Distribution Agreement With Hunter Packaging Ltd.

DISTRIBUTION AGREEMENT


THIS AGREEMENT, dated as of October 20, 1997, is between Garden Botanika, Inc. ("Garden Botanika") and Hunter Packaging Ltd. ("Hunter").


Garden Botanika sells a high-quality retail product line under the trademark "Garden Botanika." Garden Botanika owns or has rights (i) to certain formulations and graphics for such products and (ii) the Garden Botanika Trademarks listed on Schedule A, as well as owning valuable goodwill associated with, and which stems from, the Garden Botanika Trademarks. Garden Botanika and Hunter desire to make certain arrangements under which Garden Botanika will license Hunter the right to manufacture and sell certain of its products (the "Garden Botanika Products") to the Westin Hotel Company.


It is therefore agreed as follows:


1. Appointment of Hunter as Distributor.


Subject to the terms and conditions of this Agreement, including without limitation the restrictions of Section 2 below, Garden Botanika hereby appoints Hunter as a distributor to the Westin Hotel Company (the "Westin") of the Garden Botanika Products listed or to be listed on Schedule B, which may be amended by the parties from time to time, as approved by Garden Botanika for manufacture and sale by Hunter in accordance with this Agreement.


2. Restrictions on Hunter.


(a) During the term of this Agreement, Hunter shall not take any of the following actions:


(i) sell any of the Garden Botanika Products under any trademark
other than the Garden Botanika Trademarks or use the same formula for
any other product;


(ii) use any of Garden Botanika's designs, packaging, labeling or
formulas on any other product other than in the manufacture and sale of
the Garden Botanika Products as permitted herein;


(iii) sell any of the Garden Botanika Products to anyone other
than the Westin;


(iv) use the name Garden Botanika in its company name, the name
of a division or any other name under which Hunter conducts its business
or otherwise use any names, marks or symbols of Garden Botanika,
including but not limited to the Garden Botanika Trademarks or any
names, marks or symbols which are similar thereto or which might tend to
confuse, deceive or mislead purchasers or prospective purchasers. The
words "names, marks or symbols" as used in this section include, but


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are not limited to, corporate and private names, trademarks, symbols,
designations, indicia, slogans, other means of identifying products of
Garden Botanika or Hunter; or


(v) distribute or sell Garden Botanika Products in a form of
packaging other than that specifically approved by Garden Botanika for
such products.


3. Manufacture.


Garden Botanika hereby grants to Hunter the right to manufacture Garden Botanika Products or to have such Garden Botanika Products manufactured for Hunter solely for the purpose of supplying the Westin. Upon request, Garden Botanika shall promptly furnish Hunter with the formulations and specifications of the Garden Botanika Products to be manufactured and the specifications for the packaging required for such Garden Botanika Products, except that Garden Botanika reserves the right to withhold the formulations and specifications of any specific Garden Botanika Product that it does not approve for manufacture and sale by Hunter in accordance with this Agreement. Hunter shall supply Garden Botanika with samples of the formulations of the Garden Botanika Products so produced, including packaging and labels, in order that Garden Botanika may determine that such products reasonably conform to its formulations and specifications. Hunter or its manufacturer may produce such number of the approved Garden Botanika Products as may be necessary or appropriate to effect the distribution provided for in this Agreement. Hunter agrees that such formulations and specifications are the sole property of Garden Botanika and agrees to maintain said formulations and specifications in the strictest of confidence and to exert its best efforts to safeguard said formulations and specifications for the exclusive benefit of Garden Botanika.


4. Trademark, Etc.


(a) Grant of License. Garden Botanika hereby grants to Hunter the right, during the term of this Agreement, to use the Garden Botanika Trademarks and the packaging, formulations and specifications furnished to Hunter by Garden Botanika in the manufacture, labeling and selling of the Garden Botanika Products, solely in accordance with the provisions of this Agreement, with the right to sublicense a manufacturer or manufacturers, (such sublicensee to have the right only to manufacture Garden Botanika Products for sale to Hunter). The Garden Botanika Trademarks may be used by Hunter only on or in connection with the Garden Botanika Products. If requested by Garden Botanika, signs, labels, packaging materials, advertisements, product coverings and other written materials bearing the Garden Botanika Trademarks shall display either the "R" or the "TM" notice of trademark registration, depending on which notice of trademark registration Garden Botanika instructs Hunter to display. The Garden Botanika Trademarks shall be applied in compliance with all applicable laws and regulations and as Garden Botanika may reasonably request. Hunter recognizes that Garden Botanika has all rights, title and interest in and to the Garden Botanika Trademarks, including the goodwill of the business symbolized thereby, and Hunter shall at any time, whether during or after the term of this Agreement, execute any documents reasonably requested by Garden Botanika to confirm its ownership rights. Hunter further agrees to use the


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Garden Botanika Trademarks only in conformance with the trademark guidelines and standards furnished to Hunter by Garden Botanika.


(b) Quality of Products.


(1) All Garden Botanika Products manufactured by or for Hunter shall be manufactured (i) strictly in accordance with the formulations and manufacturing standards furnished to Hunter by Garden Botanika, and (ii) utilizing only ingredients and packaging components which are approved by Garden Botanika and obtained from suppliers approved by Garden Botanika.


(2) Hunter shall furnish to Garden Botanika, and shall cause its manufacturers to furnish to Garden Botanika, "batch" samples of the each of the formulated Garden Botanika Products for its testing and approval. Hunter also agrees to perform microbiological testing on all batches of Garden Botanika Products in a manner customary in the industry and as reasonably requested by Garden Botanika and to periodically submit copies of its test documentation to Garden Botanika. Garden Botanika shall receive advance notice of production schedules and, upon three business days' notice, have the right to be present and audit the manufacturing process.


(c) Similar Trademarks. During the term of this Agreement and for a period of five (5) years thereafter, Hunter shall not use for any product similar to any of the Garden Botanika Products any trademark, trade name, symbol, trade dress, label or package bearing any resemblance to the Garden Botanika Trademarks or any of the packaging or labels used by Hunter on the Garden Botanika Products.


5. Royalties and Expenses.


(a) In cons ...