Distributorship/Packager/Supply Agreement - Inter-Cal Corp. and Natrol Inc.
INTER-CAL CORPORATION
DISTRIBUTORSHIP/PACKAGER/SUPPLY AGREEMENT
AGREEMENT made as of January 1, 1995, by and between Inter-Cal Corporation,
an Arizona corporation ("Inter-Cal"), and NATROL, INC., a California corporation
("Natrol") which also does business as Nutritionals, Etc. ("Nutritionals"). This
Agreement supersedes that certain Distributorship Agreement between Inter-Cal
and Natrol dated as of September 1, 1990, as well as that certain Packager
Agreement between Inter-Cal and Nutritional dated as of December 8, 1993.
ARTICLE I
APPOINTMENT OF NATROL AS AUTHORIZED DISTRIBUTOR
1.1 Appointment of Natrol. Inter-Cal appoints Natrol as an Authorized
Distributor of the Ester-C-Registered Trademark- vitamin products for human
oral consumption shown on Exhibit A hereto (the "Products") in the geographic
area shown on Exhibit B hereto (the "Territory"). Inter-Cal may appoint other
Distributors in the Territory.
1.2 Development of Territory. Natrol will use its best efforts to promote
and sell the Products in the Territory. Natrol will not promote or sell the
Products outside the Territory and will refer inquiries from outside the
Territory to Inter-Cal.
1.3 Sales to Resellers/Sales through Intermediaries. Natrol may sell the
Products under its own label to end-users or resellers in the Territory. The
Products may not be sold for resale under any other label without Inter-Cal's
prior written approval. Natrol may sell the Products directly or through
authorized agents, brokers, or other intermediaries. Intermediaries and
resellers must comply with the same conditions imposed on Natrol by this
Agreement.
1.4 Repackaging/Purchases from Nutritionals. The Products must be repackaged
by Natrol. Natrol may also purchase the Products from Nutritionals pursuant to
Article II below. All provisions of paragraphs 2.4 and 2.5 below shall apply
regardless of whether the Products are purchased from Inter-Cal by Natrol or
Nutritionals.
ARTICLE II
APPOINTMENT OF NUTRITIONALS AS AUTHORIZED PACKAGER
2.1 Appointment of Nutritionals. Inter-Cal authorizes Nutritionals to
purchase Ester C-Registered Trademark- Ascorbate in the form of bulk powder
for any or all of the following purposes: manufacturing, processing,
packaging, labeling, and resale exclusively to Natrol and such other
companies as Inter-Cal may authorize in writing (each of which is referred to
herein as an "Account"). Authorization of additional Accounts shall not be
unreasonably withheld.
2.2 Shipments by Inter-Cal. Each shipment shall be labeled with the Product
name, the statement "For use only in manufacturing, processing or repackaging,"
Inter-Cal's name and address, and a lot/batch number. For each shipment,
Inter-Cal shall also provide an itemization of ingredients to be used by
Nutritionals or Natrol in preparing its own labels.
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CONFIDENTIAL TREATMENT REQUESTED
2.3 Resale. The Products shall be resold by Nutritionals exclusively to
Natrol and other authorized Accounts and shall not be shipped in any form
outside the Territory assigned to each Account. Nutritionals shall immediately
cease sales to any Account upon receipt of written notice from Inter-Cal that
the Account is no longer authorized to distribute the Products.
2.4 Storage and Packaging of Products. The Products must be stored in cool,
dry places under sanitary conditions. The Products may not be blended,
formulated, tabletted, or packaged in combination with any other form of vitamin
C. All handling, labeling, and repackaging must conform to the current Good
Manufacturing Practices set forth in Title 21 of the Code of Federal
Regulations, Sections 110 and following; the Food, Drug & Cosmetic Act; the Fair
Packaging & Labeling Act; and all applicable regulations. All labels must
contain the information required by paragraph 2.5.
2.5 Trademarks and Patents. Ester-C-Registered Trademark-, the EC logo,
and the Inter-Cal name, as well as any other brand names, trademarks, or
patents which Inter-Cal may identify in writing, are the exclusive property
of Inter-Cal or its licensor. Neither Natrol nor Nutritionals will take any
action inconsistent with the ownership of Inter-Cal and its licensor, nor
will Natrol or Nutritionals use or attempt to register any confusingly
similar name or mark. The information "Manufactured under U.S. Patent No.
4,822,816. Other foreign patents pending," as well as "(EC logo) and
Ester-C-Registered Trademark- are licensed trademarks of Inter-Cal
Corporation" must appear on the labels of all items containing
Inter-Cal Products. Natrol and Nutritionals agree not to apply an
Ester-C-Registered Trademark- label to any non-Ester-C-Registered Trademark-
product and to immediately notify Inter-Cal if any request for such labeling
is received from any Account.
ARTICLE III
ASSURANCES OF PRICING AND SUPPLY
3.1 Pricing. For the period extending through XXXXXXXXXXX, Inter-Cal
assures Natrol and Nutritionals that the bulk price of
Ester-C-Registered Trademark- Calcium Ascorbate will remain at the current
level of $XXXXX per pound and zinc, potassium, magnesium, and sodium mineral
ascorbates at $XXXXX per pound on orders intended for use in Products marketed
under Natrol's proprietary label. However, orders intended for use in non-Natrol
products shall not be eligible for these prices, and each purchase order shall
clearly indicate whether the order is intended for use in Natrol proprietary
Products.
3.1.1 Conditions. This assurance is subject to (1) Natrol's and
Nutritionals' continued performance of their obligations under this
Agreement, including aggressive promotional efforts at the level of XXXXXX
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX, (2) best
efforts to achieve annual sales increases (to include whenever possible, but
not limited to, distributor sales promotions, distributor consumer flyer
programs, broker coop budgets, consumer sampling, trade and broker sales
tools, consumer print advertising, broadcast advertising (radio and
television), direct trade advertising, response marketing, and any other
marketing and sales vehicles which can reasonably be used to promote the
sale of Ester-C-Registered Trademark-), and (3) Inter-Cal's right to
increase the price from time to time to reflect increases in its actual
cost of production (raw
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CONFIDENTIAL TREATMENT REQUESTED
materials, labor, equipment, and similar items). Inter-Cal may require
Natrol to provide proof of performance of conditions (1) and (2).
Inter-Cal will provide Natrol and Nutritionals with written notice at
least 60 days before the effective date of any increase in price and
will also provide Natrol and Nutritionals with satisfactory evidence of
the increased cost of production. Prices are FOB, Prescott, Arizona,
and do not include shipping or insurance charges.
3.2 Supply. For the period extending through January 1, 2000, Inter-Cal
assures Natrol and Nutritionals of a continuing source of supply of the Products
sufficient to meet each company's reasonable needs.
3.2.1 Conditions. This assurance is subject to (1) Natrol's and
Nutritionals' continued performance of their obligations under this
Agreement and (2) Natrol's and Nutritionals' recognition that there may be
occasional interruptions in the supply due to Acts of God or other causes
beyond Inter-Cal's reasonable control.
ARTICLE IV
INTERNATIONAL SALES
The pricing to Natrol and Nutritionals as set forth in paragraph 3.1 is for
Natrol-brand Products intended for domestic sale (United States, Canada, and
Puerto Rico). At such time as Inter-Cal may authorize Natrol to distribute the
Products internationally, then Inter-Cal, Natrol and Nutritionals shall
negotiate a royalty or other lawful arrangement.
ARTICLE V
GENERAL
5.1 Compliance with Laws. Natrol and Nutritionals will each comply with high
ethical standards and all laws applicable to their operations.
5.2 Records. Natrol and Nutritionals shall each make its records
concerning Ester-C-Registered Trademark- products, including production and
shipment records, available to Inter-Cal upon reasonable notice to ensure
compliance with this Agreement.
5.3 No Misrepresentations. Natrol and Nutritionals will not misrepresent the
Products or their benefits. Natrol and Nutritionals will immediately discontinue
the use of any advertising or promotional materials which Inter-Cal considers
misleading or deceptive.
5.4 Purchase Orders. Purchase orders must be in a form satisfactory to
Inter-Cal. Nothing printed or written on any purchase order shall modify or
expand Inter-Cal's obligations under this Agreement.
5.5 Payment. Payment is due 30 days after the invoice date. A late charge of
XXX per month will be added to past due amounts. An account 60 days past due
automatically becomes a COD account.
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5.6 Warranty. The Products are warranteed by Inter-Cal to be free from
physical or manufacturing defects when shipped. Defects shall be reported in
writing to Inter-Cal within 60 days after delivery. Inter-Cal may, at its
option, cure the defects, replace the Products, or refund the purchase price.
Failure to notify Inter-Cal of defects within 60 days after delivery constitutes
final acceptance by Natrol or Nutritionals (as the case may be).
5.7 Inter-Cal's Indemnity to Natrol and Nutritionals. Inter-Cal will
indemnify, defend, and hold Natrol and Nutritionals harmless against any claim
that (1) any Product as delivered by Inter-Cal was defective or caused injury or
death to any person or animal, or (2) any Product or Inter-Cal trademark, brand
name, or patent infringes a mark, name, or patent of any other person.
5.8 Natrol's and Nutritionals' Indemnities to Inter-Cal. Natrol and
Nutritionals will each indemnify, defend, and hold Inter-Cal harmless against
any claim concerning (1) any representation or advertising by Natrol or
Nutritionals or its respective employees, agents, or reseller customers, (2) any
intentional or negligent wrongdoing on the part of Natrol or Nutritionals or its
respective employees or agents in the formulation, manufacturing, repackaging,
labeling, storage, promotion, or sale of the Products, or (3) Natrol's or
Nutritionals' use of any additive, binder, excipient, or other material.
5.9 Survival of Indemnities. The parties' obligations under paragraphs 5.7
and 5.8 will survive seven years after the termination of this Agreement.
5.10 Term. The term of this Agreement is five years expiring January 1,
2000. Thereafter, this Agreement shall automatically renew for successive
two-year periods, but without the special pricing provided for in paragraph 3.1.
5.11 Termination.
a. Inter-Cal may terminate this Agreement immediately upon written
notice if Natrol or Nutritionals promotes or sells the Products outside
the Territory or blends, formulates, tablets, or packages the Products
in combination with any other form of vitamin C, or if Natrol or
Nutritionals sells the Products to any unauthorized Account.
b. Except as stated in subparagraph "a," this Agreement may be
terminated in writing by either party if the other party has failed to
perform any obligation and the default has not been cured within 60
days after the defaulting party has received written notice of the
default. A default by either Natrol or Nutritionals shall be deemed a
default by both companies. Inter-Cal may suspend further shipments or
request payment in advance while a default by Natrol or Nutritionals
remains uncured.
c. If Inter-Cal terminates this Agreement for reason other than one set
forth in subparagraph "a," it will ship reasonable quantities of the
Products to Natrol and
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Nutritionals for 90 days after termination to enable them to fulfill
existing contracts.
5.12 Limitation on Liability. In any dispute arising out of this Agreement,
neither party will be liable to the other for incidental or consequential
damages (such as loss of goodwill, sales, or profits, repurchase of inventory,
or expenses incurred in promotion or advertising).
5.13 Non-Assignment. Because Inter-Cal is relying on Natrol's qualifications
and expertise, neither Natrol nor Nutritionals may assign this Agreement without
Inter-Cal's prior written consent, which shall not be unreasonably withheld.
5.14 Notices. Notices must be sent by certified or registered mail and are
deemed received two days after being sent.
5.15 Entire Agreement. This Agreement and any exhibits and addenda constitute
the entire understanding between the parties and supersede any prior agreements
or understandings. No Inter-Cal representative may waive any provision or modify
this Agreement by oral representations. Amendments must be in writing and signed
by both parties.
5.16 Independent Contractors. Natrol and Nutritionals are each independent
contractors and are solely responsible for their employees and agents. There is
no partnership or joint venture between Inter-Cal and Natrol or Nutritionals.
5.17 Binding Effect. This Agreement is binding on the parties and their
respective successors and permitted assigns.
5.18 Applicable Law/Jurisdiction. This Agreement will be enforced under the
laws of Arizona as applicable to contracts made and performed there. Each party
consents to jurisdiction and venue in the United States District Court for the
District of Arizona and the Superior Court of the State of Arizona.
5.19 Severability. If any provision of this Agreement is invalid or
unenforceable, the remaining provisions will not be affected. If any provision
is deemed unreasonable, a reasonable provision shall be implied.
5.20 Force Majeure. Either party will be relieved of its obligations under
this Agreement if performance is impossible due to causes beyond its reasonable
control (such as fire, flood, and other natural disasters). If the inability to
perform continues for more than 180 days, the other party may terminate this
Agreement upon written notice.
5.21 Attorney Fees. In any dispute arising out of this Agreement, the court
or arbitrator shall award the prevailing party its costs and reasonable attorney
fees.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of January
1, 1995.
INTER-CAL CORPORATION
533 Madison Avenue
Prescott, Arizona 86301
By: /s/ Nancy J. Chandler
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Nancy J. Chandler
Vice President of Operations
NATROL, INC.
20731 Marilla Street
P.O. Box 5000
Chatsworth, California 91311
By: /s/ Elliott Balbert
---------------------------------
Elliott Balbert
President
NUTRITIONALS, ETC.
20731 Marilla Street
Chatsworth, California 91311
By: /s/ Elliott Balbert
---------------------------------
Elliott Balbert
President
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EXHIBITS A & B
Attached to and made a part of Distributorship Agreement by and between
Inter-Cal Corporation and Natrol, Inc.
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EXHIBIT A
The product line is Ester-C-Registered Trademark- brand ascorbates for
oral human supplementation.
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EXHIBIT B
The territory is worldwide excluding the following countries:
Austria Iceland
Australia New Zealand
Benelux Norway
Chile Poland
Denmark Sweden
Finland Switzerland
Germany Taiwan
Hungary
INTER-CAL CORPORATION NATROL, INC.
By: /s/ Nancy J. Chandler By: /s/ Elliott Balbert
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(Signature) (Signature)
NAME: NANCY J. CHANDLER NAME: ELLIOTT BALBERT
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(Print Name) (Print Name)
TITLE: Vice-President of Operations TITLE: President
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DATE: 2/16/95 DATE: 2/22/95
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