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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5.
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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 B 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 B. 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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a.
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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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4
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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5
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
