EXHIBIT 10.7
AGREEMENT
This Agreement
(this "Agreement") is made as of May 1, 2001, by and between
W. F. Young, Inc., a Massachusetts
corporation having its principal office in
East Longmeadow, Massachusetts ("W.F,
Young"); and NutraGlo, Inc., a Nevada
corporation having its principal office in
Willows, California ("NutraGlo").
Wolcott Farms, Inc., a California
corporation ('Wolcott Farms"), and NutraStar
Incorporated, a Nevada corporation,
("Nutrastar"), are signatories to this
Agreement for purposes of paragraphs
(1)(D), (6)(E) and 11, 12, 13, 14, 15, 17
and 18 only-
PRELIMINARY STATEMENT
NutraGlo has
secured the exclusive right to use certain patents, trade
secrets, and other proprietary information
(the "Technology'") used or useful in
the production of equine anti-inflammatory
food supplements in all forms,
including but not limited to powder forms
(the "Products"). The Technology and
the Products are more particularly
described in Exhibit A, which is attached
hereto and made a part hereof. NutraGlo's
business is to manufacture, package,
and ship items such as the Products. W. F.
Young is experienced in the
manufacture and distribution of items such
as the Products,
Pursuant to the
telalis, conditions and limitations set forth herein, the
parties hereto wish to establish a
relationship pursuant to which;
(A) W, F. Young will
be the exclusive worldwide distributor for the
Products;
(B) NutraGlo shall
manufacture. package and ship all of W, F. Young's
requirements for the Products pursuant to
the terms and conditions set forth
herein; and
(C) W. F. Young will
have the right of first refusal to purchase the
Technology in the event the Technology is
proposed to be sold by NutraGlo in the
future,
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In consideration
of mutual promises contained herein, the parties hereto
agree as follows:
(1) APPOINTMENT, TERRITORY AND STATUS
OF THE DISTRIBUTORSHIP.
Subject to the terms and conditions hereinafter set forth,
NutraGlo
hereby appoints W. F. Young to be the sole
and exclusive worldwide distributor
for the Products in all classes of trade
and in all channels of distribution;
provided that the distributorship shall
become non-exclusive in the event W.F.
Young fails to meet any of the minimum
purchase requirements as set forth in
paragraph (1)(B), for any period set forth
herein. In connection with W. F.
Young's appointment as distributor, the
parties agree as follows:
(A)
Sales Promotion. W. F. Young shall diligently and with all
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reasonable efforts promote the sale of the
Products worldwide. The conditions
and methods for W. F. Young's promotion and
sale o f the Products shall be
determined by W. F. Young in its sole
discretion.
(B)
Minimum Purchase Requirements. W.F. Young shall purchase the
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following minimum quantities of the
Products: (i) 90,000 pounds on or before
July 1, 2001 (the "Initial Purchase
Order"), (ii) an additional 120.000 pounds
before September I, 2002, (iii) 275,000
pounds between September 1, 2002 and
August 31, 2003. and (iv) 350,000 pounds
between September 1, 2003 and August
31, 2004. For purposes of this Agreement, a
"purchase" shall be deemed to have
occurred on the date that WY. Young makes
payment on a Purchase Order.
(C)
Minimum Purchase Orders. W.F. Young shall purchase the
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Products in minimum quantities of 50,000
pounds.
(D)
Referral of Orders. NutraGlo, Wolcott Farms, Inc., and/or
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Nutrastar, Inc., only shall sell the
Products through W. P. Young, and any order
received by NutraGlo or Nutrastar shall be
referred to W. F. Young.
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(E)
Term. The term of the distributorship granted hereunder shall
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be as set forth in paragraph (9)(A)
below.
(F)
Transactions and Orders. All transactions under this Agreement
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shall be executed in accordance with
individual contracts of sale between
NutraGlo and W. F. Young on a
principal-to-principal basis. Neither party hereto
shall rescind or amend any order or
individual contract of sale which has been
accepted by the other party without the
written consent of the other party.
(G)
Payment. Unless otherwise agreed by the parties in writing,
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payment by W. F. Young toNutraGlo shall .
bemadeasfollows: (i) thirty percent
(30%) of the purchase price of each
Purchase Order shall be paid at the time the
Purchase Order is accepted by NutraGlo, and
( ) seventy percent (70%) of the
Purchase Price of each Purchase Order shall
be paid net ten (10) days after W.
F. Young's receipt of the Products,
provided that NutraGlo shall provide W. F.
Young with a two percent (2%) cash
discount.
(2) PRODUCT PRICING.
(A)
Initial Price. The parties hereto agree that the price which
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W. F. Young shall pay for the Products for
orders placed before December 31,
2001, shall be equal to the sum of (i)
$2.50 per pound (the "Material Price"),
(ii) the out-of-pocket cost of the
packaging (unless W. F. Young, in its
discretion, purchases the packaging and has
such packaging delivered to
NutraGlo). and (iii) the out-of-pocket cost
of shipping the Products to the W.
F. Young distribution center (the "Product
Price").
(.B)
Price Changes On or before October 1st of each year, NutraGlo
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may notify W. T. Young in writing of an
adjustment to the Material Price for
orders received on January 1 of the
following year through June 30th of the
following year. On or before March 31st of
each year, NutraGlo may notify W. F.
Young in writing of an adjustment to the
Material Price for orders received on
July 1st of the same year through December
31st of the
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<PAGE>
same year. The Material Price may be
adjusted only (a) to reflect the per unit
increase or decrease in NutraGlo's direct
cost for materials and components as
such relate to the manufacture of the
Products; or (b) to reflect the per unit
increase or decrease in NutraGlo's
reasonable increases in labor and overhead
costs as such relate to the manufacture of
the Products. In the event that, for
the years beginning January 1, 2003 and
January I, 2004 (and only for those
years), the increases of the Material Price
under subparagraphs (i) and (ii)
above result in a Material Price increase
of less than five percent (5%) over
the prior calendar year, NutraGlo may
increase the Material Price up to the
difference between five percent (5%) and
such increases effective January 1,
2003 or January 1, 2004, as the case nay
be.
(C)
All notices of a change in the Material Price shall be
accompanied by documentation sufficient to
show the actual increases or
decreases in costs as set forth above.
Further, W. F. Young may request that
NutraGlo provide further information to
evidence such changes in costs. In the
event that W. F. Young or NutraGlo do not
agree that a Material Price change is
warranted, the parties agree that the
matter will be referred to a mutually
acceptable independent certified public
accountant for final resolution.
(3) PACKAGING.
The parties hereto agree that the Products shall be packaged in
accordance with the specifications set
forth on Exhibit B, which is attached
hereto and made a part hereof. All changes
to the packaging shall be subject tQ
the prior approval of NutraGlo, which
approval shall not be unreasonably
withheld, Notwithstanding anything
contained herein to the contrary, the parties
agree that all labels on the Products shall
include a reference to NaeuralGlon,
NutraGlo(R) and Ri.ceX(R) and that Wolcott
Farms, Inc. and NutraGlo, as the case
may be, hereby grant W. F. Young a
non-exclusive license to use such terms and
all trademarks related thereto on all
labels and advertising materials for the
Products during the term of this Agreement.
The RiceX
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Company shall provide W.F. Young with an
acceptable non-exclusive license to use
RiceX(R) in the form described in Exhibit
C, which is attached hereto and made a
part hereof. (4)
INSPECTION AND TESTING.
(A)
Tnspection. Before delivering the Products, NutraGlo shall
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carefully inspect and test randomly
selected samples from each batch for
compliance with specifications set forth on
Exhibit D (the "Product
Specifications"), which is attached hereto
and made a part hereof. NutraGlo, if
so requested by W. F. Young, shall give W.
F, Young reasonable notice of the
making of such inspection or test and
perrnit W. F. Young to be represented at
the testing. NutraGlo shall keep proper
records of all such inspections and
tests and shall keep finished goods retain
samples, stored at recognized room
temperature and humidity conditions, from
each production batch for one (1) year
after the expiration date of said products
or for three (3) years from the date
of production for those products not
requiring expiration dating so that W. F.
Young can examine them when and if
necessary. After the elapse of the
aforementioned period(s). NutraGlo shall
ship the samples to W. F. Young,
freight collect, or after written
authorization from W. F. Young, use other
legal means to dispose of the samples of
production batches.
(B)
Access. W. F. Young shall have the right at all reasonable
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times to inspect the Products during man.uf
aeture or processing where
appropriate or while stored under the
control of NutraGlo. If W. F. Young
exercises such right, NutraGlo shall afford
access to such plant facilities as
may be reasonably necessary by W. F.
Young.
(C)
Recourse on. Defects. If, as a result of any inspection or
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test of the Products by W. F. Young. on or
before the expiration of stated shelf
life of such products, it is determined
that the Products are not in accordance
with the Product Specifications as
determined by a mutually acceptable third
party, W. F. Young may, without prejudice
to any other provision. reject and
return the defective Products to NutraGlo
at NutraGlo's expense and the Products
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must, within a reasonable period of time to
be agreed upon in writing by the
parties, be replaced by NutraGlo at its
expense; provided, that NutraGlo is
given prior notice of the defective
Products and a reasonable opportunity to
inspect the Products prior to the return to
NutraGlo. In the event defective
Products are to be returned to NutraGlo,
NutraGlo shall have the option to
direct the carrier on which the Products
will be returned
(5) Representations and
Warranties of W. F. Young.
W. F. Young represents and warrants to NutraGlo as follows:
(A)
Organization and Standing. It is a corporation duly
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organized, validly existing and in good
standing under the laws of the
Commonwealthof Massachusetts;
(B)
Power and Authority. It has the power and authority to
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execute, deliver and perform this Agreement and any Agreement executed in
connection herewith;
(C)
Binding Agreement. This Agreement has been duly executed and
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delivered by W. F. Young and is the legal.
valid and binding obligation of W. F.
Young, enforceable against W. F. Young in
accordance with its terms, except as
enforcement may be limited by bankruptcy,
insolvency, moratorium, reorganization
or other similar laws relating to or
affecting the enforcement of creditors' ri
is generally, and except of the
availability of specific performance, injunctive
relief or other equitable remedies as
subject to the discretion of the court
before which any such proceeding therefore
may be brought; and
(D)
No Claim to
Technologv, It has no claim to the Technology or
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the Products except as set forth in this
Agreement.
(6)
REPRESENTATIONS AND
WARRANTIES OF NUTRAGLO.
NutraGlo warrants to W. F. Young as follows:
(A)
Organization and Standing. NutraGlo is a corporation duly
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organized, validly existing and in good
standing under the laws of the State of
Nevada. It has the power and authority to
own and lease the properties now owned
or leased by it and to conduct its
business.
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(B)
Power and Authority. It has the power and authority to
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execute, deliver and perform this Agreement
and any Agreement executed in
connection herewith.
(C)
Binding Agreement. This Agreement has been duly executed and
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delivered by NutraGlo and is the legal,
valid and binding obligation of it and
enforceable against it in accordance with
its terms, except as enforcement may
be limited by bankruptcy, insolvency,
moratorium, reorganization or other
similar laws relating to or affecting the
enforcement of creditors' rights
generally, and excep
