EFTA01381310.pdf

Form Table of Contents Employee and Occupational Safety Regulation We are subject to certain state and fetal employee safety and employment practices regulations. including regulations issued pursuant to the U.S. Occupational Safety and Health Act, and regulations governing prohibited workplace discriminatory practices and conditions. These regulations require us to comply with certain manufacturing safety standards. including protecting our employees from accidents, providing our employees with a safe and non-hostile work environment and being an equal opportunity employer. Environmental Regulation As a result of our pet food manufacturing and packaging activities, we at our Heartland facility and we and our contract manufacturers at their facilities, are subject to federal, state and local environmental laws and regulations These govern, among other things. air emissions, wastewater and stormwater discharges. and the treatment, handling and storage and disposal of materials and wastes. Manufacturing RelatedRegulation In addition, in connection with our operations at our Heartland manufacturing facility, we are subject to the jurisdiction of the U.S. Department of Agriculture and certain state and local agencies which may inspect the facility and regulate health and safety issues. Ownership of land in Joplin, Missouri and the operation of the Heartland facility also subject us to regulation by the Missouri Department of Natural Resources and local planning, zoning and health agencies. The facility must also be registered with the FDA. Legal Proceedings We are from time to time subject to, and are presently involved in. litigation and other proceedings. Other than the litigation and related class action lawsuits described below, we believe that there arc no pending lawsuits or claims that, individually or in the aggregate. may have a material adverse effect on our business, financial condition or results of operations. On May 6, 2014. Nestle Purina filed a lawsuit against us in the United States District Court for the Eastern District of Missouri, alleging that we have engaged in false advertising, commercial disparagement and unjust enrichment. Nestle Purina asserts that, contrary to our advertising claims, certain BLUE products contain chicken or poultry by-product meals, artificial preservatives and/or coin and that certain products in the BLUE grain-free lines contain grains. Nestle Purina also alleges that we have made false claims that our products (including LifeSource Bits) provide superior nutrition and health benefits compared to our competitors' products. In addition, Nestle Purina contends that we have been unjustly enriched as consumers have paid a premium for BLUE products in reliance on these alleged false and misleading statements, at the expense of our competitor& Nestle Purina seeks an injunction prohibiting us from making these alleged false and misleading statements, as well as treble damages. restitution and disgorgement of our profits, among other things. In connection with the litigation. Nestle Purina has also issued press releases and made other public announcements, including advertising and promotional communications through cmails and internet and social media websites that make claims similar to those contained in their lawsuit. Nestle Purina subsequently amended its complaint to seek a declaratory judgment that these statements by Nestle Purina about us are true and do not constitute defamation. Nestle Purina later amended its complaint a second time to supplement certain allegations and to add a claim regarding the advertising for one of our pet treats. In addition, nine related consumer class action lawsuits were filed on various dates from May 2014 to July 2014, making allegations similar to Nestle Purina's and socking monetary damages and injunctive relief. These related consumer class actions are consolidated under a Multi-District Litigation file also pending in the United States District Court for the Eastern District of Missouri. On May 14, 2014, we filed a lawsuit against Nestle Purina in the United States District Court for the Eastern District of Missouri, alleging that Nestle Purina has engaged in false advertising, unfair competition, unjust enrichment and defamation. We allege that the statements made by Nestle Purina advertising the 92 http://uww.see.gov/Archivestedgar/data/1609989/000119312515218883/d734898dsl.htm(7/20/2015 10:30:13 AM) CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0080179 CONFIDENTIAL SDNY GM_00228383 EFTA01381310