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EXHIBIT 10.43
SUPPLY AGREEMENT
THIS AGREEMENT is entered into this 11 day of December, 2000, by and
between Natrol, Inc., a Delaware corporation with its principal place of
business in Chatsworth, California (herein referred to as "Natrol") and Amarillo
Biosciences, Inc., a Texas corporation with its principal place of business in
Amarillo, Texas (herein referred to as "Amarillo").
WHEREAS, Amarillo has entered into an agreement with Hayashibara
Biochemical Laboratories, Inc. and Xxxxxxxxxxx Xxxxx, Inc. (collectively
referred to as "Hayashibara") whereby Amarillo has been granted the exclusive
right to purchase, distribute and sell worldwide except Japan, nutraceutical and
health-care products for human consumption containing anhydrous crystalline
maltose as the primary ingredient to relieve dry mouth;
WHEREAS, such anhydrous crystalline maltose is the subject of U.S. Patent
No. 4,816,445 which was assigned to Hayashibara by the inventors;
WHEREAS, Amarillo desires to sell anhydrous crystalline maltose
(hereinafter referred to by its tradename "SALIVE(TM)") exclusively to Natrol;
and
WHEREAS, Amarillo and Natrol desire to establish terms by which Amarillo
will supply SALIVE(TM) for incorporation into products to be sold in the United
States of America, U.S. owned territories, and Canada exclusively to Natrol.
NOW THEREFORE, in consideration of the covenants and conditions hereinafter
contained, the parties hereto mutually agree as follows:
1. AGREEMENT TO SUPPLY
1.1. Exclusive Dealing. Amarillo shall supply SALIVE(TM) manufactured by
Hayashibara, for incorporation into products to be sold in the United States of
America, U.S. owned territories, and Canada, exclusively to Natrol during the
term of this Agreement and any subsequent renewal. SALIVE(TM) purchased and sold
under this Agreement shall conform to the specifications set forth in Exhibit A
(as such specifications may be revised or amended from time to time by agreement
of all parties).
1.2 Limited Grant of Continued Sales. Amarillo may continue to sell, in
the United States, U.S. owned territories, and Canada, products containing
SALIVE(TM) until notified by Natrol that Natrol is prepared to commence the sale
and marketing of its SALIVE(TM) product(s). Upon receipt of such notice,
Amarillo will cease all sales of SALIVE(TM)-containing products and shall
provide Natrol with all pertinent sales information including the names and
address of all persons and/or businesses that have purchased
SALIVE(TM)-containing products in the United States, U.S. owned territories, and
Canada.
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1.3 Notice of Requirements. Commencing January 1, 2001 and continuing each
quarter ninety (90) days thereafter, Natrol shall inform Amarillo of its
estimated requirements for SALIVE(TM) for such quarter and for the year
commencing on the first day of such quarter.
2. PRICE, DELIVERY AND PAYMENT TERMS
2.1. Price. A. So long as Natrol meets the minimum purchase requirements
set forth in Paragraph 3 of this Agreement, the price to be paid by Natrol for
SALIVE(TM) shall be **** dollars ($****) per kilogram, FCA, Kobe, Japan. The
term "FCA" shall have the meaning ascribed thereto in INCOTERMS 1990 as
published by the International Chamber of Commerce, Paris, France.
B. In the event Natrol's purchases of SALIVE(TM) exceed Ten Thousand
(10,000) kilograms in any given year, the price for each additional kilogram
purchased during that same given year, shall be **** dollars ($****).
2.2. Delivery. All orders for SALIVE(TM)shall be delivered to Natrol's
designated carrier in Kobe, Japan within twenty-one (21) days from the date on
which Amarillo receives a purchase order.
2.3. Payment. Natrol shall remit to Amarillo full payment for each order of
SALIVE(TM)within thirty (30) days from the date Natrol receives
SALIVE(TM)pursuant to a valid purchase order.
3. MINIMUM PURCHASE REQUIREMENTS
3.1. Natrol shall purchase from Amarillo at least the following amounts of
SALIVE(TM):
A. Four thousand (4,000) kilograms within one year of the date of
this Agreement. The purchase of these four thousand (4,000) kilograms shall be
made as follows:
i. Fifteen hundred (1,500) kilograms during the first quarter
of this Agreement. Within fourteen (14) days of the
effective date of this Agreement a purchase order shall be
sent by Natrol for four hundred and eighty (480) kilograms
of SALIVE(TM). Such amount shall be applied toward Natrol's
first quarter purchase requirements.
ii. Fifteen hundred (1,500) kilograms during the second quarter
of this Agreement.
iii. One thousand (1,000) kilograms during the third quarter.
B. Six thousand (6,000) kilograms during the second year following
the effective date of this Agreement.
C. Eight thousand (8,000) kilograms during the third year following
the effective date of this Agreement and for each succeeding year during the
term of this Agreement.
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3.2. Within thirty (30) days from the end of any term designated in
Paragraphs A, B, and C, hereof, Amarillo shall notify Natrol of the amount by
which it has failed to purchase the required minimum amount. Natrol shall have
thirty (30) days from the date of receipt of such notification to send to
Amarillo a non-cancelable purchase order for immediate delivery in at least the
amount necessary to equal the required minimum amount. If Natrol fails to
correct such default within thirty (30) days, it shall immediately cease being
the exclusive purchaser of SALIVE(TM) and shall commence acting as a
non-exclusive purchaser for such product. This is the sole remedy of Amarillo
for any alleged failure on the part of Natrol to promote, market, sell or
purchase SALIVE(TM) under this Agreement. Furthermore, if Natrol ceases to be
the exclusive purchaser of SALIVE(TM) the provisions of Paragraph 2.1 shall
terminate and Amarillo may establish any price it deems appropriate for
SALIVE(TM). However, the price charged to Natrol for SALIVE(TM) shall not be
higher than the price charged to any other person for similar quantities of
SALIVE(TM) in the United States, U.S. owned territories, or Canada.
4. REPRESENTATIONS OF AMARILLO
4.1. Specifications. Amarillo represents and warrants that the
SALIVE(TM)supplied to Natrol under this Agreement shall comply with the
specifications set forth in Exhibit A.
4.2. Good Manufacturing Practices. Amarillo represents and warrants that
all SALIVE(TM) supplied to Natrol 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 SALIVE(TM) to be
used in the production of a dietary supplement in the U.S.
4.3. Patent Infringement Claims. Amarillo will indemnify and hold Natrol
and its customers harmless against any and all actions, suits, claims, demands
or prosecutions that may be brought or instituted against Natrol or its
customers based on any claim that the manufacture of SALIVE(TM) for Natrol
infringes any patent or other intellectual property right provided that Natrol
shall have first (a) promptly notified Amarillo in writing of any notice to
Natrol or institution of any proceeding against it charging such infringement,
and (b) at Amarillo's request, give all reasonable assistance in the defense of
such claims.
4.4. FDA Guaranty. All SALIVE(TM) supplied to Natrol, 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.
4.5. Non-retail Packaging. Amarillo shall make certain that all
SALIVE(TM)supplied to Natrol shall be adequately packaged.
4.6. Exclusivity. Except as permitted by paragraph 1.2 hereof, Amarillo
represents and warrants that it shall not sell in the United States of America,
U.S. owned territories, or Canada or
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permit any person to sell in the United States of America, U.S. owned
territories, or Canada, SALIVE(TM) or any product containing SALIVE(TM) other
than to Natrol.
5. REPRESENTATIONS OF NATROL
5.1. Defective Product. Natrol shall notify Amarillo in writing of any
alleged defects in SALIVE(TM) no later than thirty (30) days from the date of
its receipt.
5.2. Trademark. During the term of this Agreement Natrol shall have the
exclusive right and license as well as the obligation, to use the name
"SALIVE(TM)" in connection with the sale of products containing SALIVE(TM) and
shall use said trademark on the label of products containing the same. Natrol
shall have no right after termination of this Agreement to use the name
"SALIVE(TM)" or any similar name which may confuse or intend to confuse the
general public as a trademark for other than product supplied by Amarillo.
5.3. Marketing. Natrol agrees to commit a sum equivalent to ten (10%) of
net revenues from the sale of products containing SALIVE(TM) to marketing
support.
6. TERM
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 December 31, 2005, 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.
6.2 Termination for Cause.
a. This agreement may be terminated by either party 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.
b. If either party becomes bankrupt of insolvent during the term of
this Agreement, the other party may terminate this Agreement by giving that
party written termination notice.
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.
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8. GENERAL PROVISIONS
8.1. Entire Agreement. This Agreement, along with all exhibits, 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 sent to:
If to Amarillo, to:
Amarillo Biosciences, Inc.
000 X. Xxxxx Xxx.
Xxxxxxxx, XX 00000-0000
ATTN: President
Fax:
If to Natrol, to:
Natrol, Inc.
00000 Xxxxxxx
Xxxxxxxxxx, XX 00000
ATTN: Xxxxxxx Xxxxxxx
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 SALIVE(TM), 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.
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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 California, 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. This
Agreement may be executed in several English counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
8.7. Arbitration. All disputes between the parties in connection with this
Agreement shall be finally settled by arbitration. If Natrol requests the
arbitration, such arbitration shall take place in the State of Texas. If
Amarillo requests the arbitration, the arbitration shall take place in Los
Angles, California. In either event, the arbitration 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
California. Any judgement upon this award may be entered in any court having
jurisdiction.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
AMARILLO BIOSCIENCES, INC. NATROL, INC.
By: //signature on file// By: //signature on file//
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Title: President Title: President
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