Exhibit 10.45
SUPPLY AGREEMENT
THIS AGREEMENT is entered into this 10th day of June 2004, by and between
Xxxxx Xxxxxxx at Global Kinetics, Inc., 0000 Xxxx Xxxxx, Xxxx, Xxxxxxxxxx 00000
(herein referred to as "GLOBAL") and Amarillo Biosciences, Inc., a Texas
corporation with its principal place of business at 0000 Xxxxxxxx Xxxx Xxxxx,
Xxxxxxxx, Xxxxx 00000 XX (herein referred to as "ABI").
WHEREAS, ABI has entered into an agreement with Hayashibara Biochemical
Laboratories, Inc. and Xxxxxxxxxxx Xxxxx, Inc. (collectively referred to as
"Hayashibara") whereby ABI has been granted the exclusive right to purchase,
distribute and sell worldwide except Japan, nutraceutical and healthcare
products for human consumption containing anhydrous crystalline maltose as the
primary ingredient to relieve dry mouth;
WHEREAS, ABI and GLOBAL desire to establish terms, by which ABI will
supply anhydrous crystalline maltose (hereinafter referred to by its trade name
"DRY MOUTH RELIEF" or "DMR") for incorporation into products to relieve dry
mouth to be sold in the United States of America (hereinafter, the "Territory")
to GLOBAL;
NOW THEREFORE, in consideration of the covenants and conditions
hereinafter contained, the parties hereto mutually agree as follows:
1. AGREEMENT TO SUPPLY
1.1. Notice of Requirements. Starting in the second year of this Supply
Agreement, no earlier than thirty (30) days prior to the beginning of each
calendar quarter, and no later than thirty (30) days after the commencement of
each calendar quarter, GLOBAL shall inform ABI in writing of its estimated
requirements for DMR for such calendar quarter, and in the case of the first
calendar quarter of each year, of its estimated requirements for DMR for the
year.
2. PRICE, DELIVERY AND PAYMENT TERMS
2.1. Price. So long as GLOBAL meets the minimum purchase requirements set
forth in Paragraph 3 of this Agreement, the price to be paid by GLOBAL for DMR
shall be $**** per Kilogram (Kg), bulk product, not tableted or bottled in boxes
of 20 Kgs.
2.2. Delivery. All deliveries for DMR shall be EX WORKS, ABI's or ABI's
contractor's factory or warehouse. The term "EX WORKS" shall have the meaning
ascribed thereto in INCOTERMS 2000 as published by the International Chamber of
Commerce, Paris. Delivery shall be within thirty (30) days from the date on
which ABI receives a purchase order and initial payment.
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2.3. Payment. GLOBAL shall remit to ABI full payment in U.S. funds via
wire transfer to a bank account of ABI's choice for each order of DMR.
Account Bank: Xxxxx Fargo Bank Routing ABA Number: 000000000
Banking Center Account Name: Amarillo Biosciences, Inc.
7515 Southwest 45th, Account Number: 8980-287695
Xxxxxxxx, Xxxxx 00000
Fifty percent (50%) of the payment will accompany the purchase order with
the balance to be paid within five (5) days of pickup in Japan. Upon execution
of this Supply Agreement, GLOBAL shall make a one time reimbursement of $**** to
ABI for the use of the name "DRY MOUTH RELIEF" which ABI shall purchase from
Natrol (as per e-mail dated May 8, 2004 from Xxxxx Xxxxxx of Natrol). This
payment will be made by GLOBAL to ABI when the payment is made by ABI to Natrol.
3. MINIMUM PURCHASE REQUIREMENTS
3.1. GLOBAL shall purchase from ABI at least the following amounts of DMR.
A. 750 Kgs of DMR during the first year of this Supply Agreement. Upon
execution of the Supply Agreement, GLOBAL shall purchase 100 Kgs of
DMR ($****) and notwithstanding Paragraph 2.3, above, GLOBAL pay
the full amount plus shipping (to be billed), for a total of $****
to ABI. This sum of $**** shall be wired as above. Failure to
purchase this 100 Kgs of DMR and pay for shipping upon execution of
this Supply Agreement shall cause the Supply Agreement to be null
and void.
B. 1,500 Kgs of DMR during the second year of the Supply Agreement.
C. 2,500 Kgs of DMR during the third year of the Supply Agreement and
for all succeeding years during the term of this Agreement.
D. In the event quantities of DMR actually purchased by GLOBAL during
any contract year exceed the minimum requirements set forth in
paragraphs A through C above, the excess quantities purchased shall
apply toward GLOBAL's minimum purchase obligations in succeeding
years, with any such excess to be carried over into successive
years, until so applied.
3.2. Within ten (10) days from the end of any term designated in
Subparagraph A, B or C of Paragraph 3.1, above, ABI shall notify GLOBAL of the
amount by which it has failed to purchase the required minimum amount. GLOBAL
shall have thirty (30) days from the date of receipt of such notification to
send to ABI a non-cancelable purchase order for immediate delivery in at least
the amount necessary to equal the required minimum amount. If GLOBAL fails to
meet the minimum purchase amounts set forth in Paragraphs 3.1 (A, B, or C), this
Agreement shall terminate, and GLOBAL shall have no right hereunder to market
DMR.
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4. REPRESENTATION OF ABI
4.1. Specifications. ABI represents and warrants that DMR supplied to
GLOBAL under this Agreement shall comply with the specifications set forth in
Exhibit A.
4.2. Good Manufacturing Practices. ABI represents and warrants that all
DMR supplied to GLOBAL shall comply with Good Manufacturing Practices
established by the United States Food and Drug Administration (hereinafter
"FDA") which are or may become applicable to the manufacture of DMR to be used
in the production of a dietary supplement in the U.S.
4.3. FDA Guaranty. All DMR supplied to GLOBAL, pursuant to this Agreement,
will not be, as of the date of delivery, adulterated or misbranded within the
meaning of the Federal Food, Drug and Cosmetic Act, or an article which may not
under provisions of said Act, be shipped and/or sold in interstate or foreign
commerce.
4.4. Co-Exclusivity. Except as required for ABI to sell bottles of MAXISAL
to local Amarillo pharmacies and health food stores and to individuals who buy
bottles of Maxisal, ABI represents and warrants that it shall not sell in the
Territory or permit any person other than GLOBAL to sell DMR in the Territory,
during the term of this Agreement. ABI shall cease selling Maxisal to
individuals when GLOBAL notifies ABI that GLOBAL is able to deliver product and
when ABI's current inventories are sold.
5. REPRESENTATIONS OF GLOBAL
5.1. Defective Product. GLOBAL shall notify ABI in writing of any alleged
defects in DMR no later than thirty (30) days from the date of its receipt in
the Territory.
5.2. Trademark. During the term of this Agreement GLOBAL shall have the
exclusive right and license as well as the obligation, to use the name "DRY
MOUTH RELIEF" in connection with the sale of products containing DMR in the
Territory and shall use said trademark on the label of products containing the
same. GLOBAL shall have no right after termination of this Agreement to use the
name "DRY MOUTH RELIEF" or any similar name which may confuse or intend to
confuse the general public as a trademark for other than product supplied by
ABI.
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6. TERM and PRICING
6.1. General. This Agreement shall become effective as of the date hereof
and, unless sooner terminated pursuant to the terms hereof, shall continue in
effect until May 10, 2009, and thereafter from year to year, unless terminated
by either party by notice to the other given not less than ninety (90) days
prior to the end of the initial term or any one year extension thereof; provided
however, that for all periods subsequent to October 12, 2005, ABI's obligations
to supply DMR hereunder shall be subject to the renewal or extension to that
certain Supply Agreement between ABI and Hayashibara dated October 13, 2000 (the
"ACM Agreement") regarding supply of anhydrous crystalline maltose by
Hayashibara to ABI.
6.2. Price Redeterminations. The price of product hereunder shall be
adjusted from time to time, but no more frequently than annually, to reflect any
increase in the Producers Price Index, Drugs and Pharmaceuticals, Subdivision
Code 063 after the date of this Agreement. Such price shall also be adjusted to
reflect any increases in the price charged by HBL for product under the ACM
Agreement, to reflect any increases in ABI's costs occurring after November 30,
2003, and to reflect any costs arising from changes requested by GLOBAL in
product specifications, manufacturing, or release of the product.
6.3. Termination for Cause. This agreement may be terminated by either
party at any time upon material default by a party of its obligations under this
Agreement by giving written notice to the defaulting party specifying in detail
the facts constituting such material default and specifying a termination date
of not less than thirty (30) days following the giving of such notice. Any such
termination shall take effect on the date specified unless the other party has
remedied such default and has given written notice to the other party specifying
in detail the steps taken to effect the remedy.
7. FURTHER ASSURANCES
All parties hereto shall do and perform and cause to be done and performed
all such further acts and things and shall execute and deliver all such other
agreements, certificates, instruments or documents as the other party hereto may
reasonably request in order to carry out the intent and purposes of this
Agreement and the consummation of the transactions contemplated hereby.
8. GENERAL PROVISIONS
8.1. Entire Agreement. This Agreement, and Exhibit A hereto, comprise the
entire agreement between the parties with respect to the subject matter of this
Agreement and shall supersede all prior agreements or understandings, oral or
written, with respect thereto.
8.2. Notices. All notices to parties required under this Agreement shall
be sent (i) by Overnight Courier Delivery, or (ii) by Facsimile Message if
confirmed by phone and by mailing a copy by First Class Mail. All notices
required under this Agreement shall be
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sent to:
If to ABI, to: If to GLOBAL, to:
Amarillo Biosciences, Inc. Xxxxx Xxxxxxx
ATTN: Xxxxxx X. Xxxxxxx Global Kinetics, Inc.
0000 Xxxxxxxx Xxxx Xxxxx 4628 Kent Court
Amarillo, TX, USA 79110 Xxxx, XX 00000
Fax: 000-000-0000 Fax: 000-000-0000
or, in each case, at such other address as may be specified in writing to the
other party.
8.3. Force Majeure. Neither party hereto shall be responsible for any
failure to comply with the terms hereof for the time and to the extent that such
failure is due to a cause or causes beyond its responsible control, or could not
have been avoided by reasonable diligence. These causes shall include, without
limitation, fire, flood, explosions, strike, labor disputes, labor shortages,
picketing, lockout, transportation embargo or failure of transportation,
inability to secure power, fuel, or other materials required for the production
of DMR, inability to utilize the full capacity of any facility due to
governmental actions, machinery malfunctions, inability to obtain necessary
permits, licenses or regulatory approvals, war, riot, civil disturbance or
insurrection, epidemics, quarantine restrictions, any action or inaction of any
government or agency thereof, or any judicial action. Upon the occurrence of an
event of force majeure, the party so affected shall notify the other party
specifying in reasonable detail the nature and expected duration of the event of
force majeure, and such party will have the right to suspend or reduce
deliveries or acceptance during the period of the event of force majeure.
8.4. Amendment and Assignment. This Agreement may not be amended, waived,
discharged or terminated orally, but only by an instrument in writing signed by
both parties. This Agreement shall be binding upon the respective successors and
assigns of the parties. This Agreement may not be assigned by either party
without the prior written consent of the other party which consent shall not be
unreasonably withheld.
8.5. Law Governing. This Agreement shall be construed, enforced and
performed in accordance with the laws of the State of Texas, USA, excluding
principles of conflicts of law.
8.6. Language. The English language version of this Agreement shall govern
and control any translations of the Agreement into any other language.
8.7. Arbitration. All disputes between the parties in connection with this
Agreement shall be finally settled by arbitration. Arbitration shall take place
in Amarillo, Texas, and shall be conducted under the rules of the American
Arbitration Association by one or more arbitrators appointed in accordance with
said Rules applying the terms and conditions of this Agreement and consistent
provisions of the internal laws of the State of Texas. Any judgment upon this
award may be entered in any court having jurisdiction.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
AMARILLO BIOSCIENCES, INC. GLOBAL KINETICS, INC.
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Xxxxx Xxxxxxx
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Xxxxxx X. Xxxxxxx Xxxxx Xxxxxxx
President & CEO President
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EXHIBIT A
Maxisal(R) Powder
Bulk Product Specifications
Test Specification
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Appearance / Description White, crystalline powder that is odorless and has a sweet taste
Identity Xxxxxxx reaction produces a red precipitate
Moisture content Not more than 1.2%
Maltose Purity Not less than 92%
Crystallinity Not less than 70%
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Maxisal(R) Lozenges
Finished Product Specifications
Test Specification
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Appearance / Description White, bi-convex, cylindrical lozenges that are not cracked, are
free of foreign particulate matter, and meet the following:
Diameter Diameter 8.0 mm (approx.)
Thickness Thickness 3.9 " 0.2 mm
Hardness Hardness 7 " 3 kg / cm2
Moisture content Maximum of 2.0%
Weight Variation Not more than 5% variation from target of 204 mg
Disintegration Not more than 5 minutes in USP apparatus in water
Friability Not more than 1% loss in 4 minutes
Identity Correlation of $0.99 to Sigma standard for maltose by FT-NIR
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