained
                by the
                shipper for a period of five years and be readily available for possible
                audit.

            

    

    
      	 	
              5.

            	
              If
                it is determined that any seals are missing, the incident should
                be
                reported to your security personnel for
                investigation.

            

    

    
      	 	
              6.

            	
              If
                it appears that a container or truck has been tampered with, contact
                your
                security personnel immediately, who will then contact CBP for assistance
                with next steps.

            

    

    

    Example
      of Outbound Container/Trailer Seal Log:

    

    
      	
              Outbound
                Container/Trailer Seal Log

            

    

    
      	
              Shipment
                Date MM/DD/YY

            	
              Seal
                Number

            	
              BOL
                Number

            	
              Carrier

            	
              Container/Trailer
                Number

            	
              Shipper/Packer’s
                Printed Name & Signature

            
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 

    

    

    
      
        
           

          
          

        

        
          47

          
            

          

        

        
          
          

        

      

    

    

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

    
      	
              SCHEDULE
                13.1

            
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	
              Supplier
                Bag Line

            	 	 	 	 	 	 
	
              Equipment

            	
              Number

            	
              cost
                each, $

            	
              cost
                total, $

            	 	 	 
	 	 	 	 	 	 	 
	
              Bag
                System

            	
              [*]

            	
              [*]

            	
              [*]

            	 	 	 
	 	 	 	 	 	 	 
	
              Valve
                Applicators

            	
              [*]

            	
              [*]

            	
              [*]

            	 	 	 
	 	 	 	 	 	 	 
	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            	 	 	 
	 	 	 	 	 	 	 
	
              Bag
                Code System

            	
              [*]

            	
              [*]

            	
              [*]

            	 	 	 
	 	 	 	 	 	 	 
	
              Total

            	 	
              [*]

            	
              [*]

            	 	 	 
	 	 	 	 	 	 	 
	
              Each
                Bag Line consists of a Bag System, Valve Applicators, [*]
                and Bag Code System. 

            
	
              Supplier
                shall purchase the Bag Line equipment.

            
	
              Depreciation
                of all Bag Line equipment is based on [*]
                bags
                (total quart and gallon).

            
	
              Depreciation
                is [*]
                $/bag.

            	 	 
	
              Each
                Bag Line shall be fully depreciated based on the purchase of [*]
                bags.

            
	
              Each
                Bag Line shall be fully depreciated sequentially, beginning with
                Bag Line
                #1.

            
	
              At
                the end of the depreciation term ([*]
                bags),
                the depreciation ([*]/bag)
                price component will be removed from the price of the Bag.
                

            

    

     

    
      	
              If
                this Supply Agreement terminates or expires for any reason other
                than
                pursuant toSections
                11.2, 11.3, 11.5, or 11.6,
                whether or not accompanied by a conversion of this Supply Agreement
                to a
                Johnson License Agreement, Supplier shall transfer and deliver to
                Johnson
                good and valid title to Supplier Bag Lines 1, 2 and 3, free and clear
                of
                all liens, encumbrances and security interests. In consideration
                therefore, Johnson’s purchase price for such Supplier Bag Line Equipment
                will be the Supplier Bag Line Equipment cost, less depreciation,
                of such
                three Bag Lines. If the three Supplier Bag Lines have been fully
                depreciated, at the rate above, then the purchase price shall be
                [*]
                for all three Bag Lines. In addition, in the event of any such expiration
                or termination of this Supply Agreement, when accompanied by a conversion
                of this Supply Agreement to a Johnson License Agreement, Johnson
                may
                purchase, upon written notice to Supplier, all or any of the remaining
                three Bag Lines for a purchase price equal to the cost of the three
                Bag
                Lines less depreciation (as above) or one hundred dollars if the
                three Bag
                Lines are fully depreciated. In that case, Supplier shall transfer
                good
                and valid title for such three Bag Lines to Johnson, free and clear
                of all
                liens, encumbrances and security interests. Supplier warrants and
                represents that all Supplier Bag Lines sold to Johnson hereunder
                will be
                at original operating condition, reasonable wear excepted.
                

            

    

    

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

    

    

    
      
        
           

          
          

        

        
          48

          
            

          

        

        
          
          

        

      

    

    
       

      If
        this
        Supply Agreement terminates and/or converts to a Johnson License Agreement
        pursuant to Sections 11.2,
        11.3, 11.5, or 11.6
        (and
Section
        11.7
        as
        applicable to any such conversion), then Johnson may purchase all or any
        of the
        Supplier Bag Line Equipment upon written notice to Supplier. Upon Johnson’s
        election to purchase any or all of such Equipment, Supplier shall transfer
        and
        deliver to Johnson good and valid title to such Equipment free and clear
        of all
        liens, encumbrances and security interests. In consideration therefore,
        Johnson’s purchase price for such Equipment will be the Bag Line cost,
        identified above, less depreciation at the rate described above, or a nominal
        price of [*]
        if the
        cost has been completely depreciated. Supplier warrants and represents that
        all
        such Supplier Bag Lines sold to Johnson hereunder will be at original operating
        condition, reasonable wear excepted. 

    

     

    
      	
              Pump
                Molds

            	
              Number

            	
              cost
                each, $

            	
              cost
                total, $

            	 	 	 
	 	 	 	 	 	 	 
	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            	 	 	 
	 	 	 	 	 	 	 
	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            	 	 	 
	 	 	 	 	 	 	 
	
              Cap
                (pin half)

            	
              [*]

            	
              [*]

            	
              [*]

            	 	 	 
	 	 	 	 	 	 	 
	
              Cap
                (pin insert half)

            	
              [*]

            	
              [*]

            	
              [*]

            	 	 	 
	 	 	 	 	 	 	 
	
              [*]

            	
              [*]

            	
              0.00

            	
              0.00

            	 	 	 
	 	 	 	 	 	 	 
	
              Rubber
                Adapter

            	
              [*]

            	
              [*]

            	
              [*]

            	 	 	 
	
              Rubber
                Adapter

            	
              [*]

            	
              0.00

            	
              0.00

            	 	 	 
	 	 	 	 	 	 	 
	
              Total

            	 	 	
              [*]

            	 	 	 
	 	 	 	 	 	 	 
	
              Supplier
                shall purchase the Pump Molds.

            	 	 	 	 
	
              Supplier
                shall bear the cost of maintaining and replacing the
                molds.

            	 	 	 
	
              Depreciation
                of all Pump Molds is based on [*]
                pumps.

            	 	 	 	 
	
              At
                the end of the depreciation period, the depreciation ([*]/Pump)
                will be removed from the price of each
                Pump.

            

    

    

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

     

    
      
        
           

          
          

        

        
          49

          
            

          

        

        
          
          

        

      

    

     

    If
      the
      Supply Agreement terminates or expires for any reason other than pursuant to
      Section
      11.2, 11.3, 11.5,
      or
      11.6,
      whether
      or not accompanied by a conversion of this Supply Agreement to a Johnson License
      Agreement, Johnson shall pay [*],
      less
      all depreciation on the Pump Molds at the rate above, to purchase the Pump
      Molds
      excluding the [*], and Supplier shall transfer and deliver to
      Johnson good and valid title to the Pump Molds, free and clear of all liens,
      encumbrances and security interests. If the Pump Molds have been fully
      depreciated, at the rate above, then the purchase price shall be one hundred
      dollars for all Pump Molds. Supplier warrants and represents that the Pump
      Molds
      will be in original operating condition, reasonable wear excepted. 

     

    If
      this Supply Agreement terminates and/or converts to a
      Johnson License Agreement pursuant to Sections
      11.2, 11.3, 11.5, or 11.6
      (and
Section
      11.7
      as
      applicable to any such conversion), then Johnson may purchase all or any of
      the
      Pump Molds upon written notice to Supplier. Upon Johnson’s election to purchase
      any or all of such Pump Molds, Supplier shall transfer and deliver to Johnson
      good and valid title to such Pump Molds free and clear of all liens,
      encumbrances and security interests. In consideration therefore, Johnson’s
      purchase price for such Molds will be the Pump Mold cost, identified above,
      less
      depreciation at the rate described above, or a nominal fee of [*]
      if
      the
      cost has been completed depreciated. Supplier warrants and represents that
      the
      Pump Molds will be in original operating condition,
      reasonable wear excepted. 

    

    CONFIDENTIAL
      INFORMATION OMITTED AND FILED SEPERATELY WITH THE SECURITIES AND EXCHANGE
      COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT ASTERICK [*] DENOTE
      OMISSIONS.

     

    
      
        
           

          
          

        

        
          50

          
            

          

        

        
          
          

        

      

    

     

    SCHEDULE
      13.2

    

    Johnson
      Equipment

    

    

    There
      is
      no Johnson Equipment at Supplier's facility

    

    
      
        
        

      

      
        51Exhibit
        10.1

    

     

    NEITHER
      THIS SECURITY NOR THE SECURITY INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
      BEEN
      REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED, AND, ACCORDINGLY, MAY NOT BE OFFERED
      OR
      SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
      ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
      TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
      APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
      TO
      THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
      ACCEPTABLE TO THE COMPANY.

     

    

    Warrant
      No. W-_________

    

    

    Void
      after 5:00 p.m., Eastern Standard Time on December 20, 2012

    

    UNIT
      PURCHASE WARRANT

    
 

    DRTATTOFF,
      LLC, a California limited liability company (the “Company”),
      hereby certifies that, for value received,
      Christopher
      Knight (the “Warrant
      Holder”)
      is the
      owner of the number of unit purchase warrants (“Warrants”)
      which
      entitles the holder thereof to purchase, at any time during the period
      commencing on the Commencement Date (as defined herein) and ending on the
      Expiration Date (as defined herein), One Hundred Twenty Three Thousand Seven
      Hundred Eighty Six (123,786) fully paid and non-assessable units of Membership
      Interest (as defined in the Company’s Operating Agreement dated as of July 5,
      2005, as amended to date (the “Operating
      Agreement”))
      in
      the Company (each a “Unit”),
      at a
      purchase price equal to the Exercise Price (as defined below) in lawful money
      of
      the United States of America in cash, subject to adjustment as hereinafter
      provided. Each Unit shall include the right to receive allocations of Net
      Profits and Net Losses and distributions from the Company. 

     

    1. WARRANT;
      EXERCISE PRICE.

     

    1.1 This
      Warrant is issued pursuant to a Subscription Agreement dated as of the date
      hereof, by and among the Company and the Warrant Holder (the “Subscription
      Agreement”).
      

     

    1.2 Each
      Warrant shall entitle the Warrant Holder to purchase one Unit (individually,
      a
“Warrant
      Unit”
      severally, the “Warrant
      Units”).
      Each
      Warrant Unit shall provide the holder of such Unit with a capital account
      balance equal to the exercise price paid for such Warrant Unit. 

     

    1.3 The
      purchase price payable upon exercise of each Warrant (the “Exercise
      Price”)
      shall
      be $1.25 per Unit, or the equivalent thereof, subject to any adjustments
      pursuant to Section 8. Notwithstanding the foregoing, the Exercise Price and
      number of Warrant Units purchasable pursuant to each Warrant are subject to
      adjustment as provided in Section 8. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    2. EXERCISE
      OF WARRANT; EXPIRATION DATE.
      

     

    2.1 This
      Warrant is exercisable at any time and from time to time commencing the date
      hereof (“Commencement
      Date”)
      and
      ending at 5:00 p.m., Eastern Time on December 20, 2012 (the “Expiration
      Date”),
      in
      whole or from time to time in part, at the option of the Warrant Holder, upon
      surrender of this Warrant to the Company together with a duly completed Notice
      of Exercise in the form attached hereto and payment of an amount equal to the
      then applicable Exercise Price multiplied by the number of Warrant Units then
      being purchased upon such exercise. 

     

    2.2 Each
      exercise of this Warrant shall be deemed to have been effected immediately
      prior
      to the close of business on the day on which this Warrant shall have been
      surrendered to the Company as provided in Section 2.1. At such time, the person
      or persons in whose name or names any certificates for Warrant Units shall
      be
      issuable upon such exercise as provided in Section 2.3 below shall be deemed
      to
      have become the holder or holders of record of the Warrant Units represented
      by
      such certificates.

     

    2.3 Within
      five business days after the exercise of the purchase right represented by
      this
      Warrant, the Company at its expense will use its reasonable best efforts to
      cause to be issued in the name of, and delivered to, the Warrant Holder, or,
      subject to the terms and conditions hereof, to such other individual or entity
      as such Warrant Holder (upon payment by such Warrant Holder of any applicable
      transfer taxes) may direct: 

     

    (a) a
      certificate or certificates for the number of full Warrant Units to which such
      Warrant Holder shall be entitled upon such exercise, and 

     

    (b) in
      case
      such exercise is in part only, a new Warrant or Warrants (dated the date hereof)
      of like tenor, stating on the face or faces thereof the number of Units
      currently stated on the face of this Warrant minus the number of such Units
      purchased by the Warrant Holder upon such exercise as provided in Section 2.2
      (in each case prior to any adjustments made thereto pursuant to the provisions
      of this Warrant).

     

    3. REGISTRATION
      AND TRANSFER ON COMPANY BOOKS.
      

     

    3.1 The
      Company (or an agent of the Company) will maintain a register containing the
      names and addresses of the Warrant Holders. Any Warrant Holder may change its,
      his or her address as shown on the Warrant register by written notice to the
      Company requesting such change. 

     

    3.2 The
      Company shall register upon its books any transfer of a Warrant upon surrender
      of same as provided in Section 5. 

     

    4. RESERVATION
      OF UNITS.
      The
      Company will at all times reserve and keep available, solely for issuance and
      delivery upon the exercise of this Warrant, such Warrant Units and other stock,
      securities and property, as from time to time shall be issuable upon the
      exercise of this Warrant. 

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    5. EXCHANGE,
      TRANSFER, ASSIGNMENT OR LOSS OR MUTILATION OF WARRANTS.
      This
      Warrant is exchangeable, without expense, at the option of the Warrant Holder,
      upon presentation and surrender hereof to the Company for other warrants of
      different denominations entitling the holder thereof to purchase in the
      aggregate the same number of Units purchasable hereunder. Subject to the terms
      of Sections 6 and 7, upon surrender of this Warrant to the Company at its
      principal office or at the office of its transfer agent, if any, with the
      Assignment Form annexed hereto duly executed and funds sufficient to pay any
      transfer tax, the Company shall, without charge, execute and deliver a new
      Warrant in the name of the assignee named in such instrument of assignment
      and
      this Warrant shall be promptly canceled. Subject to the terms of Sections 6
      and
      7, this Warrant may be divided or combined with other Warrants which carry
      the
      same rights upon presentation hereof at the principal office of the Company
      together with a written notice specifying the names and denominations in which
      new Warrants are to be issued and signed by the Warrant Holder hereof. The
      term
“Warrant” as used herein includes any Warrants into which this Warrant may be
      divided or exchanged. Upon receipt by the Company of reasonable evidence of
      the
      ownership of and the loss, theft, destruction or mutilation of this Warrant
      and,
      in the case of loss, theft or destruction, of indemnity reasonably satisfactory
      to the Company, or, in the case of mutilation, upon surrender and cancellation
      of the mutilated Warrant, the Company shall execute and deliver in lieu thereof
      a new Warrant of like tenor and date representing an equal number of Warrants.
      

     

    6. LIMITATION
      ON EXERCISE AND SALES.
      

     

    6.1 Each
      holder of this Warrant acknowledges that this Warrant and the Warrant Units
      have
      not been registered under the Securities Act, as of the date of issuance hereof.
      This Warrant may only be transferred in compliance with this Section 6 and
      Section 7. The Company shall be under no obligation to issue the Units covered
      by such exercise unless and until the Warrant Holder shall have executed the
      form of exercise annexed hereto that states that at the time of such exercise
      that it is then an “accredited investor” within the meaning of Rule 501 of
      Regulation D, is acquiring such Units for its own account, and will not transfer
      the Warrant Units unless pursuant to an effective and current registration
      statement under the Securities Act or an exemption from the registration
      requirements of the Securities Act and any other applicable restrictions, in
      which event the Warrant Holder shall be bound by the provisions of a legend
      or
      legends to such effect that shall be endorsed upon the certificate(s)
      representing the Warrant Units issued pursuant to such exercise. In such event,
      the Warrant Units issued upon exercise hereof shall be imprinted with a legend
      in substantially the form provided in Section 7.2. 

     

    6.2 Warrant
      Holder represents and warrants that it is acquiring this Warrant for its own
      account, for purposes of investment, and not with a view to, or for sale in
      connection with, any distribution thereof within the meaning of the Securities
      Act and the rules and regulations promulgated thereunder. Warrant Holder
      represents, warrants and agrees that it will not sell, exercise, transfer or
      otherwise dispose of this Warrant (or any interest therein) or any of the Units
      purchasable upon exercise hereof, except pursuant to (i) an effective
      registration statement under the Securities Act and applicable state securities
      laws or (ii) an opinion of counsel, satisfactory to Company, that an exemption
      from registration under the Securities Act and such laws is available. Warrant
      Holder further acknowledges and agrees that Company is not required, legally
      or
      contractually, so to register or qualify the Warrant or such Units or to take
      any action to make such an exemption available. Warrant Holder understands
      that
      Company will be relying upon the truth and accuracy of the representations
      and
      warranties contained in this Section 6 in issuing this Warrant and such Units
      without first registering the issuance thereof under the Securities Act or
      qualifying or registering the issuance thereof under any state securities laws
      that may be applicable. 

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    6.3 Warrant
      Holder acknowledges that (i) there is not now, and there may not be in the
      future, any public market for the Warrant or the Units, (ii) although there
      currently is not a public trading market for the Units, there can be no
      assurance that any such market will be created and sustained, and (iii) there
      can be no assurance that Warrant Holder will be able to liquidate its investment
      in Company. Warrant Holder represents and warrants that it is familiar with
      and
      understands the terms and conditions of Rule 144 promulgated under the
      Securities Act. 

     

    6.4 Warrant
      Holder represents and warrants to Company that (i) it has such knowledge and
      experience in financial and business matters as is necessary to enable it to
      evaluate the merits and risks of any investments in Company and is not utilizing
      any other person to be a purchaser representative in connection with evaluation
      of such merits and risks; and (ii) it has no need for liquidity in an investment
      in Company and is able to bear the risk of that investment for an indefinite
      period and to afford a complete loss thereof. 

     

    6.5 Warrant
      Holder represents and warrants that it has had access to, and has been furnished
      with, all of the information it has requested from Company and has had an
      opportunity to review the books and records of Company and to discuss with
      management and members of the board of directors of Company the business and
      financial affairs of Company. 

     

    6.6 Warrant
      Holder agrees that at the time of each exercise of this Warrant, unless the
      issuance of Units issuable thereupon is pursuant to an effective registration
      statement under the Securities Act and under applicable state blue sky laws,
      Warrant Holder will provide Company with a letter embodying the representations
      and warranties set forth in Sections 6.2 through 6.5, in form and substance
      reasonably satisfactory to Company, and agrees that the certificate(s)
      representing any securities issued to it upon any exercise of this Warrant
      may
      bear such restrictive legend as Company may deem necessary to reflect the
      restricted status of such securities under the Securities Act unless Company
      shall have received from Warrant Holder an opinion of counsel to Warrant Holder,
      reasonably satisfactory in form and substance to Company and its counsel, that
      such restrictive legend is not required.

     

    7. TRANSFER
      RESTRICTIONS.

     

    7.1 If,
      at
      the time of the surrender of this Warrant in connection with any transfer of
      this Warrant, the transfer of this Warrant shall not be registered pursuant
      to
      an effective registration statement under the Securities Act and under
      applicable state securities or blue sky laws, the Company may require, as a
      condition of allowing such transfer (i) that the Warrant Holder or transferee
      of
      this Warrant, as the case may be, furnish to the Company a written opinion
      of
      counsel (which opinion shall be in form, substance and scope customary for
      opinions of counsel in comparable transactions and reasonably satisfactory
      to
      counsel for the Company) to the effect that such transfer may be made without
      registration under the Securities Act and under applicable state securities
      or
      blue sky laws, (ii) that the holder or transferee execute and deliver to the
      Company an investment letter in form and substance acceptable to the Company,
      (iii) that transferee agree in writing with the Company to be bound by the
      terms
      and conditions of this Warrant applicable to the Warrant Holder and (iv) that
      the transferee be an “accredited investor” as defined in Regulation D
      promulgated under the Securities Act. 

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    7.2 The
      Units
      issuable on the exercise of the Warrant shall bear the following
      legend:

     

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION,
      OR THE SECURITIES COMMISSION OF ANY STATE, IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
      COMPANY.

     

    7.3 The
      Holder acknowledges that the Warrant Units acquired upon the exercise of this
      Warrant, if not registered, will have restrictions upon resale imposed by state
      and federal securities laws.

     

    8. ADJUSTMENT
      OF EXERCISE PRICE AND NUMBER OF UNITS DELIVERABLE.
      The
      Exercise Price and the number of Warrant Units purchasable pursuant to each
      Warrant shall be subject to adjustment from time to time as hereinafter set
      forth in this Section 8: 

     

    8.1 In
      case,
      prior to the expiration of this Warrant by exercise or by its terms, the Company
      shall issue any additional units of Membership Interest as a dividend or
      subdivide the number of outstanding Units into a greater number of units of
      Membership Interest, then in either of such cases, the then applicable Exercise
      Price per Warrant Unit purchasable pursuant to this Warrant in effect at the
      time of such action shall be proportionately reduced and the number of Warrant
      Units at that time purchasable pursuant to this Warrant shall be proportionately
      increased; and conversely, in the event the Company shall reduce the number
      of
      outstanding units of Membership Interest by combining such units into a smaller
      number of units of Membership Interest then, in such case, the then applicable
      Exercise Price per Warrant Unit purchasable pursuant to this Warrant in effect
      at the time of such action shall be proportionately increased and the number
      of
      Warrant Units at that time purchasable pursuant to this Warrant shall be
      proportionately decreased. If the Company shall, at any time during the life
      of
      this Warrant, declare a dividend payable in cash on its Membership Interest
      and
      shall at substantially the same time offer to its Unitholders a right to
      purchase new units of Membership Interest from the proceeds of such dividend
      or
      for an amount substantially equal to the dividend, all units of Membership
      Interest so issued shall, for the purpose of this Warrant, be deemed to have
      been issued as a dividend. Any dividend paid or distributed upon the Membership
      Interests in units of any other class of securities convertible into units
      of
      Membership Interest shall be treated as a dividend paid in units of Membership
      Interest to the extent that units of Membership Interest are issuable upon
      conversion thereof.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    8.2 In
      case,
      prior to the expiration of this Warrant by exercise or by its terms, the Company
      shall be recapitalized by reclassifying its outstanding units of Membership
      Interest, or the Company or a successor entity (“successor
      Entity”)
      shall
      consolidate or merge with or convey all or substantially all of its or of any
      successor Entity’s property and assets to any other Entity or Entities (any such
      other Entities being included within the meaning of the term “successor Entity”
hereinbefore used in the event of any consolidation or merger of any such other
      Entity with, or the sale of all or substantially all of the property of any
      such
      other Entity to, another Entity or Entities), then, as a condition of such
      recapitalization, consolidation, merger or conveyance, lawful and adequate
      provision shall be made whereby the holder of this Warrant shall thereafter
      have
      the right to purchase, upon the same basis and on the otherwise same terms
      and
      conditions specified in this Warrant, in lieu of the Warrant Units theretofore
      purchasable upon the exercise of this Warrant, such shares of stock, securities
      or assets, as may be issued or payable with respect to, or in exchange for,
      the
      number of Warrant Units theretofore purchasable upon the exercise of this
      Warrant had such recapitalization, consolidation, merger, or conveyance not
      taken place, and the exercise price for which shall have been appropriately
      adjusted, if necessary, to reflect the number of securities which the Warrant
      Holder is entitled to purchase in exchange for such Warrant; and in any such
      event, the rights of the Warrant Holder to any adjustment in the number of
      Warrant Units purchasable upon the exercise of this Warrant, as herein provided,
      shall continue and be preserved in respect of any securities which the Warrant
      Holder becomes entitled to purchase.

     

    8.3 In
      case
      the Company at any time while this Warrant shall remain unexpired and
      unexercised shall sell all or substantially all of its property or dissolve,
      liquidate, or wind up its affairs, lawful provision shall be made as part of
      the
      terms of any such sale, dissolution, liquidation or winding up, so that the
      holder of this Warrant may thereafter receive upon exercise hereof in lieu
      of
      each Warrant Unit that it would have been entitled to receive, the same kind
      and
      amount of any securities or assets as may be issuable, distributable or payable
      upon any such sale, dissolution, liquidation or winding up with respect to
      each
      Unit of the Company, provided, however, that in any case of any such sale or
      of
      dissolution, liquidation or winding up, the right to exercise this Warrant
      shall
      terminate on a date fixed by the Company; such date so fixed to be not earlier
      than 5:00 p.m., Eastern Time, on the forty-fifth day next succeeding the date
      on
      which notice of such termination of the right to exercise this Warrant has
      been
      given by mail to the registered holder of this Warrant at its address as it
      appears on the books of the Company.

     

    8.4 If
      the
      Company shall at any time prior to the expiration of this Warrant issue any
      Units or securities convertible into Units to a person other than the Warrant
      Holder for a consideration per Unit (the “Offer
      Price”),
      less
      than the Exercise Price in effect at the time of such issuance, then the
      Exercise Price shall be immediately reset to such lower Offer Price. The
      Exercise Price, as so adjusted, shall be readjusted in the same manner upon
      the
      happening of any successive event or events described herein in this Section
      8.
      Notwithstanding the foregoing, no adjustment will be made under this Section
      8.4
      in respect of any “Excluded Securities”. “Excluded
      Securities”
means
      any Units or Unit equivalents issued or issuable to any persons and entities
      arising from any (i) issuance of securities pursuant to any stock option or
      equity incentive plan of the Company, (ii) any securities issued in connection
      with the acquisition of assets, stock purchase or merger whereby the Company
      is
      the surviving corporation, (iii) issuance of any securities pursuant to any
      subsequent agreement between Warrant Holder or any of its affiliates, and the
      Company, and (iv) issuances of Units or other securities arising from any
      existing obligation of the Company prior to the date of this
      Warrant.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    No
      adjustment in the per Unit Exercise Price shall be required unless such
      adjustment would require an increase or decrease in the Exercise Price by at
      least $0.01; provided, however, that any adjustments that by reason of this
      subsection are not required to be made shall be carried forward and taken into
      account in any subsequent adjustment. All calculations under this Section 8
      shall be made to the nearest cent or to the nearest 1/100th of a share, as
      the
      case may be.

     

    8.5 In
      case,
      prior to the expiration of this Warrant by exercise or by its terms, the Company
      (or its successor Entity) shall offer its securities for sale to the public
      pursuant to an effective registration statement under the Securities Act of
      1933, as amended, the per Unit Exercise Price shall be adjusted to the lesser
      of
      $1.00 or fifty percent (50%) of the public offering price of the Company’s
      securities at that time.

     

    9. VOLUNTARY
      ADJUSTMENT BY THE COMPANY.
      The
      Company may, at its option, at any time during the term of the Warrants, reduce
      the then current Exercise Price to any amount deemed appropriate by the Managing
      Members of the Company and/or extend the date of the expiration of the Warrants.
      

    
 

    10. RIGHTS
      OF THE HOLDER.
      The
      Warrant Holder shall not, by virtue hereof, be entitled to any rights of a
      member in the Company, either at law or equity, and the rights of the Warrant
      Holder are limited to those expressed in this Warrant and are not enforceable
      against the Company except to the extent set forth herein. This Warrant does
      not
      entitle the Holder to any voting rights or other rights as a member of the
      Company prior to the Exercise Date and then only with respect to the Warrant
      Units to be issued with respect thereto. 

     

    11. NOTICES
      OF RECORD DATE.
      In
      case: 

     

    11.1 the
      Company shall take a record of the holders of its Units (or other stock or
      securities at the time deliverable upon the exercise of this Warrant) for the
      purpose of entitling or enabling them to receive any dividend or other
      distribution, or to receive any right to subscribe for or purchase any
      Membership Interests or any other securities, or to receive any other right,
      or

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    11.2 of
      any
      capital reorganization of the Company, any reclassification of the equity
      capital of the Company, any consolidation or merger of the Company with or
      into
      a Entity or other entity (other than a consolidation or merger in which the
      Company is the surviving entity), or any transfer of all or substantially all
      of
      the assets of the Company, or 

     

    11.3 of
      the
      voluntary or involuntary dissolution, liquidation or winding-up of the Company,
      

     

    then,
      and
      in each such case, the Company will mail or cause to be mailed to the Warrant
      Holder a notice specifying, as the case may be, (i) the date on which a record
      is to be taken for the purpose of such dividend, distribution or right, and
      stating the amount and character of such dividend, distribution or right, or
      (ii) the effective date on which such reorganization, reclassification,
      consolidation, merger, transfer, dissolution, liquidation or winding-up is
      to
      take place, and the time, if any is to be fixed, as of which the holders of
      record of Units (or such other stock or securities at the time deliverable
      upon
      the exercise of this Warrant) shall be entitled to exchange their Units (or
      such
      other stock or securities) for securities or other property deliverable upon
      such reorganization, reclassification, consolidation, merger, transfer,
      dissolution, liquidation or winding-up. Such notice shall be mailed at least
      ten
      days prior to the record date or effective date for the event specified in
      such
      notice, provided that the failure to mail such notice shall not affect the
      legality or validity of any such action. 

     

    12. REGISTRATION
      RIGHTS.
      The
      Warrant Holder is entitled to the registration rights set forth in Annex A
      attached hereto and made a part hereof.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    13. SUCCESSORS.
      The
      rights and obligations of the parties to this Warrant will inure to the benefit
      of and be binding upon the parties hereto and their respective heirs,
      successors, assigns, pledgees, transferees and purchasers. 

     

    14. CHANGE
      OR WAIVER.
      Any
      term of this Warrant may be changed or waived only by an instrument in writing
      signed by the party against whom enforcement of the change or waiver is sought.
      

     

    15. HEADINGS.
      The
      headings in this Warrant are for purposes of reference only and shall not limit
      or otherwise affect the meaning of any provision of this Warrant. Wherever
      possible, each provision of this Warrant shall be interpreted in such manner
      as
      to be effective and valid under applicable law, but if any provision of this
      Warrant shall be prohibited by or invalid under applicable law, such provision
      shall be ineffective to the extent of such prohibition or invalidity, without
      invalidating the remainder of such provisions or the remaining provisions of
      this Warrant.

     

    16. GOVERNING
      LAW.
      This
      Warrant shall be governed by and construed in accordance with the laws of the
      State of California. Any action or litigation brought by either party against
      the other concerning the transactions contemplated by this Warrant shall be
      brought only in the state courts or in the federal courts located in the State
      of California. The prevailing party shall be entitled to recover from the other
      party its reasonable attorney’s fees and costs.

     

    17. MAILING
      OF NOTICES, ETC.
      All
      notices and other communications required or permitted hereunder shall be in
      writing and shall be deemed to have been duly given one (1) business day after
      delivery to an overnight carrier with instructions to deliver to the applicable
      address set forth below, or, if sent by facsimile, upon receipt of a
      confirmation of delivery: 

     

    Registered
      Holder: 

     

    To
      his or
      her last known address as indicated on the Company’s books and
      records.

     

    The
      Company:  

    DRTATTOFF,
      LLC

    8447
      Wilshire Blvd.

    Suite
      120

    Beverly
      Hills, CA 90211

    Attention:
      James Morel, Chief Executive Officer

    Fax:
      (323) 653-2661

    

    

    [Signature
      Page Follows]

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
      authorized officer as of December 20, 2007.

     

     

    
      	 	
              DRTATTOFF,
                LLC

            
	 	 	 
	 	
              By:

            	
              /s/
                James Morel

            
	 	
              Name:

            	
              James
                Morel

            
	 	
              Title:

            	
              Chief
                Executive Officer

            

    

    
 

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    
      	 	
              Notice
                of Exercise

            
	 	
              To
                Be Executed by the Warrant Holder

            
	 	
              In
                Order to Exercise Warrants

            

    

    

    TO:
      DRTATTOFF,
      LLC

    

    The
      undersigned hereby: (1) irrevocably subscribes for and offers to purchase
      _______ Units (“Units”),
      of
DRTATTOFF,
      LLC,
      pursuant to Warrant No. ___ heretofore issued to ___________________ dated
      _____________, 20___ and (2) encloses a cash payment of $__________ representing
      the aggregate exercise price for such Units. 

     

    The
      undersigned hereby represents and warrants to the Company that it is an
“Accredited Investor” within the meaning of Rule 501 of Regulation D promulgated
      under the Securities Act of 1933, as amended (the “Securities
      Act”),
      and
      is acquiring these securities for its own account and not with a view to, or
      for
      sale in connection with, any distribution thereof, nor with any present
      intention of distributing or selling the same. The undersigned further
      represents that it does not have any contract, agreement, understanding or
      arrangement with any person to sell, transfer or grant the Units issuable under
      this Warrant. The undersigned understands that the securities it will be
      receiving are “restricted securities” under Federal securities laws inasmuch as
      they are being acquired from DRTATTOFF,
      LLC, in
      transactions not including any public offering and that under such laws, such
      securities may only be sold pursuant to an effective and current registration
      statement under the Securities Act or an exemption from the registration
      requirements of the Securities Act and any other applicable restrictions, in
      which event a legend or legends will be placed upon the certificate(s)
      representing the Units issuable under this Warrant denoting such restrictions.
      The undersigned understands and acknowledges that the Company will rely on
      the
      accuracy of these representations and warranties in issuing the securities
      underlying the Warrant.

     

    
      	
              Date:

            	
                 
                

            

    

    
      	 	 
	
              Warrant
                Holder Name:

            	
                  
                

            

    

    
      	 	 
	
              Taxpayer
                Identification Number:

            	
                 
                

            

    

    
      	 	 
	
              By:

            	
                 
                

            

    

    
      	 	 
	
              Printed
                Name:

            	
                 
                

            

    

    
      	 	 
	
              Title:

            	
                 
                

            

    

    
      	 	 
	
              Address:

            	
                 
                

            

    

     

    Note:
      The
      above signature should correspond exactly with the name on the face of this
      Warrant or with the name of assignee appearing in assignment form below.

    

    AND,
      if
      said number of Units shall be less than the total number of Units purchasable
      under the Warrant, a new Warrant is to be issued in the name of said undersigned
      for the balance remaining of the Units purchasable thereunder less any fraction
      of a Unit paid in cash and delivered to the address stated above.

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    ASSIGNMENT
      FORM

    To
      be
      executed by the Warrant Holder

    In
      order
      to Assign Warrants

     

    FOR
      VALUE
      RECEIVED,____________________________________ hereby sells, assigns and
      transfers unto

     

    PLEASE
      INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

     

    
      	 

    

     

     

      
        

      

    

     

      
        

      

    

    (Please
      print or type name and address)

    

     

    ______________________
      of the Warrants represented by this Warrant, and hereby irrevocably constitutes
      and appoints ________________________ Attorney to transfer this Warrant on
      the
      books of the Company, with full power of substitution in the
      premises.

     

     

    Dated:______________________    
       ____________________________

    (Signature
      of Registered Holder)

     

     

    In
      addition to executing this Assignment Form, the Warrant Holder and the
      transferee must comply with the other requirements for transfer set forth in
      Sections 6 and 7 of the Warrant.

    

     

    CERTIFICATION
      OF STATUS OF TRANSFEREE

    TO
      BE
      EXECUTED BY THE TRANSFEREE OF THIS WARRANT

     

    The
      undersigned transferee hereby certifies to the registered holder of this Warrant
      and to DRTATTOFF, LLC that the transferee is an “accredited investor” within the
      meaning of Rule 501 of Regulation D promulgated under the Securities Act of
      1933, as amended.

     

     

    
      	
              Dated:_____________________

            	
              ________________________________

            
	 	
              (Signature
                of Transferee)

            

    

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ANNEX
      A

    

    REGISTRATION
      RIGHTS

    

     

    1. DEFINITIONS.
      Capitalized terms used and not otherwise defined herein that are defined in
      the
      Warrant shall have the meanings given such terms in the Warrant. As used herein,
      the following terms shall have the following meanings:

     

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and any successor
      statute.

     

    “Holder”
or
      “Holders”
means
      the Warrant Holder or Holders to the extent any of them hold Registrable
      Securities.

     

    “Indemnified
      Party”
shall
      have the meaning set forth in Section 5.2.

     

    “Indemnifying
      Party”
shall
      have the meaning set forth in Section 5.2.

     

    “Piggy-Back
      Registration”
is
      defined in Section 2.1.

     

    “Proceeding”
means
      an action, claim, suit, investigation or proceeding (including, without
      limitation, an investigation or partial proceeding, such as a deposition),
      whether commenced or threatened. 

     

    “Prospectus”
means
      the prospectus included in the Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by the Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus. 

     

    “Registrable
      Securities”
means
      the membership interests issuable upon exercise of the Warrants, or other
      securities of the Company or any other issuer or issuable in respect of such
      Units (because of stock splits, stock dividends, reclassifications,
      recapitalizations, mergers, combinations or similar events, if applicable);
      provided, however, that the Units which are Registrable Securities shall cease
      to be Registrable Securities upon any sale or transfer of such securities
      pursuant to a Registration Statement, Section 4(1) of the Securities Act, Rule
      144 under the Securities Act or otherwise.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    “Registration
      Statement”
means
      a
      registration statement filed by the Company with the Commission on any
      registration form prescribed by the Commission permitting a secondary offering
      or distribution, other than on Form S-4, Form S-8 or similar forms.

     

    “Rule
      144”
means
      Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
      Rule may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the Commission having substantially the same effect as
      such
      Rule. 

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, and any successor statute.

     

    “Trading
      Market”
means
      any of the Pink Sheets LLC electronic quotation service, NASD OTC Bulletin
      Board, NASDAQ Global Select Market, NASDAQ Global Market, NASDAQ Capital Market,
      American Stock Exchange or the New York Stock Exchange.

     

    “Warrants”
means
      the Unit purchase warrants issued by the Company.

     

    2. PIGGY-BACK
      REGISTRATION.
      

     

    2.1 At
      any
      time and from time to time during the Warrant exercise period, whenever the
      Company proposes to file a Registration Statement, the Company will prior to
      such filing give written notice to Holder of its intention to do so and, upon
      the written request of Holder given within ten (10) days after the Company
      provides such notice, the Company shall use its good faith efforts to cause
      all
      Registrable Securities which the Company has been requested by Holder to
      register to be registered under the Securities Act to the extent necessary
      to
      permit their sale or other disposition in accordance with the intended methods
      of distribution specified in the request of Holder; provided that the Company
      shall have the right to postpone or withdraw any registration effected pursuant
      to this Section 2 without obligation or liability to Holder. In the Holder’s
      request, the Holder will be required to describe briefly its proposed
      disposition of the Registrable Securities. However, in connection with any
      registration under Section 2, the Holder’s Registrable Securities shall be
      junior and subordinate to any registration rights granted by the Company which
      are already outstanding, and any senior registration rights granted by the
      Company in the future. 

     

    2.2 In
      connection with any registration under Section 2 involving an underwritten
      offering of the Company’s securities, the Company shall not be required to
      include any Registrable Securities in such underwriting unless Holder accepts
      the terms of the underwriting as agreed upon between the Company and the
      underwriters selected by it, and then only in such quantity as will not, in
      the
      sole discretion of the underwriters, jeopardize the success of the offering
      by
      the Company. If in the sole discretion of the managing underwriter or
      underwriters the registration of all, or part of, the Registrable Securities
      which Holder has requested to be included would adversely affect such public
      offering, then the Company shall be required to include in the underwriting
      only
      that number of Registrable Securities, if any, which the managing underwriter
      or
      underwriters believe may be sold without causing such adverse effect. If the
      number of Registrable Securities to be included in the underwriting in
      accordance with the foregoing is less than the total number of Registrable
      Securities which Holder has requested to be included, then Holder and each
      participant other than the Company in such underwriting shall participate in
      the
      underwriting pro rata based upon their total ownership of Registrable
      Securities. Any such limitation shall be imposed in such manner so as to avoid
      any diminution in the number of securities the Company may register for sale
      by
      giving first priority for the securities to be registered for issuance and
      sale
      by the Company and the underwriter, and by giving second priority for the
      securities to be registered for sale by any holder of Registrable Securities
      pursuant to the terms of this Agreement.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    2.3 In
      connection with any registration under this Section 2 involving a selling
      stockholder registration statement or any other registration statement not
      involving an underwritten offering of the Company’s securities, the Company
      reserves the right to include only that number of Registrable Securities, if
      any, as it shall determine in its sole discretion, may be sold without
      jeopardizing the success of the offering or having an adverse effect on the
      offering. If the number of Registrable Securities to be included in the offering
      in accordance with the foregoing is less than the total number of Registrable
      Securities which Holder has requested to be included, then Holder and each
      participant other than the Company in such offering shall participate in the
      offering pro rata based upon their total ownership of Registrable Securities.
      Any such limitation shall be imposed in such manner so as to avoid any
      diminution in the number of securities the Company may register for sale by
      giving first priority for the securities to be registered for issuance and
      sale
      by the Company, and by giving second priority for the securities to be
      registered for sale by any holder of Registrable Securities pursuant to the
      terms of this Agreement.

     

    2.4
       Any
      holder of Registrable Securities may elect to withdraw such holder’s request for
      inclusion of Registrable Securities in any Piggy-Back Registration by giving
      written notice to the Company of such request to withdraw prior to the
      effectiveness of the Registration Statement. The Company may also elect to
      withdraw a registration statement at any time prior to the effectiveness of
      the
      Registration Statement. Notwithstanding any such withdrawal, the Company shall
      pay all expenses incurred by the holders of Registrable Securities in connection
      with such Piggy-Back Registration as provided in Section 4.

     

    3.  REGISTRATION
      PROCEDURES.
      When
      the Company proposes to effect the registration of any of the Registrable
      Securities under the Securities Act, the Company shall: 

     

    3.1 furnish
      to the Holder such number of copies of the Registration Statement and the
      Prospectus included therein (including each preliminary Prospectus) as the
      Holder reasonably may request to facilitate the public sale or disposition
      of
      the Registrable Securities covered by the Registration Statement;

     

    3.2 use
      its
      commercially reasonable efforts to register or qualify the Holder’s Registrable
      Securities covered by the Registration Statement under the securities or “blue
      sky” laws of such jurisdictions within the United States as the Holder may
      reasonably request, provided, however, that the Company shall not for any such
      purpose be required to qualify generally to transact business as a foreign
      corporation in any jurisdiction where it is not so qualified or to consent
      to
      general service of process in any such jurisdiction; and

     

    3.3 list
      the
      Registrable Securities covered by the Registration Statement with any Trading
      Market on which the equity securities of the Company is then listed.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    4. REGISTRATION
      EXPENSES.
      All
      expenses relating to the Company’s compliance with Sections 2 and 3 hereof,
      including, without limitation, all registration and filing fees, printing
      expenses, fees and disbursements of counsel and independent public accountants
      for the Company, fees and expenses (including reasonable counsel fees) incurred
      in connection with complying with state securities or “blue sky” laws, fees of
      the NASD, transfer taxes, fees of transfer agents and registrars are called
      “Registration Expenses.” All selling commissions applicable to the sale of
      Registrable Securities, including any fees and disbursements of any counsel
      to
      the Holders, are called “Selling Expenses” and shall be the responsibility of
      the Holder. The Company shall only be responsible for all Registration
      Expenses.

     

    5. INDEMNIFICATION.

     

    5.1 In
      the
      event of a registration of the Registrable Securities, the Holder (subject
      to
      the provisions of Section 5.2) will indemnify and hold harmless the Company
      or
      its successor, and its officers, directors and each other person, if any, who
      controls the Company within the meaning of the Securities Act, against all
      losses, claims, damages or liabilities, joint or several, to which the Company
      or such persons may become subject under the Securities Act, the Exchange Act
      or
      otherwise, insofar as such losses, claims, damages or liabilities (or actions
      in
      respect thereof) arise out of or are based upon: (i) any untrue statement
      or alleged untrue statement of any material fact which was furnished in writing
      by the Holder to the Company expressly for use in (and such information is
      contained in) the Registration Statement under which such Registrable Securities
      were registered under the Securities Act pursuant to the Warrant, any
      preliminary Prospectus or final Prospectus contained therein, or any amendment
      or supplement thereof, or arise out of or are based upon the omission or alleged
      omission to state therein a material fact required to be stated therein or
      necessary to make the statements therein not misleading, and will reimburse
      the
      Company and each such person for any reasonable legal or other expenses incurred
      by them in connection with investigating or defending any such loss, claim,
      damage, liability or action, provided, however, that such Holder will be liable
      in any such case if and only to the extent that any such loss, claim, damage
      or
      liability arises out of or is based upon said Holder’s untrue statement or
      alleged untrue statement or omission or alleged omission so made in conformity
      with information furnished in writing to the Company by or on behalf of said
      Holder specifically for use in any such document, or (ii) in connection
      with a Holder’s sale of Registrable Securities, including without limitation
      alleged violations of Regulation M. Notwithstanding the provisions of this
      paragraph, no Holder shall be required to indemnify any person or entity in
      excess of the amount of the aggregate net proceeds received by said Holder
      in
      respect of Registrable Securities in connection with any such registration
      under
      the Securities Act.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    5.2 Promptly
      after receipt by a party entitled to claim indemnification hereunder (an
“Indemnified Party”) of notice of the commencement of any action, such
      Indemnified Party shall, if a claim for indemnification in respect thereof
      is to
      be made against a party hereto obligated to indemnify such Indemnified Party
      (an
“Indemnifying Party”), notify the Indemnifying Party in writing thereof, but the
      omission so to notify the Indemnifying Party shall not relieve it from any
      liability which it may have to such Indemnified Party other than under this
      Section 5.2 and shall only relieve it from any liability which it may have
      to
      such Indemnified Party under this Section 5.2 if and to the extent the
      Indemnifying Party is prejudiced by such omission. In case any such action
      shall
      be brought against any Indemnified Party and it shall notify the Indemnifying
      Party of the commencement thereof, the Indemnifying Party shall be entitled
      to
      participate in and, to the extent it shall wish, to assume and undertake the
      defense thereof with counsel reasonably satisfactory to such Indemnified Party,
      and, after notice from the Indemnifying Party to such Indemnified Party of
      its
      election so to assume and undertake the defense thereof, the Indemnifying Party
      shall not be liable to such Indemnified Party under this Section 5.2 for any
      legal expenses subsequently incurred by such Indemnified Party in connection
      with the defense thereof; if the Indemnified Party retains its own counsel,
      then
      the Indemnified Party shall pay all fees, costs and expenses of such counsel,
      provided, however, that, if the defendants in any such action include both
      the
      Indemnified Party and the Indemnifying Party and if counsel shall have
      reasonably concluded that there may be reasonable defenses available to the
      Indemnified Party which are different from or additional to those available
      to
      the Indemnifying Party or if the interests of the Indemnified Party reasonably
      may be deemed to conflict with the interests of the Indemnifying Party in either
      case which would prohibit such counsel from representing both parties under
      applicable conflicts of interest rules of professional ethics, the Indemnified
      Party shall have the right to select one separate counsel and to assume such
      legal defenses and otherwise to participate in the defense of such action,
      with
      the reasonable expenses and fees of such separate counsel and other expenses
      related to such participation to be reimbursed by the Indemnifying Party as
      incurred. Neither party shall settle any proceeding for which indemnification
      is
      sought without the written consent of the other party, which shall not be
      unreasonably withheld.

     

     

    5.3
       Notwithstanding
      any provision herein to the contrary, each Holder shall be treated individually
      and separately from all other Holders under this Section 5, and will not become
      the subject of any obligation under this Section 5 as a result of any action,
      failure to act, statement, omission, or otherwise of any other Holder
      hereunder.

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