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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): October 15, 2020

 

TATTOOED CHEF, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   001-38615   82-5457906
(State or other jurisdiction
of incorporation)
  (Commission
File Number)
  (IRS Employer
Identification No.)

 

6305 Alondra Blvd.

Paramount, CA 90723

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (562) 602-0822

 

Not Applicable
(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Warrants, each exercisable for one share of common stock   TTCFW   The Nasdaq Stock Market LLC
Common stock, par value $0.0001 per share   TTCF   The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 

 

 

 

 

Introductory Note

 

On October 15, 2020, Myjojo, Inc. (“Ittella Parent”) and the registrant, Forum Merger II Corporation (“Forum”) (now Tattooed Chef, Inc.), consummated the previously-announced transactions contemplated by the Merger Agreement (as defined below) (the “Transactions”), following the approval at the special meeting of the stockholders of Forum held on October 15, 2020 (the “Special Meeting”).

 

Immediately upon the completion of the Transactions, Ittella Parent became a direct wholly owned subsidiary of Forum. In connection with the Closing (as defined below) of the Transactions, Forum changed its name from Forum Merger II Corporation to Tattooed Chef, Inc. (“Tattooed Chef”). Certain terms used in this Current Report on Form 8-K have the same meaning as set forth in the definitive proxy statement (the “Proxy Statement”) filed with the Securities and Exchange Commission (the “Commission”) on October 1, 2020 by Forum.

 

Unless the context otherwise requires, “we,” “us,” “our,” and the “Company” refer to Tattooed Chef, Inc., a Delaware corporation, and its consolidated subsidiaries. All references herein to the “Board” refer to the board of directors of the Company. All references to “Forum” refer to the Company before the Closing.

 

Item 1.01 Entry into a Material Definitive Agreement.

 

Agreement and Plan of Merger

 

As disclosed under the section titled “The Business Combination Proposal” and its subsection titled “The Merger Agreement” of the Proxy Statement, on June 11, 2020, Forum, Sprout Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Merger Sub”), Ittella Parent, and Salvatore Galletti, in his capacity as the holder representative, entered into an Agreement and Plan of Merger, which was amended on August 10, 2020 by the First Amendment to the Agreement and Plan of Merger (as amended, the “Merger Agreement”).

 

The Transactions involved the merger of Merger Sub with and into Ittella Parent, with Ittella Parent continuing as the surviving corporation (the “Surviving Entity”) and as a wholly-owned subsidiary of the Company (the “Business Combination”).

 

Item 2.01 of this Current Report discusses the consummation of the Business Combination and various other Transactions and events contemplated by the Merger Agreement which took place on October 15, 2020 (the “Closing”), and is incorporated herein by reference.

 

Amended and Restated Registration Rights Agreement

 

On August 2, 2018, Forum Investors II, LLC, Forum’s sponsor (the “Sponsor”), entered into a registration rights agreement with Forum, pursuant to which the Sponsor was granted certain rights relating to the registration of shares of common stock, Initial Founder Shares (as defined therein), Private Placement Units (as defined therein), and Working Capital Units (as defined therein) held by it.

 

Upon the Closing, we, the Ittella Parent stockholders, the underwriters of Forum’s initial public offering, and the Sponsor entered into an amended and restated registration rights agreement (the “Registration Rights Agreement”). Under the Registration Rights Agreement, the Sponsor agreed that it will not transfer (i) 1,250,000 Founder Shares (as defined in the Registration Rights Agreement) held by it prior to six months after the Closing and (ii) 3,750,000 Founder Shares held by it prior to the earlier of (x) twelve months after the Closing, (y) the date on which the last sales price of common stock exceeds $12.00 per share, subject to adjustment as provided therein and (z) the date on which we complete a transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property. In addition, the holders of shares of common stock received as consideration in the Business Combination agreed not to transfer any of the shares held by them prior to six months after the Closing.

 

Under the Registration Rights Agreement, the Ittella Parent stockholders and the Sponsor hold registration rights that obligate the Company to register for resale under the Securities Act of 1933, as amended (the “Securities Act”), all or any portion of the common stock issued as merger consideration under the Merger Agreement, as well as shares of common stock held by the Sponsor or issuable upon the exercise of warrants held by the Sponsor. Initiating Holders (as defined in the Registration Rights Agreement) will be entitled to make a written demand for registration under the Securities Act of all or part of the their registrable securities, subject to certain limitations as described in the Registration Rights Agreement, including that these holders must propose to sell securities with anticipated total proceeds of at least $10,000,000. Subject to certain exceptions if, any time after the Closing, we propose to file a registration statement under the Securities Act with respect to our securities, under the Registration Rights Agreement, we shall give notice to stockholders who are a party to the Registration Rights Agreement, including the Sponsor, as to the proposed filing and offer these stockholders an opportunity to register the sale of the number of their registrable securities as they request in writing. In addition, subject to certain exceptions, these stockholders will be entitled under the Registration Rights Agreement to request in writing that we register the resale of any or all of their registrable securities on Form S-3 and any similar short-form registration statement that may be available at that time.

 

Under the Registration Rights Agreement, we agree to indemnify these stockholders and certain persons or entities related to these stockholders against any losses or damages resulting from any untrue statement or omission of a material fact in any registration statement or prospectus pursuant to which they sell registrable securities, unless the liability arose from their misstatement or omission, and these stockholders, if registrable securities held by these stockholders are included in the securities as to which registration, qualification or compliance is being effected, agree to indemnify us and certain persons or entities related to us against all losses caused by their misstatements or omissions in those documents.

 

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This summary is qualified in its entirety by reference to the text of the Registration Rights Agreement, which is included as Exhibit 10.1 to this Current Report and is incorporated herein by reference.

 

Sponsor Earnout Letter

 

In connection with the Merger Agreement, Forum entered into a Sponsor Earnout Letter with the Sponsor and Ittella Parent, dated June 11, 2020 (“Sponsor Earnout Letter”), pursuant to which the Sponsor placed the Sponsor Earnout Shares (as defined in the Merger Agreement) into escrow, effective as of the Closing, and subjected these shares to the vesting conditions set forth in the Merger Agreement.

 

If the vesting conditions are not satisfied, then the Sponsor Earnout Shares will be forfeited and cancelled. The vesting, release and forfeiture terms of the Sponsor Earnout Shares are as follows. Sponsor Earnout Shares will vest within the first three years after the Closing, upon the following conditions: (i) if the trading price of our common stock equals or exceeds $12.00 on any 20 trading days in any 30-day trading period (the “$12.00 Share Price Trigger”), then 50% of the Sponsor Earnout Shares will vest, or (ii) if the trading price of our common stock equals or exceeds $14.00 on any 20 trading days in any 30-day trading period (each of such $14.00 trigger and the $12.00 Share Price Trigger, a “Share Price Trigger”), then 50% of the Sponsor Earnout Shares will vest. If a change in control occurs within the first three years after the Closing, all Sponsor Earnout Shares not previously vested will vest. If the foregoing vesting conditions are not satisfied within the first three years of Closing, the Sponsor Earnout Shares are forfeited.

 

This summary is qualified in its entirety by reference to the text of the Sponsor Earnout Letter, which is included as Exhibit 10.2 to this Current Report and is incorporated herein by reference.

 

Item 2.01 Completion of Acquisition or Disposition of Assets.

 

At the Special Meeting, the Forum stockholders considered and adopted, among other matters, the Merger Agreement. On October 15, 2020, the parties consummated the Transactions.

 

At the Special Meeting, holders of 1,827 shares of Forum common stock sold in its initial public offering (“Public Shares”) exercised their right to redeem those shares for cash at a price of $10.37 per share, for an aggregate of approximately $18,952. Immediately after giving effect to the Transactions, there were approximately 57.6 million shares of common stock and warrants to purchase approximately 20.7 million shares of common stock of the Company issued and outstanding, not including any Sponsor Earnout Shares or Holdback Shares. Upon the Closing, Forum’s units automatically separated into the component securities upon consummation of the Business Combination and, as a result, no longer traded as a separate security, and our common stock and warrants began trading on The Nasdaq Stock Market (“Nasdaq”) under the trading symbols “TTCF” and “TTCFW,” respectively. Prior the Closing, each unit of Forum consisted of one share of Class A common stock and one public warrant of the Company, whereby each public warrant entitled the holder to purchase one share of Class A common stock at an exercise price of $11.50 per share. Upon the closing of the Business Combination, Forum’s amended and restated certificate of incorporation, dated August 2, 2018, was replaced with the second amended and restated certificate of incorporation of Tattooed Chef, which, among other things, reclassified all shares of Class A common stock as common stock.

 

As of the Closing, Salvatore Galletti, our chief executive officer, and an entity affiliated with him, beneficially owned approximately 49.2% of our outstanding shares of common stock and the former security holders of Forum beneficially owned approximately 5.3% of our outstanding shares of common stock, not including any Sponsor Earnout Shares or Holdback Shares. As a result, we are a “controlled company” within the meaning of the Nasdaq listing rules but currently do not intend to take advantage of the controlled company exemptions from certain of Nasdaq’s corporate governance rules.

 

The per share redemption price of approximately $10.37 for holders of Public Shares electing redemption was paid out of Forum’s trust account, which after taking into account the redemption but before any cash consideration paid to the holders of Ittella Parent equity and any transaction expenses, had a balance immediately prior to the Closing of approximately $207.4 million.

 

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FORM 10 INFORMATION

 

Item 2.01(f) of Form 8-K states that if the registrant was a shell company, as Forum was immediately before the Transactions, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10. Accordingly, we are providing the information below that would be included in a Form 10 if we were to file a Form 10. Please note that the information provided below relates to the combined company after Forum’s acquisition of Ittella Parent in connection with the consummation of the Transactions, unless otherwise specifically indicated or the context otherwise requires.

 

Forward-Looking Statements

 

This current Report on Form 8-K contains forward-looking statements. Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. The words “anticipates,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predicts,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Current Report include, but are not limited to, statements about our:

 

ability to maintain the listing of its common stock on Nasdaq following the Business Combination;

 

ability to raise financing in the future;

 

ability to successfully acquire and integrate new operations and facilities;

 

ability to respond to market conditions and global and economic factors beyond our control, including the potential adverse effects of the ongoing global coronavirus (COVID-19) pandemic on capital markets, general economic conditions, unemployment and our liquidity, operations and personnel;

 

ability to obtain raw materials on a timely basis or in quantities sufficient to meet the demand for our products;

 

ability to grow and retain our customer base;

 

ability to forecast and maintain an adequate rate of revenue growth and appropriately plan our expenses;

 

ability to continue to grow sales of “Tattooed Chef” branded products;

 

expectations regarding future expenditures;

 

ability to attract and retain qualified employees and key personnel;

 

ability to retain relationship with third party suppliers;

 

ability to compete effectively in the competitive packaged food industry;

 

ability to protect and enhance our corporate reputation and brand; and

 

ability to respond to the impact from future regulatory, judicial, and legislative changes in our industry.

 

These forward-looking statements are based on information available as of the date of this Current Report, and current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

In addition, statements that we “believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Current Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and these statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

 

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You should not place undue reliance on these forward-looking statements. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements.

 

Business

 

Our business is described in the Proxy Statement in the section titled “Information About Ittella Parent” and that information is incorporated herein by reference.

 

Risk Factors

 

The risks associated with our business are described in the Proxy Statement in the section titled “Risk Factors” and are incorporated herein by reference.

 

Financial Information

 

Reference is made to the disclosure set forth in Item 9.01 of this Current Report concerning the financial information of Ittella Parent, which is incorporated herein by reference. Reference is further made to the disclosures contained in the Proxy Statement in the sections titled “Summary Historical Financial Information of Ittella Parent and Ittella Parent Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are incorporated herein by reference.

 

The unaudited pro forma condensed combined financial information of the Company for the year ended December 31, 2019 is included in the Proxy Statement in the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 81 of the Proxy Statement and is incorporated herein by reference. The unaudited pro forma condensed combined financial information of the Company as of and for the six months ended June 30, 2020 and the unaudited pro forma condensed combined statement of operations for the Company for the year ended December 31, 2019 are set forth in Exhibit 99.1 hereto and is incorporated herein by reference.

 

The table setting forth the per share data of the Company on a stand-alone basis and the unaudited pro forma condensed combined per share data for the year ended December 31, 2019 and the six months ended June 30, 2020 after giving effect to the Business Combination is set forth in Exhibit 99.1 hereto and is incorporated herein by reference.

 

Properties

 

Our facilities are described in the Proxy Statement in the section titled “Information About Ittella Parent– Facilities,” which is incorporated herein by reference.

 

Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth information regarding the beneficial ownership of shares of our common stock upon the closing of the Business Combination by:

 

  each person known to us to be the beneficial owner of more than 5% of our upon the closing of the Business Combination;
     
  each of our officers and directors; and
     
  all of our executive officers and directors as a group upon the closing of the Business Combination.

 

Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or exercisable within 60 days.

 

Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of our common stock beneficially owned by them. The beneficial ownership of shares of our common stock has been determined assuming that there are no Sponsor Earnout Shares or Holdback Shares issued and outstanding.

 

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    Number of
Shares
Beneficially
Owned
    Percentage of
Outstanding
Shares
 
Directors and Executive Officers of Tattooed Chef            
Salvatore Galletti(3)(6)     28,324,038       49.2 %
Sarah Galletti(4)(6)              
Stephanie Dieckmann(6)     500,000       0.9 %
Giuseppe Bardari(5)(6)     1,500,000       2.6 %
Charles Cargile(6)              
Matthew Williams(6)              
David Boris(1)(2)     3,055,000       5.3 %
Ed Gelfand(6)              
Bryan Rosenberg(6)              
Paula Ciaramitaro(6)              
Jennifer Fellner(6)              
Ryan Olohan(6)              
Daniel Williamson(6)              
Marie D. Quintero-Johnson(6)              
All executive officers and directors as a group (14 individuals)     33,379,038       57.9 %
                 
Five Percent Stockholders:                
Forum Investors LLC(1)(2)     3,055,000       5.3 %
Marshall Kiev(1)(2)     3,055,000       5.3 %
UMB Capital Corporation(7)     4,046,291       7.0 %

 

* Less than 1%.

 

(1) The business address of each of these entities or individuals is 1615 South Congress Avenue, Suite 103, Delray Beach, FL 33445.
(2) Represents shares held by the Sponsor. Forum Capital Management II LLC is the managing member of the Sponsor and has voting and investment discretion with respect to the common stock held by the Sponsor. Marshall Kiev and David Boris are the managing members of Forum Capital Management II LLC and may be deemed to have beneficial ownership of the common stock held directly by the Sponsor. Each such person disclaims any beneficial ownership of the reported shares other than to the extent of any pecuniary interest they may have therein, directly or indirectly.
(3) Includes 566,481 shares held by Project Lily, LLC, a Delaware limited liability company (“Project Lily”). Project Lily is owned 52% by Salvatore Galletti, 24% by his daughter, Sarah Galletti, and 24% by his son, Abel Galletti. Salvatore Galletti has sole voting and investment power over the shares held by Project Lily.
(4) Does not include any shares to be held by Project Lily. Sarah Galletti is an owner of Project Lily, as described in footnote 3, but does not have any voting or investment power over the shares held by Project Lily.
(5) Represents shares held by Pizzo Food Srls (“Pizzo”). Mr. Bardari owns 100% of Pizzo and has sole voting and investment power over the shares held by Pizzo.
(6) The business address of each of these entities or individuals is 6305 Alondra Boulevard, Paramount, California 90723.
(7) The business address of UMB is UMB Capital Corporation, 1010 Grand Boulevard, Kansas City, Missouri 64106. Voting and dispositive power of the shares held by UMB is held by its board of directors, which currently comprises Andre Trudell, Mariner Kemper, Jim Rine, Tom Terry, Dominic Karaba, Greg Carasik, and Chris Roth. Each such person disclaims any beneficial ownership of the reported shares other than to the extent of any pecuniary interest they may have therein, directly or indirectly.

 

Directors and Executive Officers

 

The Company’s directors and executive officers after the Closing are described in the Proxy Statement in the section titled “Management After the Business Combination,” which is incorporated herein by reference.

 

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Executive Compensation

 

The executive compensation of Ittella Parent’s executive officers and directors is described in the Proxy Statement in the sections titled “Executive Compensation – Ittella Parent” and “Certain Relationships and Related Transactions – Ittella Parent Related Party Transactions” incorporated herein by reference.

 

Certain Relationships and Related Transactions

 

The certain relationships and related party transactions of Ittella Parent are described in the Proxy Statement in the section titled “Certain Relationships and Related Person Transactions,” which is incorporated herein by reference.

 

Legal Proceedings

 

Reference is made to the disclosure regarding legal proceedings in the section of the Proxy Statement titled “Information About Ittella Parent – Legal Proceedings,” which is incorporated herein by reference.

 

Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

 

Information about the market price, ticker symbol, number of stockholders and dividends for Forum’s securities is set forth in the Proxy Statement in the section titled “Market Price, Ticker Symbol and Dividend Information” and this information is incorporated herein by reference. As of the Closing, there were approximately 12 holders of record of the Company’s common stock and approximately four holders of record of the Company’s warrants to purchase common stock (formerly Class A common stock).

 

Tattooed Chef’s common stock began trading on Nasdaq under the symbol “TTCF” and its warrants began trading on Nasdaq under the symbol “TTCFW” on October 16, 2020, subject to ongoing review of Tattooed Chef’s satisfaction of all listing criteria post-Business Combination.

 

We have not paid any cash dividends on shares of our common stock to date. The payment of cash dividends is restricted by negative covenants pursuant to our line of credit.

 

Description of Registrant’s Securities

 

The description of Ittella Parent’s securities is contained in the Proxy Statement in the sections titled “Description of Securities,” which is incorporated herein by reference.

 

Financial Statements and Supplementary Data

 

Reference is made to the disclosure set forth under Item 9.01 of this Current Report, which is incorporated herein by reference.

 

Changes in Accountants

 

Reference is made to the disclosure contained in Item 4.01 of this Current Report, which is incorporated herein by reference.

 

Recent Sales of Unregistered Securities

 

Reference is made to the disclosure set forth under Item 3.02 of this Current Report concerning the issuance and sale by the Company of certain unregistered securities, which is incorporated herein by reference.

 

Indemnification of Directors and Officers

 

Reference is made to the disclosure set forth under Item 5.02 of this Current Report, which is incorporated herein by reference.

 

Financial Statements and Exhibits

 

Reference is made to the disclosure set forth under Item 9.01 of this Current Report, which is incorporated herein by reference.

 

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Item 2.02 Results of Operations and Financial Condition.

 

Certain annual and quarterly financial information regarding Ittella Parent was included in the Proxy Statement, in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Ittella Parent”, which is incorporated herein by reference. The disclosure contained in Item 2.01 of this Current Report is also incorporated herein by reference.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

In connection with the Business Combination, the following transactions have been consummated prior to, and as a condition to, the Closing: (i) UMB Capital Corporation (“UMB”) contributed all of the equity interests in Ittella International, LLC, a California limited liability, and direct subsidiary of Ittella Parent owned by it, to Ittella Parent in exchange for Ittella Parent issuing to UMB 1,176 shares of common stock of Ittella Parent; (ii) Pizzo Food Srls, a company organized under the laws of Italy (“Pizzo”) has contributed all of the equity interests in Ittella Italy S.R.L., a company organized under the laws of Italy (“Ittella Italy”) owned by it to Ittella’s Chef LLC in exchange for Ittella Parent issuing to Pizzo one share of Class B special stock, par value $0.001 per share of Ittella Parent; (iii) Salvatore Galletti has transferred some of his shares of common stock of Ittella Parent to Project Lily, which is controlled by Salvatore Galletti; and (iv) Ittella Parent issued one share of Class A special stock, par value $0.001 per share, in Ittella Parent to Stephanie Dieckmann (these transactions collectively, the “Restructuring”). The Restructuring was consummated prior to the Business Combination. The shares of Class A and Class B special stock of Ittella Parent were converted into shares of our common stock upon consummation of the Business Combination.

 

The shares issued to the applicable holders as part of the Restructuring and to the stockholders of Ittella Parent in connection with the Closing were issued pursuant to and in accordance with exemptions from registration under the Securities Act, under Section 4(a)(2) of and/or Regulation D promulgated under the Securities Act. 

 

Upon the Closing of the Transactions, (i) all shares of Class B common stock were reclassified to Class A common stock; and (ii) immediately following this reclassification, all shares of Class A common stock were reclassified to common stock of Tattooed Chef.

 

Item 3.03 Material Modification to Rights of Security Holders.

 

Amended and Restated Certificate of Incorporation

 

Upon the closing of the Business Combination, Forum’s amended and restated certificate of incorporation, dated August 2, 2018, as further amended on September 30, 2020, was replaced with the second amended and restated certificate of incorporation of Tattooed Chef (“Amended Certificate”), which, among other things:

 

(a) provides that any amendment to provisions of the Company’s charter and bylaws will require the approval of the holders of at least 66⅔% of the Company’s then-outstanding shares of capital stock entitled to vote generally at an election of directors;

 

(b) provides that the Company opts out of Section 203 of the Delaware General Corporation Law, which prevents certain Delaware corporations, under certain circumstances, from engaging in a “business combination” with certain “interested stockholders” and their affiliates;

 

(c) provides that the federal district courts of the United States of America will be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the federal securities laws, including the Securities Act of 1933, as amended;

 

(d) provides that, subject to the limitations imposed by applicable law, directors may be removed with cause by the affirmative vote of the holders of at least 66⅔% of the voting power of all then-outstanding shares of capital stock of the Company entitled to vote generally at an election of directors;

 

(e) changes the Registrant’s name to “Tattooed Chef, Inc.” from “Forum Merger II Corporation”;

 

(f)  increases the authorized capital stock from 111,000,000 shares, consisting of 100,000,000 shares of Class A common stock, 10,000,000 shares of Class B common stock and 1,000,000 shares of preferred stock, par value $0.0001 per share, to 1,010,000,000 shares, which consists of 1,000,000,000 shares of common stock, and 10,000,000 shares of preferred stock, by, on the effective date of the filing of the Amended Certificate: (i) reclassifying all shares of Class B common stock as Class A common stock; (ii) immediately following the conversion of such Class B common stock into shares of Class A common stock, reclassifying all shares of Class A common stock as common stock; and (iii) creating an additional 890,000,000 shares of common stock and 9,000,000 shares of preferred stock;

 

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(g) eliminates various provisions applicable only to blank check companies; and

 

(h) changes the classification of the board of directors from two classes to three classes of directors, with each class elected for staggered terms.

 

The stockholders of Forum approved this amended and restated certificate of incorporation at the Special Meeting. This summary is qualified in its entirety by reference to the text of the Amended Certificate, which is included as Exhibit 3.1 to this Current Report and is incorporated herein by reference.

 

Amended and Restated Bylaws

 

Upon the Closing of the Business Combination, Forum’s bylaws were amended and restated to be consistent with our Amended Certificate and to make certain other changes that our board of directors deems appropriate for a public operating company. This summary is qualified in its entirety by reference to the text of the amended and restated bylaws, which are included as Exhibit 3.2 to this Current Report and is incorporated herein by reference.

 

Item 4.01 Changes in Registrant’s Certifying Accountant.

 

(a) Dismissal of independent registered public accounting firm

 

Marcum, LLP (“Marcum”) served as the independent registered public accounting firm for Forum from its inception through the Closing. The firm of BDO USA, LLP (“BDO”) served as the independent registered public accounting firm for privately-held Ittella Parent prior to the Business Combination.

 

On October 15, 2020, the Audit Committee of the Board approved the engagement of BDO as the Company’s independent registered public accounting firm effective as of the Closing to audit the Company’s consolidated financial statements for the year ended December 31, 2020. The Audit Committee of Forum resolved that Marcum would be dismissed as the Company’s independent registered public accounting firm effective upon filing of the Company’s Form 10-Q for the quarter ended September 30, 2020, which consists only of the accounts of the pre-Business Combination special purpose acquisition company, Forum (this date, the “10-Q Filing Date”). Accordingly, Marcum was informed that it would be dismissed as the Company’s independent registered public accounting firm effective as of the 10-Q Filing Date.

 

Marcum’s report on Forum’s financial statements as of December 31, 2019 and 2018, for the year ended December 31, 2019 and for the period from May 4, 2018 (inception) to December 31, 2018 did not contain an adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope, or accounting principles. During the period of Marcum’s engagement by Forum, and the subsequent interim period preceding Marcum’s dismissal, there were no disagreements with Marcum on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Marcum, would have caused it to make a reference to the subject matter of the disagreement in connection with its reports covering such periods. In addition, no “reportable events,” as defined in Item 304(a)(1)(v) of Regulation S-K, occurred within the period of Marcum’s engagement and the subsequent interim period preceding Marcum’s dismissal.

 

During the period from May 4, 2018 (Forum’s inception) through December 31, 2019 and the subsequent interim period preceding the engagement of BDO, Forum did not consult BDO regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on Forum’s financial statements, and neither a written report was provided to Ittella Parent or oral advice was provided that BDO concluded was an important factor considered by Ittella Parent in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a disagreement (as described in Item 304(a)(1)(iv) of Regulation S-K) or a “reportable event” (as described in Item 304(a)(1)(v) of Regulation S-K).

 

Ittella Parent provided Marcum with a copy of the disclosures made pursuant to this Item 4.01 prior to the filing of this Current Report and requested that Marcum furnish a letter addressed to the Commission, which is included as Exhibit 16.1 to this Current Report, stating whether it agrees with these disclosures, and, if not, stating the respects in which it does not agree.

 

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Item 5.01 Changes in Control of Registrant.

 

Reference is made to the disclosure in the Proxy Statement in the sections titled “The Business Combination Proposal” and “The Merger Agreement,” which are incorporated herein by reference. Further reference is made to the information contained in Item 2.01 to this Current Report, which is incorporated herein by reference.

 

Immediately after giving effect to the Transactions, there were approximately 57.6 million shares of our common stock outstanding, not including Sponsor Earnout and Holdback Shares. At that time, Salvatore Galletti, our chief executive officer, and an entity affiliated with him, held approximately 49.2% of the outstanding shares of our common stock and our executive officers and directors and their affiliated entities held approximately 8.8% of our outstanding shares of our common stock.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Appointment of Directors and Officers

 

The following persons are serving as executive officers and directors following the Closing. For biographical information concerning the executive officers and directors, see the disclosure in the Proxy Statement in the sections titled “Management After the Business Combination” and “Ittella Parent Management,” which are incorporated herein by reference regarding the appointment of Mr. Williams as Chief Growth Officer and the appointment of Mr. Cargile, and the corresponding resignation of Ms. Dieckmann, as Chief Financial Officer, which is incorporated herein by reference.

 

Name   Age   Position
Salvatore “Sam” Galletti   57   President, CEO, and Class III Director
Sarah Galletti   34   Creative Director
Charles Cargile   56   Chief Financial Officer
Stephanie Dieckmann   41   Chief Operating Officer
Matthew Williams   49   Chief Growth Officer
Giuseppe Bardari   44   President, Ittella Italy
Bryan Rosenberg   55   Class III Director
Paula Ciaramitaro   57   Class III Director
Ed Gelfand   72   Class II Director
Daniel Williamson   64   Class II Director
Jennifer Fellner   54   Class II Director
Ryan Olohan   46   Class I Director
David Boris   60   Class I Director
Marie D. Quintero-Johnson   53   Class I Director

 

Effective upon the Closing, all executive officers and directors of Forum, other than David Boris, resigned as executive officers and directors of Forum.

 

Indemnification Agreement

 

On the Closing Date, we entered into indemnification agreements with each of our directors and executive officers. Each indemnification agreement provides for indemnification and advancements by us of certain expenses and costs relating to claims, suits or proceedings arising from his or her service to us or, at our request, service to other entities, as officers or directors to the maximum extent permitted by applicable law.

 

The foregoing description of the indemnification agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the indemnification agreements, a form of which is included as Exhibit 10.8 to this Current Report and is incorporated herein by reference.

 

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2020 Equity Incentive Plan

 

At the Special Meeting, the Forum stockholders considered and approved the 2020 Equity Incentive Plan (the “Incentive Plan”) and reserved 5,200,000 shares of common stock for issuance thereunder. The Incentive Plan was previously approved, subject to stockholder approval, by Forum’s board of directors on September 23, 2020. The Incentive Plan became effective immediately upon the Closing of the Business Combination. A committee of at least two people appointed by our Board (or, if no such committee has been appointed, our Board) (the “Committee”) will administer the Incentive Plan. The maximum aggregate grant-date fair value of awards granted and cash fees paid to any non-employee director pursuant to the Incentive Plan during any fiscal year may not exceed a total value of $100,000, provided that the non-employee directors who are considered independent (under the rules of The Nasdaq Stock Market or other securities exchange on which shares of our common stock are traded) may make exceptions to this limit for a non-executive chair of our Board, if any, in which case the non-employee director receiving the additional compensation may not participate in the decision to award that compensation. Shares of common stock underlying awards under the Incentive Plan that are forfeited, cancelled, expire unexercised or are settled in cash will be available again for new awards under the Incentive Plan. If there is any change in our corporate capitalization, the Committee in its sole discretion may make substitutions or adjustments to the number of shares of common stock reserved for issuance under the Incentive Plan, the number of shares of common stock covered by awards then outstanding under the Incentive Plan, the limitations on awards under the Incentive Plan, the exercise price of outstanding options and such other equitable substitutions or adjustments as it may determine appropriate.

 

A more complete summary of the terms of the Equity Incentive Plan is set forth in the Proxy Statement. That summary and the foregoing description are qualified in their entirety by reference to the text of the Equity Incentive Plan, which is filed as Exhibit 10.8 hereto and incorporated herein by reference.

 

Employment Agreements

 

In connection with the entry into the Merger Agreement, Forum entered into employment agreements with Salvatore Galletti, Sarah Galletti, Stephanie Dieckmann, and Giuseppe Bardari, which became effective at Closing. Pursuant to the terms of the employment agreements, Salvatore Galletti serves as our Chief Executive Officer and President. Sarah Galletti is our Director of Research and Development. Stephanie Dieckmann serves as our Chief Operating Officer and Giuseppe Bardari is the President of Ittella Italy, a wholly-owned subsidiary of Ittella Parent. For additional information, see the disclosure in the Proxy Statement in the section entitled “Executive Compensation — Ittella Parent,” which is incorporated herein by reference.

 

Further reference is made to see the disclosure in the Proxy Statement in the sections titled “Management After the Business Combination” and “Ittella Parent Management,” which are incorporated herein by reference concerning Mr. Cargile’s appointment as our Chief Financial Officer and Mr. Williams’ appointment as our Chief Growth Officer.

 

The descriptions of the employment agreements incorporated herein with each of Messrs. Galletti and Bardari and Mses. Galletti and Dieckmann do not purport to be complete and are qualified in their entirety by the terms and conditions of the employment agreements, which are included as Exhibits 10.3 through 10.6, respectively, to this Current Report and are incorporated herein by reference.

 

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

The information set forth in Item 3.03 of this Current Report is incorporated by reference into this Item 5.03.

 

Item 5.06 Change in Shell Company Status.

 

As a result of the Transactions, Forum ceased being a shell company. Reference is made to the disclosure in the Proxy Statement in the sections titled “The Business Combination Proposal” and “The Merger Agreement,” which are incorporated herein by reference. Further reference is made to the information contained in Item 2.01 of this Current Report, which is incorporate herein by reference.

 

Item 8.01 Other Events.

 

As a result of the Business Combination and by operation of Rule 12g-3(a) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), Ittella Parent is a successor issuer to Forum. Ittella Parent hereby reports this succession in accordance with Rule 12g-3(f) under the Exchange Act.

 

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Item 9.01 Financial Statement and Exhibits.

 

(a)-(b) Financial Statements.

 

Information responsive to Item 9.01(a) and (b) of Form 8-K is set forth in the financial statements included in the Proxy Statement beginning on page F-1.

 

The unaudited pro forma condensed combined financial information of the Company for the year ended December 31, 2019 is included in the Proxy Statement in the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 81 of the Proxy Statement and is incorporated herein by reference. The unaudited pro forma condensed combined financial information of the Company as of and for the six months ended June 30, 2020 and the unaudited pro forma condensed combined statement of operations for the Company for the year ended December 31, 2019 are set forth in Exhibit 99.1 hereto and is incorporated herein by reference.

 

The consolidated financial statements of Ittella Parent, as of December 31, 2019 and 2018, and as of June 30, 2020 and for the years ended December 31, 2019 and 2018 and the six months ended June 30, 2020, the related notes and report of independent registered public accounting firm thereto are set forth in the Proxy Statement beginning on page F-34 and are incorporated herein by reference.

 

The consolidated financial statements of Forum (i) as of December 31, 2019 and 2018, (ii) as of June 30, 2020, (iii) for the six months ended June 30, 2020, (iv) for the period from May 4, 2018 (date of inception) through December 31, 2018, (v) for the year ended December 31, 2019, and (vi) the related notes and report of independent registered public accounting firm thereto are set forth in the Proxy beginning on page F-2 and are incorporated herein by reference.

 

(d) Exhibits

 

Exhibit       Incorporated by Reference

Number

  Description of Document   Schedule/Form   File Number   Exhibits   Filing Date
                     
2.1†   Agreement and Plan of Merger, dated as of June 11, 2020, entered into by and among Forum, Sprout Merger Sub, Inc., Myjojo, Inc., a Delaware corporation, and Salvatore Galletti, in his capacity as the holder representative on August 10, 2020   Form 8-K   File No. 001-38615   2.1   June 12, 2020
                     
2.2   First Amendment to the Merger Agreement entered into by and among Forum, Sprout Merger Sub, Inc., Myjojo, Inc., a Delaware corporation, and Salvatore Galletti, in his capacity as the holder representative on August 10, 2020   Form 8-K   File No. 001-38615   2.1   August 11, 2020
                     
3.1   Amended and Restated Certificate of Incorporation   Form 8-A12B/A   File No. 001-38615   3.1   October 15, 2020
                     
3.2   Amended and Restated Bylaws   Form 8-A12B/A   File No. 001-38615   3.2   October 15, 2020
                     
4.1   Form of Warrant Agreement between Continental Stock Transfer & Trust Company, LLC and Forum   Form S-1/A   File No. 333-226084   4.4   July 18, 2018
                     
10.1   Amended and Restated Registration Rights Agreement by and among Forum, Forum Investors II, LLC, and other stockholders   Form 8-K   File No. 001-38615   10.4   June 12, 2020
                     
10.2   Sponsor Earnout Letter, dated as of June 11, 2020, by and among Forum Merger II Corporation, Forum Investors II LLC, Myjojo, Inc. and Salvatore Galletti, as the holder representative   Form 8-K   File No. 001-38615   10.3   June 12, 2020
                     
10.3*   Employment Agreement with Salvatore Galletti                
                     
10.4*   Employment Agreement with Giuseppe Bardari                
                     
10.5*   Employment Agreement with Sarah Galletti                
                     
10.6*   Employment Agreement with Stephanie Dieckmann                
                     
10.7*   Form of Indemnification Agreement                

 

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10.8*   2020 Equity Incentive Plan                
                     
10.9*   Loan and Security Agreement between Ittella Parent and Marquette Business Credit, LLC effective as of September 25, 2017, as amended.                
                     
10.10*   General Merchandise Supplier Agreement between Ittella Parent and Wal-Mart Stores, Inc. dated August 31, 2017 (Agreement 607499-91-0)                
                     
10.11*   General Merchandise Supplier Agreement between Ittella Parent and Wal-Mart Stores, Inc. dated August 28, 2017 for the supply of products to Sam’s Club store locations (Agreement 607499-64-1)                
                     
10.12*   General Merchandise Supplier Agreement between Ittella and Wal-Mart Stores, Inc. dated February 3, 2020 for the supply of products to Sam’s Club store locations (Agreement 607499-64-2)                
                     
10.13*   Basic Vendor Agreement between Ittella Parent and Costco Wholesale Corporation dated January 7, 2015                
                     
10.14*   Master Purchase Agreement between Ittella Parent and Aldi Inc., dated March 18, 2016.                
                     
10.15*   Master Vendor Agreement between Ittella Parent and Trader Joe’s Company dated July 31, 2018                
                     
10.16*   Standby Letter of Credit No. SB50533 issued by UMB Bank, N.A. on behalf of the Company, in favor of UniCredit S.P.A. dated as of November 24, 2017, as amended.                
                     
10.17   Escrow Agreement (Holder Representative), dated as of October 15, 2020 by and between Forum, Salvatore Galletti, and Citibank, N.A.   Form 8-A12B/A   File No. 001-38615   10.3   October 15, 2020
                     
10.18   Escrow Agreement (Sponsor), dated as of October 15, 2020 by and between Forum, Salvatore Galletti, and Citibank, N.A.   Form 8-A12B/A   File No. 001-38615   10.4   October 15, 2020
                     
16.1*   Letter re Change in Certifying Accountant                
                     
21.1*   List of Subsidiaries                
                     
99.1*   Unaudited Pro Forma Condensed Combined Financial Statements of the Company for the six months ended June 30, 2020, Unaudited Pro Forma Condensed Combined Statement of Operations of the Company for the year ended December 31, 2019, and Comparative Share Information.                

 

Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.
* Filed herewith.

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  TATTOOED CHEF, INC.
     
Dated: October 21, 2020 By: /s/ Salvatore Galletti
    Name:   Salvatore Galletti
    Title: Chief Executive Officer

 

 

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Exhibit 10.3

 

Execution Copy

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (this “Agreement”) is made as of June 11, 2020 by and between Forum Merger II Corporation, a Delaware corporation which will be renamed to Tattooed Chef, Inc. as of the Effective Date (the “Company”), and Salvatore Galletti (the “Executive”). This Agreement shall govern the employment relationship between Executive and the Company from and after the Effective Date.

 

WHEREAS, the Company has entered into an Agreement and Plan of Merger, dated as of June 11, 2020 (the “Merger Agreement”), by and among the Company, Sprout Merger Sub, Inc., a Delaware corporation (“Merger Sub”), Myjojo, Inc., a Delaware corporation (“Myjojo”), and the Executive (as the Holders Representative), pursuant to which, among other things, Merger Sub will merge with and into Myjojo (the “Merger”) and as a result of the Merger, (i) Myjojo will be the surviving corporation, and (ii) all issued and outstanding capital stock of Myjojo as of a moment in time immediately prior the Merger will convert into the right to receive the consideration set forth in the Merger Agreement in accordance with the terms of the Merger Agreement;

 

WHEREAS, the Executive is Chief Executive Officer and President of Ittella International, LLC (“Ittella”), which is a wholly owned subsidiary of Myjojo, Inc.;

 

WHEREAS, the Company desires to be assured that the services of the Executive will continue to be available to the Company from and after the closing date of the Merger (the “Effective Date”) and that the confidential information and goodwill of the Company will be preserved for its exclusive benefit; and

 

WHEREAS, the Company desires to employ the Executive pursuant to the terms and conditions set forth in this Agreement, subject to and contingent upon the closing of the Merger, and the Executive is willing and able to render such services and desires to do so on the terms and conditions hereinafter set forth herein.

 

NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. Definitions. In this Agreement:

 

Accrued Obligations” means (A) all previously earned and accrued but unpaid Base Salary and Benefits in accordance with and subject to the terms of the relevant employee benefit plans and (B) any reimbursement owing under Section 3(c) of this Agreement for expenses incurred by the Executive on or before the Termination Date.

 

Base Salary” has the meaning given to that term in Section 3(a).

 

Benefits” means the employee benefit programs for which senior executive employees of the Company are generally eligible.

 

Board” means the Board of Directors of the Company or its successor.

 

Business Relation” has the meaning given to that term in Section 9(b).

 

 

 

 

Cause” means (i) the Executive’s commission of, or plea of nolo contendere to, any felony or other crime involving moral turpitude; (ii) the Executive’s commission of fraud, theft, embezzlement, self-dealing or misappropriation against the business of the Company Group; (iii) the Executive’s breach of his fiduciary duties to the Company Group; (iv) the Executive’s conviction of any serious offense that results in or would reasonably be expected to result in material financial harm, materially negative publicity or other material harm to any member of the Company Group; (v) the Executive’s excessive use of alcohol or illegal drugs (including but not limited to the misuse or abuse of legal drugs) that adversely affects the Executive’s ability to perform his duties, responsibilities and functions hereunder; (vi) the Executive’s willful or grossly negligent failure to perform any material aspect of his duties and responsibilities hereunder or any lawful directive of the Board or its designee, which, if capable of being cured, is not cured to the Board’s reasonable satisfaction within ten (10) days after the delivery of written notice thereof to the Executive; (vii) the Executive’s intentional and willful misconduct in the management of any member of the Company Group; (viii) the Executive intentionally causing any member of the Company Group to violate a material local, state or federal law in any respect, unless such violation results from actions approved by the Board, (ix) the Executive’s intentional concealment of known material information from the Board, (x) any act or omission constituting a material breach by the Executive of any provision of this Agreement or any other agreement between the Executive and the Company Group, which, if capable of being cured, is not cured to the Board’s reasonable satisfaction within ten (10) days after written notice thereof to the Executive, and (xi) any breach by the Executive of Sections 6, 7, 8 and 9 of this Agreement, which, if capable of being cured, is not cured to the Board’s reasonable satisfaction within ten (10) days after written notice thereof to the Executive.

 

Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder.

 

Company Group” means the Company, its Subsidiaries and their respective affiliates.

 

Competitive Activities” has the meaning given to that term in Section 9(a).

 

Confidential Information” means any information proprietary to the Company Group and not generally known, including, without limitation, Trade Secrets (as defined herein), Inventions (as defined herein), technology whether now known or hereafter discovered, and information pertaining to research, development, techniques, engineering, purchasing, marketing, selling, accounting, licensing, know-how, processes, products, equipment, devices, models, prototypes, computer hardware, computer programs and flow charts, program code, software libraries, databases, formulae, compositions, discoveries, cost systems, financial information, personnel information, customer lists, customer histories and records, suppliers, contacts and referral sources, and any lists of names, phone numbers, and addresses of those sources, the particular needs and requirements of customers, the identity of customers and potential customers, lists of customers’ and potential customers’ names, addresses, and phone numbers, and pending business transactions and shall also include confidential and proprietary information of customers and other third parties received by the Company Group. Information may be deemed Confidential Information regardless of its source, and all information designated or treated as Confidential Information by the Company Group shall conclusively be deemed Confidential Information for all purposes.

 

The term Confidential Information shall not apply to the following: (i) information that is or becomes public knowledge other than through the fault of the Executive; (ii) information that is received by the Executive from a third party who is under no obligation to keep the information confidential; (iii) information that the Executive can show by written records was in the Executive’s possession prior to the date of disclosure by the Company Group to the Executive of the Confidential Information in question; or (iv) information which is individually developed by the Executive, and which the Executive can show by written or other tangible evidence was so independently developed.

 

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Disability” means the Executive’s inability to perform the material duties, responsibilities or functions of his position with the Company as a result of any mental or physical disability or incapacity for a period of 120 days consecutively, or any 120 days out of a 180-day period, as determined by the Board in its sole discretion. Any dispute between the Executive and the Board with respect to the qualification of a mental or physical disability or incapacity as a Disability shall be resolved by a health care specialist to be mutually agreed upon by the Company and the Executive.

 

Effective Date” has the meaning given to that term in the recitals to this Agreement.

 

Employment Period” means the period commencing on the Effective Date and ending on the Expiration Date, or such earlier date as contemplated in Section 4.

 

Expiration Date” means the three year anniversary of the date of this Agreement or such later anniversary if this Agreement is extended as follows. In the last year of the Agreement, and for each subsequent year thereafter, the Agreement will be automatically extended for a one (1) year period unless written notice has been given by the Company to the Executive or by the Executive to the Company, which notice must be given at least ninety (90) days prior to the Expiration Date, stating that the Company or the Executive is electing to terminate the Employment Period as of the Expiration Date.

 

General Release” has the meaning given to that term in Section 4(b).

 

Good Reason” means the occurrence of any one or more of the following without the Executive’s written consent, provided that the Executive has given written notice to the Company within sixty (60) days following the occurrence of the event giving rise to Good Reason, and which event remains uncured for thirty (30) days following the Company’s receipt of written notice thereof from the Executive: (i) a material diminution in the Executive’s duties or authority; (ii) a material reduction in the Base Salary other than any such reduction made in connection with a broader reduction in base salaries affecting other senior executives of the Company; or (iii) any requirement that Executive relocate to a location that is more than 50 miles from Executive’s residence at the time of the Effective Date.

 

Interfering Activities” has the meaning given to that term in Section 9(b).

 

Inventions” means all ideas, discoveries, developments, improvements, innovations, technology, computer programs, software, products, and methods, systems or plans whether or not shown or described in writing or reduced to practice or use, and whether or not entitled to the protection of applicable patent, trademark, copyright, or similar laws, relating in any manner to any of Company’s present or future products, services, manufacturing or research.

 

Merger” has the meaning given to that term in the recitals to this Agreement.

 

Noncompete Period” has the meaning given to that term in Section 9(a).

 

Person” has the meaning given to that term in Section 6.

 

Proceeding” means any action, suit, proceeding or arbitration, whether civil, criminal, administrative or investigative.

 

Severance Period” means the one (1)-year period following the Termination Date.

 

Subsidiary” means any corporation or other entity of which the securities or other ownership interests having the voting power to elect a majority of the board of directors or other governing body are, at the time of determination, owned by any of the Company, directly or through one or more other Subsidiaries.

 

3

 

 

Termination Date” means the date of the Executive’s termination of employment under this Agreement for any reason.

 

Termination Year” means the year in which the Employment Period is terminated.

 

Trade Secret” means information, including but not limited to, a formula, pattern, compilation, program, device, method, technique, process, drawing, cost data or customer list that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

 

Work Product” has the meaning given to that term in Section 7.

 

2. Employment, Position and Duties.

 

(a) This Agreement shall be effective as of the closing of the Merger, subject to and contingent upon the closing of the Merger.

 

(b) The Company shall employ the Executive, and the Executive hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement for the Employment Period.

 

(c) During the Employment Period, the Executive shall serve as the Chief Executive Officer and President of the Company and shall perform the normal duties, responsibilities and functions of the Chief Executive Officer and President of a company of a similar size and type and shall have such power and authority as shall reasonably be required to enable him to perform his duties hereunder.

 

(d) During the Employment Period, the Executive shall (i) render such administrative, financial and other executive and managerial services to the Company and the Subsidiaries as are consistent with the Executive’s position as the Board may from time to time reasonably direct, (ii) report to the Board, (iii) devote substantially all of his business time, energy and skill to the performance of his duties for the Company, (iii) perform such duties in a faithful, effective and efficient manner to the best of his abilities, (iv) devote his best efforts and his business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of the Company and the Subsidiaries, (v) hold no other employment, and (vi) submit to the Board all business, commercial and investment opportunities presented to the Executive, or of which the Executive becomes aware, that relate to the business of the Company and the Subsidiaries and, unless approved by the Board in writing, the Executive shall not pursue, directly or indirectly, any such opportunities on the Executive’s own behalf. Notwithstanding this Section 2(d), it shall not be a violation of this Agreement for the Executive to serve on civic or charitable boards or committees; provided, that such activities do not, individually or in the aggregate, interfere with the Executive’s performance of his duties, responsibilities and functions to the Company and the Subsidiaries. The Executive shall perform his duties, responsibilities and functions to the Company and the Subsidiaries hereunder to the best of his abilities in a diligent, trustworthy and professional manner and shall comply with the Company’s and the Subsidiaries’ policies and procedures in all material respects.

 

(e) The Executive’s principal employment office will be located at Ittella’s offices in Paramount, California.

 

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3. Compensation and Benefits.

 

(a) During the Employment Period, the Executive’s base salary shall be $375,000.00 per annum (as adjusted up, but not down, from time to time, the “Base Salary”), which salary shall be payable by the Company in regular installments in accordance with the Company’s general payroll practices (in effect from time to time). The Executive’s Base Salary will be subject to review annually by the Board to take effect on or about January 1 of each fiscal year during the Employment Period.

 

(b) The Executive shall be entitled to four (4) weeks of paid vacation each calendar year in accordance with the Company’s policies. In addition, during the Employment Period, the Executive shall be eligible to participate in all standard employee benefit programs made available by the Company to the Company’s executive employees generally, in accordance with the eligibility and participation provisions of such plans and as such plans or programs may be in effect from time to time and at a level consistent with his title, duties and responsibilities. The Company reserves the right to amend any employee welfare or retirement benefit plan, policy, program or arrangement from time to time, or to terminate such plan, policy, program or arrangement, consistent with the terms thereof.

 

(c) During the Employment Period, the Company shall reimburse the Executive for all reasonable out-of-pocket business expenses incurred as a result of the performance of his duties under this Agreement, including, but not limited to, his reasonable customer entertainment expenses, travel expenses, and all other business expenses incurred by him in the course of performing his duties, responsibilities and functions under this Agreement, which are consistent with the Company’s policies in effect and subject to revision from time to time with respect to travel, entertainment and other business expenses, and further subject to the Company’s requirements with respect to reporting and documentation of such expenses.

 

(d) In addition to the Base Salary, the Executive will be eligible to participate in bonuses based upon the Executive’s performance relative to annual goals and other financial and non-financial performance measures to be to be established by the Board in its reasonable discretion (the “Annual Bonus”). Annual Bonus amounts, to the extent earned for any fiscal year, will be payable in a lump sum on or before March 15th following the end of the fiscal year to which the Annual Bonus relates. The Executive must remain actively employed by the Company and in good standing through the date of payment of any Annual Bonus to earn any such amounts, except as otherwise provided in Section 4(b).

 

4. Termination and Payment Terms.

 

(a) The Employment Period shall terminate prior to the Expiration Date upon the occurrence of any of the following events: (i) delivery by the Executive of a written resignation to the Company with no less than ninety (90) days’ advance written notice to the Company or sixty (60) days’ advance written notice to the Company for termination by the Executive for Good Reason; (ii) the death or Disability of the Executive; (iii) the adoption of a good faith resolution by the Board terminating the Executive’s employment with Cause; and (iv) the adoption of a resolution by the Board terminating the Executive’s employment without Cause. Except as otherwise provided herein, any termination of the Employment Period by the Company shall be effective as specified in a written notice from the Company to the Executive.

 

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(b) Upon the Executive’s termination of employment, the Executive shall be entitled to certain payments and benefits in accordance with the following:

 

(i) Upon the Executive’s termination of employment by resolution of the Board without Cause or by the Executive for Good Reason, then the Executive shall be entitled to receive (1) the Accrued Obligations, payable within thirty (30) days following the Termination Date or such earlier time as required by law and, (2) subject to (1) the Executive’s timely execution and non-revocation of the general release described in Section 4(d) (the “General Release”) and (2) the Executive’s compliance with Sections 6, 7, 8 and 9 and the other conditions and limitations in this Agreement, (x) continued payment Base Salary (as was in effect immediately prior to such termination) for the duration of the Severance Period, payable in regular installments in accordance with the Company’s general payroll practices as in effect from time to time, and (y) any earned but unpaid Annual Bonus for the fiscal year immediately preceding the Termination Year, payable when the bonus payments for such fiscal year are otherwise due.

 

(ii) Upon the Executive’s termination of employment as a result of the Executive’s death, the Executive’s estate or other legal beneficiaries shall be entitled to receive the Accrued Obligations, payable within thirty (30) days following the Termination Date or such earlier time as required by law. The Executive’s estate shall not be entitled to any further Base Salary, bonus payments, or Benefits for the Termination Year or any future year, or to any other compensation of any kind;

 

(iii) Upon the Executive’s termination of employment as a result of the Executive’s Disability, the Executive shall be entitled to receive the Accrued Obligations, payable within thirty (30) days following the Termination Date or such earlier time as required by law, but shall not be entitled to any further Base Salary, bonus payments or Benefits (other than as described in clause (2) of this paragraph, or as required by applicable law) for the Termination Year or any future year, or to any other compensation of any kind; and

 

(iv) Upon the Executive’s termination of employment as a result of the Executive’s voluntary resignation without Good Reason in accordance with Section 4(a) or by good faith resolution of the Board for Cause in accordance with Section 4(a), the Executive shall be entitled to the Accrued Obligations, payable within thirty (30) days following the Termination Date or such earlier time as required by law, but shall not be entitled to any further Base Salary, bonus payments, or Benefits (except as required by applicable law) for the Termination Year or any future year, or to any other compensation of any kind, nature or amount.

 

(c) Notwithstanding anything to the contrary in this Agreement, as a condition precedent to any obligation of the Company to make payments to the Executive pursuant to Section 4(b)(i) (aside from the Accrued Obligations), the Executive shall be required to deliver to the Company a valid, executed General Release in substantially the form attached hereto as Exhibit A, and shall not revoke such General Release prior to the expiration of any revocation rights afforded to the Executive by applicable law. The Company shall provide the Executive with the General Release prior to the Termination Date, and the Executive must deliver the executed General Release to the Company within twenty-one (21) days (or, if greater, the minimum period required by applicable law) after the Termination Date, failing which the Executive will forfeit all rights to any payments described in Section 4(b)(i) (aside from the Accrued Obligations).

 

(d) The Executive hereby agrees that, except as expressly provided herein, no compensation of any kind, nature or amount shall be payable to the Executive and, except as expressly provided herein, the Executive hereby irrevocably waives any claim for any such compensation including, without limitation, any severance compensation.

 

(e) Except as otherwise provided in Sections 4(b)(i)-(iv) above, all of the Executive’s rights to Benefits hereunder (if any) shall cease upon the termination of the Employment Period, except as may be required by applicable law.

 

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5. Indemnification.

 

(a) During the Employment Period and for a period of six (6) years thereafter, the Board shall cause the Company or any successor to the Company to purchase and maintain, at the Company’s own expense, directors’ and officers’ liability insurance providing coverage to the Executive on terms that are no less favorable than the coverage provided to other directors and similarly situated executives of the Company.

 

(b) In the event that the Executive is made a party or threatened to be made a party to any Proceeding, other than any Proceeding initiated by the Executive or the Company related to any contest or dispute between the Executive and the Company or any of its affiliates with respect to this Agreement or the Executive’s employment hereunder, by reason of the fact that the Executive is or was a director or officer of the Company, or any member of the Company Group, or is or was serving at the request of the Company as a director, officer, member, employee or agent of another entity, the Executive shall be indemnified and held harmless by the Company to the maximum extent permitted under applicable law and the governing documents of the Company from and against any liabilities, costs, claims and expenses, including all costs and expenses incurred in defense of any Proceeding (including attorneys’ fees). Costs and expenses incurred by the Executive in defense of such Proceeding (including attorneys’ fees) shall be paid by the Company upon receipt by the Company of: (i) a written request for payment; (ii) appropriate documentation evidencing the incurrence, amount and nature of the costs and expenses for which payment is being sought; and (iii) an undertaking adequate under applicable law made by or on behalf of the Executive to repay the amounts so paid if it shall ultimately be determined that the Executive is not entitled to be indemnified by the Company under this Agreement.

 

6. Confidential Information. The Executive shall not use or disclose to any individual or natural person, partnership (including a limited liability partnership), corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or governmental authority (each, a “Person”), either during the Employment Period or thereafter, any Confidential Information of which the Executive is or becomes aware, whether or not such information is developed by him, for any reason or purpose whatsoever, nor shall he make use of any of the Confidential Information for his own purposes or for the benefit of any Person except for any member of the Company Group, except (A) to the extent that such disclosure or use is directly related to and required by the Executive’s performance in good faith of duties assigned to the Executive by the Company or the Board or (B) to the extent required to do so by a court of competent jurisdiction. The Executive will, at the sole expense of the Company, take all reasonable steps to safeguard Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft.

 

7. Intellectual Property, Inventions and Patents. The Executive acknowledges that any Invention that the Executive, either alone or with others (i) makes, discovers, devises, conceives, reduces to practice, or otherwise possesses while employed by Company or for a period of one (1) year following such employment, and (ii) directly or indirectly relates to or arises out of the Executive’s employment with Company or the actual or anticipated business, products, technology, or services of Company (“Work Product”) shall be a work for hire and the sole property of the Company. The Executive hereby assigns to Company all rights, title, and interest the Executive obtains in any and all Inventions under this Agreement, and hereby agrees, upon Company’s request, to execute, verify, and deliver to Company documents including, but not limited to, assignments and applications for Letters of Patent, trademark or copyright registrations, or any other form or method of government protection provided by any local, state, or federal laws of the United States or any other country or political subdivision thereof, and whether such protection is now known or subsequently derived, and to perform such other acts, including, but not limited to, appearing as a witness in any action brought in connection with this Agreement, that is deemed reasonably necessary or appropriate by Company to allow it to obtain the sole right, title, interest and benefit of all such Inventions. The Executive shall promptly disclose such Work Product to the Board and, at the Company’s expense, perform all actions reasonably requested by the Board (whether during or after the Employment Period) to establish and confirm such ownership (including, without limitation, assignments, consents, powers of attorney, and other instruments).

 

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The assignment of Inventions and Work (as defined herein) and the Executive’s agreements in connection therewith shall not apply to any Invention or Work for which: (i) no equipment, supplies, facilities, or Confidential Information of the Company Group or services of any of the Company Group’s employees during normal working hours was used; (ii) was developed entirely on the Executive’s own time; (iii) does not relate to the business of the Company Group or the Company Group’s actual or demonstratively anticipated research or development; and (iv) which does not result from any work performed by the Executive for the Company Group. In addition, the assignment of Inventions and Work herein and the Executive’s agreements in connection therewith shall not apply to any Invention or Work which qualify for exclusion under the terms of applicable state law, including, Section 2870 of the California Labor Code, set forth below:

 

“(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:

 

(1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or

 

(2) Result from any work performed by the employee for the employer.

 

(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.”

 

The Executive shall, during the course of the Executive’s employment and at all times subsequent to the Executive’s employment, hold in strictest and total confidence all Confidential Information. The Executive will at no time, without prior written authorization by the Company (or except pursuant to a confidentiality agreement entered into by the Company in its ordinary course of business), disclose, assign, transfer, convey, communicate, or use for the benefit of any person or entity other than the Company any Confidential Information, nor shall the Executive permit any other person or entity to use Confidential Information in competition with the Company.

 

8. Work Made for Hire. All work which the Executive performs for the Company Group that is fixed in any tangible medium of expression and which relates to the subject matter pertaining to the Executive’s employment, or that relates in any manner or is directly or indirectly connected with the business, services, products, projects, or Confidential Information of the Company Group, or that involves in any manner the use of any time, material, or facilities of the Company Group, or services of any of the Company Group’s employees during normal working hours is “work made for hire” for the sole and exclusive benefit of the Company Group according to copyright laws (“Work”). The Executive assigns to the Company Group the entire right, title, and interest in and to any and all Work, including, by way of example and not limitation, all designs, drawings, conceptions, and improvements, including any copyrights in all original works of authorship fixed in any tangible medium of expression heretofore or hereafter created for the Company Group by the Executive, or furnished to the Company Group, whether such works are created by the Executive solely or jointly with others. For all such original Work, the Executive agrees to provide documentation satisfactory to the Company Group to assure the originality of all such Work and conveyance of all such right, title and interest, including any patents, trademarks, and copyrights in the Work to the Company Group.

 

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9. Non-Compete, Non-Solicitation.

 

(a) In further consideration of the compensation to be paid to the Executive hereunder, the Executive acknowledges that during the course of his employment with the Company he shall become familiar with the Company Group’s trade secrets and with other Confidential Information concerning the Company Group and that his services shall be of special, unique and extraordinary value to the Company Group, and therefore, the Executive agrees that, during the Employment Period and for a period of twelve (12) months following the Termination Date (the “Noncompete Period”), the Executive shall not, directly or indirectly, individually or on behalf of any person, company, enterprise or entity, or as a sole proprietor, partner, stockholder, director, officer, principal, agent or executive, or in any other capacity or relationship, engage in any Competitive Activities within any jurisdiction in which any member of the Company Group had offices and/or conducted business, derived a material portion of its revenues or had demonstrable plan to commence business activities, or participated in or made any investment in any investment or venture which has been consummated or is being pursued or contemplated by the Company Group as of the date of execution of this Agreement and the date of termination of the Executive’s employment. “Competitive Activities” shall mean (A) engaging in, controlling, advising, managing, serving as a director, officer or employee of, acting as a consultant to or contractor or other agent for, receiving any economic benefit from any Competitive Business or (B) investing in or owning any interest publicly or privately in any Person engaged in any Competitive Business. Competitive Activities shall not include (X) any activities taken by the Executive at the direction or, or otherwise on behalf of the Company Group as an employee, consultant or other Person performing similar responsibilities and (Y) the ownership by the Executive or the Executive’s affiliates or immediate family of capital stock or other equity interests of any Person whose securities are listed on a national securities exchange so long as (1) such Person, together with its affiliates, and any member of a group in which such Person or any of its affiliates is a party, do not own more than 2% of the outstanding voting power of such Person and (2) such capital stock or other equity interests of such Person are held solely as a passive investment. The Executive acknowledges that the Company Group conducts business in, and has expended considerable sums to develop and maintain markets in, the foregoing areas and agrees that the scope and duration of the covenant contained herein is reasonable both in time and geographical area and is necessary to protect the Company Group’s legitimate business interests, especially considering the Executive’s position with the Company and other relevant factors.

 

(b) During the Employment Period and thereafter for the Noncompete Period, the Executive shall not individually or collectively, as a participant in a partnership, sole proprietorship, corporation, limited liability company, or other entity, or as an operator, investor, shareholder, partner, director, employee, consultant, manager, or advisor of any such entity, or in any other capacity whatsoever, either directly or indirectly, engage in Interfering Activities. “Interfering Activities” shall mean (A) encouraging, soliciting, or inducing, including, without limitation, through use of Trade Secrets or Confidential Information, or in any manner attempting to encourage, solicit, or induce for the purpose of (i) any Person employed by, or providing consulting services to, the Company Group to terminate such Person’s employment or services (or in the case of a consultant, materially reducing such services) with the Company Group; (ii) any Business Relation to cease doing business with or reduce the amount of business conducted with the Company Group, or in any way interfering with the relationship between any such Business Relation and the Company Group; or (B) hiring any individual who was employed by the Company Group within the six (6) month period prior to the date of such hiring. “Business Relation” shall mean any current or prospective client, customer, licensee, supplier or other business relation of the Company Group, or any such relation that was a client, customer, licensee or other business relation within the prior twelve (12) month period, in each case, with whom the Executive transacted business on behalf of the Company Group or whose identity became known to the Executive in connection with the Executive’s relationship with the Company Group, or the Executive’s employment by Company. Notwithstanding the foregoing, the Executive may hire those employees responding to a general solicitation not directly targeted at such employees, or those employees actively recruited by the Executive and hired by any member of the Company Group following the execution of this Agreement.

 

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(c) If, at the time of enforcement of this Section 9, a court shall hold that the duration, scope, or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area, and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law. The Executive acknowledges that the restrictions contained in this Section 8 are reasonable and that he has reviewed the provisions of this Agreement with his legal counsel.

 

(d) In the event of the breach or a threatened breach by the Executive of any of the provisions of this Section 9, the Company would suffer irreparable harm, and in addition and supplementary to other rights and remedies existing in its favor, the Company shall be entitled to specific performance and/or injunctive or other equitable relief from a court of competent jurisdiction in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security). In addition, in the event of an alleged breach or violation by the Executive of this Section 9, the Noncompete Period shall be tolled until such breach or violation has been duly cured. Notwithstanding anything contained herein to the contrary, should the Executive violate any provision of Sections 6, 7, 8 or 9 of this Agreement, and should the Executive not cure the breach (if curable) to the Board’s reasonable satisfaction within ten (10) days after written notice thereof to the Executive, the Executive shall not be entitled to any further payments pursuant to the termination of the Employment Period under Section 4.

 

(e) The Executive has carefully read and considered the provisions of Sections 6, 7, 8 and 9 and, having done so, acknowledges and recognizes the highly competitive nature of Company’s business, that access to Confidential Information, including Trade Secrets, renders the Executive special and unique within the Company Group and the Company’s industry, and that the Executive will have the opportunity to develop substantial relationships with existing and prospective clients, accounts, customers, consultants, contractors, investors, and strategic partners of the Company Group during the course of and as a result of the Executive’s employment with Company. In light of the foregoing, the Executive recognizes and acknowledges that the restrictions set forth herein are fair and reasonable and are reasonably required for the protection of the legitimate business interests, Confidential Information, including Trade Secrets, of the Company Group, and are reasonable and valid in geographical and temporal scope.

 

10. Executive’s Representations. The Executive hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by the Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which the Executive is a party or by which he is bound, (ii) the Executive is not a party to or bound by any employment agreement, non-compete agreement or non-solicit agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of the Executive, enforceable in accordance with its terms. THE EXECUTIVE HEREBY ACKNOWLEDGES AND REPRESENTS THAT HE HAS CONSULTED WITH INDEPENDENT LEGAL COUNSEL REGARDING HIS RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT AND THAT HE FULLY UNDERSTANDS THE TERMS AND CONDITIONS CONTAINED HEREIN AND THEREIN.

 

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11. Tax Withholding. All amounts payable to the Executive as compensation hereunder shall be subject to all customary withholding, payroll and other taxes, and the Company shall be entitled to deduct or withhold from any amounts payable to the Executive any federal, state, local or foreign withholding taxes, excise taxes, or employment taxes imposed with respect to the Executive’s compensation or other payments or the Executive’s ownership interest in the Company (including, without limitation, wages, bonuses, dividends, the receipt or exercise of equity options and/or the receipt or vesting of restricted equity).

 

12. Survival. This Agreement survives and continues in full force in accordance with its terms notwithstanding the expiration or termination of the Employment Period.

 

13. Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by reputable overnight courier service or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:

 

Notices to the Executive:

 

To the Executive’s address most recently on file in the payroll records of the Company.

 

With a copy to:

 

Salvatore Galletti

27996 Palos Verde Dr. E Rancho

Palos Verdes, CA 90275

Email: josangal9@hotmail.com

 

Notices to the Company:

 

Forum Merger II Corporation

Forum Merger II Corporation

1615 South Congress Avenue

Suite 103

Delray Beach, FL 33445

Attention: Marshall Kiev

David Boris

Email: mk@mkcapitalpartners.com

david@forummerger.com

 

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered, sent or mailed.

 

14. Stock Ownership. During the Employment Period, the Executive may be expected to maintain a specified level of ownership of stock of the Company, in accordance with guidelines that may be established by the Board or the Board’s Compensation Committee from time to time.

 

15. Clawback. Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or any other compensation, paid to the Executive pursuant to this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).

 

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16. Section 280G of the Code. Notwithstanding anything to the contrary in this Agreement, the amount to be paid by the Company to the Executive pursuant to this Agreement shall be limited such that the total “parachute payments” (as defined in Section 280G(b)(2)(A)(i) of the Code) made to the Executive by the Company pursuant to this Agreement or otherwise does not exceed the product of 2.99 times the “base amount” (as defined in Section 280G(b)(3) of the Code) for the Executive.

 

17. Section 409A of the Code.

 

(a) It is intended that any amounts payable under this Agreement shall be exempt from and avoid the imputation of any tax, penalty or interest under Section 409A of the Code (“Section 409A”) to the fullest extent permissible under applicable law; provided, that if any such amount is or becomes subject to the requirements of Section 409A, it is intended that those amounts shall comply with such requirements. This Agreement shall be construed and interpreted consistent with that intent. In furtherance of that intent, if payment or provision of any amount or benefit hereunder that is subject to Section 409A at the time specified herein would subject such amount or benefit to any additional tax under Section 409A, the payment or provision of such amount or benefit shall be postponed to the earliest commencement date on which the payment or provision of such amount or benefit could be made without incurring such additional tax. In no event, however, shall the Company be liable for any tax, interest or penalty imposed on the Executive under Section 409A or any damages for failing to comply with Section 409A.

 

(b) If the Executive is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the Termination Date, the Executive shall not be entitled to any payment or benefit pursuant to Section 4(b) until the earlier of (A) the date which is six (6) months after his separation from service (within the meaning of Section 409A) for any reason other than death, or (B) the date of the Executive’s death; provided, that this paragraph shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A. Any amounts otherwise payable to the Executive upon or in the six (6) month period following the Executive’s separation from service that are not so paid by reason of this Section 16(b) shall be paid (without interest) as soon as practicable (and in any event within thirty (30) days) after the date that is six (6) months after the Executive’s separation from service (provided that in the event of the Executive’s death after such separation from service but prior to payment, then such payment shall be made as soon as practicable, and in all events within thirty (30) days, after the date of the Executive’s death).

 

(c) Any reimbursement payment or in-kind benefit due to the Executive pursuant to Section 3(c), to the extent that such reimbursements or in-kind benefits are taxable to him, shall be paid on or before the last day of the Executive’s taxable year following the taxable year in which the related expense was incurred. The Executive agrees to provide prompt notice to the Company of any such expenses (and any other documentation that the Company may reasonably require to substantiate such expenses) in order to facilitate the Company’s timely reimbursement of the same. Reimbursements and in-kind benefits pursuant to Section 3(c) are not subject to liquidation or exchange for another benefit and the amount of such benefits that the Executive receives in one taxable year shall not affect the amount of such reimbursements or benefits that the Executive receives in any other taxable year.

 

(d) For purposes of Section 409A, the Executive’s right to receive any installment payments hereunder shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., payment shall be made within thirty (30) days following the date of termination), the actual date of payment within the specified period shall be within the sole discretion of the Company.

 

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18. Complete Agreement. This Agreement and those documents expressly referred to herein, including the exhibits to this Agreement embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way, provided, however, that any non-competition, non-solicitation and other restrictive covenant agreements between the Executive and the Company Group, including, without limitation, the Confidentiality, Invention and Non-Interference Agreement between Ittella International, LLC, UMB Capital Corporation, and the Executive, dated as of April 15, 2019, shall continue in full force and effect in accordance with their terms. This Agreement may not be amended, modified or changed (in whole or in part), except by written agreement executed by both of the parties hereto.

 

19. Effectiveness. The effectiveness of this Agreement is conditioned upon the closing of the Merger. Accordingly, this Agreement shall be void and of no further force or effect if the Merger Agreement is validly terminated in accordance with its terms prior to the closing of the Merger.

 

20. Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

 

21. Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by the Executive, the Company and their respective heirs, successors and assigns; provided, that the services provided by the Executive under this Agreement are of a personal nature and rights and obligations of the Executive under this Agreement shall not be assignable.

 

22. Choice of Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits hereto shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or of another State) and the parties hereto hereby irrevocably submit to the jurisdiction of the courts of the State of Delaware. The Executive represents that the Executive has had the opportunity to seek, and has in fact been individually represented by, legal counsel in negotiating the terms of this Agreement, including with respect to the choice of Delaware law as the governing law of this Agreement and Delaware courts as the jurisdiction for any judicial proceedings arising out of or relating to this Agreement.

 

23. Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement.

 

24. Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company (as approved by the Board) and the Executive, and no course of conduct or course of dealing or failure or delay by any party hereto in enforcing or exercising any of the provisions of this Agreement (including, without limitation, the Company's right to terminate the Employment Period for Cause) shall affect the validity, binding effect or enforceability of this Agreement or be deemed to be an implied waiver of any provision of this Agreement.

 

25. Legal Counsel; Mutual Drafting. Each party recognizes that this is a legally binding contract and acknowledges and agrees that they have had the opportunity to consult with legal counsel of their choice. Each party has cooperated in the drafting, negotiation and preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against either party on the basis of that party being the drafter of such language. The Executive agrees and acknowledges that he has read and understands this Agreement, is entering into it freely and voluntarily, and has been advised to seek counsel prior to entering into this Agreement and has had ample opportunity to do so.

 

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26. Key Man Life Insurance. The Company may apply for and obtain and maintain a key man life insurance policy in the name of the Executive together with other executives of the Company in an amount deemed sufficient by the Board, the beneficiary of which shall be the Company. The Executive shall submit to reasonable physical examinations and answer reasonable questions in connection with the application and, if obtained, the maintenance of, as may be required, such insurance policy.

 

27. Executive’s Cooperation. During the Employment Period, the Executive shall cooperate with the Company and the Subsidiaries in any internal investigation or administrative, regulatory or judicial proceeding as reasonably requested by the Company (including, without limitation, the Executive being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company ail pertinent information and turning over to the Company all relevant documents which are in or may come into the Executive’s possession, ail at times and on schedules that are reasonably consistent with the Executive’s other permitted activities and commitments). In the event the Company requires the Executive’s cooperation in accordance with this Section 26, the Company shall promptly reimburse the Executive solely for reasonable travel expenses (including, but not limited to, lodging and meals), upon submission of receipts.

 

[Signatures on following page]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

  FORUM MERGER II CORPORATION
     
  By:  
  Its: Marshall Kiev, Co-CEO and President
     
  EXECUTIVE
     
   
  Salvatore Galletti

 

 

 

 

Exhibit A

 

FORM OF AGREEMENT AND GENERAL RELEASE

 

THIS AGREEMENT AND GENERAL RELEASE (the “Agreement and General Release”) is made and entered into on _____________, 2020 by and between Salvatore Galletti (“Executive”) and Tattooed Chef, Inc. (“Employer”).

 

WHEREAS, Executive has been employed by Employer and the parties wish to resolve all outstanding claims and disputes between them relating to such employment;

 

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth in this Agreement and General Release, the sufficiency of which the parties acknowledge, it is agreed as follows:

 

1. In consideration for Executive’s promises, covenants and agreements in this Agreement and General Release, Employer agrees to make the payments to and on behalf of Executive provided under Section 4(b) of the employment agreement between Executive and Employer dated June 11, 2020 (the “Employment Agreement”), in accordance with the terms and subject to the conditions of such Employment Agreement. Executive would not otherwise be entitled to such payments but for his promises, covenants and agreements in this Agreement and General Release. Executive acknowledges and agrees that the confidentiality, intellectual property assignment, non-competition, non-solicitation and other restrictive covenants contained in the Employment Agreement (the “Restrictive Covenants”) shall remain in full force and effect in accordance with their terms, and Executive hereby reaffirms Executive’s agreement to comply with such Restrictive Covenants.

 

2. The parties agree that the payments described in Section 1 of this Agreement and General Release are in full, final and complete settlement of all claims Executive may have against Employer, its subsidiaries, their respective past and present affiliates, and the respective officers, directors, owners, members, employees, agents, advisors, consultants, insurers, attorneys, successors and/or assigns of each of the foregoing (collectively, the “Releasees”). For the avoidance of doubt, this Agreement and General Release provides for the sole and exclusive benefits for which Executive is eligible as a result of his termination of employment, and Executive shall not be eligible for any benefits under Employer’s severance plan, if any, or any other agreement or arrangement providing for benefits upon a separation from service other than the Employment Agreement.

 

3. Nothing in this Agreement and General Release shall be construed as an admission of liability by Employer or any other Releasee, and Employer specifically disclaims liability to or wrongful treatment of Executive on the part of itself and all other Releasees.

 

4. To the extent permitted by applicable law, Executive agrees that he will not encourage or assist any person to litigate claims or file administrative charges against Employer or any other Releasee, unless required to provide testimony or documents pursuant to a lawful subpoena or other compulsory legal process, in which case he agrees to notify Employer immediately of his receipt of such subpoena so that Employer has the opportunity to contest the same. If any court has or assumes jurisdiction of any action against Employer or any of its affiliates on behalf of Executive, Executive will request that court to withdraw from or dismiss the matter with prejudice. Executive further represents that he has reported to Employer in writing any and all work-related injuries that he has suffered or sustained during his employment with Employer or its affiliates.

 

 

 

 

5. Executive represents that he has not filed any complaints or charges against Employer or any of its affiliates with the Equal Employment Opportunity Commission, or with any other federal, state or local agency or court.

 

6. Executive fully and forever releases and discharges Employer and all other Releasees from any and all legally waivable claims, liabilities, damages, demands, and causes of action or liabilities of any nature or kind, whether now known or unknown, arising out of or in any way connected with Executive’s employment with Employer or any of its affiliates or the termination of such employment; provided, however, that nothing in this Agreement and General Release shall either waive any rights or claims of Executive (i) that arise after Executive signs this Agreement and General Release; (ii) to enforce the terms of this Agreement and General Release; (iii) for the provision of accrued benefits conferred to Executive or his beneficiaries under the terms of Employer’s medical, dental, life insurance or defined contribution retirement benefit plans or any equity plan to which Executive participated in connection with his employment with Employer; (iv) for fees, expenses and costs, including on behalf of Executive’s attorney; (v) based on Executive’s existing rights to indemnification, if any, by the Employer or its affiliates pursuant to the Employer’s or affiliate’s governing documents or other written arrangements for acts committed during the course of Executive’s employment or existing rights to coverage under any; and (vi) based on Executive’s existing coverage under any directors and officers insurance policy in accordance with the terms of such policy. This release includes but is not limited to claims arising under federal, state or local laws concerning employment discrimination, termination, retaliation and equal opportunity, including but not limited to Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Equal Pay Act of 1963, the Americans with Disabilities Act of 1990, as amended, the Worker Adjustment and Retraining Notification Act of 1988, as amended, the Employee Retirement Income Security Act of 1974, as amended (ERISA) (including but not limited to fiduciary claims), claims for attorneys’ fees or costs, any and all statutory or common law provisions relating to or affecting Executive’s employment by Employer or its affiliates, and any and all claims in contract, tort, or premised on any other legal theory. Executive acknowledges that he is releasing claims based on age, race, color, sex, sexual orientation or preference, marital status, religion, national origin, citizenship, veteran status, disability and other legally protected categories. This provision is intended to constitute a general release of all of Executive’s presently existing covered claims against the Releasees, to the maximum extent permitted by law. Notwithstanding anything herein to the contrary, this Agreement and General Release does not purport to waive any claim for worker's compensation or unemployment benefits, and does not purport to waive or affect any claim that cannot be released by an agreement voluntarily entered into between private parties.

 

7. Executive specifically acknowledges that Executive is aware of and familiar with the provisions of California Civil Code Section 1542, which provides as follows:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”

 

Executive, being aware of this section, hereby expressly waives and relinquishes all rights and benefits Executive may have under California Civil Code Section 1542, as well as any other statutes or common law principles of similar effect.

 

 

 

 

8. Nothing in this Agreement and General Release shall be construed to prevent Executive from filing a charge or complaint, including a challenge to the validity of this Agreement, with any governmental agency or from participating in or cooperating with any investigation conducted by any governmental agency. Nevertheless, Executive agrees and understands that this Agreement and General Release waives all claims and rights to monetary or other recovery for any legal claims to the fullest extent permitted by law; and any claims based upon any other theory, whether legal or equitable, arising from or related to any matter or fact arising out the events giving rise to this Agreement and General Release.

 

9. Executive acknowledges that all confidential information regarding Employer’s or any of its affiliates’ business compiled, created or obtained by, or furnished to, Executive during the course of or in connection with his employment with Employer or any of its affiliates is the exclusive property of Employer or such affiliate. Upon or before execution of this Agreement and General Release, Executive will return to Employer all originals and copies of any material containing confidential information, and Executive further agrees that he will not, directly or indirectly, use or disclose such information. Executive will also return to Employer upon or before execution of this Agreement and General Release any other items in his possession, custody or control that are the property of Employer, including, but not limited to, his files, credit cards, identification card, data storage devices, passwords and office keys.

 

10. Executive acknowledges that (i) he has been given at least twenty-one (21)1 calendar days to consider this Agreement and General Release and that modifications hereof which are mutually agreed upon by the parties hereto, whether material or immaterial, do not restart the twenty-one day period; (ii) he has seven (7) calendar days from the date he executes this Agreement and General Release in which to revoke it; and (iii) this Agreement and General Release will not be effective or enforceable nor the amounts set forth in Section 1 paid unless the seven-day revocation period ends without revocation by Executive. Revocation can be made by delivery and receipt of a written notice of revocation to [INSERT NAME/TITLE AND ADDRESS], by midnight on or before the seventh calendar day after Executive signs the Agreement and General Release.2

 

11. Executive acknowledges that he has been advised to consult with an attorney of his choice with regard to this Agreement and General Release. Executive hereby acknowledges that he understands the significance of this Agreement and General Release, and represents that the terms of this Agreement and General Release are fully understood and voluntarily accepted by him.

 

12. Executive agrees that he will treat the existence and terms of this Agreement and General Release as confidential and will not discuss the Agreement and General Release, its terms or the circumstances surrounding his separation from service with Employer or its affiliate with anyone other than: (i) his counsel or tax advisor as necessary to secure their professional advice, (ii) his spouse or (iii) as may be required by law.

 

13. Any non-disclosure provision in this Agreement and General Release does not prohibit or restrict Executive (or Executive’s attorney) from responding to any inquiry about this Agreement and General Release or its underlying facts and circumstances by the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), any other self-regulatory organization or governmental entity, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. Executive understands and acknowledges that he does not need the prior authorization of the Employer to make any such reports or disclosures and that he is not required to notify the Employer that he has made such reports or disclosures.

 

 

 

1 Note to Draft: Change to forty-five (45) days in the case of a group termination under the ADEA.
2 Note to Draft: This provision is only necessary if the Executive is over the age of 40.

 

 

 

 

14. Executive shall not make any oral or written statements, either directly or through other persons or entities, which are (i) disparaging to the Employer or any of the Employer’s affiliates, or the management, officers, directors, services, products or operations thereof, or (ii) likely to adversely affect the business relationship of the Employer or its affiliates with the public generally or with any of their respective customers, vendors, suppliers, licensors, lessors, joint venturers, associates, consultants, agents, partners, contractors or employees. Notwithstanding the foregoing, it shall not be a violation of this provision for Executive to make truthful statements when required by compulsory legal process or as otherwise may be required by law.

 

15. In the event of any lawsuit against Employer or any of its affiliates that relates to alleged acts or omissions by Executive during his employment with Employer or its affiliate, Executive agrees to cooperate with Employer or its affiliate by voluntarily providing truthful and full information as reasonably necessary for Employer or its affiliate to defend against such lawsuit, provided that the Employer shall reimburse Executive’s reasonable expenses incurred in providing such assistance subject to Executive’s delivery of written notice to the Employer prior to the time such expenses are incurred.

 

16. Executive shall indemnify and defend the Company against any claim arising out of this Agreement for unpaid taxes which may be made by any state or federal agency for any taxes, interest, fines or penalties.

 

17. Executive agrees not to seek reemployment or an independent contractor relationship with the Company at any time.

 

18. Executive agrees to hold in strictest confidence and not to disclose to any person, firm, or corporation or to use to compete with Company, without the express authorization of the CEO of the Company, any confidential or proprietary information relating to the business of Company. Confidential or proprietary information includes, but is not limited to: trade secrets, processes, formulas, computer programs, data, know-how, inventions, improvements, techniques, marketing plans, forecasts, discounts, customer and supplier lists.

 

19. The parties acknowledge that each would be irreparably harmed by any breach of the commitments in the Agreement by the other party, and that in the event of any such breach, the prevailing party shall be entitled to the recovery of all costs and attorneys’ fees incurred in bringing an action for breach of the Agreement. Any such action would have no effect on the validity or enforceability of the Agreement.

 

20. This Agreement and General Release shall be binding on Employer and Executive and upon their respective heirs, representatives, successors and assigns, and shall run to the benefit of the Releasees and each of them and to their respective heirs, representatives, successors and assigns.

 

21. This Agreement and General Release (and, to the extent explicitly provided herein, the Employment Agreement) set forth the entire agreement between Executive and Employer, and fully supersedes any and all prior agreements or understandings between them regarding its subject matter; provided, however, that nothing in this Agreement and General Release is intended to or shall be construed to limit, impair or terminate any obligation of Executive pursuant to any non-competition, non-solicitation, confidentiality or intellectual property agreements that have been signed by Executive where such agreements by their terms continue after Executive’s employment with Employer terminates, including, but not limited to, the provisions of Sections 6, 7, 8 and 9 of the Employment Agreement. This Agreement and General Release may only be modified by written agreement signed by both parties.

 

22. The Employer and Executive agree that in the event any provision of this Agreement and General Release is deemed to be invalid or unenforceable by any court or administrative agency of competent jurisdiction, or in the event that any provision cannot be modified so as to be valid and enforceable, then that provision shall be deemed severed from the Agreement and General Release and the remainder of the Agreement and General Release shall remain in full force and effect.

 

 

 

 

23. This Agreement and General Release will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflicting provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of Delaware to be applied. In furtherance of the foregoing, the internal law of the State of Delaware will control the interpretation and construction of this Agreement and General Release, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.

 

24. All judicial proceedings brought against any party arising out of or relating to this Agreement and General Release, or any obligations or liabilities hereunder, shall be brought in the United States District Court for the District of Delaware, provided that if the judicial proceeding shall not satisfy applicable federal jurisdiction requirements, such dispute shall be brought in the state courts of the State of Delaware. By executing and delivering this Agreement and General Release, each party irrevocably: accepts generally and unconditionally the exclusive jurisdiction and venue of such courts and waives, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Notwithstanding the foregoing, the parties may seek injunctive or equitable relief to enforce the terms of this Agreement and General Release in any court of competent jurisdiction.

 

25. Each of the parties hereto hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement and General Release.

 

26. The language of all parts of this Agreement and General Release in all cases shall be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties.

 

[Signatures on Following Page]

 

 

 

 

PLEASE READ CAREFULLY. THIS
AGREEMENT AND GENERAL RELEASE INCLUDES A
RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

  EMPLOYER
   
  TATTOOED CHEF, INC.
     
  By:  
  Name:   
  Title:  
     
  EXECUTIVE
     
   
  Salvatore Galletti
     
  Date:  

 

 

 

 

Exhibit 10.4

 

 

Directorship Agreement

 

Directorship Agreement

 

By and between

 

Ittella’s Chef LLC, a company incorporated and existing under the laws of California, USA, with offices in 6305 Alondra Blvd, Paramount, CA 90723 (“Ittella USA”), duly represented by its Chief Executive Officer Mr. Salvatore Galletti

 

and

 

Giuseppe Bardari, born in Vibo Valentia on May 6th,1976, Fiscal Code BRDGPP76E06F537D (“Director”)

 

Ittella USA and the Director, collectively, the “Parties

 

 

Tra

 

Ittella’s Chef LLC, società costituita ed esistente ai sensi della legge della California, con sede in 6305 Alondra Blvd, Paramount, CA 90723 (“Ittella USA”), rappresentata dal proprio Chief Executive Officer Sig. Salvatore Galletti

 

and

 

Giuseppe Bardari, nato a Vibo Valentia, il 6 maggio 1976, C.F. BRDGPP76E06F537D (l’“Amministratore”)

 

Ittella USA e l’Amministratore, congiuntamente, le “Parti

 

RECITALS:

 

A.    Ittella Italy s.r.l., a company incorporated and existing under the laws of Italy, with registered offices in Prossedi (Latina, Italy), via STRADA DELLA CASAINA SNC, cap 04010, capital of Euro 1.100.000,00, Italian tax code 03393170794, registration with the Companies register of Latina (Italy) no. REA LT 212808 (“Ittella Italy” or the “Company) is a company active in the food industry of frozen products, primarily for the U.S. market.

 

B.    The Director has experience in the above mentioned business industry, having also served as the sole director of Ittella Italy until the date hereof.

 

C.    On the date hereof, among the others, Ittella USA’s indirect parent company, Myjojo Inc. (“Myjojo”) executed a reverse triangular merger governed under the laws of Delaware pursuant to which Myjojo merged with and into a fully owned subsidiary of Forum Merger II Corporation, a company incorporated and existing under the laws of Delaware (“Forum”) (the “Merger”). As result of the Merger, Forum holds – indirectly – 100% of the equity interests of Ittella USA, which owns, in turn, 100% of the equity interests of the Company.

 

D.   In the context and pursuant to the Merger, on the date hereof (i) Ittella Italy’s quota-holders meeting has convened and Ittella USA, considering the experience and professional skills of the Director, voted in favour of the appointment of the Director as sole director of Ittella Italy (the “Office”) until the term indicated therein, and (ii) the Director accepted such appointment and all its relevant terms and conditions.

 

E.    By entering into this agreement (the “Agreement”), the Parties set forth and further specify the terms and conditions governing the Office.

 

Premesse:

 

A.    Ittella Italy s.r.l., società costituita ed esistente ai sensi della legge italiana, con sede legale in Prossedi (Latina), via STRADA DELLA CASAINA SNC, cap 04010, capitale sociale Euro 1.100.000,00, codice fiscale 03393170794 e Numero REA LT 212808 (“Ittella Italy” o la “Società”) è una società attiva nel settore dell’industria alimentare di prodotti surgelati, principalmente destinati al mercato statunitense.

 

B.   L’Amministratore ha esperienza nel settore sopra indicato, avendo egli altresì ricoperto la carica di amministratore unico di Ittella Italy sino alla data odierna.

 

C.   In data odierna, inter alia, il socio indiretto di Ittella USA, Myjojo Inc. (“Myjojo”) ha eseguito una fusione di tipo “reverse triangular merger”, ai sensi delle leggi dello stato del Delaware a seguito della quale Myjojo si è fusa per incorporazione con (e in) una società interamente posseduta da Forum Merger II Corporation, società costituita ed esistente ai sensi della legge del Delaware (“Forum”) (la “Fusione”). Quale risultato della Fusione, Forum è proprietaria – indirettamente – del 100% delle quota rappresentative del capitale sociale di Ittella USA la quale, a sua volta, è proprietaria di una quota rappresentativa del 100% del capitale sociale della Società.

 

D.   Nel contesto e in esecuzione della Fusione, in data odierna (i) l’assemblea dei soci della Società si è riunita e Ittella USA, quale socio della Società, tenuto conto dell’esperienza e della competenza dell’Amministratore, ha espresso il proprio voto favorevole alla nomina dell’Amministratore quale amministratore unico della Società (l’“Incarico”) sino al termine ivi indicato, e (ii) l’Amministratore ha accettato tale incarico e i relativi termini e condizioni.

 

E.    Con il presente accordo (l’”Accordo”) le Parti intendono disciplinare e meglio specificare i aggiuntivi termini e condizioni dell’Incarico.

 

now, therefore, the Parties agree as follows: Tutto ciò premesso le Parti stipulano e convengono quanto segue:

 

 

 

 

 

1.   Recitals and definitions

 

 

1.   Premesse e definizioni

 

1.1   The recitals are an essential part of this Agreement.

 

1.2   As used in this Agreement and in addition to any other terms expressly defined herein, the following terms shall have the meanings indicated below:

 

(i)   “Business” means any business that is competitive with the business of the Company and/or any other company of the Group as of, alternatively, (A) the date of this Agreement, or (B) the 12 (twelve) months prior to the date of this Agreement, including any activities or business (i) engaged in the production, marketing or distribution of (a) plant-based meals or dishes, (b) value-added fruit and vegetables, (c) plant- and/or dairy-based pizza toppings, (d) plant-based novelty food products, or (ii) that offers any product or service in the same line of business or product or service category as any product or service offered by the Company and/or the Group or in development by the Company and/or the Group;

 

(ii)   “Cause” means: (i) the breach by the Director of any of the obligations under articles 6, 7, and 8 of this Agreement, and (ii) any other events qualifying as “giusta causa” under Italian law;

 

(iii)   “Competitor” means any Third Party who or which is engaged in a Business;

 

(iv)   “Confidential Information” mean, in relation to the Company and/or the Group, any news, data, information, documents, research, charts, inventions, products, product sheets, details of the product, client lists, strategies, materials, research and results, technical knowledge, commercial, organizational concerning the business, the organization and structure of the Company and/or the Group, the remuneration, incentive and personnel management policies, as well as the projects and the industrial, commercial, sales, business, marketing, pricing strategies, price list and discounts, even intercompany, special conditions of supply, list of suppliers and distributors, non-public financial information, including, but always and only by way of example, budget proposals, budget and management accounts, business plans and strategic plans, proposals for capital investment and, more generally, any other information, having a confidential and/or secret nature, of which the Director comes to know by reason of the Office;

 

(v)   “Group” means, alone or collectively, the Company, Ittella USA, Forum, and any person or entity whatsoever existing or organized which is, directly and/or indirectly, a parent, affiliate, related, controlled, or under the common control of, one or more of the aforementioned entities;

 

(vi)   “Intellectual Property” means any concepts, formulas, discoveries, inventions or utility models (whether or not patentable or patented), plant varieties; processes, procedures, developments and relevant improvements; data of any nature; registered and unregistered designs and models; texts, plans, drawings; registered and unregistered trademarks and any other distinctive signs; pictures; photographs; databases; computer software; engineering project; any other artistic, literary and howsoever creative works (including all related preparatory and design materials) as well as any and all parts thereof; methods; confidential information; know-how; trade and/or industrial secrets, even of negative nature;

1.1   Le premesse costituiscono parte integrante e sostanziale dell’Accordo.

 

1.2   Ove utilizzati nel presente Accordo e in aggiunta alle ulteriori definizioni ivi indicate, i seguenti termini hanno il significato a essi attribuito qui di seguito:

 

(i)   “Business” significa qualsiasi attività che si pone in concorrenza con il settore in cui opera la Società o ogni altra entità del Gruppo, alternativamente, (A) alla data del presente Accordo, ovvero (B) nel periodo di 12 (dodici) mesi antecedentemente a tale data, inclusa ogni attività o settore (i) afferente la produzione, commercializzazione o distribuzione di (a) pasti a base vegetale o piatti, (b) concentrati di frutta e verdura, (c) condimenti per pizza con prodotti vegetali e /o caseari, (d) prodotti alimentari a base vegetale, (ii) che offre qualsiasi prodotto o servizio nello stesso settore o categoria di prodotti o servizi, nonché qualsiasi prodotto o servizio offerto dalla Società e/o dal Gruppo o sviluppato e/o prodotto dalla Società e/o dal Gruppo;

 

(ii)   “Concorrente” significa ogni Terzo che operi nell’ambito del Business;

 

(iii)   “Giusta Causa” significa (a) la violazione, da parte dell’Amministratore, di una qualsiasi delle obbligazioni di cui agli articoli 6, 7 e 8 del presente Accordo, e (b) qualsiasi altro evento che integri una “giusta causa” secondo la legge italiana.

 

(iv)   “Gruppo” significa, da sole o congiuntamente, la Società, Ittella USA, Forum e ogni altra persona o ente (in qualunque forma esistenti o costituiti) che sia, direttamente o indirettamente, controllante, affiliata, collegata, controllata da, o sotto il comune controllo di, una o più delle suddette società;

 

(v)   “Informazioni Confidenziali” significa, con riferimento alla Società e/o al Gruppo, notizie, dati, informazioni, documenti, ricerche, tabelle, invenzioni, prodotti, schede dei prodotti, dettagli di prodotto, elenchi dei clienti, strategie, materiali, ricerca ed i relativi risultati, conoscenze tecniche, commerciali, organizzative riguardanti l’attività, l’organizzazione e la struttura della Società e/o del Gruppo, le politiche retributive, di incentivazione e di gestione del personale, nonché i progetti e le strategie di sviluppo industriale, commerciale, di vendita, di business, di marketing, di pricing, il listino prezzi e sconti, anche intercompany, condizioni particolari di fornitura, listino dei fornitori e dei distributori, informazioni finanziarie non pubbliche, ivi incluse, sempre e solo in via esemplificativa, proposte di budget, budget e conti di gestione, business plan e piani strategici, proposte per investimenti di capitali e, più in generale, qualsiasi altra informazione, avente natura confidenziale e/o segreta, di cui l’Amministratore venga a conoscenza in forza dell’Incarico;

 

 

2

 

 

(vii)   “Material Business Relationship” means any (x) customer, supplier, licensee, licensor, franchisee -and its employees, consultants and/or suppliers – of any entity of the Group as of the date of this Agreement or at any time in the 12 (twelve) months period prior to the date of this Agreement, or (y) any other Third Party with whom any entity of the Group, as of the date of this Agreement or at any time in the 12 (twelve) months period prior to the date of this Agreement, has or had a material (or potentially material) business relationship;

 

(viii)   “Third Party” means any person or entity other than any entity of the Group, whatsoever existing or organized and regardless of such third party being or not being a Competitor.

 

(vi)   “Proprietà Intellettuale” deve intendersi ogni idea, formula, scoperta, invenzione o modello di utilità (che sia o meno brevettabile o brevettata) e relativi miglioramenti; varietà vegetale; processo, procedura, sviluppo e relativi miglioramenti; dato di qualunque natura; disegno e modello registrato e non registrato; testo, piano, elaborato; marchio registrato e non registrato ed ogni altro segno distintivo; immagini; fotografia; banca dati; software; progetto di ingegneria; ogni altra opera di natura artistica, letteraria o comunque creativa (inclusi tutti i materiali ed i disegni preparatori) e tutte e ciascuna le parti di essa; metodi; informazione confidenziale; know-how; segreto commerciale e/o industriale, anche di natura negativa;

 

(vii)   “Relazione Commerciale Rilevante” significa qualsiasi (x) cliente, fornitore, licenziatario, licenziante, affiliato – e i relativi dipendenti, consulenti e/o fornitori – di ogni e qualsivoglia entità del Gruppo alla data del presente Accordo o in un periodo di 12 (dodici) mesi antecedente la data del presente Accordo, o (y) qualsiasi altro Terzo con il quale una entità del Gruppo, alla data del presente Accordo o in un periodo di 12 (dodici) mesi antecedente la data del presente Accordo, , intrattenga o abbia intrattenuto un rapporto commerciale rilevante (o potenzialmente rilevante);

 

(viii)   “Terzo” significa qualsivoglia soggetto terzo diverso da alcuna delle entità del Gruppo, in qualunque forma esistente o costituito, che sia o meno un Concorrente.

 

2.   Term of the Office and of this Agreement

 

2.   Durata dell’Incarico e del Presente Accordo

 

2

 

2.1   The Director shall hold the Office until the term resolved upon by the quota-holders’ meeting of the Company, without prejudice however to the termination of the Office before such term pursuant to applicable law (including, without limitation, resignation, removal, incompatibility with the Office and/or in case of lack of the necessary requirements to hold the Office set forth under the by-laws and/or any applicable laws and/or regulations) (the date on which such termination will occur, the “Termination Date”).

 

2.2   This Agreement shall automatically terminate with immediate effects on the Termination Date, without prejudice to articles 5, 6, 7, and 8.2 of this Agreement, which will remain in full force and effects also after the Termination Date for the relevant period of time mentioned in therein.

 

2.3   In case the Office terminates for Cause, the Director will be liable to the Company for the relevant damages under this Agreement, without prejudice to any other actions, claims and/or remedies applicable under law.

 

 

2.1   L’Amministratore rimarrà in carica fino alla data stabilita dall’assemblea dei soci della Società, fatta comunque salva la cessazione dell’Incarico prima di tale data secondo la legge applicabile (incluso, a titolo esemplificativo, nell’ipotesi di dimissioni, revoca, incompatibilità o qualora vengano a mancare i necessari requisiti per ricoprire la carica di cui all’Incarico ai sensi di legge, dei regolamenti applicabili, e/o dello statuto della Società (la data di cessazione dell’Incarico, la “Data di Cessazione”).

 

2.2   Il presente Accordo cesserà automaticamente di efficacia alla Data di Cessazione, fatto comunque salvo quanto disposto agli articoli 5, 6, 7 e 8.2 del presente Accordo, che rimarranno pienamente validi ed efficaci anche successivamente alla Data di Cessazione per il periodo rispettivamente ivi indicato.

 

2.3   Nel caso in cui l’Incarico cessi per Giusta Causa, l’Amministratore sarà responsabile nei confronti della Società per i danni dovuti ai sensi del presente Accordo, senza pregiudizio per ogni ulteriore eventuale azione, pretesa e/o diritto spettante alla Società ai sensi della legge applicabile.

 

3. Powers and Responsibilities

3.   Poteri e Responsabilita’

 

3

 

3.1   The Director will be responsible for managing the Company in full accordance with the powers granted by the quota-holders’ meeting of the Company upon his appointment, the by-laws, and with any applicable laws.

 

3.1   L’Amministratore avrà i poteri e le responsabilità di gestire la Società secondo i limiti indicati dall’assemblea dei soci della Società all’atto della nomina e in conformità allo statuto della Società e alla legge.

 

 

3

 

 

3.2   The Director will perform the Office with the utmost degree of diligence required by its nature.

 

3.3   The Director will benefit from the D&O (Directors & Officers Liability) insurance policy entered into by Forum in accordance with its terms and conditions

 

3.2   L’Amministratore eseguirà l’Incarico con il più elevato standard di diligenza richiesto dalla sua natura.

 

3.3   L’Amministratore beneficerà della copertura assicurativa di cui alla polizza “D&O” (copertura assicurativa per amministratori e dirigenti) sottoscritta da Forum secondo i suoi termini e condizioni

 

4. compensation – Benefits – Reimbursement of expenses

 

4.   Remunerazione – Benefits – Rimborso Spese

 

4

 

4.1   The Director will receive, as overall compensation for the performance of the Office and for every relevant activity and responsibilities connected thereto, a fixed compensation equal to gross Euro 360,000.00 (threehundred sixtythousand) per year (the “Fixed Compensation”).

 

4.2   Payment of the Fixed Compensation, deducted any applicable tax and social security withholdings, will be made in 12 (twelve) monthly instalments in arrears each of equal amount of Euro 30,000.00 (thirty thousand).

 

4.3   The Director will be eligible to participate in bonuses plans/programs based upon the Director’s performance relative to annual goals and other financial and non-financial performance measures to be established by Forum, in its reasonable discretion, and will be entitled to 4 (four) weeks of paid leave.

 

4.4   In addition to the above, the Company will grant the Director the following benefits: the right to continue to use the apartment in Frosinone, and the company’s mobile phone and pc and company credit card.

 

4.5   The Director will be reimbursed for the duly documented expenses reasonably incurred in performing of the Office, pursuant to the Group’s policies and procedures. 

 

4.1   A titolo di corrispettivo onnicomprensivo per l’esecuzione dell’Incarico e di ogni relativa azione e responsabilità, sarà attribuito all’Amministratore un emolumento fisso pari a Euro [360.000,00] (trecentosessantamila) lordi su base annua (l’”Emolumento Fisso”).

 

4.2   Il pagamento dell’Emolumento Fisso, dedotta ogni ritenuta fiscale e previdenziale applicabile, avverrà in 12 (dodici) rate mensili posticipate ognuna di importo pari a Euro 30.000,00 (trentamila) .

 

4.3   L’Amministratore parteciperà a piani e/o programmi di incentivazione basati sui risultati di performance relativamente ad obiettivi annuali e ad altri parametri finanziari e non, che saranno identificati da Forum a propria ragionevole discrezione, e avrà diritto a 4 (quattro) settimane di assenza remunerata.

 

4.4   Inoltre, saranno assegnati all’Amministratore i seguenti benefits: diritto di continuare ad utilizzare l’appartamento in Frosinone ed il PC, il cellulare e carta di credito aziendale.

 

4.5   Verranno rimborsate all’Amministratore le spese ragionevolmente sostenute e documentate in esecuzione dell’Incarico secondo i termini delle policy e procedure del Gruppo.

 

5. Confidentiality

5.   Riservatezza

 

5

 

5.1   Without prejudice – and in addition – to any confidentiality obligation under applicable law, the Director undertakes, during the performance of the Office and for the period of 12 (twelve) months after the Termination Date, for any reason and unless in one of the cases under article 5.3 below:

 

(i)   not to disclose or communicate by any means or instrument, to any Third Party, any of the Confidential Information;

 

(ii)   to use the utmost care and caution in the treatment of the Confidential Information, using the same only for the proper performance of the Office;

 

(iii)   not to use any Confidential Information in a way that may, even if only potentially, damage, directly or indirectly, the Company or the Group;

 

(iv)   not to copy, reproduce or duplicate, in any form or by any means, data, documents, files – including in digital format – which contain or refer to Confidential Information.

 

5.1   Senza pregiudizio per – e in aggiunta a – ogni e qualsiasi obbligazione di riservatezza e confidenzialità ai sensi di legge, l’Amministratore si obbliga, durante l’esecuzione dell’Incarico e per il periodo di 12 (dodici) mesi dalla Data di Cessazione, per qualsiasi motivo e salvo per i casi di cui all’articolo 5.3 che segue, a:

 

(i)   non divulgare, diffondere o comunicare, con qualsiasi mezzo o strumento, a qualsivoglia Terzo, alcuna delle Informazioni Confidenziali;

 

(ii)   utilizzare la massima diligenza e cautela nel trattamento delle Informazioni Confidenziali, utilizzando le stesse esclusivamente per il corretto adempimento dell’Incarico;

 

(iii)   non utilizzare alcuna delle Informazioni Confidenziali in modo che si possa, anche solo potenzialmente, arrecare danno, direttamente o indirettamente, la Società e/o il Gruppo;

 

(iv)   a non copiare, duplicare o riprodurre, in alcun modo e con qualsiasi mezzo, dati, documenti, files – anche in formato digitate – che contengano o si riferiscano ad Informazioni Confidenziali.

 

 

4

 

 

5.2   Any of the Confidential Information that the Director would have access to, for any reason, during the performance of the Office shall be returned, in whatever format it is contained and/or recorded, on the Termination Date, without retaining any copy.

 

5.3   The confidentiality obligations under this article 5 will not apply if and to the extent that: (i) disclosure of the Confidential Information is ordered by the competent authorities or mandated by law, or (ii) such Confidential Information have become of public domain autonomously, and thus not as a result of the breach by the Director of his confidentiality obligations. If one or more elements, data and/or information being Confidential Information become, peacefully, of public domain, the obligations referred to in this clause will remain in full force and effect with respect to all the remaining elements, data and/or information not of public domain yet.

 

5.2   Qualsiasi delle Informazioni Confidenziali di cui l’Amministratore dovesse venire in possesso, a qualsiasi titolo, nel corso dello svolgimento dell’Incarico dovrà essere restituita, in qualunque formato essa sia contenuta e/o registrata, alla Data di Cessazione senza trattenerne copia alcuna.

 

5.3   Gli obblighi di confidenzialità e riservatezza di cui al presente articolo 5 non troveranno applicazione ove (i) la rivelazione delle suddette Informazioni Confidenziali sia ordinata dalla competente autorità giudiziaria o imposta dalla legge; o (ii) dette Informazioni Confidenziali siano diventate di pubblico dominio, e ciò non per effetto della violazione da parte dell’Amministratore degli obblighi di confidenzialità a suo carico. Qualora uno o più elementi, dati e/o notizie costituenti Informazioni Confidenziali diventi, pacificamente, di dominio pubblico, gli obblighi di cui al presente articolo avranno, comunque, piena ed integrale efficacia e validità nei confronti dell’Amministratore con riferimento a tutti i rimanenti elementi, dati e/o notizie ancora non divenuti di dominio pubblico.

 

6. Non-competition Covenants

6.   Patto di non concorrenza

 

6.1   Without prejudice to any additional non-competition obligations or restrictions set forth under applicable law or whatsoever, the Director will not – during the term of the Office as well as at any time during a period of 12 (twelve) months following the Termination Date (the “Restricted Period”) within the territory of Canada, the U.S.A., and the European Union (the “Territory”) engage in any activity falling within the Business or in favor of a Competitor (the “Restricted Activities”). For the sake of clarity, reference to the Territory means that the Director is prohibited from carrying out any Restricted Activities anyhow connected with the Territory, even if any such Restricted Activities are actually performed in/from countries which do not fall under the Territory.

 

6.2   The Director cannot carry out any of the activities prohibited by the provisions above whether directly or indirectly, whether alone or jointly with any other Third Party, and whether as shareholder, director, manager, officer, employee, agent, promoter, consultant of, in or to any other Third Party, or in any other form.

 

6.3   The Director will provide the Company and Ittella USA in writing – during the Restricted Period and within 7 (seven) days from commencement of working or professional activities of any nature engaged after the Termination Date (the “New Activities”) – any significant information regarding the New Activities, including but not limited to the data of the new employer or principal and the content of the New Activities. The Director further covenants and undertakes to inform previously his new employer or principal of the covenants undertaken by him under this Agreement.

 

6.4   The Parties acknowledge that the Fixed Compensation has been negotiated and agreed taking into consideration the restrictions under this Agreement, including the those related to the non-competition and non-solicitation covenants; the portion of Fixed Compensation apportioned in consideration for these undertakings/restrictions is equal to 40% of the Fixed Compensation.

 

 

6.1 Senza pregiudizio per ogni e qualsiasi ulteriore impegno di non concorrenza ai sensi di legge o di qualsiasi altra fonte, l’Amministratore si obbliga a non svolgere sotto qualsiasi forma – per il periodo di decorrenza dell’Incarico e per 12 (dodici) mesi a decorrere dalla Data di Cessazione (il “Periodo di Non Concorrenza”) – relativamente al territorio degli Stati Uniti d’America, Canada e Unione Europea (il “Territorio”) qualsiasi attività nell’ambito del Business ovvero in favore di un Concorrente (le “Attività In Concorrenza”). Per scrupolo di chiarezza, il riferimento al Territorio deve essere interpretato nel senso che è vietato, ai sensi del presente articolo, lo svolgimento di qualsiasi Attività In Concorrenza che sia correlata al Territorio, anche se tale svolgimento sia materialmente effettuato in/da paesi non ricompresi nel Territorio.

 

6.2 Resta inteso che l’Amministratore non potrà svolgere alcuna delle attività vietate dalle disposizioni che precedono né direttamente né indirettamente, né individualmente né unitamente ad altri Terzi, né come socio, amministratore, manager, dipendente, agente, promoter, consulente, collaboratore di altri Terzi, né sotto qualsiasi altra forma.

 

6.3 L’Amministratore fornirà alla Società e a Ittella USA, per iscritto – durante il Periodo di Non Concorrenza ed entro 7 (sette) giorni dall’inizio di attività lavorative o professionali di qualsiasi natura intraprese successivamente alla Data di Cessazione (le “Nuove Attività”) – ogni informazione rilevante riguardante le Nuove Attività, inclusi, a titolo esemplificativo e non esaustivo, i dati identificativi del nuovo datore di lavoro o committente (o equivalenti figure) e il contenuto delle Nuove Attività. Inoltre, l’Amministratore si obbliga a informare preventivamente il suo nuovo datore di lavoro o committente (o equivalenti figure) degli obblighi di cui al presente Accordo assunti dall’Amministratore.

 

6.4 Le Parti prendono atto che l’Emolumento Fisso è stato negoziato e concordato tenendo in considerazione le previsioni e divieti di cui al presente Accordo, tra le quali anche quelle correlate al presente articolo; il relativo corrispettivo per i suddetti obblighi e divieti è pari al 40% dell’Emolumento Fisso.

 

 

5

 

 

 

6.5   Upon breach of any of the provisions and the obligations under this article 6, without prejudice to the judicial remedies under Italian law (including provisional proceedings and/or measures), the Director will pay to the Company, as liquidated damages, an amount equal to Euro 300 for each and every breach occurred and for every day when such breach has taken place (the “Liquidated Damages”), without prejudice for the Company to claim additional damages. The Parties acknowledge that the amount of the Liquidated Damages has been fully negotiated at arm’s length and that such amount is fair and in line with the obligations and covenants undertaken under this Agreement.

 

 

6.5 In caso di violazione di anche una sola delle disposizioni ed obbligazioni di cui al presente articolo 6, fermi i rimedi processuali di cui all’ordinamento italiano (inclusi i procedimenti/azioni cautelari), l’Amministratore verserà alla Società, a titolo di penale, un importo pari a Euro 300,00 per ciascuna violazione commessa e per ogni giornata in cui tale violazione è occorsa (la “Penale”), fatto salvo il diritto della Società al risarcimento del danno ulteriore. Le Parti riconoscono e prendono atto che l’importo della Penale è stato pienamente negoziato secondo le normali condizioni di mercato, e che tale importo è equo e in linea con le obbligazioni e i doversi di cui al presente Accordo.

7. Non-Solicitation and non-interference

7.   Divieto di storno e di interferenza

 

7.1   During the Office and for 12 (twelve) months after the Termination Date, the Director will not, directly or indirectly, on his account or on behalf of any Third Party:

 

(a) endeavor or attempt to induce any employee, independent contractor or consultant of the Company and/or of the Group to terminate the existing working relationship engaged with them in order to establish a working relationship of employment or self-employment with the Director or any Third Party;

 

(b) offer any jobs/collaboration and/or enter into employment or self-employment contracts with employees, independent contractors or consultants of the Company and/or the Group, on behalf of the Director or of any Third Party.

 

7.2 During the Office and for 12 (twelve) months after the Termination Date, the Director, directly or indirectly, on his account or on behalf of any Third Party, will not:

 

(i)           interfere with the relationship between the Company and any Material Business Relationship;

 

(ii)         solicit, contact, induce or attempt to induce (or assist any Third Party in soliciting, contacting, inducing, or attempting to induce) any Material Business Relationship to terminate its relationship with the Company, cease doing business with the Company or terminate or otherwise adversely modify its relationship with the Company;

 

(iii)        acquire or attempt to acquire an interest in any person or business in relation to which, prior to the date of this Agreement, any entity of the Group had either (a) entertained business discussions, or (b) requested or received information relating to, or was considering (even potentially), the acquisition of, such Third Party (or any of its businesses).

 

7.1   Durante l’Incarico e per 12 (dodici) mesi decorrenti dalla Data di Cessazione, l’Amministratore, direttamente o indirettamente, né per conto proprio né per conto di Terzi, non:

 

(a)   proporrà ad alcun dipendente, collaboratore o consulente della Società e/o del Gruppo di risolvere il rapporto di lavoro esistente con gli stessi per instaurare un rapporto di lavoro di natura subordinata o autonoma con l’Amministratore o con qualsiasi Terzo;

 

(b)   a non fare offerte di lavoro/di collaborazione e/o stipulare contratti di lavoro di natura autonoma o subordinata con dipendenti, collaboratori e/o consulenti della Società e/o del Gruppo, per conto proprio o di Terzi.

 

7.2   Durante l’Incarico e per 12 (dodici) mesi decorrenti dalla Data di Cessazione, l’Amministratore, direttamente o direttamente, per conto proprio o per mezzo o per conto di Terzi, non:

 

(i)   interferirà nel rapporto tra la Società e ogni Relazione Commerciale;

 

(ii)   solleciterà, contatterà, indurrà o tenterà di indurre (né supporterà qualsiasi persona e/o ente nel sollecitare, contattare, indurre o tentare di indurre) qualsiasi Relazione Commerciale a terminare il proprio rapporto con la Società, cessare di fare affari con la Società o terminare o modificare in altro modo il proprio rapporto con la Società;

 

(iii)   acquisirà o tenterà di acquisire una partecipazione in un Terzo in relazione al quale, prima della data del presente Accordo, un’entità del Gruppo: (a) avesse intrattenuto discussioni commerciali, ovvero (b) avesse richiesto o ricevuto informazioni relative alla, o stesse contemplando (anche solo potenzialmente), l’acquisizione di tale Terzo (o di un suo bene e/o azienda).

 

 

6

 

 

8. Further obligations of the Director

8.   Ulteriori Obbligazioni dell’Amministratore

 

8.1 Without prejudice to any other obligation set forth under applicable law and in this Agreement, during the performance of the Office the Director will not, either directly or indirectly, on his account or on behalf of any Third Party:

 

(i)           carry out any working or professional activity, in any form whatsoever, with or without consideration, for the benefit of any Third Party;

 

(ii)         set up, or hold in whatsoever form, shares, quota, or any other kind of interest, in any Competitor.

 

8.2   During the performance of the Office, and at any time after the Termination Date, the Director will:

 

(i)          not give interviews to any source of information, without the prior written consent of the Ittella USA, in relation to the business of the Company and/or the Group;

 

(ii)          not make any negative, derogatory or disparaging statements or communications, either orally or in writing, regarding the activities of the Company and/or the Group, criticize or disparage the Company and/or the Group and/or any individual who is, or has been, officer, director, employee, representative whatsoever of the Company and/or any entities of the Group, and

 

(iii)           refrain from making any statements or taking any actions (or omission) which may damage the goodwill or reputation of the Company and/or the Group and/or any of the individuals indicated in point (ii) above.

 

 

8.1   Senza pregiudizio per ogni e qualsiasi ulteriore obbligazione ai sensi di legge, del presente Accordo o di qualsiasi altra fonte, durante l’esecuzione dell’Incarico, l’Amministratore, direttamente o indirettamente, per conto proprio o di un Terzo, non:

 

(i)           svolgerà alcuna attività lavorativa o professionale, sotto qualsiasi forma, con o senza corrispettivo, in favore di qualsiasi Terzo;

 

(ii)          non costituirà, direttamente o tramite terze parti, né deterrà quote o azioni o ogni altro strumento di simile natura, in qualunque forma, di alcun Concorrente.

 

8.2   Durante l’esecuzione dell’Incarico e in ogni tempo successivamente alla Data di Cessazione, l’Amministratore:

 

(i)          non rilascerà interviste a qualsiasi fonte di informazione in relazione alle attività della Società e/o del Gruppo, senza preventiva autorizzazione da parte di Ittella USA;

 

(ii)          non rilascerà dichiarazioni o comunicazioni di contenuto negativo, denigratorio o dispregiativo, sia oralmente che per iscritto, in merito alle attività della Società e/o del Gruppo, o criticare o denigrare la Società e/o il Gruppo e/o qualsiasi persona che sia, o sia stata, amministratore, dipendente, rappresentante a qualsiasi titolo della Società e/o di qualsiasi entità del Gruppo; e

 

(iii)          si asterrà dall’effettuare qualsivoglia affermazione ovvero dall’intraprendere qualsivoglia azione (o omissione) che possano cagionare un danno all’avviamento commerciale ovvero alla reputazione della Società e/o del Gruppo e/o di qualsiasi soggetto sopra menzionato al punto (ii).

 

9.   Intellectual Property Rights

 

9. Diritti di Proprietà Intellettuale

9

 

9.1   Any and all rights on Intellectual Property – with no exclusion whatsoever, save only for those moral rights which cannot be waived or assigned pursuant to applicable law – that the Director may develop and/or contribute to develop in the performance of the Office will originally vest in and be the exclusive property of the Company in any territory. To this extent, the Fixed Fees have been set out taking into account also any creative and inventive activity that the Director may carry out in the course of the Office. As a consequence, the Director shall not be entitled to any special additional consideration or compensation of whatsoever nature in connection with any results that he may develop and/or contribute to develop while performing the Office.

 

9.2   If any rights on Intellectual Property shall not originally vest in the Company or cannot be deemed as exclusive property of the Company, by executing this Agreement the Director hereby assigns and transfers irrevocably to the Company now for then (ora per allora) – to the maximum extent permissible under applicable law and in relation to any territory – any and all rights, titles and interest on the Intellectual Property, including any rights to their economic and commercial exploitation.

 

9.3   The Director undertakes to provide the Company with any reasonable assistance needed for the purpose of filing, registering, patenting and/or formalizing, at domestic and international level, any rights on the Intellectual Property which originally vested in the Company or have been subsequently assigned to the Company under the provisions above.

 

9.1  Ogni e qualsiasi diritto sulla Proprietà Intellettuale – senza esclusione alcuna, fatta eccezione soltanto per quei diritti morali che non possono essere oggetto di rinuncia o cessione ai sensi della normativa applicabile – che l’Amministratore potrà sviluppare e/o contribuire a sviluppare nell’esecuzione dell’Incarico sorgerà a titolo originario in capo alla Società e sarà di esclusiva titolarità della Società in qualsiasi territorio. A tal fine, l’Emolumento Fisso è stato calcolato tenendo in considerazione anche ogni attività creativa e inventiva che l’Amministratore potrà svolgere nel corso dell’Incarico. Ne consegue che l’Amministratore non avrà titolo per pretendere o conseguire alcun pagamento di qualsivoglia natura in relazione a ogni e qualsiasi risultato che potrà sviluppare, o contribuire a sviluppare, durante l’Incarico.

 

9.2   Tuttavia, nei casi in cui vi siano diritti sulla Proprietà Intellettuale che non sorgano a titolo originario in capo alla Società ovvero che non possono essere considerati di esclusiva titolarità della Società, con la sottoscrizione della presente Accordo l’Amministratore Unico cede e trasferisce irrevocabilmente alla Società ora per allora –- nell’estensione massima consentita dalla legge applicabile e in qualsiasi territorio – ogni e qualsiasi diritto, titolo e interesse sulla Proprietà Intellettuale, incluso ogni diritto di sfruttamento economico e commerciale della stessa.

 

 

 

7

 

 

 

9.3   L’Amministratore si impegna a fornire alla Società ogni ragionevole assistenza necessaria ai fini del deposito, registrazione, brevettazione e/o formalizzazione, a livello nazionale e internazionale, dei diritti sulla Proprietà Intellettuale che siano sorti a titolo originario in capo alla Società o che siano stati oggetto di cessione in favore della Società ai sensi delle disposizioni che precedono.

 

10. Notices

10.   Comunicazioni

 

10

 

Any communication required or admitted hereunder shall be made in writing to the following addresses and sent with registered mail with return receipt requested:

 

-        if to Ittella USA:

6305 Alondra Blvd, Paramount, CA 90723

Attention: Chief Executive Officer

 

-        if to the Director:

Mr. Giuseppe Bardari

c/o Ittella Italy

STRADA DELLA CASAINA SNC

04010, Prossedi (Latina, Italy)

Qualsiasi comunicazione necessaria o consentita in relazione al presente Accordo verrà effettuata per iscritto ai seguenti indirizzi ed inviata a mezzo di raccomandata con ricevuta di ritorno:

 

-       se a Ittella USA:

6305 Alondra Blvd, Paramount, CA 90723

Attenzione: Chief Executive Officer

 

-      se all’Amministratore:

Sig. Giuseppe Bardari

c/o Ittella Italy Srl

STRADA DELLA CASAINA SNC

04010, Prossedi (Latina, Italy)

 

11. Miscellanea

11.   Miscellanea

 

11.1.   Any amendments and/or integration to the Agreement shall be agreed in writing and undersigned by the Parties and will make express reference to this Agreement and to the provisions which the Parties intend to amend and/or integrate.

 

11.2.   Should any provision of the Agreement be deemed null, void or non effective, in whole or in part, the validity and/or enforceability of the other provisions shall not be affected.

 

11.3.   This Agreement supersedes any prior oral and written agreement between the Parties on the subject matter.

11.4.    This Agreement is governed by and shall be construed in accordance with the laws of Italy.

 

11.5.   This Agreement has been drafted in Italian and English language; in case of discrepancies, the English version will prevail at all effects.

11.1.   Qualsiasi modifica e/o integrazione del presente Accordo dovrà essere convenuta per iscritto e sottoscritta dalle Parti, e dovrà fare riferimento al presente Accordo e alle disposizioni che le Parti intendono modificare e/o integrare.

 

11.2.   Nel caso in cui qualsiasi delle disposizioni dell’Accordo sia ritenuta invalida e/o inefficace, in tutto o in parte, ciò non inficerà la validità e/o l’efficacia delle rimanenti disposizioni.

 

11.3.   Il presente Accordo supera ogni precedente accordo o intesa scritti e/o orali tra le Parti in relazione all’oggetto dello stesso.

 

11.4.   Il presente Accordo è governato, e sarà interpretato, in base alla legge italiana.

 

11.5.   Il presente Accordo è stato predisposto in lingua italiana e inglese; in caso di conflitto tra le due versioni, la versione inglese sarà ritenuta prevalente ad ogni effetto.

 

DATE: 15 October 2020

DATA: 15 Ottobre 2020

 

   
____________________________ ____________________________
Ittella’s Chef, LLC Ittella’s Chef, LLC
   
____________________________ ____________________________
Giuseppe Bardari Giuseppe Bardari
   
Also, exclusively for acknowledgment of the benefits and obligations of the Director under this Agreement Esclusivamente per presa d’atto dei diritti e delle obbligazioni dell’Amministratore ai sensi del presente Accordo
   
____________________________ ____________________________
Ittella Italy s.r.l. Ittella Italy s.r.l.
   

 

 

8

 

 

Exhibit 10.5

 

Execution Copy

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (this “Agreement”) is made as of June 11, 2020 by and between Forum Merger II Corporation, a Delaware corporation which will be renamed to Tattooed Chef, Inc. as of the Effective Date (the “Company”), and Sarah Galletti (the “Executive”). This Agreement shall govern the employment relationship between Executive and the Company from and after the Effective Date.

 

WHEREAS, the Company has entered into an Agreement and Plan of Merger, dated as of June 11, 2020 (the “Merger Agreement”), by and among the Company, Sprout Merger Sub, Inc., a Delaware corporation (“Merger Sub”), Myjojo, Inc., a Delaware corporation (“Myjojo”), and Salvatore Galletti (as the Holders Representative), pursuant to which, among other things, Merger Sub will merge with and into Myjojo (the “Merger”) and as a result of the Merger, (i) Myjojo will be the surviving corporation, and (ii) all issued and outstanding capital stock of Myjojo as of a moment in time immediately prior the Merger will convert into the right to receive the consideration set forth in the Merger Agreement in accordance with the terms of the Merger Agreement;

 

WHEREAS, the Executive is the Director of Research and Development of Ittella International, LLC (“Ittella”), which is a wholly owned subsidiary of Myjojo, Inc.;

 

WHEREAS, the Company desires to be assured that the services of the Executive will continue to be available to the Company from and after the closing date of the Merger (the “Effective Date”) and that the confidential information and goodwill of the Company will be preserved for its exclusive benefit; and

 

WHEREAS, the Company desires to employ the Executive pursuant to the terms and conditions set forth in this Agreement, subject to and contingent upon the closing of the Merger, and the Executive is willing and able to render such services and desires to do so on the terms and conditions hereinafter set forth herein.

 

NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. Definitions. In this Agreement:

 

Accrued Obligations” means (A) all previously earned and accrued but unpaid Base Salary and Benefits in accordance with and subject to the terms of the relevant employee benefit plans and (B) any reimbursement owing under Section 3(c) of this Agreement for expenses incurred by the Executive on or before the Termination Date.

 

Base Salary” has the meaning given to that term in Section 3(a).

 

Benefits” means the employee benefit programs for which senior executive employees of the Company are generally eligible.

 

Board” means the Board of Directors of the Company or its successor.

 

Business Relation” has the meaning given to that term in Section 9(b).

 

 

 

 

Cause” means (i) the Executive’s commission of, or plea of nolo contendere to, any felony or other crime involving moral turpitude; (ii) the Executive’s commission of fraud, theft, embezzlement, self-dealing or misappropriation against the business of the Company Group; (iii) the Executive’s breach of her fiduciary duties to the Company Group; (iv) the Executive’s conviction of any serious offense that results in or would reasonably be expected to result in material financial harm, materially negative publicity or other material harm to any member of the Company Group; (v) the Executive’s excessive use of alcohol or illegal drugs (including but not limited to the misuse or abuse of legal drugs) that adversely affects the Executive’s ability to perform her duties, responsibilities and functions hereunder; (vi) the Executive’s willful or grossly negligent failure to perform any material aspect of her duties and responsibilities hereunder or any lawful directive of the Board or its designee, which, if capable of being cured, is not cured to the Board’s reasonable satisfaction within ten (10) days after the delivery of written notice thereof to the Executive; (vii) the Executive’s intentional and willful misconduct in the management of any member of the Company Group; (viii) the Executive intentionally causing any member of the Company Group to violate a material local, state or federal law in any respect, unless such violation results from actions approved by the Board, (ix) the Executive’s intentional concealment of known material information from the Board, (x) any act or omission constituting a material breach by the Executive of any provision of this Agreement or any other agreement between the Executive and the Company Group, which, if capable of being cured, is not cured to the Board’s reasonable satisfaction within ten (10) days after written notice thereof to the Executive, and (xi) any breach by the Executive of Sections 6, 7, 8 and 9 of this Agreement, which, if capable of being cured, is not cured to the Board’s reasonable satisfaction within ten (10) days after written notice thereof to the Executive.

 

Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder.

 

Company Group” means the Company, its Subsidiaries and their respective affiliates.

 

Competitive Activities” has the meaning given to that term in Section 9(a).

 

Confidential Information” means any information proprietary to the Company Group and not generally known, including, without limitation, Trade Secrets (as defined herein), Inventions (as defined herein), technology whether now known or hereafter discovered, and information pertaining to research, development, techniques, engineering, purchasing, marketing, selling, accounting, licensing, know-how, processes, products, equipment, devices, models, prototypes, computer hardware, computer programs and flow charts, program code, software libraries, databases, formulae, compositions, discoveries, cost systems, financial information, personnel information, customer lists, customer histories and records, suppliers, contacts and referral sources, and any lists of names, phone numbers, and addresses of those sources, the particular needs and requirements of customers, the identity of customers and potential customers, lists of customers’ and potential customers’ names, addresses, and phone numbers, and pending business transactions and shall also include confidential and proprietary information of customers and other third parties received by the Company Group. Information may be deemed Confidential Information regardless of its source, and all information designated or treated as Confidential Information by the Company Group shall conclusively be deemed Confidential Information for all purposes.

 

The term Confidential Information shall not apply to the following: (i) information that is or becomes public knowledge other than through the fault of the Executive; (ii) information that is received by the Executive from a third party who is under no obligation to keep the information confidential; (iii) information that the Executive can show by written records was in the Executive’s possession prior to the date of disclosure by the Company Group to the Executive of the Confidential Information in question; or (iv) information which is individually developed by the Executive, and which the Executive can show by written or other tangible evidence was so independently developed.

 

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Disability” means the Executive’s inability to perform the material duties, responsibilities or functions of her position with the Company as a result of any mental or physical disability or incapacity for a period of 120 days consecutively, or any 120 days out of a 180-day period, as determined by the Board in its sole discretion. Any dispute between the Executive and the Board with respect to the qualification of a mental or physical disability or incapacity as a Disability shall be resolved by a health care specialist to be mutually agreed upon by the Company and the Executive.

 

Effective Date” has the meaning given to that term in the recitals to this Agreement.

 

Employment Period” means the period commencing on the Effective Date and ending on the Expiration Date, or such earlier date as contemplated in Section 4.

 

Expiration Date” means the three year anniversary of the date of this Agreement or such later anniversary if this Agreement is extended as follows. In the last year of the Agreement, and for each subsequent year thereafter, the Agreement will be automatically extended for a one (1) year period unless written notice has been given by the Company to the Executive or by the Executive to the Company, which notice must be given at least ninety (90) days prior to the Expiration Date, stating that the Company or the Executive is electing to terminate the Employment Period as of the Expiration Date.

 

General Release” has the meaning given to that term in Section 4(b).

 

Good Reason” means the occurrence of any one or more of the following without the Executive’s written consent, provided that the Executive has given written notice to the Company within sixty (60) days following the occurrence of the event giving rise to Good Reason, and which event remains uncured for thirty (30) days following the Company’s receipt of written notice thereof from the Executive: (i) a material diminution in the Executive’s duties or authority; (ii) a material reduction in the Base Salary other than any such reduction made in connection with a broader reduction in base salaries affecting other senior executives of the Company; or (iii) any requirement that Executive relocate to a location that is more than 50 miles from Executive’s residence at the time of the Effective Date.

 

Interfering Activities” has the meaning given to that term in Section 9(b).

 

Inventions” means all ideas, discoveries, developments, improvements, innovations, technology, computer programs, software, products, and methods, systems or plans whether or not shown or described in writing or reduced to practice or use, and whether or not entitled to the protection of applicable patent, trademark, copyright, or similar laws, relating in any manner to any of Company’s present or future products, services, manufacturing or research.

 

Merger” has the meaning given to that term in the recitals to this Agreement.

 

Noncompete Period” has the meaning given to that term in Section 9(a).

 

Person” has the meaning given to that term in Section 6.

 

Proceeding” means any action, suit, proceeding or arbitration, whether civil, criminal, administrative or investigative.

 

Severance Period” means the one (1)-year period following the Termination Date.

 

Subsidiary” means any corporation or other entity of which the securities or other ownership interests having the voting power to elect a majority of the board of directors or other governing body are, at the time of determination, owned by any of the Company, directly or through one or more other Subsidiaries.

 

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Termination Date” means the date of the Executive’s termination of employment under this Agreement for any reason.

 

Termination Year” means the year in which the Employment Period is terminated.

 

Trade Secret” means information, including but not limited to, a formula, pattern, compilation, program, device, method, technique, process, drawing, cost data or customer list that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

 

Work Product” has the meaning given to that term in Section 7.

 

2. Employment, Position and Duties.

 

(a) This Agreement shall be effective as of the closing of the Merger, subject to and contingent upon the closing of the Merger.

 

(b) The Company shall employ the Executive, and the Executive hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement for the Employment Period.

 

(c) During the Employment Period, the Executive shall serve as the Director of Research and Development of the Company and shall have the powers, authorities and duties as determined by and directed by the Chief Executive Officer (the “CEO”).

 

(d) During the Employment Period, the Executive shall (i) render such administrative, financial and other executive and managerial services to the Company and the Subsidiaries as are consistent with the Executive’s position as the CEO may from time to time reasonably direct, (ii) report to the CEO, (iii) devote substantially all of her business time, energy and skill to the performance of her duties for the Company, (iii) perform such duties in a faithful, effective and efficient manner to the best of her abilities, (iv) devote her best efforts and her business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of the Company and the Subsidiaries, (v) hold no other employment, and (vi) submit to the Board all business, commercial and investment opportunities presented to the Executive, or of which the Executive becomes aware, that relate to the business of the Company and the Subsidiaries and, unless approved by the Board in writing, the Executive shall not pursue, directly or indirectly, any such opportunities on the Executive’s own behalf. Notwithstanding this Section 2(d), it shall not be a violation of this Agreement for the Executive to serve on civic or charitable boards or committees; provided, that such activities do not, individually or in the aggregate, interfere with the Executive’s performance of her duties, responsibilities and functions to the Company and the Subsidiaries. The Executive shall perform her duties, responsibilities and functions to the Company and the Subsidiaries hereunder to the best of her abilities in a diligent, trustworthy and professional manner and shall comply with the Company’s and the Subsidiaries’ policies and procedures in all material respects.

 

(e) The Executive’s principal employment office will be located at Ittella’s offices in Paramount, California.

 

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3. Compensation and Benefits.

 

(a) During the Employment Period, the Executive’s base salary shall be $132,000.00 per annum (as adjusted up, but not down, from time to time, the “Base Salary”), which salary shall be payable by the Company in regular installments in accordance with the Company’s general payroll practices (in effect from time to time). The Executive’s Base Salary will be subject to review annually by the Board to take effect on or about January 1 of each fiscal year during the Employment Period.

 

(b) The Executive shall be entitled to four (4) weeks of paid vacation each calendar year in accordance with the Company’s policies. In addition, during the Employment Period, the Executive shall be eligible to participate in all standard employee benefit programs made available by the Company to the Company’s executive employees generally, in accordance with the eligibility and participation provisions of such plans and as such plans or programs may be in effect from time to time and at a level consistent with her title, duties and responsibilities. The Company reserves the right to amend any employee welfare or retirement benefit plan, policy, program or arrangement from time to time, or to terminate such plan, policy, program or arrangement, consistent with the terms thereof.

 

(c) During the Employment Period, the Company shall reimburse the Executive for all reasonable out-of-pocket business expenses incurred as a result of the performance of her duties under this Agreement, including, but not limited to, her reasonable customer entertainment expenses, travel expenses, and all other business expenses incurred by her in the course of performing her duties, responsibilities and functions under this Agreement, which are consistent with the Company’s policies in effect and subject to revision from time to time with respect to travel, entertainment and other business expenses, and further subject to the Company’s requirements with respect to reporting and documentation of such expenses.

 

(d) In addition to the Base Salary, the Executive will be eligible to participate in bonuses based upon the Executive’s performance relative to annual goals and other financial and non-financial performance measures to be to be established by the Board in its reasonable discretion (the “Annual Bonus”). Annual Bonus amounts, to the extent earned for any fiscal year, will be payable in a lump sum on or before March 15th following the end of the fiscal year to which the Annual Bonus relates. The Executive must remain actively employed by the Company and in good standing through the date of payment of any Annual Bonus to earn any such amounts, except as otherwise provided in Section 4(b).

 

4. Termination and Payment Terms.

 

(a) The Employment Period shall terminate prior to the Expiration Date upon the occurrence of any of the following events: (i) delivery by the Executive of a written resignation to the Company with no less than ninety (90) days’ advance written notice to the Company or sixty (60) days’ advance written notice to the Company for termination by the Executive for Good Reason; (ii) the death or Disability of the Executive; (iii) the adoption of a good faith resolution by the Board terminating the Executive’s employment with Cause; and (iv) the adoption of a resolution by the Board terminating the Executive’s employment without Cause. Except as otherwise provided herein, any termination of the Employment Period by the Company shall be effective as specified in a written notice from the Company to the Executive.

 

(b) Upon the Executive’s termination of employment, the Executive shall be entitled to certain payments and benefits in accordance with the following:

 

(i) Upon the Executive’s termination of employment by resolution of the Board without Cause or by the Executive for Good Reason, then the Executive shall be entitled to receive (1) the Accrued Obligations, payable within thirty (30) days following the Termination Date or such earlier time as required by law and, (2) subject to (1) the Executive’s timely execution and non-revocation of the general release described in Section 4(d) (the “General Release”) and (2) the Executive’s compliance with Sections 6, 7, 8 and 9 and the other conditions and limitations in this Agreement, (x) continued payment Base Salary (as was in effect immediately prior to such termination) for the duration of the Severance Period, payable in regular installments in accordance with the Company’s general payroll practices as in effect from time to time, and (y) any earned but unpaid Annual Bonus for the fiscal year immediately preceding the Termination Year, payable when the bonus payments for such fiscal year are otherwise due.

 

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(ii) Upon the Executive’s termination of employment as a result of the Executive’s death, the Executive’s estate or other legal beneficiaries shall be entitled to receive the Accrued Obligations, payable within thirty (30) days following the Termination Date or such earlier time as required by law. The Executive’s estate shall not be entitled to any further Base Salary, bonus payments, or Benefits for the Termination Year or any future year, or to any other compensation of any kind;

 

(iii) Upon the Executive’s termination of employment as a result of the Executive’s Disability, the Executive shall be entitled to receive the Accrued Obligations, payable within thirty (30) days following the Termination Date or such earlier time as required by law, but shall not be entitled to any further Base Salary, bonus payments or Benefits (other than as described in clause (2) of this paragraph, or as required by applicable law) for the Termination Year or any future year, or to any other compensation of any kind; and

 

(iv) Upon the Executive’s termination of employment as a result of the Executive’s voluntary resignation without Good Reason in accordance with Section 4(a) or by good faith resolution of the Board for Cause in accordance with Section 4(a), the Executive shall be entitled to the Accrued Obligations, payable within thirty (30) days following the Termination Date or such earlier time as required by law, but shall not be entitled to any further Base Salary, bonus payments, or Benefits (except as required by applicable law) for the Termination Year or any future year, or to any other compensation of any kind, nature or amount.

 

(c) Notwithstanding anything to the contrary in this Agreement, as a condition precedent to any obligation of the Company to make payments to the Executive pursuant to Section 4(b)(i) (aside from the Accrued Obligations), the Executive shall be required to deliver to the Company a valid, executed General Release in substantially the form attached hereto as Exhibit A, and shall not revoke such General Release prior to the expiration of any revocation rights afforded to the Executive by applicable law. The Company shall provide the Executive with the General Release prior to the Termination Date, and the Executive must deliver the executed General Release to the Company within twenty-one (21) days (or, if greater, the minimum period required by applicable law) after the Termination Date, failing which the Executive will forfeit all rights to any payments described in Section 4(b)(i) (aside from the Accrued Obligations).

 

(d) The Executive hereby agrees that, except as expressly provided herein, no compensation of any kind, nature or amount shall be payable to the Executive and, except as expressly provided herein, the Executive hereby irrevocably waives any claim for any such compensation including, without limitation, any severance compensation.

 

(e) Except as otherwise provided in Sections 4(b)(i)-(iv) above, all of the Executive’s rights to Benefits hereunder (if any) shall cease upon the termination of the Employment Period, except as may be required by applicable law.

 

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5. Indemnification.

 

(a) During the Employment Period and for a period of six (6) years thereafter, the Board shall cause the Company or any successor to the Company to purchase and maintain, at the Company’s own expense, directors’ and officers’ liability insurance providing coverage to the Executive on terms that are no less favorable than the coverage provided to other directors and similarly situated executives of the Company.

 

(b) In the event that the Executive is made a party or threatened to be made a party to any Proceeding, other than any Proceeding initiated by the Executive or the Company related to any contest or dispute between the Executive and the Company or any of its affiliates with respect to this Agreement or the Executive’s employment hereunder, by reason of the fact that the Executive is or was a director or officer of the Company, or any member of the Company Group, or is or was serving at the request of the Company as a director, officer, member, employee or agent of another entity, the Executive shall be indemnified and held harmless by the Company to the maximum extent permitted under applicable law and the governing documents of the Company from and against any liabilities, costs, claims and expenses, including all costs and expenses incurred in defense of any Proceeding (including attorneys’ fees). Costs and expenses incurred by the Executive in defense of such Proceeding (including attorneys’ fees) shall be paid by the Company upon receipt by the Company of: (i) a written request for payment; (ii) appropriate documentation evidencing the incurrence, amount and nature of the costs and expenses for which payment is being sought; and (iii) an undertaking adequate under applicable law made by or on behalf of the Executive to repay the amounts so paid if it shall ultimately be determined that the Executive is not entitled to be indemnified by the Company under this Agreement.

 

6. Confidential Information. The Executive shall not use or disclose to any individual or natural person, partnership (including a limited liability partnership), corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or governmental authority (each, a “Person”), either during the Employment Period or thereafter, any Confidential Information of which the Executive is or becomes aware, whether or not such information is developed by him, for any reason or purpose whatsoever, nor shall she make use of any of the Confidential Information for her own purposes or for the benefit of any Person except for any member of the Company Group, except (A) to the extent that such disclosure or use is directly related to and required by the Executive’s performance in good faith of duties assigned to the Executive by the Company or the Board or (B) to the extent required to do so by a court of competent jurisdiction. The Executive will, at the sole expense of the Company, take all reasonable steps to safeguard Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft.

 

7. Intellectual Property, Inventions and Patents. The Executive acknowledges that any Invention that the Executive, either alone or with others (i) makes, discovers, devises, conceives, reduces to practice, or otherwise possesses while employed by Company or for a period of one (1) year following such employment, and (ii) directly or indirectly relates to or arises out of the Executive’s employment with Company or the actual or anticipated business, products, technology, or services of Company (“Work Product”) shall be a work for hire and the sole property of the Company. The Executive hereby assigns to Company all rights, title, and interest the Executive obtains in any and all Inventions under this Agreement, and hereby agrees, upon Company’s request, to execute, verify, and deliver to Company documents including, but not limited to, assignments and applications for Letters of Patent, trademark or copyright registrations, or any other form or method of government protection provided by any local, state, or federal laws of the United States or any other country or political subdivision thereof, and whether such protection is now known or subsequently derived, and to perform such other acts, including, but not limited to, appearing as a witness in any action brought in connection with this Agreement, that is deemed reasonably necessary or appropriate by Company to allow it to obtain the sole right, title, interest and benefit of all such Inventions. The Executive shall promptly disclose such Work Product to the Board and, at the Company’s expense, perform all actions reasonably requested by the Board (whether during or after the Employment Period) to establish and confirm such ownership (including, without limitation, assignments, consents, powers of attorney, and other instruments).

 

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The assignment of Inventions and Work (as defined herein) and the Executive’s agreements in connection therewith shall not apply to any Invention or Work for which: (i) no equipment, supplies, facilities, or Confidential Information of the Company Group or services of any of the Company Group’s employees during normal working hours was used; (ii) was developed entirely on the Executive’s own time; (iii) does not relate to the business of the Company Group or the Company Group’s actual or demonstratively anticipated research or development; and (iv) which does not result from any work performed by the Executive for the Company Group. In addition, the assignment of Inventions and Work herein and the Executive’s agreements in connection therewith shall not apply to any Invention or Work which qualify for exclusion under the terms of applicable state law, including, Section 2870 of the California Labor Code, set forth below:

 

“(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:

 

(1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or

 

(2) Result from any work performed by the employee for the employer.

 

(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.”

 

The Executive shall, during the course of the Executive’s employment and at all times subsequent to the Executive’s employment, hold in strictest and total confidence all Confidential Information. The Executive will at no time, without prior written authorization by the Company (or except pursuant to a confidentiality agreement entered into by the Company in its ordinary course of business), disclose, assign, transfer, convey, communicate, or use for the benefit of any person or entity other than the Company any Confidential Information, nor shall the Executive permit any other person or entity to use Confidential Information in competition with the Company.

 

8. Work Made for Hire. All work which the Executive performs for the Company Group that is fixed in any tangible medium of expression and which relates to the subject matter pertaining to the Executive’s employment, or that relates in any manner or is directly or indirectly connected with the business, services, products, projects, or Confidential Information of the Company Group, or that involves in any manner the use of any time, material, or facilities of the Company Group, or services of any of the Company Group’s employees during normal working hours is “work made for hire” for the sole and exclusive benefit of the Company Group according to copyright laws (“Work”). The Executive assigns to the Company Group the entire right, title, and interest in and to any and all Work, including, by way of example and not limitation, all designs, drawings, conceptions, and improvements, including any copyrights in all original works of authorship fixed in any tangible medium of expression heretofore or hereafter created for the Company Group by the Executive, or furnished to the Company Group, whether such works are created by the Executive solely or jointly with others. For all such original Work, the Executive agrees to provide documentation satisfactory to the Company Group to assure the originality of all such Work and conveyance of all such right, title and interest, including any patents, trademarks, and copyrights in the Work to the Company Group.

 

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9. Non-Compete, Non-Solicitation.

 

(a) In further consideration of the compensation to be paid to the Executive hereunder, the Executive acknowledges that during the course of her employment with the Company she shall become familiar with the Company Group’s trade secrets and with other Confidential Information concerning the Company Group and that her services shall be of special, unique and extraordinary value to the Company Group, and therefore, the Executive agrees that, during the Employment Period and for a period of twelve (12) months following the Termination Date (the “Noncompete Period”), the Executive shall not, directly or indirectly, individually or on behalf of any person, company, enterprise or entity, or as a sole proprietor, partner, stockholder, director, officer, principal, agent or executive, or in any other capacity or relationship, engage in any Competitive Activities within any jurisdiction in which any member of the Company Group had offices and/or conducted business, derived a material portion of its revenues or had demonstrable plan to commence business activities, or participated in or made any investment in any investment or venture which has been consummated or is being pursued or contemplated by the Company Group as of the date of execution of this Agreement and the date of termination of the Executive’s employment. “Competitive Activities” shall mean (A) engaging in, controlling, advising, managing, serving as a director, officer or employee of, acting as a consultant to or contractor or other agent for, receiving any economic benefit from any Competitive Business or (B) investing in or owning any interest publicly or privately in any Person engaged in any Competitive Business. Competitive Activities shall not include (X) any activities taken by the Executive at the direction or, or otherwise on behalf of the Company Group as an employee, consultant or other Person performing similar responsibilities and (Y) the ownership by the Executive or the Executive’s affiliates or immediate family of capital stock or other equity interests of any Person whose securities are listed on a national securities exchange so long as (1) such Person, together with its affiliates, and any member of a group in which such Person or any of its affiliates is a party, do not own more than 2% of the outstanding voting power of such Person and (2) such capital stock or other equity interests of such Person are held solely as a passive investment. The Executive acknowledges that the Company Group conducts business in, and has expended considerable sums to develop and maintain markets in, the foregoing areas and agrees that the scope and duration of the covenant contained herein is reasonable both in time and geographical area and is necessary to protect the Company Group’s legitimate business interests, especially considering the Executive’s position with the Company and other relevant factors.

 

(b) During the Employment Period and thereafter for the Noncompete Period, the Executive shall not individually or collectively, as a participant in a partnership, sole proprietorship, corporation, limited liability company, or other entity, or as an operator, investor, shareholder, partner, director, employee, consultant, manager, or advisor of any such entity, or in any other capacity whatsoever, either directly or indirectly, engage in Interfering Activities. “Interfering Activities” shall mean (A) encouraging, soliciting, or inducing, including, without limitation, through use of Trade Secrets or Confidential Information, or in any manner attempting to encourage, solicit, or induce for the purpose of (i) any Person employed by, or providing consulting services to, the Company Group to terminate such Person’s employment or services (or in the case of a consultant, materially reducing such services) with the Company Group; (ii) any Business Relation to cease doing business with or reduce the amount of business conducted with the Company Group, or in any way interfering with the relationship between any such Business Relation and the Company Group; or (B) hiring any individual who was employed by the Company Group within the six (6) month period prior to the date of such hiring. “Business Relation” shall mean any current or prospective client, customer, licensee, supplier or other business relation of the Company Group, or any such relation that was a client, customer, licensee or other business relation within the prior twelve (12) month period, in each case, with whom the Executive transacted business on behalf of the Company Group or whose identity became known to the Executive in connection with the Executive’s relationship with the Company Group, or the Executive’s employment by Company. Notwithstanding the foregoing, the Executive may hire those employees responding to a general solicitation not directly targeted at such employees, or those employees actively recruited by the Executive and hired by any member of the Company Group following the execution of this Agreement.

 

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(c) If, at the time of enforcement of this Section 9, a court shall hold that the duration, scope, or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area, and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law. The Executive acknowledges that the restrictions contained in this Section 8 are reasonable and that she has reviewed the provisions of this Agreement with her legal counsel.

 

(d) In the event of the breach or a threatened breach by the Executive of any of the provisions of this Section 9, the Company would suffer irreparable harm, and in addition and supplementary to other rights and remedies existing in its favor, the Company shall be entitled to specific performance and/or injunctive or other equitable relief from a court of competent jurisdiction in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security). In addition, in the event of an alleged breach or violation by the Executive of this Section 9, the Noncompete Period shall be tolled until such breach or violation has been duly cured. Notwithstanding anything contained herein to the contrary, should the Executive violate any provision of Sections 6, 7, 8 or 9 of this Agreement, and should the Executive not cure the breach (if curable) to the Board’s reasonable satisfaction within ten (10) days after written notice thereof to the Executive, the Executive shall not be entitled to any further payments pursuant to the termination of the Employment Period under Section 4.

 

(e) The Executive has carefully read and considered the provisions of Sections 6, 7, 8 and 9 and, having done so, acknowledges and recognizes the highly competitive nature of Company’s business, that access to Confidential Information, including Trade Secrets, renders the Executive special and unique within the Company Group and the Company’s industry, and that the Executive will have the opportunity to develop substantial relationships with existing and prospective clients, accounts, customers, consultants, contractors, investors, and strategic partners of the Company Group during the course of and as a result of the Executive’s employment with Company. In light of the foregoing, the Executive recognizes and acknowledges that the restrictions set forth herein are fair and reasonable and are reasonably required for the protection of the legitimate business interests, Confidential Information, including Trade Secrets, of the Company Group, and are reasonable and valid in geographical and temporal scope.

 

10. Executive’s Representations. The Executive hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by the Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which the Executive is a party or by which she is bound, (ii) the Executive is not a party to or bound by any employment agreement, non-compete agreement or non-solicit agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of the Executive, enforceable in accordance with its terms. THE EXECUTIVE HEREBY ACKNOWLEDGES AND REPRESENTS THAT SHE HAS CONSULTED WITH INDEPENDENT LEGAL COUNSEL REGARDING HER RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT AND THAT SHE FULLY UNDERSTANDS THE TERMS AND CONDITIONS CONTAINED HEREIN AND THEREIN.

 

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11. Tax Withholding. All amounts payable to the Executive as compensation hereunder shall be subject to all customary withholding, payroll and other taxes, and the Company shall be entitled to deduct or withhold from any amounts payable to the Executive any federal, state, local or foreign withholding taxes, excise taxes, or employment taxes imposed with respect to the Executive’s compensation or other payments or the Executive’s ownership interest in the Company (including, without limitation, wages, bonuses, dividends, the receipt or exercise of equity options and/or the receipt or vesting of restricted equity).

 

12. Survival. This Agreement survives and continues in full force in accordance with its terms notwithstanding the expiration or termination of the Employment Period.

 

13. Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by reputable overnight courier service or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:

 

Notices to the Executive:

 

To the Executive’s address most recently on file in the payroll records of the Company.

 

With a copy to:

 

Sarah Galletti

27996 Palos Verde Dr. E Rancho

Palos Verdes, CA 90275

Email: sarahmusic85@gmail.com

 

Notices to the Company:

 

Forum Merger II Corporation

Forum Merger II Corporation

1615 South Congress Avenue

Suite 103

Delray Beach, FL 33445

Attention: Marshall Kiev

David Boris

Email: mk@mkcapitalpartners.com

david@forummerger.com

 

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered, sent or mailed.

 

14. Stock Ownership. During the Employment Period, the Executive may be expected to maintain a specified level of ownership of stock of the Company, in accordance with guidelines that may be established by the Board or the Board’s Compensation Committee from time to time.

 

15. Clawback. Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or any other compensation, paid to the Executive pursuant to this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).

 

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16. Section 280G of the Code. Notwithstanding anything to the contrary in this Agreement, the amount to be paid by the Company to the Executive pursuant to this Agreement shall be limited such that the total “parachute payments” (as defined in Section 280G(b)(2)(A)(i) of the Code) made to the Executive by the Company pursuant to this Agreement or otherwise does not exceed the product of 2.99 times the “base amount” (as defined in Section 280G(b)(3) of the Code) for the Executive.

 

17. Section 409A of the Code.

 

(a) It is intended that any amounts payable under this Agreement shall be exempt from and avoid the imputation of any tax, penalty or interest under Section 409A of the Code (“Section 409A”) to the fullest extent permissible under applicable law; provided, that if any such amount is or becomes subject to the requirements of Section 409A, it is intended that those amounts shall comply with such requirements. This Agreement shall be construed and interpreted consistent with that intent. In furtherance of that intent, if payment or provision of any amount or benefit hereunder that is subject to Section 409A at the time specified herein would subject such amount or benefit to any additional tax under Section 409A, the payment or provision of such amount or benefit shall be postponed to the earliest commencement date on which the payment or provision of such amount or benefit could be made without incurring such additional tax. In no event, however, shall the Company be liable for any tax, interest or penalty imposed on the Executive under Section 409A or any damages for failing to comply with Section 409A.

 

(b) If the Executive is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the Termination Date, the Executive shall not be entitled to any payment or benefit pursuant to Section 4(b) until the earlier of (A) the date which is six (6) months after her separation from service (within the meaning of Section 409A) for any reason other than death, or (B) the date of the Executive’s death; provided, that this paragraph shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A. Any amounts otherwise payable to the Executive upon or in the six (6) month period following the Executive’s separation from service that are not so paid by reason of this Section 16(b) shall be paid (without interest) as soon as practicable (and in any event within thirty (30) days) after the date that is six (6) months after the Executive’s separation from service (provided that in the event of the Executive’s death after such separation from service but prior to payment, then such payment shall be made as soon as practicable, and in all events within thirty (30) days, after the date of the Executive’s death).

 

(c) Any reimbursement payment or in-kind benefit due to the Executive pursuant to Section 3(c), to the extent that such reimbursements or in-kind benefits are taxable to him, shall be paid on or before the last day of the Executive’s taxable year following the taxable year in which the related expense was incurred. The Executive agrees to provide prompt notice to the Company of any such expenses (and any other documentation that the Company may reasonably require to substantiate such expenses) in order to facilitate the Company’s timely reimbursement of the same. Reimbursements and in-kind benefits pursuant to Section 3(c) are not subject to liquidation or exchange for another benefit and the amount of such benefits that the Executive receives in one taxable year shall not affect the amount of such reimbursements or benefits that the Executive receives in any other taxable year.

 

(d) For purposes of Section 409A, the Executive’s right to receive any installment payments hereunder shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., payment shall be made within thirty (30) days following the date of termination), the actual date of payment within the specified period shall be within the sole discretion of the Company.

 

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18. Complete Agreement. This Agreement and those documents expressly referred to herein, including the exhibits to this Agreement embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way, provided, however, that any non-competition, non-solicitation and other restrictive covenant agreements between the Executive and the Company Group, including, without limitation, the Confidentiality, Invention and Non-Interference Agreement between Ittella International, LLC, UMB Capital Corporation, and the Executive, dated as of April 15, 2019, shall continue in full force and effect in accordance with their terms. This Agreement may not be amended, modified or changed (in whole or in part), except by written agreement executed by both of the parties hereto.

 

19. Effectiveness. The effectiveness of this Agreement is conditioned upon the closing of the Merger. Accordingly, this Agreement shall be void and of no further force or effect if the Merger Agreement is validly terminated in accordance with its terms prior to the closing of the Merger.

 

20. Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

 

21. Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by the Executive, the Company and their respective heirs, successors and assigns; provided, that the services provided by the Executive under this Agreement are of a personal nature and rights and obligations of the Executive under this Agreement shall not be assignable.

 

22. Choice of Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits hereto shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or of another State) and the parties hereto hereby irrevocably submit to the jurisdiction of the courts of the State of Delaware. The Executive represents that the Executive has had the opportunity to seek, and has in fact been individually represented by, legal counsel in negotiating the terms of this Agreement, including with respect to the choice of Delaware law as the governing law of this Agreement and Delaware courts as the jurisdiction for any judicial proceedings arising out of or relating to this Agreement.

 

23. Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement.

 

24. Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company (as approved by the Board) and the Executive, and no course of conduct or course of dealing or failure or delay by any party hereto in enforcing or exercising any of the provisions of this Agreement (including, without limitation, the Company’s right to terminate the Employment Period for Cause) shall affect the validity, binding effect or enforceability of this Agreement or be deemed to be an implied waiver of any provision of this Agreement.

 

25. Legal Counsel; Mutual Drafting. Each party recognizes that this is a legally binding contract and acknowledges and agrees that they have had the opportunity to consult with legal counsel of their choice. Each party has cooperated in the drafting, negotiation and preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against either party on the basis of that party being the drafter of such language. The Executive agrees and acknowledges that she has read and understands this Agreement, is entering into it freely and voluntarily, and has been advised to seek counsel prior to entering into this Agreement and has had ample opportunity to do so.

 

13

 

 

26. Key Man Life Insurance. The Company may apply for and obtain and maintain a key man life insurance policy in the name of the Executive together with other executives of the Company in an amount deemed sufficient by the Board, the beneficiary of which shall be the Company. The Executive shall submit to reasonable physical examinations and answer reasonable questions in connection with the application and, if obtained, the maintenance of, as may be required, such insurance policy.

 

27. Executive’s Cooperation. During the Employment Period, the Executive shall cooperate with the Company and the Subsidiaries in any internal investigation or administrative, regulatory or judicial proceeding as reasonably requested by the Company (including, without limitation, the Executive being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company ail pertinent information and turning over to the Company all relevant documents which are in or may come into the Executive’s possession, ail at times and on schedules that are reasonably consistent with the Executive’s other permitted activities and commitments). In the event the Company requires the Executive’s cooperation in accordance with this Section 26, the Company shall promptly reimburse the Executive solely for reasonable travel expenses (including, but not limited to, lodging and meals), upon submission of receipts.

 

[Signatures on following page]

 

14

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

  FORUM MERGER II CORPORATION
   
  By:  
  Its: Marshall Kiev, Co-CEO and President

 

  EXECUTIVE
   
   
  Sarah Galletti

 

 

 

 

Exhibit A

 

FORM OF AGREEMENT AND GENERAL RELEASE

 

THIS AGREEMENT AND GENERAL RELEASE (the “Agreement and General Release”) is made and entered into on _____________, 2020 by and between Sarah Galletti (“Executive”) and Tattooed Chef, Inc. (“Employer”).

 

WHEREAS, Executive has been employed by Employer and the parties wish to resolve all outstanding claims and disputes between them relating to such employment;

 

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth in this Agreement and General Release, the sufficiency of which the parties acknowledge, it is agreed as follows:

 

1. In consideration for Executive’s promises, covenants and agreements in this Agreement and General Release, Employer agrees to make the payments to and on behalf of Executive provided under Section 4(b) of the employment agreement between Executive and Employer dated June 11, 2020 (the “Employment Agreement”), in accordance with the terms and subject to the conditions of such Employment Agreement. Executive would not otherwise be entitled to such payments but for her promises, covenants and agreements in this Agreement and General Release. Executive acknowledges and agrees that the confidentiality, intellectual property assignment, non-competition, non-solicitation and other restrictive covenants contained in the Employment Agreement (the “Restrictive Covenants”) shall remain in full force and effect in accordance with their terms, and Executive hereby reaffirms Executive’s agreement to comply with such Restrictive Covenants.

 

2. The parties agree that the payments described in Section 1 of this Agreement and General Release are in full, final and complete settlement of all claims Executive may have against Employer, its subsidiaries, their respective past and present affiliates, and the respective officers, directors, owners, members, employees, agents, advisors, consultants, insurers, attorneys, successors and/or assigns of each of the foregoing (collectively, the “Releasees”). For the avoidance of doubt, this Agreement and General Release provides for the sole and exclusive benefits for which Executive is eligible as a result of her termination of employment, and Executive shall not be eligible for any benefits under Employer’s severance plan, if any, or any other agreement or arrangement providing for benefits upon a separation from service other than the Employment Agreement.

 

3. Nothing in this Agreement and General Release shall be construed as an admission of liability by Employer or any other Releasee, and Employer specifically disclaims liability to or wrongful treatment of Executive on the part of itself and all other Releasees.

 

4. To the extent permitted by applicable law, Executive agrees that she will not encourage or assist any person to litigate claims or file administrative charges against Employer or any other Releasee, unless required to provide testimony or documents pursuant to a lawful subpoena or other compulsory legal process, in which case she agrees to notify Employer immediately of her receipt of such subpoena so that Employer has the opportunity to contest the same. If any court has or assumes jurisdiction of any action against Employer or any of its affiliates on behalf of Executive, Executive will request that court to withdraw from or dismiss the matter with prejudice. Executive further represents that she has reported to Employer in writing any and all work-related injuries that she has suffered or sustained during her employment with Employer or its affiliates.

 

 

 

 

5. Executive represents that she has not filed any complaints or charges against Employer or any of its affiliates with the Equal Employment Opportunity Commission, or with any other federal, state or local agency or court.

 

6. Executive fully and forever releases and discharges Employer and all other Releasees from any and all legally waivable claims, liabilities, damages, demands, and causes of action or liabilities of any nature or kind, whether now known or unknown, arising out of or in any way connected with Executive’s employment with Employer or any of its affiliates or the termination of such employment; provided, however, that nothing in this Agreement and General Release shall either waive any rights or claims of Executive (i) that arise after Executive signs this Agreement and General Release; (ii) to enforce the terms of this Agreement and General Release; (iii) for the provision of accrued benefits conferred to Executive or her beneficiaries under the terms of Employer’s medical, dental, life insurance or defined contribution retirement benefit plans or any equity plan to which Executive participated in connection with her employment with Employer; (iv) for fees, expenses and costs, including on behalf of Executive’s attorney; (v) based on Executive’s existing rights to indemnification, if any, by the Employer or its affiliates pursuant to the Employer’s or affiliate’s governing documents or other written arrangements for acts committed during the course of Executive’s employment or existing rights to coverage under any; and (vi) based on Executive’s existing coverage under any directors and officers insurance policy in accordance with the terms of such policy. This release includes but is not limited to claims arising under federal, state or local laws concerning employment discrimination, termination, retaliation and equal opportunity, including but not limited to Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Equal Pay Act of 1963, the Americans with Disabilities Act of 1990, as amended, the Worker Adjustment and Retraining Notification Act of 1988, as amended, the Employee Retirement Income Security Act of 1974, as amended (ERISA) (including but not limited to fiduciary claims), claims for attorneys’ fees or costs, any and all statutory or common law provisions relating to or affecting Executive’s employment by Employer or its affiliates, and any and all claims in contract, tort, or premised on any other legal theory. Executive acknowledges that she is releasing claims based on age, race, color, sex, sexual orientation or preference, marital status, religion, national origin, citizenship, veteran status, disability and other legally protected categories. This provision is intended to constitute a general release of all of Executive’s presently existing covered claims against the Releasees, to the maximum extent permitted by law. Notwithstanding anything herein to the contrary, this Agreement and General Release does not purport to waive any claim for worker’s compensation or unemployment benefits, and does not purport to waive or affect any claim that cannot be released by an agreement voluntarily entered into between private parties.

 

7. Executive specifically acknowledges that Executive is aware of and familiar with the provisions of California Civil Code Section 1542, which provides as follows:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”

 

Executive, being aware of this section, hereby expressly waives and relinquishes all rights and benefits Executive may have under California Civil Code Section 1542, as well as any other statutes or common law principles of similar effect.

 

8. Nothing in this Agreement and General Release shall be construed to prevent Executive from filing a charge or complaint, including a challenge to the validity of this Agreement, with any governmental agency or from participating in or cooperating with any investigation conducted by any governmental agency. Nevertheless, Executive agrees and understands that this Agreement and General Release waives all claims and rights to monetary or other recovery for any legal claims to the fullest extent permitted by law; and any claims based upon any other theory, whether legal or equitable, arising from or related to any matter or fact arising out the events giving rise to this Agreement and General Release.

 

 

 

 

9. Executive acknowledges that all confidential information regarding Employer’s or any of its affiliates’ business compiled, created or obtained by, or furnished to, Executive during the course of or in connection with her employment with Employer or any of its affiliates is the exclusive property of Employer or such affiliate. Upon or before execution of this Agreement and General Release, Executive will return to Employer all originals and copies of any material containing confidential information, and Executive further agrees that she will not, directly or indirectly, use or disclose such information. Executive will also return to Employer upon or before execution of this Agreement and General Release any other items in her possession, custody or control that are the property of Employer, including, but not limited to, her files, credit cards, identification card, data storage devices, passwords and office keys.

 

10. Executive acknowledges that (i) she has been given at least twenty-one (21)1 calendar days to consider this Agreement and General Release and that modifications hereof which are mutually agreed upon by the parties hereto, whether material or immaterial, do not restart the twenty-one day period; (ii) she has seven (7) calendar days from the date she executes this Agreement and General Release in which to revoke it; and (iii) this Agreement and General Release will not be effective or enforceable nor the amounts set forth in Section 1 paid unless the seven-day revocation period ends without revocation by Executive. Revocation can be made by delivery and receipt of a written notice of revocation to [INSERT NAME/TITLE AND ADDRESS], by midnight on or before the seventh calendar day after Executive signs the Agreement and General Release.2

 

11. Executive acknowledges that she has been advised to consult with an attorney of her choice with regard to this Agreement and General Release. Executive hereby acknowledges that she understands the significance of this Agreement and General Release, and represents that the terms of this Agreement and General Release are fully understood and voluntarily accepted by him.

 

12. Executive agrees that she will treat the existence and terms of this Agreement and General Release as confidential and will not discuss the Agreement and General Release, its terms or the circumstances surrounding her separation from service with Employer or its affiliate with anyone other than: (i) her counsel or tax advisor as necessary to secure their professional advice, (ii) her spouse or (iii) as may be required by law.

 

13. Any non-disclosure provision in this Agreement and General Release does not prohibit or restrict Executive (or Executive’s attorney) from responding to any inquiry about this Agreement and General Release or its underlying facts and circumstances by the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), any other self-regulatory organization or governmental entity, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. Executive understands and acknowledges that she does not need the prior authorization of the Employer to make any such reports or disclosures and that she is not required to notify the Employer that she has made such reports or disclosures.

 

14. Executive shall not make any oral or written statements, either directly or through other persons or entities, which are (i) disparaging to the Employer or any of the Employer’s affiliates, or the management, officers, directors, services, products or operations thereof, or (ii) likely to adversely affect the business relationship of the Employer or its affiliates with the public generally or with any of their respective customers, vendors, suppliers, licensors, lessors, joint venturers, associates, consultants, agents, partners, contractors or employees. Notwithstanding the foregoing, it shall not be a violation of this provision for Executive to make truthful statements when required by compulsory legal process or as otherwise may be required by law.

 

 

1 Note to Draft: Change to forty-five (45) days in the case of a group termination under the ADEA.
2 Note to Draft: This provision is only necessary if the Executive is over the age of 40.

 

 

 

 

15. In the event of any lawsuit against Employer or any of its affiliates that relates to alleged acts or omissions by Executive during her employment with Employer or its affiliate, Executive agrees to cooperate with Employer or its affiliate by voluntarily providing truthful and full information as reasonably necessary for Employer or its affiliate to defend against such lawsuit, provided that the Employer shall reimburse Executive’s reasonable expenses incurred in providing such assistance subject to Executive’s delivery of written notice to the Employer prior to the time such expenses are incurred.

 

16. Executive shall indemnify and defend the Company against any claim arising out of this Agreement for unpaid taxes which may be made by any state or federal agency for any taxes, interest, fines or penalties.

 

17. Executive agrees not to seek reemployment or an independent contractor relationship with the Company at any time.

 

18. Executive agrees to hold in strictest confidence and not to disclose to any person, firm, or corporation or to use to compete with Company, without the express authorization of the CEO of the Company, any confidential or proprietary information relating to the business of Company. Confidential or proprietary information includes, but is not limited to: trade secrets, processes, formulas, computer programs, data, know-how, inventions, improvements, techniques, marketing plans, forecasts, discounts, customer and supplier lists.

 

19. The parties acknowledge that each would be irreparably harmed by any breach of the commitments in the Agreement by the other party, and that in the event of any such breach, the prevailing party shall be entitled to the recovery of all costs and attorneys’ fees incurred in bringing an action for breach of the Agreement. Any such action would have no effect on the validity or enforceability of the Agreement.

 

20. This Agreement and General Release shall be binding on Employer and Executive and upon their respective heirs, representatives, successors and assigns, and shall run to the benefit of the Releasees and each of them and to their respective heirs, representatives, successors and assigns.

 

21. This Agreement and General Release (and, to the extent explicitly provided herein, the Employment Agreement) set forth the entire agreement between Executive and Employer, and fully supersedes any and all prior agreements or understandings between them regarding its subject matter; provided, however, that nothing in this Agreement and General Release is intended to or shall be construed to limit, impair or terminate any obligation of Executive pursuant to any non-competition, non-solicitation, confidentiality or intellectual property agreements that have been signed by Executive where such agreements by their terms continue after Executive’s employment with Employer terminates, including, but not limited to, the provisions of Sections 6, 7, 8 and 9 of the Employment Agreement. This Agreement and General Release may only be modified by written agreement signed by both parties.

 

22. The Employer and Executive agree that in the event any provision of this Agreement and General Release is deemed to be invalid or unenforceable by any court or administrative agency of competent jurisdiction, or in the event that any provision cannot be modified so as to be valid and enforceable, then that provision shall be deemed severed from the Agreement and General Release and the remainder of the Agreement and General Release shall remain in full force and effect.

 

 

 

 

23. This Agreement and General Release will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflicting provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of Delaware to be applied. In furtherance of the foregoing, the internal law of the State of Delaware will control the interpretation and construction of this Agreement and General Release, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.

 

24. All judicial proceedings brought against any party arising out of or relating to this Agreement and General Release, or any obligations or liabilities hereunder, shall be brought in the United States District Court for the District of Delaware, provided that if the judicial proceeding shall not satisfy applicable federal jurisdiction requirements, such dispute shall be brought in the state courts of the State of Delaware. By executing and delivering this Agreement and General Release, each party irrevocably: accepts generally and unconditionally the exclusive jurisdiction and venue of such courts and waives, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Notwithstanding the foregoing, the parties may seek injunctive or equitable relief to enforce the terms of this Agreement and General Release in any court of competent jurisdiction.

 

25. Each of the parties hereto hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement and General Release.

 

26. The language of all parts of this Agreement and General Release in all cases shall be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties.

 

[Signatures on Following Page]

 

 

 

 

PLEASE READ CAREFULLY. THIS
AGREEMENT AND GENERAL RELEASE INCLUDES A
RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

  EMPLOYER
   
  TATTOOED CHEF, INC.
   
  By:  
  Name:                      
  Title:  
   
  EXECUTIVE
   
   
  Sarah Galletti
   
  Date:  

 

 

 

 

Exhibit 10.6

 

Execution Copy

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (this “Agreement”) is made as of June 11, 2020 by and between Forum Merger II Corporation, a Delaware corporation which will be renamed to Tattooed Chef, Inc. as of the Effective Date (the “Company”), and Stephanie Dieckmann (the “Executive”). This Agreement shall govern the employment relationship between Executive and the Company from and after the Effective Date.

 

WHEREAS, the Company has entered into an Agreement and Plan of Merger, dated as of June 11, 2020 (the “Merger Agreement”), by and among the Company, Sprout Merger Sub, Inc., a Delaware corporation (“Merger Sub”), Myjojo, Inc., a Delaware corporation (“Myjojo”), and Salvatore Galletti (as the Holders Representative), pursuant to which, among other things, Merger Sub will merge with and into Myjojo (the “Merger”) and as a result of the Merger, (i) Myjojo will be the surviving corporation, and (ii) all issued and outstanding capital stock of Myjojo as of a moment in time immediately prior the Merger will convert into the right to receive the consideration set forth in the Merger Agreement in accordance with the terms of the Merger Agreement;

 

WHEREAS, the Executive is the Chief Operating Officer of Ittella International, LLC (“Ittella”), which is a wholly owned subsidiary of Myjojo, Inc.;

 

WHEREAS, the Company desires to be assured that the services of the Executive will continue to be available to the Company from and after the closing date of the Merger (the “Effective Date”) and that the confidential information and goodwill of the Company will be preserved for its exclusive benefit; and

 

WHEREAS, the Company desires to employ the Executive pursuant to the terms and conditions set forth in this Agreement, subject to and contingent upon the closing of the Merger, and the Executive is willing and able to render such services and desires to do so on the terms and conditions hereinafter set forth herein.

 

NOW THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1. Definitions. In this Agreement:

 

Accrued Obligations” means (A) all previously earned and accrued but unpaid Base Salary and Benefits in accordance with and subject to the terms of the relevant employee benefit plans and (B) any reimbursement owing under Section 3(c) of this Agreement for expenses incurred by the Executive on or before the Termination Date.

 

Base Salary” has the meaning given to that term in Section 3(a).

 

Benefits” means the employee benefit programs for which senior executive employees of the Company are generally eligible.

 

Board” means the Board of Directors of the Company or its successor.

 

Business Relation” has the meaning given to that term in Section 9(b).

 

 

 

 

Cause” means (i) the Executive’s commission of, or plea of nolo contendere to, any felony or other crime involving moral turpitude; (ii) the Executive’s commission of fraud, theft, embezzlement, self-dealing or misappropriation against the business of the Company Group; (iii) the Executive’s breach of her fiduciary duties to the Company Group; (iv) the Executive’s conviction of any serious offense that results in or would reasonably be expected to result in material financial harm, materially negative publicity or other material harm to any member of the Company Group; (v) the Executive’s excessive use of alcohol or illegal drugs (including but not limited to the misuse or abuse of legal drugs) that adversely affects the Executive’s ability to perform her duties, responsibilities and functions hereunder; (vi) the Executive’s willful or grossly negligent failure to perform any material aspect of her duties and responsibilities hereunder or any lawful directive of the Board or its designee, which, if capable of being cured, is not cured to the Board’s reasonable satisfaction within ten (10) days after the delivery of written notice thereof to the Executive; (vii) the Executive’s intentional and willful misconduct in the management of any member of the Company Group; (viii) the Executive intentionally causing any member of the Company Group to violate a material local, state or federal law in any respect, unless such violation results from actions approved by the Board, (ix) the Executive’s intentional concealment of known material information from the Board, (x) any act or omission constituting a material breach by the Executive of any provision of this Agreement or any other agreement between the Executive and the Company Group, which, if capable of being cured, is not cured to the Board’s reasonable satisfaction within ten (10) days after written notice thereof to the Executive, and (xi) any breach by the Executive of Sections 6, 7, 8 and 9 of this Agreement, which, if capable of being cured, is not cured to the Board’s reasonable satisfaction within ten (10) days after written notice thereof to the Executive.

 

Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder.

 

Company Group” means the Company, its Subsidiaries and their respective affiliates.

 

Competitive Activities” has the meaning given to that term in Section 9(a).

 

Confidential Information” means any information proprietary to the Company Group and not generally known, including, without limitation, Trade Secrets (as defined herein), Inventions (as defined herein), technology whether now known or hereafter discovered, and information pertaining to research, development, techniques, engineering, purchasing, marketing, selling, accounting, licensing, know-how, processes, products, equipment, devices, models, prototypes, computer hardware, computer programs and flow charts, program code, software libraries, databases, formulae, compositions, discoveries, cost systems, financial information, personnel information, customer lists, customer histories and records, suppliers, contacts and referral sources, and any lists of names, phone numbers, and addresses of those sources, the particular needs and requirements of customers, the identity of customers and potential customers, lists of customers’ and potential customers’ names, addresses, and phone numbers, and pending business transactions and shall also include confidential and proprietary information of customers and other third parties received by the Company Group. Information may be deemed Confidential Information regardless of its source, and all information designated or treated as Confidential Information by the Company Group shall conclusively be deemed Confidential Information for all purposes.

 

The term Confidential Information shall not apply to the following: (i) information that is or becomes public knowledge other than through the fault of the Executive; (ii) information that is received by the Executive from a third party who is under no obligation to keep the information confidential; (iii) information that the Executive can show by written records was in the Executive’s possession prior to the date of disclosure by the Company Group to the Executive of the Confidential Information in question; or (iv) information which is individually developed by the Executive, and which the Executive can show by written or other tangible evidence was so independently developed.

 

2

 

 

Disability” means the Executive’s inability to perform the material duties, responsibilities or functions of her position with the Company as a result of any mental or physical disability or incapacity for a period of 120 days consecutively, or any 120 days out of a 180-day period, as determined by the Board in its sole discretion. Any dispute between the Executive and the Board with respect to the qualification of a mental or physical disability or incapacity as a Disability shall be resolved by a health care specialist to be mutually agreed upon by the Company and the Executive.

 

Effective Date” has the meaning given to that term in the recitals to this Agreement.

 

Employment Period” means the period commencing on the Effective Date and ending on the Expiration Date, or such earlier date as contemplated in Section 4.

 

Expiration Date” means the three year anniversary of the date of this Agreement or such later anniversary if this Agreement is extended as follows. In the last year of the Agreement, and for each subsequent year thereafter, the Agreement will be automatically extended for a one (1) year period unless written notice has been given by the Company to the Executive or by the Executive to the Company, which notice must be given at least ninety (90) days prior to the Expiration Date, stating that the Company or the Executive is electing to terminate the Employment Period as of the Expiration Date.

 

General Release” has the meaning given to that term in Section 4(b).

 

Good Reason” means the occurrence of any one or more of the following without the Executive’s written consent, provided that the Executive has given written notice to the Company within sixty (60) days following the occurrence of the event giving rise to Good Reason, and which event remains uncured for thirty (30) days following the Company’s receipt of written notice thereof from the Executive: (i) a material diminution in the Executive’s duties or authority; (ii) a material reduction in the Base Salary other than any such reduction made in connection with a broader reduction in base salaries affecting other senior executives of the Company; or (iii) any requirement that Executive relocate to a location that is more than 50 miles from Executive’s residence at the time of the Effective Date.

 

Interfering Activities” has the meaning given to that term in Section 9(b).

 

Inventions” means all ideas, discoveries, developments, improvements, innovations, technology, computer programs, software, products, and methods, systems or plans whether or not shown or described in writing or reduced to practice or use, and whether or not entitled to the protection of applicable patent, trademark, copyright, or similar laws, relating in any manner to any of Company’s present or future products, services, manufacturing or research.

 

Merger” has the meaning given to that term in the recitals to this Agreement.

 

Noncompete Period” has the meaning given to that term in Section 9(a).

 

Person” has the meaning given to that term in Section 6.

 

Proceeding” means any action, suit, proceeding or arbitration, whether civil, criminal, administrative or investigative.

 

Severance Period” means the one (1)-year period following the Termination Date.

 

Subsidiary” means any corporation or other entity of which the securities or other ownership interests having the voting power to elect a majority of the board of directors or other governing body are, at the time of determination, owned by any of the Company, directly or through one or more other Subsidiaries.

 

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Termination Date” means the date of the Executive’s termination of employment under this Agreement for any reason.

 

Termination Year” means the year in which the Employment Period is terminated.

 

Trade Secret” means information, including but not limited to, a formula, pattern, compilation, program, device, method, technique, process, drawing, cost data or customer list that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

 

Work Product” has the meaning given to that term in Section 7.

 

2. Employment, Position and Duties.

 

(a) This Agreement shall be effective as of the closing of the Merger, subject to and contingent upon the closing of the Merger.

 

(b) The Company shall employ the Executive, and the Executive hereby accepts employment with the Company, upon the terms and conditions set forth in this Agreement for the Employment Period.

 

(c) During the Employment Period, the Executive shall serve as the Chief Operating Officer of the Company and shall have the powers, authorities and duties as determined by and directed by the Chief Executive Officer (the “CEO”).

 

(d) During the Employment Period, the Executive shall (i) render such administrative, financial and other executive and managerial services to the Company and the Subsidiaries as are consistent with the Executive’s position as the CEO may from time to time reasonably direct, (ii) report to the CEO, (iii) devote substantially all of her business time, energy and skill to the performance of her duties for the Company, (iii) perform such duties in a faithful, effective and efficient manner to the best of her abilities, (iv) devote her best efforts and her business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of the Company and the Subsidiaries, (v) hold no other employment, and (vi) submit to the Board all business, commercial and investment opportunities presented to the Executive, or of which the Executive becomes aware, that relate to the business of the Company and the Subsidiaries and, unless approved by the Board in writing, the Executive shall not pursue, directly or indirectly, any such opportunities on the Executive’s own behalf. Notwithstanding this Section 2(d), it shall not be a violation of this Agreement for the Executive to serve on civic or charitable boards or committees; provided, that such activities do not, individually or in the aggregate, interfere with the Executive’s performance of her duties, responsibilities and functions to the Company and the Subsidiaries. The Executive shall perform her duties, responsibilities and functions to the Company and the Subsidiaries hereunder to the best of her abilities in a diligent, trustworthy and professional manner and shall comply with the Company’s and the Subsidiaries’ policies and procedures in all material respects.

 

(e) The Executive’s principal employment office will be located at Ittella’s offices in Paramount, California.

 

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3. Compensation and Benefits.

 

(a) During the Employment Period, the Executive’s base salary shall be $210,000.00 per annum (as adjusted up, but not down, from time to time, the “Base Salary”), which salary shall be payable by the Company in regular installments in accordance with the Company’s general payroll practices (in effect from time to time). The Executive’s Base Salary will be subject to review annually by the Board to take effect on or about January 1 of each fiscal year during the Employment Period.

 

(b) The Executive shall be entitled to four (4) weeks of paid vacation each calendar year in accordance with the Company’s policies. In addition, during the Employment Period, the Executive shall be eligible to participate in all standard employee benefit programs made available by the Company to the Company’s executive employees generally, in accordance with the eligibility and participation provisions of such plans and as such plans or programs may be in effect from time to time and at a level consistent with her title, duties and responsibilities. The Company reserves the right to amend any employee welfare or retirement benefit plan, policy, program or arrangement from time to time, or to terminate such plan, policy, program or arrangement, consistent with the terms thereof.

 

(c) During the Employment Period, the Company shall reimburse the Executive for all reasonable out-of-pocket business expenses incurred as a result of the performance of her duties under this Agreement, including, but not limited to, her reasonable customer entertainment expenses, travel expenses, and all other business expenses incurred by him in the course of performing her duties, responsibilities and functions under this Agreement, which are consistent with the Company’s policies in effect and subject to revision from time to time with respect to travel, entertainment and other business expenses, and further subject to the Company’s requirements with respect to reporting and documentation of such expenses.

 

(d) In addition to the Base Salary, the Executive will be eligible to participate in bonuses based upon the Executive’s performance relative to annual goals and other financial and non-financial performance measures to be to be established by the Board in its reasonable discretion (the “Annual Bonus”). Annual Bonus amounts, to the extent earned for any fiscal year, will be payable in a lump sum on or before March 15th following the end of the fiscal year to which the Annual Bonus relates. The Executive must remain actively employed by the Company and in good standing through the date of payment of any Annual Bonus to earn any such amounts, except as otherwise provided in Section 4(b).

 

4. Termination and Payment Terms.

 

(a) The Employment Period shall terminate prior to the Expiration Date upon the occurrence of any of the following events: (i) delivery by the Executive of a written resignation to the Company with no less than ninety (90) days’ advance written notice to the Company or sixty (60) days’ advance written notice to the Company for termination by the Executive for Good Reason; (ii) the death or Disability of the Executive; (iii) the adoption of a good faith resolution by the Board terminating the Executive’s employment with Cause; and (iv) the adoption of a resolution by the Board terminating the Executive’s employment without Cause. Except as otherwise provided herein, any termination of the Employment Period by the Company shall be effective as specified in a written notice from the Company to the Executive.

 

(b) Upon the Executive’s termination of employment, the Executive shall be entitled to certain payments and benefits in accordance with the following:

 

(i) Upon the Executive’s termination of employment by resolution of the Board without Cause or by the Executive for Good Reason, then the Executive shall be entitled to receive (1) the Accrued Obligations, payable within thirty (30) days following the Termination Date or such earlier time as required by law and, (2) subject to (1) the Executive’s timely execution and non-revocation of the general release described in Section 4(d) (the “General Release”) and (2) the Executive’s compliance with Sections 6, 7, 8 and 9 and the other conditions and limitations in this Agreement, (x) continued payment Base Salary (as was in effect immediately prior to such termination) for the duration of the Severance Period, payable in regular installments in accordance with the Company’s general payroll practices as in effect from time to time, and (y) any earned but unpaid Annual Bonus for the fiscal year immediately preceding the Termination Year, payable when the bonus payments for such fiscal year are otherwise due.

 

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(ii) Upon the Executive’s termination of employment as a result of the Executive’s death, the Executive’s estate or other legal beneficiaries shall be entitled to receive the Accrued Obligations, payable within thirty (30) days following the Termination Date or such earlier time as required by law. The Executive’s estate shall not be entitled to any further Base Salary, bonus payments, or Benefits for the Termination Year or any future year, or to any other compensation of any kind;

 

(iii) Upon the Executive’s termination of employment as a result of the Executive’s Disability, the Executive shall be entitled to receive the Accrued Obligations, payable within thirty (30) days following the Termination Date or such earlier time as required by law, but shall not be entitled to any further Base Salary, bonus payments or Benefits (other than as described in clause (2) of this paragraph, or as required by applicable law) for the Termination Year or any future year, or to any other compensation of any kind; and

 

(iv) Upon the Executive’s termination of employment as a result of the Executive’s voluntary resignation without Good Reason in accordance with Section 4(a) or by good faith resolution of the Board for Cause in accordance with Section 4(a), the Executive shall be entitled to the Accrued Obligations, payable within thirty (30) days following the Termination Date or such earlier time as required by law, but shall not be entitled to any further Base Salary, bonus payments, or Benefits (except as required by applicable law) for the Termination Year or any future year, or to any other compensation of any kind, nature or amount.

 

(c) Notwithstanding anything to the contrary in this Agreement, as a condition precedent to any obligation of the Company to make payments to the Executive pursuant to Section 4(b)(i) (aside from the Accrued Obligations), the Executive shall be required to deliver to the Company a valid, executed General Release in substantially the form attached hereto as Exhibit A, and shall not revoke such General Release prior to the expiration of any revocation rights afforded to the Executive by applicable law. The Company shall provide the Executive with the General Release prior to the Termination Date, and the Executive must deliver the executed General Release to the Company within twenty-one (21) days (or, if greater, the minimum period required by applicable law) after the Termination Date, failing which the Executive will forfeit all rights to any payments described in Section 4(b)(i) (aside from the Accrued Obligations).

 

(d) The Executive hereby agrees that, except as expressly provided herein, no compensation of any kind, nature or amount shall be payable to the Executive and, except as expressly provided herein, the Executive hereby irrevocably waives any claim for any such compensation including, without limitation, any severance compensation.

 

(e) Except as otherwise provided in Sections 4(b)(i)-(iv) above, all of the Executive’s rights to Benefits hereunder (if any) shall cease upon the termination of the Employment Period, except as may be required by applicable law.

 

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5. Indemnification.

 

(a) During the Employment Period and for a period of six (6) years thereafter, the Board shall cause the Company or any successor to the Company to purchase and maintain, at the Company’s own expense, directors’ and officers’ liability insurance providing coverage to the Executive on terms that are no less favorable than the coverage provided to other directors and similarly situated executives of the Company.

 

(b) In the event that the Executive is made a party or threatened to be made a party to any Proceeding, other than any Proceeding initiated by the Executive or the Company related to any contest or dispute between the Executive and the Company or any of its affiliates with respect to this Agreement or the Executive’s employment hereunder, by reason of the fact that the Executive is or was a director or officer of the Company, or any member of the Company Group, or is or was serving at the request of the Company as a director, officer, member, employee or agent of another entity, the Executive shall be indemnified and held harmless by the Company to the maximum extent permitted under applicable law and the governing documents of the Company from and against any liabilities, costs, claims and expenses, including all costs and expenses incurred in defense of any Proceeding (including attorneys’ fees). Costs and expenses incurred by the Executive in defense of such Proceeding (including attorneys’ fees) shall be paid by the Company upon receipt by the Company of: (i) a written request for payment; (ii) appropriate documentation evidencing the incurrence, amount and nature of the costs and expenses for which payment is being sought; and (iii) an undertaking adequate under applicable law made by or on behalf of the Executive to repay the amounts so paid if it shall ultimately be determined that the Executive is not entitled to be indemnified by the Company under this Agreement.

 

6. Confidential Information. The Executive shall not use or disclose to any individual or natural person, partnership (including a limited liability partnership), corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or governmental authority (each, a “Person”), either during the Employment Period or thereafter, any Confidential Information of which the Executive is or becomes aware, whether or not such information is developed by him, for any reason or purpose whatsoever, nor shall she make use of any of the Confidential Information for her own purposes or for the benefit of any Person except for any member of the Company Group, except (A) to the extent that such disclosure or use is directly related to and required by the Executive’s performance in good faith of duties assigned to the Executive by the Company or the Board or (B) to the extent required to do so by a court of competent jurisdiction. The Executive will, at the sole expense of the Company, take all reasonable steps to safeguard Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft.

 

7. Intellectual Property, Inventions and Patents. The Executive acknowledges that any Invention that the Executive, either alone or with others (i) makes, discovers, devises, conceives, reduces to practice, or otherwise possesses while employed by Company or for a period of one (1) year following such employment, and (ii) directly or indirectly relates to or arises out of the Executive’s employment with Company or the actual or anticipated business, products, technology, or services of Company (“Work Product”) shall be a work for hire and the sole property of the Company. The Executive hereby assigns to Company all rights, title, and interest the Executive obtains in any and all Inventions under this Agreement, and hereby agrees, upon Company’s request, to execute, verify, and deliver to Company documents including, but not limited to, assignments and applications for Letters of Patent, trademark or copyright registrations, or any other form or method of government protection provided by any local, state, or federal laws of the United States or any other country or political subdivision thereof, and whether such protection is now known or subsequently derived, and to perform such other acts, including, but not limited to, appearing as a witness in any action brought in connection with this Agreement, that is deemed reasonably necessary or appropriate by Company to allow it to obtain the sole right, title, interest and benefit of all such Inventions. The Executive shall promptly disclose such Work Product to the Board and, at the Company’s expense, perform all actions reasonably requested by the Board (whether during or after the Employment Period) to establish and confirm such ownership (including, without limitation, assignments, consents, powers of attorney, and other instruments).

 

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The assignment of Inventions and Work (as defined herein) and the Executive’s agreements in connection therewith shall not apply to any Invention or Work for which: (i) no equipment, supplies, facilities, or Confidential Information of the Company Group or services of any of the Company Group’s employees during normal working hours was used; (ii) was developed entirely on the Executive’s own time; (iii) does not relate to the business of the Company Group or the Company Group’s actual or demonstratively anticipated research or development; and (iv) which does not result from any work performed by the Executive for the Company Group. In addition, the assignment of Inventions and Work herein and the Executive’s agreements in connection therewith shall not apply to any Invention or Work which qualify for exclusion under the terms of applicable state law, including, Section 2870 of the California Labor Code, set forth below:

 

“(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:

 

(1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or

 

(2) Result from any work performed by the employee for the employer.

 

(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.”

 

The Executive shall, during the course of the Executive’s employment and at all times subsequent to the Executive’s employment, hold in strictest and total confidence all Confidential Information. The Executive will at no time, without prior written authorization by the Company (or except pursuant to a confidentiality agreement entered into by the Company in its ordinary course of business), disclose, assign, transfer, convey, communicate, or use for the benefit of any person or entity other than the Company any Confidential Information, nor shall the Executive permit any other person or entity to use Confidential Information in competition with the Company.

 

8. Work Made for Hire. All work which the Executive performs for the Company Group that is fixed in any tangible medium of expression and which relates to the subject matter pertaining to the Executive’s employment, or that relates in any manner or is directly or indirectly connected with the business, services, products, projects, or Confidential Information of the Company Group, or that involves in any manner the use of any time, material, or facilities of the Company Group, or services of any of the Company Group’s employees during normal working hours is “work made for hire” for the sole and exclusive benefit of the Company Group according to copyright laws (“Work”). The Executive assigns to the Company Group the entire right, title, and interest in and to any and all Work, including, by way of example and not limitation, all designs, drawings, conceptions, and improvements, including any copyrights in all original works of authorship fixed in any tangible medium of expression heretofore or hereafter created for the Company Group by the Executive, or furnished to the Company Group, whether such works are created by the Executive solely or jointly with others. For all such original Work, the Executive agrees to provide documentation satisfactory to the Company Group to assure the originality of all such Work and conveyance of all such right, title and interest, including any patents, trademarks, and copyrights in the Work to the Company Group.

 

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9. Non-Compete, Non-Solicitation.

 

(a) In further consideration of the compensation to be paid to the Executive hereunder, the Executive acknowledges that during the course of her employment with the Company she shall become familiar with the Company Group’s trade secrets and with other Confidential Information concerning the Company Group and that her services shall be of special, unique and extraordinary value to the Company Group, and therefore, the Executive agrees that, during the Employment Period and for a period of twelve (12) months following the Termination Date (the “Noncompete Period”), the Executive shall not, directly or indirectly, individually or on behalf of any person, company, enterprise or entity, or as a sole proprietor, partner, stockholder, director, officer, principal, agent or executive, or in any other capacity or relationship, engage in any Competitive Activities within any jurisdiction in which any member of the Company Group had offices and/or conducted business, derived a material portion of its revenues or had demonstrable plan to commence business activities, or participated in or made any investment in any investment or venture which has been consummated or is being pursued or contemplated by the Company Group as of the date of execution of this Agreement and the date of termination of the Executive’s employment. “Competitive Activities” shall mean (A) engaging in, controlling, advising, managing, serving as a director, officer or employee of, acting as a consultant to or contractor or other agent for, receiving any economic benefit from any Competitive Business or (B) investing in or owning any interest publicly or privately in any Person engaged in any Competitive Business. Competitive Activities shall not include (X) any activities taken by the Executive at the direction or, or otherwise on behalf of the Company Group as an employee, consultant or other Person performing similar responsibilities and (Y) the ownership by the Executive or the Executive’s affiliates or immediate family of capital stock or other equity interests of any Person whose securities are listed on a national securities exchange so long as (1) such Person, together with its affiliates, and any member of a group in which such Person or any of its affiliates is a party, do not own more than 2% of the outstanding voting power of such Person and (2) such capital stock or other equity interests of such Person are held solely as a passive investment. The Executive acknowledges that the Company Group conducts business in, and has expended considerable sums to develop and maintain markets in, the foregoing areas and agrees that the scope and duration of the covenant contained herein is reasonable both in time and geographical area and is necessary to protect the Company Group’s legitimate business interests, especially considering the Executive’s position with the Company and other relevant factors.

 

(b) During the Employment Period and thereafter for the Noncompete Period, the Executive shall not individually or collectively, as a participant in a partnership, sole proprietorship, corporation, limited liability company, or other entity, or as an operator, investor, shareholder, partner, director, employee, consultant, manager, or advisor of any such entity, or in any other capacity whatsoever, either directly or indirectly, engage in Interfering Activities. “Interfering Activities” shall mean (A) encouraging, soliciting, or inducing, including, without limitation, through use of Trade Secrets or Confidential Information, or in any manner attempting to encourage, solicit, or induce for the purpose of (i) any Person employed by, or providing consulting services to, the Company Group to terminate such Person’s employment or services (or in the case of a consultant, materially reducing such services) with the Company Group; (ii) any Business Relation to cease doing business with or reduce the amount of business conducted with the Company Group, or in any way interfering with the relationship between any such Business Relation and the Company Group; or (B) hiring any individual who was employed by the Company Group within the six (6) month period prior to the date of such hiring. “Business Relation” shall mean any current or prospective client, customer, licensee, supplier or other business relation of the Company Group, or any such relation that was a client, customer, licensee or other business relation within the prior twelve (12) month period, in each case, with whom the Executive transacted business on behalf of the Company Group or whose identity became known to the Executive in connection with the Executive’s relationship with the Company Group, or the Executive’s employment by Company. Notwithstanding the foregoing, the Executive may hire those employees responding to a general solicitation not directly targeted at such employees, or those employees actively recruited by the Executive and hired by any member of the Company Group following the execution of this Agreement.

 

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(c) If, at the time of enforcement of this Section 9, a court shall hold that the duration, scope, or area restrictions stated herein are unreasonable under circumstances then existing, the parties agree that the maximum duration, scope or area reasonable under such circumstances shall be substituted for the stated duration, scope or area, and that the court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and area permitted by law. The Executive acknowledges that the restrictions contained in this Section 8 are reasonable and that she has reviewed the provisions of this Agreement with her legal counsel.

 

(d) In the event of the breach or a threatened breach by the Executive of any of the provisions of this Section 9, the Company would suffer irreparable harm, and in addition and supplementary to other rights and remedies existing in its favor, the Company shall be entitled to specific performance and/or injunctive or other equitable relief from a court of competent jurisdiction in order to enforce or prevent any violations of the provisions hereof (without posting a bond or other security). In addition, in the event of an alleged breach or violation by the Executive of this Section 9, the Noncompete Period shall be tolled until such breach or violation has been duly cured. Notwithstanding anything contained herein to the contrary, should the Executive violate any provision of Sections 6, 7, 8 or 9 of this Agreement, and should the Executive not cure the breach (if curable) to the Board’s reasonable satisfaction within ten (10) days after written notice thereof to the Executive, the Executive shall not be entitled to any further payments pursuant to the termination of the Employment Period under Section 4.

 

(e) The Executive has carefully read and considered the provisions of Sections 6, 7, 8 and 9 and, having done so, acknowledges and recognizes the highly competitive nature of Company’s business, that access to Confidential Information, including Trade Secrets, renders the Executive special and unique within the Company Group and the Company’s industry, and that the Executive will have the opportunity to develop substantial relationships with existing and prospective clients, accounts, customers, consultants, contractors, investors, and strategic partners of the Company Group during the course of and as a result of the Executive’s employment with Company. In light of the foregoing, the Executive recognizes and acknowledges that the restrictions set forth herein are fair and reasonable and are reasonably required for the protection of the legitimate business interests, Confidential Information, including Trade Secrets, of the Company Group, and are reasonable and valid in geographical and temporal scope.

 

10. Executive’s Representations. The Executive hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by the Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which the Executive is a party or by which she is bound, (ii) the Executive is not a party to or bound by any employment agreement, non-compete agreement or non-solicit agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of the Executive, enforceable in accordance with its terms. THE EXECUTIVE HEREBY ACKNOWLEDGES AND REPRESENTS THAT SHE HAS CONSULTED WITH INDEPENDENT LEGAL COUNSEL REGARDING HER RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT AND THAT SHE FULLY UNDERSTANDS THE TERMS AND CONDITIONS CONTAINED HEREIN AND THEREIN.

 

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11. Tax Withholding. All amounts payable to the Executive as compensation hereunder shall be subject to all customary withholding, payroll and other taxes, and the Company shall be entitled to deduct or withhold from any amounts payable to the Executive any federal, state, local or foreign withholding taxes, excise taxes, or employment taxes imposed with respect to the Executive’s compensation or other payments or the Executive’s ownership interest in the Company (including, without limitation, wages, bonuses, dividends, the receipt or exercise of equity options and/or the receipt or vesting of restricted equity).

 

12. Survival. This Agreement survives and continues in full force in accordance with its terms notwithstanding the expiration or termination of the Employment Period.

 

13. Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, sent by reputable overnight courier service or mailed by first class mail, return receipt requested, to the recipient at the address below indicated:

 

Notices to the Executive:

 

To the Executive’s address most recently on file in the payroll records of the Company.

 

With a copy to:

 

Stephanie Dieckmann

1002 S Ambridge St.

Anaheim, CA 92806

Email: sdieckmann@gmail.com

 

Notices to the Company:

 

Forum Merger II Corporation

1615 South Congress Avenue

Suite 103

Delray Beach, FL 33445

Attention: Marshall Kiev

David Boris

Email: mk@mkcapitalpartners.com

david@forummerger.com

 

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered, sent or mailed.

 

14. Stock Ownership. During the Employment Period, the Executive may be expected to maintain a specified level of ownership of stock of the Company, in accordance with guidelines that may be established by the Board or the Board’s Compensation Committee from time to time.

 

15. Clawback. Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or any other compensation, paid to the Executive pursuant to this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).

 

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16. Section 280G of the Code. Notwithstanding anything to the contrary in this Agreement, the amount to be paid by the Company to the Executive pursuant to this Agreement shall be limited such that the total “parachute payments” (as defined in Section 280G(b)(2)(A)(i) of the Code) made to the Executive by the Company pursuant to this Agreement or otherwise does not exceed the product of 2.99 times the “base amount” (as defined in Section 280G(b)(3) of the Code) for the Executive.

 

17. Section 409A of the Code.

 

(a) It is intended that any amounts payable under this Agreement shall be exempt from and avoid the imputation of any tax, penalty or interest under Section 409A of the Code (“Section 409A”) to the fullest extent permissible under applicable law; provided, that if any such amount is or becomes subject to the requirements of Section 409A, it is intended that those amounts shall comply with such requirements. This Agreement shall be construed and interpreted consistent with that intent. In furtherance of that intent, if payment or provision of any amount or benefit hereunder that is subject to Section 409A at the time specified herein would subject such amount or benefit to any additional tax under Section 409A, the payment or provision of such amount or benefit shall be postponed to the earliest commencement date on which the payment or provision of such amount or benefit could be made without incurring such additional tax. In no event, however, shall the Company be liable for any tax, interest or penalty imposed on the Executive under Section 409A or any damages for failing to comply with Section 409A.

 

(b) If the Executive is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the Termination Date, the Executive shall not be entitled to any payment or benefit pursuant to Section 4(b) until the earlier of (A) the date which is six (6) months after her separation from service (within the meaning of Section 409A) for any reason other than death, or (B) the date of the Executive’s death; provided, that this paragraph shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A. Any amounts otherwise payable to the Executive upon or in the six (6) month period following the Executive’s separation from service that are not so paid by reason of this Section 16(b) shall be paid (without interest) as soon as practicable (and in any event within thirty (30) days) after the date that is six (6) months after the Executive’s separation from service (provided that in the event of the Executive’s death after such separation from service but prior to payment, then such payment shall be made as soon as practicable, and in all events within thirty (30) days, after the date of the Executive’s death).

 

(c) Any reimbursement payment or in-kind benefit due to the Executive pursuant to Section 3(c), to the extent that such reimbursements or in-kind benefits are taxable to him, shall be paid on or before the last day of the Executive’s taxable year following the taxable year in which the related expense was incurred. The Executive agrees to provide prompt notice to the Company of any such expenses (and any other documentation that the Company may reasonably require to substantiate such expenses) in order to facilitate the Company’s timely reimbursement of the same. Reimbursements and in-kind benefits pursuant to Section 3(c) are not subject to liquidation or exchange for another benefit and the amount of such benefits that the Executive receives in one taxable year shall not affect the amount of such reimbursements or benefits that the Executive receives in any other taxable year.

 

(d) For purposes of Section 409A, the Executive’s right to receive any installment payments hereunder shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., payment shall be made within thirty (30) days following the date of termination), the actual date of payment within the specified period shall be within the sole discretion of the Company.

 

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18. Complete Agreement. This Agreement and those documents expressly referred to herein, including the exhibits to this Agreement embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way, provided, however, that any non-competition, non-solicitation and other restrictive covenant agreements between the Executive and the Company Group, including, without limitation, the Confidentiality, Invention and Non-Interference Agreement between Ittella International, LLC, UMB Capital Corporation, and the Executive, dated as of April 15, 2019, shall continue in full force and effect in accordance with their terms. This Agreement may not be amended, modified or changed (in whole or in part), except by written agreement executed by both of the parties hereto.

 

19. Effectiveness. The effectiveness of this Agreement is conditioned upon the closing of the Merger. Accordingly, this Agreement shall be void and of no further force or effect if the Merger Agreement is validly terminated in accordance with its terms prior to the closing of the Merger.

 

20. Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.

 

21. Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by the Executive, the Company and their respective heirs, successors and assigns; provided, that the services provided by the Executive under this Agreement are of a personal nature and rights and obligations of the Executive under this Agreement shall not be assignable.

 

22. Choice of Law. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement and the exhibits hereto shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or of another State) and the parties hereto hereby irrevocably submit to the jurisdiction of the courts of the State of Delaware. The Executive represents that the Executive has had the opportunity to seek, and has in fact been individually represented by, legal counsel in negotiating the terms of this Agreement, including with respect to the choice of Delaware law as the governing law of this Agreement and Delaware courts as the jurisdiction for any judicial proceedings arising out of or relating to this Agreement.

 

23. Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement.

 

24. Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company (as approved by the Board) and the Executive, and no course of conduct or course of dealing or failure or delay by any party hereto in enforcing or exercising any of the provisions of this Agreement (including, without limitation, the Company’s right to terminate the Employment Period for Cause) shall affect the validity, binding effect or enforceability of this Agreement or be deemed to be an implied waiver of any provision of this Agreement.

 

25. Legal Counsel; Mutual Drafting. Each party recognizes that this is a legally binding contract and acknowledges and agrees that they have had the opportunity to consult with legal counsel of their choice. Each party has cooperated in the drafting, negotiation and preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against either party on the basis of that party being the drafter of such language. The Executive agrees and acknowledges that she has read and understands this Agreement, is entering into it freely and voluntarily, and has been advised to seek counsel prior to entering into this Agreement and has had ample opportunity to do so.

 

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26. Key Man Life Insurance. The Company may apply for and obtain and maintain a key man life insurance policy in the name of the Executive together with other executives of the Company in an amount deemed sufficient by the Board, the beneficiary of which shall be the Company. The Executive shall submit to reasonable physical examinations and answer reasonable questions in connection with the application and, if obtained, the maintenance of, as may be required, such insurance policy.

 

27. Executive’s Cooperation. During the Employment Period, the Executive shall cooperate with the Company and the Subsidiaries in any internal investigation or administrative, regulatory or judicial proceeding as reasonably requested by the Company (including, without limitation, the Executive being available to the Company upon reasonable notice for interviews and factual investigations, appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company ail pertinent information and turning over to the Company all relevant documents which are in or may come into the Executive’s possession, ail at times and on schedules that are reasonably consistent with the Executive’s other permitted activities and commitments). In the event the Company requires the Executive’s cooperation in accordance with this Section 26, the Company shall promptly reimburse the Executive solely for reasonable travel expenses (including, but not limited to, lodging and meals), upon submission of receipts.

 

[Signatures on following page]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

  FORUM MERGER II CORPORATION
   
  By:  
  Its: Marshall Kiev, Co-CEO and President

 

  EXECUTIVE
   
   
  Stephanie Dieckmann

 

 

 

 

Exhibit A

 

FORM OF AGREEMENT AND GENERAL RELEASE

 

THIS AGREEMENT AND GENERAL RELEASE (the “Agreement and General Release”) is made and entered into on _____________, 2020 by and between Stephanie Dieckmann (“Executive”) and Tattooed Chef, Inc. (“Employer”).

 

WHEREAS, Executive has been employed by Employer and the parties wish to resolve all outstanding claims and disputes between them relating to such employment;

 

NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth in this Agreement and General Release, the sufficiency of which the parties acknowledge, it is agreed as follows:

 

1. In consideration for Executive’s promises, covenants and agreements in this Agreement and General Release, Employer agrees to make the payments to and on behalf of Executive provided under Section 4(b) of the employment agreement between Executive and Employer dated June 11, 2020 (the “Employment Agreement”), in accordance with the terms and subject to the conditions of such Employment Agreement. Executive would not otherwise be entitled to such payments but for her promises, covenants and agreements in this Agreement and General Release. Executive acknowledges and agrees that the confidentiality, intellectual property assignment, non-competition, non-solicitation and other restrictive covenants contained in the Employment Agreement (the “Restrictive Covenants”) shall remain in full force and effect in accordance with their terms, and Executive hereby reaffirms Executive’s agreement to comply with such Restrictive Covenants.

 

2. The parties agree that the payments described in Section 1 of this Agreement and General Release are in full, final and complete settlement of all claims Executive may have against Employer, its subsidiaries, their respective past and present affiliates, and the respective officers, directors, owners, members, employees, agents, advisors, consultants, insurers, attorneys, successors and/or assigns of each of the foregoing (collectively, the “Releasees”). For the avoidance of doubt, this Agreement and General Release provides for the sole and exclusive benefits for which Executive is eligible as a result of her termination of employment, and Executive shall not be eligible for any benefits under Employer’s severance plan, if any, or any other agreement or arrangement providing for benefits upon a separation from service other than the Employment Agreement.

 

3. Nothing in this Agreement and General Release shall be construed as an admission of liability by Employer or any other Releasee, and Employer specifically disclaims liability to or wrongful treatment of Executive on the part of itself and all other Releasees.

 

4. To the extent permitted by applicable law, Executive agrees that she will not encourage or assist any person to litigate claims or file administrative charges against Employer or any other Releasee, unless required to provide testimony or documents pursuant to a lawful subpoena or other compulsory legal process, in which case she agrees to notify Employer immediately of her receipt of such subpoena so that Employer has the opportunity to contest the same. If any court has or assumes jurisdiction of any action against Employer or any of its affiliates on behalf of Executive, Executive will request that court to withdraw from or dismiss the matter with prejudice. Executive further represents that she has reported to Employer in writing any and all work-related injuries that she has suffered or sustained during her employment with Employer or its affiliates.

 

 

 

 

5. Executive represents that she has not filed any complaints or charges against Employer or any of its affiliates with the Equal Employment Opportunity Commission, or with any other federal, state or local agency or court.

 

6. Executive fully and forever releases and discharges Employer and all other Releasees from any and all legally waivable claims, liabilities, damages, demands, and causes of action or liabilities of any nature or kind, whether now known or unknown, arising out of or in any way connected with Executive’s employment with Employer or any of its affiliates or the termination of such employment; provided, however, that nothing in this Agreement and General Release shall either waive any rights or claims of Executive (i) that arise after Executive signs this Agreement and General Release; (ii) to enforce the terms of this Agreement and General Release; (iii) for the provision of accrued benefits conferred to Executive or her beneficiaries under the terms of Employer’s medical, dental, life insurance or defined contribution retirement benefit plans or any equity plan to which Executive participated in connection with her employment with Employer; (iv) for fees, expenses and costs, including on behalf of Executive’s attorney; (v) based on Executive’s existing rights to indemnification, if any, by the Employer or its affiliates pursuant to the Employer’s or affiliate’s governing documents or other written arrangements for acts committed during the course of Executive’s employment or existing rights to coverage under any; and (vi) based on Executive’s existing coverage under any directors and officers insurance policy in accordance with the terms of such policy. This release includes but is not limited to claims arising under federal, state or local laws concerning employment discrimination, termination, retaliation and equal opportunity, including but not limited to Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Equal Pay Act of 1963, the Americans with Disabilities Act of 1990, as amended, the Worker Adjustment and Retraining Notification Act of 1988, as amended, the Employee Retirement Income Security Act of 1974, as amended (ERISA) (including but not limited to fiduciary claims), claims for attorneys’ fees or costs, any and all statutory or common law provisions relating to or affecting Executive’s employment by Employer or its affiliates, and any and all claims in contract, tort, or premised on any other legal theory. Executive acknowledges that she is releasing claims based on age, race, color, sex, sexual orientation or preference, marital status, religion, national origin, citizenship, veteran status, disability and other legally protected categories. This provision is intended to constitute a general release of all of Executive’s presently existing covered claims against the Releasees, to the maximum extent permitted by law. Notwithstanding anything herein to the contrary, this Agreement and General Release does not purport to waive any claim for worker’s compensation or unemployment benefits, and does not purport to waive or affect any claim that cannot be released by an agreement voluntarily entered into between private parties.

 

7. Executive specifically acknowledges that Executive is aware of and familiar with the provisions of California Civil Code Section 1542, which provides as follows:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”

 

Executive, being aware of this section, hereby expressly waives and relinquishes all rights and benefits Executive may have under California Civil Code Section 1542, as well as any other statutes or common law principles of similar effect.

 

8. Nothing in this Agreement and General Release shall be construed to prevent Executive from filing a charge or complaint, including a challenge to the validity of this Agreement, with any governmental agency or from participating in or cooperating with any investigation conducted by any governmental agency. Nevertheless, Executive agrees and understands that this Agreement and General Release waives all claims and rights to monetary or other recovery for any legal claims to the fullest extent permitted by law; and any claims based upon any other theory, whether legal or equitable, arising from or related to any matter or fact arising out the events giving rise to this Agreement and General Release.

 

 

 

 

9. Executive acknowledges that all confidential information regarding Employer’s or any of its affiliates’ business compiled, created or obtained by, or furnished to, Executive during the course of or in connection with her employment with Employer or any of its affiliates is the exclusive property of Employer or such affiliate. Upon or before execution of this Agreement and General Release, Executive will return to Employer all originals and copies of any material containing confidential information, and Executive further agrees that she will not, directly or indirectly, use or disclose such information. Executive will also return to Employer upon or before execution of this Agreement and General Release any other items in her possession, custody or control that are the property of Employer, including, but not limited to, her files, credit cards, identification card, data storage devices, passwords and office keys.

 

10. Executive acknowledges that (i) she has been given at least twenty-one (21)1 calendar days to consider this Agreement and General Release and that modifications hereof which are mutually agreed upon by the parties hereto, whether material or immaterial, do not restart the twenty-one day period; (ii) she has seven (7) calendar days from the date she executes this Agreement and General Release in which to revoke it; and (iii) this Agreement and General Release will not be effective or enforceable nor the amounts set forth in Section 1 paid unless the seven-day revocation period ends without revocation by Executive. Revocation can be made by delivery and receipt of a written notice of revocation to [INSERT NAME/TITLE AND ADDRESS], by midnight on or before the seventh calendar day after Executive signs the Agreement and General Release.2

 

11. Executive acknowledges that she has been advised to consult with an attorney of her choice with regard to this Agreement and General Release. Executive hereby acknowledges that she understands the significance of this Agreement and General Release, and represents that the terms of this Agreement and General Release are fully understood and voluntarily accepted by him.

 

12. Executive agrees that she will treat the existence and terms of this Agreement and General Release as confidential and will not discuss the Agreement and General Release, its terms or the circumstances surrounding her separation from service with Employer or its affiliate with anyone other than: (i) her counsel or tax advisor as necessary to secure their professional advice, (ii) her spouse or (iii) as may be required by law.

 

13. Any non-disclosure provision in this Agreement and General Release does not prohibit or restrict Executive (or Executive’s attorney) from responding to any inquiry about this Agreement and General Release or its underlying facts and circumstances by the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), any other self-regulatory organization or governmental entity, or making other disclosures that are protected under the whistleblower provisions of federal law or regulation. Executive understands and acknowledges that she does not need the prior authorization of the Employer to make any such reports or disclosures and that she is not required to notify the Employer that she has made such reports or disclosures.

 

14. Executive shall not make any oral or written statements, either directly or through other persons or entities, which are (i) disparaging to the Employer or any of the Employer’s affiliates, or the management, officers, directors, services, products or operations thereof, or (ii) likely to adversely affect the business relationship of the Employer or its affiliates with the public generally or with any of their respective customers, vendors, suppliers, licensors, lessors, joint venturers, associates, consultants, agents, partners, contractors or employees. Notwithstanding the foregoing, it shall not be a violation of this provision for Executive to make truthful statements when required by compulsory legal process or as otherwise may be required by law.

 

 

1 Note to Draft: Change to forty-five (45) days in the case of a group termination under the ADEA.
2 Note to Draft: This provision is only necessary if the Executive is over the age of 40.

 

 

 

 

15. In the event of any lawsuit against Employer or any of its affiliates that relates to alleged acts or omissions by Executive during her employment with Employer or its affiliate, Executive agrees to cooperate with Employer or its affiliate by voluntarily providing truthful and full information as reasonably necessary for Employer or its affiliate to defend against such lawsuit, provided that the Employer shall reimburse Executive’s reasonable expenses incurred in providing such assistance subject to Executive’s delivery of written notice to the Employer prior to the time such expenses are incurred.

 

16. Executive shall indemnify and defend the Company against any claim arising out of this Agreement for unpaid taxes which may be made by any state or federal agency for any taxes, interest, fines or penalties.

 

17. Executive agrees not to seek reemployment or an independent contractor relationship with the Company at any time.

 

18. Executive agrees to hold in strictest confidence and not to disclose to any person, firm, or corporation or to use to compete with Company, without the express authorization of the CEO of the Company, any confidential or proprietary information relating to the business of Company. Confidential or proprietary information includes, but is not limited to: trade secrets, processes, formulas, computer programs, data, know-how, inventions, improvements, techniques, marketing plans, forecasts, discounts, customer and supplier lists.

 

19. The parties acknowledge that each would be irreparably harmed by any breach of the commitments in the Agreement by the other party, and that in the event of any such breach, the prevailing party shall be entitled to the recovery of all costs and attorneys’ fees incurred in bringing an action for breach of the Agreement. Any such action would have no effect on the validity or enforceability of the Agreement.

 

20. This Agreement and General Release shall be binding on Employer and Executive and upon their respective heirs, representatives, successors and assigns, and shall run to the benefit of the Releasees and each of them and to their respective heirs, representatives, successors and assigns.

 

21. This Agreement and General Release (and, to the extent explicitly provided herein, the Employment Agreement) set forth the entire agreement between Executive and Employer, and fully supersedes any and all prior agreements or understandings between them regarding its subject matter; provided, however, that nothing in this Agreement and General Release is intended to or shall be construed to limit, impair or terminate any obligation of Executive pursuant to any non-competition, non-solicitation, confidentiality or intellectual property agreements that have been signed by Executive where such agreements by their terms continue after Executive’s employment with Employer terminates, including, but not limited to, the provisions of Sections 6, 7, 8 and 9 of the Employment Agreement. This Agreement and General Release may only be modified by written agreement signed by both parties.

 

22. The Employer and Executive agree that in the event any provision of this Agreement and General Release is deemed to be invalid or unenforceable by any court or administrative agency of competent jurisdiction, or in the event that any provision cannot be modified so as to be valid and enforceable, then that provision shall be deemed severed from the Agreement and General Release and the remainder of the Agreement and General Release shall remain in full force and effect.

 

 

 

 

23. This Agreement and General Release will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflicting provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the laws of any jurisdiction other than the State of Delaware to be applied. In furtherance of the foregoing, the internal law of the State of Delaware will control the interpretation and construction of this Agreement and General Release, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.

 

24. All judicial proceedings brought against any party arising out of or relating to this Agreement and General Release, or any obligations or liabilities hereunder, shall be brought in the United States District Court for the District of Delaware, provided that if the judicial proceeding shall not satisfy applicable federal jurisdiction requirements, such dispute shall be brought in the state courts of the State of Delaware. By executing and delivering this Agreement and General Release, each party irrevocably: accepts generally and unconditionally the exclusive jurisdiction and venue of such courts and waives, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute. Notwithstanding the foregoing, the parties may seek injunctive or equitable relief to enforce the terms of this Agreement and General Release in any court of competent jurisdiction.

 

25. Each of the parties hereto hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement and General Release.

 

26. The language of all parts of this Agreement and General Release in all cases shall be construed as a whole, according to its fair meaning, and not strictly for or against any of the parties.

 

[Signatures on Following Page]

 

 

 

 

PLEASE READ CAREFULLY. THIS
AGREEMENT AND GENERAL RELEASE INCLUDES A
RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

  EMPLOYER
   
  TATTOOED CHEF, INC.
   
  By:  
  Name:                      
  Title:  
   
  EXECUTIVE
   
   
 

Stephanie Dieckmann

   
  Date:  

 

 

 

 

Exhibit 10.7

 

INDEMNITY AGREEMENT

 

THIS INDEMNITY AGREEMENT (this “Agreement”) is made as of  [●]  , 2020, by and between Tattooed Chef, Inc., a Delaware corporation (the “Company”), and [●] (“Indemnitee”).

 

RECITALS

 

The Company believes that, in order to attract and retain highly qualified persons to serve as directors or in other capacities, including as officers, it must provide those persons with adequate protection through indemnification against the risk of claims and actions against them arising out of their services to and activities on behalf of the Company. The Amended and Restated Certificate of Incorporation (the “Charter”) and the Amended and Restated Bylaws (the “Bylaws”) of the Company require indemnification of the officers and directors of the Company. Indemnitee may also be entitled to indemnification pursuant to applicable provisions of the Delaware General Corporation Law (“DGCL”). The Charter, Bylaws and the DGCL expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board of Directors of the Company (the “Board”), officers and other persons with respect to indemnification, hold harmless, exoneration, advancement and reimbursement rights;

 

The Company desires and has requested Indemnitee to serve as a [director] [officer] of the Company and, in order to induce the Indemnitee to serve as a [director] [officer] of the Company, the Company is willing to grant the Indemnitee the indemnification provided for herein. Indemnitee is willing to so serve on the basis that such indemnification be provided.

 

The parties by this Agreement desire to set forth their agreement regarding indemnification and the advancement of expenses. In consideration of the mutual covenants and agreements set forth below, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

 

TERMS AND CONDITIONS

 

1. SERVICES TO THE COMPANY. In consideration of the Company’s covenants and obligations hereunder, Indemnitee will serve or continue to serve as an officer, director, advisor, key employee or in any other capacity of the Company, as applicable, for so long as Indemnitee is duly elected or appointed or retained or until Indemnitee tenders Indemnitee’s resignation or until Indemnitee is removed. The foregoing notwithstanding, this Agreement shall continue in full force and effect after Indemnitee has ceased to serve as a director, officer, advisor, key employee or in any other capacity of the Company, as provided in Section 14. This Agreement, however, shall not impose any obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company beyond any period otherwise required by law or by other agreements or commitments of the parties, if any.

 

2. DEFINITIONS. As used in this Agreement:

 

(a) References to “agent” mean any person who is or was a director, officer or employee of the Company or a Subsidiary of the Company or other person authorized by the Company to act for the Company, to include a person serving in the capacity as a director, officer, employee, fiduciary or other official of another corporation, partnership, limited liability company, joint venture, trust or other enterprise at the request of, for the convenience of, or to represent the interests of the Company or a Subsidiary of the Company.

 

 

 

(b) (i) A “change in control” shall be deemed to occur upon the earliest to occur after the date of this Agreement of any of the following: (A) any person (as defined below) is or becomes the beneficial owner (as defined below), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities, (B) during any period of two consecutive years (not including any period prior to the execution of this Agreement), individuals who at the beginning of that period constitute the Board of Directors of the Company, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (A), clause (C) or clause (D) of this Section 2(b)(i) or a director whose initial nomination for, or assumption of office as, a member of the Board occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the Board) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the members of the Board, (C) the effective date of a merger or consolidation of the Company with any other entity, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior to the merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the combined voting power of the voting securities of the surviving entity outstanding immediately after the merger or consolidation and with the power to elect at least a majority of the board of directors or other governing body of the surviving entity, and (D) the approval by the stockholders of the Company of a complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, and (E) there occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item on any similar schedule or form) promulgated under the Exchange Act (as defined below), whether or not the Company is then subject to those reporting requirement.

 

(ii) For purposes of Section 2(b)(i), the following terms have the following meanings:

 

(I) Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

 

(II) person” has the meaning as set forth in Sections 13(d) and 14(d) of the Exchange Act; provided, however, that “person” shall exclude (a) the Company, (b) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, and (c) any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

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(III) beneficial owner” has the meaning given to that term in Rule 13d-3 under the Exchange Act.

 

(c) “Corporate Status” describes the status of a person who is or was a director, officer, trustee, general partner, manager, managing member, fiduciary, employee or agent of the Company or of any other Enterprise (as defined below) which that person is or was serving at the request of the Company.

 

(d) “Delaware Court” means the Court of Chancery of the State of Delaware.

 

(e) “Enterprise” means the Company and any other corporation, constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger to which the Company (or any of its wholly owned subsidiaries) is a party, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent.

 

(f) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(g) “Expenses” shall be broadly construed and shall include, without limitation, all direct and indirect costs, fees and expenses of any type or nature whatsoever, including, without limitation, all reasonable attorneys’ fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators and professional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, fax transmission charges, secretarial services and all other disbursements, obligations or expenses in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settlement or appeal of, or otherwise participating in, a Proceeding (as defined below), including reasonable compensation for time spent by Indemnitee for which he or she is not otherwise compensated by the Company or any third party. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding (as defined below), including without limitation the principal, premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent. “Expenses,” however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

 

(h) References to “fines” includes any excise tax assessed on Indemnitee with respect to any employee benefit plan; references to “serving at the request of the Company” includes any service as a director, officer, employee, agent or fiduciary of the Company which imposes duties on, or involves services by, the director, officer, employee, agent or fiduciary with respect to an employee benefit plan, its participants or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

 

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(i) “Independent Counsel” means a law firm or a member of a law firm with significant experience in matters of corporation law and that neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements); or (ii) any other party to the Proceeding (as defined below) giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

 

(j) The term “Person” has the meaning set forth in Sections 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided, however, that “Person” shall exclude: (i) the Company; (ii) any Subsidiaries (as defined below) of the Company; (iii) any employment benefit plan of the Company or of a Subsidiary (as defined below) of the Company or of any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company; and (iv) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a Subsidiary (as defined below) of the Company or of a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

(k) The term “Proceeding” includes any threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative or related nature, in which Indemnitee was, is, will or might be involved as a party or otherwise by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action (or failure to act) taken by Indemnitee or of any action (or failure to act) on Indemnitee’s part while acting as a director or officer of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of any other Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses can be provided under this Agreement.

 

(l) The term “Subsidiary,” with respect to any Person, means any corporation, limited liability company, partnership, joint venture, trust or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by that Person.

 

3. INDEMNITY IN THIRD-PARTY PROCEEDINGS. To the fullest extent permitted by applicable law, the Company shall indemnify, hold harmless and exonerate Indemnitee in accordance with the provisions of this Section 3 if Indemnitee was, is, or is threatened to be made, a party to or a participant (as a witness, deponent or otherwise) in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor by reason of Indemnitee’s Corporate Status. Pursuant to this Section 3, Indemnitee shall be indemnified, held harmless and exonerated against all Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of those Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement) actually, and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with the Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal Proceeding, had no reasonable cause to believe that Indemnitee’s conduct was unlawful.

 

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4. INDEMNITY IN PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. To the fullest extent permitted by applicable law, the Company shall indemnify, hold harmless and exonerate Indemnitee in accordance with the provisions of this Section 4 if Indemnitee was, is, or is threatened to be made, a party to or a participant (as a witness, deponent or otherwise) in any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of Indemnitee’s Corporate Status. Pursuant to this Section 4, Indemnitee shall be indemnified, held harmless and exonerated against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with the Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company. No indemnification, hold harmless or exoneration for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee has been finally adjudged by a court to be liable to the Company, unless and only to the extent that any court in which the Proceeding was brought or the Delaware Court determines upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification, to be held harmless or to exoneration.

 

5. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY SUCCESSFUL. Notwithstanding any other provisions of this Agreement, to the extent that Indemnitee was or is, by reason of Indemnitee’s Corporate Status, a party to (or a participant in) and is successful, on the merits or otherwise, in any Proceeding or in defense of any claim, issue or matter therein, in whole or in part, the Company shall, to the fullest extent permitted by applicable law, indemnify, hold harmless and exonerate Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection therewith. If Indemnitee is not wholly successful in the Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in the Proceeding, the Company shall, to the fullest extent permitted by applicable law, indemnify, hold harmless and exonerate Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter. If Indemnitee is not wholly successful in the Proceeding, the Company also shall, to the fullest extent permitted by applicable law, indemnify, hold harmless and exonerate Indemnitee against all Expenses reasonably incurred in connection with a claim, issue or matter related to any claim, issue, or matter on which Indemnitee was successful. For purposes of this Section 5 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to the claim, issue or matter.

 

6. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness or deponent in any Proceeding (including, without limitation, any Proceeding to which Indemnitee was or is not a party or threatened to be made a party), Indemnitee shall, to the fullest extent permitted by applicable law, be indemnified, held harmless and exonerated against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.

 

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7. ADDITIONAL INDEMNIFICATION, HOLD HARMLESS AND EXONERATION RIGHTS.  Notwithstanding any limitation in Section 3, Section 4 or Section 5, the Company shall, to the fullest extent permitted by applicable law, indemnify, hold harmless and exonerate Indemnitee if Indemnitee is a party to or threatened to be made a party to any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement (including all interest, assessments and other charges paid or payable in connection with or in respect of those Expenses, judgments, liabilities, fines, penalties and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection with the Proceeding. No indemnification, hold harmless or exoneration rights shall be available under this Section 7 on account of Indemnitee’s conduct that constitutes a breach of Indemnitee’s duty of loyalty to the Company or its stockholders or is an act or omission not in good faith or that involves intentional misconduct or a knowing violation of the law.

 

8. CONTRIBUTION IN THE EVENT OF JOINT LIABILITY.

 

(a) To the fullest extent permissible under applicable law, if the indemnification, hold harmless and/or exoneration rights provided for in this Agreement are unavailable to Indemnitee in whole or in part for any reason whatsoever, the Company, in lieu of indemnifying, holding harmless or exonerating Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for judgments, liabilities, fines, penalties, amounts paid or to be paid in settlement and/or for Expenses, in connection with any Proceeding without requiring Indemnitee to contribute to the payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.

 

(b) The Company shall not enter into any settlement of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in the Proceeding) unless the settlement provides for a full and final release of all claims asserted against Indemnitee.

 

(c) The Company shall fully indemnify, hold harmless and exonerate Indemnitee from any claims for contribution which may be brought by officers, directors or employees of the Company other than Indemnitee who may be jointly liable with Indemnitee.

 

9. EXCLUSIONS. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnification, advance expenses, hold harmless or exoneration payment in connection with any claim made against Indemnitee:

 

(a) for which payment has actually been received by or on behalf of Indemnitee under any insurance policy or other indemnity or advancement provision, except with respect to any excess beyond the amount actually received under any insurance policy, contract, agreement, other indemnity or advancement provision or otherwise;

 

(b) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act (or any successor rule) or similar provisions of state statutory law or common law; or

 

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(c) in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless, as provided pursuant to Section 44(a) of the Bylaws (or that provision as revised, amended or re-numbered), (i) the indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board of Directors, (iii) the indemnification is provided by the Company, in its sole discretion, pursuant to the powers vested in the Company under the DGCL or any other applicable law or (iv) the indemnification is required to be made under Section 44(d) of the Bylaws, or any such provision as revised, amended or re-numbered addressing the enforcement of an Indemnitee’s indemnification rights. Indemnitee shall seek payments or advances from the Company only to the extent that the payments or advances are unavailable from any insurance policy of the Company covering Indemnitee.

 

10. ADVANCES OF EXPENSES; DEFENSE OF CLAIM.

 

(a) To the fullest extent permitted by the DGCL, the Company shall pay the Expenses incurred by Indemnitee (or reasonably expected by Indemnitee to be incurred by Indemnitee within three months) in connection with any Proceeding within 30 days after the receipt by the Company of a statement or statements requesting advances from time to time, prior to the final disposition of any Proceeding. Advances shall, to the fullest extent permitted by law, be unsecured and interest free. Advances shall, to the fullest extent permitted by law, be made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to be indemnified, held harmless or exonerated under the other provisions of this Agreement. Advances shall include any and all reasonable Expenses incurred pursuing a Proceeding to enforce this right of advancement, including Expenses incurred preparing and forwarding statements to the Company to support the advances claimed. To the fullest extent required by applicable law, payments of Expenses in advance of the final disposition of the Proceeding shall be made only upon the Company’s receipt of an undertaking, by or on behalf of Indemnitee, to repay the advanced amounts to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified, held harmless or exonerated by the Company under the provisions of this Agreement, the Charter, the Bylaws, applicable law or otherwise. This Section 10(a) shall not apply to any claim made by Indemnitee for which an indemnification, hold harmless or exoneration payment is excluded pursuant to Section 9.

 

(b) The Company will be entitled to participate in the Proceeding at its own expense.

 

(c) The Company shall not settle any action, claim or Proceeding (in whole or in part) which would impose any Expense, judgment, liability, fine, penalty or limitation on Indemnitee without Indemnitee’s prior written consent.

 

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11. PROCEDURE FOR NOTIFICATION AND APPLICATION FOR INDEMNIFICATION.

 

(a) Promptly after receipt by Indemnitee of notice of the commencement of any action, suit or proceeding, Indemnitee shall, if a claim in respect thereof is to be made against the Company hereunder, notify the Company in writing of the commencement thereof. The failure to promptly notify the Company of the commencement of the action, suit or proceeding, or of Indemnitee’s request for indemnification, will not relieve the Company from any liability that it may have to Indemnitee hereunder, except to the extent the Company is actually and materially prejudiced in its defense of the action, suit or proceeding as a result of the failure. To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request therefor including any documentation and information reasonably available to Indemnitee and reasonably necessary to enable the Company to determine whether and to what extent Indemnitee is entitled to indemnification.

 

(b) With respect to any action, suit or proceeding of which the Company is notified as provided in this Agreement, the Company shall, subject to the last two sentences of this paragraph, be entitled to assume the defense of the action, suit or proceeding, with counsel reasonably acceptable to Indemnitee, upon the delivery to Indemnitee of written notice of its election to do so. After delivery of the notice, approval of that counsel by Indemnitee and the retention of that counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any subsequently-incurred fees of separate counsel engaged by Indemnitee with respect to the same action, suit or proceeding unless the employment of separate counsel by Indemnitee has been previously authorized in writing by the Company. Notwithstanding the foregoing, if Indemnitee, based on the advice of his or her counsel, reasonably concludes (with written notice being given to the Company setting forth the basis for the conclusion) that, in the conduct of the defense, there is or is reasonably likely to be a conflict of interest or position between the Company and Indemnitee with respect to a significant issue, then the Company will not be entitled, without the written consent of Indemnitee, to assume the defense. In addition, the Company will not be entitled, without the written consent of Indemnitee, to assume the defense of any claim brought by or in the right of the Company.

 

(c) To the fullest extent permitted by the DGCL, the Company’s assumption of the defense of an action, suit or proceeding in accordance with Section 11(b) will constitute an irrevocable acknowledgement by the Company that any loss and liability suffered by Indemnitee and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement by or for the account of Indemnitee incurred in connection therewith are indemnifiable by the Company under this Agreement.

 

(d) The determination whether to grant Indemnitee’s indemnification request shall be made promptly and in any event within 30 days following the Company’s receipt of a request for indemnification in accordance with Section 11(a). If the Company determines that Indemnitee is entitled to indemnification or, as contemplated by Section 11(c), the Company has acknowledged the entitlement, the Company will make payment to Indemnitee of the indemnifiable amount within the 30 day period. If the Company is not deemed to have acknowledged the entitlement or the Company’s determination of whether to grant Indemnitee’s indemnification request has not been made within the 30 day period, the requisite determination of entitlement to indemnification shall, subject to Section 9, nonetheless be deemed to have been made and Indemnitee shall be entitled to indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of indemnification under the DGCL.

 

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(e) If (i) the Company determines that Indemnitee is not entitled to indemnification under this Agreement, (ii) the Company denies a request for indemnification, in whole or in part, or fails to respond or make a determination of entitlement to indemnification within 30 days following receipt of a request for indemnification as described above, (iii) payment of indemnification is not made within the 30 day period, (iv) advancement of Expenses is not timely made in accordance with Section 10, or (v) the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, the Indemnitee the benefits provided or intended to be provided to Indemnitee hereunder, Indemnitee shall be entitled to an adjudication in any court of competent jurisdiction of his or her entitlement to indemnification or advancement of Expenses. Indemnitee’s Expenses incurred in connection with successfully establishing Indemnitee’s right to indemnification or advancement of Expenses, in whole or in part, in any such proceeding or otherwise shall also be indemnified by the Company to the fullest extent permitted by the DGCL.

 

(f) Indemnitee shall be presumed to be entitled to indemnification and advancement of Expenses under this Agreement upon submission of a request therefor in accordance with Section 10 or Section 11, as the case may be. The Company shall have the burden of proof in overcoming the presumption, and the presumption shall be used as a basis for a determination of entitlement to indemnification and advancement of Expenses unless the Company overcomes the presumption by clear and convincing evidence.

 

(g) If there is a change in control of the Company, then with respect to all matters thereafter arising concerning the rights of Indemnitee to indemnification and advancement of expenses under this Agreement, any other agreement or the Company’s Charter or Bylaws now or hereafter in effect, the Company shall seek legal advice only from independent counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld). In addition, upon written request by Indemnitee for indemnification pursuant to Section 11(a), a determination, if required by the DGCL, with respect to Indemnitee’s entitlement thereto shall be made by the independent counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee. The Company shall pay the reasonable fees of the independent counsel referred to above.

 

12. SECURITY. Notwithstanding anything herein to the contrary, to the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of Indemnitee.

 

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13. NON-EXCLUSIVITY; SURVIVAL OF RIGHTS; INSURANCE; SUBROGATION.

 

(a) The rights of Indemnitee as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Charter, the Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any Proceeding (regardless of when the Proceeding is first threatened, commenced or completed) or claim, issue or matter therein arising out of, or related to, any action taken or omitted by Indemnitee in Indemnitee’s Corporate Status prior to the amendment, alteration or repeal. To the extent that a change in applicable law, whether by statute or judicial decision, permits greater indemnification, hold harmless or exoneration rights or advancement of Expenses than would be afforded currently under the Charter, the Bylaws or this Agreement, it is the intent of the parties that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by the change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

 

(b) The DGCL, the Charter and the Bylaws permit the Company to purchase and maintain insurance or furnish similar protection or make other arrangements including, but not limited to, providing a trust fund, letter of credit, or surety bond (“Indemnification Arrangements”) on behalf of Indemnitee against any liability asserted against Indemnitee or incurred by or on behalf of Indemnitee or in the capacity as a director, officer, employee or agent of the Company, or arising out of Indemnitee’s status as such, whether or not the Company would have the power to indemnify Indemnitee against that liability under the provisions of this Agreement or under the DGCL, as it may then be in effect. The purchase, establishment, and maintenance of any Indemnification Arrangement shall not in any way limit or affect the rights and obligations of the Company or of Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and Indemnitee shall not in any way limit or affect the rights and obligations of the Company or the other party or parties thereto under any Indemnification Arrangement.

 

(c) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, trustees, partners, managers, managing members, fiduciaries, employees, or agents of the Company or of any other Enterprise which the person serves at the request of the Company, Indemnitee shall be covered by the policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any director, officer, trustee, partner, managers, managing member, fiduciary, employee or agent under the policy or policies. If, at the time the Company receives notice from any source of a Proceeding as to which Indemnitee is a party or a participant (as a witness, deponent or otherwise), the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause the insurers to pay, on behalf of Indemnitee, all amounts payable as a result of the Proceeding in accordance with the terms of the policies.

 

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(d) In the event of any payment under this Agreement, the Company, to the fullest extent permitted by law, shall be subrogated to the extent of the payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure those rights, including execution of any documents necessary to enable the Company to bring suit to enforce those rights.

 

(e) The Company’s obligation to indemnify, hold harmless, exonerate or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a director, officer, trustee, partner, manager, managing member, fiduciary, employee or agent of any other Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification, hold harmless or exoneration payments or advancement of expenses from the Enterprise. Notwithstanding any other provision of this Agreement to the contrary, (i) Indemnitee shall have no obligation to reduce, offset, allocate, pursue or apportion any indemnification, hold harmless, exoneration, advancement, contribution or insurance coverage among multiple parties possessing those duties to Indemnitee prior to the Company’s satisfaction and performance of all its obligations under this Agreement, and (ii) the Company shall perform fully its obligations under this Agreement without regard to whether Indemnitee holds, may pursue or has pursued any indemnification, advancement, hold harmless, exoneration, contribution or insurance coverage rights against any person or entity other than the Company.

 

14. DURATION OF AGREEMENT. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee serves as a director or officer of the Company or as a director, officer, trustee, partner, manager, managing member, fiduciary, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other Enterprise which Indemnitee serves at the request of the Company and shall continue thereafter so long as Indemnitee shall be subject to any possible Proceeding by reason of Indemnitee’s Corporate Status, whether or not Indemnitee is acting in any such capacity at the time any liability or expense is incurred for which indemnification or advancement can be provided under this Agreement.

 

15. SEVERABILITY. If any provision or provisions of this Agreement are held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing the provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) the provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph, sentence or clause of this Agreement containing the provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

 

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16. ENFORCEMENT AND BINDING EFFECT.

 

(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as a director, officer or key employee of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director, officer or key employee of the Company.

 

(b) Without limiting any of the rights of Indemnitee under the Charter or Bylaws as they may be amended from time to time, this Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties with respect to the subject matter hereof.

 

(c) The indemnification, hold harmless, exoneration and advancement of expenses rights provided by or granted pursuant to this Agreement shall be binding upon and be enforceable by the parties and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or a director, officer, trustee, general partner, manager, managing member, fiduciary, employee or agent of any other Enterprise at the Company’s request, and shall inure to the benefit of Indemnitee and Indemnitee’s spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

 

(d) The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no succession had taken place.

 

(e) The Company and Indemnitee acknowledge that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that a breach may cause Indemnitee irreparable harm. Accordingly, Indemnitee may, to the fullest extent permitted by law, enforce this Agreement by seeking, among other things, injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which Indemnitee may be entitled. Indemnitee shall, to the fullest extent permitted by law, be entitled to specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertaking in connection therewith. The Company acknowledges that in the absence of a waiver, a bond or undertaking may be required of Indemnitee by a court of competent jurisdiction. The Company hereby waives any such requirement of such a bond or undertaking to the fullest extent permitted by law.

 

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17. MODIFICATION AND WAIVER. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the Company and Indemnitee. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.

 

18. NOTICES. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (i) if delivered by hand and receipted for by the party to whom the notice or other communication shall have been directed, (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed or (iii) when delivered by email, solely if delivery is confirmed:

 

(a) If to Indemnitee, at the address indicated on the signature page of this Agreement, or such other address as Indemnitee shall provide in writing to the Company.

 

(b) If to the Company, to:

 

Tattooed Chef, Inc.
6305 Alondra Boulevard
Paramount, California 90723
Attention: Sam Galletti
Email: sgalletti@ittellafoods.com

 

With a copy, which shall not constitute notice, to

 

Rutan & Tucker, LLP
18575 Jamboree Road, 9th Floor
Irvine, California 92612
Attention: Ellis Wasson
Email: ewasson@rutan.com

 

or to any other address as may have been furnished to Indemnitee in writing by the Company.

 

19. APPLICABLE LAW AND CONSENT TO JURISDICTION. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. To the fullest extent permitted by law, the Company and Indemnitee hereby irrevocably and unconditionally: (a) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court and not in any other state or federal court in the United States of America or any court in any other country; (b) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement; (c) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court; and (d) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum, or is subject (in whole or in part) to a jury trial. To the fullest extent permitted by law, the parties hereby agree that the mailing of process and other papers in connection with any such action or proceeding in the manner provided by Section 18 or in any other manner permitted by law, shall be valid and sufficient service thereof.

 

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20. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or electronic transmission in portable document format (.pdf) shall be effective as delivery of a manually executed counterpart of this Agreement. Only one counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

 

21. MISCELLANEOUS. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

22. ADDITIONAL ACTS. If for the validation of any of the provisions in this Agreement any act, resolution, approval or other procedure is required to the fullest extent permitted by law, the Company undertakes to cause the act, resolution, approval or other procedure to be affected or adopted in a manner that will enable the Company to fulfill its obligations under this Agreement.

 

23. MAINTENANCE OF INSURANCE. The Company shall use commercially reasonable efforts to obtain and maintain in effect during the entire period for which the Company is obligated to indemnify the Indemnitee under this Agreement, one or more policies of insurance with reputable insurance companies to provide the officers/directors of the Company with coverage for losses from wrongful acts and omissions and to ensure the Company’s performance of its indemnification obligations under this Agreement. Indemnitee shall be covered by the policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director or officer under the policy or policies. In all such insurance policies, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee with the same rights and benefits as are accorded to the most favorably insured of the Company’s directors and officers.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have caused this Indemnity Agreement to be signed as of the day and year first above written.

 

  TATTOOED CHEF, INC.

 

  By:  
    Name:
    Title:

 

  INDEMNITEE

 

  By:  
    Name:
    Title:

 

 

[Signature page to Indemnity Agreement]

 

 

 

 

Exhibit 10.8

 

TATTOOED CHEF, INC. 2020 INCENTIVE AWARD PLAN

 

1. Establishment of the Plan; Effective Date; Duration.

 

(a) Establishment of the Plan; Effective Date. Tattooed Chef, Inc., a Delaware corporation (the “Company”), hereby establishes this incentive compensation plan to be known as the “Tattooed Chef, Inc. 2020 Incentive Award Plan,” as amended from time to time (the “Plan”). The Plan permits the grant of Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Other Stock-Based Awards, Other Cash-Based Awards and Dividend Equivalents. The Plan shall become effective upon the date on which the Plan is approved by the affirmative vote of the holders of a majority of the Common Shares which are present or represented and entitled to vote and voted at a meeting (the “Effective Date”). If the Plan is not so approved by the stockholders of the Company, then the Plan will be null and void in its entirety. The Plan shall remain in effect as provided in Section 1(b). Capitalized but undefined terms shall have the meaning set forth in Section 3.

 

(b) Duration of the Plan. The Plan shall commence on the Effective Date and shall remain in effect, subject to the right of the Board to amend or terminate the Plan at any time pursuant to Section 13. However, in no event may an Award be granted under the Plan on or after ten years from the Effective Date.

 

2. Purpose. The purpose of the Plan is to provide a means through which the Company and its Affiliates may attract and retain key personnel and to provide a means whereby certain directors, officers, employees, consultants and advisors (and certain prospective directors, officers, employees, consultants and advisors) of the Company and its Affiliates can acquire and maintain an equity interest in the Company, or be paid incentive compensation, which may be measured by reference to the value of Common Shares, thereby strengthening their commitment to the welfare of the Company and its Affiliates and aligning their interests with those of the Company’s shareholders.

 

3. Definitions. Certain terms used herein have the definitions given to them in the first instance in which they are used. In addition, for purposes of the Plan, the following terms are defined as set forth below:

 

(a) “Affiliate” means (i) any person or entity that directly or indirectly controls, is controlled by or is under common control with the Company and/or (ii) to the extent provided by the Committee, any person or entity in which the Company has a significant interest. The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as applied to any person or entity, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that person or entity, whether through the ownership of voting or other securities, by contract or otherwise.

 

(b) “Applicable Laws” means the requirements relating to the administration of equity incentive plans under U.S. federal and state securities, tax and other applicable laws, rules and regulations, the applicable rules of any stock exchange or quotation system on which the Common Shares are listed or quoted, and the applicable laws and rules of any foreign country or other jurisdiction where Awards are granted, as are in effect from time to time.

 

 

 

 

(c) “Award” means, individually or collectively, any Incentive Stock Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Other Stock-Based Awards, Other Cash-Based Awards, and/or Dividend Equivalents granted under the Plan.

 

(d) “Award Agreement” means a written agreement evidencing an Award, which may be electronic, that contains terms and conditions determined by the Committee, consistent with and subject to the terms and conditions of the Plan. An Award Agreement may be a unilateral agreement, if determined by the Committee.

 

(e) “Board” means the Board of Directors of the Company.

 

(f) “Cause” means, in the case of a particular Award, unless the applicable Award Agreement states otherwise, (A) the Company or an Affiliate having “cause” to terminate a Participant’s employment or service, as defined in any employment or consulting or similar agreement between the Participant and the Company or an Affiliate in effect at the time of termination, or (B) in the absence of an employment or consulting or similar agreement (or the absence of any definition of “Cause” contained therein), a Participant’s (i) conviction of, or the entry of a plea of guilty or no contest to, a felony or any other crime that causes the Company or its Affiliates public disgrace or disrepute, or materially and adversely affects the Company’s or its Affiliates’ operations or financial performance or the relationship the Company has with its customers; (ii) gross negligence or willful misconduct with respect to the Company or any of its Affiliates, including, without limitation fraud, embezzlement, theft or proven dishonesty in the course of his or her employment or other service; (iii) alcohol abuse or use of controlled drugs other than in accordance with a physician’s prescription; (iv) refusal to perform any lawful, material obligation or fulfill any duty (other than any duty or obligation of the type described in clause (vi) below) to the Company or its Affiliates (other than due to a disability, as determined by the Committee), which refusal, if curable, is not cured within 15 days after delivery of written notice thereof; (v) material breach of any agreement with or duty owed to the Company or any of its Affiliates, which breach, if curable, is not cured within 15 days after the delivery of written notice thereof; (vi) any breach of any obligation or duty to the Company or any of its Affiliates (whether arising by statute, common law or agreement) relating to confidentiality, noncompetition, nonsolicitation and/or proprietary rights; (vii) material violation of the Company’s written policies or codes of conduct, including those related to discrimination, harassment, performance of illegal or unethical practices, and ethical misconduct; or (viii) in the case of a director, repeated failure to participate in Board meetings (including meetings of any Board committee of which the director is a member) on a regular basis despite having received proper notice of meetings in advance.

 

(g) “Change in Control” shall, in the case of a particular Award, unless the applicable Award Agreement states otherwise or contains a different definition of “Change in Control,” be deemed to occur upon any of the following events:

 

(i) any “person” as that term is used in Sections 13(d) and 14(d) of the Exchange Act (other than (A) the Company or any of its Affiliates, (B) any trustee or other fiduciary holding securities under any employee benefit plan of the Company or any of its Affiliates, (C) an underwriter temporarily holding securities pursuant to an offering of those securities, or (D) an entity owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of Common Shares) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, by way of merger, consolidation, recapitalization, reorganization or otherwise, of 50% or more of the total voting power of the then outstanding voting securities of the Company;

 

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(ii) during any period of two consecutive years, individuals who, at the beginning of that period, constitute the Board and any new director of the Board whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of a majority of the directors of the Board then still in office who either were directors of the Board at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof;

 

(iii) the consummation of a merger or consolidation of the Company with any other company, other than a merger or consolidation that would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the total voting power represented by the voting securities of the Company or the surviving entity outstanding immediately after the merger or consolidation;

 

(iv) the consummation of a plan of complete liquidation of the Company or the sale or disposition by the Company of all or substantially all the Company’s assets; or

 

(v) any other event specified as a “Change in Control” in an applicable Award Agreement.

 

Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any Award (or any portion of an Award) that provides for the deferral of compensation that is subject to Code Section 409A, to the extent required to avoid the imposition of additional taxes under Code Section 409A, the transaction or event described in subsection (i), (ii), (iii), (iv), or (v) with respect to the Award (or portion thereof) shall only constitute a Change in Control for purposes of the payment timing of the Award if the transaction also constitutes a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5).

 

(h) “Code” means the Internal Revenue Code of 1986, as amended, and any successor thereto. Reference in the Plan to any section of the Code shall be deemed to include any regulations or other interpretative guidance under that section, and any amendments or successor provisions to that section, regulations or guidance.

 

(i) “Committee” means a committee of at least two people as the Board may appoint to administer the Plan or, if no such committee has been appointed by the Board, the Board.

 

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(j) “Common Shares” means shares of the Company’s common stock, par value $0.0001 per share (and any stock or other securities into which ordinary shares may be converted or into which they may be exchanged).

 

(k) “Company” means Tattooed Chef, Inc., a Delaware corporation.

 

(l) “Date of Grant” means the date on which the granting of an Award is authorized, or other date specified in the authorization.

 

(m) “Dividend Equivalent” means a right to receive the equivalent value (in cash or Common Shares) of ordinary dividends that would otherwise be paid on the Common Shares subject to an Award that is a full-value award but that have not been issued or delivered, awarded under Section 11.

 

(n) “Effective Date” has the meaning set forth in Section 1(a).

 

(o) “Eligible Director” means a person who is a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act.

 

(p) “Eligible Person” with respect to an Award denominated in Common Shares, means any (i) individual employed by the Company or an Affiliate; (ii) director of the Company or an Affiliate; (iii) consultant or advisor to the Company or an Affiliate; provided that if the Securities Act applies those persons must be eligible to be offered securities registrable on Form S-8 under the Securities Act; or (iv) prospective employees, directors, officers, consultants or advisors who have accepted offers of employment or consultancy from the Company or its Affiliates (and would satisfy the provisions of clauses (i) through (iii) above once he or she begins employment with or begins providing services to the Company or its Affiliates).

 

(q) “Exchange Act” means the U.S. Securities Exchange Act of 1934, as it may be amended from time to time, including the rules and regulations promulgated thereunder and successor provisions and rules and regulations thereto.

 

(r) “Exercise Price” has the meaning set forth in Section 7(b).

 

(s) “Fair Market Value” means, as of any date, the value of Common Shares determined as follows:

 

(i) If the Common Shares are listed on any established stock exchange or a national market system, the Fair Market Value will be the closing sales price for the Common Shares (or the closing bid, if no sales were reported) as quoted on that exchange or system on the day of determination, as reported in The Wall Street Journal or other source the Committee deems reliable;

 

(ii) If the Common Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value will be the mean between the high bid and low asked prices for the Common Shares on the day of determination, as reported in The Wall Street Journal or other source the Committee deems reliable; or

 

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(iii) In the absence of an established market for the Common Shares, the Fair Market Value will be determined in good faith by the Committee.

 

(iv) Notwithstanding the foregoing, the determination of Fair Market Value in all cases shall be in accordance with the requirements set forth under Code Section 409A to the extent necessary for an Award to comply with, or be exempt from, Code Section 409A.

 

(t) “Good Reason” means, unless the applicable Award Agreement states otherwise: (a) if a Participant is a party to an employment or service agreement with the Company or its Affiliates and the agreement provides for a definition of Good Reason, the definition contained therein; or (b) if no agreement exists or if the agreement does not define Good Reason, the occurrence of one or more of the following without the Participant’s express written consent, which circumstances are not remedied by the Company within 30 days of its receipt of a written notice from the Participant describing the applicable circumstances (which notice must be provided by the Participant within 90 days of the Participant’s knowledge of the applicable circumstances): (i) any material, adverse change in the Participant’s duties, responsibilities, authority, title, status or reporting structure; (ii) a material reduction in the Participant’s base salary or bonus opportunity; or (iii) a geographical relocation of the Participant’s principal office location by more than 50 miles.

 

(u) “Immediate Family Members” has the meaning set forth in Section 14(b)(ii).

 

(v) “Incentive Stock Option” means an Option that is designated by the Committee as an incentive stock option as described in Code Section 422 and otherwise meets the requirements set forth in the Plan.

 

(w) “Indemnifiable Person” has the meaning set forth in Section 4(e).

 

(x) Mature Shares” means Common Shares owned by a Participant that are not subject to any pledge or security interest and that have been either previously acquired by the Participant on the open market or meet any other requirements, if any, the Committee determines are necessary in order to avoid an accounting earnings charge on account of the use of those shares to pay the Exercise Price or satisfy a tax or deduction obligation of the Participant.

 

(y) “Nonqualified Stock Option” means an Option that is not designated by the Committee as an Incentive Stock Option.

 

(z) “Option” means an Award granted under Section 7.

 

(aa) “Option Period” has the meaning set forth in Section 7(c).

 

(bb) “Other Cash-Based Award” means a cash Award granted to a Participant under Section 10, including cash awarded as a bonus or upon the attainment of any performance goals or otherwise as permitted under the Plan.

 

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(cc) “Other Stock-Based Award” means an equity-based or equity-related Award, other than an Option, SAR, Restricted Stock, Restricted Stock Unit or Dividend Equivalent, granted in accordance with the terms and conditions set forth under Section 10 (including upon the attainment of any performance goals or otherwise as permitted under the Plan).

 

(dd) “Participant” means an Eligible Person who has been selected by the Committee to participate in the Plan and to receive an Award pursuant to Section 6.

 

(ee) “Permitted Transferee” has the meaning set forth in Section 14(b)(ii).

 

(ff) “Person” means any individual, entity or group within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act.

 

(gg) “Plan” means this Tattooed Chef, Inc. 2020 Incentive Award Plan, as amended from time to time.

 

(hh) “Restricted Period” means the period of time determined by the Committee during which an Award is subject to restrictions or, as applicable, the period of time within which performance is measured for purposes of determining whether an Award has been earned.

 

(ii) “Restricted Stock Unit” means an unfunded and unsecured promise to deliver Common Shares, cash, other securities or other property, subject to certain performance or time-based restrictions (including, without limitation, a requirement that the Participant remain continuously employed, provide continuous services for a specified period of time, or attain specified performance objectives), granted under Section 9.

 

(jj) “Restricted Stock” means Common Shares, subject to certain specified performance or time-based restrictions (including, without limitation, a requirement that the Participant remain continuously employed, provide continuous services for a specified period of time, or attain specified performance objectives), granted under Section 9.

 

(kk) “SAR Period” has the meaning set forth in Section 8(b).

 

(ll) “Securities Act” means the Securities Act of 1933, as amended, and any successor thereto. Reference in the Plan to any section of the Securities Act shall be deemed to include any rules, regulations or other interpretative guidance under that section, and any amendments or successor provisions to those section, rules, regulations or guidance.

 

(mm) “Stock Appreciation Right” or SARmeans an Award granted under Section 8.

 

(nn) “Strike Price” means, except as otherwise provided by the Committee in the case of Substitute Awards, (i) in the case of a SAR granted in tandem with an Option, the Exercise Price of the related Option, or (ii) in the case of a SAR granted independent of an Option, the Fair Market Value on the Date of Grant.

 

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(oo) “Subsidiary” means, with respect to any specified Person:

 

(i) any corporation, association or other business entity (other than a partnership) of which more than 50% of the total voting power of shares or other equity interests (without regard to the occurrence of any contingency and after giving effect to any voting agreement, stockholders’ agreement, operating agreement, or other agreement that effectively transfers voting power) is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

 

(ii) any partnership (or any comparable foreign entity) (a) the sole general partner (or functional equivalent thereof) or the managing general partner of which is that Person or Subsidiary of that Person or (b) the only general partners (or functional equivalents thereof) of which are that Person or one or more Subsidiaries of that Person (or any combination thereof).

 

(pp) “Substitute Award” has the meaning set forth in Section 5(e).

 

4. Administration.

 

(a) The Committee shall administer the Plan. To the extent required to comply with the provisions of Rule 16b-3 promulgated under the Exchange Act (if the Board is not acting as the Committee under the Plan), it is intended that each member of the Committee shall, at the time he or she takes any action with respect to an Award under the Plan, be an Eligible Director. However, the fact that a Committee member fails to qualify as an Eligible Director shall not invalidate any Award granted by the Committee that is otherwise validly granted under the Plan.

 

(b) Subject to the provisions of the Plan and Applicable Laws, the Committee shall have the sole and plenary authority, in addition to other express powers and authorizations conferred on the Committee by the Plan, to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of Common Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award (including any performance goals, criteria, and/or periods applicable to Awards); (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Common Shares, other securities, other Awards or other property, or canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances the delivery of cash, Common Shares, other securities, other Awards or other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the Participant or of the Committee; (vii) interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Plan and any instrument or agreement relating to, or Award granted under, the Plan, including any changes required to comply with Applicable Laws (including any amendments to the terms and conditions of outstanding Awards in response to changes in Applicable Laws); (viii) establish, amend, suspend, or waive any rules and regulations and appoint any agents the Committee deems appropriate for the proper administration of the Plan; (ix) accelerate the vesting or exercisability of, payment for or lapse of restrictions on, Awards; and (x) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan.

 

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(c) The Committee may delegate to one or more officers of the Company or any Affiliate the authority to act on behalf of the Committee with respect to any matter, right, obligation, or election that is the responsibility of or that is allocated to the Committee herein, and that may be so delegated as a matter of law, except for grants of Awards to persons subject to Section 16 of the Exchange Act.

 

(d) Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award or any documents evidencing Awards granted pursuant to the Plan shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all persons or entities, including, without limitation, the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, and any shareholder of the Company.

 

(e) No member of the Board, the Committee, delegate of the Committee or any employee or agent of the Company (each such person, an “Indemnifiable Person”) shall be liable for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Award hereunder. Each Indemnifiable Person shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense (including attorneys’ fees) that may be imposed upon or incurred by the Indemnifiable Person in connection with or resulting from any action, suit or proceeding to which the Indemnifiable Person may be a party or in which the Indemnifiable Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement and against and from any and all amounts paid by the Indemnifiable Person with the Company’s approval, in settlement thereof, or paid by the Indemnifiable Person in satisfaction of any judgment in any such action, suit or proceeding against the Indemnifiable Person, provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and once the Company gives notice of its intent to assume the defense, the Company shall have sole control over the defense with counsel of the Company’s choice. The foregoing right of indemnification shall not be available to an Indemnifiable Person to the extent that a final judgment or other final adjudication (in either case not subject to further appeal) binding upon the Indemnifiable Person determines that the acts or omissions of the Indemnifiable Person giving rise to the indemnification claim resulted from the Indemnifiable Person’s bad faith, fraud or willful criminal act or omission or that the right of indemnification is otherwise prohibited by law or by the Company’s Certificate of Incorporation or Bylaws. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which the Indemnifiable Persons may be entitled under the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any other power that the Company may have to indemnify the Indemnifiable Persons or hold them harmless.

 

(f) Notwithstanding anything to the contrary contained in the Plan, the Board may, in its sole discretion, at any time and from time to time, grant Awards and administer the Plan with respect to those Awards. In any such case, the Board shall have all the authority granted to the Committee under the Plan.

 

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5. Grant of Awards; Shares Subject to the Plan; Limitations.

 

(a) The Committee may, from time to time, grant Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Other Stock-Based Awards, Other Cash-Based Awards, and/or Dividend Equivalents to one or more Eligible Persons.

 

(b) Subject to Section 12, Awards granted under the Plan shall be subject to the following limitations: (i) the Committee is authorized to deliver under the Plan an aggregate of 5,200,000 Common Shares; and (ii) the maximum number of Common Shares that may be granted under the Plan during any single fiscal year to any Participant who is a non-employee director, when taken together with any cash fees paid to the non-employee director during that year in respect of his or her service as a non-employee director (including service as a member or chair of any committee of the Board), shall not exceed $100,000 in total value (calculating the value of any such Awards based on the grant date fair value of the Awards for financial reporting purposes); provided that the non-employee directors who are considered independent (under the rules of The Nasdaq Stock Market or other securities exchange on which the Common Shares are traded) may make exceptions to this limit for a non-executive chair of the Board, if any, in which case the non-employee Director receiving the additional compensation may not participate in the decision to award the compensation. Notwithstanding the automatic annual increase set forth in (i) above, the Board may act prior to January 1st of a given year to provide that there will be no increase in the share reserve for that year or that the increase in the share reserve for that year will be a lesser number of Common Shares than would otherwise occur pursuant to the stipulated percentage.

 

(c) If (i) any Option or other Award granted hereunder is exercised through the tendering of Common Shares (either actually or by attestation) or by the withholding of Common Shares by the Company, or (ii) tax or deduction liabilities arising from the Option or other Award are satisfied by the tendering of Common Shares (either actually or by attestation) or by the withholding of Common Shares by the Company, then in each case the Common Shares so tendered or withheld shall be added to the Common Shares available for grant under the Plan on a one-for-one basis. Shares underlying Awards under this Plan that are forfeited, cancelled, expire unexercised, or are settled in cash are available again for Awards under the Plan.

 

(d) Common Shares delivered by the Company in settlement of Awards may be authorized and unissued shares, shares held in the treasury of the Company, shares purchased on the open market or by private purchase, or a combination of the foregoing.

 

(e) Awards may, in the sole discretion of the Committee, be granted under the Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity acquired by the Company or with which the Company combines (“Substitute Awards”). The number of Common Shares underlying any Substitute Awards shall not be counted against the aggregate number of Common Shares available for Awards under the Plan.

 

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6. Eligibility. Participation shall be limited to Eligible Persons who have entered into an Award Agreement or who have received written notification from the Committee, or from a person designated by the Committee, that they have been selected to participate in the Plan.

 

7. Options.

 

(a) Generally. Each Option granted under the Plan shall be evidenced by an Award Agreement (whether in paper or electronic medium (including email or the posting on a web site maintained by the Company or a third party under contract with the Company)). Each Option so granted shall be subject to the conditions set forth in this Section 7, and to any other conditions not inconsistent with the Plan reflected in the applicable Award Agreement. All Options granted under the Plan shall be Nonqualified Stock Options unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option. The maximum aggregate number of Common Shares that may be issued through the exercise of Incentive Stock Options granted under the Plan is 5,200,000 Common Shares. Incentive Stock Options shall be granted only to Eligible Persons who are employees of the Company and its Affiliates, and no Incentive Stock Option shall be granted to any Eligible Person who is ineligible to receive an Incentive Stock Option under the Code. No Option shall be treated as an Incentive Stock Option unless the Plan has been approved by the stockholders of the Company in a manner intended to comply with the stockholder approval requirements of Code Section 422(b)(1); provided that any Option intended to be an Incentive Stock Option shall not fail to be effective solely on account of a failure to obtain approval, but rather the Option shall be treated as a Nonqualified Stock Option unless and until approval is obtained. In the case of an Incentive Stock Option, the terms and conditions of the grant shall be subject to and comply with any rules prescribed by Code Section 422. If for any reason an Option intended to be an Incentive Stock Option (or any portion thereof) does not qualify as an Incentive Stock Option, then, to the extent of the nonqualification, the Option or portion thereof shall be regarded as a Nonqualified Stock Option appropriately granted under the Plan.

 

(b) Exercise Price. Except with respect to Substitute Awards, the exercise price (“Exercise Price”) per Common Share for each Option shall not be less than 100% of the Fair Market Value of that share determined as of the Date of Grant; provided, however, that in the case of an Incentive Stock Option granted to an employee who, at the time of the grant of the Option, owns shares representing more than 10% of the total combined voting power of all classes of shares of the Company or any related corporation (as determined in accordance with Treasury Regulation Section 1.422-2(f)), the Exercise Price per share shall not be less than 110% of the Fair Market Value per share on the Date of Grant and provided further, that, notwithstanding any provision herein to the contrary, the Exercise Price shall not be less than the par value per Common Share.

 

(c) Vesting and Expiration. Options shall vest and become exercisable in the manner (including any terms and conditions) and on the date or dates determined by the Committee (including, if applicable, the attainment of any performance goals, as determined by the Committee in the applicable Award Agreement) and shall expire after that period, not to exceed ten years, as may be determined by the Committee (the “Option Period”); provided, however, that the Option Period shall not exceed five years from the Date of Grant in the case of an Incentive Stock Option granted to a Participant who on the Date of Grant owns shares representing more than 10% of the total combined voting power of all classes of shares of the Company or any related corporation (as determined in accordance with Treasury Regulation Section 1.422- 2(f)); provided, further, that notwithstanding any vesting dates set by the Committee, the Committee may, in its sole discretion, accelerate the exercisability of any Option, which acceleration shall not affect the terms and conditions of the Option other than with respect to exercisability. In the event of any termination of employment or service with the Company and its Affiliates thereof of a Participant who has been granted one or more Options, the Options shall be exercisable at the time or times and subject to the terms and conditions set forth in the Award Agreement. If the Option would expire at a time when the exercise of the Option would violate applicable securities laws, the expiration date applicable to the Option will be automatically extended to a date that is 30 calendar days following the date the exercise would no longer violate applicable securities laws (so long as the extension does not violate Code Section 409A); provided, that in no event shall the expiration date be extended beyond the expiration of the Option Period.

 

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(d) Method of Exercise and Form of Payment. No Common Shares shall be delivered pursuant to any exercise of an Option until payment in full of the Exercise Price therefor is received by the Company and the Participant has paid to the Company an amount equal to any taxes required to be withheld or paid. Options that have become exercisable may be exercised by delivery of written or electronic notice of exercise to the Company in accordance with the terms of the applicable Award Agreement and accompanied by payment of the Exercise Price. The Exercise Price shall be payable (i) in cash, check, cash equivalent and/or Common Shares valued at the Fair Market Value at the time the Option is exercised (including, pursuant to procedures approved by the Committee, by means of attestation of ownership of a sufficient number of Common Shares in lieu of actual delivery of the shares to the Company); provided that the Common Shares are not subject to any pledge or other security interest and are Mature Shares and; (ii) by any other method the Committee permits in accordance with Applicable Laws, in its sole discretion, including without limitation: (A) in other property having a Fair Market Value on the date of exercise equal to the Exercise Price or (B) if there is a public market for the Common Shares at that time, by means of a broker-assisted “cashless exercise” pursuant to which the Company is delivered a copy of irrevocable instructions to a stockbroker to sell the Common Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the Exercise Price or (C) by a “net exercise” method whereby the Company withholds from the delivery of the Common Shares for which the Option was exercised that number of Common Shares having a Fair Market Value equal to the aggregate Exercise Price for the Common Shares for which the Option was exercised. No fractional Common Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities or other property shall be paid or transferred in lieu of any fractional Common Shares, or whether the fractional Common Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.

 

(e) Notification upon Disqualifying Disposition of an Incentive Stock Option. Each Participant awarded an Incentive Stock Option under the Plan shall notify the Company in writing immediately after the date he or she makes a disqualifying disposition of any Common Shares acquired pursuant to the exercise of the Incentive Stock Option. A disqualifying disposition is any disposition (including, without limitation, any sale) of the Common Shares before the later of (A) two years after the Date of Grant of the Incentive Stock Option or (B) one year after the date of exercise of the Incentive Stock Option. The Company may, if determined by the Committee and in accordance with procedures established by the Committee, retain possession of any Common Shares acquired pursuant to the exercise of an Incentive Stock Option as agent for the applicable Participant until the end of the period described in the preceding sentence.

 

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(f) Compliance With Laws, etc. Notwithstanding the foregoing, in no event shall a Participant be permitted to exercise an Option in a manner that the Committee determines would violate the Sarbanes-Oxley Act of 2002, if applicable, or any other Applicable Laws or the applicable rules and regulations of the Securities and Exchange Commission or the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or traded.

 

8. Stock Appreciation Rights.

 

(a) Generally. Each SAR granted under the Plan shall be evidenced by an Award Agreement (whether in paper or electronic medium (including email or the posting on a web site maintained by the Company or a third party under contract with the Company)). Each SAR so granted shall be subject to the conditions set forth in this Section 8, and to any other conditions not inconsistent with the Plan reflected in the applicable Award Agreement. Any Option granted under the Plan may include tandem SARs. The Committee also may award SARs to Eligible Persons independent of any Option.

 

(b) Strike Price. The Strike Price per Common Share for each SAR shall not be less than 100% of the Fair Market Value of the share determined as of the Date of Grant.

 

(c) Vesting and Expiration. A SAR granted in connection with an Option shall become exercisable and shall expire according to the same vesting schedule and expiration provisions as the corresponding Option (including the terms and conditions set forth in the applicable Award Agreement). A SAR granted independent of an Option shall vest and become exercisable and shall expire in the manner (including any terms and conditions) and on the date or dates determined by the Committee (including, if applicable, the attainment of any performance goals, as shall be determined by the Committee in the applicable Award Agreement) and shall expire after that period, not to exceed ten years, as may be determined by the Committee (the “SAR Period”); provided, however, that notwithstanding any vesting dates set by the Committee, the Committee may, in its sole discretion, accelerate the exercisability of any SAR, which acceleration shall not affect the terms and conditions of the SAR other than with respect to exercisability. In the event of any termination of employment or service with the Company and its Affiliates thereof of a Participant who has been granted one or more SAR, the SARs shall be exercisable at the time or times and subject to the terms and conditions as set forth in the Award Agreement (or in the underlying Option Award Agreement, as may be applicable). If the SAR would expire at a time when the exercise of the SAR would violate applicable securities laws, the expiration date applicable to the SAR will be automatically extended to a date that is 30 calendar days following the date the exercise would no longer violate applicable securities laws (so long as the extension shall not violate Code Section 409A); provided, that in no event shall the expiration date be extended beyond the expiration of the SAR Period.

 

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(d) Method of Exercise. SARs that have become exercisable may be exercised by delivery of written or electronic notice of exercise to the Company in accordance with the terms of the applicable Award Agreement, specifying the number of SARs to be exercised and the date on which the SARs were awarded. Notwithstanding the foregoing, if on the last day of the Option Period (or in the case of a SAR independent of an option, the SAR Period), the Fair Market Value exceeds the Strike Price, the Participant has not exercised the SAR or the corresponding Option (if applicable), and neither the SAR nor the corresponding Option (if applicable) has expired, the SAR shall be deemed to have been exercised by the Participant on the last day of the Option Period and the Company shall make the appropriate payment therefor.

 

(e) Payment. Upon the exercise of a SAR, the Company shall pay to the Participant an amount equal to the number of shares subject to the SAR that are being exercised multiplied by the excess, if any, of the Fair Market Value of one Common Share on the exercise date over the Strike Price, less an amount equal to any taxes required to be withheld or paid. The Company shall pay this amount in cash, in Common Shares valued at Fair Market Value, or any combination thereof, as determined by the Committee. No fractional Common Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities or other property shall be paid or transferred in lieu of any fractional Common Shares, or whether the fractional Common Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.

 

9. Restricted Stock and Restricted Stock Units.

 

(a) Generally. Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by an Award Agreement (whether in paper or electronic medium (including email or the posting on a web site maintained by the Company or a third party under contract with the Company)). Each grant shall be subject to the conditions set forth in this Section 9, and to any other terms and conditions not inconsistent with the Plan reflected by the Committee in the applicable Award Agreement (including the performance goals, if any, upon whose attainment the Restricted Period shall lapse in part or full).

 

(b) Restricted Accounts; Escrow or Similar Arrangement. Upon the grant of Restricted Stock, a book entry in a restricted account shall be established in the Participant’s name at the Company’s transfer agent and, if the Committee determines that the Restricted Stock shall be held by the Company or in escrow rather than held in the restricted account pending the release of the applicable restrictions, the Committee may require the Participant to additionally execute and deliver to the Company (i) an escrow agreement satisfactory to the Committee, if applicable, and (ii) the appropriate share power (endorsed in blank) with respect to the Restricted Stock covered by the agreement. If a Participant shall fail to execute an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and blank share power within the amount of time specified by the Committee, the Award shall be null and void. Subject to the restrictions set forth in this Section 9 and the applicable Award Agreement, the Participant generally shall have the rights and privileges of a stockholder as to the Restricted Stock, including without limitation the right to vote the Restricted Stock and the right to receive dividends, if applicable. To the extent shares of Restricted Stock are forfeited, any share certificates issued to the Participant evidencing the shares shall be returned to the Company, and all rights of the Participant to the shares and as a stockholder with respect thereto shall terminate without further obligation on the part of the Company.

 

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(c) Vesting. Unless otherwise provided by the Committee in an Award Agreement, the unvested portion of Restricted Stock and Restricted Stock Units shall terminate and be forfeited upon termination of employment or service of the Participant granted the applicable Award.

 

(d) Delivery of Restricted Stock and Settlement of Restricted Stock Units.

 

(i) Upon the expiration of the Restricted Period with respect to any shares of Restricted Stock, the restrictions set forth in the applicable Award Agreement shall be of no further force or effect with respect to those shares, except as set forth in the applicable Award Agreement. If an escrow arrangement is used, upon expiration, the Company shall deliver to the Participant, or his or her beneficiary, without charge, the share certificate evidencing the shares of Restricted Stock that have not then been forfeited and with respect to which the Restricted Period has expired (rounded down to the nearest full share). Dividends, if any, that may have been withheld by the Committee and attributable to any particular share of Restricted Stock shall be distributed to the Committee and attributable to any particular share of Restricted Stock shall be distributed to the Participant in cash or, at the sole discretion of the Committee, in Common Shares having a Fair Market Value equal to the amount of the dividends, upon the release of restrictions on the share and, if the share is forfeited, the Participant shall have no right to the dividends (except as otherwise set forth by the Committee in the applicable Award Agreement).

 

(ii) Unless otherwise provided by the Committee in an Award Agreement, upon the expiration of the Restricted Period with respect to any outstanding Restricted Stock Units, the Company shall deliver to the Participant, or his or her beneficiary, without charge, one Common Share for each outstanding Restricted Stock Unit; provided, however, that the Committee may, in its sole discretion, elect to (i) pay cash or part cash and part Common Share in lieu of delivering only Common Shares in respect of the Restricted Stock Units or (ii) defer the delivery of Common Shares (or cash or part Common Shares and part cash, as the case may be) beyond the expiration of the Restricted Period if delivery would result in a violation of Applicable Laws until it is no longer the case. If a cash payment is made in lieu of delivering Common Shares, the amount of the payment shall be equal to the Fair Market Value of the Common Shares as of the date on which the Restricted Period lapsed with respect to the Restricted Stock Units, less an amount equal to any taxes required to be withheld or paid.

 

10. Other Stock-Based Awards and Other Cash-Based Awards.

 

(a) Other Stock-Based Awards. The Committee may grant types of equity-based or equity-related Awards not otherwise described by the terms of the Plan (including the grant or offer for sale of unrestricted Common Shares), in amounts and subject to terms and conditions, determined by the Committee (including, if applicable, the attainment of any performance goals, as set forth in the applicable Award Agreement). Other Stock-Based Awards may involve the transfer of actual Common Shares to Participants, or payment in cash or otherwise of amounts based on the value of Common Shares. The terms and conditions of the Awards shall be consistent with the Plan and set forth in the Award Agreement and need not be uniform among all the Awards or all Participants receiving the Awards.

 

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(b) Other Cash-Based Awards. The Committee may grant a cash Award granted to a Participant not otherwise described by the terms of the Plan, including cash awarded as a bonus or upon the attainment of any performance goals or otherwise as permitted under the Plan.

 

(c) Value of Awards. Each Other Stock-Based Award shall be expressed in terms of Common Shares or units based on Common Shares, as determined by the Committee, and each Other Cash-Based Award shall be shall be expressed in terms of cash, as determined by the Committee. The Committee may establish performance goals and/or criteria in its discretion, and any such performance goals and/or criteria shall be set forth in the applicable Award Agreement. If the Committee exercises its discretion to establish performance goals and/or criteria, the number and/or value of Other Stock-Based Awards or Other Cash-Based Awards that will be paid out to the Participant will depend on the extent to which the performance goals and/or criteria are met.

 

(d) Payment of Awards. Payment, if any, with respect to an Other Stock-Based Award or Other Cash-Based Award shall be made in accordance with the terms of the Award, as set forth in the Award Agreement, in cash, Common Shares or a combination of cash and Common Shares, as the Committee determines.

 

(e) Vesting. The Committee shall determine the extent to which the Participant shall have the right to receive Other Stock-Based Awards or Other Cash-Based Awards following the Participant’s termination of employment or service (including by reason of the Participant’s death, disability (as determined by the Committee), or termination for or without Cause or for or without Good Reason). These provisions shall be determined in the sole discretion of the Committee and these provisions may be included in the applicable Award Agreement, but need not be uniform among all Other Stock-Based Awards or Other Cash-Based Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for the termination of employment or service.

 

11. Dividend Equivalents. No adjustment shall be made in the Common Shares issuable or taken into account under Awards on account of cash dividends that may be paid or other rights that may be issued to the holders of Common Shares prior to issuance of the Common Shares under the Award. The Committee may grant Dividend Equivalents based on the dividends declared on Common Shares that are subject to any Award (other than an Option or Stock Appreciation Right). Any Award of Dividend Equivalents may be credited as of the dividend payment dates, during the period between the Date of Grant of the Award and the date the Award becomes payable or terminates or expires, as determined by the Committee; however, Dividend Equivalents shall not be payable unless and until the Award becomes payable, and shall be subject to forfeiture to the same extent as the underlying Award. Dividend Equivalents may be subject to any additional limitations and/or restrictions determined by the Committee. Dividend Equivalents shall be payable in cash, Common Shares or converted to full-value Awards, calculated based on a formula determined by the Committee.

 

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12. Changes in Capital Structure and Similar Events. In the event of (i) any dividend (other than ordinary cash dividends) or other distribution (whether in the form of cash, Common Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, amalgamation, consolidation, spin-off, split-up, split-off, combination, repurchase or exchange of Common Shares or other securities of the Company, issuance of warrants or other rights to acquire Common Shares or other securities of the Company, or other similar corporate transaction or event (including, without limitation, a Change in Control) that affects the Common Shares, or (ii) unusual or infrequently occurring events (including, without limitation, a Change in Control) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange or inter-dealer quotation system, accounting principles or law, such that in either case an adjustment is determined by the Committee in its sole discretion to be necessary or appropriate, then the Committee shall make the adjustments it deems equitable, including without limitation any or all of the following:

 

(a) adjusting any or all of (A) the number of Common Shares or other securities of the Company (or number and kind of other securities or other property) that may be delivered in respect of Awards or with respect to which Awards may be granted under the Plan (including, without limitation, adjusting any or all of the limitations under Section 5) and (B) the terms of any outstanding Award, including, without limitation, (1) the number of Common Shares or other securities of the Company (or number and kind of other securities or other property) subject to outstanding Awards or to which outstanding Awards relate, (2) the Exercise Price or Strike Price with respect to any Award or (3) any applicable performance measures (including, without limitation, any performance goals and/or criteria);

 

(b) providing for a substitution or assumption of Awards in a manner that substantially preserves the applicable terms of the Awards;

 

(c) accelerating the exercisability or vesting of, lapse of restrictions on, or termination of, Awards or providing for a period of time for exercise prior to the occurrence of the event;

 

(d) modifying the terms of Awards to add events, conditions or circumstances (including termination of employment within a specified period after a Change in Control) upon which the exercisability or vesting of or lapse of restrictions thereon will accelerate;

 

(e) deeming any performance measures (including, without limitation, any performance goals and/or criteria) satisfied at target, maximum or actual performance through closing or any other level determined by the Committee in its sole discretion, or providing for the performance measures to continue (as is or as adjusted by the Committee) after closing;

 

(f) providing that for a period prior to the Change in Control determined by the Committee in its sole discretion, any Options or SARs that would not otherwise become exercisable prior to the Change in Control will be exercisable as to all Common Shares subject thereto (but the exercise will be contingent upon and subject to the occurrence of the Change in Control and if the Change in Control does not take place after giving the notice for any reason whatsoever, the exercise will be null and void) and that any Options or SARs not exercised prior to the consummation of the Change in Control will terminate and be of no further force and effect as of the consummation of the Change in Control; and

 

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(g) canceling any one or more outstanding Awards and causing to be paid to the holders thereof, in cash, Common Shares, other securities or other property, or any combination thereof, the value of the Awards, if any, as determined by the Committee (which if applicable may be based upon the price per Common Share received or to be received by other shareholders of the Company in that event), including without limitation, in the case of an outstanding Option or SAR, a cash payment in an amount equal to the excess, if any, of the Fair Market Value (as of a date specified by the Committee) of the Common Shares subject to the Option or SAR over the aggregate Exercise Price or Strike Price of the Option or SAR, respectively (it being understood that, in that event, any Option or SAR having a per share Exercise Price or Strike Price equal to, or in excess of, the Fair Market Value of a Common Share subject thereto may be canceled and terminated without any payment or consideration therefor); provided, however, that in the case of any “equity restructuring” (within the meaning of the Financial Accounting Standards Board Accounting Standards Codification Topic 718), the Committee shall make an equitable or proportionate adjustment to outstanding Awards to reflect the equity restructuring. The Company shall give each Participant notice of an adjustment hereunder and, upon notice, the adjustment shall be conclusive and binding for all purposes.

 

13. Amendments and Termination.

 

(a) Amendment and Termination of the Plan. The Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion thereof at any time; provided that (i) no amendment to Section 13(b) (to the extent required by the proviso in Section 13(b)) shall be made without shareholder approval and (ii) no amendment, alteration, suspension, discontinuation or termination shall be made without stockholder approval if the approval is necessary to comply with any tax or regulatory requirement applicable to the Plan (including, without limitation, as necessary to comply with any rules or requirements of any securities exchange or inter-dealer quotation system on which the Common Shares may be listed or quoted); provided, further, that any amendment, alteration, suspension, discontinuance or termination that would materially and adversely affect the rights of any Participant or any holder or beneficiary of any Award theretofore granted shall not to that extent be effective as to the affected Participant, holder or beneficiary without the consent of the affected Participant, holder or beneficiary.

 

(b) Amendment of Award Agreements. The Committee may, to the extent consistent with the terms of any applicable Award Agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted or the associated Award Agreement, prospectively or retroactively; provided that the waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any Participant or any holder or beneficiary of any Award with respect to any Award theretofore granted shall not to that extent be effective without the consent of the affected Participant, holder or beneficiary; provided, further, that without stockholder approval, except as otherwise permitted under Section 12, (i) no amendment or modification may reduce the Exercise Price of any Option or the Strike Price of any SAR, (ii) the Committee may not cancel any outstanding Option or SAR where the Fair Market Value of the Common Shares underlying the Option or SAR is less than its Exercise Price or Strike Price, as applicable, and replace it with a new Option or SAR, another Award or cash and (iii) the Committee may not take any other action that is considered a “repricing” for purposes of the stockholder approval rules of the applicable securities exchange or inter-dealer quotation system on which the Common Shares are listed or quoted.

 

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14. General.

 

(a) Award Agreements. Each Award under the Plan shall be evidenced by an Award Agreement, which shall be delivered to the Participant (whether in paper or electronic medium (including email or the posting on a web site maintained by the Company or a third party under contract with the Company)) and shall specify the terms and conditions of the Award and any rules applicable thereto, including without limitation, the effect on the Award of the death, disability or termination of employment or service of a Participant, or of any other events determined by the Committee. Except as the Plan otherwise provides, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award to a Participant need not be identical, and the Committee need not treat Participants or Awards (or portions thereof) uniformly.

 

(b) Nontransferability.

 

(i) Each Award shall be exercisable only by a Participant during the Participant’s lifetime, or, if permissible under Applicable Laws, by the Participant’s legal guardian or representative. No Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant other than by will or by the laws of descent and distribution and the purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or an Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.

 

(ii) Notwithstanding the foregoing, the Committee may, in its sole discretion, permit Awards (other than Incentive Stock Options) to be transferred by a Participant, without consideration, subject to any rules the Committee adopts consistent with any applicable Award Agreement to preserve the purposes of the Plan, to: (A) any person who is a “family member” of the Participant, as that term is used in the instructions to Form S-8 under the Securities Act (collectively, the “Immediate Family Members”); (B) a trust solely for the benefit of the Participant and his or her Immediate Family Members; (C) a partnership or limited liability company whose only partners or stockholders are the Participant and his or her Immediate Family Members; or (D) any other transferee as may be approved either (I) by the Board or the Committee in its sole discretion, or (II) as provided in the applicable Award Agreement. (each transferee described in clauses (A), (B), (C) and (D) above is hereinafter referred to as a “Permitted Transferee”); provided that the Participant gives the Committee advance written notice describing the terms and conditions of the proposed transfer and the Committee notifies the Participant in writing that the transfer would comply with the requirements of the Plan.

 

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(iii) The terms of any Award transferred in accordance with the immediately preceding sentence shall apply to the Permitted Transferee and any reference in the Plan, or in any applicable Award Agreement, to a Participant shall be deemed to refer to the Permitted Transferee, except that (A) Permitted Transferees shall not be entitled to transfer any Award, other than by will or the laws of descent and distribution; (B) Permitted Transferees shall not be entitled to exercise any transferred Option unless there shall be in effect a registration statement on an appropriate form covering the Common Shares to be acquired pursuant to the exercise of the Option if the Committee determines, consistent with any applicable Award Agreement, that such a registration statement is necessary or appropriate; (C) the Committee or the Company shall not be required to provide any notice to a Permitted Transferee, whether or not the notice is or would otherwise have been required to be given to the Participant under the Plan or otherwise; and (D) the consequences of the termination of the Participant’s employment by, or services to, the Company or an Affiliate under the terms of the Plan and the applicable Award Agreement shall continue to be applied with respect to the Participant, including, without limitation, that an Option shall be exercisable by the Permitted Transferee only to the extent, and for the periods, specified in the Plan and the applicable Award Agreement.

 

(c) Tax Withholding and Deductions.

 

(i) A Participant shall be required to pay to the Company or any Affiliate, and the Company or any Affiliate shall have the right and is hereby authorized to deduct and withhold, from any cash, Common Shares, other securities or other property deliverable under any Award or from any compensation or other amounts owing to a Participant, the amount (in cash, Common Shares, other securities or other property) of any required taxes (up to the maximum statutory rate under Applicable Laws as in effect from time to time as determined by the Committee) and deduction in respect of an Award, its grant, vesting or exercise, or any payment or transfer under an Award or under the Plan and to take any other action necessary in the opinion of the Committee or the Company to satisfy all obligations for the payment of the taxes.

 

(ii) Without limiting the generality of clause (i) above, the Committee may, in its sole discretion, permit a Participant to satisfy, in whole or in part, the foregoing tax and deduction liability by (A) the delivery of Common Shares (which are not subject to any pledge or other security interest and are Mature Shares, except as otherwise determined by the Committee) owned by the Participant having a Fair Market Value equal to the liability or (B) having the Company withhold from the number of Common Shares otherwise issuable or deliverable pursuant to the exercise or settlement of the Award a number of shares with a Fair Market Value equal to the liability.

 

(d) No Claim to Awards; No Rights to Continued Employment; Waiver. No employee of the Company or an Affiliate, or other person, shall have any claim or right to be granted an Award under the Plan or, having been selected for the grant of an Award, to be selected for a grant of any other Award. There is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’s determinations and interpretations with respect thereto need not be the same with respect to each Participant and may be made selectively among Participants, whether or not the Participants are similarly situated. Neither the Plan nor any action taken hereunder shall be construed as giving any Participant any right to be retained in the employ or service of the Company or an Affiliate, nor shall it be construed as giving any Participant any rights to continued service on the Board. The Company or any of its Affiliates may at any time dismiss a Participant from employment or discontinue any consulting relationship, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or any Award Agreement. By accepting an Award under the Plan, a Participant shall thereby be deemed to have waived any claim to continued exercise or vesting of an Award or to damages or severance entitlement related to non-continuation of the Award beyond the period provided under the Plan or any Award Agreement, notwithstanding any provision to the contrary in any written employment contract or other agreement between the Company and its Affiliates and the Participant, whether any such agreement is executed before, on or after the Date of Grant.

 

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(e) International Participants. With respect to Participants who reside or work outside of the United States of America, the Committee may in its sole discretion amend the terms of the Plan or outstanding Awards with respect to those Participants in order to conform the terms with the requirements of local law or to obtain more favorable tax or other treatment for a Participant, the Company or its Affiliates.

 

(f) Designation and Change of Beneficiary. Each Participant may file with the Committee a written designation of one or more persons as the beneficiary(ies) who shall be entitled to receive the amounts payable with respect to an Award, if any, due under the Plan upon his or her death. A Participant may, from time to time, revoke or change his or her beneficiary designation without the consent of any prior beneficiary by filing a new designation with the Committee. The last designation received by the Committee shall be controlling; provided, however, that no designation, or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant’s death, and in no event shall it be effective as of a date prior to receipt. If no beneficiary designation is filed by a Participant, the beneficiary shall be deemed to be his or her spouse or, if the Participant is unmarried at the time of death, his or her estate.

 

(g) Termination of Employment/Service. Unless determined otherwise by the Committee at any point following the event: (i) neither a temporary absence from employment or service due to illness, vacation or leave of absence nor a transfer from employment or service with the Company to employment or service with an Affiliate (or vice-versa) shall be considered a termination of employment or service with the Company or an Affiliate; and (ii) if a Participant’s employment with the Company and its Affiliates terminates, but the Participant continues to provide services to the Company and its Affiliates in a non-employee capacity (or vice-versa), the change in status shall not be considered a termination of employment with the Company or an Affiliate.

 

(h) No Rights as a Stockholder. Except as otherwise specifically provided in the Plan or any Award Agreement, no person shall be entitled to the privileges of ownership in respect of Common Shares or other securities that are subject to Awards hereunder until the shares have been issued or delivered to that person.

 

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(i) Government and Other Regulations.

 

(i) The obligation of the Company to settle Awards in Common Shares or other consideration shall be subject to all Applicable Laws, rules, and regulations, and to any approvals required by governmental agencies. Notwithstanding any terms or conditions of any Award to the contrary, the Company shall be under no obligation to offer to sell or to sell, and shall be prohibited from offering to sell or selling, any Common Shares or other securities pursuant to an Award unless the shares have been properly registered for sale pursuant to the Securities Act with the Securities and Exchange Commission or unless the Company has received an opinion of counsel, satisfactory to the Company, that the shares may be offered or sold without registration pursuant to an available exemption therefrom and the terms and conditions of the exemption have been fully complied with. The Company shall be under no obligation to register for sale under the Securities Act any of the Common Shares or other securities to be offered or sold under the Plan. The Committee shall have the authority to provide that all certificates for Common Shares or other securities of the Company or any Affiliate delivered under the Plan shall be subject to any stop transfer orders and other restrictions the Committee deems advisable under the Plan, the applicable Award Agreement, the federal securities laws, or the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or inter-dealer quotation system upon which the shares or other securities are then listed or quoted and any other applicable federal, state, local or non-U.S. laws, and, without limiting the generality of Section 9, the Committee may cause a legend or legends to be put on the certificates and Award Agreements to make appropriate reference to the restrictions. Notwithstanding any provision in the Plan to the contrary, the Committee reserves the right to add any additional terms or provisions to any Award granted under the Plan that it in its sole discretion deems necessary or advisable in order that the Award complies with the legal requirements of any governmental entity to whose jurisdiction the Award is subject.

 

(ii) The Committee may cancel an Award or any portion thereof if it determines, in its sole discretion, that legal or contractual restrictions and/or blockage and/or other market considerations would make the Company’s acquisition of Common Shares from the public markets, the Company’s issuance of Common Shares or other securities to the Participant, the Participant’s acquisition of Common Shares or other securities from the Company and/or the Participant’s sale of Common Shares to the public markets, illegal, impracticable or inadvisable. If the Committee determines to cancel all or any portion of an Award denominated in Common Shares in accordance with the foregoing, the Company shall pay to the Participant an amount equal to the excess of (A) the aggregate Fair Market Value of the Common Shares subject to the Award or portion thereof canceled (determined as of the applicable exercise date, or the date that the shares would have been vested or delivered, as applicable), over (B) the aggregate Exercise Price or Strike Price (in the case of an Option or SAR, respectively) or any amount payable as a condition of delivery of Common Shares (in the case of any other Award). This amount shall be delivered to the Participant as soon as practicable following the cancellation of the Award or portion thereof.

 

(j) Payments to Persons Other Than Participants. If the Committee shall find that any person to whom any amount is payable under the Plan is unable to care for his or her affairs because of illness or accident, or is a minor, or has died, then any payment due to that person or his or her estate (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee so directs the Company, be paid to his or her spouse, child, relative, an institution maintaining or having custody of that person, or any other person deemed by the Committee to be a proper recipient on behalf of that person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Committee and the Company therefor.

 

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(k) Nonexclusivity of the Plan. Neither the adoption of this Plan by the Board nor the submission of this Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board to adopt any other incentive arrangements it deems desirable, including, without limitation, the granting of stock options or other equity-based awards otherwise than under this Plan, and these arrangements may be either applicable generally or only in specific cases.

 

(l) No Trust or Fund Created. The Plan is intended to constitute an “unfunded” plan for incentive compensation. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate, on the one hand, and a Participant or other person or entity, on the other hand. No provision of the Plan or any Award shall require the Company, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor shall the Company maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for those purposes. Participants shall have no rights under the Plan other than as unsecured general creditors of the Company, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they shall have the same rights as other employees under general law.

 

(m) Reliance on Reports. Each member of the Committee and each member of the Board shall be fully justified in acting or failing to act, as the case may be, and shall not be liable for having so acted or failed to act in good faith, in reliance upon any report made by the independent public accountant of the Company and its Affiliates and/or any other information furnished in connection with the Plan by any agent of the Company or the Committee or the Board, other than himself.

 

(n) Relationship to Other Benefits. No payment under the Plan shall be taken into account in determining any benefits under any pension, retirement, profit sharing, group insurance or other benefit plan of the Company or any Affiliate except as otherwise specifically provided in the other plan or an agreement thereunder.

 

(o) Governing Law. The Plan shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and performed wholly within the State of Delaware, without giving effect to the conflict of laws provisions thereof.

 

(p) Severability. If any provision of the Plan or any Award or Award Agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or entity or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, the provision shall be construed or deemed amended to conform to the Applicable Laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, the provision shall be construed or deemed stricken as to that jurisdiction, person or entity or Award and the remainder of the Plan and the Award shall remain in full force and effect.

 

  22  

 

 

(q) Obligations Binding on Successors. The obligations of the Company under the Plan shall be binding upon any successor corporation or organization resulting from the merger, amalgamation, consolidation or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company.

 

(r) Code Section 409A.

 

(i) Notwithstanding any provision of this Plan to the contrary, all Awards made under this Plan are intended to be exempt from or, in the alternative, comply with Code Section 409A and the interpretive guidance thereunder, including the exceptions for stock rights and short-term deferrals. The Plan shall be construed and interpreted in accordance with that intent. Each payment under an Award shall be treated as a separate payment for purposes of Code Section 409A.

 

(ii) If a Participant is a “specified employee” (as that term is defined for purposes of Code Section 409A) at the time of his or her termination of service, no amount that is nonqualified deferred compensation subject to Code Section 409A and that becomes payable by reason of the termination of service shall be paid to the Participant (or in the event of the Participant’s death, the Participant’s representative or estate) before the earlier of (x) the first business day after the date that is six months following the date of the Participant’s termination of service, and (y) within 30 days following the date of the Participant’s death. For purposes of Code Section 409A, a termination of service shall be deemed to occur only if it is a “separation from service” within the meaning of Code Section 409A, and references in the Plan and any Award Agreement to “termination of service” or similar terms shall mean a “separation from service.” If any Award is or becomes subject to Code Section 409A, unless the applicable Award Agreement provides otherwise, the Award shall be payable upon the Participant’s “separation from service” within the meaning of Code Section 409A. If any Award is or becomes subject to Code Section 409A and if payment of the Award would be accelerated or otherwise triggered under a Change in Control, then the definition of Change in Control shall be deemed modified, only to the extent necessary to avoid the imposition of an excise tax under Code Section 409A, to mean a “change in control event” as that term is defined for purposes of Code Section 409A.

 

(iii) Any adjustments made pursuant to Section 12 to Awards that are subject to Code Section 409A shall be made in compliance with the requirements of Code Section 409A, and any adjustments made pursuant to Section 12 to Awards that are not subject to Code Section 409A shall be made in such a manner as to ensure that after the adjustment, the Awards either (x) continue not to be subject to Code Section 409A or (y) comply with the requirements of Code Section 409A.

 

(s) Notification of Election Under Code Section 83(b). If any Participant, in connection with the acquisition of Common Shares under an Award, makes the election permitted under Code Section 83(b), the Participant shall notify the Company of the election within ten days of filing notice of the election with the Internal Revenue Service.

 

  23  

 

 

(t) Expenses; Gender; Titles and Headings; Interpretation. The expenses of administering the Plan shall be borne by the Company and its Affiliates. Masculine pronouns and other words of masculine gender shall refer to both men and women. The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than those titles or headings shall control. Unless the context of the Plan otherwise requires, words using the singular or plural number also include the plural or singular number, respectively; derivative forms of defined terms will have correlative meanings; the terms “hereof,” “herein” and “hereunder” and derivative or similar words refer to this entire Plan; the term “Section” refers to the specified Section of this Plan and references to “paragraphs” or “clauses” shall be to separate paragraphs or clauses of the Section or subsection in which the reference occurs; the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation”; and the word “or” shall be disjunctive but not exclusive.

 

(u) Other Agreements. Notwithstanding the above, the Committee may require, as a condition to the grant of and/or the receipt of Common Shares or other securities under an Award, that the Participant execute lock-up, shareholder or other agreements, as it may determine in its sole and absolute discretion.

 

(v) Payments. Participants shall be required to pay, to the extent required by Applicable Laws, any amounts required to receive Common Shares or other securities under any Award made under the Plan.

 

(w) Clawback; Erroneously Awarded Compensation. All Awards (including on a retroactive basis) granted under the Plan are subject to the terms of any Company forfeiture, incentive compensation recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of Applicable Laws, as well as any other policy of the Company that may apply to the Awards, such as anti-hedging or pledging policies, as they may be in effect from time to time. In particular, these policies and/or provisions shall include, without limitation, (i) any Company policy established to comply with Applicable Laws (including, without limitation, Section 304 of the Sarbanes-Oxley Act and Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act), and/or (ii) the rules and regulations of the applicable securities exchange or inter-dealer quotation system on which the Common Shares or other securities are listed or quoted, and these requirements shall be deemed incorporated by reference into all outstanding Award Agreements.

 

(x) No Fractional Shares. No fractional shares of Common Shares shall be issued or delivered pursuant to the Plan. The Committee shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of fractional shares or whether fractional shares or any rights thereto shall be forfeited, rounded, or otherwise eliminated.

 

(y) Paperless Administration. If the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Participant may be permitted through the use of such an automated system.

 

  24  

 

 

(z) Data Privacy. As a condition for receiving any Award, each Participant explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this Section 14(z) by and among the Company and its Subsidiaries and Affiliates exclusively for implementing, administering and managing the Participant’s participation in the Plan. The Company and its Subsidiaries and Affiliates may hold certain personal information about a Participant, including the Participant’s name, address and telephone number; birthdate; social security, insurance number or other identification number; salary; nationality; job title(s); any Common Shares held in the Company or its Subsidiaries and Affiliates; and Award details, to implement, manage and administer the Plan and Awards (the “Data”). The Company and its Subsidiaries and Affiliates may transfer the Data amongst themselves as necessary to implement, administer and manage a Participant’s participation in the Plan, and the Company and its Subsidiaries and Affiliates may transfer the Data to third parties assisting the Company with Plan implementation, administration and management. These recipients may be located in the Participant’s country, or elsewhere, and the Participant’s country may have different data privacy laws and protections than the recipients’ country. By accepting an Award, each Participant authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, to implement, administer and manage the Participant’s participation in the Plan, including any required Data transfer to a broker or other third party with whom the Company or the Participant may elect to deposit any Common Shares. The Data related to a Participant will be held only as long as necessary to implement, administer, and manage the Participant’s participation in the Plan. A Participant may, at any time, view the Data that the Company holds regarding the Participant, request additional information about the storage and processing of the Data regarding the Participant, recommend any necessary corrections to the Data regarding the Participant or refuse or withdraw the consents in this Section 14(z) in writing, without cost, by contacting the local human resources representative. The Company may cancel Participant’s ability to participate in the Plan and, in the Committee’s discretion, the Participant may forfeit any outstanding Awards if the Participant refuses or withdraws the consents in this Section 14(z).

 

(aa) Broker-Assisted Sales. In the event of a broker-assisted sale of Common Shares in connection with the payment of amounts owed by a Participant under or with respect to the Plan or Awards: (a) any Common Shares to be sold through the broker-assisted sale will be sold on the day the payment first becomes due, or as soon thereafter as practicable; (b) the Common Shares may be sold as part of a block trade with other Participants in the Plan in which all participants receive an average price; (c) the applicable Participant will be responsible for all broker’s fees and other costs of sale, and by accepting an Award, each Participant agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses relating to any such sale; (d) to the extent the Company or its designee receives proceeds of the sale that exceed the amount owed, the Company will pay the excess in cash to the applicable Participant as soon as reasonably practicable; (e) the Company and its designees are under no obligation to arrange for the sale at any particular price; and (f) if the proceeds of the sale are insufficient to satisfy the Participant’s applicable obligation, the Participant may be required to pay immediately upon demand to the Company or its designee an amount in cash sufficient to satisfy any remaining portion of the Participant’s obligation.

 

 

 

25

 

 

Exhibit 10.9

 

FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) dated as of November 22, 2017, is entered into by MARQUETTE BUSINESS CREDIT, LLC, a Delaware limited liability company (“Lender”), and ITTELLA INTERNATIONAL, INC.., a California corporation (“Borrower”), with reference to the following facts:

 

RECITALS

 

A. Lender and Borrower are parties to a Loan and Security Agreement dated as of September 25, 2017 (as has been or may be amended, supplemented, replaced, restated or otherwise modified, the “Loan Agreement”), pursuant to which Lender has provided certain credit facilities to Borrower.

 

B. Borrower has requested that Lender provide Borrower with a letter of credit facility.

 

C. Lender is willing to provide such accommodations to the Borrower on the terms and conditions set forth below.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1. Defined Terms. Any and all initially capitalized terms used in this Amendment (including, without limitation, in the Recitals to this Amendment) without definition shall have the respective meanings assigned thereto in the Loan Agreement.

 

2. Additional Guarantor. The definition of “Guarantor” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

Guarantor” and “Guarantors” mean(s) Salvatore Galletti, Deluna Investments, Inc. and each other Person that guarantees the payment and performance of any of the Obligations; providedhowever, the guaranty of Salvatore Galletti shall be released by Lender if Borrower delivers a Compliance Certificate for the fiscal period ending on January 31, 2018 demonstrating as follows: (A) no Default or Event of Default has occurred, and (B) Borrower’s Fixed Charge Coverage Ratio is not less than 1.10 to 1.00.

 

3. Facility Limit. The definition of “Revolving Facility Limit” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

Revolving Facility Limit” means $4,000,000 minus Letter of Credit Exposure.

 

4. New Defined Terms. Section 1.1 of the Loan Agreement is hereby amended to and supplemented to add the following new defined terms:

 

Deluna Property” means the real property commonly known as 1622 South Gaffey Street, San Pedro, California.

 

  -1- [First Amendment to
Loan and Security Agreement]

 

 

ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

 

Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit application, and any other document, agreement and instrument entered into by the Lender, the issuing bank and/or the Borrower or in favor of the issuing bank or Lender and relating to such Letter of Credit.

 

L/C Fee” has the meaning given to it in Section 2.7.

 

L/C Maximum Amount” means the lesser of:

 

(A) the greater of:

 

(i) €750,000, or

 

(ii) $900,000; or

 

(B) 50% of the appraised value of the Deluna Property.

 

L/C Reimbursement Obligations” means all Obligations related to or arising out of the issuance of any Letters of Credit.

 

Letters of Credit” has the meaning given to it in Section 2.7.

 

Letter of Credit Exposure” means, at any time, the sum of (i) the aggregate undrawn amount of all Letters of Credit outstanding pursuant hereto at such time, plus (ii) the aggregate amount of all drawings under such Letters of Credit for which the issuer has not been reimbursed.

 

Letter of Credit Facility. The Loan Agreement is hereby amended and supplemented to add a new Section 2.7 as follows:

 

Section 2.7 Letters of Credit.

 

(i) Provided no Default or Event of Default has occurred, at the request of Borrower, Lender may arrange for the issuance of letters of credit for the account of Borrower and guarantees of payment of such letters of credit, in each case in form and substance satisfactory to Lender in its sole discretion (each a “Letter of Credit” and collectively, “Letters of Credit”).

 

(ii) Borrower shall give Lender at least three (3) Business Days prior written notice requesting the issuance of any Letter of Credit, specifying the date such Letter of Credit is to be issued, identifying the beneficiary to which such Letter of Credit relates and describing the nature of the transactions proposed to be supported thereby.

 

  -2- [First Amendment to
Loan and Security Agreement]

 

 

(iii) The aggregate face amount of all outstanding Letters of Credit from time to time shall not to exceed the lesser of:

 

(A) The Revolving Facility Limit minus all outstanding Revolving Loans; and

 

(B) the L/C Maximum Amount.

 

(iv) Borrower shall pay all bank charges for the issuance of Letters of Credit, together with the following fees (collectively, the “L/C Fee”):

 

(A) 1.00% of the face amount of each Letter of Credit on the issuance date of such Letter of Credit and each anniversary thereof; and

 

(B) a $400 processing fee on the issuance date of each Letter of Credit.

 

The L/C Fee shall be deemed to be fully earned and shall be due and payable in full upon the issuance of each Letter of Credit. Any advance by Lender under or in connection with a Letter of Credit shall constitute an Obligation hereunder.

 

(v) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the issuing bank or Lender (upon Lender becoming aware thereof) shall notify the Borrower thereof. Not later than 12:00 p.m. on the date of any payment by the issuing bank or Lender under or with respect to a Letter of Credit (each such date, an ‘Honor Date’), the Borrower shall reimburse the issuer of the Letter of Credit or Lender, as applicable, in an amount equal to the amount of such drawing. If the Borrower fails to so reimburse such Person by such time, the Borrower shall be deemed to have requested a borrowing of Revolving Loans to be disbursed on the Honor Date in an amount equal to amount of the unreimbursed drawing. Any notice given by the issuing bank or Lender pursuant to this Section 2.6(v) may be given by telephone to a Responsible Officer if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

 

(vi) Unless otherwise consented to in writing by Lender, the expiration of any Letter of Credit shall not be later than the earlier of:

 

(A) one year after the date of issuance of such Letter of Credit; or

 

(B) 30 days prior to the Maturity Date.

 

(vii) Immediately upon the Facility Termination Date, Borrower shall:

 

(A) provide cash collateral to Lender in an amount equal to 105% of the maximum amount of Lender’s obligations under or in connection with all then-outstanding Letters of Credit, or

 

(B) cause to be delivered to Lender releases of all of Lender’s obligations under all then-outstanding Letters of Credit.

 

  -3- [First Amendment to
Loan and Security Agreement]

 

 

(viii) The Lender shall not be under any obligation to arrange the issuance of any Letter of Credit if:

 

(A) any order, judgment or decree of any governmental authority or arbitrator shall by its terms purport to enjoin or restrain the issuing bank from issuing the Letter of Credit, or any law applicable to the issuing bank or any request or directive (whether or not having the force of law) from any governmental authority with jurisdiction over the issuing bank shall prohibit, or request that the issuing bank refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon the issuing bank with respect to the Letter of Credit any restriction, reserve or capital requirement (for which the issuing bank is not otherwise compensated hereunder) not in effect on the Agreement Date, or shall impose upon the issuing bank any unreimbursed loss, cost or expense which was not applicable on the Agreement Date and which the issuing bank in good faith deems material to it;

 

(B) the issuance of the Letter of Credit would violate one or more policies of the issuing bank applicable to letters of credit generally; or

 

(C) the Letter of Credit is to be denominated in a currency other than Dollars.

 

(ix) Unless otherwise expressly agreed by the issuing bank, Lender and the Borrower when a Letter of Credit is issued, (i) the rules of the ISP shall apply to each Letter of Credit. Notwithstanding the foregoing, neither the issuing bank nor Lender shall be responsible to the Borrower for, and the issuing bank and Lender’s rights and remedies against the Borrower shall not be impaired by, any action or inaction of the issuing bank or Lender required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the law or any order of a jurisdiction where the issuing bank, Lender or the beneficiary is located, the practice stated in the ISP as applicable, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.

 

(x) At Lender’s reasonable discretion, any proceeds of Collateral received by Lender may be held as the cash collateral required by this Section 2.7.

 

(xi) Borrower hereby agrees to indemnify, save, and hold Lender harmless from any loss, cost, expense, or liability, including payments made by Lender, expenses, and attorneys’ fees incurred by Lender arising out of or in connection with any Letters of Credit. Borrower agrees to be bound by the issuing bank’s regulations and, reasonable interpretations (from the standpoint of a secured lender) of any Letters of Credit guaranteed by Lender and opened for Borrower’s account or by Lender’s interpretations of any Letter of Credit issued by Lender for Borrower’s account, and Borrower understands and agrees that Lender shall not be liable for any error, negligence, or mistake, whether of omission or commission, in following Borrower’s instructions or those contained in the Letters of Credit or any modifications, amendments, or supplements thereto. Borrower understands that Lender may indemnify the bank issuing a Letter of Credit for certain costs or liabilities arising out of claims by Borrower against such issuing bank. Borrower hereby agrees to indemnify and hold Lender harmless with respect to any loss, cost, expense, or liability incurred by Lender (other than a loss, cost, expense or liability caused by Lender’s gross negligence, bad faith or willful misconduct) under any such indemnification by Lender to any issuing bank.

 

  -4- [First Amendment to
Loan and Security Agreement]

 

 

(xii) Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; providedhowever, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.”

 

5. Representations and Warranties. Borrower represents and warrants to Lender that:

 

(a) There exists no Default or Event of Default, or any other condition or occurrence of events that now constitute or with the passage of time or the giving of notice or both, would constitute a Default or Event of Default, under the Loan Agreement or any other Loan Document.

 

(b) Each person executing and delivering this Amendment (other than Lender), has been duly authorized by all necessary corporate action.

 

(c) All representations and warranties contained in the Loan Documents, except for those that speak as of a particular date, are and remain true and correct in all material respects as of the date of this Amendment.

 

6. Conditions Precedent. The effectiveness of this Amendment shall be subject to the prior satisfaction of each of the following conditions:

 

(a) This Amendment. Lender shall have received this Amendment duly executed by an authorized officer of Borrower;

 

(b) Guaranty. Lender shall have received a duly executed guaranty of Deluna Investments, Inc.

 

(c) Deed of Trust. Lender shall have received a duly executed, notarized, and recorded deed of trust in favor of Lender with respect to the Deluna Property;

 

(d) Title Insurance. Lender shall have received a commitment from a title company acceptable to Lender to issue a lender’s policy of title insurance with respect to the foregoing deed of trust, in such amounts, with such endorsements and subject to such exceptions, as Lender, in each case, may approve in its sole and absolute discretion;

 

(e) Authority. Lender shall have received such officer’s certificates and other certificates of Borrower and Deluna Investments, Inc. approving this Amendment and each of the documents executed in connection herewith, each in form acceptable to Lender in its sole discretion.

  

  -5- [First Amendment to
Loan and Security Agreement]

 

  

7. Integration. This Amendment, the Loan Documents and the documents referred to herein constitute the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.

 

8. Counterparts. This Amendment may be executed in multiple counterparts, each of which when so executed and delivered shall be deemed an original, and all of which, taken together, shall constitute but one and the same agreement.

 

9. Governing Law. This Amendment, the interpretation and construction of this Amendment and any provision of this Amendment and of any issue relating to the transactions contemplated by this Amendment shall be governed by the laws of the State of California, not including conflicts of law rules.

 

10. Further Assurances. Borrower agrees to execute and deliver such other agreements, documents and instruments and take such other actions as Lender may reasonably request in connection with the transactions contemplated by this Amendment.

 

[Signature Page Follows]

 

  -6- [First Amendment to
Loan and Security Agreement]

 

 

IN WITNESS WHEREOF, Borrower and Lender have executed this Amendment by their respective duly authorized officers as of the date first above written.

 

  MARQUETTE BUSINESS CREDIT, LLC,
a Delaware limited liability company

 

  By: /s/ Xavier Gannon
  Name: Xavier Gannon
  Title: Senior Vice President

 

  ITTELLA INTERNATIONAL, INC..,
a California corporation

 

  By: /s/ Salvatore Galletti
  Name: Salvatore Galletti
  Title: President

 

  -7- [First Amendment to
Loan and Security Agreement]

 

 

SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) dated as of December 4, 2017, is entered into by MARQUETTE BUSINESS CREDIT, LLC, a Delaware limited liability company (“Lender”), and ITTELLA INTERNATIONAL, INC.., a California corporation (“Borrower”), with reference to the following facts:

 

RECITALS

 

A. Lender and Borrower are parties to a Loan and Security Agreement dated as of September 25, 2017 (as has been or may be amended, supplemented, replaced, restated or otherwise modified, the “Loan Agreement”), pursuant to which Lender has provided certain credit facilities to Borrower.

 

B. Borrower has requested that Lender extend the maturity date of the Loan Agreement.

 

C. Lender is willing to provide such accommodations to the Borrower on the terms and conditions set forth below.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1. Defined Terms. Any and all initially capitalized terms used in this Amendment (including, without limitation, in the Recitals to this Amendment) without definition shall have the respective meanings assigned thereto in the Loan Agreement.

 

2. Maturity Date. The definition of “Maturity Date” in Section 1.1 of Loan Agreement is hereby amended to read in full as follows:

 

Maturity Date” means May 25, 2021.

 

3. Representations and Warranties. Borrower represents and warrants to Lender that:

 

(a) There exists no Default or Event of Default, or any other condition or occurrence of events that now constitute or with the passage of time or the giving of notice or both, would constitute a Default or Event of Default, under the Loan Agreement or any other Loan Document.

 

(b) Each person executing and delivering this Amendment (other than Lender), has been duly authorized by all necessary corporate action.

 

(c) All representations and warranties contained in the Loan Documents, except for those that speak as of a particular date, are and remain true and correct in all material respects as of the date of this Amendment.

 

4. Conditions Precedent. The effectiveness of this Amendment shall be subject to the prior satisfaction of each of the following conditions:

 

(a) This Amendment. Lender shall have received this Amendment duly executed by an authorized officer of Borrower and each Guarantor;

 

  -1- [Second Amendment to
Loan and Security Agreement]

 

 

(b) Authority. Lender shall have received such officer’s certificates approving this Amendment and each of the documents executed in connection herewith, each in form acceptable to Lender in its sole discretion.

 

5. Integration. This Amendment, the Loan Documents and the documents referred to herein constitute the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.

 

6. Counterparts. This Amendment may be executed in multiple counterparts, each of which when so executed and delivered shall be deemed an original, and all of which, taken together, shall constitute but one and the same agreement.

 

7. Governing Law. This Amendment, the interpretation and construction of this Amendment and any provision of this Amendment and of any issue relating to the transactions contemplated by this Amendment shall be governed by the laws of the State of California, not including conflicts of law rules.

 

8. Further Assurances. Borrower agrees to execute and deliver such other agreements, documents and instruments and take such other actions as Lender may reasonably request in connection with the transactions contemplated by this Amendment

 

[Signature Page Follows]

 

  -2- [Second Amendment to
Loan and Security Agreement]

 

 

IN WITNESS WHEREOF, Borrower and Lender have executed this Amendment by their respective duly authorized officers as of the date first above written.

 

  MARQUETTE BUSINESS CREDIT, LLC,
  a Delaware limited liability company

 

  By: /s/ Xavier Gannon
  Name: Xavier Gannon
  Title: Senior Vice President

 

  ITTELLA INTERNATIONAL, INC..,
a California corporation

 

  By: /s/ Salvatore Galletti
  Name: Salvatore Galletti
  Title: President

 

Each of the undersigned hereby (a) consents to and acknowledges the terms and conditions of the foregoing Amendment, (b) acknowledges and reaffirms his or its obligations owing to Lender under its applicable guaranty and each of the other loan documents executed by him or it in favor of Lender, and (c) agrees that his or its obligations under such documents are and shall remain in full force and effect. Although the undersigned is acknowledging and agreeing to the foregoing, the undersigned understands that Lender has no obligation to inform it of such matters in the future or to seek his or its acknowledgment or agreement to future amendments or waivers, and nothing herein shall create such a duty.

 

  /s/ Salvatore Galletti
  SALVATORE GALLETTI

 

  DELUNA INVESTMENTS, INC.,
a California corporation

 

  By: /s/ Salvatore Galletti
  Name: Salvatore Galletti
  Title: President

 

  -3- [Second Amendment to
Loan and Security Agreement]

 

 

OFFICER’S CERTIFICATE

 

The undersigned, a duly authorized officer of ITTELLA INTERNATIONAL, INC.., a California corporation (“Borrower”), certifies to MARQUETTE BUSINESS CREDIT, LLC, a Delaware limited liability company, as follows:

 

1. Borrower has requested that Lender enter into the Second Amendment of even date herewith (the “Agreement”) with respect to the Loan and Security Agreement dated as of September 25, 2017 (as has been or may be amended, supplemented, replaced, restated or otherwise modified, the “Loan Agreement”) by and between Borrower and Lender.

 

2. The following is a true copy of resolutions duly adopted by Board of Directors at a special meeting held as of December 2017, at which a quorum was present and which voted thereon:

 

“RESOLVED that the terms of the Second Amendment between this limited liability company and Marquette Business Credit, LLC (‘Lender’) are hereby approved and ratified.

 

FURTHER RESOLVED, that any one officer of this limited liability company is hereby authorized and directed, on behalf of this limited liability company, to make, execute, and deliver to Lender any and all documents and to do any and all acts necessary or desirable to effectuate the foregoing resolution.”

 

3. These resolutions are in conformity with the articles of incorporation and bylaws of Borrower, have never been modified or repealed, and are now in full force and effect.

 

4. No further approvals or authorizations are necessary for Borrower to execute, deliver and perform wider the Agreement.

 

5. As of the date set forth below, (a) all of the representations and warranties in the Loan Agreement are true and correct, and (b) no “Default” or “Event of Default” (as each such term is defined in the Loan Agreement) has occurred.

 

  Dated: As of December 4, 2017
     
  By: /s/ Salvatore Galletti
  Name: Salvatore Galletti
  Title: President

 

  -4- [Second Amendment to
Loan and Security Agreement]

 

 

THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) dated as of July 31, 2018, is entered into by MARQUETTE BUSINESS CREDIT, LLC, a Delaware limited liability company (“Lender”), and ITTELLA INTERNATIONAL, INC.., a California corporation (“Borrower”), with reference to the following facts:

 

RECITALS

 

A. Lender and Borrower are parties to a Loan and Security Agreement dated as of September 25, 2017 (as has been or may be amended, supplemented, replaced, restated or otherwise modified, the “Loan Agreement”), pursuant to which Lender has provided certain credit facilities to Borrower.

 

B. Borrower has requested that Lender provide Borrower with a letter of credit facility.

 

C. Lender is willing to provide such accommodations to the Borrower on the terms and conditions set forth below.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1. Defined Terms. Any and all initially capitalized terms used in this Amendment (including, without limitation, in the Recitals to this Amendment) without definition shall have the respective meanings assigned thereto in the Loan Agreement.

 

2. Borrowing Base. The definition of “Borrowing Base” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

“Borrowing Base’ means, as of any date of determination, an amount equal to:

 

(a) ninety percent (90%) (or such lesser percentage as Lender may in its sole and absolute discretion determine from time to time) of the Net Amount of Eligible Accounts; plus

 

(b) the least of:

 

(i) the sum of:

 

(A) fifty percent (50%) (or such lesser percentage as Lender may in its sole and absolute discretion determine from time to time) of the Net Amount of Eligible Inventory; plus

 

(B) forty-five percent (45%) (or such lesser percentage as Lender may in its sole and absolute discretion determine from time to time) of the Net Amount of Eligible In-Transit Inventory;

 

(ii) $3,000,000; or

  

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(iii) fifty percent (50%) of the aggregate amount of Revolving Loans outstanding, minus

 

(c) the sum of all Reserves.

 

Without limiting Lender’s discretion to implement other Reserves, Lender shall institute Reserves with respect to Eligible Accounts in the event that dilution exceeds 1.00% such that the advance rate shall be reduced by 1.00% for each percentage of dilution in excess of 1.00% and Lender shall institute Reserves in the amount of any Producer Payables.”

 

3. Contract Rate. The definition of “Contract Rate” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

“‘Contract Rate’ means for any date a per annum rate equal to: (a) with respect to Revolving Loans, the sum of the Base Rate in effect from time to time plus one and one-half percent (1.50%), and (b) with respect to the Term Loan, the sum of the Base Rate in effect from time to time plus two percent (2.00%).”

 

4. Guarantors. The definition of “Guarantor” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

“’Guarantor’ and ‘Guarantors’ mean(s) Salvatore Galletti, Deluna Investments, Inc. and each other Person that guarantees the payment and performance of any of the Obligations.”

 

5. Permitted Affiliate Loan. The definition of “Permitted Affiliate Loan” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

“’Permitted Affiliate Loan’ means a loan from Borrower to an Affiliate of Borrower to assist in the establishment of an operation in Italy, in a maximum outstanding amount any time of $1,700,000.”

 

6. Permitted Debt. The definition of “Permitted Debt” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

“’Permitted Debt’ means (a) Debt constituting purchase money indebtedness or Capital Lease Obligations in aggregate amount outstanding not to exceed $50,000, (b) the Obligations (including, without limitation, a $3,000,000 loan from UMB Capital Markets), (c) trade payables and other contractual obligations arising in the ordinary course of business that are not past due by more than 90 days, and (d) Debt existing on the Closing Date and described on Schedule 9.3 attached hereto and made a part hereof.”

 

7. Revolving Facility Limit. The definition of “Revolving Facility Limit” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

“’Revolving Facility Limit’ means $8,000,000.”

 

8. New Defined Terms. Section 1.1 of the Loan Agreement is hereby amended to and supplemented to add the following new defined terms:

 

“‘Term Loan’ has the meaning ascribed to it in Section 2.8.”

 

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‘Third Amendment Effective Date’ means the effective date of the Third Amendment to Loan and Security Agreement, between Borrower and Lender, dated as of July 31, 2018.”

 

9. Term Loans. The Loan Agreement is hereby amended and supplemented to add a new Section 2.8 as follows:

 

“Section 2.8 Term Loan. Subject to and on the terms and conditions of this Agreement, on the Third Amendment Effective Date, Lender agrees to make a loan to Borrower at Borrower’s request, in an aggregate amount of $1,000,000 (the ‘Term Loan’). Borrower unconditionally promises to repay the Term Loan, and all accrued and unpaid interest thereon, promptly when due as provided by this Agreement.

 

(a) Request for Term Loan. Borrower hereby authorizes Lender to make the Term Loan upon a request received from anyone purporting to be a Responsible Officer and in form and substance satisfactory to Lender, or at Borrower’s option unless required otherwise by Lender, by telephonic notice from a Responsible Officer, in lieu of written notice. Such request shall be irrevocable. Lender is authorized to rely upon any such notice purporting to be received from a Responsible Officer, and Lender shall have no duty to verify the identity of any individual representing himself or herself as a Person who is a Responsible Officer. Such request must be received by Lender prior to 10:00 a.m. (Los Angeles, California, time) on the requested funding date. The proceeds of the Term Loan, when funded, shall be disbursed by Lender to an account of Borrower designated by Borrower.

 

(b) Repayment. Borrower hereby agrees to repay to Lender the Term Loan, as follows:

 

(1) On the first Business Day of each month in an amount equal to $27,777.78 plus all accrued but unpaid interest thereon.

 

(2) On the Facility Termination Date, the unpaid balance of the Term Loan, together with all accrued but unpaid interest thereon.”

 

10. Capital Expenditures. Section 9.l(c) of the Loan Agreement is hereby amended and to read in full as follows:

 

“(c) Maximum Non-Financed Capital Expenditures. Borrower’s Non-Financed Capital Expenditures shall not exceed (a) $800,000 in the fiscal year ended December 31, 2018, and (b) $50,000 in any subsequent fiscal year.”

 

11. Controller. Borrower covenants and agrees to hire a controller or senior accountant on or before December 31, 2018.

 

12. Representations and Warranties. Borrower represents and warrants to Lender that:

 

(a) There exists no Default or Event of Default, or any other condition or occurrence of events that now constitute or with the passage of time or the giving of notice or both, would constitute a Default or Event of Default, under the Loan Agreement or any other Loan Document.

 

(b) Each person executing and delivering this Amendment (other than Lender), has been duly authorized by all necessary corporate action.

 

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Loan and Security Agreement]

 

 

(c) All representations and warranties contained in the Loan Documents, except for those that speak as of a particular date, are and remain true and correct in all material respects as of the date of this Amendment.

 

13. Conditions Precedent. The effectiveness of this Amendment shall be subject to the prior satisfaction of each of the following conditions:

 

(a) This Amendment. Lender shall have received this Amendment duly executed by an authorized officer of Borrower;

 

(b) Guaranty. Lender shall have received a duly executed guaranty of Salvatore Galletti in the attached form; and

 

(c) Authority. Lender shall have received such officer’s certificates approving this Amendment in the attached form.

 

14. Integration. This Amendment, the Loan Documents and the documents referred to herein constitute the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.

 

15. Counterparts. This Amendment may be executed in multiple counterparts, each of which when so executed and delivered shall be deemed an original, and all of which, taken together, shall constitute but one and the same agreement.

 

16. Governing Law. This Amendment, the interpretation and construction of this Amendment and any provision of this Amendment and of any issue relating to the transactions contemplated by this Amendment shall be governed by the laws of the State of California, not including conflicts of law rules.

 

17. Further Assurances. Borrower agrees to execute and deliver such other agreements, documents and instruments and take such other actions as Lender may reasonably request in connection with the transactions contemplated by this Amendment.

 

[Signature Page Follows]

 

  -4- [Third Amendment to
Loan and Security Agreement]

 

 

IN WITNESS WHEREOF, Borrower and Lender have executed this Amendment by their respective duly authorized officers as of the date first above written.

 

  MARQUETTE BUSINESS CREDIT, LLC,
  a Delaware limited liability company
     
  By: /s/ Xavier Gannon
  Name:  Xavier Gannon
  Title: Senior Vice President

 

  ITTELLA INTERNATIONAL, INC.., a California corporation
     
  By: /s/ Salvatore Galletti
  Name: Salvatore Galletti
  Title: CEO

 

The undersigned hereby (a) consents to and acknowledges the terms and conditions of the foregoing Amendment, (b) acknowledges and reaffirms its obligations owing to Lender under its guaranty and each of the other loan documents executed by it in favor of Lender, and (c) agrees that its obligations under such documents are and shall remain in full force and effect. Although the undersigned is acknowledging and agreeing to the foregoing, the undersigned understands that Lender has no obligation to inform it of such matters in the future or to seek its acknowledgment or agreement to future amendments or waivers, and nothing herein shall create such a duty.

 

  DELUNA INVESTMENTS, INC., a California corporation
     
  By: /s/ Salvatore Galletti
  Name: Salvatore Galletti
  Title: CEO

 

  -5- [Third Amendment to
Loan and Security Agreement]

 

 

OFFICER’S CERTIFICATE

 

The undersigned, a duly authorized officer of ITTELLA INTERNATIONAL, INC.., a California corporation (“Borrower”), certifies to MARQUETTE BUSINESS CREDIT, LLC, a Delaware limited liability company, as follows:

 

1. Borrower has requested that Lender enter into the Third Amendment of even date herewith (the “Agreement”) with respect to the Loan and Security Agreement dated as of September 25, 2017 (as has been or may be amended, supplemented, replaced, restated or otherwise modified, the “Loan Agreement”) by and between Borrower and Lender.

 

2. The following is a true copy of resolutions duly adopted by Board of Directors at a special meeting held as of July 31, 2018, at which a quorum was present and which voted thereon:

 

“RESOLVED that the terms of the Third Amendment between this limited liability company and Marquette Business Credit, LLC (‘Lender’) are hereby approved and ratified.

 

FURTHER RESOLVED, that any one officer of this limited liability company is hereby authorized and directed, on behalf of this limited liability company, to make, execute, and deliver to Lender any and all documents and to do any and all acts necessary or desirable to effectuate the foregoing resolution.”

 

3. These resolutions are in conformity with the articles of incorporation and bylaws of Borrower, have never been modified or repealed, and are now in full force and effect.

 

4. No further approvals or authorizations are necessary for Borrower to execute, deliver and perform under the Agreement.

 

5. As of the date set forth below, (a) all of the representations and warranties in the Loan Agreement are true and correct, and (b) no “Default” or “Event of Default” (as each such term is defined in the Loan Agreement) has occurred.

 

  Dated: As of July 31, 2018
     
  By: /s/ Salvatore Galletti
  Name:  Salvatore Galletti
  Title: CEO

 

  -6- [Third Amendment to
Loan and Security Agreement]

 

 

CONSENT AND FOURTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT

THIS CONSENT AND FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) dated as of April 10, 2019, is entered into by MARQUETTE BUSINESS CREDIT, LLC, a Delaware limited liability company (“Lender”), and ITTELLA INTERNATIONAL, INC., a California corporation (“Borrower”) with reference to the following facts:

 

RECITALS

 

A. Lender and Borrower are parties to a Loan and Security Agreement dated as of September 25, 2017 (as has been or may be amended, supplemented, replaced, restated or otherwise modified, the “Loan Agreement”), pursuant to which Lender has provided certain credit facilities to Borrower.

 

B. Borrower has informed Lender that it desires to reorganize as Ittella International, LLC, a California limited liability company (the “Reorganized Borrower”), with 1,000 shares of common stock in Borrower, representing 100% of the Equity Interests of Borrower, to be contributed by Controlling Equity Holder to Myjojo, Inc., a California corporation (“Myjojo”) in exchange for 1,000 shares of common stock in Myjojo and the designation of Controlling Equity Holder as the sole director of Myjojo, which in turn will be the sole member and initial manager of Reorganized Borrower (the “Restructuring Transaction”).

 

C. Borrower has requested that Lender consent to the Restructuring Transaction and make certain modifications of the Loan Agreement as set forth herein.

 

D. Lender is willing to provide such accommodations to the Borrower on the terms and conditions set forth below.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1. Defined Terms. Any and all initially capitalized terms used in this Amendment (including, without limitation, in the Recitals to this Amendment) without definition shall have the respective meanings assigned thereto in the Loan Agreement.

 

2. Borrower. Effective upon the consummation of the Restructuring Transaction, the definition of “Borrower” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

“‘Borrower’ means Ittella International, LLC, a California limited liability company.

  

 

 

 

3. Change of Control. Effective upon the consummation of the Restructuring Transaction, the definition of “Change of Control” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

“‘Change of Control’ means, at any time, (a) the Controlling Equity Holder shall cease to beneficially own and control at least one hundred percent (100%) on a fully diluted basis of the economic and voting interests in the Equity Interests of Parent, (b) Parent shall cease to beneficially own and control at least eighty percent (80%) on a fully diluted basis of the economic and voting interests in the Equity Interests of Borrower, (c) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended) other than the Controlling Equity Holder (i) shall have acquired beneficial ownership of twenty percent (20%) or more on a fully diluted basis of the voting and/or economic interest in the Equity Interests of Borrower or (ii) shall have obtained the power (whether or not exercised) to elect a majority of the members of the Board of Directors (or similar governing body) of Borrower, (d) Borrower shall cease to beneficially own and control 100% on a fully diluted basis of the economic and voting interest in the Equity Interests in each of its Subsidiaries (if any), or (e) any “change of control” or similar event under any Subordinated Debt shall occur.”

 

4. Parent. Effective upon the consummation of the Restructuring Transaction, Section 1.1 of the Loan Agreement is hereby amended and supplemented to add the following new defined term:

 

“‘Parent’ means Myjojo, Inc., a California corporation, or any successor or assign thereof approved by Lender in its sole and absolute discretion.”

 

5. Schedule 5.1(a). Effective upon the consummation of the Restructuring Transaction, Schedule 5.1(a) to the Loan Agreement is hereby restated in its entirety by Schedule 5.1(a) attached hereto.

 

6. Consent to Restructuring Transaction. Lender hereby consents to the Restructuring Transaction on the terms and conditions set forth herein. Effective upon the consummation of the Restructuring Transaction, Reorganized Borrower hereby becomes the “Borrower” under the Loan Agreement and the other Loan Documents. Reorganized Borrower will be bound by all covenants, terms, conditions, and duties applicable to the Borrower and hereby grants and regrants a security interest in all Collateral to secure the Obligations.

 

7. Enforceability of Indebtedness, Collateral and Loan Documents. Borrower and each Guarantor acknowledges and agrees that:

 

(a) Lender has a valid, perfected and first priority security interest and lien upon all of the Collateral to secure the Obligations.

 

(b) Each of the Loan Documents is in full force and effect, and is enforceable against Borrower and the Collateral in accordance with its respective terms.

 

(c) Borrower has no defenses, offsets, recoupments or counterclaims to: (i) its obligation to pay all amounts from time to time owing and to perform all obligations required to be performed under the Loan Documents, (ii) enforcement of Lender’s rights in and to the Collateral, or (iii) enforcement of any other of Lender’s rights or remedies.

 

8. Representations and Warranties. Borrower represents and warrants to Lender that:

 

(a) Other than the Restructuring Transaction consented to hereby, there exists no Default or Event of Default, or any other condition or occurrence of events that now constitute or with the passage of time or the giving of notice or both, would constitute a Default or Event of Default, under the Loan Agreement or any other Loan Document.

 

(b) Each person executing and delivering this Amendment (other than Lender), has been duly authorized by all necessary corporate action.

 

(c) All representations and warranties contained in the Loan Documents, except for those that speak as of a particular date, are and remain true and correct in all material respects as of the date of this Amendment.

 

2

 

  

9. Conditions Precedent. The effectiveness of this Amendment shall be subject to the prior satisfaction of each of the following conditions:

 

(a) This Amendment. Lender shall have received this Amendment duly executed by an authorized officer of Borrower;

 

(b) Restructuring Transaction Documents. Lender shall have received duly executed copies of the following, in form and substance approved by Lender in its sole and absolute discretion:

 

i. That certain Contribution Agreement and Plan of Reorganization by and among Borrower, Salvatore Galletti and Myjojo;

 

ii. That certain Joint Action by Written Consent of the Board of Directors and Shareholders of Borrower, approving the Restructuring Transaction;

 

iii. A member’s certificate of Reorganized Borrower in the attached form, to which is attached the duly executed Operating Agreement and pro forma Form LLC-1A of Reorganized Borrower.

 

(c) Authority. Lender shall have received an officer’s certificate of Borrower approving this Amendment in the attached form.

 

10. Post-Closing Covenant--Formation and Good Standing of Reorganized Borrower. No later than five (5) Business Days after the date of this Amendment, Borrower shall deliver to Lender (i) a certified copy of Form LLC-1A filed with the California Secretary of State with respect to the conversion of Borrower to Reorganized Borrower and (ii) good standing certificate with respect to Reorganized Borrower from the California Secretary of State of the State. Upon the delivery of such documents to Lender, Reorganized Borrower hereby authorizes Lender to file all necessary amendments to its financing statements, intellectual property assignments and/or other documents filed or recorded in any public office to identify Reorganized Borrower as debtor. Furthermore, to the extent that Reorganized Borrower makes any further modifications to its Operating Agreement, it will, within five (5) Business Days thereafter, deliver to Lender an updated member’s (or manager’s certificate) in form acceptable to Lender.

 

11. Integration. This Amendment, the Loan Documents and the documents referred to herein constitute the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.

 

12. Counterparts. This Amendment may be executed in multiple counterparts, each of which when so executed and delivered shall be deemed an original, and all of which, taken together, shall constitute but one and the same agreement.

 

13. Consent and Reaffirmation of Guarantors. Guarantors hereby acknowledge and agree to the terms and conditions of this Amendment, acknowledge and reaffirm their respective obligations owing to Lender under each respective Guaranty and any other Loan Document to which such Guarantor is a party, and agree that each Guaranty and other Loan Documents are and shall remain in full force and effect. Although Guarantors have been informed of the matters set forth herein and have acknowledged and agreed to the same, Guarantors understand Lender has no obligation to inform Guarantors of such matters in the future or to seek any Guarantor’s acknowledgement or agreement to future amendments, and nothing herein shall create such a duty.

  

14. Governing Law. This Amendment, the interpretation and construction of this Amendment and any provision of this Amendment and of any issue relating to the transactions contemplated by this Amendment shall be governed by the laws of the State of California, not including conflicts of law rules.

 

15. Further Assurances. Borrower agrees to execute and deliver such other agreements, documents and instruments and take such other actions as Lender may reasonably request in connection with the transactions contemplated by this Amendment.

 

[Signature Page Follows]

 

3

 

  

IN WITNESS WHEREOF, Borrower and Lender have executed this Amendment by their respective duly authorized officers as of the date first above written.

 

 

MARQUETTE BUSINESS CREDIT, LLC,

a Delaware limited liability company

   
  By: /s/ Xavier Gannon
  Name:  Xavier Gannon
  Title: Senior Vice President

 

  ITTELLA INTERNATIONAL, INC., a California corporation
     
  By: /s/ Salvatore Galletti
  Name: Salvatore Galletti
  Title: President and CEO

 

Each of the undersigned hereby (a) consents to and acknowledges the terms and conditions of the foregoing Amendment, (b) acknowledges and reaffirms its obligations owing to Lender under its guaranty and each of the other loan documents executed by it in favor of Lender, and (c) agrees that its obligations under such documents are and shall remain in full force and effect. Although the undersigned is acknowledging and agreeing to the foregoing, the undersigned understands that Lender has no obligation to inform it of such matters in the future or to seek its acknowledgment or agreement to future amendments or waivers, and nothing herein shall create such a duty.

 

  DELUNA INVESTMENTS, INC., a California corporation
     
  By: /s/ Salvatore Galletti
  Name: Salvatore Galletti
  Title: CEO

 

  /s/ SALVATORE GALLETTI
  SALVATORE GALLETTI, an individual

 

  S-1 [Signature Page to Consent and Fourth
    Amendment to Loan and Security Agreement]

 

 

 

OFFICER’S CERTIFICATE

 

(ITTELLA INTERNATIONAL, INC.)

 

The undersigned, a duly authorized officer of ITTELLA INTERNATIONAL, INC., a California corporation (“Borrower”), certifies to MARQUETTE BUSINESS CREDIT, LLC, a Delaware limited liability company, as follows:

 

1. Borrower has requested that Lender enter into the Consent and Fourth Amendment of even date herewith (the “Agreement”) with respect to the Loan and Security Agreement dated as of September 25, 2017 (as has been or may be amended, supplemented, replaced, restated or otherwise modified, the “Loan Agreement”) by and between Borrower and Lender.

 

2. The following is a true copy of resolutions duly adopted by the Board of Directors at a special meeting held as of April 10, 2019, at which a quorum was present and which voted thereon:

 

“RESOLVED that the terms of the Fourth Amendment between the Company and Marquette Business Credit, LLC (‘Lender’) are hereby approved and ratified.

 

FURTHER RESOLVED, that any one officer of the company is hereby authorized and directed, on behalf of this limited liability company, to make, execute, and deliver to Lender any and all documents and to do any and all acts necessary or desirable to effectuate the foregoing resolution.”

 

3. These resolutions are in conformity with the articles of incorporation and bylaws of Borrower, have never been modified or repealed, and are now in full force and effect.

 

4. No further approvals or authorizations are necessary for Borrower to execute, deliver and perform under the Agreement.

 

5. As of the date set forth below, (a) all of the representations and warranties in the Loan Agreement are true and correct, and (b) no “Default” or “Event of Default” (as each such term is defined in the Loan Agreement) has occurred.

 

  Dated As of April 10, 2019
     
  /s/ Salvatore Galletti
  Name: Salvatore Galletti
  Title: President and CEO

 

[Officer’s Certificate re: Consent and Fourth

Amendment to Loan and Security Agreement]

 

 

 

MEMBER’S CERTIFICATE

 

(ITTELLA INTERNATIONAL, LLC)

 

The undersigned, the sole member of ITTELLA INTERNATIONAL, LLC, a California limited liability company (“Reorganized Borrower”), certifies to MARQUETTE BUSINESS CREDIT, LLC, a Delaware limited liability company, as follows:

 

1. Each of the following named Persons holds the office set forth opposite his or her respective name; and the signature appearing opposite each such person’s respective name is his or her genuine signature:

 

NAME   TITLE   SIGNATURE
         
MYJOJO, INC, a California corporation   Manager   Salvatore Galletti, its President
         
        /s/ Salvatore Galletti
         
         

 

2. Attached hereto as Exhibit “A” is a true, current and complete copy of the Operating Agreement of the Reorganized Borrower.

 

3. Attached hereto as Exhibit “B” is a true, current and complete copy of the pro forma Form LLC-IA of the Reorganized Borrower that will be filed with the California Secretary of State.

 

  Dated: As of April 10, 2019
     
  MEMBER:
  MYJOJO, INC.
     
  By: /s/ Salvatore Galletti
  Name:  Salvatore Galletti
  Title: President

 

[Member's Certificate re: Consent and Fourth

Amendment to Loan and Security Agreement] 

 

 

 

Exhibit “A” to Member’s Certificate

Operating Agreement of Reorganized Borrower

(see attached)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Member’s Certificate re: Consent and Fourth

Amendment to Loan and Security Agreement] 

 

 

 

OPERATING AGREEMENT
OF
ITTELLA INTERNATIONAL, LLC,
a California Limited Liability Company

 

Effective Date: April 10, 2019

 

This Operating Agreement (this “Agreement”) of ITTELLA INTERNATIONAL, LLC, a California limited liability company (the “Company”), is entered into by the undersigned Member and the Board of Managers, as defined herein, who desire to form and operate a limited liability company pursuant to and in accordance with the California Revised Uniform Limited Liability Company Act as amended from time to time (the “Act”), under the following terms and conditions:

 

1. Name. The name of the limited liability company is ITTELLA INTERNATIONAL, LLC. The business of the Company may be conducted under that name, or such other name or names as the Board deems appropriate. The Board is authorized to make all appropriate filings on behalf of the Company to enable the Company to conduct business under an assumed or different name, and to secure the Company’s proprietary rights to such a name.

 

2. Conversion and Term. On April 10, 2019, the Company was converted into a California limited liability company from a California corporation by the filing of Articles of Organization – Conversion (the “Articles”) with the Secretary of State of the State of California. The Company’s term shall be perpetual, until terminated as provided in this Agreement or the Act.

 

3. Principal Place of Business. The principal office of the Company is 6305 Alondra Blvd, Paramount, CA 90723. The Company may locate its place of business at any other place or places as the Board may from time to time deem advisable; provided, however, that the Company shall at all times maintain within the State of California a registered agent. The initial registered agent for service of process in California is stated in the Articles of Organization.

 

4. Appointment of the Board; Authority and Duties. In accordance with the relevant provisions of the Act, the operations of the Company shall be conducted by a board of managers (the “Board of Managers” and “Board”) who shall be appointed by the Member and may be removed by the Member at any time for any reason. In the event no managers are appointed and serving at any particular time, the Board shall consist solely of the Member. The Board shall have the responsibility and authority to manage the business, property and affairs of the Company in all respects, to execute and deliver on behalf of the Company such documents and instruments as it shall deem reasonably required in connection therewith and to enter into such contracts and to take such actions as it deems from time to time to be in the best interests of the Company; provided, that without the prior written consent of the Member, the Board shall not (i) convey or hypothecate any real property of the Company, (ii) take any action which might cause the Company to dissolve, or (iii) initiate or consent to the filing of a petition in bankruptcy of the Company or admit the allegations of such a petition. There shall be two (2) managers on the Board, which initially consists of MYJOJO, INC, a California corporation, and one initial vacancy.

 

 

 

  

5. Purpose. The Company is formed for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is, engaging in any lawful act or activity for which limited liability companies may be formed under the Act, and engaging in any and all activities necessary or incidental to the foregoing.

 

6. Ownership of Company Assets. All assets owned by the Company shall be owned by the Company as an entity, and held in the name of the Company. Neither the Member nor the Board shall have any ownership interest in any Company property in the Member’s own name or right, and the Member’s interest in the Company is personal property for all purposes.

 

7. Limited Liability. Except as otherwise provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, are solely the debts, obligations and liabilities of the Company, and neither the Member nor any member of the Board is personally obligated for any such debt, obligation or liability of the Company solely by reason of being a manager or member of the Company.

 

8. Capital Contributions. The Member will contribute to the Company, as its initial capital contribution, the amount set forth on the books and records of the Company. The Member is not required to make any additional capital contributions to the Company. A Member may make additional capital contributions to the Company in the Member’s sole and absolute discretion. The Board is neither required nor permitted to make capital contributions to the Company.

 

9. Allocation of Profits and Losses. The Company’s profits and losses shall be allocated to the Member.

 

10. Distributions. Distributions shall be made to the Member at the times and in the amounts determined by the Member. Notwithstanding any provision to the contrary in this Agreement, the Company shall not make a distribution to the Member on account of its interest in the Company if such distribution would violate the relevant provisions of the Act or any other similar applicable law.

 

11. Officers. The Board may, from time to time as the Board deems advisable, appoint officers of the Company (the “Officers”) and assign in writing titles (including, without limitation, President, Vice President, Secretary, and Treasurer) to any such person. Unless the Board decides otherwise, if the title is one commonly used for officers of a business corporation formed under the California General Corporation Law, the assignment of such title constitutes the delegation to such person of the authorities and duties that are normally associated with that office, including, without limitation, the execution of documents, instruments and agreements in the name of and on behalf of the Company. Any delegation pursuant to this Section may be revoked at any time by the Board in writing. As of the date of this Agreement, the Company has no Officers.

 

12. Other Business. The Board or the Member may engage in or possess an interest in other business ventures (unconnected with the Company) of every kind and description, independently or with others. The Company has no rights in or to such independent ventures or the income or profits therefrom.

 

-2-

 

  

13. Exculpation and Indemnification.

 

(a) No member, manager, officer, director, shareholder or other holder of an equity interest in the Company, the Board or the Member, shall be personally liable for the performance of the obligations of the Company, but the foregoing shall not relieve any such member, manager, officer, director or employee of the Company, the Board or the Member, of its obligations to the Company, the Board or the Member.

 

(b) To the fullest extent permitted by applicable law, a Member, manager, Officer or employee of the Company, and the officers, directors and employees of the managers and Member (each of the foregoing a “Person” and collectively the “Persons”) shall be indemnified, defended and held harmless by the Company from and against any and all claims, demands, liabilities, costs, damages, expenses and causes of action of any nature whatsoever arising out of or incidental to any act performed or omitted to be performed by any one or more of such indemnified Persons in connection with the business of the Company; provided, however, the indemnity under this Section shall be paid solely out of and to the extent of the assets owned by the Company and shall not be a personal obligation of the Member. All judgments against the Company, the Board, a manager, a Member, such other Persons or any one or more thereof, wherein such manager or Member is entitled to indemnification, must be satisfied from the assets owned by of the Company.

 

14. Assignments. A Member may assign in whole or in part its limited liability company interest. If a Member transfers its interest in the Company, the transferee shall be admitted to the Company upon its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement; and if a Member transfers its entire membership interest in the Company and there are no other Members of the Company, the admission of the transferee as a Member of the Company shall be deemed effective concurrent with the termination of the transferor as a Member of the Company. The Board may not transfer its rights or obligations under this Agreement in whole or in part.

 

15. Withdrawal. A Member may withdraw from the Company. If a Member withdraws from the Company and there are no other Members of the Company at the time, a new Member shall be admitted to the Company, subject to Section 17 below, upon its execution of an instrument signifying its agreement to be bound by the terms and conditions of this Agreement. The admission of the new Member shall be deemed effective concurrent with the termination of the withdrawing Member.

 

16. Admission of Additional Members. One (1) or more additional members of the Company may be admitted to the Company with the written consent of the Member. If the Company subsequently has more than one Member, then all references in this Agreement to the singular “Member” will refer to all of the Members of the Company, and any matter requiring the consent of the “Member” under this Agreement will require the consent of a majority in interest of the Members.

 

17. Dissolution.

 

(a) The Company shall dissolve, and its affairs shall be wound up upon the first to occur of the following: (i) the occurrence of any dissolution event set forth in the Articles of Organization, as the same may be amended from time to time, (ii) the written consent of the Member, (iii) the withdrawal or dissolution of the Member or the occurrence of any other event which terminates the continued membership of the Member in the Company unless the business of the Company is continued in a manner permitted by the Act, or (iv) the entry of a decree of judicial dissolution under the relevant provisions of the Act.

 

-3-

 

  

(b) The bankruptcy of the Member will not cause the Member to cease to be a member of the Company, and upon the occurrence of such an event, the business of the Company shall continue without dissolution.

 

(c) In the event of dissolution, the Board shall conduct only such activities as are necessary to wind up the affairs of the Company (including the sale of the assets of the Company in an orderly manner), and the assets of the Company shall be applied in the manner, and in the order of priority, set forth in the relevant provisions of the Act.

 

18. Separability of Provisions. Each provision of this Agreement is separable and if for any reason any provision or provisions herein are determined to be invalid, unenforceable or illegal under any existing or future law, such invalidity, unenforceability or illegality does not impair the operation of or affect those portions of this Agreement which are valid, enforceable and legal.

 

19. Entire Agreement. This Agreement and the exhibits to this Agreement constitute the entire agreement of the Member with respect to the subject matter hereof. The exhibits to this Agreement are incorporated into and made a part of this Agreement by reference. This Agreement is intended to be a legally binding document.

 

20. Governing Law. This Agreement shall be governed by, and construed under, the internal laws of the State of California, all rights and remedies being governed by California law.

 

21. Amendments. This Agreement may not be modified, altered, supplemented or amended except pursuant to a writing executed and delivered by the Member.

 

-4-

 

 

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Agreement effective as of the Effective Date first written above.

 

  MANAGER:
     
  MYJOJO, INC.
     
  By: /s/ Salvatore Galletti
  Name:  Salvatore Galletti
  Title: President

 

  MEMBER:
     
  MYJOJO, INC.
     
  By: /s/ Salvatore Galletti
  Name:  Salvatore Galletti
  Title: President

  

 

 

 

Exhibit “B” to Member’s Certificate

 

Pro Forma Form LLC-1A of Reorganized Borrower


(see attached)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Member’s Certificate re: Consent and Fourth

Amendment to Loan and Security Agreement]

 

 

 

 

 

 

 

SCHEDULE 5.1(a)

 

ORGANIZATION; POWER; QUALIFICATION

(see attached)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Schedule 5.1(a)-- Consent and Fourth

Amendment to Loan and Security Agreement]

 

 

 

FIFTH AMENDMENT TO

LOAN AND SECURITY AGREEMENT

 

THIS FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) dated as of June l4, 2019, is entered into by MARQUETTE BUSINESS CREDIT, LLC, a Delaware limited liability company (“Lender”), and ITTELLA INTERNATIONAL, LLC, a California limited liability company, successor in interest to ITTELLA INTERNATIONAL, INC., a California corporation (“Borrower”) with reference to the following facts:

 

RECITALS

 

A. Lender and Borrower are parties to a Loan and Security Agreement dated as of September 25, 2017 (as has been or may be amended, supplemented, replaced, restated or otherwise modified, the “Loan Agreement”), pursuant to which Lender has provided certain credit facilities to Borrower.

 

B. Borrower has requested that Lender make certain modifications of the Loan Agreement as set forth herein.

 

C. Lender is willing to provide such accommodations to the Borrower on the terms and conditions set forth below.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1. Defined Terms. Any and all initially capitalized terms used in this Amendment (including, without limitation, in the Recitals to this Amendment) without definition shall have the respective meanings assigned thereto in the Loan Agreement.

 

1. Borrowing Base. The definition of “Borrowing Base” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

“‘Borrowing Base’ means, as of any date of determination, an amount equal to:

 

(a) ninety percent (90%) (or such lesser percentage as Lender may in its sole and absolute discretion determine from time to time) of the Net Amount of Eligible Accounts; plus

 

(b) the least of:

 

(i) the sum of:

 

(A) fifty percent (50%) (or such lesser percentage as Lender may in its sole and absolute discretion determine from time to time) of the Net Amount of Eligible Inventory: plus

 

(B) forty-five percent (45%) (or such lesser percentage as Lender may in its sole and absolute discretion determine from time to time) of the Net Amount of Eligible In-Transit Inventory;

 

(ii) $4,000,000; or

 

(iii) fifty percent (50%) of the aggregate amount of Revolving Loans outstanding, minus

 

 

 

 

(c) the sum of all Reserves.

 

Without limiting Lender’s discretion to implement other Reserves, Lender shall institute Reserves with respect to Eligible Accounts in the event that dilution exceeds 1.00% such that the advance rate shall be reduced by 1.00% for each percentage of dilution in excess of 1.00% and Lender shall institute Reserves in the amount of any Producer Payables.”

 

2. Revolving Facility Limit. The definition of “Revolving Facility Limit” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

Revolving Facility Limit” means $10,000,000 minus Letter of Credit Exposure.”

 

3. Capital Expenditures. Section 9.1(c) of the Loan Agreement is hereby amended and to read in full as follows:

 

“(c) Maximum Non-Financed Capital Expenditures. Borrower’s Non-Financed Capital Expenditures shall not exceed (a) $1,500,000 in the fiscal year ended December 31, 2019, and (b) $50,000 in any subsequent fiscal year.”

 

2. Enforceability of Indebtedness, Collateral and Loan Documents. Borrower and each Guarantor acknowledges and agrees that:

 

(a) Lender has a valid, perfected and first priority security interest and lien upon all of the Collateral to secure the Obligations.

 

(b) Each of the Loan Documents is in full force and effect, and is enforceable against Borrower and the Collateral in accordance with its respective terms.

 

(c) Borrower has no defenses, offsets, recoupments or counterclaims to: (i) its obligation to pay all amounts from time to time owing and to perform all obligations required to be performed under the Loan Documents, (ii) enforcement of Lender’s rights in and to the Collateral, or (iii) enforcement of any other of Lender’s rights or remedies.

 

3. Representations and Warranties. Borrower represents and warrants to Lender that:

 

(a) There exists no Default or Event of Default, or any other condition or occurrence of events that now constitute or with the passage of time or the giving of notice or both, would constitute a Default or Event of Default, under the Loan Agreement or any other Loan Document.

 

(b) Each person executing and delivering this Amendment (other than Lender), has been duly authorized by all necessary corporate action.

 

(c) All representations and warranties contained in the Loan Documents, except for those that speak as of a particular date, are and remain true and correct in all material respects as of the date of this Amendment.

 

4. Conditions Precedent. The effectiveness of this Amendment shall be subject to the prior satisfaction of each of the following conditions:

 

 

 

 

(a) This Amendment. Lender shall have received this Amendment duly executed by an authorized officer of Borrower;

 

(b) Guaranty Reaffirmation and Amendment. Lender shall have received duly executed reaffirmation and amendment executed by Salvatore Galletti in form acceptable to Lender;

 

(c) Guaranty Reaffirmation. Lender shall have received duly executed reaffirmation and amendment executed by Deluna Investments, Inc. in form acceptable to Lender; and

 

(d) Manager’s Certificate. Lender shall have received a duly executed Manager’s Certificate in form acceptable to Lender.

 

5. Integration. This Amendment, the Loan Documents and the documents referred to herein constitute the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.

 

6. Counterparts. This Amendment may be executed in multiple counterparts, each of which when so executed and delivered shall be deemed an original, and all of which, taken together, shall constitute but one and the same agreement.

 

7. Governing Law. This Amendment, the interpretation and construction of this Amendment and any provision of this Amendment and of any issue relating to the transactions contemplated by this Amendment shall be governed by the laws of the State of California, not including conflicts of law rules.

 

8. Further Assurances. Borrower agrees to execute and deliver such other agreements, documents and instruments and take such other actions as Lender may reasonably request in connection with the transactions contemplated by this Amendment.

 

[Signature Page Follows]

 

 

 

 

IN WITNESS WHEREOF, Borrower and Lender have executed this Amendment by their respective duly authorized officers as of the date first above written.

 

  MARQUETTE BUSINESS CREDIT, LLC,
  a Delaware limited liability company
   
  By: /s/ Xavier Gannon
  Name: Xavier Gannon
  Title: Senior Vice President
   
  ITTELLA INTERNATIONAL, LLC, a California limited liability company, successor in interest to ITTELLA INTERNATIONAL, INC., a California corporation
   
  By: /s/ Stephanie Dieckmann
  Name: Stephanie Dieckmann
  Title: COO

 

 

[Signature Page to Fifth Amendment to Loan

and Security Agreement]

 

S-1

 

 

GUARANTY REAFFIRMATION AND AMENDMENT

 

Reference is made to the Continuing Guaranty, dated as of September 25, 2017 (the “Guaranty”), by the undersigned in favor of Marquette Business Credit, LLC.

 

The undersigned hereby:

 

(a) consents to and acknowledges the terms and conditions of the foregoing Amendment,

 

(b) acknowledges and reaffirms its obligations owing to Lender under the Guaranty and each of the other loan documents executed by it in favor of Lender, and

 

(c) acknowledges that the release condition set forth in Section 3 was not satisfied and agrees that its obligations under such documents are and shall remain in full force and effect; and

 

(e) agrees that Section 3 of the Guaranty is hereby amended to read in full as follows:

 

“3. Release Condition. After payment in full of the Term Loan, Guarantor’s guaranty of the Obligations shall be released by Lender.”

 

 

   
  SALVATORE GALLETTI, an individual
   
  ACCEPTED AND AGREED:
   
 

MARQUETTE BUSINESS CREDIT, LLC,

a Delaware limited liability company

 

[Guaranty Reaffirmation and Amendment -

Fifth Amendment to Loan and Security

Agreement]

 

 

 

 

GUARANTY REAFFIRMATION AND AMENDMENT

 

Reference is made to the Continuing Guaranty, dated as of September 25, 2017 (the “Guaranty”), by the undersigned in favor of Marquette Business Credit, LLC.

 

The undersigned hereby:

 

(a) consents to and acknowledges the terms and conditions of the foregoing Amendment,

 

(b) acknowledges and reaffirms its obligations owing to Lender under the Guaranty and each of the other loan documents executed by it in favor of Lender, and

 

(c) acknowledges that the release condition set forth in Section 3 was not satisfied and agrees that its obligations under such documents are and shall remain in full force and effect; and

 

(e) agrees that Section 3 of the Guaranty is hereby amended to read in full as follows:

 

“3. Release Condition. After payment in full of the Term Loan, Guarantor’s guaranty of the Obligations shall be released by Lender.”

 

                      
  SALVATORE GALLETTI, an individual
   
  ACCEPTED AND AGREED:
   
  MARQUETTE BUSINESS CREDIT, LLC, a Delaware limited liability company
   
 
  By: /s/ Xavier Gannon
  Name:  Xavier Gannon
  Title: Senior Vice President

 

[Guaranty Reaffirmation and Amendment -

Fifth Amendment to Loan and Security

Agreement]

 

 

 

 

GUARANTY REAFFIRMATION

 

The undersigned hereby (a) consents to and acknowledges the terms and conditions of the foregoing Amendment, (b) acknowledges and reaffirms its obligations owing to Lender under the Continuing Guaranty dated as of November 22, 2017, the Deed of Trust, Assignment of Rents and Fixture Filing and each of the other loan documents executed by it in favor of Lender, and (c) agrees that its obligations under such documents are and shall remain in full force and effect. Although the undersigned is acknowledging and agreeing to the foregoing, the undersigned understands that Lender has no obligation to inform it of such matters in the future or to seek its acknowledgment or agreement to future amendments or waivers, and nothing herein shall create such a duty.

 

 

DELUNA INVESTMENTS, INC., a California corporation

   
  By: /s/ S Galletti
  Name: S Galletti
  Title: CEO

 

 

[Guaranty Reaffirmation - Fifth Amendment to

Loan and Security Agreement]

 

 

 

 

MEMBER’S CERTIFICATE

 

(ITTELLA INTERNATIONAL, LLC)

 

The undersigned, a duly authorized officer of ITTELLA INTERNATIONAL, LLC, a California limited liability company (“Borrower”), certifies to MARQUETTE BUSINESS CREDIT, LLC, a Delaware limited liability company, as follows:

 

1. Borrower has requested that Lender enter into the Fifth Amendment of even date herewith (the “Agreement”) with respect to the Loan and Security Agreement dated as of September 25, 2017 (as has been or may be amended, supplemented, replaced, restated or otherwise modified, the “Loan Agreement”) by and between Borrower and Lender.

 

2. The following is a true copy of resolutions duly adopted by the members by unanimous written consent:

 

“RESOLVED that the terms of the Fifth Amendment between the Company and Marquette Business Credit, LLC (‘Lender’) are hereby approved and ratified.

 

FURTHER RESOLVED, that any one manager of the company is hereby authorized and directed, on behalf of this limited liability company, to make, execute, and deliver to Lender any and all documents and to do any and all acts necessary or desirable to effectuate the foregoing resolution.”

 

3. These resolutions are in conformity with the articles of formation and operating company of Borrower, have never been modified or repealed, and are now in full force and effect.

 

4. No further approvals or authorizations are necessary for Borrower to execute, deliver and perform under the Agreement.

 

5. As of the date set forth below, (a) all of the representations and warranties in the Loan Agreement are true and correct, and (b) no “Default” or “Event of Default” (as each such term is defined in the Loan Agreement) has occurred.

 

  Dated: As of June 14, 2019
   
  /s/ Stephanie Dieckmann
  Name: Stephanie Dieckmann
  Title: COO

 

 

[Manager’s Certificate -- Fifth Amendment to

Loan and Security Agreement]

 

 

 

 

SIXTH AMENDMENT TO
LOAN AND SECURITY AGREEMENT

 

THIS SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) dated as of December 16, 2019, is entered into by MARQUETTE BUSINESS CREDIT, LLC, a Delaware limited liability company (“Lender”), and ITTELLA INTERNATIONAL, LLC, a California limited liability company, successor in interest to ITTELLA INTERNATIONAL, INC., a California corporation (“Borrower”) with reference to the following facts:

 

RECITALS

 

A. Lender and Borrower are parties to a Loan and Security Agreement dated as of September 25, 2017 (as has been or may be amended, supplemented, replaced, restated or otherwise modified, the “Loan Agreement”), pursuant to which Lender has provided certain credit facilities to Borrower.

 

B. Borrower has requested that Lender make certain modifications of the Loan Agreement as set forth herein.

 

C. Lender is willing to provide such accommodations to the Borrower on the terms and conditions set forth below.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1. Defined Terms. Any and all initially capitalized terms used in this Amendment (including, without limitation, in the Recitals to this Amendment) without definition shall have the respective meanings assigned thereto in the Loan Agreement.

 

1. Borrowing Base. The definition of “Borrowing Base” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

“‘Borrowing Base’ means, as of any date of determination, an amount equal to:

 

(a) ninety percent (90%) (or such lesser percentage as Lender may in its sole and absolute discretion determine from time to time) of the Net Amount of Eligible Accounts; plus

 

(b) the least of:

 

(i) the sum of:

 

(A) fifty percent (50%) (or such lesser percentage as Lender may in its sole and absolute discretion determine from time to time) of the Net Amount of Eligible Inventory; plus

 

(B) forty-five percent (45%) (or such lesser percentage as Lender may in its sole and absolute discretion determine from time to time) of the Net Amount of Eligible In-Transit Inventory;

 

(ii) $5,000,000; or

 

(iii) fifty percent (50%) of the aggregate amount of Revolving Loans outstanding, minus

 

 

 

(c) the sum of all Reserves.

 

Without limiting Lender’s discretion to implement other Reserves, Lender shall institute Reserves with respect to Eligible Accounts in the event that dilution exceeds 1.00% such that the advance rate shall be reduced by 1.00% for each percentage of dilution in excess of 1.00% and Lender shall institute Reserves in the amount of any Producer Payables.”

 

2. Capex Facility Limit. The definition of “Capex Facility Limit” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

“‘Capex Facility Limit’ means $1,886,000; provided that as of December 16, 2019, $1,500,000 remains available to be drawn.”

 

3. Contract Rate. The definition of “Contract Rate” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

“‘Contract Rate’ means for any date a per annum rate equal to: (a) with respect to Revolving Loans and Capex Loans, the sum of the Base Rate in effect from time to time plus one percent (1.00%), and (b) with respect to the Term Loan, the sum of the Base Rate in effect from time to time plus one and one half percent (1.50%).”

 

4. LIBOR Rate. The definition of “LIBOR Rate” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

“‘LIBOR Rate’ means, on any date of determination, the greater of (a) zero and (b) the rate of interest per annum reported on Reuters Screen LIBOROI (or any successor page or other commercially available, generally recognized financial information source providing quotations of the London Interbank Offered Rate (“LIBOR”), as determined by Lender from time to time) at approximately 11:00 a.m., London time, on such day (or, if such day is not a Business Day, on the preceding Business Day) for dollar deposits in the amount of $1,000,000 with a maturity of one month; provided that if Lender determines in good faith for any reason that (a) it is not reasonably possible to determine the LIBOR Rate, (b) the LIBOR Rate is no longer available or generally used in commercial loan transactions, or (c) it is no longer lawful for Lender to make Loans based on the LIBOR Rate, the Lender may in its reasonable discretion designate a replacement benchmark index for LIBOR and select a spread adjustment between LIBOR and such replacement benchmark index rate. The determination of the LIBOR Rate by Lender shall be conclusive in the absence of manifest error. The LIBOR Rate shall be determined on the first Business Day of each calendar month.”

 

5. Permitted Affiliate Loan. The definition of “Permitted Affiliate Loan” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

“‘Permitted Affiliate Loan’ means a loan from Borrower to an Affiliate of Borrower to assist in the establishment of an operation in Italy, in a maximum outstanding amount any time of $3,500,000.”

 

6. Revolving Facility Limit. The definition of “Revolving Facility Limit” in Section 1.1 of the Loan Agreement is hereby amended to read in full as follows:

 

“‘Revolving Facility Limit’ means $15,000,000.”

 

 

 

2. Enforceability of Indebtedness, Collateral and Loan Documents. Borrower and each Guarantor acknowledges and agrees that:

 

(a) Lender has a valid, perfected and first priority security interest and lien upon all of the Collateral to secure the Obligations.

 

(b) Each of the Loan Documents is in full force and effect, and is enforceable against Borrower and the Collateral in accordance with its respective terms.

 

(c) Borrower has no defenses, offsets, recoupments or counterclaims to: (i) its obligation to pay all amounts from time to time owing and to perform all obligations required to be performed under the Loan Documents, (ii) enforcement of Lender’s rights in and to the Collateral, or (iii) enforcement of any other of Lender’s rights or remedies.

 

3. Representations and Warranties. Borrower represents and warrants to Lender that:

 

(a) There exists no Default or Event of Default, or any other condition or occurrence of events that now constitute or with the passage of time or the giving of notice or both, would constitute a Default or Event of Default, under the Loan Agreement or any other Loan Document.

 

(b) Each person executing and delivering this Amendment (other than Lender), has been duly authorized by all necessary corporate action.

 

(c) All representations and warranties contained in the Loan Documents, except for those that speak as of a particular date, are and remain true and correct in all material respects as of the date of this Amendment.

 

4. Conditions Precedent. The effectiveness of this Amendment shall be subject to the prior satisfaction of each of the following conditions:

 

(a) This Amendment. Lender shall have received this Amendment duly executed by an authorized officer of Borrower;

 

(b) Guaranty Reaffirmation. Lender shall have received duly executed reaffirmations executed by Deluna Investments, Inc. and Salvatore Galletti in form acceptable to Lender; and

 

(c) Manager’s Certificate. Lender shall have received a duly executed Manager’s Certificate in form acceptable to Lender.

 

5. Integration. This Amendment, the Loan Documents and the documents referred to herein constitute the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.

 

6. Counterparts. This Amendment may be executed in multiple counterparts, each of which when so executed and delivered shall be deemed an original, and all of which, taken together, shall constitute but one and the same agreement.

 

 

 

7. Governing Law. This Amendment, the interpretation and construction of this Amendment and any provision of this Amendment and of any issue relating to the transactions contemplated by this Amendment shall be governed by the laws of the State of California, not including conflicts of law rules.

 

8. Further Assurances. Borrower agrees to execute and deliver such other agreements, documents and instruments and take such other actions as Lender may reasonably request in connection with the transactions contemplated by this Amendment.

 

[Signature Page Follows]

 

 

 

IN WITNESS WHEREOF, Borrower and Lender have executed this Amendment by their respective duly authorized officers as of the date first above written.

 

  MARQUETTE BUSINESS CREDIT, LLC,
a Delaware limited liability company

 

  By:  
  Name: Xavier Gannon
  Title: SVP Client Manager

 

  ITTELLA INTERNATIONAL, LLC, a California limited liability company, successor in interest to ITTELLA INTERNATIONAL, INC., a California corporation

 

  By: /s/ Stephanie Dieckmann
  Name: Stephanie Dieckmann
  Title: COO

 

  S-1 [Signature Page to Sixth Amendment to Loan
and Security Agreement]

 

 

GUARANTY REAFFIRMATION

 

Reference is made to the Continuing Guaranty, dated as of September 25, 2017 (the “Guaranty”), by the undersigned in favor of Marquette Business Credit, LLC. The undersigned hereby: (a) consents to and acknowledges the terms and conditions of the foregoing Amendment, (b) acknowledges and reaffirms its obligations owing to Lender under the Guaranty and each of the other loan documents executed by it in favor of Lender, and (c) agrees that its obligations under such documents are and shall remain in full force and effect. Although the undersigned is acknowledging and agreeing to the foregoing, the undersigned understands that Lender has no obligation to inform it of such matters in the future or to seek its acknowledgment or agreement to future amendments or waiver, and nothing herein shall create such a duty.

 

  /s/ Salvatore Galletti
  SALVATORE GALLETTI, an individual

 

  [Guaranty Reaffirmation - Sixth Amendment to
Loan and Security Agreement]

 

 

GUARANTY REAFFIRMATION

 

The undersigned hereby (a) consents to and acknowledges the terms and conditions of the foregoing Amendment, (b) acknowledges and reaffirms its obligations owing to Lender under the Continuing Guaranty dated as of November 22, 2017, the Deed of Trust, Assignment of Rents and Fixture Filing and each of the other loan documents executed by it in favor of Lender, and (c) agrees that its obligations under such documents are and shall remain in full force and effect. Although the undersigned is acknowledging and agreeing to the foregoing, the undersigned understands that Lender has no obligation to inform it of such matters in the future or to seek its acknowledgment or agreement to future amendments or waivers, and nothing herein shall create such a duty.

 

  DELUNA INVESTMENTS, INC.,
a California corporation

 

  By: /s/ Salvatore Galletti
  Name: Salvatore Galletti
  Title: CEO

 

  [Guaranty Reaffirmation - Sixth Amendment to
Loan and Security Agreement]

 

 

MEMBER’S CERTIFICATE

 

(ITTELLA INTERNATIONAL, LLC)

 

The undersigned, a duly authorized officer of ITTELLA INTERNATIONAL, LLC, a California limited liability company (“Borrower”), certifies to MARQUETTE BUSINESS CREDIT, LLC, a Delaware limited liability company, as follows:

 

1. Borrower has requested that Lender enter into the Sixth Amendment of even date herewith (the “Agreement”) with respect to the Loan and Security Agreement dated as of September 25, 2017 (as has been or may be amended, supplemented, replaced, restated or otherwise modified, the “Loan Agreement”) by and between Borrower and Lender.

 

2. The following is a true copy of resolutions duly adopted by the members by unanimous written consent:

 

“RESOLVED that the terms of the Sixth Amendment between the Company and Marquette Business Credit, LLC (tender’) are hereby approved and ratified.

 

FURTHER RESOLVED, that any one manager of the company is hereby authorized and directed, on behalf of this limited liability company, to make, execute, and deliver to Lender any and all documents and to do any and all acts necessary or desirable to effectuate the foregoing resolution.”

 

3. These resolutions are in conformity with the articles of formation and operating company of Borrower, have never been modified or repealed, and are now in full force and effect.

 

4. No further approvals or authorizations are necessary for Borrower to execute, deliver and perform under the Agreement.

 

5. As of the date set forth below, (a) all of the representations and warranties in the Loan Agreement are true and correct, and (b) no “Default” or “Event of Default” (as each such term is defined in the Loan Agreement) has occurred.

 

  Dated: As of December 16, 2019
     
  By: /s/ Stephanie Dieckmann
  Name: Stephanie Dieckmann
  Title: COO

 

  [Merger’s Certificate - Sixth Amendment to
Loan and Security Agreement]

 

 

CREDIT LINE AGREEMENT

 

FIRST AMENDMENT

 

This First Amendment dated July 25, 2018 will serve to extend its termination date from original Credit Line Agreement dated August 1, 2017 for 1 year. The effective date is July 1, 2018 and will terminate on August 31, 2019.

 

By Borrower signing this First Amendment to extend its termination date Borrower also agrees to the same Terms and Conditions to the original Agreement.

 

Borrower:   Lender:
     
ITTELLA CHEF   Ittella International, Inc.
     
/s/ Salvatore Galletti   /s/ Salvatore Galletti
Salvatore Galletti, Officer   Salvatore Galletti, CEO
     
Date: July 25, 2018   Date: July 25, 2018

 

 

 

 

 

 

 

 

 

 

 

 

LOAN AND SECURITY AGREEMENT

 

dated as of September 25, 2017

 

between

 

MARQUETTE BUSINESS CREDIT, LLC,

as Lender

 

 

and

 

 

ITTELLA INTERNATIONAL, INC.

as Borrower

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page
     
ARTICLE I - DEFINITIONS 1
     
Section 1.1 Definitions 1
     
Section 1.2 UCC Terms 15
     
Section 1.3 Accounting Terms and Determinations 15
     
Section 1.4 Interpretative Provisions 15
     
ARTICLE II - REVOLVING CREDIT FACILITY 16
     
Section 2.1 Revolving Loans 16
     
Section 2.2 Advances 16
     
Section 2.3 Repayment of the Revolving Loans 16
     
Section 2.4 Disbursement of Revolving Loans 16
     
Section 2.5 Deemed Requests for Revolving Loans to Pay Required Payments 17
     
Section 2.6 Capex Loans 17
     
ARTICLE III - GENERAL LOAN PROVISIONS; FEES AND EXPENSES 18
     
Section 3.1 Interest 18
     
Section 3.2 Fees and Expenses 18
     
Section 3.3 Manner of Payment 19
     
Section 3.4 Termination of Agreement or Facility 19
     
Section 3.5 Evidence of Debt 20
     
Section 3.6 Changes in Capital Adequacy Regulations 20
     
Section 3.7 Lender Statements; Survival of Indemnity 20
     
Section 3.8 Maximum Interest; Controlling Limitation 20
     
ARTICLE IV - CONDITIONS PRECEDENT 21
     
Section 4.1 Conditions Precedent 21
     
Section 4.2 Conditions to Subsequent Advances 23
     
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BORROWER 23
     
Section 5.1 Representations and Warranties 23
     
Section 5.2 Survival of Representations 27
     
ARTICLE VI - SECURITY INTEREST AND COLLATERAL COVENANTS 27
     
Section 6.1 Security Interest 27
     
Section 6.2 Collection of Accounts 27
     
Section 6.3 Verification of Accounts 27
     
Section 6.4 Disputes, Returns and Adjustments 27

 

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TABLE OF CONTENTS

(continued)

 

    Page
     
Section 6.5 Invoices 28
     
Section 6.6 Ownership; Defense of Title 28
     
Section 6.7 Locations; Organizational Information; Inventory 28
     
Section 6.8 Records Relating to Collateral 28
     
Section 6.9 Inspection 28
     
Section 6.10 Maintenance 29
     
Section 6.11 Appraisals 29
     
Section 6.12 Preservation of Lender’s Rights 29
     
Section 6.13 Perfection and Protection of Lender’s Security Interest 29
     
Section 6.14 Power of Attorney 29
     
ARTICLE VII - AFFIRMATIVE COVENANTS 30
     
Section 7.1 Preservation of Corporate Existence and Similar Matters 30
     
Section 7.2 Compliance with Applicable Law 30
     
Section 7.3 Conduct of Business 30
     
Section 7.4 Payment of Taxes and Claims 30
     
Section 7.5 Accounting Methods and Financial Records 31
     
Section 7.6 Use of Proceeds 31
     
Section 7.7 Hazardous Waste and Substances; Environmental Requirements 31
     
Section 7.8 Accuracy of Information 31
     
Section 7.9 Revisions or Updates to Schedules 31
     
Section 7.10 ERISA 31
     
Section 7.11 Insurance 31
     
Section 7.12 Payroll Taxes 32
     
Section 7.13 Notice of Certain Matters 32
     
Section 7.14 Deposit Accounts 32
     
Section 7.15 Producer Payables 32
     
ARTICLE VIII - FINANCIAL AND COLLATERAL REPORTING 32
     
Section 8.1 Financial Statements 32
     
Section 8.2 Compliance Certificate 33
     
Section 8.3 Collateral Information and Reports 33
     
ARTICLE IX - NEGATIVE COVENANTS 34
     
Section 9.1 Financial Covenants 34

 

-ii-

 

 

TABLE OF CONTENTS

(continued)

 

    Page
     
Section 9.2 Prohibited Distributions and Payments, Etc. 34
     
Section 9.3 Debt 35
     
Section 9.4 Liens 35
     
Section 9.5 Loans 35
     
Section 9.6 Merger, Consolidation, Sale of Assets, Acquisitions 35
     
Section 9.7 Transactions with Affiliates 35
     
Section 9.8 Contingent Liabilities 35
     
Section 9.9 Operating Leases 35
     
Section 9.10 Benefit Plans 35
     
Section 9.11 Sales and Leasebacks 35
     
Section 9.12 Investments 35
     
Section 9.13 Amendments 35
     
Section 9.14 No Restrictions on Subsidiary Distributions 35
     
Section 9.15 Collateral Locations 36
     
Section 9.16 USA Patriot Act 36
     
Section 9.17 SANCTIONS 36
     
ARTICLE X - DEFAULT 36
     
Section 10.1 Events of Default 36
     
Section 10.2 Remedies 37
     
Section 10.3 Application of Proceeds 38
     
Section 10.4 Miscellaneous Provisions Concerning Remedies 38
     
Section 10.5 Trademark License 38
     
ARTICLE XI - MISCELLANEOUS 39
     
Section 11.1 Notices 39
     
Section 11.2 Expenses 39
     
Section 11.3 Setoff 40
     
Section 11.4 Venue; Service of Process 40
     
Section 11.5 Assignment; Participation 41
     
Section 11.6 Amendments and Waivers 41
     
Section 11.7 Performance of Borrower’s Duties 41
     
Section 11.8 Indemnification 41
     
Section 11.9 All Powers Coupled with Interest 42

 

-iii-

 

 

TABLE OF CONTENTS

(continued)

 

    Page
     
Section 11.10 Severability of Provisions 42
     
Section 11.11 GOVERNING LAW 42
     
Section 11.12 Jury Waiver 42
     
Section 11.13 Counterparts; Integration 42
     
Section 11.14 Time is of the Essence 42
     
Section 11.15 Waiver of Consumer Rights 42
     
Section 11.16 Patriot Act Notice 43
     
Section 11.17 Press Releases and Related Matters 43

 

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LOAN AND SECURITY AGREEMENT

 

This Loan and Security Agreement (this “Agreement”) is executed by and between MARQUETTE BUSINESS CREDIT, LLC (together with its successors and assigns, “Lender”) and ITTELLA INTERNATIONAL, INC., a corporation organized under the laws of the State of California (“Borrower”), as of September 25, 2017. Lender and Borrower hereby agree as follows:

 

ARTICLE I - DEFINITIONS

 

Section 1.1 Definitions. When used in this Agreement, the capitalized terms set forth below shall have the definitions assigned to such terms below:

 

Account Debtor” means a Person who is obligated on an account.

 

Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of a Person, or of all or substantially all of any business or division of a Person, (b) the acquisition of in excess of 50% of the Equity Interests of any Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger or consolidation or any other combination with another Person (other than a Person that is already a Subsidiary).

 

Affiliate” of a Person means another Person which, directly or indirectly, controls, is controlled by, or is under common control with, such former Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities or partnership or other interests, by contract or otherwise. Without limiting the forgoing, UMB Bank, n.a., UMB Financial Corporation and all of its direct and indirect subsidiaries are Affiliates of Lender.

 

Agreement” has the meaning prescribed for such term in the preamble paragraph of this Agreement.

 

Anti-Corruption Laws” means: (a) the U.S. Foreign Corrupt Practices Act of 1977, as amended; (b) the U.K. Bribery Act 2010, as amended; and (c) any other anti-bribery or anti-corruption laws, regulations or ordinances in any jurisdiction in which Borrower is located or doing business.

 

Anti-Money Laundering Laws” means applicable laws or regulations in any jurisdiction in which Borrower is located or doing business that relates to money laundering, any predicate crime to money laundering, or any financial record keeping and reporting requirements related thereto.

 

Applicable Law” means, as to any Person, any law (statutory or common), treaty, rule or regulation of a governmental authority or determination of a court or binding arbitrator, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

 

Availability” means, as of any date, the positive difference between (i) the Borrowing Base on such date and (ii) the outstanding principal amount of the Revolving Loans on such date.

 

Base Rate” means for any day a rate per annum equal to the higher of (a) the Prime Rate in effect on such day, or (b) the LIBOR Rate plus two percent (2%), which LIBOR Rate shall be determined by Lender on a daily basis (or, if such day is not a LIBOR Business Day, on the preceding LIBOR Business Day). Any change in the Base Rate resulting from a change in either the Prime Rate or the LIBOR Rate shall become effective on the day such change occurs.

 

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Benefit Plan” means a defined benefit plan as defined in Section 3(35) of ERISA (other than a Multiemployer Plan) in respect of which a Person or any Related Company is, or within the immediately preceding six (6) years was, an “employer” as defined in Section 3(5) of ERISA, including such plans as may be established after the date hereof.

 

Borrower” has the meaning prescribed for such term in the preamble paragraph of this Agreement.

 

Borrowing Base” means, as of any date of determination, an amount equal to:

 

(a) ninety percent (90%) (or such lesser percentage as Lender may in its sole and absolute discretion determine from time to time) of the Net Amount of Eligible Accounts; plus

 

(b) the least of:

 

(i) the sum of:

 

(A) fifty percent (50%) (or such lesser percentage as Lender may in its sole and absolute discretion determine from time to time) of the Net Amount of Eligible Inventory; plus

 

(B) forty-five percent (45%) (or such lesser percentage as Lender may in its sole and absolute discretion determine from time to time) of the Net Amount of Eligible In-Transit Inventory;

 

(ii) $2,250,000; or

 

(iii) fifty percent (50%) of the aggregate amount of Revolving Loans outstanding, minus

 

(c) the sum of all Reserves.

 

Without limiting Lender’s discretion to implement other Reserves, Lender shall institute Reserves with respect to Eligible Accounts in the event that dilution exceeds 1.00% such that the advance rate shall be reduced by 1.00% for each percentage of dilution in excess of 1.00% and Lender shall institute Reserves in the amount of any Producer Payables.

 

Borrowing Base Certificate” means a certificate in the form of Exhibit A attached hereto or otherwise in a form acceptable to Lender.

 

Business Day” means any day that is not a Saturday, Sunday, or other day on which commercial banks in Los Angeles, California, are authorized or required by law to remain closed, or is a day when Lender is otherwise closed.

 

Borrowed Debt” means Debt (i) that is represented by notes payable, drafts accepted, bonds, debentures or similar instruments that represent extensions of credit, (ii) upon which interest charges are customarily paid (other than trade Debt), (iii) that was issued or assumed as full or partial payment for property, (iv) that is evidenced by a guarantee (but only if the obligations guaranteed would otherwise qualify as Money Borrowed), (v) that constitutes reimbursement obligations with respect to letters of credit, or (vi) that constitutes a Capitalized Lease Obligation.

 

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Capex Facility Limit” means $500,000.

 

Capex Loans” means the advances made to Borrower pursuant to Section 2.6.

 

Capital Expenditures” means, with respect to any Person, all expenditures made and liabilities incurred for the acquisition of assets which are required to be capitalized in accordance with GAAP.

 

Capitalized Lease” means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

 

Capitalized Lease Obligation” means Debt represented by obligations under a Capitalized Lease, and the amount of such Debt shall be the capitalized amount of such obligations determined in accordance with GAAP.

 

Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any governmental authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any governmental authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

Change of Control” means, at any time, (a) the Controlling Equity Holder shall cease to beneficially own and control at least one hundred percent (100%) on a fully diluted basis of the economic and voting interests in the Equity Interests of Borrower, (b) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as amended) other than the Controlling Equity Holder (i) shall have acquired beneficial ownership of ten percent (10%) or more on a fully diluted basis of the voting and/or economic interest in the Equity Interests of Borrower or (ii) shall have obtained the power (whether or not exercised) to elect a majority of the members of the Board of Directors (or similar governing body) of Borrower, (c) Borrower shall cease to beneficially own and control 100% on a fully diluted basis of the economic and voting interest in the Equity Interests in each of its Subsidiaries (if any), or (d) any “change of control” or similar event under any Subordinated Debt shall occur.

 

Closing Date” means the date on which all such conditions precedent set forth in Section 4 have been satisfied or waived in writing by Lender.

 

Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

Collateral” means and includes all of Borrower’s now owned or hereafter acquired assets, whether tangible or intangible, including without limitation all of Borrower’s right, title and interest in and to each of the following, wherever located and whether now existing or hereafter arising or acquired: (a) all accounts, (b) all inventory, (c) all equipment and fixtures, (d) all contract rights, (e) all general intangibles, including without limitation payment intangibles and software, (f) all Intellectual Property, (g) all securities accounts, deposit accounts, cash, money, drafts, certificates of deposit, and general and special deposits, (h) all investment property and financial assets (other than margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), (i) all instruments, (j) all chattel paper, including without limitation, electronic chattel paper, (k) all goods and all accessions thereto, (1) all healthcare-insurance receivables, (m) all leases, (n) all reporting obligations, (o) all documents, (p) all letter of credit rights, (q) all insurance and certificates of insurance pertaining to any and all items of Collateral, (r) all books and records, (s) all files, correspondence, computer programs, tapes, disks and related data processing software and other media which contain information identifying or pertaining to any of the Collateral or any Account Debtor or showing the amounts thereof or payments thereon or otherwise necessary or helpful in the realization thereon or the collection thereof, (t) all cash deposited with any Affiliate of Lender, (u) all commercial tort claims, including, without limitation, those described on Schedule 1.1 hereto, if any, and (v) any and all products and cash and non-cash proceeds of the foregoing (including, but not limited to, any claims to any items referred to in this definition and any claims against third parties for loss of, damage to or destruction of any or all of the Collateral or for proceeds payable under or unearned premiums with respect to policies of insurance) in whatever form; provided, however, that “Collateral” shall not include the Excluded Property.

 

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Collection Account” means the special account maintained with UMB Bank, n.a., in the name of Lender, for the benefit of Borrower, over which Lender alone has the power of withdrawal.

 

Concentration Limit” means twenty percent (20%) of total accounts of Borrower deemed Eligible Accounts other than with respect to clause (m) of the definition of “Eligible Accounts”; provided, however, as it relates solely to accounts of Borrower (a) from Trader Joes, the Concentration Limit means fifty percent (50%), (b) from Walmart/Sam’s Club, the Concentration Limit means thirty-five percent (35%), and (c) from Whole Foods, the Concentration Limit means twenty five percent (25%).

 

Contingent Liability” means any obligation of a Person arising from a guaranty, indemnity or other assurance of payment or performance of any Debt, lease, dividend or other obligation (“primary obligations”) of another obligor (“primary obligor”) in any manner, whether directly or indirectly, including any obligation of such Person under any (a) guaranty, endorsement, co-making or sale with recourse of an obligation of a primary obligor; (b) obligation to make take-or-pay or similar payments regardless of nonperformance by any other party to an agreement; and (c) arrangement (i) to purchase any primary obligation or security therefor, (ii) to supply funds for the purchase or payment of any primary obligation, (iii) to maintain or assure working capital, equity capital, net worth or solvency of the primary obligor, (iv) to purchase Property or services for the purpose of assuring the ability of the primary obligor to perform a primary obligation, or (v) otherwise to assure or hold harmless the holder of any primary obligation against loss in respect thereof. The amount of any Contingent Obligation shall be deemed to be the stated or determinable amount of the primary obligation (or, if less, the maximum amount for which such Person may be liable under the instrument evidencing the Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto.

 

Contract Rate” means for any date a per annum rate equal to the sum of the Base Rate in effect from time to time plus one and one half percent (1.50%).

 

Controlling Equity Holder” means Salvatore Galletti or any successor or assign thereof approved by Lender in its sole and absolute discretion.

 

Cross Aging Percentage” shall mean thirty five percent (35%) of the aggregate balance of all accounts owing by a particular Account Debtor.

 

Debt” means, without duplication, (a) all obligations for Borrowed Debt or for the deferred purchase price of property or services or in respect of reimbursement obligations under letters of credit, (b) all obligations represented by bonds, debentures, notes and accepted drafts that represent extensions of credit, (c) Capitalized Lease Obligations, (d) all obligations (including, during the noncancellable term of any lease in the nature of a title retention agreement, all future payment obligations under such lease discounted to their present value in accordance with GAAP) secured by any Lien to which any property or asset owned or held by a Person is subject, whether or not the obligation secured thereby shall have been assumed by such Person, (e) all Contingent Liabilities of such Person, (f) Disqualified Equity Interests, including all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interests in such Person or any other Person or any warrant, right or option to acquire such Equity Interests, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference, and (g) in the case of Borrower, the Loans.

 

-4-

 

 

Debt to be Repaid” means the Debt owed to Community Bank.

 

Default” means any of the events specified in Section 10.1 that, with the passage of time or giving of notice or both, would constitute an Event of Default.

 

Default Rate” means the Contract Rate plus three (3.00%) per annum.

 

Disqualified Equity Interest” means any Equity Interest that, by its terms (or by the terms of any security of other Equity Interest into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the date that is six months after the Maturity Date, (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Equity Interest referred to in clause (a) above, in each case at any time prior to six months after the Maturity Date, (c) contains any repurchase obligation that may come into effect prior to payment in full of all Obligations, (d) requires cash dividend payments prior to six months after the Maturity Date, (e) provides the holders of such Equity Interest thereof with any rights to receive any cash upon the occurrence of a change of control prior to six months after the date on which the Obligations have been irrevocably paid in full, unless the rights to receive such cash are contingent upon the Obligations being irrevocably paid in full, or (f) is prohibited by the terms of this Agreement.

 

Dollar” and “$” means freely transferable United States dollars.

 

EBITDA” means, for any period, the sum of (a) Net Income (or Net Loss) for such period, plus (b) the cash interest expense for such period, plus (c) the provision for income taxes allocable to such period, plus (d) any depreciation or amortization expenses incurred in determining Net Income (or Net Loss) for such period.

 

Eligible Accounts” shall mean all accounts of Borrower which are deemed by Lender in the exercise of its sole and absolute discretion to be eligible for inclusion in the calculation of the Borrowing Base. In no event shall Eligible Accounts include the following:

 

(a) accounts (i) which are due and payable within 30 days and which remain unpaid more than 90 days past their original invoice dates, (ii) which are due and payable within 15 days and which remain unpaid more than 45 days past their original invoice dates, (iii) which are due and payable within 10 days and which remain unpaid more than 30 days past their original invoice dates;

 

(b) accounts which are not due and payable within 30 days after their original due dates;

 

(c) accounts owing by a single Account Debtor if more than the Cross Aging Percentage of such accounts is ineligible pursuant to clauses (a) or (b) above;

 

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(d) accounts with respect to which the Account Debtor is an Affiliate of Borrower;

 

(e) accounts with respect to which the obligation of payment by the Account Debtor is or may be conditional for any reason whatsoever including, without limitation, accounts arising with respect to goods that were (i) not sold on an absolute basis, (ii) sold on a bill and hold sale basis, (iii) sold on a consignment sale basis, (iv) sold on a guaranteed sale basis, (v) sold on a sale or return basis, or (vi) sold on the basis of any other similar understanding;

 

(f) accounts with respect to which the Account Debtor is not a resident or citizen of, or otherwise located in, the United States of America or with respect to which the Account Debtor is not subject to service of process in the United States of America;

 

(g) accounts with respect to which the Account Debtor is the United States of America or any other federal governmental body unless such accounts are duly assigned to Lender in compliance with all applicable governmental requirements (including, without limitation, the Federal Assignment of Claims Act of 1940, as amended, if applicable);

 

(h) accounts with respect to which Borrower is or may be liable to the Account Debtor in any way, or which is subject to any right of setoff or recoupment, or if the Account Debtor thereon has disputed liability or made any claim with respect to any other Account due from such Account Debtor;

 

(i) owed by an Account Debtor, to the extent the amount owing thereon, exceeds the credit limit extended to such Account Debtor by Borrower;

 

(j) which is evidenced by a promissory note or other instrument or by chattel paper;

 

(k) which arises out of a sale not made in the ordinary course of the Borrower’s business;

 

(1) with respect to which any of the following events has occurred as to the Account Debtor on such Account: death or judicial declaration of incompetency, if the Account Debtor is an individual, the filing of any petition for relief under the bankruptcy code or similar proceeding, a general assignment for the benefit of creditors, the appointment of a receiver or trustee, application or petition for dissolution, the sale or transfer of all or any material part of the assets or the cessation of the business as a going concern;

 

(m) accounts with respect to which the goods giving rise thereto have not been shipped and delivered to and accepted as satisfactory by the applicable Account Debtor or accounts with respect to which the services performed giving rise thereto have not been completed and accepted as satisfactory by the applicable Account Debtor;

 

(n) accounts which are not invoiced within 3 days after the shipment and delivery to and acceptance by said Account Debtor of the goods giving rise thereto or the performance of the services giving rise thereto by the applicable Account Debtor;

 

(o) accounts that are not invoiced within the period specified in the contract giving rise thereto or, with respect to such contract, pursuant to a documented change request of the applicable Account Debtor;

 

(p) accounts which are not subject to a first priority perfected security interest in favor of Lender;

 

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(q) that portion of an account balance owed by a single Account Debtor which exceeds the Concentration Limit;

 

(r) accounts with respect to which the Account Debtor is located in any state that requires Borrower to qualify to do business in such state or to file a business activities report or similar report in order to permit Borrower to seek judicial enforcement in such state of payment of such account, unless Borrower is qualified to do business in such state or is in compliance with any such filing requirements;

 

(s) accounts which represent a progress billing;

 

(t) accounts with respect to which there exists any Lien in favor of any Person other than Lender, unless such Lien has been fully and unconditionally subordinated to Lender’s security interest pursuant to a written agreement in form and substance acceptable to Lender;

 

(u) accounts representing funds paid by vendors of Borrower in connection with promotion of such vendors’ brands; and

 

(v) accounts that Lender, in its sole and absolute discretion, has determined to be ineligible.

 

Eligible In-Transit Inventory” means Inventory that satisfied all of the requirements to constitute Eligible Inventory other than clause (I) (because such Inventory is in-transit to the United States), and such Inventory (i) has been purchased from a foreign supplier, (ii) is in the process of being shipped directly from a foreign country to a customs broker in the United States (iii) has not yet been delivered to the Borrower, (iv) is covered by a non-negotiable document of title, (v) is supported by a letter of credit or covered by marine transit insurance, in each case in form and substance acceptable to Lender in its sole and absolute discretion, and (vi) is subject to an imported inventory agreement, in form and substance acceptable to Lender.

 

Eligible Inventory” means, as at any date of determination, all inventory owned by and in the possession of Borrower and located in the United States of America that Lender, in its sole and absolute discretion, deems to be eligible for borrowing purposes. Without limiting the generality of the foregoing, unless otherwise agreed by Lender, the following is not Eligible Inventory:

 

(a) work-in-process;

 

(b) finished goods which do not meet the specifications of the purchase order for such goods;

 

(c) inventory which Lender determines, in its sole and absolute discretion, to be unacceptable for borrowing purposes;

 

(d) inventory with respect to which Lender does not have a valid, first priority and fully perfected Lien;

 

(e) inventory with respect to which there exists any Lien in favor of any Person other than Lender or which has been consigned to Borrower;

 

(f) packaging and shipping materials, products and labels;

 

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(g) inventory that is within 6 months (or 30 days with respect to refrigerated inventory) of its expiration date, slow-moving or obsolete or returned or repossessed or used goods taken in trade;

 

(h) inventory consisting of sub-assemblies;

 

(i) inventory produced in violation of the Fair Labor Standards Act, in particular provisions contained in Title 29 U.S.C. 215 (a)(i);

 

(j) customer-supplied inventory;

 

(k) inventory that is subject to any license or other agreement that limits, conditions, or restricts Borrower’s or Lender’s right to sell or otherwise dispose of such inventory or is the subject of a claim that Borrower’s use, marketing, sale, or distribution thereof violates the ownership, patent, copyright, trademark, or other rights of a Person other than Borrower unless such inventory can be repackaged and sold by Lender; and

 

(l) inventory that is in transit or located at a location for which Lender does not have a valid landlord’s or warehouseman’s waiver or subordination on terms and conditions acceptable to Lender in its sole and absolute discretion and inventory located at any location other than those listed on Schedule 5.1(p).

 

Environmental Laws” means all federal, state, local and foreign laws now or hereafter in effect relating to pollution or protection of the environment, including laws relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, removal, transport or handling of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes, and any and all regulations, notices or demand letters issued, entered, promulgated or approved thereunder.

 

Equity Interest” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing.

 

ERISA” means the Employee Retirement Income Security Act of 1974, as in effect from time to time, and any successor statute, and any rule or regulation issued thereunder.

 

Event of Default” means any of the events specified in Section 10.1.

 

Excluded Property” means (a) any lease, license or contract to which Borrower is a party, or any license, consent, permit, variance, certification, authorization or approval of any governmental authority (or any person acting on behalf of a governmental authority) of which Borrower is the owner or beneficiary, or any of its rights or interests thereunder, if and for so long as the grant of a security interest therein shall constitute or result in (i) the abandonment, invalidation or unenforceability of the right, title or interest of Borrower therein or (ii) a breach or termination pursuant to the terms of, or a default under, such lease, license or contract or such license, consent, permit, variance, certification, authorization or approval (other than, in the case of clauses (i) and (ii), to the extent that any such term would be rendered ineffective pursuant to Section 9.406, 9.407, 9.408 or 9.409 of the UCC or any other Applicable Law or principles of equity); (b) any equipment owned by Borrower on the date hereof or hereafter acquired that is subject to a purchase money lien or a Lien securing a Capital Lease Obligation permitted to be incurred hereunder if the contract or other agreement (or the documentation providing for such permitted purchase money debt or Capitalized Lease Obligations) in which such Lien is granted validly prohibits the creation of any other Lien on such equipment; (c) any intent-to-use trademark application prior to the filing and acceptance of evidence of the use of such trademark in interstate commerce to the extent, if any, that and solely during the period, if any, in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark application under Applicable Law; provided that (x) no accounts, inventory or other Collateral at any time included in the Borrowing Base shall be Excluded Property and (y) if any Excluded Property would otherwise constitute Collateral, then, immediately upon such property ceasing to constitute Excluded Property for any reason, such property shall be deemed at all times from and after the date thereof to constitute Collateral.

 

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Facility Limit” means the sum of the Capex Facility Limit and the Revolving Facility Limit.

 

Facility Termination Date” means the earliest to occur of (a) the Maturity Date, (b) the date on which Borrower terminates the loan facility contemplated hereunder pursuant to Section 3.4, and (c) the date on which Lender’s commitment to make Loans is terminated pursuant to Section 10.2.

 

Financial Statements” means, (a) with respect to financial statements dated as of a date prior to the Closing Date, (i) the balance sheet of Borrower for its fiscal year ended December 31, 2016, and the related statements of profit and loss and cash flows for the year ended on such date, reviewed by independent public accountants, and (ii) its company prepared balance sheet as of June 30, 2017, and the related statements of profit and loss and cash flows for the monthly period then ended, and (b) with respect to financial statements dated after the Closing Date, the financial statements delivered to Lender pursuant to Section 8.1(a) and Section 8.1(b), respectively.

 

Fixed Charge Coverage Ratio” means the ratio, determined as of the end of each calendar month for the twelve consecutive months then ending of (a) EBITDA for such period minus cash taxes paid during such period (including distributions to shareholders for the payment of taxes), minus Non-Financed Capital Expenditures made during such period, minus any Restricted Payments, to (b) without duplication, cash interest expense paid during such period, plus principal payments on Debt which were made or scheduled to be paid during such period, plus payments on Capitalized Leases during such period, plus all dividends and distributions made by Borrower in respect of its Equity Interests during such period, plus management fees or advisory fees paid during such period, all calculated for Borrower and its Subsidiaries on a consolidated basis. The Permitted Affiliate Loan from the calculation of the Fixed Charge Coverage Ratio.

 

FX Obligations” means, if any, the obligations of Borrower to UMB Bank, n.a. under certain foreign exchange facilities. The FX Obligations will be separately managed by UMB Bank, n.a., will be supported by separate collateral and shall not be secured by the Collateral.

 

GAAP” means generally accepted accounting principles and practices consistently applied.

 

Guarantor” and “Guarantors” Salvatore Galletti and each other Person that guarantees the payment and performance of any of the Obligations; provided, however, the guaranty of Salvatore Galletti shall be released by Lender if Borrower delivers a Compliance Certificate for the fiscal period ending on January 31, 2018 demonstrating as follows: (A) no Default or Event of Default has occurred, and (B) Borrower’s Fixed Charge Coverage Ratio is not less than 1.10 to 1.00.

 

Intellectual Property” means, as to any Person, all of such Person’s then owned and existing and future acquired or arising patents, patent rights, copyrights, works which are the subject of copyrights, trademarks, service marks, trade names, trade styles, patent, trademark and service mark applications, and all licenses and rights related to any of the foregoing, and all rights to sue for past, present and future infringements of any of the foregoing.

 

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Investment” means, with respect to any Person, any investment in another Person, whether by acquisition of any Debt or Equity Interest, by making any loan or advance, by becoming obligated with respect to a Contingent Liability in respect of obligations of such other Person (other than travel and similar advances to employees in the ordinary course of business and consistent with historical practices) or by making an Acquisition.

 

Lender” has the meaning prescribed for such term in the preamble paragraph of this Agreement.

 

Lender’s Office” means the office of Lender located at 333 South Grand Avenue, Suite 2200, Los Angeles, California 90071, or such other office as Lender may designate from time to time.

 

LIBOR Rate” means, on any date of determination, the rate of interest per annum reported on Reuters Screen LIBOR01 (or any successor page or other commercially available, generally recognized financial information source providing quotations of LIBOR as determined by Lender from time to time) at approximately 11:00 a.m., London time, on such day (or, if such day is not a Business Day, on the preceding Business Day) for dollar deposits in the amount of $1,000,000 with a maturity of one month.

 

LIBOR Business Day” means a day that commercial banks are open with respect to the transaction of international commercial banking business (including dealings in Dollar deposits) in London, England.

 

Lien” means, with respect to any Person, any security interest, chattel mortgage, charge, mortgage, deed to secure debt, deed of trust, lien, pledge, Capitalized Lease, conditional sale or other title retention agreement, or other security interest or encumbrance of any kind in respect of any property of such Person or upon the income or profits therefrom.

 

Loans” means, collectively, the Capex Loans and the Revolving Loans.

 

Loan Documents” means, collectively, this Agreement, each agreement or document now or hereafter executed and delivered by any Person to evidence or secure the Obligations and each other instrument, agreement and document now or hereafter executed and delivered in connection with this Agreement or the Loans.

 

Material Adverse Change” means any act, omission, event or undertaking which would, singly or in the aggregate, have a materially adverse effect upon (a) the business, assets, properties, liabilities, condition (financial or otherwise), results of operations or business prospects of Borrower or any of its subsidiaries, (b) the ability of Borrower or any of its subsidiaries to perform any obligations under this Agreement or any other Loan Document to which it is a party, or (c) the legality, validity, binding effect, enforceability or admissibility into evidence of any Loan Document or the ability of Lender to enforce any rights or remedies under or in connection with any Loan Document.

 

Maturity Date” means September 25, 2020.

 

Maximum Rate” means the maximum nonusurious interest rate, if any, that at any time, or from time to time, may be contracted for, taken, reserved, charged, or received on the Loans under the laws which are presently in effect of the United States and the State of California applicable to Lender and such Debt or, to the extent permitted by law, under Applicable Law of the United States and the State of California which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than Applicable Laws now allows.

 

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Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which Borrower or a Related Company is required to contribute or has contributed within the immediately preceding 6 years.

 

Net Amount” means (a) with respect to Eligible Accounts at any time, the gross amount of Eligible Accounts less sales, excise or similar taxes, and less returns, discounts, claims, credits and allowances of any nature at any time issued, owing, granted, outstanding, available or claimed and (b) with respect to Eligible Inventory at any time, the lesser of cost value or market value thereof, determined in a manner acceptable to Lender, and excluding any portion of cost attributable to intercompany profit between Borrower and its Affiliates, after deducting the amount of any Permitted Liens on such Inventory warehouseman’s liens.

 

Net Income” or “Net Loss” means, with respect to any Person, the net income or net loss of such Person for the period in question (after provision for income taxes) determined in accordance with GAAP, provided that the impact of any extraordinary gains, determined in accordance with GAAP, shall be excluded from the determination of “Net Income” and “Net Loss.”

 

Net Worth” of any Person means the total shareholders’ or members’ equity (including Equity Interests, additional paid-in capital and retained earnings, after deducting treasury stock) which would appear as such on a balance sheet of such Person prepared in accordance with GAAP.

 

Non-Financed Capital Expenditures” means Capital Expenditures that are made with funds other than funds obtained from a seller of the capital assets, by a lender, lessor or another financial institution, including, without limitation, Lender, for the specific purpose of making such Capital Expenditure, provided, however, that Capital Expenditures funded from advances under the Loans shall be considered Non-Financed Capital Expenditures.

 

Obligations” means (i) all Loans or other advances made by Lender to Borrower pursuant to this Agreement or otherwise, (ii) all future advances or other value, of whatever class or for whatever purpose, at any time hereafter made or given by Lender to Borrower, whether or not the advances or value are given pursuant to a commitment and whether or not Borrower is indebted to Lender at the time of such advance; (iii) any and all other debts, liabilities and obligations of every kind and character of Borrower to Lender, whether now or hereafter existing, and regardless of whether such present or future debts, liabilities or obligations are direct or indirect, primary or secondary, joint, several, or joint and several, fixed or contingent, and regardless of whether such present or future debts, liabilities or obligations may, prior to their acquisition by Lender, be or have been payable to, or be or have been in favor of, some other Person or have been acquired by. Lender in a transaction with one other than Borrower (it being contemplated that Lender may make such acquisitions from others), howsoever such debts, liabilities or obligations shall arise or be incurred or evidenced; (iv) any and all other debts, liabilities and obligations of every kind and character of Borrower to any Affiliate of Lender, whether now or hereafter existing, and regardless of whether such present or future debts, liabilities or obligations are direct or indirect, primary or secondary, joint, several, or joint and several, fixed or contingent, and regardless of whether such present or future debts, liabilities or obligations may, prior to their acquisition by such Affiliate, be or have been payable to, or be or have been in favor of, some other Person or have been acquired by such Affiliate in a transaction with one other than Borrower (it being contemplated that Affiliates of Lender may make such acquisitions from others), howsoever such debts, liabilities or obligations shall arise or be incurred or evidenced; (v) interest on all of the debts, liabilities and obligations set forth above (including interest accruing after the filing of any bankruptcy or similar petition); (vi) letter of credit reimbursement obligations, liabilities in respect of any bank products, credit card facilities, foreign exchange facilities or hedging agreements, including without limitation, interest rate swap transaction, basis swap transaction, forward rate transaction, equity transaction, equity index transaction, foreign exchange transaction, cap transaction, floor transaction (including any option with respect to any of these transactions and any combination of any of the foregoing), (vii) all costs, fees and expenses payable by Borrower to Lender or any Affiliate of Lender pursuant to any of the Loan Documents; and (viii) any and all renewals, extensions, modifications and increases of the debts, liabilities and obligations set forth above, or any part thereof. The term “Obligations” shall not include any FX Obligations.

 

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Obligors” means Borrower, each Guarantor of the Obligations, and all other Persons obligated to Lender in respect of the Obligations and “Obligor” means any one of them.

 

Operating Lease” means any lease (other than a lease constituting a Capitalized Lease) of real or personal property determined in accordance with GAAP.

 

PBGC” means the Pension Benefit Guaranty Corporation or any successor agency.

 

Permitted Affiliate Loan” means a loan from Borrower to an Affiliate of Borrower to assist in the establishment of an operation in Italy, in a maximum outstanding amount any time of $1,000,000.

 

Permitted Debt” means (a) Debt constituting purchase money indebtedness or Capital Lease Obligations in aggregate amount outstanding not to exceed $50,000, (b) the Obligations, (c) trade payables and other contractual obligations arising in the ordinary course of business that are not past due by more than 90 days, and (d) Debt existing on the Closing Date and described on Schedule 9.3 attached hereto and made a part hereof.

 

Permitted Investments” means Investments of Borrower in (a) negotiable certificates of deposit issued by any commercial bank having capital and surplus in excess of $100,000,000, and (b) any direct obligation of the United States of America or any agency or instrumentality thereof which has a remaining maturity at the time of repurchase of not more than one year and repurchase agreements relating to the same.

 

Permitted Liens” means: (a) Liens which constitute purchase money security interests or arise in connection with Capital Leases (and attaching only to the property being purchased or leased) permitted under clause (a) of the definition of Permitted Debt; provided that any such Lien attaches to such property within fifteen (15) days of the acquisition thereof and attaches solely to the property so acquired or leased, (b) Liens in favor of Lender, (c) Producer’s Liens to the extent disclosed in the manner required by this Agreement and to the extent such liens do not secure Producer Payables more than 10 days past the applicable invoice date, (d) Liens securing taxes, assessments and other governmental charges or levies (excluding any Lien imposed pursuant to any of the provisions of ERISA) or the claims of materialmen, mechanics, carriers, warehousemen or landlords for labor, materials, supplies or rentals incurred in the ordinary course of business, but (i) in all cases, only if payment shall not at the time be past due, and (ii) in the case of warehousemen or landlords controlling locations where inventory is located, only if such Liens have been waived or subordinated to the security interest of Lender in a manner satisfactory to Lender, and (e) the Liens existing on the Closing Date and described on Schedule 9.4 attached hereto and made a part hereof.

 

Person” means an individual, corporation, limited liability company, partnership, joint venture, association, trust or unincorporated organization or a government or any agency or political subdivision thereof.

 

Prime Rate” means the rate per annum published from time to time by The Wall Street Journal as the base rate for corporate loans at large commercial banks (or if more than one such rate is published, the higher or highest of the rates so published). If such rate is no longer published by The Wall Street Journal, then Lender shall, in its sole and absolute discretion, substitute the base or prime rate for corporate loans at a large commercial bank for the base rate published in The Wall Street Journal. Such rate may not necessarily be the lowest or best rate actually charged to any customer of such commercial bank.

 

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Producer’s Lien” means any agricultural producer’s lien, statutory trust (including, without limitation, the statutory trust created by the Perishable Agricultural Commodities Act, as amended) or similar security arrangements that secure the payment of any amounts owed from time to time by Borrower to any Person (including, without limitation, producers, suppliers, sellers and their agents) on account of the purchase price of agricultural products or services.

 

Producer Payables” means accounts payable with are subject to a Producer’s Lien.

 

Related Company” means, as to any Person, any (a) corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as such Person, (b) partnership or other trade or business (whether or not incorporated) under common control (within the meaning of Section 414(c) of the Code) with such Person, or (c) member of the same affiliated service group (within the meaning of Section 414(m) of the Code) as such Person or any corporation described in clause (a) above or any partnership, trade or business described in clause (b) above.

 

Reserve” means, as of any date of determination, an amount from time to time established by Lender in its sole and absolute discretion as a reserve in reduction of the Borrowing Base in respect of contingencies or other potential factors (such as, without limitation, rebates, sales taxes, property taxes, installation. delivery expenses, warranties and repackaging costs) which could adversely affect or otherwise reduce the anticipated amount of timely collections in payment of Eligible Accounts or the value (whether at cost, market or orderly liquidation value) of Eligible Inventory, which could affect the enforceability, perfection or priority of Lender’s Lien on the Collateral or which does or would with notice or passage of time or both, constitute an Event of Default. The “Reserve,” if any from time to time, does not represent cash funds.

 

Restricted Payments” means, with respect to any Person, (a) the retirement, redemption, purchase, or other acquisition for value of any Equity Interests issued by such Person, (b) the declaration or payment of any dividend or distribution on or with respect to any Equity Interests (excluding distributions made solely in shares of stock of the same class and further excluding distributions for the payment of taxes in an amount not exceeding the liability of each such shareholder for income taxes solely attributable to Borrower’s net income) or any other payment by such Person in respect of Equity Interests, (c) make any redemption, prepayment (whether mandatory or optional), defeasance, repurchase or any other payment in respect of any Subordinated Debt, (d) the payment by any Person of the principal amount of or interest on any Debt (other than trade debt in the ordinary course) owing to an Affiliate of such Person, or (e) pay any management fees or similar fees to any Person, including, without limitation, any holders of its Equity Interests or any Affiliate thereof.

 

Revolving Facility Limit” means $4,000,000.

 

Revolving Loans” means the advances made to Borrower pursuant to Section 2.1.

 

Sanction” or “Sanctions” means individually and collectively, respectively, any and all economic or financial sanctions, sectoral sanctions, secondary sanctions, trade embargoes and antiterrorism laws, including but not limited to those imposed, administered or enforced from time to time by: (a) the United States of America, including those administered by the OFAC, the U.S. State Department, the U.S. Department of Commerce, or through any existing or future Executive Order, (b) the United Nations Security Council, (c) the European Union, (d) the United Kingdom, or (e) any other governmental authorities with jurisdiction over Borrower.

 

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Sanctioned Person” means any Person that is a target of Sanctions, including without limitation, a Person that is: (a) listed on OFAC’s Specially Designated Nationals and Blocked Persons List; (b) listed on OFAC’s Consolidated Non-Specially Designated Nationals List; (c) a legal entity that is deemed by OFAC to be a Sanctions target based on the ownership of such legal entity by Sanctioned Peron(s); or (d) a Person that is a Sanctions target pursuant to any territorial or country-based Sanctions program.

 

Schedule of Accounts” means a schedule delivered by Borrower to Lender pursuant to the provisions of Section 8.3(a).

 

Schedule of Inventory” means a schedule delivered by Borrower to Lender pursuant to the provisions of Section 8.3(c).

 

Solvent” means, when used in connection with any Person, that such Person has assets of a fair value which exceeds the total liabilities of such Person and which exceeds the amount required to pay its debts (including contingent, subordinated, unmatured and unliquidated liabilities) as they become absolute and matured, and that such Person is able to, and anticipates that it will be able to, meet its debts as they mature and has adequate capital to conduct the business in which it is or proposes to be engaged, and when used in connection with Borrower, that all of the foregoing requirements are true after given effect to the transactions contemplated hereby, and that Borrower will not be rendered insolvent by the execution and delivery of the Loan Documents or by completion of the transactions contemplated hereunder or thereunder.

 

Subordinated Debt” means Debt of Borrower to a third Person (i) that has been approved in writing by Lender and (ii) that has been subordinated to the payment of the Obligations pursuant to a written subordination agreement executed by Lender and the holder of such Debt containing terms acceptable to Lender in its sole and absolute discretion.

 

Subsidiary” means, with respect to any Person, a corporation, partnership, limited liability company, or other legal entity in which that Person directly or indirectly owns or controls the shares of Equity Interests having ordinary voting power to elect a majority of the board of directors (or appoint a majority of other comparable managers) of such corporation, partnership, limited liability company, or other legal entity.

 

Tangible Net Worth” means (a) the Net Worth of Borrower at the time in question, less (b) the amount of all intangible items (e.g. goodwill, noncompetition agreements, patents, copyrights, trademarks, franchises, organization or research and development costs), amounts due from Affiliates, employees, officers, managers, directors, members and shareholders, and all other items which should properly be treated as intangibles in accordance with GAAP, less (c) deferred tax liabilities of Borrower, plus (d) Subordinated Debt of Borrower.

 

Termination Event” means (a) a “Reportable Event” as defined in Section 4043 of ERISA, but excluding any such event as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, provided however, that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code, (b) the filing of a notice of intent to terminate a Benefit Plan or the treatment of a Benefit Plan amendment as a termination under Section 4041 of ERISA, or (c) the institution of proceedings to terminate a Benefit Plan by the PBGC under Section 4042 of ERISA or the appointment of a trustee to administer any Benefit Plan.

 

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UCC” means the Uniform Commercial Code as in effect from time to time in the State of California, including without limitation, any amendments thereto which are effective after the date hereof or, when the laws of any other jurisdiction govern the perfection or enforcement of any Lien, the Uniform Commercial Code of such jurisdiction.

 

Unfunded Vested Liabilities” shall mean the amount (if any) by which (i) the actuarial present value of accumulated benefits under a Benefit Plan which are vested exceeds (ii) such Benefit Plan’s net assets available for benefits (all as determined in connection with the filing of Borrower’s most recent Annual Report on Form 5500) but only to the extent such excess would, if such Benefit Plan were to terminate as of such date, represent a liability of Borrower or any ERISA Affiliate to the PBGC under Title IV of ERISA. In each case the foregoing determination shall be made as of the most recent date prior to the filing of said Annual Report as of which such actuarial present value of accumulated Plan benefits is determined.

 

Section 1.2 UCC Terms. Terms defined in the UCC (such as, but not limited to, accounts, chattel paper, commercial tort claims, contract rights, deposit account, documents, electronic chattel paper, equipment, financial assets, fixtures, general intangibles, goods, instruments, investment property, inventory, proceeds, security, security certificates and tangible chattel paper), as and when used (without being capitalized) in this Agreement or the Loan Documents, shall have the meanings given to such terms in the UCC.

 

Section 1.3 Accounting Terms and Determinations. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all financial statements and certificates and reports as to financial matters required to be furnished to Lender hereunder shall be prepared, in accordance with GAAP, applied on a basis consistent with the reviewed financial statements of Borrower referenced in Section 5.1(1).

 

Section 1.4 Interpretative Provisions.

 

(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

 

(b) Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

 

(c) The term “including” is not limiting and means “including without limitation.”

 

(d) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”, and the word “through” means “to and including.”

 

(e) Unless otherwise expressly provided herein, (i) references to agreements (including this Agreement and the other Loan Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, supplements and other modifications thereto, but only to the extent such amendments, restatements, supplements and other modifications are not prohibited by the terms of any Loan Document, and (ii) references to any statute or regulation shall be construed as including all statutory and regulatory provisions amending, replacing, supplementing or interpreting such statute or regulation.

 

(f) This Agreement and the other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and each shall be performed in accordance with its terms.

 

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ARTICLE II - REVOLVING CREDIT FACILITY

 

Section 2.1 Revolving Loans. Subject to the terms and conditions of this Agreement, prior to the Facility Termination Date Lender shall make revolving loans and advances to Borrower (each a “Revolving Loan” and collectively the “Revolving Loans”) in an outstanding aggregate amount not to exceed at any time the lesser of (a) the Revolving Facility Limit and (b) the Borrowing Base. Borrower may borrow, repay and reborrow the principal of the Revolving Loans in accordance with the terms of this Agreement.

 

Section 2.2 Advances. A request for a Revolving Loan shall be made, or shall be deemed to be made, in the following manner:

 

(a) Borrower may request a Revolving Loan by notifying Lender (a “Notice of Borrowing”), before 10:00 a.m. Los Angeles, California, time) on the proposed borrowing date, of Borrower’s intention to borrow and specifying the effective date and amount of the requested advance. Any Notice of Borrowing may be made by telephone and confirmed in writing (including email or facsimile) with each writing being in a form acceptable to Lender; provided that the failure to provide written confirmation shall not invalidate any telephonic notice and, if such written confirmation differs in any respect from the action taken by Lender, the records of Lender shall control absent manifest error.

 

(b) Borrower’s failure to pay any amount required to be paid under any Loan Document or any Obligation shall be deemed, in Lender’s sole and absolute discretion, to be a request for a Revolving Loan on the due date in the amount required to pay such amount, and such request shall be irrevocable. Lender shall not have any obligation to Borrower to honor any deemed request for an advance but may do so in its sole and absolute discretion and without regard to the existence of, and without being deemed to have waived, any Default or Event of Default.

 

Section 2.3 Repayment of the Revolving Loans. The Revolving Loans shall be repaid as follows: (a) unless accelerated in accordance with the terms hereof, the outstanding principal amount of, and all accrued and unpaid interest on, the Revolving Loans are due and payable, without demand, on the Maturity Date; (b) if any such payment due date is not a Business Day, then such payment may be made on the next succeeding Business Day and such extension of time shall be included in the computation of the amount of interest and fees due hereunder. If at any time the principal of, and interest upon, any portion of the Revolving Loans exceed the lesser of (i) the Revolving Facility Limit or (ii) the Borrowing Base, Borrower shall immediately repay the Revolving Loans in the amount to eliminate such excess; and (c) Borrower hereby instructs Lender to repay the Revolving Loans on any day in an amount equal to the amount received by Lender on such day pursuant to Section 6.2.

 

Section 2.4 Disbursement of Revolving Loans. Borrower hereby irrevocably authorizes Lender to disburse the proceeds of the Revolving Loans requested, or deemed to be requested, pursuant to this Article II as follows: (i) each advance requested under Section 2.2(i) shall be disbursed by Lender in lawful money of the United States of America in immediately available funds, (a) in the case of the initial advance under the Revolving Loan, in accordance with the written instructions from Borrower to Lender, and (b) in the case of each subsequent advance, to a deposit account owned by Borrower and designated in writing by Borrower to Lender; and (ii) the proceeds of each advance requested under Section 2.2(ii) shall be distributed by Lender by way of direct payment of the relevant Obligation.

 

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Section 2.5 Deemed Requests for Revolving Loans to Pay Required Payments. All payments of principal, interest, fees and other amount payable hereunder, including all reimbursements for expenses pursuant to Section 11.2, may be paid from the proceeds of Revolving Loans, whether made pursuant to a request by Borrower or a deemed request as provided herein. Borrower hereby irrevocably authorizes Lender to make any Revolving Loan for the purpose of paying principal, interest, fees and other amounts payable under the Loan Documents, including reimbursing costs or expenses for which Borrower is obligated under the Loan Documents, whether or not any condition precedent specified by Article IV has been satisfied, and agrees that all Revolving Loans so made shall be deemed to have been requested by Borrower pursuant to this Agreement.

 

Section 2.6 Capex Loans. Subject to the terms of this Agreement, including, without limitation, Article IV, upon the request of Borrower, Lender shall make advances to Borrower (each a “Capex Loan” and collectively the “Capex Loans”) in an aggregate principal amount not to exceed $500,000 to purchase new equipment and Borrower hereby agrees to repay to Lender the Capex Loans, together with interest thereon, in the manner provided below.

 

(a) Each Capex Loan shall be in an amount of not less than $50,000. Amounts advanced may not be readvanced hereunder.

 

(b) Each Capex Loan shall not exceed 80% of the net purchase price of the new equipment deemed acceptable to Lender in its sole and absolute discretion, excluding charges for taxes, transportation, installation and other similar “soft costs” as determined by Lender in its sole and absolute discretion.

 

(c) Borrower may request a Capex Loan to reimburse Borrower for the aggregate amount of new equipment purchased up to 30 days prior to the request for such Capex Loan as follows:

 

(A) Borrower may, prior to purchasing the new equipment, deliver to Lender a purchase order (or such other information as Lender may reasonably request) and the terms of such purchase shall be acceptable to Lender and upon receipt of such information, Lender will provide Borrower with an estimate of the “hard cost” of such equipment (i.e. the cost of such equipment net of all “soft costs”).

 

(B) After purchasing the new equipment, Borrower shall deliver to Lender:

 

(1) a Compliance Certificate covering the most recent completed fiscal period, demonstrating that no Default or Event of Default has occurred or would result from the making of such Capex Loan (after giving effect to any interest payments which will become due and any increase in indebtedness);

 

(2) a copy of the applicable bills of sale (and such other information as Lender may request) establishing to Lender ‘s reasonable satisfaction that Borrower is the owner of the equipment free and clear of liens; and

 

(C) After Lender has received the information set forth in clause (c)(B), Lender will disburse the Capex Loan to Borrower.

 

(d) Borrower shall pay interest on each Capex Loan at the applicable Contract Rate in accordance with Section 3.1 and shall make monthly payments of principal based upon a five year straight-line amortization commencing on the first day of the first month following the funding of each requested Capex Loan, and continuing on the first day of each month thereafter, provided that any remaining unpaid principal balance of all Capex Loans and any accrued interest thereon shall be due and payable on the Facility Termination Date.

 

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ARTICLE III - GENERAL LOAN PROVISIONS; FEES AND EXPENSES

 

Section 3.1 Interest.

 

(a) Loans. Borrower shall pay interest on the unpaid principal amount of the outstanding Obligations at a rate per annum equal to the lesser of (i) the Maximum Rate and (ii) the Contract Rate applicable to such Obligations, and such interest shall be, payable monthly in arrears on the first day of each calendar month and on the Facility Termination Date.

 

(b) Default Rate. From and after the occurrence of an Event of Default, the unpaid principal amount of all Obligations shall, at the option of Lender, bear interest until paid in full (or, if earlier, until such Event of Default is cured or waived in writing by Lender) at a rate per annum equal to the lesser of (i) the Maximum Rate and (ii) the Default Rate, payable on demand.

 

(c) Computation of Interest. The interest rates provided for in Sections 3.1(a) and (b) shall be computed on the basis of a year of 360 days and the actual number of days elapsed; provided, however, any calculation of the Maximum Rate shall be computed on the basis of the actual days elapsed in a year of 365 or 366 days, as appropriate.

 

Section 3.2 Fees and Expenses.

 

(a) Unused Line Fee. Borrower agrees to pay to Lender an unused line fee for the period from the date hereof through the Facility Termination Date of one half of one percent (0.50%) per annum on the average daily unborrowed amount of the Revolving Facility Limit during such period. Such unused line fee shall be payable monthly in arrears on the first day of the next calendar month until the Facility Termination Date and on the Facility Termination Date (pro-rated for any period of less than one calendar month). Such fee shall be computed on the basis of a 360-day year for the actual number of days elapsed. The parties hereto agree that such unused line fee constitutes reasonable consideration for Lender’s taking of appropriate actions to be able to make available to Borrower the amount of the Revolving Facility Limit for such period.

 

(b) Minimum Usage Fee. Until the Loans have been paid in full and this Agreement is terminated, Borrower agrees to pay to Lender, on the first day of each calendar month and on the Termination Date, a minimum usage fee in an amount equal to the difference between: (i) the calculated monthly interest accruing for Revolving Loans had the average daily outstanding amount of such Revolving Loans during the immediately preceding month (or shorter period if calculated on the Termination Date or first monthly measurement date) been equal to $2,000,000; and (ii) the sum of the actual monthly interest accrued for Revolving Loans for the immediately preceding month (or shorter period if calculated on the Termination Date or first monthly measurement date). Such fee shall be computed on the basis of a 360-day year for the actual number of days elapsed. All payments on the Revolving Loans received by Lender shall be deemed to be credited to such Revolving Loans immediately upon receipt for purposes of calculating the amount payable hereunder.

 

(c) Annual Fee. In consideration for Lender’s agreement to make the Loan in accordance with the terms of this Agreement, Borrower shall pay to Lender an annual fee on the first anniversary of this Agreement and on each anniversary thereafter in the amount of $10,000.

 

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(d) Origination Fee. In consideration for Lender’s agreement to make the Loans in accordance with the terms of this Agreement and in order to compensate Lender in part for the costs associated with the Loans, Borrower shall pay to Lender on the date hereof an origination fee in the amount of $45,000. Such origination fee is in addition to the expenses and other fees that Borrower has agreed to pay elsewhere in this Agreement. Such origination fee shall in all respects be limited so that interest on the Obligations is at all times less than interest calculated at the Maximum Rate.

 

(e) Early Termination Fees. The early termination fee shall be an amount equal to (i) three percent (3.00%) of the Facility Limit if the termination occurs on or prior to the first anniversary of the date hereof, (ii) two percent (2.00%) of the Facility Limit if the termination occurs after the first anniversary of the date hereof but on or prior the second anniversary of the date hereof; and (iii) and one percent (1.00%) of the Facility Limit if the termination occurs any time after the second anniversary of the date other than the Maturity Date.

 

(f) Float Fee. Lender shall be entitled to charge Borrower for one (1) Business Day of “float” at the Contract Rate, or if Lender so elects after an Event of Default has occurred, at the Default Rate, on all collections, checks, wire transfers, or other items of payment that are received by Lender. This across-the-board float charge on all receipts is acknowledged by the parties to constitute an integral aspect of the pricing of Lender’s facility to Borrower, and shall apply irrespective of the level of Borrower’s Obligations to Lender.

 

(g) Expenses. The expenses as set forth in Section 11.2.

 

Section 3.3 Manner of Payment.

 

(a) Timing. Each payment by Borrower on account of the Obligations payable to Lender by Borrower pursuant to this Agreement or the other Loan Documents shall be made not later than 1:00 p.m. (Los Angeles, California, time) on the applicable due date (or if such day is not a Business Day, the next succeeding Business Day, provided that interest shall continue to accrue until such payment is made). All payments shall be made to Lender at Lender’s Office, in Dollars, in immediately available funds and shall be made without any setoff, counterclaim or deduction whatsoever.

 

(b) Charging Accounts. Borrower hereby irrevocably authorizes Lender and each Affiliate of Lender to charge any account of Borrower maintained with Lender or such Affiliate with such amounts as may be necessary from time to time to pay any Obligations owed by Borrower which are not paid when due.

 

Section 3.4 Termination of Agreement or Facility.

 

(a) Required Payments of Loans. On the Facility Termination Date, Borrower shall pay to Lender (i) the outstanding principal of, and accrued and unpaid interest on, the Loans on such date, (ii) all fees accrued and unpaid, (iii) any amounts payable to Lender pursuant to the other provisions of this Agreement or any other Loan Document, and (iv) any and all other Obligations then outstanding.

 

(b) Early Termination. If (i) Borrower terminates this Agreement prior to the Maturity Date for any reason whatsoever or (ii) Lender’s commitment to make Loans hereunder terminates (whether automatically under Section 10.2(a) or by action of Lender pursuant to Section 10.2(b), Borrower acknowledges that such termination would result in the loss to Lender of the benefits of this Agreement and, as a result thereof, Borrower shall pay to Lender an early termination fee in the amount provided in Section 3.2(e).

 

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Section 3.5 Evidence of Debt.

 

(a) At the request of Lender, the Loans shall be further evidenced by one or more promissory notes.

 

(b) Lender shall maintain accounts in which it will record (i) the amount of each Loan extended hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable from Borrower to Lender hereunder, and (iii) the amount of any payment received by Lender hereunder from Borrower.

 

(c) The entries in the accounts maintained pursuant to subsection (b) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded, provided, however, that the failure of Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of Borrower to repay the Obligations in accordance with their terms.

 

Section 3.6 Changes in Capital Adequacy Regulations. If Lender reasonably determines that the amount of capital required or expected to be maintained by Lender or any corporation controlling Lender is increased as a result of a Change in Law, then, within 15 days of demand for payment by Lender to Borrower, Borrower shall pay Lender the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which Lender determines is attributable to this Agreement and any facility hereunder.

 

Section 3.7 Lender Statements; Survival of Indemnity. Lender shall deliver a written statement to Borrower as to the amount due, if any, under Section 3.6. Such written statement shall set forth in reasonable detail the calculations upon which Lender determined such amount and shall be final, conclusive and binding on Borrower in the absence of manifest error. Unless otherwise provided herein, the amount specified in the written statement of Lender shall be payable on demand after receipt by Borrower of such written statement. The obligations of Borrower under Section 3.6 shall survive payment of the Obligations and termination of this Agreement.

 

Section 3.8 Maximum Interest; Controlling Limitation.

 

(a) Lender and Borrower each acknowledges, agrees, and declares that it is its intention to expressly comply with all Applicable Law in respect of limitations on the amount or rate of interest that can legally be contracted for, charged or received under or in connection with the Loan Documents. Notwithstanding anything to the contrary contained in any Loan Document (even if any such provision expressly declares that it controls all other provisions of the Loan Documents), in no contingency or event whatsoever shall the amount of interest (including the aggregate of all charges, fees, benefits, or other compensation which constitutes interest under any Applicable Law) under the Loan Documents paid by Borrower, received by Lender or agreed to be paid by Borrower, or requested or demanded to be paid by Lender exceed the Maximum Rate, and all provisions of the Loan Documents in respect of the contracting for, charging, or receiving compensation for the use, forbearance, or detention of money shall be limited as provided by this Section. To the extent permitted by Applicable Law, all interest paid, or agreed to be paid, by Borrower, or taken, reserved, or received by Lender shall be amortized, prorated, spread, and allocated in respect of the Obligations throughout the full term of this Agreement. Notwithstanding any provision contained in any of the Loan Documents, or in any other related documents executed pursuant hereto, Lender shall never be entitled to charge, receive, take, reserve, collect, or apply as interest any amount which, together with all other interest under the Loan Documents would result in a rate of interest under the Loan Documents in excess of the Maximum Rate and, in the event Lender ever charges, receives, takes, reserves, collects, or applies any amount in respect of Borrower that otherwise would, together with all other interest under the Loan Documents, be in excess of the Maximum Rate, such amount shall automatically be deemed to be applied in reduction of the unpaid principal balance of the Obligations other than interest and, if the principal balance thereof is paid in full, any remaining excess shall forthwith be refunded to Borrower. Subject to the foregoing, Borrower hereby agrees that the actual effective rate of interest from time to time existing under the Loan Documents, including all amounts agreed to by Borrower pursuant to and in accordance with the Loan Documents which may be deemed to be interest under any Applicable Law, shall be deemed to be a rate which is agreed to and stipulated by Borrower and Lender in accordance with Applicable Law.

 

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(b) To the maximum extent permitted under any Applicable Law, Borrower and Lender shall (i) characterize any non-principal payment as a standby fee, commitment fee, prepayment charge, delinquency charge, expense, or reimbursement for a third-party expense rather than as interest and (ii) exclude prepayments, acceleration, and the effect thereof.

 

(c) Subject to Section 3.8(a), after any period during which the limitations prescribed by Section 3.8(a) have limited the applicable rate of interest on the Obligations to the Maximum Rate when, absent such limitations, such applicable rate would have exceeded the Maximum Rate, then, thereafter, the rate of interest applicable to the Obligations shall instead be deemed to be, and shall remain at, the Maximum Rate (notwithstanding any other provision of this Agreement other than Section 3.8(a)), until such time as the amount of interest paid hereunder equals the amount of interest that would have been lawfully contracted, charged or received in the absence of the limitation prescribed by Section 3.8(a).

 

ARTICLE IV - CONDITIONS PRECEDENT

 

Section 4.1 Conditions Precedent. Lender shall not be obligated to make any Loan or advance hereunder (including the first) until (i) it shall have received the following documents and items, each duly executed and delivered in form and substance satisfactory to Lender, in its sole and absolute discretion, and (ii) the following requirements have been fulfilled to the satisfaction of Lender, in its sole and absolute discretion.

 

(a) this Agreement and promissory note evidencing the Loan;

 

(b) a completed collateral questionnaire and authorization to file financing statements prior to the Closing Date;

 

(c) a certificate executed by the President and the Secretary of Borrower certifying (i) the names and signatures of the officers of such Person authorized to execute Loan Documents, (ii) the resolutions duly adopted by the Board of Directors (or equivalent governing body) of Borrower authorizing the execution of this Agreement and the other Loan Documents, as appropriate, (iii) the correctness and completeness of the copy of the bylaws (or equivalent governing document) of such Person attached thereto and (iv) the correctness and completeness of the copy of the certificate of incorporation (or equivalent governing document) of such Person attached thereto;

 

(d) a good standing certificates for Borrower, issued by the Secretary of State or other appropriate official of Borrower’s jurisdiction of organization and each jurisdiction where Borrower’s conduct of business or ownership of property necessitates qualification;

 

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(e) a payoff letter and lien release with respect to the Debt to be Repaid (provided, that such payoff letter and lien release shall provide for, among other things, the (x) total satisfaction of the Debt to be Repaid, (y) the discharge of all Liens and guarantees securing the Debt to be Repaid and (z) the release of any and all claims the holder of the Debt to be Repaid may have against Borrower or any guarantee;

 

(f) a guaranty executed by each Guarantor;

 

(g) an intellectual property security agreement;

 

(h) a judicial reference agreement executed by Borrower, each Guarantor and each subordinated creditor;

 

(i) endorsements naming Lender as an additional insured and lender loss payee on all property insurance and all liability insurance policies of Borrower, as applicable;

 

(j) establishment of a one or more Collection Accounts for receipts of proceeds of Collateral;

 

(k) pre-funding verifications of accounts;

 

(1) satisfactory background checks with respect to all officers and directors of the Borrower;

 

(m) a Borrowing Base Certificate executed by Borrower making a request for a Loan, prepared as of a date acceptable to Lender;

 

(n) evidence satisfactory to Lender that after giving effect to (w) the first advance of the Loan, (x) the repayment in full of the Debt to be Repaid, (y) the payment of all fees and expenses incurred by Borrower in connection with the Loan, and (z) the Reserve established by Lender, Borrower shall have Availability of at least $1,000,000, plus an amount sufficient so that no trade payables or taxes are overdue (provided, that for purposes of this clause, trade payables shall be deemed overdue if payment has not been made by Borrower thereon within 60 days of invoice date), and plus an amount sufficient to pay all book overdrafts;

 

(o) a subordination agreement with respect to any Debt proposed by Borrower as Subordinated Debt and a copy of the instrument evidencing any such debt, in each case duly executed by the applicable parties, including, without limitation the Debt of Seaview AGI Partners, LLC, Galletti SMF Holdings, LLC and the lessor of the Italian operations of Borrower’s Affiliate;

 

(p) completion of a satisfactory field examination of Borrower, its Collateral and books and records;

 

(q) completion of a satisfactory review of Borrower’s licenses by counsel to Lender;

 

(r) a valid landlord’s or warehouseman’s waiver with respect to each location where Collateral and/or books and records of Borrower are located;

 

(s) company prepared consolidated and consolidating balance sheet of Borrower as of December 31, 2016, and the related statements of profit and loss and cash flows for the monthly period then ended;

 

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(t) such other documents, certificates, opinions, and information that Lender may require; and

 

(u) approval of the transaction contemplated hereby by the credit committee of Lender.

 

Section 4.2 Conditions to Subsequent Advances. The obligation of Lender to make any advance subsequent to the initial advance is subject to the following conditions precedent:

 

(a) Conditions to First Advance. All of the conditions precedent set forth in Section 4.1 have been satisfied.

 

(b) Borrowing Base Certificate. Lender shall have received from Borrower a Borrowing Base Certificate executed by Borrower prepared as of a date not more than 5 Business Days prior to the date of the requested advance.

 

(c) Representations and Warranties. The representations and warranties contained in each of the Loan Documents shall (i) with respect to representations and warranties that contain a materiality qualification, be true and correct with the same force and effect as though made on and as of the date of such advance (except for representations and warranties that expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all respects as of such earlier date) and (ii) with respect to representations and warranties that do not contain a materiality qualification, true in all material respects with the same force and effect as though made on and as of the date of such advance (except for representations and warranties that expressly relate to an earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date).

 

(d) Defaults and Events of Default. No Default or Event of Default shall have occurred and be continuing.

 

(e) Adverse Change. No Material Adverse Change (or event or condition that could reasonably be expected to cause or have a Material Adverse Change) has occurred since the date of the Financial Statements.

 

(f) Legal Restriction. Such advance or financial accommodation shall not be prohibited by any law or regulation or any order of any court or governmental agency or authority.

 

(g) No Repudiation. Neither Borrower nor any Obligor shall have repudiated or made any anticipatory breach or repudiation of any of its obligations under any Loan Document.

 

ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BORROWER

 

Section 5.1 Representations and Warranties. As of the Closing Date and the date of each advance under the Loan, Borrower represents and warrants to Lender as follows:

 

(a) Organization; Power; Qualification. Borrower is the type of entity identified on Schedule 5.1(a), duly organized, validly existing and in good standing under the laws of state identified on Schedule 5.1(a) and is qualified to do business in each state in which the nature of its properties or its activities requires such qualification, except to the extent the failure to be so qualified could reasonably be expected to have a Material Adverse Change. The jurisdictions in which Borrower is qualified to do business as a foreign entity are listed on Schedule 5.1(a).

 

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Borrower’s federal employer identification number and its organizational number with the Secretary of State of the state of its organization (if issued) are as set forth on Schedule 5.1(a).

 

(b) Authorization; Enforceability. Borrower has the power and authority to, and is duly authorized to, execute and deliver the Loan Documents to be executed by Borrower. Each of the Loan Documents to which Borrower is a party, constitutes the legal, valid and binding obligations of Borrower, enforceable in accordance with its terms, except as limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors’ rights generally.

 

(c) Subsidiaries, Parents and Affiliates; Ownership. Except as shown on Schedule 5.1(c), Borrower does not have any subsidiaries, parents or other Affiliates. The outstanding Equity Interests of Borrower has been duly and validly issued and are fully paid and nonassessable (to the extent applicable), and the number and owners of such Equity Interests are set forth on Schedule 5.1(c).

 

(d) Conflicts. Neither the execution and delivery of the Loan Documents, nor consummation of any of the transactions therein contemplated nor compliance with the terms and provisions thereof, will contravene any provision of law or any judgment, decree, license, order or permit applicable to Borrower or will conflict with, or will result in any breach of, any agreement to which Borrower is a party or by which Borrower may be bound or subject, or violate any provision of the organizational documents of Borrower.

 

(e) Consents and Governmental Approvals. No governmental approval nor any consent or approval of any third Person (other than those which have been obtained prior to the date hereof) is required in connection with the execution, delivery and performance by Borrower of the Loan Documents. Borrower is in compliance with all applicable governmental approvals and permits.

 

(f) Loans. Borrower has not made any loans or advances to any Affiliate or other Person except for advances authorized hereunder for routine expense allowances in the ordinary course of business and the Permitted Affiliate Loan.

 

(g) Business. Borrower is engaged principally in the business of the manufacture of frozen food items.

 

(h) Title; Liens. Except for Permitted Liens, all of the properties and assets of Borrower are free and clear of all Liens, and Borrower has good and marketable title to such properties and assets. Each Lien granted, or intended to be granted, to Lender pursuant to the Loan Documents is a valid, enforceable, perfected, first priority Lien and security interest.

 

(i) Debt and Contingent Liabilities. As of the Closing Date, set forth on Schedule 5.1(i) is a complete and correct listing of all of Borrower’s (i) Borrowed Debt, and (ii) Contingent Liabilities.

 

(j) Suits, Actions, Etc. Except as disclosed on Schedule 5.1(j), no litigation, arbitration, governmental investigation, proceeding or inquiry is pending or, to the knowledge of Borrower, threatened against Borrower or that could affect any of the Collateral. No such litigation, arbitration, governmental investigation, proceeding or inquiry could reasonably be expected to result in a Material Adverse Change.

 

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(k) Tax Returns and Payments. All tax returns required to be filed by Borrower in any jurisdiction have been filed and all taxes (including property taxes) have been paid prior to the time that such taxes could give rise to a lien therefor.

 

(1) Financial Condition. Borrower has delivered to Lender copies of the Financial Statements. The Financial Statements fairly present the financial condition of Borrower as of their respective dates and have been prepared in accordance with GAAP (except, with respect to the company prepared statements, for the presentation of footnotes and for applicable normal year-end adjustments). There is no Debt of Borrower which is not reflected in the Financial Statements, and no event or circumstance has occurred since the date of the Financial Statements which has had or could have or result in a Material Adverse Change.

 

(m) ERISA. Neither Borrower nor any Related Company maintains or contributes to any Benefit Plan other than those listed on Schedule 5.1(m). Further, (i) no Reportable Event (as defined in ERISA) has occurred and is continuing with respect to any Benefit Plan, and (ii) the PBGC has not instituted proceedings to terminate any Benefit Plan. Borrower and each Related Company has satisfied the minimum funding standards under ERISA with respect to its Benefit Plans and is in compliance in all material respects with the presently applicable provisions of ERISA and the Code, and has not incurred any liability to the PBGC or a Benefit Plan under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA.

 

(n) Defaults. No Default or Event of Default has occurred and is continuing.

 

(o) Borrowing Base Reports. All accounts and inventory included in any Borrowing Base Certificate constitute Eligible Accounts or Eligible Inventory, as appropriate, except as disclosed in such Borrowing Base Certificate.

 

(p) Locations of Inventory and Equipment. Set forth on Schedule 5.1(p) are (i) the location and address where all inventory and equipment of Borrower is located, except for inventory that is in transit to such location, and (ii) if the facility is leased or is a third party warehouse, processor location, the name of the landlord or such third party warehouseman or processor.

 

(q) Place of Business. The place of business of Borrower (or if Borrower has more than one place of business, its chief executive office) is at the address or addresses set forth on Schedule 5.1(q) and the books and records relating to the accounts of Borrower are located at the address or addresses set forth on Schedule 5.1(q).

 

(r) Corporate and Fictitious Names; Trade Names. Except as disclosed on Schedule 5.1(r), Borrower has not, during the preceding five (5) years, (i) been known as or used any other corporate, fictitious or trade names, (ii) been the surviving corporation of a merger or consolidation, or (iii) acquired all or substantially all of the assets of any Person.

 

(s) Intellectual Property. Schedule 5.1(s) lists all Intellectual Property owned by Borrower. Borrower owns or possesses all Intellectual Property required to conduct its business as now and presently planned to be conducted without, to its knowledge, any material conflict with the rights of others.

 

(t) Payroll Taxes. Borrower has made all payroll tax deposits for all of its employees on or before the date when due.

 

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(u) Solvency. Borrower is Solvent. No transfer of property is being made by Borrower and no obligation is being incurred by Borrower in connection with the transactions contemplated by this Agreement or the other Loan Documents with the intent to hinder, delay or defraud either present or future creditors of Borrower.

 

(v) Permits and Licenses. Borrower has obtained and maintains all permits and licenses necessary for Borrower to conduct its business. To the extent such permits and licenses must be held by individuals, all employees of Borrower required to obtain and maintain permits and licenses necessary for them to conduct Borrower’s business have been obtained and are maintained and current.

 

(w) Deposit Accounts. Except as may be designated to Lender by Borrower in writing after the Closing Date and approved by Lender in writing, each deposit account of Borrower is listed in Schedule 5.1(w).

 

(x) Compliance with Laws. Borrower and its Subsidiaries each is in compliance, in all material respects, with Applicable Law.

 

(y) Material Agreements. Schedule 5.1(y) sets forth all material agreements to which Borrower is a party or is otherwise bound, true, correct and complete copies of which have been delivered to Lender. Schedule 5.1(y) further identifies, as of the Closing Date, each such material agreement that requires consent to the granting of a Lien in favor of Lender on the rights of Borrower thereunder. Borrower is not in default under or with respect to any such material agreement that gives rise to a right of termination by the non-defaulting party and could reasonably be expected to have a Material Adverse Effect.

 

(z) Non-Regulated Entities. Neither Borrower nor any Affiliate of Borrower is an “Investment Company” within the meaning of the Investment Company Act of 1940. Borrower is not subject to regulation under the Federal Power Act, any state public utilities code or law, or any other federal or state statute or regulation limiting its ability to incur Debt.

 

(aa) Investment Banking or Finder’s Fees. Borrower has not agreed to pay or is otherwise obligated to pay or reimburse any Person with respect to any investment banking or similar or related fee, underwriter’s fee, finder’s fee or broker’s fee in connection with this Agreement.

 

(bb) Producer Payables. Borrower has no past-due Producer Payables.

 

(cc) Sanctions, Anti-Corruption and Anti-Money Laundering Laws. Borrower is not: (a) a Sanctioned Person; (b) controlled by or acting on behalf of a Sanctioned Person; (c) under investigation for an alleged breach of Sanction(s) by a governmental authority that enforces Sanctions. Borrower: (a) is in compliance with all Anti-Corruption Laws and Anti-Money Laundering Laws; (b) is not, and has not been, under administrative, civil or criminal investigation; and (c) has not received notice from or made a voluntary disclosure to any governmental entity regarding a possible violation of any Anti-Corruption Laws or Anti-Money Laundering Laws. The provisions in this Section shall prevail and control over any contrary provisions in this Agreement or in any related documents.

 

(dd) Full Disclosure. None of the representations or warranties made by Borrower in the Loan Documents and none of the statements contained in any Schedule or any report, statement or certificate furnished to Lender by or on behalf of Borrower in connection with the Loan Documents contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered.

 

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Section 5.2 Survival of Representations. All representations and warranties by Borrower herein shall be deemed to have been made on the date hereof and the date of each subsequent advance or Loan.

 

ARTICLE VI - SECURITY INTEREST AND COLLATERAL COVENANTS

 

Section 6.1 Security Interest. To secure the payment and performance of the Obligations, Borrower hereby mortgages, pledges and assigns to Lender for itself, and as agent for its Affiliates, all of the Collateral and grants to Lender for itself, and as agent for its Affiliates, a security interest and Lien in and upon all of the Collateral. Borrower shall, at Lender’s request, at any time and from time to time, authenticate, execute and deliver to Lender such financing statements, documents and other agreements and instruments (and pay the cost of filing or recording the same in all public offices deemed necessary or desirable by Lender) and do such other acts and things or cause third parties to do such other acts and things as Lender may deem necessary or desirable, in its sole discretion, in order to establish and maintain a valid, attached and perfected security interest in the Collateral in favor of Lender (free and clear of all other Liens except for Permitted Liens) to secure payment of the Obligations, and in order to facilitate the collection of the Collateral.

 

Section 6.2 Collection of Accounts.

 

(a) If Borrower or any Affiliate receives any monies, checks, notes, drafts, and other payments relating to or constituting proceeds of accounts or of any other Collateral, Borrower shall immediately (but in any event within 3 Business Days) deposit such items in kind in the Collection Account fully-endorsed. Borrower shall advise each Account Debtor that remits amounts payable on the accounts or any other Person that remits amounts to Borrower in respect of any of the Collateral by wire transfer or ACH to make such remittances directly to the Collection Account.

 

(b) Borrower shall establish a Collection Account and shall cause all moneys, checks, notes, drafts and other payments relating to or constituting proceeds of accounts, or of any other Collateral, to be deposited in the Collection Account.

 

(c) Any payments which are received by Borrower or any Affiliate (including any payment evidenced by a promissory note or other instrument) shall be held in trust for Lender and shall be (i) deposited in the Collection Account, or (ii) delivered to Lender, as promptly as possible in the exact form received, together with any necessary endorsements.

 

(d) Borrower shall pay all customary fees, costs and expenses in connection with opening and maintaining any Collection Account.

 

Section 6.3 Verification of Accounts. Lender shall have the right at any time at Borrower’s expense and in its own name, Borrower’s name, or an assumed name to verify the validity, amount or any other matter relating to any accounts.

 

Section 6.4 Disputes, Returns and Adjustments.

 

(a) Borrower shall provide Lender with prompt written notice of amounts in excess of $50,000 that are in dispute between any Account Debtor and Borrower.

 

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(b) Borrower shall notify Lender promptly of all returns and credits in respect of any account, which notice shall specify the accounts affected and be included in the Borrowing Base Certificate delivered to Lender in accordance with Section 8.3(d). Borrower shall notify Lender promptly of any pending return or credit in excess of $50,000, and shall specify the account affected, the related Account Debtor and the goods to be returned.

 

Section 6.5 Invoices. Upon request, Borrower shall deliver to Lender copies of customers’ invoices or the equivalent, original shipping and delivery receipts or other proof of delivery, customers’ statements, the original copy of all documents, including, without limitation, repayment histories and present status reports, relating to accounts and such other documents and information relating to the accounts as Lender shall specify.

 

Section 6.6 Ownership; Defense of Title.

 

(a) Borrower shall defend its title in and to the Collateral and shall defend the security interest of Lender in the Collateral against the claims and demands of all Persons.

 

(b) Borrower shall (i) protect and preserve all properties material to its business, including Intellectual Property, and maintain all tangible property in good and workable condition in all material respects, with reasonable allowance for wear and tear, and (ii) from time to time make or cause to be made all needed and appropriate repairs, renewals, replacements, and additions to such properties necessary for the conduct of its business.

 

Section 6.7 Locations; Organizational Information; Inventory. Borrower shall not change the location of its place of business (or, if it has more than one place of business, its chief executive office) or the place where it keeps its books and records relating to the Collateral or change its name, identity, corporate structure or jurisdiction of organization without giving Lender at least 30 days’ prior written notice thereof. All inventory, other than inventory in transit to any such location, shall at all times be kept by Borrower at one or more of the locations set forth in Schedule 5.1(p). Borrower shall use its best efforts to ensure that all Inventory that is produced in the United States will be produced in compliance with the Fair Labor Standards Act, as amended.

 

Section 6.8 Records Relating to Collateral.

 

(a) Borrower shall at all times keep and maintain (i) complete and accurate records of inventory on a basis consistent with past practices of Borrower, itemizing and describing the kind, type and quantity of inventory and Borrower’s cost therefor and a current price list for such inventory, (ii) complete and accurate records of all other Collateral, (iii) a list of all customers of Borrower with names, addresses and phone numbers, (iv) a list of all distributors for each product line included in Borrower’s inventory, (v) a current customer open order report against current inventory, and (vi) a current list of all salesmen and employees of Borrower. Databases containing the foregoing shall at all times be accessible and available to Lender, subject to the terms of Section 6.9.

 

(b) Borrower will conduct a physical count of all inventory, wherever located, at least annually and make adjustments to its books and records to reflect the findings of such count and such adjustments shall be immediately reported to Lender.

 

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Section 6.9 Inspection. Lender (by any of its officers, employees, or agents) shall have the right at any time or times (with reasonable prior notice to Borrower unless an Event of Default exists) to (a) visit the properties of Borrower, inspect the Collateral and the other assets of Borrower and inspect and make extracts from the books and records of Borrower, all during customary business hours, (b) discuss Borrower’s business, financial condition, results of operations and business prospects with Borrower’s (i) principal officers, (ii) independent accountants and other professionals providing services to Borrower, and (iii) any other Person (except that any such discussion with any third parties shall be conducted only in accordance with Lender’s standard operating procedures relating to the maintenance of confidentiality of confidential information of Borrower), (c) conduct field examinations and otherwise verify the amount, quantity, value, and condition of, or any other matter relating to, any of the Collateral and in this connection review, audit and make extracts from all records and files related to any of the Collateral, and (d) access and copy the records, lists, reports and data bases referred to in Section 6.8. Borrower will deliver to Lender upon request any instrument necessary to authorize an independent accountant or other professional to have discussions of the type outlined above with Lender or for Lender to obtain records from any service bureau maintaining records on behalf of Borrower.

 

Section 6.10 Maintenance. Borrower shall maintain all equipment of Borrower in good and working order and condition, reasonable wear and tear excepted.

 

Section 6.11 Appraisals. At any time when a Default or Event of Default exists, and also at such other times not more frequently than once a year as Lender requests, Borrower shall, at its expense, provide Lender with appraisals, or updates of appraisals, of any Collateral, prepared by an appraiser acceptable to Lender and on a basis satisfactory to Lender.

 

Section 6.12 Preservation of Lender’s Rights. To the extent allowed by law, neither Lender nor any of its officers, directors, employees or agents shall be liable or responsible in any way for the safekeeping of any Collateral or for any act or failure to act with respect to the Collateral, or for any loss or damage thereto or any diminution in the value thereof, or for any act by any other Person. In the case of any instruments and chattel paper included within the Collateral, Lender shall have no duty or obligation to preserve rights against prior parties. The Obligations shall not be affected by any failure of Lender to take any steps to perfect its security interests or to collect or realize upon the Collateral, nor shall loss of or damage to the Collateral release Borrower from any of the Obligations.

 

Section 6.13 Perfection and Protection of Lender’s Security Interest. Borrower shall perform, at its expense, all actions requested by Lender at any time to perfect, maintain, protect and enforce Lender’s security interest in the Collateral. Without limiting the foregoing, unless Lender agrees otherwise in writing, (a) Borrower will deliver to Lender the originals of all instruments, documents and chattel paper, duly endorsed or assigned to Lender without restriction, and all certificates of title covering any portion of the Collateral for which certificates of title have been issued, together with executed applications for corrected certificates of title and other such documentation as may be requested by Lender, and (b) Borrower shall deliver to Lender such executed documentation as Lender may request in order to perfect its security interest in any letter of credit issued in favor of Borrower. If at any time any Collateral is located on any leased premises not owned by Borrower, then Borrower shall, at the request of Lender, obtain written landlord lien waivers or subordinations with respect to such Collateral, in form and substance satisfactory to Lender. If any Collateral is at any time in the possession or control of any warehouseman, bailee, processor or any other Person other than Borrower, then Borrower shall notify Lender thereof and shall, at the request of Lender, notify such Person (in form and substance satisfactory to Lender) of Lender’s security interest in such Collateral and instruct such Person to hold all such Collateral for Lender’s account subject to Lender’s instructions.

 

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Section 6.14 Power of Attorney. Borrower hereby irrevocably appoints Lender as Borrower’s agent and attorney-in-fact to take any action necessary to preserve and protect the Collateral and Lender’s interests under the Loan Documents or to sign and file any document necessary to perfect Lender’s security interest in the Collateral. Without limiting the foregoing:

 

(i) Lender shall have the right at any time to take any of the following action, in its own name or in the name of Borrower, whether or not an Event of Default is in existence: (a) make written or verbal requests for verification of the validity, amount or any other matter relating to any Collateral from any Person, (b) endorse Borrower’s name on checks, instruments or other evidences of payment on Collateral, (c) sign and file, in Borrower’s name or in Lender’s name as secured party, any proof of claim or other document in any bankruptcy proceedings of any Account Debtor or obligor on Collateral, (d) access, copy or utilize any information recorded or contained in any computer or data processing equipment or system maintained by Borrower in respect of the Collateral and (e) open mail addressed to Borrower and take possession of checks or other proceeds of Collateral for application in accordance with this Agreement.

 

(ii) Lender shall have the right at any time to take any of the following action, in its own name or in the name of Borrower, at any time when any Event of Default is in existence: (a) notify any or all Persons which Lender believes may be Account Debtors or obligors on Collateral to make payment directly to Lender, for the account of Borrower, (b) redirect the deposit and disposition of collections and proceeds of Collateral; provided that such proceeds shall be applied to the Obligations as provided by this Agreement, (c) settle, adjust, compromise or discharge Accounts or extend time of payment upon such terms as Lender may determine, (d) notify post office authorities, in the name of Borrower or in the name of Lender, as secured party, to change the address for delivery of Borrower’s mail to an address designated by Lender, (e) sign Borrower’s name on any invoice, bill of lading, warehouse receipt or other document of title relating to any Collateral, and (f) clear Inventory through customs in Borrower’s name, in Lender’s name as secured party or in the name of Lender’s designee, and to sign and deliver to customs officials powers of attorney in Borrower’s name for such purpose.

 

The powers granted under this Section are coupled with an interest and are irrevocable until all Obligations have been paid in full and all commitments of Lender under this Agreement have been terminated. Costs and expenses incurred by Lender in connection with any of such actions by Lender, including attorneys’ fees and out-of-pocket expenses, shall be reimbursed to Lender on demand.

 

ARTICLE VII - AFFIRMATIVE COVENANTS

 

So long as this Agreement shall be in effect or any of the Obligations shall be outstanding, Borrower covenants and agrees as follows:

 

Section 7.1 Preservation of Corporate Existence and Similar Matters. Borrower shall preserve and maintain its existence and legal form, and qualify and remain qualified as a foreign entity qualified to do business in each jurisdiction in which the character of its properties or the nature of its business requires such qualification, except to the extent the failure to be so qualified could reasonably be expected to have a Material Adverse Change.

 

Section 7.2 Compliance with Applicable Law. Borrower shall comply with all applicable laws.

 

Section 7.3 Conduct of Business. Borrower shall engage only in substantially the same businesses conducted by Borrower on the date hereof.

 

Section 7.4 Payment of Taxes and Claims. Borrower shall pay or discharge when due (a) all taxes, assessments and governmental charges imposed upon it or its properties and (b) all lawful claims which, if unpaid, might become a Lien on any properties of Borrower, except that this Section shall not require the payment or discharge of any such tax, assessment, charge, levy or claim which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established on the appropriate books of Borrower in accordance with GAAP.

 

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Section 7.5 Accounting Methods and Financial Records. Borrower shall maintain a system of accounting, and keep such books, records and accounts (which shall be true and complete), as may be required or as may be necessary to permit the preparation of financial statements in accordance with GAAP consistently applied.

 

Section 7.6 Use of Proceeds. Borrower shall (a) use the proceeds of the Loan for (i) the repayment of the Debt to be Repaid, (ii) to fund the Permitted Affiliate Loan, (iii) working capital and general business purposes and (iv) to pay fees owed to Lender and costs and expenses incurred in connection with the transactions contemplated hereby, and (b) not use any part of such proceeds to purchase or carry, or to reduce or retire or refinance any credit incurred to purchase or carry, any margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System) or for any other purpose which would violate Regulation U or Regulation T or X of such Board of Governors or for any other purpose prohibited by law or by the terms and conditions of this Agreement.

 

Section 7.7 Hazardous Waste and Substances; Environmental Requirements. Borrower shall comply with all occupational health and safety laws and Environmental Laws.

 

Section 7.8 Accuracy of Information. All written information, reports, statements and other papers and data furnished to Lender shall be, at the time the same is so furnished, complete and correct in all material respects.

 

Section 7.9 Revisions or Updates to Schedules. Should any of the information or disclosures provided on any of the Schedules attached hereto become outdated or incorrect in any material respect, Borrower shall provide promptly to Lender such revisions or updates to such Schedule(s) as may be necessary or appropriate to update or correct and update such Schedule(s). Notwithstanding the foregoing, the delivery to Lender of a revised or updated schedule shall not constitute a waiver of, or consent to, any Default or Event of Default arising as a result of any erroneous or incorrect information provided in any Schedule previously delivered to Lender.

 

Section 7.10 ERISA. Borrower shall provide to Lender, as soon as possible and in any event within 30 days after the date that (a) any Termination Event with respect to a Benefit Plan has occurred or will occur, (b) the aggregate present value of the Unfunded Vested Liabilities under all Benefit Plans has increased to an amount in excess of $0, or (c) Borrower is in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan required by reason of its complete or partial withdrawal (as described in Section 4203 or 4205 of ERISA) from such Multiemployer Plan, a certificate of the president or the chief financial officer of Borrower setting forth the details of such of the events described in clauses (a) through (c) as applicable and the action which is proposed to be taken with respect thereto and, simultaneously with the filing thereof, copies of any notice or filing which may be required by the PBGC or other agency of the United States government with respect to such of the events described in clauses (a) through (c) as applicable.

 

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Section 7.11 Insurance. Borrower shall keep or cause to be kept adequately insured by financially sound and reputable insurers all of its property usually insured by Persons engaged in the same or similar businesses. Without limiting the foregoing, Borrower shall insure the Collateral of Borrower against loss or damage by fire, theft, burglary, pilferage, loss in transit, business interruption, product recall, and such other hazards as usual and customary in Borrower’s industry or as Lender may specify in amounts and under policies by insurers acceptable to Lender, and all premiums thereon shall be paid by Borrower and copies of the policies delivered to Lender. If Borrower fails to do so, Lender may procure such insurance and charge the cost to Borrower’s account. Each policy of insurance covering the Collateral shall provide that at least 30 days prior written notice of cancellation or notice of lapse must be given to Lender by the insurer (or at least 10 days if the reason for cancellation is for non-payment of premium). All insurance policies required under this Section shall name Lender as an additional named insured and as a lender loss payee, as applicable. Any proceeds of insurance referred to in this Section which are paid to Lender shall be, at the option of Lender in its sole and absolute discretion, either (i) applied to rebuild, restore or replace the damaged or destroyed property, or (ii) applied to the payment or prepayment of the Obligations.

 

Section 7.12 Payroll Taxes. Borrower shall at all times make all payroll tax deposits (with such deposits being paid to a payroll company, to the applicable taxing authority or to a segregated account) for all of its employees on or before the date when due.

 

Section 7.13 Notice of Certain Matters. Borrower shall provide to Lender prompt notice of (a) the commencement, to the extent Borrower is aware of the same, of all actions and proceedings in any court against Borrower or any of the Collateral, (b) any amendment of any of the organizational documents of Borrower, including but not limited to certificate of incorporation or bylaws, (c) any change in the business, financial condition, results of operations or business prospects of Borrower and any change in the executive officers of Borrower, (d) any (i) Default or Event of Default, or (ii) event that would constitute a default or event of default by Borrower under any material agreement (other than this Agreement) to which Borrower is a party, (e) the initiation of any litigation, arbitration, governmental investigation or other action or proceeding, and (f) the occurrence of any event causing any account or inventory identified by Borrower to Lender as an Eligible Account of Eligible Inventory to become ineligible for any reason.

 

Section 7.14 Deposit Accounts. Borrower shall cause Lender to at all times have control (as defined by Section 9.104 of the UCC) with respect to each deposit account of Borrower other than any deposit account solely maintained for paying payroll and related withholding taxes.

 

Section 7.15 Producer Payables. Borrower shall pay all Producer Payables within 10 days after such accounts payable are invoiced.

 

ARTICLE VIII - FINANCIAL AND COLLATERAL REPORTING

 

So long as this Agreement shall be in effect or any of the Obligations shall be outstanding, Borrower covenants and agrees as follows:

 

Section 8.1 Financial Statements.

 

(a) Reviewed Year-End Statements. As soon as available, but in any event within 120 days after the end of each fiscal year of Borrower, Borrower shall furnish to Lender copies of the reviewed consolidated and consolidating balance sheet of Borrower and its subsidiaries as of the end of such fiscal year and the related reviewed consolidated and consolidating statements of income, shareholders’ equity and cash flow for such fiscal year, in each case setting forth in comparative form the figures for the previous year of Borrower and its subsidiaries, along with management’s summary written overview and analysis of the results for such fiscal year, together with a report certified by independent certified public accountants selected by Borrower and reasonably acceptable to Lender, and a listing of any adjusting entries. In addition, on or before such date, Borrower shall provide Lender with copies of all management reports received from its certified public accountants.

 

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(b) Monthly Financial Statements. As soon as available, but in any event within 30 days after the end of each month, Borrower shall furnish to Lender copies of the company prepared consolidated and consolidating balance sheet of Borrower and its subsidiaries as of the end of such month and the related company prepared consolidated and consolidating income statement and statement of cash flow of Borrower and its subsidiaries for such month and for the portion of the fiscal year of Borrower through such month, along with management’s summary written overview and analysis of the results for such month, certified by the chief financial officer of Borrower as presenting fairly the financial condition and results of operations of Borrower and its subsidiaries as of the date thereof and for the periods ended on such date, subject to normal year-end adjustments.

 

(c) Projected Financial Statements. Not more than 60 days, and not less than 30 days prior to the end of each fiscal year of Borrower, Borrower shall furnish to Lender forecasted financial statements, prepared by Borrower, consisting of consolidated and consolidating balance sheets, cash flow statements and income statements of Borrower and its subsidiaries, reflecting projected borrowing hereunder and setting forth the assumptions on which such forecasted financial statements were prepared, covering the one-year period until the next fiscal year end.

 

All such financial statements shall be complete and correct in all material respects and all such financial statements referred to in clauses (a) and (b) shall be prepared in accordance with GAAP (except, with respect to interim financial statements, for the omission of footnotes) applied consistently throughout the periods reflected therein. Further, all such financial statements shall be in a form acceptable to Lender.

 

Section 8.2 Compliance Certificate. Together with each delivery of financial statements required by Sections 8.1(a) and (b), Borrower shall furnish to Lender a certificate of Borrower’s president or chief financial officer in the form of Exhibit B or otherwise in a form acceptable to Lender.

 

Section 8.3 Collateral Information and Reports.

 

(a) Schedules of Accounts. Within 15 days after the end of each month, Borrower shall furnish to Lender a Schedule of Accounts listing all accounts of Borrower as of the last Business Day of such month setting forth (i) the name of each Account Debtor together with account balances detailed by invoice number, amount (and any applicable rebate or discount), invoice date and terms, (ii) aging of all accounts setting forth accounts 30 days past the invoice date or less, accounts over 30 days past the invoice date but less than 61 days past the invoice date, accounts over 60 days past the invoice date but less than 91 days past the invoice date, accounts over 90 days past the invoice date and less than 121 days past the invoice date and accounts over 120 days past the invoice date, and (iii) a reconciliation of the Schedule of Accounts to the Borrowing Base Certificate as of the most recent month end and Borrower’s general ledger as of such month end.

 

(b) Schedules of Accounts Payable. Within 15 days after the end of each month, Borrower shall furnish to Lender a schedule of accounts payable of Borrower as of the last Business Day of such month setting forth (i) a detailed aged trial balance of all of Borrower’s then existing accounts payable, specifying the name of and the balance due to each creditor and (ii) a reconciliation to the schedule of accounts payable to Borrower’s general ledger as of such month end. Concurrently with the delivery of each Borrowing Base Certificate, Borrower will deliver a schedule of all Producer Payables specifying the name, balance due and an aging.

 

(c) Schedule of Inventory. Within 15 days after the end of each month, Borrower shall furnish to Lender (i) (A) a Schedule of Inventory, based upon Borrower’s perpetual inventory, as of the last Business Day of such month, itemizing and describing the kind, type, quantity and location of all inventory of Borrower and the cost thereof with a summary of inventory by category, (B) a detailed statement of all inventory that is not located on the premises described on Schedule 5.1(p), and (C) an inventory turnover report, in form and substance acceptable to Lender, and (ii) a reconciliation of the Schedule of Inventory to the Borrowing Base Certificate as of the most recent month end and Borrower’s general ledger as of such month end.

 

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(d) Borrowing Base Certificate. Not less often than weekly, Borrower shall furnish to Lender a Borrowing Base Certificate prepared as of the close of business on the last Business Day of such week, along with supporting documentation, in form and substance satisfactory to Lender (including but not limited to information on sales, credits, collections, adjustments and inventory changes).

 

(e) Certification. Each of the schedules and certificates delivered to Lender by Borrower pursuant to this Section 8.3 shall be in a form acceptable to Lender and shall be signed and certified by the president, chief financial officer or treasurer of Borrower to be true, correct and complete as of the date indicated thereon. In the event that any of such schedules or certificates are delivered electronically or without signature, such schedules and/or certificates shall, by virtue of their delivery, be deemed to have been signed and certified by the president of Borrower to be true, correct and complete as of the date indicated thereon.

 

(f) Other Information. Lender may, in its sole and absolute discretion, from time to time require Borrower to deliver the schedules and certificates described in Section 8.3 more or less often and on different schedules than specified in such Section. Borrower shall also furnish to Lender such other additional information as Lender may from time to time request.

 

ARTICLE IX - NEGATIVE COVENANTS

 

So long as this Agreement shall be in effect or any of the Obligations shall be outstanding, Borrower covenants and agrees as follows:

 

Section 9.1 Financial Covenants. Borrower shall maintain and keep in full force and effect each of the financial covenants set forth below:

 

(a) Minimum Tangible Net Worth. Borrower shall not, directly or indirectly, permit its consolidated Tangible Net Worth at any time to be less than the Tangible Net Worth Requirement. As used herein, the term “Tangible Net Worth Requirement” shall mean negative two hundred fifty six thousand dollars (-$256,000) from the date of this Agreement to the date of Lender’s receipt of Borrower’s reviewed financial statements pursuant to Section 8.1(a) (the “Annual Adjustment Date”), and (ii) as of each Annual Adjustment Date, the Tangible Net Worth Requirement will be adjusted upward by fifty percent (50%) of Borrower’s positive Net Income for the immediately preceding fiscal year as reflected in Borrower’s reviewed financial statements; provided, that the Tangible Net Worth Requirement will not be adjusted down for any losses.

 

(b) Minimum Fixed Charge Coverage Ratio. Borrower’s Fixed Charge Coverage Ratio as of each month-end shall be at least 1.10 to 1.00.

 

(c) Maximum Non-Financed Capital Expenditures. Borrower’s Non-Financed Capital Expenditures shall not exceed $50,000 in any fiscal year.

 

Section 9.2 Prohibited Distributions and Payments, Etc. Borrower shall not, directly or indirectly, declare or make any Restricted Payment.

 

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Section 9.3 Debt. Borrower shall not, directly or indirectly, create, assume, or otherwise become or remain obligated in respect of, or permit or suffer to exist or to be created, assumed or incurred or to be outstanding, any Debt other than Permitted Debt.

 

Section 9.4 Liens. Borrower shall not, directly or indirectly, create, assume or permit or suffer to exist or to be created or assumed any Lien on any of the property or assets of Borrower, real, personal or mixed, tangible or intangible, other than Permitted Liens.

 

Section 9.5 Loans. Borrower shall not make any loans or advances to or for the benefit of any Person (other than the Permitted Affiliate Loan), including, without limitation, officer, director, manager, shareholder, member, or partner of Borrower except advances for routine expense allowances in the ordinary course of business and consistent with past practice. Borrower shall not make any payment on any obligation owing to or by any officer, director, manager, shareholder, member, partner or Affiliate of Borrower, except for payments of salary in the ordinary course consistent with past practice and Restricted Payments permitted pursuant to Section 9.2.

 

Section 9.6 Merger, Consolidation, Sale of Assets, Acquisitions. Borrower shall not, directly or indirectly, merge or consolidate with any other Person or sell, lease or transfer or otherwise dispose of any assets to any Person (other than sales of inventory in the ordinary course of business) or acquire all or substantially all of the assets of any Person or the assets constituting the business or a division or operating unit of any Person.

 

Section 9.7 Transactions with Affiliates. Borrower shall not, directly or indirectly, effect any transaction with any Affiliate on a basis less favorable to Borrower than would be the case if such transaction had been effected with a Person not an Affiliate, unless expressly permitted by Section 9.2; provided that in no event shall Borrower enter into any lease with any Affiliate.

 

Section 9.8 Contingent Liabilities. Borrower shall not, directly or indirectly, become or remain liable with respect to any Contingent Liabilities in respect of Debt not permitted by Section 9.3.

 

Section 9.9 Operating Leases. Borrower shall not, directly or indirectly, suffer to exist or enter into any lease (other than a Capitalized Lease) which would cause the annual payment obligations of Borrower under all leases (other than Capitalized Leases) to exceed $250,000 in the aggregate.

 

Section 9.10 Benefit Plans. Borrower shall not, directly or indirectly, permit, or take any action which would cause, the Unfunded Vested Liabilities under all Benefit Plans of Borrower to exceed $0.

 

Section 9.11 Sales and Leasebacks. Borrower shall not, directly or indirectly, enter into any arrangement with any Person providing for the leasing from such Person of real or personal property which has been or is to be sold or transferred, directly or indirectly, by Borrower to such Person.

 

Section 9.12 Investments. Borrower shall not, directly or indirectly, make or acquire any Investment, except for Permitted Investments.

 

Section 9.13 Amendments. Borrower shall not amend or modify, or permit any amendment or modification to, whether orally, in writing, or otherwise, to any agreement evidencing or relating to Subordinated Debt.

 

Section 9.14 No Restrictions on Subsidiary Distributions. Borrower will not permit directly or indirectly to create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Person to pay dividends or make any other distribution on any of such Person’s equity interests owned by Borrower.

 

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Section 9.15 Collateral Locations. Except for Inventory in transit to Borrower in the ordinary course of business, Borrower will not maintain any Collateral at any location other than those locations listed on Schedule 5.1(p) unless it gives Lender at least 30 days’ prior written notice thereof and delivers or causes to be delivered to Lender all documents that Lender reasonably requests in connection therewith, including without limitation, in the case of any leased location, an access and waiver agreement, signed by the owner of such location, in form and substance satisfactory to Lender.

 

Section 9.16 USA Patriot Act. Borrower shall not (a) be or become subject at any time to any law, regulation, or list of any government agency (including, without limitation, the U.S. Office of Foreign Asset Control list) that prohibits or limits Lender from making any advance or extension of credit to Borrower or from otherwise conducting business with Borrower or (b) fail to provide documentary and other evidence of Borrower’s or its corporate officers’ identities as may be requested by Lender at any time to enable Lender to verify Borrower’s identity or to comply with any Applicable Law, including, without limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. §5318.

 

Section 9.17 SANCTIONS. Borrower shall not: (a) use any of the Loan proceeds for the purpose of: (i) providing financing to or otherwise making funds directly or indirectly available to any Sanctioned Person; or (ii) providing financing to or otherwise funding any transaction which would be prohibited by Sanctions or would otherwise cause Lender or Borrower, or any entity affiliated with Lender or Borrower, to be in breach of any Sanction; or (b) fund any repayment of the Loan with proceeds derived from any transaction that would be prohibited by Sanctions or would otherwise cause Lender or Borrower, or any Person affiliated with Lender or Borrower, to be in breach of any Sanction. Borrower shall notify Lender in writing not more than one (1) Business Day after becoming aware of any breach of this Section.

 

ARTICLE X - DEFAULT

 

Section 10.1 Events of Default. The occurrence of any one or more of the following events shall constitute an Event of Default:

 

(a) the failure or refusal of Borrower to make any payment of the Obligations when due;

 

(b) the failure of any Obligor to properly observe or perform any obligation, agreement, covenant, or other provision contained in this Agreement or in any other Loan Document;

 

(c) the occurrence of any default or event of default under any of the other Loan Documents;

 

(d) any representation or warranty contained herein or in any of the other Loan Documents is false or misleading in any material respect when made or deemed made;

 

(e) an Obligor shall at any time (i) apply for or consent to the appointment of a receiver, trustee, custodian, intervenor or liquidator of such Obligor or of all or a substantial part of such Obligor’s assets, (ii) file a voluntary petition in bankruptcy, (iii) admit in writing that such Obligor is unable to pay its debts as they become due, (iv) make a general assignment for the benefit of creditors, (v) file a petition or answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy or insolvency proceeding, or (vi) take corporate, company or partnership action for the purpose of effecting any of the foregoing;

 

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(f) at any time, either (i) an involuntary petition or complaint shall be filed against any Obligor seeking its bankruptcy or reorganization or appointment of a receiver, custodian, trustee, intervenor or liquidator of such Obligor, or of all or substantially all of such Obligor’s assets, which such Obligor shall acquiesce to or fail to have dismissed within thirty (30) days, or (ii) an order, order for relief, judgment or decree shall be entered by any court of competent jurisdiction or other competent authority approving a petition or complaint seeking reorganization of such Obligor or appointing an intervenor or liquidator of such Obligor, or of all or substantially all of its assets;

 

(g) Borrower ceases operations or commences liquidation of its assets;

 

(h) any money judgment in excess of $25,000 (net of insurance coverage as to which the insurer has been notified of such judgment and has accepted coverage in writing) is rendered against Borrower that is not paid within thirty (30) days, or the failure, within a period of ten (10) days after the commencement thereof, to have discharged any attachment, sequestration, or similar proceedings against Borrower’s assets;

 

(i) the occurrence of a default or event of default under any other Debt of Borrower which Debt exceeds $25,000;

 

(j) a loss, theft, damage or destruction occurs with respect to any Collateral if the amount not covered by insurance exceeds $100,000;

 

(k) an Obligor or any of its senior officers is criminally indicted or convicted for (i) a felony committed in the conduct of the Obligor’s business, or (ii) violating any state or federal law (including the Controlled Substances Act, Money Laundering Control Act of 1986 and Illegal Exportation of War Materials Act, each as amended) that could lead to forfeiture of any material Property or any Collateral;

 

(l) Lender shall cease to have a valid, perfected and first priority Lien on any of the Collateral, except as otherwise expressly permitted herein or consented to in writing by Lender;

 

(m) any guarantor of the Obligations, or such guarantor’s successors, heirs, or personal representatives, shall (i) repudiate its or his obligations under, or commit an anticipatory breach of, its guaranty executed for the benefit of Lender or (ii) attempt to terminate such guaranty, or (iii) commence any legal proceeding to terminate or hold invalid in any respect such guaranty;

 

(n) Borrower is enjoined, restrained or in any way prevented by court order from continuing to conduct all or any material part of its business affairs or Borrower ceases operations or commences liquidation of its assets;

 

(o) the occurrence of a Change of Control; or

 

(p) a Material Adverse Change shall occur, as determined by Lender in its sole judgment, or the occurrence of any event which, in Lender’s sole judgment, could have a Material Adverse Change.

 

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Section 10.2 Remedies.

 

(a) Automatic Acceleration and Termination of Facilities. Upon the occurrence of an Event of Default with respect to Borrower under Section 10.1(e) or ID, (i) the principal of and the accrued interest on the Loans at the time outstanding, and all other amounts owed to Lender under this Agreement or any of the Loan Documents and all other Obligations, shall thereupon become due and payable without presentment, demand, protest, notice of protest and non-payment, notice of default, notice of acceleration or intention to accelerate, or other notice of any kind, all of which are expressly waived, anything in this Agreement or any of the Loan Documents to the contrary notwithstanding, and (ii) the commitment of Lender to make Loans hereunder shall immediately terminate.

 

(b) Other Remedies. Without limiting the terms of Section 10.2(a) above, if any Event of Default shall have occurred and be continuing, Lender, in its sole and absolute discretion, may (i) declare the principal of and accrued interest on the Loans at the time outstanding, and all other amounts owed to Lender under this Agreement or any of the Loan Documents and all other Obligations, to be forthwith due and payable, whereupon the same shall immediately become due and payable without presentment, demand, protest, notice of protest and non-payment, notice of default, notice of acceleration or intention to accelerate, or other notice of any kind, all of which are expressly waived, anything in this Agreement or the Loan Documents to the contrary notwithstanding; (ii) terminate any commitment of Lender to make Loans hereunder; (iii) enter upon any premises where Collateral is located; and (iv) exercise any or all rights and remedies available under the Loan Documents, at law and/or in equity including, without limitation, the rights and remedies of a secured party under the UCC (whether or not the UCC is applicable). Borrower agrees that, to the extent notice of sale shall be required by law, at least 10 days’ notice to Borrower of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notice, but notice given in any other reasonable manner or at any other reasonable time shall also constitute reasonable notification.

 

Section 10.3 Application of Proceeds. All proceeds from each sale of, or other realization upon, all or any part of the Collateral following an Event of Default shall be applied to the payment of the Obligations (with Borrower remaining liable for any deficiency) in any order which Lender may elect with the balance (if any) paid to Borrower or to whomsoever is entitled thereto.

 

Section 10.4 Miscellaneous Provisions Concerning Remedies.

 

(a) Rights Cumulative. The rights and remedies of Lender under the Loan Documents shall be cumulative and not exclusive of any rights or remedies which it would otherwise have. In exercising such rights and remedies, Lender may be selective and no failure or delay by Lender in exercising any right shall operate as a waiver of such right nor shall any single or partial exercise of any power or right preclude its other or further exercise or the exercise of any other power or right.

 

(b) Waiver of Marshaling. Borrower hereby waives any right to require any marshaling of assets and any similar right.

 

Section 10.5 Trademark License. All trademarks, patents, copyrights, service marks and licenses owned by Borrower and all trademarks, patents, copyrights, service marks and software licensed by Borrower, are listed on Schedule 5.1(s). Borrower hereby grants to Lender the nonexclusive right and license to use all of the trademarks, patents, copyrights, service marks and licenses described on Schedule 5.1(s) and any other trademarks, patents, copyrights, service marks and licenses now or hereafter used by Borrower, following the occurrence and during the continuance of an Event of Default, for the purposes set forth in Section 10.2 and for the purpose of enabling Lender to realize on the Collateral and to permit any purchaser of any portion of the Collateral through a foreclosure sale or any other exercise of Lender’s rights and remedies under the Loan Documents to use, sell or otherwise dispose of the Collateral bearing any such trademarks, patents, copyrights, service marks and licenses. Such right and license is granted free of charge, without the requirement that any monetary payment whatsoever be made to Borrower or any other Person by Lender.

 

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ARTICLE XI - MISCELLANEOUS

 

Section 11.1 Notices.

 

(a) Method of Communication. All notices and the communications hereunder and thereunder shall be in writing or by telephone subsequently confirmed in writing. Notices in writing shall be delivered personally or sent by overnight courier service, by certified or registered mail, postage pre-paid, or by facsimile transmission and shall be deemed received, in the case of personal delivery, when delivered, in the case of overnight courier service, on the next Business Day after delivery to such service, in the case of mailing, on the third day after mailing (or, if such day is a day on which deliveries of mail are not made, on the next succeeding day on which deliveries of mail are made) and, in the case of facsimile transmission, upon transmittal; provided that in the case of notices to Lender, Lender shall be charged with knowledge of the contents thereof only when such notice is actually received by Lender. A telephonic notice to Lender as understood by Lender will be deemed to be the controlling and proper notice in the event of a discrepancy with or failure to receive a confirming written notice.

 

(b) Addresses for Notices. Notices to any party shall be sent to it at the following addresses, or any other address of which all the other parties are notified in writing.

 

If to Borrower:

Ittella International, Inc.

6305 Alondra Blvd.

Paramount, CA 90723

Attn: Salvatore Galletti

   
If to Lender:

Marquette Business Credit, LLC Premier Place, Suite 1900

5910 N. Central Expressway Dallas, Texas 75206

Attention: Portfolio Manager, URGENT Facsimile No.: (214) 389-5901

with a complete copy to:

Marquette Business Credit, LLC

333 South Grand Avenue, Suite 2200

Los Angeles, California 90071

Fax No. (213) 625-7875

Attention: Portfolio Manager, URGENT

 

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Section 11.2 Expenses. Within 10 days after presentation of an invoice for such costs and expenses, outlining such items in reasonable detail, Borrower agrees to pay or reimburse all costs and expenses incurred by Lender arising out of or in connection with this Agreement and the Loans including, without limitation, (a) the reasonable fees and expenses of counsel in connection with the negotiation, preparation, execution, delivery, amendment, enforcement and termination of this Agreement and each of the other Loan Documents, (b) the out-of-pocket costs and expenses incurred in connection with the administration and interpretation of this Agreement and the other Loan Documents, (c) the costs and expenses of appraisals of the Collateral on such basis as Lender shall from time to time request; provided that Borrower shall not be liable for the cost and expense of more than one appraisal per calendar year pursuant to this Section, so long as no Event of Default has occurred and is continuing, (d) the costs and expenses of lien searches, (e) all stamp, registration, recordation and similar taxes, fees or charges related to the Collateral and charges of filing financing statements and continuations and the costs and expenses of taking other actions to perfect, protect, and continue the security interest of Lender, (f) costs and expenses related to the preparation, execution and delivery of any waiver, amendment, supplement or consent by Lender relating to this Agreement or any of the Loan Documents, (g) sums paid or obligations incurred in connection with the payment of any amount or taking any action required of Borrower under the Loan Documents that Borrower fails to pay or take, (h) costs of inspections and verifications of the Collateral, including, without limitation, $1,000 per diem per examiner plus out of pocket expenses for travel, lodging, and meals arising in connection with inspections and verifications of the Collateral and Borrower’s operations and books and records by Lender’s employees and agents, (i) costs and expenses of forwarding loan proceeds, collecting checks and other items of payment, and establishing and maintaining each account of Borrower maintained with Lender or owned by Lender for the benefit of Borrower and each Collection Account, (j) the costs of Borrower’s monthly access to “StuckyNet”, which fee is currently $100.00 per month (k) costs and expenses of preserving and protecting the Collateral, (1) costs and expenses related to consulting with and obtaining opinions and appraisals from one or more Persons, including personal property appraisers, accountants and lawyers, concerning the value of any Collateral for the Obligations or related to the nature, scope or value of any right or remedy of Lender hereunder or under any of the Loan Documents, including any review of factual matters in connection therewith, which expenses shall include the fees and disbursements of such Persons, and (m) costs and expenses paid or incurred to obtain payment of the Obligations, enforce the security interest of Lender, sell or otherwise realize upon the Collateral, and otherwise enforce the provisions of the Loan Documents, or to prosecute or defend any claim in any way arising out of, related to or connected with, this Agreement or any of the Loan Documents, which expenses shall include the reasonable fees and disbursements of counsel and of experts and other consultants retained by Lender. Borrower hereby authorizes Lender to debit Borrower’s loan account by increasing the principal amount of the Loan, or deduct from Borrower’s accounts maintained with any Affiliate of Lender, the amount of any costs, fees and expenses owed by Borrower when due.

 

Section 11.3 Setoff. In addition to any rights now or hereafter granted under Applicable Law, and not by way of limitation of any such rights, upon and after the occurrence of any Event of Default, Lender and any participant with Lender in the Loans are hereby authorized by Borrower at any time or from time to time, without notice to Borrower or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, time or demand, including, but not limited to, Debt evidenced by certificates of deposit, whether matured or unmatured) and any other Debt at any time held or owing by Lender or any participant to or for the credit or the account of Borrower against and on account of the Obligations irrespective of whether or not (a) Lender shall have made any demand under this Agreement or any of the Loan Documents, or (b) Lender shall have declared any or all of the Obligations to be due and payable as permitted by Section 10.2 and although such Obligations shall be contingent or unmatured.

 

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Section 11.4 Venue; Service of Process. BORROWER HEREBY IRREVOCABLY SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN LOS ANGELES COUNTY, CALIFORNIA, AND AGREES AND CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT, ANY BORROWING HEREUNDER OR ANY OTHER RELATIONSHIP BETWEEN LENDER AND BORROWER BY ANY MEANS ALLOWED UNDER STATE OR FEDERAL LAW. ANY LEGAL PROCEEDING ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY BORROWING HEREUNDER OR ANY OTHER RELATIONSHIP BETWEEN LENDER AND BORROWER MAY BE BROUGHT AND LITIGATED IN ANY ONE OF THE STATE OR FEDERAL COURTS LOCATED IN LOS ANGELES COUNTY, CALIFORNIA, HAVING JURISDICTION. BORROWER AND LENDER WAIVE AND AGREE NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, THAT ANY SUCH PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS IMPROPER. NOTHING HEREIN SHALL LIMIT THE RIGHT OF LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY BORROWER AGAINST LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTION WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN LOS ANGELES, CALIFORNIA. Borrower expressly waives personal service of the summons and complaint or other process or papers issued therein and agrees that service of such summons and complaint or other process or papers may be made by registered or certified mail addressed to Borrower at its address referenced in Section 11.1, which service shall be deemed to have been made on the date that receipt is deemed to have occurred for registered or certified mail as provided in Section 11.1.

 

Section 11.5 Assignment: Participation. All the provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that Borrower may not assign or transfer any of its rights under this Agreement or delegate any of its duties or obligations under this Agreement. Lender may assign to one or more Persons, or sell participations to one or more Persons in, all or a portion of its rights and obligations hereunder and under this Agreement and any promissory notes issued pursuant hereto and, in connection with any such assignment or sale of a participation, may assign its rights and obligations under the Loan Documents. Borrower agrees that Lender may provide any information that Lender may have about Borrower or about any matter relating to this Agreement to any of its Affiliates or their successors, or to any one or more purchasers or potential purchasers of any of its rights under this Agreement or any one or more participants or potential participants.

 

Section 11.6 Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by Borrower therefrom, shall be effective unless the same shall be in writing and signed by Lender and Borrower and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

Section 11.7 Performance of Borrower’s Duties. If Borrower shall fail to do any act or thing which it has covenanted to do under this Agreement or any of the Loan Documents, Lender may (but shall not be obligated to) do the same or cause it to be done either in the name of Lender or in the name and on behalf of Borrower, and Borrower hereby irrevocably authorizes Lender so to act.

 

Section 11.8 Indemnification. Borrower shall reimburse Lender and its Affiliates and their respective officers, employees, directors, shareholders, agents and legal counsel (collectively, the “Indemnified Parties” and individually, an “Indemnified Party”) for all reasonable costs and expenses, including legal fees and expenses, incurred and shall indemnify and hold the Indemnified Parties harmless from and against all losses suffered by any Indemnified Party, other than losses resulting from an Indemnified Party’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final non-appealable judgment, in connection with (a) the exercise by Lender or any of its Affiliates of any right or remedy granted to it under this Agreement or any of the Loan Documents or at law, (b) any claim, and the prosecution or defense thereof, arising out of or in any way connected with this Agreement or any of the Loan Documents, except in the case of a dispute between Borrower and Lender in which Borrower prevails in a final non-appealable judgment, and (c) the collection or enforcement of the Obligations or any of them. BORROWER AND LENDER EXPRESSLY INTEND THAT THE FOREGOING INDEMNITY SHALL COVER, AND THAT BORROWER SHALL INDEMNIFY AND HOLD THE INDEMNIFIED PARTIES HARMLESS FROM AND AGAINST, COSTS, EXPENSES AND LOSSES SUFFERED AS A RESULT OF THE NEGLIGENCE OF ANY INDEMNIFIED PARTY.

 

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Section 11.9 All Powers Coupled with Interest. All powers of attorney and other authorizations granted to Lender and any Persons designated by Lender pursuant to any provisions of this Agreement or any of the Loan Documents shall be deemed coupled with an interest and shall be irrevocable so long as any of the Obligations remain unpaid or unsatisfied or Lender has any obligations to make the Loan hereunder.

 

Section 11.10 Severability of Provisions. Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating the remainder of such provision or the remaining provisions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.

 

Section 11.11 GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND OF ANY PROVISION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND OF ANY ISSUE RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA NOT INCLUDING CONFLICTS OF LAWS RULES.

 

Section 11.12 Jury Waiver. BORROWER AND LENDER HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG BORROWER AND LENDER AND LENDER’S AFFILIATES ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY RELATIONSHIP BETWEEN LENDER AND BORROWER OR BETWEEN BORROWER AND ANY AFFILIATE OF LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER LOAN DOCUMENTS.

 

Section 11.13 Counterparts; Integration. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and shall be binding upon all parties, their successors and assigns, and all of which taken together shall constitute one and the same agreement. A facsimile or digital copy of any signed Loan Document, including this Agreement, shall be deemed to be an original thereof. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

 

Section 11.14 Time is of the Essence. Time is of the essence of this Agreement and the other Loan Documents.

 

Section 11.15 Waiver of Consumer Rights. BORROWER HEREBY WAIVES ITS RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41 ET. SEQ. BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF ITS OWN SELECTION, BORROWER VOLUNTARILY CONSENTS TO THIS WAIVER. BORROWER EXPRESSLY WARRANTS AND REPRESENTS THAT IT (A) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO LENDER, (B) BORROWER HAS BEEN ADVISED BY LENDER TO SEEK THE ADVICE OF AN ATTORNEY AND AN ACCOUNTANT IN CONNECTION WITH THIS LOAN, AND (C) BORROWER HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF AN ATTORNEY AND ACCOUNTANT OF BORROWER’S CHOICE IN CONNECTION WITH THIS LOAN.

 

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Section 11.16 Patriot Act Notice. IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each Person that opens an account, including any deposit account, treasury management account, loan, other extension of credit, or other financial services product. What this means for Borrower: When Borrower opens an account, if Borrower is an individual, Lender will ask for Borrower’s name, residential address, date of birth, and other information that will allow Lender to identify Borrower, and if Borrower is not an individual, Lender will ask for Borrower’s name, employer identification number, business address, and other information that will allow Lender to identify Borrower. Lender may also ask, if Borrower is an individual, to see Borrower’s driver’s license or other identifying documents, and if Borrower is not an individual, to see Borrower’s legal organizational documents or other identifying documents.

 

Section 11.17 Press Releases and Related Matters. Borrower consents to the publication by Lender of customary advertising material relating to the transactions contemplated by this Agreement and the other Loan Documents, including on the website of Lender or its Affiliates, using Borrower’s name, product photographs, logo or trademark, subject to Lender’s prior notice to Borrower of such advertising material.

 

[Signature Pages Follow]

 

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THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

  ITTELLA INTERNATIONAL, INC.
   
  By: /s/ Sal Galletti                 
  Name:  Sal Galletti
  Title: CEO

 

  MARQUETTE BUSINESS CREDIT, LLC
   
  By: /s/ Xavier Gannon
  Name:  Xavier Gannon
  Title: Senior Vice President

 

-44-

 

 

EXHIBIT A

 

BORROWING BASE CERTIFICATE

 

 

 

[to be provided by Marquette]

 

1 -

 

 

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

(LOAN AND SECURITY AGREEMENT)

 

Dated: ___________, 20_____ (the “Measurement Date”)

 

TO: Marquette Business Credit, LLC.

Premier Place, Suite 1900

5910 N. Central Expressway

Dallas, Texas 75206

 

The undersigned hereby certifies to you that on the Measurement Date, pursuant to Section 8.2 of the Loan and Security Agreement dated as of September 25, 2017 (as the same has been or may be amended, restated, extended, supplemented, or otherwise modified from time to time, the “Loan Agreement”), between ITTELLA INTERNATIONAL, INC., a California corporation (“Borrower”) and MARQUETTE BUSINESS CREDIT, LLC, a Delaware limited liability company (“Marquette”), the following are true, complete and correct:

 

1. Financial Covenants:

 

  Required Actual Compliant (Y/N)
(a) Minimum Tangible Net Worth ≥ __________ __________ __________
(b) Minimum Fixed Charge Coverage Ratio ≥ [__________] __________ __________
(c) Maximum Non-Financed Capital Expenditures ≤ [__________] __________ __________

 

The foregoing actual figures have been determined in accordance with the definitions set forth under the Loan Agreement. The calculations for arriving at such actual figures are attached to this Compliance Certificate.

 

2. As of the Measurement Date and except as set forth below: (i) all of the representations and warranties of Borrower contained in the Loan Agreement and the other Loan Documents are correct and complete in all material respects, except for those that speak as of a particular date and except as set forth in reasonable detail below; (ii) Borrower is in compliance in all material respects with all of its respective covenants and agreements in the Loan Agreement and the other Loan Documents; and (iii) no Default or Event of Default exists or existed during the period covered by the financial statements delivered in connection herewith.

 

 

 

 

 

 

 

 

 

 

1 -

 

 

3. If applicable, the corrective action taken or proposed to be taken to prevent or cure such Default or Event of Default, or with respect to such representation or warranty which is not materially correct or complete, or with respect to such covenant which has not been materially complied with, as applicable, is as follows:

 

 

 

 

 

 

 

 

 

 

4. The financial statements submitted as of this date have been prepared in accordance with GAAP, other than the absence of footnotes and the absence of normal year-end adjustments, and fairly present, in all material respects, the financial condition and results of operations of Borrower as of the dates and for the periods indicated therein. All reports submitted as of this date are true, complete and correct in all material respects.

 

Any and all initially capitalized terms set forth in this certificate without definition shall have the respective meanings ascribed thereto in the Loan Agreement.

 

  ITTELL A INTERNATIONAL, INC.
   
  By:                          
  Name:   
  Title:  

 

2 -

 

 

SCHEDULE 1.1

 

TORT CLAIMS

 

 

 

N/A

 

 

 

 

SCHEDULE 5.1(a)

 

ORGANIZATION: POWER; QUALIFICATION

 

 

 

FEDERAL IDENTIFICATION NO. 54-2135710

 

STATE IDENTIFICATION NO. C-2498519

 

 

 

 

SCHEDULE 5.1(c)

 

SUBSIDIARIES, PARENTS AND AFFILIATES; CAPITALIZATION

 

 

 

N/A

 

 

 

 

SCHEDULE 5.1(1)

 

DEBT AND GUARANTESS

 

Loan 414 Community Bank   $ 500,000.00  
Loan 499 Community Bank   $ 23,518.00  
Loan 501 Community Bank   $ 21,774.00  
Loan 543 Community Bank   $ 149,827.00  
Seaview AGI Partners, LLC   $ 50,000.00  
Salvatore Galletti, an Individual   $ 150,000.00  
Salvatore Galletti, an Individual   $ 427,990.00  
Accrual Interest to Loan   $ 58,396.00  

 

 

 

 

SCHEDULE 5(j)

 

LITIGATION

 

 

 

N/A

 

 

 

 

SCHEDULE 5.1(m)

 

ERISA

 

 

 

 

SCHEDULE 5.1(p)

 

LOCATIONS OF INVENTORY AND EQUIPMENT

 

 

 

ITTELLA INTERNATIONAL, INC.
6305 ALONDRA BLVD.
PARAMOUNT, CA 90723

 

AMERICOLD FOGELSVILLE
7150 AMBASSADOR DRIVE
ALLETNOWN PA 18106

 

AMERICOLD DALLAS
5140 CATON DRIVE
DALLAS TX 95227

 

AMERICOLD BELVIDERE
6765 UNRIB DRIVE
VELVIDERE. IL 61008

 

AM ERICOLD ATLANTA
6500 TRADE WATER PKWY
ATALNTA, GA 30336

 

US GROWERS

3141 E.44TH STREET
VERNON. CA 90058

 

CASESTACK C/O KANE IS ABLE
STAUFFER INDUSTRIAL PARK DC#6
SCRANTON PA 18517

 

 

 

 

SCHEDULE 5.1(q)

 

PLACE OF BUSINESS

 

 

 

PARAMOUNT BUSINESS PARK CENTER

 

6305 ALONDRA BLVD.

 

PARAMOUNT, CA 90723

 

 

 

 

SCHEDULE 5.1(r)

 

CORPORATE AND FICTITIOUS NAMES; TRADE NAMES

 

 

 

ITTELLA

 

ITTELLA FOODS

 

STONEGATE FOODS

 

TATTOOED CHEF

 

 

 

 

SCHEDULE 5.1(s)

 

INTELLECTUAL PROPERTY

 

 

 

CAULIFLOWER PIZZA CRUST (PATTON)

 

ITTELLA FOODS.COM (WEBSITE)

 

TATTOOED CHEF ™

 

1TTELLA FOODS ™

 

 

 

 

SCHEDULE 5.1(w)

 

DEPOSIT ACCOUNTS

 

COMMUNITY BANK 2004002247
   
COMMUNITY BANK FX 301231
   
BANK OF AMERICA 4957601389
   
UMB 9872220749
   
UMB (ITTELLA CHEF) 9872220943

 

 

 

 

SCHEDULE 5.1(y)

 

MATERIAL AGREEMENTS

 

 

 

N/A

 

 

 

 

SCHEDULE 9.3

 

PERMITTED LIENS

 

 

 

N/A

 

 

 

 

 

Exhibit 10.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.11

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 

 

 

Exhibit 10.12

 

 

Effective Date: 02/03/2020

 

SAM’S CLUB GROCERY

MERCHANDISE AGREEMENT

General Supplier Information

 

Agreement Number: SAP Supplier Number: Supplier ID: Category:
607499-64-2 1400560216   44-Frozen Foods

 

Specialty Group: None

 

Company Legal Name: Ittella International LLC

 

Doing Business As: STONEGATE FOODS INC

 

Legal Entity: Corporation

 

Taxpayer Identification Number ( TIN ): XX-XXX5710

 

Company Contacts  
Supplier Agreement Accepted By: Al Galletti Phone: 15624084829
CEO/President: Sam Galletti Phone: (562)602-0822
CFO: Stephanie Dieckmann Phone: (562)602-0822

 

Corporate Address Remit Address
Address Line 1: 6305 ALONDRA BLVD Address Line 1: 6305 ALONDRA BLVD
Address Line 2: Address Line 2:
City: PARAMOUNT City: PARAMOUNT
State: CA State: CA
Zip: 90723-3750 Zip: 90723-3750

  

The Supplier Agreement detailed below has been accepted on behalf of the supplier by: 

Al Galletti - (RLID : 6vf2l12 ) 

 

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Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

SUPPLIER AGREEMENT

 

(Standard Terms and Conditions for Suppliers)

 

This Supplier Agreement, (“Agreement”) is between supplier indicated on the GENERAL SUPPLIER INFORMATION form that is part of the supplier registration process (“Supplier” or “you”) and Walmart Inc., and its direct and indirect US and Puerto Rico operating subsidiaries (collectively, “Company””). This Agreement consists of (1) these Standard Terms and Conditions for Suppliers (“Terms and Conditions”), (2) the Company policies and guidelines referenced in this Agreement; (3) the Appendix and any Schedule(s) attached hereto and (4) Company’s minimum requirements and Standards for Suppliers posted at http://corporate.walmart.com/suppliers/minimum-requirements and http://corporate.walmart.com/sourcing-standards-resources, each as may be amended from time to time by Company (collectively, the “Standards”), each of which is incorporated in this Agreement.

 

BY CLICKING “I ACCEPT” AND “SUBMIT” BELOW, BY OFFERING TO SELL, SELLING, OR DELIVERING ANY MERCHANDISE TO COMPANY OR ITS CUSTOMERS, INCLUDING THROUGH ANY COMPANY WEBSITE OR APPLICATION, OR PROVIDING DIRECT SHIP SERVICES ON BEHALF OF COMPANY, YOU AGREE THAT YOU HAVE READ AND UNDERSTAND AND AGREE TO BE BOUND BY ALL TERMS AND CONDITIONS OF THIS AGREEMENT WITHOUT CHANGE. YOU FURTHER REPRESENT AND WARRANT THAT (1) ALL THE INFORMATION YOU PROVIDE AS PART OF THE REGISTRATION PROCESS WILL BE ACCURATE AND COMPLETE AND (2) IF YOU ARE EXECUTING THIS AGREEMENT ON BEHALF OF AN ENTITY, YOU HAVE THE REQUISITE RIGHT, POWER, AND AUTHORITY TO ENTER INTO THIS AGREEMENT ON BEHALF OF THE ENTITY YOU REGISTER AS SUPPLIER.

 

By clicking the “I ACCEPT” button below, you understand that execution of this Agreement by both Supplier and Company does not impose on Company any obligation (and Company has no obligation) to purchase or take delivery of Merchandise (or to enable the sale or delivery of Merchandise to any customer) or to use any services of Supplier.

 

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Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

STANDARD TERMS AND CONDITIONS

 

1. DEFINITIONS. As used in this Agreement or any Order (defined below), the following capitalized words shall have the meanings set forth below: 

(a) “Account” means any right to receive payments arising under this Agreement.

(b)”Authorized Buyer” means any buyer or category lead (or successor or equivalent titles) of Company assigned to the category/department corresponding to the purchased Merchandise.

(c) “Change of Control” of Supplier means an event by which any person or entity, other than person(s) or entity(ies) having Control of Supplier as of the Effective Date, acquires Control of Supplier. “Control” means having direct or indirect power to direct, or cause the direction of, the management and policies of an entity, whether through the ownership of voting securities (even if less than majority ownership), contract, or otherwise. 

(d) “Content” means product images, product descriptions, Supplier name, logo, trademarks, service marks, copyrights, trade dress, and other information and materials, and content for marketing and promoting Merchandise in connection with Company’s marketing of the Merchandise. Content also includes any product information collected by Company from your website, or otherwise made available to Company by Supplier (or by a third party at Supplier’s direction). 

(e) “Effective Date” means the date this Agreement becomes effective as to both Company and Supplier.

(f) “Law” means any applicable international, foreign, or domestic law, regulation, order or other requirement imposed or compelled by a governing or regulatory authority having legal force (whether federal, state or local), including any treaty, statute, common law, judicial decision, rule, regulation, code or ordinance.

(g) “Merchandise” means all products, goods, materials, equipment, displays, articles, and tangible items supplied by Supplier to Company within the Territory, and all packaging, instructions, warnings, warranties, advertising and other services included therewith.

(h) “Order” means any written or electronic purchase order for Merchandise issued by Company through an Authorized Buyer.

(i) “Recall” means any removal of Merchandise from the stream of commerce or the issuance of a corrective action plan or other remedial action initiated by Supplier, a government entity, or Company.

(j) “Territory” means the United States of America, its territories and possessions and APO/FPO military addresses.

 

2. ORDERS; CANCELLATION. Supplier shall receive Orders and send Company invoices electronically unless otherwise agreed to by Company in writing. Supplier shall comply with Company electronic transmission requirements set forth here https://gsm.wal-mart.com/GSM_Web/Supplier Policies and Requirements/#EDI requirements. No Company representative has authority to order Merchandise except an Authorized Buyer through an Order issued pursuant to and subject to the terms of this Agreement. Supplier may ship only after receipt of an Order. Supplier may accept an Order only as follows: (i) a written confirmation notice to Company, if such notice is requested by Company, or (ii) shipping conforming Merchandise in accordance with this Agreement and the Order. Supplier is responsible for verifying the accuracy of all terms of sale on all Orders. Supplier shall notify Company of any inaccuracies not less than twenty-four (24) hours before shipment. If a change is necessary, no shipment is to commence without written confirmation of the change from an Authorized Buyer. If Merchandise ships before discovery of an error on the Order, the parties shall confer within forty-eight (48) hours of such discovery to determine the actions to be taken regarding the erroneous Order. Shipments made contrary to Company’s routing instructions will be deemed F.O.B. destination (store, club or warehouse). Supplier’s invoice, confirmation memorandum or other writing may not vary the terms of any Order. Supplier’s failure to comply with one or more terms of an Order shall constitute breach of this Agreement. Company may cancel all or any part of an Order at any time before shipment.

 

3. DELIVERY TIME. THE TIME SPECIFIED IN AN ORDER FOR SHIPMENT AND/OR DELIVERY OF MERCHANDISE IS OF THE ESSENCE OF THIS AGREEMENT. If Merchandise is not shipped and/or delivered within the time specified, Company may, at its option and without limitation, cancel the order and/or reject any merchandise delivered after the time specified. Company may assess and collect reasonable damages for any deliveries of Merchandise not received by the time specified in the Order. Notwithstanding Company’s remedies, Supplier shall inform Company immediately of any actual or anticipated failure to ship all or any part of an Order on the shipment date specified. Acceptance of any Merchandise shipped after or before the time specified shall not be construed as a waiver of any of Company’s rights or remedies resulting from the untimely shipment.

 

4. SUPPLIER FINANCIAL INFORMATION; SUPPLIER NUMBER Supplier authorizes Company to obtain a current Dun & Bradstreet report (or such other risk evaluation report as may be designated by Company) for Supplier. The supplier number assigned to Supplier in connection with this Agreement is unique and personal to Supplier and is non-transferable. Any person other than Supplier that purports to transact business with Company under Supplier’s vendor number will be jointly and severally liable with Supplier for all Supplier obligations to Company arising under this Agreement and any Order.

  

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Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

5. PAYMENT TERMS; CASH DISCOUNT; AUDITS. Payment terms shall be as set forth in Business Terms. Supplier shall comply with the Payment Process requirements set forth https://gsm.wal-mart.com/GSM_Web/ Supplier Policies and Requirements/#Payment Process Requirements. Company or its auditors may inspect and audit Supplier’s financial and other account records relating to the sale and return of Merchandise. Supplier shall provide reasonable assistance in such audits by providing supplemental records as reasonably requested by Company or its auditors to validate audit results.

 

6. SET-OFF. Company may recoup, set off, or credit against amounts payable to Supplier all present and future indebtedness of Supplier to Company arising from this or any other transaction with Supplier or any of its affiliates whether or not related to this Agreement. Company also may establish a reserve or place a hold on Supplier’s Account as set forth https://gsm.wal-mart.com/GSM_Web/Supplier Policies and Requirements/#Reservation of Account.

 

7. TAXES. Unless otherwise agreed, Company is purchasing Merchandise under this Agreement for resale and will supply necessary resale certificates to Supplier upon request. The Order price includes all taxes and fees which may be imposed upon Supplier by a taxing jurisdiction on the sale of Merchandise under this Agreement. The Order price does not include: (i) sales, excise or use tax for which Company is liable upon the sale or use of the Merchandise or (ii) taxes or fees that Supplier is required by Law to separately state on invoices to Company. If Supplier receives a refund of any taxes included in the Order price or otherwise collected from Company by Supplier, Supplier shall promptly pay or credit Company the amount of the refund, including any interest.

 

8. PRICE PROTECTION; PRICE GUARANTEE AND NOTICE OF PRICE INCREASES. Supplier guarantees its prices against manufacturer’s or Supplier’s own price decline. If Supplier reduces its price on any Merchandise sold to Company, which Merchandise has not yet been delivered to Company by Supplier or, if consistent with Supplier’s practice, which Merchandise is currently in Company’s inventory (including Merchandise on hand, in warehouses and in transit), Supplier shall at Company’s discretion either issue a check or give Company a credit equal to the price difference for such Merchandise, multiplied by the units of such Merchandise to be delivered by Supplier and/ or currently in Company’s inventory. If at a reasonably close point in time with Supplier’s sale of Merchandise to the Company, Supplier sells or offers to any competitor of Company any merchandise of like grade and quality at lower prices and/or on terms more favorable than those stated on the Order, then, except as prohibited by Law, the prices and/or terms of the Order shall be deemed automatically revised to equal the lowest prices and most favorable terms at which Supplier shall have sold or shall have offered such Merchandise, and payment shall be made accordingly. If Company becomes entitled to lower prices under this Section, but has already made payment at a higher price, Supplier shall promptly refund the difference in price to Company. Supplier shall give Company written notice of any proposed Merchandise price increase at least sixty (60) days before the effective date of the increase.

 

9. CONTENT. Supplier shall comply with Supplier Content requirements set forth https://gsm.wal-mart.com/ GSM_Web/Supplier Policies and Requirements/#Supplier Content Obligations. All right, title and interest in the underlying Content as originally provided by Supplier to Company will remain the exclusive property of Supplier or the original licensor of the Content. Supplier hereby grants Company a limited, royalty-free, non-exclusive, non-transferable right to publish, use, reproduce, distribute, transmit, display, modify, edit and create derivative works based on the Content on the Company website(s) or in the Company apps and in connection with the marketing and promotion thereof, in connection with the retail sale and rental of its products and services (including without limitation, all Company’s businesses). The rights in this Section include the right to have third parties exercise Company’s rights on its behalf, including third party service providers, and will not expire or terminate for so long as needed for marketing and fulfillment of the Merchandise (including handling of customer returns and warranties).

 

All Merchandise shall have an accurate UPC barcode (also known as an EAN/UPC symbol) that includes a valid Global Trade Item Number® (GTIN®) and will comply with GS1 US standards (found at http://www.gs1us.org) or such other of Company’s UPC requirements, as amended from time to time. Where applicable, Supplier shall provide Company with a current, complete, and accurate Material Safety Data Sheet (“MSDS”) for the Merchandise.

 

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Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

10. INSURANCE REQUIREMENTS. During the term of this Agreement and for at least two (2) years thereafter, Supplier at its own cost and expense will procure and maintain insurance coverage from qualified underwriters meeting or exceeding the requirements posted at http://corporate.walmart.com/suppliers, which are incorporated into this Agreement, and comply with the Insurance requirements https://gsm.wal-mart.com/GSM_Web/Supplier Policies and Requirements/#Insurance. Company may change the requirements for insurance posted at http:// corporate.walmart.com/suppliers at any time. Changes to the insurance requirements posted after the Effective Date of this Agreement, however, will not be applicable to Supplier until twelve (12) months after Company’s posting of such changes. The requirements in this Section are not intended to and will not in any manner limit or qualify Seller’s obligations under this Agreement including, but not limited to, Supplier’s defense and indemnity obligations under Section 12.

 

11. REPRESENTATIONS AND WARRANTIES. By acceptance of an Order, Supplier represents, warrants and covenants that: 

(a) Supplier is in compliance with and will continue to comply with Company’s Standards;

(b) Supplier and the Merchandise are in compliance with and shall continue to comply with all Laws applicable to the manufacture, mining, sourcing, distribution, assembly, packaging, transportation, and sale of the Merchandise; 

(c) The Merchandise will be new and not used, remanufactured, reconditioned or refurbished, and will comply with all specifications contained in such Order and will be of equal or better quality as all samples delivered to Company; 

(d) The Merchandise is genuine and is not counterfeit, adulterated, misbranded, falsely labeled or advertised or falsely invoiced within the meaning of any Laws; 

(e) The Merchandise has been labeled, advertised and invoiced in accordance with the requirements of all Laws, and the Merchandise, and its sale by Company anywhere within the Territory does not violate any Law; 

(f) The Merchandise shall be delivered in good and undamaged condition and shall, when delivered, be merchantable and fit and safe for the purposes for which the Merchandise is intended to be used, including but not limited to consumer use; 

(g) The Merchandise and Content does not infringe upon or violate any patent, copyright, trademark, trade name, trade dress, trade secret, or any other rights belonging to others, and all royalties owed by Supplier, if any, have been paid to the appropriate licensor; 

(h) All information regarding the Merchandise and Content, provided by or on behalf of Supplier to Company, including all weights, measures, sizes, legends or descriptions printed, stamped, attached or otherwise indicated with regard to the Merchandise, is true and correct, and conforms and complies with all Laws relating to the Merchandise; 

(i) Where required by Law, or by Company’s policies, the Merchandise has been tested by third-party testing bodies approved by Company, found compliant with all applicable standards and Laws, and the results of such tests will be provided to Company at Company’s request; 

(j) There is no other impediment or restriction, legal or otherwise, that restricts prevents Supplier from selling and delivering the Merchandise to Company or Company from reselling the Merchandise to its customers; 

(k) Supplier has all necessary rights to grant the rights and licenses granted under this Agreement, including with respect to Content; Supplier has secured and will secure all rights and licenses from the respective intellectual property rights holders of the Content provided under this Agreement; 

(l) The Content does not and Supplier’s and Company’s permitted use of the Content does not infringe or misappropriate any third party intellectual property rights, privacy rights or publicity rights or violate any Law; and the Content is not deceptive, misleading or inaccurate or defame or otherwise injure any party, and

(m) The Merchandise is not transshipped for the purpose of mislabeling, evading quota or country of origin restrictions or avoiding compliance with the Standards and all Laws. 

Nothing contained in this Agreement or an Order shall be deemed a waiver of any representations, warranties, or guarantees implied by Law.

 

12. INDEMNIFICATION. Supplier shall protect, defend, hold harmless and indemnify Company, including its affiliates, officers, directors, employees and agents, from and against any and all lawsuits, claims, demands, actions, liabilities, injuries, losses, damages, expenses, and attorneys’ fees and costs, regardless of whether such matters are groundless, fraudulent, or false, regardless of the cause or alleged cause thereof, and regardless of whether such matters arise out of or were caused by the alleged or actual joint or concurrent negligence of Company, its affiliates or their officers, directors, employees or agents arising in whole or in part out of any actual or alleged: 

(a) Misappropriation or infringement of any patent, trademark, trade dress, trade secret, copyright or other right relating to any Merchandise or Content; 

(b) Death of or injury to any person, damage to any property, or any other damage or loss, by whomsoever suffered, arising out of any actual or alleged defect in the Merchandise (whether latent or patent), or assembly, sale, delivery, loading or unloading of the Merchandise, including but not limited to: (i) any actual or alleged failure to provide adequate warnings, labeling or instructions; (ii) any actual or alleged improper design, manufacture, construction, assembly, or installation of the Merchandise; (iii) any display or demonstration by Supplier or Supplier’s vendors or representatives on the Company’s premises; or (iv) any actual or alleged failure of the Merchandise to comply with specifications or with any express or implied warranties of Supplier; 

 

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Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

(c) Violation of any Law relating to the Merchandise, or to any of its components or ingredients, or to its manufacture, shipment, labeling, use or sale, or to any failure to provide a Material Safety Data Sheet or certification; 

(d) Act, activity or omission of Supplier or any of its employees, representatives or agents, including but not limited to activities on Company’s premises; 

(e) Use of any vehicle, equipment, fixture or material of Supplier or Company in connection with any sale to or service for the Company; and 

(f) Any in-store product demonstrator, point of sale display, promotional exhibit, other advertising display or material, pallet or other tangible materials, equipment or fixtures provided by Supplier and related to Merchandise or services under this Agreement.

 

Supplier shall promptly notify Company of the assertion, filing or service of any lawsuit, claim, or other matter that is or may be covered by this indemnity, and shall immediately take such action as necessary or appropriate to protect the interests of Company, its affiliates, officers, directors, employees and agents. On Company’s request, Supplier will promptly provide reasonable cooperation and assistance to Company with respect to any claim, lawsuit, demand, or investigation involving Company. Supplier shall have an obligation and duty to defend Company and its affiliates, officers, directors, employees and agents against any lawsuit, claim or other matter that is potentially within Supplier’s indemnity obligation as described in this Section until final adjudication of Supplier’s indemnity obligation. Supplier shall promptly notify Company of the legal counsel Supplier proposes to engage to defend and otherwise protect Company’s interest in such matter and such counsel shall be subject to Company’s approval, which Company shall not unreasonably withhold. Any counsel proposed, selected or provided by Supplier or its insurer to represent or defend Company or any of its affiliates, officers, directors, employees or agents shall follow the requirements set forth in Company’s Indemnity Counsel Guidelines. If Company determines that such legal counsel has not represented, defended or protected Company’s interests in accordance with the Indemnity Counsel Guidelines, or reasonably believes Supplier’s legal counsel is unwilling or unable to do so, Company may replace such counsel with other counsel of Company’s own choosing. In such event, any fees and expenses of Company’s new counsel, together with all expenses or costs incurred because of the change of counsel, shall be paid or reimbursed by Supplier as part of its indemnity obligation under this Agreement. Company shall at all times have the right to direct the defense of, and to accept or reject any offer to compromise or settle, any lawsuit, claim, demand or liability asserted against Company or any of its officers, directors, employees or agents, and Supplier will not settle or resolve any portion of any such claim or lawsuit without Company’s written approval, which Company will not unreasonably withhold. The duties and obligations of Supplier created here shall not be affected or limited in any way by Supplier’s fulfillment of its insurance requirements under this Agreement, or Company’s extension of express or implied warranties to its customers.

 

13. FORUM SELECTION; CHOICE OF LAW; STATUTE OF LIMITATIONS. This Agreement, any and all Orders, and any and all disputes arising under or relating to this Agreement, whether sounding in contract or tort, shall be governed by and construed in accordance with the laws of the State of Arkansas without regard to the internal law of Arkansas regarding conflicts of law. The federal and/or state courts of Benton and Washington County, Arkansas shall have exclusive venue and jurisdiction over any actions or suits relating to this Agreement, except where Company expressly agrees otherwise in writing, and except where Company brings any action or suit against Supplier under or with respect to Section 10 (Insurance Requirements) or Section 12 (Indemnification). The parties shall not raise, and expressly waive, any defenses based on venue, inconvenience of forum or lack of personal jurisdiction in any action or suit brought in accordance with the foregoing. Any legal action brought by Supplier against Company must be filed within two (2) years after the date payment on the Order was due or it shall be deemed forever waived. The parties acknowledge that they have read and understand this clause and agree willingly to its terms.

 

14. RECALLS; REPORTING OF DEFECTS; TESTING. If Merchandise is the subject of a Recall, Supplier shall be responsible for all matters and costs associated with the Recall, including but not limited to: 

(a) Consumer notification and contact;

(b) All expenses and losses incurred by Company in connection with such Recall (and where applicable, any products with which the Recalled Merchandise has been packaged, consolidated or commingled), including but not limited to refunds to customers, lost profits, transportation costs, the cost to Company of its associates’ time, systems expenses in processing any Recall, and all other costs associated therewith; and 

(c) Initial and subsequent contact and reporting of the Recall to any government agency having jurisdiction over the affected Recalled Merchandise. Supplier shall promptly, and in no event later than twenty-four (24) hours after its decision to initiate a Recall or its receipt of a Recall notice from a government entity, inform Company of the Recall. Supplier shall promptly inform Company of its becoming aware of any defect in the Merchandise that could reasonably be expected to cause damage, illness, injury or death to humans, animals, or property, or the noncompliance of the Merchandise with any applicable safety or regulatory standard or Law, whether imposed by a government entity or by Company.

 

6

Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

If a government agency initiates any inquiry or investigation relating to the Merchandise or similar or related goods of Supplier, Supplier shall notify Company immediately and take reasonable steps to resolve the matter without exposing Company to any liability or risk. After acceptance of delivery, Company may periodically conduct testing of Merchandise for compliance with Laws, and other standards and specifications, the costs of which shall be paid or reimbursed to Company by Supplier.

 

15. LIMITATION OF DAMAGES. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY PUNITIVE, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND (INCLUDING BUT NOT LIMITED TO LOST PROFITS, BUSINESS REVENUES, BUSINESS INTERRUPTION AND THE LIKE), ARISING FROM OR RELATING TO THE RELATIONSHIP BETWEEN SUPPLIER AND COMPANY, INCLUDING ALL PRIOR DEALINGS AND AGREEMENTS, OR THE CONDUCT OF BUSINESS UNDER OR BREACH OF THIS AGREEMENT OR ANY ORDER, CANCELLATION OF ANY ORDER OR ORDERS OR THE TERMINATION OF BUSINESS RELATIONS, REGARDLESS OF WHETHER THE CLAIM UNDER WHICH SUCH DAMAGES ARE SOUGHT IS BASED UPON BREACH OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE, TORT, STRICT LIABILITY, STATUTE, REGULATION OR ANY OTHER LEGAL THEORY OR LAW, EVEN IF COMPANY OR SUPPLIER HAS BEEN ADVISED BY THE OTHER PARTY OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THE FOREGOING SHALL NOT LIMIT THE SPECIFIC RIGHTS AND REMEDIES EXPRESSLY PROVIDED IN THIS AGREEMENT, INCLUDING SECTIONS 12 (INDEMNIFICATION) AND 14 (RECALLS),OR LIMIT LIABILITY FOR NEGLIGENT OR WILLFUL BREACH OF THE USER AGREEMENT.

 

16. REMEDIES. Supplier’s breach of or failure to comply with any of the Terms and Conditions of this Agreement or any Order shall be grounds for Company to exercise any one or more of the following remedies: 

(a) Cancellation of all or any part of any undelivered Order without notice, including but not limited to the balance of any remaining installments on a multiple-shipment Order; 

(b) Rejection (or revocation of acceptance) of all or any part of any delivered shipment. Upon rejection or revocation of acceptance of any part of or all of a shipment, Company may return the Merchandise or hold it at Supplier’s risk and expense. Payment of any invoice shall not limit Company’s right to reject or revoke acceptance. Company shall be under no duty to inspect the Merchandise, and notice to Supplier of rejection shall be deemed given within a reasonable time if given within a reasonable time after notice of defects or deficiencies has been given to Company by its customers. Unless Company otherwise agrees in writing, Supplier shall not have the right to make a conforming delivery within the contract time; 

(c)Termination or suspension of all current and future business relationships;

(d) Recovery from Supplier of any damages or expenses sustained by Company as a result of Supplier’s breach; and

(e) Buyer’s remedies under the Uniform Commercial Code and such other remedies as are provided under applicable Law. 

These remedies are not exclusive and are in addition to all other remedies available to Company at Law or in equity.

 

17. FORCE MAJEURE. If any place of business or other premises of Company or Supplier shall be affected by lockouts, strikes, riots, war, acts of terrorism, fire, civil insurrection, flood, earthquake, acts of God, or any other casualty beyond that party’s control (but not including market fluctuations other than those caused by reason of the foregoing), which might reasonably tend to impede or delay the delivery, receipt, handling, inspection, processing, sale or marketing of the Merchandise covered by this Agreement, the party so impacted may, at its option, cancel all or any part of the undelivered Order hereunder by giving prompt written notice to the other party.

 

18. ASSIGNMENT. Except as specifically set forth in the https://gsm.wal-mart.com/GSM_Web/Supplier Policies and Requirements/#Payment Process Requirements regarding factoring, Supplier may not assign, delegate, or otherwise transfer to any entity any of its rights or obligations under this Agreement or under any Order (including any rights to any Company vendor number) without Company’s written consent. For purposes of and without limiting the foregoing, a Change of Control of Supplier will be deemed to constitute an assignment (or purported assignment) of this Agreement by Supplier. Any purported assignment in violation of this provision will be void.

 

19. INTELLECTUAL PROPERTY. Supplier shall not produce, distribute, sell or dispose of Merchandise, or apply for, assign, license, or abandon, any intellectual property right, that incorporates intellectual property that is owned by or licensed to Company, including Company’s name, logo, trademarks, trade secrets, service marks, patents, copyrights or trade dress, without the prior written approval of Company.

 

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Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

20. COMPLIANCE WITH STANDARDS FOR SUPPLIER. Supplier will comply with the requirements set forth in the Standards located at http://corporate.walmart.com/sourcing-standards-resources, and as may be amended from time to time by Company.

 

21. SEVERABILITY; WAIVER. No finding that a part of this Agreement is invalid or unenforceable shall affect the validity of any other part of the Agreement. A party’s failure to enforce at any time any provision of this Agreement will not be construed as or constitute a continuing waiver of such provision. Any waiver of any of the Terms and Conditions of this Agreement or any Order must be in writing signed by an authorized representative of Company or Supplier.

 

22. NOTICES. Except as otherwise specifically provided in this Agreement, any notice or demand which under the terms of this Agreement or under any Law must or may be given or made shall be in writing and shall be given or made by overnight express service addressed as follows: if to Company: to the address as instructed by Walmart If to Supplier: to Supplier’s address set forth in the General Supplier Information form that is part of the supplier registration process. Such notice or demand shall be deemed given on the second business day after deposit of such notice or demand with the overnight express service.

 

23. TERM; TERMINATION. This Agreement will commence on the Effective Date and continue in effect until terminated. This Agreement will not become effective as to Company until Company notifies you in writing that you have been approved as a supplier of Company. If Company has notified you in writing that you have been approved as a supplier for Company, then this Agreement will become effective as to both Company and Supplier on the date you click or clicked “I ACCEPT” and such action by you shall be execution of this Agreement by, and the same as, your physical signature on this Agreement. If Company does not approve you as a supplier of Company in writing after you have clicked “I ACCEPT”, then this Agreement will be considered null and void ab initio and will be of no force and effect. If Company has accepted Supplier as a supplier but Company has not yet issued an Order to Supplier, Company may terminate this Agreement immediately for any or no reason and without penalty by providing written notice to Supplier.

 

Either party may terminate this Agreement for any or no reason and without penalty on thirty (30) days ’ notice. This Agreement will continue to apply to any Order dated before the termination of this Agreement, even if the Merchandise is delivered or accepted after termination of this Agreement.

 

24. NO THIRD PARTY BENEFICIARIES. Except as expressly provided in this Agreement, Company and Supplier intend the Terms and Conditions of this Agreement and any Order to solely benefit Company and Supplier. Company and Supplier do not otherwise intend to, and do not, confer third-party beneficiary rights on any other person or entity.

 

25. SURVIVAL OF PROVISIONS. Sections 6, 11-16, and 18-19, and any other provisions of this Agreement that by their nature are reasonably intended to survive termination, will survive the termination of this Agreement.

 

26. CHANGES TO TERMS; BUSINESS PROGRAMS AND PROCESSES. From time to time, Company may modify this Agreement, ands alter, amend, or create business programs, processes, directives and policies. When it does, Company will provide notice to Supplier of such changes via its Retail Link system, its corporate website (http:// corporate.walmart.com/suppliers), and/or by such other means of direct notification to Supplier as Company may determine. After receiving such notice(s), Supplier’s acceptance of Orders will serve as confirmation of its acceptance of Company’s modifications, and/or new or amended business programs, processes, directives and policies. If you do not agree to such changes after receiving notice of them, you will notify Company in writing and may not continue to offer to sell, sell, or make deliveries of Merchandise to Company or its customers.

 

27. NO BUSINESS EXPECTATION. Company has no obligation and makes no promises to purchase any minimum amount of Merchandise from Supplier. Projections, past purchasing history and representations about quantities to be purchased are not binding on Company, and Company shall not be liable for any act or expenditure (including but not limited to expenditures for equipment, labor, materials, packaging or capital expenditures) by Supplier in reliance on them.

 

28. INTEGRATED AGREEMENT. This Agreement (and all linked Supplier policies and requirements https:// gsm.wal-mart.com/GSM_Web/Supplier Policies and Requirements, each as may be amended from time to time), the Standards (as may be amended from time to time), any Order, and the User Agreement constitute the full understanding of the parties, a complete allocation of risks between them and a complete and exclusive statement of the terms and conditions of their agreement. All prior agreements, negotiations, dealings and understandings, whether written (including any electronic record) or oral, regarding the subject matter hereof, are superseded by this Agreement. Any changes to this Agreement shall be in writing and executed by both parties. If there is a conflict of terms between this Agreement, an Order, the Standards, the User Agreement, business terms, business programs, processes, directives or policies incorporated into this Agreement, this Agreement shall be the controlling document.

 

8

Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

Sam’s Club Supplier Agreement Appendix

 

This Appendix constitutes and is part and incorporated into the Supplier Agreement. The terms of the Supplier Agreement are binding and enforceable as to this Appendix.

 

1. STANDARD PURCHASE ORDER ALLOWANCE

 

These allowances apply to each Order issued, unless otherwise agreed to by the parties.

 

Purchase Order Allowance   %   Payment Method   Payment Frequency
SW - Swell Allowance   1.0   Off Invoice   Each Invoice
(SW or DM)            

 

2. PAYMENT TERMS

 

2.0% Cash Discount

30 Cash Discount Days Available
45 Net Payment Days Available

 

3. SHIPPING TERMS

 

Prepaid - F.O.B. Supplier

 

No minimum purchase is required for prepaid freight terms. No freight charges are to be added to invoices. Refer to the current Routing Instructions for detailed instructions.

 

4. CONDITION OF SALE

 

Condition of Sale   Definition
N/A   N/A

 

5. PRODUCT CHEMICAL INFORMATION

 

Does Supplier currently sell, or anticipate selling, to Company under this Agreement any item of Merchandise that contains a powder, gel, paste, or liquid that is not intended for human consumption or any of the following products that are intended for human inhalation, consumption, or absorption: Lozenges, pills or capsules (e.g. pain relievers, vitamins); Medicated swabs, wipes and bandages; Patches (heated and/or medicated); Energy bars, diet supplements and vitamin drinks; Liquids (e.g. cough medicine, eye drops, ear drops, nasal spray and inhalers); Medicated shampoos, gums, ointments and creams; Lip balm, lip creams and petroleum jelly; Contraceptive foam, films, and spermicides; and Product/Equipment sold with chemicals (e.g. vaporizer sold with medication), and electronic cigarettes?

 

YES                        ☒ NO

 

6. RETURN POLICY

 

Company may return to Supplier, at Supplier’s expense, Merchandise that is: (i) defective or nonconforming; (ii) returned to Company by customer (either instore or online); (iii) subject to Conditions of a Guaranteed Sale or Overstock/Stock Balancing; or (iv) subject to a Recall or product withdrawal under Section 14 of the Supplier Agreement (in any case “Returned Merchandise”). Returned Merchandise will remain returnable for sixty (60) days after Company and Supplier mutually agree to shutoff returns. Company will manage Returned Merchandise as follows: Supplier will be charged the greater of the landed price of the Merchandise or the current Merchandise cost plus a 10% handling charge for all Returned Merchandise. Returned Merchandise will be shipped with return freight charges billed back to Supplier. Returns are F.O.B Company’s dock.

 

9

Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

Swell Allowance

 

Supplier will allow the Member Satisfaction Merchandise Allowance stated in this Agreement. The percentage must be adequate to cover all costs associated with Returned Merchandise, including but not limited to defective/returned merchandise and handling costs, or additional claims will be filed by the Company at its fiscal year end.

 

NOTWITHSTANDING THE FOREGOING (AND UNDER ANY OPTION), SUPPLIER AUTHORIZES COMPANY TO PROCESS AND MANAGE RETURNED MERCHANDISE AS COMPANY CHOOSES IN ITS DISCRETION (BUT WITHOUT AFFECTING RESPONSIBILITY FOR RETURN COSTS), IF COMPANY DETERMINES, FOR WHATEVER REASON (INCLUDING THE CONDITION OF THE MERCHANDISE AND ITS PACKAGING), THAT THE OPTION SELECTED BY SUPPLIER IS UNSUITABLE. IN ADDITION, COMPANY IS NOT REQUIRED TO RETURN EMPTY OR DAMAGED PACKAGING TO SUPPLIER (OR RETURN CENTER) TO SUPPORT A CLAIM FOR RETURNED MERCHANDISE.

 

7. Distribution Method

 

DC (Warehouse) ASN - No DSDC - No 

 

 

10

 

 

 

Exhibit 10.13

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 
 

 

 

 

 

 

Exhibit 10.14

 

ALDI MASTER PURCHASE AGREEMENT

 

This Agreement is made this 18 of March, 2016 by and between Ittella International, INC. with offices located at 6305 Alondra Blvd. Paramount ca. A (“Supplier”), and (a) ALDI Corporate Buying or (b) ALDI Division on behalf of ALDI Inc., an Illinois corporation, with Corporate offices at 1200 North Kirk Road, Batavia, Illinois 60510-1477 (“ALDI”).

 

ARTICLE I
Introduction

 

This Master Purchase Agreement (“Agreement”) applies to all products, including Supplier branded or ALDI Private Label brand and fresh produce sold by Supplier directly or through a distributor to ALDI.

 

ARTICLE II
Prices and Terms

 

1. Supplier shall sell, and ALDI shall purchase, products, as the ALDI order or Purchasing Contract indicates, at the prices then currently in effect and or as otherwise mutually agreed. Supplier shall only raise prices with mutual agreement of ALDI effective upon thirty (30) days of such agreement.

 

2. If ALDI is exempt from sales and use taxes for the purposes of a purchase made under this Agreement, it will submit an exemption certificate to Supplier. ALDI will not be responsible for such taxes for which ALDI provides Supplier with a valid, properly executed exemption certificate. Except as provided in this Agreement, Supplier is responsible for all other taxes, assessments, duties, permits, tariffs and fees or other charges of any kind.

 

3. Payment shall be made to Supplier within 30 days of merchandise receipt or as otherwise agreed. ALDI may set-off any amount owed by ALDI to Supplier against any amount owed by Supplier to ALDI.

 

ARTICLE III

Production and Inventory

 

1. Supplier shall maintain its production and inventory of finished products for sale to ALDI in quantities not to exceed a one (1) month supply of ALDI’s normal orders and requirements and not more than three (3) months’ supply of labels and packaging.

 

2. Supplier shall have an annual inspection performed for all facilities used to manufacture, or pack product sold to ALDI with GFSI certification or equivalent. All facilities used to store product sold to ALDI must have an annual inspection and obtain a GMP certification or equivalent. Fresh produce Supplier shall instead have completed GAP (for growers) and GMP (for growers and distributors). All national produce suppliers must have GFSI inspection reports for all facilities used to process or store product sold to ALDI performed annually. A copy of the applicable inspection report shall be sent electronically to ALDI within ten (10) days of receipt by Supplier with Supplier’s written action plan for making corrections or changes outlined in the report.

 

3. Supplier agrees to allow persons authorized by ALDI to inspect, upon reasonable notice, any facility used for products sold to ALDI, including but not limited to third-party warehouses and storage facilities.

 

4. Notwithstanding the previous provisions, ALDI reserves the right to refuse to accept product from any third-party warehouse or storage facility at any time for any reason. Should ALDI exercise this right, Supplier shall indemnify, defend, and hold ALDI and its agents and employees harmless, from and against any allegation, claim or lawsuit brought by a third-party warehouse or storage facility.

 

5. At ALDI’s discretion, Supplier shall have its product tested at Supplier’s expense for compliance with ALDI’s specifications by an outside laboratory approved by ALDI, and Supplier shall furnish ALDI with all test results.

 

6. All products sold by Supplier to ALDI shall be properly packaged in order to assure safe delivery. Supplier shall label the outer shipping case for products sold to ALDI with item description, item code and units per case. Individual cases shall not be shrink wrapped.

 

ARTICLE IV

Private Label Products

 

1. ALDI grants Supplier a nonexclusive, non-assignable and revocable license to use ALDI’s Private Labels for the sole purpose of manufacturing ALDI Private Label products for sale to ALDI in accordance with this Agreement.

 

Please keep a copy for your files, and send the original, completed contract to:

 

Attn: Julie Jolly

Corporate Buying Director

1200 N. Kirk Road

Batavia, IL 60510-1477

 

  Initial:
ALDI
Supplier

ALDI US, Master Purchasing Agreement 3.0 1 of 6

 

 

2. Supplier shall not use, reproduce, distribute or sell ALDI Private Labels or Private Label products without ALDI’s prior written approval and Supplier shall indemnify ALDI for all of its losses and damages, including attorneys’ fees, which result from any unauthorized use.

 

.3 Supplier shall prepare product packaging for ALDI Private Label products in accordance with the following terms:

 

a. Supplier shall use the style guides, artwork and packaging for the product label and display case provided by ALDI’s design agency to develop ALDI Private Label product packaging and labeling, consumer packaging, and outer shipment packaging.

 

b. Supplier shall be responsible for use and accuracy of the information, proper terminology, ingredient and nutritional information contained on packaging, as well as any warnings or caution statements necessary to meet industry standards and all applicable federal, state and local laws.

 

c. Supplier shall pay the design agency’s fees and expenses for all design, packaging and artwork and such expenses incurred by ALDI. ALDI is authorized to pay design agency and to deduct the amount paid from any amount due to Supplier.

 

4. Supplier shall indemnify ALDI for any suit, cost or damages that may be filed against or imposed upon ALDI as a result of any proceedings instituted by any Third Party against ALDI arising out of any activities of Supplier pursuant to this Agreement. Such indemnification shall not apply to the extent any claim arises from material supplied by or design elements required by ALDI.

 

5. Supplier agrees that (a) the ALDI Private Labels are the sole and exclusive property of ALDI, (b) Supplier shall not acquire a proprietary interest in the ALDI Private Labels or any other product specific logos, slogans, and other intangibles relating to the products, (c) it will not do anything inconsistent with ALDI’s ownership of the Private Labels, (d) it will not use any trademark, trade name or trade dress which is similar to the ALDI Private Labels for any of Supplier’s products or services, and (e) upon termination of this Agreement, Supplier immediately will discontinue all use of ALDI Private Labels.

 

ARTICLE V

Supplier’s Warranties

 

1. Supplier represents and warrants to ALDI that all products sold by Supplier to ALDI:

 

a. are not adulterated or misbranded under the Federal Food, Drug and Cosmetic Act, or the pure food and drug laws or any other legal requirement in the states in which the products are re-distributed by ALDI;

 

b. are merchantable and fit for the particular purpose for which they are intended and Supplier has good and merchantable title;

 

c. meet all applicable specifications, and are free from defects in material, design, and workmanship, processing and packaging even where ALDI supplies specifications;

 

d. conform in all respects to the quantity, nature, substance, design, functionality, performance criteria, description, and specification for such products referred to in Supplier’s sample, literature and representations;

 

e. are produced, manufactured, packaged, labeled (including showing country of origin and including labeling requirements for genetically engineered products or ingredients) and sold by Supplier in compliance with applicable laws of the United States, and the states in which the products are redistributed by ALDI;

 

f. prepared, designed and manufactured by Supplier to be safe and without risk to health or property when properly used and will not contain any improper unlawful or unspecified contents;

 

g. do not infringe, and all labeling and packaging do not infringe, intellectual property rights or Supplier has necessary approvals of, owner of third-party intellectual property rights;

 

h. include all necessary and accurate information and warnings about safe use of the product;

 

i. are packaged in a manner which protects the product from tampering or interference, damage or deterioration and shall be packed and secured to ensure that the product is delivered to ALDI in good condition;

 

j. any non-food products sold by Supplier to ALDI will also comply with applicable rules and regulations including rules and regulations of the Consumer Product Safety Commission; and

 

k. there has been no testing with animals of Supplier’s product sold by ALDI, except for pet food.

 

  Initial:
ALDI
Supplier

ALDI US, Master Purchasing Agreement 3.0 2 of 6

 

 

In addition, Supplier also represents and warrants to ALDI that it:

 

l. has complied with all applicable import and export and related laws of the United States and of any foreign nation from which the goods may originate and will comply with any hold or other order or direction issued by the Department of Homeland Security, U.S. Customs and the FDA;

 

m. has all licenses, permits and registrations that are necessary to manufacture, sell or deliver any of the products delivered pursuant to this Agreement; and

 

n. has full rights and authority to enter into and perform this Agreement and Supplier’s performance will riot violate any agreement to which Supplier is a party.

 

2 Supplier’s warranties in Section 1 paragraphs a-f and h-j shall also be made by Supplier to ALDI’s customers who purchase Supplier’s product from ALDI. The remedy of ALDI’s customer for breach of any warranty by Supplier shall be recovery from Supplier for any personal injury or property damage caused by Supplier’s products, and any consequential and incidental damages relating thereto including loss of earnings, in addition to repair, replacement or refund of the purchase price of the product by Supplier, as ALDI’s customer may select.

 

3 For all non-food products, Supplier shall

 

a. establish a pre-arranged procedure for the ALDI customer to return the product, including pre-labeled return packages and pre-paid shipping;

 

b. bear any costs that ALDI’s customer may incur in connection with returning the product to Supplier at such location as Supplier designates, which shall not be an ALDI store;

 

c. make repairs, replacements or refunds, as the ALDI customer elects within ten (10) business days after the ALDI customer ships the item, and any replacement product or repair must be of comparable quality and specifications;

 

d. make available a toll-free number, and an email or website, for use by ALDI customers in making warranty claims which will be available during regular business hours throughout the warranty claim period;

 

e. sufficiently staff its customer response number, email and website so that customer inquiries are handled promptly when made, but in no event in more than 24 hours after first submitted;

 

f. staff its response sites with personnel sufficiently competent to handle common problems, operating instructions and troubleshooting;

 

g. maintain a sufficient inventory of replacement parts, products and manuals to comply with customer claims during the warranty period;

 

h. keep the customer and ALDI advised promptly of the status and timeline for resolution of the claim or inquiry in all cases of customer claims or inquiries;

 

i. respond to any inquiry or claim made directly to ALDI as provided herein, and

 

j indemnify ALDI for any costs or expenses it may incur in connection with any ALDI customer making warranty claims against Supplier’s product.

 

4 The use of a Kosher certification label on Supplier’s products sold to ALDI shall be authorized by the Kosher certifier and Supplier is and shall remain in compliance with the requirements for use of such certification(s). Supplier shall enter into and comply with such agreement as required by the certifier for authorized use of the Kosher label(s) and Supplier shall indemnify ALDI for any liability under such agreement and shall pay all administrative and annual fees of the Kosher certifier(s).

 

ARTICLE VI

Product Liability/Indemnification

 

1. Supplier shall indemnify, defend, and hold ALDI and its agents and employees harmless, from and against any claims, suits, judgments, damages, loss and liability for bodily injury, sickness, disease or death, destruction or damage to property, and any loss, including consequential and incidental damages, lost profit, injury to reputation, reasonable attorneys’ fees and other expenses of litigation, and exemplary damages for which ALDI may be vicariously liable, which arise out of or result from (a) any breach by Supplier of its obligations or warranties and representations under this Agreement, and (b) any lawsuit or claim of any type against ALDI arising out of Supplier’s product sold to ALDI, including any act or omission of Supplier or its agents, employees or subcontractors, in connection with this Agreement or the product furnished by Supplier; provided, however this indemnification obligation of Supplier shall not apply to that portion of any loss and liability due to ALDI’s negligence or willful misconduct.

 

  Initial:
ALDI
Supplier

ALDI US, Master Purchasing Agreement 3.0 3 of 6

 

 

2. ALDI shall have the right to participate in the defense of any claim including claims involving ALDI Private Labels, with counsel of its choosing, at the expense of Supplier, without losing the right to indemnity.

 

3. Regarding claims by an employee of Supplier or its subcontractor against ALDI, Supplier’s indemnification obligation under this Article is not limited by a limitation on the amount or type of damages, compensation or benefits payable by or for Supplier under workers’ or workmen’s compensation acts, disability benefit acts or other employee benefit acts.

 

4. Supplier’s obligation under this Article shall be independent of, and in addition to, Supplier’s obligation to provide insurance under Article VII.

 

5. In addition to ALDI’s remedies, under paragraph 1 of this Article, if (a) products sold to ALDI by Supplier are (i) non- compliant with Supplier’s warranties, (ii) not or will not be delivered in a timely manner, (iii) not in compliance with any requirements of this Agreement, or (iv) rejected or encumbered by U.S. authorities; (b) Supplier advises ALDI that it will not be able to perform any of its obligations under this Agreement; or (c) ALDI believes on reasonable grounds that there will be a delay in delivery, or a failure to comply with any applicable law, or any of Supplier’s obligations under this Agreement, then, in addition to and without limiting any other rights or remedies of ALDI, including any right to claim damages for Supplier’s breach, ALDI shall be entitled to:

 

a. issue a “stop sale” for such products, in which case the products will be pulled from sale in ALDI stores;

 

b. withhold payment for such products;

 

c. cancel an order and terminate the Purchasing Contract, in which case ALDI has no obligation to accept delivery of or pay for the products;

 

d. reject any products forming part of the order which have already been received; and

 

e. purchase alternative supplies of the products, and Supplier will be liable for any additional costs incurred by ALDI in respect of such alternative suppliers.

 

6. Where ALDI exercises a right hereunder to reject any products which have been received by ALDI or to cancel an order which is in shipment to ALDI:

 

a. Supplier shall, at its risk and expense, collect any products that have been delivered to ALDI within 14 days of ALDI providing written notice to Supplier that the products are to be collected;

 

b. if Supplier does not collect the products within 28 days of ALDI providing written notice to Supplier that the products are to be collected by Supplier, ALDI may destroy those products and Supplier shall have no claim against ALDI with respect to the destruction of those products; and

 

c. Supplier shall reimburse ALDI for its lost profit, cost of advertising, cost of returns, any payment made by ALDI for such products, and without limitation, any freight expense, fines, penalties, fees and any other expenses incurred by ALDI with respect thereto.

 

7. If ALDI issues a “stop sale” or rejects Supplier’s products, and if Supplier’s product has already been delivered to ALDI and Supplier desires return of its product, Supplier shall pay all expenses in any way associated by such return, and Supplier shall pay ALDI a fee of $50 per store involved as a handling charge for return of the product with a minimum charge to Supplier of $1,000 per ALDI division. If Supplier does not desire return of its product, Supplier shall pay ALDI’s costs of disposing and destruction of the product.

 

Supplier shall remove all references to ALDI’s Private Labels on any product and packaging which is the subject of an order cancelled by ALDI or which is returned from ALDI, and Supplier shall not sell or dispose of the products until such removal has been effected and approved by ALDI.

 

ARTICLE VII
Insurance

 

Supplier shall procure and maintain in full force and effect during the term of this Agreement, insurance with the minimum limits and conditions based upon the category of product furnished by Supplier to ALDI as shown in the Supplier Liability Matrix all as detailed in the Insurance Limits and Conditions made part of this Agreement and made available to Supplier by ALDI at the time this Agreement is presented to Supplier for execution. All insurance carriers shall be rated not less than A-VII by Best’s Key Rating Guide and each insurance policy shall (a) provide that defense costs will not apply against the required coverage limits; (b) contain waiver of subrogation against ALDI Inc., its agents and employees for Commercial General Liability Insurance; (c) provide the insurance is primary, non-contributory and not excess over any other valid collectible insurance and (d) must name ALDI Inc. and its wholly owned subsidiaries, its agents ad employees as additional insureds and certificate holders. Supplier shall provide current Certificates of Insurance verifying Supplier’s compliance with the Insurance Requirements (a) prior to execution of this Agreement, and (b) at any time upon the request of ALDI. For European Suppliers, there is a separate Addendum which is required.

 

  Initial:
ALDI
Supplier

ALDI US, Master Purchasing Agreement 3.0 4 of 6

 

 

ARTICLE VIII

Corporate Responsibility

 

Supplier shall comply with ALDI’s Corporate Responsibility Principles which are available on ALDI’s website and made a part of this Agreement.

 

ARTICLE IX

Customer Complaints

 

1. Supplier and ALDI shall promptly advise the other of any complaint which either receives regarding Supplier’s product or packaging.

 

2. Supplier shall contact the customer within 24 hours regarding all product inquiries or complaints, and shall resolve all issues within seven (7) days. Supplier shall reply to ALDI’s notification to Supplier of inquiries or complaints received by ALDI detailing Supplier’s actions taken and resolutions. Supplier shall not copy ALDI on any direct email correspondence with the customer.

 

ARTICLE X

Policy on Special Payments. Gifts, or Gratuities

 

1. The offering or making of payments, gifts, contributions or other inducements to any ALDI personnel is contrary to ALDI’s policy regardless of the amount involved. Supplier’s salespersons, representatives and brokers may not under any circumstances make or offer to make any payment, gift, contribution or other inducement to ALDI personnel.

 

2. ALDI personnel may not invest in or associate with any entity which could influence any ALDI personnel’s judgment regarding a business decision or is contrary to ALDI Policy. Supplier, as well as Supplier’s salespersons, representatives, brokers and any third party involved in the relationship, may not under any circumstances establish any business relationship with any ALDI personnel or establish any business relationship with any third-party business in which any ALDI personnel or a relative of any ALDI personnel have a significant economic or personal interest.

 

3. Supplier is responsible for insuring that its sales representatives, brokers and any third party involved in any relationship with ALDI comply with this Article X.

 

4. Supplier represents that its business activities are in strict compliance with all legal requirements applicable to its business, in particular, with those statutory provisions and contractual agreements with ALDI Inc., including, but not limited to this Article X concerning policy on special payments, gifts, gratuities or business relationships set forth above in Sections 1-3 above. Supplier represents that it has taken all required and necessary measures to ensure that compliance with the foregoing requirements is maintained at all times during the period that this Agreement is in effect.

 

5. A violation of this Article X is a default under this Agreement and cause for immediate Termination of this Agreement and all related contracts.

 

ARTICLE XI

Supplier’s Relationship with ALDI

 

1. Supplier and ALDI agree that all marketing, product specifications, new product information, sales data and other information received from either party is confidential information and a trade secret. Both parties agree to safeguard and use such information received from the other party only for purposes of this Agreement, and not to disclose such information to any other party without prior written authorization. Each party will return confidential information received from the other party upon any termination of this Agreement. Both parties further agree not to announce publicly that Supplier and ALDI have entered into this Agreement without prior written consent and approval of the content of any such announcement.

 

  Initial:
ALDI
Supplier

ALDI US, Master Purchasing Agreement 3.0 5 of 6

 

 

ARTICLE XII
Termination

 

1. Either party may terminate this Agreement for any reason upon 30 days prior written notice, or in the case of default, immediately upon written notice of default. Default is defined as a failure to perform any obligation under this Agreement, including but not limited to quality of products sold by Supplier to ALDI.

 

2. In the event of termination, other than as a result of a default by Supplier, ALDI will pay Supplier and Supplier will deliver to ALDI:

 

a. for Special Buy items, an amount sufficient to satisfy the applicable Purchasing Contract.

 

b. for all Private Label finished goods Supplier has manufactured for ALDI and bearing ALDI trade names or trademarks, up to an amount equal to a one (1) month average supply.

 

c. for all special packaging and labeling materials bearing ALDI Private Labels, Supplier’s cost, but not to exceed a (3) months average supply.

 

3. The provisions in Articles II, III, IV, V, VI, VII, IX, and XIII, and other provisions of this Agreement which require performance after termination of this Agreement shall survive any termination of this Agreement and, including all indemnity and insurance obligations of Supplier.

 

ARTICLE XIII

Binding Agreement

 

1. This Agreement is made in the State of Illinois and shall be governed by the Laws of the State of Illinois. Any legal action in any way related to this Agreement shall be brought only in federal and state courts of Illinois, and Supplier consents to personal and subject matter jurisdiction of such courts.

 

2 If any section of this Agreement is found to be legally not enforceable, all other provisions of this Agreement will remain in full force. If another Agreement is later made between Supplier and ALDI, this Agreement shall take precedence, and any provisions of a later agreement which are inconsistent with this Agreement will be of no force or effect.

 

3. Supplier shall not assign or subcontract this Agreement or any of its rights under it, or otherwise involve another party with performance of its obligations hereunder, including co-packaging, without ALDI’s prior written consent.

 

4. Supplier’s sub-contractor/sub-supplier shall meet the same insurance requirements and other obligations under this Agreement to ALDI as Supplier.

 

5. ALDI shall have the right to assign this Agreement to any affiliate, subsidiary or division of ALDI without Supplier’s consent.

 

In witness whereof, the parties have initialed each page of, and signed below, this Agreement as of the date first above written.

 

SUPPLIER: Ittella International, INC.   ALDI INC.
       
By: /s/ Martha Martinez                                    By:
    Title: Director
Printed Name: Martha Martinez      
    By:
Title: Controller   Title:  Group Director Corporate Buying or Vice president
Date: 3/18/2016   Date: 4/6/16

 

  Initial:
ALDI
Supplier

ALDI US, Master Purchasing Agreement 3.0 6 of 6

 

 

ADDENDUM

(For European Suppliers)

 

Amendment made this 18 day of March, 2016, by and between (“Supplies”), and ALDI Inc. (“ALDI”).

 

WHEREAS Supplier and ALDI are parties to a Master Purchase Agreement (the “Agreement”) dated 3/10/16;

 

WHEREAS, Supplier and ALDI desire to amend the Agreement as set forth herein;

 

NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein, ALDI and Supplier agree as follows:

 

1. Article VI, Section 1 of the Agreement is replaced with the following:

 

Supplier shall indemnify, defend, and hold ALDI and its agents and employees harmless, from and against any claims, loss and liability for bodily injury, sickness, disease or death, destruction or damage to property, and any loss, including consequential and incidental damages, lost profit, injury to reputation, attorneys’ fees, including exemplary damages for which ALDI may be vicariously liable, which arise out of or result from any breach by Supplier of its obligations or warranties under this Agreement, the product furnished by Supplier, or any act or omission of Supplier, or its agents, employees or subcontractors, in connection with this Agreement or the product furnished by Supplier; provided, however, this Indemnification obligation of Supplier shall not apply to that portion of any loss and liability which ALDI incurs due to its own negligence or willful misconduct.

 

2. The following changes are made to Article VII, of the Agreement:

 

A. The second sentence of the first paragraph of Section 1 is replaced with the following:

 

All insurance carrier(s) must be rated not less than A-VIII by A.M. Best’s Key Rating Guide or an insurer with a lower rating that is approved by Aldi that can provide the required insurance coverages and limits below, at the sole cost of the Supplier.

 

B. A new subparagraph b is added to Section 1 immediately following subparagraph a as follows:

 

b. Supplier shall obtain a Vendor’s endorsement to the Supplier’s insurance which provides ALDI is indemnified and held harmless under the Supplier’s insurance for any liability arising out of the Supplier’s product supplied to ALDI. This endorsement shall provide indemnification to for ALDI for liability arising out of bodily injury or property damage, except when such liability is (a) assumed by the Vendor under a contract or agreement of ALDI which would not have attached in the absence of the contract or agreement, (b) arising under any express warranty unauthorized by Supplier, (c) arising out of any physical or chemical change in the products made intentionally by ALDI, (d) arising out of repackaging of products by ALDI unless solely for the purpose of inspection, demonstration, testing or the substitution of parts under instructions from the insured and then repackaged in the original container, (e) arising out of any failure to make such inspections, adjustments, tests or servicing as ALDI has agreed to make or normally undertakes to make in the usual course of business in connection with the distribution or sale of products, (f) arising out of demonstration, installation, service or repair operations other than such operations performed at ALDI’s premises in connection with the sale of products, and (g) from products which have been labeled or re-labeled or use as a container, part or ingredient of any other thing or substance by or for ALDI. Such endorsement shall also provide that Supplier’s insurer shall indemnify ALDI for defense cost in any lawsuit arising out of the product sold to ALDI by Supplier.

 

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C. Section 1 is amended with respect to coverage limits only as follows:

 

Commercial General Liability:

(Coverage Limits are stated in Euros):

 

  Category of Product*     Required Coverage Amount (each occurrence / in the
  I     € 2,000,000 / € 3,000,000
  II     € 5,000,000 / € 6,000,000
  III     € 10,000,000 / € 11,000,000

 

*The coverage limits required of Supplier are based upon the category of product furnished by Supplier to ALDI as shown in the Supplier Liability Insurance Matrix. For example, if Supplier furnishes ALDI with a product listed in Category II on the Matrix, the minimum coverage limits which that Supplier shall procure and maintain are €5,000,000 per occurrence and €6,000,000 aggregate. If the product furnished to ALDI is not listed on the Matrix, Supplier shall contact ALDI which will determine coverage requirements based upon its assessment of product risk. If Supplier is furnishing ALDI with products in more than one category, then the highest level of coverage requirements shall be procured and maintained by Supplier. ** Coverage Limits are stated in Euros.

 

Products Completed Operations Aggregate Limits:

 

Category of Product     Coverage Amount  
  I       €2,000,000  
  II       €5,000,000  
  III       €10,000,000  

 

Automobile Liability insurance: compulsory insurance must be purchased from the auto rental company if the Supplier is traveling to ALDI premises.

 

Worker’s Compensation/Employer’s Liability insurance, with statutory benefits limits with either a private insurer or through the applicable Government Scheme and Employer’s liability Limit of €500,000, if product is delivered to ALDI premises or if Supplier’s employee is on ALDI premises.

 

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D. Section 2 is amended to provide that the defense costs for claims in the United States do apply to coverage limits.

 

E. The following sentence is added after the first sentence of paragraph 4:

 

If such notice of cancellation or non-renewal is unavailable, then Supplier shall provide prompt notice to ALDI of (i) any cancellation (and the reasons therefor) or (ii) non-renewal.

 

F. The last sentence of Section 4 is replaced with the following:

 

In the event a Supplier’s carrier is downgraded, the Supplier shall procure new coverage from a carrier rated no less than A-VIII by A.M. Best’s Key Rating or an insurer with a lower rating that is approved by ALDI that can provide the coverage and limits required, at the sole cost and expense of the Supplier.

 

G. The certificate of insurance requirements in Section 6 are replaced with the following:

 

i. Show insurance on an occurrence basis with limits not less than those set forth in Paragraph 1 above
ii. Show ALDI as Certificate Holder and Vendor’s Endorsement or if available, Additional Insured status, per the requirements set forth in Paragraph 3 above;
iii. All required insurance must provide coverage as detailed above for occurrences in the U.S.;
iv. Provide for filing of claims in the United States and payment of claims in U.S. currency unless Supplier’s insurers require payment of claims in the currency of Supplier’s domicile;
v. Permit legal service of process in the U.S.; and
vi. State that U.S. law must apply to any and all claims.

 

3. Section 4 of Article X is replaced with the following:

 

Supplier warrants that the prices and terms offered by Supplier do not breach any prohibition against anti-competitive business practices and Supplier confirms it has not engaged in any cartel or price-fixing arrangement or other anti-competitive conduct. Should a court or an antitrust authority or other agency having jurisdiction over such matters find that either Supplier or its agents have violated any such prohibition, or that Supplier has been involved in such activity, Supplier must pay ALDI as liquidated damages and not as a penalty, a lump- sum of five percent (5%) of the purchase price of all goods sold to ALDI in violation of such prohibition during the relevant time period plus interest as prescribed by law, as compensation to ALDI, unless the Supplier can prove that the damage was of a lesser amount (or did not occur at all) or ALDI shows that greater damage was caused. All other legal or contractual claims for compensation which ALDI may have against Supplier shall remain unaffected by such payment. Supplier shall provide ALDI with any information required by ALDI to determine whether there is a basis for such claim(s).

 

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4. Section 5 of Article X is moved to Section 6 of Article XII.

 

5. Section 5 of Article X is replaced with the following:

 

Supplier represents that its business activities are in strict compliance with all legal requirements applicable to its business, in particular, with those statutory provisions and contractual agreements with ALDI Inc., including, but not limited to this Article X concerning policy on special payments, gifts, gratuities or business relationships set forth in Sections 1-4 above. Supplier represents that it has taken all required and necessary measures to ensure that compliance with the requirements generally described in the above sentence is maintained at all times during the period that this Agreement is in effect.

 

6. Except as amended hereby, the Agreement between ALDI and Supplier shall remain in full force and effect.

 

Supplier: Ittella International, INC.   ALDI INC.
     
By: /s/ Martha Martinez   By: /s/ Jamie Shunick
     
Printed Name: Martha Martinez   Printed Name: Jamie Shunick
Title: Controller   Title: Director of Corp. Buying
     
Date: 3/18/2016   Date:4/6/16

 

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Effective Date: 02/03/2020

 

SAM’S CLUB GROCERY

MERCHANDISE AGREEMENT

General Supplier Information

 

Agreement Number: SAP Supplier Number: Supplier ID: Category:
607499-64-2 1400560216   44-Frozen Foods

 

Specialty Group: None

 

Company Legal Name: Ittella International LLC

 

Doing Business As: STONEGATE FOODS INC

 

Legal Entity: Corporation

 

Taxpayer Identification Number ( TIN ): XX-XXX5710

 

Company Contacts  
Supplier Agreement Accepted By: Al Galletti Phone: 15624084829
CEO/President: Sam Galletti Phone: (562)602-0822
CFO: Stephanie Dieckmann Phone: (562)602-0822

 

Corporate Address Remit Address
Address Line 1: 6305 ALONDRA BLVD Address Line 1: 6305 ALONDRA BLVD
Address Line 2: Address Line 2:
City: PARAMOUNT City: PARAMOUNT
State: CA State: CA
Zip: 90723-3750 Zip: 90723-3750

 

The Supplier Agreement detailed below has been accepted on behalf of the supplier by:

Al Galletti - (RLID : 6vf2l12 )

 

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Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

SUPPLIER AGREEMENT

 

(Standard Terms and Conditions for Suppliers)

 

This Supplier Agreement, (“Agreement”) is between supplier indicated on the GENERAL SUPPLIER INFORMATION form that is part of the supplier registration process (“Supplier” or “you”) and Walmart Inc., and its direct and indirect US and Puerto Rico operating subsidiaries (collectively, “Company”). This Agreement consists of (1) these Standard Terms and Conditions for Suppliers (“Terms and Conditions”), (2) the Company policies and guidelines referenced in this Agreement; (3) the Appendix and any Schedule(s) attached hereto and (4) Company’s minimum requirements and Standards for Suppliers posted at http://corporate.walmart.com/suppliers/minimum-requirements and http://corporate.walmart.com/sourcing-standards-resources, each as may be amended from time to time by Company (collectively, the “Standards”), each of which is incorporated in this Agreement.

 

BY CLICKING “I ACCEPT” AND “SUBMIT” BELOW, BY OFFERING TO SELL, SELLING, OR DELIVERING ANY MERCHANDISE TO COMPANY OR ITS CUSTOMERS, INCLUDING THROUGH ANY COMPANY WEBSITE OR APPLICATION, OR PROVIDING DIRECT SHIP SERVICES ON BEHALF OF COMPANY, YOU AGREE THAT YOU HAVE READ AND UNDERSTAND AND AGREE TO BE BOUND BY ALL TERMS AND CONDITIONS OF THIS AGREEMENT WITHOUT CHANGE. YOU FURTHER REPRESENT AND WARRANT THAT (1) ALL THE INFORMATION YOU PROVIDE AS PART OF THE REGISTRATION PROCESS WILL BE ACCURATE AND COMPLETE AND (2) IF YOU ARE EXECUTING THIS AGREEMENT ON BEHALF OF AN ENTITY, YOU HAVE THE REQUISITE RIGHT, POWER, AND AUTHORITY TO ENTER INTO THIS AGREEMENT ON BEHALF OF THE ENTITY YOU REGISTER AS SUPPLIER.

 

By clicking the “I ACCEPT” button below, you understand that execution of this Agreement by both Supplier and Company does not impose on Company any obligation (and Company has no obligation) to purchase or take delivery of Merchandise (or to enable the sale or delivery of Merchandise to any customer) or to use any services of Supplier.

 

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Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

STANDARD TERMS AND CONDITIONS

 

1. DEFINITIONS. As used in this Agreement or any Order (defined below), the following capitalized words shall have the meanings set forth below:

 

(a) “Account” means any right to receive payments arising under this Agreement.

 

(b) “Authorized Buyer” means any buyer or category lead (or successor or equivalent titles) of Company assigned to the category/department corresponding to the purchased Merchandise.

 

(c) “Change of Control” of Supplier means an event by which any person or entity, other than person(s) or entity(ies) having Control of Supplier as of the Effective Date, acquires Control of Supplier. “Control” means having direct or indirect power to direct, or cause the direction of, the management and policies of an entity, whether through the ownership of voting securities (even if less than majority ownership), contract, or otherwise.

 

(d) “Content” means product images, product descriptions, Supplier name, logo, trademarks, service marks, copyrights, trade dress, and other information and materials, and content for marketing and promoting Merchandise in connection with Companys marketing of the Merchandise. Content also includes any product information collected by Company from your website, or otherwise made available to Company by Supplier (or by a third party at Suppliers direction).

 

(e) “Effective Date” means the date this Agreement becomes effective as to both Company and Supplier.

 

(f) “Law” means any applicable international, foreign, or domestic law, regulation, order or other requirement imposed or compelled by a governing or regulatory authority having legal force (whether federal, state or local), including any treaty, statute, common law, judicial decision, rule, regulation, code or ordinance.

 

(g) “Merchandise” means all products, goods, materials, equipment, displays, articles, and tangible items supplied by Supplier to Company within the Territory, and all packaging, instructions, warnings, warranties, advertising and other services included therewith.

 

(h) “Order” means any written or electronic purchase order for Merchandise issued by Company through an Authorized Buyer.

 

(i) “Recall” means any removal of Merchandise from the stream of commerce or the issuance of a corrective action plan or other remedial action initiated by Supplier, a government entity, or Company.

 

(j) “Territory” means the United States of America, its territories and possessions and APO/FPO military addresses.

 

2. ORDERS; CANCELLATION. Supplier shall receive Orders and send Company invoices electronically unless otherwise agreed to by Company in writing. Supplier shall comply with Company electronic transmission requirements set forth here https://gsm.wal-mart.com/GSM_Web/Supplier Policies and Requirements/#EDI requirements. No Company representative has authority to order Merchandise except an Authorized Buyer through an Order issued pursuant to and subject to the terms of this Agreement. Supplier may ship only after receipt of an Order. Supplier may accept an Order only as follows: (i) a written confirmation notice to Company, if such notice is requested by Company, or (ii) shipping conforming Merchandise in accordance with this Agreement and the Order. Supplier is responsible for verifying the accuracy of all terms of sale on all Orders. Supplier shall notify Company of any inaccuracies not less than twenty-four (24) hours before shipment. If a change is necessary, no shipment is to commence without written confirmation of the change from an Authorized Buyer. If Merchandise ships before discovery of an error on the Order, the parties shall confer within forty-eight (48) hours of such discovery to determine the actions to be taken regarding the erroneous Order. Shipments made contrary to Company's routing instructions will be deemed F.O.B. destination (store, club or warehouse). Supplier's invoice, confirmation memorandum or other writing may not vary the terms of any Order. Supplier's failure to comply with one or more terms of an Order shall constitute breach of this Agreement. Company may cancel all or any part of an Order at any time before shipment.

 

3. DELIVERY TIME. THE TIME SPECIFIED IN AN ORDER FOR SHIPMENT AND/OR DELIVERY OF MERCHANDISE IS OF THE ESSENCE OF THIS AGREEMENT. If Merchandise is not shipped and/or delivered within the time specified, Company may, at its option and without limitation, cancel the order and/or reject any merchandise delivered after the time specified. Company may assess and collect reasonable damages for any deliveries of Merchandise not received by the time specified in the Order. Notwithstanding Company's remedies, Supplier shall inform Company immediately of any actual or anticipated failure to ship all or any part of an Order on the shipment date specified. Acceptance of any Merchandise shipped after or before the time specified shall not be construed as a waiver of any of Company's rights or remedies resulting from the untimely shipment.

 

4. SUPPLIER FINANCIAL INFORMATION; SUPPLIER NUMBER Supplier authorizes Company to obtain a current Dun & Bradstreet report (or such other risk evaluation report as may be designated by Company) for Supplier. The supplier number assigned to Supplier in connection with this Agreement is unique and personal to Supplier and is non-transferable. Any person other than Supplier that purports to transact business with Company under Supplier's vendor number will be jointly and severally liable with Supplier for all Supplier obligations to Company arising under this Agreement and any Order.

 

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Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

5. PAYMENT TERMS; CASH DISCOUNT; AUDITS. Payment terms shall be as set forth in Business Terms. Supplier shall comply with the Payment Process requirements set forth https://gsm.wal-mart.com/GSM_Web/Supplier Policies and Requirements/#Payment Process Requirements. Company or its auditors may inspect and audit Supplier's financial and other account records relating to the sale and return of Merchandise. Supplier shall provide reasonable assistance in such audits by providing supplemental records as reasonably requested by Company or its auditors to validate audit results.

 

6. SET-OFF. Company may recoup, set off, or credit against amounts payable to Supplier all present and future indebtedness of Supplier to Company arising from this or any other transaction with Supplier or any of its affiliates whether or not related to this Agreement. Company also may establish a reserve or place a hold on Supplier’s Account as set forth https://gsm.wal-mart.com/GSM_Web/Supplier Policies and Requirements/#Reservation of Account.

 

7. TAXES. Unless otherwise agreed, Company is purchasing Merchandise under this Agreement for resale and will supply necessary resale certificates to Supplier upon request. The Order price includes all taxes and fees which may be imposed upon Supplier by a taxing jurisdiction on the sale of Merchandise under this Agreement. The Order price does not include: (i) sales, excise or use tax for which Company is liable upon the sale or use of the Merchandise or (ii) taxes or fees that Supplier is required by Law to separately state on invoices to Company. If Supplier receives a refund of any taxes included in the Order price or otherwise collected from Company by Supplier, Supplier shall promptly pay or credit Company the amount of the refund, including any interest.

 

8. PRICE PROTECTION; PRICE GUARANTEE AND NOTICE OF PRICE INCREASES. Supplier guarantees its prices against manufacturer's or Supplier's own price decline. If Supplier reduces its price on any Merchandise sold to Company, which Merchandise has not yet been delivered to Company by Supplier or, if consistent with Supplier's practice, which Merchandise is currently in Company's inventory (including Merchandise on hand, in warehouses and in transit), Supplier shall at Company's discretion either issue a check or give Company a credit equal to the price difference for such Merchandise, multiplied by the units of such Merchandise to be delivered by Supplier and/or currently in Company's inventory. If at a reasonably close point in time with Supplier's sale of Merchandise to the Company, Supplier sells or offers to any competitor of Company any merchandise of like grade and quality at lower prices and/or on terms more favorable than those stated on the Order, then, except as prohibited by Law, the prices and/or terms of the Order shall be deemed automatically revised to equal the lowest prices and most favorable terms at which Supplier shall have sold or shall have offered such Merchandise, and payment shall be made accordingly. If Company becomes entitled to lower prices under this Section, but has already made payment at a higher price, Supplier shall promptly refund the difference in price to Company. Supplier shall give Company written notice of any proposed Merchandise price increase at least sixty (60) days before the effective date of the increase.

 

9. CONTENT. Supplier shall comply with Supplier Content requirements set forth https://gsm.wal-mart.com/GSM_ Web/Supplier Policies and Requirements/#Supplier Content Obligations. All right, title and interest in the underlying Content as originally provided by Supplier to Company will remain the exclusive property of Supplier or the original licensor of the Content. Supplier hereby grants Company a limited, royalty-free, non-exclusive, non-transferable right to publish, use, reproduce, distribute, transmit, display, modify, edit and create derivative works based on the Content on the Company website(s) or in the Company apps and in connection with the marketing and promotion thereof, in connection with the retail sale and rental of its products and services (including without limitation, all Company’s businesses). The rights in this Section include the right to have third parties exercise Company’s rights on its behalf, including third party service providers, and will not expire or terminate for so long as needed for marketing and fulfillment of the Merchandise (including handling of customer returns and warranties).

 

All Merchandise shall have an accurate UPC barcode (also known as an EAN/UPC symbol) that includes a valid Global Trade Item Number® (GTIN®) and will comply with GS1 US standards (found at http://www.gs1us.org) or such other of Company's UPC requirements, as amended from time to time. Where applicable, Supplier shall provide Company with a current, complete, and accurate Material Safety Data Sheet (“MSDS”) for the Merchandise.

 

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Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

10. INSURANCE REQUIREMENTS. During the term of this Agreement and for at least two (2) years thereafter, Supplier at its own cost and expense will procure and maintain insurance coverage from qualified underwriters meeting or exceeding the requirements posted at http://corporate.walmart.com/suppliers, which are incorporated into this Agreement, and comply with the Insurance requirements https://gsm.wal-mart.com/GSM_Web/Supplier Policies and Requirements/#Insurance. Company may change the requirements for insurance posted at http://corporate.walmart.com/suppliers at any time. Changes to the insurance requirements posted after the Effective Date of this Agreement, however, will not be applicable to Supplier until twelve (12) months after Company's posting of such changes. The requirements in this Section are not intended to and will not in any manner limit or qualify Seller’s obligations under this Agreement including, but not limited to, Supplier’s defense and indemnity obligations under Section 12.

 

11. REPRESENTATIONS AND WARRANTIES. By acceptance of an Order, Supplier represents, warrants and covenants that:

 

(a) Supplier is in compliance with and will continue to comply with Company’s Standards;

 

(b) Supplier and the Merchandise are in compliance with and shall continue to comply with all Laws applicable to the manufacture, mining, sourcing, distribution, assembly, packaging, transportation, and sale of the Merchandise;

 

(c) The Merchandise will be new and not used, remanufactured, reconditioned or refurbished, and will comply with all specifications contained in such Order and will be of equal or better quality as all samples delivered to Company;

 

(d) The Merchandise is genuine and is not counterfeit, adulterated, misbranded, falsely labeled or advertised or falsely invoiced within the meaning of any Laws;

 

(e) The Merchandise has been labeled, advertised and invoiced in accordance with the requirements of all Laws, and the Merchandise, and its sale by Company anywhere within the Territory does not violate any Law;

 

(f) The Merchandise shall be delivered in good and undamaged condition and shall, when delivered, be merchantable and fit and safe for the purposes for which the Merchandise is intended to be used, including but not limited to consumer use;

 

(g) The Merchandise and Content does not infringe upon or violate any patent, copyright, trademark, trade name, trade dress, trade secret, or any other rights belonging to others, and all royalties owed by Supplier, if any, have been paid to the appropriate licensor;

 

(h) All information regarding the Merchandise and Content, provided by or on behalf of Supplier to Company, including all weights, measures, sizes, legends or descriptions printed, stamped, attached or otherwise indicated with regard to the Merchandise, is true and correct, and conforms and complies with all Laws relating to the Merchandise;

 

(i) Where required by Law, or by Company’s policies, the Merchandise has been tested by third-party testing bodies approved by Company, found compliant with all applicable standards and Laws, and the results of such tests will be provided to Company at Company's request;

 

(j) There is no other impediment or restriction, legal or otherwise, that restricts prevents Supplier from selling and delivering the Merchandise to Company or Company from reselling the Merchandise to its customers;

 

(k) Supplier has all necessary rights to grant the rights and licenses granted under this Agreement, including with respect to Content; Supplier has secured and will secure all rights and licenses from the respective intellectual property rights holders of the Content provided under this Agreement;

 

(l) The Content does not and Supplier’s and Company’s permitted use of the Content does not infringe or misappropriate any third party intellectual property rights, privacy rights or publicity rights or violate any Law; and the Content is not deceptive, misleading or inaccurate or defame or otherwise injure any party, and

 

(m) The Merchandise is not transshipped for the purpose of mislabeling, evading quota or country of origin restrictions or avoiding compliance with the Standards and all Laws.

 

Nothing contained in this Agreement or an Order shall be deemed a waiver of any representations, warranties, or guarantees implied by Law.

 

12. INDEMNIFICATION. Supplier shall protect, defend, hold harmless and indemnify Company, including its affiliates, officers, directors, employees and agents, from and against any and all lawsuits, claims, demands, actions, liabilities, injuries, losses, damages, expenses, and attorneys’ fees and costs, regardless of whether such matters are groundless, fraudulent, or false, regardless of the cause or alleged cause thereof, and regardless of whether such matters arise out of or were caused by the alleged or actual joint or concurrent negligence of Company, its affiliates or their officers, directors, employees or agents arising in whole or in part out of any actual or alleged:

 

(a) Misappropriation or infringement of any patent, trademark, trade dress, trade secret, copyright or other right relating to any Merchandise or Content;

 

(b) Death of or injury to any person, damage to any property, or any other damage or loss, by whomsoever suffered, arising out of any actual or alleged defect in the Merchandise (whether latent or patent), or assembly, sale, delivery, loading or unloading of the Merchandise, including but not limited to: (i) any actual or alleged failure to provide adequate warnings, labeling or instructions; (ii) any actual or alleged improper design, manufacture, construction, assembly, or installation of the Merchandise; (iii) any display or demonstration by Supplier or Supplier’s vendors or representatives on the Company’s premises; or (iv) any actual or alleged failure of the Merchandise to comply with specifications or with any express or implied warranties of Supplier;

 

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Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

(c) Violation of any Law relating to the Merchandise, or to any of its components or ingredients, or to its manufacture, shipment, labeling, use or sale, or to any failure to provide a Material Safety Data Sheet or certification;

 

(d) Act, activity or omission of Supplier or any of its employees, representatives or agents, including but not limited to activities on Company's premises;

 

(e) Use of any vehicle, equipment, fixture or material of Supplier or Company in connection with any sale to or service for the Company; and

 

(f) Any in-store product demonstrator, point of sale display, promotional exhibit, other advertising display or material, pallet or other tangible materials, equipment or fixtures provided by Supplier and related to Merchandise or services under this Agreement.

 

Supplier shall promptly notify Company of the assertion, filing or service of any lawsuit, claim, or other matter that is or may be covered by this indemnity, and shall immediately take such action as necessary or appropriate to protect the interests of Company, its affiliates, officers, directors, employees and agents. On Company’s request, Supplier will promptly provide reasonable cooperation and assistance to Company with respect to any claim, lawsuit, demand, or investigation involving Company. Supplier shall have an obligation and duty to defend Company and its affiliates, officers, directors, employees and agents against any lawsuit, claim or other matter that is potentially within Supplier’s indemnity obligation as described in this Section until final adjudication of Supplier’s indemnity obligation. Supplier shall promptly notify Company of the legal counsel Supplier proposes to engage to defend and otherwise protect Company’s interest in such matter and such counsel shall be subject to Company’s approval, which Company shall not unreasonably withhold. Any counsel proposed, selected or provided by Supplier or its insurer to represent or defend Company or any of its affiliates, officers, directors, employees or agents shall follow the requirements set forth in Company’s Indemnity Counsel Guidelines. If Company determines that such legal counsel has not represented, defended or protected Company’s interests in accordance with the Indemnity Counsel Guidelines, or reasonably believes Supplier’s legal counsel is unwilling or unable to do so, Company may replace such counsel with other counsel of Company’s own choosing. In such event, any fees and expenses of Company’s new counsel, together with all expenses or costs incurred because of the change of counsel, shall be paid or reimbursed by Supplier as part of its indemnity obligation under this Agreement. Company shall at all times have the right to direct the defense of, and to accept or reject any offer to compromise or settle, any lawsuit, claim, demand or liability asserted against Company or any of its officers, directors, employees or agents, and Supplier will not settle or resolve any portion of any such claim or lawsuit without Company’s written approval, which Company will not unreasonably withhold. The duties and obligations of Supplier created here shall not be affected or limited in any way by Supplier’s fulfillment of its insurance requirements under this Agreement, or Company’s extension of express or implied warranties to its customers.

 

13. FORUM SELECTION; CHOICE OF LAW; STATUTE OF LIMITATIONS. This Agreement, any and all Orders, and any and all disputes arising under or relating to this Agreement, whether sounding in contract or tort, shall be governed by and construed in accordance with the laws of the State of Arkansas without regard to the internal law of Arkansas regarding conflicts of law. The federal and/or state courts of Benton and Washington County, Arkansas shall have exclusive venue and jurisdiction over any actions or suits relating to this Agreement, except where Company expressly agrees otherwise in writing, and except where Company brings any action or suit against Supplier under or with respect to Section 10 (Insurance Requirements) or Section 12 (Indemnification). The parties shall not raise, and expressly waive, any defenses based on venue, inconvenience of forum or lack of personal jurisdiction in any action or suit brought in accordance with the foregoing. Any legal action brought by Supplier against Company must be filed within two (2) years after the date payment on the Order was due or it shall be deemed forever waived. The parties acknowledge that they have read and understand this clause and agree willingly to its terms.

 

14. RECALLS; REPORTING OF DEFECTS; TESTING. If Merchandise is the subject of a Recall, Supplier shall be responsible for all matters and costs associated with the Recall, including but not limited to:

 

(a) Consumer notification and contact;

 

(b) All expenses and losses incurred by Company in connection with such Recall (and where applicable, any products with which the Recalled Merchandise has been packaged, consolidated or commingled), including but not limited to refunds to customers, lost profits, transportation costs, the cost to Company of its associates' time, systems expenses in processing any Recall, and all other costs associated therewith; and

 

(c) Initial and subsequent contact and reporting of the Recall to any government agency having jurisdiction over the affected Recalled Merchandise. Supplier shall promptly, and in no event later than twenty-four (24) hours after its decision to initiate a Recall or its receipt of a Recall notice from a government entity, inform Company of the Recall. Supplier shall promptly inform Company of its becoming aware of any defect in the Merchandise that could reasonably be expected to cause damage, illness, injury or death to humans, animals, or property, or the noncompliance of the Merchandise with any applicable safety or regulatory standard or Law, whether imposed by a government entity or by Company.

 

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Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

If a government agency initiates any inquiry or investigation relating to the Merchandise or similar or related goods of Supplier, Supplier shall notify Company immediately and take reasonable steps to resolve the matter without exposing Company to any liability or risk. After acceptance of delivery, Company may periodically conduct testing of Merchandise for compliance with Laws, and other standards and specifications, the costs of which shall be paid or reimbursed to Company by Supplier.

 

15. LIMITATION OF DAMAGES. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY PUNITIVE, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND (INCLUDING BUT NOT LIMITED TO LOST PROFITS, BUSINESS REVENUES, BUSINESS INTERRUPTION AND THE LIKE), ARISING FROM OR RELATING TO THE RELATIONSHIP BETWEEN SUPPLIER AND COMPANY, INCLUDING ALL PRIOR DEALINGS AND AGREEMENTS, OR THE CONDUCT OF BUSINESS UNDER OR BREACH OF THIS AGREEMENT OR ANY ORDER, CANCELLATION OF ANY ORDER OR ORDERS OR THE TERMINATION OF BUSINESS RELATIONS, REGARDLESS OF WHETHER THE CLAIM UNDER WHICH SUCH DAMAGES ARE SOUGHT IS BASED UPON BREACH OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE, TORT, STRICT LIABILITY, STATUTE, REGULATION OR ANY OTHER LEGAL THEORY OR LAW, EVEN IF COMPANY OR SUPPLIER HAS BEEN ADVISED BY THE OTHER PARTY OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THE FOREGOING SHALL NOT LIMIT THE SPECIFIC RIGHTS AND REMEDIES EXPRESSLY PROVIDED IN THIS AGREEMENT, INCLUDING SECTIONS 12 (INDEMNIFICATION) AND 14 (RECALLS),OR LIMIT LIABILITY FOR NEGLIGENT OR WILLFUL BREACH OF THE USER AGREEMENT.

 

16. REMEDIES. Supplier's breach of or failure to comply with any of the Terms and Conditions of this Agreement or any Order shall be grounds for Company to exercise any one or more of the following remedies:

 

(a) Cancellation of all or any part of any undelivered Order without notice, including but not limited to the balance of any remaining installments on a multiple-shipment Order;

 

(b) Rejection (or revocation of acceptance) of all or any part of any delivered shipment. Upon rejection or revocation of acceptance of any part of or all of a shipment, Company may return the Merchandise or hold it at Supplier's risk and expense. Payment of any invoice shall not limit Company’s right to reject or revoke acceptance. Company shall be under no duty to inspect the Merchandise, and notice to Supplier of rejection shall be deemed given within a reasonable time if given within a reasonable time after notice of defects or deficiencies has been given to Company by its customers. Unless Company otherwise agrees in writing, Supplier shall not have the right to make a conforming delivery within the contract time;

 

(c) Termination or suspension of all current and future business relationships;

 

(d) Recovery from Supplier of any damages or expenses sustained by Company as a result of Supplier's breach; and

 

(e) Buyer's remedies under the Uniform Commercial Code and such other remedies as are provided under applicable Law.

 

These remedies are not exclusive and are in addition to all other remedies available to Company at Law or in equity.

 

17. FORCE MAJEURE. If any place of business or other premises of Company or Supplier shall be affected by lockouts, strikes, riots, war, acts of terrorism, fire, civil insurrection, flood, earthquake, acts of God, or any other casualty beyond that party's control (but not including market fluctuations other than those caused by reason of the foregoing), which might reasonably tend to impede or delay the delivery, receipt, handling, inspection, processing, sale or marketing of the Merchandise covered by this Agreement, the party so impacted may, at its option, cancel all or any part of the undelivered Order hereunder by giving prompt written notice to the other party.

 

18. ASSIGNMENT. Except as specifically set forth in the https://gsm.wal-mart.com/GSM_Web/Supplier Policies and Requirements/#Payment Process Requirements regarding factoring, Supplier may not assign, delegate, or otherwise transfer to any entity any of its rights or obligations under this Agreement or under any Order (including any rights to any Company vendor number) without Company’s written consent. For purposes of and without limiting the foregoing, a Change of Control of Supplier will be deemed to constitute an assignment (or purported assignment) of this Agreement by Supplier. Any purported assignment in violation of this provision will be void.

 

19. INTELLECTUAL PROPERTY. Supplier shall not produce, distribute, sell or dispose of Merchandise, or apply for, assign, license, or abandon, any intellectual property right, that incorporates intellectual property that is owned by or licensed to Company, including Company’s name, logo, trademarks, trade secrets, service marks, patents, copyrights or trade dress, without the prior written approval of Company.

 

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Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

20. COMPLIANCE WITH STANDARDS FOR SUPPLIER. Supplier will comply with the requirements set forth in the Standards located at http://corporate.walmart.com/sourcing-standards-resources, and as may be amended from time to time by Company.

 

21. SEVERABILITY; WAIVER. No finding that a part of this Agreement is invalid or unenforceable shall affect the validity of any other part of the Agreement. A party's failure to enforce at any time any provision of this Agreement will not be construed as or constitute a continuing waiver of such provision. Any waiver of any of the Terms and Conditions of this Agreement or any Order must be in writing signed by an authorized representative of Company or Supplier.

 

22. NOTICES. Except as otherwise specifically provided in this Agreement, any notice or demand which under the terms of this Agreement or under any Law must or may be given or made shall be in writing and shall be given or made by overnight express service addressed as follows: if to Company: to the address as instructed by Walmart If to Supplier: to Supplier's address set forth in the General Supplier Information form that is part of the supplier registration process. Such notice or demand shall be deemed given on the second business day after deposit of such notice or demand with the overnight express service.

 

23. TERM; TERMINATION. This Agreement will commence on the Effective Date and continue in effect until terminated. This Agreement will not become effective as to Company until Company notifies you in writing that you have been approved as a supplier of Company. If Company has notified you in writing that you have been approved as a supplier for Company, then this Agreement will become effective as to both Company and Supplier on the date you click or clicked “I ACCEPT” and such action by you shall be execution of this Agreement by, and the same as, your physical signature on this Agreement. If Company does not approve you as a supplier of Company in writing after you have clicked “I ACCEPT”, then this Agreement will be considered null and void ab initio and will be of no force and effect. If Company has accepted Supplier as a supplier but Company has not yet issued an Order to Supplier, Company may terminate this Agreement immediately for any or no reason and without penalty by providing written notice to Supplier.

 

Either party may terminate this Agreement for any or no reason and without penalty on thirty (30) days’ notice. This Agreement will continue to apply to any Order dated before the termination of this Agreement, even if the Merchandise is delivered or accepted after termination of this Agreement.

 

24. NO THIRD PARTY BENEFICIARIES. Except as expressly provided in this Agreement, Company and Supplier intend the Terms and Conditions of this Agreement and any Order to solely benefit Company and Supplier. Company and Supplier do not otherwise intend to, and do not, confer third-party beneficiary rights on any other person or entity.

 

25. SURVIVAL OF PROVISIONS. Sections 6, 11-16, and 18-19, and any other provisions of this Agreement that by their nature are reasonably intended to survive termination, will survive the termination of this Agreement.

 

26. CHANGES TO TERMS; BUSINESS PROGRAMS AND PROCESSES. From time to time, Company may modify this Agreement, ands alter, amend, or create business programs, processes, directives and policies. When it does, Company will provide notice to Supplier of such changes via its Retail Link system, its corporate website (http://corporate.walmart.com/suppliers), and/or by such other means of direct notification to Supplier as Company may determine. After receiving such notice(s), Supplier's acceptance of Orders will serve as confirmation of its acceptance of Company’s modifications, and/or new or amended business programs, processes, directives and policies. If you do not agree to such changes after receiving notice of them, you will notify Company in writing and may not continue to offer to sell, sell, or make deliveries of Merchandise to Company or its customers.

 

27. NO BUSINESS EXPECTATION. Company has no obligation and makes no promises to purchase any minimum amount of Merchandise from Supplier. Projections, past purchasing history and representations about quantities to be purchased are not binding on Company, and Company shall not be liable for any act or expenditure (including but not limited to expenditures for equipment, labor, materials, packaging or capital expenditures) by Supplier in reliance on them.

 

28. INTEGRATED AGREEMENT. This Agreement (and all linked Supplier policies and requirements https://gsm.wal-mart.com/GSM_Web/Supplier Policies and Requirements, each as may be amended from time to time), the Standards (as may be amended from time to time), any Order, and the User Agreement constitute the full understanding of the parties, a complete allocation of risks between them and a complete and exclusive statement of the terms and conditions of their agreement. All prior agreements, negotiations, dealings and understandings, whether written (including any electronic record) or oral, regarding the subject matter hereof, are superseded by this Agreement. Any changes to this Agreement shall be in writing and executed by both parties. If there is a conflict of terms between this Agreement, an Order, the Standards, the User Agreement, business terms, business programs, processes, directives or policies incorporated into this Agreement, this Agreement shall be the controlling document.

 

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Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

Sam’s Club Supplier Agreement Appendix

 

This Appendix constitutes and is part and incorporated into the Supplier Agreement. The terms of the Supplier Agreement are binding and enforceable as to this Appendix.

 

1. STANDARD PURCHASE ORDER ALLOWANCE

 

These allowances apply to each Order issued, unless otherwise agreed to by the parties.

 

Purchase Order Allowance   %     Payment Method   Payment Frequency
SW - Swell Allowance
(SW or DM)
    1.0     Off Invoice   Each Invoice

  

2. PAYMENT TERMS

 

2.0% Cash Discount
30 Cash Discount Days Available
45 Net Payment Days Available

 

3. SHIPPING TERMS

 

Prepaid - F.O.B. Supplier

 

No minimum purchase is required for prepaid freight terms. No freight charges are to be added to invoices. Refer to the current Routing Instructions for detailed instructions.

 

4. CONDITION OF SALE

 

Condition of Sale   Definition
N/A   N/A

 

5. PRODUCT CHEMICAL INFORMATION

 

Does Supplier currently sell, or anticipate selling, to Company under this Agreement any item of Merchandise that contains a powder, gel, paste, or liquid that is not intended for human consumption or any of the following products that are intended for human inhalation, consumption, or absorption: Lozenges, pills or capsules (e.g. pain relievers, vitamins); Medicated swabs, wipes and bandages; Patches (heated and/or medicated); Energy bars, diet supplements and vitamin drinks; Liquids (e.g. cough medicine, eye drops, ear drops, nasal spray and inhalers); Medicated shampoos, gums, ointments and creams; Lip balm, lip creams and petroleum jelly; Contraceptive foam, films, and spermicides; and Product/Equipment sold with chemicals (e.g. vaporizer sold with medication), and electronic cigarettes?

 

YES             ✔ NO

 

6. RETURN POLICY

 

Company may return to Supplier, at Supplier’s expense, Merchandise that is: (i) defective or nonconforming; (ii) returned to Company by customer (either instore or online); (iii) subject to Conditions of a Guaranteed Sale or Overstock/Stock Balancing; or (iv) subject to a Recall or product withdrawal under Section 14 of the Supplier Agreement (in any case “Returned Merchandise”). Returned Merchandise will remain returnable for sixty (60) days after Company and Supplier mutually agree to shutoff returns. Company will manage Returned Merchandise as follows: Supplier will be charged the greater of the landed price of the Merchandise or the current Merchandise cost plus a 10% handling charge for all Returned Merchandise. Returned Merchandise will be shipped with return freight charges billed back to Supplier. Returns are F.O.B Company’s dock.

 

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Supplier Number: 607499 Agreement Number: 607499-64-2 Effective Date: 02/03/2020

 

Swell Allowance

Supplier will allow the Member Satisfaction Merchandise Allowance stated in this Agreement. The percentage must be adequate to cover all costs associated with Returned Merchandise, including but not limited to defective/returned merchandise and handling costs, or additional claims will be filed by the Company at its fiscal year end.

 

NOTWITHSTANDING THE FOREGOING (AND UNDER ANY OPTION), SUPPLIER AUTHORIZES COMPANY TO PROCESS AND MANAGE RETURNED MERCHANDISE AS COMPANY CHOOSES IN ITS DISCRETION (BUT WITHOUT AFFECTING RESPONSIBILITY FOR RETURN COSTS), IF COMPANY DETERMINES, FOR WHATEVER REASON (INCLUDING THE CONDITION OF THE MERCHANDISE AND ITS PACKAGING), THAT THE OPTION SELECTED BY SUPPLIER IS UNSUITABLE. IN ADDITION, COMPANY IS NOT REQUIRED TO RETURN EMPTY OR DAMAGED PACKAGING TO SUPPLIER (OR RETURN CENTER) TO SUPPORT A CLAIM FOR RETURNED MERCHANDISE.

 

7. Distribution Method

 

DC (Warehouse) ASN - No DSDC - No

 

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MASTER VENDOR AGREEMENT

 

This Master Vendor Agreement (“Agreement”) is entered into this 31 day of July, 2018, by and between TRADER JOE’S COMPANY and its subsidiaries (including Trader Joe’s East Inc.). (hereinafter collectively referred to as “TJ’s”) and Stonegate Foods, a CALIFORNIA (“VENDOR”).

 

SCOPE OF AGREEMENT

 

A. TJ’s and VENDOR desire to enter into (or continue) a business relationship with each other whereby TJ’s may from time to time issue purchase orders to VENDOR for certain products.

 

B. TJ’s and VENDOR desire to set forth herein the terms and conditions that will govern their business relationship.

 

C. TJ’s and VENDOR acknowledge that this Agreement contains the entire agreement and understanding between the Parties concerning the business relationship between TJ’s and VENDOR, and any and all prior oral or written agreements or understandings between the Parties related hereto are superseded. No representations, oral or otherwise, express or implied, other than those specifically referred to in this Agreement, have been made by any party hereto, except that any prior Vendor Representation Agreement regarding VENDOR’s indemnity obligations to TJ’s for the use of third-party brokers or intermediaries is incorporated into this Agreement by reference, but in the event of a conflict between the two agreements, the provisions of this Agreement control.

 

D. TJ’s and VENDOR understand that this Agreement preempts the existence of and/or overrides any previous agreements, whether express or implied, or whether oral or in writing, between TJ’s and VENDOR concerning TJ’s obligation and/or commitment to purchase goods from VENDOR.

 

TERMS AND CONDITIONS

 

1. Purchase Orders: It is understood and agreed that, by entering into a business relationship with VENDOR, TJ’s may from time to time issue, but has not committed to issue, purchase orders to VENDOR. The parties to this Agreement understand that this Agreement and business relationship may never result in TJ’s issuing any purchase orders to VENDOR and that by entering into this Agreement neither party has undertaken any obligations to the other except as expressly provided herein. VENDOR is not entering into this Agreement in reliance on the issuance of any future purchase orders by TJ’s to VENDOR.

 

  (a) This Agreement shall be incorporated by reference and made a part of any purchase order hereinafter issued by TJ’s to VENDOR.

 

  (b) Each of the terms and conditions set forth in this Agreement will apply to each purchase order unless otherwise specified by TJ’s in writing.

 

  (c) The purchase order shall set forth the description and quantity of goods, price, arrival date or schedule, payment terms, pack/size, net weight per unit, type of packaging, point of delivery, and other terms.

 

 

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  (d) TJ’s is under no obligation to purchase goods from VENDOR regardless of whether VENDOR is willing or able to supply TJ’s. And VENDOR may not produce or procure any goods for TJ’s in the absence of a purchase order for said goods.

 

In those special circumstances (usually related to seasonal goods) where TJ’s and VENDOR agree to purchase and supply a certain volume of goods, such commitment and obligation must be documented in writing prior to the issuance of the initial purchase order, in the form set forth in Exhibit A, which is attached hereto and incorporated by reference.

 

Absent such prior written approval from TJ’s, TJ’s will not be obligated to purchase nor will VENDOR be obligated to supply goods other than described in individual purchase orders.

 

  (e) No contract shall exist with respect to an individual purchase order unless and until it has been accepted by VENDOR as provided herein. VENDOR may accept a purchase order by signing and returning it to TJ’s or by the shipment of goods in accordance with the terms set forth in the purchase order. TJ’s reserves the right to demand a written acceptance of a purchase order at any time prior to shipment.

 

2. VENDOR’s Representations and Warranties: The following representations and warranties shall apply to each and every purchase order issued by TJ’s to VENDOR:

 

  (a) VENDOR represents and warrants that any goods sold to TJ’s shall be of merchantable quality; shall be consistent with any samples submitted to and accepted by TJ’s; and shall be of uniform kind, quality, quantity, and net weight within each unit and among all units sold pursuant to said purchase order.

 

  (b) VENDOR represents and warrants that all goods will be delivered with a reasonable shelf life remaining agreed upon in advance by TJ’s and VENDOR based on the type and nature of the product and will have legibly printed on all packages coding information according to a coding method agreed upon in advance by VENDOR and TJ’s.

 

  (c) VENDOR represents and warrants that any foods sold by VENDOR to TJ’s do not in fact contain human public health pathogens or adulterants that are regulated as zero tolerance for their presence, are not at reasonable risk of containing such pathogens or adulterants, and are not manufactured, packaged, or otherwise produced at facilities contaminated with such pathogens or at reasonable risk of being contaminated with such pathogens.

 

  (d) VENDOR represents and warrants that VENDOR has absolute and good title to and full right to dispose of any goods sold to TJ’s and that said goods shall be, at the time of delivery to TJ’s, free of all security interests, liens, or other encumbrances.

 

  (e) VENDOR represents and warrants that the goods sold to TJ’s and any product information provided by VENDOR to TJ’s do not infringe upon or violate any patent, copyright, trademark, trade name, or, without limitation, any other rights belonging to others.

 

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  (f) VENDOR understands that it must timely provide all product information requested by TJ’s. VENDOR represents and warrants the accuracy of all information it enters into TJ’s GORP system including but not limited to product information such as product name and description; nutritional information; ingredient lists; Kosher certifications; and claims that the products are “organic,” “non-GMO”, “natural,” “fat-free,” or contain “no preservatives” or “no artificial flavorings or colorings,” etc. To the extent that VENDOR provides information to TJ’s outside of GORP, VENDOR hereby represents and warrants the accuracy of all product information supplied by VENDOR to TJ’s regarding the goods. VENDOR further represents and warrants the accuracy of all nutritional claims and information, nutrient content claims, health claims, descriptive claims, and/or any other claims that appear on the labels and/or packaging of VENDOR’s goods, whether private-label or otherwise, regardless of whether such claims are made at the request and/or direction of VENDOR. VENDOR understands that it has a continuing obligation to assure the accuracy of all information it enters or has entered into TJ’s GORP system, and that it will immediately notify TJ’s if any such information is not completely accurate. VENDOR further understands that it has a continuing obligation to review the labeling and/or packaging of VENDOR’s goods, whether private label or otherwise, and to inform TJ’s immediately if VENDOR believes that the labeling and/or packaging related to any goods supplied to TJ’s by VENDOR is inaccurate or unlawful in any way.

 

  (g) VENDOR understands that it is VENDOR’s sole responsibility to provide TJ’s or its designated payment processing partners (including but not limited to Western Union) with accurate payment information and represents and warrants the accuracy of any and all such payment information.

 

  (h) VENDOR represents and warrants that no contractual or business relationship exists that prevents VENDOR from selling directly to TJ’s. As such, TJ’s may purchase directly from VENDOR, and VENDOR may sell directly to Trader Joe’s without the use or involvement of any broker or intermediary. VENDOR understands that the indemnification obligations set forth in Section 13 of this Agreement include the obligation, to the fullest extent permitted by law, to indemnify, defend and hold Trader Joe’s harmless from any and all claims brought by any party asserting that TJ’s purchase of goods from VENDOR constitutes wrongful and/or unlawful conduct, including but not limited to interference with contract or interference with prospective economic relations of any sort.

 

  (i) VENDOR represents and warrants that it shall comply with all applicable anti-bribery and anti-corruption laws, including the US Foreign Corrupt Practices Act (“FCPA”). VENDOR shall not make, directly or indirectly, in connection with this Agreement, a payment or gift of, or an offer, promise, or authorization to give money or anything of value to any Government Official or any other person or entity for the purpose of influencing any act or decision on such Government Official or such person or entity in his or her official capacity or for the purpose of inducing such Government Official or such person or entity to use his or her influence or position with any Government Entity to influence any act or decision in order to obtain or retain business for, direct business to, or secure an improper advantage for TJ’s or third-party intermediary.

 

  (i) “Government Official” means (i) any officer, employee, or representative (including anyone elected, nominated, or appointed to be an officer, employee, or representative) of any Government Entity, or anyone otherwise acting in an official capacity on behalf of a Government Entity; (ii) any political party, political party official, or political party employee; (iii) any candidate for public office; (iv) any royal or ruling family member; or (v) any agent or representative of any of those persons listed in subcategories (i) through (v).

 

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  (ii) “Government Entity” means (i) any national, state, regional, or local government, and any government agency or department, or political party; (ii) any entity or business that is owned or controlled by any of those bodies listed in subcategory (i); or (iii) any international organization such as the United Nations or the World Bank.

 

  (j) VENDOR represents and warrants that the goods sold to TJ’s were produced, harvested, manufactured, processed, packaged, labeled, transported, delivered, and sold in compliance with all applicable federal, state, and local laws and regulations of the United States of America and all of its subdivisions and, if applicable, the laws of any other country, state, or international governing body. See Exhibit B for specific requirements related to Proposition 65 and Exhibit C for specific information related to the toxics in packaging laws.

 

  (k) VENDOR represents and warrants that the resale of any of the goods by TJ’s would not be in violation of any federal, state, or local law or regulation of the United States of America or any of its subdivisions, or the laws of any other country, state, or international governing body, including but not limited to all Weights and Measures regulations applicable to the goods. Said products shall fully comply at the time of purchase and/or through the date listed as the “expiration” or “sell by” date.

 

  (l) VENDOR represents and warrants that the goods sold to TJ’s were not produced, harvested, manufactured, processed, packaged, labeled, transported, or delivered using forced or prison labor or forced or illegal child labor.

 

  (m) VENDOR represents and warrants that none of the goods sold to TJ’s are diverted, freight salvaged, distressed, or subject to any resale limitations, without TJ’s prior knowledge and written consent.

 

  (n) VENDOR represents and warrants that it will comply with all requirements of TJ’s GORP system.

 

  (o) VENDOR understands that it is VENDOR’s responsibility to pay any container and/or bottle fees applicable to goods supplied to TJ’s by VENDOR and otherwise comply with any federal, state, or local law or regulation of the United States of America regarding container and/or bottle deposits.

 

3. Inspection Report and Product Recall Notification: VENDOR has the obligation to notify TJ’s within 24 hours of the issuance of any violation report following an inspection by any federal, state, or local inspector of any facility in which goods sold at TJ’s are manufactured, processed, produced, packaged, labeled, stored, grown, or harvested. VENDOR also has the obligation to notify TJ’s as specified in TJ’s Product Recall Protocol (Exhibit D). In the event of any and all product recalls that are either (i) agreed upon between VENDOR and TJ’s, or (ii) that are required (either by law or in the commercially reasonable judgment of TJ’s) because TJ’s has reason to believe the products are: defective; dangerous; incomplete; mislabeled; infringe upon intellectual property rights; produced in a facility that, in Trader Joe’s commercially reasonable judgment, poses unacceptable risks of product contamination by human public health pathogens; or are not in compliance with applicable laws or regulations, the products will be returned to VENDOR or destroyed at VENDOR’s expense. This expense includes any administrative costs, handling costs, warehousing and/or storage costs, actual shipping and/or freight costs, disposal costs, or customer refunds arising out of the recall.

 

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4. Packing Requirements: TJ’s will not accept any goods which do not conform with the following packing requirements:

 

  (a) All goods must be adequately contained, packaged, and labeled so as to satisfy all legal and commercial requirements for such goods.

 

  (b) All goods must be packed according to the pack/size, net weight per unit, and type of packaging set forth in the purchase order. Any changes must be approved by TJ’s in writing prior to shipment by VENDOR.

 

  (c) Subject to Section 4(a) of this Agreement, VENDOR agrees to print the following information on one side of each case in characters that are prominent, conspicuous, and easy to read and that are at least 1 inch tall: SKU number, product description, expiration date, pack/size, and production lot number/pack date. If VENDOR fails to print this information on the cases, VENDOR, at TJ’s sole discretion, may be charged for the cost of labeling.

 

  (d) All code, expiration, and pack dates 1) on the outside of shipping cases, shipping cartons or 2) on the packaging of any products supplied to TJ’s by VENDOR, should be in month/day/year format. Each individual package must bear coding information according to a coding method agreed upon in advance by VENDOR and TJ’s. VENDOR should ship no more than one date code per pallet, but if more than one code is included, the oldest code must be on the top of the pallet and tags must be placed on all four sides of the pallet indicating that it contains multiple date codes.

 

5. Bar Code Labeling of Packages: Each package must be labeled with a bar code meeting the following requirements:

 

  (a) All private-label goods (i.e., goods to be resold under TJ’s trade name) shall be labeled with an EAN-8 code, which shall be assigned by TJ’s to a product upon request by VENDOR.

 

  (b) All branded products shall be labeled with a UPC Consumer Package Code conforming to and in accordance with the guidelines and specifications of the Uniform Code Council. VENDOR shall be responsible for informing TJ’s buyer of the UPC code for a new product prior to issuance of the initial purchase order for that product and for providing TJ’s buyer with at least 30 days’ advance written notice of any changes in the UPC code for any existing products.

 

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  (c) Unless the labels were printed by TJ’s, VENDOR shall be responsible for the readability of bar codes and for ensuring that the bar codes have an ANSI Symbol Grade of “C” or better per ANSI X3.182 – 1990 Bar Code Print Quality Guideline.

 

  (d) If the bar code for any product is not readable (unless the labels were printed by TJ’s) or if VENDOR failed to provide accurate or updated information concerning that product’s bar code, TJ’s, at its sole discretion, may charge VENDOR for any resulting costs and damages (including, but not limited, to the cost of recalling product from the stores and the cost of relabeling) or may reject the goods and return them to VENDOR for a full credit of the purchase price and all costs incurred in returning the goods to VENDOR.

 

6. Shipping and Warehouse Requirements: VENDOR agrees to comply with the Shipping and Warehouse Requirements set forth in Exhibit E, which is attached hereto and incorporated herein by reference. If TJ’s issues shipping and warehouse requirements via the GORP system, the requirements stated in GORP shall supersede and replace Exhibit E to the extent they impose any new or greater requirements on VENDOR.

 

7. Time of Delivery: VENDOR agrees to deliver the goods by the arrival date or according to the schedule specified in the purchase order. Time is of the essence of this contract and each purchase order issued by TJ’s to VENDOR. Should VENDOR fail to deliver the goods by the arrival date or according to the schedule specified in the purchase order, TJ’s may, at its sole option and without limitations, cancel said purchase order or any undelivered portion of said order and hold VENDOR liable for any damages sustained by TJ’s as a result of said late delivery.

 

8. Inspection and Acceptance of Goods: TJ’s has the right to inspect the goods within a reasonable time after their arrival at TJ’s warehouse before accepting or rejecting the goods. TJ’s will notify VENDOR of any apparent nonconformity, breach, or rejection of the goods within the time frame required by the Perishable Agricultural Commodities Act (“PACA”), at the time the goods are delivered to TJ’s, to the extent PACA is applicable to these terms and remains in effect (for produce) or within 7 days of said inspection (for all other goods). TJ’s reserves the right to reject goods and return them to VENDOR at any time should it discover any latent nonconformity or defect in quality.

 

  (a) If TJ’s rejects the goods or a portion of the goods, VENDOR will be responsible for all warehouse handling charges, duties, freight, labels, and other costs associated with the rejected goods. TJ’s will not be required to accept any substitute performance or to allow VENDOR to cure the original tender.

 

  (b) TJ’s reserves the right to return to VENDOR any goods that are in violation of any of the terms, conditions, warranties, or requirements of this Agreement or any purchase order issued by TJ’s to VENDOR.

 

  (c) Any private-label goods that TJ’s rejects must not be sold, donated, given, or otherwise transferred by VENDOR to any third party or to be salvaged. VENDOR must provide a Certificate of Destruction from an authorized production destruction site confirming that any rejected private-label goods have been destroyed.

 

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9. Waiver of Consequential Damages: In the event of breach or cancellation of the purchase order by TJ’s, TJ’s liability, if any, shall be limited to the purchase price of the goods actually shipped by VENDOR to TJ’s prior to notice of the facts giving rise to said breach or cancellation. Under no circumstance will TJ’s assume liability to VENDOR for incidental or consequential damages of any kind (including, but not limited to, lost profits, loss of business reputation, loss of capital investments, and/or employee severance payments).

 

10. Payment Terms and Invoice Requirements: For produce, the payment terms specified in the purchase order shall be 10 days after acceptance of the goods and shall commence upon receipt by TJ’s of VENDOR’s invoice, documentary proof of delivery of the goods, and, if applicable, a credit memo acknowledging any costs or damages chargeable to VENDOR. For all other goods, the payment terms specified in the purchase order shall commence upon receipt by TJ’s of VENDOR’s invoice, documentary proof of delivery of the goods, and, if applicable, a credit memo acknowledging any costs or damages chargeable to VENDOR. VENDOR agrees that, should TJ’s be unable to meet the payment terms specified in this Section 10 owing to delayed receipt of VENDOR’s invoice, documentary proof of delivery of the goods, or, if applicable, a credit memo acknowledging any costs or damages chargeable to VENDOR, VENDOR will not hold TJ’s liable for default and will extend the payment terms specified in this Section 10 on terms mutually agreeable to VENDOR and TJ’s. See Exhibit F for specific requirements related to invoicing.

 

11. Coupons/Promotions: Unless otherwise agreed between VENDOR and TJ’s, TJ’s will not accept any products which are subject to any coupons or other promotional programs or redeem any such coupons or promotions at any point of sale.

 

12. Insurance Requirements: VENDOR will, at VENDOR’s sole expense, maintain insurance coverage at all times while providing products to TJ’s. As such, within five (5) days of execution of this Agreement, VENDOR must submit to TJ’s a current certificate of insurance (“Certificate”) issued by VENDOR’s insurance company or broker that meets the minimum requirements set forth in Exhibit G.

 

13. Indemnification and Resolution of Claims:

 

  (a) VENDOR shall, to the fullest extent permitted by law, indemnify, defend, and hold TJ’s (and its officers, directors, shareholders, employees, agents, or insurers) harmless from and against any and all claims, actions, liabilities, damages, costs, expenses, penalties, fines and losses of any kind brought by a third party (including but not limited to private parties and government agencies) against TJ’s (and its officers, directors, shareholders, employees, agents, or insurers) arising out of or related to (a) the sale of goods by VENDOR to TJ’s; (b) the involvement of an agent, broker, distributor, or sales representative in any such sale or any existing or prior relationship between VENDOR and an agent, broker, distributor, or sales representative; (c) the marketing, advertising, or resale of those goods by TJ’s; (d) the purchase, consumption or use of those goods by any person; or (e) the breach or alleged breach of any of the representations and warranties made herein by VENDOR. This indemnity obligation shall apply even if the claim is groundless, false, or fraudulent, shall apply regardless of whether it is covered by either TJ’s or VENDOR’s insurance, and shall apply to any acts or omissions, willful misconduct, or negligent conduct, whether active or passive, and to any suit or action founded upon such claims.

 

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  (b) Unless otherwise agreed in writing by TJ’s and VENDOR, in connection with any indemnity or obligations set forth in this Section 13, TJ’s will be entitled to use legal counsel of its choice, and VENDOR agrees to reimburse TJ’s for all attorneys’ fees, costs and expenses incurred by such counsel.

 

  (c) If TJ’s is obligated to respond to a third-party subpoena or other compulsory legal order regarding products supplied to TJ’s by VENDOR or TJ’s business relationship with VENDOR, VENDOR agrees to reimburse TJ’s for all attorneys’ fees, costs and expenses incurred by TJ’s responding to and/or resolving the subpoena or order.

 

14. No Assignment or Delegation of Duties: VENDOR shall not delegate or assign any obligation owed to it by TJ’s (including, but not limited to, the factoring of an account receivable) or the performance of any obligation due from it to TJ’s, without the written consent of TJ’s.

 

15. Publicity: VENDOR shall not publicize its business relationship with TJ’s in any manner (including, but not limited to, verbal or written disclosure to any third party or the public display of TJ’s private-label merchandise at trade shows or in advertisements) without TJ’s prior written consent unless such publicity is necessary in the performance of VENDOR’s obligations under this Agreement or any purchase order which incorporates this Agreement.

 

16. Proprietary Information: Unless otherwise agreed to in writing by TJ’s, TJ’s is entitled to exclusivity on the formulation of all private-label merchandise. During the course of this business relationship, TJ’s may disclose to VENDOR certain information that, if disclosed, would allow a competitor to create a substantially similar product [including recipes, formulae, production specifications, processing procedures, packaging, production quantities, pricing, marketing strategies, market research, sales results, supply sources, “trade secrets” as defined in the Uniform Trade Secrets Act, all information concerning any products developed specifically for or at the request or suggestion of TJ’s (other than a minor reformulation or modification of an existing product of VENDOR), and other commercial information] (hereinafter referred to as “Proprietary Information”). TJ’s requires such information to be kept and VENDOR agrees to keep in strictest confidence.

 

  (a) All Proprietary Information disclosed, either orally or in writing, by TJ’s to VENDOR (including VENDOR’s employees, agents, and representatives) shall be kept strictly confidential and shall not be disclosed to any other party for any reason, either during or after termination of our business relationship, until such time as said information is made known to the public by TJ’s or TJ’s gives its prior written consent to the disclosure.

 

  (b) VENDOR shall make no use, nor authorize any use, of any Proprietary Information for any purpose unrelated to this Agreement or any purchase orders issued pursuant to this Agreement, whether for VENDOR’s own benefit or the benefit of others, including the sale to third parties of any products developed specifically for or at the request or suggestion of, TJ’s (other than a minor reformulation or modification of an existing product of VENDOR). In other words, VENDOR cannot take any information related to products developed specifically for TJ’s and use that information to make substantially similar products to sell to any third party; nor may VENDOR sell products developed specifically for TJ’s to any third party.

 

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  (c) VENDOR will take appropriate measures to restrict the dissemination of Proprietary Information on a “need to know” basis and will ensure that its employees, agents, and representatives are aware of and agree to be bound by the terms of this Agreement. To the extent VENDOR maintains any proprietary or TJ’s information, VENDOR shall comply with the Information Security Guidelines in Exhibit H. Without limiting any of TJ’s rights or remedies hereunder and notwithstanding anything to the contrary in this Agreement, TJ’s may immediately terminate this Agreement upon written notice if VENDOR breaches its confidentiality obligations with respect to Proprietary Information hereunder or fails to comply with the Information Security Guidelines. VENDOR shall, to the fullest extent permitted by law, indemnify, defend, and hold TJ’s (and its officers, directors, shareholders, employees, agents, or insurers) harmless from and against any and all claims, actions, liabilities, damages, costs, expenses, penalties, fines and losses of any kind arising out of or related to VENDOR’s breach of its confidentiality obligations with respect to Proprietary Information hereunder or its failure to comply with the Information Security Guidelines.

 

  (d) Upon termination of the business relationship between TJ’s and VENDOR, VENDOR will not pack any products using labels or other packaging developed by or for TJ’s and shall, at TJ’s direction, immediately destroy or return all such materials and all written Proprietary Information to TJ’s. VENDOR further agrees that it will not copy TJ’s trade dress or copyrights in its labels and other packaging.

 

  (e) Any use or disclosure of Proprietary Information in violation of this Agreement shall entitle TJ’s to injunctive relief restraining such unauthorized use or disclosure without the requirement to post a bond, together with damages, costs, and attorney’s fees.

 

17. Private-Label Products: The following terms and conditions shall apply to any private-label goods (i.e., goods to be resold under TJ’s trade name) sold by VENDOR to TJ’s:

 

  (a) VENDOR will not make any changes in the recipe for said goods (including, but not limited to, adding, deleting, or changing any of the ingredients, changing upstream ingredient suppliers and/or manufacturers, or changing the cooking times or methods) without the prior written approval of TJ’s.

 

  (b) VENDOR agrees that TJ’s owns the copyright, trademark, and trade dress on all labels (including the copy, artwork, and product name) bearing the TJ’s trade name (regardless of whether the copy, artwork, or product name was developed by or for TJ’s or was supplied or suggested to TJ’s by VENDOR). VENDOR shall require any printer of labels or packaging for private-label goods to make no modifications to the approved label provided by VENDOR without prior written approval from TJ’s.

 

  (c) VENDOR will not allow any products bearing labels or other packaging developed by or for TJ’s to be sold, donated, given, or otherwise transferred by VENDOR to any third party or to be salvaged, including but not limited to, goods that are rejected by TJ’s pursuant to Section 8 of this Agreement. VENDOR further agrees that it will not copy TJ’s copyrights, trademarks, or trade dress in its labels and other packaging.

 

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  (d) VENDOR agrees to fully comply with all TJ’s Minimum Vendor Requirements as documented and available for download in myLibrary in the GORP system except for where an approved and signed variance request is on file and maintained by VENDOR. VENDOR also agrees to submit all required food safety & quality programs as requested in the vendor set-up and QA Approval scorecards in GORP and meet all finished product testing requirements as applicable to the product category.

 

  (e) VENDOR understands and agrees that, prior to the issuance of any purchase orders for a product, VENDOR must provide to TJ’s Quality Assurance Department the product information requested by TJ’s either via GORP or (if directed by TJ’s) TJ’s Product Specification Information form.

 

  (f) If TJ’s discontinues a private-label product through no fault of VENDOR’s, TJ’s will not be liable for any packaging (including but not limited to labels, containers, bags, and wrappers) costs except as provided in a Packaging Commitments/Reorder Agreement between VENDOR and TJ’s for said product. Any Packaging Commitments/Reorder Agreement between VENDOR and TJ’s shall be documented in writing, in the form set forth in Exhibit I, which is attached hereto and incorporated by reference.

 

18. Audits and Site Visits: VENDOR agrees that TJ’s has the absolute right to audit, visit, or tour any facilities used for the production or storage of goods sold to TJ’s. VENDOR agrees that it shall pay all costs for any such audit conducted by TJ’s designated third-party auditor and that TJ’s may deduct from any outstanding invoices with VENDOR the amounts due for such audit if VENDOR does not timely comply with this obligation.

 

19. Additional Terms for Brokers, Distributors, or Sales Representatives:

 

  (a) If VENDOR is a broker, distributor, or sales representative, the following additional terms shall apply:

 

  (i) VENDOR agrees, upon request by TJ’s, to disclose to TJ’s VENDOR’s costs of goods from the manufacturer and any other costs incurred in connection with the goods and the VENDOR’s markup on said costs. Within 14 days of written request by TJ’s, VENDOR shall furnish TJ’s with documentation of said costs and markups.

 

  (ii) VENDOR agrees, upon request by TJ’s, to disclose to TJ’s any contractual or other business relationship between VENDOR and the manufacturer or supplier of the goods. Within 14 days of written request by TJ’s, VENDOR shall furnish TJ’s with copies of all contracts or other documents establishing said relationship.

 

  (iii) VENDOR agrees that TJ’s has the absolute right to audit, visit, or tour the facilities of any manufacturer or producer of the goods sold to TJ’s.

 

  (b) If VENDOR is represented by or acting through a broker, distributor, or sales representative, the following additional terms shall apply:

 

  (i) VENDOR agrees that TJ’s may communicate with VENDOR either directly or through VENDOR’s authorized agent, broker, distributor, or sales representative (“AGENT”).

 

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  (ii) VENDOR represents and warrants that any audit, visit, or tour by TJ’s of the facilities where the goods are produced does not violate any contractual or other business relationship between VENDOR and AGENT.

 

  (iii) VENDOR represents and warrants that direct communication between TJ’s and VENDOR does not violate any contractual or other business relationship between VENDOR and AGENT.

 

  (iv) VENDOR represents and warrants that it will not sell any goods to TJ’s in violation of any contractual or other business relationship between VENDOR and AGENT.

 

  (v) VENDOR represents and warrants that VENDOR unambiguously understands that AGENT is not an agent or representative of TJ’s and that AGENT has no authority, express or implied, to legally obligate or otherwise bind TJ’s.

 

  (vi) Upon request by TJ’s, VENDOR agrees to disclose to TJ’s any contractual or other business relationship between VENDOR and AGENT that would govern the sale of goods to TJ’s. VENDOR will furnish TJ’s with copies of all contracts or other documents establishing such a relationship within 14 days of TJ’s request.

 

20. Mailing Address: All purchase orders, invoices, notices, and other documents should be sent to the parties at the following addresses unless the party is notified in writing by the other party to send any documents to a different address:

 

  Trader Joe’s Company  
  800 South Shamrock Avenue  
  Monrovia, California 91016-6346  
     
  VENDOR:  
  Stonegate Foods  
  6305 Alondra Blvd,  
  Paramount, CA 90723,  

 

21. Additional Vendor Documents and/or Information: In addition to any documents specified above, VENDOR agrees to submit the following documents and/or information to TJ’s within five (5) days of execution of this Agreement:

 

  (a) A copy of VENDOR’s Federal Inspection Certificate, its Processed Food Registration Certificate issued by the State of California, or any similar certificate issued by any other state (or VENDOR may provide the name of the government agency and its registration number in a letter);

 

  (b) If VENDOR’s principal place of business is not located within the United States:

 

  (i) Documents sufficient to show that VENDOR is duly licensed to operate in its country of residence and has complied with any local registration requirements.

 

  (ii) Any completed US withholding certificates (W-8 series of forms) necessary to claim an exemption from or reduction in withholding.

 

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  (c) If VENDOR’s principal place of business is located within the United States, a completed IRS Form W-9, Request For Taxpayer Identification Number and Certification.

 

  (d) Proof of compliance with the food facility registration requirements of the Public Health Security and Bioterrorism Act of 2002 and Food Safety Modernization Act, including any certificates of registration and/or registration numbers.

 

22. Additional Requirements for Vendors of Dietary Supplements: If VENDOR is a supplier of products subject to the Dietary Supplement & Nonprescription Drug Consumer Protection Act (the “FDCA”), VENDOR acknowledges and agrees that TJ’s is assigning the reporting requirement of the FDCA to VENDOR, as set forth in Exhibit J, which is attached hereto and incorporated herein by reference.

 

23. Additional Requirements for Vendors of Produce: If VENDOR is a supplier of produce, VENDOR acknowledges and agrees that it will provide only non-GMO and non-irradiated produce to TJ’s, regardless of whether the produce is branded label or private label. In addition, any produce item that is listed as a “Genetically Engineered Suspect Ingredient” on El’s Acceptable Ingredient List for Food and Dietary Supplements must include a non-GMO affidavit documenting from seed source to harvest: corn, papaya, radicchio, tomatoes, and yellow squash.

 

24. Claims and Disputes: Any dispute, claim, or controversy arising out of or relating to this Agreement, the breach, termination, enforcement, interpretation or validity this Agreement, any purchase order issued by TJ’s to VENDOR, or any aspect of the business relationship between VENDOR and TJ’S, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in Los Angeles, CA, before one arbitrator. Unless otherwise agreed by TJ’s and VENDOR, the arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. Judgment on the award may be entered in any court having jurisdiction. This clause shall not preclude parties from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction. Notwithstanding Section 25(b) of this Agreement, this Section shall be governed by, construed in accordance with, and enforced under the terms of Federal Arbitration Act, and no ruling and/or decision of a California court or provision of California law, including, but not limited to, Section 1281.2 of the California Code of Civil Procedure, shall be construed to apply to the enforcement of this Section or construed to govern the scope of discovery available to the parties or any other aspect of the arbitration’s procedure. Any dispute, claim, or controversy arising out of or relating to this Agreement, the breach, termination, enforcement, interpretation or validity this Agreement, any purchase order issued by TJ’s to VENDOR, or any aspect of the business relationship between VENDOR and TJ’S, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration regardless of whether a party to the arbitration is also a party to litigation in a pending court action or special proceeding with a third party and/or third parties arising out of the same transaction or series of related transactions.

 

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  (a) Except that Section 25(a) of this Agreement shall be governed by, construed in accordance with, and enforced under terms of the Federal Arbitration Act, this Agreement and any purchase order issued which incorporates this Agreement shall be governed by and construed in accordance with the laws of the State of California, excluding any laws regarding the conflict or choice of laws and the United Nations Convention on Contracts For the International Sale of Goods. Venue for any action or arbitration arising out of or relating to this Agreement or any purchase order issued which incorporates this Agreement, or the breach thereof, shall be in Los Angeles County, California, U.S.A. and the parties hereby consent to personal jurisdiction in said county.

 

  (b) The prevailing party in any action, arbitration, or other proceeding by which one party to this Agreement seeks to enforce its rights under the Agreement or any purchase orders that incorporate this Agreement shall be entitled to recover its attorney’s fees and all costs, fees, and expenses incurred in connection with said action, arbitration, or proceeding.

 

25. Warranties: All warranties contained herein are continuing warranties and will be binding upon VENDOR with respect to all goods that VENDOR ships or delivers to TJ’s (including goods that are in transit).

 

26. Additional Terms and Conditions: If this paragraph is initialed by VENDOR and TJ’s, this Agreement is supplemented by the Additional Terms and Conditions contained in the attached Exhibit K._______ VENDOR _______ TJ’s.

 

27. Amendments: This Agreement can only be modified by a writing signed by duly authorized representatives of both TJ’s and VENDOR. The failure of either party to insist on strict performance of any provision of this Agreement, or to exercise any right or remedy, will not be deemed a waiver of such performance, right or remedy, of that or any other provision of this Agreement.

 

28. Validity: If any provision of this Agreement is held to be contrary to law, the remaining provisions of this Agreement shall remain in full force and effect.

 

29. Section Headings: The section headings set forth in this Agreement are for convenience only and shall not be construed as part of this Agreement. When the context requires, the plural shall include the singular and singular the plural.

 

30. Neutral Drafting: Any ambiguities in the Agreement are not to be construed against either party as this Agreement shall be deemed to be drafted neutrally.

 

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31. Counterparts: This Agreement may be executed in duplicate counterparts or by facsimile or PDF or similar electronic format, each of which shall be considered an original, and which together shall constitute one and the same instrument.

 

TRADER JOE’S COMPANY   VENDOR   Stonegate Foods
       
BY     BY /s/ Martha Martinez
    Martha Martinez Controller
(Print Name and Title)   (Print Name and Title)
    FED TIN: 54-2135710
         

 

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EXHIBIT A

VOLUME PURCHASE AGREEMENT

 

This Volume Purchase Agreement (“Agreement”) is entered into as of the effective date indicated below (“Effective Date”), by and between TRADER JOE’S COMPANY and its subsidiaries (including Trader Joe’s East, Inc.) (hereinafter collectively referred to as “TJ’s”) and Stonegate Foods (“VENDOR”).

 

This Agreement consists of this signature sheet and the Master Vendor Agreement (“MVA”) executed by TJ’s and Vendor. As provided in the MVA, TJ’s will not be liable for any costs (including, but not limited to, costs for finished goods and raw ingredients) for product inventory remaining in the event TJ’s discontinues the private-label product.

 

Product Name: __________________________________

 

UPC No.: __________________________________

 

VENDOR: __________________________________

 

Effective Date of

 

Volume Purchase Agreement: __________________________________

 

Term of Agreement and Delivery Terms: __________________________________

 

Price Term: __________________________________

 

Volume Commitment: __________________________________

 

(1) Volume based on average sales of _______________________ number of weeks prior to termination.

 

TJ’s will fulfill this Volume Purchase Agreement by issuing individual purchase orders in accordance with the terms set forth herein; VENDOR shall deliver the goods in compliance with those purchase orders.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers or representatives as of the Effective Date,

 

TRADER JOE’S COMPANY   VENDOR  
BY     BY  
     
(Print Name and Title)   (Print Name and Title)
      FED TIN:  

 

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EXHIBIT B

VENDOR REPRESENTATION REGARDING PROPOSITION 65 COMPLIANCE

 

Trader Joe’s continually strives for higher quality in order to deliver more value to our customers. We intend to meet customer expectations, particularly with regard to product safety. As such, we would like to take this opportunity to remind you of your obligation as a business partner to ensure that all products you sell to Trader Joe’s are in full compliance with all applicable laws and regulations, including California’s Safe Drinking Water and Toxic Enforcement Act, Cal. Health & Safety Code § 25249.5 et seq. (“Proposition 65”).

 

As set forth in Section 2 of this Agreement, VENDOR has represented and warranted to TJ’s, amongst other things:

 

  VENDOR will comply with all requirements of TJ’s GORP system;

 

  The accuracy of all information entered into TJ’s GORP system;

 

  The accuracy of all product information supplied by VENDOR to Trader Joe’s;

 

  The goods sold to Trader Joe’s by VENDOR were produced, harvested, manufactured, processed, packaged, labeled, delivered, and sold in compliance with all applicable laws; and

 

  The resale of any of the goods by Trader Joe’s would not be in violation of any laws.

 

In light of such representations and warranties, TJ’s requires VENDOR to review and agree to the following terms related to VENDOR’s relationship with TJ’s. By signing this document, you agree that you understand that the terms below are to be read in conjunction with, and do not override or modify in any way the requirements of, the Master Vendor Agreement.

 

On this 31 day of July, 20l8, Stonegate Foods (“VENDOR”) hereby acknowledges and agrees to the following terms provided herein:

 

1. The Agreement Requires Compliance with Proposition 65: VENDOR understands that, as part of its obligations under this Agreement, all goods sold to TJ’s by VENDOR must fully comply with Proposition 65.

 

2. VENDOR Represents and Warrants Compliance with Proposition 65: VENDOR represents and warrants that all goods sold to TJ’s by VENDOR do and will comply with Proposition 65 and, as such, either (a) do not contain chemicals known to the State of California to cause cancer or reproductive toxicity at a level requiring a Proposition 65 warning; or (b) may contain chemicals known to the State of California to cause cancer or reproductive toxicity at a level requiring a Proposition 65 warning, in which case VENDOR represents and warrants that it has informed Trader Joe’s in writing of the chemicals and levels that it believes may require a warning. In the event a warning is required, VENDOR agrees that the placement of a warning sign at shelf level or at checkout (even as to multiple products in a category) would be appropriate or, if not, will provide recommendations as to what type of Proposition 65 warning would be appropriate.

 

3. VENDOR Commits to Make Test Results Available: Should Trader Joe’s request access to laboratory testing or other analytical results regarding the levels of chemicals contained in goods sold to TJ’s by VENDOR, VENDOR shall share such information and will provide it to TJ’s promptly upon request.

 

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4. Indemnification of Related Claims: As provided above, the Master Vendor Agreement requires that all goods sold to Trader Joe’s by VENDOR fully comply with Proposition 65. Thus, VENDOR agrees, to the fullest extent permitted by law, to indemnify, defend and hold TJ’s harmless from any and all claims brought by any party that TJ’s resale of products sold it to by VENDOR (whether private-label or otherwise) are or were sold in violation of Proposition 65. VENDOR further agrees that its obligation to indemnify, defend and hold TJ’s harmless from Proposition 65 claims will apply regardless of Cal. Code Regs. tit. 27 § 25600.2 (or any other similar provision of law governing the respective responsibilities of product suppliers and retailers to provide Proposition 65 warnings), such that VENDOR shall be obligated to indemnify, defend and hold TJ’s harmless from any Proposition 65 claims arising out of TJ’s resale of VENDOR’s products regardless of whether VENDOR 1) provides TJ’s with warning materials for its products, or 2) supplies TJ’s with private-label products.

 

Please sign below to acknowledge that you have received, read and will adhere to the above terms while engaged in business with Trader Joe’s.

 

AGREED AND ACKNOWLEDGED BY:  
     
VENDOR:  Stonegate Foods  
     
BY: /s/ Martha Martinez  
     
Date: 7/3/2018  

 

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EXHIBIT C

VENDOR REPRESENTATION REGARDING TOXICS IN PACKAGING LAWS

 

Trader Joe’s is committed to providing its customers with safe products, and as Trader Joe’s business partner, we expect you to deliver products that meet this commitment. As such, we would like to remind you of your obligation to ensure that all products you sell to Trader Joe’s are in full compliance with all applicable laws and regulations, including the toxics in packaging laws in the following states, as well as any similar laws in other states:

 

  California, Toxics in Packaging Prevention Act, Cal. Health & Safety Code § 25214.11 et seq.

 

  Connecticut, Conn. Gen. Stat. § 22a-255g et seq.

 

  Florida, Fla. Stat. § 403.7191

 

  Georgia, Ga. Code Ann. § 12-8-160 et seq.

 

  Illinois, 415 Ill. Comp. Stat. 5/21.5

 

  Iowa, Iowa Code § 455D.19

 

  Maine, Me. Stat. tit. 32, § 1731 et seq.

 

  Maryland, Md. Code Ann., Environment § 9-1901 et seq.

 

  Minnesota, Minn. Stat. § 115A.965

 

  Missouri, Mo. Rev. Stat. § 260.820 et seq.

 

  New Hampshire, N.H. Rev. Stat. Ann. § 149-M:32 et seq.

 

  New Jersey, Toxic Packaging Reduction Act, N.J. Rev. Stat. § 13:1E-99.44 et seq.

 

  New York, Hazardous Packaging Law, N.Y. Envtl. Conserv. Law § 37-0201 et seq.

 

  Pennsylvania, Safe Packaging Act, 35 Pa. Stat. and Cons. Stat. Ann. § 6024.101 et seq.

 

  Rhode Island, Toxic Packaging Reduction Act, 23 R.I. Gen. Laws § 23-18.13-1 et seq.

 

  Vermont, Vt. Stat. Ann. tit. 10, § 6620a et seq.

 

  Virginia, Reduction of Heavy Metals in Packaging Act, Va. Code Ann. § 10.1-1425.20

 

  Washington, Wash. Rev. Code § 70.95G.005 et seq.

 

  Wisconsin, Wis. Stat. § 100.285 et seq.

 

For more information about state toxics in packaging laws, VENDOR may contact the Toxics in Packaging Clearinghouse, which coordinates the implementation of toxics in packaging legislation on behalf of its member states.

 

As set forth in Section 2 of this Agreement, VENDOR has represented and warranted to Trader Joe’s, amongst other things, that:

 

  VENDOR will comply with all requirements of Trader Joe’s GORP system;

 

  The accuracy of all information entered into Trader Joe’s GORP system;

 

  The accuracy of all product information supplied by VENDOR to Trader Joe’s;

 

  The goods sold to Trader Joe’s by VENDOR were produced, harvested, manufactured, processed, packaged, labeled, delivered, and sold in compliance with all applicable laws; and

 

  The resale of any of the goods by Trader Joe’s would not be in violation of any laws.

 

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In light of such representations and warranties, Trader Joe’s requires VENDOR to review and agree to the following terms related to VENDOR’s relationship with Trader Joe’s:

 

On this 31` day of July, 2018, Stonegate Foods (“VENDOR”) hereby acknowledges and agrees to the following terms provided herein:

 

1. The Agreement Requires Compliance with State Toxics in Packaging Laws: VENDOR understands that, as part of its obligations under this Agreement, all goods sold to Trader Joe’s by VENDOR must fully comply with state toxics in packaging laws.

 

2. VENDOR Represents and Warrants Compliance with State Toxics in Packaging Laws: VENDOR represents and warrants that all goods sold to Trader Joe’s by VENDOR do and will comply with state toxics in packaging laws.

 

3. VENDOR to Provide Certificates of Compliance: VENDOR shall provide Trader Joe’s with applicable certificates of compliance with state toxics in packaging laws regarding packaging and/or packaging components of goods sold to Trader Joe’s by VENDOR.

 

4. Indemnification of Related Claims: As provided above, the Master Vendor Agreement requires that all goods sold to Trader Joe’s by VENDOR fully comply with Toxics in Packaging Laws. Thus, VENDOR agrees, to the fullest extent permitted by law, to indemnify, defend and hold Trader Joe’s harmless from any and all claims or enforcement actions brought by any party regarding Trader Joe’s resale of products sold it to by VENDOR (whether private-label or otherwise) that are or were sold in violation of state toxics in packaging laws.

 

Please sign below to acknowledge that you have received, read and will adhere to the above terms while engaged in business with Trader Joe’s.

 

AGREED AND ACKNOWLEDGED BY:  
     
VENDOR : Stonegate Foods  
     
BY: /s/ Martha Martinez  
     
Date: 7/31/2018  

 

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EXHIBIT D

PRODUCT RECALL PROTOCOL

 

Trader Joe’s Product Recall Protocol sets forth clear expectations that must be followed if any item sold to Trader Joe’s is subject to, or has the potential to be subject to, a recall.

 

It is the vendor’s obligation to notify Trader Joe’s at the first sign of any food safety issue which has the potential for resulting in a recall. First sign includes but are not limited to:

 

  Any contact from a regulatory agency (FDA, USDA, Center for Disease Control, Public Health Department, etc.) indicating any form of a potential investigation related to products manufactured in the same facility as TJ’s product OR using the same raw materials (not lot) as the product in question, regardless if the product in question is a Trader Joe’s product or not.

 

  Release of non-conforming product out of the manufacturing facilities control.

 

Such notification shall be done both verbally and in writing via email. Actual receipt of such notice by Trader Joe’s must be verified by the vendor. The sending of notice via email, letter or voicemail without reply from Trader Joe’s shall not constitute notice.

 

Trader Joe’s MUST be alerted prior to any report to a regulatory agency (FDA Reportable Foods Registry, USDA, etc.).

 

If a situation arises due to contact from a regulatory agency (FDA, USDA, Center for Disease Control, Public Health Department, etc.) Trader Joe’s requires notification within two hours of first contact from the agencv.

 

Below are Trader Joe’s recall contacts, please send written communication to all of the Trader Joe’s crew members listed below.

 

  Carla Hechler, Snr. Director Food Safety & Regulatory Compliance

  o chechler@traderjoes.com

  o 626-533-5636 (c); 626-599-2869 (o)

  Sokrith Sea, Quality Control Director

  o ssea@traderjoes.com

  o 626-622-5423 (c); 626-599-3763 (o)

  Marcy Kopelman, Vice President of Merchandising

  o mkopelman@traderjoes.com

  o 626-376-5150 (c); 626-599-3761 (o)

  Colin Fields, Vice President of Merchandising

  o cfields@traderjoes.com

  o 818-809-7921 (c); 857-400-3373 (o)

  Matt Sloan, Vice President of Marketing-Product

  o msloan@traderjoes.com

  o 626-376-5716 (c); 626-599-2813 (o)

  Erin Baker, Vice President of Marketing-Communications

  o ebaker@traderjoes.com

  o 626-260-8867 (c); 626-599-2805 (o)

 

20

 

  

  Kenya Friend-Daniel, Director of Public Relations

  o kfriend@traderjoes.com

  o 626-486-4847(c); 626-599-2898 (o)

  Trader Joe’s Category Leader for the respective product(s)

 

  2. When notifying Trader Joe’s of an issue that has the potential to be a product recall, the following information should be provided as soon as possible.

  Product name and TJ product SKU number

  Product lot code and date code — all information that would be on the package, in the format that it is written on the package.

  Reason for recall or description of the issue/investigation at hand and information on what has taken place thus far and immediate next steps being carried out.

  Any instructions/information provided by a regulatory agency (if initiated by them).

  o A regulatory agency should not be contacted for an issue identified with a TJ’s product prior to communications with TJ’s.

  Traceability details — When was this product shipped to TJ’s (WCD Distribution Centers), what quantity, which DC’s, what PO numbers.

  Contact information for your company’s Recall Coordinator as well as 24 hour emergency contact info.

  Contact information for who will be handling press and writing the press release in the event that it is necessary.

  o NOTE: For FDA Recalls - Any press materials referencing Trader Joe’s MUST be sent to TJ’s PRIOR to submittal for review and approval by the FDA. DO NOT send draft press releases to the FDA without approval from TJ’s

  o NOTE: For USDA Recalls — Draft Press releases issued by the USDA MUST immediately be sent to TJ’s to review within the given 30 minute window.

 

Company Name:   Stonegate Foods  
     
Signature, Printed Name & Date (Office of the Company)  
   
   
   
Signature, Printed Name & Date (Food Safety/Office of the Company)  
   
   

 

21

 

 

EXHIBIT E

SHIPPING AND WAREHOUSE REQUIREMENTS

 

VENDOR must contact Trader Joe’s Service Center Appointment Clerk within a reasonable amount of time (requested time, 48 hours or greater) in advance of the arrival of a shipment in order to make an appointment for delivery of the goods. VENDOR acknowledges that the failure to provide timely notice may delay receipt of the goods and VENDOR agrees that, at TJ’s sole discretion, it may be charged for any damages and/or costs resulting from any such delay and/or it may result in the cancellation of the purchase order by TJ’s. Each shipment must be accompanied by a bill of lading specifying TJ’s Purchase Order no., and the TJ’s SKU no., product description, total number of cases shipped, vendor name, and gross weight and a packing slip/Bio Sheet that conforms to the Bio Terrorist requirements.

 

  (a) Warehouses will only book deliveries 3 days prior, on or within the 7 days after the Requested Delivery Date (abbreviated going forward as “RDD”) — the ETA on the PO.

 

  (b) Warehouses will not book deliveries for expired PO’s (PO’s that are more than 7 days past the ETA).

 

  (c) Warehouses will email vendors/drivers an appointment that falls within the RDD guidelines when they call to schedule a delivery appointment. An email confirmation will be required to complete the booking agreement between Warehouse and vendors/drivers.

 

The purchase order will specify whether the goods are to be delivered on slip sheets, floor stacked, or pallets. If the goods are to be delivered on pallets, TJ’s does not pay for pallets and VENDOR agrees that the pallets will conform to the following requirements:

 

  (a) The pallets must be #2 quality or better. The pallets may not have any missing or broken boards.

 

  (b) The pallets must be 40” x 48”, 4-way, wood pallets.

 

  (c) The maximum pallet heights (including the pallet) for each warehouse are:

 

Site   Site description   State   60”   65”   70”   72”   74”   78”   80”   84”   96”
901   TOLLESON AZ ALCOHOL   AZ   X                                
985   TOLLESON AZ CROSSDOCK   AZ   X                                
902   TOLLESON AZ INVENTORIED - PHOENIX   AZ   X                                
900   CHINO   CA   X                                
5043   CHINO DRY   CA   X                                
930   FONTANA   CA   X                                
5006   FONTANA ALCOHOL   CA   X                                
932   FONTANA COOLER   CA   X                                

 

22

 

  

Site   Site description   State   60”   65”   70”   72”   74”   78”   80”   84”   96”
980   FONTANA CROSS DOCK   CA   X                                
931   FONTANA DRY   CA   X                                
933   FONTANA JIT FRESH   CA                           X        
5003   FONTANA NON ALC BEVERAGES   CA   X                                
5013   REDLANDS   CA   X                                
981   US GROWERS   CA   X                                
5304   IRVING COOLER   TX   X                                
5303   IRVING DRY   TX   X                                
5309   IRVING FROZEN   TX   X                                
5305   IRVING TX JIT   TX                           X        
5308   XDOCK IRVING TEXAS   TX   X                                
993   JIT STOCKTON   CA                           X        
992   REFRIGERATED STOCKTON   CA   X                                
990   STOCKTON (GOLD STOCK)   CA   X                                
989   STOCKTON (WMS JR)   CA   X                                
5056   STOCKTON ALCOHOL   CA   X                                
5057   STOCKTON CONFECTION   CA   X                                
5054   STOCKTON COOLER   CA   X                                
988   STOCKTON CROSS DOCK   CA   X                                
5053   STOCKTON DRY   CA   X                                
5055   STOCKTON JIT   CA   X                                
5058   STOCKTON XDOCK   CA   X                                
5059   STOCKTON FREEZER/COOLER   CA   X                                
943   VERSACOLD MODESTO   CA                               X  
5106   LACEY ALCOHOL   WA   X                                
5107   LACEY CONFECTION   WA   X                                
5104   LACEY COOLER   WA   X                                
987   LACEY CROSS DOCK   WA   X                                
5103   LACEY DRY   WA   X                                
974   LACEY JIT   WA                           X        
5105   LACEY JIT   WA                           X        

 

23

 

 

Site   Site description   State   60”   65”   70”   72”   74”   78”   80”   84”   96”
972   LACEY NORTHWEST COOLER   WA   X                                
970   LACEY NORTHWEST DRY   WA   X                                
971   LACEY WA ALCOHOL   WA   X                                
5108   LACEY XDOCK   WA   X                                
5109   LACEY FREEZER   WA   X                                
5653   DAYTONA DRY   FL   X                                
5654   DAYTONA - REFRIGERATED   FL   X                                
5655   DAYTONA - JIT   FL                           X        
5656   DAYTONA - ALCOHOL   FL                   X                
5657   DAYTONA-TEMP CONTROL   FL       X                            
5658   DAYTONA — XDOCK   FL   X                                
5659   DAYTONA - FROZEN   FL               X                    
922   CHEESE PRODUCTION MINOOKA   IL                   X                
5354   MINOOKA COOLER   IL                   X                
5353   MINOOKA DRY   IL                   X                
5359   MINOOKA FROZEN   IL           X                        
5355   WCD JIT MINOOKA   IL                   X                
5358   WCD XDOCK MINOOKA   IL                   X                
953   JIT MIDDLEBORO   MA                           X        
954   MIDDLEBORO COOLER   MA                           X        
959   MIDDLEBORO CROSS DOCK   MA                           X        
968   FROZEN NAZARETH PA   PA   X                                
963   JIT NAZARETH   PA   X                                
962   NAZARETH COOLER   PA   X                                
965   NAZARETH COOLER   PA   X                                
969   NAZARETH CROSS DOCK   PA   X                                
961   NAZARETH PA   PA               X                    
5525   JIT Hartford   CT                           X        
5524   Cooler Hartford   CT                           X        

 

24

 

 

Site   Site description   State   60”   65”   70”   72”   74”   78”   80”   84”   96”
5528   Cross Dock Hartford   CT                           X        
5523   Dry Hartford   CT                           X        
5527   Temp Hartford   CT                           X       X
5529   Frozen Hartford   CT               X                    

 

Any request to exceed the maximum pallet height must be approved in writing by Trader Joe’s prior to delivery.

 

  (d) A pallet may not exceed 2500 pounds gross weight.

 

  (e) The pallets must be stable, rackable, and stackable.

 

  (f) The ties and heights must be uniform for all pallets in a shipment.

 

  (g) Each layer of product should be configured in alternating patterns for stability.

 

  (h) All products (including ties and other packing materials) must be contained within the limits of the pallet.

 

  (i) All cases must be palletized so that the product information is visible from at least the 40” side of the pallet.

 

Trader Joe’s does not participate in the CHEP pallet program.

 

Any goods which are delivered on pallets which do not comply with the applicable pallet requirements will be repalletized and VENDOR agrees that, at TJ’s sole discretion, it may be charged for the costs of repalletizing the goods.

 

Pallets that comply with the applicable pallet requirements will be exchanged for like-type and like-quality pallets at the time of delivery, unless otherwise agreed. Any non-conforming pallets will be rejected and it will be the driver’s responsibility to wait while the goods are repalletized and to take the rejected pallets at that time; otherwise, TJ’s will dispose of the rejected pallets.

 

All refrigerated products shall be shipped and received at 40°F or less (product cannot be frozen). All frozen products shall be shipped and received at 0°F or less. Ice cream shall be shipped and received at -10°F to -20°F. Appropriate temperatures must be evidenced by a calibrated temperature monitoring device during transport from VENDOR.

 

A delivery of goods will only be received by TJ’s warehouse if the goods are delivered in clean trucks, TJ’s trays have been cleaned & sanitized by VENDOR, the packaging is clean and intact, there are no evident dents or tears, and the seals are intact. All products and transport trailers from VENDOR must comply with all applicable laws and regulations.

 

25

 

 

EXHIBIT F

INVOICING POLICIES

 

1. Any invoice issued to TJ’s by VENDOR must conform to the following requirements:

 

(i) Must be 8 Y2” X 11”

 

(ii) Must include VENDOR’s name, address, and phone number.

 

(iii) Must include invoice number, invoice date, detail of items, quantities, and unit prices being billed, an invoice total, and corresponding Purchase Order number.

 

(iv) “Remit to” address must be clearly stated on the invoice if different than the vendor address

 

(v) Invoices should be system-generated, not hand-written, including the Purchase Order number. Excel or Word formats are acceptable.

 

2. Invoices must be issued to TJ’s in a timely fashion. TJ’s and VENDOR agree and understand that TJ’s will not be obligated to pay (but may pay in its sole discretion) invoices issued more than six months after TJ’s acceptance of the goods at issue.

 

3. The proof of delivery must be signed by a TJ’s employee or agent.

 

4. Payment shall be deemed to have been made upon deposit of the check by TJ’s in the U.S. mail or when an electronic payment made by TJ’s is credited into an intermediary’s account.

 

ADDITIONAL REQUIREMENTS FOR ELECTRONIC INVOICES

 

As part of our initiative to reduce paper and make our invoice processing more efficient, TJ’s requires invoices to be submitted via e-mail or EDI. To email your invoices, follow these three steps to ensure your invoices are received and processed in a timely manner. All emailed invoices sent to TJ’s by VENDOR must be sent according to the following procedures:

 

5. Create an e-mail message and address it to: invoices@traderjoes.com.

 

6. Attach your invoice document(s) to the e-mail message. Each document you attach must contain only one invoice (include all pages of each invoice on one document), however you can attach multiple documents to an e-mail message to submit multiple invoices at one time. The document(s) you attach must be one of these supported types: .PDF (Adobe),.TIFF or .TIF (Tagged Image Format File),.DOC, DOCX, .XLS, and .XLSX (Microsoft Office 2003, 2007, 2010 and 2013 or later).

 

7. Send your email (do not mail these invoices).

 

If you have any questions please contact the Trader Joe’s Accounts Payable Department. If for any reason we cannot process your invoices submitted via e-mail, an Accounts Payable representative will contact you to provide assistance.

 

26

 

  

EXHIBIT G

MINIMUM INSURANCE REQUIREMENTS

 

Any certificate of insurance (“Certificate”) issued by VENDOR’s insurance company or broker pursuant to Section 12 of this Agreement must meet the following minimum requirements:

 

1. Coverage Amount: The Certificate must specify that VENDOR has general liability insurance coverage, which includes products liability and contractual liability, with limits of not less than $5 million, per occurrence and in the aggregate.

 

2. Insurance Carrier: VENDOR’s insurance carrier must be rated “Class A: VII” or better as reported in A.M. Best’s Key Rating Guide and be authorized to do business in the United States.

 

3. Additional Insured: “Trader Joe’s Company and its subsidiaries, affiliates, shareholders, directors, officers, agents, and employees” must be covered as additional insureds on the Certificate in order that TJ’s may be defended and indemnified in suits involving goods sold to TJ’s by VENDOR or security breaches of VENDOR’s facilities or IT systems that affect TJ’s proprietary or confidential information.

 

4. Waiver of Subrogation: All insurance policies maintained pursuant to Section 12 of this Agreement will include a waiver of subrogation.

 

5. Products Liability and Completed Operations: Products liability and completed operations insurance must provide coverage in respect of claims involving bodily injury or property damage arising out of or in connection with VENDOR supply of goods to TJ’s.

 

6. Notice of Cancellation: The Certificate must indicate that TJ’s will be given at least 30 days’ written notice prior to the cancellation of VENDOR’s liability policy.

 

7. Renewal and Change in Coverage: The Certificate must be renewed each year as long as J’s maintains this business relationship with VENDOR. In addition, VENDOR must provide TJ’s with a new Certificate if VENDOR makes any changes in its coverage or its insurance carrier.

 

8. Self-Insured: Self-insurance is not acceptable except with the prior written approval of TJ’ s.

 

27

 

  

EXHIBIT H

INFORMATION SECURITY GUIDELINES

 

Any vendor that possesses TJ’s proprietary or confidential information (including, but not limited to, trade secrets, recipes, financial and pricing information, and contact information for TJ’s) outside the GORP system must:

 

  1. Protect against viruses and other threats to the integrity of TJ’s data by:

installing, maintaining, and applying anti-virus programs across servers and end user devices;

ensuring timely remediation of all virus outbreaks within the vendor environment; and keeping current with critical software updates across servers and end user devices.

 

  2. Protect against unauthorized access of TJ’s data by:

the timely inactivation and removal of all unused software and end-user accounts;

employing the use of strong passwords and the policies requiring password changes on a regular basis;

employing the use of firewalls to protect the vendor’s external network perimeter; and limiting access to TJ’s sensitive and confidential data.

 

  3. Continue to improve, in a timely manner, upon all IT security systems and controls by:

meeting or exceeding common sense IT security best practices as they continue to evolve; and

ensuring timely communication to vendor’s executive management of all IT security breaches or potential areas for IT security breaches.

 

  4. Notify TJ’s by email (Cyber Security: cybersecurity@traderjoes.com with a subject line of “Trader Joe’s Vendor Security Alert” and the vendor’s name) or by phone (626-8035205) of any IT security breach or loss of data affecting TJ’s data within 24 hours of discovery of the issue.

 

  5. Cooperate with any investigation TJ’s undertakes in the aftermath of a data breach.

 

  6. Return or destroy TJ’s data promptly upon termination of the Master Vendor Agreement.

 

28

 

 

EXHIBIT I

PACKAGING COMMITMENTS/REORDER AGREEMENT

 

This Commitments/Reorder Agreement (“Agreement”) is entered into as of the effective date indicated below (“Effective Date”), by and between TRADER JOE’S COMPANY and its subsidiaries (including Trader Joe’s East, Inc.) (hereinafter collectively referred to as “TJ’s”) and Stonegate Foods (“VENDOR”).

 

This Agreement consists of this signature sheet, the terms and conditions of the individual purchase orders issued from TJ’s to VENDOR, and the Master Vendor Agreement (“MVA”) executed by TJ’s and Vendor. As provided in the MVA, in the event TJ’s discontinues the private-label product, TJ’s will not be liable for any packaging costs (including, but not limited to, costs for labels, containers, bags, and wrappers) for inventory that exceeds the commitments/reorder agreement below.

 

Product Name: _____________________________________

 

UPC No.: _____________________________________

 

VENDOR: _____________________________________

 

Effective Date of

 

Packaging Commitment: _____________________________________

 

Quantity of Agreed-upon Packaging in inventory based on

 

(1) Volume:________________________________

 

(2) Packaging for product based on average sales for___ number of weeks prior to termination

 

This agreement must be renewed between Trader Joe’s and vendor when the agreed upon packaging in inventory reaches depletion.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers or representatives as of the Effective Date.

 

TRADER JOE’S COMPANY   VENDOR   Stonegate Foods
BY     BY /s/ Martha Martinez
        Martha Martinez
(Print Name and Title)   (Print Name and Title)
      FED TIN: 54-2135710

 

29

 

  

EXHIBIT J

REPORTING REQUIREMENTS

FOR VENDORS OF DIETARY SUPPLEMENTS

 

As a vendor of dietary supplements, you are providing products to Trader Joe’s that are subject to the Dietary Supplement & Nonprescription Drug Consumer Protection Act (the “FDCA”). The FDCA establishes two parallel reporting systems for nonprescription drugs and dietary supplements. The new reporting system is designed to identify potential public health issues associated with use of any of these products and enable the government, manufacturers, and retailers to respond more quickly to problems that are identified.

 

Pursuant to section 761(b)(2) of the FDCA, Trader Joe’s authorizes, and VENDOR hereby agrees, that VENDOR of the dietary supplements sold to Trader Joe’s will comply with the reporting requirements of section 761 of the FDCA, which requires mandatory serious adverse event reporting for dietary supplements.

 

A “serious adverse event” is defined as one that results in death, a life-threatening experience, inpatient hospitalization, a persistent or significant disability or incapacity, or a congenital anomaly or birth defect. In addition, a serious adverse event could be one that requires, based on reasonable medical judgment, a medical or surgical intervention to prevent the serious outcomes outlined in this paragraph.

 

VENDOR shall submit to the Secretary of Health and Human Services, using the MedWatch form, any report received of a serious adverse event associated with such dietary supplement when used in the United States, accompanied by a copy of the label on or within the retail packaging of that dietary supplement. Such report must be submitted by the VENDOR within 15 business days after the report is received through the domestic address or domestic phone number required to appear on the label of dietary supplements.

 

VENDOR also agrees that it will report any additional new medical information it receives within 1 year of the initial report related to the submitted serious adverse event report. Any such new information shall be submitted by VENDOR to the Secretary within 15 business days after receipt of this new information.

 

VENDOR shall maintain records of all adverse reports it receives, whether serious or not, related to any products sold to Trader Joe’s, for 6 years.

 

Trader Joe’s will direct to the VENDOR all adverse events associated with any dietary supplement product(s) that are reported to Trader Joe’s through the address or telephone number included on the label of the dietary supplement.

 

This agreement between Trader Joe’s and VENDOR related to products subject to the FDCA is effective and binding whether executed as a separate document or incorporated as an exhibit to a Master Vendor Agreement between Trader Joe’s and VENDOR. If incorporated as an exhibit to an executed Master Vendor Agreement, such agreement shall be valid and binding regardless of whether it is separately executed.

 

VENDOR shall, to the fullest extent permitted by law, indemnify, defend, and hold Trader Joe’s (and its officers, directors, shareholders, employees, agents, or insurers) harmless from and against any and all claims, actions, liabilities, damages, costs, expenses, penalties, fines and losses of any kind brought by a third party against TJ’s (and its officers, directors, shareholders, employees, agents, or insurers) arising out of or related to any failure to comply with the reporting requirements of the FDCA.

 

TRADER JOE’S COMPANY   VENDOR  Stonegate Foods
BY     BY /s/ Martha Martinez
      Martha Martinez
(Print Name and Title)   (Print Name and Title)
      FED TIN: 54-2135710

 

30

 

  

EXHIBIT K

ADDITIONAL TERMS AND CONDITIONS

 

31

 

  

Effective Date: 09/21/2017

 

WALMART GROCERY

MERCHANDISE AGREEMENT

General Supplier Information

 

Agreement Number: SAP Supplier Number: Supplier ID:
607499-91-1 1400560216  

 

Specialty Group: None

 

Company Legal Name: STONEGATE FOODS INC

 

Doing Business As: Ittella Foods Inc

 

Legal Entity: Corporation

 

Taxpayer Identification Number ( TIN ): XX-XXX5710

 

Company Contacts

Supplier Agreement Accepted By: Martha Chaidez Phone: 3107325875
CEO/President: Phone:
CFO: Phone:

 

Corporate Address Remit Address
Address Line 1: 6305 ALONDRA BLVD Address Line 1: 6305 ALONDRA BLVD
Address Line 2: Address Line 2:
City: PARAMOUNT City: PARAMOUNT
State: CA State: CA
Zip: 90723-3750 Zip: 90723-3750

 

The Supplier Agreement detailed below has been accepted on behalf of the supplier by:

Martha Chaidez - (RLID : tm1ao3a )

 

1

 

 

Supplier Number: 607499 Agreement Number: 607499-91-1 Effective Date: 09/21/2017

 

 

 

GENERAL MERCHANDISE SUPPLIER AGREEMENT

 

(Standard Terms and Conditions for Suppliers)

 

This Supplier Agreement, (Agreement) is between supplier indicated on the GENERAL SUPPLIER INFORMATION form that is part of the supplier registration process (Supplieror you) and Wal-Mart Stores, Inc., and its direct and indirect US and Puerto Rico operating subsidiaries (hereinafter referred to collectively as “Company). This Agreement consists of (1) these Standard Terms and Conditions for Suppliers (Terms and Conditions), (2) the Appendix and any Schedule(s) attached hereto and (2) Companys minimum requirements and Standards for Suppliers posted at http://corporate.walmart.com/sourcing-standards-resources as may be amended from time to time by Company (collectively, the Standards).

 

BY CLICKING THE I ACCEPTBOX AND CLICKING THE SUBMITBUTTON BELOW, BY OFFERING TO SELL, SELLING, OR DELIVERING ANY MERCHANDISE TO COMPANY OR ITS CUSTOMERS, INCLUDING THROUGH ANY COMPANY WEBSITE OR APPLICATION, OR PROVIDING DIRECT SHIP SERVICES ON BEHALF OF COMPANY, YOU AGREE THAT YOU HAVE READ AND UNDERSTAND AND AGREE TO BE BOUND BY ALL TERMS AND CONDITIONS OF THIS AGREEMENT (INCLUDING THE STANDARDS) WITHOUT CHANGE, AS THE STANDARDS MAY BE UPDATED FROM TIME TO TIME IN ACCORDANCE WITH THIS AGREEMENT. YOU FURTHER REPRESENT AND WARRANT THAT (1) ALL THE INFORMATION YOU PROVIDE AS PART OF THE REGISTRATION PROCESS WILL BE ACCURATE AND COMPLETE AND (2) IF YOU ARE EXECUTING THIS AGREEMENT ON BEHALF OF AN ENTITY, YOU HAVE THE REQUISITE RIGHT, POWER, AND AUTHORITY TO ENTER INTO THIS AGREEMENT ON BEHALF OF THE ENTITY YOU REGISTER AS SUPPLIER.

 

By clicking the I ACCEPTbutton below, you understand that execution of this Agreement by both Supplier and Company does not impose on Company any obligation (and Company has no obligation) to purchase or take delivery of Merchandise (or to enable the sale or delivery of Merchandise to any customer) or to use any services of Supplier.

 

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Supplier Number: 607499 Agreement Number: 607499-91-1 Effective Date: 09/21/2017

 

STANDARD TERMS AND CONDITIONS

 

1. DEFINITIONS. As used in this Agreement or any Order (defined below), the following capitalized words shall have the meanings set forth below:

(a) “Account” means any right to receive payments arising under this Agreement.

(b) “Authorized Buyer” means any General Merchandise Manager, Divisional Merchandise Manager, Buyer, Sr. Buyer and Replenishment Manager (or successor or equivalent titles) of Company assigned to the category/ department corresponding to the purchased Merchandise.

(c) Change of Controlhas the meaning set forth in Section 20 of this Agreement.

(d) Effective Datemeans the date this Agreement becomes effective as to both Company and Supplier.

(e) “Electronic Data Interchange” (“EDI”) means the electronic transmission of information regarding specific business processes (invoicing, ordering, reporting, etc.) between two or more businesses according to standards mandated by Company.

(f) “Law” means any applicable international, foreign, or domestic law, regulation, order or other requirement imposed or compelled by a governing or regulatory authority having legal force (whether federal, state or local), including any treaty, statute, common law, judicial decision, rule, regulation, code or ordinance.

(g) “Merchandise” means all products, goods, materials, equipment, displays, articles, and tangible items supplied by Supplier to Company within the Territory, and all packaging, instructions, warnings, warranties, advertising and other services included therewith.

(h) “Must Arrive By Date” or “MABD” means the delivery date or period identified in an Order.

(i) “Order” means any written or electronic purchase order for Merchandise issued by Company through an Authorized Buyer.

(j) Recall” means any removal of Merchandise from the stream of commerce or the issuance of a corrective action plan or other remedial action initiated by Supplier, a government entity, or Company.

(k) “Shared Services” means Company’s business division known as Global Shared Services, North America, or its functional successor, which is the accounting department of Company responsible for control and processing of new supplier agreements and updates to existing agreements.

(l) “Standards” means the Wal-Mart Stores, Inc. Standards for Suppliers posted at http://corporate.walmart.com/ sourcing-standards-resources and minimum requirements posted at http://corporate.walmart.com/suppliers/ minimum-requirements, as may be amended from time to time by Company.

(m) “Territory” means the United States of America, its territories and possessions and APO/FPO military addresses.

 

2. ORDERS; CANCELLATION. Supplier may ship only after receipt of an Order. Supplier may accept an Order only as follows: (i) a written confirmation notice to Company, if such notice is requested by Company, or (ii) shipping conforming Merchandise in accordance with this Agreement and the Order. Shipments made contrary to Company’s routing instructions will be deemed F.O.B. destination (store, club or warehouse). Supplier’s invoice, confirmation memorandum or other writing may not vary the terms of any Order. Supplier’s failure to comply with one or more terms of an Order shall constitute breach of this Agreement and shall be grounds for the exercise by Company of any of the remedies provided for in this Agreement or by applicable Law. Projections, past purchasing history and representations about quantities to be purchased are not binding on Company, and Company shall not be liable for any act or expenditure (including but not limited to expenditures for equipment, labor, materials, packaging or capital expenditures) by Supplier in reliance on them. Company may cancel all or any part of an Order at any time prior to shipment.

 

3. SUPPLIER FINANCIAL INFORMATION; CHANGE OF CONTROL. Within thirty (30) days prior to the Effective Date, upon each anniversary thereof, and at such other times as Company may request, Supplier hereby authorizes Company to obtain, at Supplier’s expense, a current Dun & Bradstreet report (or such other risk evaluation report as may be designated by Company) for Supplier. Supplier shall immediately notify Company upon any occurrence of a Change of Control of Supplier after the Effective Date. Where Company seeks assurances concerning Suppliers financial health, Supplier shall provide reasonable assistance and provide additional financial reporting as requested by Company.

 

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Supplier Number: 607499 Agreement Number: 607499-91-1 Effective Date: 09/21/2017

 

4. PAYMENT TERMS; CASH DISCOUNT; AUDITS. Supplier shall transmit invoices on the same day Merchandise is shipped, but Company’s payment terms under an Order will be calculated from the latest of: (i) the date that Company accepts delivery of the Merchandise at the facility designated by Company and records receipt of the Merchandise on its Warehouse Management System (i.e., in exceptional situations, delivery or drop off on Company property may not be the same day that the Merchandise is recorded on its Warehouse Management System); (ii) the date that Company receives the invoice, or if disputed, the date the invoice is reconciled; (iii) the MABD; or (iv) if terms are “pay from scan,” the date of sale of the Merchandise by Company. Any cash discount selected by Supplier on the Appendix will be calculated on the gross amount of Supplier’s invoice. Company will make payment via electronic funds transfer (“EFT”), unless otherwise agreed to by Company in writing. Supplier shall provide any information and documents required by Company to establish EFT payment. Irrespective of any prior payments, Company or its auditors may inspect and audit Supplier’s financial and other account records relating to the sale and return of Merchandise. These audits may be conducted on a continual basis using Companys internal data related to the sale and return of Merchandise. Supplier shall provide reasonable assistance in such audits by providing supplemental records as reasonably requested by Company or its auditors to validate audit results.

 

5. SET-OFF; RESERVATION OF ACCOUNT; CREDIT BALANCE. Company may recoup, set off, or credit against amounts payable to Supplier all present and future indebtedness of Supplier to Company arising from this or any other transaction with Supplier or any of its affiliates whether or not related hereto. If Company determines that Supplier’s performance under an Order and/or this Agreement is likely to be impaired, Company may establish a reserve or place a hold on Supplier’s Account to satisfy Supplier’s actual or anticipated obligations to Company arising from any such Order or this Agreement, by withholding payment of Supplier’s invoices. Company will disburse to Supplier any remaining amounts due on Supplier’s Account so held in reserve or release the hold if and when Company determines that the reserve is no longer necessary to secure Supplier’s obligations. Supplier will pay to Company in cash any credit balance upon written request. IMPORTANT NOTICE: ALL PAYMENTS OF MONIES OWED PURSUANT TO THIS SUPPLIER AGREEMENT AND PURCHASE ORDERS MUST BE MAILED TO THE FOLLOWING ADDRESS: WAL-MART STORES, INC./SAM’S CLUB, C/O CORPORATE ACCOUNTING, P.O. BOX 500787, ST. LOUIS, MISSOURI 63150-0787.

 

6. ASSIGNMENT OF ACCOUNTS. Supplier shall provide Company written notice of an assignment, factoring, or other transfer of its Account at least thirty (30) days prior to such assignment, factoring, or other transfer taking legal effect. Such written notice shall include the name and address of the assignee/transferee, the date the assignment is to begin, and terms of the assignment, and shall be considered delivered upon receipt of such written notice by Shared Services. Supplier may have only one assignment, factoring or transfer of its Account effective at any time. The assignment of any Account hereunder shall not affect Company’s rights set forth in Section 5 of this Agreement. Supplier shall defend, indemnify and hold Company harmless from any and all lawsuits, claims, demands, actions, damages (including reasonable attorney fees, court costs, obligations, liabilities or liens) arising from or related to the assignment, transfer or factoring of its Account. Supplier releases and waives any right, claim or action against Company for amounts due and owing under this Agreement where Supplier has not complied with the notice requirements of this provision. Notices required pursuant to this Section shall be mailed to: Wal-Mart Stores, Inc. Attn: Global Shared Services, North America, Master Data Management, 1301 S.E. 10th St. Bentonville, AR 72716-0680. Notwithstanding the foregoing or any other circumstance, Company reserves the right to remit payment to Supplier.

 

7. TAXES. Unless otherwise agreed, Company is purchasing Merchandise under this Agreement for resale and will supply necessary resale certificates to Supplier upon request. The Order price includes all taxes and fees which may be imposed upon Supplier by a taxing jurisdiction on the sale of Merchandise under this Agreement. The Order price does not include: (i) sales, excise or use tax for which Company is liable upon the sale or use of the Merchandise or (ii) taxes or fees that Supplier is required by Law to separately state on invoices to Company, If Supplier receives a refund of any taxes included in the Order price or otherwise collected from Company by Supplier, Supplier shall promptly pay or credit Company the amount of the refund, including any interest.

 

8. PRICE PROTECTION; PRICE GUARANTEE AND NOTICE OF PRICE INCREASES. Supplier guarantees its prices against manufacturer’s or Supplier’s own price decline. If Supplier reduces its price on any Merchandise sold to Company, which Merchandise has not yet been delivered to Company by Supplier or, if consistent with Supplier’s practice, which Merchandise is currently in Company’s inventory (including Merchandise on hand, in warehouses and in transit), Supplier shall at Company’s discretion either issue a check or give Company a credit equal to the price difference for such Merchandise, multiplied by the units of such Merchandise to be delivered by Supplier and/ or currently in Company’s inventory. If a court, regulatory agency or other government entity with jurisdiction finds that the prices on an Order are in excess of that allowed by any Law, the prices shall be automatically revised to equal a price which is not in violation of said Law. If Company overpays for Merchandise at a price in violation of this Section, Supplier shall promptly refund the difference between the price paid for the Merchandise and the price which is not in violation of this Section. If at a reasonably close point in time with Supplier’s sale of Merchandise to the Company, Supplier sells or offers to any competitor of Company any merchandise of like grade and quality at lower prices and/or on terms more favorable than those stated on the Order, then, except as prohibited by Law, the prices and/or terms of the Order shall be deemed automatically revised to equal the lowest prices and most favorable terms at which Supplier shall have sold or shall have offered such Merchandise and payment shall be made accordingly. If Company becomes entitled to such lower prices, but has already made payment at a higher price, Supplier shall promptly refund the difference in price to Company. Supplier shall give Company written notice of any proposed Merchandise price increase at least sixty (60) days prior to the effective date of the increase.

 

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Supplier Number: 607499 Agreement Number: 607499-91-1 Effective Date: 09/21/2017

 

9. SUPPLIER EDI RESPONSIBILITIES.

 

(a) Supplier shall electronically receive Orders and send Company invoices via EDI unless otherwise agreed to by Company in writing.

(b) Supplier shall ensure that access by its employees to the EDI interchange is restricted by password to those persons authorized to contractually bind Supplier.

(c) Supplier’s use of the EDI interchange acknowledges Supplier’s review and acceptance of the terms and requirements for using the EDI system to contract electronically.

(d) Supplier shall establish a unique user identification to identify itself, and the presence of the user identification in the EDI interchange will be sufficient to verify the source of the data and the authenticity of the document.

(e) EDI documents containing Supplier’s user identification will constitute a signed writing, and neither party shall contest the validity or enforceability of the document on the basis of lack of a signature or sufficient identification of the parties.

(f) EDI documents or printouts thereof shall constitute originals.

(g) EDI documents will be retained by both Company and Supplier in a form that is accessible and reproducible.

(h) If Company agrees to waive the EDI requirements of this Section of this Agreement, Orders may be sent via overnight mail at Supplier’s expense.

 

10. PURCHASE COSTS AND CONDITIONS. Supplier is responsible for verifying the accuracy of costs, discounts, allowances and all other terms of sale on all Orders. If incorrect information exists, Supplier shall notify Company of any inaccuracies not less than twenty-four (24) hours prior to shipment. If a change is necessary, no shipment is to commence without written confirmation of the change from an Authorized Buyer. If Merchandise ships prior to discovery of an error on the Order, the parties shall confer within forty-eight (48) hours of such discovery to determine the actions to be taken regarding the erroneous Order.

 

11. SHIPPER LOAD AND COUNT RESPONSIBILITIES. If Supplier is shipping to Company a full truckload collect, or full truckload under Company control, Supplier is responsible for monitoring its shipping process. Supplier is required to close the trailer, seal it with a Supplier-provided seal, and document the seal number on all copies of the Bill of Lading. All such shipments will be considered Shipper Load and Shipper Count, whether or not so notated. If Supplier fails to seal the trailer, or fails to reference and identify the seal on all copies of the Bill of Lading, and shortages occur, Supplier shall be liable for such shortages. The provisions of this Agreement supersede any contrary Bill of Lading term, clause, notation, other provision, or any other writing.

 

12. DELIVERY TIME. THE TIME SPECIFIED IN AN ORDER FOR SHIPMENT AND/OR DELIVERY OF MERCHANDISE IS OF THE ESSENCE OF THIS AGREEMENT AND IF SUCH MERCHANDISE IS NOT SHIPPED AND/OR DELIVERED WITHIN THE TIME SPECIFIED, COMPANY RESERVES THE RIGHT, AT ITS OPTION AND WITHOUT LIMITATION, TO CANCEL THE ORDER AND/OR REJECT ANY MERCHANDISE DELIVERED AFTER THE TIME SPECIFIED. In addition to the aforementioned remedy, Company may exercise any other remedies provided for in this Agreement or provided by applicable Law, including but not limited to those remedies provided by the Uniform Commercial Code. Company may assess and collect reasonable damages for any deliveries of Merchandise not received within the MABD. Notwithstanding Company’s right to cancel shipment, or to reject or revoke acceptance of Merchandise, Supplier shall inform Company immediately of any actual or anticipated failure to ship all or any part of an Order or the exact Merchandise called for in an Order on the shipment date specified. Acceptance of any Merchandise shipped after or before the MABD shall not be construed as a waiver of any of Company’s rights or remedies resulting from the untimely shipment.

 

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Supplier Number: 607499 Agreement Number: 607499-91-1 Effective Date: 09/21/2017

 

13. REPRESENTATIONS AND WARRANTIES. By acceptance of an Order, Supplier represents, warrants and covenants that:

 

(a) Supplier is in compliance with and will continue to comply with Company’s Standards;

(b) Supplier and the Merchandise are in compliance with and shall continue to comply with all Laws applicable to the manufacture, sourcing, distribution and sale of the Merchandise;

(c) The Merchandise will be new and not used, remanufactured, reconditioned or refurbished, and will comply with all specifications contained in such Order and will be of equal or better quality as all samples delivered to Company;

(d) The Merchandise is genuine and is not counterfeit, adulterated, misbranded, falsely labeled or advertised or falsely invoiced within the meaning of any Laws;

(e) The Merchandise has been labeled, advertised and invoiced in accordance with the requirements of all Laws, and the Merchandise, and its sale by Company anywhere within the Territory does not violate any Law;

(f) The Merchandise shall be delivered in good and undamaged condition and shall, when delivered, be merchantable and fit and safe for the purposes for which the Merchandise is intended to be used, including but not limited to consumer use;

(g) The Merchandise does not infringe upon or violate any patent, copyright, trademark, trade name, trade dress, trade secret, or any other rights belonging to others, and all royalties owed by Supplier, if any, have been paid to the appropriate licensor;

(h) All information regarding the Merchandise, provided by or on behalf of Supplier to Company, including all weights, measures, sizes, legends or descriptions printed, stamped, attached or otherwise indicated with regard to the Merchandise, is true and correct, and conforms and complies with all Laws relating to the Merchandise;

(i) Where required by Law, or by Company’s policies, the Merchandise has been tested by third-party testing bodies approved by Company, found compliant with all applicable standards and Laws, and the results of such tests will be provided to Company at Company’s request;

(j) All Merchandise shall have an accurate UPC barcode (also known as an EAN/UPC symbol) that includes a valid Global Trade Item Number® (GTIN®) and will comply with GS1 US standards (found at http://www.gs1us.org) or such other of Company’s UPC requirements, as amended from time to time;

(k) There is no other impediment or restriction, legal or otherwise, that limits, prohibits or prevents Supplier from selling and delivering the Merchandise to Company or limits, prohibits or prevents Company from reselling the Merchandise to its customers within the Territory;

(l) The Merchandise is mined, produced, manufactured, assembled, packaged and transported in compliance with the Standards and all Laws; and

(m) The Merchandise is not transshipped for the purpose of mislabeling, evading quota or country of origin restrictions or avoiding compliance with the Standards and all Laws.

Where applicable, Supplier shall provide Company with a current, complete, and accurate Material Safety Data Sheet (MSDS) for the Merchandise. Nothing contained in this Agreement or an Order shall be deemed a waiver of any representations, warranties, or guarantees implied by Law.

 

14. INDEMNIFICATION. Supplier shall protect, defend, hold harmless and indemnify Company, including its affiliates, officers, directors, employees and agents, from and against any and all lawsuits, claims, demands, actions, liabilities, injuries, losses, damages, expenses, and attorneysfees and costs, regardless of whether such matters are groundless, fraudulent, or false, regardless of the cause or alleged cause thereof, and regardless of whether such matters arise out of or were caused by the alleged or actual joint or concurrent negligence of Company, its affiliates or their officers, directors, employees or agents arising in whole or in part out of any actual or alleged:

(a) Misappropriation or infringement of any patent, trademark, trade dress, trade secret, copyright or other right relating to any Merchandise;

(b) Death of or injury to any person, damage to any property, or any other damage or loss, by whomsoever suffered, arising in whole or in part, out of any actual or alleged defect in the Merchandise (whether latent or patent), including but not limited to: (i) any actual or alleged failure to provide adequate warnings, labeling or instructions; (ii) any actual or alleged improper design, manufacture, construction, assembly, or installation of the Merchandise; or (iii) any actual or alleged failure of the Merchandise to comply with specifications or with any express or implied warranties of Supplier;

(c) Violation of any Law relating to the Merchandise, or to any of its components or ingredients, or to its manufacture, shipment, labeling, use or sale, or to any failure to provide a Material Safety Data Sheet or certification;

(d) Act, activity or omission of Supplier or any of its employees, representatives or agents, including but not limited to activities on Company’s premises;

(e) Use of any vehicle, equipment, fixture or material of Supplier in connection with any sale to or service for the Company; and

(f) Any display, exhibit, pallet or other tangible items related to Merchandise or services under this Agreement.

 

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Supplier Number: 607499 Agreement Number: 607499-91-1 Effective Date: 09/21/2017

 

Supplier shall promptly notify Company of the assertion, filing or service of any lawsuit, claim, demand, action, liability or other matter that is or may be covered by this indemnity, and shall immediately take such action as may be necessary or appropriate to protect the interests of Company, its affiliates, officers, directors, employees and agents. Upon Company’s request, Supplier will promptly provide reasonable cooperation and assistance to Company with respect to any claim, lawsuit, demand, or investigation involving Company that relates to the Merchandise or any obligations under this Agreement. Supplier shall promptly notify Company of the legal counsel Supplier proposes to engage to defend and otherwise protect Companys interest in such matter. Supplier agrees that any counsel proposed, selected or provided by Supplier or its insurer to represent or defend Company or any of its affiliates, officers, directors, employees or agents shall represent, defend and protect Companys interests strictly in accordance with the requirements set forth in Companys Indemnity Counsel Guidelines. If Company determines that such legal counsel has not represented, defended or protected Companys interests in accordance with the Indemnity Counsel Guidelines, or reasonably believes Suppliers legal counsel is unwilling or unable to do so, Company may replace such counsel with other counsel of Company’s own choosing. In such event, any fees and expenses of Company’s new counsel, together with all expenses or costs incurred because of the change of counsel, shall be paid or reimbursed by Supplier as part of its indemnity obligation hereunder. Company shall at all times have the right to direct the defense of, and to accept or reject any offer to compromise or settle, any lawsuit, claim, demand or liability asserted against Company or any of its officers, directors, employees or agents, and Supplier will not settle or resolve any portion of any such claim or lawsuit without Company’s written approval, which Company will not unreasonably withhold. The duties and obligations of Supplier created hereby shall not be affected or limited in any way by Suppliers fulfillment of its insurance requirements under this Agreement, or Company’s extension of express or implied warranties to its customers.

 

15. RECALLS; REPORTING OF DEFECTS; TESTING. If Merchandise is the subject of a Recall, Supplier shall be responsible for all matters and costs associated with the Recall, including but not limited to:

(a) Consumer notification and contact;

(b) All expenses and losses incurred by Company in connection with such Recall (and where applicable, any products with which the Recalled Merchandise has been packaged, consolidated or commingled), including but not limited to refunds to customers, lost profits, transportation costs, the cost to Company of its associates’ time, systems expenses in processing any Recall, and all other costs associated therewith; and

(c) Initial and subsequent contact and reporting of the Recall to any government agency having jurisdiction over the affected Recalled Merchandise. Supplier shall promptly, and in no event later than twenty-four (24) hours after its decision to initiate a Recall or its receipt of a Recall notice from a government entity, inform Company of the Recall. Supplier shall promptly inform Company of its becoming aware of any defect in the Merchandise that could reasonably be expected to cause damage, illness, injury or death to humans, animals, or property, or the noncompliance of the Merchandise with any applicable safety or regulatory standard or Law, whether imposed by a government entity or by Company.

If a government agency initiates any inquiry or investigation relating to the Merchandise or similar or related goods of Supplier, Supplier shall notify Company immediately thereof and take reasonable steps to resolve the matter without exposing Company to any liability or risk. After acceptance of delivery, Company may periodically conduct testing of Merchandise for compliance with Laws, and other standards and specifications, the costs of which shall be paid or reimbursed to Company by Supplier.

 

16. LIMITATION OF DAMAGES. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY PUNITIVE, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND (INCLUDING BUT NOT LIMITED TO LOST PROFITS, BUSINESS REVENUES, BUSINESS INTERRUPTION AND THE LIKE), ARISING FROM OR RELATING TO THE RELATIONSHIP BETWEEN SUPPLIER AND COMPANY, INCLUDING ALL PRIOR DEALINGS AND AGREEMENTS, OR THE CONDUCT OF BUSINESS UNDER OR BREACH OF THIS AGREEMENT OR ANY ORDER, CANCELLATION OF ANY ORDER OR ORDERS OR THE TERMINATION OF BUSINESS RELATIONS, REGARDLESS OF WHETHER THE CLAIM UNDER WHICH SUCH DAMAGES ARE SOUGHT IS BASED UPON BREACH OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE, TORT, STRICT LIABILITY, STATUTE, REGULATION OR ANY OTHER LEGAL THEORY OR LAW, EVEN IF COMPANY OR SUPPLIER HAS BEEN ADVISED BY THE OTHER PARTY OF THE POSSIBILITY OF SUCH DAMAGES. PROVIDED, HOWEVER, THE FOREGOING SHALL NOT LIMIT THE SPECIFIC RIGHTS AND REMEDIES EXPRESSLY PROVIDED IN THIS AGREEMENT, INCLUDING SECTIONS 14 AND 15, OR LIMIT LIABILITY FOR NEGLIGENT OR WILLFUL BREACH OF SECTIONS 26 AND 30.

 

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Supplier Number: 607499 Agreement Number: 607499-91-1 Effective Date: 09/21/2017

 

17. REMEDIES. Supplier’s breach of or failure to comply with any of the Terms and Conditions of this Agreement or any Order shall be grounds for Company to exercise any one or more of the following remedies:

(a) Cancellation of all or any part of any undelivered Order without notice, including but not limited to the balance of any remaining installments on a multiple-shipment Order;

(b) Rejection (or revocation of acceptance) of all or any part of any delivered shipment. Upon rejection or revocation of acceptance of any part of or all of a shipment, Company may return the Merchandise or hold it at Supplier’s risk and expense. Payment of any invoice shall not limit Company’s right to reject or revoke acceptance. Company’s right to reject and return or hold Merchandise at Supplier’s expense and risk shall also extend to Merchandise which is returned by Company’s customers. Company may, at its option, require Supplier to grant a full refund or credit to Company of the price actually paid by any customer of Company for any such item in lieu of replacement with respect to any item. Company shall be under no duty to inspect the Merchandise, and notice to Supplier of rejection shall be deemed given within a reasonable time if given within a reasonable time after notice of defects or deficiencies has been given to Company by its customers. In respect of any Merchandise rejected (or acceptance revoked) by Company, there shall be charged to Supplier all expenses incurred by Company in: (i) unpacking, examining, repacking and storing such Merchandise (it being agreed that in the absence of proof of a higher expense that the Company shall claim an allowance for each rejection at the rate of ten percent (10%) of the price for each rejection made by Company); (ii) additional fees may be imposed if disposal is required; and (iii) landing and reshipping such Merchandise. Unless Company otherwise agrees in writing, Supplier shall not have the right to make a conforming delivery within the contract time;

(c) Termination or suspension of all current and future business relationships;

(d) Recovery from Supplier of any damages or expenses sustained by Company as a result of Supplier’s breach; and

(e) Buyer’s remedies under the Uniform Commercial Code and such other remedies as are provided under applicable Law.

These remedies are not exclusive and are in addition to all other remedies available to Company at Law or in equity.

 

18. INSURANCE REQUIREMENTS. During the term of this Agreement and for at least two (2) years thereafter, Supplier at its own cost and expense will procure and maintain insurance coverage from qualified underwriters meeting or exceeding the requirements posted at http://corporate.walmart.com/suppliers, which are incorporated into this Agreement.

(a) Company may change the requirements for insurance posted at http://corporate.walmart.com/suppliers at any time. Changes to the insurance requirements posted after the Effective Date of this Agreement, however, will not be applicable to Supplier until twelve (12) months after Company’s posting of such changes.

(b) Upon Supplier’s execution of this Agreement, Supplier must provide Company with a current Certificate of Insurance verifying Supplier’s compliance with the insurance requirements. The Certificate of Insurance must be dated not more than thirty (30) days before the Effective Date of this Agreement and not less than thirty (30) days before the expiration of the policy period of any policy identified in the Certificate of Insurance. Thereafter, Supplier must provide current Certificates of Insurance (i) at any time upon request of Company; (ii) not less than thirty (30) days prior to expiration of any policy required by this Agreement; and (iii) annually upon the Effective Date of this Agreement. The Certificate of Insurance must include the Supplier’s Supplier Number, if one has been assigned to Supplier. Suppliers failure to provide Certificate(s) of Insurance to Company does not limit or diminish, in whole or in part, Suppliers obligations in this Section 18.

(c) Supplier will provide written notice to Company at least thirty (30) days prior to any cancellation, expiration, substitution or material change of or to any policy of insurance required by this Agreement.

(d) Supplier’s failure to procure and maintain the insurance required by this Agreement constitutes a material breach and default under this Agreement by Supplier. In addition to and without limiting any other remedy available to Company, upon a breach by Supplier of its obligations under this Section, Company may withhold payment of any invoice and/or any Order until Supplier has provided written documentation of Supplier’s compliance with this Section.

(e) Upon Suppliers execution of this Agreement, Supplier must provide Company with a Supplier Contact for product liability claims, including name, address, telephone, email and the name, telephone, and email contact information of Suppliers insuring company.

The requirements of this Section 18 are not intended to and will not in any manner limit or qualify the liabilities or obligations assumed by Supplier under this Agreement including, without limitation, Suppliers indemnity obligations under Section 14 of this Agreement.

 

19. FORCE MAJEURE. If any place of business or other premises of Company or Supplier shall be affected by lockouts, strikes, riots, war, acts of terrorism, fire, civil insurrection, flood, earthquake, acts of God, or any other casualty beyond that party’s control (but not including market fluctuations other than those caused by reason of the foregoing), which might reasonably tend to impede or delay the delivery, receipt, handling, inspection, processing, sale or marketing of the Merchandise covered by this Agreement, the party so impacted may, at its option, cancel all or any part of the undelivered Order hereunder by giving prompt written notice to the other party.

 

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Supplier Number: 607499 Agreement Number: 607499-91-1 Effective Date: 09/21/2017

 

20. ASSIGNMENT; VENDOR NUMBER. Except as specifically set forth in Section 6, Supplier may not assign, delegate, or otherwise transfer to any entity any of its rights or obligations under this Agreement or under any Order (including any rights to any Company vendor number) without Company’s written consent. For purposes of and without limiting the foregoing, a Change of Control of Supplier will be deemed to constitute an assignment (or purported assignment) of this Agreement by Supplier. A “Change of Control” of Supplier means an event by which any person or entity, other than person(s) or entity(ies) having Control of Supplier as of the Effective Date, acquires Control of Supplier. “Control” means having direct or indirect power to direct, or cause the direction of, the management and policies of an entity, whether through the ownership of voting securities (even if less than majority ownership), contract, or otherwise. Any purported assignment in violation of this provision will be void. The vendor/supplier number assigned to Supplier in connection with this Agreement is unique and personal to Supplier and is non-transferable. Any person other than Supplier that purports to transact business with Company under Supplier’s vendor number will be jointly and severally liable with Supplier for all Supplier obligations to Company arising under this Agreement and any Order.

 

21. PUBLICITY; USE OF NAME AND INTELLECTUAL PROPERTY. Supplier shall not refer to Company in any advertising or published communication without the prior written approval of Company. Supplier shall not (i) produce, distribute, sell or dispose of Merchandise, or (ii) apply for, assign, license, or abandon intellectual property, that incorporates intellectual property that is owned by or licensed to Company, including Companys name, logo, trademarks, trade secrets, service marks, patents, copyrights or trade dress, without the prior written approval of Company. Company may use Suppliers name, logo, trademarks, service marks, marketing materials or content, copyrights and trade dress in connection with Companys marketing of the Merchandise.

 

22. COMPLIANCE WITH STANDARDS FOR SUPPLIER. Supplier warrants that it has read and understands and will comply with the requirements set forth in the Standards located at http://corporate.walmart.com/sourcing-standards-resources, and as may be amended from time to time by Company.

 

23. SEVERABILITY; WAIVER. No finding that a part of this Agreement is invalid or unenforceable shall affect the validity of any other part hereof. A party’s failure to enforce at any time any provision of this Agreement will not be construed as a waiver of such provision or of any rights thereafter to enforce such provision. Any waiver of any of the Terms and Conditions of this Agreement or any Order must be in writing signed by an authorized representative of Company or Supplier.

 

24. FORUM SELECTION; CHOICE OF LAW; STATUTE OF LIMITATIONS. This Agreement, any and all Orders, and any and all disputes arising hereunder or relating hereto, whether sounding in contract or tort, shall be governed by and construed in accordance with the laws of the State of Arkansas without regard to the internal law of Arkansas regarding conflicts of law, and the federal and/or state courts of Benton and Washington County, Arkansas, shall have exclusive venue and jurisdiction over any actions or suits relating thereto, except where Company expressly agrees otherwise in writing. The parties shall not raise, and hereby waive, any defenses based upon venue, inconvenience of forum or lack of personal jurisdiction in any action or suit brought in accordance with the foregoing. Any legal action brought by Supplier against Company must be filed within two (2) years after the date payment on the Order was due or it shall be deemed forever waived. The parties acknowledge that they have read and understand this clause and agree willingly to its terms.

 

25. ACCOUNT RECONCILIATIONS. Supplier shall pay amounts due to Company within thirty (30) days of the accrual date of the obligation. To address uncertainties regarding unclaimed property and to provide for timely account reconciliations, Company may: (i) retain, without payment to Supplier, any Merchandise received by Company for which Supplier does not invoice Company within one-hundred-eighty (180) days of Merchandise receipt; (ii) resolve any immaterial discrepancy in Company’s accounts payable balance for Supplier in favor of and credited to Company, unless Supplier establishes within one-hundred-eighty (180) days after receiving a notification of claim from Company that such discrepancy should be resolved in favor of Supplier; and (iii) reasonably request a binding statement of account from Supplier, and Supplier shall provide same within thirty (30) days of such request, reflecting the aggregate cumulative balance owed by Company to Supplier through the date of such statement of account and such additional detail concerning same as Company may request.

 

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Supplier Number: 607499 Agreement Number: 607499-91-1 Effective Date: 09/21/2017

 

26. CONFIDENTIALITY. Except as required by Law, Supplier will treat as confidential: (i) this Agreement; (ii) any Orders; (iii) Company’s costs, pricing, marketing, sales, customer and strategic information; (iv) the nature or results of any testing, inspection, or audit; (v) any information obtained while in attendance at Company sponsored events or meetings; and (vi) any other information Company designates as confidential. Upon Company’s request, Supplier will promptly return or destroy Company’s confidential information.

 

27. SUPPLIER REPRESENTATIVES. Supplier will not allow any employee or agent to make deliveries or perform services on Company’s premises unless and until Supplier conducts a reasonable investigation and determines that such person does not pose a reasonably ascertainable risk to the safety or property of Company, its employees, customers, or invitees. Supplier will maintain employment authorization records (including Form I-9 records) for any of its employees who perform services or make deliveries on Company’s premises, and will make such records available for inspection and audit by Company for purposes of confirming compliance as Company may from time to time request.

 

28. NOTICES. Unless otherwise specifically provided for herein, any notice or demand which under the terms of this Agreement or under any Law must or may be given or made shall be in writing and shall be given or made by overnight express service addressed as follows: if to Company: Wal-Mart Stores, Inc., Attn: General Merchandise Manager (identify department or category), 702 SW 8th Street, Bentonville, AR 72716 (or, if to Sam’s Club, Attn: General Merchandise Manager (identify department or category), 2101 SE Simple Savings Drive, Bentonville, AR 72716). If to Supplier: to Supplier’s address set forth in the General Supplier Information form that is part of the supplier registration process. Such notice or demand shall be deemed given on the second business day after deposit of such notice or demand with the overnight express service.

 

29. TERM; TERMINATION. This Agreement will commence on the Effective Date and continue in effect until terminated. If Company has not approved you as a supplier (whether or not Company has expressly rejected your application to become a supplier) then this Agreement will not become effective as to Company until Company does notify you in writing that you have been approved as a supplier of Company. If Company has notified you in writing that you have been approved as a supplier for Company, then this Agreement will become effective as to both Company and Supplier on the date you click or clicked I ACCEPTand remains effective until terminated in accordance with this Section. If Company rejects your application to be a supplier or does not approve you as a supplier of Company in writing after you have clicked I ACCEPT, then this Agreement will be considered null and void ab initio and will be of no force and effect. If Company has accepted Supplier as a supplier but Company has not yet issued an Order to Supplier, Company may terminate this Agreement immediately for any or no reason and without penalty by providing written notice to Supplier.

 

Upon at least thirty (30) days notice, either party may terminate this Agreement for any or no reason and without penalty. This Agreement will continue to apply to any Order dated before the termination of this Agreement, even if the Merchandise is delivered or accepted after termination of this Agreement. The acceptance by Supplier of any Order shall constitute acknowledgment of, and agreement with, the terms and conditions of this Agreement, the Order, and Standards, business programs, processes, directives or policies incorporated into this Agreement, and a reaffirmation of the representations, warranties and covenants made in this Agreement.

 

30. INFORMATION SECURITY. Supplier represents that it currently follows industry best practices to prevent any compromise of its information systems, computer networks, or data files (“Systems”) by unauthorized users, viruses, or malicious computer programs which could in turn be propagated via computer networks, email, magnetic media or other means to Company. Supplier shall immediately notify Company if the security of Supplier’s Systems is breached or compromised in any way. Supplier shall apply appropriate internal information security practices, including, but not limited to, using appropriate firewall and antivirus software; maintaining countermeasures, operating systems, and other applications with up to date virus definitions and security patches; installing and operating security mechanisms in the manner in which they were intended and sufficient to ensure the Company will not be impacted nor its operations disrupted; and permitting only authorized users access to computer systems, applications, and Retail Link. Supplier shall: (i) use up-to-date antivirus tools to remove known viruses and malware from any email message or data transmitted to Company; (ii) prevent the transmission of attacks on Company via the network connections between Company and the Supplier; and (iii) prevent unauthorized access to Company systems via the Supplier’s networks and access codes. In accordance with all applicable US and international privacy Laws, Supplier shall safeguard confidential protected individually identifiable personal information (health, financial, identity) which is received, transmitted, managed, processed, etc. and require its subcontractors or agents to meet the above security precautions. If Supplier receives personally identifiable financial information of Companys customers, it will maintain a current SSAE-16 SOC II audit.

 

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Supplier Number: 607499 Agreement Number: 607499-91-1 Effective Date: 09/21/2017

 

31. NO THIRD PARTY BENEFICIARIES. Except as expressly provided in this Agreement, Company and Supplier intend the Terms and Conditions of this Agreement and any Order to solely benefit Company and Supplier. Company and Supplier do not otherwise intend to, and do not, confer third-party beneficiary rights on any other person or entity.

 

32. SURVIVAL OF PROVISIONS. Sections 5, 6, 13, 14, 15, 16, 17, 21, 24 and 26, and any other provisions of this Agreement that by their nature are reasonably intended to survive termination, will survive the termination of this Agreement.

 

33. LEGAL COMPLIANCE; ETHICAL, SOCIAL AND ENVIRONMENTAL STANDARDS.

 

(a) Supplier will comply with the Standards and Laws of the jurisdictions in which the Supplier and all factories that produce Merchandise operate. Supplier shall ensure through self-audits, third party audits or approved certification programs that all factories producing Merchandise, including subcontractors’ factories, are in compliance with the Standards and all Laws, including those pertaining to labor, worker safety, and the environment.

(b) Supplier agrees to disclose all factories producing Merchandise, including subcontractorsfactories, as required under Companys factory disclosure policies, as may be amended from time to time. A description of Companys disclosure policy is available at http://corporate.walmart.com/sourcing-standards-resources. All factories, including subcontractors’ factories may be subject to announced and unannounced audits and/or verification audits by Company, its third party service providers and, if applicable, governmental agencies. Supplier shall cooperate and ensure that all factories cooperate with such audits. Supplier shall, and shall cause its contract factories to, provide all reasonable assistance for the safety and convenience of such auditors and inspectors in the performance of such audits, including providing adequate working area at the production facilities. Supplier will bear or reimburse Company for the costs of such audits.

(c) Company reserves the right to cancel any outstanding Order, refuse any shipments and otherwise cease to do business with Supplier if Supplier fails to comply with any terms of the Standards or if Company reasonably believes Supplier has failed to do so.

 

34. NO BUSINESS EXPECTATION. Company has no obligation and makes no promises to purchase any minimum amount of Merchandise from Supplier. No person has authority, on Company’s behalf, to make any representations or promises to Supplier of any expected or possible level of business with Supplier or about Company’s intentions or expectations regarding any present or future business with Supplier. Company will never assume that Supplier will be willing to continue to deliver Merchandise under this Agreement or to accept any specific volume of Orders. Conversely, Supplier should never assume that Company will issue Orders for specific volumes, if any, of Merchandise, even if Supplier’s impression is based on discussions Supplier may have had with Company representatives. No Company representative has authority to order Merchandise except an Authorized Buyer through an Order issued pursuant to and subject to the terms of this Agreement.

 

35. BUSINESS PROGRAMS AND PROCESSES. From time to time, Company may alter, amend, or create business programs, processes, directives and policies. When it does, Company may provide notice to Supplier of such changes via its Retail Link system, its corporate website (http://corporate.walmart.com/suppliers), and/or by such other means of direct notification to Supplier as Company may determine. After receiving such notice(s), Supplier’s acceptance of Orders will serve as confirmation of its acceptance of Company’s new business programs, processes, directives and policies.

 

36. ENTIRE AGREEMENT. This Agreement, the Standards (as may be amended from time to time) and any Order constitute the full understanding of the parties, a complete allocation of risks between them and a complete and exclusive statement of the terms and conditions of their agreement. All prior agreements, negotiations, dealings and understandings, whether written (including any electronic record) or oral, regarding the subject matter hereof, are superseded by this Agreement. Any changes in this Agreement shall be in writing and executed by both parties. Furthermore, if there is a conflict of terms between this Agreement, an Order, the Standards, business programs, processes, directives or policies incorporated into this Agreement, this Agreement shall be the controlling document.

 

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Supplier Number: 607499 Agreement Number: 607499-91-1 Effective Date: 09/21/2017

 

Appendix

 

This Appendix constitutes and is part and parcel of the Supplier Agreement. The terms of the Supplier Agreement are binding and enforceable as to this Appendix.

 

1. STANDARD PURCHASE ORDER ALLOWANCE

These allowances apply to each Order issued, unless otherwise agreed to by the parties.

 

Purchase Order Allowance   %   Payment Method   Payment Frequency
SA - New Store Allowance   10.0   Off Invoice   Each Invoice

NW - New

Warehouse Allowance

  10.0   Off Invoice   Each Invoice
WA - Warehouse Allowance   1.0   Off Invoice   Each Invoice
QD - Warehouse
Distribution Allowance
  1.0   Off Invoice   Each Invoice
SW - Swell Allowance
(SW or DM)
  0.85   Off Invoice   Each Invoice

 

2. PAYMENT TERMS

 

2.0% Cash Discount

30 Cash Discount Days Available

45 Net Payment Days Available

 

3. SHIPPING TERMS

 

Collect - F.O.B. Supplier

 

No minimum purchase is required for prepaid freight terms. No freight charges are to be added to invoices. Refer to the current Routing Instructions for detailed instructions.

 

4. PRODUCT CHEMICAL INFORMATION

Does Supplier currently sell, or anticipate selling, to Company under this Agreement any item of Merchandise that contains a powder, gel, paste, or liquid that is not intended for human consumption or any of the following products that are intended for human inhalation, consumption, or absorption: Lozenges, pills or capsules (e.g. pain relievers, vitamins); Medicated swabs, wipes and bandages; Patches (heated and/or medicated); Energy bars, diet supplements and vitamin drinks; Liquids (e.g. cough medicine, eye drops, ear drops, nasal spray and inhalers); Medicated shampoos, gums, ointments and creams; Lip balm, lip creams and petroleum jelly; Contraceptive foam, films, and spermicides; and Product/Equipment sold with chemicals (e.g. vaporizer sold with medication), and electronic cigarettes?

 

☐ YES         ☑   NO

 

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Supplier Number: 607499 Agreement Number: 607499-91-1 Effective Date: 09/21/2017

 

5. GROCERY RETURN POLICY

Company may return to Supplier, at Supplier’s expense, Merchandise that is: (i) defective or nonconforming; (ii) returned to Company by its customer (store or online); (iii) subject to Conditions of a Guaranteed Sale or Overstock/Stock Balancing; (iv) unsalable because, without limitation, it is short-dated, out-of-date, broken, crushed, dented, overfilled, underfilled, unlabeled, mislabeled, contaminated, infested, soiled, leaking; or (v) subject to a recall or product withdrawal from sale (in any case, “Unsalable Merchandise”). Unsalable Merchandise will remain returnable for sixty (60) days after Company and Supplier mutually agree to shut-off returns. Company will manage Unsalable Merchandise as follows:

 

SWELL ALLOWANCE

Supplier has given a Swell Invoice Allowance shown in “Standard Purchase Order Allowances” which will be deducted from each invoice before payment is made for Merchandise. Supplier will give the Swell Allowance in lieu of actual Unsalable Merchandise deductions being processed at store level. The Swell Allowance percentage must be adequate to cover all Unsalable Merchandise. If the actual value of Unsalable Merchandise at cost exceeds the Swell Allowance, Company reserves the right to charge Supplier the difference. Unsalable Merchandise will be handled by Company by recycling, disposal, salvage, or donation.

 

NOTWITHSTANDING THE FOREGOING (AND UNDER ANY OPTION), SUPPLIER AUTHORIZES COMPANY TO PROCESS AND MANAGE UNSALABLE MERCHANDISE AS COMPANY CHOOSES IN ITS DISCRETION (BUT WITHOUT AFFECTING RESPONSIBILITY FOR RETURN COSTS), IF COMPANY DETERMINES, FOR WHATEVER REASON (INCLUDING THE CONDITION OF THE MERCHANDISE AND ITS PACKAGING), THAT THE OPTION SELECTED BY SUPPLIER IS UNSUITABLE IN ADDITION, COMPANY IS NOT REQUIRED TO RETURN EMPTY OR DAMAGED PACKAGING TO SUPPLIER (OR RECLAMATION FACILITY) TO SUPPORT A CLAIM FOR RETURNED MERCHANDISE.

 

6. SHIPPING INSTRUCTIONS

Supplier will ship all Merchandise in accordance with the then current Shipping and Routing Instructions, Wal-Mart Stores, Inc. (the “Routing Instructions”). Supplier acknowledges it has received a copy of the Routing Instructions. The current Routing Instructions, as may be reasonably amended by Company from time to time, shall be available on Retail Link. Each purchase order will show a routing, which is determined by Company’s Traffic Department. Supplier is liable for the excess transportation cost if the designated routing is not followed. If Supplier has a question concerning the routing selected, Supplier must call Company’s Traffic Department before releasing the shipment at the following number: (479) 277-9096.

 

7. DISTRIBUTION METHOD

 

DC (Warehouse) ASN - No DSDC - No

 

8. CONDITION OF SALE

 

Condition of Sale   Definition
N/A   N/A

  

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SEAFOOD SUPPLIER TERMS & CONDITIONS

 

1. These terms and conditions apply to all orders to purchase products (collectively, “Product”) issued by a direct or indirect subsidiary of Whole Foods Market, Inc., a Texas corporation (“WFM”) to the Supplier of the Products listed below (“Supplier”). The Supplier shall perform according to these terms and conditions and all Pricing and Product Specifications Addendums and Purchase Orders (as defined below) entered into between the parties (collectively, the “Agreement”).

 

2. Product and Business Requirements.

 

(a) Supplier Supply Chain Information. Supplier represents and warrants that all information provided in the Seafood Supplier Application, including all supplements and related compliance requirements set forth therein, is true and correct and Supplier shall update on a regular basis any information in order to maintain its accuracy and completeness.

 

(b) WFM Product Specifications Definitions and Representations. Supplier has reviewed WFM’s quality standards, as set forth in the “Food: Acceptable/Unacceptable Ingredients” list provided on the vendor pages of WFM’s website https://supplier.wholefoodsmarket.com (username: vendor, password: wholefoods), and understands the requirement that all Product must be Chem-free, the unacceptable use of sodium tripolyphosphates on any fresh, frozen or retail packaged item (collectively, the “Ingredient List”) and any other Product specifications or requirements for doing business that WFM has provided to Supplier in writing, including, but not limited to, WFM Aquaculture Standards, which require a third party certification (collectively with the Ingredient List and the purchase order requirements the “WFM Requirements”). Supplier represents that it has or will provide WFM with information regarding its sourcing, production, processing, handling and record-keeping procedures and with a complete list of all ingredients used in the Products and in the production, processing and handling procedures, including those supplied and performed by any third party, and the identities of those third parties (“Supplier’s Standard Procedures and Ingredients”). Supplier’s Standard Procedures and Ingredients and the WFM Requirements are referred to in this Agreement as the “Product Specifications”. The term “Applicable Law” includes all requirements of any applicable domestic or foreign federal, state, provincial or local law, regulation or ordinance of the place where Products are grown, produced, processed, packaged, transported and the laws of the place where the Products are to be sold.

 

(c) Traceability Requirement. With the exception of Supplier’s that solely supply WFM with live mollusks, Supplier’s that sell products shall register with Trace Register and input all required documentation in order to allow WFM full traceability into the Product supply chain. Supplier shall not sell any Product to WFM that is not registered through Trace Register to ensure compliance with Product’s third party verified color rating.

 

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(d) Representations and Warranties. Supplier represents and warrants that until transfer of possession of its Products to the designated location listed in the Purchase Order (the “Delivery Point”) all Product (A) will be merchantable and comply with all Product Specifications; (B) will include packaging (if any) that is in compliance with all safety standards required by Applicable Law; (C) will not pose a health or safety hazard; (D) will not be contaminated with a foreign substance or contain any rancid ingredient; (E) will not include any ingredient that has not been disclosed to WFM; (F) will not include any major food allergen (within the meaning of Applicable Law) or be processed or packaged in a facility that uses a major food allergen in production processes unless it has been disclosed on the label in accordance with Applicable Law; (G) will not include any illegal, misleading or untrue label claim and will meet any certification requirements of any label claim; (H) will not be packed or held under insanitary conditions; (I) will not be adulterated or misbranded within the meaning of Applicable Law; (J) will be kept at appropriate temperatures throughout storage and transportation (K) will comply with all Applicable Law; and (L) upon payment, WFM will own the Product shipment free of any security interest, lien, pledge or other encumbrance of any nature. Supplier further represents and warrants that (i) if Supplier has knowledge that Products in a Product shipment may not comply with any representation, warranty or covenant made by Supplier or may otherwise pose a health or safety risk, Supplier will promptly notify WFM by phone and in writing; (ii) Supplier shall comply with all requirements and agreements contained in the WFM Seafood Supplier Application and will immediately notify WFM of any violation of the terms of that agreement or any related laws; (iii) Supplier will comply with the requirements described on the WFM Seafood Supplier Application; (iv) Supplier will not sell or substitute or attempt to sell or substitute products to WFM that are not “approved” by WFM via the Seafood Supplier Application; and (v) Supplier will provide full disclosure and updates to WFM of any notices, violations, fees, fines or other actions taken by any federal, state or local government regulatory agency against Supplier. Supplier further agrees that no proposed change to any Supplier Product or Supplier’s Standard Procedures and Ingredients will be deemed accepted by WFM unless WFM has agreed to the change in writing. Supplier agrees to promptly notify WFM in writing if Supplier becomes aware its Products or Standard Procedures and Ingredients fail to comply with any Product Specifications or Applicable Law.

 

(e) Social Accountability. Supplier shall comply with all WFM Labor and Human Rights Standards, including any required audits, which shall be based on the type of product and location Supplier and all employees and agents involved in the production, farming, processing or delivery of the Products will adhere to all Applicable Laws related to slavery and human trafficking as it pertains to the operation of their production facilities and their other business and labor practices, including but not limited to, the California Transparency in Supply Chains Act of 2010. Supplier specifically represents that it adheres to all local, state and national laws, codes and regulations governing all aspects of doing business including those that govern health, labor and employment, discrimination, the environment and disposal, safety, building and zoning for each location and country in which it does business. Supplier represents and warrants that (i) all work performed for it will be voluntary; (ii) its workers shall be free to leave upon reasonable notice; (iii) its workers, despite language, literacy, disability or other barriers, are informed of laws affecting labor, personal health and safety while at work; (iv) it will not use forced, bonded or indentured labor or involuntary prison labor; and (v) it is not involved in the recruitment, abduction, transport, harboring, transfer, sale or receipt of persons, through force, coercion, fraud or deception. Further, Supplier verifies its Product supply chains to ensure the above statements are true with respect to the producers and providers of goods and materials used by Supplier in Products sold to WFM.

 

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(f) Purchase Orders. All agreements to purchase a specific quantity of Products will be documented in a purchase order (a “Purchase Order”) issued by WFM. WFM shall issue a Purchase Order via electronic transmission. If Supplier desires to make any changes to any Purchase Order, Supplier must obtain the prior approval of WFM. If Supplier’s invoice or a shipping document conflicts with the Agreement, the provisions of these terms & conditions shall prevail.

 

(g) Delivery. Supplier will deliver Products in compliance with the Agreement appropriately packed for reshipment (unless delivered directly to a store). Supplier’s delivery of Product shipments will occur and title and risk of loss will pass when a Product shipment is received at the Delivery Point and an authorized representative of WFM has signed the bill of lading or other shipping document acknowledging its receipt. Supplier’s failure to timely deliver Product in compliance with the Purchase Order arrival date shall provide WFM the option, in its sole discretion, to cancel such Purchase Order.

 

3. Quality Assurance.

 

(a) Documentation. Supplier will maintain appropriate documentation evidencing compliance with this Agreement and shall, upon reasonable prior written notice from WFM, grant WFM reasonable access during normal business hours to this documentation. Supplier represents and warrants as follows: (i) Supplier and all third parties involved in production, processing and handling the Product until transfer of possession to WFM will maintain all licenses and registrations required by federal, state or local law to operate their businesses; and (ii) upon request, Supplier agrees to promptly provide WFM with such information or documentation.

 

(b) WFM Inspections. Supplier grants WFM and its agents the right to do the following at WFM’s expense: (i) to inspect all farms and processing or packing facilities during regular business hours; and (i) to have a representative on-site at any reasonable time.

 

4. Product Withdrawals & Recalls. Supplier has and will maintain a written recall plan for a reliable recall system which shall include appropriate tracking, coding and accounting systems for all Products for the entire supply chain, as well as securing necessary records for a minimum of two years beyond the expected shelf-life of the Product, or to the extent required by Applicable Laws of the country in which the Product is designated for sale, whichever is greater. Supplier shall immediately notify WFM of Product withdrawal or recall via email at: wfmfoodsafety.withdrawals@wholefoods.com. Supplier will provide WFM with primary and secondary contact numbers where WFM may reach Supplier outside of normal business hours with questions concerning time sensitive issues. Supplier will maintain updated primary and secondary 24-hour contact information for every Supplier, farm, processing facility, cold storage, broker, handling and transportation entity involved in both the inbound and outbound supply chain for each Product. At WFM’s request, Supplier will cooperate with and assist WFM with a consumer complaint, quality or regulatory issues, withdrawals, recalls or safety notices. WFM may withdraw or recall any Product for any reason at WFM’s own expense without liability or obligation to Supplier.

 

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5. Nonconforming Products. WFM may terminate any outstanding Purchase Order for a Product and/or reject, revoke acceptance of and either hold or return Products at Supplier’s expense if (i) there is evidence that a Product or part of any Product shipment fails to comply with the Agreement, (ii) conditions exist at any of the facilities in which the Product was produced, processed or handled that create a substantial risk that some of the Product could be contaminated or could fail to meet Product Specifications, or (iii) the Product is contaminated or otherwise fails to comply with the Agreement upon receipt at the Delivery Point. Payment of an invoice will not waive these rights and these rights are in addition to all others provided under law.

 

6. Insurance. Supplier shall obtain and maintain the insurance required by WFM (the “Insurance Coverage”) as determined through registration with WFM’s designated third party service provider (the “Insurance Portal”). Unless an exception is granted by WFM, the Insurance Coverage will be written by insurers in good standing that are licensed and admitted to do business in the locations where the Products are to be sold and the Insurance Coverage will be written on an occurrence basis by an insurance company classified by A M Best as a Class VII or larger with a Financial Strength Rating of at least A-. Through WFM’s Insurance Portal Supplier will provide a Certificate of Insurance naming Whole Foods Market, Inc. and its subsidiaries as an additional insured to the Company’s Commercial General Liability Policy and Umbrella/Excess Liability Policy and Supplier will provide a copy of the “CG20 15 Additional Insured” endorsement or its equivalent specifically covering products and completed operations. Supplier will require all of Supplier’s subcontractors to be insured against claims arising out of or relating to their performance of any of Supplier’s duties under the Agreement. Supplier will provide WFM 30 days’ notice of cancellation, as well as, a copy of the insurance and endorsements annually, upon renewal and/or upon material changes, or within 30 days of cancellation.

 

7. Indemnification.

 

(a) Supplier agrees to indemnify and hold harmless and defend WFM and Supplier hereby releases WFM from and against any and all Losses (defined below) caused in whole or in part by or arising from (i) Supplier’s breach or alleged breach of any representation, warranty, covenant or other obligation of Supplier set forth in the Agreement, (ii) the negligence, recklessness or willful misconduct of Supplier or any third party Supplier involved in the production, processing or handling the Product, (iii) the presence or activities of Supplier or any of its agents at any WFM premises, (iv) the failure of a Product to comply with any claim or representation on its label or the failure of a Product label to disclose information about the Product, including, but not limited to, information about allergens or country of origin, (v) any claim relating to a Product brought pursuant to California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65), (vi) any claim associated with the withdrawal or recall of a Product or safety notice if the withdrawal, recall or safety notice is based upon Product test samples or other evidence indicating that all or part of one or more Product shipments, as a result of a condition that existed upon receipt at the Delivery Point, failed to comply with the representations, warranties or covenants made by Supplier pursuant to the Agreement or could otherwise pose a health or safety risk, (vii) any claim initiated because of or resulting from the condition of a Product which existed prior to the acceptance of the Product shipment at the Delivery Point, (viii) any claim that a Product or its packaging or materials (or the use thereof whether alone or in combination with any other product or service) infringes upon or constitutes an unauthorized use of any patent, copyright, trademark, service mark, trade secret or other intellectual property right (collectively “Intellectual Property”); or (ix) the termination by any certifying agent of authorization to use their certifying marks. If the root cause of an adulteration discovered after delivery of a Product shipment to the Delivery Point is a result of the production, processing or handling of the Products in the Product shipment prior to delivery or the condition of the container at the time of delivery, then the adulteration will be regarded as having existed prior to the time of the acceptance of the Product shipment.

 

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(b) The obligation to indemnify set forth in this section includes an obligation to indemnify Whole Foods Market, Inc. and all its direct and indirect affiliates and each of their shareholders, members, managers, general and limited partners and other owners, their officers, directors, employees, agents, consultants and other representatives (in each case, an “Indemnitee”). The term “Losses” means losses suffered by an Indemnitee and all claims against an Indemnitee for losses, including, but not limited to, those relating to bodily injury, personal injury, illness, death, property damage or loss (including real and personal property whether owned or leased, and including loss of use), damages, liabilities, demands, liens, encumbrances, causes of action, obligations, costs and expenses including those relating to inspections, testing and product analysis, labor, publishing notices, storing, packaging, handling, transporting, re-labeling and/or destroying the product, refunds, WFM’s cost of unsold products, judgments, fines, fees, interest, awards or settlement amounts, reasonable attorneys’ fees, court costs and other costs of defense, and all claims that might be brought by (or losses suffered by) spouses, heirs, survivors or legal representatives, successors and assigns.

 

(c) WFM will have the option of investigating and negotiating a settlement of customer complaints and, where appropriate, of selecting counsel and controlling the defense of third party claims unless Supplier notifies WFM that its insurance provider has accepted the claim, in which case WFM shall have a right to participate in the investigation and settlement of complaints and to approve any choice of counsel and to participate in the settlement or defense. Supplier agrees to reimburse WFM for reasonable expenses (including reasonable attorneys’ fees and court costs) associated with investigating and settling or litigating claims as those expenses are incurred if the claim is subject to indemnification under this section.

 

8. Confidentiality. In connection with the negotiation of the terms of the Agreement and the provision of Products hereunder, WFM and Supplier may have acquired or may acquire or develop non public information relating to the other party and their businesses (“Confidential Information”). The parties agree that they will not disclose any Confidential Information to any third party unless the disclosure is necessary to fulfill the parties’ obligations under the Agreement and the third party has agreed in writing to keep the information confidential. The parties will use the degree of care it uses to protect their own confidential information to maintain the confidentiality of all Confidential Information, but in no case less than reasonable care.

 

9. Agreement Term; Termination. The Agreement shall be effective as of the date of execution by Supplier and will continue for as long as Supplier sells Product to WFM. Upon termination, all provisions of the Agreement, which are by their nature intended to survive termination, all representations and warranties, confidentiality and all indemnities shall survive such termination.

 

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10. Offset. WFM may deduct or offset payment of any amounts owed by Supplier to WFM as a result of (1) obligations described in these terms, (2) cost of onsite audits for selected rating units, (3) any other elections made by Supplier and (4) any other amounts owed under the law.

 

11. Governing Law; Forum and Jurisdiction; Waiver of Punitive Damages; Injunctive Relief. The relationship of the parties hereto and all claims arising out of or related to that relationship, including, but not limited to, the construction and interpretation of the Agreement, will be governed by the substantive laws of the State of Texas. The parties consent to venue in and the jurisdiction of the courts located in Austin, Travis County, Texas and acknowledge that these courts are proper and convenient forums. This is not an exclusive forum selection clause, however, to the fullest extent permitted by law, if an action is filed in the appropriate court in Austin, Travis County, Texas the parties waive any right to object to jurisdiction or venue in such court. The prevailing party in any action to enforce the Agreement will be entitled to recover all costs of the suit, including reasonable attorneys’ fees, expert fees and court costs.

 

12. Miscellaneous. The Agreement supersede all prior oral and written agreements between Supplier and WFM concerning the on-boarding of Supplier as a WFM approved vendor and the purchase of Products. The Agreement is binding upon and will inure to the benefit of the parties, their legal representatives and permitted successors and assigns. The Agreement may not be modified or waived except in writing. A waiver of any provision of the Agreement by a party will only apply to the occurrence involved and will not be construed as a continuing waiver. Failure or delay by a party to enforce the Agreement will not be construed as a waiver. Unless otherwise stated, all notices given in connection with the Agreement will be in writing and will be deemed to have been delivered as follows: (i) if sent by email, upon receipt of a return email from the recipient responding to the original email (ii) at the time of personal delivery, (iii) on date of delivery if mailed by certified mail, return receipt requested, (iv) at the time guaranteed by the courier if sent by a recognized national or international courier, as appropriate (in all cases postage prepaid) to Supplier at the address provided in the Seafood Supplier Application and to WFM at 550 Bowie Street, Austin, Texas 78703, Attention: Vice President of Purchasing-Perishables with a copy to General Counsel at the same address. If any provision of the Agreement is invalid, illegal, or unenforceable, it will be severed from the Agreement and the remainder of the Agreement will be enforced.

 

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SIGNED on 9/14/2017  
     
SUPPILIER: 

Ittella International INC.

DBA: Stonegate foods

 
     
By: /s/ Martha Martinez  
Name: Martha Martinez  
Title: Controller  
     
Address:

6305 Alondra Blvd.

 
  Paramount, CA 90723  

 

  7  

 

 

Date: January 7, 2015

Vendor A/P No. 

________________________________________

   
  Dept. No  ________________________________________

 

COSTCO WHOLESALE

BASIC VENDOR AGREEMENT
United States (2004)

  

Stonegate Foods INC. (“Vendor”) and Costco Wholesale Corporation (referred to as “Costco Wholesale”) agree that:

 

A. Agreement Documents. All sales and deliveries of all merchandise by Vendor to Costco Wholesale (or other purchaser under paragraph C below), and all purchase orders by Costco Wholesale (or other purchaser under paragraph C below) to Vendor, will be covered by and subject to the terms of each of the following documents (collectively the “Agreement Documents”):

 

This Basic Vendor Agreement;

 

The attached Costco Wholesale Standard Terms United States (2004), as they may be amended in writing by Costco Wholesale from time to time (“Standard Terms”); and

 

Each Vendor Purchase Program Agreement, Item Agreement, or any other agreements (such as warehouse displays, promotions or rebates) that have been or will be signed between Vendor and Costco Wholesale.

 

B. Inconsistency. The above Agreement Documents collectively are an agreement between us, are part of this Basic Vendor Agreement and are incorporated herein by reference. In case of any inconsistency among any Agreement Documents, the lowest such document in the above list will take priority over any document higher on the list.

 

C. Purchaser. Each purchase will be made in the name of “Costco Wholesale,” but may be for the account of its affiliates or licensees.

 

D. Insurance. The insurance requirements are set forth in Section 16 of the Standard Terms.

 

E. Disputes. Disputes shall be resolved under Sections 20 and 21 of the Standard Terms.

 

F. Relationship of the Parties. The relationship between Costco Wholesale and Vendor is that of an independent contractor and Vendor agrees that it has not and shall not hold itself out as, nor shall Vendor be deemed to be, an agent of Costco Wholesale.

 

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G. Vendor Code of Conduct. Vendor agrees to comply with Costco Wholesale’s Vendor Code of Conduct (December 2003), as it may be amended in writing by Costco Wholesale from time to time.

 

H. Other Forms. The Agreement Documents supersede all terms in Vendor’s invoices and other forms, and all prior oral or written communications between us. No party is entering into these Agreement Documents in reliance on any oral or written promises, representations or understandings other than those in the Agreement Documents.

 

COSTCO WHOLESALE CORPORATION VENDOR

 

By:     By /s/ Salvatore Galletti

  (Buyer)   (Signature of owner, Officer or other Authorized Employee)

 

By     Salvatore Galletti, CEO

  (GMM)   (print Name and title)

 

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Costco Wholesale STANDARD TERMS United States (2004)

 

These terms and conditions (“Standard Terms”) apply to every purchase, sale, shipment and delivery of Merchandise from Vendor to Costco Wholesale Corporation (“Costco Wholesale”) or its affiliates or licensees (“Affiliate Purchasers”), and related transactions, unless otherwise agreed in writing and signed by Costco and by Vendor. Each purchase will be made in the trade name of “Costco Wholesale,” but will be for the account of either Costco, or of one of the Affiliate Purchasers. The term “Costco Wholesale” as used below means the entity or entities for which the purchase is being made. The term “Agreement Documents” refers to all documents as defined in the Basic Vendor Agreement.

 

I. MERCHANDISE AND PALLETS.

 

(a) “Merchandise” includes all goods described in any Costco Wholesale Purchase Order to Vendor and all packaging, instructions, warnings, warranties and other materials and services normally included or otherwise delivered with such Merchandise. Vendor shall comply with all packing (including pallets) requirements of the carrier and Costco Wholesale, and its cost is included in the price of the Merchandise. Vendor shall comply with Costco Wholesale’s Structural Packaging Specifications and inspect all Merchandise prior to shipment to ensure quality, safety and conformity and to ensure that the Merchandise is properly packed and loaded to prevent transit damage and tampering.

 

(b) “Pallets” must at a minimum, be of standard GMA #1 quality, 4 way entry (40” x 48”) or CHEP. In the event pallets do not meet these minimum standards, Costco Wholesale, at its sole option, may at Vendor’s sole expense reject the Merchandise and/or rework the pallets.

 

2. PURCHASE ORDERS. Vendor may ship only against a written Costco Wholesale Purchase Order (“Purchase Order”). A Purchase Order shall be considered an acceptance of any offer to sell by Vendor. Shipment in response to a Purchase Order is acceptance of the Purchase Order and of these Standard Terms. Except as specified in a Purchase Order, projections, any past purchasing history and representations about quantities to be purchased are not binding and Costco Wholesale shall not be liable for any act or expenditure (including expenditures for equipment, labor, materials or packaging) by Vendor in reliance on them. The relationship between Costco Wholesale and Vendor is that of an independent contractor and Vendor agrees that it has not and shall not hold itself out as, nor shall Vendor be deemed to be, an agent of Costco Wholesale.

 

3. P.O. & ITEM NUMBER. Vendor shall mark all invoices, bills of lading, and packing lists to show legibly the complete Costco Wholesale Purchase Order and Item number(s) to which they relate.

 

4. DOCUMENTS. Vendor shall comply with all billing, payment, claim and document instructions in the Costco Wholesale Vendor Credit Information Packet, as it may be revised in writing by Costco Wholesale from time to time. On the date any Merchandise is shipped, Vendor shall send to the “Bill To” address an original invoice that reflects Costco Wholesale’s Purchase Order and accounts payable vendor number. The actual scale weights shall be shown on all bills of lading and other shipping documents that must accompany the Merchandise to the shipping destination. Any claims submitted by Vendor to Costco Wholesale regarding unpaid invoices, partial payments, RTVs, rebate or audit deductions, etc. must be submitted on a Costco Wholesale Standard Vendor Claim Form.

 

5. PRICE CHANGES. The prices on Costco Wholesale’s Purchase Order are not subject to any increase or additional charges because of increased cost, any change in law or any other reason. Vendor must give Costco Wholesale thirty (30) days’ advance written notice of any price change on future orders.

 

6. PAYMENT. (30) days after delivery is completed under Section 7 below. Vendor shall not assign or factor its account without prior written notice by Vendor to Costco Wholesale’s accounting department. Said assignee or factoring third party is only entitled to the payment validly owed to Vendor and said assignment does not confer upon assignee or factor any other rights. Once the account has been assigned to a third party, the assignment shall not be changed or discontinued without the prior written consent of both the Vendor and such third party and prior written notice to Costco Wholesale’s accounting department.

 

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Costeo Wholesale STA_NDARD TERMS United States (2004)

 

7. DELIVERY. Vendor will be responsible for making all claims with the carrier in writing for all losses or damages and/or rework expenses regardless of whether Costco Wholesale arranges carriage, designates the carrier and/or pays the freight. Sales are on a delivered basis and Vendor’s delivery of the Merchandise will occur and title and risk of loss will pass only when and to the extent conforming Merchandise has been received at the Costco Wholesale warehouse or depot designated in the Purchase Order and a Costco Wholesale employee has signed the bill of lading or other shipping document acknowledging that receipt. If the Purchase Order designates an FOB sale with delivery to an ocean port or carrier for ocean shipment, the terms of sale and delivery will be FOB Vessel Incoterms 2000. All ocean shipments for Hawaii and Alaska are FOB Costco Wholesale.

 

8. LATE SHIPMENT. Costco Wholesale may at any time cancel any shipment not actually received by Costco Wholesale by the “Ship To Arrive Date” shown on the Purchase Order, without cost to or further obligation by Costco Wholesale. Vendor shall notify Costco Wholesale immediately if any shipment will not occur in time to arrive by the “Ship To Arrive Date”. Vendor may ship back orders and late shipments only to the extent authorized in writing by Costco Wholesale and only on a freight prepaid basis at Vendor’s expense.

 

9. COMPLIANCE WITH LAWS.

 

(a) Vendor warrants all Merchandise to be manufacture & processed, packaged, labeled, tagged, tested, certified, accurately marked, weighed, inspected, shipped and sold in compliance with all applicable industry standards and all applicable federal, state, provincial and local laws, treaties and regulations, including by way of example all laws and regulations relating to labor, health, safety, environment, serial and identification numbers, labeling, country of origin designation, and Customs requirements; all FDA, toxic substances, OSHA and EPA regulations, Federal Meat Inspection Act or Poultry Products Inspection Act, or any other food safety statute; and the requirements of California Proposition 65.

 

(b) Vendor agrees to execute and/or furnish to Costco Wholesale on reasonable request, all certifications, guaranties and other documents regarding and verifying compliance with such laws and regulations, including any Material Safety Data Sheet (“MSDS”) as required by OSHA regulations. Vendor shall supply Costco Wholesale, at Vendor’s expense, with an annual Good Manufacturing Practices (“GMP”) Food Safety Audit conducted by a Costco Wholesale approved independent third-party auditing company or by Costco Wholesale’s vendor auditing employees.

 

(c) Vendor must give prompt written notice to Costco Wholesale of any facts it learns indicating that Merchandise is not in compliance with such laws, regulations and/or standards in Section 9 (a) or any other provisions of these Standard Terms.

 

(d) Costco Wholesale reserves the right to cancel any Purchase Order if it reasonably believes Merchandise to be delivered does not comply with the requirements of this section.

 

10. U.L. All electrical Merchandise must be approved by Underwriter’s Laboratories, Inc. or the equivalent designated in writing by Costco Wholesale,

 

11. ABILITY TO SELL. Vendor warrants and represents to Costco Wholesale that the Merchandise and its resale will not infringe any patent, trademark, trade dress, trade name, copyright or other right of any third party; that the Merchandise is without defects and has adequate warnings and instructions; and that Vendor is not a party to any agreement or understanding, and that there is no other impediment or restriction that limits, prohibits or prevents Vendor from selling and delivering the Merchandise to Costco Wholesale or limits, prohibits or prevents Costco Wholesale from reselling the Merchandise.

 

12. REJECTION/MERCHANDISE RETURN.

 

(a)  Costco Wholesale at its option may, at any time, reject (or revoke acceptance of) and either return to Vendor or hold at Vendor’s risk and expense, any Merchandise, shipment or portion thereof that is non-conforming, or that is shipped contrary to Costco Wholesale’s instructions, or that is in excess of the quantities covered by the Purchase Order, or that allegedly contains any defect or inadequate warnings or instructions, or allegedly violates any law, regulation, or court or administrative order, or allegedly infringes any patent, trade name, trade dress, trademark, copyright or other right of any third party;

 

(b) Payment of any invoice does not limit Costco Wholesale’s right to reject or revoke acceptance. Vendor hereby assumes, and shall bear and pay. all risks and expenses of unpacking, examining, repacking, storing, holding and/or reshipping or returning any such Merchandise, and shall reimburse Costco Wholesale its net landed cost for such Merchandise as shown on the books of Costco Wholesale, in addition to any other remedies available to Costco Wholesale. In the event Vendor’s payment terms include a cash discount, such discount is not refundable to Vendor upon return of Merchandise pursuant to this Section 12;

 

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Costeo Wholesale STA_NDARD TERMS United States (2004)

 

(c) Vendor is responsible for all amounts arising from Costco Wholesale’s rejection or revocation of acceptance of Merchandise (including Merchandise which may have been processed and/or commingled with other product) and any amounts over and above any negotiated defective allowance;

 

(d) In the event Costco Wholesale cancels any Purchase Order pursuant to Sections 8 and 9, rejects any Merchandise for any reason set forth in Section 12(a), accepts customer returns pursuant to Section 13, or exercises its rights under Section 14, Costco Wholesale shall not be liable to Vendor for any damages.

 

13. CUSTOMER RETURNS. Costco Wholesale may reject or revoke acceptance of any Merchandise returned by Costco Wholesale’s customers for any reason stated in Section 12(a) above.

 

14. REFUND; OFFSETS. At Costco Wholesale’s option, Vendor shall grant a full refund to Costco Wholesale or, if Costco Wholesale so elects, a credit or replacement with respect to any shipment, Merchandise or portion thereof that Costco Wholesale rejects or revokes acceptance; and Costco Wholesale may offset any such amounts against amounts Costco Wholesale owes to Vendor or may owe in the future. Costco Wholesale may also offset costs associated with defective pallets, monies owed for regulatory fines or penalties (including associated attorneys’ fees), any rebates/incentive allowances and any other amounts owed or to be owed by Vendor against amounts Costco Wholesale owes to Vendor. Costco Wholesale may, at the end of a season at the close of a business relationship, or otherwise, hold back a reasonable reserve for future claims against amounts owed. In the event there remains an outstanding balance owed Costco Wholesale after such offset, Vendor shall immediately pay to Costco Wholesale said balance.

 

15. INDEMNITY. Vendor shall defend, hold harmless and indemnify Costco Wholesale, its subsidiaries, affiliates, and their employees, agents and representatives (collectively “Costco Wholesale”) from and against any and all claims (including claims of Costco Wholesale against Vendor), actions, liabilities, losses, fines, penalties, costs and expenses (including reasonable attorneys’ and experts’ fees) arising out of any of the following provided that the Vendor’s obligation to defend shall apply only to claims or actions brought by a third party against Costco Wholesale:

 

(a) Any actual or alleged infringement or misappropriation of any patent, trademark, trade name, trade dress, copyright or other right relating to any Merchandise, or other breach of these Standard Terms or the Agreement Documents;

 

(b) Any actual or alleged injury to any person, damage to any property, or any other damage or loss, by whomsoever suffered, claimed to result in whole or in part from the Merchandise or any actual or alleged defect in such Merchandise, whether latent or patent, including any alleged failure to provide adequate warnings, labeling or instructions;

 

(c) Any actual or alleged violation of any law, statute or ordinance or any judicial or administrative order, rule or regulation relating to the Merchandise, or to its manufacture, shipment, import, labeling, weights and measurements, use or sale, or any failure to provide an MSDS or certification; or

 

(d) Any act, activity or omission of Vendor or any of its affiliates, employees, representatives, agents or contractors, including activities on Costco Wholesale’s premises and the use of any vehicle, equipment, fixture or material of Vendor in connection with any sale to or service for Costco Wholesale.

 

These indemnities and obligations of Vendor shall not be affected, expanded or limited in any way by Costco Wholesale’s extension of warranties to its customers, or by any approval, specification, act or omission of Costco Wholesale. Vendor shall have no obligation to defend, hold harmless and indemnify Costco Wholesale for Costco Wholesale’s sole negligence or intentional wrongful acts.

 

16. INSURANCE.

 

(a) Vendor shall obtain and maintain, at its expense, a policy or policies of:

 

(i) Commercial General Liability (including product and completed operations, personal and advertising injury, contractual liability coverage) with a minimum of $2,000,000 General Aggregate limit; $2,000,000 Products and Completed Operations Aggregate limit; and $1,000,000 each occurrence, written on an occurrence form. Insurance shall be written on a world-wide basis.

 

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Costeo Wholesale STA_NDARD TERMS United States (2004)

 

(ii) For Vendors whose employees enter Costco Wholesale’s premises, Workers’ Compensation Insurance with statutory limits and Employers’ Liability (Stop-Gap Liability in monopolistic State Workers Compensation Fund states) insurance with minimum limits of $1,000,000 per accident combined single limit for bodily injury and property damage; Automobile Liability Insurance with $1,000,000 per accident combined single limit for bodily injury and property damage limits for each accident, including owned, non-owned and hired vehicles. Such insurance shall contain a waiver of subrogation endorsement in favor of Costco Wholesale.

 

(b) Vendor will provide Certificates of Insurance at all times naming Costco Wholesale Corporation and/or any subsidiary, proprietary company or corporation, partnership or joint venturer thereof as “Additional Insureds” with respect to General Liability and Automobile Liability policies, and attach the Broad Form Vendor Endorsement (ISO CG2015 1185) executed in favor of Costco Wholesale and Additional Insureds, to the Certificates of Insurance, and protecting all parties from the liability set forth in 16(a) above. Vendor’s insurers must be Best’s rated B+, VII or better. Vendor shall provide the Certificates of Insurance, evidencing the required coverage, prior to receiving a Purchase Order from Costco Wholesale.

 

(c) Policy limits may not be reduced, terms changed, or the policy canceled with less than thirty (30) days’ prior written notice to Costco Wholesale. Vendor’s insurance shall be primary with respect to any other insurance available to Costco Wholesale and shall contain a waiver of subrogation by Vendor’s insurance carrier against Costco Wholesale and its insurance carrier with respect to all obligations assumed by the Vendor pursuant to the Agreement Documents. It shall be the responsibility of the Vendor to ensure that any of its agents, representatives, subcontractors, and independent contractors comply with the above insurance requirements. Coverage and limits referred to above shall not in any way limit the liability of the Vendor.

 

17. RECALLS. In the event Merchandise is the subject of a recall (which includes safety notices) or other action required to bring the Merchandise into compliance with the Agreement Documents (whether initiated by Costco Wholesale, Vendor, or a government or consumer protection agency), Vendor shall be responsible for all costs and expenses associated with the recall, notice or action. Vendor shall promptly reimburse Costco Wholesale for all costs and expenses incurred by Costco Wholesale related to the recall, notice or action including recalling, shipping and/or destroying the Merchandise (and where applicable, any products with which the Merchandise has been packaged, consolidated or commingled), including refunds to customers and Costco Wholesale’s net landed cost of unsold Merchandise.

 

18. TAXES. Costco Wholesale’s purchase is for resale unless Costco Wholesale otherwise states in writing. Vendor’s pricing should be exclusive of all sales, use and like taxes. If claiming the resale sales tax exemption, Costco Wholesale will provide Vendor with valid tax exemption (resale) certificates for those states where deliveries are to be made. Vendor’s invoicing Costco Wholesale for any tax or fee shall constitute a warranty that Vendor is duly registered with the agency which levies the tax or fee. If Vendor does not remit the tax or fee to the appropriate agency, and/or if the same tax or fee is subsequently assessed by the agency against Costco Wholesale, Vendor shall reimburse Costco Wholesale for all amounts of tax or fee Costco Wholesale has remitted to Vendor to date and Vendor shall defend, indemnify and hold harmless Costco Wholesale against all losses, penalties, interest and expenses (including attorneys’ fees)

 

19. REMEDIES. The exercise of any remedy herein shall be without prejudice to any other right or remedy available to either party. At no time shall Costco Wholesale be liable for consequential damages incurred by Vendor.

 

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Costeo Wholesale STA_NDARD TERMS United States (2004)

 

20. DISPUTES AND ARBITRATION. All claims and disputes that (1) are between Vendor and Costco Wholesale or either’s subsidiaries, parents, affiliates, officers, directors and/or employees, and (2) arise out of or relate to the Agreement Documents or their subject matter, interpretation, performance or enforcement, or any other agreement, transaction or occurrence between Vendor and Costco Wholesale (including without limitation any tort or statutory claim) (“Dispute”) shall be arbitrated under the Commercial Arbitration Rules of the American Arbitration Association (“AAA”), in English at Seattle, Washington, before one neutral arbitrator who may be a national of any party and who shall be a member of the AAA’s Large Complex Case Panel. All documents and information relevant to the claim or dispute in the possession of any party shall be made available to the other party not later than sixty (60) days after the demand for arbitration is served, and the arbitrator may permit such depositions or other discovery deemed necessary for a fair hearing. The arbitrator shall have the power to require discovery of third parties (including testimony and documents) to the fullest extent allowed by the laws of the State of Washington. The hearing may not exceed two days. The award shall be rendered within 120 days of the demand. The arbitrator may award interim and final injunctive relief and other remedies, but may not award punitive, exemplary, treble, or other enhanced damages. To the fullest extent permitted by law, no arbitration under the Agreement Documents shall be joined to an arbitration involving any other party, whether through class arbitration proceedings or otherwise. No time limit herein is jurisdictional. Any award of the arbitrator (including awards of interim or final remedies) may be confirmed or enforced in any court having jurisdiction. Notwithstanding the above, Costco Wholesale or Vendor may bring court proceedings or claims against each other (i) solely as part of separate litigation commenced by an unrelated third party, or (ii) if not first sought from the arbitrator, solely to obtain in the state or federal courts in King County, Washington, temporary or preliminary injunctive relief or other interim remedies pending conclusion of the arbitration. In the case of contradiction between the provisions of this Section 20 and the Commercial Arbitration Rules of AAA, this Section shall prevail. The limitations on remedies described above may be deemed inoperative to the extent necessary to preserve the enforceability of the agreement to arbitrate. If any provision of this agreement to arbitrate is held invalid or unenforceable, it shall be so held to the minimum extent required by law and all other provisions shall remain valid and enforceable.

 

21. VENUE: ATTORNEYS’ FEES. Vendor consents to the personal jurisdiction and exclusive venue of the federal and state courts in King County, Washington, for any court action or proceeding. The prevailing party in any arbitration or court action or proceeding shall be awarded its reasonable attorneys’ fees, expenses (including without limitation expert witness fees) and costs.

 

22. GOVERNING LAW. The Agreement Documents and all agreements between Vendor and Costco Wholesale shall be governed by and construed according to the laws of the State of Washington, without regard to conflicts of laws principles.

 

23. SEVERABILITY. If any provision of any Agreement Document or of any agreement between Vendor and Costco Wholesale is held invalid or unenforceable, it shall be so held to the minimum extent required by law and all other provisions shall remain valid and enforceable.

 

24. BAR CODES. Vendor shall place on all Merchandise sold to Costco Wholesale an accurate Universal Product Code (“UPC”) that complies with the written Costco Wholesale Uniform Product Code Requirements, as amended from time to time. Vendor will promptly supply Costco Wholesale with its manufacturer assigned UPC number. If Vendor fails to place an accurate UPC on any Merchandise, Costco Wholesale may assess Vendor for Costco Wholesale’s internal costs and any associated fines, costs, expenses or attorneys’ fees levied. If requested by Costco Wholesale, Vendor shall place Costco Wholesale’s assigned item number on all Merchandise supplied to Costco Wholesale.

 

25. CALIF. PROP. 65. Vendor represents it is fully aware of, and agrees to comply with, California Proposition 65 (Calif. Health & Safety Code 25249.5-25249.13) and its implementing regulations (22 Calif. Code Reg. § 12000 et seq), including the following:

 

(a) The Merchandise must not contain chemicals known to the State of California to cause cancer or reproductive toxicity; or

 

(b) The quantity of the chemical in question is in compliance with the Federal and California standards, or the Merchandise must carry a warning label that complies with California law.

 

Vendor shall provide Costco Wholesale a current MSDS that meets the requirements of OSHA regulations and California Admin. Code, Title 8, § 5194, or a statement from the manufacturer that no MSDS is legally required for the Merchandise.

 

26. OZONE LAWS. Vendor represents and certifies that:

 

(a) No Merchandise contains any foam or other substances (“Banned Substances”) banned under regulations adopted by the U.S. Environmental Protection Agency (“EPA”) or under any other U.S. laws or regulations; and

 

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Costeo Wholesale STA_NDARD TERMS United States (2004)

 

(b) The Merchandise either (a) does not contain and/or is not manufactured with the use of any Class I or Class II Ozone-Depleting Chemicals (“ODCs”), or (b) is properly labeled in full compliance with EPA regulations and other applicable laws and regulations.

 

27. INTELLECTUAL PROPERTY. The ownership and exclusive use of the trademarks and other intellectual property owned by or under license to Costco Wholesale and/or its affiliates, which include COSTCO WHOLESALE (and all derivatives thereof) and KIRKLAND SIGNATURE (and all derivatives thereof) shall remain vested in Costco Wholesale and/or such affiliates as the case may be, and Vendor shall have no rights or interest in them. Vendor agrees that prior to using such intellectual property in any manner, it will obtain prior written consent and comply with Costco Wholesale’s Guidelines. Vendor shall not contest, directly or indirectly, the ownership, validity, or enforceability of such intellectual property or use any confusingly other similar intellectual property.

 

28. CHILD/FORCED PRISON LABOR LAWS AND VENDOR CODE OF CONDUCT. Vendor represents and warrants that it and its subcontractors/suppliers will comply with all applicable labor and environmental laws and regulations of the country’ where the Merchandise is produced. Vendor further represents and warrants that it and its subcontractors/suppliers do not use any form of compulsory prison or slave labor, or illegal child labor and do not physically abuse their workers. Vendor also agrees to comply with Costco Wholesale’s Vendor Code of Conduct. Upon review of any unsatisfactory audit results, Castro Wholesale, in its sole discretion, reserves the right to terminate its relationship with a Vendor or any of its subcontractors/suppliers, cancel any Purchase Order, return or revoke acceptance of affected Merchandise and/or require corrective action be taken. The Vendor shall be liable for all related damages incurred by Costco Wholesale, including lost profits.

 

29. CONFIDENTIALITY.

 

(a) Vendor may be exposed to confidential information of Costco Wholesale. “Confidential Information” means non-public information, whether written, oral, recorded on tapes or in any other media or format, that Costco Wholesale designates confidential or which, under the circumstances surrounding disclosure, ought to be treated as confidential. Confidential Information includes, without limitation, information relating to Costco Wholesale’s members, vendors, employees, business plans, marketing plans, product plans, processes, strategies, know-how, forecasts, and/or sales or financial information.

 

(b) Confidential Information shall not include information that Vendor can conclusively establish (i) entered the public domain without Vendor’s breach of any obligation owed to Costco Wholesale; (ii) was lawfully disclosed to Vendor from a source other than Costco Wholesale; or (iii) is or was rightfully in Vendor’s possession prior to disclosure by Costco Wholesale.

 

(c) Vendor agrees, both during and after the close of the business relationship with Costco Wholesale, to hold the Confidential Information in the strictest confidence and not to disclose such Confidential Information to any third party. Vendor shall, however, be permitted to disclose relevant aspects of such Confidential Information to its officers, employees, attorneys, auditors by a public accounting firm, or a federal or state government agency, on a need-to-know basis in order to perform its obligations under the Agreement Documents, provided that it has undertaken to protect the Confidential Information to the same extent as required under this Agreement Vendor shall give Costeo Wholesale notice immediately upon learning of any unauthorized use or disclosure of Confidential Information.

 

(d) In the event Vendor is served with any subpoena or other legal process requiring or purporting to require the disclosure of any Confidential Information, Vendor shall promptly notify Costco Wholesale and shall cooperate fully with Costco Wholesale and its legal counsel in challenging, opposing, seeking to limit or appealing any such legal process to the extent deemed appropriate by Costco Wholesale

 

30. CHANGE IN CONTROL /ASSIGNMENT.

 

(a) In the event of a change in control of
Vendor, Costco Wholesale shall have the option but not the obligation to cancel any Purchase Order that in whole or in part has not been fully performed.

 

(b) Any assignment of the Agreement Documents without Costco Wholesale’s prior written consent is void and if approved, the Agreement Documents will be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns.

 

31. NO PUBLICITY. Vendor shall not, without the prior written consent of Costco Wholesale, refer to Costco Wholesale or any of its affiliates in any manner in press releases, advertising or other public or promotional statements.

 

 

Page 6

 

Exhibit 10.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.16

 

24/11/17-10:25:10 UmkcPrt3TRA~E-9210-000001 1

 

Instance Type and Transmission

 

 

Notification (Transmission) of Original sent to SWIFT (ACK) 

Network Delivery Status : Network Ack
Priority/Delivery : Normal
Messade Input Reference : 0925 171124UMKCUS44BINT2711689795

 

Message Header

 

 

swift Input : FIN 700 Issue of a Documentary credit

 

Sender : UMKCUS44INT
    UMB BANK, N.A.
    (TRADE SERVICES)
    KANSAS CITY,MO US
Receiver : UNCRITMMDIR
    UNICREDIT S.P.A.
    (HEAD OFFICE)
    MILANO IT

 

Message Text

 

 

27:   Sequence of Total
    1/2
40A:   Form of Documentary Credit
    IRREVOCABLE STANDBY
20:   Documentary Credit Number
    SB50533
31c:   Date of Issue
    171124
40E:   Applicable Rules
    UCP LATEST VERSION
31D:   Date and Place of Expiry
    2104300UR COUNTERS
50:   Applicant
    ITTELLA INTERNATIONAL,INC.
    6305 ALONDRA BOULEVARD
    PARAMOUNT, CA 90723
59:   Beneficiary - Name & Address
    UNICREDIT S.P.A.
    PIAZZA GAE AULENTI - UNICREDIT
    TOWER B-6, 20154 MILAN - ITALY
32B:   Currency Code, Amount
    Currency : EUR (EURO)
    Amount   : #750,000.#
41A:   Available With...By... - FI BIC
    UMKCUS44INT
    UMB BANK, N.A.
    (TRADE SERVICES)
    KANSAS CITY,MO US
    BY PAYMENT
46A:   Documents Required
    FUNDS UNDER THIS CREDIT ARE AVAILABLE AGAINST PRESENTATION OF:
    A) A SIGNED STATEMENT SENT BY AN AUTHORIZED REPRESENTATIVE OF UNI CREDIT S.P.A., ADDRESSED TO US AT UMB BANK, N.A., 1008 OAK. STREET, KANSAS CITY, MISSOURI 64106, ATTN: INTERNATIONAL TRADE SERVICES, OR
    B) AN AUTHENTICATED SWIFT MESSAGE SENT BY AN AUTHORIZED REPRESENT ATIVE OF UNICREDIT S.P.A., TO SWIFT BIC: UMKCUS44INT
     
    EITHER OF WHICH TO BE IN THE FOLLOWING FORMAT (WITH THE BLANKS COMPLETED):
     
    QUOTE THE UNDERSIGNED, AN AUTHORIZED REPRESENTATIVE OF UNICREDIT S.P.A., CERTIFIES THAT A COMPLIANT DEMAND HAS BEEN RECEIVED UNDER GUARANTEE NUMBER XX ISSUED BY UNICREDIT S.P.A. IN FAVOR OF ESOG EL S.R.L. IN LIQUIDAZIONE ON BEHALF OF ITTELLA ITALY S.R.L., AND THE AMOUNT OF EUR XX IS DUE UNICREDIT S.P.A. UNDER UMB BANK, N.A. LETTER OF CREDIT NO. SB50533.UNQUOTE

 

 

 

 

24/11/17-10:25:10 UmkcPrt3TRA~E-9210-000001 2

 

    THIS CREDIT IS ISSUED TO INDUCE ISSUANCE BY UNICREDIT SPA, MILAN ITALY OF A BANK GUARANTEE ON OUR BEHALF SUBSTANTIALLY AS FOLLOWS IN FIELD 47A (SPECIAL CONDITIONS).
    UPON ISSUANCE OF THE REQUESTED BANK GUARANTEE PLEASE SEND YOUR AU THENTICATED SWIFT MESSAGE TO US (UMKCUS44INT) CONFIRMING SUCH ISS UANCE, INCLUDING THE BANK GUARANTEE REFERENCE NUMBER. ALL BANKING CHARGES INCURRED BY UNICREDIT SPA ARE FOR THE ACCOUNT OF ITTELLA ITALY S.R.L., AND WILL BE COLLECTED BY UMB BANK, N.A. ON YOUR BEH ALF UPON YOUR REQUEST.
    WE ENGAGE WITH YOU THAT DEMANDS FOR PAYMENT PRESENTED IN COMPLIAN CE WITH THE TERMS AND CONDITIONS OF THIS CREDIT WILL BE DULY HONO RED ON PRESENTATION IF PRESENTED ON OR BEFORE THE EXPIRY DATE.

 

47A:   Additional conditions
    (carta intestata della banca)
    QUOTE:
    A:
    Esogel in liquidazione s.r.l.
     
    Data, luogo: xxx
     
    Oggetto: Fideiussione bancaria n. xxx
     
    Premesso che

 

    (A) ai sensi del contratto di affitto di ramo d'azienda concluso il 16 ottobre 2017 con scrittura autenticata dal Notaio italiano Coppola Rep. n. 77.752, Raccolta 41.700, tra "STONEGATE FOODS S. R.L." (poi rinominata "Ittella Italy S.r.l." il 25 ottobre 201 7), con sede legale a PIZZO (Vv) Via Riviera, Prangi Lotto Colace SNC, CAP 89812, codice fiscale italiano 03393170794, una societa organizzata ai sensi deTTa legge italiana, (1' "Affittuario") e "ESOGEL s.r.l. in liquidazione" una societa organizzata ai se nsi della legge italiana, con sede legale in Prossedi (LT), colle la Torre, Via La Torre or Strada della Casaina, s.n.c., codice fi scale italiano 02583730599 (il "Concedente"), it Concedente ha affittato all'Affittuario un ramo d'azienda situato in Prossedi (LT) costituito da un edificio e relativi impianti e autori-zzazio ne per condurre la produzione e la conservazione di prodotti alim entari surgelati (il "Contratto di Affitto"),
     
    (B) ai sensi del Contratto di Affitto, l'Affittuario ha l'obbligo di pagare al Concedente it canone in rate mensili anticipate di E uro 25.000,00, oltre IVA, entro it decimo giorno di ciascun mese (1' "Obbligazione di Pagamento del Canone"), cosi per n.42 (qua rantadue) mesi complessivi, salvo l'esercizio anticipato del diri tto di opzione di acquisto del ramo di azienda,
     
    (C) ai sensi del Contratto di Affitto, a garanzia dell'obbligazio ne di pagamento del canone, l'Affittuario deve consegnare al conc edente una fideiussione bancaria, emessa in favore del Concedente, per un importo totale di Euro 750.000,00 (settecentoc inquantamila) e valida per un periodo di 42 mesi, i.e. firm al 15 aprile 2021,con riduzione automatica ad Euro 450.000,00 - in asse nza di escussione - alla fine del secondo anno, come meglio speci ficato infra,
     
    (D) it Contratto di Affitto e regolato dalla legge italiana e sog getto alla giurisdizione esclusiva del Tribunale di Latina
     
    ora, pertanto, si conviene quanto segue.
     
    Su ordine e per conto dell'Affittuario, la banca sottoscritta (, con sede legale in xx, in persona di xx) (in seguito, la "Banca"), emette la presente fideiussione in favore del Concede nte per l'ammontare massimo di Euro 750.000,00 (settecentocinquan tamila) (1' "Importo Garantito"), al fine di assicurare l'obbli gazione,di Pagamento del Canone ai seguenti termini e condizioni (la "Fi deiussione Bancaria"). Allo scadere del secondo anno da ll'emissione della Fideiussione Bancaria e cioe alla data del (g g/mm/aaaa), l'importo Garantito si ridurra automaticamente, senza necessita di modifica, ad Euro 450.000,00 (Euro quattrocentocinq uantamila/00): pertanto decorsi ulteriori 15 giorni da tale data, ogni even tuale richiesta di pagamento per importi superior i a tale cifra non sara considerata conforme ai sensi della prese nte Fideiussione Bancaria.
    La Banca emette la presente Fideiussione Bancaria all'espressa co ndizione del beneficio della preventiva escussione nei confronti dell'Affittuario nel senso di non dover pagare prima che it conce dente non abbia esperito i rimedi nei confronti dell'Affittuario indicati di seguito, sulla base di quanto precede, prima che it c oncedente possa chiedere alla Banca it pagamento ai sensi della p resente Fideiussione Bancaria, it Concedente deve ottenere un tit olo esecutivo di pagamento nei confronti dell'Affittuario e deve avere eseguito senza successo it titolo esecutivo di pagamento ne i confronti dell'Affittuario, come meglio sotto specificato._
     
    Qualsiasi richiesta di pagamento alla Banca deve essere inviata d al Concedente, unitamente ad una copia autenticata-:

 

 

 

 

24/11/17-10:25:10 UmkcPrt3TRADE-9210-000001 3

 

    (i) del titolo esecutivo di pagamento in favore del Concedente e nei confronti dell'Affittuario per il pagamento del canone scadut o ai sensi del Contratto di Affitto, e
    (ii) di una dichiarazione dell'Ufficiale Giudiziario italiano che mostri che la prima esecuzione sui beni dell'Affittuario sulla ba se del Titolo Esecutivo di Pagamento e insufficiente, in tutto o in parte, per soddisfare il credito del Concedente ai sensi dell' Obbligazione di Pagamento del Canone.
     
    A condizione che i documenti di cui sopra siano ricevuti dalla Ba nca, la Banca si impegna a pagare, fino all'Importo Garantito, qu alsiasi importo dovuto dall'Affittuario al Concedente per l'obbli gazione di Pagamento del Canone e come risultante dei documenti d i cui sopra, entro 10 giorni lavorativi dopo il ricevimento dei s uddetti documenti. Ogni pagamento effettuato dalla Banca ai sensi della presente Fideiussione Bancaria, verra portato a riduzione d ell'Importo Garantito.
     
    La presente Fideiussione Bancaria puo essere eseguita una o piu v olte, fino all'Importo Garantito, essendo espressamente pattuito che l'Importo Garantito si riterra ridotto per qualsivoglia impor to pagato, per qualunque ragione, dalla Banca al Concedente ai se nsi della presente Fideiussione Bancaria.
    continued in SWIFT MT 701
71B:   Charges
    ALL BANKING CHARGES OTHER THAN THE
    ISSUING BANK'S CHARGES ARE FOR
    THE ACCOUNT OF THE BENEFICIARY.
49:   Confirmation Instructions
    WITHOUT
78:   Instr to Payg/Accptg/Negotg Bank
    DOCUMENTS MUST BE SENT TO UMB BANK, N.A., INTERNATIONAL TRADE
    SERVICES, 1008 OAK STREET, KANSAS CITY, MISSOURI 64106 USA
    IN ONE LOT VIA EXPRESS AIR COURIER.
    THIS IS THE OPERATIVE CREDIT INSTRUMENT.
72:   Sender to Receiver Information
    Please acknowledge receipt.

 

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PKI Signature: MAC-Equivalent

 

Interventions

 

 

Category : Network Report
Creation Time : 24/11/17 10:24:58
Application : SWIFT Interface
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{l:F21UMKCUS44BINT2711689795}{4:{177:1711240925}{451:0}}

*End of Message

 

 

 

 

24/11/17-10:38:19 UmkcPrt3TRADE-9211-000001 1

 

Instance Type and Transmission

 

 

Notification (Transmission) of Original sent to SWIFT (ACK) 

Network Delivery Status : Network Ack
Priority/Delivery : Normal
Message Input Reference : 0938 171124UMKCUS44BINT2711689799

 

Message Header

 

 

Swift Input : FIN 701 Issue of a Documentary Credit

 

Sender : UMKCUS44INT
    UMB BANK, N.A.
    (TRADE SERVICES)
    KANSAS CITY, MO US
Receiver : UNCRITMMDIR
    UNICREDIT S.P.A.
    (HEAD OFFICE)
    MILANO IT

 

Message Text

 

 

27:   Sequence of Total
    2/2
20:   Documentary Credit Number
    SB50533
47B:   Additional Conditions
    Qualsiasi pagamento da parte della Banca sara effettuato in Euro.
     
    La presente Fideiussione Bancaria entra in vigore dalla data odie rna e rimarra valida ed efficace fino al 15 aprile 2021 (la ''Da to Finale di Scadenza"). Ogni richiesta di pagamento ai sensi de lla presente Fideiussione Bancaria dovra pervenirci entro e non o ltre it 30 aprile 2021 a pena di decadenza, non intendendo la sot toscritta Banca, in deroga al disposto dell'art. 1957 C.C. rimane re obbligata dopo la scadenza di tale termine. Dopo tale data ci considereremo automaticamente e pienamente liberati da ogni e qua lsiasi obbligazione nei Vostri confronti, anche nel caso in cui 1 a presente fideiussione non dovesse esserci restituita.
     
    Qualsiasi richiesta di pagamento da parte del Concedente, e ogni altra comunicazione dal Concedente alla Banca relativa alla Fidei ussione Bancaria, deve essere effettuata per iscritto e inviata a lla Banca, con copia per l'Affittuario, tramite raccomandata con ricevuta di ritorno o consegna a mano, con la sottoscrizione di p ersone a cio autorizzate. Detta comunicazione sara efficace al mo mento della ricezione se ricevuta dalla Banca prima o alle 16.00 di un giorno lavorativo, altrimenti, essa sara efficace a partire dal successivo giorno lavorativo.
     
    Le comunicazioni devono essere inviate ai seguenti indirizzi:
     
    se alla Banca, a:
     
    se al Concedente, a:
     
    Via Appia Km. 56,100 – Cisterna di Latina (LT)
     
    se all'Affittuario, a:
     
    Ittella Italy S.r.l., Strada della Casaina, s.n.c., localita Coll e La Torre, Prossedi (LT)
     
    o ad altro indirizzo che ciascuna relativa parte puo notificare a lle altre parti per iscritto.
     
    Alla decorrenza della Data Finale di Scadenza, la presente Fideiu ssione Bancaria cessera di avere ogni effetto, indipendentemente dalla circostanza che l'originale della controparte sia restituit o alla Banca.
     
    La presente Fideiussione Bancaria non puo essere ceduta a terzi s enza il previo consenso della Banca o dell'Affittuario.
     
    La presente Fideiussione Bancaria e regolata dalla legge della Re pubblica Italiana. Qualsiasi controversia che sorga in concession e con la presente Fideiussione Bancaria sara sottoposta alla giur isdizione esclusiva del Tribunale di (xx).
     
    Distinti saluti,
     
    (Banca)

 

 

 

  

24/11/17-10:38:19 UmkcPrt3TRADE-9211-000001 2

 

    Ai sensi dell'art. 1341 C.C. si approvano esplicitamente i seguen ti punti:
     
    Deroga al disposto dell'art. 1957 C.C.
     
    Foro competente.
     
    (Banta)
    UNQUOTE

 

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*End of Message

 

 

 

 

 

Exhibit 16.1

 

October 21, 2020

 

Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

 

Commissioners:

 

We have read the statements made by Tattooed Chef, Inc. (formerly known as Forum Merger II Corporation) under Item 4.01 of its Form 8-K dated October 21, 2020. We agree with the statements concerning our Firm in such Form 8-K; we are not in a position to agree or disagree with other statements of Tattooed Chef, Inc. contained therein.

 

Very truly yours,

 

/s/ Marcum llp

 

Marcum llp

 

Exhibit 21.1

 

TATTOOED CHEF INC.

 

LIST OF SUBSIDIARIES

 

(as of October 15, 2020)

 

Name of Subsidiary   Country (State)   Percent
Ownership
Myjojo, Inc.   United States (Delaware)   100%
Ittella International, LLC   United States (California)   100%
Ittella’s Chef, LLC   United States (California)   100%
Ittella Italy S.R.L.   Italy   100%

Exhibit 99.1

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

Introduction

 

The Company is providing the following unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the Business Combination.

 

The following unaudited pro forma condensed combined financial information is prepared in accordance with Article 11 of Regulation S-X and presents the pro forma effects of the following transactions (collectively the “Transactions”):

 

1. The restructuring described in the section of the Proxy Statement titled “Information About Ittella Parent — Corporate Information” prior to the consummation of the Business Combination.

 

2. Tax distribution of $512,000 to the stockholders of Ittella Parent prior to the consummation of the Business Combination.

 

3. The Business Combination.

 

The Unaudited Pro Forma Condensed Combined Financial Statements

 

The following unaudited pro forma condensed combined balance sheet as of June 30, 2020, assumes that the Transactions, as described above, occurred on June 30, 2020. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2019 and the six months ended June 30, 2020, present the pro forma effect of the Transactions as if they had been completed on January 1, 2019.

 

The following unaudited pro forma combined financial statements do not necessarily reflect what the Company’s financial condition or results of operations would have been had the Transactions occurred on the dates indicated. The pro forma combined financial information also may not be useful in predicting the future financial condition and results of operations of the Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

 

The historical financial information of Forum was derived from the audited financial statements of Forum as of and for the year ended December 31, 2019 and the unaudited condensed financial statements of Forum as of and for the six months ended June 30, 2020, included elsewhere in the Proxy Statement. The historical financial information of Ittella Parent was derived from Ittella Parent’s audited consolidated financial statements as of and for the year ended December 31, 2019 and its unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2020, included in the proxy statement.

 

The pro forma financial information is qualified in its entirety by reference to, and should be read together with Forum’s and Ittella Parent’s unaudited and audited consolidated financial statements and related notes and the sections titled “Summary Historical Financial Information of the Company”, “Summary Historical Financial Information of Ittella Parent”, “The Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations”, and “Ittella Parent Management Discussion and Analysis of Financial Condition and Results of Operations”, included in the Proxy Statement. The unaudited pro forma adjustments are based on information currently available, and assumptions and estimates underlying the unaudited pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma condensed combined financial information.

 

Description of the Business Combination

 

Pursuant to the Merger Agreement, Merger Sub was merged with and into Ittella Parent, with Ittella Parent continuing as the surviving entity and a wholly-owned subsidiary of the Company. The aggregate consideration paid at the Closing to the Ittella Parent securityholders is the “Closing Merger Consideration.” The Closing occurred on October 15, 2020. The Closing Merger Consideration comprised $75,000,000 in cash, with the remainder of the Closing Merger Consideration comprising the Company’s common stock, valued at $10.00 per share. The Holdback Shares are payable after the Closing to the Ittella Parent stockholders upon satisfaction of certain conditions within the first three years after the Closing.

 

1

 

 

Accounting for the Business Combination

 

Business combinations in which the legal acquirer is not the accounting acquirer are commonly referred to as “reverse acquisitions” and can represent asset acquisitions, capital transactions and business combinations. A reverse acquisition occurs when the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes and the entity whose equity interests are acquired (the legal acquiree) is identified as the acquirer for accounting purposes. Reverse acquisitions are accounted for in accordance with Subtopic 805-40 of Accounting Standards Codification Topic 805 “Business Combinations” (“ASC 805-40”).

 

As described in the Proxy Statement, including under the section entitled “Proposal No. 1 — The Business Combination Proposal,” Ittella Parent was acquired by the Company and the owners of Ittella Parent obtained control of the Company following the Business Combination. In accordance with ACS 805-40, the Business Combination will be accounted for as a reverse acquisition in which the Company is considered the legal acquirer and Ittella Parent is considered the accounting acquirer. As such, the consolidated financial statements will reflect the accounting from the perspective of Ittella Parent as the accounting acquirer. This determination is based on the following factors:

 

i. Ittella Parent securityholders combined retained the largest voting interest in the Company.

 

ii. Ittella Parent’s former management represent the majority of the management of the Company.

 

iii. Ittella Parent is the entity with the ability to elect the largest number of members to the Company’s board of directors.

 

iv. Ittella Parent is larger than Forum based on assets, revenues, or earnings.

 

Other factors were evaluated but are not considered to have a material impact on the determination of Ittella Parent as the accounting acquirer.

 

The Business Combination will be accounted for as a reverse acquisition in accordance with U.S. GAAP. Under this method of accounting, Forum will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Ittella Parent issuing stock for the net assets of Forum, accompanied by a recapitalization. The net assets of Forum will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the reverse acquisition will be those of Ittella Parent. The reverse acquisition of Ittella Parent is determined to result in a transfer of an entire business operation and therefore represents a business combination through which the pre-transaction securityholders of Ittella Parent will retain a controlling interest in the Company.

 

Basis of Unaudited Pro Forma Presentation

 

The unaudited pro forma condensed combined financial statements for the year ended December 31, 2019 have been prepared using and should be read in conjunction with the following:

 

Forum’s audited financial statements, consisting of the balance sheet as of December 31, 2019 and statement of operations and comprehensive income for the year ended December 31, 2019, and the related notes, included in the Proxy Statement.

 

Ittella Parent’s audited consolidated financial statements, consisting of the consolidated balance sheet as of December 31, 2019 and consolidated statement of operations and comprehensive income (loss) for the year ended December 31, 2019, and the related notes, included in the Proxy Statement.

 

2

 

 

The unaudited pro forma condensed combined financial statements as of and for the six months ended June 30, 2020 have been prepared using and should be read in conjunction with the following:

 

Forum’s unaudited financial statements, consisting of the balance sheet as of June 30, 2020 and statement of operations and comprehensive income for the six months ended June 30, 2020, and the related notes, included in the Proxy Statement.

 

Ittella Parent’s unaudited consolidated financial statements, consisting of the consolidated balance sheet as of June 30, 2020 and consolidated statement of operations and comprehensive income (loss) for the six months ended June 30, 2020, and the related notes, included in the Proxy Statement.

 

Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.

 

The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings or cost savings that may be associated with the Business Combination.

 

The unaudited condensed pro forma adjustments reflecting the completion of the Business Combination are based on certain currently available information and certain assumptions and methodologies that the Company believes are reasonable under the circumstances. The unaudited condensed pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the unaudited pro forma condensed adjustments and it is possible the difference may be material. The Company believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination based on information available to management at this time and that the unaudited pro forma condensed adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

 

The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the business combination taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the post-combination company. They should be read in conjunction with the historical financial statements and notes thereto of the Company and Ittella Parent.

 

The unaudited pro forma condensed combined financial information has been prepared on the basis of total redemptions of 1,827 shares of Class A common stock of the Company valued at $18,952.

 

Accounting Policies and Reclassifications

 

Based on management’s initial analysis of the accounting policies of Forum and Ittella Parent, there were no differences identified that would have an impact on the unaudited pro forma condensed combined financial information or that would require adjustments to the unaudited pro forma condensed combined financial statements. Management will perform a comprehensive review of the accounting policies of Forum and Ittella Parent. As a result of the comprehensive review, management may identify differences between the accounting policies of these entities which, when conformed, could have a material impact on the financial statements of the Company.

 

Unaudited Pro Forma Financial Information

 

The following unaudited pro forma condensed combined balance sheet as of June 30, 2020 and the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2019 and six months ended June 30, 2020 are based on the historical financial statements of Forum and Ittella Parent. The unaudited pro forma adjustments are based on information currently available, and assumptions and estimates underlying the unaudited pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma condensed combined financial information.

 

3

 

 

ITTELLA PARENT AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2020

 

(in thousands)   Ittella
Parent
Consolidated
    Forum
Consolidated
    Ittella
Parent
Pro Forma
Consolidated
    Pro Forma
Adjustments
        Ittella
Parent
As adjusted
 
CURRENT ASSETS                                            
Cash and cash equivalents   $ 5,202     $ 86     $ 5,288     $ 104,400    

PF: 1

PF: 2
PF: 3
PF: 6

  $ 109,688  
Cash held in Trust           207,402       207,402       (207,402 )   PF: 1      
Accounts receivable     15,707             15,707                   15,707  
Inventory     27,100             27,100                 27,100  
Prepaid expenses and other current assets     3,780       426       4,206                 4,206  
      51,789       207,914       259,703       (103,002 )         156,701  
                                             
PROPERTY AND EQUIPMENT, NET     11,915             11,915                 11,915  
                                             
INTANGIBLE ASSETS INCLUDING GOODWILL                                  
                                             
DEFERRED TAXES     189             189                 189  
                                             
OTHER ASSETS     256             256                 256  
                                             
TOTAL ASSETS   $ 64,149     $ 207,914     $ 272,063     $ (103,002 )       $ 169,061  
                                             
LIABILITIES AND STOCKHOLDERS’ EQUITY                                            
                                             
CURRENT LIABILITIES                                            
Accounts payable   $ 26,163     $ 1,245     $ 27,408     $         $ 27,408  
Accrued expenses     1,456             1,456       8,250     PF: 3     9,706  
Dividends payable     1,923             1,923                 1,923  
Line of credit     14,532             14,532                 14,532  
Notes payable to related parties, current portion     189             189       (189 )          
Notes payable, current portion     540             540       (404 )         136  
Other current liabilities     895             895                 895  
      45,698       1,245       46,943       7,657     PF: 6     54,600  

 

4

 

 

ITTELLA PARENT AND SUBSIDIARIES
UNAUDITED PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2020 (Continued)

 

(in thousands)   Ittella
Parent
Consolidated
    Forum
Consolidated
    Ittella
Parent
Pro Forma
Consolidated
    Pro Forma
Adjustments
        Ittella
Parent
As adjusted
 
NONCURRENT LIABILITIES     2,433       8,800       11,233       (9,332 )  

PF: 2;

PF: 6

    1,901  
                                             
CLASS A COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION           192,868       192,868       (192,868 )   PF: 6      
                                             
REDEEMABLE NONCONTROLLING INTEREST     43,900             43,900       (43,900 )   PF: 4      
                                             
STOCKHOLDERS’ EQUITY (DEFICIT)                                            
Common stock     1       1       2       (1 )   PF: 7     1  
Additional paid-in capital           2,127       2,127       165,581     PF: 4;
PF: 8
    167,708  
Accumulated other comprehensive income     (343 )           (343 )               (343 )
Retained earnings (deficit)     (28,498 )     2,873       (25,625 )     (29,181 )   PF: 1;
PF: 2;
PF: 3;
PF: 4;
PF: 7
    (54,806 )
Total equity attributable to common stockholders     (28,840 )     5,001       (23,839 )     136,399           112,560  
Noncontrolling interests     958             958       (958 )   PF: 5      
      (27,882 )     5,001       (22,881 )     135,441           112,560  
                                             
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 64,149     $ 207,914     $ 272,063     $ (103,002 )       $ 169,061  

 

5

 

 

ITTELLA PARENT AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2019

 

(in thousands except per share information)   Ittella
Parent
Consolidated
    Forum
Consolidated
Forum
    Ittella
Parent
Pro Forma
Consolidated
    Pro Forma
Adjustments
        Ittella
Parent
As adjusted
 
REVENUE   $ 84,919     $     $ 84,919     $         $ 84,919  
                                             
COST OF GOODS SOLD     71,209             71,209                 71,209  
                                             
GROSS PROFIT     13,710             13,710                 13,710  
                                             
OPERATING EXPENSES     7,454       1,105       8,559       934     PF: 8    

9,493

 
                                             
INCOME FROM OPERATIONS     6,256       (1,105 )     5,151       (934 )         4,217  
                                             
OTHER INCOME AND EXPENSES                                            
Interest income           4,289       4,289       (2,326 )   PF: 1     1,963  
Interest expense (income)     (494 )           (494 )         PF: 1     (494 )
Unrealized gain on marketable securities held in Trust Account           18       18       (18 )          
      (494 )     4,307       3,813       (2,344 )         1,469  
                                             
INCOME BEFORE PROVISION FOR INCOME TAXES     5,762       3,202       8,964       (3,278 )         5,686  
                                             
PROVISION FOR INCOME TAXES     154       852       1,006       (973 )   PF: 9     33  
                                             
NET INCOME (LOSS)     5,608       2,350       7,958       (2,305 )         5,653  
                                             
LESS: INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS     1,082             1,082       (1,082 )   PF: 4      
                                             
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS   $ 4,526     $ 2,350     $ 6,876     $ (1,223 )       $ 5,653  
                                             
SHARES OUTSTANDING, BASIC AND DILUTED     8       6,688                           57,619 (1)
                                             
NET INCOME PER SHARE   $ 549.93     $ (0.11 )                       $ 0.10  

 

 

(1) Pro forma shares outstanding does not include 2,500 Sponsor Earnout Shares and 5,000 Holdback Shares that are held in escrow subject to the achievement of certain conditions.

 

6

 

 

ITTELLA PARENT AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2020

 

(in thousands except per share information)   Ittella
Parent
Consolidated
    Forum
Consolidated
    Ittella
Parent
Pro Forma
Consolidated
    Pro Forma
Adjustments
        Ittella
Parent
As adjusted
 
REVENUE   $ 67,934     $     $ 67,934     $         $ 67,934  
                                             
COST OF GOODS SOLD     54,946             54,946                 54,946  
                                             
GROSS PROFIT     12,988             12,988                 12,988  
                                             
OPERATING EXPENSES     4,458       1,273       5,731       467     PF: 8     6,198  
                                             
INCOME FROM OPERATIONS     8,530       (1,273 )     7,257       (467 )         6,790  
                                             
OTHER INCOME AND EXPENSES                                            
Interest income           751       751       (363 )   PF: 1     388  
Interest expense     (381 )           (381 )               (381 )
Other income (expense)     288             288                 288  
      (93 )     751       658       (363 )         295  
                                             
INCOME BEFORE PROVISION FOR INCOME TAXES     8,437       (522 )     7,915       (830 )   PF: 1     7,085  
                                             
PROVISION (BENEFIT) FOR INCOME TAXES     1,283       32       1,315       (248 )   PF: 9     1,067  
                                             
NET INCOME (LOSS)     7,154       (554 )     6,600       (582 )         6,018  
                                             
LESS: INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS     1,361             1,361       (1,361 )   PF: 4      
                                             
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS   $ 5,793     $ (554 )   $ 5,239     $ 778         $ 6,018  
                                             
SHARES OUTSTANDING, BASIC AND DILUTED     8       6,835                           57,619 (1)
                                             
NET INCOME (LOSS) PER SHARE   $ 703.55     $ (0.17 )                       $ 0.10  

 

 

(1) Pro forma shares outstanding does not include 2,500 Sponsor Earnout Shares and 5,000 Holdback Shares that are held in escrow subject to the achievement of certain conditions.

 

7

 

 

Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

 

The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give effect to pro forma events that are (1) directly attributable to the Business Combination, (2) factually supportable and (3) with respect to the statement of operations, expected to have a continuing impact on the results of the Company.

 

There were no intercompany balances or transactions between Forum and Ittella Parent as of the dates and for the periods of these unaudited pro forma condensed combined financial statements.

 

The unaudited pro forma condensed combined provision for income taxes does not necessarily reflect the amounts that would have resulted had Forum and Ittella Parent filed consolidated income tax returns during the periods presented.

 

The unaudited pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined consolidated statements of operations are based upon the number of shares outstanding, assuming the Business Combination occurred on January 1, 2019.

 

The unaudited pro forma adjustments included in the unaudited pro forma condensed combined balance sheet as of June 30, 2020, and the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2019 and the six months ended June 30, 2020, are as follows:

 

Pro Forma Adjustments (PF)

 

1 Reflects the reclassification of cash held in Forum’s trust account amounting to $207,402,252 as of June 30, 2020. This cash is used for transaction considerations (i.e., settlement of debts and defined obligations of Ittella Parent), transaction expenses, the redemption of 1,827 shares of Class A common stock of Forum valued at $18,952 and general corporate purposes following the Closing. This also reflects the adjustment of trust income related to the transaction cash consideration and other expenses related thereto and the resulting tax impact of the trust income using a US federal tax rate of 21% and a California state tax rate of 8.84%.

 

2. Reflects the settlement of $7,000,000 of deferred underwriters’ fees.

 

3. Represents transaction costs in connection with the Business Combination totaling $35,105,092 of which $26,855,092 was paid in cash at Closing, consisting of the deferred underwriters’ fees referenced in PF 2, legal and financial advisors’ fees, and other professional fees. This amount includes the accrued compensatory shares payable to Harrison Co. in the second quarter of 2021.

 

4. Represents recapitalization of Ittella Parent equity through the issuance of 9,406 shares of common stock, one share of Class A special stock, one share of Class B special stock and the exchange of certain securityholders’ shares of Ittella Parent’s common stock for 34,470,329 shares of the Company’s common stock as consideration in the Business Combination.

 

a. Exchange of 12.5% noncontrolling ownership interest held by a financial institution in Ittella LLC
to Ittella Parent for 1,176 shares of common stock of Ittella Parent.

 

b. Exchange of Pizzo’s 30% ownership interest in Ittella Italy to Ittella Parent in exchange for one share of Class B special stock of Ittella Parent, which entitled Pizzo to receive 1,500,000 shares of common stock of the Company and $2,000,000 in cash at the Closing.

 

c. Issuance of one share of Class A special stock of Ittella Parent to a key employee, which entitled her to receive 500,000 shares of common stock of the Company and $1,000,000 in cash at the Closing.

 

d. Conversion of all issued and outstanding capital stock of Ittella Parent immediately prior to the Business Combination into the right to receive common stock of the Company.

 

8

 

 

e. Conversion of shares of the Company’s Class B common stock into shares of the Company’s common stock in connection with the Business Combination.

 

f. The Sponsor will subject 2,500,000 founder shares to potential forfeiture if certain conditions are not achieved by the post-combination company following the Closing. These shares are not included for purposes of the calculations of net income (loss) per share. In addition, 5,000,000 Holdback Shares subject to the achievement of the same conditions are also not included for purposes of the calculations of net income (loss) per share.

 

g. Reversal of non-controlling interests on Ittella Parent’s shares that were subsequently converted/exchanged with the Company’s shares.

 

5. Reflects elimination of non-controlling interests attributable to a financial institution and Pizzo.

 

6. Reflects settlement of Class A common stock subject to possible redemption held by Forum prior to the Business Combination, and certain of Forum’s debt obligations outstanding at Closing.

 

7. Reflects elimination of Forum’s stockholders’ equity.

 

8. Reflects the incremental expense to be incurred by Ittella Parent as a result of agreements for (i) a new hire to the executive management team, and (ii) compensation adjustments to the existing executive management team’s compensation based on the employment agreements to be effective upon the Closing. Compensation expense includes salary, bonus and burden.

 

9. Reflects adjustments to income tax expense as a result of the tax impact on the pro forma adjustments at the estimated US federal statutory tax rate of 21.0% and the California state tax rate of 8.84%.

 

Net income (loss) per Share

 

Represents the net income (loss) per share calculated using the historical weighted average shares outstanding and the issuance of additional shares in connection with the Business Combination, assuming the shares were outstanding since January 1, 2019. As the Business Combination is being reflected as if it had occurred at the beginning of the periods presented, the calculation of weighted average shares outstanding for basic and diluted net income per share assumes that the shares issuable relating to the Business Combination have been outstanding for the entire periods presented.

 

9

 

 

COMPARATIVE SHARE INFORMATION

 

The following table sets forth the per share data of Forum on a stand-alone basis and the unaudited pro forma condensed combined per share data for the year ended December 31, 2019 and the six months ended June 30, 2020 after giving effect to the Business Combination.

 

You should read the information in the following table in conjunction with the selected historical financial information summary included in the Proxy Statement, and the historical financial statements of Forum and Ittella Parent and related notes that are included in the Proxy Statement. The unaudited Forum and Ittella Parent pro forma combined per share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this Form 8-K.

 

The unaudited pro forma combined net income per share information below does not purport to represent the net income per share which would have occurred had the companies been combined during the periods presented, nor net income per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of Forum and Ittella Parent would have been had the companies been combined during the periods presented.

 

    Ittella
Parent
    Forum     Pro Forma
Combined
 
    (in thousands, except share and per share amounts)  
Six Months Ended June 30, 2020                        
Net income (loss) attributable to common stockholders   $ 5,793     $ (554 )   $ 6,018  
Stockholders’ equity (deficit) attributable to common stockholders   $ (28,840 )   $ 5,001     $ 112,560  
Weighted average shares outstanding – basic and diluted     8,230       6,834,958     57,618,913 (2) 
Basic and diluted net income (loss) per share   $ 703.55 (1)   $ (0.17 )   $ 0.10  
Stockholders’ equity per share   $ (3,504.25 )   $ 0.73     $ 1.95  
                         
Year Ended December 31, 2019                        
Net income attributable to common stockholders   $ 4,526     $ 2,350     $

5,653

 
Stockholders’ equity attributable to common stockholders   $ 2,890     $ 5,000     $          
Weighted average shares outstanding – basic and diluted     8,230       6,687,798       57,618,913 (2)
Basic and diluted net income per share   $ 549.93 (1)   $ (0.11 )   $ 0.10  
Stockholders’ equity per share   $ 351.15     $ 0.75     $          

 

 

(1) Per share information for Ittella Parent is derived from the net income (loss) per share attributable to Ittella Parent from the historical consolidated financial statements of Ittella Parent.
(2) Pro forma shares outstanding does not include 2,500,000 Sponsor Earnout Shares and 5,000,000 Holdback Shares that are held in escrow subject to the achievement of certain conditions.

 

 

10