SUPPLY AGREEMENT
Exhibit 10.03
THIS SUPPLY AGREEMENT (this
“Agreement”), made and effective the 29th day of December, 2009 (the “Effective
Date”), is by and between NUTRITION 21, INC. (hereinafter referred to as
“Nutrition 21”), a New York corporation, having a place of business at 0
Xxxxxxxxxxxxxx Xxxx, Xxxxxxxx, XX 00000 and NATURE’S PRODUCTS, INC., a Florida
corporation, having a place of business at 0000 Xxxxxxxx Xxxxxxxxx Xxxxxxx,
Xxxxxxx, XX 00000.
Nature’s Products, Inc. and its
affiliated entities, including, without limitation, Iceland Health, Inc., a
Florida corporation, are hereinafter collectively referred to as “NPI.”
Nutrition 21 and NPI are each individually sometimes referred to as a “Party”
and collectively as the “Parties.”
Preliminary
Statement
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a.
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Nutrition 21 currently sells
Chromium Picolinate, Chromium Histidinate, Chromium Picolinate-Biotin
Blend, and Arginine-Silicate-Inositol Blend (the “Ingredients”). Nutrition
21 also uses the Ingredients in the manufacture of the end-products whose
SKU’s are listed in Exhibit 1 (the “Listed
SKUs”).
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b.
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NPI wishes to purchase the
Ingredients from Nutrition 21 on the terms hereinafter set
forth.
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In consideration of the foregoing and
the mutual obligations undertaken in this Agreement, and for other
consideration, the value and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
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1.
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Sale and Purchase of
Ingredients.
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a.
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NPI agrees to purchase from N21
all of NPI’s requirements for the Ingredients, and Nutrition 21 agrees to
sell NPI all of its requirements for such
Ingredients.
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b.
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Exhibit 2 sets forth the prices to
be charged by Nutrition 21 to NPI for Ingredients that are ordered through
December 31, 2013 for use by NPI in the manufacture of any Listed SKUs
(“Discounted Prices”).
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c.
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Prices for Ingredients that are
ordered by NPI for use by NPI from and after January 1, 2014 for use in
manufacturing any Listed SKUs shall be computed on a most favored nation
basis for customers who purchase similar volumes of
Ingredients.
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d.
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From and after the date of this
Agreement, prices for Ingredients that are ordered for use by NPI for
manufacturing any product other than a Listed SKU shall be computed on a
most favored nation basis for customers who purchase similar volumes of
Ingredients.
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e.
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Payment hereunder shall be due and
payable no later than thirty (30) days following the date that Nutrition
21 has issued an invoice. NPI shall pay all invoices by
check. Any amount not paid when due shall bear interest at the
maximum lawful interest rate from the due date until paid in
full.
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f.
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All payments hereunder will be
made in U.S. dollars.
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g.
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If at any time during the term of
this Agreement, Nutrition 21 is not able or willing to supply any of the
Ingredients to NPI (called a “Period of Unavailability”), Nutrition 21
hereby grants to NPI a non-exclusive license during the Period of
Unavailability to purchase or have manufactured by a third party or to
manufacture for its own account any such Ingredients for Licensed Uses, as
such term is defined in a License Agreement of even date
herewith. After any Period of Unavailability ends, NPI shall
again purchase all of its requirements for Ingredients from Nutrition 21.
If the failure of Nutrition 21 to supply the Ingredients to NPI occurs at
a time that Nutrition 21 is supplying the Ingredients to third parties or
offering such Ingredients as available for purchase, Nutrition 21 shall
indemnify NPI for the additional cost NPI incurs in obtaining the
Ingredients from an alternate
source.
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2.
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Audit Rights,
etc.
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a.
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Orders that NPI submits as being
entitled to Discounted Prices shall be accompanied by such documentation
as Nutrition 21 reasonably requires to confirm this entitlement. NPI shall
from time to time give to Nutrition 21 and its representatives access to
NPI’s books and records to the extent necessary to confirm that prior
purchases by NPI at Discounted Prices were in fact entitled to Discounted
Prices.
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3.
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Uses Subject to Patent
License.
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a.
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Nutrition 21 owns patents on the
composition and/or the use of the Ingredients. Concurrently herewith,
Nutrition 21 is by separate instrument granting patent licenses to use the
Ingredients in the specific manner set forth in the patent licenses.
Nothing in this Agreement shall be deemed to enlarge or expand the scope
of the patent licenses, and NPI shall use the Ingredients only to the
extent consistent with the Patents and the patent
licenses.
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4.
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The term of this Agreement shall
be for the period commencing on the date of this Agreement (the
“Commencement Date”) and ending on August 21,
2022.
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Orders and
Forecasts
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a.
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Orders.
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i.
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NPI will submit electronic
purchase orders for the purchase of Ingredients in accordance with the
lead-time requirements and capacity limits set forth in Section 4.1(b)
below and Exhibit 2 hereto (each such purchase order, an
“Order”).
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ii.
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Ingredients purchased in
connection with any Order will be delivered in accordance with the
schedule, and subject to the daily capacity and other limitations, set
forth in Exhibit 2. Orders received after 4:30 pm shall be
deemed received by Nutrition 21 as of 8:00 am on the Business Day
following the day of actual receipt.
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iii.
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Delivery will be effected F.O.B.
Nutrition 21’s US point of
shipment.
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iv.
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While Ingredients are in Nutrition
21’s possession, Nutrition 21 will bear the risk of loss only to the
extent of the cost of manufacture of any Ingredients actually lost or
damaged. Upon transfer of the Ingredients to a common carrier
at Nutrition 21’s US point of shipment, title and risk of loss with
respect to the Ingredients shall transfer to
NPI.
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b.
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Forecasts.
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i.
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NPI will provide quarterly to
Nutrition 21 forecasted purchases for the next twelve-months and will
update the forecast quarterly one week prior to the start of each
succeeding quarter.
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6.
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Nutrition 21 Product Warranty and
Limitation of Liability.
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a.
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Nutrition 21 warrants that the
Ingredients supplied by it under this Agreement shall meet Nutrition 21’s
specifications (“Specifications”). If any Ingredient supplied
under this Agreement proves to be a Defective Ingredient and the defect is
attributable to Nutrition 21, Nutrition 21’s obligation with respect to
the Defective Ingredient shall be, at NPI’s option, to replace such
Ingredient or to issue a credit or refund to NPI in the amount of the
price received by Nutrition 21 from NPI for the Ingredients (plus any
documented commercially reasonable out-of-pocket freight charges actually
incurred by NPI in connection with replacing and returning such
Ingredient). Nutrition 21 shall have no liability whatsoever
for any defects unless notified within a commercially reasonable period by
NPI in writing identifying any such
defects.
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b.
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“Defective Ingredients” means
Ingredients that materially differ from agreed to
Specifications.
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c.
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All claims under this warranty
must be reported in writing to Nutrition 21 as promptly as practicable
after discovery. Nutrition 21 will provide NPI with a return
materials authorization (RMA) number and shipping instructions within
three days after receipt of NPI’s report of the claim, and NPI must ship
the Ingredients claimed to be defective to Nutrition 21 within thirty (30)
days after NPI’s receipt of the RMA number and shipping
instructions.
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7.
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Force
Majeure
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Neither Party shall be liable for
any failure of or delay in performance of its obligations under this
Agreement to the extent such failure or delay is due to circumstances
beyond its control, including acts of God, acts of a public enemy, fires,
floods, wars, civil disturbances, sabotage, terrorism, accidents,
insurrections, blockades, embargoes, storms, explosions, damage to its
plants, labor disputes (whether or not the employees’ demands are
reasonable and within the Party’s power to satisfy), acts of any
governmental body (whether civil or military, foreign or domestic), all
perils of the seas and other waters, failure or delay of third parties or
governmental bodies from whom either Party is obtaining or must obtain
rights of way, easements, franchises, permits, machinery, materials,
equipment, transportation, independent contracting, or supplies to grant
or deliver the same, or inability to obtain labor, materials, equipment,
or transportation (collectively referred to herein as “Force Majeure
Event”).
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b.
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Each Party shall provide written
notice to the other within thirty (30) days after a Force Majeure Event
which has resulted in such Party’s failure of or delay in performance of
its obligations under this
Agreement.
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c.
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Each Party shall use its
reasonable efforts (without being obligated to incur any additional
expenses) to minimize the duration and consequences of any failure of or
delay in performance resulting from a Force Majeure
Event.
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8.
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Use of
Trademarks. Except as provided herein or in Asset Purchase
Agreements among Nutrition 21, NPI and other parties, NPI shall not use
any trademark (including Nutrition 21’s logo) owned and or controlled by
Nutrition 21.
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9.
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Miscellaneous
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a.
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Notices. All notices
and other communications which may be required or are desired to be given
hereunder shall be in
writing.
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b.
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No Waivers of Rights,
Etc. No failure or delay on the part of any Party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.
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c.
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Amendments. Any
provision of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by Nutrition 21 and
NPI.
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d.
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Assignments and
Successors.
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i.
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Nutrition 21 may assign this
Agreement or any of its rights or delegate any of its obligations
hereunder to an affiliate or to any person or entity who is acquiring all
or substantially all of its assets or with whom Nutrition 21 may merge or
enter into other business combination. Nutrition 21 shall not have the
right to assign or sublicense any of its rights or to delegate any of its
obligations hereunder to any other person or entity without the consent of
NPI, which consent shall not be unreasonably withheld or
delayed.
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ii.
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The foregoing in no way shall
limit Nutrition 21’s right to subcontract any of its obligations
hereunder.
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iii.
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NPI shall not have the right to
assign or sublicense any of its rights or to delegate any of its
obligations hereunder to any other person or Person without the consent of
Nutrition 21.
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e.
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No Third-Party
Beneficiaries. This Agreement does not create, and shall not be
construed as creating, any rights enforceable by any person not a party to
this Agreement.
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f.
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No Joint Venture. The
Parties hereto are independent contractors. The Parties hereto
are not partners, joint venturers, or agents of one another and nothing in
this Agreement or in the performance thereof shall be construed to place
them in the relationship of partners or joint venturers or to make one an
agent of the other. Neither Party hereto shall have the power
to obligate or to bind the other in any manner or for any
purpose.
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g.
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Entire Agreement. This
Agreement constitutes the entire agreement among the Parties hereto with
respect to the subject matter hereof and supersedes all prior agreements
and undertakings, both written and oral, relating to the subject matter
hereof.
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h.
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Governing Law. This
Agreement shall be governed by, and construed in accordance with, the laws
of the State of Florida without regard to conflict of law
principles.
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i.
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Consent to
Jurisdiction. Nutrition 21 and NPI hereby irrevocably submit to
the jurisdiction of any court of the State of Florida sitting in Broward
County and any Federal court sitting in Broward County, Florida in respect
of any suit brought by Nutrition 21, and sitting in Westchester County New
York in respect of any suit brought by NPI or its affiliates, and any
appellate court from any thereof in any action or proceeding arising out
of or relating to this Agreement, and Nutrition 21 and NPI hereby
irrevocably agree that all claims in respect of such action or proceeding
may be heard and determined in such
court.
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j.
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Counterparts. This
Agreement may be executed in counterparts, and by the different Parties
hereto in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall constitute
one and the same agreement.
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IN WITNESS WHEREOF, the Parties hereto
have duly caused the execution of this Agreement by their duly authorized
officers, as of the day and year first above written.
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NUTRITION 21,
INC.
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By:
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Name:
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Title:
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NATURE’S PRODUCTS,
INC.
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By:
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Name:
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Title:
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Exhibit 1 Listed
SKU’s
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Item Num
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Description
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10601769731333
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IH Appetite Control
(12/Case)
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050428858431
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CVS 100ct 200mcg (24/Case)
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050428095829
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CVS 100ct 400mcg (24/Case)
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050428095836
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CVS 250ct 200mcg (24/Case)
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10041520871388
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CareOne
(Ahold) 60ct 500mcg (24/Case)
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10041520871371
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CareOne (Ahold)
300ct 200mcg (24/Case)
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10601769736253
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Club: Chromax AMF
90ct (12/Case)
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10601769734266
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Club: Chromax Ultra
250ct (12/Case)
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10601769995902
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DE
Diachrome 60ct (12/Case)
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10601769737403
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DE Diachrome 30ct
(12/Case)
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10601769737502
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DE NTG - Tea 10ct sticks
(12/Case)
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10601769737205
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DE NTG Multi Vitamin -
Citrus (12/Case)
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10041163438368
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Equaline Chromium 200mcg 100ct
(24/Case)
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10041163438375
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Equaline Chromium 400mcg 100ct
(24/Case)
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10601769736154
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IH Advanced MF 45ct
(12/Case)
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10601769731326
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IH Chromax 1000mcg
250ct (12/Case)
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20601769731323
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IH Chromax 1000mcg 250ct Xxxx
Display
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10601769734068
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IH Chromax Extra Strength 75ct
(12/Case)
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10601769734167
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IH Chromax Ultra Strength 60ct
(12/Case)
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10601769996015
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International
Diachrome 60ct (12/Case)
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10011822009314
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Pharmassure 1000mcg CP
100ct (24/Case)
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10011822375419
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Rite
Aid 100ct 400mcg (24/Case)
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10011822880531
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Rite
Aid 300ct 200mcg (24/Case)
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10048107049314
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Rite Aid Pharmass 100ct 200mcg
(24/Case)
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10011822375402
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Rite Aid Pharmass 100ct 400mcg
(24/Case)
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10311917099078
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Walgreen CP FN 200mg 100ct
(24/Case)
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10311917099092
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Walgreen CP FN 200mg 250ct
(24/Case)
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10311917099085
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Walgreen CP FN 400mg 100ct
(24/Case)
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10311917101696
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Walgreen FN Advanced JR 120ct
(24/Case)
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10311917107193
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Walgreen FN CP 1000mcg 100ct
(24/Case)
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10311917101689
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Walgreen FN Chol Relief 120ct
(24/Case)
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10311917107209
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Walgreen FN Dia Health MV 30ct
(24/Case)
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10681131928622
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Walmart CP
100ct 800mcg (24/Case)
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10681131312681
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Walmart 100ct
1000mcg (24/Case)
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Exhibit 2 Prices, etc. for Listed
SKUs
Chromium
Picolinate [**confidential material is omitted and is filed
separately with the Securities and Exchange Commission**]
Chromium
Histidinate [**confidential material is omitted and is filed
separately with the Securities and Exchange Commission**]
Chromium Picolinate-Biotin
Blend [**confidential material is omitted and is filed separately
with the Securities and Exchange Commission**]
Arginine-Silicate-Inositol
Blend [**confidential material is omitted and is filed separately
with the Securities and Exchange Commission**]
Lead-time
Requirements
Chromium Picolinate - 10 working
days
Chromium Histidinate - 20 working
days
Chromium Picolinate-Biotin blend - 20
working days
Arginine Silicate Inositol blend - 20
working days
Capacity Limits
Not Applicable
Allowed Time Between Order and
Shipping
For materials in stock - five business
days
