Sugarfina v. GLJ - Complaint (BK)

Sugarfina, Inc. v. GLJ, Inc. et al, Docket No. 1_19-ap-50364 (Bankr. D. Del.
Sept 19, 2019), Court Docket
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Part Description
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Case 19-50364-MFW Doc 1 Filed 09/19/19 Page 1 of 15
IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE
In re: Chapter 11
SUGARFINA, INC., Case No. 19-11973 (MFW)

(Jointly Administered)
Debtor.
SUGARFINA, INC.,
Adv. Pro. No. 19-_____
Plaintiff,
vs.
GLJ, INC. and MJC CONFECTIONS LLC,
Defendants.
COMPLAINT
Debtor, Sugarfina, Inc. (“Plaintiff” or “Sugarfina”), by and through its undersigned
counsel, hereby brings this Complaint against defendants GLJ, Inc. (“GLJ”) and MJC Confections
LLC (“MJC” and collectively with GLJ, “Defendants” or “MNS”) as follows:
NATURE OF THE ACTION
1. This adversary proceeding is brought pursuant to and under Federal Rules of
Bankruptcy Procedure 7001, et seq. (the “Bankruptcy Rules”) for turnover, in accordance with
section 542 of title 11 of the United States Code (the “Bankruptcy Code”), of property belonging
to Sugarfina.
JURISDICTION AND VENUE
2. This Court has jurisdiction over this adversary proceeding pursuant to 28 U.S.C.
§§ 157 and 1334.
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3. Venue is proper in this proceeding pursuant to 28 U.S.C. §§ 1408 and 1409. This
is a core proceeding pursuant to 28 U.S.C. § 157(b).
THE PARTIES
4. Plaintiff is a Delaware corporation, having its principal place of business at 3915
West 102nd Street, Inglewood, California 90303.
5. Defendant GLJ, Inc. is a New York corporation having its principal place of
business located at 999 South Oyster Bay Road, Building #500, Bethpage, New York 11714.
6. Defendant MJC Confections LLC is a New York limited liability company having
its principal place of business located at 999 South Oyster Bay Road, Building #500, Bethpage,
New York 11714.
BACKGROUND
A. Debtor’s Bankruptcy Cases
7. On September 6, 2019 (the “Petition Date”), Plaintiff and two of its affiliates filed
voluntary Chapter 11 petitions in this Court, thereby commencing the above-captioned cases,
which are being jointly administered pursuant to an Order of this Court entered on September 9,
2019.
8. As of the Petition Date, Plaintiff and its affiliates were authorized to continue to
operate their businesses and manage their properties as debtors in possession (“DIP”) pursuant to
Bankruptcy Code sections 1107(a) and 1108.
9. No trustee or examiner has been requested in the Chapter 11 case. An official
committee of unsecured creditors has been appointed.
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B. Debtor’s Business Operations
10. Sugarfina owns and operates a specialty retail and wholesale business in the United
States and internationally.
11. Sugarfina is an iconic candy and confectionary brand with a uniquely fresh,
fashionable, and experiential approach to gourmet confections. With the creation of a “candy store
for grownups,” Sugarfina has gained a strong and loyal customer following, through constant
creation and innovation focused on distinctive product presentation and invention of fresh new
candy offerings that delight and surprise. Its offerings are sourced from the finest candy makers
in the world and include such iconic varieties as Champagne Bears®, Peach Bellini®, Sugar
Lips®, Green Juice Bears®, and Cold Brew Bears™. Packaging design is also central to
Sugarfina’s edge—listed among “The World’s Most Innovative Companies” in 2018 by Fast
Company Magazine, Sugarfina’s presentation centers around the invention of the distinct Candy
Cube™, Candy Bento Box®, and Candy Wall™. The result is an experience that is unique,
attracting a significant social media following and a series of successful co-branding opportunities
with well-known labels such as Disney, Barbie, Nintendo, Tito’s Vodka, Casamigos, and The
Honest Company.
12. Sugarfina operates an “omnichannel” business, involving design, assembly,
marketing, and sale of confectionary items through a retail fleet of 44 “Candy Boutiques,”
including 11 “shop in shops” within Nordstrom’s department stores, a wholesale channel,
e-commerce, international franchise, and a corporate/custom channel. In 2018, Sugarfina
generated more than $47 million in net sales.
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C. MNS’s Receipt of Sugarfina’s Property
13. Sugarfina and MNS entered into a Services Agreement dated August 11, 2017 (the
“Services Agreement”), a true and correct copy of which is annexed hereto as Exhibit A.
14. Pursuant to the Services Agreement, MNS was required to provide services (the
“Services”) to Sugarfina including, among other things, the storage of raw candy and packaging,
and assembly of finished product.
15. In connection with the Services, MNS came into possession of numerous items of
Sugarfina’s property, including “Merchandise” (defined as “confections, candy, food items,
containers, ancillary products, displays, store fixtures, marketing materials, promotional materials
and other similar items from time to time designated by SGR”), “SGR Products” (defined as “[t]he
final products containing the Merchandise”), “Bailed Equipment” (defined as “equipment,
machinery, and supplies to be used in connection with the Services [that is delivered to MNS]”),
and a “Racking System” (defined as “a racking system [erected] for SGR’s products”). The
Merchandise, SGR Product, Bailed Equipment, and Racking System are collectively referred to
herein as the “Sugarfina Property.”
16. Through the Services Agreement, MNS specifically disclaimed any possessory or
other rights or interest in the Sugarfina Property.
17. With respect to the Merchandise and the SGR Products, section 10(c) of the
Services Agreement provided as follows:
Merchandise Title. All legal title to the Merchandise and the SGR Product shall be
vested in and held by SGR, regardless of location and state of said Merchandise or
SGR Product. MNS shall be deemed a bailee for such Merchandise and the SGR
Product, and shall segregate the Merchandise and SGR Product from any of its
property or those of any third party. MNS shall affix the Merchandise and SGR
Product with labels sufficient to ensure that a reasonable person can determine it is
owned by SGR, and shall not make any representations or statements to third parties
regarding any claim to ownership or title over the Merchandise or SGR Product.
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To the extent applicable, MNS hereby waives and relinquishes any claims or
rights that may arise, by operation of law or otherwise, to assert a possessory
interest in or lien on the Merchandise or SGR Product by nature of MNS’
possession or control of the Merchandise or SGR Product. With respect to
transportation terms of title, MNS has no agency, representative, power of attorney,
or other ability to modify, cause to modify, provide, provide in absence of, or
otherwise affect the transportation terms of title negotiated, or intended to be
negotiated, by SGR, for either past, present, or future terms. Prior written approval
on an incident-by-incident basis is required before MNS may create or change the
transportation terms of title. MNS shall use its best effort to receive Merchandise
from carriers, to prepare shipments for carriers in a manner to avoid damage to
Merchandise and SGR Product, to promptly document and notify SGR of damages,
to collect carrier and freight documents, and to sign for acknowledgement of receipt
or shipment of Merchandise and SGR Product.
Services Agmt. § 10(c) (emphasis added).
18. With respect to the Bailed Equipment, section 8(c) of the Services Agreement
provided as follows:
Equipment Delivery and Use. SGR may, from time to time, deliver to MNS
equipment, machinery, and supplies to be used in connection with the Services (the
“Bailed Equipment”). MNS shall not have any title or interest in the Bailed
Equipment, and shall hold and use such Bailed Equipment as a bailee only.
Upon delivery of the Bailed Equipment to MNS, SGR shall also provide MNS with
any applicable lease agreements or security agreements governing use and/or
possession of the Bailed Equipment. MNS shall take all steps reasonably required
to maintain the Bailed Equipment, including but not limited to those steps required
under such lease agreements or security agreements; provided, however, that SGR
shall reimburse MNS for the out-of-pocket and reasonable costs of such
maintenance, unless the need for maintenance is caused by MNS. MNS shall
segregate the Bailed Equipment from all other similar equipment, and affix it with
labels sufficient to ensure that a reasonable person can determine it is owned by
SGR. MNS shall not make any representations or statements to third parties
regarding any claim to ownership or title over the Racking System. MNS shall use
the Bailed Equipment only for purposes of performing the Services, and may not
use it to benefit any third party without SGR’s express written consent.
Services Agmt. § 8(c) (emphasis added).
19. With respect to the Racking System, section 8(d) of the Services Agreement
provided as follows:
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Racking System Use. MNS shall not have any title or interest in the Racking
System, and shall hold and use such Racking System as a bailee only. MNS shall
take all steps reasonably required to maintain the Racking System. MNS shall affix
the Racking Systems with labels sufficient to ensure that a reasonable person can
determine it is owned by SGR, and shall not make any representations or statements
to third parties regarding any claim to ownership or title over the Racking System.
MNS shall use the Racking System only for purposes of performing the Services,
and may not use it to benefit any third party without SGR’s express written consent.
Services Agmt. § 8(d) (emphasis added).
20. As set forth above as well as in the Service Agreement, MNS had no right, title or
interest in any of the Sugarfina Property.
21. Sugarfina estimates that the value of the Sugarfina Property exceeds $2.8 million.
D. MNS Agreed to Turn Over the Sugarfina Property upon Termination
22. Section 6(d)(i) imposes a number of obligations on MNS upon the termination of
the Services Agreement, including requiring that “MNS shall take commercially reasonable steps
to cooperate with and otherwise facilitate the transfer of Merchandise, SGR Product, the Bailed
Equipment, and the Racking System, to SGR of its designee(s), in order to minimize impact, delay,
or cost to SGR’s operations and/or supply chain . . . (the ‘Transition Obligations’) . . . .”
23. Under Section 6(d)(i), “MNS shall perform the Transition Obligations without
regard to the reason for the expiration of the Term.”
24. Importantly, Section 6(d)(i) further provides that “[f]or purposes of this section,
SGR’s determination that the Term has expired . . . shall be conclusive. MNS hereby waives,
relinquishes, and forever disclaims any claims or arguments to contest, oppose, or otherwise hinder
SGR’s determination that the Term has expired.”
E. MNS Doubled Down on its Waiver of Rights to the Sugarfina Property
25. Over and above the waivers and agreements provided in the Services Agreement,
MNS provided similar assurances and waivers to Sugarfina’s lenders. Specifically, in connection
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with the Services Agreement, MNS entered into (i) that certain Warehouseman’s Release and
Waiver Agreement, dated October 2, 2018 (the “Avidbank Lender Release”); and (ii) that certain
Warehouseman’s Release and Waiver Agreement, dated January 2019, with Goldman Sachs
Specialty Lending Holdings, Inc. (the “Goldman Lender Release” and collectively with the
Avidbank Lender Release, the “Lender Releases”). True and correct copies of each of the Lender
Releases are annexed hereto as Exhibit B and Exhibit C, respectfully.
26. By the Lender Releases, MNS further contractually acknowledged that it has no
rights to the Sugarfina Property. For example, Section 1 of the Lender Releases provide that MNS
waived, released, and relinquished all right, title, interest and claim to Sugarfina’s Property:
The Warehouseman [i.e., MNS] hereby waives, releases and relinquishes to the
Bank all right, title, interest and claim which Warehouseman has or may in the
future have in, to or against any personal property (including, without limitation,
all Inventory, equipment, goods, books and records), whether now or hereafter
acquired by Borrower and located at any time in the Premises (collectively, the
“Goods”).
27. Similarly, Section 2 of the Lender Releases provide that the Sugarfina Property is
only a bailment to MNS, and Sugarfina shall retain title to the Sugarfina Property at all times:
The Warehouseman [i.e., MNS] agrees that the Goods are bailed to the
Warehouseman solely for storage and processing purposes and title to such Goods
shall at all times remain in the Borrower. The Warehouseman shall have no right,
title or interest therein and will not, by storing or processing same, acquire any
right, title or interest therein.
28. Further, Section 4 of the Lender Releases provide that MNS waived any and all
claims, liens, charges and encumbrances in, to, or against any of Sugarfina’s Property:
The Warehouseman waives any and all claims, liens, charges and encumbrances
which it now has or may at any time hereafter acquire (whether arising under
applicable common law or statute, by contract with the Borrower, or otherwise) in,
to, or against any of the Goods in its possession at the Premises. The
Warehouseman will not encumber, grant a security interest in, or dispose or sell
any of the Goods; provided, however, that Warehouseman may dispose of Goods
at the request of Borrower in the ordinary course of business.
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29. And, Section 7 of the Lender Releases provides for no offsets:
So long as this Agreement shall remain in effect, the Warehouseman agrees that it
shall not offset or apply any amounts due and owing by the Warehouseman to the
Borrower against any indebtedness, obligation, or other amount(s) owed to the
Warehouseman by the Borrower, whether arising in the ordinary course of business
or otherwise, except as described in number 5 (5) of this Agreement.
F. Termination of the Services Agreement
30. Pursuant to Section 23(e) of the Services Agreement, Sugarfina terminated the
Services Agreement effective July 17, 2019, upon the delivery of the Termination Intent Notice,
dated July 16, 2019 (the “Termination Intent Notice”). A true and correct copy of the Termination
Intent Notice is annexed hereto as Exhibit D.
31. While MNS alleges that Sugarfina’s termination of the Services Agreement was
improper, it is undisputed that Sugarfina is no longer having MNS perform services pursuant to
the Services Agreement.1
G. MNS Has Refused to Return the Sugarfina Property
32. By the Termination Intent Notice, Sugarfina reminded MNS of its obligations under
the Services Agreement’s Transition Obligations to return all Sugarfina Property in MNS’s
facilities. See Exh. D.
33. By letter dated July 22, 2019 from the undersigned firm to MNS’s then-counsel,
Sugarfina again reminded MNS of its obligations under the Services Agreement’s Transition
1
In the proceeding GLJ, Inc. and MJC Confections LLC v. Sugarfina, Inc., Civil Action No. 2:19-cv-04970-
ARR-RML (E.D.N.Y.), filed on August 30, 2019 (the “MNS Action”), MNS contends that Sugarfina’s termination of
the Services Agreement was improper and that Sugarfina breached the Services Agreement and the implied duty of
good faith and fair dealing. The MNS Action is stayed by reason of 11 U.S.C. § 362(a), notice of which will be filed
with that court shortly. Plaintiff notes that it has significant counterclaims against MNS in any civil proceeding relating
to the termination of the Services Agreement, and reserves all rights relating to such claims and any all claims and
defenses applicable to the MNS Action.
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Obligations to return all Sugarfina Property to Sugarfina. A true and correct copy of this letter is
annexed hereto as Exhibit E.
34. By letter (incorrectly) dated August 2, 2019, which was sent on August 1, 2019,
from the undersigned firm to MNS’s new counsel, Sugarfina informed MNS of its intention to
pick up the Sugarfina Property from MNS on August 5, 2019.
35. Also on August 1, MNS’s new counsel (and MNS’s counsel in the MNS Action)
responded by email and informed Sugarfina that “[a]bsent a Court Order, I can assure you that
your client will pick up nothing—absolutely nothing—from MNS’ [sic] and that law enforcement
will be notified should your client attempt to do so.” A true and correct copy of this email is
annexed hereto as Exhibit F.
36. After this bankruptcy proceeding was commenced, by letter dated September 6,
2019, Sugarfina informed MNS that, pursuant to sections 362(a)(3), 362(a)(6), and 542(a) of the
Bankruptcy Code, MNS is required to turn over possession of the Sugarfina Property (the
“Turnover Letter”). A true and correct copy of this letter is annexed hereto as Exhibit G.
37. MNS has not responded to the Turnover Letter, nor has it turned over the Sugarfina
Property to Sugarfina.
H. The Sugarfina Property is Urgently Needed for the Debtors’ Continued Operations
38. MNS is holding, and refusing to produce, over 237 pallets of raw candy, in addition
to packaging and finished product. The Debtors urgently require access to this Sugarfina Property
in order to perform with respect to its budgetary requirements and continue operations in these
cases. Among other things, the Debtors’ operations are running desperately low on empty cubes
and some of the raw candy that MNS is holding – items that cannot be purchased from a vendor
in time to satisfy the Debtors’ production needs.
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39. Specifically, if MNS does not release to Sugarfina the empty cubes in its
possession, Sugarfina estimates that by October 15, 2019, it will run out of empty cubes, and its
ability to process new orders will be greatly limited.
40. The replacement cost of new cubes is estimated to be $694,000.00.
41. Moreover, Sugarfina has already been damaged by MNS’s refusal to comply with
the Turnover Obligations set forth in the Services Agreement. Specifically, it had to spend
$77,000.00 to expedite an order of Champagne Bears®, and $79,000.00 on an initial order of
empty cubes, for a total of $156,000.00.
42. If the Debtors do not gain access to the Sugarfina Property as soon as possible they
run a material risk of missing projected sales, causing a default under their DIP Credit Facility2.
In addition, the Debtors’ current proposed Stalking Horse APA3 provides for a deduction in the
purchase price if the Debtors’ inventory values do not satisfy a specific threshold. If the Debtors
do not gain access to the Sugarfina Property immediately, they are projecting to fall below that
threshold, such that the purchase price paid for the Debtors’ assets may be materially reduced.
43. In addition to refusing to provide Sugarfina with access to the Sugarfina Property,
in contravention of Services Agreement and the Lender Releases, MNS has also threatened to take
steps that would destroy or reduce the value of the Sugarfina Property. For example, by letter
dated July 17, 2019 to Sugarfina, MNS, by its then-counsel, stated that “...until all outstanding
invoices are immediately paid in full and MNS is provided with assurances to its satisfaction that
it will be made whole, MNS reserves the right to take all necessary steps to mitigate its damages
2
This term is defined in the Interim Order (I) Authorizing the Debtors to Obtain Post-Petition Secured
Financing, etc. [Docket No. 71].
3
This term is defined in the Declaration of Adam Meislik in Support of Debtors’ Motion for Entry of Interim and
Final Orders Authorizing Post-Petition Financing Pursuant to 11 U.S.C. §§ 105, 362, and 364, and Use of Cash
Collateral (the “Meislik Decl.”)[Docket No. 62].
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caused by Sugarfina, including shutdown of all operations, electricity and other utilities.” A true
and correct copy of this letter is annexed hereto as Exhibit H. Such a shutdown is likely to result
in the destruction of Sugarfina’s Merchandise and the SGR Product, which are perishable
confections, candy, and food items.
COUNT I
(Turnover of Property Pursuant to 11 U.S.C. § 542)
44. Plaintiff repeats and re-alleges paragraphs 1 through 43 as though fully set forth
herein.
45. The Sugarfina Property is property of the estate of Sugarfina under Bankruptcy
Code section 541(a).
46. Defendants remain in possession of the Sugarfina Property, despite demand for its
return.
47. The Sugarfina Property is property that Sugarfina may use under Bankruptcy Code
section 363.
48. Under Bankruptcy Code section 542(a), an entity in possession of property that the
trustee (or debtor in possession under section 1107) may use “shall deliver” such property to the
trustee.
49. Under Bankruptcy Code section 542(a), an entity in possession of property that the
trustee (or debtor in possession under section 1107) may use “shall . . . account for” such property.
50. The Sugarfina Property is not of inconsequential value to Sugarfina’s estate.
Rather, it is essential to its ongoing operations.
51. The Plaintiff is entitled to the return of the Sugarfina Property.
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COUNT II
(Violations of 11 U.S.C. §§ 362(a) and (a)(6))
herein.
53. “[A] petition…operates as a stay, applicable to all entities, of,,,(3) any act to obtain
possession of property of the estate or of property from the estate or to exercise control over
property of the estate;…[and] (6) any act to collect, assess, or recover a claim against the debtor
that arose before the commencement of the case under this title… .” 11 U.S.C. §§ 362(a)(3) and
(a)(6).
54. By the Turnover Letter, which was dated September 6, 2019, and sent to MNS and
its council by certified mail, return receipt requested (and by email to counsel for MNS), Sugarfina
informed MNS that, pursuant to sections 362(a)(3), 362(a)(6), and 542(a) of the Bankruptcy Code,
MNS is required to turn over possession of the Sugarfina Property. See Exh. G.
55. MNS has not responded to the Turnover Letter, nor has it turned over the Sugarfina
Property to Sugarfina.
56. This failure by MNS to turn over the Sugarfina Property constitutes a willful
violation of the automatic stay, which has caused Sugarfina immediate and irreparable harm as set
forth herein.
57. Sugarfina seeks actual damages, including legal fees and expenses, as well as
punitive damages, as a result of MNS’s knowing and willful violation of the automatic stay.
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COUNT III
(Section 105 Injunction)
herein.
59. A bankruptcy court may “issue any order, process, or judgment that is necessary or
appropriate to carry out the provisions of [the Bankruptcy Code].” 11 U.S.C. § 105(a).
60. A Bankruptcy Court may, therefore, in its discretion, issue injunctive relief under
section 105 of the Bankruptcy Code in order to restrain activities that threaten the policies
underlying the bankruptcy process and the administration of a debtor’s estate or impair the court’s
jurisdiction with respect to the case before it.
61. This Court’s issuance of an injunction barring MNS from destroying the Sugarfina
Property and ordering MNS to turnover the Sugarfina Property is necessary in order to preserve
and facilitate the orderly administration of the debtor’s estate.
62. Without the Court’s issuance of an injunction, Sugarfina will run a material risk of
missing projected sales, causing a default under their DIP Credit Facility. In addition, the Debtors’
current proposed Stalking Horse APA provides for a deduction in the purchase price if the Debtors’
inventory values do not satisfy a specific threshold. If the Debtors do not gain access to the
Sugarfina Property immediately, they are projecting to fall below that threshold, such that the
purchase price paid for the Debtors’ assets may be materially reduced.
63. The requested injunctive relief will serve the public interest by allowing this Court
to treat all general unsecured creditors equally.
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64. Injunctive relief pursuant to section 105 of the Bankruptcy Code enjoining MNS
from destroying the Sugarfina Property and ordering MNS to turn over the Sugarfina Property is
therefore necessary and appropriate.
RESERVATION OF RIGHTS
65. Plaintiff reserves the right to bring all other claims or causes of action that Plaintiff
might have against Defendants, on any and all grounds, as allowed under law or in equity. Nothing
contained in this Complaint shall be construed as a waiver of Plaintiff’s rights to object to any
scheduled claim or any proof of claim filed by Defendants. Accordingly, Plaintiff reserves the
right to object, on any and all grounds, to any scheduled claim or proof of claim asserted by
Defendants. For each objection to a claim, a separate notice will be given and a separate hearing
will be scheduled.
RELIEF REQUESTED
WHEREFORE, Sugarfina prays that this Court enter judgment as follows: (i) turnover of
the Sugarfina Property; (ii) disallowance of any claim Defendants may have in the Debtors’
bankruptcy cases pursuant to Bankruptcy Code section 502(d) unless the Sugarfina Property is
turned over; (iii) exercise by the Court of its powers under section 105 of the Bankruptcy Code to
issue an injunction enjoining MNS from destroying the Sugarfina Property and ordering MNS to
turn over the Sugarfina Property; (iv) all actual damages, including legal fees and expenses, as
well as punitive damages as a result of MNS’s knowing and willful violation of the automatic stay;
(v) all costs under applicable law; and (vi) such other and further relief as the Court deems just
and proper.
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Dated: September 19, 2019 MORRIS JAMES LLP
/s/ Eric J. Monzo

Eric J. Monzo (DE Bar No. 5214)
Brya M. Keilson (DE Bar No. 4643)
500 Delaware Avenue, Suite 1500
Wilmington, DE 19801
Telephone: (302) 888-6800
Facsimile: (302) 571-1750
E-mail: emonzo@morrisjames.com
E-mail: bkeilson@morrisjames.com
and
FISHERBROYLES LLP
Christina H. Bost Seaton, Esquire
445 Park Avenue, Ninth Floor
New York, NY 10022
Telephone: (203) 887-4665
E-mail: Christina.BostSeaton@fisherbroyles.com
Proposed Special Litigation Counsel to the Debtors
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Case 19-50364-MFW Doc 1-1 Filed 09/19/19 Page 1 of 117
EXHIBIT A
DocuSign Envelope ID: 801F261F-7DF6-4355-B37C-48DF047501D1
SERVICES AGREEMENT
THIS SERVICES AGREEMENT ( Agreement dated as of August 11, 2017 Effective Date ,
is by and between Sugarfina, Inc., a Delaware corporation, having offices at 3915 West 102nd Street,
Inglewood, CA 90303, on the one hand ( SGR ), and each of GLJ, Inc. GLJ
New York corporation, and MJC Confections LLC MJC
Company, each having offices at 999 South Oyster Bay Road, Building # 500, Bethpage, NY 11714, on the
other hand. GLJ and MJC MNS
RECITALS
MNS operates a business providing warehousing, production, assembly, packaging, distribution and related
services in intrastate commerce.
SGR owns and operates a specialty retail and wholesale business in the United States and internationally.
SGR desires to engage MNS to provide such services, and MNS shall provide such services, as more fully
set forth in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises, agreements and conditions herein
contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
1. References. Pursuant to section 27, below, GLJ and MJC shall be jointly and severally responsible
and liable for the obligations, conditions, and terms hereof; as such, references to MNS shall be
deemed references to each of GLJ and MJC, individually and respectively. Each of SGR and MNS
Party Parties
2. Administrative Needs. Within one (1) business day of the Effective Date, MNS shall provide SGR
with a completed Form W-9 and ACH information.
3. Engagement. SGR engages MNS to perform, and MNS agrees to perform, the services (the
Services set forth in the Schedule Scope of Work attached hereto as Schedule A. The
Parties may also agree to future additional Scopes of Work to provide for services other than the
Services ("Special Services"), provided that such additional Scopes of Work must be signed by both
Parties in advance. Any Special Services shall be governed by the terms and conditions of this
Agreement, unless specifically provided otherwise in the applicable Scope of Work.
4. Facilities.
(a) New Facility. In anticipation of performing the Services, MNS shall secure access to and
use of that certain facility located at 999 S. Oyster Bay Road, Suite 107, Bethpage, New York
11714 New Facility
(b) Construction at New Facility. Immediately following the Effective Date, MNS shall begin
efforts to build-out and otherwise prepare the New Facility to serve as the primary Facility used
for the Services consistent with the terms contained herein Build-Out
include, but not be limited to, (i) those necessary to ensure that the New Facility complies with all
requirements set forth in Section 9, and (ii) construction and completion, without reimbursement
cording to instructions and specifications approved
in writing, in advance, by SGR. Within five (5) business days of the Effective Date, SGR shall
pay to MNS the sum of $15,000 Construction Allowance MNS shall hold the Construction
-1-
Allowance amounts in trust in a segregated account, and may apply such amounts towards the
documented and reasonable costs of constructing a racking system for SGR (the
Racking System . All use of the Construction Allowance shall be subject to the following:
(1) construction must be completed according to plans and specifications to be agreed between the
Parties; (2) MNS shall provide SGR with a weekly statement outlining amounts applied from the
Construction Allowance, along with supporting documentation and records; and (3) upon notice of
any dispute from SGR as to use of the Construction Allowance, MNS shall restore to the Allowance
the disputed amounts and maintain such amounts with the Construction Allowance until the dispute
is resolved. Upon conclusion of construction hereunder, MNS shall refund to SGR the remaining
balance of the Construction Allowance, without setoff, offset, recoupment, or other reduction on
account of amounts owed or allegedly owed by SGR hereunder. With the exception of the
Construction Allowance, the costs and expenses to complete the Build-Out shall be borne solely
and exclusively by MNS.
(c) Facilities, Generally. MNS shall perform and complete the Services in the New Facility
and in portions of other facilities adjacent to the New Facility that are controlled by MNS
(collectively, with the New Facility Facilities (a) unless agreed
otherwise by SGR (in its sole and absolute discretion), from and after January 1, 2018, the New
Facility shall be the primary Facility devoted towards performance of the Services; (b) without the
express written permission from SGR obtained in advance, MNS shall not sublease any portion of
the New Facility or otherwise use a portion of the New Facility to benefit a third party; (c) from
and after January 1, 2018, SGR must pre-approve in writing the use of any Facility other than the
New Facility prior to its use in connection with the Services; (d) MNS shall implement and
maintain any reasonable restrictions on access by MNS employees, Representatives, or third parties
to the New Facility and that portion of the Facilities that relate to the Services; and (e) any portion
of a Facility that is used in connection with the Services must be dedicated exclusively to the
Services, with the exception of common areas and other Facility areas where exclusivity and/or
separate designation is impracticable under the circumstances. Notwithstanding use of any Facility
and except as specifically set forth herein, under no circumstances shall SGR be responsible for
the operation, maintenance, lease, purchase, use, or exploitation of any Facility, regardless of
whether such Facility or Facilities are used in connection with or otherwise benefit the Services.
(d) Transition. The Parties understand and agree that the New Facility will not be ready upon
the Effective Date to facilitate the Services. Accordingly, the Parties agree to the following
transition plan:
(i) MNS shall use commercially reasonable efforts to ensure that the Build-Out is
completed by January 1, 2018;
(ii) MNS shall provide SGR with monthly updates regarding the status of the Build-
Out efforts;
(iii) Upon completion of the Build-Out, MNS shall provide a written certification
Build-Out Certification SGR that, among other things, (a) the Build-Out is complete,
(b) the New Facility is fully capable of completing the Services without any additional effort or
expense, and (c) the New Facility complies in all respects with the requirements of Section 9,
hereof;
(iv) Following delivery of the Build-Out Certification, upon written consent of SGR,
MNS shall transition the Services to the New Facility and/or transfer the Merchandise and SGR
Products to the New Facility, all as according to SGR
(v) As discussed in Schedule D, hereof, until the later of (i) December 31, 2017 and
(ii) delivery of the Build-Out Certification, the Facility Fee shall not be owed and any and
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all fees and expenses owed by SGR on account of the Facilities (including the Lease Fee) shall be
equal to $8,000.00 per month.
5. Liens and Rights. Within fifteen (15) business days of the

Effective Date, MNS shall obtain from the owner(s) of each of the Facilities an agreement, in form and
substance acceptable to SGR, providing for waiver and relinquishment of any liens, claims, rights, or interest
in the Merchandise, the SGR Product, the Bailed Equipment, or the Racking System (each as defined herein).
Within fifteen (15) business days of the Effective Date, MNS shall obtain from any creditors with security
interests or liens on the assets of either GLJ or MJC, including but not limited to The Westchester Bank, an
acknoweledgement or agreement that the collateral securing the relevant obligations does not and will not
include the Merchandise, the SGR Product, the Bailed Equipment, or the Racking System.
6. Term and Termination.
(a) Term. The initial term of this Agreement shall be for a period of thirty-six (36) months
commencing on the Effective Date, unless terminated earlier pursuant to this Section 6 Initial
Term This Agreement and the Scope of Work shall renew automatically and without further
action by SGR for two (2) additional and successive Renewal Term
and, together with the Initial Term Term unless either Party provides written notice to the
other Party of its election not to renew, at least three (3) months prior to the expiration date of the
Initial Term or the then-current Renewal Term, as the case may be. In the event the Parties execute
a Scope of Work or Scopes of Work governing Special Services Special Services Scope
of Work term extending beyond the Term provided above, the Term
shall be deemed extended only as required to perform the Special Services and only with respect
to such Special Services.
(b) Termination.
(i) Either Party may immediately terminate this Agreement and/or any Scope of
Work in the event that:
(1) the other Party is in material breach of its obligations under this
Agreement and fails to cure such breach within thirty (30) days after the non-breaching
Party provides written notice of any such breach, unless such breach by its nature is
incapable of cure in which case the non-breaching Party may terminate immediately; or
(2) the other Party or any of its officers or directors are convicted under the
Racketeer Influenced and Corrupt Organizations Act of 1970, as amended or a state
equivalent; or
(3) any of the financial or diligence-related information received from the

non-terminating Party in connection with this Agreement is determined to be materially
false or misleading.
(4) substantial loss of or damage to one or more of the Facilities which

would prevent or materially impede the performance of Services hereunder; or
(5) such Party terminates this Agreement under Section 23 (Negative

Covenants Against Competition by MNS).
(ii) SGR may immediately terminate this Agreement and/or any Scope of Work in
the event of any of the following:
(1) In the event that SGR determines, in its sole and absolute discretion,
that MNS has failed to duly and timely either (i) perform its obligations hereunder
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(including as set forth in Sections 8, 9, and 15), (ii) maintain the expected Cost Per Unit
Performance, resources, or levels of risk protection provided under a Scope of Work,
(iii) timely satisfy all Purchase Orders submitted by SGR under this Agreement, or
(iv) otherwise comply with a Scope of Work, SGR may provide notice of such failure to
MNS. The provision of a notice due to a specific issue, problem, or deficiency will not
impact Sugarfina
issue, problem, or deficiency continues for a meaningful period or is repeated. Upon
occurance of the third such notice, SGR may immediately terminate this Agreement
and/or any Scope of Work upon notice to MNS; provided, however, that SGR shall use
its reasonable discretion in determining whether and to what extent a particular notice
should be withdrawn (which withdrawal will require formal notice to SGR), taking into
account efforts to cure; or
(2) In the event that SGR determines, in its reasonable discretion, that
MNS has become insolvent, is likely to become insolvent in the next six (6) month
period, is unable to pay its debts as they become due, or its credit risk has materially
degraded since the Effective Date; or
(3) Upon notice to MNS of breach of the NDA; or
(4) Upon notice to MNS, in the event that Craig Fraum and Matthew
Silberstein ceases to control either regular and daily operations, and/or
performance of the Services; or
(5) Upon notice to MNS, in the event MNS breaches Section 5, above
Liens and Rights).
(iii) This Agreement and all outstanding Scopes of Work shall immediately
terminate without notice and without either Party
(a) either Party files a petition or otherwise seeks relief under any bankruptcy, insolvency or
reorganization statute or proceeding anywhere in the world, including but not limited to under
Title 11 of the Bankruptcy Proceeding , (b) either Party becomes the
subject of a Bankruptcy Proceeding; (c) either Party makes an assignment for the benefit of its
creditors or begins negotiations to initiate an assignment for the benefit of creditors, (d) a
custodian, receiver, or trustee is appointed for a Party or a substantial portion of a Party business
or assets, or (e) either Party admits in writing its inability to pay its debts as they become due.
(c) Effect of Termination. The following Sections of this Agreement shall survive
termination, in addition to those Sections that by their nature should be expected to survive
termination: 6(d), 8, 10, 11, 13-20 (inclusive), 22, 23, and 25-35 (inclusive). Upon expiration of
the Term (whether resulting from expiration of time, termination, or otherwise), and/or termination
of a Scope of Work, each Party shall promptly and immediately pay to the other Party any amounts
owed with respect to this Agreement or the Scope of Work (as applicable) for Services rendered
or payment obligations arising prior to the termination date. With the exception of amounts owed
on account of Transition Obligations (as defined below) and Services rendered prior to expiration
of the Term, all payment obligations owed hereunder (including, but not limited to, the
Management Fee, the Lease Fee, and the Facility Fee) shall automatically terminate and conclude
upon expiration of the Term (whether resulting from expiration of time, termination, or otherwise).
(d) Transition Following Termination.
(i) Transition Obligations. Upon expiration of the Term (whether

resulting from expiration of time, termination, or otherwise) and for the duration of the Transition
Period (as defined below), MNS shall take commercially reasonable steps to cooperate with and
otherwise facilitate the transfer of Merchandise, SGR Product, the Bailed Equipment, and the
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Racking System, to SGR or its designee(s) in order to minimize impact, delay, or cost to SGR
Transition Obligations
include, but not be limited to, the following:
(1) As requested and directed by SGR, providing the Services for

the duration of the Transition Period;
(2) As requested and directed by SGR, providing SGR with

access to updated and current records maintained by MNS in the
ordinary course relating to or otherwise regarding the Merchandise or
SGR Product;
(3) Providing SGR and its Representatives with access to the

Merchandise, SGR Product, the Bailed Equipment, and the Racking
System, wherever maintained or stored for the duration of the
Transition Period (as defined below), with such access to begin
immediately and no later than twenty-fours following expiration of the
Term;
(4) Providing SGR and its Representatives with support and

services (including labor and equipment) sufficient to prepare and load
by expiration of the Transition Period, the Merchandise, the SGR
Product, the Bailed Equipment, and Racking System onto trucks to be
provided by SGR or its designee(s); provided, however, that SGR must
pre-approve any extraordinary expenses; and
(5) Providing SGR and its Representatives with priority access to

and use of all loading docks at the New Facility and at least one (1)
loading dock at each of the other Facilities where the Merchandise,
SGR Product, Equipment, and/or Racking System is located.
MNS shall perform the Transition Obligations without regard to the reason for expiration of the Term. For
purposes of this section, SGR Term has expired (whether resulting from expiration
of time, termination, or otherwise), shall be conclusive. MNS hereby waives, relinquishes, and forever
disclaims any claims or arguments to contest, oppose, or otherwise hinder SGR
Term has expired.
(ii) Transition Period. For purposes of the foregoing Section, the term
Transition Period a time to be specified by SGR, in its sole and absolute discretion,
up to one hundred and twenty (120) days.
(iii) Compensation for the Transition Obligations. In addition to all

undisputed amounts owed hereunder by SGR to MNS, SGR shall reimburse MNS for all
documented out-of-pocket expenses incurred by MNS in performing the Transition Obligations;
provided, however, that MNS shall use commercially reasonable efforts to provide SGR with
written notice of such expenses prior to incurring them. In addition to the foregoing, if and to the
extent SGR requests that MNS continue to perform the Services during the Transition Period,
SGR shall pay to MNS amounts that would otherwise be due hereunder or under a Scope of
Work on account of such Services, if the Term had not ended.
7. Rates & Charges; Billing & Payment.
(a) Rates & Charges. During the Term (as defined in Section 6), SGR shall pay MNS the
rates and charges set forth in the Scope of Work, which rates and charges are inclusive of labor,
operating expenses, fixed costs and profit for the Services, except as may otherwise be agreed in a
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writing executed by authorized Representatives of the Parties. For any Special Services, SGR shall
pay to MNS such rates and charges as set forth in acceptance of any Special Services Work
Order.
(b) Billing & Payment.
(i) Labor-Related Amounts.
(1) Within one (1) business day of MNS commencing the

Services, SGR shall pay to MNS an amount reasonably expected to
cover all labor costs to be incurred by MNS during the initial first two
(2) weeks of the Services, which amount the Parties shall work in good
Wage Fund As the volume of Services
increase during the Term, the Parties will work in good faith to
determine whether and to what extent the Wage Fund should be
increased. MNS shall hold the Wage Fund in trust in a segregated
account (separate from the Construction Allowance and any third party
funds or uses).
(2) By 5:00 p.m. Eastern Time on the first business day of each
calendar week in which MNS processes payroll in the ordinary course
of business, MNS shall provide SGR with payroll registers and
associated time entries relating to labor costs incurred for the Services
during the previous Payroll Registers
MNS receives written notice from SGR of a good faith dispute
regarding the Payroll Registers within two (2) business days of SGR
receiving the Payroll Registers, MNS may apply the Wage Fund to
satisfy the payroll payments made in connection with the Payroll
Registers.
(3) The Parties acknowledge and agree that the Payroll Registers
will reflect only a basic estimate of the payroll actually owed to MNS
employees and contractors on account of the Services and may include
errors. Within two (2) business days of MNS processing the payroll in
connection with the Payroll Records, MNS shall provide SGR with an
Labor Invoice Wage
Fund on account of the foregoing payroll period. Such Labor Invoice
shall, for each category of employee or contractor set forth on Schedule
D, detail the total regular hours worked, total overtime hours worked,
total Ancillary Rate for those employees, and the total Markup.
(4) Amounts owed on account of a Labor Invoice shall be due and

paid within ten (10) days of delivery of such Invoice. Such amounts
shall be funded into, and used to replenish, the Wage Fund.
(ii) Other Amounts. Amounts owed hereunder or under a Scope of Work that do
not relate to labor and/or a Labor Invoice, including the Management Fee, Facility Fee, and Lease Fee,
shall be due and paid within thirty (30) days of delivery to a Party of an invoice setting forth (i) the owed
amounts, and (ii) an accounting of how such amounts were calculated.
(iii) Good Faith Disputes; Miscellaneous. Amounts disputed in good faith and in
writing by SGR shall not be due or owed until and unless resolved (by agreement of the Parties or
otherwise). MNS is not liable for chargebacks or other amounts relating to Special Services that were not
subject to an accepted Special Services Work Order. Amounts owed hereunder by SGR to MNS shall be
paid, where practicable, via ACH according to instructions to be provided by MNS.
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(c) Rate Adjustments. rates and charges, whether for Services, Special Services, or
otherwise, are subject to change SGR, in the event that:
(i) the scope of services provided by MNS materially change at SGR

request; or
(ii) there is an increase in aggregate salary expenses for MNS employees that
are directly working on matters relating to this Agreement, which increase is
directly attributable to the following; provided, however, that with respect to the
Management Fee this section shall apply only to those MNS employees or
Representatives who are exclusively dedicated to or otherwise working on
SGR Services:
(A) a mandated increase in the New York State minimum wage. SGR acknowledges that
this wage increase may apply to employees not directly impacted by the higher minimum
wage. For instance, if the minimum wage increased to $12.50 per hour but that employee
earns $12.51 currently, that employee can be increased to maintain the earnings disparity
relative to an employee directly impacted by the minimum wage hike. Any adjustment in
rates to be charged to SGR relating to this Section 7(c)(ii)(A) shall be made at the same
time as the adjustment under 3(c)(ii)(B) below; or
(B) discretionary annual salary increases by MNS of up to 5% per year. The calculation
of increase in salary expenses which may permit an increase in rates shall be made within
fifteen days after each calendar year during the Term, starting with calendar year 2017
e.g. the first calculation, applicable to calendar year 2017, shall be made by January 15,
2018. The Parties shall calculate the percentage by which salary for employees working
on matters relating to this Agreement increased from the prior calendar year and that same
percentage shall then be utilized to adjust the rates set forth in numbers 1 through 5 of the
first paragraph of the Scope of Work going forward. The calculation shall include only
those employees who work on SGR Services throughout the course of the applicable
calendar year.
For the avoidance of doubt, the Lease Fee and Facility Fee are not subject to adjustment under this
subsection. Notwithstanding any of the above, SGR shall not be responsible for, and there shall be
no rate adjustment, for any individual employee salary increase in excess of what is paid to that
individual employee when that employee is working on own matters. For instance, SGR
for $11.50
per hour when working on MNS matters. MNS shall provide SGR 30-day written notice of any
adjustments in rates described in this Section. Only the direct labor costs set forth on the Scope of
Work shall be used to calculate the rate adjustments.
(d) Billing & Payment Chargebacks, Corrections and Adjustments. MNS shall immediately
post credits to the receivable account of SGR for any and all (i) chargebacks, (ii) billing corrections,
and (iii) agreed upon adjustments for Services and/or Special Services. For the avoidance of doubt,
MNS shall not be liable or responsible for chargebacks that are not caused by its own acts or
omissions.
(e) Payment Under Protest. If at any time a dispute shall arise as to any amount or sum of
money to be paid by one Party to the other Party under the provisions hereof, the Party against
whom the obligation to pay the money is asserted shall have the right (but not the obligation) to
ed as a
voluntary payment, and there shall survive the right on the part of each Party to institute suit for
recovery of each sum. If it shall be adjudged that there was no legal obligation on the part of such
Party to pay such sum or any part thereof, such Party shall be entitled to recover from the other
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Party such sum or so much thereof as it were not legally required to pay under the provisions of
this Agreement.
(f) Audit Rights. In the event that MNS requests any rate increase based on Section 7(c)
above or any other provisions of this Agreement, SGR may request whatever records or
documentation from MNS that SGR may deem reasonably necessary as support for request,
including without limitation payroll records. SGR may make copies of such records and
give access to such records to SGR and SGR Representatives, including SGR
other financial advisers. SGR 7(f) shall be in addition to any other audit
or inspection rights of SGR under this Agreement. SGR shall use commercially reasonable efforts
to complete the audit or review within a reasonable period of time, but the rate increase at issue
shall not be due and payable by SGR until and unless the audit or review is completed.
(g) Late Payments. Any undisputed amounts owed by one Party to the other Party hereunder
which become late or delinquent shall incur a late fee equal to 3.0% of the obligation at issue, and
shall accrue interest at a rate equal to the lesser of (i) the maximum allowed under applicable law,
and (ii) 6.0% per annum.
8. Manner of Performance.
(a) MNS shall provide sufficient personnel, equipment and other supplies necessary to
perform the Services. MNS shall perform the Services, as set forth in a Scope of Work, in a timely
and workmanlike manner and in accordance with applicable laws and generally accepted industry
standards, practices and procedures.
(b) MNS acknowledges that certain of the leases governing the Facilities, including the lease
for the New Facility, (collectively, Leases may contain IDA terms and conditions, that MNS
has obligations to offer work, provide and grant bids, interview, employ, contract for goods and
services, and other performance obligations as defined in said referenced lease. MNS further
acknowledges that it accepts full and sole responsibility for compliance with and performance of
those obligations and hereby excludes those obligations, terms, and conditions from this
Agreement. MNS further acknowledges that SGR has no obligation to insure, confirm, or otherwise
monitor performance of said obligations.
(c) Equipment Delivery and Use. SGR may, from time to time, deliver to MNS equipment,
machinery, and supplies Bailed Equipment .
MNS shall not have any title or interest in the Bailed Equipment, and shall hold and use such Bailed
Equipment as a bailee only. Upon delivery of the Bailed Equipment to MNS, SGR shall also
provide MNS with any applicable lease agreements or security agreements governing use and/or
possession of the Bailed Equipment. MNS shall take all steps reasonably required to maintain the
Bailed Equipment, including but not limited to those steps required under such lease agreements
or security agreements; provided, however, that SGR shall reimburse MNS for the out-of-pocket
and reasonable costs of such maintenance, unless the need for maintenance is caused by MNS.
MNS shall segregate the Bailed Equipment from all other similar equipment, and affix it with labels
sufficient to ensure that a reasonable person can determine it is owned by SGR. MNS shall not
make any representations or statements to third parties regarding any claim to ownership or title
over the Racking System. MNS shall use the Bailed Equipment only for purposes of performing
the Services, and may not use it to benefit any third party without SGR
(d) Racking System Use. MNS shall not have any title or interest in the Racking System, and
shall hold and use such Racking System as a bailee only. MNS shall take all steps reasonably
required to maintain the Racking System. MNS shall affix the Racking Systems with labels
sufficient to ensure that a reasonable person can determine it is owned by SGR, and shall not make
any representations or statements to third parties regarding any claim to ownership or title over the
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Racking System. MNS shall use the Racking System only for purposes of performing the Services,
and may not use it to benefit any third party without SGR
9. Quality Control, Licensing, Etc.
(a) Facility Maintenance. MNS shall maintain the Facilities in a clean, safe and orderly
condition in accordance with applicable laws and with the best industry standards, practices and
procedures for those engaged in the production, distribution, or sale of food and other consumable
items. In addition and without limiting the foregoing, MNS shall maintain that portion of the
Facilities devoted towards the Services in a manner consistent with standards and procedures that
may be required by SGR from time to time, including but not limited to those set forth on Schedule
E, provided that additional standards and procedures set in the future are commercially reasonable.
MNS shall be responsible for its methods of operations, processes and practices, at its sole and
absolute cost and expense. MNS shall ensure that all Services and operation of Facilities, whether
they are performed by MNS or by Parties, shall satisfy the standards and requirements of,
and that MNS and affiliates and agents comply with, the terms of this Agreement. SGR
shall not have any separate or additional obligation to compensate or reimburse any person or entity
other than MNS.
(b) Licenses, Permits, Certifications, and Regulatory Compliance. MNS shall be responsible
for obtaining any relevant licenses, permits or other regulatory certificates and/or approvals, as
well as complying with any regulatory schemes required by any Authority (defined below) to
perform the services contemplated by this Agreement. For purposes of this Agreement,
Authority
the United States, or any quasi-governmental or private body asserting, exercising or empowered
to assert or exercise any regulatory authority thereunder and any entity or organization directly or
indirectly owned by and subject to the control of any of the foregoing. MNS shall also maintain
Kosher certification recognized by OU and and shall obtain and maintain Halal certification by at
least three (3) months following the Effective Date. Upon SGR MNS shall
obtain certification recognized by KOF-K, at SGR During the Term, MNS
shall SQF Program
SQF Certification Facilities where the Merchandise and/or SGR
Products are located; provided, however, that (1) until MNS provides SGR with the Build-Out
Certification, the New Facility shall comply with the SQF Program but need not have SQF
Certification, and (2) during such period SGR may specify certain Merchandise and/or SGR
Products that must have SQF Certification and the Services performed with respect to such
Merchandise and/or SGR Product shall be completed in the Facilities that have SQF Certification.
MNS shall also use commercially reasonable efforts to obtain and maintain other certifications as
reasonably requested by SGR, from time to time. MNS shall notify SGR immediately of any
changes in its certifications or certification levels (including in the SQF Certification). Subject to
the following, SGR shall reimburse MNS for all costs or amounts incurred in connection with any
certification efforts made by MNS under this section with respect to the New Facility (including
Certification Costs :
(i) If and to the extent such certification covers or otherwise benefits

Facilities other than the New Facility, SGR for Certification Costs
shall be reduced to the extent of the corresponding benefit to the other Facilities in an amount to
be negotiated and agreed between the Parties in good faith.
(ii) MNS must obtain SGR o incurring

or expending Certification Costs.
(iii) If MNS services or otherwise addresses more than 5 million small

cubes during the first twelve (12) months following the Build-Out Certification, MNS shall pay
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to SGR an amount equal to fifty percent (50%) of the Certification Costs expended until that
date; if MNS services or otherwise addresses more than 10 million small cubes during the second
twelve (12) months following the Build-Out Certification, MNS shall pay to SGR an amount
equal to fifty percent (50%) of the Certification Costs epended until that date. Amounts owed by
SGR to MNS.
(c) In the event MNS is contacted by any Authority for non-compliance, or fails an inspection
by any Authority, MNS shall give SGR written notice within twenty-four (24) hours after MNS is
contacted or becomes aware of such failed inspection, and shall use its best efforts to timely correct
such non-compliance.
(d) Quality Control. MNS shall ensure that the SGR Products meet or exceed all of SGR
specifications and standards provided to MNS from time to time, including but not limited to those
set forth on Schedule E. MNS shall only use the Merchandise provided by SGR to assemble and
package the SGR Products. All of the aforementioned is subject to SGR prior review and
approval as to quality. SGR will provide training and other support to assist with quality control
upon the reasonable request of MNS. Without limiting the foregoing, the SGR Products shall be
of high quality as to workmanship and appearance. MNS shall properly and safely store all of the
Merchandise, SGR Products, and packaging materials in compliance with the storage guidelines
provided by the applicable manufacturer.
10. Tender, Transfer & Removal of Merchandise.
(a) Merchandise. From time to time during the Term, SGR may provide to MNS, and MNS
agrees to accept from SGR, shipments of, among other things, confections, candy, food items,
containers, ancillary products, displays, store fixtures, marketing materials, promotional materials
and other similar items from time to time designated by SGR. The aforementioned items are
sometimes referred to in this Agreement Merchandise. The final products containing the
SGR Products.
(b) Tender for Storage. All Merchandise tendered for storage shall be delivered to the New
Facility or any other facility designated by SGR in a segregated manner, properly marked and
packaged for handling. SGR shall furnish at or prior to delivery of a purchase order or transfer
order showing the Merchandise to be stored by MNS, which shall show Merchandise to be kept
and accounted for separately. MNS shall make entries in NetSuite or any other software systems
implemented by SGR evidencing the Merchandise received for storage at the Facility; such entries
shall be deemed evidence of receipt. The terms or conditions of any such receipt are subject and
subordinate to the terms and conditions of this Agreement. In the event of any conflict between
the terms and conditions of such receipt and this Agreement, the terms and conditions of this
Agreement shall govern.
(c) Merchandise Title. All legal title to the Merchandise and the SGR Product shall be vested
in and held by SGR, regardless of location and state of said Merchandise or SGR Product. MNS
shall be deemed a bailee for such Merchandise and the SGR Product, and shall segregate the
Merchandise and SGR Product from any of its property or those of any third party. MNS shall
affix the Merchandise and SGR Product with labels sufficient to ensure that a reasonable person
can determine it is owned by SGR, and shall not make any representations or statements to third
parties regarding any claim to ownership or title over the Merchandise or SGR Product. To the
extent applicable, MNS hereby waives and relinquishes any claims or rights that may arise, by
operation of law or otherwise, to assert a possessory interest in or lien on the Merchandise or SGR
Product by nature of possession or control of the Merchandise or SGR Product. With respect
to transportation terms of title, MNS has no agency, representative, power of attorney, or other
ability to modify, cause to modify, provide, provide in absence of, or otherwise affect the
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transportation terms of title negotiated, or intended to be negotiated, by SGR, for either past,
present, or future terms. Prior written approval on an incident-by-incident basis is required before
MNS may create or change the transportation terms of title. MNS shall use its best effort to receive
Merchandise from carriers, to prepare shipments for carriers in a manner to avoid damage to
Merchandise and SGR Product, to promptly document and notify SGR of damages, to collect
carrier and freight documents, and to sign for acknowledgement of receipt or shipment of
Merchandise and SGR Product.
(d) Transfer. Subject to the terms hereof, MNS may, without notice, move Merchandise or
SGR Product within the Facilities. MNS shall not move the Merchandise or SGR Product to
another location without the prior written consent of SGR, and shall in all events continue to
maintain the Merchandise and SGR Product in a segregated manner. If Merchandise or SGR
Product are or become a hazard to other property, the Facility or persons, MNS may immediately
notify SGR and MNS shall immediately claim and remove such Merchandise or SGR Product from
the Facilities. The cost of such removal shall be borne exclusively by SGR, unless the cause of the
hazard at issue was caused by acts or omissions of MNS.
(e) Shipping and Receiving. Shipping and receiving rates and charges set forth in a Scope of
Work cover ordinary labor and administration involved in receiving Merchandise at the Facility
door or dock, placing Merchandise or SGR Product in storage and returning goods to the Facility
door or dock. Receiving of inbound shipments shall be on an appointment basis and mutually
agreed upon schedule. Outbound shipments shall be coordinated between SGR, MNS and the
relevant transportation services provider (if applicable).
(f) Inbound Shipments. MNS shall promptly notify SGR of any known discrepancy on, or
readily observable damage to, inbound shipments and shall protect SGR
shipping documents. MNS shall prepare a report
defined in Schedule B) of all such overages, shortages or damages to the
Merchandise and notify SGR. SGR shall be responsible for processing all claims and MNS shall
be responsible for providing SGR with all relevant documents, media and information in a timely
manner.
(g) Notice of Problem Merchandise. MNS is not responsible for Merchandise which arrives
at the Facilities in a damaged or defective condition, if MNS notifies SGR within forty-eight (48)
hours of the delivery of such Merchandise.
(h) Customer Representative. SGR shall specify an employee(s), to be assigned to

communicate and coordinate with MNS Customer Rep
Customer Rep may or may not be the SGR Designated Contact on the Signature Page of this
Agreement. SGR may from time to time change the employee assigned as Customer Rep, provided
that such changes must be notifed and/or authorized or approved by SGR
Operations, Chief Operations Officer, or Chief Executive Officer. All instructions from SGR to
MNS shall be communicated via the Customer Rep or the SGR Designated Contact; provided,
however, that Customer Rep or SGR Designated Contact shall not at any time direct or instruct
employees or agents. Any instructions from the Customer Rep or SGR Designated Contact
to MNS shall be given to a MNS manager/employee or the MNS Designated Contact. The
Customer Rep and SGR Designated Contact shall comply with all Facility work place rules and
regulations and conduct him or herself in a good and workmanlike manner.
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11. Loss & Damage to Merchandise or SGR Product or Property: Chargebacks.
(a) Shortages. Subject to a tolerance equal to two percent (2%) of the total volume of
Merchandise, MNS shall be liable for Merchandise or SGR Product that is lost, misplaced, harmed,
damaged, stolen, missing or tainted while in the custody or control of MNS, or due to the acts or
omissions of any of its Representatives Shortages , subject to the following
limitation:
(i) MNS is not liable for any concealed Shortages, or Shortages in a factory sealed
carton or inner pack, except for any Merchandise purchased directly from MNS.
In the event a concealed shortage is identified by MNS after the Merchandise is
received into inventory, MNS shall immediately notify SGR of the correct
inventory count. MNS shall not be liable for damage caused to Merchandise that
are received by MNS in other than its original shipping carton including carton
fillers and/or damage that occurs in transit so long as MNS promptly notifies
SGR of such damage in accordance with the terms of this Agreement.
(b) Payment for Shortages. Promptly upon discovery by MNS of a Shortage or upon demand
by SGR in respect of a Shortage, MNS shall remit and pay to SGR an amount equal to the
replacement value of the Shortages. Such payment(s) shall be without regard to settof, offset,
recoupment, or other defense.
12. Shipments by Third Party Carriers. MNS is not obligated to accept shipments to any of its
Facilities if the transportation documents name MNS as consignee. All inbound shipments shall be
made on a prepaid/FOB Destination basis, which SGR is shown as the responsible payer for all
freight charges. Freight collect ship
but shall be accepted when mutually agreed to by MNS and SGR.
13. Limitation on Liability; Force Majeure. NOTWITHSTANDING ANYTHING TO THE

CONTRARY HEREIN, EXCEPT WITH RESPECT TO (I) SECTION 16 (INDEMNIFICATION),
(II) SECTION 23 (NEGATIVE COVENANTS AGAINST COMPETITION BY MNS),
(III) SECTION 6 (TERM AND TERMINATION), (IV) SECTION 9 (QUALITY CONTROL,
LICENSING, ETC.), AND (V) CLAIMS OR AMOUNTS ARISING FROM A PARTY
WILLFUL MISCONDUCT, RECKLESS DISREGARD, OR GROSS NEGLIGENCE: (1) IN NO
EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR CLAIMS,
AMOUNTS, EXPENSES, JUDGMENTS, OR RIGHTS TO PAYMENT FOR MORE THAN THE
GREATER OF (A) $500,000, AND (B) THE TOTAL AMOUNT OWED TO MNS UNDER THIS
AGREEMENT DURING THE PRECEEDING TWELVE (12) MONTH PERIOD, AND (2) IN NO
EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY
CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES OR AMOUNTS. MNS shall not be
liable for damages or any delay or failure in the performance of this Agreement resulting from any
cause beyond its control, such as acts of God, fires, explosions, floods, wars, sabotage, riots,
governmental action, or acts of terrorism.
14. Insurance. GLJ and MJC shall each procure and maintain during the entire Term of this Agreement
and for a period of three (3) years thereafter, at their sole cost and expense, the following insurance
coverages with policy limits no less than the following:
(a)
state(s) in which services are to be performed;
(b) Employment practices liability insurance with a self-insured retention and/or deductible
of no greater than $10,000 and policy limits of at least $1,000,000;
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(c) All risk cargo insurance (including coverage for infidelity, fraud, dishonesty or criminal
acts) with a self-insured retention and/or deductible of no greater than $10,000 and minimum limits
of not less than $200,000 per occurrence and a combined single limit for all liability totaling
$1,000,000; and
(d) Broad form comprehensive general liability insurance and/or property insurance with a
self-insured retention and/or deductible of no greater than $10,000 and minimum limits of liability
of not less than $1,000,000 per occurrence combined single limit for personal injury and property
damage covering (i) the SGR Products and Merchandise, (ii) Merchandise or SGR Product recall,
investigation, or reporting obligations associated with or arising from the Services, (iii) spoilage,
rot, or other contamination of the SGR Products and Merchandise, and (iv) liability assumed by
MNS under this Agreement; and
In addition to the foregoing, MJC shall procure and maintain during the entire Term of this
Agreement and for a period of three (3) years thereafter, at its sole cost and expense, a Stock
Throughput insurance policy that includes coverage for ocean cargo, domestic transit, and business
property, sufficient to cover the SGR Products and Merchandise.
All insurance coverages required under this Section 14 shall designate SGR as an additional insured
and, with respect to cargo and property insurance, as a loss payee. As discussed below, immediately
upon the Effective Date MNS shall furnish to SGR insurance certificate(s), and all applicable
endorsements, addressed to SGR evidencing compliance with the requirements of this
Section 14 and naming SGR as a beneficiary under each such policy. The certificate(s) shall provide
that such insurance shall not be canceled or changed unless at least thirty (30) days prior written
notice has been given to SGR of any such changes. MNS represents and warrants it shall
continuously fulfill the requirements of this Section 14 during the Term. MNS shall be responsible
for paying all deductibles and retentions due under required insurance policies under this
Section 14 as well as premiums on such coverage.
15. Loss and Risk Control; facility access. If events transpire requiring SGR or its Representatives to
conduct an investigation, MNS agrees to lead such investigation and to apprise SGR of the
developments, updating SGR on no less than a twelve (12) hours basis during the investigative
process. MNS shall interview employees (as well as employees of any third party
subcontractors, consultants and agents utilized by MNS) in the performance of the Services and
agrees to work with SGR in good faith (including allowing SGR to be present for interviews, as
appropriate, in judgment reasonably applied to confirm compliance) in general with SGR
or its Representatives policies. If a theft, fire or other event occurs resulting in loss of or damage to
Merchandise or SGR Product, MNS agrees in good faith to provide such access to the Facilities as
may be required by the circumstances. MNS agrees that it shall take all commercially reasonable
steps to protect all of the Merchandise, SGR Product, and other goods, supplies, equipment and
property belonging to SGR, including the Racking System and Bailed Equipment, and to comply
with reasonable suggested loss prevention requirements, and take all reasonably necessary action to
implement such requirements as soon as is commercially practicable following written requests.
Notwithstanding the foregoing, SGR and its Representatives and designees shall have unrestricted
access to the Facilities.
Notwithstanding anything to the contrary herein or in the foregoing, during the Term and for any
Transition Period, SGR, any of its Representatives, and any of SGR
obtain prior written approval from SGR, may enter any Facility during normal working hours at any
time to examine, count, remove, or otherwise control any or all of the Merchandise or SGR Product
stored under this Agreement, to observe the operations within the Facility, to inspect Merchandise
or SGR Product including returns and damages, or to investigate, or further investigate with the
MNS Designated Contact any issues involving claims, adjustments, chargebacks or work
performance, provided reasonable notice is given; provided however that SGR shall have
unrestricted access to the New Facility. Upon request by SGR, MNS shall execute or otherwise
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agree to agreements with customers or potential customers in connection with compliance,

reporting, or auditing programs maintained by SGR
limited to, executing or otherwise agreeing to agreements with the customer(s) providing such
customer(s) or their Representatives with access to facilities, information regarding the
Merchandise, SGR Product and/or the Services, and compliance with commercially reasonable
audit, certification, and inspection requests or needs; provided, however, that none of the foregoing
conflict with the terms of this Agreement.
16. Indemnification. Each Party Indemnifying Party shall indemnify, defend, and hold harmless
the other Party and each of its officers, directors, employees, managers, representatives, attorneys,
accountants, contractors and agents (a Party Representatives from and against any and all loss,
liability, damage, fine, penalty, cost, demand, expense, action, claim, or cause of action (including
costs of defens
damage or destruction of property, or injury (including death) Losses
with a third party claim in any way arising out of, resulting from or relating to: (a) breach by the
indemnifying party or any of its Representatives of this Agreement or any Scope of Work; and
(b) gross negligence, willful misconduct, or recklessness of the indemnifying party or any of its
Representatives. In addition to the foregoing, MNS shall indemnify, defend, and hold harmless
SGR and its Representatives from and against any Losses arising from or relating to (i) the retention,
employment, or use of employees, contractors, or other third parties in performing the Services,
including without limitation Losses arising from or relating to the assertion, argument,
determination, or judgment that SGR is an employer or is otherwise responsible for employment
practices associated with such persons or contractors, (ii) Merchandise or SGR Product recall,
investigation, or reporting obligations arising from the Services, (iii) obligations under either
Sections 8, 9, and 15 of this Agreement, (iv) the Leases, or (v) breach by MNS of any of its
Transition Obligations or any other portion of Section 6 (Term and Termination).
17. Relationship of Parties. It is agreed and understood that MNS is performing the Services as an
independent contractor. Neither Party nor any personnel engaged by such Party shall be considered
as employees or agents of the other Party at any time or for any purpose whatsoever. Nothing
contained in this Agreement shall be deemed to constitute a relationship of agency, joint venture,
partnership or any relationship other than that of an independent contractor.
18. Contractors, Employees & Agents: No solicitation & No Hire. SGR shall not be
responsible for the hiring, discipline, discharge or payment of agents and employees. MNS
shall secure all reasonably necessary permits and licenses related to such employment or retainment,
federal payroll and other taxes, and employee benefit contributions, including, but not limited to,
taxes and contributions for unemployment insurance, social security and old age benefits, required
in performance by MNS of the Services. During the Term and for a period of two (2) years following
the Term, neither Party without the written permission of the other Party, shall knowingly solicit or
cause to be solicited for employment, or hire or cause the hiring, of any person who is employed or
retained on a contract basis by the other Party at any time during the Term.
19. Books And Records. MNS agrees to keep at its principal office as set forth in the Agreement,
complete, accurate books and records with respect to the Services, obligations under this
Agreement, and all amounts charged by MNS to SGR in connection therewith for a period of three
(3) years after the expiration or termination of this Agreement. SGR reserves the right to audit, copy
and inspect Services Records, subject to SGR giving MNS reasonable notice of such an audit
where possible. In connection therewith, SGR shall have the right to interview employees, to
confirm the accuracy of any Services records and to require printouts or copies of any such
records maintained in its computer software in which event MNS shall deliver the printouts to SGR
Designated Contact. During the course of any inspection or audit, SGR may make and retain copies
of Services records. Nothing contained herein shall or shall be deemed to give SGR the right
to audit and inspect any of books and records other than Services records. During the
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course of any inspection or audit, SGR may make and retain copies of records relevant to the
Services.
20. Confidentiality. On the Effective Date, the Parties shall deliver executed copies of the Non-
Disclosure Agreement attached hereto as Exhibit A NDA NDA are
incorporated herein by reference as if set forth herein in their entirety.
21. Computer. MNS will utilize SGR services outlined in

this Agreement. Upon request by MNS, SGR shall provide MNS with the necessary hardware for
doing so.
22. Intellectual Property.
(a) Limited License. MNS acknowledges that SGR owns all intellectual property (whether in
the nature of patent, trademark, copyright, trade dress, or trade secrets), exploitation, and use rights
associated with the distribution, sale, marketing, and benefit from the Merchandise and SGR
Product (collectively, th Intellectual Property , including but not limited to (i) the patent,
copyright, and trademark registrations set forth on the Schedule appended hereto as Exhibit B, and
(ii) the trade dress depicted, displayed, and otherwise referenced at www.sugarfina.com. SGR
hereby grants to MNS a limited, non-exclusive, world-wide, non-transferable, royalty-free,
terminable license to use the Intellectual Property solely in connection with MNS
the Services for the Term. The foregoing license shall terminate immediately and without notice,
upon expiration of the Term (whether resulting from expiration of time, termination, or otherwise).
23. Negative Covenants Against Competition by MNS.
(a) Designation of Exclusivity. Attached hereto as Exhibit C is a Schedule of items that SGR
offers, plans to offer, or may offer for sale in connection with its businesses. The Schedule
-Exclusive Offering.
otherwise closely identified with its Intellectual Property or long-term strategies, or (b) SGR
currently offers or plans to offer on an exclusive basis. SGR may amend Exhibit C from time to
time, upon written notice to MNS -
Exclusive Offerings.
(b) Exclusive Offerings. During the Term, unless agreed otherwise by SGR in writing, MNS
shall not, and shall not aid, support or encourage any third party to, sell, market, offer, gift, or
otherwise provide third parties with, (i) the Exclusive Offerings, and (ii) any items that closely
resemble, mimic, or otherwise approximate the Exclusive Offerings, as determined by SGR in its
reasonable discretion.
(c) Non-Exclusive and Excepted Offerings. During the Term, MNS shall not, and shall not
aid, support or encourage any third party to, sell, market, offer, gift, or otherwise provide third
parties with Non-Exclusive Offerings or Excepted Offerings that are packaged or placed in cubes
or other packaging that resembles SGR SGR in its sole and absolute
discretion.
(d) Packaging. current labeling and packaging for offerings placed in cubes (the
Current Packaging including the Exhibit D, require
a license of SGR Intellectual Property. SGR hereby grants to MNS a limited, perpetual, fully
paid-up, worldwide license to use and exploit the Current Packaging for a period of eighteen (18)
months following the Effective Date; provided, however, that MNS may not actively market the
Current Packaging in connection with the foregoing license (e.g., the Current Packaging may not
be displayed or referenced in email marketing, at trade shows, on the main webpage or main
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internet page operated by MNS or any of its agents or Representatives, or in prominent places in
catalogs). Following the Effective Date, the Parties shall work in good faith to agree on changes
to the Current Packaging that will not infringe on the Intellectual Property; provided, however, that
MNS shall not launch, use, exploit, or otherwise benefit from any such changes until and unless
the Parties have agreed.
(e) Good Faith Coordination. The Parties recognize that they each offer a large array of
products. The Parties shall work in good faith to ensure compliance with this Section 23. To that
end, MNS shall use reasonable efforts to discuss with SGR any prospective order, request,
proposal, or concept that it believes may violate or implicate the terms of this Section 23. In
addition, SGR shall notify MNS of any concerns that MNS has or may violate the terms of this
Section 23. The Parties shall work in good faith for a period of at least seven (7) calendar days to
Identified Concern
that similar concerns are avoided in the future. If the Parties cannot agree on a resolution of an
Identified Concern following such seven-day period, either Party may provide notice of an intent
to terminate this Agreement Termination Intent Notice . The Parties have
expended significant amounts of resources and time to negotiate and resolve this Agreement, and
are entering into this Agreement with the expectation of a long and trusting relationship. The
Parties intend to consider that aspect in discussing Identified Concerns and in deciding whether to
serve a Termination Intent Notice. This Agreement shall be deemed terminated upon delivery of
a Termination Intent Notice.
24. Further Assurances. Either Party shall execute and deliver such agreements, documents, and
recognitions as reasonably requested by the other Party which are consistent and otherwise in
furtherance of the terms hereof. In particular, MNS shall execute and deliver to SGR such waivers,
collateral access agreements, and subordinations as requested and in form and substance provided
by SGR
in Merchandise or SGR Product (if any).
25. Assignment. The Services are of a personal services nature. Neither GLJ or MJC shall assign,
subcontract, broker, or transfer, in whole or in part, any right, interest, duty, responsibility,
agreement or obligation contained in this Agreement or any Scope of Work, including the right to
receive payments, without the prior written consent of SGR. Any such attempted assignment or
transfer shall be null and void. SGR may not assign this Agreement in whole or in part without the
prior written consent of MNS, which consent may be withheld upon reasonable business
judgment. Notwithstanding the foregoing, SGR may assign this Agreement to any entity controlled
by, controlling, or under common control with such Party, or to any successor in interest in
connection with any sale of all or substantially all assets of such Party. This Agreement shall inure
to the benefit of, and be binding upon, the lawful or permitted, as applicable, successors and assigns
of the Parties.
26. Notices. Any notice contemplated by or required or permitted to be given under this Agreement
shall be sufficient if in writing and if delivered personally, or sent by overnight courier, or sent by
registered or certified mail, return receipt requested, to the addresses below:
If to MNS:
GLJ, Inc.
MJC Confections LLC
999 South Oyster Bay Road, Building 500
Bethpage, New York 11714
Attn: Craig Fraum
Attn: Matthew Silberstein
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If to SGR:
Sugarfina, Inc.
3915 West 102nd Street
Inglewood, California 90303
Attn: Josh Resnick, Chief Executive Officer
Attn: Lance Miller, General Counsel
27. MJC and GLJ. MJC and GLJ shall be jointly and severally responsible, liable, obliged, and
answerable for each and every term, condition, warranty, representation, covenant, and obligation
that applies herein to MNS. For purposes of this Agreement, MJC and GLJ shall be deemed agents
and Representatives of the other, such that any statements, actions, or omissions of either MJC or
GLJ, or any of their respective Representatives shall be deemed the statements, actions, or omissions
of both MJC and GLJ; provided, however, that any notice or termination under section 6 (Term and
Termination), above, must be executed by both MJC and GLJ. Payments owed and/or made by
SGR to either MJC or GLJ shall be deemed payments to both MJC and GLJ, in satisfaction of SGR
payment obligations hereunder.
28. Severability. The terms and conditions of this Agreement are hereby deemed by the Parties to be
severable, and the invalidity or unenforceability of any one or more of the provisions of this
Agreement shall not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement shall be deemed prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, and such prohibition or
invalidity shall not invalidate the remainder of such provision or the other provisions of this
Agreement.
29. Governing Law. This Agreement shall be interpreted and construed in accordance with the laws
of the State of New York, excluding choice of law provisions, unless explicitly preempted by
applicable federal laws and regulations.
30. Integration; Authority; No Waiver. All exhibits or schedules attached hereto are hereby
incorporated herein by this reference for all purposes. This Agreement, including exhibits and
schedules, together with any related documents referred to herein constitutes the entire agreement
between or among the Parties with respect to the subject matter hereof. This Agreement supersedes
and replaces any and all prior agreements, proposed agreements, negotiations and communications,
oral or written, and contains the entire agreement between the Parties as to the subject matter hereof
and any and all prior agreements, understandings or representations are hereby terminated and
canceled in their entirety. Each Party hereby acknowledges that no other Party, nor its agents or
attorneys, have made any promises, representations or warranties whatsoever, expressed or implied,
not contained herein, to induce such Party to execute this Agreement, and each Party acknowledges
that it has not executed this Agreement in reliance on any such promise, representation or warranty
not contained herein. The individuals signing this Agreement on behalf of such Party have the
authority to do so, and the execution, delivery and performance of this Agreement have been duly
authorized by all appropriate action on behalf of such Party. The waiver by any Party to this
Agreement of any breach or violation of any provision of this Agreement by the other Party shall
not operate or be constructed to be a waiver of any subsequent breach or violation thereof.
31. Construction. Each of the Parties acknowledges that they and their counsel have reviewed this
Agreement and suggested changes to its language. Therefore, any rule of construction that any
ambiguity shall be construed against the drafter of this Agreement shall not apply in interpreting the
provisions of this Agreement. Should there be any conflict between the terms of this Agreement or
any other document created by either Party relating to the business relationship, this Agreement
shall control. SGR and MNS reject any term or condition of any invoice, shipping document, letter,
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e-mail or other document which conflicts with or adds to this Agreement, unless signed by both
Parties.
32. Amendment. This Agreement may be modified only as stated in and by writing signed both Parties.
This Agreement and all Scopes of Work, including the Exhibits hereto, may not be changed or
amended orally but only in writing signed by both Parties.
33. Binding Arbitration. Any dispute or controversy arising under, out of, in connection with, or in
relation to this Agreement shall be determined and settled by arbitration to be held in New York
City, New York, heard by a single arbitrator within forty-five (45) Business Days of receiving notice
from any Party
arbitration shall be governed by the rules mutually agreed upon by the Parties, or according to the
rules established by the arbitrator or in accordance with the Judicial Arbitration and Mediation
JAMS Parties cannot agree upon any particular rule. The arbitration
proceedings shall be conducted before a single, neutral arbitrator associated with JAMS. In the
event that the Parties cannot agree upon a single arbitrator, or in the event of the failure, inability or
refusal of the arbitrator to act, an arbitrator shall be appointed by JAMS. The decision of the
arbitrator shall be final, conclusive and binding on the Parties. All proper costs and expenses of
fees of the arbitrator(s) shall be charged to a Party in such amounts as the arbitrator shall determine
at the time of the award. An award so rendered shall be binding in all aspects. The arbitrator may,
in the award, allocate all or part of the costs of the arbitration, including the fees of the arbitrator
ailing Party, and judgment on the award may be entered
in any court having jurisdiction; and the provisions of this clause may be enforced by any court of
competent jurisdiction, and the Party seeking enforcement shall be entitled to an award of all costs,
Party against whom
enforcement is ordered. Notwithstanding anything to the contrary herein, claims or relief relating
to or arising from the alleged breach of any terms governing Intellectual Property or confidentiality
shall not be subject to binding arbitration. The Parties shall keep all filings, proceedings, statements,
awards, and judgments made in connection with an arbitration hereunder, confidential.
34. Schedules and Exhibits. The schedules and exhibits which are annexed to this Agreement are
hereby incorporated into and form part of this Agreement.
35. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be
deemed an original and all of which shall constitute one Agreement. The signature of any Party to
any counterpart shall be deemed to be a signature to; any may be appended to, any other counterpart.
Facsimile or PDF signatures shall be deemed as part of the original.
(Remainder of page intentionally left blank.)
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Signature Page
SUGARFINA, INC. GLJ, INC.
By: By:
Its: Its:
MJC CONFECTIONS LLC
By:
Its:
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SCHEDULE A
Scope of Work
SERVICES
As used in this Agreement Services
involving receiving, cross-dock, value added services, re-work, order fulfillment, shipping and inventory
control. Unless approved in writing by SGR, the Facilities should be operated during required business
hours on each business day as set forth in Schedule C.
Overtime work. SGR acknowledges that MNS shall be required to meet deadlines that may require
overtime work. SGR reserves the right to challenge overtime charges should that overtime not have been
pre-approved and if insufficient evidence exists, as determined by SGR at its reasonable discretion, to
prove the necessity of overtime, SGR shall not be liable for overtime charges nor be required to pay
overtime charges.
1. Standard Operating Procedures. MNS shall perform the following tasks as part of its performance to
provide the Services or Special Services contemplated in this Agreement:
a. Receiving Operations.
i. Provide sufficient dock door access and dock space to perform receiving task.
ii. Unload Merchandise for SGR in manner which shall protect the Merchandise from weather
conditions such as severe temperatures, rain and snow, contamination, theft, tampering,
unauthorized opening or resealing of cartons, or anything else that may be damaging to the
Merchandise.
iii. All Merchandise received into the Facilities must be recorded on individual, serialized
receiving forms, either manually or electronically received.
iv. Verify and inspect inbound shipment carton information and counts against carrier provided
BOL and manifest or freight receipts. Verification of paperwork includes checking for the PO
number(s), confirming number of cartons, identifying incorrect Merchandise (per paperwork),
damages or tampered freight. MNS shall digitally attached all receiving documents to the
relevant transaction posted in SGR record. Receiving documents can include:
BOL(s), packing slip(s), manifest(s). Note on the BOL or freight receipt documents any and
all damages noted upon inspection of the inbound shipment in accordance with the reporting
and audit requirements set forth on Schedule B to this Agreement.
v. Record all overages, shortages or damages on SGR .
report as needed and set forth on Schedule B. This OS&D report should not preclude MNS
from recording accurate actual receipt information into SGR
for the impact of overages, shortages, and damages.
vi. Comply with the terms of Sections 6(e) and (f) of the Agreement.
vii. All receipts should be recorded and posted in the system of record within no more than 24
hours of physical receipt of the Merchandise (i.e. when Merchandise physically arrived; not
when the receiving process was started). Protocol and security features for receipt
transmissions shall be determined by both parties in accordance to reasonable industry
standards.
viii. Merchandise shall be put away and stored in manner which shall facilitate the protection of
the Merchandise and permit ease of processing, audit and count.
b. Picking and Packing Operations.

i. Orders shall be picked and packed in accordance to the SGR internal and external
Routing Guide requirements, so long as those requirements are expressly communicated by
SGR to MNS. Unless otherwise directed by SGR or Routing Guide requirements, MNS shall
-1-
utilize proper packaging materials such as air bags, ice packs, bubble pack, chipboards, eco
fill, to protect the Merchandise from being damaged in transit.
ii. All packed cartons must be labeled with SGR -specific Routing Guide
requirements. Some requirements include, but are not limited to Packing Lists, Carton
Markings, Manifests, Shipping Label Format, and Label Placement. EDI orders must ship
with the required UCC-128 format outlined in SGR Customer specific Routing Guides, so
long as SGR communicates those requirements to MNS prior to the work being done.
iii. During the normal course of the year, Monday through Friday, all Ecommerce (Web) orders
received by 2:00 pm EST shall be shipped the same day. Orders received after the 2:00 pm
cut off time Peak Times
in Schedule C of year SGR Ecommerce (Web) orders to
change. Any new cut off times established f Peak Times
and published in writing.
iv. All non e-commerce orders will be communicated with a defined ship window. These orders
shall be processed in a timely manner and in accordance to meet SGR Customer
window, Routing Guide and EDI requirements. MNS should notify SGR immediately upon
receipt of order if MNS is unable to meet the defined shipping window.
v. O SGR .
vi. As needed, MNS shall provide to SGR an Open Pick Ticket Report from their system of
record as defined in Schedule B.
c. Shipping and Routings.

i. Outbound EDI orders shall be routed and shipped within the specified shipping window per
SGR Customer and adequately before the
-time delivery of shipments.
ii. All Outbound shipments shall be routed, processed and labeled according to SGR Customer
specific Routing Guide requirements. Some requirements include but are not limited to
Carton Markings, Manifests, Shipping Label Format, Label Placement,
Container Seals, Pallets and Shrink Wrap. EDI orders must ship with the required UCC-128
format outlined in SGR Customer specific Routing Guides.
iii. MNS SGR
Customer specific Routing Guides. All shipping documents (e.g. BOL) must be digitally
attached to the relevant transaction in SGR
iv. Protocol and security features for shipment transmissions shall be determined by both parties
in accordance to reasonable industry standards.
v. As needed, MNS shall provide to SGR an Outstanding Shipment Report from their system as
defined in Schedule B.
d. Return Processing.
i. All SGR Customer Return RA Number
that is issued by SGR. As common practice, MNS shall not accept a return from any carrier
that does not have a RA Number clearly noted on the outside of the carton(s) or on the
paperwork attached to the outside of the carton(s) being returned. MNS must reach out to
SGR for a valid RA number before processing the return.
ii. MNS must notify SGR
SGR Customer and returned to the Facility by the freight carrier.
iii. MNS shall track returns and report to SGR units received for each return. Returns Report
shall include an RA Number, the date the return was physically received, the SKU(s)
received, and the quantities received. Returns Report shall note if the Merchandise was
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received in First Quality condition or if the Merchandise is Damaged as set forth in Schedule
B.
iv. MNS shall record and post in SGR system of record the Customer Returns as an Item
Reciept posted against a valid Return Authorization. All paperwork found by processing
employee outside or inside the Customers Return carton(s) must be digitally attached to the
relevant transaction in SGR
v. Returns must be processed within five (5) business days of physical receipt of the returned
Merchandise.
vi. As needed, MNS shall provide to SGR an Unprocessed Returns Report as defined in Schedule
B.
e. Inventory Control.
i. MNS shall partner with SGR in the event there is a product recall by promptly providing
necessary records available to help identify the status or disposition of Merchandise affected
by the recall. Status in this instance is to be defined as, but not limited to, the sales order and
shipment details for all affected Merchandise shipped, all receipt records of the Merchandise,
on-hand inventory, and all transaction detail for Merchandise inventory adjustment.
ii. MNS shall not physically move any Merchandise out of the Facilities without SGR
permission.MNS may not make any inventory adjustments transactions in SGR
record for physical or logical quantity variances or discrepancies without prior authorization
from SGR. Any inventory adjustment recorded by MNS must have a reason code for the
adjustment. These inventory adjustments will post once approved by SGR, with such
approval either automatically processed based on tolerance levels or manually granted after
review.
iii. MNS shall conduct physical inventories and provide the corresponding reports to SGR, as
reasonably requested by SGR, in the formrat required by SGR.
f. Assembly Operations.
i. MNS will assemble Merchandise for SGR according to the assembly instructions on the Work
Order from SGR. MNS will meet the specific aesthetic requirements for ongoing individual
SGR shall provide product-by-product guidelines for MNS to keep on file for reference when
building each item. Assembly Work Orders can either utilize 100 % of SGR Merchandise or
may at times utilize product purchased from MNS under a separate purchasing agreement.
ii. Assembly orders will be processed at the established per hour labor rate in Exhibit A.
iii. MNS shall maintain adequate resources such that MNS can meet SGR
requirement estimates, with such output requirement estimates being provided on a rolling 3
month basis by SGR to MNS.
g. Value Added Services.

i. As needed, MNS SGR Merchandise according to the
Value Added instructions on the Work Order received from SGR.
ii. Value Added Services or VAS
(1) SGR Customer required price tickets
(2) SGR Customer double wrap, extra
tape, no mixed item in cartons, even layers only, no slip sheets, or bundling requirements.
(3)
-3-
The Management Fee shall cover all associated oversight services not detailed in Schedule A
1. MNS should acknowledge/accept work orders and fulfillment orders (transfer orders, sales orders,
etc.) within 1 business day of receipt. Lack of acknowledgement shall indicate acceptance.
2. MNS shall transact directly in SGR of record according to SGR

policies. Accurate system transactions in SGR
success of this partnership.
3. Work orders (builds) shall follow over/under tolerance parameters as defined by SGR on each
work order.
4. MNS shall perform cycle counts as requested by SGR.
5. MNS shall use first-rate packaging materials consistent with SGR

E.g. good condition pallets, fresh and unmarked corrugate, etc. All documentation and labeling
shall also be consistent with SGR
-4-
SCHEDULE B
Reports and Auditing Requirements

Inbound Warehouse Receipt (with each receipt) including container or shipments PO number.
Daily Receiving Activity including total cartons, containers, BOL and PO numbers from inbound
receipts.
History reports and transactional data showing when orders are received, allocated, picked,
packed, shipped.
Open Pick Ticket report showing the status of all SGR orders outstanding.
OS&D report (per incident) which shows all overages, shortages, and damages.
Daily Shipping Report detailing which SGR MNS including shipment details
such as Customer, BOL, Customer PO, Total Cartons, Total Units, Weights, Carrier, Shipment
Date and ASN for EDI Customers.
Unshipped PO Report that lists all Customer Orders that have not shipped and the status of routing
appointment.
Inventory On Hand Report including location level details.
Inventory Adjustment Report showing movement and reason codes per transaction.
Returns Report shall include RA number, date return was received at MNS, total cartons, total first
quality units received and total damaged units received.
Unprocessed Returns Report shall include RA Number, date return was received at MNS and total
number of cartons to be processed.
Copies of all bills, invoices that MNS directly incur to perform the Services covered in this
Agreement, including but not limited to: utilities bills, repairs and maintenance, telephone bill,
administrative supplies
SCHEDULE C
Business Days; Hours of Operations; Holidays
Standard Working Hours.

8:15 am to 5 pm , factory, and 9 am to 5 pm office Eastern Standard Time Monday through Friday (except
for the Holidays).
Holidays.
Memorial Day
Independence Day
Labor Day
Thanksgiving Day
Christmas Day
Peak Time.
Seasonal demand where volumes exceed normal daily operational throughput, therefore, requiring
additional effort in order to meet SGR Customer
Transition Period.
During the Transition Period, MNS shall use commercially reasonable efforts to secure access beyond the
Standard Working Hours, as requested by SGR.
SCHEDULE D
Rates, Fees & Compensation
The following rates, fees, and compensation shall govern and otherwise apply to the Services:
Agreed upon hourly wage rates to remain in effect the Term. All labor for the specific Services defined
below sha Base Hourly Rate , plus a fixed amount per
hour for all ancillary costs associated with an hourly worker, i.e, workers comp, FICA, insurance etc. (the
Ancillary Rate , plus a Markup (as defined below).
Labor Category1 Base Hourly Rate Ancillary Rate Total per Category
Shipping and Receiving $15.68 per hour $2.32 per hour $18.00 per hour
Purchasing Coordinator $15.68 per hour $2.32 per hour $18.00 per hour
Value Added Services $11.96 per hour $2.04 per hour $14.00 per hour
Picking and Packing $11.96 per hour $2.04 per hour $14.00 per hour
Assembly $11.96 per hour $2.04 per hour $14.00 per hour
Inventory Control $13.82 per hour $2.18 per hour $16.00 per hour
Physical Inventory Count or Cycle $13.82 per hour $2.18 per hour $16.00 per hour
Counting
Shift Supervisors (Main $15.68 per hour $2.32 per hour $18.00 per hour
Departments)
In addition to the foregoing, any hourly wage rate related to employees, agents or independent contractors
of MNS for job tasks which are not defined above shall be billed and calculated equal to the actual hourly
rate, as agreed upon by SGR in writing in advance of said performance, of such employees, agent or
independent contractors plus a ten percent (10%) markup.
Markup Base Hourly

Rate plus the Ancillary Rate; provided, however, that in the event of overtime the Markup shall be
calculated on the Base Hourly Rate as if overtime had not occurred or been triggered. For purposes of
Assembly of small cubes, the Markup calendar quarter.
Specifically, upon conclusion of each calendar quarter the Parties shall work in good faith to agree on the
actual Cost Per Unit Performance experienced for such quarter for small cubes and taster packets within
control. Using the Schedules attached hereto as Exhibit E, the Cost Per Unit Performance realized
by MNS, before any additions shall dictate what the Markup should have been for such quarter (the
Adjusted Markup . For example, if the Cost Per Unit Performance is less than $0.24 for small cubes
containing chocolate, $0.40 0.24 for small cubes
- SGR shall pay to MNS the difference between the Markup actually paid
during the quarter and the Adjusted Markup; if the the Cost Per Unit Performance is greater than the
foregoing amounts, MNS shall pay to SGR the difference between the Adjusted Markup and the Markup
actually paid during the quarter; provided that SGR may elect instead to recoup payment of such amounts
through setoff.
Upon request by SGR, the Parties

and metrics for products other than small cubes.
Cost Per Unit Performance l Merchandise, creating a

completed SGR Product.
1
Appended hereto are descriptions of each Labor Category.
-1-
Freight and Supplies:
1. For freight originating from SGR MNS shall permit and facilitate SGR
shipping accounts with third party shippers (e.g., FedEx and UPS), without markup or
additional cost.
2. For freight and shipping supplies originating from the Facilities, MNS shall charge actual
cost incurred, plus an additional 6.0%; provided, however, that until December 31, 2017, the 6.0%
mark-up shall not apply. This includes all the services associated with shipping via a common
carrier. (e.g. negotiating the best rates, handling all inbound and outbound parcel business etc.)
3. MNS owned truck service: For all shipments that SGR wants to use the MNS-owned truck,
namely for those in a 50 mile radius, SGR
the two individuals who will operate the truck, and all of the costs incurred in relation to the
operation of the truck. The truck is a refrigerated truck that holds 8 standard pallets.
4. For consumable and/or shipping supplies (e.g., corrugated, packing tape, gloves, and hair nets)
that MNS provides in connection with the Services, the charge for Supplies shall be cost,
plus 10%. For supplies that are not of a consumable nature, including capital expenditures (e.g.,
mops, lockers, tables, and tape dispensers), MNS shall provide such supplies at its sole and
exclusive cost, without charge to SGR.
Management Fee:
SGR agrees to pay a management fee of $250,000 a year, during the Term Management Fee with
the first invoice for such amount to be dated on the first day of the month following the Effective Date;
provided, however, that for the first thirty (30) days of the Term the Management Fee shall be reduced by
fifty percent (50%). This Management Fee shall be inclusive of the oversight of the management of MNS
(including by Craig Fraum), in all matters related to the SGR business. It will also include the full-time and
complete dedication to the Services of three key roles in the operation itself. First, the warehouse manager,
who will directly supervise all warehouse operations, including, but not limited to, picking, packing, stageing,
shipping, storage, etc. Second, this fee will include the Assembly manager who will directly supervise all
assembly operations. Third, this fee will include training of MNS employees and representatives of SGR
Representatives for purposes of improving efficiency and operations at SGR The
assignment of specific people for each of the foregoing roles shall be subject to SGR
be revoked or withheld at any time, regardless of whether previously granted). All other roles, as defined in
Exhibit A will be billed as per the agreement. In addition, all accounting of the various elements, invoicing,
billing, auditing, and any and all back office services and general administrative overhead and expenses etc
will be covered in this fee, and will not be billed in addition. In the event SGR renews the Term of this
Agreement, the Parties shall negotiate in good faith in order to reach an agreement at least two (2) months
prior to the expiration of the then-current Term (as defined in Section 6) regarding the rates and charges for
any subsequent Renewal Term. If no agreement is reached by the Parties, then the applicable rates and
charges shall be those set forth in the Scope of Work, adjusted to account for any percentage increases in the
Consumer Price Index since the Effective Date. For avoidance of doubt, the Parties agree that a Management
Fee shall be payable only during the Term.
Setup Costs and Update to New Facility
See Section 4 of the Agreement.
-2-
Facility and Lease Fees
SGR shall pay to MNS a facility fee on account of the New Facility, totaling $35,000 per year (the
Facility Fee , plus all documented lease payments owed by MNS on account of the New Facility (the
Lease Fee Facility Fee and the Lease Fee shall be paid in equal monthly installments with the first
invoice for such amount to be dated on the first day of the month following the Effective Date. Payment of
the Facility Fee and the Lease Fee are subject in all respects to the following:
(a) Notwithstanding the amount of lease payments owed by MNS on account of the New
Facility , utilities, or other charges or expenses incurred by MNS in
connection with any Facility, until the later of (i) December 31, 2017 and (ii) MNS
delivery of the Build-Out Certification, the Facility Fee shall not be owed and the
Lease Fee shall be equal to $8,000.00 per month (it being understood that the
foregoing amount shall also compensate MNS for any use of its other Facilities
during such time);
(b) If and to the extent MNS does not control or otherwise abandons use of the New
Facility, the Facility Fee and the Lease Fee shall not be owed by SGR; and
(c) A MNS on account of the New
Facility shall be invoiced to SGR as and when paid by MNS to the New Facility
landlord.
At SGR Facility Fee shall no longer be paid by SGR

according to the terms above; instead, SGR shall provide to GLJ and/or MJC a warrant or option to
purchase common stock of SGR, in an aggregate exercise amount equal to the Facility Fee that is projected
to be owed for the remainder of the Term (without regard to extensions or renewals) and at an exercise
price per share equal to the price per share paid by the sale of investors of at least 5.0% of SGR
outstanding stock within four (4) months of the warrants being granted to MNS or, if no such transaction
exists, the price per share paid in SGR
5.0% of SGR . Unless designated otherwise in a writing signed by both GLJ and
MJC, 50% of such warrants or options shall be provided to MJC, and 50% shall be provided to GLJ.
Termination of this Agreement shall automatically terminate and otherwise forfeit the warrants and/or
options issued hereunder. The terms of such warrants or options shall be subject in all respects to terms,
conditions, and agreements that are commercially reasonable and required by SGR.
-3-
LABOR CATEGORY DESCRIPTIONS
Shipping:
Shipping associate is responsible for scheduling all pick-ups with carriers, reviewing dock reports,
coordinating with customer service on special routing needs, accurately staging, labeling and scanning all
products shipped.
Receiving:
The Receiving associate is responsible for the accurate receiving, staging, labeling and recording of all
products received. Load and unload freight in an efficient manner. Perform QC audit. Identify and record
damages. Ensure that the proper labels are applied to cartons/pallets received. Ensure that product is
efficiently and accurately put into proper inventory locations. Turn in all original paperwork for systemic
receiving the same day as goods are physically received.
Purchasing Coordinator:
The purchasing coordinator would be responsible for keeping track of all necessary daily supplies that SGR
would instruct MNS to buy directly. This would include items like tape, bubble, tissue paper, standard
corrugated etc.
Value Added Services:
The value added services associate adds customer specific packaging requirements to finished good items
so they ship correctly to customers such as price tickets.
Picking and packing:
Picking and Packing associates duties include picking and packing orders in an accurate manner; following
Assembly: Associates are responsible for the physical assembly of candy cubes and any other items,
labeling, packaging, lot coding and best by dating to produce a finished goods for sale. Any and all piece
work performed at a given station falls under the assembly category.
Inventory Control and Physical Inventory Count and Cycle Count:
Inventory Management:
Maintain and update inventory records in conjunction with the picking and packing team. Reconcile
inventories and make adjustments when necessary. Coordinate and oversee stock consolidations and cycle
counts. Maintain location accuracy.
Stock Search:
Conduct as necessary, any search to locate products within the system. Adjust records when there are
discrepancies between actual product and records. Take steps to correct and prevent discrepancies.
Cycle Count:
Works with Management on scheduling and performing cycle counts. Ensure that the work assigned is
being handled effectively and completed correctly.
Records/Reports:
Maintain all necessary reports and documentation to facilitate accurate inventory counts including records
of all audits, counts, and adjustments. Complete and issue all necessary records and reports in a timely and
-4-
accurate manner.
Shift Supervisors Main:
Shift supervisors will be mixed in to all departments were necessary to ensure the proper quality and
control of the finished goods. Shift supervisors will help coordinate the staging of product, the timing of
items to be worked on, and will help facilitate in any other areas as the production manager deems
necessary.
-5-
SCHEDULE E
SGR Standards and Certifications
Manufacturing Component
3rd Party GMP Audit(s) for each manufacturing facility
Provide a full Good Manufacturing Practices (GMP) audit report completed within the last 12
months.
Global audit standards that are acceptable include:
SQF
BRC
IFS
ISO 22000
HACCP Plan
Flowchart showing CCPs and HACCP Summary
Licensee Recall Plan

Provide a company recall plan complete with 24-hour contact information.
Nutritional Component
Nutrition Information
Safety & Quality Component

Product Testing Reports
Substantiation for any claims made on package
EXHIBIT A
(Non-Disclosure Agreement)
-Attached-
MUTUAL NONDISCLOSURE AGREEMENT

SUGARFINA, INC.
THIS MUTUAL NONDISCLOSURE AGREEMENT (this “Agreement”) is made and entered

into as of the date specified on the signature page hereto (“Effective Date”) by and between
SUGARFINA, INC., a Delaware corporation (“SUGARFINA”), on the one hand, and the individual
or entity identified on the signature page hereto (the “Undersigned”), on the other hand. SUGARFINA
and the Undersigned are each referred to hereinafter as a “Party”, and, collectively as the “Parties”.
1. Purpose. The Parties wish to either explore the possibility of entering into, or proceed
with, a business relationship (a “Transaction”). In connection with the Transaction, each Party may
disclose or has disclosed to the other certain confidential and proprietary business and technical
information which the disclosing Party desires the receiving Party to treat as confidential.
2. “Confidential Information” means any information disclosed by either Party to the

other Party, orally, in writing, visually, electronically, or by any other means (including without
limitation financial, product, product pricing, marketing, organization, technical, technology-related,
formula-related, recipe-related, manufacturing-related or other information or documents and program
information) for the purpose of considering, discussing, evaluating, proceeding with, or otherwise
performing under the Transaction. Confidential Information shall include information that has already
been exchanged between or received by the Parties. Confidential Information shall also include the
evaluation of this business opportunity and that negotiations are taking or have taken place; that the
Parties have exchanged information with a view toward the negotiation of an agreement; or that this
agreement exists. Confidential Information shall also include information that was exchanged between
the Parties prior to the date hereof. Confidential Information shall not, however, include any
information which (i) was publicly known and made generally available in the public domain prior to
the time of disclosure by the disclosing Party; (ii) becomes publicly known and made generally
available after disclosure by the disclosing Party to the receiving Party through no action or inaction
of the receiving Party; (iii) is already in the possession of the receiving Party at the time of disclosure
by the disclosing Party as shown by the receiving Party's files and records immediately prior to the
time of disclosure; (iv) is obtained by the receiving Party from a third party who is not known to the
receiving Party to have obligations of confidentiality to the disclosing Party; or (v) is independently
developed by the receiving Party without use of or reference to the disclosing Party's Confidential
Information, as shown by documents and other competent evidence in the receiving Party's possession.
3. Use and Nondisclosure.
(a) Each Party agrees to use the Confidential Information of the other Party only for the
purpose of evaluating and engaging in discussions concerning a potential business relationship between
the Parties. Each Party agrees not to disclose any Confidential Information of the other Party to third
parties or to such third party's employees, representatives or outside advisors, except to those
employees, representatives or outside advisors of the receiving Party who have been advised of the
confidentiality of this information and agree in writing to be bound by this Agreement. Each Party
may disclose Confidential Information to any parent, subsidiary and/or division subject to the same
conditions. Neither Party shall reverse engineer, disassemble or de-compile any Confidential
Information which is provided to the Party hereunder.
Mutual Nondisclosure Agreement

SUGARFINA, INC.
1
4. Maintenance of Confidentiality.
(a) Each Party agrees that it shall take commercially reasonable measures to protect the
secrecy of and avoid disclosure and unauthorized use of the Confidential Information of the other Party.
Without limiting the foregoing, each Party shall take those measures that it takes to protect its own
most highly confidential information, not less than a reasonable standard of care, prior to any disclosure
of Confidential Information to such employees. Each Party shall reproduce the other Party's
proprietary rights notices on any copies in the same manner in which such notices were set forth in or
on the original.
(b) In the event that a Party or anyone to whom a Party transmits the Confidential
Information pursuant to this Agreement becomes legally compelled to disclose any of the Confidential
Information, the Party will provide the other Party with prompt notice prior to disclosure, if permitted
by law, so that such Party may seek a protective order or other appropriate remedy and/or waive
compliance with the provisions of this Agreement. In the event such Party is unable to obtain such
protective order or other appropriate remedy, the Party subject to such order will disclose only that
portion of the Confidential Information, which it is advised by a written opinion of its legal counsel it
is legally required to do so. The Party subject to such legal order will exercise its best efforts to obtain
at the expense of the Party whose Confidential Information is subject to such order a protective order
or other reliable assurance that confidential treatment will be accorded the Confidential Information as
disclosed.
5. No Obligation. Nothing contained in this Agreement shall obligate either Party to

proceed with any transaction between them, and each Party reserves the right, in its sole discretion, to
terminate the discussions contemplated by this Agreement concerning the business opportunity.
6. Destruction of Materials. All documents and other tangible objects containing or

representing Confidential Information which have been disclosed by either Party to the other Party,
and all copies thereof which are in the possession of the other Party, shall be and remain the property
of the disclosing Party and shall be promptly destroyed or returned upon the disclosing Party's written
request. Receiving Party shall provide written certification to the disclosing Party by the receiving
Party's appropriate officer of the destruction of the materials and tangible objects.
7. No License; Intellectual Property.
(a) Nothing in this Agreement is intended to grant any rights to either Party under any
patent, mask work right or copyright of the other Party, nor shall this Agreement grant any Party any
rights in or to the Confidential Information of the other Party except as expressly set forth herein.
(b) Each Party acknowledges and agrees that the other Party is the exclusive owner of all
of such other Party’s products, trade secrets, formulas, methods, techniques, processes, software,
trademarks, patents, know-how and data, and any derivatives thereof (collectively, “Intellectual
Property”). Each Party further acknowledges and agrees that it shall not acquire any right, title or
interest in, or to, the other Party’s Intellectual Property as a result of this Agreement.
8. Term. This Agreement and the obligations of each receiving Party hereunder shall
survive from the date of initial receipt by the receiving Party until such time as all Confidential
Information of the other Party disclosed hereunder becomes publicly known and made generally
available through no action or inaction of the receiving Party unless terminated by mutual consent of

SUGARFINA, INC.
2
the Parties expressed in writing or unless superseded by a subsequent written agreement between the
Parties.
9. Remedies. Each Party agrees that any violation of this Agreement may cause
irreparable injury to the other Party, entitling the other Party to seek injunctive relief in addition to all
other remedies at law. Therefore, in addition to all other remedies available at law (which neither Party
waives by the exercise of any rights hereunder), the non-breaching Party shall be entitled to seek
specific performance and injunctive and other equitable relief as a remedy for any such breach or
threatened breach, and the Parties hereby waive any requirement for the securing or posting of any
bond or the showing of actual monetary damages in connection with such claim.
10. Miscellaneous. This Agreement is effective as of the Effective Date of the Agreement
and shall bind and inure to the benefit of the Parties hereto and their successors and assigns. This
Agreement shall be governed by the laws of the State of Delaware, without reference to conflict of
laws principles. Any dispute arising from or relating to this Agreement shall be subject to the exclusive
jurisdiction of courts located within the Central District of California, and the Parties hereby expressly
consent and agree to the exercise of jurisdiction by such courts. This document contains the entire
agreement between the Parties with respect to the subject matter hereof, and neither Party shall have
any obligation, express or implied by law, with respect to and Confidential Information, Intellectual
Property or any other trade secret or proprietary information of the other Party except as set forth
herein. Any failure to enforce any provision of this Agreement shall not constitute a waiver thereof or
of any other provision. This Agreement may not be amended, nor any obligation waived, except by a
writing signed by both Parties hereto.
11. Indemnification. The recipient of any particular Confidential Information will defend,
indemnify and hold harmless the Party that disclosed such Confidential Information and its affiliates
(and their officers, directors, agents and representatives) from and against any claims, losses, expenses
(including reasonable attorneys' fees and other costs of any litigation), penalties, liabilities, judgments
or damages of any kind or nature whatsoever arising by virtue of or as a result of any use or disclosure
by the recipient or any of its agents, officers, directors, representatives, members or employees of such
Confidential Information in a manner that is inconsistent with or in violation of this Agreement.
[remainder of page intentionally left blank]

SUGARFINA, INC.
3
IN WITNESS WHEREOF, the Parties have caused this Mutual Nondisclosure Agreement to
be executed by their respective duly authorized representatives or offices on the date and year set forth
below.
Effective Date: August 11, 2017
SUGARFINA:
SUGARFINA, INC.
_____________________________________
Name:
Title:
UNDERSIGNED: MJC CONFECTIONS LLC
Print Name: _________________________
Sign Name: _________________________
Print Title: _________________________

(if applicable)
UNDERSIGNED: GLJ, INC.
Print Name: _________________________
Sign Name: _________________________
Print Title: _________________________

(if applicable)

SUGARFINA, INC.
4
EXHIBIT B
(Intellectual Property)
-Attached-
SUGARFINA, INC.
TRADEMARK REPORT
Date: July 7, 2017

CONFIDENTIAL
SUGARFINA, INC.
COPYRIGHT REPORT
Date: July 7, 2017

CONFIDENTIAL
SUGARFINA, INC.
DOMAIN NAME REPORT
Date: June 30, 2017

CONFIDENTIAL
EXHIBIT C
(SGR Offerings)
-Attached-
Exclusive Items (See Section 23(b) of Services Agreement)
Photo of
Exclusive
Exclusive Sugarfina
Candy Name Country of Origin Offering? Notes Product
Aphrodite IMPORTED FROM

Strawberry GREECE Exclusive
Apollo IMPORTED FROM

Kumquat GREECE Exclusive
IMPORTED FROM
Apple Pie ITALY Exclusive
Athena Black IMPORTED FROM

Cherry GREECE Exclusive
IMPORTED FROM
Atomic Sours FRANCE Exclusive
Parties to work in
good faith to
IMPORTED FROM determine items
Baby Butterflies GERMANY Exclusive that are OK
Non-bear shapes
are OK however
product may not be
named or described
Baby as Champagne or
Champagne IMPORTED FROM Bubbly; Prosecco is
Bears® GERMANY Exclusive OK
Baby Rosé IMPORTED FROM

Bears GERMANY Exclusive
IMPORTED FROM
Baby Whales GERMANY Exclusive
Bear-y IMPORTED FROM

Smoothie GERMANY Exclusive
IMPORTED FROM
Bella Rosa ITALY Exclusive
Produced by Marich
Birthday Cake exclusively for
Caramels MADE IN THE USA Exclusive Sugarfina
Bling Rings - IMPORTED FROM

Gold GREECE Exclusive
Bling Rings - IMPORTED FROM

Platinum GREECE Exclusive
Blood Orange IMPORTED FROM

Fruttini ITALY Exclusive
IMPORTED FROM
Bourbon Bears GERMANY Exclusive
Brown Butter IMPORTED FROM

Brittle GERMANY Exclusive
Non-bear shapes
are OK however
product may not be
named or described
as Champagne or
IMPORTED FROM Bubbly; Prosecco is
Bubbly Bears® GERMANY Exclusive OK
IMPORTED FROM
Bunny Tails FRANCE Exclusive
But First, Rosé - IMPORTED FROM

Gummy Roses GERMANY Exclusive
Non-bear shapes
are OK however
product may not be
named or described
as Champagne or
Champagne IMPORTED FROM Bubbly; Prosecco is
Bears® GERMANY Exclusive OK
Chocolate IMPORTED FROM

Sparkles - Blue GREECE Exclusive

Sparkles - Gold GREECE Exclusive

Sparkles - Pink GREECE Exclusive

Sparkles - Silver GREECE Exclusive
IMPORTED FROM
Confetti Dolci ITALY Exclusive
IMPORTED FROM
Cowboy Cactus GERMANY Exclusive
IMPORTED FROM
Cuba Libre® GERMANY Exclusive
The Dark Chocolate

version is exclusive
to Sugarfina. The
Dark Chocolate Milk Chocolate
Marshmallow version from
Eggs MADE IN THE USA Exclusive Koppers is OK
IMPORTED FROM
Dulce de Leche DENMARK Exclusive
IMPORTED FROM
Fruity Loops GREECE Exclusive
Golden Truffle IMPORTED FROM

Eggs GERMANY Exclusive
Green Juice
Bears (Pressed IMPORTED FROM
Juicery) GERMANY Exclusive
IMPORTED FROM
Gummy Kicks GERMANY Exclusive
IMPORTED FROM
Gummy Mango GERMANY Exclusive
Hearts Afire
(Spicy Heart IMPORTED FROM Cinnamon Heart
Gummies) GERMANY Exclusive candies are OK
IMPORTED FROM
Hello Bambina GREECE Exclusive
IMPORTED FROM
Hello Bambino GREECE Exclusive
Hello Kitty
Gummy Bow IMPORTED FROM
(Sanrio) GERMANY Exclusive
Hello Kitty
Gummy Face IMPORTED FROM
(Sanrio) GERMANY Exclusive
Parties to work in
good faith to
Hot Lips (Spicy IMPORTED FROM determine hot
Lip Gummies) GERMANY Exclusive items that are OK
Parties to work in
good faith to
determine ice
Ice Cream IMPORTED FROM cream cones that
Cones GERMANY Exclusive are OK
Italian Lemon IMPORTED FROM

Fruttini ITALY Exclusive
Jamaican Rum IMPORTED FROM

Snowballs GERMANY Exclusive
Kir Royale IMPORTED FROM

Cordials GERMANY Exclusive
Kyoto Blossoms IMPORTED FROM

- Rainbow JAPAN Exclusive
Kyoto Blossoms IMPORTED FROM

- Sugarfina JAPAN Exclusive
Limoncello IMPORTED FROM

Cordials GERMANY Exclusive
Long-Stem IMPORTED FROM

Roses GERMANY Exclusive
Maple Brown Sugar

Caramels from
Marich are OK,
however the Maple
Bourbon-infused
caramels are an
Maple Bourbon exclusive recipe for
Caramels MADE IN THE USA Exclusive Sugarfina
Moscow Mule IMPORTED FROM

IMPORTED FROM
Pale Ale Pints GERMANY Exclusive
Parisian IMPORTED FROM

Pineapples FRANCE Exclusive
IMPORTED FROM
Pastel Pearls GREECE Exclusive
Caramels from
Marich are OK, but
the PB&J Caramels
are an exclusive
PB&J Caramels MADE IN THE USA Exclusive recipe for Sugarfina
gummies are OK as
long as the shape is
not a heart (peach
fruit shapes and
IMPORTED FROM peach ring shapes
Peach Bellini® GERMANY Exclusive are OK). Cannot use
peanuts from
Marich and Koppers
are OK; Sugarfina
Peanut Butter has the exclusive
Peanuts MADE IN THE USA Exclusive recipe with Marich
Chocolate-covered
pretzels from
Marich and Koppers
are OK; Sugarfina
has the exclusive
recipe with Marich
for pretzels dipped
in peanut butter,
Peanut Butter then coated in
Pretzels MADE IN THE USA Exclusive chocolate
IMPORTED FROM
Pebble Beach ITALY Exclusive
IMPORTED FROM
Pink Diamonds GERMANY Exclusive
IMPORTED FROM
Pink Flamingos GERMANY Exclusive
This is a Marich
recipe created
exclusively for
Sugarfina;
Cheesecake
Red Velvet Caramels from
Caramels MADE IN THE USA Exclusive Marich are OK
Rose All Day® IMPORTED FROM

IMPORTED FROM
Royal Roses GERMANY Exclusive
Single Malt
Scotch Cordials - IMPORTED FROM
Cask Strength GERMANY Exclusive
Skinny IMPORTED FROM

GERMANY Exclusive
Sparkling Rosé IMPORTED FROM

IMPORTED FROM
Stout Pints GERMANY Exclusive
Tequila
Grapefruit IMPORTED FROM
Sours GERMANY Exclusive
IMPORTED FROM
Vodka Cordials GERMANY Exclusive
Non-Exclusive Items (See Section 23(c) of Services Agreement)
Exclusivity Photo of SGR

Candy Name Country of Origin Designation Product
Champagne Bubbles MADE IN THE USA Non-Exclusive
Cherry Sweethearts MADE IN THE USA Non-Exclusive
Chocolate Bacon
Pretzels MADE IN THE USA Non-Exclusive
Chocolate Bacon
Toffee MADE IN THE USA Non-Exclusive
Chocolate Berry
Basket MADE IN THE USA Non-Exclusive
Cookies & Cream

Milkshake Malt Balls MADE IN THE USA Non-Exclusive
Dark Chocolate Acai

Blueberries MADE IN THE USA Non-Exclusive
Dark Chocolate
Coffee Toffee MADE IN THE USA Non-Exclusive
Dark Chocolate
Pistachios MADE IN THE USA Non-Exclusive
Dark Chocolate Sea

Salt Caramels MADE IN THE USA Non-Exclusive
Dark Chocolate Sea

Salt Cashews MADE IN THE USA Non-Exclusive
Dark Chocolate
Toffee Almonds MADE IN THE USA Non-Exclusive
English Toffee
Caramels MADE IN THE USA Non-Exclusive
Espresso Caramels MADE IN THE USA Non-Exclusive
IMPORTED FROM
Finnska Black FINLAND Non-Exclusive
IMPORTED FROM
Finnska Red FINLAND Non-Exclusive
Fluffy Bunnies
(Easter) MADE IN THE USA Non-Exclusive
IMPORTED FROM
Fruits de Mer FRANCE Non-Exclusive
Fuji Apple Caramels MADE IN THE USA Non-Exclusive

Gingerbread
Gingerbread
Cookies MADE IN THE USA Non-Exclusive
Heavenly Sours MADE IN THE USA Non-Exclusive
Kona Espresso
Beans MADE IN THE USA Non-Exclusive
IMPORTED FROM
Love Parfait DENMARK Non-Exclusive
Mama & Baby IMPORTED FROM

Piglets HOLLAND Non-Exclusive
Martini Olive
Almonds MADE IN THE USA Non-Exclusive
Matcha Green Tea

Milk Chocolate
Marshmallow Eggs MADE IN THE USA Non-Exclusive
Mint Chip Caramels MADE IN THE USA Non-Exclusive

Mint Chip Milkshake MADE IN THE USA Non-Exclusive
Mint Chocolate
Caviar MADE IN THE USA Non-Exclusive
IMPORTED FROM
Party Penguins SPAIN Non-Exclusive
Peanut Butter
Peanut Butter
Milkshake MADE IN THE USA Non-Exclusive
Peanut Butter
Toffee MADE IN THE USA Non-Exclusive
Pumpkin Patch
(Halloween) MADE IN THE USA Non-Exclusive
Pumpkin Pie
Reindeer Noses MADE IN THE USA Non-Exclusive
Robin's Egg
S'Mores MADE IN THE USA Non-Exclusive
Strawberry
Milkshake Malt Balls MADE IN THE USA Non-Exclusive
Sugar Cookies MADE IN THE USA Non-Exclusive
Sugar Lips® MADE IN THE USA Non-Exclusive
Super Sour Hearts MADE IN THE USA Non-Exclusive
IMPORTED FROM
Swedish Fish SWEDEN Non-Exclusive
Sweetheart
Tahitian Vanilla
IMPORTED FROM
Apple Frogs GERMANY Non-Exclusive
IMPORTED FROM
Beach Buddies GERMANY Non-Exclusive
IMPORTED FROM
Choco Crisps GREECE Non-Exclusive
IMPORTED FROM
Chocolate Confetti GREECE Non-Exclusive
IMPORTED FROM
Cuban Rum Cordials GERMANY Non-Exclusive
Fuzzy Monkey
(Banana Gummies) MADE IN FRANCE Non-Exclusive
IMPORTED FROM
Gingerbread Men GERMANY Non-Exclusive
Gummy Eggs IMPORTED FROM

(Sanrio) FRANCE Non-Exclusive
Hawaiian Sea Salt

Macadamia Nuts MADE IN THE USA Non-Exclusive
Key Lime Pie Jelly

Beans (Sanrio) MADE IN THE USA Non-Exclusive
IMPORTED FROM
Mama & Baby Bears GERMANY Non-Exclusive
IMPORTED FROM
Mini Cola Cuties GERMANY Non-Exclusive
Princess Pearls - IMPORTED FROM

Blue GREECE Non-Exclusive

Pink GREECE Non-Exclusive

White GREECE Non-Exclusive
IMPORTED FROM
Queen of Hearts GERMANY Non-Exclusive
IMPORTED FROM
Sassy Strawberries SWEDEN Non-Exclusive
IMPORTED FROM
Sour Fizz Cola Cuties GERMANY Non-Exclusive
IMPORTED FROM
Sparkle Pops TURKEY Non-Exclusive
Sugar Skulls
(Halloween) MADE IN SWEDEN Non-Exclusive
Sugarfina Pearls - IMPORTED FROM

Blue & White GREECE Non-Exclusive
Sugarfina Pearls - IMPORTED FROM

Pink & White GREECE Non-Exclusive
IMPORTED FROM
Sweet Strawberries GERMANY Non-Exclusive
IMPORTED FROM
Tequila Cordials GERMANY Non-Exclusive
IMPORTED FROM
Watermelon Slices GERMANY Non-Exclusive
Zombie Brains IMPORTED FROM

(Halloween) GERMANY Non-Exclusive
EXHIBIT D
(Current Packaging)
-Attached-
EXHIBIT E
(Markup Schedule)
-Attached-
DocuSign Envelope ID: 9148533A-9DC0-4C20-A428-FACD422183A6
AMENDMENT NO. 1 TO SERVICES AGREEMENT
Amendment
SGR GLJ MJC
Parties as of September 25, 2017, with reference to that certain
Services
Agreement
1. Section 4(d)(v) of the Services Agreement is hereby deleted and expunged, and replaced
with the following:
As discussed in Schedule D, hereof, until the later of (i) December 31, 2017 and
-Out Certification, the Facility Fee shall not be
owed and any and all fees and expenses owed by SGR on account of the Facilities
(including the Lease Fee) shall be equal to $8,000.00 per month, plus any
amounts owed on account of Overflow Spaces.
2. Section 4(e) of the Services Agreement is hereby added as follows:
Overflow Space. Upon written consent by SGR and following good faith
discussions between the Parties regarding Facility capacity and needs, MNS may
secure use on a temporary basis of additional facilities or space within close
Overflow Space
shall be used solely and exclusively for the Services, unless SGR agrees
otherwise, and shall be treated as a Facility for purposes of this Agreement (such
that use of the Overflow Space will be subject to the same terms, conditions, and
requirements for the Facilities, including
consent and any terms or conditions governing an Overflow Space shall be
documented in an Addendum to be signed by the Parties, in the form attached
hereto as Schedule F. All executed Addenda in the form attached hereto as
Schedule F shall be deemed incorporated herein by reference and shall become a
part of this Agreement. To the extent of a direct conflict between an Addendum
and the terms of this Agreement, the Addendum shall govern.
3. Section 5 of the Services Agreement is hereby deleted and expunged, and replaced with
the following:
Within fifteen (15) business days of the Effective Date, MNS shall obtain from the
owner(s) of each of the Facilities an agreement, in form and substance acceptable to
SGR, providing for waiver and relinquishment of any liens, claims, rights, or interest in
the Merchandise, the SGR Product, the Bailed Equipment, or the Racking System (each
as defined herein). Prior to using any Overflow Space for the Services, MNS shall obtain
from the owner(s) of such Overflow Space an agreement, in form and substance
acceptable to SGR, providing for waiver and relinquishment of any liens, claims, rights,
or interest in the Merchandise, the SGR Product, the Bailed Equipment, or the Racking
System. Within fifteen (15) business days of the Effective Date, MNS shall obtain from
any creditors with security interests or liens on the assets of either GLJ or MJC, including
but not limited to The Westchester Bank, an acknowledgement or agreement that the
collateral securing the relevant obligations does not and will not include the Merchandise,
the SGR Product, the Bailed Equipment, or the Racking System.
4. The last sentence of Section 6(c) of the Services Agreement is hereby deleted and
expunged, and replaced with the following:
With the exception of amounts owed on account of Transition Obligations (as

defined below) and Services rendered prior to expiration of the Term, all payment
obligations owed hereunder (including, but not limited to, the Management Fee,
the Lease Fee, the Facility Fee, and any fees owed on account of Overflow
Spaces) shall automatically terminate and conclude upon expiration of the Term
(whether resulting from expiration of time, termination, or otherwise).
5. Subsection (a) of the Facility and Lease Fees section of Schedule D to the Services
Agreement is hereby deleted and expunged, and replaced with the following:
Notwithstanding the amount of lease payments owed by MNS on account of the

or expenses incurred by
MNS in connection with any Facility, until the later of (i) December 31, 2017 and
-Out Certification, the Facility Fee shall not be
owed and the Lease Fee shall be equal to $8,000.00 per month (it being
understood that the foregoing amount shall also compensate MNS for any use of
its other Facilities during such time, other than fees owed on account of Overflow
Spaces);
6. Except as provided above and herein, the remainder of the Services Agreement remains
unchanged.
(Remainder of Page Intentionally Left Blank)

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date
set forth above.
By: By:
Its: Its:
MJC CONFECTIONS LLC
By:
Its:
SCHEDULE F
(Overflow Space Addendum)
Overflow Space Address:
Capacity Expectations:
Length/Term:
Commencement Date:
Space Usage Price:
Expense Reimbursements:
Other Notes:
This Overflow Space Addendum is entered into as of [_____________], with reference to that
certain Services Agreement between the Parties dated as of August 11, 2017, as amended from
time to time . Pursuant to that Agreement, the terms of this Addendum are
incorporated into the Agreement by reference. Use of the Overflow Space is otherwise subject to
the terms and conditions of the Agreement. To the extent of a direct conflict between the
Agreement and this Addendum, this Addendum shall govern.
Agreed and Acknowledged:
By: By:
Its: Its:
MJC CONFECTIONS LLC
By:
Its:
EXHIBIT B
EXHIBIT C
EXHIBIT D
EXHIBIT E
Christina H. Bost Seaton, Esq. 1
Partner
445 Park Avenue, Ninth Avenue
New York, New York 10022
Direct: (203) 887-4665
Christina.BostSeaton@fisherbroyles.com
www.FisherBroyles.com
July 22, 2019
BY ELECTRONIC MAIL
James Yu
Seyfarth Shaw LLP
620 Eighth Avenue
jyu@seyfarth.com
Re: Transition Obligations of GLJ, Inc. and MJC Confections LLC
Dear James:
This firm represents Sugarfina, Inc. (“Sugarfina”) in connection with the dispute between
Sugarfina and GLJ, Inc. and MJC Confections LLC (collectively, “MNS”).
We are in receipt of your letter dated July 17, 2019 (the “July 17 Letter”), wherein MNS states that
it “deems the Termination Intent Notice as an early termination of the Services Agreement and a breach
thereof.” Sugarfina rejects this attempt to recast the Termination Intent Notice, dated July 16, 2019 (the
“Termination Intent Notice”): Pursuant to the terms of the Services Agreement, dated as of August 11,
2017, by and between Sugarfina and MNS (the “Services Agreement”), Sugarfina terminated the Services
Agreement effective July 17, 2019, upon the delivery of the Termination Intent Notice to MNS.
That MNS “deems” the Termination Intent Notice “improper” does not eliminate the Termination
Obligations to which MNS is subject under Section 6(d) of the Services Agreement: 1
“MNS shall perform the Transitions Obligations without regard to the reason for the
expiration of the Term. For purposes of this section, SGR’s determination that the Term
has expired (resulting from expiration of time, termination, or otherwise), shall be
conclusive. MNS hereby waives, relinquishes, and forever disclaims any claims or
arguments to contest, oppose, or otherwise SGR’s determination that the Term has
expired.”
Accordingly, MNS is hereby on notice that if it fails to perform the Transition Obligations—as
threated in the July 17 Letter—and proceeds to “shutdown [] all operations, electricity, and other utilities,”
1
Capitalized terms not otherwise defined herein have the same meaning as in the Services Agreement.
ATLANTA  AUSTIN  BOSTON  CHARLOTTE  CHICAGO  CINCINNATI  CLEVELAND  COLUMBUS  DALLAS  DENVER  DETROIT
HOUSTON  LOS ANGELES  MIAMI  NAPLES  NEW YORK  PALO ALTO  PHILADELPHIA  PRINCETON  SEATTLE  WASHINGTON D.C.
July 22, 2019
Sugarfina will incur material damages, including, inter alia, lost sales and damaged or destroyed
inventory, for which it would seek all remedies available at law and equity.
We also reject your contention that “Sugarfina … failed to abide by the protocol for resolution” of
Identified Concerns. In its July 8, 2019, notice to MNS (the “July 8 Letter”), Sugarfina unambiguously
notified MNS that “[t]here are more than 30 different instances of infringing products displayed for sale
on your website,” and specifically identified several examples by, among other things, providing the url
addresses of the product listings on the MNS website (the “Identified URLs”), and providing screenshots
of the listings. Sugarfina specifically notified MNS that (a) these items were being sold in breach of the
Services Agreement, as the limited license granted to MNS therein had expired in February 2019, and (b)
Sugarfina viewed these items as raising an “Identified Concern,” as defined by Section 23(e), and subject
to the seven day notice period set forth in that provision.
In response, MNS incredibly claimed that these items were not, in fact, on the MNS website. Had
MNS taken the minimal effort to enter the Identified URLs into a search engine, it would have seen
immediately that its representation was incorrect. Moreover, MNS then requested that Sugarfina “bring
to [MNS’s] attention” any infringing items on the MNS website. It defies credulity that MNS thinks that,
in order to comply with Section 23(e), Sugarfina was required to identify to MNS infringing items located
on its own website more than once. Nowhere does the Services Agreement require such an action, and
MNS’s blatant misrepresentation is contrary to the “good faith” required by the Services Agreement. Had
MNS taken Sugarfina’s “Identified Concerns” with even a minimal amount of good faith, it could simply
have typed “cube” into the search bar on the MNS website and located 28 separate instances of
infringement. Each of these items was specifically identified by Sugarfina in Exhibit D to the Services
Agreement as part of the “Signature Cube Collection,” for which the limited license granted to MNS in
the Services Agreement expired in February of this year.
Indeed, despite your representation that no infringing items remain on the MNS website, in
searching “cube” on the MNS website today, the same 28 infringing items remain:
July 22, 2019
Thus, MNS continues to infringe upon Sugarfina’s intellectual property rights.
The protection of Sugarfina’s intellectual property rights is an integral and important part of
Sugarfina’s business, which is one reason that these rights were specifically addressed in the Services
Agreement. Sugarfina reserves the right to seek all remedies available at law and equity for such
infringement.
It appears that MNS may now be taking the position that only “Bento Box” packaged cubes may
be infringing for purposes of Section 23(d) of the Services Agreement, basing its position on a single
email, taken out of context, which was referenced in the July 17 Letter. This email does not—and
cannot—amend the Services Agreement, which requires any amendment to be “in writing signed by both
parties.” See Agreement § 32. Moreover, the January 11, 2018 email referenced in the July 17 Letter
(which was sent a full thirteen months prior to the expiration of the limited license) also may not be taken
as evidence indicating the parties’ amendment of the Services Agreement, since that email was clearly
addressing the way that MNS described the cubes on its website—not the use of the cubes themselves. As
set forth herein, Section 23(d) and Exhibit D of the Services Agreement make clear that single cubes, in
addition, to “Bento Boxes,” were subject to the limited license, which expired in February of this year.
As you are aware, your client’s Termination Obligations last for the duration of the
Transition Period, which shall be “a time specified by [Sugarfina], in its sole and absolute
discretion, up to one hundred and twenty (120) days.” See Agreement § 6(d)(ii). Thus, the Transition
Period may last, through and including, November 14, 2019.
July 22, 2019
Pursuant to Section 6(d) of the Services Agreement, Sugarfina reiterates its requests, as set forth
in the Termination Intent Notice, that MNS:
(1) Produce sample packets of Sugarfina’s product, in accordance with the specifications that
Sugarfina already provided to MNS;
(2) Provide Sugarfina with all updated and current records maintained by MNS relating to the
Merchandise or SGR Product (both as defined in the Services Agreement);
(3) Promptly inform Sugarfina how many sample packets of Sugarfina’s are available for pickup;
and
(4) Immediately confirm that MNS is continuing to complete all purchase orders received.
As to your demand that Sugarfina pay the amount of $181,075.85 on or before today’s date, as
indicated previously, these charges are currently under review, and Sugarfina requires additional
information, as requested in Sugarfina’s July 8 Letter, before these payments can be approved and paid.
Of course, Sugarfina will pay all amounts properly due and owing to MNS under the Services Agreement,
as required by Section 6(c).
Please further note that Section 6(c) of the Services Agreement provides that “all payment
obligations owed hereunder (including, but not limited to, the Management Fee, the Lease Fee, and the
Facility Fee) shall automatically terminate and conclude upon expiration of the Term (whether resulting
from expiration of time, termination, or otherwise.” Accordingly, Sugarfina rejects the implication in the
July 17 Letter that it is responsible for the “rental obligations for [MNS’s] lease of the facility.” Sugarfina
also reminds you that when MNS “take[s] all necessary steps to mitigate its damages,” this includes taking
steps to mitigate damages on its lease of the facility, as well as taking whatever steps are necessary to
mitigate the Management Fee, as such services are no longer required.
None of the foregoing should be deemed a waiver of any rights or remedies may have at law or in
equity, and Sugarfina hereby reserves any and all such rights and remedies.
Very truly yours,

/s/ Christina H. Bost Seaton
cc: Lance Miller
EXHIBIT F
From: Jeremy Bohrer

To: Rebecca Rettig
Cc: Arthur Tergesen; Steven Cheng; Christina Bost Seaton; Joel Meyers; Michael Gramins; Jonathan Jason
Subject: Re: Dispute between MJC Confections LLC and GLJ, Inc. and Sugarfina, Inc.
Date: Thursday, August 01, 2019 7:13:03 PM
Hey Rebecca:
Thank you for your letter.
Please be advised, Absent a Court order; I can assure you that your client will pick up nothing
— absolutely nothing— from MNS’ and that law enforcement will be notified should your
client attempt to do so.
I suggest we meet.
Best, jb.
Note.
Copied here
My partner Joel Meyers
Former Manhattan ADA
And supervising prosecutor DOJ.
Trust me, You want to have a chat with me before doing the traditional lawyer ... thing. This
is about Mexico and short sightedsightedness. And, of course hypocrisy and publicity and
optics and American jobs and stewardship when handling controlled substances and pretexts
and ... and Willy Wonka’s golden ticket about to go terribly wrong.
Lets not play games. Let’s start a constructive dialogue.
Have a great evening.

Jb
Jeremy I. Bohrer
Managing Partner

BOHRERPLLC
101 Park Avenue, 33rd Floor
O: (212) 303-3536 | C: (646) 765-8088
jb@bohrerpllc.com | www.bohrerpllc.com
On Aug 1, 2019, at 6:56 PM, Rebecca Rettig <rebecca.rettig@fisherbroyles.com> wrote:
Dear Mr. Bohrer,

Please see the attached correspondence in relation to the above-referenced
matter.

Regards,
Rebecca Rettig

Rebecca Rettig
Partner
<image002.jpg> [fisherbroyles.com]
Direct: 646.522.9975 | rebecca.rettig@fisherbroyles.com | Bio [fisherbroyles.com]
ATLANTA • AUSTIN • BOSTON • CHARLOTTE • CHICAGO • CINCINNATI • CLEVELAND • COLUMBUS •

DALLAS • DENVER • DETROIT • HOUSTON • LOS ANGELES • MIAMI • NAPLES • NEW YORK • PALO
ALTO • PHILADELPHIA • PRINCETON • SALT LAKE CITY • SEATTLE • WASHINGTON, D.C.

The information contained in this e-mail message is only for the personal and confidential use of the intended
recipient(s). If you have received this communication in error, please notify us immediately by e-mail, and delete the
original message.

<8.1.2019 Ltr. to J. Bohrer.pdf>

EXHIBIT G
EXHIBIT H
Seyfarth Shaw LLP
620 Eighth Avenue
(212) 218-5500
Writer's direct phone fax (212) 218-5526

(212) 218-5524
www.seyfarth .com
Writer's e-mail
jyu@seyfarth .com
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Re: Notice of Breach of Services Agreement, dated August 11, 2017 on Behalf of
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Tl 11S I ErrmHE,ID IS PRINTED ON f<EC\'CI El) STOC~ 0

Lance Miller, Esq.
July17,2019
Page 2
"Identified Concern" for the first time in its July 8, 2019 letter from its recently hired Chief Operating
Officer, Scott Cuillard. The parties were scheduled to have a call later that week on July 10 to discuss
this and other issues raised in that letter. In advance of that call, MNS sent a letter on July 9, 2019
preliminarily responding to Sugarfina's concerns. As specifically stated in the letter, MNS "wanted
[Sugarfina] to have this information before [the] call tomorrow so it can be productive." With respect
to the infringement claim, MNS denied that it put infringing products back on the website, but invited
Sugarfina to bring to its attention any specific active items of concern. MNS also indicated in that
same letter that during the call, "we remain hopeful that we can resolve our differences and find a
path forward."
On the morning of July 10, MNS received an email from Danny Coorsh cancelling the meeting
due to a "conflict" and that MNS should expect a new invite from Mr. Cuillard. When no subsequent
invite was received, MNS sent an email on July 11 to Mr. Coorsh, copying you and Mr. Cuillard
asking when the call could be rescheduled. MNS further indicated that it has "additional information
to share regarding some of the issues." Despite MNS's stated willingness to work in good faith
towards a resolution, it received in return nothing but radio silence. Instead, Sugarfina' s July 16 letter
makes clear that it unilaterally (and incorrectly) determined that MNS has no desire to resolve the
alleged infringement issues as a pretext to terminate the Services Agreement. Sugarfina failed to
follow protocol and is in breach of the Services Agreement.
Sugarfina's Termination Intent Notice is Without Basis
The Termination Intent Notice is also without basis. All items that Sugarfina requested be
removed from MNS's website related to so-called "Bento Box" packaged cubes that have remained
off the website since March 2019. No such items have been marketed or sold by MNS since. Contrary
to Sugarfina's assertion, none of those items were put back on the website after March. Instead, it
appears that several of the items identified in the screenshots attached to its July 8, 2019 letter are
internet "caches" of historical webpages that are capable of being captured by search engines, but
over which MNS has no control. Those pages otherwise do not exist on www.mldnitesnax.com, nor
can those items be purchased from or found on the website itself. As such, MNS maintains its
categorical denial of the assertion that it put infringing items back on the website.
As to the remaining alleged infringing items identified in Sugarfina's July 8 letter, these
appear to be offerings packaged in clear single box containers, which, as you know, MNS has
historically marketed and sold for years. Until now, Sugarfina voiced no concerns with such
packaging, despite having full knowledge of their existence on MNS 's website: This is supported by
the parties' communications and course of conduct both before and after entry of the Services
Agreement. For example, in an email from you to Craig Fraum, dated January 11, 2018, you indicated
that Sugarfina was comfortable with the packaging of a single box container as long as MNS did not
use the term "Candy Cube." Instead, the only alleged infringing products of concern to Sugarfina
were the non-exclusive offerings in the "Bento Box" style packages of cubes, which were promptly
removed from MNS's website in March 2019, once the 18 month license period elapsed. When MNS
learned from Nick Meese (Sugarfina's former SVP) later that same month that there were still two
other alleged infringing items that MNS had inadvertently overlooked, MNS immediately removed
THIS LETTFI/H[AO IS PRl:-ClED ON 11~(\CI ED sroc~ 0

Lance Miller, Esq.
Julyl?,2019
Page 3
them from the site. Sugarfina took no issue with and accordingly consented to MNS's remaining
products on its website, which included a variety of offerings contained in clear single box containers.
In any event, had Sugarfina simply explained the basis for its concerns regarding MNS 's
marketing of clear single box containers as it was required to do, MNS was open to addressing and
resolving those concerns as it has always done. The history of communications shows that at all
times, MNS has viewed the parties' agreement as a partnership and acted in good faith to resolve any
issues. In this instance, Sugarfina deprived MNS of any opportunity to attempt to discuss a resolution.
What is really going on here is obvious. As you know, the Services Agreement contemplated
that MNS would handle warehousing, assembly, packaging and distribution of SGR' s goods in a new
facility built out by MNS. Sugarfina is required to pay to MNS, among other things, a Management
Fee, Facility Fee, and Lease Fee. We understand that after execution of the Services Agreement,
Sugarfina engaged an entity in Mexico in an attempt to assemble product at a lower cost. Over the
course of the past few months, Sugarfina transitioned most of its assembly to Mexico. It is clear that
Sugarfina is now looking for a way to extricate itself from the Services Agreement by manufacturing
a "violation" that could easily have been cured had Sugarfina engaged in good faith discussions with
MNS. Such early termination without adhering to proper protocol is not only a breach of the Services
Agreement itself, but a violation of the covenant of good faith and fair dealing.
Sugarfina's Separate Breaches of the Services Agreement
As you also know, Sugarfina to date has failed to pay to MNS invoices that have remained
outstanding since February, which is a material breach of Sugarfina's obligations under the Services
Agreement. At present, the total amount due and owing is $181,075.85, which includes amounts
owed under the Custom Services Agreement. The invoices also include reimbursement for racking
ordered and approved by Sugarfina as well as open payroll. A copy of all open invoices and an aging
report are attached. The only explanation that Sugarfina has given for its delay to date was that it was
undergoing a financial audit. That audit was apparently completed in April 2019. MNS also promptly
responded to all questions relating to MNS 's charges on the invoices without any further inquiry from
Sugarfina. MNS accordingly demands full and immediate payment of all outstanding amounts due
to Sugarfina under the Services Agreement.
Damages to MNS Caused by Sugarfina
Sugarfina's improper premature termination of the Services Agreement has and will continue
to cause substantial injury to MNS. In addition to damages and lost profits for breach of contract,
MNS is now straddled with its rental obligations for the lease of the facility, which MNS built out at
its expense in accordance with the terms of the Services Agreement.
Given Sugarfina's breaches of the Services Agreement and the damages suffered by MNS to
date, MNS is under no obligation to adhere to the transition protocols set forth therein, particularly
given that Sugarfina has provided no indication that it intends to compensate MNS for expenses and
utilities associated with continuing operations, as required under paragraph 6(d)(iii). To that end,
until all outstanding invoices are immediately paid in full and MNS is provided with assurances to its
Tl IIS LETTER HE.ID IS PR/Nl ED ON RECYCLED STOC~ 0

Lance Miller, Esq.
July 17, 2019
Page4
satisfaction that it will be made whole, MNS reserves the right to take all necessary steps to mitigate
its damages caused by Sugarfina, including shutdown of all operations, electricity and other utilities.
Sugarfina's Duty to Preserve
In light of the potential for legal action, this letter shall also serve as a separate formal demand
that Sugarfina take immediate action to preserve all documents, tangible things, and electronically
stored information potentially relevant to the subject matters set forth in this letter of which may lead
to the discovery of relevant information. This notice to preserve evidence shall apply to all computer
systems, e-mail repositories and removable electronic media (including all remote access and wireless
devices such as cellular phones and tablets), of both a professional and personal nature, including
personal e-mail, text messages, pictures, and cloud storage, and including any Carbonite, Dropbox,
or similar accounts. This necessarily also includes, but is not limited to, other electronic
communications (Skype messages, instant messages, etc.), social media messages (Facebook,
Instagram, Twitter, etc.), electronically stored documents, records, images, graphics, recordings,
spreadsheets, databases, calendars, system usage logs, phone records, telephone logs, internet usage
files, archives, backup tapes, voicemails, and other data. Further, to properly fulfill Sugarfina's
preservation obligation, it must stop all scheduled data destructions.
As you know, the laws and rules prohibiting destruction of evidence apply to electronically
stored information in the same manner that they apply to other evidence. Due to its format, electronic
information is easily deleted, modified or corrupted. Accordingly, Sugarfina must take every
reasonable step to preserve this information. Spoliation of this evidence may warrant the imposition
of sanctions or other penalties.
This preservation notice is applicable to all owners, officers, directors, employees, agents and
representatives of Sugarfina who may have knowledge relevant to issues concerning the parties'
dispute. At a minimum, a litigation hold must be circulated to the following individuals presently
associated with Sugarfina: 1
• Danny Coorsh, Senior Director

• Cindy Chow, Director of Quality Assurance
• Steve Borse, Controller
• Kris Sackett, Senior Director, Planning
• Phil Littleton, Global Logistics Supply Chain Consultant
• Lisa Harris, Chief Financial Officer
• Scott Cuillard, Chief Operating Officer
• Lance Miller, General Counsel
1 The following Sugarfina personnel are also believed to have relevant knowledge and information:
Harvey Jones, Debbie Connor, David Cruz, Kimberly Stanford, Jennifer Chang, Helen Cho, Kayla
Choe, Jessica Saylor, Annabelle Gagnon, Noel Espinosa, Isabel Ibarra, Lauren Armstrong, Nicole
Chillingworth, Nichole Hosseinzadeh, Katelynn Danluck, Brittany Shefts, Emily Sweet, Ashley
Altstadt, Jackie Mlinarcik, Julie Wilton, and Brittney Palencia.
THIS LETTrnl-lE.\D IS Pl!INTU) ON ~EC\'CLf/J STOCK 0

Lance Miller, Esq.
July 17, 2019
Page 5
• Michael Myers, Regional Operations Manager

• Rosie O'Neill, Co-Founder, CEO
• Josh Resnick, Co-Founder, CEO
The following former personnel are also believed to have relevant knowledge and
information:
• Nick Meese, former SVP, Supply Chain Operations

• Ben Smith, former Chief Operating Officer
• Darren Lamothe, former VP, Distribution
• Bridge Wirtz, former VP, Distribution Operations
• Simone Rybovic, former Manager, Planning and Allocation
***
Please be advised that the entire balance of $181,075.85 must be received by close of business
on Monday, July 22, 2019. Nothing herein shall be construed as a waiver by MNS of its right to
pursue appropriate legal action against Sugarfina in connection with the breach of its obligations to
MNS to date and other tortious conduct. MNS will also be providing appropriate notices to all parties
affected by Sugarfina's breach.
Rest assured that MNS is prepared to take any and all necessary steps to protect its business
interests.
Very truly yours,
SEYFARTH SHAW LLP
JSY
cc: Josh Resnick (via email)
THIS LETTERl·lf:,11) IS PRINTED ON RECYCLED S"IClCK 0

Sugarfina v. GLJ - Complaint (BK)

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Sugarfina v. GLJ - Complaint (BK)

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Sugarfina, Inc. v. GLJ, Inc. et al, Docket No. 1_19-ap-50364 (Bankr. D. Del.

Sept 19, 2019), Court Docket

IN THE UNITED STATES BANKRUPTCY COURT

SUGARFINA, INC., Case No. 19-11973 (MFW)

GLJ, INC. and MJC CONFECTIONS LLC,

Debtor, Sugarfina, Inc. (“Plaintiff” or “Sugarfina”), by and through its undersigned

LLC (“MJC” and collectively with GLJ, “Defendants” or “MNS”) as follows:

NATURE OF THE ACTION

1. This adversary proceeding is brought pursuant to and under Federal Rules of

JURISDICTION AND VENUE

§§ 157 and 1334.

is a core proceeding pursuant to 28 U.S.C. § 157(b).

4. Plaintiff is a Delaware corporation, having its principal place of business at 3915

West 102nd Street, Inglewood, California 90303.

New York 11714.

A. Debtor’s Bankruptcy Cases

Bankruptcy Code sections 1107(a) and 1108.

9. No trustee or examiner has been requested in the Chapter 11 case. An official

committee of unsecured creditors has been appointed.

B. Debtor’s Business Operations

States and internationally.

12. Sugarfina operates an “omnichannel” business, involving design, assembly,

including 11 “shop in shops” within Nordstrom’s department stores, a wholesale channel,

e-commerce, international franchise, and a corporate/custom channel. In 2018, Sugarfina

generated more than $47 million in net sales.

C. MNS’s Receipt of Sugarfina’s Property

and assembly of finished product.

Sugarfina’s property, including “Merchandise” (defined as “confections, candy, food items,

final products containing the Merchandise”), “Bailed Equipment” (defined as “equipment,

herein as the “Sugarfina Property.”

other rights or interest in the Sugarfina Property.

Services Agreement provided as follows:

Services Agmt. § 10(c) (emphasis added).

Services Agmt. § 8(c) (emphasis added).

Services Agmt. § 8(d) (emphasis added).

interest in any of the Sugarfina Property.

D. MNS Agreed to Turn Over the Sugarfina Property upon Termination

or cost to SGR’s operations and/or supply chain . . . (the ‘Transition Obligations’) . . . .”

regard to the reason for the expiration of the Term.”

SGR’s determination that the Term has expired.”

E. MNS Doubled Down on its Waiver of Rights to the Sugarfina Property

Releases are annexed hereto as Exhibit B and Exhibit C, respectfully.

29. And, Section 7 of the Lender Releases provides for no offsets:

F. Termination of the Services Agreement

Intent Notice is annexed hereto as Exhibit D.

the Services Agreement.1

G. MNS Has Refused to Return the Sugarfina Property

facilities. See Exh. D.

annexed hereto as Exhibit E.

pick up the Sugarfina Property from MNS on August 5, 2019.

annexed hereto as Exhibit F.

in time to satisfy the Debtors’ production needs.

ability to process new orders will be greatly limited.

40. The replacement cost of new cubes is estimated to be $694,000.00.

$77,000.00 to expedite an order of Champagne Bears®, and $79,000.00 on an initial order of

empty cubes, for a total of $156,000.00.

confections, candy, and food items.

(Turnover of Property Pursuant to 11 U.S.C. § 542)

Code section 541(a).

50. The Sugarfina Property is not of inconsequential value to Sugarfina’s estate.

Rather, it is essential to its ongoing operations.

51. The Plaintiff is entitled to the return of the Sugarfina Property.

(Violations of 11 U.S.C. §§ 362(a) and (a)(6))

(Section 105 Injunction)