[LOGO]
December 23rd, 1997
Xx. Xxxxxxx X. Xxxxxx
Xxxxx, Incorporated
President and Chief Operating Officer
0000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
RE: Letter Agreement Concerning the Requirements Supply of LAREX
Arabinogalactan Products
Dear Xx. Xxxxxx:
Further to our discussions during October, 1997, this Letter Agreement
between Larex-Registered Trademark-, Incorporated as Seller and Mannatech-TM-,
Incorporated as Buyer is intended to set forth the salient terms and conditions
which will govern the sale by the Seller and purchase by the Buyer of Larex
Arabinogalactan nutraceutical products, known as Laraceutical AG Products,
including Manna 2000, (the specifications of such Manna 2000 being set forth in
Exhibit "A" hereto) ("Larex Products"). The subject terms and conditions are as
follows:
1. Up to and including through December, 1998 (and thereafter, if this
Agreement is, by the further agreement of the parties, extended), the Buyer
agrees that it will purchase its requirements for Larex Products, as shall from
time-to-time exist, if any, from the Seller, and the Seller shall sell the same
to Buyer. The obligation of the Seller to sell Larex-Registered Trademark-
Products to the Buyer in the market segment of nutraceuticals for use in
products for human nutritional, health and dietary supplement needs and for
sales of such Products (including as an ingredient) and for distribution of
Larex-Registered Trademark- Products in multi-level, direct and network sales is
exclusive ("Exclusive Market Segments"). This exclusivity does not include the
following applications and market channels of Larex-Registered Trademark-
Products: (a) medical foods with medical or drug claims which are governed or
permitted under the Food, Drug and Cosmetic Act (US, only) so long as the same
do not conflict or compete with claims made and product types of nutraceutical
products or functional foods produced by the Buyer and containing Larex
Products, (b) products referred to as fiber or fiber supplements to enhance
health and body benefits, so long as no claims for efficacy
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respecting the Larex-Registered Trademark- Products as fiber relate to
carbohydrate function or technology; (c) products used for flavor, color,
texture or function health benefits or other associated properties with respect
to food function so long as no claims for efficacy respecting the
Larex-Registered Trademark- Products for such purposes relate to carbohydrate
function or technology; (d) nutraceutical use where none of the claims relate to
saccharide or carbohydrate technology, activity or efficacy and where
Larex-Registered Trademark- Products are not used in nutraceutical products
which compete with or with claims similar to those product offered for sale,
from time-to-time by the Buyer; and (e) Practitioners/Herbalists/Chinese
Medicines customers to which Seller currently sells Larex-Registered Trademark-
Products as set forth on Exhibit "B" hereto provided such customers do not make
claims as to the Larex Products based upon saccharide or carbohydrate technology
or efficacy. It is specifically agreed between the parties that a claim
relating to the Larex Products, as containing fiber, which may have
cholesterol-lowering attributes, enhancement of bifido bacteria or other
fiber-related benefits, so long as the same do not rely or conflict with claims
related to carbohydrate and/or saccharide technology or efficacy, will not
conflict with the exclusive granted to the Buyer hereunder.
Larex represents and warrants that it will not sell any grade of
arabanogalactan which it produces other than the Laraceutical AG Products for
use in dietary supplements and health products.
For the period of the operation of this Letter Agreement, Larex shall
not sell Larex Products to any third party for use in or as a constituent
component of products to be sold within the Exclusive Market Segments within
the Territory, as set forth below.
The Territory in which in the Exclusive Market Segments shall apply
curing the term of this Agreement shall include North America, Australia, and
the Asian Continent. It is recognized by Buyer that the Seller has previously
appointed exclusive distributors in certain countries who are not currently
bound by the Exclusive Marketing Segment limitations in favor of the Buyer in
this agreement. Therefore, Seller shall use its reasonable best efforts to
work with its existing distributors to protect by concession the Exclusive
Market Segments in favor of Buyer wherever possible. During the term of this
Agreement, however, the Seller shall make no commitments for any of the
Exclusive Market Segments in other countries or continents which might
preclude the granting of Exclusive Market Segments to the Buyer in such other
countries or continents upon renewal or extension of this Agreement, inasmuch
as it is the intention of the Buyer is to extend its products to all feasible
world markets. Such restriction shall not, however, prevent the Seller from
selling Larex-Registered Trademark- Products outside the Territory in any
market segment during the term of this Agreement.
2. Buyer shall make a quarterly forecast for expected quantities in
excess of the Minimum Sales Amount and provide an
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updated (90) day rolling forecast to the Seller. During each month of the
effective period of this Letter Agreement, the Buyer will provide to the Seller
a projection of its requirements for Larex Products for the month next following
("Purchase Projection"). Such Purchase Projections shall be prepared in good
faith and furnished to the Seller on or before the 20th day of each new quarter
("Projection Delivery Date") in which this Letter Agreement is in effect
beginning with the Second Quarter. Seller shall then invoice the Buyer for the
amount of Larex Products delivered in any Delivery Month, and Buyer shall have
until the end day of the month following the Delivery Month in which to remit
payment for such invoice. In any event the Purchase Projection, and
consequently the minimum amount that the Buyer is required to purchase shall not
be less than the following amount(s) of Larex Products in any specified month in
which this Letter Agreement is in effect, as set forth below ("Minimum Sales
Amount"):
Month Monthly Minimum Purchase
----- -------------------------
November & December 1997 MANNA 2000, 2,275kg @ $48.40/kg
L'EXTRA B1000, 1,350kg @ $33.00/kg
January 1998-December 1998 MANNA 2000, 4,546kg @ $48.40/kg
3. In any month in which the Seller receives a Purchase Projection which
contains a projected requirement which it, in its good faith discretion,
determines that it will be unable to fulfil, it will notify the Buyer
immediately; provided the Seller shall be required in all instances to sell and
deliver at lease the Minimum Sales Amount of Larex Products to the Buyer.
4. Seller warrants to Buyer that all Larex Products sold by Seller
pursuant to this Letter Agreement will conform to the quality specifications
set forth in EXHIBIT A to this Agreement and that all Larex Products sold by
the Seller to the Buyer are suitable for use in its line of proprietary
dietary supplement, over-the-counter drug, and cosmetic products ("Mannatech
Products"). The Seller further agrees to notify Buyer if any of the Larex
Products should cease to be generally regarded as safe for human use by any
agency of the federal government of the United States of America or Canada,
any State or local government or subdivision thereof with appropriate
authority to make and enforce such a determination. Larex shall use and
maintain current Good Manufacturing Practices in respect of its manufacture
of Larex Products, being cognizant of the ultimate use in the Mannatech
Products.
5. (a) The pricing, per kilogram of Larex Products, shall be $48.40 USD
per kilogram, F.O.B., dockside of Seller's warehouse facilities, Roseville,
Minnesota.
(b) The prices set forth above are valid through
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December, 1998, at which time this Letter Agreement shall cease as to its effect
unless both parties mutually agree in writing to extend this Agreement or a new
agreement is initiated with new volume and terms.
6. It is understood by the Seller that the Buyer will use Larex Products
as a source of Arabinogalactan in Ambrotose-TM-, its proprietary ingredient in
its various dietary supplement, cosmetic, health card products that the Buyer
offers for sale in domestic and world markets and sold as Mannatech Products.
During the term of this Letter Agreement, and any extensions as renewals
thereof the Buyer may, without the payment of royalty, but shall not be required
to use the registered trademarks, "Manna 2000-TM-" in identifying the Larex
Products purchased from the Seller and used as a constituent component in
Ambrotose-TM-. Any use of the trademark, "Manna 2000-TM-, pursuant to this
agreement is non-exclusive. Whenever the Buyer uses the trademark, "Manna
2000-TM-", it shall also indicate that such name is the trademark of Seller and
shall take all reasonable measures to assure that there is no confusion of
ownership of the mark or the substance which it identifies, the same being the
proprietary property of the Seller. Likewise, Seller, if referring to
Ambrotose-TM-, shall indicate that the same is the trademark of Mannatech-TM-,
Incorporated and shall take all reasonable measures to assure that there is no
confusion of ownership the mark or the substance which it identifies, the same
being the proprietary property of the Buyer.
7. In the performance of obligations pursuant to this Letter Agreement,
either party might acquire from the other or its affiliates, technical,
commercial, operating or other proprietary information relative to the business
or operations of Seller or its affiliates (the "Confidential Information"). Each
party shall maintain the confidentiality, and take all necessary precautions to
safeguard the secrecy, of any and all Confidential Information it may acquire
from the other party or its affiliates. Neither party shall use any of such
Confidential Information for its own benefit or for the benefit of anyone else.
It is, nevertheless, intended that both parties will likely announce the
existence of this Letter Agreement, which, in and of itself, shall not
constitute Confidential Information. Seller shall execute the Confidentiality
Agreement set forth in Exhibit "C" in respect of this covenant, which shall
survive the performance and/or termination of this Agreement.
8. If either party (i) fails to observe the purchase or supply provisions
of this Letter Agreement, (ii) fails to make a payment hereunder when due or
(iii) otherwise breaches any term of this Agreement, and such failure or breach
is not cured to other party's reasonable satisfaction within 5 days (in the case
of a failure to make a payment or a shipment) or 30 days (in any other case)
after receipt of written notice thereof by other party (which
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notice shall be given in accordance with Paragraph 14 hereof, and which shall
further state with specificity the nature, extent and required cure of the
contended default), or if either party fails to perform or observe any covenant
or condition on its part to be performed or observed under this Letter Agreement
when required to be performed or observed, and such failure continues after the
applicable grace period specified herein, the non-breaching party may refuse to
continue under this Agreement and may terminate this Agreement upon notice to
the breaching party and, in addition, shall have such other rights and remedies,
including the right to recover damages, as are available to the non-breaching
party under applicable law or otherwise. If either party becomes bankrupt or
insolvent, or if a petition in bankruptcy is filed by or against it, or if a
receiver is appointed for it or its properties, either party may, subject to the
provisions of Section 365 and other applicable provisions of the Bankruptcy
Code, refuse to continue to perform under this Letter Agreement. Any performance
by either party of a failure by the other party to timely or appropriately
perform under the terms of this Letter Agreement, or after any other default by
such other party hereunder, shall not constitute a waiver of any rights of
Seller arising out of such prior default; nor shall either party's failure to
insist upon strict performance of any provision of this Agreement be deemed a
waiver by such party of any of its rights or remedies hereunder or under
applicable law or a waiver by such party of any subsequent default by other
party in the performance of or compliance with any of the terms of this
Agreement.
9. Buyer and Seller both represent, respectively, that each has in full
force and effect, and will during the term of this agreement keep in full force
and effect, products liability insurance covering its respective products. Each
party agrees to name the other party as an additional insured under its products
liability policy or certificate of insurance.
10. The expiration or termination of the term of this Letter Agreement
shall not impair the rights or obligations of either party hereto which shall
have accrued hereunder prior to such expiration or termination. The provisions
of Exhibit "A", and Paragraphs 4 (as to quality requirements) 6 (as to the use
of Larex-Registered Trademark- Products by Buyer), 7 and its related Exhibit
"B", and 9 hereof, and the rights and obligations of the parties under each such
Paragraph and Exhibit, shall survive the expiration or termination of this
Letter Agreement.
11. This Letter Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of Texas and in a venue situs
appropriate to Dallas County, Texas.
12. Neither party hereto may assign or otherwise transfer this Letter
Agreement or any of its rights or obligations hereunder (including, without
limitation, by merger or consolidation) without
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the prior written consent of the other party. This Letter Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Upon merger, acquisition or consolidation of either
party to this agreement, this obligation shall, without further action by either
party, be assumed by the surviving entity of such merger, acquisition or
consolidation.
13. This Letter Agreement constitutes the entire agreement between the
parties hereto relating to the matters covered hereby and supersedes any and all
prior understandings, whether written or oral, with respect to such matters,
including the prior Supply and License Agreements between the parties. The
terms of this Letter Agreement shall prevail over any inconsistent terms
contained in any purchase order issued by Buyer and acknowledgement or
acceptance thereof issued by Seller. No modification, waiver or discharge of
this Agreement or any of its terms shall be binding unless in writing and signed
by the party against which the modification, waiver or discharge is sought to be
enforced.
14. All notices and other communications with respect to this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
personally or when duly deposited in the mails, first class mail, postage
prepaid, to the address set forth below, or such other address hereafter
specified in like manner by one party to the other.
If to Seller: LAREX Incorporated
0000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xx Xxxxxxxxx
If to Buyer: Mannatech, Incorporated
000 X. Xxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Chairman of the Board
15. In the event that any provision of this Agreement is illegal, invalid
or unenforceable as written but may be rendered legal, valid and enforceable by
limitation thereof, then such provision shall be deemed to be legal, valid and
enforceable to the maximum extent permitted by applicable law. The illegality,
invalidity or unenforceability in its entirety of any provision hereof will not
affect the legality, validity or enforceability of the remaining provisions of
this Agreement.
16. Each party hereto agrees that it will not voluntarily undertake any
action or cause of action inconsistent with the provisions or intent of this
Agreement and, subject to the requirements of notice and opportunity to cure
contained herein, will promptly do all acts and take all measures as may be
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appropriate to comply with the terms, conditions and provisions of this
Agreement.
If the foregoing comports with your understanding of our agreements in this
matter, please signify the same by affixing your execution below.
Very truly yours,
MANNATECH-TM-, INCORPORATED
A Texas Corporation
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx,
Chief Operations Officer
AGREED:
LAREX Incorporated
A Minnesota Corporation
By: /s/ Xx Xxxxxxxxx
----------------------------
Its: Chief Operating Officer
---------------------------
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EXHIBIT A
MANNA 2000 SPECIFICATIONS
ATTRIBUTE SPECIFICATION
PURITY (RI) 95% MINIMUM
PHYSICAL STATE
-TEXTURE FREE FLOWING
-FLAVOR SLIGHT
-ODOR SLIGHTLY AROMATIC
ABSORBANCE
-1% SOL. @ 400nm 0.06 AU MAXIMUM
DISSOLUTION
-SINK WET PASS
-LUMPS NONE
BULK DENSITY RECORD
PARTICLE SIZE
-(+) 40 MESH RECORD
pH(1% SOL.) RECORD
BACTI
-APC 1000 CFU/G MAX
-YEAST 10 CFU/G MAX
-MOLD 100 CFU/G MAX
-SALMONELLA NEGATIVE
-COLIFORM 10 CFU/G MAX
-E. COLI 10 CFU/G MAX
-STAPH 1 CFU/G MAX
/s/ Xxxxxxx X. Xxxx
XXXXXXX X. XXXX
DIRECTOR OF PROCESS TECHNOLOGY
NOVEMBER 26, 1997
EXHIBIT B
Larex currently sells and continues to sell Laraceutical AG to the following
customers:
Biotics
Eclectic
GNC
Intelligent Nutrients
Monarch
NANP
Synergy Co.
Sisu (Canada)
Exhibit C
NONDISCLOSURE AGREEMENT
THIS AGREEMENT is made effective as of December 23, 1997, by and between
Larex, Inc. ("Larex") and Mannatech, Inc., (the "Recipient") to assure the
protection and preservation of the confidential and or proprietary nature of
information to be disclosed or made available by Larex to the Recipient in
connection with certain negotiations or discussions further described in Exhibit
A attached hereto.
1. Subject to the limitations set forth in Section 2, all information
disclosed by Larex to the Recipient shall be deemed to be "Proprietary
Information." In particular, Proprietary Information shall be deemed to include
any trade secret or other confidential information, know-how or data of any
nature concerning the development, use, formulation or manufacture of Larex's
products or prospective products, and any process, techniques, formulae,
chemical compositions, cell line, sample, algorithm, computer program, design,
drawing or test data therefor. Proprietary Information shall further include any
information relating to any marketing, servicing, financing, or personnel matter
relating to Larex or any third party, or their respective present or future
products, sales, suppliers, clients, employees, investors, or business, whether
in oral, written, graphic or electronic form.
2. The term "Proprietary Information" shall not be deemed to include
information which the Recipient can demonstrate:
(a) is now, or hereafter becomes, through no act or failure to act on the
part of the Recipient, generally known or available;
(b) is known by the Recipient at the time of receiving such information as
evidenced by its records;
(c) is hereafter furnished to the Recipient by a third party, as a matter
of right and without restriction on disclosure; or
(d) is the subject of a written permission to disclose provided by Xxxxx.
3. All Proprietary Information shall remain the property of Larex and
shall be returned to Larex promptly upon its request together with all copies
thereof. The Recipient shall protect the Proprietary Information received with
at least the same degree of care used to protect its own Proprietary Information
from unauthorized use or disclosure and shall not use it for any purpose other
than as specified above. The Recipient shall not disclose Larex's Proprietary
Information to any third party without the express written consent of Larex.
Proprietary Information supplied shall not be reproduced in any form except as
required to accomplish the intent of this Agreement. The Recipient shall advise
its employees or agents who might have access to such
Proprietary Information of the confidential nature thereof and shall obtain from
each of such employees and agents an agreement to abide by the terms of this
Agreement.
4. This Agreement shall continue in full force for so long as the
Recipient continues to receive or hold any Proprietary Information. This
Agreement may be terminated at any time by either party upon thirty (30) days
written notice to the other party. The termination of this Agreement shall not
relieve the Recipient of the obligations imposed by Sections 2 and 3 with
respect to Proprietary Information disclosed prior to the effective date of such
termination, which shall survive the termination of this Agreement for a period
of five (5) years from the date of such termination.
5. This Agreement shall be governed by the laws of the State of
Minnesota, excluding its choice of law provisions.
6. This Agreement contains the final, complete and exclusive agreement of
the parties relative to the subject matter hereof and may not be changed,
modified, amended or supplemented except by a written instrument signed by both
parties.
7. Larex shall be entitled to seek injunctive relief in any court of
competent jurisdiction in addition to any other remedy at law or in equity in
the event of a material breach of this Agreement. In the event of any legal
action or proceeding arising out of or resulting from this Agreement, the
prevailing party shall also be entitled to recover its reasonable attorney's
fees and costs thereby incurred.
AGREED TO: AGREED TO:
Larex, Inc. Mannatech, Inc.
0000 Xxxxxx Xxxx 000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xx. Xxxx, XX 00000 Xxxxxxx, XX 00000
U.S.A. U.S.A.
/s/ Xx Xxxxxxxxx /s/ Xxxx Xxxxxx
----------------------------- -----------------------------
By: Xx Xxxxxxxxx By: Xx. Xxxx Xxxxxx
Title:Chief Operating Officer Title: Chief Operating Officer
NONDISCLOSURE AGREEMENT
EXHIBIT A
TO DISCUSS ALL ASPECTS OF ARABINOGALACTAN (AG).
