Document:

Unassociated Document

Exhibit 10.1

 

Certain portions of this agreement have been omitted in accordance with a request for confidential treatment submitted to the Securities and Exchange Commission (the “SEC”).  Omitted information has been replaced with three asterisks (***).  The omitted information has been filed separately with the SEC.

Amended and Restated Manufacturing Agreement

Effective Date:  January 1, 2011

 

This Manufacturing Agreement (the “Agreement”) is made and entered into as of the Effective Date shown above by and between

 

	 	
GFA BRANDS, INC. 

	
(“Customer”)

 

115 West Century Road, Suite 260

Paramus, NJ 07652

 

and

 

	 	
VENTURA FOODS, LLC 

	
(“Ventura”)

 

40 Pointe Drive

Brea, CA  92821–3698

 

Recitals

 

A.           Ventura previously has manufactured various products for Customer in aggregate quantities exceeding *** net pounds per year.

 

B.           Customer desires to have Ventura continue to manufacture various products under trademarks and trade names owned or used by Customer subject to the terms and conditions set forth in this Agreement.

 

C.           Ventura is willing to reserve manufacturing capacity for Customer, and manufacture the agreed products for sale to Customer, subject to the terms and conditions set forth in this Agreement.

 

D.           The parties have accepted and agreed to the terms and respective obligations contained in this Agreement, each intending to be legally bound.

 

______________________________

*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

  

  

 

Terms of Agreement

 

1.           General:  co-packing arrangement

 

Ventura shall manufacture and sell to Customer and Customer shall purchase from Ventura Products subject to the terms and conditions of this Agreement.

 

2.           Products

2.1           Customer is responsible for providing to Ventura a complete ingredient list for each Product.  Customer may, at its option, provide additional formulas, specifications and process parameters (“Product Manuals”) regarding the manufacture of its Products subject to mutual agreement and acceptance by Ventura.

 

2.2           Before Ventura commences volume production of any new Product for Customer, Customer shall test the finished Product and approve the Product for production.  All production trials and testing of new Products shall be billed to Customer at a mutually agreed rate.

 

3.           Capitalized Terms

 

Capitalized terms used in this Agreement shall have the definitions set forth in Schedule 3, unless a different meaning is clearly required by the context.

 

4.           Forecasts, cost projections and orders

 

4.1           Customer forecasts.  Customer shall provide Ventura each month with a rolling thirteen (13) week forecast of its requirements for Products for the following thirteen (13) weeks.  The forecast for each month will include at a minimum specific Product volume by SKU and plant.

 

4.2           Ventura Price Reports.  Ventura shall provide Customer periodically with updated Price Reports for each Product on Customer’s most recent forecast, including:

 

	
  

	
(a)

	
Ingredient Cost;

 

	
  

	
(b)

	
Packaging Cost;

 

	
  

	
(c)

	
Loss Factors; and

 

	
  

	
(d)

	
the Toll.

 

4.3           Orders.  Customer will use its best efforts to place orders as far as possible in advance of the requested shipment date, and no less than five (5) business days before the requested delivery date, and Ventura will timely fill all Customer orders subject only to Force Majeure Events, short lead orders (i.e., orders placed with requested delivery date of less than five (5) business days) and occasional issues contemplated by paragraph 4.4 below.

 

  

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4.4           Mutual cooperation. The parties recognize that lead times on ingredients and manufacturing schedules may limit the ability of Ventura to fill orders on five (5) business days notice, and the parties will mutually cooperate to provide accurate forecast data and improved lead times to the maximum extent practicable.

 

 

4.5           Minimum Annual Volume. Customer agrees to purchase a minimum Annual Volume of *** pounds of Products per Contract Year during the term of this Agreement, commencing with the Contract Year July 1, 2010 to June 30, 2011.

 

5.           Price

 

5.1           In general, the Price for each Product is the ***.

 

5.2           The calculation of Prices for Products shall be set forth in the Product Cost Sheets to be provided to Customer on a regular basis in accordance with past practices. Pricing is subject to revision and amendment from time to time as provided in paragraph 6 and elsewhere in the Agreement.

 

5.3           In the event that Ventura invoices Customer separately for unused, obsolete or excess Ingredient Costs or Packaging Costs incurred by Ventura, the amount invoiced shall be the actual cost of the ingredients or packaging, provided that such components have been purchased in conformity with forecasts made by Customer’s pursuant to subparagraph 4.1.

 

5.4           Ventura and Customer will work together on continuous improvement initiatives during the term of this Agreement, including but not limited to (i) reallocating Products within Ventura’s network of manufacturing facilities (as mutually agreed) to drive unnecessary costs out of the system; (ii) reducing Loss Factors; and (iii) evaluating and implementing new and/or improved equipment for the manufacturing of Products.

 

6.           Toll adjustments

 

6.1           Initial Toll and Loss Factors rates

 

The initial Toll rates and Loss Factors in effect at the Effective Date are set forth on Schedule 6.1.

 

_________________________

*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

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6.2           Annual Toll adjustments

 

The initial Toll rates set forth on Schedule 6.1 shall be increased by $*** each year on July 1 during the term of this Agreement.Such changes in the Toll rates shall apply to all Products shipped on or after July 1 of each Contract Year during the term.

 

6.3           Toll discount if Annual Volume exceeds *** pounds.

 

6.3(a)           General: discount on Incremental Volume.

 

Commencing with the Contract Year July 1, 2010 to June 30, 2011, and for each Contract Year thereafter, if Customer’s Annual Volume exceeds *** pounds of Products then Customer shall receive a discount on Tolls for that Contract Year in the amounts shown in the following table:

 

 

Table 6.3(a)                      Toll Discounts

 

	
Annual Volume

	
Toll Discount

	
Annual Volume less than *** pounds

	
None

	
Annual Volume *** pounds or more

	
$*** on Incremental Volume

	
Annual Volume more than

*** pounds

	
Retroactive discount of $*** on the first *** pounds and continuance of the $*** on all Incremental Volume

 

6.3(b)           Calculation of Toll Discount.                                                      Upon achieving an Annual Volume of *** pounds, the applicable Toll discount shall be calculated by Ventura and all invoices to Customer for Incremental Volume shall reflect such reduced Tolls.  In addition, in the event Annual Volume exceeds *** pounds, Ventura shall promptly (within sixty (60) days of achieving the threshold) pay Customer ***, representing the additional incentive of $***on the first *** pounds shipped during the Contract Year.

 

 

_____________________

*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

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6.4           Product Growth Fund. The parties acknowledge that increased consumer demand for Products could benefit both parties.   To aid in Customer’s efforts to grow demand for Products, within thirty (30) days of the execution of this Agreement, Ventura agrees to pay Customer a one-time, nonrefundable amount of *** to be used at Customer’s discretion to promote the sale of Products in calendar year 2011.

 

6.5           True-Up Credit.  Any adjustments to charges for Toll fees incurred after February 1, 2011, that are necessary to reflect the January 1, 2011 effective date of this Agreement shall be paid to Customer in the form of a credit memo to be deducted by Customer on Customer’s next scheduled invoice.  Ventura shall provide adequate documentation to detail such credit amounts (based on Product shipment dates).

 

7.           Packaging

 

Products shall be packed in containers bearing trademarks and/or trade names specified and owned or lawfully used by Customer. If packaging and/or label changes are required by a change in law or at the request of Customer, all costs of such changes shall be borne by Customer.

 

8.           Payment and delivery terms

 

8.1           Terms of payment shall be net thirty (30) days from date of invoice.

 

8.2            Unless other arrangements for distribution or warehousing have been made for a Product under paragraph 9, all Products purchased by Customer hereunder shall be delivered to Customer F.O.B. Ventura’s plant.

 

8.3           Products shall be invoiced on or shortly after the date of shipment.

 

8.4           If Ventura incurs unique Ingredient Costs or unique Packaging Costs based on Customer’s forecasts pursuant to subparagraph 4.1 for inventory that it reasonably determines is unused, obsolete or excess (for example, those costs have not been included in an invoiced Product Price for 90 days; or Customer’s forecasts do not project that the ingredient or packaging will be used within three months and Ventura does not project using the ingredient or packaging for another customer within three months), then Ventura shall invoice and Customer shall pay the Ingredient Costs or Packaging Costs as provided in paragraph 5.3.  If Ventura agrees that the material to be invoiced to Customer under this paragraph may be usable within the specified time frame at another Ventura location, then as an alternative to purchasing the Ingredient or Packaging, Customer may agree with Ventura to ship the material to such other Ventura location at Customer’s sole expense.

 

 

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*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

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8.5           Customer may reject and refuse to pay for Product that the parties reasonably agree does not conform to specifications or otherwise is not in compliance with the terms and conditions of this Agreement.

 

9.           Distribution and warehousing services

 

9.1           Ventura shall not charge Customer for warehousing required to rationalize production commitments with Customer’s forecasts.

 

9.2           If Customer requests Ventura to provide warehousing services beyond the basic scope of this Agreement, and Ventura agrees to provide such services, such services shall be separately stated on each invoice for each affected Product.

 

9.3           If Customer requests Ventura to provide distribution services beyond the basic scope of this Agreement (that is, delivery terms other than F.O.B. Ventura plant), and Ventura agrees to provide such services, such services shall be separately stated on each invoice.

 

10.           Shipping and risk of loss

 

10.1           Products shall be delivered F.O.B. Ventura’s plant.

 

10.2           In the normal course Customer shall designate a carrier for shipments of Products.  Ventura shall coordinate loading appointments at Ventura’s plant for the shipping of Products.  Customer shall be responsible for payment of freight invoices directly to the carrier.

 

10.3           If Customer does not designate a carrier, or a designated carrier declines to provide the requested service, Ventura may designate a licensed common carrier for delivery.  If Ventura pays the carrier, Customer is responsible for reimbursement of all freight charges.  Ventura shall seek prior approval of freight charges that are not part of the then-applicable standard freight table and supply customary documentation of Ventura-paid freight charges if requested by Customer.  The freight table in effect as of January 24, 2011 is attached as Schedule 10.3.  Ventura shall use reasonable efforts to provide at least five (5) business days prior notice of any freight rate changes.

 

10.4           If Ventura prepays freight charges for shipments of Products, the minimum freight charge shall be for *** pounds; provided, however, that if Ventura adds an order or accepts a third party order to the same destination as the Products, then Customer will only be charged for the actual weight of Products shipped.

 

 

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*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

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10.5           Customer shall bear the risk of damage to or loss of Products after delivery to a carrier.

 

10.6           If Customer pays the freight charges directly, Customer shall be responsible for filing any claim for damaged or missing Products with the carriers.

 

10.7           If Ventura prepays freight charges, Ventura shall be responsible for filing any claim for damaged or missing Products with the carriers.

 

11.           Warranties of Ventura

 

11.1 Ventura warrants that Products will be processed and packaged according to and shall meet the specifications and be manufactured in accordance with the Product Manuals provided by Customer and accepted by Ventura. Ventura shall not cause any adulteration of the Products due to their packaging and handling of the Products and the furnished materials.

 

11.2           Ventura warrants that Products delivered by Ventura hereunder are guaranteed, as of the date of such delivery, to be on such date not short in weight or, due to a failure to meet the mutually agreed specifications, adulterated or misbranded within the meaning of the Federal Food, Drug and Cosmetic Act, as amended, or any other Federal, state or local law.

 

11.3           Ventura will under no circumstances use the brand names under which the Products are sold or the labels utilized on the Products (or any other trademarks or brand names of Customer or others which Customer uses with respect to the Products) on any product or products other than the Products supplied hereunder to Customer, except by written agreement with Customer. Ventura acknowledges that it does not have and shall not acquire any interest by reason of its use of same in supplying Products to Customer hereunder.

 

11.4           Ventura will comply with all applicable federal, state and local health, safety and food laws, regulations and ordinances, including without limitation, the Public Health Security and Bioterrorism Preparedness and Response Act, as amended, and the Food Safety Modernization Act, as amended, and the regulations promulgated thereunder.

 

  

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12.           Ventura Indemnification

 

12.1           Ventura will defend, indemnify and hold Customer and its Customers harmless (i) against any and all losses, damages, fines, and expenses arising from complaints or legal actions by any agency of Federal, state or local government, including, without limitation, the Federal Food and Drug Administration and comparable state or local agencies, and including, without limitation, such actions as those seeking seizure of product or injunctive relief, and (ii) against any and all losses, damages, fines, expenses, complaints, claims or legal actions alleging or arising from damages, death, illness or injuries arising out of the purchase, sale or use of the Products, to which Customer may become subject by reason of any breach of the warranties and guarantee in paragraph 11 or any breach of Ventura’s responsibilities in paragraph 15 of this Agreement, unless and to the extent such breaches are caused in whole or in part by the negligent or willful act or omission of Customer or a third party, or by Customer’s breach of its obligations hereunder.

 

12.2           In the event any claim is asserted or any suit is filed against Customer for which Ventura may be required to indemnify Customer under this paragraph, Customer shall promptly notify Ventura of such claim or suit. Ventura, upon receipt of such notice, shall undertake the defense of such suit or the settlement of any such claim at its own expense and in such event shall have charge and direction of any proceedings relating thereto provided that Customer, at its option and expense, may employ counsel of its choice and participate in the defense.

 

12.3           In no event shall Customer be free to settle any such claim or suit without the consent of Ventura if by such settlement Ventura may be rendered liable to indemnify Customer under the terms of this Agreement. Failure on the part of Customer to notify Ventura within a reasonable time of any claim or suit shall negate Ventura’s obligations under this paragraph.

 

13.           Warranties of Customer

 

13.1           Customer has all necessary rights to manufacture, distribute and sell the Products (including without limitation all associated trademarks and packaging) throughout the United States, and any other jurisdiction to which it will sell or offer to sell the Products.

 

13.2           Customer warrants that all Products and their constituent ingredients are wholesome, suitable for human consumption as food and formulated in compliance with all applicable law and regulations.

 

  

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13.3           Customer warrants that all labels approved by Customer to be used upon the Products shall not violate any law or regulations in effect in any jurisdiction in which the Products are manufactured, shipped or sold; and

 

13.4           Customer warrants that all labels, specifications and procedures supplied by Customer hereunder shall not infringe any valid United States patent, trademark or copyright of any person not a party to this Agreement.

 

14.           Customer Indemnification

 

14.1           Customer will defend, indemnify and hold harmless Ventura from and against all losses, claims, damages, fines, expenses or actions to which Ventura may become subject by reason of any breach by Customer of the representations and warranties described in paragraph 13 of this Agreement, unless and to the extent such breaches are caused in whole or in part by the negligent or willful act or omission of Ventura or by Ventura’s breach of its obligations hereunder.

 

14.2           In the event any claim is asserted or any suit is filed against Ventura for which Customer may be required to indemnify Ventura under this paragraph, Ventura shall promptly notify Customer of such claim or suit. Customer, upon receipt of such notice, shall undertake the defense of such suit or the settlement of any such claim at its own expense and in such event shall have charge and direction of any proceedings relating thereto provided that Ventura, at its option and expense, may employ counsel of its own choice and participate in the defense.

 

14.3           In no event shall Ventura be free to settle any such claim or suit without the consent of Customer if by such settlement Customer may be rendered liable to indemnify Ventura under the terms of this Agreement. Failure on the part of Ventura to notify Customer within a reasonable time of any claim or suite shall negate Customer obligation under this paragraph.

 

15.           Ventura Responsibilities

 

15.1           Ventura shall be responsible for ensuring that all records of Ventura regarding the manufacturing, processing, packaging, handling and shipment of the Products are being properly documented and retained in accordance with current manufacturing practices promulgated by the United States Food and Drug Administration (“FDA”) and other comparable promulgations of Federal, state and local agencies (collectively, “Good Manufacturing Practices”), and upon prior written request, Customer shall be provided reasonable backup documentation confirming the compliance with such regulations.  Upon written request by Customer, Ventura shall provide reasonable backup documentation in the form of Price Reports detailing the amounts invoiced by Ventura to Customer under this Agreement.

 

  

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15.2           Ventura shall remain responsible for, and exercise full control, direction and supervision over, all testing of the Products, including but not limited to stability tests, as such records, inspections or tests may be required by the FDA, other Federal, state and local agencies and/or current Good Manufacturing Practices.

 

15.3           The Products subject to this Agreement shall be produced and packed at the plant(s) mutually agreed by Ventura and Customer.

 

15.4           Representatives of Customer shall be permitted to enter Ventura’s plant upon reasonable notice during business hours, including, without limitation, during preparation, processing, packaging and/or clean-up hours to inspect the manner in which the Products are being packaged, stored and loaded. Customer representatives shall have the right to inspect all pertinent records which may apply to or have a bearing on the quality and quantity of finished goods sold to Customer hereunder, including but not limited to all reports, charts, data, samples and other documents routinely made as part of Ventura’s production procedures for Customer Products and reports of applicable governmental inspectors.

 

15.5           Upon receipt of written notice from Customer, Ventura shall promptly correct any matters that are found to be in noncompliance with applicable governmental regulations and/or Good Manufacturing Practices. Ventura shall make and maintain such other production records as may be reasonably requested from time to time by Customer, and Customer representative shall also have the right to inspect such records and reports.

 

15.6           Ventura shall exercise due care in the processing, packaging, storage, and loading of all Products and supplies covered by this Agreement and shall, in particular, follow applicable Good Manufacturing Practices.

 

15.7           Ventura shall furnish Customer with a copy of its recall policy and procedures, which demonstrate its ability to track all raw materials and their production codes through processing and into primary distribution.

 

15.8           Ventura shall notify Customer immediately by phone (with written confirmation to follow within 24 hours) of (i) any recall (or other) action by any regulatory agency against a Product covered under this Agreement, (ii) any violations reported or recorded during any inspection and/or any analytical results obtained from regulatory agencies which impact such Products, ingredients or supplies, (iii) any significant process deviation that compromises the safety and/or quality of Products and (iv) any complaints received from consumers or other parties regarding reports of illness or complaints relating to health, injury, accident, death or any other potential hazard related to Products.  All such notifications must be immediately sent to Customer’s designated “Quality Control” contact.

 

  

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15.9           Either Customer or Ventura may determine that a product recall is necessary.  If Customer determines that it is in the best interest of the Customer, its brand names, trade names and other consumer values that a recall is necessary, Ventura shall arrange the recall in close coordination with the Customer.  Ventura shall be responsible for direct costs of the recall to the extent that the recall is required due to Ventura’s breach of the warranties set forth in paragraph 11 or obligations set forth in paragraph 15.  The Customer shall be responsible for all other recall costs.

 

15.10           Ventura shall provide Customer with the following policies, which shall be updated and resubmitted to Customer from time to time: Allergen Policy, HACCP Plan and Metal Detection Policy.

16.           Infringement of Customer IP. Customer may test products manufactured by Ventura no more than *** per calendar quarter.  In the event that Customer believes Ventura is infringing any of its patents (owned or licensed) or trade secrets (collectively, “Customer’s IP”), Customer shall promptly notify Ventura of the alleged infringement and provide relevant information regarding the alleged infringement, including but not limited to a description of the applicable products and their applicable manufacturing codes along with identification of the Customer IP that has been infringed.  Except as otherwise provided in paragraph 16.1, within ten (10) business days of receipt of said notice of alleged infringement, Ventura shall provide written notice to Customer either (i) electing to implement immediate corrective actions as provided in paragraph 16.1 or (ii) initiating the dispute process as provided in paragraph 16.2.

 

16.1   In the event that Ventura elects to not dispute the notice of alleged infringement, Ventura and Customer shall cooperate and Ventura shall use its best efforts to determine the cause of the alleged infringement and to take such immediate actions as are required to eliminate such infringement.  So long as Ventura complies in good faith with its obligations under this paragraph, Ventura shall not be required to withdraw any products from distribution nor shall any compensation be owed by Ventura to Customer for any such infringement.  Notwithstanding anything to the contrary, if Ventura (i) fails to comply with its obligations under this paragraph, (ii) receives *** or more bona fide notifications of infringement from Customer in any *** calendar quarter period, or (iii) receives *** or more bona fide notifications of infringement within the initial term of this Agreement, Customer may directly initiate proceedings under Section 23 of the Agreement and pursue all available claims and remedies for such infringements.

 

 

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*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

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16.2           In the event that Ventura elects to dispute any notice of infringement, the parties shall promptly initiate proceedings under Section 23 of the Agreement.

 

17.           Term

 

The initial term of this Agreement commences as of January 1, 2011, and continues unless earlier terminated through June 30, 2016. The term then shall be extended for additional twelve-month terms unless either party has given at least (a) twelve months prior notice of termination, for the initial term, or (b) one-hundred-eighty (180) days prior written notice of termination for any additional twelve-month term.

 

18.           Termination

 

18.1           Upon expiration or termination of this Agreement, Customer shall purchase (1) all remaining Products produced by Ventura for Customer, at the then-current Pricing; and (2) any unused unique ingredients and packaging materials purchased by Ventura in conformance with Customer’s forecasts under subparagraph 4.1, at then-current Cost Sheet costs. Ventura shall return to Customer (at Customer request), freight collect, all such Products, Raw Materials, ingredients and Packaging Materials.

 

18.2           Termination of this Agreement shall be without prejudice to any rights which may have accrued to Customer or Ventura prior to the date of termination.

 

18.3           With the exception of Customer’s payment obligation, neither party shall be responsible to the other for failure to perform or delays in performing obligations under this Agreement due to a Force Majeure Event.  In the event Ventura is unable to perform its obligations under this Agreement due to a Force Majeure Event, Ventura shall immediately notify Customer and provide details of the Force Majeure Event and Ventura’s best estimate of its duration.  For a period of thirty (30) days after Customer’s receipt of written notice of the Force Majeure Event, Customer may give written notice to Ventura that it intends to transfer volume to an alternate supplier.  At the end of the Force Majeure Event, Ventura shall give Customer written notice of its ability to resume full performance under this Agreement, and the parties shall work in good faith to transition the transferred production back to Ventura in a reasonable time frame.  All transferred volume of Product produced by a third party manufacturer that is attributed to the Force Majeure Event shall be included in calculating Customer’s minimum Annual Volume as contemplated by paragraph 4.5, but will not be included in the Toll Discount Program as contemplated by paragraph 6.3(a).

 

  

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18.4           Either party may, at its sole option, terminate this Agreement immediately:

 

	
  

	
(i)

	
in the event the other party shall breach or violate any material terms or conditions required to be performed by such party and fails to remedy such breach or violation within thirty (30) days after receipt of written notice from the terminating party of its intention to terminate; or

 

	
  

	
(ii)

	
in the event the other party shall make an assignment for the benefit of creditors, commence a voluntary case or unsuccessfully defend an involuntary petition under any bankruptcy law or similar law of relief of debtors, consent to the appointment of a receiver, custodian or trustee for itself or the major part of its property, or otherwise fail to pay its debts as they become due.

 

In the event Ventura elects to terminate this Agreement in accordance with paragraph 18.4(i) for any reason other than Customer’s uncured payment breach, Ventura agrees to cooperate with Customer on an orderly transition (not to exceed one hundred and eighty (180)days) of Customer’s production volume to Customer’s alternate manufacturers.

 

In the event Customer elects to terminate this Agreement in accordance with paragraph 18.4(i), Customer agrees to have Ventura continue manufacturing the Products and cooperate with Ventura on an orderly transition (not to exceed one hundred and eighty (180) days) of Customer’s production volume to Customer’s alternate manufacturers.

 

 19.           Insurance

 

Throughout the term of this Agreement, Ventura shall maintain comprehensive general liability insurance in the following amounts:

 

	Bodily Injury	-	$*** per occurrence
	 	 	 
	Property Damage	-	$*** (except automobile)

 

The CGL policy shall include Product Liability coverage of at least $*** per occurrence with Broad Form Vendor’s Endorsement naming Customer. Ventura shall furnish Certificates of Insurance to Customer evidencing the coverage described in this paragraph as soon as practicable but not more than thirty (30) days after request by Customer. Said Certificate shall provide for at least thirty (30) days’ prior written notice of cancellation or substantial change.

 

 

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*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

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20.           Confidential information

 

20.1           Duty to protect.   Each party receiving Confidential Information shall protect it from disclosure or misuse with at least the same degree of care as it uses for its own confidential and proprietary information.

 

20.2           Non-disclosure.    Each party receiving Confidential Information shall hold it in confidence and not disclose to any other person (except to its affiliates, agents or employees bound by an appropriate obligation of confidentiality, or as required by judicial process) without the disclosing party’s prior written consent.  Ventura acknowledges that Customer may have to disclose copies of this Agreement, as amended, to the Securities and Exchange Commission. Ventura consents to such disclosures.

 

20.3           Use only in support of Agreement. Each party receiving Confidential Information shall use it only for the purposes of performing its obligations under this Agreement.

 

20.4           Survival of confidentiality obligations. The obligations described above regarding Confidential Information shall survive any termination of this Agreement.

 

20.5           Return or destruction of Confidential Information. Upon request of a disclosing party, the receiving party shall return all Confidential Information delivered by the requestor, and either return or certify to the destruction of Confidential Information contained in the records of the receiving party.  Notwithstanding the foregoing, (a) the receiving party shall be permitted to retain one copy of Confidential Information in its legal files until the expiration of applicable statutes of limitations, and (b) this provision shall not be interpreted to require Ventura to destroy, alter or segregate production records kept in the normal course of business.

 

20.6           Supersedes prior confidentiality agreements. The provisions of this Agreement regarding Confidential Information supersede all prior agreements and understandings between the parties on the subject of confidentiality and protection of proprietary information, except that Confidential Information received under prior confidentiality or nondisclosure agreements shall continue to be held in confidence pursuant to the terms of this Agreement.

 

  

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21.           Independent Contractors

 

It is understood and agreed that the parties are independent contractors and engage in the operation of their own respective businesses.  Except as may be specifically provided in this Agreement, neither Customer nor Ventura shall be considered the agent of the other for any purpose, and neither Customer nor Ventura has any authority to enter into any contracts or assume any obligations for the other or to make any warranties or representations on behalf of the other. Nothing in this Agreement shall be construed to establish a relationship of co-partners or joint venturers between Customer and Ventura.

 

22.           Governing law

 

This Agreement shall be governed by the laws of the State of California, as applied to contracts entered into and entirely to be performed within that state, and federal laws of the United States as applicable. Except for disputes that are submitted and timely resolved pursuant to the arbitration process set forth in paragraph 22, each of the parties agrees to submit to the exclusive jurisdiction of the federal and state courts of the State of California sitting in Orange and Los Angeles counties in any action or proceeding arising out of or relating to this Agreement.

 

23.           Dispute resolution

 

23.1           Arbitration:  general

 

Except as provided in subparagraph 23.5, below, any dispute, claim or controversy between Customer and Ventura that arises out of or relates to this Agreement or its breach, termination, enforcement, interpretation or validity, including the determination of the scope or applicability of this Agreement to arbitrate, shall be determined by arbitration before one arbitrator. The arbitrator may, in the Award, allocate all or part of the costs of the arbitration, including the fees of the arbitrator and the reasonable attorneys’ fees of the prevailing party.  Judgment on the Award may be entered in any court having jurisdiction.

 

23.2           Arbitration agency and site of arbitration

 

The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures.

 

  

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23.3           Site of arbitration

 

For all claims other than alleged infringement, the arbitration shall be administered in the city of (i) New York if the arbitration is first demanded by Ventura, or (ii) Los Angeles if the arbitration is first demanded by Customer.  For claims of alleged infringement, the arbitration and mediation shall be held and administered in the neutral forum of Kansas City, Missouri.

 

23.4           Provisional remedies

 

This arbitration paragraph shall not preclude parties from seeking provisional remedies in aid of arbitration, or to prevent immediate and irreparable injury, loss or damage from a court of appropriate jurisdiction.

 

23.5           Mandatory mediation prior to arbitration

 

Prior to the appointment of the arbitra­tor, and within 10 days from the date of commencement of the arbitration, the parties shall submit the dispute to JAMS for mediation. The parties will cooperate with JAMS and with one another in selecting a mediator from JAMS panel of neutrals, and in promptly scheduling the mediation proceedings. The parties covenant that they will participate in the mediation in good faith, and that they will share equally in its costs. All offers, promises, conduct and statements, whe­ther oral or written, made in the course of the mediation by any of the parties, their agents, employees, experts and attorneys, and by the mediator or any JAMS employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any arbitration or other proceeding involving the parties, provided that evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in the mediation. If the dispute is not resolved within 30 days from the date of the submission of the dispute to mediation (or such later date as the parties may mutually agree in writing), the administration of the arbitration shall proceed forthwith. The mediation may continue, if the parties so agree, after the appointment of the arbitrators.  Unless otherwise agreed by the parties, the mediator shall be disqualified from serving as arbitrator in the case.  The pendency of a mediation shall not preclude a party from seeking provisional remedies in aid of the arbitration from a court of appropriate jurisdiction, and the parties agree not to defend against any application for provisional relief on the ground that a mediation is pending.

 

23.6           Limitation of damages

 

Except as attributable to willful misconduct, neither party to this Agreement, nor any affiliate, assignee or controlling entity, shall have any liability or obligation arising from or relating to the transactions contemplated by this Agreement for special, incidental, indirect, consequential, exemplary or punitive  damages, however categorized.  Nothing in this paragraph, however, shall limit a party’s ability to pursue claims for actual, direct or compensatory damages.

 

  

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23.7           Continuing Obligations.

 

For the avoidance of doubt, during the pendency of any dispute resolution procedure under this Agreement relating to intellectual property disputes, Ventura shall continue to manufacture the Products for Customer in accordance with the terms and conditions of this Agreement.

 

24.           No Waiver

 

No waiver by either party of any breach, default, or violation of any term or provision hereof shall constitute a waiver of any subsequent breach, default or violation of the same or other term or provision.

 

25.           Compliance with laws

 

If any law, ordinance, rule, order or regulation of any governmental unit shall become effective during the term of this Agreement, which shall prohibit the performance of any portion of this Agreement, this Agreement shall be suitably amended so that it will comply with such law, ordinance, rule, order or regulation.

 

26.           Assignment: notice and consent

 

26.1           Neither party may assign or otherwise transfer this agreement, including without limitation by operation of law, merger or acquisition, without the prior written consent of the other party, except in connection with a reorganization or similar transaction as a result of which there is no substantial change to the ultimate beneficial ownership of the assigning party.  Any other purported assignment or transfer without prior written consent shall render this Agreement terminable on 90 days notice at the election of the party whose consent was not obtained.

 

26.2           A party wishing to assign this Agreement shall provide the other party with at least thirty (30) days prior written notice.

 

26.3           Neither party shall unreasonably withhold its consent to an assignment.  Reasonable grounds for withholding consent might include factors such as the financial resources, competitive posture or commercial viability of the proposed assignee, or any failure of the proposed assignee to timely provide reasonable written assurances requested by the party whose consent is requested.

 

  

17

  

 

26.4  Notwithstanding anything to the contrary contained in this Agreement, upon written notice to Ventura, Customer may, without the prior written consent of Ventura, sell, transfer, assign or otherwise delegate its rights to, interest in, and obligations under this Agreement to any affiliate or person or entity that (i) acquires all or substantially all of Customer’s business or assets, or (ii) consolidates with, merges with or acquires more than fifty percent (50%) of the outstanding common stock of Customer or Customer’s parent company, Smart Balance, Inc.; provided, however, that the terms of this Agreement and all obligations set forth herein, including the accrued payment obligations and surviving payment obligations to Ventura, in connection with this Agreement, shall be binding upon the affiliate or transferee to the same extent it would be binding upon Customer if not for the assignment, sale, merger, consolidation, transfer or other delegation and Customer shall cause such affiliate or transferee to assume such obligations in writing and guarantee the performance of such affiliate or transferee pursuant to this Agreement.

 

26.5           This Agreement shall be binding and inure to the benefit of each of the parties, their successors and permitted assigns.

 

27.           Notice

 

27.1           The address of each party, for purposes of all formal notices required or permitted by this Agreement, is shown on the first page.

 

27.2           Either party may, from time to time, advise the other party in writing of a change of its address(es) for giving notice.

 

27.3           All notices required to be given pursuant to this Agreement shall be in writing and addressed to the party at the address shown on the first page of the Agreement, or such other address as to which the party has provided formal written notice.

 

27.4           Notices shall be deemed to have been duly given (a) if personally delivered or telecopied by 5:00 PM EST on such date (or the next following business day if personally delivered or telecopied after such time); or (b) if delivered or mailed (registered or certified mail, postage prepaid, return requested), on the date of receipt indicated on the return receipt or third-party delivery confirmation.

 

27.5           Any notice intended to call a party’s attention to a material breach of this Agreement shall be effective only if an additional copy is sent to the address identified above, addressed to the attention of “General Counsel” or “Legal Department.”

 

  

18

  

 

28.           Integration

 

This Agreement, together with any attached schedules and exhibits, contains all of the terms, warranties, representations, agreements, covenants, conditions and provisions agreed upon by the parties with respect to the manufacture and sale of the Products.  This Agreement merges and supersedes all prior agreements, understandings and representations relating to its subject matter.

 

29.           Modification and revision; construction

 

 This Agreement shall not be altered or changed except in writing and signed by appropriate authorized officials of the party or parties sought to be bound.  If any provision contained in this Agreement is determined to be invalid or unenforceable in any respect, that determination will not invalidate the entire agreement; instead, an arbitrator or court of competent jurisdiction shall have the authority to modify this Agreement so that it will be construed and enforced consistent with the intent of its provisions to the greatest extent permissible under applicable law.

 

30.           Counterparts

 

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which, when taken together, shall constitute one and the same instrument.

 

  

19

  

 

31.           Signatures

 

The parties have caused this Agreement to be signed by their duly authorized representatives, intending to be legally bound as of the Effective Date shown on the first page.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which, when taken together, shall constitute one and the same instrument.

 

	
GFA Brands, Inc.

    a Delaware corporation

	
Ventura Foods, LLC

    a Delaware limited liability company

	 	 
	
By:

	
/s/ Stephen B. Hughes

	
By:

	
/s/ Christopher D. Furman

	 	 	 	 
	
Name:

	
Stephen B. Hughes

	
Name:

	
Christopher D. Furman

	 	 	 	 
	
Title:

	
Chief Executive Officer

	
Title:

	
President and Chief Executive Officer

	 	 	 	 
	
Date Signed:

	
2/23/11

	
Date Signed:

	
2/18/11

Schedules:

	 	
2 

	
Schedule of Products

	 	
3 

	
Defined Terms

	 	
6.1

	
Schedule of Initial Toll Rates and Loss Factors

	 	
10.3

	
Freight rates in effect as of January 24, 2011

 

  

20

  

Schedule 2

Schedule of Products

	  	  	  	  
	
Pack

	
Description

	
GFA #

	
Ventura #

	
18/15 oz

	
Smart Balance Buttery Spread

	
01101

	
17464SBN

	
12/15 oz

	
Smart Balance Buttery Spread  with Omega - 3

	
01104

	
17278SBN

	
12/2 - 7.5 oz

	
Smart Balance Buttery Spread  with Flax

	
01106

	
17416SBN

	
18/15 oz

	
Smart Balance Buttery Spread (Wal-Mart)

	
01110

	
17464SMA

	
12/13 oz

	
Smart Balance Low Sodium Spread

	
01120

	
16060SMA

	
6/13 oz

	
Smart Balance Low Sodium Spread

	
01121

	
19397SBN

	
12/13 oz

	
Smart Balance Buttery Spread with EVOO

	
01130

	
17063SBN

	
12/15 oz

	
Smart Balance Buttery Spread with Calcium

	
01135

	
18330SBN

	
6/15 oz

	
Smart Balance Buttery Spread with Calcium

	
01136

	
19399SBN

	
12/15 oz

	
Smart Balance Light Spread with Flax (Wal-Mart)

	
01140

	
17419SMA

	
6/15 oz

	
Smart Balance Light Buttery Spread with EVOO

	
01142

	
19398SBN

	
6/15 oz

	
Smart Balance Light Buttery Spread with Omega - 3

	
01144

	
19396SBN

	
12/2 - 7.5 oz

	
Smart Balance Light Buttery Spread

	
01151

	
17417SBN

	
12/15 oz

	
Smart Balance Light Buttery Spread with EVOO

	
01152

	
17280SBN

	
12/15 oz

	
Smart Balance Light Buttery Spread with Omega - 3

	
01154

	
17064SBN

	
12/15 oz

	
Smart Balance Light Buttery Spread with Flax

	
01158

	
17419SBN

	
12/13 oz

	
Smart Balance Organic Buttery Spread

	
01162

	
16801SBN

	
6/45 oz

	
Smart Balance Buttery Spread

	
01163

	
17427SBN

	
6/45 oz

	
Smart Balance Light Buttery Spread with Flax

	
01166

	
17420SBN

	
12/15 oz

	
Earth Balance Soy-Free Buttery Spread (Canada)

	
01169

	
18142EBX

	
12/13 oz

	
Earth Balance Organic Buttery Spread

	
01171

	
16801EBN

	
12/15 oz

	
Earth Balance Non-GMO Buttery Spread (Canada)

	
01172

	
17586EBX

	
18/16 oz

	
Earth Balance Buttery Sticks

	
01174

	
13773EBN

	
18/15 oz

	
Earth Balance Shortening Sticks

	
01179

	
13657EBN

	
18/15 oz

	
Earth Balance Non-GMO Buttery Spread

	
01180

	
17421EBN

	
12/15 oz

	
Earth Balance Soy Garden Buttery Spread

	
01181

	
17425EBN

	
18/16 oz

	
Earth Balance Buttery Sticks (Canada)

	
01182

	
13773EBX

	
18/15 oz

	
Earth Balance Shortening Sticks (Canada)

	
01183

	
13657EBX

	
12/13 oz

	
Earth Balance Organic Buttery Spread (Canada)

	
01184

	
16801EBX

	
12/13 oz

	
Earth Balance Buttery Spread with EVOO (Canada)

	
01185

	
17587EBX

	
12/13 oz

	
Earth Balance Buttery Spread with EVOO

	
01186

	
17087EBN

	
6/45 oz

	
Earth Balance Non-GMO Buttery Spread

	
01187

	
17426EBN

	
6/45 oz

	
Earth Balance Non-GMO Buttery Spread (Canada)

	
01188

	
17426EBX

	
12/15 oz

	
Earth Balance Soy-Free Buttery Spread

	
01189

	
18142EBN

	
6/15 oz

	
Earth Balance Non-GMO Buttery Spread

	
01190

	
18563EBN

	
6/15 oz

	
Earth Balance Organic Buttery Spread

	
01191

	
19353EBN

	
6/15 oz

	
Earth Balance Soy-Free Buttery Spread

	
01199

	
18564EBN

	
30/16 oz

	
Nucoa Margarine Sticks

	
01300

	
11300NUC

	
12/15 oz

	
Nucoa Margarine

	
01400

	
18084NUC

	
12/15 oz

	
Best Life Buttery Spread

	
01500

	
18531BLF

	
12/15 oz

	
Best Life Buttery Spread with EVOO

	
01520

	
18530BLF

	
6/45 oz

	
Best Life Buttery Spread

	
01540

	
18532BLF

	
12/16 oz

	
Best Life Buttery Sticks (West)

	
01580

	
19129BLF

	
12/16 oz

	
Best Life Buttery Sticks (East)

	
01585

	
19128BLF

	
12/16 oz

	
Smart Balance Butter Blend Sticks (West)

	
01702

	
17866SBN

	
12/16 oz

	
Smart Balance Butter Blend Sticks (East)

	
01706

	
17864SBN

	
12/16 oz

	
Smart Balance Butter Blend Sticks with Omega - 3 (West)

	
01707

	
17867SBN

	
12/16 oz

	
Smart Balance Butter Blend Sticks with Omega - 3 (East)

	
01709

	
17860SBN

	
12/16 oz

	
Smart Balance Butter Blend Sticks with EVOO (West)

	
01710

	
17865SBN

	
12/16 oz

	
Smart Balance Butter Blend Sticks with EVOO (East)

	
01715

	
17862SBN

	
12/12 oz

	
Smart Balance HeartRight Regular Buttery Spread

	
01940

	
17641SBN

	
12/12 oz

	
Smart Balance HeartRight Light Buttery Spread

	
01950

	
17640SBN

	
6/12 oz

	
Smart Balance HeartRight Light Buttery Spread

	
01951

	
19395SBN

	
12/24 oz

	
Smart Balance Omega Oil Blend

	
09500

	
12451SBN

	
9/48 oz

	
Smart Balance Omega Oil Blend

	
09650

	
12452SBN

 

  

21

  

 

Schedule 3

 

Defined Terms

 

	
  

	
“Agreement” means the Manufacturing Agreement between Ventura and Customer, to which this Schedule is appended.

 

	
  

	
“Annual Volume” means the total pounds of Products shipped by Ventura (net of returns) during a Contract Year.

 

	
  

	
“Confidential Information” means all information that one party receives from the other that is of a nature that a reasonable business person would consider valuable, proprietary or confidential.  Examples include, but are not limited to, cost and pricing information, customer and vendor lists, product formulations, manufacturing techniques, sales forecasts and marketing plans. Confidential Information may be conveyed or recorded in oral, written, digital, magnetic or any other form.  Confidential Information does not include any information that is (a) publicly available, (b) known to the recipient prior to receipt from the disclosing party, (c) received by the recipient from a third party without breach of an obligation of confidentiality, or (d) independently developed by the recipient without reference to the disclosing party’s Confidential Information.

 

	
  

	
“Contract Year” means a period beginning July 1 and ending June 30 of the following calendar year during the term of this Agreement.

 

	
 

	

“Force Majeure Event” means a failure, disruption or delay in a party’s ability to perform its obligations under the Agreement by reason of fires, floods, storms, strike or labor disputes, civil disorders, war, governmental restrictions, crop failure, delays in transportation or car shortages, inability to obtain necessary labor, materials, manufacturing facilities, ingredients or energy, or other conditions beyond the reasonable control of either party.  No delay of Customer’s payment obligation is considered a Force Majeure Event.

 

	
  

	
“Incremental Volume” means, for any Contract Year, the amount by which Annual Volume exceeds *** pounds of Products shipped by Ventura (net of returns).

 

 

______________________________

*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

22

  

 

	
  

	
“Ingredient Cost” means, for each ingredient in a Product, the delivered cost of that ingredient.  The cost shall be

 

	 	
(a)  

	
if the ingredient is purchased pursuant to a contract entered into between Ventura and Customer (such as, to fix the price of an oil ingredient for a particular time or quantity), the full delivered contract cost per unit;

 

	 	
(b)  

	
if the ingredient is purchased by Ventura pursuant to a contract negotiated by Customer with the ingredient vendor, the full delivered contract cost per unit; or

 

	 	
(c)  

	
if the ingredient is purchased by Ventura, without a specific contract with Customer, the Standard Cost of the ingredient.

 

	
  

	
“Loss Factors” means the agreed loss factors for ingredients and packaging for each Product size and configuration as identified on Schedule 6.1 hereto.  For new Product sizes and case configurations, Customer and Ventura will reasonably negotiate appropriate Loss Factors.

 

	
  

	
“Packaging Cost” means, for each packaging of a Product, the delivered cost of packaging (such as tubs, lids, cases, sleeves, bands, wrappers, pallets). The cost shall be

 

	 	
(a)  

	
if the packaging is purchased pursuant to a contract entered into between Ventura and Customer (such as, to fix the price of packaging for a particular time or quantity), the full delivered contract cost per unit;

 

	 	
(b)  

	
if the packaging is purchased by Ventura pursuant to a contract negotiated by Customer with the packaging vendor, the full delivered contract cost per unit; or

 

	 	
(c)  

	
if the packaging is purchased by Ventura, without a specific contract with Customer, the Standard Cost of the packaging.

 

	
  

	
“Price” means, for each Product, the sum of all Ingredient Costs and Packaging Costs, applicable Loss Factor and other agreed cost items (if any, as evidenced by written agreement of the parties), plus the applicable Toll with agreed adjustments as set forth in this Agreement.

 

  

23

  

 

	
  

	
“Price Report” means the document delivered to Customer by Ventura from time to time for each Product SKU.  The Price Report lists all applicable components of the then-effective Price by Product.

 

	
  

	
“Products” means (a) the products listed in Schedule 2 offered for sale primarily in the United States and Canada, and (b) other products to be manufactured at Customer’s request, subject to Ventura’s prior written approval, upon mutually agreeable terms.

 

“Standard Cost” means, for any ingredient in a Product, the then-current unit price reflected in Ventura’s manufacturing accounting system as of the date of manufacture or shipment of a Product.  Standard Costs are budgetary cost values that typically are adjusted in the last week of each calendar quarter for the following quarter.  Many ingredients will be adjusted only once a quarter, but ingredients subject to volatile market price movements may be adjusted monthly or in response to specific market movement.

 

	
  

	
“Toll”means the agreed component of a Product Price that represents compensation for ***.  The Toll for each Product size and case configuration at the Effective Date is set forth on Schedule 6.1.  See paragraph 6 for a description of when Tolls may be adjusted.  For new Product sizes and case configurations, Customer and Ventura will reasonably negotiate appropriate Tolls.

 

 

______________________________

*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

24

  

 

Schedule 6.1

 

Schedule of Initial Toll Rates and Loss Factors

 

	  	  	
Loss Factors (shrink)

	
By Case Configuration and Size

	
Toll/lb.

	
Commodity / Ingredient*

	
Packaging*

	  	  	  	  
	
18/15 oz tubs

	
$***

	
***%

	
***%

	
18/15 oz shortening sticks

	
$***

	
***%

	
***%

	
12/15 oz tubs

	
$***

	
***%

	
***%

	
6/13 oz tubs

	
$***

	
***%

	
***%

	
 12/13 oz tubs (excluding organic)

	
$***

	
***%

	
***%

	
12/13 oz tubs (organic)

	
$***

	
***%

	
***%

	
6/45 oz tubs

	
$***

	
***%

	
***%

	
12/2-7.5 oz tubs

	
$***

	
***%

	
***%

	
6/12 oz tubs

	
$***

	
***%

	
***%

	
12/12 oz tubs

	
$***

	
***%

	
***%

	
6/15 oz tubs

	
$***

	
***%

	
***%

	
12/16 oz sticks (excluding butter blend sticks)

	
$***

	
***%

	
***%

	
12/16 oz butter blend sticks

	
$***

	
***%

	
***%

	
18/16 oz sticks

	
$***

	
***%

	
***%

	
30/16 oz sticks

	
$***

	
***%

	
***%

	
12/24 oz bottled oil **

	
$***

	
***%

	
***%

	
9/48 oz bottled oil **

	
$***

	
***%

	
***%

*Expressed as a percentage of delivered cost of the commodity/ingredient/packaging for the Products

 

** Loss Factors = ***% for Packaging only applies to Opelousas Plant;

 

** Loss Factors = ***% for Packaging applies to Ontario Plant (Corrugated).

 

 

______________________________

*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

25

  

 

Schedule 10.3

 

Freight Rates as of January 24, 2011

 

 

See attached freight rate spreadsheet dated 1/24/11

 

 

 

  

26

  

 

Ontario

 

	
Customer #

	
Customer Name

	
Ship-to City

	
State

	
W/ Fuel Charge

	
W/O Fuel Charge

	
Notes

	
22050-018

	
C & S Whls.

	
Fresno

	
N CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-325

	
Super Store

	
Lathrop

	
N CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-080

	
Yosemite

	
Merced

	
N CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-194

	
Grocery Outlet

	
Modesto

	
N CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-240

	
Winco

	
Modesto

	
N CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-004

	
Albertsons

	
Roseville

	
N CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-163

	
Raley's

	
Sacramento

	
N CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-331

	
Coastal Pacific

	
Stockton

	
N CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-012

	
Unified Grocers

	
Stockton

	
N CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-327

	
Unified Western

	
Stockton

	
N CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-329

	
Safeway

	
Tracy

	
N CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-326

	
Albertsons

	
Vacaville

	
N CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-222

	
Trader Joes

	
Stockton

	
N CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-335

	
Bashas

	
Chandler

	
AZ

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-397

	
McLane

	
Goodyear

	
AZ

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-334

	
Peyton

	
Phoenix

	
AZ

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-337

	
Supervalu

	
Phoenix

	
AZ

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-333

	
Safeway

	
Tempe

	
AZ

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-332

	
Albertsons

	
Tolleson

	
AZ

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-153

	
Kroger Co.

	
Tolleson

	
AZ

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

 

Truckload Costs

 

	  	  	  	  	
W/ Fuel Charge

	
W/O Fuel Charge

	  
	  	  	  	  	  
	
Northern CA

	  	
Under ***#

	  	
***

	
***

	
Over ***#

	
Southern CA

	  	
Under ***#

	  	
***

	
***

	
Over ***#

 

 

___________________________

*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

27

  

 

Ontario

 

	
Customer #

	
Customer Name

	
Ship-to City

	
State

	
W/Fuel Charge

	
W/O Fuel Charge

	
Notes

	
22050-316

	
Supervalu

	
Brea

	
CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-317

	
Supervalu

	
Irvine

	
CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-318

	
C & S Whls.

	
Vernon

	
CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-082

	
Coastal Pacific

	
Ontario

	
CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-065

	
Stater Bros

	
Colton

	
CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-321

	
Stater Bros

	
Relands

	
CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-382

	
Stater Bros

	
San Bernardino

	
CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-452

	
Trader Joes

	
Fontana

	
CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-011

	
Unified Western

	
Santa Fe Springs

	
CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	
22050-341

	
99 Cents Only

	
City of Commerce

	
CA

	
***

	
***

	
Route rate--if under ***lbs--actual cost (A)

	  	  	  	  	  	  	  
	
(A) Actual freight procedure: Orders under *** lbs will be route rate times *** lbs for actual cost.

 

 

____________________________

*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

28Unassociated Document

Exhibit 10.2

 

Certain portions of this agreement have been omitted in accordance with a request for confidential treatment submitted to the Securities and Exchange Commission (the “SEC”).  Omitted information has been replaced with three asterisks (***).  The omitted information has been filed separately with the SEC.

MANUFACTURING AGREEMENT

by and between

	 	 	 
	
GFA Brands, Inc.

	
       and

	
Kagome Creative Foods, Inc.

	
115 West Century Road, Suite 260

	  	
710 North Pearl Street

	Paramus, NJ 07652-1432	  	
Osceola, AR 72370-2038

This Agreement is entered into as of the 23rd day of February, 2011, and will serve as our agreement for Kagome Creative Foods, Inc. (“Kagome” or “Manufacturer”) to manufacture for GFA Brands, Inc. (“GFA”) certain products designated by GFA (collectively, the “Products” and individually, each a “Product”), including but not limited to buttery spreads, buttery sticks, oils, margarines and/or shortenings under one or more of GFA’s Earth Balance®, Smart Balance®, BestlifeTM or other brands, on a non-exclusive basis on the terms and conditions set forth herein.

	
1.  

	
GFA’s Responsibilities.  During the Term of this Agreement, GFA shall:

	
a.  

	
Provide quality control policies, procedures and specifications (as may be modified by GFA from time to time, the “Product Manuals”) for the Products within Confidentiality Agreement parameters to Manufacturer.

	
b.  

	
Timely pay Manufacturer’s invoices in accordance with Section 3, below.

	
c.  

	
Provide forecasts, which will neither be guarantees of timing or quantities, nor will they be limitations on production requests.  They will be intended solely as planning tools.

	
d.  

	
Place production orders that meet Manufacturer’s minimum production run sizes with lead times of at least seven (7) days.

	
e.  

	
Transmit shipping orders to Manufacturer which will be placed with a minimum of seven (7) days lead time.

	
2.  

	
Manufacturer’s Responsibilities.  During the Term of this Agreement, Manufacturer shall:

	
a.  

	
Timely produce and package all Products strictly in accordance with the Product Manuals, and submit samples of ingredients and finished goods as requested for GFA review as an accurate representation of ingredients used and Products produced in each production run at Manufacturer’s cost.  Manufacturer’s quality control department will prepare reports to record its laboratory findings for each lot relative to GFA’s Product Manuals.

	
b.  

	
Not manufacture, deliver or ship Products out of specification (which shall include off-taste or other consumer unfriendly issues as determined by GFA in its sole discretion) and will hold same for GFA’s instruction for disposition. Should a Product manufactured hereunder be delivered or shipped and be judged by Manufacturer, GFA or the United States Food and Drug Administration (the “FDA”) or other federal or state agency to represent an alleged, potential or actual consumer health risk (including, without limitation, the alleged or actual inclusion of foreign material) or a regulatory violation or is otherwise deemed to be potentially damaging to GFA’s or Manufacturer’s reputation (or the reputation of the trademarks owned or licensed by GFA), Manufacturer will provide a tracer report within two (2) hours after notification or discovery of an incident, and perform a timely stock hold, stock recovery and recall, as applicable (collectively, a “Product Retrieval”), of the affected Products at Manufacturer’s cost.  In the event either party determines that a Product Retrieval is warranted or necessary, it will immediately notify the other party.  Prior to commencing any Product Retrieval, GFA will review with Manufacturer the manner in which the Product Retrieval is to be carried out and any instructions or suggestions or the applicable regulatory authorities.  The Product Retrieval will be effected in as expeditious a manner as possible and in such a way as to cause the least disruption to the sales of the Product and to preserve the goodwill and reputation of GFA and Manufacturer.  If it is ultimately determined that the cause of the unacceptable Product resulted directly from the acts, omissions, or willful misconduct of GFA (or its customers) or GFA’s designated ingredient or packaging suppliers, Manufacturer shall be reimbursed for actual direct expenses incurred in connection with the Product Retrieval to the extent attributable to GFA (or its customers) or GFA’s designated ingredient or packaging suppliers.

 

  

  

  

	
c.  

	
Notify GFA immediately by phone (with written confirmation to follow within 24 hours) of (i) any notices, communications or other contact received by Manufacturer from the FDA or any other federal or state agency relating to any products manufactured, packaged or stored by Manufacturer, (ii) any violations reported or recorded during any inspection and/or any analytical results obtained from regulatory agencies that impact the Products or Product ingredients, packaging or supplies, (iii) any process deviation that compromises the safety or quality of any Products, and (iv) complaints received from consumers, retailers or other parties regarding reports of illness or complaints relating to health, injury, accident, death or any other potential hazard related to the Products.

	
d.  

	
Maintain adequate records of production, including lot numbers, date, codes, etc., to identify and isolate production and to reduce losses in the event of a Product Retrieval and to comply with current manufacturing practices promulgated by the FDA and other comparable promulgations of federal, state and local agencies (collectively, “Good Manufacturing Practices”).

	
e.  

	
Furnish GFA with a copy of Manufacturer’s recall policy and procedures, and sourcing contingency plan, which demonstrate Manufacturer’s ability to track all raw materials and their production codes through processing and into primary distribution and sourcing alternatives in the event Manufacturer’s production capabilities become suddenly constrained.  In addition, the following policies are to be furnished to GFA at the execution of this Agreement and as updated: Allergen Policy, HACCP Plan and Metal Detection Policy.

	
f.  

	
Maintain, at its cost, OU rabbinical and organic certifications as well as such other certifications that may be agreed upon by the parties.

	
g.  

	
Maintain, at its cost, insurance policies with reputable insurance carrier(s) acceptable to GFA, covering Product Retrievals, products liability and general liability in amounts of not less than $*** million per occurrence, and an umbrella policy of not less than $*** million in the aggregate.  Such insurance shall be on an occurrence basis; that is, it shall cover any claim made for injuries or damages arising out of an event occurring during the term of the policy regardless of whether the claim is made after the expiration of the term of the policy.  All insurance policies shall provide for at least thirty (30) days prior written notice of cancellation, non-renewal, reduction, or change in the terms and conditions of such coverage and shall name GFA and any other affiliates designated by GFA as additional insureds.  Manufacturer will promptly (within 5 business days) inform GFA of Manufacturer’s receipt of a notice of cancellation, non-renewal, reduction, or change in the terms and conditions of such coverage.  Upon request or upon the expiration of any certificates of insurance, Manufacturer shall furnish GFA with certificate(s) of insurance evidencing the above minimum coverages and evidencing GFA and its named affiliates as additional insureds. Such certificates shall contain a clause for notification of GFA by the insurer at least thirty (30) days in advance of any cancellation, non-renewal, reduction, or change in the terms and conditions of such coverage.  Manufacturer will provide GFA such other evidence as GFA may request to ensure that the insurer is required to cover GFA and its named affiliates, as additional insureds, for the deductible portion as well.

 

 

____________________________

*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

2

  

 

	
h.  

	
Allow for timely carrier pickup, free and clear of all liens and encumbrances, of Products pursuant to GFA orders provided such orders are placed with ten (10) days lead.  Notwithstanding the foregoing, Manufacturer will use best efforts to fill and make available for carrier pickup all GFA orders placed with seven (7) days lead. Should short lead orders be requested by GFA, both parties agree to work together to achieve shipment as soon as practical.

	
i.  

	
Fulfill GFA orders on a FIFO basis, unless specified otherwise, and load carriers per shipping orders submitted by GFA.

	
j.  

	
Notify GFA of all applicable shipment dates and invoice for all Products within twenty-four (24) hours of shipment.  In the event an invoice is not delivered to GFA within forty-five (45) days after shipment of Product, or after the applicable freight, ingredient or packaging cost is incurred by Manufacturer, as applicable, such invoices shall be subject to a ***% reduction.  After ninety (90) days, GFA shall have no obligations for such underlying costs or payments.  Monthly summary statements will be provided to GFA to assist in maintaining current account status.

	
k.  

	
Maintain at least seven (7) days worth of inventory of finished product for each Product, based on GFA’s forecasts, in Manufacturer’s plants or warehouses at appropriate storage conditions for such Products.  Unless otherwise agreed by the parties concerning specific ingredients, Manufacturer shall also maintain a minimum of thirty (30) days inventory of unique or single-source ingredients and packaging.

	
l.  

	
Agree and covenant that all Products, as of the date of shipment or delivery: (i) shall not be adulterated or misbranded within the meaning of the U.S. Federal Food, Drug and Cosmetic Act (as amended, the “Act”) or within the meaning of the pure food or drug laws or ordinances of any state, province, territory or city that produces or receives any shipment or delivery of the goods; (ii) may be legally introduced into interstate commerce under Sections 404 and 505 of the Act; (iii) shall be fit and wholesome for human consumption and comply with all applicable federal, state, and local laws, including but not limited to, the Consumer Product Safety Act, the Fair Labor Standards Act of 1938 and the Food Safety Modernization Act, each as amended; (iv) shall be manufactured in accordance current Good Manufacturing Practices; and (v) be not short in weight.

 

 

____________________________

*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

3

  

	
m.  

	
Be registered with the FDA if required by the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 and the regulations promulgated thereunder or any other applicable federal regulations and will comply with all recordkeeping requirements thereof, if applicable.  Manufacturer shall provide GFA with up-to-date contact information for Manufacturer’s designated FDA contact person.

	
n.  

	
Not use the GFA formulas, trademarks, patented technologies or rights, recipes or processes for itself or any other customer or third party, for private label use, salvage sales or for any other use outside the scope of this Agreement without GFA’s prior written consent.  If bona fide lab test results show that Kagome is manufacturing, packaging, storing, distributing or selling a product for a third party unrelated to GFA that infringes on GFA’s patent rights or trade secrets (the “GFA IP”), Kagome acknowledges and agrees that (i) Kagome shall immediately notify the third party that they are infringing on the GFA IP and that Kagome is no longer willing or able to manufacture the product; and (ii) Kagome shall cooperate fully with GFA in GFA’s efforts to end the infringement and to pursue damages for any past infringement.  If Kagome is found by GFA to be manufacturing, storing, distributing or selling any infringing product and GFA takes steps to enforce its rights, which may include legal action, then notwithstanding anything to the contrary contained in this Agreement or otherwise, Kagome shall continue manufacturing, packaging and storing GFA’s products in accordance with the terms and conditions of this Agreement; provided, however, that GFA shall have the option, in its sole discretion, to terminate this Agreement with no less than thirty (30) days prior notice.

	
o.  

	
Agree that this Agreement does not give Manufacturer any rights or claims to the GFA or Smart Balance, Inc. portfolio of trade names and trademarks or any rights or claims to the patents, licensed technology, recipes, formulations, specifications, Product Manuals or other confidential or proprietary information of GFA or Smart Balance, Inc.

	
p.  

	
Obtain and maintain, at its own expense, all federal, state and local licenses and permits required for manufacture and sale of Products in the agreed territory served from Manufacturer’s plants.

	
q.  

	
Manufacture, label, package and ship Products in compliance with all applicable United States federal, state, county and local laws, orders, regulations, codes and standards (whether or not specifically referenced elsewhere in the Agreement).

	
r.  

	
Only use GFA approved packaging and ingredient suppliers for all Products.  GFA may designate unique packaging and ingredient suppliers in an Approved Supplier list, which may be updated by GFA from time to time and shared with Manufacturer, and Manufacturer shall follow GFA’s instructions with respect to purchases from those designated suppliers.  The initial Approved Supplier list is attached hereto as Exhibit A.  GFA shall have full access to all records pertaining to GFA’s approved ingredient suppliers as well as copies of all current and prior Specifications.

	
s.  

	
Maintain accurate documentation verifying that the products and ingredients used meet any certifications required by the Specifications.

 

  

4

  

 

	
t.  

	
Agree that the Products will meet the shelf life designated by GFA, with both individual Product labels and shipping cases being marked with buy-before codes based on the designated shelf life.

	
u.  

	
Manufacture, label and package the Products using equipment and procedures that will not infringe any valid United States, foreign or other recognized patent, trademark, copyright or other proprietary right of any person not a party to this Agreement.

	
v.  

	
Allow representatives of GFA to enter and inspect the plants and any warehouses at which Manufacturer has manufactured or stored the Products, ingredients or packaging, provided such inspections pertain to the manufacturing, packaging or storage of the Products, ingredients or packaging.

	
w.  

	
Keep complete, correct and accurate books of account and all records (collectively, “Records”) that are relevant to verify performance of the parties under this Agreement. Records shall be maintained for a minimum of two (2) years.  GFA and its designated representatives shall have the right to audit such Records and shall be given access to all Records upon request.  Fees and expenses incurred in connection with an audit shall be paid by GFA; provided, however, that if any such audit reveals pricing or invoicing discrepancies of two percent (2%) or more to the disadvantage of GFA, Manufacturer shall, in addition to curing the discrepancies, reimburse GFA its fees and expenses incurred.

	
x.  

	
In support of GFA’s risk management objectives, upon request and at least once annually, provide GFA with financial information sufficient to reasonably demonstrate Manufacturer’s satisfactory financial condition.  Such information may include copies of financial statements, annual or quarterly reports, bank references or other information reasonably directed towards a description of Manufacturer’s current financial status satisfactory to GFA in its sole discretion.

3.      Product Pricing; Ingredients and Packaging; Freight

	
a.  

	
Product Pricing; Toll Fees; Loss Factors:   Pricing of Products will be on a toll method in which out-of-pocket expenses for packaging and ingredients---not labor or overhead--will be detailed monthly with documentation satisfactory to GFA, to which is added a toll fee as set forth in Exhibit B hereto.  Invoices will be priced on an order date basis.  Agreed-upon loss factors are also identified in Exhibit B.

The schedule of toll fees reflect (i) the phase-in of a $*** toll reduction on all Products that are ***oz. or smaller, and (ii) the phase-in of a $*** toll reduction on all Products that are larger than ***oz. (except *** items which will not be subject to the phase-in toll reduction), all as shown on Exhibit B:

 

	Phase-in % and Date	 	Toll Reduction ≤***oz	 	Toll Reduction >***oz
	 	 	***	 	***
	***% effective 2/1/11	 	***	 	***
	***% effective 5/1/11	 	***	 	***
	***% effective 8/1/11	 	***	 	***
	***% effective 11/1/11	 	***	 	***
	* cumulative	 	 	 	 

 

 

____________________________

*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

5

  

                                                                

Similarly, the schedule of loss factors reflect the phase-in of lower loss factors over the first few months of the Agreement.  Effective April 1, 2011, loss factors for ingredients and packaging will be revised as detailed in Exhibit B. Effective July 1, 2011, loss factors will be further adjusted to reflect rates detailed on Exhibit B.  The revised loss factors due to be implemented April 1, 2011 are based on a *** monthly threshold (8 batches).  The qualification of the *** threshold will be determined by the most recent Plan Shipping Forecast for the next 4 week month (4 week pricing period).  For individual Products that fall below the *** monthly threshold, ingredient loss factors for such individual Products will remain at initial levels unless otherwise agreed by the parties.  The parties will meet quarterly to jointly review loss factors, beginning in April of 2011.

	
b.  

	
Annual Toll Changes:  Annual changes in the toll fees during the Term will be based on the percentage changes in the Producer Price Index for Finished Consumer Foods (the “PPI”), which will be measured by taking the unweighted average monthly indices for January through December (final where available or preliminary otherwise) of the most recently concluded calendar year compared to the unweighted average monthly indices for the year prior to the most recently concluded calendar year.  The percentage change in the PPI will be applied against the base toll in effect at the time of the change and the new toll fee will become effective with February pricing of the next contract year (February to January) beginning in 2012; provided, however, that in no case will any annual increase or decrease exceed $***.  For purposes of determining any 2012 toll changes, the PPI for 2010 is set at 182.9.

	
c.  

	
Elimination of Pre-Blending:  Kagome currently uses a third party to pre-blend certain ingredients for Products.  Kagome agrees to provide all pre-blending services in-house as soon as possible, but in no event later than March 31, 2011.  Kagome will work with current supply house to determine existing inventory levels and limit future purchases by supply house to ease transfer to in-house blending.  GFA and Kagome will work together to determine the necessary equipment and the funding of such equipment.

	
d.  

	
Payment Terms and Invoices.  Payment terms are 1% 10, Net 30 until such time as Kagome completes the pre-blending transition contemplated above.  Commencing the calendar month following the completion of the pre-blending transition, payment terms will change to Net 15 days from the invoice date, which shall correspond to the date shipment notification is delivered to GFA.  Any prepaid freight shall be invoiced separately from Product invoices and shall be sent to GFA or GFA’s designated third party service provider, if applicable, for processing and payment and such invoices shall detail the various cost components of the freight charges as may be requested by GFA.

	
e.  

	
Ingredients and Packaging Costs:  Manufacturer will notify GFA monthly upon receipt of a proposed vendor price change in ingredients or packaging to allow GFA time to explore reformulation or negotiate with vendors.  No increases or decreases in pricing may be instituted without agreement by both parties in writing.  In no case may the basic fee structure be changed by either party without written authorization by both parties.  In no event will toll charges be increased during contract period unless changes are approved by both parties in writing.  Ingredient and packaging costs will be updated monthly or as incurred.

 

 

____________________________

*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

6

  

 

	
f.  

	
Soy Oil Purchases.  GFA may, at its option, elect to contract for future delivery of soy oil through Kagome’s oil buying group.  Soy oil costs will be computed based on *** plus *** plus ***.

	
g.  

	
Vendors: When available, Manufacturer will work together with GFA and packaging and ingredient vendors to reduce costs for GFA hereunder.

	
h.  

	
Packaging Inventory:  Manufacturer will purchase and inventory all packaging components needed for the Products as authorized in writing by GFA.  GFA may elect to participate in Manufacturer’s purchasing arrangements or may separately negotiate pricing with vendors.  GFA will be responsible for the cost of all packaging materials, as well as costs associated with packaging development, which includes design costs, plate charges, run charges, etc.  GFA will also be responsible for GFA approved up-charges incurred for expedited or under-minimum carton orders, which shall be billed separately. In the event of a termination of this Agreement by GFA, GFA agrees to purchase any remaining packaging inventory up to a maximum of ninety (90) days (calculated as the average usage for the most recently ended six (6) month period), unless GFA has instructed Manufacturer to carry an inventory in excess of ninety (90) days based on order minimums, in which case GFA will purchase the entire inventory.

	
i.  

	
Freight; Risk of Loss:  Products shall be priced F.O.B. Manufacturer’s Osceloa, AR loading dock. Manufacturer shall coordinate loading appointments at Manufacturer’s plant for the shipping of Products.  GFA shall designate carriers for shipments of Products and GFA shall be responsible for payment of freight invoices directly to the carrier.  If GFA does not designate a carrier or if GFA requests that Manufacturer arrange for shipping, then Manufacturer shall designate and arrange licensed common carriers acceptable to GFA and its customers for delivery, provided that Manufacturer shall seek GFA’s prior approval of all freight charges.  If Manufacturer arranges and prepays the carrier, GFA shall be responsible for reimbursement of Manufacturer’s actual freight costs, but Manufacturer shall guarantee shipment to the destination and indemnify and hold harmless GFA against any damage to person or property arising from such shipment and shall be responsible for filing any claim for damaged or missing Products or other related claims with such carriers.  In all instances, regardless of which party arranges shipment, Manufacturer shall bear the risk of loss or damage to any Products that occurs before delivery to, or completed pickup by, the applicable carrier.  For purposes of this subsection, an “acceptable” carrier shall have proper operating authority and must have, at a minimum, insurance coverages in the following amounts:

 

	General Liability:	$1,000,000
	Auto Liability:	$750,000
	Cargo Liability:	$100,000 per shipment
	Worker’s Compensation:	As required by law

Manufacturer covenants and agrees that it will require proof of insurance and operating authority from each carrier.

 

 

____________________________

*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

7

  

	
  

	
4.

	
Term and Termination; Miscellaneous

	
a.  

	
Period of Agreement:  The initial term of this Agreement will be effective February 1, 2011 and continue until January 31, 2015, subject to early termination as set forth below (the “Initial Term”). After the Initial Term, this Agreement shall automatically renew for one (1) year terms on the same terms and conditions unless either party shall give to the other party, not less than 120 days prior to the expiration of the Initial Term or renewal term then in effect, a notice of non-renewal, time being of the essence (the Initial Term with any renewal(s), the “Term”).

	
b.  

	
Termination of Agreement: Should either party wish to terminate due to breach of the other party, a written notice of breach of agreement must be sent to the other party and thirty (30) days will be allowed to resolve such breach.  If the breach is not cured within the thirty (30) day period, the non-breaching party shall have the ability to terminate this Agreement.

Either party may terminate immediately with written notice if the other makes an assignment for the benefit of its creditors, commits any act of bankruptcy, has a receiver appointed, or otherwise admits of its inability to pay its debts as they mature.  In the event of termination of this Agreement, such termination shall be without prejudice to any rights that may have accrued to either party at the date of termination and Manufacturer agrees to return any materials provided to it hereunder by GFA upon GFA’s request.

	
c.  

	
Confidentiality: Manufacturer agrees to maintain GFA’s formulas, specifications and other trade secrets strictly confidential.  Manufacturer agrees to comply with all of the terms and provisions of the Confidentiality Agreement executed on or about October 8, 2009 by GFA and Kagome Co., LTD of Japan (the “CA”), which is incorporated herein in its entirety by reference and shall control with respect to the subject matter addressed therein as if Manufacturer was the named “Recipient.”

	
d.  

	
General Representations and Warranties: (a) Each party hereto represents and warrants to the other that: (i) it has all requisite power and authority to enter into the Agreement and to carry out the transactions contemplated hereby; (ii) the execution, delivery and performance of the Agreement are duly authorized; (iii) the Agreement has been duly executed and delivered by it and is a valid and binding obligation of it; and (iv) the execution, delivery and performance of the Agreement and the consummation of the transactions contemplated hereby do not conflict with or violate its charter and by-laws, any other contract or agreement to which it is a party, any applicable law or any order or judgment of any court or governmental authority.

	
e.  

	
General Indemnification:  Each party to this Agreement shall indemnify, defend and hold  the other party, its parents, subsidiaries, affiliates and their respective officers, directors, employees, agents and representatives harmless from all claims, suits demands, proceedings, judgments, verdicts, actions, and causes of action, in law or equity and all losses, damages,  liabilities, costs and expenses (including without limitation, interest, penalties, reasonable legal fees, expert or other consulting fees and disbursements) incurred by the other party arising from (i) its gross negligence or intentional misconduct, or (ii) the breach by it of any of its representations, warranties, obligations, covenants or agreements set forth herein.  Notwithstanding anything to the contrary contained in this Section 4.e., in no event shall either party be liable to the other for special, indirect or consequential damages.

 

  

8

  

 

	
f.  

	
Product Liability:  In addition to the foregoing, Manufacturer shall indemnify, defend, and hold GFA, its parents, subsidiaries, affiliates and their respective officers, directors, employees, agents and representatives harmless from all  claims, suits demands, proceedings, judgments, verdicts, actions, and causes of action, in law or equity and all losses, damages, liabilities, costs and expenses (including without limitation,  interest, penalties, reasonable legal fees, expert or other consulting fees and disbursements) against or incurred by GFA arising from (i) any  failure of the Products to comply with applicable  specifications, warranties, covenants and certificates under this Agreement, and (ii) all claims, demands or lawsuits that, with respect to the Products manufactured under this Agreement, allege product liability, strict product liability or any variation thereof.

	
g.  

	
Commitment to Innovate and Improve:  Kagome will support GFA’s growth initiatives and GFA’s position as an innovative market leader in buttery spreads.  Kagome agrees to pursue a vigorous “continuous improvement” program to improve quality, lower costs and innovate.  Kagome will develop an annual continuous improvement plan and present its continuous improvement progress to GFA on a quarterly basis.

	
h.  

	
Capacity: Kagome agrees to allocate capacity in its plants to accommodate at least *** of GFA’s Products each year, which is an estimate, and not a guarantee or minimum commitment, of GFA’s annual volume requirements of Kagome.

	
i.  

	
Plant Manager:  GFA shall be consulted prior to the hiring of any new plant manager (or the equivalent) for Kagome’s Osceola, Arkansas plant.

	
j.  

	
Scope of Relationship: The relationship of the parties hereto is and shall be that of independent contractors. This Agreement is not intended to create and shall not be construed as creating between GFA and Manufacturer the relationship of principal and agent, joint venturer, co-partners or any similar relationship, the existence of which is hereby expressly denied. Manufacturer shall keep in force and maintain worker’s compensation insurance in accordance with applicable law and otherwise comply with all applicable law.  This Agreement supersedes all prior agreements pertaining to the supply of products contemplated hereby.

	
k.  

	
Force Majeure: Neither party shall be liable to the other party if the performance of any of its respective obligations under the Agreement is prevented or delayed because an event of Force Majeure and not due to such Party's own fault or negligence (an "Excusable Delay").  A party shall be excused from its performance to the extent caused by such Excusable Delay; provided that such party (i) gives notice of the Excusable Delay to the other party promptly after its occurrence, (ii) uses its reasonable efforts to overcome, mitigate and remove the cause of the event preventing or delaying performance, (iii) continues the performance of all its obligations under the Agreement that are not prevented or delayed and (iv) upon cessation of the Excusable Delay, promptly performs or completes performance of the obligations which were prevented or delayed.   For purposes of this Agreement, “Force Majeure” shall mean and include any circumstance to the extent beyond the reasonable control of the party so affected, including without limitation, the following: any act of nature or public enemies; explosion; fire; earthquake; flood; drought; shortage of product or raw materials; riots; sabotage; embargo; or war, provided that the party claiming force majeure has exerted all reasonable efforts to avoid or remedy such force majeure.

 

 

____________________________

*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

9

  

	
l.  

	
Governing Law: This Agreement shall be construed as a whole in accordance with the laws of the State of New Jersey, United States of America, without giving effect to the conflicts of laws rules.  The parties hereto irrevocably agree that any legal action or proceeding with respect to this Agreement shall be brought exclusively in the courts of the State of New Jersey, and further agree to submit to the jurisdiction and venue of such courts.  This original English language version of the Agreement shall be controlling in all respects.

	
m.  

	
Action on Agreement.  The prevailing party in any action or proceeding to enforce any provision of this agreement shall be awarded reasonable attorneys’ fees and costs incurred in that action or proceeding or in efforts to negotiate the matter.

	
n.  

	
Faxes and Counterparts – This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. A facsimile copy hereof shall be deemed to be an original.

	
o.  

	
Amendments and Integration – This Agreement may not be waived, modified or amended unless expressly stated in writing signed by both parties. This Agreement with its references constitutes the entire agreement between GFA and Manufacturer with respect to the matters addressed herein and shall, when effective supersede any and all prior negotiations, understandings, and/or agreements, oral or written, between the parties hereto with respect to the subject matter hereof.

	
p.  

	
Binding Effect and Assignment – This Agreement shall be binding upon the parties, their successors, and assigns, provided that it shall not be assigned or transferred in whole or in part (except by operation of law) by either party without the express written consent of the other party.

This Agreement, having been fully read, is entered into by and between the undersigned parties as of the date first written above.

 

	
GFA BRANDS, INC.

	  	
KAGOME CREATIVE FOODS, INC.

	
a Delaware corporation

	  	
a California corporation

	  	  	  	  	  
	
By:

	
/s/ Stephen B. Hughes

	  	
By:

	
/s/ Hiroshi Mori

	  	
Stephen B. Hughes, CEO

	  	
Name:

	
Hiroshi Mori

	  	  	  	
Title:

	
President/CEO

 

  

10

  

 

EXHIBIT A

 

	
·  

	
*** – Tubs and lids for all spreads

	
·  

	
*** – Sleeves for club pack

	
·  

	
*** – pads, glue, related inputs for Delkor machines

	
·  

	
*** – Smart Balance Spreads Butter Flavors

	
·  

	
*** – STS Grindsted

	
·  

	
*** – Fish Oil

	
·  

	
*** - Palm Blend G

	
·  

	
*** – Non-GMO and Organic Soy and Canola

	
·  

	
*** –Organic Palm Oil

	
·  

	
*** – Flax Oil

	
·  

	
*** – Phytosterols

 

 

___________________________

*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

 

  

11

  

EXHIBIT B

 

TOLL FEES:

	  	
TOLL FEE PER POUND

	
PRODUCT SIZE

	
CURRENT

	
EFFECTIVE 2/1/11

	
EFFECTIVE 5/1/11

	
EFFECTIVE 8/1/11

	
EFFECTIVE 11/1/11

	
18/15 oz

	
***

	
***

	
***

	
***

	
***

	
12/15 oz

	
***

	
***

	
***

	
***

	
***

	
12/13 oz

	
***

	
***

	
***

	
***

	
***

	
16/2 #

	
***

	
***

	
***

	
***

	
***

	
8/2x2 #

	
***

	
***

	
***

	
***

	
***

	
6/2x2 #

	
***

	
***

	
***

	
***

	
***

	
6/45 oz

	
***

	
***

	
***

	
***

	
***

	
6/15 oz

	
***

	
***

	
***

	
***

	
***

	
6/13 oz

	
***

	
***

	
***

	
***

	
***

	
20 #

	
***

	
***

	
***

	
***

	
***

	
30 #

	
***

	
***

	
***

	
***

	
***

 

LOSS FACTORS:

 

	  	
INGREDIENTS

	
PACKAGING

	
PRODUCT SIZE

	
CURRENT

	
EFFECTIVE  4/1/11

	
EFFECTIVE 7/1/11

	
CURRENT

	
EFFECTIVE  4/1/11

	
EFFECTIVE 7/1/11

	
18/15 oz

	
***%

	
***%

	
***%

	
***%

	
***%

	
***%

	
12/15 oz

	
***%

	
***%

	
***%

	
***%

	
***%

	
***%

	
12/13 oz

	
***%

	
***%

	
***%

	
***%

	
***%

	
***%

	
16/2 #

	
***%

	
***%

	
***%

	
***%

	
***%

	
***%

	
8/2x2 #

	
***%

	
***%

	
***%

	
***%

	
***%

	
***%

	
6/2x2 #

	
***%

	
***%

	
***%

	
***%

	
***%

	
***%

	
6/45 oz*

	
***%

	
***%

	
***%

	
***%

	
***%

	
***%

	
6/15 oz

	
***

	
***%

	
***%

	
***

	
***%

	
***%

	
6/13 oz

	
***

	
***%

	
***%

	
***

	
***%

	
***%

	
20 #

	
***%

	
***%

	
***%

	
***%

	
***%

	
***%

	
30 #

	
***%

	
***%

	
***%

	
***%

	
***%

	
***%

	
* Exception - 6/45 oz Bestlife

	
***%

	
***%

	
***%

	
***%

	
***%

	
***%

	  	  	  	  	  	  	  
	
EFFICIENCIES CAN & WILL BE ACHIEVED THROUGH IMPLEMENTATION OF TIME PHASE REPLENISHMENT SYSTEM

	
WHICH WILL ALLOW FOR LARGER MORE EFFICIENT RUNS, INCREASED VOLUME,  IN-HOUSE IMPROVEMENTS

	  
	
TO ENSURE SUFFICIENT INGREDIENTS & MATERIALS ARE ON HAND THROUGH INCREASED LEAD TIME ON ORDERS.

 

 

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*** Certain information on this page has been omitted in accordance with a request for confidential treatment submitted to the SEC.  The omitted information has been filed separately with the SEC.

  

12

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