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NUTRIX TERMS AND CONDITIONS OF AGREEMENT TO SUPPLY PRODUCT

1.Definitions

1.1 Unless the context otherwise requires, the following terms as used in this Agreement shall have the following meanings:

Customer” means the customer identified in the price quote attached hereto as Exhibit A (the “Price Quote”).

Customer Supplied Component” shall mean any material or component of a Product or its packaging that (i) is manufactured by Customer or by a third party pursuant to an agreement between Customer and such third party or (ii) that Nutrix is directed to use or incorporate into the Product by Customer.

Effective Date” means the date this Agreement is fully executed by the parties.

Intellectual Property Rights” means all intellectual property rights anywhere in the world, including, without limitation, any invention, patent, design, copyright, trademark, service mark, database rights, commercial or confidential information, know how or trade secrets, and any other rights of a similar nature whether or not any of the same are registered, and the rights to apply for any such right.

Nutrix” means Nutrix, LLC, with a principal place of business at 921 West 500 North, Lindon, Utah 84042

Products” means the products identified on the Price Quote.

Customer Exclusion” means any failure of a Product to meet the Specifications that arises out of or relates to (i) a Customer Supplied Component; (ii) an act or omission of Customer; (iii) a modification of a Product by Customer; or (iv) artwork or labeling provided by Customer to Nutrix.

Specifications” means, collectively, the then-current Product bill of materials and Product quality control records, which shall be maintained and stored at Nutrix’s facility.  Non-confidential information related to the Specification and a certificate of conformance for each Product shall be made available to Customer upon request.

2. Manufacture and Delivery

2.1 Manufacture.  Nutrix shall manufacture and sell to Customer the Products.  Nutrix shall manufacture the Products in accordance with the Specifications. Nutrix retains title to and ownership of all Intellectual Property Rights with respect to the Products, unless otherwise agreed upon in writing. Compliance by Nutrix with the Specifications shall constitute complete and final performance by Nutrix.

2.2 Specification Changes.  Nutrix shall implement as soon as commercially reasonable any change or modification to the Specifications that are requested by Customer; provided, however, that nothing in this Agreement shall require Nutrix to implement any such change or modification unless (i) Nutrix has separately agreed in writing to implement such change or modification and (ii) Customer agrees to reimburse Nutrix for all costs incurred as a result of such change or modification.  In the event of any revisions to the Specifications, Customer shall purchase from Nutrix, at Nutrix’s documented cost, all components, materials, or any other product that was purchased by or on behalf of Nutrix for manufacturing under the prior Specifications and that are no longer required as a result of the agreed upon revisions to the Specifications.

2.3 Purchase Orders.  Customer shall place orders for Products using a purchase order and Nutrix shall supply such Products so ordered; provided Customer’s purchase order does not deviate from the minimum order requirement and/or annual purchase requirement set forth in the Price Quote (as applicable).  Nutrix shall confirm acceptance of each purchase order within five (5) business days from the date of receipt of the purchase order.  Nutrix shall ship Products within the timeframe set forth in the applicable confirmation. Any failure of Nutrix to meet a shipment date which is caused by (i) a Customer request or (ii) delay in delivery of or any other issue with a Customer Supplied Component, shall not be a breach of this Agreement.  Nutrix shall be entitled to deliver and invoice Customer for up to ten percent (10%) more or Nutrix will provide a credit for ten percent (10%) less than the quantity identified in the applicable purchase order. In the event of a conflict between the terms of this Agreement and the terms of a purchase order, the terms of this Agreement shall govern.

2.4 Canceled Purchase Order.  Customer cannot cancel or modify a confirmed purchase order without the written approval of Nutrix.  In the event Nutrix agrees to such cancellation, Customer shall reimbursement Nutrix for all loss (including loss of profits), costs (including the cost of all labor and materials and disposal of the Products), damages, and any other expense incurred by Nutrix in the performance of this Agreement or as a result of Customer’s modification or cancellation.

2.5 Delivery.  Nutrix shall deliver the Products FOB Midvale, Utah.  Customer shall pay all applicable freight and insurance charges, third party handling charges, and all applicable taxes, customs, duties, or other charges relating to the retrieval and/or delivery of the Product from Nutrix’s facility.  Risk of loss shall lie with the Customer upon delivery of the Products to the carrier at Nutrix’s facility; provided, however, that title to the shipment shall remain with Nutrix until Nutrix receives full payment.  If Customer is responsible for delivery, Customer shall pay a doc fee of $50 per pallet per day once the Customer has been notified of the final dimensions and weight of shipment.

2.6 Storage.  Customer shall pay a $50 pallet fee for storage of any raw or finished goods stored at Nutrix’s facility. Customer will be invoiced monthly.

2.7 Inspection.  Customer shall have thirty (30) days after receipt of any shipment of the Product to inspect such Product for compliance with the Specifications and to notify Nutrix of any non-compliant Product (the “Testing Period”). Product shall only be determined non-compliant if it fails to meet the Specifications and such failure is not the result of a Customer Exclusion.  If Nutrix’s testing confirms a failure to meet the Specification, Nutrix shall have the option to replace the nonconforming Product or to provide Customer a refund/credit of the amount paid for such Product.  Failure of Customer to give Nutrix notice of any noncompliance within the Testing Period, or distribution of the Product for commercial sale by Customer, shall constitute acceptance by Customer of the Product and a waiver of any claims for non-compliance of such Product with the Specifications.

3. Payment and Termination

3.1  Price.  Subject to the terms and conditions of this Agreement, Customer shall purchase Products from Nutrix at the prices set forth in the Price Quote, and as such prices are adjusted pursuant to this Agreement. Customer shall also pay Nutrix for all other services performed by Nutrix as set forth in the Price Quote or as otherwise agreed upon in writing by the parties.

3.2  Price Adjustments.  Nutrix shall be allowed one (1) annual price adjustment per twelve (12) month period on at least thirty (30) days prior written notice to Customer (the “Annual Price Adjustment”).  In addition to the Annual Price Adjustment, Nutrix may make additional price adjustments at any time in the event of a change in the Specifications or a change in Nutrix’s costs and/or expenses associated with the manufacture of the Product.

3.3 Payment Terms. Customer shall pay Nutrix in accordance with the payment terms set forth in the Price Quote. Late payment or non payment shall be considered a material breach of this Agreement and Nutrix shall have the right to take any of the following actions: (1) charge interest at the annual rate of eighteen percent (18%) per year, one and one-half percent (1.5%) per month, calculated daily and assessed monthly; (2) suspend all further deliveries of Products to Customer under this Agreement or any other contract; and/or (3) terminate this Agreement and charge Customer for all losses (including loss of profits), costs (including the cost of all labor and materials and disposal of the Products), damages, charges, and any other expenses incurred by Nutrix in connection with its performance of this Agreement or as a result of the termination thereof.

3.4  Term. This Agreement shall become effective on the Effective Date and shall be valid for a period of one (1) year.  This Agreement shall be automatically extended for successive one (1) year terms, unless notice of non-renewal is provided in writing no less than ninety (90) days before the date of expiration.

3.5 Termination.  Either party may terminate this agreement for any reason by giving the other party no less than ninety (90) days prior written notice.  Upon termination or expiration of this Agreement for any reason, the parties shall reasonably cooperate with each other to transfer to Customer all materials, components (including those ordered but not yet delivered to Nutrix), finished goods, and inventory, related to the Product, and Customer shall reimburse Nutrix for the documented cost incurred by Nutrix in procuring and manufacturing such materials. All obligations of both parties, including obligations of confidentiality, indemnity, and any accrued financial obligations hereunder which expressly or by their nature survive the expiration, termination, or assignment of this Agreement, shall continue in full force and effect subsequent to, and notwithstanding, such expiration, termination or assignment, until they are satisfied or, by their nature, expire.

4. Regulatory, Recalls and Labeling

4.1 Product Clearances.  Customer shall obtain and maintain, at its sole cost, all regulatory approvals from any regulatory authorities necessary for the marketing, sale, and distribution of the Product.  Nutrix shall reasonably cooperate with Customer, at Customer’s expense, in obtaining such regulatory approvals; provided, however, that Nutrix shall not disclose information deemed by Nutrix to be proprietary or confidential.

4.2  Recalls.  Customer shall be responsible for all of the costs and expenses related to a Product recall or market withdrawal except to the extent such recall or market withdrawal is directly caused by the Product’s failure to meet the Specifications.

4.3  Labeling.  Customer shall be responsible for ensuring that all labeling, content, artwork, and instructions for use comply with all applicable laws in the territories where Customer markets, sales, or otherwise distributes the Product.

5. Warranties, Liability, and Indemnification

5.1 Nutrix Warranties.  Nutrix represents and warrants that the Products shall comply with the Specifications at the time of delivery (other than to the extent any failure to meet the Specification is the result of a Customer Exclusion).

5.2 Customer Warranties.  Customer represents and warrants that (i) it has and shall maintain an internal quality system that complies with all applicable laws in the territories where Customer markets, sales, or otherwise distributes the Product; (ii) it owns or controls all Intellectual Property Rights, including patents, trademarks, and copyrights necessary to manufacture, test, label, package, store, and distribute the Products in accordance with this Agreement and hereby grants to Nutrix a non-exclusive license to utilize such Intellectual Property Rights necessary for the manufacture and supply of the Products for the benefit of Customer; and (iii) Nutrix’s fulfillment of the terms of this Agreement will not infringe the Intellectual Property Rights of any third party.

5.3 WARRANTY DISCLAIMER.  EXCEPT FOR THE EXPRESS WARRANTIES CONTAINED HEREIN, NO OTHER WARRANTIES, EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE (INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE AND MERCHANTABILITY), SHALL APPLY TO THE MANUFACTURING OF THE PRODUCTS OR ANY OTHER SERVICES PERFORMED BY NUTRIX UNDER THIS AGREEMENT.  ALL SUCH WARRANTIES ARE HEREBY DISCLAIMED.

5.4  Limitation of Liability.  The entire liability of Nutrix and the exclusive remedy of Customer for any and all damages arising from or relating to this Agreement and/or the sale of the Product by Nutrix to Customer shall be limited to, at Nutrix’s option, either (i) replacement of the Product for which damages are claimed or (ii) return of the purchase price paid by Purchaser for such Product. Any action by Customer for such damages must be commenced within one (1) year after the cause of action has accrued.  Nutrix shall not be liable to Customer for any special, indirect, incidental, or consequential damages, including, without limitation, loss of profits, regardless of whether Nutrix has been advised of the possibility of such damages.

5.5 Indemnification.  Customer shall indemnify, defend, and hold harmless Nutrix and its affiliates from and against any and all losses, liabilities, damages, costs, expenses and judgments of any kind (including attorneys’ fees) (“Damages”) that may be incurred by Nutrix in connection with a claim, action, or proceeding of any kind made or brought by a third party as a result of the manufacture, use, or sale of the Product (including a claim that the Product infringes a third party’s Intellectual Property Rights), except for Damages incurred as a direct result of the failure of the Product to meet the Specifications (other than to the extent any such failure is the result of a Customer Exclusion).

6. Miscellaneous

6.1 Confidentiality.  The parties agree that the Product formulae, recipes, ingredients, (and details as to their sourcing), manufacturing information, customer lists, pricing, information, and the Specifications, are confidential information and shall not be disclosed to any third party without the disclosing party’s prior written consent. This Agreement, by reference, incorporates all prior confidentiality agreements, if any, executed by Nutrix and Customer, as though fully set forth herein.  In the event of a conflict between this Agreement and the prior confidentiality agreement, the provision that best protects the confidential information of the disclosing party shall govern.

6.2  Force Majeure.  No party shall be liable for delay or failure to perform its obligations hereunder due to any contingency directly impacting such party’s delay or failure to perform and beyond its reasonable control, after reasonable efforts to exercise such control, including, but not limited to war (declared or undeclared), riot, political insurrection, rebellion, revolution, acts or orders of or expropriation by any government (whether de facto or de jure), prohibition of the import or export of the Product, lack of availability or shortage of suppliers, of necessary materials, equipment or production facilities, quarantine restrictions, fuel shortage, strike, lock-out or other labor troubles which interfere with the manufacture, sale or transportation of the Product or with the supply of raw materials necessary for their production, or fire, flood, explosion, earthquake, tornadoes or other natural events.

6.3 Governing Law.  The parties agree that all questions of the validity, interpretation, or performance of the terms of this Agreement or of any rights or obligations of the parties related in anyway to this Agreement shall be governed by Utah law and the federal laws of the United States of America without regard to principles of conflict of laws, and venue shall lie exclusively in the courts of the state of Utah, Salt Lake County.  Each party expressly consents to the jurisdiction of the state or federal courts in the state of Utah and hereby further irrevocably waives any objection to jurisdiction or venue based on lack of personal jurisdiction, place of residence, improper venue, or forum non conveniens in any such action.

6.4 Waiver. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.

6.5 Entire Agreement.  This Agreement and attachments contain the entire understanding among the Parties and supersedes any and all prior agreements, understandings and arrangements whether written or oral among the Parties with respect to the matters contained in this Agreement.  No amendments, changes, modifications or alterations of the terms and conditions of this Agreement shall be binding upon any party, unless in writing and signed by an authorized representative of each party.  Any terms and conditions, or any other provision in any purchase order used by Purchaser or acknowledgment document used by Supplier that may be different or inconsistent with this Agreement shall be entirely inapplicable, and this Agreement shall take precedence over all such other releases, acknowledgments, or other documents which may be used in the implementation or the administration of this Agreement.

6.6 Severability.  In the event that individual provisions of this Agreement become wholly or partially invalid as evidenced by a ruling of a court of competent jurisdiction, the effectiveness of the remaining provisions shall not be affected, to the extent severable.  The Parties undertake in good faith to replace an invalid provision by a valid one which most closely corresponds with the economic intention of the invalid ruling.

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