SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (this "Agreement") effective as of August 14, 1997,
is by and between CARALOE, INC., a Texas corporation ("Seller"), and MANNATECH,
INC., a Texas corporation ("Buyer"),
WITNESSETH:
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, bulk aloe xxxx mucilaginous polysaccharide (hereinafter referred to
under the product name of "MANAPOL-Registered Trademark- powder") in the
quantities, at the price, and upon the terms and conditions hereinafter set
forth; and
WHEREAS, simultaneously with the execution of this Agreement, Seller and
Buyer are entering into a Trademark License Agreement of even date herewith (the
"License Agreement") pursuant to which, among other things, Seller is granting
to Buyer a license to use the product name MANAPOL-Registered Trademark- in
connection with the labeling, advertising and sale of products manufactured by
or for Buyer that contain MANAPOL-Registered Trademark- powder; as one of the
ingredients in products manufactured by or for Buyer also containing other
ingredients and substances (the "Manufactured Products").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties hereto agree as follows:
1. TERM. The term of this Agreement shall commence on August 15, 1997, and
shall end at midnight on August 14, 2000, unless further extended or sooner
terminated as provided herein (such term as extended, herein called the "Term").
The Term (including each one-year extension of the Term) shall be extended
automatically for an additional one-year period, provided that, at least thirty
(30) days prior to the end of the Term, Seller and Buyer mutually agree in
writing on the quantity and price of MANAPOL-Registered Trademark- to be sold by
Seller and purchased by Buyer hereunder during such additional one-year period.
At least sixty (60) days prior to the end of the Term, Seller and Buyer shall
commence good faith negotiations to determine and agree upon such quantity and
price for such additional one-year period. If the parties are unable to so agree
on such quantity and price, this Agreement shall terminate effective at the end
of the current Term. Nothing contained in this Paragraph 1 shall be deemed to
(i) obligate the parties to agree upon such quantity and price, (ii) obligate a
party to negotiate with the other party regarding such quantity and price if
such other party is then in breach of or in default under this Agreement or the
License Agreement or (iii) limit the rights to the parties under Paragraph 8
hereof This Agreement shall terminate automatically upon the expiration or
termination of the License Agreement.
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2. SALE AND PURCHASE LICENSE.
(a) Subject to the terms and conditions of this Agreement, Seller
shall sell to Buyer, and Buyer shall purchase from Seller, not less than 300
kilograms per month.
(b) Buyer agrees that all MANAPOL-Registered Trademark- powder
purchased by it hereunder shall be used only (i) as an additive in human or
animal health food products (in capsule or liquid form) manufactured by or for
Buyer that are intended for sale to the ultimate consumer in the United States
or elsewhere and subject to compliance with Buyer's obligations under the
License Agreement, including without limitation Buyer's obligations under
Article III thereof. Such food products are herein called "Buyer Products".
3. QUALITY. Seller warrants to Buyer that all MANAPOL-Registered
Trademark- powder sold by Seller pursuant to this Agreement will conform to the
quality specifications set forth in EXHIBIT A to this Agreement. EXCEPT AS
PROVIDED IN THIS PARAGRAPH 3, THERE ARE NO WARRANTIES OR REPRESENTATIONS OF ANY
KIND, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY, FITNESS AND FITNESS FOR A PARTICULAR PURPOSE, MADE WITH RESPECT
TO THE MANAPOL-Registered Trademark- POWDER TO BE SOLD HEREUNDER, AND NONE SHALL
BE IMPLIED BY LAW. THE FOREGOING NOTWITHSTANDING, SELLER DOES REPRESENT THAT
THE MANAPOL-Registered Trademark- POWDER DOES MEET THE SPECIFICATIONS OUTLINED
ON EXHIBIT A AND THAT IT IS A FOOD SUPPLEMENT UNDER THE FDA RULES AND
REGULATIONS.
4. INSURANCE. Xxxxxxxxxx shall maintain insurance during the term of this
Agreement, and any extensions thereof with not less than the same coverage,
endorsements, limits and notice of cancellation as shown in the insurance
certificate attached hereto as Exhibit X. Xxxxxxxxxx shall, within thirty (30)
days after this Agreement is executed by both Parties, provide Mannatech with a
copy of its insurance certificate naming Mannatech as an additional insured and
listing the coverage, endorsements, limits, and notice of cancellation
provisions. Xxxxxxxxxx shall not cancel or materially alter such policy without
providing at least thirty (30) days prior written notice to all named insured.
Failure by Xxxxxxxxxx to maintain insurance coverage in accordance with this
Article 4 shall constitute a material breach of this Agreement. It is understood
and agreed that the furnishing of such insurance certificate will not relieve
Xxxxxxxxxx of its other respective obligations under this Agreement.
5. DELIVERIES. Buyer shall instruct Seller from time to time during the
Term, by placing a purchase order with Seller reasonably in advance of the date
Buyer desires MANAPOL-Registered Trademark- powder to be delivered to it
hereunder, (i) as to the quantities of MANAPOL-Registered Trademark- powder to
be delivered to Buyer, (ii) as to the specific date of delivery, (iii) as to the
specific location of delivery and (iv) as to the carrier or particular type of
carrier for such delivery. Xxxx the Term, Buyer shall provide Seller (a) on a
quarterly basis commencing on August 15, a binding forecast of Buyer's mi:mum
and maximum aggregate delivery requirements for MANAPOL-Registered Trademark-
powder for such period, and (b) on a yearly basis a good faith forecast
acceptable to Seller (which shall be binding on Buyer) of Buyer's
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minimum and maximum delivery requirements for MANAPOL-Registered Trademark-
powder for each month of the next twelve (12) month period. The quantities of
MANAPOL-Registered Trademark- powder ordered by Buyer pursuant to this Agreement
from time to time shall be spaced in a reasonable manner, and Buyer shall order
such quantities in accordance with Buyer's binding forecasts. In no event shall
Seller be required to deliver to Buyer in any three-month period a quantity of
MANAPOL-Registered Trademark- powder in excess of 125% of the maximum delivery
requirement for such period set forth in the binding forecast for such period
accepted by Seller. In no event shall Mannatech be required to purchase more
than 300 kilos of Manapol-Registered Trademark- powder per month, unless a
higher minimum monthly amount has been projected by Seller pursuant to 5(a).
Deliveries of MANAPOL-Registered Trademark- powder shall be made by Seller under
normal trade conditions in the usual and customary manner being utilized by
Seller at the time and location of the particular delivery. The
MANAPOL-Registered Trademark- powder delivered to Buyer hereunder shall be
packaged in five (5) kilogram or fifteen (15) kilogram containers. All
deliveries of MANAPOL-Registered Trademark- powder to Buyer hereunder shall be
made by Seller F.O.B. at the facilities of Seller or its affiliates located in
Irving, Texas.
6. PRICE. All MANAPOL-Registered Trademark- powder to be purchased by
Buyer under this Agreement shall be purchased by it, during the first year of
the Term, at a price as outlined in Attachment B, and during each year (if any)
of the Term, at the price per kilogram agreed upon by the parties for such
additional year pursuant to the provisions of Paragraph 1 hereof. Buyer shall
bear all freight, insurance and similar costs, and all sales taxes, with respect
to such purchases. The purchase price of MANAPOL-Registered Trademark- powder,
together with all related freight, insurance and similar costs, and sales taxes,
shall be paid by Buyer to Seller within thirty (30) days after the date of
invoice.
7. CONFIDENTIALITY. In the performance of Seller's obligations pursuant
to this Agreement or the License Agreement, Buyer may acquire from Seller or its
affiliates technical, commercial, operating or other proprietary information
relative to the business or operations of Seller or its affiliates (the
"Confidential Information"). Buyer shall maintain the confidentiality, and take
all necessary precautions to safeguard the secrecy, of any and all Confidential
Information it may acquire from Seller or its affiliates. Buyer shall not use
any of such Confidential Information for its own benefit or for the benefit of
anyone else. Buyer shall not publicly disclose the existence of this Agreement
or the terms hereof without the prior written consent of Seller.
8. FORCE MAJEURE. Seller shall not have any liability hereunder if it
shall be prevented from performing any of its obligations hereunder by reason of
any factor beyond its control, including, without limitation, fire, explosion,
accident, riot, flood, drought, storm, earthquake, lightning, frost, civil
commotion, sabotage, vandalism, smoke, hail, embargo, act of God or the public
enemy, other casualty, strike or lockout, or interference, prohibition or
restriction imposed by any government or any officer or agent thereof ("Force
Majeure"), and Seller's obligations, so fir as may be necessary, shall be
suspended during the period of such Force Majeure and shall be canceled in
respect of such quantities of MANAPOL-Registered Trademark- powder as would have
been sold hereunder but for such suspension. Seller shall give to Buyer prompt
notice of any such Force Majeure, the date of commencement thereof and its
probable duration and shall give a further notice in like manner upon the
termination thereof. Each party hereto shall endeavor with due diligence to
resume compliance with its
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obligations hereunder at the earliest date and shall do all That it reasonably
can to overcome or mitigate The effects of any such Force Majeure upon its
obligations under this Agreement.
9. RIGHT UPON DEFAULT.
(a) SELLER'S RIGHTS UPON DEFAULT. If Buyer (i) fails to purchase The
quantities of MANAPOL-Registered Trademark- powder specified for purchase by
Buyer hereunder, (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 Seller's reasonable satisfaction within five (5) days (in the case of a
failure to make a payment) or thirty (30) days (in any other case) after receipt
of notice thereof by Buyer, or if Buyer fails to perform or observe any covenant
or condition on its part to be performed when required to be performed or
observed, and such failure continues after the applicable grace period, if any,
specified in the Agreement, Seller may refuse to make further deliveries
hereunder and may terminate this Agreement upon notice to Buyer and, in
addition, shall have such other rights and remedies, including the right to
recover damages, as are available to Seller under applicable law or otherwise.
If Buyer 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, Seller
may refuse to make further deliveries hereunder and may terminate this Agreement
upon notice to Buyer, without prejudice to any rights of Seller existing
hereunder or under applicable law or otherwise. Any subsequent shipment of
MANAPOL-Registered Trademark- powder by Seller after a failure by Buyer to make
any payment hereunder, or after any other default by Buyer hereunder, shall not
constitute a waiver of any rights of Seller arising out of such prior default;
nor shall Seller's failure to insist upon strict performance of any provision of
this Agreement be deemed a waiver by Seller of any of its rights or remedies
hereunder or under applicable law or a waiver by Seller of any subsequent
default by Buyer in The performance of or compliance with any of The terms of
this Agreement.
(b) BUYER'S RIGHTS UPON DEFAULT. If Seller fails in any material respect
to perform its obligations hereunder, and such failure is not cured to Buyer's
reasonable satisfaction within 30 days after receipt of notice thereof by
Seller, Buyer shall have the right to refuse to accept further deliveries
hereunder and to terminate this Agreement upon notice to Seller and, in
addition, shall have such other rights and remedies, including the right to
recover damages, as are available to Buyer under applicable law or otherwise.
Any subsequent acceptance of delivery of MANAPOL-Registered Trademark- powder by
Buyer after any default by Seller under this Agreement shall not constitute a
waiver of any rights of Buyer arising out of such prior default; nor shall
Buyer's failure to insist upon strict performance of any provision of this
Agreement be deemed a waiver by Buyer of any of its rights or remedies hereunder
or under applicable law or a waiver by Buyer of any subsequent default by Seller
in the performance of or compliance with any of the terms of this Agreement.
10. DISCLAIMER AND INDEMNITY. Buyer shall assume all financial and other
obligations for Buyer Products, and Seller shall not incur any liability or
responsibility to Buyer or to Third parties arising out of or connected in any
manner with Buyer Products. In no event shall Seller be liable for lost profits,
special damages, consequential damages or contingent liabilities arising out of
or connected in any manner with this Agreement or Buyer Products. Buyer shall
defend, indemnify and
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hold harmless Seller and its affiliates, and their respective officers,
directors, employees and agents, from and against all claims, liabilities,
demands, damages, expenses and losses (including reasonable attorneys fees and
expenses) arising out of or connected with (i) any manufacture, use, sale or
other disposition of Buyer Products, or any other products of Buyer, by Buyer or
any other party and (ii) any breach by Buyer of any of its obligations under
this Agreement.
11. EQUITABLE RELIEF. A breach by Buyer of the provisions of Paragraph
2(b) shall cause Seller to suffer irreparable harm and, in such event, Seller
shall be entitled, as a matter of right, to a restraining order and other
injunctive relief from any court of competent jurisdiction, restraining any
further violation thereof by Buyer, its officers, agents, servants, employees
and those persons in active concert or participation with them. The right to
a restraining order or other injunctive relief shall be supplemental to any
other right or remedy Seller may have, including, without limitation, the
recovery of damages for the breach of such provisions or of any other
provisions of this Agreement.
12. SURVIVAL. The expiration or termination of the Term 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 Paragraphs
2(b), 3, 7, 9, 10 and 11 hereof, and the rights and obligations of the parties
thereunder, shall survive the expiration or termination of the Term.
13. GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Texas.
14. SUCCESSION Neither party hereto may assign or otherwise transfer this
Agreement or any of its rights or obligations hereunder (including, without
limitation, by merger or consolidation) without the prior written consent of the
other parry; provided, however, that Seller may assign any of its rights or
obligations hereunder to any affiliate of Seller. Subject to the immediately
preceding sentence, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and theft respective successors and assigns.
15. ENTIRE AGREEMENT. This Agreement and the License Agreement constitute
the entire agreement between the parties hereto relating to the matters covered
hereby The terms of this Agreement shall prevail over any inconsistent terms
contained in any purchase order issued by Buyer and acknowledgment 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.
This Agreement is separate from and, except for the License Agreement, unrelated
to any other agreement between the parties hereto and has been entered into for
separate and independent consideration, the sufficiency of which is hereby
acknowledged by the parties.
16. NOTICES. 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 prep aid, to the address set forth below, or such other address
hereafter specified in like manner by one party to the other:
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If to Seller: Caraloe, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: President
If to Buyer: Mannatech, Inc.
000 X. Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
17. INTERPRETATION. 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.
18. NO INCONSISTENT ACTIONS. Each party hereto agrees that it will not
voluntarily undertake any action or course of action inconsistent with the
provisions or intent of this Agreement and, subject to the provisions of
Paragraph 7 hereof, will promptly do all acts and take all measures as may be
appropriate to comply with the terms, conditions and provisions of this
Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as of the day and year first above written.
CARALOE, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: XXXXXXX X. XXXXXX
-------------------------------
Title: PRES/CEO
-----------------------------
MANNATECH, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Name: XXXXXXX X. "SKIP" XXXXXXXX
------------------------------
Title: CHAIRMAN OF THE BOARD
-----------------------------
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EXHIBIT A
TO THAT CERTAIN TRADEMARK LICENSE AND SUPPLY AGREEMENT
DATED AUGUST 14, 1997 BY AND BETWEEN CARALOE, INC. AND MANNATECH, INC.
MANAPOL-Registered Trademark- POWDER PRODUCT SPECIFICATION
SOURCE:
Freeze dried powder produced from inner gel of Aloe xxxx X.
PROCESSING:
PATENTED: U.S. and other patents.
PRODUCT SPECIFICATIONS:
Appearance Fine white to beige powder
Complex carbohydrates GREATER THAN OR EQUAL TO 30% of soluble
fraction
Moisture LESS THAN OR EQUAL TO 14%
Residue on ignition LESS THAN OR EQUAL TO 16%
Microbiological purity Meets U.S.P. specifications
Gel Points = 240 mg/oz
Viscosity (cP) @ 4 mg/ml = 40
Total acid value
(as malic acid) = 0.7% by AOAC method
Fiber content (GREATER LESS THAN OR EQUAL TO 60%
THAN 5 MICROMETERS)
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EXHIBIT B
MANAPOL-Registered Trademark- POWDER
MONTHLY QUANTITY PRICE/KG
---------------- --------
200 to 300 Kg $ 1,225/Kg
301 to 400 Kg 1,200/Kg
401 to 500 Kg 1,150/Kg
501 to 600 Kg 1,125/Kg
601 to 700 Kg 1,100/Kg
The above pricing will be re-evaluated in May, 1998 or when monthly purchases
exceed 700 kilograms.
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