Terms and Conditions Manufacturing

 

1. Master Agreement. This Agreement establishes the general terms and conditions under which Natura will perform Services for Client or any affiliate of Client at a Natura manufacturing site. This “master” form of agreement is intended to allow the Parties, or any of their affiliates, to contract for manufacture of multiple Products through the issuance of specific sales orders (each, a “Sales Order”) and corresponding invoice (“Natura Invoice”) without having to renegotiate the basic terms and conditions contained herein.
2. Sales Orders. This Agreement is structured so that a Sales Order may be entered into by the Parties for the manufacture of a particular Product or multiple Products at a Natura manufacturing site per the specifications mutually agreed upon by the parties (the “Specifications”). Each Sales Order will be governed by the terms and conditions of this Agreement unless the Parties to the Sales Order expressly modify the terms and conditions of this Agreement in the Sales Order.
3. Term and Termination.
   1. Term and Renewal. The initial term of this Agreement is twelve (12) month commencing on the Effective Date (“Initial Term”). This Agreement will automatically renew for consecutive twelve (12) month periods (each, a “Renewal Term”). The Initial Term and any Renewal Term are herein referred to as the “Term”.
   2. Either party may terminate this Agreement, in whole or in part, at any time for any reason or no reason at all by providing the other party with ninety (90) days’ advanced, written notice.
   3. Termination for Breach. This Agreement may be terminated by either party as a result of a material breach by the other party upon not less than forty-five (45) days prior written notice thereof to the other party provided that such breach is not cured within the forty-five (45) days period. In addition, the non-breaching party may pursue any and all additional remedies available to it in law and equity.
   4. Effect of Termination. If this Agreement or any Sales Order is completed, expires, or is terminated in whole or in party for any reason, then:
   5. Client or Client’s designee will take delivery of and pay for all undelivered Products that are manufactured and/or packaged under an accepted Sales Order at the price in effect at the time the Sales Order was placed. ii. Any termination or expiration of the Agreement or a Sales Order will not affect any outstanding obligations or payments due prior to the termination or expiration, nor will it prejudice any other remedies that the Parties may have under this Agreement or any Sales Order.
4. The terms of this Agreement are confidential and, except as otherwise required by law, Client shall not disclose the terms of this Agreement to any third party in any manner whatsoever without Natura’s prior written consent; provided that Client may disclose the terms of this Agreement to those of its attorneys and accountants who need to know this information in connection with the services they are performing for Client (“Client Advisors”), provided that any such Client Advisors agree not to disclose the terms of this Agreement to any third party in any manner whatsoever. The provisions of this paragraph shall survive termination or expiration of this Agreement.
5. Intellectual Property.
   1. Definition of Intellectual Property: For purposes of this Agreement, “Intellectual Property” means any and all rights in patents, patent applications, formulae, trademarks, trademark applications, trade-names, inventions, copyrights, industrial designs, trade secrets, and know how.
   2. Client Intellectual Property. All inventions generated or derived by Natura while performing the Services, to the extent relating specifically to the development, manufacture, use, or sale of any Product that is the subject of the Services, and all Client Intellectual Property will be the exclusive property of Client (collectively, “Client IP”). Natura may retain one copy of records relating to Client IP to the extent required under Applicable Laws.
   3. License to Natura. For the term of this Agreement, Client hereby grants to Natura a non-exclusive, paid-up, royaltyfree, non-transferable license to Client IP solely to the extent necessary for Natura to perform the Service and manufacture the Products in accordance with this Agreement, and not for any other purpose.
   4. Natura Intellectual Property. All Natura intellectual property (“Natura IP”) will be the exclusive property of Natura. The Parties acknowledge and agree that Natura alone shall own all right, title, and interest, including all related intellectual property rights in and to any products developed independently or with Client (“Products”) during the term of this Agreement. All formulation and manufacturing services, and any suggestions, ideas, enhancement requests, feedback, recommendations or other information provided by Licensor or any other party relating to the Products (collectively, “Product Intellectual Property Rights”). This Agreement is nor a sale and does not convey to Licensor any rights of ownership in or related to the Product Intellectual Property Rights. Furthermore, the Natura name, the Natura logo, and the New Product names are trademarks of Natura or third parties, and no right or license is granted to Licensor to use them. Client shall be required to obtain the written permission of Natura in order to market, sell, license, or otherwise convey Product Intellectual Property Rights in any jurisdiction worldwide.
   5. No Other Use. All Client IP will be owned by Client and Natura IP will be owned by Natura. Neither Party has, nor will it acquire, any interest in any of the other Party’s Intellectual Property unless otherwise expressly agreed to in writing or expressly set forth in this Agreement. Neither Party will use any Intellectual Property of the other Party, except as specifically authorized by the other Party, or as required for the performance of its obligations under this Agreement.
6. As an explicit condition precedent to this Agreement, each Party will maintain commercial insurance, including blanket contractual liability insurance covering the obligations of that Party under this Agreement through the term of this Agreement and for a period of three years thereafter. Client shall provide a Certificate of Insurance and Endorsement, attached hereto as Exhibit D, as follows:
   1. General Liability including Product Liability (Finished Goods). $1,000,000 each occurrence and $2,000,000 general aggregate covering bodily injury and property damage liability arising from premises operations, products/completed operations, independent contractors, personal injury and advertising injury liability assumed under an insured contract. Limit requirements can be met with a combination of primary liability and excess or umbrella policy. Furthermore, Client’s policy shall contain:
   2. Natura named as an Additional Insured on Client’s policy as follows: “Natura Holdings, LLC, its directors, officers, employees, agents and affiliates 8280 Elder Creek Rd. Sacramento, CA 95828.”
   3. Commercial Automobile Coverage. $2,000,000 each occurrence for bodily injury and property damage for any owned, hired or non-owned automobile. Limit requirements can be met with a combination of primary liability and an excess or umbrella policy. Furthermore, Client’s policy shall contain:
      95828. Natura named as an Additional Insured on client’s policy as follows: “Natura Holdings, LLC, its directors, officers, employees, agents and affiliates 8280 Elder Creek Rd. Sacramento, CA 95828.”
      95829. A 30-day written notice of cancellation or material change of coverage notice to Natura.

• Coverage must have minimum rating by AM Best of no lower than A:VII.

1. Workers Compensation. Statutory coverage as prescribed by law with Employers Liability limits of no less than $1,000,000. A waiver of Subrogation in favor of Natura shall be endorsed to the policy.

7. Indemnification.
   1. Mutual Indemnification. Each party (as “Indemnifying Party”) shall indemnify, hold harmless, and defined the other party and its managers, officers, directors, employees, agents, affiliates, successors, and permitted assigns (collectively, “Indemnified Party”) against any and all losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs, or expenses of whatever kind, including professional fees and attorneys’ fees, that are incurred by Indemnified Party in a final, non-appealable judgment, administrative proceeding, or any alternative dispute resolution proceeding (collectively, “Losses”), arising out of any third-party claim alleging:
      1. (a) breach of non-fulfillment of any representation, warranty, or covenant under/representation or warranty set forth. In this Agreement by Indemnifying Party;
      2. (b) any grossly negligent or more culpable act or omission of Indemnifying Party (including any reckless or willful misconduct) in connection with the performance of its obligations under this Agreement; or

• (c) any bodily injury, death of any person, or damage to real or tangible personal property caused by the grossly negligent or more culpable acts or omissions of Indemnifying Party (including any reckless or willful misconduct); or

1. (d) any failure by Indemnifying Party to comply with any applicable federal, state, or local laws, regulations, or codes in the performance of its obligations under this Agreement, except for those federal laws related to cannabis as a Schedule 1 substance on the Controlled Substances Act.

Notwithstanding anything to the contrary in this Agreement, this Section 1.1 does not apply to any claim (whether direct or indirect) for which a sole and exclusive remedy is provided under another section of this Agreement.

1. Exceptions and Limitations on Indemnification. Notwithstanding anything to the contrary in this Agreement, Indemnifying Party is not obligated to indemnify, hold harmless, or defend Indemnified Party against any claim (whether direct or indirect) if such claim or corresponding Losses arise out of or result from, in whole or in part, Indemnified Party’s:
   1. (a) gross negligence or more culpable act or omission (including recklessness or willful misconduct); or
   2. (b) bad faith failure to comply with any of its obligations set forth in this Agreement.
2. Maximum Aggregate Third-Party Claim Liability. Indemnifying Party is not obligated to reimburse Indemnified Party under this Section 7 (Mutual Indemnification) for any Losses that exceed, in the aggregate, $3,000,000 or the total amount paid or payable by the Buyer to the Seller under this Agreement period preceding the event giving rise to the indemnification claim, whichever is less (the “Cap”)
3. Payment Adjustments for Taxes. Regarding any payment made under Section 7 (Mutual Indemnification) in respect of Losses, Indemnifying Party:
4. (a) may reduce it by an amount equal to any Tax benefit actually realized as a result of such Losses by

Indemnified Party; and  ii. (b) must increase it by an amount equal to any Tax imposed on the receipt of such indemnity payment.

1. Sole Remedy. SECTION 7 (MUTUAL INDEMNIFICAQTION) SETS FORTH THE ENTIRE LIABILITY AND OBLIGATION OF THE INDEMNIFYING PARTY AND THE SOLE AND EXCLUSIVE REMEDY FOR THE INDEMNIFIED PARTY FOR ANY DAMAGES COVERED UNDER SECTION 7 (MUTUAL INDEMNIFICATION).
2. Indemnification Procedures.
3. Notice of Third-party Claims. Indemnified Party shall give Indemnifying Party prompt written notice (a “Claim Notice”) of any Losses or discovery of facts on which Indemnified Party intends to base a request for indemnification under Section 7 (Mutual Indemnification). Indemnified Party’s failure to provide a Claim Notice to Indemnifying Party under this Section 7 does not relieve Indemnifying Party of any liability that Indemnifying Party may have to Indemnified Party, but in no event shall Indemnifying Party be liable for any Losses that result from a delay in providing a Claim Notice, which delay and amount of the related Losses (to the extent that the nature and amount of the Losses are know at the time). Indemnified Party shall furnish promptly to Indemnifying Party copies of all papers and official documents received in respect of any Losses. Indemnifying Party’s duty to defend applies immediately, regardless of whether Indemnified Party has paid any sums or incurred any detriment arising out of or relating, directly or indirectly, to any third-party claim.

8. Representations and Warranties.
   1. Authority. Each Party covenants, represents, and warrants to the other Party, as of the Effective Date, that (a) it has the full right and authority to enter into this Agreement and that it is not aware of any impediment that would inhibit its ability to perform its obligations hereunder and has taken all necessary action on tis part to authorize the performance of the obligations; (b) the execution and delivery of this Agreement and the performance of the Party’s obligations hereunder (i) do not conflict with or violate any requirement of Applicable Laws (as defined below) or regulations and (ii) do not conflict with, or constitute default or require any consent under, any contractual obligation of the Party; (c) it is duly organized, validly existing and in good standing under the laws of the state and country in which it is organized; and (d) this Agreement has been duly executed and delivered on behalf of the party, and constitutes a legal, valid, binding obligation, enforceable against the Party in accordance with its terms.
   2. Client Warranties. Client covenants, represents, and warrants that:
      1. the Specifications for each of the Products are its or its affiliate’s property and Client may lawfully disclose the Specifications to Natura;
      2. any Client IP provided by Client for use by Natura in performing the Services according to the Specifications and the other terms of this Agreement (i) is owned or controlled by Client or its Affiliate, (ii) may be lawfully used by Natura as directed by Client, and (iii) when used by Natura according to the Specifications and the other terms of this Agreement does not infringe any third-party rights known to Client.

• as of the Effective Date, there are no actions or other legal proceedings to which the Client is a party or of which Client is aware, concerning the infringement of third-party rights related to any of the Specifications,

or any of the Client-supplied components, or the sale, use, or other disposition of any Product made in accordance with the Specifications.

1. Natura Warranties. Natura covenants, represents, and warrants that:
   1. all Products delivered hereunder will (i) conform to the applicable Specifications; (ii) be free and clear of any and all encumbrances, liens, or other third-party claims; (iii) be manufactured, packaged, labeled and delivered in compliance with the Applicable Laws and regulations applicable to the Products;
   2. Natura’s processes used to perform the Services will not infringe on any third-p[arty rights (collectively, the

“Product Warranties”);  iii. It will perform the Services in accordance with California Cannabis Regulations (as defined below) promulgated by the Regulatory Authority (as defined below) and Applicable Laws; and

1. Any Natura IP used for Natura to perform the Services (i) is Natura’s or its affiliate’s unencumbered property, (ii) may be lawfully used by Natura, and (iii) does not infringe and will not infringe any third-paryt rights.

1. No Warranty. NEITHER PARTY MAKES ANY WARRANTY OR REPRESENTATION OF ANY KIND, EITHER EXPRESSED OR IMPLIED, BY FACT OR LAW, OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT. WITHOUT LIMITING THE FOREGOING, NETIHER PARTY MAKES ANY WARRANTY OR REPRESENTATION OF FITNESS FOR A PARTICULAR PURPOSE NOR ANY WARRANTY OR REPRESENTATION OF MERCHANTABILITY FOR THE PRODUCTS. Definitions.
   1. For purposes of this Agreement, “Regulatory Authority” means the Department of Cannabis Control, the California Department of Food and Agriculture CalCannabis Cultivation Licensing Division, and the California Department of Public Health Manufactured Cannabis Safety Branch and any other state regulatory agencies competent to grant licenses to conduct commercial cannabis activity in the State of California.
   2. For purposes of this Agreement, “California Cannabis Regulations” means, collectively, the California Code of Regulations Title 16, Division 42, Bureau of Cannabis Control; Title 17, Division 1, Chapter 13, Manufactured Cannabis Safety; and Title 3, Division 8, Chapter 1, Cannabis Cultivation Program.

• For purposes of this Agreement, “Applicable Laws” means the applicable provision of any and all national, supranational, regional, state, provincial, county and local laws, statutes, treaties, ordinances, regulations, rules, administrative codes, guidance, ordinances, bylaws, judgments, decrees, directives, injunctions, permits (including marketing approvals), or orders of or from any Authority having jurisdiction over or related to the subject item.

1. For purposes of this Agreement, “Inputs” means cannabis flower and cannabis concentrates as further listed in Exhibit E.

9. Relationship of the Parties for Regulatory Matters
   1. No Representation of Other Party. Neither Party shall represent that it is (a) owned or controlled by the other Party; (b) employed by the other Party, or (c) authorized to represent to the other Party, obligate the other Party, or act as an agent of the other Party with respect to any matters not expressly provided in this Agreement.
   2. Regulatory Interpretation of Parties’ Relationship. The entirety of this Section 9 shall be in effect notwithstanding the fact that Client may be considered and listed as a regulatory “Owner” of “Financial Interest Holder” on one or more of Natura’s licensed entities as set forth under California Cannabis Regulations. The Parties acknowledge and agree that certain terms of this Agreement may be considered by a Regulatory Authority to constitute participation in the “direction, control, or management” of Natura’s (or its licensed affiliates’) commercial cannabis business pursuant to the California Cannabis Regulations. The Parties further acknowledge and agree that this regulatory definition of “Owner” or “Financial Interest Holder” does not evidence, indicate, imply, or otherwise suggest that Client owns any equity, shares, membership interest, or other property right in the corporate entity, assets, or property of Natura or its licensed entity.
   3. Cannabis License Disclosure. If it is determined to be necessary by Applicable Laws or the request of a Regulatory Authority, Client hereby agrees to be listed on Natura’s commercial cannabis license(s) as an “Owner” or “Financial Interest Holder” as the case may be, and provide Natura with the required information and ongoing disclosures as required by Medicinal and Adult-Use Cannabis Regulation and Safety Act (“MAUCRSA”) and California Cannabis regulations and further submitting to any local and/or Department of Justice LiveScan background check. In the event Client is not approved as an “Owner” or “Financial Interest Holder” due to such background check, that will be grounds for termination of this Agreement, in accordance with Section 3 hereof.
   4. Regulatory Actions. The Parties, their officers, directors, employees, agents, and contractors, hereby agree that they must comply with MAUCRSA and all Applicable Laws, particularly with regard to California Cannabis Regulations, and commercial cannabis operations.
   5. Cooperation. The Parties hereby agree to cooperate and respond promptly to the other, the applicable Regulatory Authority, local and State regulatory agencies, and administrative law judges regarding any requests for information from a Regulatory Authority regarding the specific activities that are the subject matter of this Agreement.
10. Quality Assurance
    1. R&D Testing. Upon receipt, Natura will conduct R&D testing with all product inputs, including cannabis inputs acquired from licensed facilities. If an Input fails to meet manufacturing standards, the Client will replace these goods with Inputs that meet the standard outline by internal compliance and quality assurance standards.
    2. Finished Goods. All finished goods will undergo quality assurance and regulatory testing. If a finished goods fials to meet quality assurance and/or regulatory requirements, Natura will dispose of failed products per regulatory guidelines. Further, Natura is financially obligated to replace cannabis Inputs purchased from licensed facilities at a redefined wholesale cost listed in Exhibit E.
11. Product Recalls.
    1. Records and Notice. Natura and Client will each maintain records necessary to permit a recall (each, a “Recall”) of any Products delivered to Client or customers of Client. Each Party will, within two (2) business days, notify the other by telephone and email to the contracts designated in Section 19, below, of any information which might affect the marketability, safety, or effectiveness of the Products or which might result in the Recall or seizure of the Products. Upon receiving this notice or upon this discovery, each Party will stop making any further shipments of any Products in ether Party’s possession or control until Natura makes a decision as to whether a Recall or some other corrective action is necessary. The decision to initiate a recall or to take some other corrective action, if any, will be made and implemented by Natura.
    2. Product Recalls. If (i) any Regulatory Authority issues a directive, order, or, following the issuance of a safety warning or alert about a Product, a written request that any Product be Recalled, (ii) a court of competent jurisdiction orders a Recall, or (iii) Client determines that any Product should be Recalled or that letter is required relating the restrictions on the use of any Product, Natura will cooperate as reasonably required by Client, having regard to all Applicable Laws.
12. Inspection and Acceptance of Products. Upon completion of the Services, Natura shall make the Products available at its shipping point for inspection by Client or its designee. Prior to taking possession of the Products, Client or its designee must inspect the Products related to that Sales Order and accept or reject them. If Client does not explicitly reject any Products, Client shall be deemed to have accepted the Products without qualification, and cannot, thereafter, reject any Products. Once accepted, Products are deemed to be fully conforming to this Agreement.
13. Bill and Hold. Client hereby agrees that Natura shall store Product at its facilities for a period of time immediately after manufacturing the Products into “finished goods” but prior to shipment (“Bill and Hold”). For each Bill and Hold, Client acknowledges that (i) Client has made a fixed commitment to purchase such Product, (ii) risk of ownership for such Product passes to Client, (iii) the Products are being put on a Bill and Hold basis for legitimate business purposes, (iv) if no delivery date is determined at the time of billing, Natura shall have the right to ship the Products to Client if Natura does not receive a requires for delivery within six (6) months after Client receives an invoice from Natura, and (v) Client will be responsible for any decrease in market value of such Product relates to factors or circumstances outside of Natura’s reasonable control. Upon request for shipment of such stored Product by Client, Natura shall use commercially reasonable efforts to ship five (5) business days following confirmed receipt of such request.
14. Consent for Promotional Purposes. Natura shall have the right to disclose the existence of this Agreement, Client’s status as Client of Natura, and to include the other Client’s name, image, and profile in various promotional materials, including, but not limited to, executive summaries and the Parties’ websites.
15. Independent Contractors. The parties to this Agreement are independent contractors. This Agreement does not create or otherwise imply that there is any relationship of employment, agency, franchise, joint venture, partnership, or other similar legal relationship among the parties. No party has the authority to bind or act on behalf of any other party except as otherwise expressly stated in this Agreement.
16. Amendments and Changes. Any amendment to this Agreement shall be in writing and signed by the parties. No change to this Agreement, including any conflicting or additional terms contained in any purchase order, acknowledgement form, or other written document submitted by Client, shall be valid or binding upon Natura unless approved in writing by Natura.
17. Assignment. No duty, obligation, or performance required under this Agreement may be assigned by either party without the express written consent of the other party. However, Natura, without such consent, may assign this Agreement in who or in part, to its parent or a wholly owned subsidiary of its parent.
18. Governing Law. This Agreement shall be construed, interpreted, and governed by the laws of the State of California without regard to its conflict of law provisions.
19. Severability. The provisions of this Agreement shall be severable if any provision of this Agreement shall be held or declared to be illegal, invalid, or unenforceable, such illegality, invalidity, or unenforceability shall not affect any provision hereof, and the remainder of the Agreement, disregarding such invalid portion, shall continue in full force and effect as though such void provision had not been contained herein.
20. Entire Agreement. Upon acceptance by Natura, this Agreement and all applicable Sales Orders constitute the entire agreement between the parties regarding the subject matter hereof and shall supersede all prior oral and written agreements for the delivery of Services and the purchase of the Products specified herein.
21. Force Majeure. Natura will not be liable for any failure to perform under this Agreement or to supply any Product due to strikes, fires, explosion, flood, injunction, interruption of transportation, accidents, inability to obtain supplies at reasonable prices, shortage of raw materials, war, act of governmental authority, global pandemics, riots, protests, terrorism, acts of God, or other causes beyond its control.
22. Waiver. The waiver by either of the parties of any breach of nay provision hereof by the other party shall not be construed to be either a waiver of any subsequent breach of any such provision or a waiver of the provision itself.
23. Disputes.
    1. Commercial Dispute Resolution. If a dispute (a “Dispute”) arises out of this Agreement or any Sales Order, the Parties will first try to resolve it amicably. In that regard, any Party may send a notice of dispute to the other, and each Party will appoint, within five (5) business days from receipt of the notice of dispute, a single representatives fail to resolve the matter within ten (10) business days from their appointment, or if a Party fails to appoint a representative within the five (5) business day period set forth above, the dispute will immediately be referred to the Chief Operating Officer (or another officer as he/she may designate) of Natura and the Chief Executive Officer of Client who will meet and discuss as necessary to try to resolve the dispute amicably. Should the Parties fail to reach a resolution, the dispute will be settled per the terms in Section 18(b), below.
    2. Mediation. If a Dispute cannot be settled through negotiation, the Parties agree to submit the matter to mediation. Cost related to mediation shall be mutually shared between or among the parties. Unless otherwise agreed in mediation, the Parties retain their rights to litigation.
    3. Venue; Waiver of Jury Trial. Each Party irrevocably and unconditionally agrees that it will not commence any action, litigation, or proceeding of any kind whatsoever against the other Party in any way arising from or relating to this Agreement or any Sales Order, including all exhibits, schedules, attachments and appendices attached to this Agreement, and all contemplated transactions, in any forum other than the courts of the State of California sitting in Sacramento, California, and any appellate court from any thereof. Each Party irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and agrees to bring any such action, litigation or proceeding only in the courts of the state of California sitting in Sacramento, California. Each Party agrees that a final judgment in any such action, litigation, or proceeding is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. EACH PARTY ACKNOWLEDGES THAT ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT, INCLUDING EXHIBITS, SCHEDULES, ATTACHMENTS OR APPENDICES ATTACHED TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY.
24. Unless otherwise agreed in a Sales Order, any notice, approval, instruction, or other written communication required or permitted hereunder will be sufficient if made or given to the other Party by personal delivery, telecopy, facsimile communication, or confirmed receipt email, or by sending the same by first class mail, postage prepaid to the respective addresses, telecopy, or facsimile numbers or electronic mail addresses set forth above on the Account Setup Form.