Co-packing Agreement

OAK STATE PRODUCTS INC.

CO-PACKING AGREEMENT



This Agreement is made as of February 26, 2008, by and between Mrs. Fields Branded Retail Group, a division of Mrs. Fields Famous Brands, a Delaware limited liability company, with its principal place of business at 2855 East Cottonwood Parkway, Suite 400, Salt Lake City, Utah 84121, (hereinafter referred to as "Buyer"), and Oak State Products Inc., an Illinois corporation with its principal place of business at 775 State Route 251 South, Wenona, IL 61377 (hereinafter referred to as "OSP" or the "Seller").



WHEREAS, Buyer markets, sells and arranges for distribution of shelf stable baked products; and



WHEREAS, OSP manufactures various types of shelf stable baked products for third parties to be marketed, sold and distributed by such third parties; and



WHEREAS, Buyer wishes to engage OSP to co-manufacture certain of its products upon the terms and conditions described in this Agreement and OSP wishes to accept such engagement; and



WHEREAS, in consideration of the mutual promises contained in this Agreement, the parties agree as set forth below.



1. Term. The term of this Agreement shall commence on February 26, 2008 and shall expire on the first anniversary of such date, unless sooner terminated as provided herein (the "Initial Term"). The Agreement shall renew automatically for additional one-year terms ("Renewal Term") unless canceled by either party with at least one hundred twenty (120) days written notice prior to the end of the applicable Initial or Renewal Term.



2. Production of the Product .



(a) OSP shall manufacture the products specified in Exhibit "A" (the "Products"). Buyer may, from time to time, introduce new products which may be added to Exhibit A by providing OSP with thirty (30) days written notice; provided that OSP and Buyer agree as to all needed specifications for the new Product(s), including pricing. Buyer may also introduce product(s) that will be needed for seasonal purposes only, and OSP agrees to manufacture such seasonal product(s) in amounts designated by Company from time to time if doing so can be reasonably accomplished; provided that OSP and Buyer agree as to all needed specifications for the seasonal product(s), including pricing. Buyer agrees to purchase any remaining components after requested production of a seasonal item with








particular attention to those items with minimum order requirements over and above those needed for the production of the seasonal item, provided OSP consults with Buyer prior to placing orders with a minimum that exceeds required production. OSP agrees to inform Buyer promptly in writing if for any reason it is not able to manufacture new product(s) or seasonal product(s) in the amounts needed. For purposes of this Agreement, the new products and seasonal products contemplated by this Section shall be considered "Products". If a new Product is to be added, Exhibit A will be revised to add the new Product. Other Exhibits will be added or revised as needed to accurately reflect the addition of new Products to this Agreement. Products may also be removed from Exhibit "A" upon Buyer92s decision to no longer manufacture the Products or as may otherwise be permitted under the terms of this Agreement.



(b) Except as otherwise agreed, OSP shall supply, at its own expense, all facilities, equipment, supplies, personnel and technical information (along with technical information of Buyer if supplied by Buyer to OSP) to manufacture, package and deliver the Products in accordance with the specifications for each Product, a summary of which are attached hereto as Exhibit "B" (hereinafter, the "Buyer Specifications"). A complete set of Buyer Specifications applicable to the production of the Products shall be provided to OSP by Buyer. OSP acknowledges that the Buyer Specifications for any of the Products may be revised upon prior written notice by Buyer, in its sole discretion, at any time during the term of this Agreement. Within two (2) weeks of Buyer providing OSP revised specifications, OSP shall determine if it will be able or unable to meet the new specifications as requested by Buyer. If OSP determines it will not be able to meet the specifications and so notifies Buyer, OSP shall have the right to terminate the Agreement or Buyer shall have the right to revert to the old specification and the contract will remain in force. If the contract is terminated pursuant to this provision, then the obligation of the Buyer to repurchase components as provided herein shall apply. In the event that revisions to the Buyer Specifications result in a change in actual cost to OSP, the Tolling Fees paid to OSP pursuant to Section 6 of this Agreement will be adjusted to reflect the new cost. For clarification, any such revision shall only reflect increases and decreases to OSP92s actual cost of production, and shall not affect any fees or profits payable to OSP by Buyer in accordance with this Agreement. If such revisions render unmarketable any of the Products or inventories of ingredients or packaging materials, Buyer shall purchase all such items from OSP at OSP92s cost or other agreed upon price.



(c) Finished Goods Inventory

Product shall be loaded from the production line onto trailers from Buyer92s approved carrier list. Except for short-term storage, not to exceed seventy five (75) pallets, of Products necessary to arrange for








pickup and shipping of products by Buyer92s distributors or agents as set forth in Section 5, OSP shall not be required to provide storage of finished goods Product inventory in OSP92s facility.





3. Supplies .



(a) Buyer Components . Upon receipt of the Buyer Specifications, OSP shall purchase, upon such schedule as may be mutually agreed upon in writing, a supply of buyer components that are unique to Buyer92s Products as identified and contracted by Buyer as set forth on Exhibit "C" (the "Buyer Components"), as required by the Buyer Specifications, sufficient to carry out all Production Orders. Buyer may revise the Buyer Components by revising Exhibit C upon 30 days prior written notice to OSP. OSP will use such Buyer Components solely to produce Products hereunder. OSP will not be responsible for any failure to produce Products hereunder to the extent (but only to the extent) such failure is due solely to the unavailability of Buyer Components. If OSP is unable to obtain Buyer Components, and a line shutdown and changeover occur as a result, OSP will have the option to delay production until the next previously scheduled and agreed production date. OSP will allocate sufficient space to store a 2-week supply of Buyer Components.



(b) Non-Buyer Components . OSP will purchase all raw materials, labeling and packaging (other than the Buyer Components) required to produce Products hereunder in accordance with the Buyer Specifications ("Non-Buyer Components") from such vendors as may be approved by Buyer in writing. OSP will use its reasonable best efforts to timely obtain a sufficient supply of all Non-Buyer Components necessary to produce the Products as required herein at the lowest cost for the quality required to meet the Buyer Specifications.



(c) Inventory System . OSP will regularly monitor and control its inventory of Buyer Components, Non-Buyer Components and finished Products in accordance with a reasonably detailed written inventory and control system (the "Inventory System"). OSP will use its reasonable best efforts to minimize the obsolescence of all such inventory. Promptly upon receipt of delivery of any Buyer Components or Non-Buyer Components, OSP will inspect such delivery in accordance with the Inventory System to confirm receipt of proper quantities and quality. No more often than quarterly during the term hereof, OSP and Buyer will review OSP92s on hand supply of Buyer Components (which shall be a minimum of ninety (90) day supply 96 the Minimum Required Supply) and identify any obsolete Buyer Components.. Buyer will compensate OSP for an amount not to exceed its Minimum Required Supply of actual obsolete Buyer Components.








(d) Procurement.

Buyer shall contract with suppliers for Buyer Components and determine the quantities necessary to meet production requirements. OSP will issue purchase orders to these suppliers and purchase Buyer Components necessary to meet production requirements. OSP shall contract for ingredient and materials common to its normal course of business, including Non-Buyer Components, and purchase those items necessary for production requirements.



(e) Inventory Audits . At Buyer92 request from time to time but no more frequent than once per month, OSP will promptly conduct a full physical inventory or a spot inventory of Buyer Components, Non-Buyer Components and/or finished Products then in OSP92 s possession or under its control, in accordance with policies and procedures to be mutually agreed upon in writing. OSP will promptly furnish the results of any such inventory to Buyer in such form and manner as Buyer may reasonably request.



4. Production Scheduling . The first week of each month, Buyer will provide OSP a non-binding twenty six (26) week rolling forecasted production plan for the Products. Each week Buyer shall also provide OSP a revised rolling schedule of their production requirements for the next six (6) weeks. The first three (3) weeks of this six (6) week production plan will be considered a binding production commitment, provided that the Products are packaged and delivered in accordance with the terms and conditions of this Agreement. The parties acknowledge that customer and consumer demand for the Products may fluctuate and OSP will use commercially reasonable efforts to accommodate any production changes within the six (6) week period that are necessary to allow Buyer to meet such customer and consumer demands. Provided, however, OSP shall notify Buyer within six (6) business days if OSP will not be able to manufacture the Product requested in the six (6) week production plan.



To also assist OSP in meeting Buyer92s volume requirements, on each anniversary of the commencement date of this Agreement, Buyer shall provide OSP with a non-binding best estimate of Buyer92s production requirements for the next twelve month period of production by OSP. The estimate for the Initial Term for those Products currently included in this Agreement is attached hereto as Exhibit "D". OSP will notify Buyer immediately if at any time it determines it will not have sufficient capacity to meet the production outlined in the twelve month forecasts, the weekly rolling forecasts or the scheduling agreement.



If at any time during the Term of this Agreement OSP experiences any unscheduled interruption in the production of the Products hereunder, Buyer shall have the right to a prorate share of OSP92s capacity (based on the volume of production utilized by Buyer compared to OSP92s total production) when production resumes until the production schedule is back on track according to the








scheduling agreement. Unless such interruption is due to an uncontrollable shortage of Buyer Components or Force Majeure as set forth in Section 11 below, OSP shall indemnify Buyer and hold Buyer harmless from any damages and expenses arising out of the unscheduled interruption.



5. Shipping. OSP shall arrange for pick up and delivery of the product by common carrier pursuant to Buyer92s written instructions. OSP shall be responsible for the safe and proper loading of the Product onto shipping vehicles. OSP will maintain adequate and accurate shipping records in order that Product lots on all shipments may be traced. Buyer shall be responsible for paying all shipping costs associated with the transportation of the Product and will indemnify and hold OSP harmless for any loss, cost or expense associated therewith.



6. Price and Payment; Review and Audit . The prices of the Product shall be as set forth on Exhibit A. Exhibit A shall include a breakdown of OSP92s costs for Buyer Components, Non-Buyer Components and Tolling Fees (defined below) for each Product. Within forty-five (45) days after the end of each calendar quarter during the term of this Agreement, the representatives of the parties shall meet to review the performance of the parties, and OSP92s invoices for Buyer Components, Non-Buyer Components and any other ingredients purchased to produce the Products. In the event that there has been an upward or downward change in OSP92s costs for such items (which may be subject to independent audit) the parties shall in good faith apply the adjustment in pricing for the Products commensurate with such material increase or decrease in cost, such change to be effective from the beginning of the following quarterly pricing period, which will be outlined on a revised Exhibit A. In addition to this review, Buyer, and Buyer92s cost, may require an independent audit of OSP92s pricing no more frequently than twice in each 12-month period. OSP will cooperate fully with Buyer92s review and any independent audit conducted in accordance with this Section. OSP agrees to use its best efforts to avoid increases in its cost and to obtain the best prices possible, consistent with quality standards for the ingredients and packaging required by the Buyer Specifications for the Products. Tolling fees, which shall include OSP92s cost of labor, overhead and profit ("Tolling Fees"), shall be reviewed quarterly, and may be adjusted annually upon each anniversary of this Agreement as agreed between the parties.



OSP shall issue its invoice for Products, and Buyer shall remit payment for such invoices, in accordance with the terms set forth on Exhibit "E".





7. Confidential & Proprietary Information.



(a) The Buyer Specifications and all information OSP may receive from Buyer concerning the processing of, production of, marketing of, distribution of, selling of, strategic plans of, recipes for and quantities of the Products Buyer requests OSP to process and package, whether such information is conveyed orally or in written form (including without








limitation by e-mail or other electronic communication) or by observation or in any other manner, shall be treated and regarded as confidential, proprietary and trade secret information, which is the exclusive and sole property of Buyer. In addition, any recipes, formulations, ingredients, product specifications, production output, sales volume, costing/financial information, productivity, research/developmental activities, location of manufacturing or manufacturing processes used by OSP in the production of the Products or any New Products shall be treated and regarded as confidential, proprietary and trade secret information which is the exclusive and sole property of Buyer.



OSP shall keep all such information strictly confidential and secret and shall not divulge, communicate or transmit this information to third parties nor utilize this information in any commercial manner, except for the limited purpose of processing and packaging the Products solely and exclusively for Buyer hereunder. OSP shall restrict disclosure of such information only to such directors, officers, employees and advisors who need such information in order to perform the obligations imposed by this Agreement. During production of the Products, OSP shall not allow access by third parties (other than OSP92s employees or service providers) to the production and packaging areas in its facility involved in ...